TABLE OF CONTENTS
17
PRELIMINARY TITLE ........................................1
I. EFFECT AND APPLICATION OF LAWS ...... 2
A. When Laws Take Effect ................................ 2
B. Retroactivity of Laws ..................................... 2
C. Mandatory or Prohibitory Laws .................... 2
D. Choice-of-Law Rules..................................... 2
Nationality Principle ................................................. 2
Lex Situs...................................................................... 3
Lex Loci Celebrationis .............................................. 3
E. Repeal of Laws .............................................. 3
F. Applicability of Penal Laws ........................... 3
G. Waiver of Rights ............................................ 3
II. HUMAN RELATIONS.................................... 5
A. Abuse of Right ............................................... 5
Kinds of Abuse of Right .......................................... 5
1. Acts Contrary to Law ....................................... 5
2. Acts Contrary to Morals .................................. 5
3. Malicious Prosecution ...................................... 6
4. Public Humiliation............................................ 7
5. Oppressive Dismissal ....................................... 7
B. Unjust Enrichment ........................................ 7
C. Liability without fault .................................... 8
D. Ostentatious Display of Wealth .................... 8
E. Violation of Human Dignity ......................... 9
1. Violation of personal dignity ............................... 9
2. Violation of privacy .............................................. 9
3. Violation of right to peace of mind .................. 10
4. Interference with relations ................................. 10
a. Family Relations .............................................. 10
b. Social Relations ............................................... 11
c. Economic Relations ....................................... 12
d. Political Relations ........................................... 12
5. Civil Action .......................................................... 14
PERSONS AND FAMILY RELATIONS............ 17
I. PERSONS ......................................................... 17
A. Civil Personality ............................................ 17
1. In General ............................................................ 17
2. Kinds of Persons ................................................. 17
a. Natural Persons ...............................................
b. Juridical Persons..............................................18
3. Capacity to Act.....................................................19
a. Minority ............................................................19
b. Insanity .............................................................20
c. Deaf-Mutism ....................................................20
d. Prodigality ........................................................21
e. Civil Interdiction .............................................21
f. Family Relations ...............................................21
g. Alienage ............................................................21
h. Absence ............................................................21
i. Insolvency and Trusteeship ............................21
4. Domicile and Residence of Persons .................22
B. Use of Surnames .......................................... 22
1. Surname of Children ...........................................22
a. Legitimate and Legitimated Children ...........22
b. Adopted Child .................................................22
c. Illegitimate Child .............................................22
2. Surname of Wife After and During Marriage..22
a. During Marriage ..............................................22
b. After Marriage .................................................23
3. Confusion of Names ...........................................23
4. Change of Names ................................................23
C. Entries in the Civil Registry and Clerical Error
Law ................................................................... 23
D. Absence ....................................................... 25
1. Civil Code Provisions..........................................25
a. Provisional Measures in case of Absence ....25
b. Declaration of Absence..................................25
c. Administration of the Property of the
Absentee ...............................................................25
d. Presumption of Death ..................................25
2. Presumptive Death of Absent Spouse Under the
Family Code ..............................................................26
II. MARRIAGE .................................................... 27
A. In General .................................................... 27
B. Requisites of Marriage ................................ 27
1. Essential Requisites .............................................27
a. Sex......................................................................27
b. Age ....................................................................28
 c. Consent Freely Given .................................... 28
d. No Subsisting Marriage ................................. 29
2. Formal Requisites ................................................ 29
a. Marriage Ceremony ........................................ 29
b. Authority of Solemnizing Officer ................ 29
c. Marriage License ............................................. 30
C. Marriages Solemnized Abroad, and Foreign
Divorce .............................................................. 31
1. Marriages Celebrated Abroad ........................... 31
2. Foreign Divorce ................................................. 32
D. Void and Voidable Marriages ......................32
1. Void Marriages .................................................... 32
a. Absence of Requisites .................................... 32
b. Bigamous and Polygamous Marriages ......... 32
c. Subsequent Marriage When One Spouse is
Absent................................................................... 33
d. Bad Faith of Both Spouses ........................... 34
e. Psychological Incapacity ................................ 34
f. Incestuous Marriage ........................................ 35
g. Against Public Policy...................................... 35
h. Non-Compliance with Recording
Requirement after Declaration of Nullity........ 35
2. Voidable Marriages ............................................ 37
a. Lack of Parental Consent .............................. 37
b. Insanity ............................................................. 37
c. Fraud................................................................. 38
d. Force, Intimidation, Undue Influence......... 39
e. Impotency ........................................................ 39
f. Sexually-Transmissible Disease Serious and
Incurable............................................................... 40
III. LEGAL SEPARATION ................................43
A. Grounds for Legal Separation [Art. 55, Family
Code] .................................................................43
B. Defenses [Art. 56, Family Code] ..................44
C. Procedure ......................................................44
D. Effects of Filing Petition ..............................45
E. Effects of Pendency ......................................45
F. Effects of Decree of Legal Separation ..........45
G. Reconciliation ...............................................45
H. Effect of Death of One of the Parties ..........46
IV. RIGHTS AND OBLIGATIONS BETWEEN
HUSBAND AND WIFE...................................... 50
A. Live Together.............................................. 50
B. Fix a Family Domicile ................................ 50
C. Support the Family ..................................... 50
D. Management of Family Life....................... 50
E. Effect of Neglect of Duty ........................... 50
F. Exercise of Profession................................. 50
V. PROPERTY RELATIONS BETWEEN
HUSBAND AND WIFE....................................... 51
A. General Provisions ........................................ 51
B. Donations by Reason of Marriage Donations
Propter Nuptias ................................................. 51
C. Absolute Community of Property ................ 53
D. Conjugal Partnership of Gains .................... 53
E. Separation of Property and Administration of
Common Property by One Spouse During the
Marriage ........................................................... 60
F. Regime of Separation of Property................ 60
G. Property Regime of Unions Without Marriage
........................................................................... 61
VI. FAMILY HOME ........................................... 62
A. In General .................................................... 62
B. Who May Constitute the Family Home ...... 62
C. Beneficiaries of the Family Home............... 62
D. Exemption from Forced Sale, Execution,
Attachment ....................................................... 62
E. Sale of Family Home ................................... 62
F. When Terminated ........................................ 63
VII. PATERNITY AND FILIATION ................ 64
A. Legitimate Children ..................................... 65
B. Proof of Filiation .......................................... 66
C. Illegitimate Children ................................... 66
D. Legitimated Children .................................. 68
VIII. ADOPTION ............................................... 69
A. Domestic Adoption (RA 11642) ................... 69
1. Who May Adopt ..................................................69
2. Who May be Adopted [Sec. 22, RA 11642] .....69
3. Rights of an Adopted Child ...............................69
a. In General [Sec. 42, RA 11642] ....................69
b. Legitimacy [Sec. 41, RA 11642] ....................70
 c. Succession [Sec. 43, RA 11642] .................... 70
d. Name ................................................................ 70
e. Nationality ........................................................ 70
4. Instances and Effects of Rescission ................ 70
B. Inter-country Adoption (RA 8043, as amended
by RA 11642) ......................................................70
When Allowed ......................................................... 70
IX. SUPPORT ....................................................... 71
A. Scope ............................................................. 71
B. Who are Obliged to Give Support ................ 71
C. Source of Support ......................................... 71
D. Order of Support .......................................... 71
E. Amount of Support .......................................72
F. Manner and Time of Payment ......................72
G. Renunciation and Termination ....................72
H. Support Pendente Lite .................................73
I. Procedure in Applications for Support ..........73
X. PARENTAL AUTHORITY ............................74
A. General Provisions ........................................74
B. Substitute Parental Authority .......................74
C. Special Parental Authority ............................74
D. Effect of Parental Authority over the Child’s
Person ................................................................75
E. Effect of Parental Authority over the Child’s
Property .............................................................75
F. Suspension or Termination of Parental
Authority............................................................76
XI. EMANCIPATION .........................................77
A. Cause of Emancipation ................................77
B. Effect of Emancipation ................................77
SUCCESSION ...................................................... 81
I. GENERAL PROVISIONS ...............................79
A. Definition ......................................................79
Kinds of Succession: ............................................... 79
Scope of Inheritance: .............................................. 79
B. Rules on Opening of Succession ..................79
1. The rights to succession are transmitted from the
moment of the death of the decedent [Art. 777,
Civil Code] ................................................................ 79
2. A person may be “presumed” dead for the
purpose of opening his succession after absence of:
80
C. Subjects of Succession: ................................ 80
Kinds of Successors/Heirs: ....................................80
II.TESTAMENTARY SUCCESSION ................. 81
A. Wills .............................................................. 81
1. Kinds of Wills: .....................................................81
2. Characteristics of Wills: ......................................81
B. Testamentary Capacity and Intent .............. 82
Time of Determining Capacity: .............................82
Requisites for Capacity to Make a Will: ................82
Test of soundness of mind: To be of sound mind,
the testator must know:...........................................82
C. Forms of Wills .............................................. 83
Arts. 815-817, Civil Code (summarized in the table
below) provide for the various governing laws in
these instances: .........................................................83
D. Attested or Notarial Wills ............................ 84
Formal requirements for notarial wills: ................84
Rules on Interested Witness [Art. 823, Civil Code]:
86
E. Holographic Wills........................................ 86
Formal Requirements: .............................................86
Witnesses Required for Probate [Art. 811, Civil
Code]..........................................................................86
Additional Dispositions: .........................................86
Insertion, Cancellation, Erasure or Alteration [Art.
814, Civil Code] ........................................................86
Effect of Insertion Written by Another Person on
the Validity of a Holographic Will:........................87
F. Other Types of Wills .................................... 87
Joint Wills: .................................................................87
Mutual Wills: .............................................................87
Reciprocal Wills: .......................................................87
G. Codicil and Incorporation by Reference: .... 87
Codicil: .......................................................................87
Incorporation by Reference: ..................................87
H. Revocation of Wills ..................................... 88
I. Republication and Revival: ........................... 89
J. Allowance and Disallowance of Wills ........... 89
Kinds of Probate: .....................................................89
Scope of Probate Proceedings [Art. 839, Civil
Code]..........................................................................89
 Effect of Final Decree of Probate, Res Judicata on
Formal Validity: ....................................................... 90
Grounds for Denying Probate: ............................. 90
K. Institution of Heirs .......................................90
Extent of Grant [Art. 842, Civil Code]: ............... 90
Effect of Predecease of Heir [Art. 856, Civil Code]:
90
Manner of Distribution: ......................................... 90
Declaration of heirship as decided in Treyes v. Larlar,
G.R. No. 232579 (2020) ......................................... 91
L. Preterition ..................................................... 91
Concept [Art. 854, Civil Code]: ............................. 91
Omission of Heir from Inheritance:..................... 91
No Preterition .......................................................... 91
Distinguished from Disinheritance: ...................... 91
M. Substitution of Heirs ...................................92
Kinds of Substitution: ............................................. 92
1. Brief or Compendious [Art. 860, Civil
Code]..................................................................... 92
2. Reciprocal [Art. 861, Civil Code].............. 92
3. Simple Substitution [Art. 859, Civil Code]
92
4. Fideicommissary Substitution ................... 92
N. Conditional Testamentary Dispositions and
Those with a Term ............................................93
3 Kinds of Testamentary Disposition: ................. 93
Conditional Dispositions: .................................. 93
Dispositions with a Term: ................................. 94
Modal Dispositions:............................................ 94
O. Legitime .......................................................94
Classes of Compulsory Heirs [Art. 887, Civil Code]:
94
Specific Rules on Legitime: .................................... 95
Steps in Determining the Legitime of Compulsory
Heirs [Arts. 908-910, Civil Code]: ......................... 95
Remedy of a Compulsory Heir in Case of
Impairment of Legitime: ........................................ 95
Method of Reduction [Art. 911, Civil Code]: ...... 95
How are Devises and Legacies with usufructs, life
annuities and pensions reduced? ........................... 96
Reserva Troncal: ...................................................... 96
Concept of Reserva Troncal:............................. 96
Parties: [Balane] ...................................................96
Requisites for Reserva Troncal [Chua v. CFI,
G.R. No. L-29901 (1977)]: .................................96
Three transmissions involved: [Balane] ............97
Extinguishment of the Reserva: ..........................97
P. Disinheritance .............................................. 98
Effect of Disinheritance: ........................................98
Requisites of a Valid Disinheritance: ....................98
Causes Common to Disinheritance and
Unworthiness............................................................98
Modes of Revocation of Disinheritance:..............99
Reconciliation [Art. 922, Civil Code]: ...................99
Ineffective Disinheritance [Art. 918, Civil Code]:
99
Q. Legacies and Devises .................................. 99
Persons Charged with the Duty to Give Legacies
and Devises in a Will ...............................................99
Validity and Effect of Legacy or Devise: .............99
Delivery of Legacy/Devise [Art. 951, Civil Code]:
100
Effect of Ineffective Legacies or Devises [Art. 956,
Civil Code]: ............................................................ 100
Revocation of Legacies and Devises [Art. 957, Civil
Code]:...................................................................... 100
III. LEGAL AND INTESTATE SUCCESSION
............................................................................. 101
A. General Provisions; Relationship and
Right of Representation .................................. 101
Fundamental Principles in Intestate Succession:
101
Relationship: .......................................................... 102
Incapacity [Art. 968, Civil Code] ........................ 102
Repudiation [Arts. 968-969, Civil Code] ........... 102
Adoption [Art. 189, Family Code]...................... 102
Right of Representation: ...................................... 102
B. Order of Intestate Succession ..................... 104
RULES OF EXCLUSION AND
CONCURRENCE IN INTESTATE SHARES
104
Outline of Intestate Shares .................................. 105
IV. PROVISIONS COMMON TO TESTATE
AND INTESTATE SUCCESSION ................... 107
A. Right of Accretion: ...................................... 107
 B. Capacity to Succeed by Will or by Intestacy
......................................................................... 108
Requisites for Capacity to Succeed by Will or by
Intestacy [Art. 1024 – 1025, Civil Code]: ........... 108
Persons Incapable of Succeeding [Arts. 1027, 739,
1032, Civil Code]: .................................................. 108
Based on Morality or Public Policy [Arts. 739 and
1028, Civil Code]: .................................................. 108
Based on Acts of Unworthiness [Art. 1032, Civil
Code]: ...................................................................... 109
Determination of Capacity [Tolentino] .............. 109
C. Acceptance and Repudiation of Inheritance:
......................................................................... 109
Requisites [Art. 1043, Civil Code] ....................... 109
Forms of Acceptance [Arts. 1049 – 1050, Civil
Code]: ...................................................................... 110
Forms of Repudiation [Art. 1051, Civil Code] .. 110
Heirs in Two Capacities [Art. 1055, Civil Code]:
110
Irrevocability of Acceptance or Repudiation .... 110
D. Partition and Distribution of the Estate .....111
What can be divided? ............................................ 111
Effects of Inclusion of Intruder in Partition [Art.
1105, Civil Code] ................................................... 112
Right of Redemption in Partition ....................... 112
Legal Redemption by Co-Heir; ....................... 112
Effects of Partition ................................................ 112
Warrant of bad debts ............................................ 113
Rescission and Nullification of Partition ........... 113
DIFFERENCE OF NULLITY FROM
RESCISSION ........................................................ 114
Important Periods in Partition ............................ 114
OBLIGATIONS AND CONTRACTS ............... 121
OBLIGATIONS ................................................. 116
I. GENERAL PROVISIONS ............................. 116
A. Definition .................................................... 116
B. Elements of an obligation .......................... 116
1. Active Subject (Obligee/Creditor) ............ 116
The person (natural or juridical) who has the right
or power to demand the prestation. ................... 116
2. Passive Subject (Obligor/Debtor) ............. 116
The person bound to perform the prestation. .. 116
3. Prestation (Object) ........................................ 116
The conduct required to be observed by the
debtor/obligor (i.e. to give, to do, or not to do)
[Ang Yu Asuncion v. CA, G.R. No. 109125 (1994)];
116
a. Must be possible, physically and juridically. .. 116
b. Must be determinate or at least determinable
according to pre-established elements. .............. 116
c. Must have a possible equivalent in money. ... 116
C. Sources of obligations................................. 116
1. Law ...................................................................... 116
2. Contracts ............................................................ 116
3. Quasi-Contracts ................................................ 116
4. Acts or Omissions Punishable by Law .......... 116
5. Quasi-Delicts ..................................................... 116
II. NATURE AND EFFECT ............................. 117
A. Obligation to give ....................................... 117
1. Types of Things ............................................. 117
2. Rights and Duties of Parties ...................... 117
B. Obligation to do or not to do ...................... 118
1. Rights and Duties of Parties ....................... 118
C. Transmissibility of obligations ................... 119
D. Performance of Obligations ....................... 119
1. Definition ......................................................... 119
2. General Rule/Requirement ........................ 119
3. Exceptions ....................................................... 119
a. Substantial Performance ......................... 119
b. Incomplete/Irregular performance ..... 119
d. Partial Liquidation ................................... 119
E. Breaches of Obligations ............................. 119
1. Failure to Perform .......................................... 119
2. Default, Delay, or Mora ............................... 120
Kinds of Delay .................................................. 121
3. Fraud (Dolo) in the Performance of the
Obligation ............................................................ 122
Requisites for Fraud to Vitiate a Contract (Dolo
Causante) ........................................................... 122
4. Negligence (Culpa) in the Performance of
the Obligation ..................................................... 122
5. Contravention of the Tenor of the Obligation
123
 F. Remedies Available to Creditor in Cases of
Breach.............................................................. 124
1. Principal Remedies of Creditors ................ 124
2. Subsidiary Remedies of Creditors ............. 125
a. Accion Subrogatoria ..................................... 125
b. Accion Pauliana ............................................ 125
III. KINDS OF OBLIGATIONS ....................... 127
A. Pure ............................................................. 127
B. Conditional ................................................. 127
1. Kinds of Conditions as to Effect ................ 127
A. Suspensive................................................... 127
b. Resolutory.................................................... 128
2. Kinds of Conditions as to Cause/Origin. 128
a. Potestative.................................................... 128
b. Casual ........................................................... 128
c. Mixed ............................................................ 128
3. Impossible Conditions.................................. 130
4. Positive And Negative Conditions ............ 130
C. Obligation with a Period or a Term ........... 130
Kinds of Period [Art. 1193, Civil Code] ............ 130
Effect of Advance Payment or Delivery [Art. 1195,
Civil Code] .............................................................. 131
Loss, Deterioration, or Improvement of the Thing
Before Period Expires [Art. 1194, Civil Code].. 131
Benefit of the Period [Art. 1196, Civil Code] .... 131
When Courts May Fix Period .............................. 131
D. Alternative or Facultative ........................... 132
Alternative and Facultative Conditions
Distinguished ......................................................... 132
Right of Choice [Art. 1200, Civil Code] ............. 132
Loss of Specific Things or Impossibility of
Performance of Prestations in an Alternative
Obligation ............................................................... 133
Facultative Obligations ......................................... 134
Loss or Deterioration of Substitute in Facultative
Obligations [Art. 1206, Civil Code] .................... 134
E. Joint and Solidary Obligations ................... 134
1. Joint Obligations............................................. 134
Presumption of Joint Obligation [Art. 1207,
Civil Code] ......................................................... 134
Presumption of Divisibility in Joint Obligations
[Art. 1208, Civil Code] ..................................... 134
2. Solidary Obligations ..................................... 135
Kinds of Solidary Obligations ........................ 135
Defenses Available to a Solidary Debtor [Art.
1222, Civil Code] .............................................. 136
Loss of the thing or impossibility of
performance of the passive/mixed solidary
obligation [Art. 1221, Civil Code] .................. 137
F. Obligations with a Penal Clause ................. 137
Rules on Penalty .................................................... 137
Enforcement of the Penalty ................................ 138
Proof of Actual Damage ...................................... 138
When Penalty may be Reduced [Art. 1229, Civil
Code]:...................................................................... 138
IV. EXTINGUISHMENT OF OBLIGATIONS
............................................................................. 139
Modes of Extinguishing Obligations [Par. 1., Art.
1231, Civil Code] .............................................. 139
Other Modes of Extinguishing Obligations [Par.
2, Art. 1231, Civil Code] ................................... 139
Other Forms of Extinguishment Not Found in
Art. 1231 ........................................................... 139
A. Payment or performance ............................ 139
1. Payment ............................................................ 139
a. Definition .................................................... 139
b. Object of Payment .................................... 139
c. Necessity of Complete Performance [Art.
1248, Civil Code] .............................................. 140
d. By whom...................................................... 140
e. To whom...................................................... 141
f. Place of Payment........................................ 141
g. Time of Payment ...................................... 141
h. Form of Payment ...................................... 141
2. Application of Payments ............................. 142
Requisites If there is plurality of debts, the
debtor, at the time of payment, may declare to
which of the debts the payment must be applied,
provided: ............................................................ 142
3. Dation in Payment ........................................ 143
4. Payment by cession....................................... 143
5. Tender of Payment and Consignation .... 144
a. Definitions................................................... 144
b. Requisites of Consignation .................... 144
 c. When tender and refusal not required/ E. Compensation............................................. 151
Consignation alone is sufficient [Art. 1256, Civil 1. Requisites ......................................................... 151
Code]................................................................... 144
2. Nature and Effects ........................................ 151
d. What constitutes valid consignation.... 145
a. General Rule ............................................... 151
e. How consignation is made ..................... 145
b. By Operation of Law................................ 151
f. Who bears the expenses ........................... 145
c. Compensation Distinguished from Other
g. Effects of Consignation ........................... 145
Modes of Extinguishment............................... 151
h. Withdrawal of Consigned Amount by the 3. Kinds of Compensation ............................... 152
Debtor ................................................................ 145
a. As to extent ................................................. 152
B. Loss of determinate thing due or impossibility
or difficulty of performance............................. 145 b. As to cause .................................................. 152

1. Loss..................................................................... 145 F. Novation ..................................................... 153

a. Loss of Determinate Things................... 145 1. In General......................................................... 153

When the legal excuse of fortuitous event is a. Requisites:................................................... 153

not applicable: ................................................. 146 b. Effects .......................................................... 153
b. Loss of Generic Things ........................... 146 2. Kinds of Novation ......................................... 154
c. Partial Losses .............................................. 146 a. As to Form................................................... 154
d. Presumption of Fault ............................... 146 b. As to extent or effect ................................ 154
e. Loss in Obligations to Give with Resolutory c. As to Essence or Object .......................... 155
Conditions.......................................................... 146
3. Substitution of Debtors ................................ 155
f. Creditors’ Rights......................................... 146
4. Subrogation ..................................................... 156
2. Impossibility of Performance ..................... 147
CONTRACTS ..................................................... 157
a. In General .................................................... 147
I. GENERAL PROVISIONS ............................. 157
b. Types of Impossibility ............................. 147
A. Stages of Contract ....................................... 157
3. Unforeseen Difficulty .................................... 147
B. Classifications ............................................. 157
C. Condonation or remission of debt .............. 148
1. According to subject matter ........................ 157
1. Definition and General Rules ..................... 148
2. According to formation or perfection ....... 157
2. Kinds of Remission........................................ 148
3. According to relation to other contracts .. 157
Rules and Form ................................................. 149
4. According to form .......................................... 157
a. Express Remission .................................... 149
5. According to cause/by equivalence of
b. Implied Remission.................................... 149 prestations ............................................................ 157
c. Partial Remission....................................... 150 6. According to purpose .................................... 157
d. Other Rules on Donation Applicable to 7. According to time of fulfillment ................. 157
Remission ......................................................... 150
8. According to risk ............................................ 158
D. Confusion ................................................... 150
9. According to the nature of the vinculum
1. Definition .......................................................... 150 produced ............................................................... 158
2. Requisites ......................................................... 150 10. According to their designation/name
3. Effects ................................................................ 150 158

a. In general ..................................................... 150 C. Characteristics ............................................ 158

b. Confusion among the Guarantors ........ 150 1. Obligatory force .............................................. 158

c. In case of joint or solidary obligations 151 2. Mutuality .......................................................... 158

 a. General Rule................................................ 158
b. Exception..................................................... 158
A contract shall be valid even though its fulfillment
or implementation is left to the will of either party
as long as there is a finding of the presence of
equality of the parties, which thus prevents the
perpetration of injustice on the weaker party [GF
Equity v. Valenzona, G.R. No. 156841 (2005)]. .. 158
3. Relativity ........................................................... 158
a. General Rule................................................ 158
b. Exceptions................................................... 158
II. ESSENTIAL REQUISITES ......................... 160
A. Consent ....................................................... 160
1. Definition .......................................................... 160
2. Requisites for Valid Consent ....................... 160
3. Concurrence of Offer and Acceptance...... 160
a. Offer............................................................... 160
b. Acceptance .................................................. 161
4. Necessary Legal Capacity ............................ 161
Persons incapacitated to give consent [Art. 1327,
Civil Code] ......................................................... 161
Persons Disqualified to Contract.................... 162
6. Consent Must be Intelligent, Free,
Spontaneous and Real ....................................... 162
a. Mistake ......................................................... 162
b. Intimidation ................................................ 163
c. Violence ........................................................ 163
d. Undue Influence ........................................ 164
e. Fraud ............................................................. 164
7. Simulation of Contracts ................................ 165
Absolute vs. Relative Simulation [Art. 1345, Civil
Code]................................................................... 165
B. Object ......................................................... 166
1. Requisites ......................................................... 166
2. What may be the object of a contract ....... 166
a. General Rule................................................ 166
b. Exceptions [Art. 1347-1349, Civil Code] .. 166
c. Exceptions to the Exception .................. 166
C. Cause .......................................................... 166
1. Requisites ......................................................... 166
2. Presumption .................................................... 167
3. Cause vs. Object ............................................. 167
4. Distinguished from Motive......................... 167
5. Cause in contracts [Art. 1350, Civil Code] 167
6. Effect of Lack of Cause, Unlawful Cause,
False Cause and Lesion [Arts. 1352-1355, Civil
Code]....................................................................... 167
III. FORMALITY ............................................... 169
A. General Rule ............................................... 169
B. Exceptions .................................................. 169
Kinds of Formalities Required by Law .............. 169
1. For the Validity of Contracts (Ad Essentia/ Ad
Solemnitatem/ Solemn Contracts) ......................... 169
2. For the Purpose of Proving the Existence of
the Contract (Ad Probationem/ Statute of Frauds)
............................................................................. 169
3. For the Effectivity of the Contract Against
Third Persons.................................................... 170
IV. REFORMATION OF INSTRUMENTS .... 172
A. In General ................................................... 172
Requisites [Art. 1359, Civil Code] ...................... 172
B. Burden of Proof........................................ 172
C. Effect of Reformation .............................. 172
D. Cases Where Reformation is Proper .......... 173
1. Mistake.............................................................. 173
2. Fraud ................................................................. 173
3. Inequitable conduct ...................................... 173
4. Accident............................................................ 173
5. Severe Pacto de Retro / Relative Simulation
173
E. Who May Ask for Reformation ................... 173
F. Cases Where Reformation is Not Proper ... 173
G. Prescriptive Period for Reformation........ 174
V. INTERPRETATION OF CONTRACTS ..... 175
A. Primacy of Language or Intention ............. 175
1. Cardinal/First Rule of Interpretation –
Literal Meaning Governs ................................. 175
2. Rule if Language Contrary to Intent – Intent
over Literal Interpretation ............................... 175
3. Exclusion to Rules – Distinct and Different
Cases ...................................................................... 176
4. Stipulation Rendered to be Effectual ....... 176
5. Stipulations Interpreted Together ............. 176
 6. Interpretation According to Nature and
Object of Contract .............................................. 176
7. Interpretation against Party Causing
Obscurity............................................................... 176
8. Nomenclature NOT Decisive of the
Character ............................................................... 176
9. Separability Clause ......................................... 176
B. In case of doubt .......................................... 177
C. Other rules from the Rules of Court ........... 177
VI. DEFECTIVE CONTRACTS ....................... 178
A. Rescissible contracts .................................. 178
1. Rescission ......................................................... 178
Rescission in Art. 1380 distinguished from
rescission in Art. 1191, Civil Code [Universal Food
Corp. v. CA, L-29155 (1970)] ........................... 178
2. Characteristics of Rescissible Contracts . 178
3. Rescissible Contracts and Their Requisites
179
Requisites for Rescission under Pars. 1 & 2, Art.
1381, Civil Code ................................................ 179
Requisites before a Contract Entered into In
Fraud of Creditors May Be Rescinded under Par.
3, Art. 1381, Civil Code.................................... 179
Requisites Before Payment Made by Insolvent
can be Rescinded............................................... 180
4. Effects of Rescission [Art. 1385, Civil Code]
180
5. Presumption of Fraud ................................... 180
6. Resolution and rescission distinguished . 181
B. Voidable contracts ............................................ 181
1. Characteristics of Voidable Contracts ...... 182
2. Who may institute action for annulment. 182
3. Effects of Annulment .................................... 183
4. Modes of Convalidating a Voidable Contract
183
a. Prescription ................................................. 183
b. Ratification .................................................. 183
C. Unenforceable contracts ............................ 184
1. Characteristics ................................................. 184
2. Kinds of Unenforceable Contracts [Art. 1403,
Civil Code] ............................................................ 184
D. Void or inexistent contracts ..................... 186
1. Characteristics ................................................. 186
2. Divisibility of Contracts ............................... 187
3. In Pari Delicto Principle (in pari delicto, non oritur
actio) [Art. 1411, Civil Code] ................................ 187
General Rules .................................................... 187
Exceptions to the Principle of In Pari Delicto:187
NATURAL OBLIGATIONS.............................. 189
I. IN GENERAL................................................. 189
A. Concept ....................................................... 189
B. Conditions Necessary for Natural Obligations
......................................................................... 189
C. Types of Obligations in Juridical Science .. 189
II. CONVERSION TO CIVIL OBLIGATIONS
............................................................................. 190
III. EXAMPLES OF NATURAL OBLIGATIONS
............................................................................. 190
A. Performance after Prescription ................... 190
1. Voluntary Performance by Obligor........... 190
2. When Third Person Pays the Debt ........... 190
B. Contracts Made by a Minor ........................ 190
1. Minor Voluntarily Returns Payment ........ 190
2. Minor Voluntarily Pays ................................ 191
3. Arts. 1426 and 1427, Civil Code,
distinguished ....................................................... 191
C. Performance by Winning Party .................. 191
D. Payment beyond Inheritance ..................... 191
E. Payment of a Void Legacy.......................... 192
ESTOPPEL ......................................................... 193
I. DEFINITION................................................. 193
II. KINDS OF ESTOPPEL ................................ 193
A. Equitable Estoppel or Estoppel in pais [Art.
1433, Civil Code] .............................................. 193
B. Technical Estoppels ................................... 193
C. Estoppel by Judgment ................................ 193
D. Estoppel by laches ..................................... 193
III. PERSONS BOUND..................................... 193
IV. CASES WHERE ESTOPPEL APPLIES ..... 194
A. Sale or alienation of a thing which does not
belong to the seller or grantor and later on acquire
title thereto [Art. 1434, Civil Code] .................. 194
B. Agent sells or alienates a thing [Art. 1435, Civil
Code] ............................................................... 194
 C. Title of the lessee or bailee against the lessor
or bailor [Art. 1436, Civil Code] ....................... 194
D. Contract between third persons concerning
immovable property where one of them is misled
by a person with respect to the ownership or real
right over the real estate [Art. 1437, Civil Code]
......................................................................... 194
E. One who has allowed another to assume
apparent ownership of personal property for the
purpose of making any transfer of it, cannot, if he
received the sum for which a pledge has been
constituted, set up his own title to defeat the
pledge of the property, made by the other to a
pledgee who received the same in good faith and
for value [Art. 1438, Civil Code] ...................... 194
IV. LACHES ....................................................... 195
TRUSTS .............................................................. 196
I. IN GENERAL ................................................ 196
A. Definition .................................................... 196
B. Characteristics of Trust .............................. 196
C. Distinguished from Other Concepts .......... 196
II. GOVERNING RULES ................................. 198
III. PARTIES ...................................................... 198
IV. KINDS OF TRUST ...................................... 198
A. Express Trust.............................................. 198
B. Implied Trust .............................................. 199
Kinds of Implied Trusts ....................................... 199
1. Resulting Trusts ............................................ 199
2. Constructive Trusts ...................................... 201
QUASI-CONTRACTS........................................ 202
I. IN GENERAL ................................................ 202
II. NEGOTIORUM GESTIO
(UNAUTHORIZED MANAGEMENT)........... 202
1. Observe the requisite standard of diligence
202
2. Liability in the management of the property
202
B. Obligations of the Owner of the Property or
Business .......................................................... 203
C. Effect of Ratification .................................. 203
D. Extinguishment of Management ............... 203
III. SOLUTIO INDEBITI (UNDUE PAYMENT)
............................................................................. 204
A. Requisites ................................................... 204
B. When Debt not yet Due .............................. 204
C. Responsibility of Two or More Payees ....... 204
D. When Money or Thing Delivered is Owned by
Third Person.................................................... 204
E. Liability of Payee ........................................ 204
F. Exemption from the Obligation to Restore the
Payment Unduly Made ................................... 204
G. Presumption of Payment by Mistake, Defense
......................................................................... 205
IV. OTHER QUASI-CONTRACTS .................. 206
SALES ................................................................. 262
I. NATURE AND FORM ................................ 208
A. Essential requisites [Art. 1318, Civil Code] 208
1. Consent of contracting parties ................... 208
2. Object certain which is the subject matter of
the contract .......................................................... 208
a. Must be licit ............................................... 208
b. Existing, Future, Contingent ............. 208
c. Determinate or Determinable ................ 209
3. Cause of the obligation which is established
209
a. Requisites of a valid price....................... 209
b. How price is determined/when certain
............................................................................. 210
c. Inadequacy of price .................................. 210
d. When no price agreed .............................. 210
e. False price vs. simulated price .............. 210
f. Earnest money vs. option money .......... 211
B. Perfection .................................................... 212
1. Meeting of Minds........................................... 212
2. Option contracts ............................................ 212
3. Right of first refusal ...................................... 212
4. Mutual promise to buy and sell ................. 213
C. Contract of Sale v. Contract to Sell ............. 213
II. CAPACITY TO BUY OR SELL .................... 214
A. Capacity of Parties ...................................... 214
1. Absolute Incapacity .......................................... 214
2. Relative incapacity ........................................ 214
a. Husband and wife [Art. 1490, Civil Code]
............................................................................. 214
b. Alienage [Art. 39, Civil Code]................ 214
 c. Trusteeship [Art. 39, Civil Code] .......... 214
B. Effects of incapacity ................................... 215
1. Absolute incapacity ........................................ 215
2. Relative incapacity ......................................... 215
3. Specific incapacity ......................................... 216
III. EFFECTS OF THE CONTRACT WHEN
THE THING SOLD HAS BEEN LOST .......... 217
A. Res Perit domino [Arts. 1263, and 1189 Civil
Code] ............................................................... 217
B. Prior to Perfection of Contract ................... 217
C. At Time of Perfection [Arts. 1493 and 1494,
Civil Code]....................................................... 217
D. After Perfection but Before Delivery .......... 218
E. After Delivery .............................................. 218
IV. OBLIGATIONS OF VENDOR ................... 220
A. Obligations of the Vendor in General ........ 220
1. To Transfer Ownership of the Thing and To
Deliver the Thing, with its Accessions and
Accessories ........................................................... 220
a. When Seller is Not the Owner ............... 220
b. Sale by Person having a Voidable Title
............................................................................. 220
c. Manner of Transfer [Arts. 1477, 1496-1501,
Civil Code] ....................................................... 220
d. Concept of Delivery .................................. 221
e. When Delivery Does Not Transfer Title
............................................................................. 222
f. Kinds of Delivery ........................................ 223
g. Double Sales [Art. 1544, Civil Code] .... 224
h. Property Registration Decree [P.D. 1529]
............................................................................. 226
2. To Warrant Against Eviction and Against
Hidden Defects ................................................... 226
a. Express Warranties ................................... 227
b. Implied Warranties [Art. 1547, Civil Code]
............................................................................. 228
c. Effects of Warranties ................................ 230
d. Effects of Waiver ....................................... 230
e. Buyer’s Options in Case of Breach of
Warranty............................................................ 230
f. Warranty in Sale of Consumer Goods... 232
V. OBLIGATIONS OF VENDEE ..................... 233
A. Inspection and acceptance ......................... 233
1. Inspection/buyer’s right to examine [Art.
1584, Civil Code] ................................................. 233
2. Delivery of goods in installment ............... 233
Where separate price has been fixed for each
installment [par. 2, Art. 1583, Civil Code ]
............................................................................. 233
B. Obligation to pay the price ......................... 234
1. Obligation to pay interest ............................ 234
2. Right of vendee to suspend payment of price
234
C. Obligation to bear the expenses for the
execution and registration of the sale and putting
the goods in a deliverable state, if so stipulated
......................................................................... 234
VI. BREACH OF CONTRACT ......................... 235
A. Remedies .................................................... 235
1. Remedies of the Seller .................................. 235
a. Sale of Goods .............................................. 235
b. Special Remedies of the Unpaid Seller
[Arts. 1525-1535, Civil Code] ....................... 236
2. Remedies of the Buyer ................................. 239
a. Sale of Movables ........................................ 240
b. Sale of Immovables [Art 1539 – 1543, Civil
Code] ................................................................. 241
B. Recto Law and Maceda Law ...................... 241
1. Recto Law: Sale of Movables on Installment
– Arts. 1484-1486, Civil Code ........................... 241
a. Specific Performance ............................... 242
b. Cancellation of sale if vendee fails to pay
2 or more installments .................................. 242
c. Foreclosure of Chattel Mortgage if vendee
fails to pay 2 or more installments ............ 242
2. Maceda Law (RA 6552): Sale of Immovables
on Installment ..................................................... 242
Rights of the Buyer ....................................... 242
VII. EXTINGUISHMENT ................................ 244
A. In general .................................................... 244
B. Conventional Redemption / Pacto de retro
sale ................................................................... 244
1. Definition [Art.1601, Civil Code] ............... 244
2. Period [Art.1606, Civil Code] ...................... 244
3. By Whom Exercised ..................................... 244
4. From Whom to Redeem .............................. 244
 5. How Exercised ............................................... 244
6. Effect of Redemption .................................... 245
7. Effect of non-redemption ............................ 245
8. Right to redeem v. Option to Purchase ... 245
C. Equitable mortgage .................................... 245
1. Presumption that a contract is an equitable
mortgage ............................................................... 246
2. Requisites for presumption of an equitable
mortgage ............................................................... 246
3. Rationale behind provision on equitable
mortgage ............................................................... 246
4. Remedies of apparent vendor ..................... 246
5. Period of redemption .................................... 247
6. Exercise of the right to redeem [Art. 1616,
Civil Code] ............................................................ 247
7. How redemption is exercised ..................... 247
VIII. ASSIGNMENT OF CREDITS ................. 248
A. Definition .................................................... 248
B. Nature ......................................................... 248
C. Perfection .................................................... 248
D. Assignment Distinguished from Other Terms
......................................................................... 248
E. Binding Effect ............................................ 248
F. Consent not Necessary ............................... 248
G. Effect of Payment by Debtor after Assignment
of Credit ........................................................... 249
1. After notice ....................................................... 249
2. After notice, or before notice but debtor had
knowledge of assignment................................. 249
H. Extent of Assignment of Credit ................. 249
I. Warranties of the Assignor of Credit ........... 249
LEASE ................................................................ 262
I. GENERAL PROVISIONS ............................ 251
A. Definition .................................................... 251
1. Who is Qualified or Disqualified? ............. 251
2. Transfer of Lease ............................................ 252
Rights of a Purchaser of Land Under a Lease
[Art. 1676, Civil Code] ................................... 252
3. Warranties ........................................................ 252
a. Eviction [Art. 1548, Civil Code] .... 252
b. Warranty against Defects [Art. 1561,
Civil Code] ....................................................... 252
c. Where Return of the Price is
Required [Art. 1653(2), Civil Code] .......... 252
d. Presumption of Good Condition [Art.
1666, Civil Code] ............................................ 252
4. Termination..................................................... 253
II. RIGHTS AND OBLIGATIONS OF THE
LESSOR .............................................................. 254
A. Obligations of a Lessor ............................... 254
B. Rights of a Lessor ....................................... 254
1. To engage in a business ............................... 254
2. To Eject the Lessee (Unlawful Detainer) 254
Causes for judicial ejection of the lessee [Art.
1673, Civil Code] .............................................. 254
III. RIGHTS AND OBLIGATIONS OF THE
LESSEE .............................................................. 255
A. Obligations of a Lessee .............................. 255
B. Rights of a Lessee ....................................... 255
1. To Sublease ...................................................... 255
2. To Reduce or Rescind in case of FE ........ 255
C. To make use of the period .......................... 256
PARTNERSHIP AND AGENCY ...................... 270
PARTNERSHIP ................................................. 258
I. GENERAL PROVISIONS ............................. 258
A. Definition .................................................... 258
B. Elements ..................................................... 258
1. Two or more persons bind themselves to
contribute money, property, or industry to a
common fund ........................................................ 258
2. Intention of dividing the profits among
themselves .............................................................. 258
C. Parties & Object ......................................... 258
1. Parties ................................................................ 258
2. Object ................................................................ 259
a. In a Universal Partnership...................... 259
b. In a Particular Partnership ..................... 259
c. Effect when the object is unlawful ............ 259
D. Form ........................................................... 259
E. Characteristics ............................................ 260
1. Generally [De Leon] ....................................... 260
2. Essential Attributes [Villanueva] .................... 260
3. Delectus Personae (Selection of Persons)..... 260
 4. Partners Burdened with Unlimited Liability
[Arts. 1816, 1817, Civil Code] .............................. 260
F. Rules to Determine Existence .................... 260
G. Partnership Term ....................................... 261
H. Partnership by Estoppel ............................ 261
1. Definition .......................................................... 261
2. Partner by Estoppel ....................................... 261
3. Liability of a Partner by Estoppel ................... 261
a. Personal Representation .......................... 261
b. Public Representation.............................. 261
I. Partnership as Distinguished from Joint
Venture ............................................................ 262
J. Professional Partnership .............................. 262
K. Management ............................................... 263
1. In General ......................................................... 263
2. Scope of Powers of a Managing Partner ....... 263
3. Managing Partner’s Power to Revoke ............ 263
4. In case of Two or More Managing Partners
263
5. Stipulation of Unanimity.............................. 264
6. When Manner of Management was not
Agreed Upon ........................................................ 264
7. Mutual Agency ................................................ 264
II. OBLIGATIONS OF THE PARTNERS ....... 265
A. Obligations of the Partners to the Partnership
......................................................................... 265
1. Obligation to Contribute and to Warrant 265
Contribution of Money or Property............... 265
Amount of Contribution ................................. 265
Additional Capital Contribution ..................... 265
Contribution of Industry ................................. 265
2. Obligation to Apply Sums Collected Pro
Rata ......................................................................... 266
Requisites for Applicability of Art. 1792, Civil
Code .................................................................... 266
3. Obligation to Compensate for Damages . 266
Set-Off of Liability ............................................ 266
4. Obligation to Account and Act as Trustee
266
B. Obligations of the Partners Among
Themselves ...................................................... 267
1. Obligation to Render True and Full
Information .......................................................... 267
2. Obligation not to Engage in Another
Business ................................................................ 267
a. Industrial Partners .................................... 267
b. Capitalist Partners .................................... 267
3. Obligation to Share in the Profits/Losses
267
Rules for Distribution of Profits and Losses 267
Exclusion of Partner From Share .................. 268
C. Obligations of the Partners to Third
Persons 268
1. Liability for Partnership Debts .................. 268
Nature of Individual Subsidiary Liability ...... 268
Pro Rata .................................................................. 268
Liability of an Industrial Partner .................... 268
Stipulation against Individual Liability .......... 268
2. Liability of Partners for Partnership
Contracts............................................................... 269
a. Acts apparently for the carrying on of
usual business................................................. 269
b. Acts not apparently for carrying on of
the usual business ......................................... 269
c. Acts of strict dominion ............................ 269
d. Acts in contravention of a restriction .. 269
3. Liability for Admission by a Partner ........ 270
4. Liability for Wrongful Acts of a Partner... 270
5. Liability for Misapplication of Money or
Property ................................................................. 270
6. Liability in case of Partnership by Estoppel
270
7. Liability of an Incoming Partner............... 271
8. Liability with Regard to Personal Creditors
of Partners ............................................................ 271
III. DISSOLUTION AND WINDING UP ....... 272
A. Concepts ..................................................... 272
B. Causes of Dissolution ................................. 272
1. Without Violation of the Agreement Between
the Partners .......................................................... 272
2. In Contravention of the Agreement Between
the Partners .......................................................... 272
3. By Operation of Law..................................... 272
4. By Decree of Court ........................................ 273
 5. Other Causes ................................................... 273
C. Effects of Dissolution ................................. 274
1. On Authority of the Partners ....................... 274
2. On Liability for Transactions after
Dissolution ........................................................... 274
3. On Liability for Contracts after Dissolution
by Specific Causes [Art. 1833, Civil Code] ..... 275
4. On Existing Liability of Partners [Art. 1835,
Civil Code] .............................................................. 275
D. Winding Up ................................................ 275
1. Who May Wind Up ........................................ 275
2. Manner of Winding Up ................................ 275
E. Rights of Partners in Case of Dissolution .. 275
1. Dissolution Without Violation of the
Agreement............................................................. 275
2. Dissolution in Contravention of the
Agreement............................................................. 276
a. Partner who did not cause the
dissolution ........................................................ 276
b. Partner who caused the dissolution ..... 276
F. Rights of Partners in Case of Rescission .... 276
G. Settling of Accounts between Partners ...... 276
1. Composition of Partnership Assets ........... 276
2. Amount of Contribution for Liabilities..... 277
3. Enforcement of Contribution ..................... 277
4. Order of Application of Assets ................... 277
5. Doctrine of Marshaling of Assets .............. 277
6. Distribution of Property of Insolvent Partner
277
H. Rights of the Creditors of the Dissolved
Partnership ...................................................... 277
1. As Creditors of the New Partnership ........ 277
2. Liability of A New Partner........................... 278
3. Priority of Creditors of Dissolved Partnership
278
4. Rights of a Retired Partner or a
Representative of Deceased Partner ............. 278
I. Right to an account ..................................... 278
IV. LIMITED PARTNERSHIP ........................ 279
A. Definition .................................................... 279
B. Characteristics ............................................ 279
C. General and Limited Partners Distinguished
......................................................................... 279
D. General and Limited Partnership
Distinguished .................................................. 280
E. Formation ................................................... 280
1. General Requirements .................................. 280
2. Purpose of Filing ........................................... 280
3. Firm Name ...................................................... 280
4. False Statement in the Certificate ............. 281
5. General and Limited Partner at the Same
Time ....................................................................... 281
F. Management ............................................... 281
G. Obligations of a Limited Partner ............... 282
1. Obligations Related to Contribution........ 282
2. Liability to Partnership Creditors ............. 282
3. Liability to Separate Creditors ................... 282
H. Rights of a Limited Partner ....................... 283
1. In General......................................................... 283
2. Right to Transact Business with the
Partnership ........................................................... 283
3. Right to Share in Profits .............................. 283
4. Right to Return of Contribution ................ 283
5. Preference of Limited Partners .................. 284
6. Right to Assign Interest ............................... 284
7. Right to Ask for Dissolution ....................... 284
I. Dissolution ................................................... 284
J. Settlement of Accounts ................................ 285
1. Order of Payment ........................................... 285
2. Share in the Partnership Assets ................. 285
K. Amendment or Cancellation of Certificate . 285
1. Cancellation of Certificate ........................... 285
2. Amendment of Certificate ........................... 285
3. Requirements for Amendment or
Cancellation ......................................................... 285
In case of refusal to execute the writing [Art.
1865, Civil Code] .............................................. 285
L. Limited Partnerships Formed Prior to the
Effectivity of the Civil Code ............................ 286
AGENCY ............................................................ 287
I. NATURE, FORM, AND KINDS ................... 287
A. Nature and Elements.................................. 287
 B. Form ........................................................... 288 2. If the Contract Involves Things Belonging to
the Principal......................................................... 296
C. Kinds ........................................................... 288
IV. MODES OF EXTINGUISHMENT ............ 297
1. As to Manner of Creation ............................. 288
A. Summary ..................................................... 297
2. As to Scope of Business ................................ 289
B. Revocation .................................................. 297
3. As to Authority Conferred ............................ 289
1. In General......................................................... 297
4. Other Kinds of Agency ................................. 290
2. When Revocation is Not Binding on Third
a. Agency by estoppel ................................... 290
Persons .................................................................. 297
b. Agency by operation of law .................... 290
a. When Notice is Required ....................... 297
II. OBLIGATIONS OF THE AGENT.............. 291
b. When a Third Person in Good Faith
A. Act within the Scope of Authority .... 291 Has No Knowledge of Revocation ........... 297
B. Carry Out the Agency ................................. 291 3. Appointment of New Agent ....................... 298
C. Prefer the Interest of the Principal Over His 4. Direct Management by the Principal ...... 298
Own ................................................................. 291
5. General authority revoked by special
D. Render an Account, and Deliver ................ 291 authority ................................................................ 298
E. Summary of Liabilities for Damages.......... 292 6. When Agency Cannot be Revoked ........... 298
F. Liability to Pay Interest [Art. 1896, Civil Code] C. Withdrawal by the Agent ............................ 298
......................................................................... 292
D. Death, Civil Interdiction, Insanity or
G. Liability for Acts of Substitutes [Arts. 1892- Insolvency........................................................ 298
1893, Civil Code] .............................................. 292
1. In General......................................................... 298
Liability of the agent for his substitutes ........ 292
2. Exceptions ....................................................... 298
H. Obligations of Commission Agents [Arts.
a. Agency Coupled with an Interest 298
1903-1908, Civil Code] ..................................... 293
b. Contract between Agent Without
Responsibility for goods received [Art. 1903, Civil
Knowledge of Death and Third Person in
Code] ....................................................................... 293
Good Faith ....................................................... 298
Goods belonging to different owners [Art. 1904,
c. Unfinished business ................................. 299
Civil Code] .............................................................. 293
3. In case of the death of an agent ................ 299
Failure to collect credits [Art. 1908, Civil Code]
293 E. Dissolution, Accomplishment, or Expiration
Sale on credit .......................................................... 293 ......................................................................... 299

III. OBLIGATIONS OF THE PRINCIPAL ..... 294

CREDIT TRANSACTIONS .............................. 316
I. LOAN .............................................................. 301
A. Comply with the Obligations
Contracted by the Agent ................................. 294 Commodatum v. Mutuum .............................. 301
B. Advance or Reimburse Sums Necessary A. Commodatum ............................................. 302
294 1. Parties ................................................................. 302
The principal is not liable for the expenses incurred 2. Use by the Bailee .............................................. 302
by the agent in the following cases [Art. 1918, Civil
Code]: ...................................................................... 295 As to Who May Use of the Property Loaned
............................................................................. 302
C. Indemnify the Agent for Injury .................. 295
As to the Use of Fruits of the Thing Loaned302
D. Compensate the Agent ............................... 295
3. Obligations of the Bailee ................................. 303
E. Scope and Nature of the Liability of the
Principal .......................................................... 296 4. Obligations of the Bailor ................................. 303

1. Solidary Liability ............................................. 296 5. Liability for Deterioration ............................... 304

6. Liability for Loss ............................................... 304
 7. Right of Retention............................................. 304
8. Extinguishment ................................................. 304
B. Mutuum ...................................................... 304
1. Obligations of the Borrower ........................... 305
Rights of the Borrower .................................... 305
Obligations of the Creditor ............................. 305
Rights of the Creditor ...................................... 305
2. Interest ................................................................ 305
Requisites for Interest to be Chargeable (EWL)
............................................................................. 305
3. Kinds of Interest ............................................... 305
a. Conventional Interest ................................... 305
b. Interest on Interest ....................................... 305
c. Compensatory, Penalty or Indemnity Interest
............................................................................. 305
4. Usury ................................................................... 306
5. Finance Charges ................................................ 307
Under the Truth in Lending Act .................... 307
Requirement for Disclosure ............................ 307
Under the Philippine Credit Card Industry
Regulation Law.................................................. 308
In Relation to Credit Limit .............................. 308
Requirement for Disclosure ............................ 308
When Finance Charge is Imposed ................. 308
How Finance Charge is Imposed ................... 308
C. Precarium.................................................... 309
II. DEPOSIT....................................................... 310
A. Voluntary Deposit ....................................... 310
1. Extinguishment ................................................. 310
2. Obligations of a Depositary............................. 310
Depositary NOT Liable for Loss ................... 310
3. Authority of Depositary ................................... 311
4. Obligations of a Depositor .............................. 311
5. Authority of Depositor .................................... 311
6. Right of Retention............................................. 311
B. Necessary Deposit ...................................... 312
1. Kinds of Necessary Deposit ............................ 312
2. Deposit by Travelers in Hotels and Inns ....... 312
3. Extent of Liability Under Art. 1998, Civil Code
312
4. When Hotel-Keeper Liable ............................. 312
5. When Hotel-Keeper not Liable ...................... 312
Rule in the Occurrence of Theft or Robbery312
Exemption or Diminution of Liability .......... 312
6. Hotel-Keeper’s Right to Retention ................ 312
C. Judicial Deposit or Sequestration ............... 313
1. Nature and Purpose ......................................... 313
2. Depositary of Sequestered Property .............. 313
3. Applicable Law.................................................. 313
III. GUARANTY AND SURETYSHIP ............. 314
A. Nature and Extent of Guaranty .................. 314
1. Obligation Secured by Guaranty .................... 314
2. Parties to a Guaranty ........................................ 314
Parties to a Guaranty ....................................... 314
Qualifications of a Guarantor [Art. 2056, Civil
Code] .................................................................. 314
3. Excussion ........................................................... 315
4. Right to Protection ........................................... 315
5. Right to Indemnification ................................. 315
6. Right to Subrogation ........................................ 315
7. Rights of Co-Guarantors ................................. 315
Requisites for the Applicability of Art. 2073,
Civil Code .......................................................... 316
B. Nature and Extent of Suretyship ................ 316
1. Concept .............................................................. 316
Suretyship .......................................................... 316
2. Form of Surety .................................................. 316
3. Obligations Secured ......................................... 317
4. Surety Distinguished from Standby Letter of
Credit ...................................................................... 317
5. Surety Distinguished from Guaranty ............. 317
6. Surety Distinguished from Joint and Solidary
Obligations ............................................................. 318
C. Effect of Guaranty ...................................... 318
1. The Guarantor has the Right to Benefit from
Excussion/Exhaustion [Art. 2058, Civil Code] 318
2. The Creditor has the Right to Secure a Judgment
Against the Guarantor Prior to the Excussion . 318
3. The Creditor has the Duty to Make Prior
Demand for Payment from the Guarantor [Art.
2060, Civil Code]................................................... 318
 4. The Guarantor has the Duty to Set Up the
Benefit of Excussion [Art. 2060, Civil Code] .... 318
5. The Creditor has the Duty to Resort to All Legal
Remedies [Arts. 2058 and 2061, Civil Code] ..... 319
6. The Creditor has the Duty to Notify the
Guarantor in the Action Against the Debtor [Art.
2062, Civil Code] ................................................... 319
7. A Compromise Shall Not Prejudice a Person
Not Party to It [Art. 2063, Civil Code] .............. 319
8. Effects of Guaranty between the Debtor and the
Guarantor ............................................................... 319
D. Extinguishment of Guaranty ..................... 319
1. General Rule ...................................................... 319
2. Specific Instances that Extinguish the Guaranty
319
a. Creditor Voluntary Accepts the Immoveable
for Payment ....................................................... 319
b. When an Extension is Granted to the Debtor
without the Consent of Guarantor................. 320
c. When Subrogation is Not Feasible............. 320
E. Legal and Judicial Bonds ........................... 320
Qualifications of Personal Bondsman [Art. 2082 in
relation to Art. 2056, Civil Code] ........................ 320
Pledge or Mortgage in Lieu of Bond [Art. 2083,
Civil Code] .............................................................. 320
Bondsman Not Entitled to Excussion [Art. 2084,
Civil Code] .............................................................. 320
IV. QUASI-CONTRACTS.................................. 320
TORTS AND DAMAGES .................................. 339
I. TORTS ........................................................... 322
A. Elements ..................................................... 322
1. Duty ..................................................................... 322
2. Breach.................................................................. 322
3. Injury ................................................................... 322
4. Proximate Causation ......................................... 322
Quasi-Delict ........................................................... 322
Elements of Quasi-Delict ..................................... 322
B. Culpa aquilana v. culpa contractual v. culpa
criminal ........................................................... 322
C. Vicarious liability ........................................ 322
1. Doctrine of Vicarious Liability ........................ 322
Doctrine of Vicarious Liability [Art. 2180, Civil
Code]................................................................... 322
Rationale ............................................................... 323
When Not Applicable ....................................... 323
When moral culpability can be directly imputed to
the direct tortfeasor, as when there is actual intent
to cause harm to others........................................ 323
2. Persons Vicariously Liable [Article 2180, Civil
Code]....................................................................... 323
3. What must be established for vicarious
liability ................................................................... 323
D. Res ipsa loquitur ........................................ 323
1. Elements ........................................................... 324
2. Basis .................................................................. 324
3. Effect of the Rule ........................................... 324
4. Effect of Direct Evidence ............................ 324
5. Res Ipsa Loquitur vs. Expert Testimony in
Medical Negligence Cases .............................. 325
E. Last clear chance ........................................ 325
Doctrine of Last Clear Chance ....................... 325
F. Damnum absque injuria ............................. 325
II. NEGLIGENCE ............................................. 326
A. Negligence .................................................. 326
B. Standard of care .......................................... 326
1. Default Standard of Care: Good Father of a
Family .................................................................... 326
2. Standard of Care Needed in Specific
Circumstances ..................................................... 326
Operators of Motor Vehicles in Relation to
Cyclists ............................................................... 326
Banks .................................................................. 326
Experts (In General) ........................................ 326
Doctors .............................................................. 327
Possessors of Extremely Dangerous
Instrumentalities ............................................... 327
Children ............................................................. 327
C. Presumptions .............................................. 328
1. In Motor Vehicle Mishaps........................... 328
a. Liability of the owner ................................... 328
b. Liability of the driver ................................... 329
2. Possession of Dangerous Weapons or
Substances ............................................................ 329
3. Common Carriers .......................................... 330
4. Res Ipsa Loquitur .......................................... 330
 D. Persons Liable ............................................ 330
1. The direct tortfeasor, for his own acts ...... 330
a. Natural Persons ............................................. 330
b. Juridical Persons ........................................... 330
2. Persons vicariously liable ............................. 330
3. Persons exercising parental authority ...... 330
a. Parents ............................................................ 331
b. Guardians....................................................... 331
c. Teachers and schools ................................... 331
d. Owners/managers of establishments or
employers ........................................................... 333
e. The State ........................................................ 335
f. Joint tortfeasors ............................................. 335
III. PROXIMATE CAUSE ................................. 337
A. Concept of Proximate Cause ...................... 337
1. Two Definitions ................................................ 337
Proximate cause immediately resulting in injury:
............................................................................. 337
Proximate cause not immediately resulting in
injury but sets in motion a chain of events, which
eventually result in injury: ................................ 337
2. Differentiated from other causes .................... 337
Concurrent Cause ............................................. 337
Remote Cause .................................................... 337
Intervening Cause ............................................. 337
Cause in Fact ..................................................... 338
Efficient Intervening Cause............................. 338
Foreseeable Intervening Cause ....................... 338
Efficient Intervening Cause............................. 338
Cause as distinguished from condition .......... 338
B. Tests to Determine Proximate Cause ........ 338
But-for test ............................................................. 338
Natural and foreseeable test................................. 338
Substantial factor test ............................................ 338
Cause and condition.............................................. 339
Sufficient link test .................................................. 339
Mixed considerations test ..................................... 339
IV. DAMAGES .................................................... 340
A. General provisions ...................................... 340
B. Kinds of damages ....................................... 340
According to Purpose: ......................................... 340
1. Actual and Compensatory Damages ........ 341
a. Components................................................ 342
b. Loss Covered .............................................. 342
c. Earning capacity, business standing... 343
d. Death by Crime or Quasi-Delict .......... 344
e. Civil/death indemnity ............................. 344
1. Death by Crime or Quasi-Delict................ 344
2. Civil or Death indemnity ............................. 345
f. Attorney’s fees and expenses of litigation . 345
g. Interest ......................................................... 346
2. Moral Damages .............................................. 348
a. When awarded ........................................... 348
b. When Recoverable .................................... 349
c. Who may Recover Moral Damages ..... 352
3. Nominal Damages ........................................ 353
a. When awarded ........................................... 353
a. When Recoverable .................................... 354
b. Factors when Determining Amount ... 355
5. Liquidated Damages .................................... 355
6. Exemplary or Corrective Damages .......... 356
a. When Recoverable .................................... 356
b. Requisites.................................................... 357
C. Miscellaneous Rules ................................... 357
1. Damages that cannot co-exist .................... 357
Nominal with other damages.......................... 357
Actual and liquidated ....................................... 357
2. Damages that must co-exist ....................... 358
Exemplary with moral, temperate, liquidated or
compensatory .................................................... 358
3. Damages that must stand alone ................ 358
Nominal damages ............................................. 358
D. Graduation of Damages ............................. 358
1. Duty of Injured Party .................................... 358
2. Rules ................................................................... 358
a. In Crimes ....................................................... 358
5. In case of death ........................................... 362
a. Death by Crime or Quasi-Delict ............... 362
PROPERTY ........................................................ 376
I. CLASSIFICATION OF PROPERTY............. 365
 A. Based on Mobility [Immovable or Movable]
......................................................................... 365
1. Real or Immovable Property [Art. 415, Civil
Code] ...................................................................... 365
a. Immovables by Nature ............................ 365
b. Immovables by Incorporation ............... 365
c. Immovables by Destination ................... 365
d. By Analogy .................................................. 366
2. Personal or Movable [Arts. 416 and 417, Civil
Code] ...................................................................... 366
3. Importance and Significance of
Classification under the Civil Code ............... 367
B. Based on Ownership/ Rights-Holder ........ 367
1. Public Dominion ............................................ 367
Classifications .................................................... 368
2. Private Ownership ......................................... 369
Kinds................................................................... 369
3. Based on Consumability .............................. 369
4. Based on Susceptibility to Substitution ... 369
5. Hidden Treasure ............................................ 369
6. Based on the Constitution ........................... 370
II. OWNERSHIP................................................ 371
A. General Rules .............................................. 371
1. Rights of an Owner ........................................ 371
a. Actions to Recover Ownership and
Possession of Real Property and its
Distinctions...................................................... 371
b. Actions to Recover Movable Property . 372
2. Limitations on Ownership........................... 372
a. General Limitations ...................................... 372
b. Specific Limitations ...................................... 372
B. Rules on Accession ..................................... 372
1. For Immovables .............................................. 372
a. Accession Discreta .................................... 372
b. Accession Continua .................................. 373
c. Naturally Incorporated [Arts. 457-465,
Civil Code] ....................................................... 379
2. For Movables ................................................... 380
a. Conjunction/Adjunction [Arts. 466-471,
Civil Code] ....................................................... 380
b. Commixtion/Confusion [Arts. 472-473,
475, Civil Code] ............................................... 381
c. Specification [Art. 474-475, Civil Code]
............................................................................. 382
III. CO-OWNERSHIP ....................................... 385
A. Requisites ................................................... 385
B. Sources of Co-Ownership ........................... 385
1. Law ..................................................................... 385
2. Contract ............................................................ 385
3. Intestate Succession...................................... 385
4. Testamentary Disposition or Donation Inter
Vivos....................................................................... 385
5. By Fortuitous Event or by Chance ........... 385
6. By Occupancy................................................. 385
C. Rights of Co-Ownership ............................. 386
1. Right to Share in the Benefits as Well as the
Charges [Art. 485, CC] ...................................... 386
a. Proportionality ........................................... 386
b. Presumption of Equal Share.................. 386
The portions belonging to the co-owners in the
co-ownership shall be presumed equal, unless
the contrary is proved [Art. 485(2), Civil Code]
............................................................................. 386
2. Right to Use the Thing Owned in Common
[Art. 486, Civil Code] ......................................... 386
3. Right to Bring an Action in Ejectment [Art.
487 Civil Code] .................................................... 386
4. Right to Compel Other Co-Owners to
Contribute to the Expenses of Preservation
and to the Taxes [Art. 488, Civil Code]........ 386
5. Right to Reimbursement for Necessary
Repairs [Art. 488-489, Civil Code] ................. 386
6. Right to Oppose Alterations [Art. 491, Civil
Code] ..................................................................... 387
7. Right to Full Ownership of His Part and of
the Fruits and Benefits Pertaining thereto [Art.
493, Civil Code] ................................................... 387
8. Right to Partition [Art. 494, Civil Code] . 387
9. Right to Redemption [Art. 1619, Civil Code]
388
10. Right to Participate in Administration of
Property Owned in Common [Art. 492, Civil
Code] ..................................................................... 388
D. Rules ........................................................... 389
1. On Renunciation of Share ........................... 389
 A co-owner may exempt himself from the
payment of expenses of preservation by
renouncing his undivided interest in the co-
ownership as may be equivalent to his share in
the necessary expenses and taxes [Art. 488, Civil
Code]................................................................... 389
A co-owner who has not waived his share in the
co-ownership may be compelled to pay his share
in the cost of its maintenance, but he may not be
compelled to renounce..................................... 389
Waiver of renunciation is not allowed if it is
prejudicial to the co-ownership [Art. 488, Civil
Code]................................................................... 389
2. Repairs for Preservation Embellishments or
Improvements...................................................... 389
3. Rules on Multi-Story House [Art. 490, Civil
Code] ...................................................................... 389
E. Termination or Extinguishment ................ 390
1. Total Destruction of Thing or Loss of the
Property Co-Owned ........................................... 390
2. Merger of All Interests in One Person ..... 390
3. Acquisitive Prescription ............................... 390
4. Partition or Division ...................................... 390
5. Sale of Property Co-Owned [Art. 498, Civil
Code] ...................................................................... 391
6. Termination of Period Agreed Upon by the
Co-Owners [Art. 494, Civil Code] .................. 391
IV. POSSESSION ............................................... 392
A. Kinds of Possession .................................... 392
1. Possession for Oneself, or Possession
Exercised in One’s Own Name and Possession
in the Name of Another .................................... 392
a. In One’s Own Name ................................ 392
b. In the Name of Another .......................... 392
2. Possession in the Concept of a Holder with
the Ownership Belonging to Another [Art. 525,
Civil Code] ............................................................ 392
3. Possession in the Concept of an Owner .. 392
4. Possession in Good Faith ............................ 392
a. Possessor in Good Faith .......................... 392
b. Rights of a Possessor in Good Faith.... 392
c. Other Consequences................................. 393
5. Possession in Bad Faith ............................... 394
B. Acquisition of Possession (including
possession based on tolerance) ....................... 394
1. Ways of Acquiring Possession ................... 394
a. By the Material Occupation of a Thing or
the Exercise of a Right................................. 394
b. By the Fact that the Thing is Subject to
the Action of Our Will .................................. 394
Possession is acquired through the following
modes of constructive delivery:...................... 394
c. By the Proper Acts and Legal Formalities
Established for Acquiring Such Right..... 394
2. By Whom May Possession be Acquired
[Arts. 532-534, Civil Code] ............................... 395
3. Preference of Possession [Art. 538, Civil
Code] ..................................................................... 395
4. What Does Not Affect Possession ............ 395
a. Acts Merely Tolerated [Art. 537, Civil
Code] ................................................................. 395
b. Acts Executed Clandestinely and Without
the Knowledge of the Possessor [Art. 537,
Civil Code] ....................................................... 395
c. Acts of Violence as long as the Possessor
Objects Thereto [Art. 536, Civil Code] .... 395
C. Effects of Possession .................................. 396
1. Possession in the Concept of Owner is
Converted into Ownership After the Required
Lapse of Time Necessary of Prescription ... 396
2. Entitlement to Fruits/Expenses ............... 396
a. Possessor in Good Faith ......................... 396
b. Possessor in Bad Faith ............................ 397
V. USUFRUCT ................................................... 398
A. In General ................................................... 398
1. Characteristics ................................................ 398
2. Classifications ................................................. 398
B. Rights and Obligations of the Usufructuary
......................................................................... 400
1. Rights ................................................................ 400
a. Rights as to the Thing and its Fruits .. 400
b. Right to Natural and Industrial Fruits
Pending at the Beginning of Usufruct .... 400
c. Right to Lease the Thing in Usufruct . 401
d. To Enjoy Any Increase Which the Thing
May Acquire Through Accession ............. 401
e. To Make Improvements on the Property
as He May Deem Proper ............................. 401
f. Right of Retention ..................................... 401
 2. Rights of the Owner ...................................... 402
a. At the Beginning of the Usufruct.......... 402
b. During the Usufruct ................................. 402
3. Obligations....................................................... 402
a. Obligations at the Beginning of the
Usufruct or before Exercising the Usufruct
............................................................................. 402
b. Obligations During the Usufruct ......... 403
c. Obligations at the Time of the
Termination of the Usufruct [RIPP] ........ 403
C. Extinguishment .......................................... 403
1. By the Death of the Usufructuary, unless a
Contrary Intention Clearly Appears .............. 403
2. By the Expiration of the Period for which it
was Constituted ................................................... 404
3. By the Fulfillment of any Resolutory
Condition Provided in the Title Creating the
Usufruct ................................................................. 404
4. By Merger of the Usufruct and Ownership in
the Same Person.................................................. 404
5. By Renunciation of the Usufructuary ...... 404
6. By the Total Loss of the Thing in Usufruct
404
7. By the Termination of the Right of the
Person Constituting the Usufruct .................. 405
8. By Prescription ............................................... 405
VI. EASEMENTS ............................................... 407
A. Modes of Acquiring Easements ................. 407
An easement is either acquired through a
title/juridical act or by prescription [Art. 620 and
622, Civil Code]. .................................................... 407
1. By Title or by Something Equivalent to a
Title......................................................................... 407
2. By Law (Legal Easements) ......................... 408
3. By Prescription ............................................... 408
B. Rights and Obligations of the Owners of the
Dominant and Servient Estates ...................... 408
1. Rights of Dominant Estate Owner ............ 408
2. Obligations of Dominant Estate Owner . 408
3. Rights of the Servient Estate Owner ........ 409
4. Obligations of Servient Estate Owner...... 409
C. Modes of Extinguishment .......................... 409
D. Legal vs. Voluntary Easements .................. 410
E. Kinds of Legal Easement ........................... 410
1. Relating to Waters ......................................... 410
a. Natural Drainage [Art. 637, Civil Code] ... 410
b. Riparian Banks [Art. 638, Civil Code] ....... 411
c. Abutment of a Dam [Art. 639, Civil Code]
............................................................................. 411
d. Drawing Water and Watering Animals [Arts.
640 and 641, Civil Code] ................................. 411
e. Aqueduct [Arts. 642-646, Civil Code] ....... 411
f. Stop Lock or Sluice Gate [Art. 647, Civil Code]
............................................................................. 412
2. Right of Way ................................................... 412
3. Light and View [Arts. 667-673, Civil Code]
413
VII. NUISANCE................................................. 415
A. Classes......................................................... 415
1. According to Nature ..................................... 415
a. Nuisance per se ......................................... 415
b. Nuisance per accidens ............................ 415
2. According to Scope of Injurious Effects . 416
a. Public Nuisance ........................................ 416
b. Private Nuisance ....................................... 416
B. Doctrine of Attractive Nuisance ................. 416
C. Liability in Case of Nuisance ..................... 416
D. Regulation of Nuisances ............................ 417
1. Public Nuisance ............................................. 417
a. Summary Abatement................................ 417
b. Need for Abatement................................. 418
c. Who May Abate Public Nuisances District
Health Officer ................................................. 418
2. Private Nuisance............................................ 418
VIII. MODES OF ACQUIRING OWNERSHIP
............................................................................. 419
A. Occupation ................................................. 419
1. Requisites ......................................................... 419
2. Rules ................................................................... 419
a. On Land ....................................................... 419
b. On animals.................................................. 419
c. On Other Personal Property .................. 419
B. Donation ..................................................... 420
1. Requisites [CADAF] ..................................... 420
 2. Persons Who May Give/Receive a Donation
420
3. Effects and Limitations ................................ 420
4. Revocation and Reduction .......................... 421
C. Prescription................................................. 421
1. Definition .......................................................... 421
2. Who May Acquire Ownership by Prescription
421
3. Types ................................................................. 421
a. Acquisitive Prescription........................... 421
b. Extinctive Prescription ............................ 421
4. When Inapplicable ......................................... 422
5. Prescription of Ownership and Other Real
Rights ..................................................................... 422
6. Prescription of Actions .................................... 423
a. To Recover Movables ............................... 423
b. To Recover Immovables ......................... 423
c. Other Actions .............................................. 423
IX. QUIETING OF TITLE ............................... 424
A. Requisites ................................................... 424
B. Who May File [Sec. 1, Rule 63, Rules of Court]
......................................................................... 424
C. Quieting of Title vs. Removing or Preventing
a Cloud ............................................................ 425
D. Prescription/Non-Prescription of Action .. 426
CREDIT TRANSACTIONS II .......................... 428
I. PERSONAL PROPERTY SECURITIES (R.A.
No. 11057) ............................................................ 429
A. Scope of the Personal Property Security Act
(PPSA) ............................................................. 429
B. Definitions .................................................. 429
C. Security Interest .......................................... 430
1. Asset-Specific Rules - Accounts Receivable.. 430
2. Perfection ........................................................... 431
D. The Registry ............................................... 432
E. Priority of Security Interest ........................ 433
1. Priority Rules for Intangible Assets ................ 433
2. Priority Rules for Tangible Assets .................. 434
3. Priority Rules for Specific Cases ..................... 435
4. Priority of Perfected Security Interest Prior to
Insolvency Proceedings ........................................ 436
F. Enforcement of Security Interest ................ 437
1. Recovery............................................................. 437
2. Disposition ........................................................ 437
a. Repossession of Collateral .......................... 438
b. Notification of Disposition ........................ 438
c. Right of Redemption ................................... 438
3. Retention............................................................ 439
G. Transitional Provisions............................... 440
1. Prior Interests.................................................... 440
2. Transitional Period ........................................... 440
II. REAL ESTATE MORTGAGE ...................... 442
A. Objects of Real Mortgage ........................... 442
1. Obligations Secured ......................................... 442
B. Characteristics ............................................ 442
1. Characteristics of the Collateral ...................... 442
2. Characteristics of the Mortgage ...................... 443
C. Kinds ........................................................... 443
D. Principle of Indivisibility of Pledge/Mortgage
......................................................................... 443
E. Recording Required ................................... 444
F. Foreclosure of Mortgage............................. 444
1. Judicial Foreclosure [Rule 68, Rules of Court]
445
2. Extrajudicial Foreclosure ................................. 445
3. Nature of Power of Foreclosure by Extrajudicial
Sale .......................................................................... 447
4. Right to Surplus or Deficiency ....................... 447
5. Effect of Inadequacy of Price in Foreclosure Sale
447
G. Waiver of Security by Creditor.................... 447
H. Redemption................................................ 447
1. Kinds .................................................................. 447
2. Requisites ........................................................... 448
LAND TITLES AND DEEDS ........................... 466
I. THE TORRENS SYSTEM ............................ 450
A. In General ................................................... 450
1. The Torrens System ......................................... 450
2. Nature................................................................. 450
3. Purpose .............................................................. 450
4. Background........................................................ 450
B. Concepts ..................................................... 450
 1. Land Title ........................................................... 450
2. Deed .................................................................... 450
3. Estate .................................................................. 451
4. Land Registration .............................................. 451
a. Nature of Land Registration ....................... 451
b. Laws Implementing Land Registration ..... 451
c. Purpose of Land Registration ..................... 452
d. Object of Registration.................................. 452
5. Classification of Lands [Sec, 3, Art. XII, 1987
Constitution] .......................................................... 452
C. Administration of the Torrens System ....... 452
1. Land Registration Authority ............................ 452
2. Register of Deeds .............................................. 452
II. THE REGALIAN DOCTRINE ................... 454
A. Concept of the Regalian Doctrine .............. 454
B. Effects of the Regalian Doctrine ................ 454
C. Native Title and Ancestral Domains .......... 454
1. Native Title ........................................................ 454
2. Ancestral Domains............................................ 454
III. ORIGINAL REGISTRATION.................... 456
A. Concept ....................................................... 456
B. Voluntary or Involuntary ............................ 456
C. Who May Apply .......................................... 456
1. Under Sec. 14, P.D. 1529, as amended by Sec. 6,
R.A. No. 11573 ...................................................... 456
2. Under Sec. 16, P.D. 1529; Land Applied for
Registration by a Non-Resident of the Philippines
457
3. Under Sec. 12, CA 141 ..................................... 457
4. Under R.A. No. 8371:....................................... 457
D. Jurisdiction ..................................................... 457
IV. CERTIFICATE OF TITLE ......................... 458
A. The Torrens Title ....................................... 458
1. Original Certificate of Title (OCT)................. 458
2. Transfer Certificate of Title (TCT) ................. 458
3. Patents................................................................. 458
B. Probative Value........................................... 458
C. Effects of Registration under the Torrens
System ............................................................. 458
1. Land is placed under the operation of the
Torrens system....................................................... 458
2. Claims and liens prior to the decree of
registration ............................................................. 458
3. Title to the land becomes non-prescriptible . 458
4. Torrens certificate is presumed valid and devoid
of flaws. .................................................................. 459
D. Effect of Non-Registration ........................ 459
E. Dealings in Land before Issuance of Decree
......................................................................... 459
F. Laches, When Applicable ........................... 459
V. SUBSEQUENT REGISTRATION ............... 460
A. In General ................................................... 460
B. Voluntary Dealings ..................................... 461
1. Innocent purchaser for value and in good faith
461
2. Mortgagee in good faith................................... 461
3. Reliance on title................................................. 461
4. Double Sales ...................................................... 462
5. Forged Deed...................................................... 462
6. Registration of Voluntary Instruments in
General ................................................................... 462
Registration of Dealings Less than Ownership
[Sec. 54, P.D. 1529] .......................................... 463
Registration of Deeds of Sale and Transfers 463
Registration of Mortgages and Leases [Sec. 60,
P.D. 1529] .......................................................... 464
Registration of Powers of Attorneys [Sec. 64,
P.D. 1529] .......................................................... 464
Registration of Trusts ...................................... 464
C. Involuntary Dealings ...................................... 464
1. Attachments ...................................................... 464
2. Adverse Claim ................................................... 465
3. Sale on Execution or For Taxes or Assessments
465
4. Lis Pendens........................................................ 466
VI. NON-REGISTRABLE PROPERTIES ....... 468
A. Civil Code provisions dealing with non-
registrable properties....................................... 468
1. Properties of public dominion [Art. 420, Civil
Code]....................................................................... 468
2. Waters under Art. 502, Civil Code ................. 468
B. Specific kinds of non-registrable properties or
lands ................................................................ 468
 1. Forest or timberland, public forest, forest
reserves.................................................................... 468
2. National parks.................................................... 468
3. Mangrove swamps ............................................ 468
4. Mineral lands ...................................................... 468
5. Foreshore land and seashore and reclaimed lands
468
6. Lakes ................................................................... 469
7. Creeks and Streams ........................................... 469
8. Military or Naval Reservations ........................ 469
9. Watershed........................................................... 469
10. Grazing lands ................................................... 469
11. Previously titled land ...................................... 469
12. Alluvial deposit along river when man-made
469
13. Reservations for public and semi-public
purposes .................................................................. 469
C. Patrimonial Property .................................. 469
VII. DEALINGS WITH UNREGISTERED
LANDS ................................................................ 470
VIII. ASSURANCE FUND ................................ 471
A. Action of compensation from funds ........... 471
B. Limitation of Action ................................... 471
IX. CADASTRAL SYSTEM OF REGISTRATION
............................................................................. 472
A. In General ....................................................... 472
B. Procedure in Cadastral Registration [Secs. 35
and 36, P.D. 1529] ............................................ 473
2. Administrative, which may be availed only in
case of: .................................................................... 482
PRACTICAL EXERCISES ................................ 483
I. DEMAND AND AUTHORIZATION
LETTERS ........................................................... 483
A. Demand Letter ............................................ 483
B. Authorization Letter ................................... 483
C. Special Power of Attorney for Sale of Real
Property ........................................................... 484
D. Special Power of Attorney for Purchase of Real
Property ........................................................... 485
E. Special Power of Attorney for Representation
in Actions......................................................... 485
II. SIMPLE CONTRACTS ................................ 487
A. Unilateral Deed of Sale of Registered Land
......................................................................... 487
B. Unilateral Deed of Sale of Unregistered Land
......................................................................... 488
C. Bilateral Deed of Sale of Registered Land . 489
D. Bill of Sale (Personal Property) .................. 490
E. Deed of Sale of Motor Vehicle .................... 490
F. Contract of Lease ........................................ 491
1. Acknowledgment .............................................. 492
2. Acknowledgment (Affiant Representing a
Corporation) .......................................................... 493
III. COMPLAINT .............................................. 494
A. Complaint for Sum of Money ..................... 494
B. Replevin ...................................................... 495

X. REGISTRATION THROUGH C. Complaint for Ejectment with Damages ... 497

ADMINISTRATIVE PROCEEDINGS............. 474 1. Verification ........................................................ 498
A. Registration Process and Requirements .... 474 2. Certificate of Non-Forum Shopping ............. 499
B. Remedies .................................................... 479 IV. CHECKLIST ................................................ 500
1. Motion for New Trial ....................................... 479
2. Appeal ................................................................. 479
3. Relief from Judgment ....................................... 480
4. Petition for Review of Decree of Registration
480
5. Action for Reconveyance ................................. 481
6. Quieting of Title ................................................ 481
XI. RECONSTITUTION OF TITLES ............. 482
Kinds: .............................................................. 482
1. Judicial................................................................. 482
PRELIMINARY TITLE
CIVIL LAW
PRELIMINARY TITLE
I. EFFECT AND
APPLICATION OF LAWS
A. When Laws Take Effect
Article 2, Civil Code. Laws shall take effect after
fifteen days following the completion of their
publication either in the Official Gazette, or in a
newspaper of general circulation in the Philippines,
unless it is otherwise provided (As amended by E.O.
200).
General Rules
The clause "unless it is otherwise provided"
refers to the date of effectivity (i.e., as to when
a law shall take effect) and not to the
requirement of publication itself, which cannot,
in any event, be omitted [Tañada v. Tuvera,
G.R. No. L-63915 (1986)].
• Publication is indispensable in every case,
but the legislature may in its discretion
provide that the usual fifteen-day period
shall be shortened or extended [Tañada v.
Tuvera, supra].
When, on the other hand, the administrative
rule goes beyond merely providing for the
means that can facilitate or render least
cumbersome the implementation of the law but
substantially increases the burden of those
governed, it behooves the agency to accord at
least to those directly affected a chance to be
heard, and thereafter to be duly informed,
before that new issuance is given the force and
effect of law [Commissioner v. Hypermix, G.R.
No. 179579 (2012)].
Exception: Interpretative [implementing] rules
and regulations and those internal in nature
[Tañada v. Tuvera, supra].
B. Retroactivity of Laws
Laws shall have no retroactive effect, unless
the contrary is provided [Art. 4, Civil Code].
General Rule: All statutes are to be construed
as having only prospective operation.
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Exceptions
1. When the law itself expressly provides;
a. Exceptions to Exception:
• Ex post facto law
• Impairment of the obligations in the
contract
2. In case of remedial statutes;
3. In case of curative statutes;
a. Exceptions to the Exception:
• If it will violate the Constitution
• If it will destroy the rights of third
persons
• Final judgment
4. In case of laws interpreting others;
5. In case of laws creating new rights [Bona v.
Briones, G.R. No. L-10806 (1918)];
6. Penal Laws favorable to the accused [Art.
22, RPC].
C. Mandatory or Prohibitory
Laws
Article 5, Civil Code. Acts executed against the
provisions of mandatory or prohibitory laws shall be
void, except when the law itself authorizes their
validity.
Paragraph 3, Article 17, Civil Code. Prohibitive
laws concerning persons, their acts or property, and
those which have for their object public order, public
policy and good customs shall not be rendered
ineffective by laws or judgments promulgated, or by
determinations or conventions agreed upon in a
foreign country.
D. Choice-of-Law Rules
Nationality Principle
Article 15, Civil Code. Laws relating to family rights
and duties, or to the status, condition and legal
capacity of persons are binding upon citizens of the
Philippines, even though living abroad.
Paragraph 2, Article 16, Civil Code. However,
intestate and testamentary successions, both with
respect to the order of succession and to the amount
of successional rights and to the intrinsic validity of
testamentary provisions, shall be regulated by the
national law of the person whose succession is
under consideration, whatever may be the nature of
the property and regardless of the country wherein
said property may be found.
PRELIMINARY TITLE
Article 1039, Civil Code. Capacity to succeed is
governed by the law of the nation of the decedent.
Lex Situs
Paragraph 1, Article 16, Civil Code. Real property
as well as personal property is subject to the law of
the country where it is situated.
Lex Loci Celebrationis
Paragraphs 1 & 2, Article 17, Civil Code. The
forms and solemnities of contracts, wills and other
public instruments shall be governed by the laws of
the country in which they are executed.
When the acts referred to are executed before the
diplomatic or consular officials of the Republic of the
Philippines in a foreign country, the solemnities
established by Philippine laws shall be observed in
their execution.
E. Repeal of Laws
Article 7, Civil Code. Laws are repealed only by
subsequent ones, and their violation or non-
observance shall not be excused by disuse, or
custom or practice to the contrary.
When the courts declare a law to be inconsistent
with the Constitution, the former shall be void and
the latter shall govern.
Administrative or executive acts, orders and
regulations shall be valid only when they are not
contrary to the laws or the Constitution.
TWO KINDS OF REPEAL [Tolentino]
1. Express or Declared: contained in a
special provision of a subsequent law;
names the law repealed.
2. Implied or Tacit: takes place when the
provisions of the subsequent law are
incompatible or inconsistent with those of an
earlier law.
The fundamental rule is that the legislature
should be presumed to have known the
existing laws on the subject and not have
enacted conflicting statutes. Hence, all doubts
must be resolved against any implied repeal,
and all efforts should be exerted in order to
harmonize and give effect to all laws on the
subject [Republic v. Marcopper Mining, G.R.
No. 137174 (2000)].
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F. Applicability of Penal Laws
Territoriality Principle
Penal laws and those of public security and
safety shall be obligatory upon all who live or
sojourn in the Philippine territory, subject to the
principles of public international law and to
treaty stipulations [Art. 14, Civil Code].
Exemptions to the Territoriality Principle
under International Law (Theory of
Extraterritoriality):
1. When the offense is committed by a foreign
sovereign while in Philippine territory;
2. When the offense is committed by
diplomatic representatives; or
3. When the offense is committed in a public
or armed vessel of a foreign country.
G. Waiver of Rights
Article 6, Civil Code. Rights may be waived, unless
the waiver is contrary to law, public order, public
policy, morals, or good customs, or prejudicial to a
third person with a right recognized by law.
Waiver
Voluntary and intentional relinquishment or
abandonment of a known legal right or
privilege. It has been ruled that a waiver to be
valid and effective must be couched in clear
and unequivocal terms which leave no doubt
as to the intention of a party to give up a right
or benefit which legally pertains to him [RB
Michael Press v. Galit, G.R. No. 153510
(2008)].
The waiver should be made in a positive
manner [Dona Adela Export International Inc.
v. Tidcorp, G.R. No. 201931 (2015)].
Requisites of a Valid Waiver
1. Existence of a right;
2. Knowledge of the existence thereof; and
3. An intention to relinquish the right [Herrera
v. Borromeo, G.R. No. L-41171, (1987)].
General Rule: Rights may be waived.
Exceptions
1. If the waiver is contrary to law, public order,
public policy, morals or good customs;
2. If the waiver prejudices a third person;
PRELIMINARY TITLE CIVIL LAW
3. If the alleged rights do not yet exist;
4. If the right is a natural right.

No compromise upon the following

questions shall be valid [Art. 2035, Civil
Code]:
1. The civil status of persons;
2. The validity of a marriage or a legal
separation;
3. Any ground for legal separation;
4. Future support;
5. The jurisdiction of courts;
6. Future legitime.

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PRELIMINARY TITLE
II. HUMAN RELATIONS
A. Abuse of Right
Article 19, Civil Code: Every person must, in the
exercise of his rights and in the performance of his
duties, act with justice, give everyone his due, and
observe honesty and good faith.
Note: On its own, Article 19 is not actionable.
While Article 19 lays down a rule of conduct for
the government of human relations and for the
maintenance of social order, it does not provide
a remedy for its violation. Generally, an action
for damages under either Article 20 or Article
21 would be proper [Tocoms Philippines v.
Philips Electronics, G.R. No. 214046 (2020);
Globe MacKay Cable and Radio Corp. v. CA,
G.R. No. 81262 (1989)].
Elements of Abuse of Right
1. There is a legal right or duty;
2. Which is exercised in bad faith; and
3. For the sole intent of prejudicing or injuring
another [California Clothing v. Quiñones,
G.R. No. 175822 (2013)].
Test of abuse of rights
No hard and fast rule; depends on the
circumstances of each case. The exercise of a
right must be in accordance with the purpose
for which it was established, and must not be
excessive or unduly harsh; there must be no
intention to injure another.
There is abuse of right when:
1. The right is exercised for the only purpose
of prejudicing or injuring another;
2. The objective of the act is illegitimate;
3. There is an absence of good faith.
Effects of the application of Art. 19:
1. “A right, though by itself legal because
recognized or granted by law as such, may
nevertheless become the source of some
illegality” [Globe Mackay v. CA, G.R. No.
81262 (1989)];
2. It precludes the defense of damnum absque
injuria. Damnum absque injuria does not
apply when there is an abuse of a person’s
right [Amonoy v. Gutierrez, G.R. No.
140420 (2001)].
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Kinds of Abuse of Right
1. Acts Contrary to Law
Article 20, Civil Code: Every person who, contrary
to law, wilfully or negligently causes damage to
another, shall indemnify the latter for the same.
The provision is intended to provide a remedy
in cases where the law declares an act illegal
but fails to provide for a relief to the party
injured [Jarencio].
Art. 20 does not distinguish, and the act may
be done willfully or negligently.
Requisites
a. The act must be willful or negligent;
b. It must be contrary to law; and
c. Damages must be suffered by the injured
party.
Salvador was misdiagnosed with Hepatitis, as
a result of which she lost her job. During trial, it
was proven that the clinic was operating under
substandard conditions, in violation of the
Clinical Laboratory Law, DOH Administrative
Order No. 49-B, and the Philippine Medical
Technology Act of 1969. The Court held that
violation of a statutory duty is negligence, and
that Article 20 provides the legal basis for
award of damages to a party who suffers
damage whenever one commits an act in
violation of some legal provision [Garcia v.
Salvador, G.R. No. 168512 (2007)].
2. Acts Contrary to Morals
Article 21, Civil Code: Any person who wilfully
causes loss or injury to another in manner that is
contrary to morals, good customs or public policy
shall compensate the latter for the damage.
Elements [Albenson v. CA, G.R. No. 88694
(1993)]
a. There is an act which is legal;
b. But which is contrary to morals, good
customs, and public policy; and
c. It is done with intent to injure.
This article is designed “to expand the concept
of torts and quasi-delict in this jurisdiction by
granting adequate legal remedy for the untold
number of moral wrongs which is impossible
for human foresight to specifically enumerate
and punish in statute books” [Baksh v. CA,
PRELIMINARY TITLE
G.R. No. 97336 (1993)].
The injury suffered by the plaintiff may refer to
any determinate right or property, whether
material or not.
The doctrine of proximate cause must apply,
because the defendant must have caused the
injury through their act or omission. If through
the plaintiff’s own fault or negligence, they
sustained injury, they cannot recover.
Does a “willful” act require malice or
deceit?
Yes. The Code uses the motive-laden word
“willfully” rather than the comparatively weaker
word “intentionally.”
An act which is “willful” connotes an evil or
malicious motive, while an act which is merely
intentional has ordinarily no such implication
[Carpio, Antonio T., Intentional Torts in
Philippine Law, 47 PHIL L.J. 649 (1972)].
a. Acts contrary to morals, in general
Article 21 is the result of adopting moral norms
into actual legal rules, which the Court found as
acceptable, as it notes that the “conscience of
man has remained fixed to ancient moorings”
and that this will impart an “enduring quality” to
our laws, which is a desirable thing from the
Court’s perspective [Velayo v. Shell, G.R. No.
L-7817 (1956)].
A reading of the provision may provide an
inference of three requisites for a cause of
action under Article 21:
1. that one willfully causes injury or loss to
another;
2. that it was done in a manner that is contrary
to morals, good customs, or public policy;
and
3. That the act done to cause injury or loss
must be legal.
The complaint must ask for damages because
it presupposes losses or injuries material or
otherwise; if complaint does not ask for
damages, Art. 21 cannot be invoked [Albenson
v. CA, G.R. No. 88694 (1993)].
b. Breach of Promise to Marry and Moral
Seduction
Mere breach of promise to marry is not an
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actionable wrong. But to formally set a wedding
and go through all the above-described
preparation and publicity, only to walk out of it
when the matrimony is about to be solemnized,
is quite different. This is palpably and
unjustifiably contrary to good customs
[Wassmer v. Velez, G.R. No. L-20089 (1964)].
Where a man's promise to marry is in fact the
proximate cause of the acceptance of his love
by a woman and his representation to fulfill that
promise thereafter becomes the proximate
cause of the giving of herself unto him in a
sexual congress, proof that he had, in reality,
no intention of marrying her and that the
promise was only a subtle scheme or deceptive
device to entice or inveigle her to accept him
and to obtain her consent to the sexual act,
could justify the award of damages pursuant to
Article 21 not because of such promise to
marry but because of the fraud and deceit
behind it and the willful injury to her honor and
reputation. It is essential, however, that such
injury should have been committed in a manner
contrary to morals, good customs or public
policy [Baksh v. CA, supra].
Note on Baksh: The test, however, is
problematic, in that it employs the concept of
proximate cause even if Article 21 cases do not
require the application of proximate cause.
However, when for one whole year, the
plaintiff, a woman of legal age, maintained
sexual relations with the defendant, with
repeated acts of intercourse, there is here
voluntariness. No case under Article 21 is
made [Tanjanco v. CA, G.R. No. L-18630
(1966)].
In an action by the woman, the enticement,
persuasion or deception is the essence of the
injury; mere proof of intercourse is insufficient
to warrant a recovery. It is not seduction where
the willingness arises out of sexual desire or
curiosity of the female, and the defendant
merely affords her the needed opportunity for
the commission of the act [Tanjanco v. CA,
G.R. No. L-18630 (1966)].
3. Malicious Prosecution
Malicious prosecution is the institution of any
action or proceeding, either civil or criminal,
maliciously and without probable cause.
PRELIMINARY TITLE
Malicious prosecution is an action for
damages brought by one against whom a
criminal prosecution, civil suit, or other legal
proceeding has been instituted maliciously and
without probable cause, after the termination of
such prosecution, suit, or other proceeding in
favor of the defendant therein [Magbanua v.
Junsay, G.R. No. 132659 (2007)].
Elements [Magbanua v. Junsay, G.R.
No.132659 (2007)]
a. The fact of the prosecution or that the
prosecution did occur and that the
defendant was himself the prosecutor or
that he instigated its commencement;
b. That the action finally terminated with an
acquittal;
c. That in bringing the action, the prosecutor
acted without probable cause; and
d. That the prosecutor was actuated or
impelled by legal malice, that is, by improper
or sinister motive.
The mere dismissal of the criminal complaint
by the fiscal’s office did not create a cause of
action for malicious prosecution, because the
proceedings therein did not involve an
exhaustive examination of the elements of
malicious prosecution.
To constitute such, there must be proof that the
prosecution was prompted by a sinister design
to vex and humiliate a person and that it was
initiated deliberately by the defendant knowing
that his charges were false and groundless
[Que v. IAC, G.R. No. 66865 (1989)].
Malicious prosecution involves not only
criminal but civil and administrative suits as
well [Magbanua v. Junsay, supra].
The presence of probable cause signifies as a
legal consequence the absence of malice [Que
v. IAC, supra].
4. Public Humiliation
The circumstances under which the defendant
tried to win Lolita’s affection cannot lead to any
other conclusion than that it was he who,
through an ingenious scheme or trickery,
seduced the latter to the extent of making her
fall in love with him. The wrong he has caused
her and her family is indeed immeasurable
considering the fact that he is a married man.
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Verily, he has committed an injury to Lolita's
family in a manner contrary to morals, good
customs and public policy as contemplated in
Article 21 of the new Civil Code [Pe v. Pe, G.R.
No. L-17396 (1962)].
It is against morals, good customs and public
policy to humiliate, embarrass and degrade the
dignity of a person. Everyone must respect the
dignity, personality, privacy and peace of mind
of his neighbors and other persons [Article 26,
Civil Code; Grand Union v. Espino, G.R. No. L-
48250 (1979)].
A person may be held liable under Article 21 if
they make an accusation against another and
acts to prejudice such person, without proof
substantiating her accusation.
5. Oppressive Dismissal
The right of an employer to dismiss an
employee is not to be confused with the
manner in which this right is to be exercised
and the effects flowing therefrom.
If the dismissal was done antisocially or
oppressively, then there is a violation of Article
1701, which prohibits acts of oppression by
either capital or labor against the other, and
Article 21, which makes a person liable for
damages if he willfully causes loss or injury to
another in a manner that is contrary to morals,
good customs, or public policy.
When the manner in which the company
exercised its right to dismiss was abusive,
oppressive and malicious, it is liable for
damages [Quisaba v. Sta. Ines, G.R. No. L-
38088 (1974)].
B. Unjust Enrichment
Article 22, Civil Code. Every person who through
an act of performance by another, or any other
means, acquires or comes into possession of
something at the expense of the latter without just or
legal ground, shall return the same to him.
Article 23, Civil Code. Even when an act or event
causing damage to another’s property was not due
to the fault or negligence of the defendant, the latter
shall be liable for indemnity if through the act or
event he was benefited.
PRELIMINARY TITLE
Article 2142, Civil Code. Certain lawful, voluntary
and unilateral acts give rise to the juridical relation of
quasi-contract to the end that no one shall be
unjustly enriched or benefited at the expense of
another.
Article 2143, Civil Code. The provisions for quasi
contracts in this Chapter do not exclude other quasi-
contracts which may come within the purview of the
preceding article.
Elements [Yon Mitori International Industries
v. Union Bank of the Philippines, G.R. No.
225538 (2020)]
1. A person is unjustly benefited; and
2. Such benefit is derived at the expense of or
with damages to another.
One person should not be permitted to unjustly
enrich himself at the expense of another, but
should be required to make restitution of, or for
property or benefits received, retained, or
appropriated where it is just and equitable that
such restitution be made, and where such
action involves no violation or frustration of law
or opposition to public policy, either directly or
indirectly.
Enrichment at the expense of another is not per
se forbidden. It is such enrichment without just
or legal cause that is contemplated here. Just
and legal cause is always presumed, and the
plaintiff has the burden of proving its absence.
The restitution must cover the loss suffered by
the plaintiff, but it can never exceed the amount
of unjust enrichment of the defendant if it is less
than the loss of the plaintiff.
Requisites
1. That the defendant has been enriched;
2. That the plaintiff has suffered a loss;
3. That the enrichment of the defendant is
without just or legal ground; and
4. That the plaintiff has no other action based
on contract, crime or quasi-delict.
Under the civil law principle of unjust
enrichment, the registered owner of the motor
vehicle has a right to be indemnified by the
actual employer of the driver; and under Article
2181 of the Civil Code, whoever pays for the
damage caused by his dependents or
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employees may recover from the latter what he
has paid or delivered in satisfaction of the claim
[Mendoza v. Sps. Gomez, G.R No. 160110
(2014)].
C. Liability without fault
Article 23, Civil Code. Even when an act or event
causing damage to another’s property was not due
to the fault or negligence of the defendant, the latter
shall be liable for indemnity if through the act or
event he was benefited.
This provision imposes liability even without
fault, as long as the injurious act or event
benefited the defendant.
This article is based on equity. An involuntary
act, because of its character cannot generally
create an obligation; but when by such act its
author has been enriched, it is only just that he
should indemnify for the damages caused, to
the extent of his enrichment.
The indemnity does not include unrealized
profits of the injured party, because
defendant’s enrichment is the limit of his
liability. The plaintiff has the burden of proving
the extent of the benefit or enrichment of the
defendant.
D. Ostentatious Display of
Wealth
Article 25, Civil Code: Thoughtless extravagance
in expenses for pleasure or display during a period
of acute public want or emergency may be stopped
by order of the courts at the instance of any
government or private charitable institution.
Note: The law does not provide a cause of
action by private citizens. It is only upon the
instance of:
1. The government; or
2. Private charitable institutions.
PRELIMINARY TITLE
E. Violation of Human Dignity
Article 26, Civil Code. Every person shall respect
the dignity, personality, privacy and peace of mind of
his neighbors and other persons. The following and
similar acts, though they may not constitute a
criminal offense, shall produce a cause of action for
damages, prevention and other relief:
1. Prying into the privacy of another’s residence;
2. Meddling with or disturbing the private life or
family relations of another;
3. Intriguing to cause another to be alienated from
his friends;
4. Vexing or humiliating another on account of his
religious beliefs, lowly station in life, place of
birth, physical defect, or other personal
condition.
Article 26 specifically applies to intentional acts
which fall short of being criminal offenses. It
itself expressly refers to tortious conduct which
“may not constitute criminal offenses.” The
purpose is precisely to fill a gap or lacuna in the
law where a person who suffers injury because
of a wrongful act not constituting a crime is left
without any redress.
Under Article 26, the person responsible for
such act becomes liable for “damages,
prevention and other relief.” In short, to
preserve peace and harmony in the family and
in the community, Article 26 seeks to eliminate
cases of damnum absque injuria in human
relations [MVRS Publications v. Islamic
Da’wah Council, G.R. No. 135306 (2003)].
The principal rights protected under this
provision are the following:
1. The right to personal dignity;
2. The right to personal security;
3. The right to family relations;
4. The right to social intercourse;
5. The right to privacy; and
6. The right to peace of mind
Note: Coverage of Art. 26 is not limited to those
enumerated therein, the enumeration being
merely examples of acts violative of a person’s
rights to dignity, personality, privacy and peace
of mind. Other “similar acts” are also covered
within the scope of the article.
1. Violation of personal dignity
In order to be actionable, it is not necessary
that the act constitutes a criminal offense. The
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remedy afforded by the law is not only the
recovery of damages. Injunction and other
appropriate reliefs may also be obtained by the
aggrieved party.
2. Violation of privacy
Privacy is the right to be let alone, or to be free
from unwarranted publicity, or to live without
unwarranted interference by the public in
matters in which the public is not necessarily
concerned.
This right is purely personal in nature, such that
it can be invoked only by the person actually
injured, it is subject to a proper waiver, and it
ceases upon death. However, the privilege
may be given to heirs of a deceased to protect
his memory, to protect the feelings of the living
heirs.
Reasonableness of Expectation of Privacy
Test: [Ople v. Torres, G.R. No. 127685 (1998)]
a. Whether by one’s conduct, the individual
has exhibited an expectation of privacy
b. Whether this expectation is one that society
recognizes and accepts as reasonable
Invasion of the right of privacy involves
four distinct types of tort:
a. Intrusion upon the plaintiff's physical and
mental solitude;
b. Public disclosure of private facts;
c. Placing the plaintiff in false light in the public
eye;
d. The commercial appropriation of the
plaintiff’s name or likeness.
Note: The right of privacy does not prohibit the
publication of materials which are of legitimate
public or general interest.
It has been frequently held that those who
unwillingly court public attention become
reluctant public figures and “until they have
reverted to the lawful and unexciting life led by
the great bulk of the community, they are
subject to the privileges which publishers have
to satisfy the curiosity of the public as to their
leaders, heroes, villains and victims” [Carpio,
Antonio T., Intentional Torts in Philippine Law,
supra].
PRELIMINARY TITLE
3. Violation of right to peace of mind
Violation of the right to peace of mind under Art.
26 is akin to the American tort of intentional
infliction of mental distress (physical illness
suffered by the plaintiff as a result of the
offensive words or act).
However, the view that physical illness is
immaterial in infliction of mental distress
appears to be applicable in this jurisdiction
since Art. 26 itself creates a cause of action for
violation of the right to “peace of mind.”
Violation of the right in itself constitutes a legal
injury sufficient to support the action [Carpio,
Antonio T., Intentional Torts in Philippine Law,
supra].
4. Interference with relations
An interference with the continuance of
unimpaired interests founded upon the relation
in which the plaintiff stands toward one or more
third persons [Prosser and Keeton].
Kinds
a. Family relations;
b. Social relations;
c. Economic relations;
d. Political relations.
a. Family Relations
1. Husband and wife
The law expressly recognizes the right of either
spouse to sue the other without any limitations
as to the subject matter of litigation. Litigations
between members of the same family are
expressly allowed by the Code as long as
earnest efforts towards a compromise have
been made.
Moreover, the Code defines family relations as
including those between husband and wife. It
is therefore our belief that in this jurisdiction, a
personal tort action, like battery, can be
maintained by a wife against her husband, or
vice versa [Carpio, Antonio T., Intentional Torts
in Philippine Law, supra].
2. Interferences by third persons
The right to family relations includes the right to
consortium and to recover damages in case of
breach thereof. A spouse’s interest in his
relationship with the other spouse is known as
consortium. The gist of a husband’s cause of
action for loss of his wife’s consortium is a loss
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sustained by him and not the damage
sustained by her [Carpio, Antonio T.,
Intentional Torts in Philippine Law, supra].
Forms of interference
a. Adultery with the wife: The husband may
maintain an action not only where the
intercourse is the result of rape, but also
where the wife consents to it, or where she
herself seduces the defendant.
b. Alienation of affection: Interference with
the wife’s affection and mental attitude
toward the husband. In the same manner,
the wife has a cause of action for the
alienation of her husband’s affection. The
attempt to alienate must be successful to
be actionable.
Affirmative action on the part of the
defendant is required in order that he may
be liable for interference with the marriage
relation. Although the defendant need not
be motivated by spite or ill will toward the
plaintiff, the tort must nevertheless be an
intentional one, directed at the relation
itself.
1. Requisites:
a. That the defendant acted for the
purpose of effecting the relation;
and
b. That he was a substantial factor in
causing the alienation.
2. Elements:
a. Wrongful conduct of the
defendant: intentional and
malicious enticing of a spouse
away from the other spouse;
b. Loss of affection or consortium
(Note: Complete absence of
affection between the spouses is
not a defense); and
c. Causal connection between such
conduct and loss.
3. Can a meddling mother-in-law be
liable for alienation of affection? No.
Parents enjoy a qualified privilege to
interest themselves in the marital
affairs of their child.
“An action for alienation of affections
against the parents of one consort does
not lie in the absence of proof of malice
or unworthy motives on their part”
PRELIMINARY TITLE
[Tenchavez v. Escano, G.R. No. L-
19671 (1965)].
4. Liability of Parents, Guardians or
Kin. The law distinguishes between the
right of a parent to interest himself in
the marital affairs of his child and the
absence of rights in a stranger to
intermeddle in such affairs.
a. Such distinction between the
liability of parents and that of
strangers is only with regard to
what will justify interference.
b. A parent is liable for alienation of
affections resulting from his own
malicious conduct, as where he
wrongfully entices his son or
daughter to leave his or her
spouse, but he is not liable unless
he acts maliciously, without
justification and from unworthy
motives.
c. He is not liable where he acts
and advises his child in good
faith with respect to his child's
marital relations in the interest
of his child as he sees it.
d. He may in good faith take his
child into his home and afford him
or her protection and support, so
long as he has not maliciously
enticed his child away, or does not
maliciously entice or cause him or
her to stay away from his or her
spouse.
This rule has more frequently been
applied in the case of advice given
to a married daughter, but it is
equally applicable in the case of
advice given to a son [Tenchavez
v. Escaño, G.R. No. L-19671
(1965)].
3. Parent and child
Nowhere in the law is there a prohibition
against a child suing the parent. A child can
bring a tort action for injuries inflicted on him by
the parent through excessive punishment.
By parity of reasoning, a parent can also
institute a personal tort action against the child
under Art. 26, like an action for assault or
battery. There is no law which prohibits a
parent from suing his own child on a personal
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tort [Carpio, Antonio T., Intentional Torts in
Philippine Law, supra].
4. Enticement
Under Art. 26, a parent may institute a tort
action against a person who entices a child
away from home. The right to family relations
is quite broad and includes within its embrace
the right of parents to the custody of the child.
Hence, intruding upon the parents’ right to the
child's custody is an actionable tort under Art.
26.
Can a child sue his mother’s paramour for
enticing her to leave the conjugal home
under Art. 26? Yes. The child can sue on the
basis of interference with family relations.
Family relations include those between
ascendants and descendants.
Moreover, a child has a right to an undisturbed
family life. He has an interest in the family
honor and reputation for after all he is part of
the family and he will carry the family honor and
reputation as he grows up.
When the mother is enticed away from the
family home, the child is deprived of the right to
be educated by the parent, which includes the
moral and spiritual upbringing of the child, such
as the guidance of his conscience, the
development of family affection and formation
of his character [Carpio, Antonio T., Intentional
Torts in Philippine Law, supra].
b. Social Relations
Meddling with or disturbing family relations
Article 26, Civil Code. Every person shall respect
the dignity, personality, privacy and peace of mind of
his neighbors and other persons. The following and
similar acts, though they may not constitute a
criminal offense, shall produce a cause of action for
damages, prevention and other relief;
xxx
2. Meddling with or disturbing the private life or
family relations of another;
The right to social relations embodied in Art. 26
imposes liability for intriguing to cause another
to be alienated from his friends. The word
intrigue implies malice or ill will, coupled with
some scheme or secret plot to bring about the
desired purpose, that is, to alienate one from
his friends [Carpio, Antonio T., Intentional Torts
PRELIMINARY TITLE
in Philippine Law, supra].
c. Economic Relations
Article 1314, Civil Code. Any third person who
induces another to violate his contract shall be liable
for damages to the other contracting party.
1. Interference with Contractual Relations
Elements of tort interference: [So Ping Bun
v. CA, G.R. No. 120554 (1999)]
a. Existence of a valid contract;
b. Knowledge on the part of the third person of
the existence of contract; and
c. Interference of the third person is without
legal justification or excuse.
Everyone has a right to enjoy the fruits and
advantages of his own enterprise, industry, skill
and credit. He has no right to be protected
against competition; but he has a right to be
free from malicious and wanton interference,
disturbance or annoyance.
If disturbance or loss comes as a result of
competition, or the exercise of like rights by
others, it is damnum absque injuria, unless
some superior right by contract or otherwise is
interfered with.
Thus, a plaintiff loses his cause of action if the
defendant provides a sufficient justification for
such interference, which must be an equal or
superior right in themselves. The defendant
may not legally excuse himself on the ground
that he acted on a wrong understanding of his
own rights, or without malice, or bona fide, or
in the best interests of himself [Gilchrist v.
Cuddy, G.R. No. 9356 (1915)].
Bad faith/malice is required to make the
defendant liable for damages in cases of
tortuous interference [So Ping Bun v. CA,
supra].
2. Unfair Competition
Article 28, Civil Code: Unfair competition in
agricultural, commercial or industrial enterprises or
in labor through the use of force, intimidation, deceit,
machination or any other unjust, oppressive or
highhanded method shall give rise to a right of action
by the person who thereby suffers damage.
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What constitutes unfair competition:
[Willaware Products Corp. v. Jesichris
Manufacturing Corp., G.R. No. 195549 (2014)]
a. it must involve an injury to a competitor or
trade rival, and
b. it must involve acts which are characterized
as "contrary to good conscience," or
"shocking to judicial sensibilities," or
otherwise unlawful; in the language of our
law, these include force, intimidation, deceit,
machination or any other unjust, oppressive
or high-handed method.
Note: The public injury or interest is a minor
factor; the essence of the matter appears to be
a private wrong perpetrated by unconscionable
means.
When a person starts an opposing place of
business, not for the sake of profit to himself,
but regardless of loss and for the sole purpose
of driving his competitor out of business so that
later on he can take advantage of the effects of
his malevolent purpose, he is guilty of wanton
wrong.
d. Political Relations
Dereliction of duty
Article 27, Civil Code. Any person suffering
material or moral loss because a public servant or
employee refuses or neglects, without just cause, to
perform his official duty may file an action for
damages and other relief against the latter, without
prejudice to any disciplinary administrative action
that may be taken.
This applies only to acts of nonfeasance or the
nonperformance of some acts which a person
is obliged or has responsibility to perform. The
duty of the public servant must be ministerial in
character. If the duty is discretionary, he is not
liable unless he acted in a notoriously arbitrary
manner.
The defense of good faith is not available
because an officer is under constant obligation
to discharge the duties of his office, and it is not
necessary to show that his failure to act was
due to malice or willfulness.
Requisites: [Amaro v. Sumanguit, G.R. No. L-
14986 (1962)]
1. Defendant is a public officer charged with a
performance of a duty in favor of the
PRELIMINARY TITLE
plaintiff;
2. He refused or neglected without just cause
to perform the duty;
3. Plaintiff sustained material or moral loss as
a consequence of such non-performance;
and
4. The amount of such damages, if material.
Violation of Civil and Political Rights
Article 32, Civil Code. Any public officer or
employee, or any private individual, who directly or
indirectly obstructs, defeats, violates or in any
manner impedes or impairs any of the following
rights and liberties of another person shall be liable
to the latter for damages:
1. Freedom of religion;
2. Freedom of speech;
3. Freedom to write for the press or to maintain a
periodical publication;
4. Freedom from arbitrary or illegal detention;
5. Freedom of suffrage;
6. The right against deprivation of property without
due process of law;
7. The right to a just compensation when private
property is taken for public use;
8. The right to the equal protection of the laws;
9. The right to be secure in one’s person, house,
papers, and effects against unreasonable
searches and seizures;
10. The liberty of abode and of changing the same;
11. The privacy of communication and
correspondence;
12. The right to become a member of associations
or societies for purposes not contrary to law;
13. The right to take part in a peaceable assembly
to petition the Government for redress of
grievances;
14. The right to be free from involuntary servitude in
any form;
15. The right of the accused against excessive bail;
16. The right of the accused to be heard by himself
and counsel, to be informed of the nature and
cause of the accusation against him, to have a
speedy and public trial, to meet the witnesses
face to face, and to have compulsory process to
secure the attendance of witness in his behalf;
17. Freedom from being compelled to be a witness
against one’s self, or from being forced to
confess guilt, or from being induced by a
promise of immunity or reward to make such
confession, except when the person confessing
becomes a State witness;
18. Freedom from excessive fines, or cruel and
unusual punishment, unless the same is
imposed or inflicted in accordance with a statute
which has not been judicially declared
unconstitutional; and
19. Freedom of access to the courts.
In any of the cases referred to in this article,
whether or not the defendant’s act or omission
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constitutes a criminal offense, the aggrieved
party has a right to commence an entirely
separate and distinct civil action for damages,
and for other relief.
Such civil action shall proceed independently of any
criminal prosecution if the latter be instituted), and
may be proved by a preponderance of evidence.
The indemnity shall include moral damages.
Exemplary damages may also be adjudicated.
The responsibility herein set forth is not demandable
from a judge unless his act or omission constitutes a
violation of the Penal Code or other penal statute.
Both private individuals and public officers can
be held liable under this provision.
This article further implements the civil liberties
guaranteed by the Constitution and creates an
absolutely separate and independent civil
action for the violation of these civil liberties.
Malice is not required. To require that a person
act with malice before he is held liable under
this article would defeat the purpose to protect
individual rights. The object of the article is to
put an end to official abuse under the guise of
being done in good faith.
Liability for violation or obstruction of civil
liberties
Any person, whether public officer/employee or
private individual, who directly or indirectly
obstructs, violates or in any manner impede or
impair the rights of a person as enumerated
(these are actually rights under the Bill of
Rights) shall be liable to the latter for damages.
Separate and distinct civil action; quantum
of evidence
The aggrieved party has the right to commence
a civil action for damages separate, distinct
and independent of any criminal action that
may arise from the same violation of right. Only
preponderance of evidence is required.
Type of damages
Indemnity shall include moral damages.
Exemplary damages for also be awarded.
Limited liability for judges
Persons are liable under this provision whether
or not their act or omission constitutes a
PRELIMINARY TITLE
criminal offense. But Judges can only be held
liable only when their act or omission in
violation of civil liberties of others also
constitutes a criminal offense.
Article 34, Civil Code. When a member of a city or
municipal police force refuses or fails to render aid
or protection to any person in case of danger to life
or property, such peace officer shall be primarily
liable for damages, and the city or municipality shall
be subsidiarily responsible therefor. The civil action
herein recognized shall be independent of any
criminal proceedings, and a preponderance of
evidence shall suffice to support such action.
The primary liability upon a member of a local
police force is already covered by Article 27.
However, Article 34 creates a separate civil
action to enforce that liability, independent of
any criminal proceedings.
Article 34 makes the city or municipality
subsidiarily liable for the omission of its police
officers to render aid or protection to anyone.
This liability, therefore, can be enforced against
the city or municipality only when the guilty
police officer is insolvent. However, it cannot
be avoided by proving that the city or
municipality has exercised due diligence in the
selection and supervision of its policemen
[Tolentino].
5. Civil Action
Article 29, Civil Code. When the accused in a
criminal prosecution is acquitted on the ground that
his guilt has not been proved beyond reasonable
doubt, a civil action for damages for the same act or
omission may be instituted. Such action requires
only a preponderance of evidence. Upon motion of
the defendant, the court may require the plaintiff to
file a bond to answer for damages in case the
complaint should be found to be malicious.
If in a criminal case the judgment of acquittal is
based upon reasonable doubt, the court shall so
declare. In the absence of any declaration to that
effect, it may be inferred from the text of the decision
whether or not the acquittal is due to that ground.
Acquittal predicated on the conclusion “that the
guilt of the defendant has not been
satisfactorily established” is equivalent to one
on reasonable doubt, and a suit to enforce civil
liability for the same act or omission lies [PNB
v. Catipon, G.R. No. L-6662 (1956)].
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The accused once found by the court not to
have been the author of an offense and being
acquitted of the accusation under no condition
can he be made civilly responsible for the harm
caused and for the damages and losses
suffered by reason of the criminal act [Almeida
v. Abaroa, G.R. No. L-2993 (1907)].
Article 30, Civil Code. When a separate civil action
is brought to demand civil liability arising from a
criminal offense, and no criminal proceedings are
instituted during the pendency of the civil case, a
preponderance of evidence shall likewise be
sufficient to prove the act complained of.
Under Art. 100 of the Civil Code, “every person
criminally liable for a felony is also civilly liable”.
Civil Liability is dependent upon facts, if true,
would constitute a crime.
The civil liability is a necessary consequence of
criminal responsibility and is to be declared and
enforced in the criminal proceeding. The Final
Judgement rendered in the case constitutes a
bar to the subsequent civil action for damages
based upon the same case [Tolentino].
Article 31, Civil Code. When the civil action is
based on an obligation not arising from the act or
omission complained of as a felony, such civil action
may proceed independently of the criminal
proceedings and regardless of the result of the latter.
This article is intended to cover cases where
the civil action can be based on an act or
omission distinct from that which is complained
of as a felony [Tolentino].
Article 33, Civil Code. In cases of defamation,
fraud, and physical injuries a civil action for
damages, entirely separate and distinct from the
criminal action, may be brought by the injured party.
Such civil action shall proceed independently of the
criminal prosecution, and shall require only a
preponderance of evidence.
In these cases, a civil action may be filed
independently of the criminal action, even if
there has been no reservation made by the
injured party; the law in itself makes such
reservation. The result of the civil action is thus
independent of the result of the criminal action.
The underlying purpose for this independent
civil action (also in Articles 32 and 34) is to
PRELIMINARY TITLE CIVIL LAW
allow the citizen to enforce his rights in a crime to disappear; the prejudicial question
private action brought by him, regardless of the must be determinative of the case before the
action of the State attorney. court, and, that jurisdiction to try said question
must be lodged in another tribunal.
The term “physical injuries” mean bodily
injuries, not the crime of physical injuries
defined in the Revised Penal Code, whether
inflicted with intent to kill or not [Tolentino].

Article 35, Civil Code. When a person, claiming to

be injured by a criminal offense, charges another
with the same, for which no independent civil action
is granted in this Code or any special law, but the
justice of the peace finds no reasonable grounds to
believe that a crime has been committed, or the
prosecuting attorney refuses or fails to institute
criminal proceedings, the complaint may bring a civil
action for damages against the alleged offender.
Such civil action may be supported by a
preponderance of evidence. Upon the defendant's
motion, the court may require the plaintiff to file a
bond to indemnify the defendant in case the
complaint should be found to be malicious.

If during the pendency of the civil action, an

information should be presented by the prosecuting
attorney, the civil action shall be suspended until the
termination of the criminal proceedings.
The right to file a civil action provided in the first
paragraph also exists with respect to offenses
for which the law expressly provides a separate
civil action independent of the criminal
prosecution.

However, the second paragraph only applies to

offenses for which no independent civil action
is provided. The filing of a criminal case
suspends the civil case, inasmuch as the
decision in the civil case would generally
depend upon the judgment in the criminal case.
But if the offense is one for which an
independent civil action is provided by law
(Articles 32-34), the filing of the criminal action
will not suspend the civil action.

Article 36, Civil Code. Pre-judicial questions which

must be decided before any criminal prosecution
may be instituted or may proceed, shall be governed
by rules of court which the Supreme Court shall
promulgate and which shall not be in conflict with the
provisions of this Code.

A pre-judicial question is one raised in a

criminal case by the accused, which is of such
a nature that, if decided favorably to the
accused in a civil case, will cause the supposed
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RELATIONS
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PERSONS AND FAMILY RELATIONS CIVIL LAW

I. PERSONS implies that of the former. Full civil capacity is

the existence of both capacity to act and
juridical capacity.
A. Civil Personality
Capacity and incapacity depend on the law.
1. In General Therefore, they cannot be modified by
Persons agreements. It is a matter of public interest
Any being, physical, moral, real, juridical and [Tolentino].
legal susceptible of rights and obligations or
being the subject of legal relations [Tolentino]. 2. Kinds of Persons
Persons could be natural, juridical, or
Personality presumptive or provisional.
The aptitude of a person of becoming the
subject of legal relations, inherent in every a. Natural persons refer to individuals or
natural person and is lost only through death human beings who are created by
[Tolentino]. procreation.
b. Juridical persons are artificial, abstract
Status entities created through laws [Tolentino].
The legal condition or class to which one c. Persons with presumptive or provisional
belongs in society or the legal and juridical personality refer to a conceived child
position of the individual in society, which considered born for all purposes favorable
determines the nature and number of rights of to it, provided it be born later with the
an individual [Tolentino]. conditions under Art. 41 Civil Code [Art. 40,
Civil Code].
Juridical Capacity and Capacity to Act d. Quasi-Personality refers to the estate of
Distinguished the deceased which is considered an
Juridical Capacity Capacity to Act artificial or juridical person for the purposes
of the settlement and distribution of his
Fitness of a person Power to do acts with estate which include the exercise of the
to be the subject of legal effect rights and the fulfillment of obligations which
legal relations survived after his death [Limjoco v. Intestate
Estate of Fragrante, G.R. No. L-770 (1948)].
Passive Active
a. Natural Persons
Aptitude for the Aptitude to exercise Art. 40, Civil Code provides that the conceived
holding and rights child shall be considered born for all purposes
enjoyment of right that are favorable to it, provided it be born later
with the conditions specified in Art. 41, Civil
Inherent in natural Acquired (not Code (i.e. that the fetus be alive at the time it is
persons inherent) and may be completely delivered from the mother’s womb).
lost This proviso, however, is not a condition
precedent to the right of the conceived child; for
Lost upon death and Lost through death if it were, the first part of Art. 40 would become
cannot be limited or and may be entirely useless and ineffective [Quimiguing v.
restricted restricted by other Icao, G.R. No. L-26795 (1970)].
causes
Characteristics of Fetal Personality
Can exist without Must exist with 1. Limited – because it only has rights for
capacity to act juridical capacity purposes favorable to it
2. Provisional/Conditional – because it
Cannot be limited or May be restricted or should be born alive later before the rights
restricted limited can be claimed
3. Can enjoy rights – inherit by will or
Note: Juridical capacity can exist even without intestacy and be given donations even
capacity to act; the existence of the latter before birth.

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A conceived child has a provisional personality called to succeed each other. It does not apply
for all purposes favorable to it. when there is credible eyewitness as to who
1. It is entitled to support [Quimiguing v. Icao, died first [Joaquin v. Navarro, G.R. No. 5426
G.R. No. L-26795 (1970)] (1953)].
2. It may inherit or succeed [Art. 1025, Civil
Code] Art. 43, Civil Code vs. Sec. 3(jj), Rule 131,
3. It may receive donations [Art. 742, Civil Rules of Court
Code]
Art. 43, Civil Code Sec. 3(jj), Rule 131
Period of Conception: The first 120 days of Only use the presumptions when there are
the 300 days preceding the birth of the child no facts to get inferences from
[Art. 166, Family Code].
Only used for Cannot be used for
Birth succession purposes succession purposes
For civil purposes, the fetus is considered born
if it is alive at the time it is completely delivered In any circumstance Only during death in
from the mother’s womb [Art. 41, Civil Code]. calamities, wreck,
Because of the expectancy that it may be born, battle or
the law protects it and reserves its rights, conflagration
making its legal existence, if born alive, retroact
to the moment of its conception [Tolentino].
Rule 131, Section 3(jj) provides that, except
for purposes of succession, when two persons
Intrauterine Life When Considered perish in the same calamity, and it is not shown
Born who died first, and there are no circumstantial
evidence to be inferred from, the survivorship
7 months or more If alive (e.g. can is determined from the probabilities resulting
breathe from the strength and the age of the sexes.
independently, etc.
upon delivery)
Deceased A Deceased B Presumed
Less than 7 months If alive after to have
completion of 24 survived
hours from delivery
Under 15 Under 15 Older
Note, however: Above 60 Above 60 Younger
1. The State shall equally protect the life of the
mother and the life of the unborn from Under 15 Above 60 Under 15
conception [Art. II, Sec. 12, 1987
Constitution]. Above 15 but under 60, Male
2. The life of a new human being commences different sex
upon fertilization [Imbong v. Ochoa, G.R.
No. 204819 (2014)]. Above 15 but under 60, Older
same sex
Death
Civil personality is extinguished by death [Art. Under 15 or Between 15 Between 15
42, Civil Code]. over 60 and 60 and 60

Criminal liability ends with death, but civil

b. Juridical Persons
liability may be charged against the estate
A juridical person is an abstract being, formed
[People v. Tirol, G.R. No. L-30538 (1981)].
for the realization of collective purposes, to
which the law has granted capacity for rights
Presumptions on Survivorship
and obligations. The entity must be recognized
The statutory presumption provided by Art. 43,
as having its own rights and obligations which
Civil Code applies only when there is doubt on
are not that of its component members. Its
the order of death between persons who are
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PERSONS AND FAMILY RELATIONS
personality is manifested only in the realm of
patrimonial relations–it has no family and
personal rights [Tolentino].
Juridical Persons may:
1. Acquire and possess property of all kinds
2. Incur obligations
3. Bring civil or criminal actions [Tolentino]
Juridical persons are not completely at par with
natural persons as to capacity because they
cannot exercise rights which presuppose
physical existence, such as family rights,
making of wills, etc. But like natural persons,
they can have a nationality, a domicile, a name,
and a right to reputation. They can own and
possess property, dispose of such property,
enter into contracts, and inherit by will. They
can also incur obligations [Tolentino].
The Roman Catholic Church in the Philippines
is considered as a corporation sole which can
acquire properties in the country [Roman
Catholic Apostolic Administrator of Davao Inc.
v. Land Registration Com. and Register of
Deeds, G.R. No.L-8451 (1957)].
3. Capacity to Act
Refers to the power to do acts with legal effect
[Art. 37, Civil Code].
Presumption of Capacity: Capacity to act
must be supposed to attach to a person who
has not previously been declared incapable,
and such capacity is presumed to continue for
so long as the contrary is nor proved [Standard
Oil Co. v. Arenas, G.R. No. L-5921 (1911)].
Restrictions on Capacity to Act
Circumstances which modify, limit, or restrict
capacity to act:
1. Minority
2. Insanity or imbecility
3. Deaf-mutism
4. Civil Interdiction (Penalty)
5. Prodigality
6. Family relations
7. Alienage
8. Absence
9. Insolvency and trusteeship
Religious belief and political opinion do not limit
the capacity to act [Art. 39, Civil Code].
Note: Incapacitated persons are not exempt
from certain obligations arising from his acts or
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property relations. Restrictions in capacity to
act generally affect obligations arising from
contracts only. As a rule, they do not affect
those arising from law, quasi-delicts, etc. Also,
certain rights are not affected by incapacity,
such as the right to inherit or to support [Perez].
a. Minority
Art. 234, Family Code is amended, lowering
the age of emancipation/majority from 21 to 18
years. Arts. 235 and 237 of Family Code are
repealed [RA 6809].
Effects on Contracts
1. They cannot give consent to a contract [Art.
1327 (1), Civil Code)]
2. Minority cannot be asserted by the other
party in an action for annulment [Art. 1397,
Civil Code]
3. Not obliged to make restitution except
insofar as he has been benefited [Art. 1399,
Civil Code]
4. Minor has no right to demand the thing/price
voluntarily returned by hum [Art. 1426, Civil
Code]
5. Minor has no right to recover voluntarily paid
sum or delivered thing, if consumed in good
faith [Art. 1427, Civil Code]
6. Must pay a reasonable amount for
necessaries delivered to him [Art. 1489,
Civil Code]
7. A contract where one of the parties is a
minor is voidable [Art. 1390 (1), Civil Code]
8. A contract is unenforceable when both of
the parties are minors (incapable of giving
consent) [Art. 1403 (3), Civil Code]
Estoppel works against minors who
misrepresent their ages in a contract and are
compelled to comply with its terms [Mercado v.
Espiritu, G.R. No. L-11872 (1917)].
However, when a minor made no active
misrepresentation as to his minority and such
minority is known to the other party, the
contract may be annulled by the minor upon
attaining age the age of majority [Bambalan v.
Maramba, G.R. No. L-27710 (1928)].
Failure of the minors to disclose their age does
not constitute fraud. Because it was merely a
passive misrepresentation, they were not
estopped and cannot be legally bound by their
signature in the contract. They do not have to
pay the interest, they may just return their
portion of the loan. However, the minors are
PERSONS AND FAMILY RELATIONS
obliged to make restitution insofar as they have
been benefited from what they have received
[Art. 1399, Civil Code; Braganza v. Villa Abrille,
G.R. No. L-12471 (1959)].
Effects on Marriage
1. May not yet contract marriage [Art. 5, Family
Code]
2. Marriages, where one of the parties is below
18, even with the consent of
parents/guardians, are void [Art. 35, Family
Code]
Effect on Crimes [RA 9344 (Juvenile Justice
and Welfare Act of 2006)]
General Rule: Exempted from criminal liability
Exception: Acted with discernment, and the
minor is between 15 and 18 years of age
b. Insanity
Insanity includes many forms of mental
disease, either inherited or acquired. A person
may not be insane but only mentally deficient
(idiocy, imbecility, feeble-mindedness).
Insanity is the complete deprivation of reason
or intelligence or power to discern [People v.
Austria, G.R. Nos. 111517-19 (1996)].
On the other hand, imbecility is the weakness
of mind which, without depriving the person
entirely of the use of his reason, leaves only the
faculty of conceiving the most common and
ordinary ideas and such as relate almost
always to physical wants and habits [Black’s
Law Dictionary].
Prevailing Presumption: Every person is of
sound mind, in the absence of proof to the
contrary [Art. 800 (1), Civil Code].
Effect on Contracts
1. Incapacity to give consent to a contract [Art.
1327 (2), Civil Code]
2. Contracts entered into during lucid intervals
are valid [Art. 1328, Civil Code]
3. Burden of proof lies with the party asserting
the contract was entered into by the insane
during a lucid interval
4. Resolution of benefits [Art. 1399, Civil Code]
5. Voidable if one of the parties is insane [Art.
1390, Civil Code]
6. Unenforceable if both of the parties are
insane [Art. 1403 (3), Civil Code]
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Effect on Crimes
General Rule: Exempted from criminal liability
[Art. 12 (1), Revised Penal Code]
To be exempt from criminal liability on the
ground of insanity, complete deprivation of
intelligence in committing the criminal act
needs to be proved. The fact that the accused
threatened the complainant with death should
she reveal she had been sexually assaulted by
him indicates that the accused was aware of
the reprehensible moral quality of that assault,
which negated the complete destruction of his
intelligence at the time of commission of the act
charged [People v. Rafanan, Jr., G.R. No.
54135 (1991)].
In the absence of proof that the defendant had
lost his reason or became demented a few
moments prior to or during the perpetration of
the crime, it is presumed that he was in a
normal condition of mind [USA v. Vaquilar,
G.R. No. L-9471-72 (1914)].
Effect on Marriage
May be annulled if either party was of unsound
mind unless such party, after coming to reason,
freely cohabited with the other [Art. 45 (2),
Family Code].
Action for annulment of marriage must be filed
by the sane spouse who had no knowledge of
the other’s insanity, or by any relative/guardian
of the insane before the death of either party;
or by the insane spouse during a lucid interval
or after regaining sanity [Art. 47 (2), Family
Code].
c. Deaf-Mutism
Effect on Contracts
1. Cannot give consent to a contract if he/she
also does not know how to write [Art. 1327
(2), Civil Code]
2. Can make a valid will, if able to do so;
otherwise, he shall designate two persons
to read it and communicate to him, in some
practicable manner, the contents thereof
[Art. 807, Civil Code]
3. Cannot be a witness to the execution of a
will [Art. 820, Civil Code]
4. Voidable if one of the parties is a deaf-mute
who does not know how to write [Art. 1390,
Civil Code]
5. Unenforceable if both of the parties are
deaf-mutes and do not know how to write
[Art. 1403 (3), Civil Code]
PERSONS AND FAMILY RELATIONS
d. Prodigality
The word “incompetent” includes prodigals
[Sec. 2, Rule 92, Rules of Court]
Note: It is not the circumstance of prodigality,
but the fact of being under guardianship that
restricts capacity to act.
e. Civil Interdiction
It is an accessory penalty imposed upon
persons who are sentenced to a principal
penalty not lower than reclusion temporal [Art.
41, Revised Penal Code].
CIVIL LAW
2. Mitigating circumstance if acted in the
immediate vindication of a grave
offense/felony committed against his
spouse, ascendants or relatives of the same
civil degree [Art. 13 (5), Revised Penal
Code]
3. Descendants cannot be compelled to testify
in a criminal case, against his parents and
grandparents.
Unless: the crime was against the
descendants OR by one parent against the
other [Art. 215, Family Code]

Effect on Parental/Marital Authority g. Alienage

Offender is deprived of the rights of parental Dual Citizenship v. Dual Allegiance [Cordora
authority, or guardianship, and of marital v. COMELEC, G.R. No. 176947 (2009)]
authority [Art. 34, Revised Penal Code]. Dual Citizenship Dual Allegiance
Effect on Marriage and Property Arises when, as a Refers to the
1. For the validity of marriage settlements, the result of the situation in which a
participation of the guardian shall be concurrent person
indispensable [Art. 123, Civil Code] application of the simultaneously
2. Sentence of one’s spouse to a penalty different laws of two owes, by some
which carries with it civil interdiction is or more states, a positive act, loyalty to
sufficient cause for judicial separation of person is two or more states
property [Art. 135 (1), Family Code] simultaneously
3. The administration of exclusive property of considered a
either spouse may be transferred by the national by said
court to the other spouse when one of them states
is sentenced to civil interdiction [Art. 142 (3),
Family Code] Involuntary Result of individual’s
4. Does not have the right to manage his volition
property and
5. Does not have the right to dispose of such
by any act inter vivos [Art. 34, Revised Effect of Property
Penal Code]. Aliens cannot own or operate public utilities.
Corporations should be at least 40% Filipino,
f. Family Relations and their managing or executive officials
Family relations include those: should be Filipinos. Furthermore, alien
1. Between husband and wife; Corporations cannot operate for more than 50
2. Between parents and children; years [Sec. 11, Art. XII, 1987 Constitution].
3. Among other ascendants and
descendants; and h. Absence
4. Among brothers and sisters, whether of Absence is a limitation because it is a ground
the full- or half-blood [Art. 150, Family for the judicial appointment of a representative
Code] [Art. 381, Civil Code].

Effect on Crimes Note: Refer to the discussion below on

1. Justifying circumstance if acted in defense Absence.
of person/rights of spouse, ascendants,
descendants, brothers/sisters, and other i. Insolvency and Trusteeship
relatives up to the 4th civil degree [Art. 11 Under the Insolvency Law, debtor who has
(2), Revised Penal Code] been found insolvent cannot dispose of his
property or receive payments [Perez citing Act
No. 1956 (Rules on Corporate Rehabilitation)].
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4. Domicile and Residence of Persons
Domicile of Natural Persons
The place of their habitual residence [Art. 50,
Civil Code]
Domicile of Juridical Persons
The place where their legal representation is
established, or where they exercise their
primary functions, unless there is a law or other
provision that fixes the domicile [Art. 51, Civil
Code].
Domicile v. Residence
While domicile is permanent (there is intent to
remain), residence is temporary and may be
changed anytime (there is no necessary intent
to remain).
Requisites of Domicile
1. Residence or bodily appearance in a new
locality;
2. Intention to permanently remain there
(animus manendi); and
3. An intention to abandon the old domicile
(animus non revertendi).
There must be animus manendi coupled with
animus non revertendi. One must have actual
change of domicile and a bona fide intention to
establish a new residence [Poe Llamanzares v.
COMELEC, G.R. No. 221697 (2016)].
Kinds of Domicile
1. Domicile of Origin: Domicile of parents of
a person at the time he was born.
2. Domicile of Choice: Domicile chosen by a
person, changing his domicile of origin.
Domicile where he intends to remain
(animus revertendi).
3. Domicile by Operation of Law (e.g. Art.
69, Family Code: domicile of married
persons).
A married woman does not lose her domicile to
that of her husband. Unless there is a clear
proof of abandonment, domicile of origin
subsists [Romualdez-Marco v. COMELEC,
G.R. No. 119976 (1995)].
A foundling found in the Philippines and/or in
Philippine embassies, consulates and
territories abroad is presumed a natural-born
Filipino citizen regardless of the status or
circumstances of birth [RA 11767 (Foundling
Recognition and Protection Act)].
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A house is not necessary to establish a
domicile [Jalosjos v. COMELEC, G.R. No.
193237 (2012)].
B. Use of Surnames
1. Surname of Children
a. Legitimate and Legitimated Children
Reading Art. 364 of the Civil Code together with
the State's declared policy to ensure the
fundamental equality of women and men
before the law, a legitimate child is entitled to
use the surname of either parent as a last
name [Alanis III v. CA, G.R. No. 216425
(2020)].
b. Adopted Child
An adopted child shall bear the surname of the
adopter [Art. 365, Civil Code; Art. 189 (1),
Family Code].
Under RA 11642, the adopter has the right to
choose the name by which the child is to be
known, consistent with the best interest of the
child. An adopted child shall bear the surname
of the adopter [Sec. 41 (2), RA 11642; Art. 365,
Civil Code; Art. 189 (1), Family Code].
Note: RA 11642 took effect on January 21,
2022, beyond the bar cutoff date of June 30,
2021.
c. Illegitimate Child
Illegitimate children shall use the surname of
their mother [Art. 176, Family Code].
2. Surname of Wife After and During
Marriage
a. During Marriage
A married woman may use:
1. Her maiden first name and surname and
add her husband’s surname, or;
2. Her maiden first name and her husband’s
surname, or;
3. Her husband’s full name, but prefixing a
word indicating that she is his wife, such as
“Mrs.” [Art. 370, Civil Code].
Note: A married woman has an option, not a
duty, to use the surname of her husband in any
of the ways under Art. 370, Civil Code. Hence,
she is allowed to use not only any of the three
provided in Art. 370, Civil Code, but also her
maiden name upon marriage.
PERSONS AND FAMILY RELATIONS
A woman is not prohibited from continuously
using her maiden name once she is married
because when a woman marries, she does not
change her name but only her civil status
[Remo v. Sec. of DFA, G.R. No. 169202
(2010)].
Note: Under the Philippine Passport Act (RA
8239), once a married woman opted to adopt
her husband’s surname in her passport, she
may not revert to the use of her maiden name,
except in the following cases:
1. Death of Husband;
2. Divorce;
3. Annulment; or
4. Nullity of Marriage
CIVIL LAW
Grandsons and other direct male descendants
shall either:
1. Add a middle name or the mother’s
surname, or
2. Add the Roman numerals II, III, and so on.
Note: Although Art. 375, Civil Code restricts the
use of “Junior” to sons, social usage allows the
use of “Junior” also for daughters but not for
granddaughters [Paras].
Usurpation and Unauthorized or Unlawful
Use of Name [Arts. 377-378, Civil Code]
Usurpation of a name and surname may be the
subject of an action for damages and other
relief [Art. 377, Civil Code].

b. After Marriage 4. Change of Names

Annulment [Art. 371, Civil Code] General Rule [Art. 376, Civil Code]
In case of annulment of marriage and the wife No person can change his name or surname
is the guilty party, she shall resume her maiden without judicial authority.
name and signature.
Exception [Arts. 379-380, Civil Code]
In case of annulment of marriage and the wife The employment of pen names or stage
is the innocent party, she may choose to names is permitted, provided it is done in good
continue employing her former husband’s faith and there is no injury to third persons. Pen
surname, unless: names and stage names cannot be usurped
1. The court decrees otherwise, or; [Art. 379, Civil Code].
2. She or the former husband is married again
to another person. C. Entries in the Civil Registry
Legal Separation [Art. 372, Civil Code] and Clerical Error Law
When legal separation has been granted, the
wife shall continue using her name and RA 9048 (Correction of Error in Name), as
surname employed before the legal separation. amended by RA 10172 (Correction of Error
in Birthday and Sex)
Note: Before the legal separation, not before The petition for change of first
the marriage. name or nickname may be
allowed in any of the following
Death of Husband [Art. 373, Civil Code] cases [Sec. 4, RA 9048]:
A widow may use the deceased husband’s ● The petitioner finds the
surname as though he were still living, in first name or nickname to
accordance with Art. 370, Civil Code. be ridiculous, tainted with
dishonor or extremely
3. Confusion of Names difficult to write or
General Rule [Art. 374, Civil Code] Grounds pronounce;
In case of identity of names and surnames, the ● The new first name or
younger person shall be obliged to use such nickname has been
additional name or surname as will avoid habitually and
confusion. continuously used by the
petitioner and he has
Special Rules [Art. 375, Civil Code] been publicly known by
In case of identity of names and surnames the first name or
between ascendants and descendants, the nickname in the
word “Junior” can only be used by a son. community, or;

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PERSONS AND FAMILY RELATIONS
● The change will avoid
confusion.
Under Sec. 1, RA 10172: No
entry in a civil register shall be
changed or corrected without a
judicial order, except:
● clerical or typographical
errors and change of first
name or nickname,
● the day and month in the
date of birth or sex of a
person where it is
patently clear that there
was a clerical or
typographical error or
mistake in the entry.
[Sec 3, RA 10172]
Documentary Attachments:
1. A certified true machine
copy of the certificate or
of the page of the registry
book containing the entry
or entries sought to be
corrected or changed;
2. At least two (2) public or
private documents
showing the correct entry
or entries upon which the
correction or change
shall be based; and
3. Other documents which
the petitioner or the city
Requirem or municipal civil
ents registrar or the consul
general may consider
relevant and necessary
for the approval of the
petition
Additional Documentary
Attachments
Generally:
1. Certification from
appropriate law
enforcement agencies
that petitioner has no
pending case or no
criminal record.
For Day and Month in Date of
Birth and Sex:
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1. Earliest school record or
earliest school
documents.
2. Medical records.
3. Other documents issued
by religious authorities.
For Sex:
Certification by an accredited
government physician attesting
to the fact that petitioner did not
undergo sex change or sex
transplant.
Note: RA 9048 (as amended by
RA 10172) does not allow a
change of first name on the
ground of sex reassignment
[Silverio v. Republic, G.R. No.
174689 (2007)].
Changes in Procedure: The
petition shall be published at
least once a week for two
consecutive weeks in a
newspaper of general
circulation.
Clerical or Typographical Error
[Sec. 2 (3), RA 10172]
Refers to a mistake committed in the
performance of clerical work in writing,
copying, transcribing or typing an entry in the
civil register that is
1. harmless and innocuous,
2. visible to the eyes or obvious to the
understanding, and
3. can be corrected or changed only by
reference to other existing record or
records.
Examples:
1. Misspelled name or
2. Misspelled place of birth,
3. Mistake in the entry of day and month in the
date of birth or
4. The sex of the person or the like
What Cannot Be Corrected:
1. Nationality
2. Age
3. Status
PERSONS AND FAMILY RELATIONS CIVIL LAW
D. Absence 4. Those who may have, over the property of
the absentee, some right subordinated to
the condition of his death.
1. Civil Code Provisions
a. Provisional Measures in case of Effectivity of the Judicial Declaration of
Absence Absence [Art. 386, Civil Code]
General Rule [Art. 381, Civil Code]: A judge, at The judicial declaration of absence shall not
the instance of an interested party, a relative, take effect until six months after its publication
or a friend, may appoint a person to represent in a newspaper of general circulation.
the absentee in all that may be necessary.
c. Administration of the Property of the
Note: The same shall be observed when under
Absentee
similar circumstances that power conferred by
the absentee has expired.
Appointment of Administrator [Art. 387, Civil
Code]
Requisites
An administrator of the absentee’s property
1. A person disappears from his domicile.
shall be appointed in accordance with Article
2. His whereabouts are unknown.
383.
3. He did not leave an agent to administer his
property.
On Alienation or Encumbrance of the
Property Administered [Art. 388, Civil Code]
Who May Be Appointed [Art. 383, Civil Code]
The wife who is appointed as an administratrix
General Rule: The spouse present shall be
of the husband’s property cannot alienate or
preferred, when there is no legal separation.
encumber the husband’s property; or that of
the conjugal partnership, without judicial
Exception: If there is no spouse, any
authority.
competent person may be appointed by the
court.
Cessation of Administration [Art. 389, Civil
Code]
Safeguarding the Absentee’s Rights and
When Administration Ceases
Properties [Art. 382, Civil Code]
1. When the absentee appears personally or
The judge shall specify the power, obligations,
by means of an agent;
and remuneration of the absentee’s
2. When the death of the absentee is proved
representative, regulating them, according to
and his testate or intestate heir appear;
the circumstances, by the rules concerning
3. When a third person appears, showing by a
guardians.
proper document that he has acquired the
absentee’s property by purchase or other
b. Declaration of Absence title.
When Absence May Be Declared [Art. 384,
Civil Code] Effects of Cessation
A person’s absence may be declared 1. The administrator shall cease in the
1. After two years have elapsed without any performance of his office, and;
news about the absentee or since the 2. The property shall be at the disposal of
receipt of the last news, or those who may have a right thereto.
2. After five years have elapsed, in case the
absentee left a person in charge of the
administration of his property.
d. Presumption of Death
General Rule [Art. 390, Civil Code & Art. 41,
Family Code]
Who May Ask for the Declaration of
1. Seven years, for all purposes, except
Absence [Art. 385, Civil Code]
succession and marriage.
1. The spouse present;
2. Ten years, for the purpose of the opening of
2. The heirs instituted in a will, who may
succession, except marriage.
present an authentic copy of the same;
3. Four consecutive years, for purposes of
3. The relatives who may succeed by the law
remarriage.
of intestacy;

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Exception [Art. 390, Civil Code] Exceptions [Art. 41, Family Code]
If the absentee disappeared after the age of When there is a subsequent marriage due to
seventy-five (75) years: An absence of five (5) ordinary absence, where:
years shall be sufficient to open his a. The prior spouse had been absent for four
succession. (4) consecutive years under ordinary
circumstances, or for two (2) consecutive
Where Disappearance is Attendant with years under the extraordinary
Dangerous Circumstance [Art. 391, Civil circumstances in Art. 391, Civil Code; and
Code] b. The surviving spouse had a well-founded
The absentee shall be presumed dead for all belief that the absent spouse was already
purposes, if he were absent under the following dead.
circumstances:
1. Where the absentee is on board a vessel
lost during a sea voyage, or an airplane
which is missing, who has not been heard of
for four (4) years since the loss of the vessel
or airplane;
2. Where the absentee is in the armed forces
who has taken part in war, and has been
missing for four (4) years.
3. Where the absentee has been in danger of
death under other circumstances and his
existence has not been known for four (4)
years.

In Case of the Absentee’s Reappearance or

Proof of Existence [Art. 392, Civil Code]
If the absentee appears, or without appearing,
his existence is proved, he shall recover his
property in which it may have been alienated or
the property acquired therewith; but he cannot
claim either fruits or rents.

Statutory Presumption on the Order of

Death Between Persons Who Are Called to
Succeed Each Other [Art. 43, Civil Code]

Trigger: If there is doubt, as between two or

more persons who are called to succeed each
other, as to which of them died first

Rules:
1. Whoever alleges the death of one prior to
the other, shall prove the same
2. In the absence of proof: it is presumed that
they died at the same time and there shall
be no transmission of rights from one to
another.

2. Presumptive Death of Absent

Spouse Under the Family Code
General Rule [Art. 41, Family Code]
Marriage contracted by any person during the
subsistence of a previous marriage is void.

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PERSONS AND FAMILY RELATIONS CIVIL LAW

II. MARRIAGE Formal Requisites [Art. 3, Family Code]

1. Authority of solemnizing officer (subject to
Art. 35 (2), Family Code)
A. In General 2. A valid marriage license (subject to
exceptions)
Marriage [Art. 1, Family Code] 3. Marriage ceremony
1. A special contract of permanent union;
2. Between a man and a woman; Effect of Absence or Defect/Irregularity of
3. Entered into in accordance with law; the Requisites on the Marriage [Art. 4, Family
4. For the establishment of conjugal and Code]
family life.
5. It is the foundation of the family and an Absence Defect or
inviolable social institution; Irregularity
6. Its nature, consequences, and incidents
Essential Void Voidable
are governed by law and not subject to
stipulation.
Formal Void No effect, but
makes the
Note: Marriage settlements may fix the
party
property relations during the marriage, within
responsible
the limits provided by this Code [Art. 1, Family
for such
Code].
irregularity
civilly,
Marriage is an institution, the maintenance of
criminally or
which the public is deeply interested in. It is a
administrativ
relation for life and the parties cannot terminate
ely liable
it at any shorter period by virtue of any contract
they may make. The reciprocal rights arising Note: The term “defect” is used for essential
from this relation, so long as it continues, are requisites while “irregularity” is used for formal
such as the law determines from time to time, requisites.
and none other [Goitia v. Campos Rueda, G.R.
No. 11263 (1916)]. 1. Essential Requisites
a. Sex
Breach of Promise to Marry Note: The best source for citing the
Article 21, Civil Code. Any person who willfully requirement of male/female is still statutory, as
causes loss or injury to another in a manner that is provided explicitly Art. 1, Family Code.
contrary to morals, good customs or public policy Marriage is a special contract of permanent
shall compensate the latter for the damages. union between a man and a woman.

Mere breach of a promise to marry is not an A person’s sex is an essential factor in

actionable wrong.
However, damages incurred by an injured
party are actionable if proven. This can be said
to have been in violation of Art. 21, Civil Code
[Wassmer v. Velez, G.R. No. L-20089 (1964)].
B. Requisites of Marriage
marriage and family relations. It is a part of a
person’s legal capacity and civil status. In this
connection, sex is defined as “the sum of
peculiarities of structure and function that
distinguish a male from a female.” The sex of a
person is determined at birth, visually done by
the birth attendant (the physician or midwife) by
examining the genitals of the infant.

Thus, the words “male” and “female” in

Essential Requisites [Art. 2, Family Code]
everyday understanding do not include
1. Legal capacity of the contracting parties,
persons who have undergone sex
who must be a male and a female; and
reassignment. Furthermore, considering that
2. Consent (of the contracting parties) freely
there is no law legally recognizing sex
given in the presence of a solemnizing
reassignment, the determination of a person’s
officer.
sex made at the time of his or her birth, if not

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PERSONS AND FAMILY RELATIONS CIVIL LAW
attended by error, is immutable [Silverio v. married to the other. i.e., to make the woman
Republic, G.R. No. 174689 (2007)]. his wife [People v. Santiago, G.R. No. 27972
(1927)].
However, the Supreme Court ruled in the case
of Republic v. Cagandahan [G.R. No. 166676 In People v. Santiago [G.R. No. 27972 (1927)],
(2008)] that when the change in sex happens it was held that the marriage entered into by a
naturally, as when the person has Congenital person whose real intent is to avoid
Adrenal Hyperplasia (CAH) or is “biologically or prosecution for rape is void for total lack of
naturally intersex,” the determining factor in consent. Here, it was the intent of the
their sex classification would be what they, accused—not the victim of rape, whom he
having reached the age of majority, with good married under duress—that was considered.
reason thinks is their sex. Sexual development The accused did not intend to make the victim
in cases of intersex persons makes the sex his wife. He merely used such marriage to
classification at birth inconclusive, hence a escape criminal liability.
change in name and sex as registered in the
birth certificate is here allowed. Absence of consent renders the marriage void
while defective consent makes it voidable [Art.
b. Age 4, Family Code].
Article 5, Family Code. Any male or female of the
age of eighteen years or upwards not under any of Situation Consent Status of
the impediments mentioned in Articles 37 and 38, Marriage
may contract marriage.
Either party was of Vitiated/ Voidable
Other Impediments Referenced: unsound mind [Art. Defective
45 (2), Family
Art. 37, Family Code: Incestuous marriages Code]
1. Between ascendants and descendants of
any degree; and Mistake as to the Absent Void
2. Between brothers and sisters, whether of identity of the
the full or half-blood. other party [Art. 35
(5), Family Code]
Art. 38, Family Code: Void for public policy
1. Between collateral blood relatives, whether e.g. if one
legitimate or illegitimate, up to the fourth civil mistakenly marries
degree; his fiancée’s twin
2. Between step-parents and step-children; [Tolentino]
3. Between parents-in-law and children-in-law;
4. Between the adopting parent and the Mistake as to the Absent Void
adopted child; legal
5. Between the surviving spouse of the consequences and
adopting parent and the adopted child; nature of the
6. Between the surviving spouse of the marriage
adopted child and the adopter; ceremony
7. Between an adopted child and a legitimate
child of the adopter; e.g. thinking the
8. Between adopted children of the same ceremony is a
adopter; and joke, pretend, or
9. Between parties where one, with the play-acting
intention to marry the other, killed that other [Tolentino]
person's spouse or his or her own spouse.

c. Consent Freely Given

Consent here refers to the consent of the
contracting parties. The consent must refer to
the contracting parties’ bona fide intention to be
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PERSONS AND FAMILY RELATIONS CIVIL LAW

Situation Consent Status of d. No Subsisting Marriage

Marriage A marriage contracted by any person during
subsistence of a previous valid marriage shall
Consent was Vitiated/ Voidable be null and void, unless there is a declaration
obtained by fraud: Defective of presumptive death of the absentee spouse
[Art. 41, Family Code].
a. Non-
disclosure of The parties are not required to obtain a judicial
previous declaration of absolute nullity of a void ab initio
conviction of first and subsequent marriages in order to raise
crime of it as a defense in a bigamy case [Pulido v.
moral People of the Philippines, G.R. No. 220149
turpitude (2021)].
b. Concealmen
t of Note: This case was promulgated after the
pregnancy cutoff date of June 30, 2021.
by another
man 2. Formal Requisites
c. Concealmen a. Marriage Ceremony
t of STD No prescribed form or religious rite for the
d. Concealmen solemnization of marriage is required [Art. 6,
t of drug Family Code].
addiction,
habitual b. Authority of Solemnizing Officer
alcoholism, Who May Solemnize Marriage:
homosexuali
Normal Circumstances
ty, or
lesbianism Incumbent member of the Judiciary, within
[Art. 46, his jurisdiction [Art. 7, Family Code]
Family
Code] Priest, Rabbi, Imam or Minister of any
Church or Religious Sect who must be:
Consent was Vitiated Voidable a. Duly authorized by his church or
obtained by: /Defective religious sect;
b. Registered with the civil registrar
a. Force general;
b. Intimidation c. Acting within the limits of the written
c. Undue authority granted to him by his
Influence church or religious sect;
[Art. 45 (4), d. At least one of the contracting parties
Family belongs to the solemnizing officer’s
Code] church or religious sect [Art. 7,
Family Code]
Marriage entered Absent Void
into by a person Municipal and City Mayors [Secs. 444-445,
whose real intent Local Government Code]
is to avoid
prosecution for Articulo Mortis (in addition to those
rape [People v. above mentioned)
Santiago, G.R. No.
27972 (1927)] Ship Captain or Airplane Chief may
Note: Defects in consent are discussed further solemnize a marriage in articulo mortis
below in void and voidable marriages. between passengers or crew members [Arts.
7 and 31, Family Code]

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PERSONS AND FAMILY RELATIONS
A Military Commander of a unit may
solemnize marriages in articulo mortis
between persons within the zone of military
operation in the absence of a chaplain [Arts.
7 and 32, Family Code]
Marriages Abroad
Consul-general, consul or vice-consul may
solemnize marriages between Filipino
citizens abroad [Arts. 7 and 10, Family Code]
General Rule: Those solemnized by any
person not legally authorized to perform
marriages are void.
Exception: Unless such marriages were
contracted with either or both parties believing
in good faith that the solemnizing officer had
the legal authority to do so [Art. 35 (2), Family
Code].
Good faith refers to questions of fact, not
ignorance of the law (e.g. they did not know the
priest’s license expired vs. thinking a Senator
could solemnize their marriage) [Legarda,
Deriquito-Mawis, and Vargas].
Note: An irregularity in a formal requisite will
not affect the validity of the marriage but those
responsible may be held criminally, civilly,
and administratively liable [Arts. 4 & 7,
Family Code].
c. Marriage License
General Rule: The license required is that
which is issued by the local registrar of the city
or municipality where either contracting party
habitually resides [Art. 9, Family Code].
Publication is required. The civil registrar
determines the age of the parties.
Where Valid: License valid in any part of the
Philippines.
Period of Validity: It will be valid for 120 days
from date of issue, automatically canceled at
the expiration of such period.
Marriages celebrated without a marriage
license before the effectivity of the Family Code
are void ab initio as marriage license was an
essential requisite in the Civil Code [Kho v.
Republic, G.R. No. 187462 (2016)].
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CIVIL LAW
A marriage which preceded the issuance of the
marriage license is void and the subsequent
issuance of such license cannot render valid
the marriage. Except in cases provided by law,
it is the marriage license that gives the
solemnizing officer the authority to solemnize a
marriage [Aranes v. Occiano, MTJ-02-1390
(2002)].
Foreign National
1. When either or both parties are foreign
nationals: Certificate of legal capacity to
contract marriage issued by a diplomatic
or consular official, shall be submitted
before a marriage license can be obtained
[Art. 21, Family Code]
2. Stateless persons or refugees from other
countries: Affidavit stating
circumstances showing capacity to
contract marriage, instead of certificate of
legal capacity [Art. 21, Family Code]
Note: The Apostille Convention, which took
effect in the Philippines on 14 May 2019,
simplifies the authentication of foreign
documents. Public documents executed in
Apostille-contracting countries, once
Apostillized, no longer need authentication
from the Philippine embassy or consulate
general. In the same way, PH documents
Apostillized by the DFA need not be
authenticated by Foreign embassies or
consulate generals if the country is a member
of the convention [DFA Public Advisory].
A marriage certificate is not an essential or
formal requisite without which the marriage will
be void [Madridejo v. de Leon, G.R. No. L-
32473 (1930)]. However, it is the best evidence
that a marriage does exist [Tenebro v. CA, G.R.
No. 150758 (2004)].
Exemption from License Requirement
a. Marriage in articulo mortis [Art. 27, Family
Code]
The marriage may be solemnized without the
necessity of a marriage license. It remains valid
even if the ailing party survives.
1. Between passengers or crew members
in a ship or airplane [Art. 31, Family
Code]
2. Persons within a military zone [Art. 32,
Family Code]
3. Other situations in articulo mortis
PERSONS AND FAMILY RELATIONS
b. Marriage in remote and inaccessible
places [Art. 28, Family Code]
c. Marriages by Muslims and Ethnic cultural
minorities provided they are solemnized in
accordance with their customs, rites or
practices [Art. 33, Family Code]
d. Marriage by parties who have cohabited
for at least 5 years without any legal
impediment to marry each other [Art. 34,
Family Code; Ninal v. Bayadog, G.R. No.
133778 (2000)]
Note: A false affidavit of having lived together
for 5 years as husband and wife cannot be
considered as a mere irregularity in the formal
requisites of marriage but a complete absence,
rendering their marriage void ab initio [De
Castro v. Assidao-De Castro, G.R. No. 160172
(2008)].
CIVIL LAW
Exceptions: Void when it involves
a. Marriage where one or both parties are
below 18 years old [Art. 35 (1), Family
Code]
b. Bigamous or polygamous marriage [Art. 35
(4), Family Code]
c. Mistake in identity [Art. 35 (5), Family Code]
d. Marriages void under Art. 53 [Art. 35 (6),
Family Code]
e. Psychological incapacity [Art. 36, Family
Code]
f. Incestuous marriages [Art. 37, Family Code]
g. Marriage void for reasons of public policy
[Art. 38, Family Code]
Note: This means that the foreign marriage
may still be recognized as valid in the
Philippines even if it would have fallen under
Pars. 2 & 3, Art. 35, Family Code so long as it
is valid under the law of the country in which it
was solemnized.

Requisites for the 5-year Cohabitation to be

Essential Formal Requisites
Valid for the Exemption from Acquiring a
Requisites
Marriage License
a. The man and woman must have been Inherent in the Requirements
living together as husband and wife for at parties, carried independent of the
least five (5) years before the marriage; everywhere parties
b. The parties must have no legal
impediment to marry each other; Lex Nationalii – Lex loci
c. The fact of absence of legal impediment Laws relating to celebrationis – If
between the parties must be present at family rights and valid where
the time of marriage; duties, or to the celebrated, then
d. The parties must execute an affidavit status, condition, and valid everywhere;
stating that they have lived together for legal capacity of forms of contracting
at least five years [and are without legal persons are binding marriage are to be
impediment to marry each other]; and upon PH citizens regulated by the law
e. The solemnizing officer must execute a even though living where it is celebrated
sworn statement that he had abroad [Art. 15, Civil [Art. 17, Civil Code]
ascertained the qualifications of the Code]
parties and that he had found no legal
impediment to their marriage [Borja- Foreign marriages Foreign marriages
Manzano v. Judge Sanchez, A.M. MTJ- void under PH law may be void under
00-1329 (2001)]. due to lack of an PH law due to
essential requisite, absence of a formal
C. Marriages Solemnized even if valid under requisite under
Abroad, and Foreign Divorce foreign laws, will not foreign laws.
be recognized.
1. Marriages Celebrated Abroad
General Rule: Marriages solemnized abroad Proof of Foreign Marriage in order that it may
in accordance with the laws in force in that be upheld:
country shall be valid in the Philippines [Art. 26 a. Provisions of the foreign law, and
(1), Family Code]. b. Celebration of the marriage in accordance
with said provisions.

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PERSONS AND FAMILY RELATIONS
2. Foreign Divorce
If the foreign spouse obtains a valid divorce
decree abroad capacitating him/her to remarry,
the Filipino spouse shall have capacity to
remarry under Philippine law [Art. 26 (2),
Family Code].
The citizenship of the spouses at the time of
the divorce determines their capacity to obtain
a valid divorce [Quita v. Dandan, G.R. No.
124862 (1998)].
A marriage between two Filipinos cannot be
dissolved even by a divorce obtained abroad,
because of Arts. 15 & 17, Civil Code [Garcia v.
Recio, G.R. No. 138322 (2001)].
Aliens may obtain divorces abroad, which may
be recognized in the Philippines, provided they
are valid according to their national law; thus, it
is a matter of evidence. The marriage tie when
thus severed as to one party, ceases to bind
either [Van Dorn v. Romillo, G.R. No. L-68470
(1985)].
Divorces obtained abroad by Filipino citizens
may now be validly recognized in the
Philippines but only in cases of mixed
marriages involving a Filipino and a foreigner
[Republic of the Philippines v. Manalo, G.R.
No. 221029 (2018)].
Note: Following the ruling in Galapon v.
Republic [G.R. No. 243722 (2020)], paragraph
2, Art. 26, Family Code applies to mixed
marriages where the divorce decree is: (1)
obtained by the foreign spouse; (2) obtained
jointly by the Filipino and foreign spouse; or (3)
obtained solely by the Filipino spouse.
D. Void and Voidable Marriages
1. Void Marriages
Types of Void Marriages
a. Absence of any formal/essential
requisites [Art. 35, Family Code]
b. Bigamous and polygamous marriages
[Art. 35 (4), Family Code]
c. Bad faith of both spouses in the
subsequent marriage [Art. 44, Family Code]
d. Psychologically Incapacitated spouse
[Art. 36, Family Code]
e. Void subsequent marriages [Art. 35 (6),
Family Code] for failure to comply with Art.
53, Family Code
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CIVIL LAW
f. Incestuous Marriages [Art. 37, Family
Code]
g. Void by reasons of public policy [Art. 38,
Family Code]
Article 39, Family Code. The action or defense for
the declaration of absolute nullity shall not prescribe.
(as amended by RA 8533)
a. Absence of Requisites
Void from the Beginning [Art. 35, Family
Code]
1. Marriage where any party is below
eighteen (18) years of age even with the
consent of parents or guardians
2. Marriage solemnized by any person not
legally authorized to perform marriages
unless such marriages were contracted with
either or both parties believing in good faith
that the solemnizing officer had legal
authority to do so
Note: One’s belief in good faith that the
solemnizing officer has the required
authority is a mistake of fact, and not of law.
3. Marriage solemnized without a valid
marriage license, except in marriages
under exceptional circumstances
4. Bigamous or polygamous marriages not
falling under Art. 41 (Art. 41, Family Code:
Subsequent marriage by present spouse
who obtained a declaration of presumptive
death for absent spouse prior to the
subsequent marriage)
5. There is a mistake as to the identity of the
other contracting party
6. Subsequent marriages that are void
under Art. 53, Family Code (Non-
compliance with Art. 52, Family Code)
To be considered void on the ground of
absence of a marriage license, the law requires
that the absence of such marriage license must
be apparent on the marriage contract, or at the
very least, supported by a certification from the
local civil registrar that no such marriage
license was issued to the parties [Alcantara v.
Alcantara, G.R. No. 167746 (2007)].
b. Bigamous and Polygamous Marriages
Elements of a Bigamous Marriage
1. Offender legally married
2. Marriage not legally dissolved
3. Offender contracts a subsequent marriage
PERSONS AND FAMILY RELATIONS
4. Subsequent marriage has all the essential
requisites for validity, except legal capacity
[Capili v. People, G.R. No. 183805 (2013)]
The parties are not required to obtain a
judicial declaration of absolute nullity of a
void ab initio first and subsequent
marriages in order to raise it as a defense in
a bigamy case. The same rule now applies to
all marriages celebrated under the Civil Code
and the Family Code. Art. 40, Family Code did
not amend Art. 349, Revised Penal Code, and
thus, did not deny the accused the right to
collaterally attack the validity of a void ab initio
marriage in the criminal prosecution for bigamy
[Pulido v. People of the Philippines, G.R. No.
220149 (2021)]. (Note: This case was
promulgated after the cutoff date of June 30,
2021)
Presumptive Death
Failure of the spouse present to obtain a
judicial declaration of presumptive death
before entering a subsequent marriage [Art.
41, Family Code].
Bad Faith of Both Spouses
Both spouses entering a subsequent marriage
after presumptive death, who acted in bad faith
[Art. 44, Family Code].
c. Subsequent Marriage When One
Spouse is Absent
Requirements for Subsequent Marriage to
be Valid When Prior Spouse is Absent [Art.
41, Family Code]
1. Subsequent marriage due to ordinary
absence where:
a. Absent spouse had been absent for 4
consecutive years;
b. The spouse present had a well-founded
belief that the absent spouse is dead;
and
c. Judicial declaration of presumptive
death was secured (no prejudice to the
effect of the reappearance of the absent
spouse)
2. Subsequent marriage due to extraordinary
absence where:
a. Absent spouse had been missing for 2
consecutive years;
b. There is danger of death under the
circumstances set forth in Art. 391, Civil
Code attendant to the disappearance;
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c. Onboard vessel lost at sea voyage,
airplane,
d. Armed forces in war, or
e. Danger of death under other
circumstances, existence not known
3. The spouse present had a well-founded
belief that the missing person is dead; and
4. Judicial declaration of presumptive
death was secured through a summary
proceeding (no prejudice to the effect of the
reappearance of the absent spouse).
The belief of the present spouse must be the
result of proper and honest to goodness
inquiries and efforts to ascertain the
whereabouts of the absent spouse and
whether the absent spouse is still alive or is
already dead. This is drawn from
circumstances before and after the
disappearance and the nature and extent of
inquiries made [Republic v. Granada, G.R. No.
187512 (2012)].
Although incapable of exact definition, “well-
founded belief” requires a stringent standard.
Jurisprudence demands an active search for
the absentee spouse, along with attempts to
contact legal authorities to aid in the search
and corroborative evidence to support the
claim that a diligent search and inquiry was
made [Republic v. Quiñonez, G.R No. 237412
(2020)].
Effect of Reappearance of Absent Spouse
General Rule: The subsequent marriage
remains valid.
Exception: It is automatically terminated by
the recording of the affidavit of reappearance
of the absent spouse at the instance of any
interested person, with due notice to the
spouses of the subsequent marriage [Art. 42,
Family Code].
Note: It is the recording of the affidavit of
reappearance that automatically terminates the
subsequent marriage. Hence, if the absentee
spouse reappears without recording an
affidavit of reappearance, then there is no legal
effect. Meanwhile, the absentee spouse cannot
remarry [Tolentino].
Exception to the Exception: If there is a
judgment annulling the previous marriage or
declaring it void ab initio [Art. 42, Family Code].
PERSONS AND FAMILY RELATIONS CIVIL LAW
Good faith: Period of absence for presumptive
Psychological Vice of Consent
death is mandatory. However, the law
Incapacity
shortens the period for purposes of remarriage.
Has nothing to do The consent itself is
The period of absence is counted from when with consent, but the defective
the party last heard from his/her absentee incapacity to comply
spouse [Jones v. Hortiguela, G.R. No. 43701 with the essential
(1937)]. marital obligations of
marriage
Absence of Spouse under Art. 41 Family
Code [Republic v. Nolasco, G.R. No. 94053
(1993)] Psychological Insanity
[Art. 41, Family Code] Incapacity

1. Well-founded belief Consent might be Vice of consent

that the absent spouse valid, but the party is
is dead; and unable to assume
essential marital
2. Absence of: obligations
Grounds a. 4 years under
normal Ground for nullity Ground for
circumstances; or annulment
b. 2 years under
extraordinary Example of Psychological Incapacity
circumstances The senseless and protracted refusal of one of
the parties to fulfill the marital obligation "to
Summary Required procreate children based on the universal
proceedings principle that procreation of children through
for the sexual cooperation is the basic end of
declaration of marriage," is equivalent to psychological
presumptive incapacity. “A man who can but won’t is
death psychologically incapacitated” [Tsoi v. CA,
G.R. No. 119190 (1997)].
The subsequent marriage
Effect on the is automatically terminated
Annulment under Art. 36, Family Code (as
subsequent by the recording of an
recently articulated in Tan-Andal v. Andal;
marriage affidavit of reappearance
Totality of Evidence Rule)
of the absent spouse
The Court in Tan-Andal v. Andal [G.R. No.
d. Bad Faith of Both Spouses 196359 (2021)] pronounced that psychological
Article 44, Family Code. If both spouses of the
incapacity is not a medical but a legal concept.
subsequent marriage acted in bad faith, said It refers to a personal condition which prevents
marriage shall be void ab initio and all donations by a spouse from complying with fundamental
reason of marriage and testamentary dispositions marital obligations only in relation to a specific
made by one in favor of the other are revoked by partner that may exist at the time of marriage
operation of law. but may have revealed through behavior
subsequent to the ceremonies. In this case, the
e. Psychological Incapacity Court stated that it need not be a permanent
and incurable disorder (effectively overturning
Article 36, Family Code. A marriage contracted by
previous jurisprudence on the matter).
any party who, at the time of the celebration, was
psychologically incapacitated to comply with the Therefore, the testimony of a psychologist or
essential marital obligations of marriage, shall psychiatrist is not mandatory in all cases. The
likewise be void even if such incapacity becomes totality of evidence must show clear and
manifest only after its solemnization. convincing evidence to cause the declaration
of nullity of marriage.
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PERSONS AND FAMILY RELATIONS
Things to be Considered in Invoking and
Proving Psychological Incapacity:
1. The burden of proof in proving
psychological incapacity is on the plaintiff.
The quantum of proof required in nullity
cases is clear and convincing evidence
2. Psychological incapacity is neither a mental
incapacity nor a personality disorder that
must be proven through expert testimony.
There must be proof, however, of the
durable or enduring aspects of a person’s
personality, called “personality structure,”
which manifests itself through clear acts of
dysfunctionality that undermines the family
3. Incurable, not in the medical, but in the legal
sense; incurable as to the partner
4. As to gravity, it must be shown that the
incapacity is caused by a genuinely serious
psychic cause
5. Juridical antecedence
6. Marital obligations refer to Arts 68-71, 220,
221 & 225, Family Code
7. The decisions of the National Appellate
Matrimonial Tribunal of the Catholic Church
of the Philippines has persuasive effect on
nullity cases pending before secular courts
[Tan-Andal v. Andal, G.R. No. 196359
(2021)].
f. Incestuous Marriage
Marriages between the following are
considered incestuous, and are therefore
void ab initio:
1. Between ascendants and descendants of
any degree, legitimate or illegitimate
2. Between brothers and sisters, whether
full or half blood, legitimate or illegitimate
[Art. 37, Family Code]
g. Against Public Policy
Marriages between the following are
considered against public policy, and are
therefore void ab initio:
1. Between collateral blood relatives,
legitimate or illegitimate, up to the fourth civil
degree;
2. Between step-parents and step-children;
(Note: Stepbrothers and stepsisters can
marry because marriages between them
are not among those enumerated in Art. 38,
Family Code)
3. Between parents-in-law and children-in-law;
4. Between adopting parent and adopted
child;
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5. Between the surviving spouse of the
adopting parent and the adopted child;
6. Between the surviving spouse of the
adopted child and the adopter;
7. Between an adopted child and a legitimate
child of the adopter;
8. Between adopted children of the same
adopter; and
9. Between parties where one, with the
intention to marry the other, killed that other
person's spouse, or his or her own spouse
[Art. 38, Family Code]
Note: The following relationships are outside of
Arts. 37-38, Family Code and are therefore not
impediments to marriage:
1. Brother-in-law with sister-in-law;
2. Stepbrother with stepsister;
3. Guardian with ward; and
4. Adopted son of the husband with adopted
daughter of the wife (i.e. stepchildren).
h. Non-Compliance with Recording
Requirement after Declaration of
Nullity
Subsequent marriage of spouses, where the
requirements of recording under Art. 52, Family
Code have not been complied with, shall be
null and void [Art. 53, Family Code].
The judgment of annulment or of absolute
nullity of the marriage, the partition and
distribution of the properties of the spouses
and the delivery of the children's presumptive
legitimes shall be recorded in the appropriate
civil registry and registries of property;
otherwise, the same shall not affect third
persons [Art. 52, Family Code].
Arts. 50, 51, and 52, Family Code, in relation to
Arts. 102 and 129, Family Code (i.e., the rules
governing the liquidation of the absolute
community or the conjugal partnership of
gains, the property regimes for valid and
voidable marriages) relate only to voidable
marriages and, exceptionally, to void
marriages under Art. 40, Family Code (i.e.
the declaration of nullity of a subsequent
marriage contracted by a spouse of a prior void
marriage before the latter is judicially declared
void) [Valdez v. QC-RTC, G.R. No. 122749
(1996)].
Under the Civil Code, no judicial declaration for
nullity of previous marriage was required to
PERSONS AND FAMILY RELATIONS
contract a subsequent marriage [People v.
Mendoza, G.R. No. L-5877 (1954)].
Note: This is now the general rule under Pulido
v. People [G.R. No. 220149 (2021)], which was
promulgated after the cutoff date of June 30,
2021.
Effects of Termination of Subsequent
Marriage Under Art. 42 [Art. 43, Family Code]
1. Children of subsequent marriage:
conceived prior to its termination considered
legitimate; custody and support decided by
court in a proper proceeding.
2. Property Regime: dissolved and liquidated
(party in bad faith shall forfeit his/her share
in favor of the common children or if there
are none, children of the guilty spouse by a
previous marriage, and in case there are
none, to the innocent spouse).
3. Donation propter nuptias: remains valid,
(but if the donee contracted marriage in bad
faith, donations are revoked by operation of
law)
4. Insurance benefits: innocent spouse may
revoke designation of guilty party as
beneficiary, even if such designation is
stipulated as irrevocable.
5. Succession Rights: party in bad faith shall
be disqualified to inherit from the innocent
spouse, whether testate or intestate.
Both Spouses Guilty of Bad Faith
If both spouses of the subsequent marriage
acted in bad faith, all donations by reason of
marriage and testamentary dispositions made
by one party in favor of the other are revoked
by operation of law [Art. 44, Family Code].
Who may File the Petition for Nullity of Void
Marriages?
General Rule: Only the husband or wife may
file the petition [Sec. 2, AM No. 02-11-10-SC].
Specifically, A.M. No. 02-11-10-SC extends
only to marriages covered by the Family Code,
which took effect on August 3, 1988, but, being
a procedural rule that is prospective in
application, is confined only to proceedings
commenced after March 15, 2003 [Ablaza v.
Republic, G.R. No 158298 (2010)].
Exceptions:
1. Nullity of marriage cases commenced
before the effectivity of A.M. No. 02-11-10-
SC
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2. Marriages celebrated during the effectivity
of the Civil Code [Carlos v. Sandoval, G.R.
No 179922 (2008)]
Procedure in Attacking a Void Marriage
Void Marriages may be attacked collaterally or
directly.
Safeguard Against Collusion and No
Confession of Judgment
In the cases referred to in the preceding
paragraph, no judgment shall be based upon a
stipulation of facts or confession of judgment
[Art. 48 (2), Family Code].
Stipulation of Facts
An admission by both parties after agreeing to
the existence of any of the grounds or facts that
would constitute a void/voidable marriage.
Confession of Judgment
The admission by one party admitting his/her
fault to cause the invalidity of the marriage.
Although the admission of guilt of the wife
constitutes a confession of judgment, the
husband was also able to present other
evidence to support the allegation. Hence,
there was no collusion [Ocampo v.
Florenciano, G.R. No. L-13553 (1960)].
Participation of the OSG
The obvious intent of the AM 02-11-10-SC was
to require the OSG to appear as counsel for the
State in the capacity of a defensor vinculi (i.e.,
defender of the marital bond) to oppose
petitions for, and to appeal judgments in favor
of declarations of nullity of marriage under Art.
36, Family Code, thereby ensuring that only the
meritorious cases for the declaration of nullity
of marriages based on psychological
incapacity-those sufficiently evidenced by
gravity, incurability and juridical antecedence-
would succeed [Mendoza v. Republic, G.R. No.
157649 (2012)].
No Motion to Dismiss
Sec. 7, AM 02-11-10-SC prohibits the filing of
a motion to dismiss in actions for annulment of
marriage [Aurelio v. Aurelio, G.R. No. 175367
(2011)].
Effect of Pendency of Action for Declaration
of Nullity:
1. The court shall provide for the support of the
spouses.
PERSONS AND FAMILY RELATIONS
2. The custody and support of the common
children, giving paramount consideration to
their moral and material welfare, their
choice of parent with whom they wish to
remain.
3. The court shall also provide for visitation
rights of the other parent [Art. 49, Family
Code].
Effect of Final Judgment Declaring Nullity
The effects provided for by Pars. 2, 3, 4 & 5,
Art. 43 and by Art. 44, Family Code shall also
apply in the proper cases to marriages which
are declared void ab initio or annulled by final
judgment under Arts. 40 and 45 [Art. 50 (1),
Family Code].
Final judgment in such cases shall provide for:
1. Liquidation, partition, and distribution of the
properties of the spouses
2. Custody and support of the common
children
3. Delivery of their presumptive legitimes
Unless: Such matters had been adjudicated
in previous judicial proceedings [Art. 50 (2),
Family Code].
All creditors of the spouses/property regime
shall be notified of the proceedings for
liquidation [Art. 50 (3), Family Code].
In the partition, the conjugal dwelling and lot
shall be adjudicated to the spouse with whom
majority of the common children remain [Art.
102 and 129, Family Code].
Generally, children born or conceived within
void marriages are illegitimate.
Exceptions:
1. Children conceived or born before the
judgment under Art. 36 has become final
and executory [Art. 54, Family Code]
2. Children conceived or born of subsequent
marriages under Art. 53 [Art. 54, Family
Code]
2. Voidable Marriages
Art. 4, Family Code states that a defect in any
of the essential requisites shall render the
marriage voidable as provided in Art. 45,
Family Code.
Grounds for Annulment that Must Exist at
the Time of the Marriage [Art. 45, Family
Code]
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CIVIL LAW
a. The party in whose behalf it is sought to
have the marriage annulled was eighteen
(18) years of age or over but below
twenty-one (21), and the marriage was
solemnized without the consent of the
parents, guardian or person having
substitute parental authority over the party,
in that order, unless after attaining the age
of twenty-one (21), such party freely
cohabited with the other and both lived
together as husband and wife;
b. Either party was of unsound mind, unless
such party after coming to reason, freely
cohabited with the other as husband and
wife;
c. The consent of either party was obtained
by fraud, unless such party afterwards,
with full knowledge of the facts constituting
the fraud, freely cohabited with the other as
husband and wife;
d. The consent of either party was obtained
by force, intimidation or undue
influence, unless the same having
disappeared or ceased, such party
thereafter freely cohabited with the other as
husband and wife;
e. Either party was physically incapable of
consummating the marriage with the other,
and such incapacity continues and appears
to be incurable; or
f. Either party was afflicted with a sexually
transmissible disease found to be serious
and appears to be incurable.
Nature of an Action for Annulment
Action in rem, concerns the status of parties.
a. The res is the relation between parties or
marriage tie.
b. Jurisdiction depends on nationality or
domicile not the place of celebration.
a. Lack of Parental Consent
Par. 1, Art. 45, Family Code provides the first
ground for a voidable marriage, which is the
solemnization of a marriage of a party between
18-21 years of age without the consent of their
parents.
May be ratified by the party 18 or above but
below 21 upon free cohabitation upon reaching
21.
b. Insanity
Par. 2, Art. 45, Family Code provides the
second ground for a voidable marriage, which
PERSONS AND FAMILY RELATIONS
is a marriage entered into by an insane party
or a person of unsound mind.
Mental incapacity or insanity is a vice of
consent. It can be ratified by cohabitation after
insanity is cured or during a lucid interval
[Tolentino].
Must exist at the time of the celebration of the
marriage. Insanity that occurs after the
celebration of marriage does not constitute a
cause for nullity [Katipunan v. Tenorio, G.R.
No. 43442 (1937)].
c. Fraud
Par. 3, Art. 45, Family Code provides the third
ground for a voidable marriage, wherein
consent to the marriage was obtained
through fraud. The party who was the victim
of the fraud may, however, ratify the detect in
the marriage by voluntarily cohabiting with the
party after knowledge of the facts constituting
the fraud.
Article 46, Family Code. Any of the following
circumstances shall constitute fraud referred to in
No. 3 of the preceding Article:
1. Non-disclosure of a previous conviction by
final judgment of the other party of a crime
involving moral turpitude;
2. Concealment by the wife of the fact that at
the time of marriage, she was pregnant by
a man other than her husband;
3. Concealment of sexually transmissible
disease, regardless of its nature, existing at
the time of marriage; or
4. Concealment of drug addiction, habitual
alcoholism or homosexuality or lesbianism
existing at the time of marriage.
No other misrepresentation or deceit as to character,
health, rank, fortune or chastity shall constitute such
fraud as will give grounds for the action of annulment
of marriage.
Note: The enumeration of the grounds for
annulment under Art. 46, Family Code for
reasons of fraud or vice of consent is
exclusive. No other misrepresentation or
deceit of character, health, rank, fortune or
chastity shall constitute fraud.
Non-Disclosure of Conviction of Crime
Involving Moral Turpitude
1. The crime must involve moral turpitude, or
“Conduct that is contrary to justice, honesty,
and morality” [Black’s Law Dictionary]
2. Must be convicted by final judgment
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CIVIL LAW
3. Conviction must be prior to marriage
A crime involves moral turpitude when it
pertains to an act of “baseness, vileness,
depravity in the private and social duties which
a man owes to his fellow man or to society in
general, contrary to the accepted and
customary rules of right and duty between man
and man” [Teves v. COMELEC, G.R. No.
180363 (2009)].
Concealment of Pregnancy by Another Man
Wife must have:
1. Concealed her pregnancy and
2. Pregnancy is by another man other than her
husband
If the husband knew of pregnancy, the
marriage cannot be annulled on the ground of
concealment.
The woman was seven (7) months pregnant at
the time she met the petitioner. He cannot
claim that the pregnancy was concealed from
him and that he was defrauded into marrying
her [Buccat v. Buccat, G.R. No 47101 (1941)].
But where the wife concealed the fact that she
was 4 months pregnant during the time of the
marriage and was “naturally plump,” Delizo
could hardly be expected to know, by mere
looking, whether or not she was pregnant at the
time of the marriage [Aquino v. Delizo, G.R. No.
L-15853 (1960)].
Note: May be ratified upon free cohabitation
after knowledge of fraud.
Concealment of Sexually Transmissible
Disease
The STD that was concealed from the other
spouse need not be serious and incurable.
When the ground for annulment falls under
Par. 3, Art. 46 vis-à-vis Par. 3, Art. 45, Family
Code, the healthy spouse through cohabitation
can still ratify the marriage because the defect
is in the fact of the concealment and not the
gravity of the disease. Hence, even if the STD
is treatable, the fraud gives the unsuspecting
spouse the right to file for annulment.
Concealment of Drug Addiction, Habitual
Alcoholism, Homosexuality or Lesbianism
The non-disclosure of the drug addiction,
habitual alcoholism, homosexuality or
lesbianism must have been done prior to the
PERSONS AND FAMILY RELATIONS
marriage. Recovery or rehabilitation from STD,
drug addiction, and habitual alcoholism will not
bar action for annulment; the defect is not the
disease, but the fraud which vitiated consent
[Tolentino].
It is the concealment of homosexuality, and not
homosexuality per se, that vitiates the consent
of the innocent party. Such concealment
presupposes bad faith and intent to defraud the
other party in giving consent to the marriage
[Almelor v. RTC, G.R. No. 179620 (2008)].
CIVIL LAW
Among the circumstances that define improper
advantage are the (1) confidential, (2) family,
(3) spiritual, (4) professional or other
relationship between the parties, or the fact
that the person alleged to have been unduly
influenced was suffering from (5) mental
weakness, (6) ignorance, or (7) was in financial
or emotional distress [Art. 1337, Civil Code].
May be ratified upon voluntary cohabitation
after force, intimidation, or undue influence has
ceased or disappeared.

Any Other Misrepresentation e. Impotency

Art. 46, Family Code categorically states that
any other misrepresentation as to character,
health, rank, fortune, or chastity shall not be a
manifestation of fraud sufficient to be a ground
for annulment of marriage.
The non-disclosure of a husband’s premarital
relationship with another woman does not
constitute fraud. It was expressly stated in Art.
46, Family Code that misrepresentation or
deceit as to one’s chastity shall not be a basis
for an action to annul a marriage [Anaya v.
Palaroan, G.R. No. L-27930 (1970)].
d. Force, Intimidation, Undue Influence
Par. 4, Art. 45, Family Code provides the
fourth ground for a voidable marriage, wherein
the consent of one party was obtained by
violence, intimidation, or undue influence.
Impotency refers to the person’s physical
condition where sexual intercourse with a
person of the opposite sex is impossible. It
does not refer to mere sterility.
Refers to the inability to copulate, not
procreate.
Impotency being an abnormal condition should
not be presumed. The presumption is in favor
of potency. The lone testimony of the husband
that his wife is physically incapable of sexual
intercourse is insufficient to tear asunder the
ties that have bound them together as husband
and wife [Jimenez v. Canizares, G.R. No. L-
12790 (1960)].

There is violence when in order to wrest

consent, serious or irresistible force is
employed [Art. 1335, Civil Code].

Intimidation must be one as to compel the

party by a reasonable and well-grounded
fear of an imminent and grave evil upon his
person/properties [Art. 1335, Civil Code]
1. Degree of intimidation: age, sex, condition
of person borne in mind
2. Threat or intimidation as not to act as free
agent

Note: A threat to enforce one’s claim through

competent authority, if one’s claim is just and
legal, does not vitiate consent [Art. 1335, Civil
Code].

There is undue influence when a person

takes improper advantage of his power or
position over the will of another, depriving the
latter of a reasonable freedom of choice.
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PERSONS AND FAMILY RELATIONS CIVIL LAW
f. Sexually-Transmissible Disease 3. Should appear to be incurable [Art. 45 (6),
Serious and Incurable Family Code]
Requisites
1. Should exist at the time of the marriage Not subject to ratification: Cannot be ratified or
2. Should be found serious validated by cohabitation.

Who may File, Prescription, Ratification

Ground [Art. Who can file [Art. 47, Prescription [Art. 47, Ratification [Art. 45,
45, Family Family Code] Family Code] Family Code]
Code]

Lack of Party 18 or above but Within 5 years after Free cohabitation of the
Parental below 21 attaining age of 21 party who entered the
Consent marriage without parental
Parent or guardian who Before party below 21 consent after attaining age
did not give consent reaches 21 of 21

Insanity Sane spouse with no Any time before the death Free cohabitation of insane
knowledge of the other’s of either party party after insane party
insanity comes to reason

Legal guardian of insane Any time before the death

party of either party

Insane party During lucid interval or Free cohabitation after

after regaining sanity, and insane party comes to
before death reason

Fraud Injured (defrauded) party Within 5 years after Free cohabitation of the
discovery of fraud defrauded party after
having full knowledge of
fraud

Force, Injured party Within 5 years after Free cohabitation of the

Intimidation, disappearance of force, injured party after the force
undue undue influence, or or intimidation or undue
influence intimidation influence has ceased or
disappeared

Impotence Potent spouse Within 5 years after Cannot be ratified by

marriage action; prescribes

STD Healthy party Within 5 years after Cannot be ratified by

marriage action; prescribes

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PERSONS AND FAMILY RELATIONS CIVIL LAW
Marriages Not Subject to Ratification
Void Voidable
1. One spouse is incurably impotent
2. One spouse has incurable STD beginning
Rationale: Public policy and health. Susceptible Cannot be Can be
to ratified ratified,
Note: Though these marriages cannot be Ratification subject to 2
ratified, the petition for annulment will prescribe exceptions
within 5 years.
Property Only co- ACP or any
Presence of Prosecutor Relation ownership other
To prevent collusion between the parties, [Art. 147, property
fabrication or suppression of evidence, the Family regime in
prosecuting attorney or fiscal shall appear on Code]; No accordance
behalf of the State [Art. 48, Family Code]. ACP or CPG with the
despite marriage
In a legal separation or annulment case, the having settlement
prosecuting attorney must first rule out entered into
collusion as a condition sine qua non for further a marriage
proceedings. A certification by the prosecutor settlement
that he was present during the hearing and Except the
even cross-examined the plaintiff does not 2nd void
suffice to comply with the mandatory marriage
requirement [Corpus v. Ochotorena, A.M. No. under Art. 40
RTJ- 04-1861 (2004)]. Family
Code.
Effects of Pending Decree of Annulment
The Court shall provide for the support of Status of Illegitimate Children are
spouses and support and custody of common Children under Art. legitimate if
children [Art. 49, Family Code]. In determining 165, Family conceived
which parent should have custody of them, Code (with or born prior
their moral and material welfare shall be given Arts. 36 and to the
paramount consideration [Art. 49, Family 53, Family decree
Code; Luna and Luna v. IAC, G.R. No. L-68374 Code as
(1985)]. exceptions
under Art.
Effects of Decree of Annulment 54, Family
(Same as Decree of Nullity) The effects Code)
provided for by Pars. 2, 3, 4 & 5 of Art. 43 and
by Art. 44, Family Code shall also apply in the How May be Cannot be
proper cases to marriages which are declared Impugned attacked attacked
void ab initio or annulled by final judgment directly or collaterally
under Arts. 40 and 45 [Art. 50 (1), Family collaterally,
Code]. but for the Cannot be
purpose of impugned
Comparative Table on Void and Voidable remarriage, after death
Marriages a judicial of one of the
declaration parties
Void Voidable
of nullity is
Nature No validity Valid until required [Art.
from the time annulled 40, Family
of Code]
performance
; inexistent Can be
from the very impugned

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PERSONS AND FAMILY RELATIONS CIVIL LAW

Void Voidable

even after
death of the
parties

Who May A proper A party to

Challenge interested the
Validity person marriage
(depending
on the dates
of marriage
and of filing
of
proceeding)

Susceptible Does not Prescribes

to prescribe
Prescription

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PERSONS AND FAMILY RELATIONS CIVIL LAW

III. LEGAL SEPARATION 46, Family Code. If drug addiction, habitual

alcoholism, lesbianism or homosexuality
should occur only during the marriage, they
An action for legal separation involves nothing
become mere grounds for legal separation
more than the bed-and-board separation of the
under Art. 55 Family Code [Santos v. Court of
spouses. It is purely personal in nature [Lapuz
Appeals and Bedia-Santos, G.R. No. 112019
Sy v. Eufemio, G.R. No. L-30977 (1972)].
(1995)].

A. Grounds for Legal Separation 7. Contracting by the respondent of a

[Art. 55, Family Code] subsequent bigamous marriage,
whether in the Philippines or abroad
Note: As a ground for legal separation,
1. Repeated physical violence or grossly
however, there is no need for a criminal
abusive conduct directed against the
conviction for bigamy.
petitioner, a common child, or a child of
the petitioner
8. Sexual infidelity or perversion
Note: Acts of Violence according to the Anti-
In Dedel v. Court of Appeals [G.R. No. 151867
Violence Against Women and Their Children
(2004)], the Supreme Court ruled that a
Act of 2004 (RA 9262) are also grounds for
spouse's sexual infidelity or perversion and
legal separation under Art. 55 (1), Family
abandonment, by themselves, do not
Code.
constitute psychological incapacity within the
contemplation of Art. 36, Family Code.
2. Physical violence or moral pressure to
compel the petitioner to change
Irreconcilable differences, sexual infidelity or
religious or political affiliation
perversion, emotional immaturity and
The law does not require the violence or moral
irresponsibility, and the like, do not by
pressure to be repeated. A single act of
themselves warrant a finding of psychological
violence is sufficient to be a ground since
incapacity under Art. 36, as the same may only
religious and political belief are human rights
be due to a person's refusal or unwillingness to
[Tolentino].
assume the essential obligations of marriage
and not due to some psychological illness that
3. Attempt of respondent to corrupt or
is contemplated by this rule [Garlet v. Garlet,
induce the petitioner, a common child,
G.R. No. 193544 (2017)].
or a child of the petitioner, to engage in
prostitution, or connivance in such
9. Attempt by the respondent against the
corruption or inducement
life of the petitioner
Only the respondent spouse must be guilty of
corrupting or inducing the petitioner, a common
10. Abandonment of petitioner by
child or a child of the petitioner to engage in
respondent without justifiable cause
prostitution.
for more than one (1) year.
Abandonment is not mere physical
4. Final judgment sentencing the
estrangement but also financial and moral
respondent to imprisonment of more
desertion. There must be an absolute
than six (6) years, even if pardoned
cessation of marital relations, duties, and rights
with the intention of perpetual separation [Dela
5. Drug addiction or habitual alcoholism
Cruz. v. Dela Cruz, G.R. No. L-19565 (1968)].
of the respondent
To be a ground for legal separation,
6. Lesbianism or homosexuality of the
abandonment must be without just cause [Ong
respondent
Eng Kiam v. Ong, G.R. No. 153206 (2006)].
The other forms of psychoses, if existing at
the inception of marriage, like the state of a
party being of unsound mind or concealment of
drug addiction, habitual alcoholism,
homosexuality or lesbianism, merely renders
the marriage contract voidable pursuant to Art.
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PERSONS AND FAMILY RELATIONS
B. Defenses [Art. 56, Family
Code]
1. Condonation by the aggrieved party –
after the commission of the offense; may
be expressed or implied.
Condonation may be given expressly or
impliedly. An example of an implied
condonation is when a husband repeatedly has
intercourse with the wife despite the wife’s
cruelty. “Although he did not wish it, [he did it]
eventually for the sake of peace” [Willan v.
Willan, G.R. No. L-13553 (1960)].
2. Consent by the aggrieved party to the
commission of the offense – before the
commission of the offense; may be
express [e.g. written agreement, Matubis v.
Praxedes, G.R. No. L-11766 (1960)] or
implied
The non-interference of the husband with
regard to the amorous relations between his
wife and Ramos constitutes consent [People v.
Sensano and Ramos, G.R. No. L-37720
(1933)].
3. Connivance between parties in the
commission of the offense
Connivance is present when the husband
throws no protection around his wife nor warns
her against intimacy with the driver. A husband
who had reliable reports for two months that
gave him reason to suspect that his wife was
having an affair with her driver yet did nothing
to keep the latter away is guilty of connivance
[Sargent v. Sargent, 114 A. 428 (1920)].
4. Mutual guilt or recrimination between
spouses in the commission of any
ground for legal separation
5. Collusion between parties to obtain
decree of legal separation
Collusion in matrimonial cases is the act of
married persons in procuring a divorce by
mutual consent, whether by preconcerted
commission by one of a matrimonial offense, or
by failure, in pursuance of agreement, to
defend divorce proceedings [Brown v.
Yambao, G.R. No. L-10699 (1957)].
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6. Prescription of action for legal
separation
Article 57, Family Code. An action for legal
separation shall be filed within five years from the
time of the occurrence of the cause.
7. Reconciliation of parties during
pendency of action [Art. 66 (1), Family
Code]
A joint manifestation, under oath and duly
signed by the spouses shall be filed with the
court in the same proceeding for legal
separation [Art. 65, Family Code].
8. Death of either party during pendency
of action
Death of the plaintiff before decree of legal
separation abates the action. There is no more
need for legal separation because the marriage
is already dissolved by the death of one of the
parties [Lapuz Sy v. Eufemio, G.R. No 30977
(1972)].
C. Procedure
Who may File the Action
A petition for legal separation may be filed only
by the husband or the wife [Sec. 2, A.M. No.
02-11- 11-SC (Rule on Legal Separation)].
Where to File the Action
The petition shall be filed in the Family Court of
the province or city where the petitioner or the
respondent has been residing for at least six
months prior to the date of filing “or in the case
of a non-resident respondent, where he may be
found in the Philippines, at the election of the
petitioner” [Sec. 2, A.M. No. 02-11-11-SC].
When to File Action
An action for legal separation shall be filed
within five years from the time of the
occurrence of the cause [Art. 57, Family Code;
A.M. No. 02-11-11-SC].
Cooling-off and Reconciliation Effects
An action for legal separation shall in no case
be tried before six months shall have elapsed
since the filing of the petition [Art. 58, Family
Code].
Actions cannot be tried unless the court has
attempted to reconcile the spouses, and
determined that despite such efforts,
PERSONS AND FAMILY RELATIONS
reconciliation is highly improbable [Art. 59,
Family Code].
Note:
1. This is without prejudice to judicial
determination of custody of children,
alimony, and support pendente lite.
2. This Family Code provision dictating a
mandatory 6-month cooling-off period does
not apply in cases where violence, as used
in RA 9262 (Anti-Violence Against Women
and their Children), is alleged. The case
should be heard as soon as possible by the
court.
D. Effects of Filing Petition
1. The spouses are entitled to live separately,
but the marital bond is not severed [Art. 61
(1), Family Code]
2. Administration of community or conjugal
property – If there is no written agreement
between the parties, the court shall
designate one of them or a third person to
administer the ACP or CPG [Art. 61 (2),
Family Code]
Note: No motion to dismiss the petition shall be
allowed except on the ground of lack of
jurisdiction over the subject matter or over the
parties; provided, however, that any other
ground that might warrant a dismissal of the
case may be raised as an affirmative defense
in an answer [Sec. 4, A.M. No. 02-11-11-SC]
E. Effects of Pendency
The Court shall provide for: [Arts. 62 & 49,
Family Code]
1. Support of spouses
2. Custody of children: The court shall give
custody of children to one of them, if there
is no written agreement between the
spouses.
3. Visitation rights of the other spouse
F. Effects of Decree of Legal
Separation
1. The spouses can live separately [Art. 63,
Family Code] but the marriage bonds are
not severed
2. The ACP or CPG shall be dissolved and
liquidated, and the share of the guilty
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spouse shall be forfeited in favor of the
common children, previous children, or
innocent spouse, in that order [Arts. 63 &
Art. 43 (2), Family Code]
3. Custody of the minor children shall be
awarded to the innocent spouse [Arts. 63 &
213, Family Code]
4. Guilty spouse shall be disqualified from
inheriting from the innocent spouse by
intestate succession. The provisions in
favor of the guilty party in the will of the
innocent spouse shall also be revoked by
operation of law [Art. 63, Family Code]
5. Donations in favor of the guilty spouse may
be revoked [Art. 64, Family Code] but this
action prescribes after 5 years from the
decree of legal separation
6. Innocent spouse may also revoke
designation of guilty spouse as beneficiary
in an insurance policy, even if such
stipulations are irrevocable [Art. 64, Family
Code; Sec. 11, PD 612]
7. Obligation for mutual support ceases, but
the court may order the guilty spouse to
support the innocent spouse [Art. 198,
Family Code]
8. The wife shall continue to use the surname
of the husband even after the decree for
legal separation [Laperal v. Republic, G.R.
No. L-18008 (1992)]
G. Reconciliation
Effects of Reconciliation:
1. Proceedings for legal separation shall be
terminated at whatever stage [Art. 66 (1),
Family Code].
2. If there is a final decree of legal separation,
it shall be set aside [Art. 66 (2), Family
Code].
3. The separation of property and forfeiture of
share of the guilty spouse shall subsist,
unless the spouses agree to revive their
former property regime or to institute
another property regime [Arts. 66-67,
Family Code].
4. Joint custody of children is restored.
5. The right to intestate succession by the
guilty spouse from the innocent spouse is
restored.
6. The right to testamentary succession
depends on the will of the innocent spouse.
PERSONS AND FAMILY RELATIONS CIVIL LAW
H. Effect of Death of One of the
Parties
The death of either party to a legal separation
proceeding, before final decree, abates the
action. There is no more need for legal
separation because the marriage is already
dissolved by the death of one of the parties. An
action for legal separation is also purely
personal between the spouses [Lapuz Sy v.
Eufemio, G.R. No. 30977 (1972)].

Void Marriages, Voidable Marriages and Legal Separation

Void Marriages Voidable Marriages Legal Separation

Grounds 1. Absence of essential or Defect in any of the Grounds not relating to

formal requisites essential requisites: any of the essential or
a. One is a minor 1. Lack of parental formal requisites:
b. No authority to marry consent, 1. Repeated physical
c. No valid marriage 2. Insanity, violence
license 3. Fraud, 2. Pressure to compel
d. Bigamous and 4. Force, intimidation, to change
polygamous undue influence, religious/political
marriages 5. Impotence, affiliation
e. Mistake of 6. Serious and 3. Corruption/
identity incurable STD inducement to
2. Psychological engage in
incapacity prostitution
3. Incestuous marriages 4. Final judgment with
4. Marriages against sentence of more
public policy than 6 years
5. Subsequent marriages 5. Drug addiction/
which did not comply habitual alcoholism
with Art. 53, Family 6. Homosexuality/
Code lesbianism
7. Bigamous marriage
8. Sexual infidelity or
perversion
9. Attempts against
the life of petitioner
10. Abandonment
without just cause
for more than 1
year

Defenses None 1. Condonation

2. Consent
3. Connivance
4. Collusion
5. Recrimination
6. Prescription

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Void Marriages Voidable Marriages Legal Separation

Prescription No Prescription 1. Lack of parental Within 5 years from the

consent occurrence of the cause
a. Spouses: 5 years
after turning 21
b. Parents: before
the spouses turn
21
2. Insanity
a. Insane spouse:
during lucid
intervals
b. Sane spouse/
guardian: lifetime
3. Fraud: 5 years after
the discovery of the
fraud
4. Force, intimidation,
undue influence: 5
years after cessation
5. Impotence/STD: 5
years from marriage

Who can file According to A.M. No. 02- Only the spouses Only the spouses
11-10-SC: (cannot survive the (cannot survive the
1. Before March 18, 2003 death of the plaintiff) death of the plaintiff)
(petition for nullity or
celebration of marriage)
- any party
2. On and after March 18,
2003 (petition for nullity
or celebration of
marriage) - only the
Spouses

According to Enrico v. Heirs

of Medinaceli [G.R. No.
173614, (2007):

3. Upon death of the

parents - the heirs

Note: Upon the death of the

parent his heirs have
already a vested right over
whatever property left by
the parent. Hence, upon the
death of anyone of the
guilty party to the void
marriage, his heirs may file
a petition to declare the
marriage void [Enrico v,
Heirs of Medinaceli, supra].

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PERSONS AND FAMILY RELATIONS CIVIL LAW

Void Marriages Voidable Marriages Legal Separation

Effects of In the absence of adequate provisions in a written 1. Live separately

Pendency agreement: 2. Designate either of
1. Support of spouses them or a third
2. Support and custody of children person as
3. Visitation rights administrator of
property
3. Support of spouses
4. Support and custody
of children
5. Visitation rights

Effects of 1. General Rule: 1. Properties [Art. 50, 1. Properties [Art. 63

Decree Properties [Art. 147-148, Family Code] (2), Family Code]
Family Code] a. ACP/CPG a. Dissolution and
a. Art. 147 (equal dissolved, share Liquidation of
shares) governs forfeited to heirs ACP/CPG
property relations of if bad faith
void marriages b. Donations valid, 2. Support and Custody
b. Art. 148 (in except if bad faith [Art. 213, Family
proportion) governs c. Insurance may be Code]
property relations of revoked if bad a. Parental authority
bigamous faith to the parent
adulterous d. No succession for designated by
relationships spouse in bad Court after all
faith relevant
Exception: 2nd void consideration
marriage under Art. 40. 2. Status of Children b. Tender years
[Art. 54, Family presumption for
2. Status of Children [Art. Code] Child under 7 y.o.
54, Family Code] a. Conceived or [Art 213,
born before Family Code]
General Rule: Conceived judgment,
or born before the judgment legitimate. 3. Inheritance,
of absolute nullity, Donations and
illegitimate 3. Continued Use of Designation in
Surname [Art. 371, Insurance Policies
Exceptions: Conceived or Civil Code] [Sec. 22, Rules on
born a. Dependent on Legal Separation]
a. Before the judgment of her being the
annulment; innocent or guilty 4. Continued Use of
b. Before the judgment of party Surname [Art. 372,
absolute nullity under Civil Code]
Art 36, FC
(Psychological
Incapacity)
c. Of the subsequent
marriage under Art. 53,
FC (Failure to Record
the Decree of Nullity of
Annulment);
d. Prior to the termination

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of the subsequent
marriage
under Art. 42, FC (when
the absent spouse files
an affidavit of
reappearance)

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PERSONS AND FAMILY RELATIONS CIVIL LAW

IV. RIGHTS AND Note: Injury contemplated here is physical,

OBLIGATIONS BETWEEN
HUSBAND AND WIFE
These rights and duties are not subject to
stipulation between the spouses; and though
they may voluntarily agree to any change in
their personal relations, this agreement will be
void and have no legal effect.
moral, emotional or psychological, not
financial.
F. Exercise of Profession
Either spouse may exercise any legitimate
profession, without the need for consent of the
other [Art. 73, Family Code].

A. Live Together

Article 68, Family Code. The husband and wife are

obliged to live together, observe mutual love,
respect and fidelity, and render mutual help and
support.

Exception: One spouse living abroad or there

are valid and compelling reasons [Art. 69 (2),
Family Code] – at the discretion of the court.

Exception to the Exception: Incompatibility

with the solidarity of the family [Art. 69 (2),
Family Code].

B. Fix a Family Domicile

Paragraph 1, Article 69, Family Code. The

husband and wife shall fix the family domicile. In
case of disagreement, the court shall decide.

C. Support the Family

The spouses are jointly responsible for the
support of the family.

D. Management of Family Life

Article 71, Family Code. The management of the

household shall be the right and duty of both
spouses. The expenses for such management shall
be paid in accordance with the provisions of Art. 70.

E. Effect of Neglect of Duty

Article 72, Family Code. When one of the spouses

neglects his or her duties or commits acts which tend
to bring danger, dishonor or injury to the other or to
the family, the aggrieved party may apply to the court
for relief.

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PERSONS AND FAMILY RELATIONS
V. PROPERTY RELATIONS
BETWEEN HUSBAND
AND WIFE
A. General Provisions
Requisites for Validity of Marriage
Settlements [Art. 75, Family Code]
1. Future spouses agree upon the regime of
absolute community, conjugal partnership
of gains, complete separation of property, or
any other regime.
2. In the absence of marriage settlement, or
when the regime agreed upon is void, the
system of absolute community property as
established in this Code shall govern.
Requirements for Marriage Settlements and
any Modification Thereof [Art. 77, Family
Code]
1. Must be made in writing
2. Signed by the parties
3. Executed before the marriage celebration
4. If executed by a person below 21 years,
valid only when persons required to give
consent to the marriage (father, mother, or
guardian, respectively) are made parties to
the agreement [Art. 78, Family Code; Sec.
3, RA 6809 amending Art. 236, Family
Code]
Note: Marriage settlements are considered
accessory to the marriage, therefore as per Art.
81, Family Code, stipulations in consideration
of future marriage and donations will be void if
the marriage does not take place.
Should the surviving spouse contract a
subsequent marriage without compliance with
the foregoing requirements, a mandatory
regime of complete separation of property shall
govern the property relations of the subsequent
marriage [Art. 103 (3), Family Code].
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B. Donations by Reason of
Marriage Donations Propter
Nuptias
Donations propter nuptias are made in
consideration of marriage. There can be a valid
donation even if the marriage never took place,
but the absence of marriage is a ground for the
revocation of the donation [Solis v. Barroso,
G.R. No. 27939 (1928)].
Donations propter nuptias are without onerous
consideration, marriage being merely the
occasion or motive for the donation, not its
cause. Being liberalities, they remain subject to
reduction for inofficiousness upon the donor’s
death, if they should infringe the legitime of a
forced heir [Mateo v. Lagua, G.R. No. L-26270
(1969)].
Requisites of Donation Propter Nuptias
1. Made before the celebration of marriage
2. Made in consideration of marriage
3. Made in favor of one or both of the future
spouses
4. In a public document and not merely
privately stipulated [Solis v. Barroso, G.R.
No. 27939 (1928)]
Who May Donate
1. Spouses to each other
2. Parents of one or both spouses
3. Third persons to either or both spouses
Donations Excluded are:
1. Ordinary wedding gifts given after the
celebration of marriage
2. Donations in favor of future spouses made
before marriage but not in consideration
thereof
3. Donations made in favor of persons other
than the spouses even if founded on the
intended marriage
PERSONS AND FAMILY RELATIONS CIVIL LAW
Distinguished from Ordinary Donations
marriage due (knowing donor’s
Donations Propter Ordinary to non- that it was choice;
Nuptias Donations compliance void), within 5
with donations in years from
Does not require Express acceptance registration favor of the date of
express acceptance required requirement second finality of the
in Art. 52, marriage are judicial
May include future Cannot include Family revoked by declaration
property (subject to future property Code) operation of of nullity.
formalities of wills) law.
In case of donation No limit to donation 2. Art 44, If either or
between spouses, if of present property Family Code both
present property is provided legitimes (bad faith in spouses in
donated and the are not impaired securing the
property regime is declaration subsequent
not absolute of marriage
community, limited to presumptive acted in bad
1/5 [Art. 84, Family death) faith
Code] (knowing
that the
Grounds for Grounds for person was
revocation found in revocation found in still alive),
Art. 86, Family Code donation laws Civil donations in
Code provisions favor of the
subsequent
Grounds for Revocation of Donation marriage is
Propter Nuptias [Art. 86, Family Code] revoked by
operation of
Marriage Not Celebrated law.

Donation contained Rendered void [Art. 3. All other Donor’s

in marriage 81, Family Code] void choice,
settlement marriages regardless of
Does not prescribe good/bad
faith of the
donee.
Donation contained Donor’s choice
in a separate
instrument
Prescribes within 5 Other Cause of Annulment
years from supposed
date of marriage Revoked by operation of law if donee is the
guilty spouse who acted in bad faith

Void Marriage
Upon Legal Separation, Donee the Guilty
General Rule: There must be a judicial Spouse [Art. 64, Family Code]
declaration of nullity for the void marriage.
Revocation is by donor’s choice and done
1. Art 40, in If donee- If both within 5 years from finality of decree of legal
relation to spouse parties acted separation
Art 53, contracted in good
Family Code the second faith,
(void marriage in revocation
subsequent bad faith will be by
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PERSONS AND FAMILY RELATIONS
Resolutory Condition Complied With
General Rule: Revocation is by donor’s
choice and done within 5 years from finality
of decree of legal separation
Exception: If the other spouse is the donor,
action does not prescribe
Acts of Ingratitude [Art. 765, Civil Code]
General Rule: Revocation is by donor’s
choice and done within 1 year from
knowledge of fact of ingratitude with donor
being capable of bringing suit
C. Absolute Community of
Property
Definition
The community property consists of all the
property owned by the spouses at the time of
the celebration of the marriage, and those
either one or both of them acquired during the
marriage.
Property acquired during the marriage is
presumed to belong to the community, unless
proved to be excluded therefrom [Art. 93,
Family Code].
If Marriage Does Not Take Place
Everything stipulated in the settlements or
contracts referred to in the preceding articles in
consideration of a future marriage, including
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CIVIL LAW
donations between the prospective spouses
made therein, shall be rendered void if the
marriage does not take place. However,
stipulations that do not depend upon the
celebration of the marriages shall be valid [Art.
81, Family Code].
Provisions on Co-ownership Apply
The provisions on co-ownership shall apply to
the absolute community of property between
the spouses in all matters not provided for in
this Chapter [Art. 90, Family Code].
N.B. The creditors of the spouse who made
such waiver may petition the court to rescind
the waiver to the extent of the amount sufficient
to cover the amount of their credits.
D. Conjugal Partnership of Gains
This property regime was formerly the default
regime under the Civil Code.
In this regime, the spouses retain ownership of
their separate property. However, the spouses
place in a common fund the proceeds,
products, fruits and income of their separate
property and those acquired by either or both
spouses through their efforts or by chance.
The presumption applies that all properties
acquired during the marriage belong to the
CPG. There are 3 distinct patrimonies in this
system, the husband’s capital property, the
wife’s paraphernal property, and the conjugal
property.
PERSONS AND FAMILY RELATIONS
Comparison of ACP and CPG
Absolute Community of Property (ACP)
When it At the precise moment of the celebration
commences of the marriage [Art. 88, Family Code]
What it All the properties owned by the spouses at
consists of the time of the celebration of the marriage
or acquired thereafter [Art. 91, Family Code]
Under the ACP, spouses cannot exclude
specific properties from the regime unless
done in settlement
Winnings from gambling shall accrue to
the community property but obligations from
gambling shall not [Art. 95, Family Code]
Property acquired during marriage is
presumed to have been obtained through
joint efforts of parties, even though one did
not actually participate in the acquisition.
This is true for a party whose efforts
consisted in the care and maintenance of
the family household. Such is regarded as
contributions to the acquisition of common
property by one who has no salary, income,
work or industry [Ocampo v. Ocampo, G.R.
No. 198908 (2015)].
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Conjugal Partnership of Gains (CPG)
For marriages after the Family Code, CPG becomes
the property regime only if agreed to by the parties
through a marriage settlement
Proceeds, products, fruits, and income of their
separate properties
Everything acquired by them during marriage
through their own efforts
Everything acquired through their efforts or by chance
Specific properties [Art. 117, Family Code]
1. Acquired by onerous title during the marriage at
the expense of the Common Fund;
2. Acquired through the labor, industry, work, or
profession of either or both spouses
3. Fruits from common property and net fruits of
the exclusive property of each spouse
4. Share of either spouse in hidden treasure,
whether as finder or owner of property where
treasure was found
5. Acquired through occupation such as fishing or
hunting
6. Livestock existing at dissolution of partnership
in excess of what is brought by either spouse to
the marriage
7. Acquired by chance, such as winnings from
gambling or betting
Moral damages arising from a contract paid from the
CPG [Zulueta v. Pan American World Airways, G.R.
No. L-28589 (1973)]
Loans contracted during the marriage are conjugal,
and so is any property acquired therefrom [Mendoza
v. Reyes, G.R. No. L-31625 (1983)]
Property purchased by installment, paid partly with
conjugal funds and partly with exclusive funds, if full
ownership was vested during the marriage; the CPG
shall reimburse the owner-spouse [Art. 118, Family
Code]
If a winning ticket is bought by conjugal funds, the
prize is conjugal (otherwise, the prize is exclusive
property of the spouse who owns the ticket)
Improvement on exclusive property: if original value is
less than new value (where new value = value of land
+ value of improvements + net change in value), then
land becomes conjugal property, subject to the
reimbursement of the value of the property of the
owner-spouse at the dissolution of the CPG
Property belonging to one spouse converted into
another kind totally different in nature from its original
PERSONS AND FAMILY RELATIONS
Absolute Community of Property (ACP)
What Properties acquired before the marriage, for
remains those with legitimate descendants by a
exclusive former marriage (to protect rights of children
property by a former marriage)
[Art. 92, FC]
Properties acquired during the marriage
by a gratuitous title, i.e., donation,
inheritance by testate and intestate
succession, including the fruits of such
properties
Except: When expressly provided by the
donor or testator that the property shall form
part of the ACP
Properties for personal use i.e., wearing
apparel, toilet articles, eyeglasses
Except:
1. Luxurious jewelry and those of special
value that increase in value over time
(partakes of the nature of an
investment)
Presumptio All properties acquired during the marriage
n form part of the ACP, unless it be proven
that they are excluded [Art. 93, Family
Code].
Charges [Arts. 94 & 121-123, Family Code]
and 1. Support of the following:
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Conjugal Partnership of Gains (CPG)
form during marriage becomes conjugal in the
absence of proof that the expenses of the conversion
were exclusively for the account of the original owner-
spouse, subject to reimbursement of the value of the
original property from the conjugal partnership
Property brought into the marriage by each spouse
as his/her own
Properties acquired during the marriage by a
gratuitous title, i.e., donation, inheritance by testate
and intestate succession (but the fruits of such
properties form part of the CPG)
Except: When expressly provided by the donor or
testator that the property shall form part of the CPG
Property acquired by right of redemption, by barter, or
by exchange with property belonging to either spouse
Plata v. Yatco, G.R. No. L-20825 (1964): Plata
purchased property when she was single. When
married, she and her husband Bergosa co-signed a
mortgage on the property. Upon foreclosure, Bergosa
was sued for illegal detainer. A writ of execution on
the property was carried out but Plata refused to leave
the premises. SC ruled that Plata cannot be held in
contempt. Property is not conjugal.
Her husband signing as co-mortgagor does not
convert it to CPG. She could ignore execution
because the decision was for her husband alone.
Property purchased with exclusive money of either
spouse
Property purchased with exclusive money of either
spouse
Property purchased by installment, paid partly with
conjugal funds and partly with exclusive funds, if full
ownership was vested before the marriage [Art. 118,
Family Code]. Even if the installment is completed
after the marriage, the property is exclusive if
ownership was vested in one spouse before the
marriage [Lorenzo v. Nicolas, G.R. No. L-4085
(1952)].
All property acquired during the marriage, whether
made, contracted, or registered in the name of one
spouse, are presumed conjugal unless the contrary is
proven [Art. 116, Family Code].
PERSONS AND FAMILY RELATIONS CIVIL LAW
Absolute Community of Property (ACP) Conjugal Partnership of Gains (CPG)

Obligations a. Spouses;
b. Common children;
c. Legitimate children of previous marriage;
d. Illegitimate children – follow the provisions on Support; common property liable in case of
absence or insufficiency of the exclusive property of the debtor-spouse, but the payment
shall be considered as an advance on the share of the debtor-spouse.
2. Expenses to enable either spouse to commence/complete a professional/vocational course or
activity for self-improvement;
3. Value donated or promised by both spouses in favor of common legitimate children for the
exclusive purpose of commencing/ completing a professional/ vocational course or activity for
self-improvement;
4. Generally: all expenses incurred with the consent to the spouses or for the benefit of the family.

If community property is insufficient, the
spouses are solidarily liable for the unpaid
balance from their separate properties
except for:
1. Debts contracted by either spouse
before marriage which have not
redounded to the benefit of the family;
2. Support of illegitimate children; and
3. Liabilities incurred by either spouse
arising from crime or quasi-delict.
Gambling losses of any kind (i.e., legal or
illegal) shall be borne by the losing spouse’s
separate property [Art. 95, Family Code]
If community property is insufficient, the spouses are
solidarily liable for the unpaid balance from their
separate properties except for:
1. Debts contracted by either spouse before
marriage which have not redounded to the
benefit of the family;
2. Support of illegitimate children; and
3. Liabilities incurred by either spouse arising from
crime or quasi-delict.
Gambling losses of any kind (i.e., legal or illegal) shall
be borne by the losing spouse’s separate property
[Art. 95, Family Code]
If conjugal partnership property is insufficient, the
spouses are solidarily liable for the unpaid balance
from their separate properties. Gambling losses of
any kind (i.e., legal or illegal) shall be borne by the
losing spouse’s separate property [Art. 123, Family
Code]

Loan contracts signed by both spouses are conjugal,

and they are jointly liable for payment, even if only one
spouse signs a subsequent promissory note [DBP v.
Adil, G.R. No. L-48889 (1988)].

The Supreme Court ruled that the indirect benefits

that might accrue to a husband in signing as a surety
or guarantee in an agreement not in favor of the family
but in favor of his employer corporation are not
benefits that can be considered as giving a direct
advantage accruing to the family. Hence, the creditors
cannot go against the conjugal partnership property in
satisfying the obligation subject of the surety
agreement. A contrary view would put in peril the
conjugal partnership by allowing it to be given
gratuitously as in cases of donation of conjugal
partnership property, which is prohibited [Ayala
Investment v. Ching, G.R. No. 118305 (1998)].

Ownership, The administration and enjoyment of the community/conjugal property shall belong to both spouses
administrati jointly.
on,
enjoyment, In case of disagreement, the husband’s decision shall prevail, subject to recourse to the court by
and the wife for a proper remedy, within 5 years from the date of contract [Art. 96, 124 Family Code].
disposition
of property Spouses are not co-owners of CPG during the
marriage and cannot alienate the supposed 1/2
interest of each in the said properties. The interest of

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PERSONS AND FAMILY RELATIONS CIVIL LAW
Absolute Community of Property (ACP) Conjugal Partnership of Gains (CPG)

the spouses in the CPG is only inchoate or a mere

expectancy and does not ripen into title until it
appears after the dissolution and liquidation of the
partnership that there are net assets [De Ansaldo v.
Sheriff of Manila, G.R. No. L-43257 (1937)].

Either spouse may, through a will, dispose

of his or her interest in the community
property [Art. 97, Family Code].

However, the will should refer only to his or

her share in the community property.

Disposition or encumbrance of conjugal property requires the following: Authority of the court or
written consent of the other spouse. The absence of such will render such encumbrance void [Art.
96 and 124 (2), Family Code]. It is the same for ACP.

Donation of one spouse without the consent of the other is not allowed [Art. 98, 125 Family Code]

Exception:
Moderate donations to charity or on occasion of family rejoicing or distress

Mere awareness of a transaction is not consent [Jader-Manalo v. Camaisa, G.R. No. 147978
(2002)].

In the absence of (court) authority or written consent of the other spouse, any disposition or
encumbrance of the conjugal property shall be void [Homeowners Savings & Loan Bank v. Dailo,
G.R. No. 153802 (2005)].

If, however, one of the spouses is an alien, the Filipino spouse may encumber or dispose of the
property w/o the consent of the former. The property is presumed to be owned exclusively by the
Filipino spouse [Cheesman v. IAC, G.R. No. 7483 (1991)].

Dissolution Terminates upon [Art. 99, 126 Family Code]:

of the 1. Death of either spouse – follow rules in Art. 103
regime 2. Legal separation – follow rules in Arts. 63 and 64
3. Annulment or judicial declaration of nullity – follow rules in Arts. 50 and 52

Judicial separation of property during marriage – follow rules in Arts. 134 to 138

Rules on de General Rule: De facto separation does not affect the ACP/CPG.
facto
separation Exceptions:
1. Spouse who leaves the conjugal home without just cause shall not be entitled to support;
however, he/she is still required to support the other spouse and the family
2. If consent is necessary for transaction but is withheld or otherwise unobtainable, authorization
may be obtained from the court
3. Support for family will be taken from the ACP/CPG
4. If ACP/CPG is insufficient, spouses shall be solidarily liable

Effect of de If it is necessary to administer or encumber separate property of the spouse who left, the spouse
facto present may ask for judicial authority to do this.
separation
If ACP/CPG is not enough and one spouse has no separate property, the spouse who has property
is liable for support, according to provisions on support.

Rules on Abandonment [Art. 101 & 128, Family Code]

Abandonme Present/aggrieved spouse may petition the court for:
nt 1. Receivership
2. Judicial Separation of Property

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PERSONS AND FAMILY RELATIONS
Absolute Community of Property (ACP)
3. Authority to be the sole administrator of the absolute community, subject to precautionary
conditions that the court may impose
A spouse is deemed to have abandoned the other when he or she has left the conjugal dwelling
without any intention of returning.
Spouse is prima facie considered to have abandoned the other spouse and the family if he or she
has:
1. Left for a period of 3 months
2. Failed to inform the other spouse of his or her whereabouts for a period of 3 months
Liquidation Procedure [Art. 102, Family Code]
of assets 1. Prepare an inventory of assets of ACP
and and of spouses with market values
liabilities 2. Debts and obligations are paid with
community property, and separate
debts and obligations not charged to
ACP paid by respective assets of
spouses
a. If obligations exceed the assets of
the ACP, nothing is divided.
Creditors can go after the separate
properties of the spouses, which are
solidarily liable for the deficiency
3. Delivery of whatever remains in their
exclusive property
4. The balance, or net remainder, is
divided equally between the spouses,
or in accordance to the proportion
agreed upon in the marriage
settlement, irrespective of how much
each brought into the community
5. If personal obligations of a spouse
exceed his/her separate property,
creditor can go after the share of the
spouse on the net remainder of the
ACP, without prejudice to the provisions
of law on forfeitures and delivery of
presumptive legitimes
6. After covering all community obligations
and obligations of spouses, balance of
separate properties shall be delivered
to respective spouses or their heirs, and
they will also divide into two equal
shares whatever is left of the
community assets, without prejudice to
the provisions of law on forfeitures and
delivery of presumptive legitimes
7. Presumptive legitimes are delivered to
common children
8. Conjugal dwelling goes to:
a. Spouse with whom majority of
common children choose to remain
(below 7 y.o., = deemed to have
chosen the mother based on the
tender years presumption)
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Conjugal Partnership of Gains (CPG)
Physical separation of the spouses, coupled with the
husband’s refusal to give support to the wife, sufficed
to constitute abandonment as a ground for an action
for the judicial separation of their conjugal property
[Partosa-Jo v. CA, G.R. No. 82606 (1992)].
Procedure [Art. 129, Family Code]
1. Prepare an inventory of all properties
2. Amounts advanced by CPG in payment of
personal debts and obligations shall be credited
to the CPG
3. Reimburse each spouse for the use of his/her
exclusive funds in the acquisition of property or
for the value of his or her exclusive property, the
ownership of which has been vested by law in
the conjugal partnership
4. Debts and obligations of CPG shall be paid out
of the conjugal assets, otherwise both spouses
are solidarily liable with their exclusive property
5. Remains of the exclusive properties shall be
delivered to respective owner-spouses.
6. Indemnification for loss/deterioration of movables
belonging to either spouse, even due to
fortuitous event, used for the benefit of the family
7. Net remainder of CPG shall constitute the profits
which shall be divided equally between husband
and wife except when:
a. A different proportion or division was agreed
upon in the marriage settlements
b. There has been a voluntary waiver or
forfeiture of such share as provided in the FC
c. Presumptive legitimes are delivered to
common children
d. Conjugal dwelling goes to:
i. Spouse with whom majority of common
children choose to remain (below 7 y.o. =
deemed to have chosen the mother based
on the tender years presumption)
ii. Whoever the court chooses in case of lack
of majority
PERSONS AND FAMILY RELATIONS CIVIL LAW
Absolute Community of Property (ACP) Conjugal Partnership of Gains (CPG)

b. Whoever the court chooses in case

of lack of majority

Rules in case of termination of marriage by death of one of the spouses [Art. 103, Family Code]:
1. The community property shall be liquidated in the same proceeding for the settlement of the
estate of the deceased spouse.
2. If no such judicial settlement proceeding is instituted, surviving spouse shall liquidate the
community property either judicially or extra-judicially, within one year from the death of the
deceased spouse.
a. If no liquidation is made within the period, any disposition or encumbrance involving
community property of the terminated marriage shall be void.
b. Non-compliance with liquidation procedures would mean that a subsequently contracted
marriage will follow a regime of complete separation of property.

Procedure for liquidation of properties of two marriages [Art. 104, Family Code]:
1. Determine the capital, fruits, and income of each community upon such proof as may be
considered according to the rules of evidence.
2. In case of doubt as to which community the existing properties belong, they shall be divided
between two communities in proportion to the capital and duration of each.

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PERSONS AND FAMILY RELATIONS
E. Separation of Property and
Administration of Common
Property by One Spouse
During the Marriage
If the spouses did not execute a written
agreement regarding their property regime
prior to the marriage, they can no longer
change it after the marriage ceremony has
taken place unless they have secured judicial
approval [Art. 134, Family Code].
Separation of Property
When it Agreed upon in the
applies marriage settlements by
the spouses
Mandatory under Arts. 103
& 130, Family Code
(subsequent marriages
contracted by a surviving
spouse without judicial
settlement of previous
property regime)
Judicial separation of
property (Voluntary or just
cause)
Default property regime
when there is reconciliation
between spouses after
judicial separation of
property
What it Present or future property
consists of or both
Each spouse’s earnings
from his or her own
profession, business, or
industry
Natural, industrial or civil
fruits of spouse’s separate
properties
May be total or partial. If
partial, property not
considered separate is
presumed to pertain to the
ACP
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Liabilities Family expenses: Both
spouses are liable in
proportion to their income;
if insufficient, based on the
current value of their
separate properties
Creditors for family
expenses: Spouses
solidarily liable
Ownership, Spouses may own,
administration, dispose, possess, and
enjoyment, and administer separate
disposition estates without the consent
of the other
Administration of exclusive
properties may be
transferred between
spouses when:
1. One spouse becomes
the other spouse’s
guardian
2. One spouse is judicially
declared an absentee
3. One spouse is given the
penalty of civil
interdiction
4. One spouse becomes a
fugitive
Conveyance between the
spouses is allowed under
Art. 1490, Civil Code
F. Regime of Separation of
Property
Each spouse has complete control and
ownership of his or her own properties which
will include “all earnings from his or her
profession, business or industry and all fruits,
natural, industrial or civil, due or received
during the marriage from his or her separate
property.” Expenses of the family shall be
shouldered by the spouses in proportion to
their income, or, in case of insufficiency or
default thereof, to the current market value of
their separate properties.
PERSONS AND FAMILY RELATIONS CIVIL LAW
G. Property Regime of Unions contributed jointly, equal sharing.
Without Marriage if the former’s
effort consisted in
the care and
Art. 147, Family Art. 148, Family maintenance of
Code Code family and
household
Applicabil Man and woman Man and woman
ity living together as living together as N.B. Neither party
husband and wife, husband and can encumber or
with capacity to wife, NOT dispose by acts
marry (Art. 5, capacitated to inter vivos his
without any legal marry: share in co-owned
impediment) 1. Under 18 property without
1. at least 18 years old the consent of the
years old 2. Adulterous other party until
2. not violative relationship cohabitation is
of Art. 37 3. Bigamous/ terminated.
(incestuous polygamous
void marriage
marriage) 4. Incestuous Forfeiture Where only one If one party is
3. not violative marriages party to a void validly married to
of Art. 38 under Art. 37 marriage is in another, his/her
(void 5. Void good faith, share share in the co-
marriage by marriages by of party in bad owned
reason of reason of faith is forfeited: properties will
public policy) public policy accrue to the
4. not bigamous under Art. 38 In favor of their ACP/CPG of
common children his/her existing
In case of default valid marriage.
Other void of or waiver by any
marriages due to or all of the If the party who
absence of formal common children acted in bad faith
requisite or their is not validly
descendants, married to
Salaries Owned in equal Separately each vacant share another, his/her
and shares owned by parties shall belong to the share shall be
Wages respective forfeited in the
surviving same manner as
Properties Remains Remains descendants that provided in
acquired exclusive, exclusive Art 147.
through provided there is In the absence of
exclusive proof such The same rules
funds descendants, on forfeiture shall
such share apply if both
Properties Governed by rules Owned in belongs to the parties are in bad
acquired on co-ownership common in innocent party faith.
by both proportion to
through respective
work and contribution
industry

Properties Owned in equal No presumption

acquired shares since it is of joint
while presumed to have acquisition.
living been acquired When there is
together through joint evidence of joint
efforts acquisition but
none as to the
If one party did not extent of actual
participate in contribution,
acquisition, there is a
presumed to have presumption of

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PERSONS AND FAMILY RELATIONS
VI. FAMILY HOME
A. In General
What Constitutes the Family Home
The family home is the dwelling house where
family resides and the land on which it is
sustained [Art. 152, Family Code].
When Deemed Constituted
The family home is deemed constituted on a
house and lot from the time it is occupied as a
family residence [Art. 153, Family Code].
Limitations on the Family Home
The family home must be part of the properties
of the absolute community or the conjugal
partnership, or of the exclusive properties of
either spouse with the other’s consent. It may
also be constituted by an unmarried head of a
family in his or her own property [Art. 156,
Family Code].
B. Who May Constitute the
Family Home
The family home may be constituted
1. Jointly by the husband and wife; or
2. An unmarried head of the family [Art. 152,
Family Code]
Note: A person may constitute and be the
beneficiary of only one family home [Art. 161,
Family Code]
Under the Family Code, there is no need to
constitute the family home judicially or
extrajudicially. All family homes constructed
after the effectivity of the Family Code (August
3, 1988) are constituted as such by operation
of law. All existing family residences as of
August 3, 1988 are considered family homes
and are prospectively entitled to the benefits
accorded to a family home under the Family
Code [Kelley, Jr. v. Planters, G.R. No. 172263
(2008)].
C. Beneficiaries of the Family
Home
Beneficiaries
1. The husband and wife, or an unmarried
person who is the head of a family; and
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2. Their parents, ascendants, descendants,
brothers, and sisters whether the
relationship be legitimate or illegitimate,
who are living in the family home and who
depend on the head of the family for support
[Art. 154, Family Code].
Requisites to be a Beneficiary of the Family
Home
1. The relationship is within those enumerated
in Art. 150, Family Code
2. They live in the family home
3. They are dependent for legal support on the
head of the family
Descendants cannot be considered
beneficiaries if they are supported by their own
parents and not by the ascendants who
constituted the family home [Patricio v. Dario,
G.R. No. 170829 (2006)].
D. Exemption from Forced Sale,
Execution, Attachment
Rule: The family home is exempt from the
following from the time of its constitution and so
long as any of its beneficiaries resides therein:
1. Execution;
2. Forced sale;
3. Attachment [Art. 153, Family Code].
The proof that the house is the family home
must be alleged against creditors [Versola v.
Mandolaria, G.R. No. 164740 (2006); Art. 160,
Family Code].
Note: The provisions of this Chapter (Arts. 152-
162, Family Code) shall also govern existing
family residences insofar as said provisions are
applicable [Art. 162, Family Code].
E. Sale of Family Home
When the Family Home may be Sold
The family home may be sold alienated,
donated, assigned, or encumbered by the
owner or owners thereof with the written
consent of the person constituting the same as
the latter’s spouse and a majority of the
beneficiaries of legal age. In case of conflict,
the court shall decide [Art. 158, Family Code].
PERSONS AND FAMILY RELATIONS CIVIL LAW
Requirements for the Sale, Alienation,
Donation, Assignment, or Encumbrance of
the Family Home
The written consent of the following:
1. the person constituting it;
2. the spouse of the person constituting it;
3. the majority of the beneficiaries who are
of legal age [Art. 158, Family Code].

F. When Terminated
The family home shall continue despite the
death of one or both of the spouses or of the
unmarried head of the family:
1. for a period of ten (10) years; or
2. for as long as there is a minor beneficiary.

And the heirs cannot partition the same unless

the court finds compelling reasons therefore.
The rule shall apply regardless of whoever
owns the property or constituted the family
home [Art. 159, Family Code].

Art. 159, Family Code imposes the

proscription against the immediate
partition of the family home regardless of
its ownership. This signifies that even if the
family home has passed by succession to the
co-ownership of the heirs, or has been willed to
any one of them, this fact alone cannot
transform the family home into an ordinary
property, much less dispel the protection cast
upon it by the law. The rights of the individual
co-owner or owner of the family home cannot
subjugate the rights granted under Article 159
to the beneficiaries of the family home [Arriola
v. Arriola, G.R. No. 177703 (2008)].

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PERSONS AND FAMILY RELATIONS
VII. PATERNITY AND
FILIATION
The filiation of children may be (a) by nature
or (b) by adoption. Natural filiation may be
(a) legitimate or (b) illegitimate [Art. 163,
Family Code; See table below].
Status Children Who Have this
Status
Legitimate a. Conceived or born during
(Marital) the valid marriage of the
parents [Art. 164, Family
Code]
b. Conceived through
artificial
insemination [Art. 164,
Family Code]
c. Children of a subsequent
marriage (after declaration
of presumptive death)
conceived prior to its
termination [Art. 43,
Family Code]
d. Conceived or born before
the final judgment of
annulment under Art. 45 or
absolute nullity under Art.
36 [Art. 54, Family Code]
e. Conceived or born of the
subsequent marriage
under Art. 53 [Art. 54,
Family Code]
f. Legitimated children [Art.
177, Family Code]
g. Adopted Children [RA
11642]
Illegitimate Conceived and born outside a a. Bear the surname
(Nonmarital) valid marriage [Art. 165,
Family Code] b. Bear the surname
c. Receive support
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Note: In Aquino v. Aquino [G.R. Nos. 208912
and 209018 (2021)], the Court used the terms
“marital” and “nonmarital” to replace the terms
“legitimate” and “illegitimate” when referring to
the children, as the latter terms are pejorative
terms when used to describe children based on
their parents’ marital status.
Rights Effects on
Succession
a. Bear the surnames Legitimate children are
of the father and entitled to 1/2 of the
the mother estate of the parent
b. Receive support divided amongst
from parents, themselves [Art. 888,
ascendants, and Civil Code]
brothers/sisters in
proper cases
c. Entitled to
legitimate
and other
successional rights
[Art. 174, Family
Code]
d. Claim legitimacy
[Art. 173, Family
Code]
Each illegitimate child
of the mother is entitled to an amount
1/2 the share of a
of the father if legitimate child [Art.
filiation has been 176, Family Code]
expressly
recognized by the
father through:
record of birth,
public document,
or private
handwritten
instrument
PERSONS AND FAMILY RELATIONS CIVIL LAW

Status Children Who Have this Rights Effects on

Status Succession

d. Entitled to
successional rights
[Art 176, Family
Code]
e. Establish
illegitimate filiation
[Art 175, Family
Code]

Legitimated Conceived and born outside a Same as Legitimate Same as Legitimate

valid marriage provided that: Child [Art. 179, Family Child
a. At the time of conception: Code]
the parents were not
disqualified to marry each
other (unless the
impediment was minority
of either or both of them)
[Art. 177, Family Code]
and
b. The parents subsequently
enter into a valid marriage
[Art. 178, Family Code]

Adopted Those adopted through RA Same as Legitimate Sec. 43, RA 11642

11642 Child [Sec. 42, RA a. In legal and
11642] intestate
succession, the
adopter and the
adoptee shall have
reciprocal rights of
succession without
distinction from
legitimate filiation.
b. If the adoptee
and his/her
biological parents
had left a will, the
law on testamentary
succession shall
govern

A. Legitimate Children subsequent marriages which were

terminated after the reappearance of the
Who are the Legitimate Children? spouse presumed dead.
1. Children conceived or born during the valid 4. Children conceived or born before the
marriage of the parents [Art. 164, Family judgment of annulment under Art. 45 or
Code] absolute nullity under Art. 36 has become
2. Children conceived through artificial final and executory [Art. 54, Family Code]
insemination [Art. 164, Family Code] 5. Children conceived or born of the
3. Children of a subsequent marriage subsequent marriage under Art. 53 [Art. 54,
conceived prior to its termination [Art. 43, Family Code]
Family Code]. This refers to those 6. Legitimated children [Art. 177, Family Code]
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PERSONS AND FAMILY RELATIONS
7. Adopted Children [RA 11642]
Natural/Biological
A child conceived or born during a valid
marriage is presumed to belong to that
marriage, regardless of the existence of
extramarital relationships [Liyao v. Liyao, G.R.
No. 138961 (2002)].
Artificial Insemination [Art. 164, Family
Code]
Artificial insemination is the impregnation of a
female with the semen from male without
sexual intercourse.
The child conceived through artificial
insemination with the consent of both husband
and wife is legitimate.
The Family Code does not require, as a
condition for the legitimacy of the child, the
impotence of the husband.
Note: The child must be born to the wife to be
considered legitimate [Art. 164, Family Code].
B. Proof of Filiation
Proof of Filiation is Necessary:
1. Where the child is born after 300 days
following the termination of the marriage
→ Child has no status, and whoever alleges
legitimacy must prove it.
2. If the legitimacy of a child conceived or
born in wedlock is impugned and the
plaintiff has presented evidence to prove
any of the grounds provided in Art. 166 →
proof of filiation may be used as a defense
[Tolentino]
Legitimate Children may Establish Their
Filiation by any of the Following [Art. 172,
Family Code]:
1. Primary Evidence (for voluntary recognition)
a. Their record of birth appearing in the civil
registry or a final judgment.
b. An admission of his filiation by his parent
in a public document or a private
handwritten instrument and signed by
said parent
2. Secondary Evidence (for involuntary
recognition)
a. Proof of open and continuous
possession of status as legitimate child.
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b. Any other means stated by the rules of
court or special laws.
Note: Only in the absence of primary evidence
can secondary evidence be admitted
Action for Claiming Filiation (Legitimate
Children) [Art. 173, Family Code]:
1. The child can bring the action during his or
lifetime.
2. If the child dies during minority or in a state
of insanity, such action shall be transmitted
to his heirs, who shall have a period of five
years within which to institute the action.
3. The action commenced by the child shall
survive notwithstanding the death of either
or both of the parties.
Right of Legitimate Children to use their
Mother’s Surname
Art. 364, Civil Code states that legitimate
children shall “principally” use the surname of
the father, but “principally” does not mean
“exclusively.” There is no legal obstacle if a
legitimate or legitimated child should choose to
use the surname of its mother to which it is
equally entitled [Alanis III v. CA, G.R. No.
216425 (2020)].
C. Illegitimate Children
Who are Illegitimate Children?
General Rule: Those conceived and born
outside of a valid marriage [Art. 165, Family
Code].
Exceptions [Art. 54, Family Code]
1. Children of marriages void under Art. 36
(psychological incapacity); and
2. Under Art. 53 (subsequent marriages which
did not comply with Art. 52)
Action for Claiming Illegitimate Filiation
Illegitimate children may establish their
illegitimate filiation in the same way and on the
same evidence as legitimate children [Art. 175,
Family Code].
1. For actions based on primary evidence,
the same periods stated in Art. 173 of
Family Code apply - lifetime of the child, will
not be extinguished by death of either party.
2. For actions based on secondary evidence,
the action may only be brought during the
lifetime of the alleged parent.
PERSONS AND FAMILY RELATIONS
The same kind of evidence provided in Art. 172
for establishing legitimate filiation may be used
to prove the filiation of illegitimate children, and
the action for this purpose must be brought
within the same period and by the same parties
as provided in Article 173 [Art. 175, Family
Code].
However, if the evidence to prove the filiation is
secondary, the action must be brought within
the lifetime of the alleged parent [Art. 175,
Family Code].
Primary Evidence
Signature of the father on the birth certificate is
considered as an acknowledgement of
paternity and mere presentation of a duly
authenticated copy of such certificate will
successfully establish filiation [Eceta v. Eceta,
G.R. 157037 (2004)].
The due recognition of an illegitimate child in a
record of birth, a will, a statement before a court
of record, or in any authentic writing, is in itself
a consummated act of acknowledgement of the
child, and no further court action is required [De
Jesus v. Estate of Decedent Juan Gamboa
Dizon, G.R. No. 142877 (2001)].
Secondary Evidence
Rule 130, Sec. 40 [now Sec. 41] is limited to
objects commonly known as family
possessions reflective of a family's reputation
or tradition regarding pedigree like inscriptions
on tombstones, monuments, or coffin plates
[Jison v. CA, G.R. No. 124853 (1998)].
"Su padre [Your father]" ending in a letter is
only proof of paternal solicitude and not of
actual paternity. Signature on a report card
under the entry of “Parent/Guardian” is likewise
inconclusive of open admission [Heirs of
Rodolfo Bañas v. Heirs of Bibiano Bañas, G.R.
No. L-25715 (1985)].
Mere possession of status as an illegitimate
child does not make an illegitimate child
recognized but is only a ground for bringing an
action to compel judicial recognition by the
assumed parent [Gono-Javier v. CA, G.R. No.
111994 (1994)].
To prove open and continuous possession of
the status of an illegitimate child, there must be
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evidence of the manifestation of the permanent
intention of the supposed father to consider the
child as his, by continuous and clear
manifestations of parental affection and care,
which cannot be attributed to pure charity
[Perla v. Baring, G.R. No. 172471 (2012)].
Meanwhile, the lack of participation of the
supposed father in the preparation of a
baptismal certificate renders this document
incompetent to prove paternity. Baptismal
certificates are per se inadmissible in evidence
as proof of filiation and they cannot be admitted
indirectly as circumstantial evidence to prove
the same [Perla v. Baring, supra].
By "open and continuous possession of the
status of a legitimate child" is meant the
enjoyment by the child of the position and
privileges usually attached to the status of a
legitimate child, like bearing the paternal
surname, treatment by the parents and family
of the child as legitimate, constant attendance
to the child's support and education, and giving
the child the reputation of being a child of his
parents [De Jesus v. Syquia, G.R. No. L-39110
(1933)].
Other Evidence
DNA evidence can be used as proof of
paternity [Agustin v. CA, G.R. No. 162571
(2005)].
Marriage certificates cannot be used as proof
of filiation [Lim v. CA, G.R. No. L-39381
(1975)].
There are four significant procedural aspects of
a traditional paternity action that parties have
to face: a prima facie case, affirmative
defenses, presumption of legitimacy, and
physical resemblance between the putative
father and the child. A prima facie case exists
if a woman declares — supported by
corroborative proof — that she had sexual
relations with the putative father; at this point,
the burden of evidence shifts to the putative
father. Further, the two affirmative defenses
available to the putative father are: (1)
incapability of sexual relations with the mother
due to either physical absence or impotency, or
(2) that the mother had sexual relations with
other men at the time of conception [Gotardo v.
Buling, G.R. No. 165166 (2012)].
PERSONS AND FAMILY RELATIONS
Rights of Illegitimate Children
Illegitimate children shall use the surname and
shall be under the parental authority of their
mother, and shall be entitled to support in
conformity with this Code. The legitime of each
illegitimate child shall consist of one-half of the
legitime of a legitimate child [Art. 176, Family
Code].
It is mandatory that the mother of an illegitimate
child signs the birth certificate of her child in all
cases, irrespective of whether the father
recognizes the child as his or not. The only
legally known parent of an illegitimate child, by
the fact of illegitimacy, is the mother of the child
who conclusively carries the blood of the
mother [Barcelote v. Republic, G.R. No.
222095 (2017)].
Illegitimate children shall be under the parental
authority of their mother. Mothers are entitled
to the sole parental authority of their illegitimate
children notwithstanding the father’s
recognition of the child. In the exercise of that
authority, mothers are consequently entitled to
keep their illegitimate children in their
company, and the Court will not deprive them
of custody, absent any imperative cause
showing the mother’s unfitness to exercise
such authority and care [Masbate v. Relucio,
G.R. No. 235498 (2018)].
CIVIL LAW
2. The parents, at the time of the child's
conception, were not disqualified by any
impediment to marry each other, or
disqualified only because either or both of
them were below 18 years old [Art. 177,
Family Code as amended by RA 9858]
Procedure and Effects:
1. Legitimation shall take place by a
subsequent valid marriage between the
parents. The annulment of a voidable
marriage shall not affect the legitimation.
[Art. 178, Family Code]
2. Effects of legitimation shall retroact to the
time of the child’s birth [Art. 180, Family
Code]
3. Legitimation of children who died before
the celebration of the marriage shall benefit
their descendants [Art. 181, Family Code]
Rights of Legitimated Children
Legitimated children have the same rights as
those of legitimate children [Art. 179, Family
Code].

The choice of a child over 7 years of age [Art.

213, Family Code] and over 10 years of age
[Rule 99, Rules of Court] shall be considered in
custody disputes only between married parents
as they are accorded joint parental authority
over their common children [Art. 211, Family
Code]. This choice is not available to an
illegitimate child, because parental authority is
given only to the mother [Art. 176, Family
Code], unless she is shown to be unfit or
unsuitable [Masbate v. Relucio, supra]
.
D. Legitimated Children
Rule: Legitimated children are illegitimate
children who because of the subsequent
marriage of their parents are, by legal fiction,
considered legitimate.

Requisites for Legitimation:

1. The child must have been conceived and
born outside of wedlock; and
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PERSONS AND FAMILY RELATIONS
VIII. ADOPTION
A. Domestic Adoption (RA
11642)
Since adoption is wholly and entirely artificial,
to establish the relation the statutory
requirements must be strictly carried out;
otherwise, the adoption is an absolute nullity
[Republic v. CA and Caranto, G.R. No. 103695
(1996)].
Note: Republic Act No. 11642 (the Domestic
Administrative Adoption and Alternative Child
Care Act) repealed RA 8552 and amended RA
8043. It took effect on January 21, 2022, which
is beyond the bar cutoff date of June 30, 2021.
Under RA 11642, the Inter-Country Adoption
Board is reorganized into the National Authority
for Child Care. The duties, functions and
responsibilities of the ICAB, the DSWD and
other government agencies relating to
alternative child care and adoption are
transferred to the NACC.
1. Who May Adopt
a. Filipino Citizens [Sec. 21(a), RA 11642]
1. Of at least 25 years of age
2. With full civil capacity and legal rights
3. Of good moral character and has not
been convicted of any crime involving
moral turpitude
4. Emotionally and psychologically capable
of caring for children
5. At least sixteen (16) years older than
adoptee, except:
a. when adopter is the biological parent
of the adoptee or
b. the spouse of the adoptee’s parent or
c. the sibling or the adopted
6. In a position to support and care for
his/her children in keeping with the
means of the family
7. Has undergone pre-adoption services
b. Foreign Nationals
1. Are permanent or habitual residents of
the Philippines for at least 5 years
2. Must possess the same qualifications as
stated for Filipino nationals prior to the
filing of the petition
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3. Must come from a country with
diplomatic relations with the Philippines
and that the laws of the adopter’s country
will:
a. acknowledge the Certificate of
Adoption as valid
b. acknowledge the child as a legal child
of the adopters
c. allow entry of the child into such
country as an adoptee
c. Guardians [Sec. 21(b), RA 11642]: With
respect to their wards, after the termination
of the guardianship and clearance of his/her
accountabilities
d. Foster parent [Sec. 21(c), RA 11642]: With
respect to the foster child
e. Philippine government officials and
employees [Sec. 21(d), RA 11642]
1. Deployed abroad, and
2. Are able to bring the child with them
2. Who May be Adopted [Sec. 22, RA
11642]
a. Any child who has been issued by a
CDCLAA
b. Legitimate child of one spouse by another
c. Illegitimate child by a qualified adopter to
improve the child’s status to that of
legitimacy
d. A Filipino of legal age if, prior to the
adoption, said person has been consistently
considered and treated, for a period of at
least 3 years, by the adopter(s) as his/her
child since minority
e. A child whose previous adoption has been
rescinded
f. A child whose biological or adoptive
parent(s) has died, provided that no
proceedings shall be initiated within 6
months from the time of death of said
parent(s)
g. A foster child
3. Rights of an Adopted Child
a. In General [Sec. 42, RA 11642]
Except in cases where the biological parent is
the adopter’s spouse, all legal ties between
biological parent and adoptee shall be severed,
and the same shall then be vested on the
adopters.
PERSONS AND FAMILY RELATIONS
b. Legitimacy [Sec. 41, RA 11642]
The adoptee shall be considered the legitimate
son/daughter of the adopters for all intents and
purposes, and as such is entitled to all rights
and obligations provided by law to legitimate
children born to them without discrimination of
any kind. The adoptee is entitled to love,
guidance, and support in keeping with the
means of the family.
c. Succession [Sec. 43, RA 11642]
In legal and intestate succession, the adopter
and the adoptee shall have reciprocal rights of
succession without distinction from legitimate
filiation. However, if the adoptee and his/her
biological parents had left a will, the law on
testamentary succession shall govern.
d. Name
Under RA 11642, the adopter has the right to
choose the name by which the child is to be
known, consistent with the best interest of the
child.
e. Nationality
Adoption does not confer citizenship of the
adopter to the adopted. Under Sec. 3, Art. IV of
the Constitution, Philippine citizenship may be
lost/acquired [only] in the manner provided by
law. The adoption of an alien is not a means of
acquiring Philippine citizenship. A Filipino
adopted by an alien does not lose his Philippine
citizenship.
The right to confer citizenship belongs to the
State (political) and cannot be granted by a
citizen through adoption. Adoption creates a
relationship between the adopter and adoptee,
not between the State and the adoptee
[Tolentino].
4. Instances and Effects of
Rescission
Under RA 11642, the adoption may be
rescinded only upon the petition of the adoptee
with the NACC, or with the assistance of the
SWDO if the adoptee is a minor or if the
adoptee is over 18 but is incapacitated, based
on the following grounds: [Sec. 47, RA 11642]
a. Repeated physical and verbal maltreatment
by adopters despite having undergone
counseling
b. Attempt on life of adoptee
c. Sexual assault or violence
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d. Abandonment or failure to comply with
parental obligations
Effects of Rescission [Sec. 53, RA 11642]
a. Restoration of parental authority of the
adoptee’s biological parent(s) or the legal
custody of the NACC if the adoptee is still a
child
b. Extinguishing of the reciprocal rights and
obligations of the adopters and adoptee.
c. Cancellation of the new birth certificate of
the adoptee as ordered by the court and
restoration of the adoptee’s original birth
certificate.
d. Reverting successional rights to its status
prior to adoption but not only as of the date
of judgment of judicial rescission.
e. Vested rights acquired prior to judicial
rescission shall be respected.
Note: Rescission contemplates a situation
where the adoption decree remains valid until
its termination.
B. Inter-country Adoption (RA
8043, as amended by RA 11642)
Inter-Country Adoption refers to the socio-legal
process of adopting a Filipino child by a
foreigner or a Filipino citizen permanently
residing abroad where the petition is filed, the
supervised trial custody is undertaken, and the
decree of adoption is issued outside the
Philippines.
Note: Under the new law, the Inter-Country
Adoption Board is reorganized into the National
Authority for Child Care. The duties, functions
and responsibilities of the ICAB, the DSWD
and other government agencies relating to
alternative child care and adoption are
transferred to the NACC.
When Allowed
No child shall be matched to a foreign adoptive
family unless it can be satisfactorily shown that
the child cannot be adopted locally [Sec. 11,
RA 8043].
PERSONS AND FAMILY RELATIONS
IX. SUPPORT
A. Scope
Support consists of everything indispensable
for sustenance, dwelling, clothing, medical
attendance, education and transportation, in
keeping with the financial capacity of the family
[Art. 194 (1), Family Code].
1. Education includes a person’s schooling or
training for some profession, trade or
vocation, the right to which shall subsist
beyond the age of majority [Art. 194, Family
Code].
2. Transportation includes expenses in going
to and from school, or to and from place of
work [Art. 194, Family Code].
B. Who are Obliged to Give
Support
Those obliged to support each other are:
1. Spouses,
2. Legitimate ascendants and descendants,
3. Parents and their children (legitimate and
illegitimate) and the children of the latter
(legitimate and illegitimate),
4. Legitimate brothers and sisters, whether of
full or half-blood; [Art. 195, Family Code]
5. Illegitimate brothers and sisters, whether of
full or half-blood
● Except when the need for support of
one (who is of age) is due to a cause
imputable to his/her fault or negligence
[Art. 196, Family Code]
Mutual Obligation to Support of Spouses
Note: Both legitimate and illegitimate children
are entitled to support. The only difference is
the source of support which, for illegitimate
children, is the parent’s separate properties.
Where the illegitimate parent is legally married
to another person, their CPG or ACP cannot
answer for support for the illegitimate child of
one of them unless the parent has no adequate
separate property, in which case, support will
be taken from the CPG or ACP subject to
reimbursement [Arts. 122 & 197, Family Code].
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C. Source of Support
CPG or ACP shall answer for the support of
the:
1. spouse,
2. their common children, and
3. the legitimate children of their spouse [Arts.
94 & 121, Family Code].
The separate property of the obligor shall
answer for the support of the:
1. Legitimate ascendants,
2. [All other] descendants, whether legitimate
or illegitimate, and
3. Brothers and sisters, whether legitimate or
illegitimately related.
If no separate property, the ACP/CPG (if
financially capable) shall advance the support,
to be deducted from the obligor’s share upon
liquidation of such regime [Art. 197, Family
Code].
D. Order of Support
Article 199, Family Code. Whenever two or more
persons are obliged to give support, the liability shall
devolve upon the following persons in the order
herein provided:
1. The spouse;
2. The descendants in the nearest degree;
3. The ascendants in the nearest degree;
and
4. The brothers and sisters.
The order of liability among ascendants and
descendants would be:
1. Legitimate children and descendants,
2. Legitimate parents and ascendants, and
3. Illegitimate children and their descendants
[Tolentino].
In Case of Multiple Obligors
When the obligation to give support falls upon
two or more persons, the payment of the same
shall be divided between them in proportion to
their resources [Art. 200 (1), Family Code].
Also, in case of urgent need and by special
circumstance, the judge may order only one
obligor to furnish support without prejudice to
reimbursement from other obligors of the share
due from them [Art. 200(2), Family Code].
PERSONS AND FAMILY RELATIONS
In Case of Multiple Recipients
If there are multiple recipients and only one
obligor, and the latter has no sufficient means
to satisfy all claims:
1. Observe order in Art. 199 as to whose claim
shall be satisfied first;
2. But if the concurrent obligees are the
spouse and a child subject to parental
authority, the child shall be preferred [Art.
200 (3), Family Code].
The above preference given to a child under
parental authority over the spouse should
prevail only if the person obliged to support
pays it out his separate property. So if the
support comes from ACP or CPG, the above
rule of preference for the child does not apply
[Tolentino].
Support Given by a Stranger
Article 206, Family Code. When, without the
knowledge of the person obliged to give support, it
is given by a stranger, the latter shall have a right to
claim the same from the former, unless it appears
that he gave it without intention of being reimbursed.
The stranger contemplated in this provision is
one who does not have any obligation to
support the recipient.
Person Obliged Refuses or Fails to Give
Support
Article 207, Family Code. When the person obliged
to support another unjustly refuses or fails to give
support when urgently needed by the latter, any third
person may furnish support to the needy individual,
with the right of reimbursement from the person
obliged to give support. This Article shall particularly
apply when the father or mother of a child under the
age of majority unjustly refuses to support or fails to
give support to the child when urgently needed.
E. Amount of Support
The amount of support is in proportion to the
means of the provider and the needs of the
receiver, and can be reduced or increased if
such circumstances change [Arts. 201 & 202,
Family Code].
Contractual Support or that Given by Will
The excess in amount beyond that required for
legal support shall be subject to levy on
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attachment or execution [Art. 208, Family
Code].
Reason: The amount of support agreed upon
in the contract or given in the will can be more
than what the recipient needs [Sempio-Diy].
Furthermore, contractual support shall be
subject to adjustment whenever modification is
necessary due to changes in circumstances
manifestly beyond the contemplation of the
parties [Art. 208, Family Code].
F. Manner and Time of Payment
Article 203, Family Code. The obligation to give
support shall be demandable from the time the
person who has a right to receive the same needs it
for maintenance, but it shall not be paid except from
the date of judicial or extrajudicial demand.
Support pendente lite may be claimed in accordance
with the Rules of Court.
Payment shall be made within the first five days of
each corresponding month or when the recipient
dies, his heirs shall not be obliged to return what he
has received in advance.
Two Options to Fulfill Obligation to Give
Support
1. Payment of the amount; or
2. Receiving and maintaining the recipient in
the home of the provider
Requisites:
1. The obligor has his own home or domicile,
and
2. There is no moral or legal reason which
prevents the recipient from living in the
obligor’s home or domicile [Art. 204, Family
Code].
G. Renunciation and Termination
The obligation of spouses to mutual support
lies in the existence of marriage bonds. Once
the marriage has been declared null, this
obligation ceases.
The Court held that the validity of marriage can
be collaterally attacked in an action for support.
Although the suit is not instituted to directly
address the issue of validity, the Court deems
it essential to the determination of the issue on
PERSONS AND FAMILY RELATIONS
support [De Castro v. Assidao-De Castro, G.R.
No. 160172 (2008)].
Under Art. 194, Family Code, the obligation to
support a recipient’s education may continue
even after the person entitled has reached the
age of majority.
H. Support Pendente Lite
Pending legal separation or annulment, and for
declaration of nullity, support pendente lite for
spouses and children will come from the
ACP/CPG. After final judgment granting the
petition, mutual support obligation between
spouses ceases. However, in legal separation,
the court may order the guilty spouse to give
support to the innocent spouse [Art. 198,
Family Code].
CIVIL LAW
support without justifiable cause shall render
the respondent or his employer liable for
indirect contempt of court [Sec. 8(g), RA 9262].
In case the filiation of a child claiming for
support is disputed, the rules on proving
filiation apply. An order for support must be
issued only if paternity or filiation is established
by clear and convincing evidence; the reason
being that such order may create an
unwholesome situation in the lives of the
parties [Perla v. Baring, G.R. No. 172471
(2012)].

Note: In Par. 1, Art. 100, Family Code, de facto

separation does not affect the ACP and the
CPG, except that the spouse who leaves the
conjugal home without just cause shall not be
entitled to support.

I. Procedure in Applications for

Support
Petitions for support and/or acknowledgement
may be filed with Family Courts which have
original jurisdiction over such cases [Sec. 5,
RA 8369].

In cases involving violence among immediate

family members living in the same household,
the court may order the temporary custody of
children in all civil actions for their custody. The
court may also order support pendente lite,
including deduction from the salary and use of
conjugal home and other properties in all civil
actions for support [Sec. 7, RA 8369].

A woman or her child experiencing violence

may also be granted a protection order which
may include directing the respondent to
provide support to the woman and/or her child
if entitled to legal support. An appropriate
percentage of the income or salary of the
respondent shall be withheld regularly by the
respondent’s employer for it to be automatically
remitted to the woman. Failure to remit and/or
withhold or any delay in the remittance of

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X. PARENTAL AUTHORITY a. Exception: When several survive, the

one designated by the court, taking into
account all relevant considerations [Art.
A. General Provisions 214, Family Code].

What Comprises Parental Authority [Art. 2. The oldest brother or sister, over 21 years
209, Family Code] of age [Art. 216, Family Code].
1. Caring for and rearing of children for civic 3. The child’s actual custodian, over 21 years
consciousness and efficiency, and; of age [Art. 216, Family Code].
2. Development of the moral, mental, and
physical character and well-being of
children.
C. Special Parental Authority
Who Exercises Special Parental Authority
What Characterizes Parental Authority [Art.
[Art. 218, Family Code]
210, Family Code]
1. The school (its administrators and
teachers), or
General Rule: Parental authority is not
2. The individual, entity, or institution engaged
renounceable and non-transferable.
in child care
Exception: In cases provided by law.
When is Special Parental Authority
Exercised [Art. 218, Family Code]
Who Exercises Parental Authority [Arts.
1. While the child is under their supervision,
211-213, Family Code]
instruction, or custody
2. During all authorized activities, whether
General Rule: Joint exercise by the father and
inside or outside the premises of the school,
the mother of a child [Art. 211 (1), Family
entity, or institution
Code].
Substitute Parental Authority and Special
Exceptions:
Parental Authority, Distinguished
1. In case of disagreement, the father’s
decision prevails [Art. 211, Family Code]. DIFFERENCE SUBSTITUTE SPECIAL
a. Exception to the Exception: If there is
judicial order to the contrary. Who Exercises Grandparents, Schools
2. In case of absence or death of either parent, oldest sibling, (administrat
or court- ors and
the parent present or alive [Art. 212, Family appointed teachers) or
Code]. guardian individuals,
3. In case of separation of the parents, the entities
parent designated by the court [Art. 213, engaged in
Family Code]. child care
4. In case of illegitimate children, the mother
When Exercised Only in case of Concurrent
[Art. 176, Family Code] death, with parental
absence, or authority or
B. Substitute Parental Authority unsuitability of substitute
parents parental
authority
When Substitute Parental Authority is
Exercised [Art. 214, Family Code] How Liable Subsidiarily Principally
In case of death, absence, or unsuitability of liable for and
the parents damages solidarily
caused by the liable for
Who Exercises Substitute Parental minor damages
caused the
Authority (in order) minor’s acts
1. The surviving grandparent [Art. 214, Family or omissions
Code]. while under
their

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PERSONS AND FAMILY RELATIONS
custody,
supervision,
or
instruction
D. Effect of Parental Authority
over the Child’s Person
Civil Liability [Art. 221, Family Code]
Parents and other persons exercising parental
authority shall be civilly liable for the injuries
and damages caused by the acts or omissions
of their unemancipated children living in their
company and under their personal authority
subject to the appropriate defenses provided
by law.
Disciplinary Measures over the Child [Art.
223, Family Code]
Persons exercising parental authority over a
child may petition the proper court of the place
where the child resides for an order providing
for disciplinary measures over the child.
Note:
1. The child shall be entitled to the assistance
of counsel, either of his choice or appointed
by the court, and a summary hearing shall
be conducted wherein the petition and the
child shall be heard.
2. However, if in the same proceeding the
court finds the petitioner at fault, irrespective
of the merits of the petition, or when the
circumstances warrant, the court may also
order the deprivation or suspension of
parental authority or adopt such other
measures as it may deem just and proper.
For Persons Exercising Substitute Parental
Authority [Art. 233 (1), Family Code]
The person exercising substitute parental
authority shall have the same authority over the
person of the child as the parents.
E. Effect of Parental Authority
over the Child’s Property
Joint Legal Guardianship [Art. 225 (1),
Family Code]
The father and the mother shall jointly exercise
legal guardianship over the property of their
unemancipated child without the necessity of a
court appointment.
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In case of disagreement, the father’s decision
shall prevail, unless there is judicial order to
the contrary.
Nature of Administration
The property of the unemancipated child
earned or acquired with his work or industry or
by onerous or gratuitous title shall belong the
child in ownership and shall be devoted
exclusively to the latter’s support and
education, unless the title or transfer provides
otherwise.
The right of the parents over the fruits and
incomes of the child’s property shall be limited
primarily to the child’s support and secondarily
to the collective daily needs of the family [Art.
226, Family Code].
Bonds
Where the market value of the property or the
annual income of the child exceeds P50,000,
the parent concerned shall be required to
furnish a bond in such amount as the court may
determine, but not less than ten per centum
(10%) of the value of the property or annual
income, to guarantee the performance of the
obligations prescribed for general guardians
[Art. 225 (2), Family Code].
The petition shall be considered as a summary
special proceeding, with the ordinary rules on
guardianship being merely suppletory.
Except the Following, in which Case the
Ordinary Rules on Guardianship shall
Apply:
1. When the child is under substitute parental
authority;
2. When the guardian is a stranger, or;
3. A parent has remarried.
Trusts
If the parents entrust the management or
administration of any of their properties to an
unemancipated child, the net proceeds of such
property shall belong to the owner.
The child shall be given a reasonable monthly
allowance in an amount not less than that
which the owner would have paid if the
administrator were a stranger, unless the
owner grants the entire proceeds to the child.
PERSONS AND FAMILY RELATIONS CIVIL LAW
In any case, the proceeds thus given in whole parent or person exercising parental
or in part shall not be charged to the child’s authority [Art. 231, Family Code]
legitime.
When Reinstated [Arts. 230-231, Family
F. Suspension or Termination of Code]
1. Automatically upon service of penalty (civil
Parental Authority interdiction).
2. Automatically upon pardon or amnesty of
When Permanently Terminated [Art. 228, the offender.
Family Code] 3. By judicial order, if the court finds that the
1. Upon the death of the parents cause therefore has ceased and will not be
2. Upon the death of the child, or repeated [Art. 231, Family Code].
3. Upon the emancipation of the child.
Prohibition for Persons Exercising Special
Unless Subsequently Revived by Final Parental Authority [Art. 233, Family Code]
Judgment, there is Permanent Termination In no case shall the school administrator,
[Art. 229, Family Code] teacher or individual engaged in child care and
1. Upon adoption of the child; exercising special parental authority inflict
2. Upon appointment of a general guardian; corporal punishment upon the child.
3. Upon judicial declaration of
abandonment of the child in a case filed for
the purpose;
4. Upon final judgment of a competent court
divesting the party concerned of parental
authority
a. Note: Also mandatory if the person
exercising parental authority has
subjected the child or allowed him to
be subjected to sexual abuse [Art. 232,
Family Code].
5. Upon judicial declaration of absence or
incapacity of the person exercising
parental authority.

When Suspended [Arts. 230-231, Family

Code]
1. Upon conviction of the parent or the person
exercising the same of a crime which carries
with it the penalty of civil interdiction;
2. Upon final judgment of a competent court
in an action filed for the purpose or in a
related case, if the parent or the person
exercising the same:
a. Treats the child with excessive
harshness or cruelty;
b. Gives the child corrupting orders,
counsel or example;
c. Compels the child to beg, or
d. Subjects the child or allows him to be
subjected to acts of lasciviousness [Art.
231, Family Code].

Note: The grounds enumerated above are

deemed to include cases which have
resulted from culpable negligence of the
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XI. EMANCIPATION XII. RETROACTIVITY OF THE

FAMILY CODE
A. Cause of Emancipation
Article 256 Family Code. This Code shall have
When Emancipation Takes Place [Art. 234, retroactive effect insofar as it does not prejudice or
Family Code, as amended by RA 6089] impair vested or acquired rights in accordance with
By attainment of majority, at the age of 18 the Civil Code or other laws.
years
General Rule: The Family Code has
B. Effect of Emancipation retroactive effect

Effect: Termination of parental authority over Exception: It will not apply if it will prejudice or
the person and property of the child impair vested or acquired rights
emancipated [Art. 228 (3), Family Code]. The
person emancipated becomes qualified and
responsible for all acts of civil life.

Note:
1. Persons possessing parental authority over
the emancipated individual are required to
give their respective parental consent until
the emancipated individual is at the age of
21.
2. Nothing shall be construed to derogate the
duty and responsibility of parents and
guardians for children and wards below 21
years of age mentioned in the Pars. 2 & 3,
Art. 2180, Civil Code.
3. Other exceptions established by existing
laws in special cases.

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SUCCESSION
CIVIL LAW
SUCCESSION
I. GENERAL PROVISIONS
A. Definition
Succession is a mode of acquisition by virtue
of which the property, rights and obligations,
to the extent of the value of the inheritance, of
a person are transmitted through death to
another or others either by will or by operation
of law [Art. 774, Civil Code].
Kinds of Succession:
1. Testamentary
2. Legal or Intestate
3. Mixed
4. Compulsory
Scope of Inheritance:
General Rule:
1. All the property, rights and obligations (to
the extent of the inheritance) of a person
which are not extinguished by such person’s
death [Art. 776, Civil Code].
2. The property and the transmissible rights
and obligations which have accrued to item
(1) above since the opening of the
succession [Art. 781, Civil Code].
Exceptions:
1. Rights and obligations which are not
transmissible [Art. 1311, Civil Code]; and
a. Intransmissible by nature
• Refers to rights and obligations which
are strictly personal (intuitu personae)
• Examples:
1. Those relating to family relations
2. Those arising from public law
3. Those which involve or require the
personal skills, qualifications,
characteristics or circumstances of
a particular individual
4. Criminal responsibility
b. Intransmissible by stipulation
c. Intransmissible by provision of law
• Examples:
1. Usufruct [Art. 603, Civil Code]
2. Agency [Art. 1919, Civil Code]
3. Commodatum [Art. 1939, Civil
Code]
2. Monetary debts left by the decedent are
intransmissible in the sense that they are
paid from the estate of the decedent and
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only the net estate or remainder goes to the
heirs. If the decedent’s estate is not
sufficient to pay his debts, his heirs cannot
be held liable for said debts in their personal
capacity [Rule 88-90, Rules of Court].
B. Rules on Opening of
Succession
1. The rights to succession are
transmitted from the moment of
the death of the decedent [Art.
777, Civil Code]
Implications:
a. The law in effect at the time of death of the
decedent governs the succession [Art.
2263, Civil Code];
b. The heir becomes the owner of his share in
the inheritance as well as all fruits which
accrue to such share upon the death of the
decedent;
c. Upon the death of the decedent, heirs may
immediately possess, administer and
dispose of their shares in the estate (in the
absence of existing debts/claims against
the estate);
d. Since succession takes place by operation
of law at the moment of the death of the
decedent, the heirs can sue upon the rights
of the decedent, without having to be
appointed executor or administrator
[Emnace v. CA, G.R. No. 126334 (2001)],
and without need of a judicial declaration of
their status as heirs [De Vera v. Galauran,
G.R. No. 45170 (1939)];
e. Heirs may also be sued without a previous
declaration of heirship, provided there is no
pending special proceeding for the
settlement of estate of the decedent [Gayon
v. Gayon, G.R. No. L-28394 (1970)];
f. The possession of hereditary property is
deemed transmitted to the heir without
interruption and from the moment of death
of the decedent, in case the inheritance is
accepted [Art. 533, Civil Code];
g. Estate taxes accrue upon death of the
decedent, even if the heirs come into
possession only later.
SUCCESSION CIVIL LAW
2. A person may be “presumed” dead does not affect the institution of legatees and
for the purpose of opening his devisees provided that the legitimes are not
succession after absence of: impaired [Art. 854, Civil Code].

No. of Years Age at Disappearance

Compulsory Heir Legatee / Devisee

10 years 75 years old and below Represents the Does not represent
juridical personal regardless of the
5 years 76 years old and above obligations not legacy or device’s
extinguished by value
death
A person who has gone missing for at least
four years: Succeeds to the Succeeds only to the
a. While on board a lost sea vessel or airplane; remainder of the determinate thing or
or decedent’s quantity which is
b. While taking part in war as a member of the properties after all mentioned in the
armed forces; or the debts and all the legacy or device
c. Has been in danger of death under other legacies and devices
circumstances shall be presumed dead for have been paid
the purpose of division of the estate.
Can exist in either Can exist only in
If the absent person appears, such person may testamentary or testamentary
recover the properties in the condition in which intestate succession succession
they may be found or the price of any alienated
property may be given to said returning person
[Arts. 390-392, Civil Code].

C. Subjects of Succession:

1. Decedent – person whose property is

transmitted through succession, whether or
not he left a will [Art. 775, Civil Code]
2. Testator – a decedent who left a will [Art.
775, Civil Code]
3. Successor/Heir – person who succeeds to
the property of the decedent.

Kinds of Successors/Heirs:
1. Compulsory Heirs;
2. Voluntary or Testamentary Heir;
a. Instituted heir by universal title
b. Devisees are persons to whom gifts of
real property are given by virtue of a will
[Art. 782, Civil Code]
c. Legatees are persons to whom gifts of
personal property are given by virtue of a
will [Art. 782, Civil Code]
3. Legal or Intestate Heirs.

Note: In case of preterition, the distinction

between an instituted heir by universal title and
legatee/devisee is significant. Preterition
annuls the institution of heir by universal title. It
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II.TESTAMENTARY b. Free and intelligent [Art. 839, Civil

Code]
SUCCESSION Execution of a will tainted by any vices affecting
the free will of the testator can cause its
A. Wills disallowance.

Definition of a will: An act whereby a person c. Solemn or formal

is permitted, with the formalities prescribed by If the formalities of a will required by law are not
law to control to a certain degree the complied with, it will be disallowed [Art. 839,
disposition of his estate to take effect after Civil Code].
his death [Art. 783, Civil Code].
d. Revocable and ambulatory
1. Kinds of Wills: A will can be revoked at any time before the
a. Notarial – an ordinary or attested will, which testator’s death [Art. 828, Civil Code].
must comply with the requirements of the
law [Arts. 804-808, Civil Code]. e. Mortis causa
b. Holographic – a will entirely written, dated It takes effect upon the testator’s death [Art.
and signed by the hand of the testator [Art. 783, Civil Code].
810, Civil Code].
f. Individual
2. Characteristics of Wills: Prohibition against joint wills [Art. 818, Civil
a. Purely personal Code].
General Rule: the making of a will is a strictly
personal act. Thus, g. Executed with animus testandi
• It cannot be left in whole or in part to the Intent to dispose of the property.
discretion of a third person, or
• It cannot be accomplished through an agent h. Executed with testamentary capacity
or attorney.
i. Unilateral act
Exception Does not involve an exchange of values or
depend on simultaneous offer and acceptance.
What cannot be What may be
delegated to 3rd entrusted to 3rd
j. Dispositive
persons persons
Disposes of property.
a. designation of a. designation of
heirs, devisees, person/institution Even in the absence of dispositive provisions,
and legatees falling under a a will disinheriting a compulsory heir is still a
b. duration/efficacy class specified by dispositive will because a disinheritance has
of designation testator the effect of disposing the legitime of the
c. determination of b. manner of disinherited compulsory heir in favor of other
portions, when distribution of compulsory heirs [Seangio v. Reyes, G.R. Nos.
referred to by property specified 140371-72 (2006)].
name [Art. 785, by testator [Art.
Civil Code]. 786, Civil Code]. Exception: Non-dispositive wills.
e.g. A will recognizing an illegitimate child
Note: The testator
must first specify the k. Statutory grant
class and the amount Permitted only by law, not a constitutional right.
of property for proper
delegation.

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3. Rules of Construction and Test of soundness of mind: To be of
Interpretation [Arts. 788-795, Civil sound mind, the testator must know:
Code]: 1. The nature of the estate to be disposed of;
Main principle: Testacy is preferred to 2. The proper objects of his bounty;
intestacy. The intent of the testator is 3. The character of the testamentary act [Art.
paramount and must be given effect as far as 799, Civil Code]
legally possible.
General Rule: Soundness of mind is
Governing Laws, In General: presumed [Art. 800, Civil Code].
Aspect of the Governing Law Exceptions:
Will 1. When the testator, one month or less before
the execution of the will, was publicly known
Formal Validity Law in force at the time
to be insane [Art. 800, Civil Code].
the will was executed
2. When the testator executed the will after
[Art. 795, Civil Code].
being placed under guardianship or ordered
committed, in either case, for insanity under
Intrinsic Validity Law of decedent’s
Rules 93 and 101 of the Rules of Court, and
nationality at the time of
before said order has been lifted [Torres v.
his death [Arts. 16 and
Lopez, G.R. No. L-25966 (1926); Balane].
2263, Civil Code].

Aspects of the will governed by the national

law of the decedent:
a. Order of succession;
b. Amount of successional rights;
c. Intrinsic validity of testamentary provisions;
and
d. Capacity to succeed [Art. 16, Civil Code]

B. Testamentary Capacity and

Intent
Time of Determining Capacity:
Capacity to make a will is determined as of the
time of making thereof [Art. 798, Civil Code].

Supervening incapacity does not invalidate an

effective will. Likewise, a supervening capacity
does not validate the will of an incapable [Art.
801, Civil Code].

Requisites for Capacity to Make a Will:

1. The testator must not be expressly
prohibited by law to make a will [Art. 796,
Civil Code];
2. The testator must be at least 18 years old
[Art. 797, Civil Code]; and
3. The testator must be of sound mind at the
time of execution [Art. 798, Civil Code].

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Governing Law as to Place of Execution of C. Forms of Wills
Will:
In General [Art. 804, Civil Code]
Testator Place of Governing Law
1. The will must be in writing;
Execution
2. It must be in a language or dialect known to
of Will
the testator.
Filipino Philippines Philippine Law
[Art. 16, Civil Applicable Laws as to Formal Validity:
Code] Applicable Law

Outside of 1. Philippine Law As to Time Law in force at the time the

the [Art. 815, Civil will was executed [Art. 795,
Philippines Code]; or Civil Code]
2. Law of the
country in which As to Place Law of the country in which
it is executed the will was executed [Art. 17,
[Art. 17, Civil Civil Code]
Code]

Alien Philippines 1. Philippine Law; Arts. 815-817, Civil Code (summarized

or in the table below) provide for the
2. Law of the various governing laws in these
country of which instances:
testator is a 1. A will was made in a foreign country by a
citizen or Filipino [Art. 815];
subject [Art. 2. A will was made in a foreign country by an
817, Civil Code] alien [Art. 816];
3. A will was made in the Philippines by an
Outside of 1. Philippine Law Alien [Art. 817].
the [Art. 816, Civil
Philippines Code]; or
2. Law of the
testator’s
country; or
3. Law of the place
where the
testator resides;
or
4. Law of the
country where
the will is
executed [Art.
17, Civil Code]

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D. Attested or Notarial Wills
Formal requirements for notarial wills:
1. Subscribed to by the testator at the end;
2. Attested and subscribed by 3 or more witnesses in the presence of the testator and of one another;
3. Marginal signatures;
4. Page numbers in letters; and
5. Acknowledged before a notary public.

Note: Unlike in holographic wills, there is no requirement that an attested will should be dated.

Formal Requirements

Subscription Subscribed at the end of the will by:

1. Testator himself; or
2. Testator’s name written by a representative in his presence and under his
express direction.

Attestation Clause Attested and subscribed by 3 or more credible witnesses in the presence of
the testator and of one another [Art. 805, Civil Code]

The attestation clause shall state the following [par. 3, Art. 805, Civil
Code]:
1. Number of pages;
2. The fact that the testator or his representative under his express direction
signed the will and every page in the presence of instrumental witnesses;
and
3. That the witnesses signed the will and all its pages in the presence of the
testator and of one another.

The signatures of the witnesses must be at the bottom of the attestation clause
[Cagro v. Cagro, G.R. No. L-5826 (1953)].

The notary public cannot be counted as an attesting witness [Cruz v. Villasor,

G.R. No. L-32213 (1973)].

Test of presence: Not whether they saw each other sign, but whether they
might have seen each other sign had they chosen to do so considering their
mental and physical condition and position with relation to each other at the
moment of inscription of each signature [Jaboneta v. Gustilo, G.R. No. 1641
(1906)].

Effect of omissions: Omissions which can be supplied by an examination of

the will itself, without the need of resorting to extrinsic evidence, will not be
fatal and will not prevent allowance of the will.

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Formal Requirements

Marginal General Rule: Testator or his representative shall write his name, and the
Signatures witnesses shall sign every page except the last page [Art. 805, Civil Code].

Exceptions:
1. When the will consists of only one page;
2. When the will consists of only two pages, the first of which contains all
dispositions and is signed at the bottom by the testator and the witnesses,
and the second page contains only the attestation clause duly signed at
the bottom by the witnesses [Abangan v. Abangan, G.R. No. L-13431
(1919)];
3. The use of thumbprint was allowed [Matias v. Salud, G.R. No. L-10751
(1958)];
4. The inadvertent failure of one witness to affix his signature to one page of
a testament, due to the simultaneous lifting of two pages in the course of
signing, is not per se sufficient to justify denial of probate [Icasiano v.
Icasiano, G.R. No. L-18979 (1964)].

Page Numbers All the pages of the will shall be numbered correlatively in letters placed on the
upper part of each page (i.e. Page One of Five Pages) [Art. 805, Civil Code].

Acknowledged The certification of acknowledgement need not be signed by the notary in the
before a notary presence of the testator and the witnesses [Javellana v. Ledesma, G.R. L-
public [Art. 806, 7179 (1955)].
Civil Code]

Additional 1. Deaf Mute [Art. 807, Civil Code]

Requirements for a. Testator must personally read the will; or
Handicapped b. Testator shall personally designate two persons to read the contents
Testators and communicate it to him in some practicable manner.
2. Blind [Art. 808, Civil Code]
a. The will shall be read to the testator twice by one of the subscribing
witnesses and by the notary public acknowledging the will.
b. A testator suffering from glaucoma may be considered as legally blind
[Garcia v. Vasquez, G.R. No. L-26615 (1970)].
c. The provision requiring reading of a will twice to a blind testator also
applies to an illiterate testator [In Re: Probate of the Will of Cosico,
G.R. No. 246997 (2021)].

Subscribed by 3 or Qualifications [Art. 820, Civil Code]:

more witnesses in 1. Of sound mind;
the presence of the 2. Aged 18 years or over;
testator and of one 3. Not blind, deaf or dumb; and
another 4. Able to read and write.

Disqualifications [Art. 821, Civil Code]

1. Person not domiciled in the Philippines;
2. Those who have been convicted of falsification, perjury, or false testimony.

Creditors may be witnesses [Art. 824, Civil Code].

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Formal Requirements

Supervening incompetency shall not prevent the allowance of the will [Art. 822,
Civil Code].

Rules on Interested Witness [Art. 823, 3. Entirely written, dated and signed in the
Civil Code]: hand of the testator himself [Art. 810, Civil
Code].
General Rule Exception
Witnesses Required for Probate [Art.
Devises or legacies If there are three 811, Civil Code]
in favor of an other competent 1. At least one witness who knows the
interested witness or witnesses, the devise handwriting and signature of the testator;
his or her spouse, or legacy shall be explicitly declare that it is the testator’s;
parent, or child will valid and the 2. If contested – at least 3 of such witnesses;
be void. interested witness 3. In the absence of a competent witness,
shall be treated as a expert testimony may be resorted to.
mere surplusage
General Rule: The holographic will itself must
be presented for probate [Gan v. Yap, G.R. No.
Note: A survivorship agreement is not a will L-12190 (1958)].
[Vitug v. CA, G.R. No. 82027 (1990)].
● A survivorship agreement is a contract Exception: If there is a photostatic copy or
where two or more parties agree that, upon xerox copy of the holographic will, it may be
the death of one of the co-owners, the title presented for probate [Rodelas v. Aranza, G.R.
to the property shall vest to the survivor. No. L-58509 (1982)].
Said contract imposes a mere obligation
with a term (i.e. the death of one of the co- Additional Dispositions:
owners.) In holographic wills, the dispositions of the
● It is a valid contract but its effect may be testator written below his signature must be
illegal if it is used as a mere cloak to hide an dated and signed by him in order to make
inofficious donation, to transfer property in them valid as testamentary dispositions [Art.
fraud of creditors, or to defeat the legitime of 812, Civil Code].
a compulsory heir.
● A survivorship agreement is NOT a will When a number of dispositions appearing in a
because it does not pertain to a testator but holographic will are signed without being
to a co-ownership. Therefore, it need not dated, and the last disposition has a signature
follow the solemnities of will and it need not and date, such date validates the dispositions
be probated. preceding it, whatever be the time of prior
● A survivorship agreement is neither a dispositions [Art. 813, Civil Code].
donation inter vivos or mortis causa, but
instead is an aleatory contract. Insertion, Cancellation, Erasure or
Alteration [Art. 814, Civil Code]
E. Holographic Wills Testator must authenticate by his full signature.

Formal Requirements: If such change is not authenticated by the

1. In writing [Art. 804, Civil Code]; testator, such change is considered not made.
2. In a language known to the testator [Art. Thus, “the will is not thereby invalidated as a
804, Civil Code]; and whole, but at most only as regards the
particular words erased, corrected, or inserted”
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[Kalaw v. Relova, G.R. No. L-40207 (1984),
citing Velasco v. Lopez, G.R. No. 905 (1903)].
Note, however, that in the case of Kalaw v.
Relova, the alteration involved the designation
of the testator’s sole heir. In this case, the
holographic will had only one substantial
provision, which was altered by substituting the
original heir with another, but which alteration
did not carry the requisite of full authentication
by the full signature of the testator, the effect
must be that the entire will is voided or revoked
for the simple reason that nothing remains in
the will after that which could remain valid.
CIVIL LAW
Mutual Wills:
1. Executed pursuant to an agreement
between two or more persons;
2. Jointly executed by them; and
3. Either for their reciprocal benefit or for the
benefit of a third person.
This is prohibited under Article 818, Civil Code.
Reciprocal Wills:
1. Testators name each other as beneficiaries
in their own wills (there are therefore 2
separate documents);
2. Under similar testamentary plans – valid.

Effect of Insertion Written by Another G. Codicil and Incorporation by

Person on the Validity of a
Holographic Will:
Reference:
When Made Effect Codicil:
1. It is a supplement or addition to a will;
2. Made after the execution of a will;
After the Insertion considered 3. Annexed to be taken as a part of the will;
execution, without not written. Validity 4. By which any disposition made in the
consent of testator cannot be defeated by original will is explained, added to, or
the malice or caprice altered;
of a third person 5. In order that it may be effective, it shall be
executed as in the case of a will [Arts. 825-
After execution, Will is valid, insertion 826, Civil Code].
with consent is void
Note: A codicil must be in the form of a will –
Contemporaneous Will is void because it
can have a notarial codicil attached to a
to the execution of is not written entirely
holographic will, and a holographic codicil
the will by the testator
attached to a notarial will.

F. Other Types of Wills Incorporation by Reference:

Requisites [Art. 827, Civil Code]
1. The document or paper referred to in the will
Joint Wills: must be in existence at the time of the
1. A single testamentary instrument;
execution of the will;
2. Which contains the wills of two or more
2. The will must clearly describe and identify
persons;
the same, stating among other things the
3. Jointly executed by them;
number of pages thereof;
4. Either for their reciprocal benefit or for the
3. It must be identified by clear and
benefit of a third person.
satisfactory proof as the document or paper
referred to therein; and
Filipinos cannot make Joint Wills
4. It must be signed by the testator and the
Joint wills executed by Filipinos, whether in the
witnesses on each and every page, except
Philippines or abroad, are prohibited.
in case of voluminous books of account or
inventories.
Note: Separate documents, each serving as
one independent will (even if written on the
Note: Not available in holographic wills.
same sheet) are not considered joint wills.

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of Will
H. Revocation of Wills [Balane]
A will may be revoked by the testator at any
time before his death [Art. 828, Civil Code].

Modes of Revocation [Art. 830, Civil Code]:

1. By implication of law;
• EXAMPLE:
a. Preterition [Art. 854, Civil Code] Foreign 1. Law of the
b. Legal separation [Art. 63, Family Country Place of
Code] Execution of
c. Unworthiness to succeed [Art. 1032, Will; or
Civil Code] 2. Law of the
2. By the execution of a will, codicil or other place in
writing executed as provided in the case of which the
wills (may be total or partial); or testator had
3. By burning, tearing, canceling, or his domicile
obliterating the will with the intention of at the time of
revoking it, by the testator himself, or by revocation
some other person in his presence, and by
his express direction.
General Rule: A revocation made in a
The act contemplating revocation must be subsequent will shall take effect, even if the
done at any time before the death of the new will should become inoperative by reason
testator. The right of revocation cannot be of the incapacity of the heirs, devisees or
waived or restricted [Art. 828, Civil Code]. legatees designated therein, or by their
renunciation [Art. 832, CC].
Note: Even if a holographic will was not
intended to be revoked, unless a xerox copy Exception: Doctrine of Dependent Relative
exists, it can no longer be proved. Revocation [Molo v. Molo, G.R. No. L-2538
(1951)].
Law Governing Revocation [Art. 829, Civil
Code]: The rule that where the act of destruction is
Place of Testator’s Governing Law connected with the making of another will so as
Revocation Domicile to fairly raise the inference that the testator
meant the revocation of the old to depend upon
Philippines Philippines, Philippine Law the efficacy of the new disposition intended to
or some be substituted, the revocation will be
other conditional and dependent upon the efficacy of
country the new disposition; and if for any reason, the
new will intended to be made as a substitute is
Outside the Philippines 1. Law of inoperative, the revocation fails and the original
Philippines (This Domicile - will remain in full force.
situation is Philippine
not law; or The failure of the new testamentary disposition
governed 2. Law of Place upon whose validity the revocation depends is
by Art. 829) of equivalent to the non-fulfillment of a
Revocation; suspensive condition and hence prevents the
or revocation.
3. Law of Place
of Execution False Cause/Illegal Cause
A revocation based on a false cause or illegal
cause is null and void [Art. 833, Civil Code].
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It must appear from the will that the testator is J. Allowance and Disallowance
revoking because of the cause which he did not
know was false. of Wills

Recognition of Illegitimate Child Probate Requirement: No will shall pass

The recognition of an illegitimate child does not either real or personal property unless it is
lose its legal effect even though the will wherein proved and allowed in accordance with the
it was made should be revoked [Art. 834, Civil Rules of Court [Art. 838, Civil Code].
Code].
Definition of a Probate: A proceeding in rem
Principle of Instanter required to establish the validity of a will and in
Revoking clause in the 2nd will is not order to pass real or personal property. The
testamentary in character but operates to testator himself may, during his lifetime,
revoke the prior will instanter (immediately) petition the court having jurisdiction for the
upon the execution of the will containing it. The allowance of his will [Art. 838, Civil Code].
revocation of the 2nd will does not revive the 1st
will which has already become a nullity. Kinds of Probate:
1. Post-mortem: after death
2. Ante-mortem: during the testator’s lifetime
I. Republication and Revival:
Note: Probate of a will is mandatory.
Republication vs. Revival:
Republication Revival Matters to be proved in probate:
1. Identity
● Takes place by ● Takes place by 2. Due Execution
an act of the operation of law 3. Capacity of the Testator
testator ● Restores a
● Corrects extrinsic revoked will Scope of Probate Proceedings [Art.
and intrinsic 839, Civil Code]
defects General Rule: The probate court cannot
inquire into the intrinsic validity of testamentary
provisions. Only the extrinsic validity of such
2 Provisions on Republication:
wills may be examined.
Art. 835 Art. 836
Exceptions:
1. When practical considerations demand that
Void as to form [Art. Void as to: the intrinsic validity of the will be resolved:
805, Civil Code] 1. Non-formal When the will is intrinsically void on its face
defect (e.g., when there is clearly a preterition)
2. Previously such that to rule on its formal validity would
revoked be a futile exercise [Acain v. IAC, G.R. No.
L-72706 (1987)].
How to Republish: How to Republish: 2. Claimants are all heirs and they consent,
1. Execute new will 1. Execute new will either expressly or impliedly, to the
2. Copy out the or codicil submission of the question of intrinsic
provisions from 2. Simply make validity to the court [Valera v. Inserto, G.R.
the original void references to old No. L-56504 (1987)].
will will 3. Probate court may pass upon the title to a
property, but such determination is
Reference to original Reference to original provisional and not conclusive, and is
insufficient sufficient subject to the final decision in a separate
action to resolve title [Pastor v.CA, G.R. No.
L-56340 (1983)].

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4. Probate court may decide on the ownership
of a property when the estate contains only
one property to be adjudicated upon
[Portugal v. Portugal-Beltran, G.R. No.
155555 (2005)].
Revocation vs. Disallowance:
Revocation Disallowance
Voluntary act of the Given by judicial
testator decree
With or without Must always be for a
cause legal cause
May be partial or Always total, except
total when the ground is
fraud or influence
which affects only
certain portions of the
will
Effect of Final Decree of Probate, Res
Judicata on Formal Validity:
The probate of a will by the probate court
having jurisdiction thereof is usually considered
as conclusive as to its due execution and
validity and is also conclusive that the testator
was of sound and disposing mind at the time
when he executed the will, and was not acting
under duress, menace, fraud, or undue
influence, and that the will is genuine and not a
forgery [Mercado v. Santos, G.R. No. 45629
(1938)].
Grounds for Denying Probate:
1. If the signature of the testator was procured
by fraud;
2. If it was procured by undue and improper
pressure and influence, on the part of the
beneficiary or some other person;
3. If the testator acted by mistake or did not
intend that the instrument he signed should
be his will at the time affixing his signature
thereto;
4. If the testator was insane or otherwise
mentally incapable of making a will at the
time of its execution;
5. If the formalities required by law have not
been complied with; or
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CIVIL LAW
6. If it was executed through force or under
duress, or the influence of fear, or threats
[Art. 839, Civil Code].
K. Institution of Heirs
A will shall be valid even though it —
1. should not contain an institution of an heir;
or
2. such institution should not comprise the
entire estate; or
3. the person so instituted should not accept
the inheritance or be incapacitated to
succeed.
In such cases, the testamentary dispositions
made in accordance with law shall be complied
with and the remainder of the estate shall pass
to the legal heirs [Art. 841, Civil Code].
Extent of Grant [Art. 842, Civil Code]:
Freedom of disposition depends upon the
existence, kind and number of compulsory
heirs.
1. No compulsory heirs – Testator has full
power of disposition
2. With compulsory heirs – Testator cannot
disregard the rights of the compulsory heirs.
Testator may dispose of the free portion of
his estate only.
Effect of Predecease of Heir [Art. 856,
Civil Code]:
Any heir who dies before the testator or is
incapacitated to succeed or renounces the
inheritance transmits no rights of the testator to
his own heirs. This is without prejudice to the
rights of representation [Tolentino].
Manner of Distribution:
1. Heirs instituted without designation of
shares shall inherit in equal parts [Art. 846,
Civil Code]
2. If the institution pertains to some heirs
individually and others collectively, the
presumption is that all are individually
instituted [Art. 847, Civil Code]
3. If siblings are instituted (whether full or half-
blood), the presumption is that the
inheritance is to be distributed equally [Art.
848, Civil Code]. This is different from the
rules of distribution in intestate succession.
SUCCESSION
4. If parents and children are instituted, they
are presumed to have been instituted
simultaneously and not successively [Art.
849, Civil Code]
Note: By “unknown,” the Code actually means
persons who could not be ascertained; a
disposition in favor of a stranger is valid
[Tolentino].
Declaration of heirship as decided in
Treyes v. Larlar, G.R. No. 232579
(2020)
The rule which requires a prior determination of
heirship in a separate special proceeding as a
prerequisite before one can file an ordinary civil
action to enforce ownership rights acquired by
virtue of succession, is abandoned.
Henceforth, the rule is: unless there is a
pending special proceeding for the settlement
of the decedent's estate or for the
determination of heirship, the compulsory or
intestate heirs may commence an ordinary civil
action to declare the nullity of a deed or
instrument, and for recovery of property, or any
other action in the enforcement of their
ownership rights acquired by virtue of
succession, without the necessity of a prior
and separate judicial declaration of their
status as such.
The ruling of the trial court shall only be in
relation to the cause of action of the ordinary
civil action, i.e., the nullification of a deed or
instrument, and recovery or reconveyance of
property, which ruling is binding only between
and among the parties.
L. Preterition
CIVIL LAW
least have been conceived before the
testator’s death.
Omission of Heir from Inheritance:
NOT ALTHOUGH NAMED
NAMED
He is not He is:
named in the 1. Expressly disinherited
will. without valid cause
2. Not instituted as an heir
3. Not assigned any part of
the estate
Thus: the heir is deprived of his right to
legitime.
No Preterition
If the heir in question is instituted in the will but
the portion given to him by the will is less than
his legitime – there is no preterition [Reyes v.
Barretto-Datu, G.R. No. L-17818 (1967)].
If the heir is given a legacy or devise – there is
no preterition [Aznar v. Duncan, G.R. No. L-
24365 (1966)].
If the heir had received a donation inter vivos
from the testator – the better view is that there
is no preterition. The donation inter vivos is
treated as an advance on the legitime under
Articles 906, 909, 910 and 1062.
The remedy, if the value of inheritance, legacy
or devise, or donation inter vivos is only for
completion of his legitime under Articles 906
and 907.
Distinguished from Disinheritance:
Preterition Disinheritance

Concept [Art. 854, Civil Code]: ● Tacit deprivation ● Express

1. There must be a total omission of one, some of a compulsory deprivation of a
or all of the heir/s from the inheritance heir of his compulsory heir
[Seangio v. Reyes, G.R. Nos. 140371-72 legitime of his legitime
(2006)]. ● May be ● Always voluntary
2. The omission must be that of a compulsory voluntary but the ● For some legal
heir. presumption of cause
3. The compulsory heir omitted must be of the law is that it is ● If the
direct line. involuntary disinheritance is
4. The omitted compulsory heir must be living ● Law presumes valid, the
at the time of the testator’s death or must at there has been compulsory heir
merely oversight disinherited is

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or mistake on totally excluded 2. Reciprocal [Art. 861, Civil Code]

the part of the from the If the heirs instituted in unequal shares should
testator inheritance be reciprocally substituted, the substitute shall
● Since preterition ● In case of invalid acquire the share of the heir who dies,
annuls the disinheritance, renounces, or is incapacitated, unless it clearly
institution of the compulsory appears that the intention of the testator was
heirs, the heir is merely otherwise. If there is more than one substitute,
omitted heir gets restored to his they shall have the same share in the
not only his legitime substitution as the institution.
legitime but also
his share in the Example (only 1 substitute): If two heirs are
free portion not reciprocally substituted, then if one of them
disposed of by dies before the testator dies, renounces, or
way of legacies turns out to be incapacitated, the other will get
and devises his share, regardless of whether or not their
shares are equal.

Effects of Preterition [Art. 854, Civil Code]:
1. The institution of the heir is annulled.
2. Devises and legacies shall remain valid as
long as they are not inofficious.
3. If the omitted compulsory heir should die
before the testator, the institution shall be
effective, without prejudice to the right of
representation.
Example (more than 1 substitute): A is
instituted to 1/3, B to 1/6, and C to ½. If C dies
before the testator, renounces or turns out to
be incapacitated, then the other two will get his
shares in the same proportion as in the
institution. A will get twice as much as B
(because his share of 1/3 in the institution is
twice the size of B’s share of 1/6).

When there are no devises and legacies,
preterition will result in the annulment of the will
and give rise to intestate succession [Neri v.
Akutin, G.R. No. L-47799 (1941)].
M. Substitution of Heirs
Substitution - the appointment of another heir,
so that he may enter into the inheritance in
default of the heir originally instituted [Art. 857,
Civil Code].
The substitute shall be subject to the same
charges and conditions imposed upon the
instituted heir, unless the testator has
expressly provided the contrary, or the charges
or conditions are personally applicable only to
the heir instituted [Art. 862, Civil Code].
Kinds of Substitution:
1. Brief or Compendious [Art. 860, Civil
Code]
Brief – Two or more persons were designated
by the testator to substitute for only one heir.
Compendious – One person is designated to
take the place of two or more heirs.
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3. Simple Substitution [Art. 859, Civil
Code]
The testator may designate one or more
persons to substitute the heir/s instituted in
case the heirs should:
a. die before him;
b. should not wish to accept the inheritance
(repudiation); or
c. should be incapacitated to accept the
inheritance.
4. Fideicommissary Substitution
The testator institutes an heir with an obligation
to preserve and to deliver to another the
property so inherited. The heir instituted to
such condition is called the First Heir or the
Fiduciary Heir; the one to receive the property
is the Second Heir or the Fideicommissary [Art.
863, Civil Code].
Requisites [Arts. 863-865, Civil Code]:
a. A Fiduciary or first heir instituted is
entrusted with the obligation to preserve
and to transmit to a Fideicommissary
Substitute or second heir the whole or part
of the inheritance.
b. The substitution must not go beyond one
degree from the heir originally instituted.
SUCCESSION
c. The Fiduciary Heir and the
Fideicommissary are living at the time of
the death of the testator.
d. The fideicommissary substitution must be
expressly made.
e. The fideicommissary substitution is
imposed on the free portion of the estate
and never on the legitime
In the absence of an obligation on the part of
the first heir to preserve the property for the
second heir, there is no fideicommissary
substitution [PCIB v. Escolin, G.R. Nos. L-
27860 and L-27896 (1974)].
Effects of predecease of the first
heir/fiduciary or the second
heir/fideicommissary:
Situation 1: If the heir dies followed by the
second heir, then the testator dies, who will
inherit? The legal heirs. There is no
fideicommissary substitution because first and
second heirs are not living at the time of the
testator’s death [Art. 863, Civil Code].
Situation 2: The testator dies first followed by
the second heir. The first heir survived them but
subsequently dies, who will inherit? The
second heir and his heirs under Art. 866, Civil
Code. This is because the second heir passes
his rights to his own heirs when he dies before
first heir.
Situation 3: If the first heir dies, followed by the
testator, then the second heir, who will inherit?
No specific provision in law, but second heir
inherits because the testator intended him to
inherit.
N. Conditional Testamentary
Dispositions and Those with a
Term
3 Kinds of Testamentary Disposition:
1. Conditional [Art. 871, Civil Code]
2. Dispositions with a term [Art. 885, Civil
Code]
3. Dispositions with a mode/modal
dispositions [Art. 882, Civil Code]
Conditional Dispositions:
Effect: Entire disposition is void.
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POTESTATIVE, CASUAL, AND MIXED
CONDITIONS
Potestative Conditions
Depends solely on the will of the heir.
General Rule: Must be fulfilled as soon as the
heir learns of the testator’s death.
Exception: If the condition was already
complied with at the time the heir learns of the
testator’s death; or if the condition is of such a
nature that it cannot be fulfilled again.
If there is constructive compliance, it is
deemed fulfilled.
Casual and Mixed Conditions:
Casual Mixed
Fulfillment depends Fulfillment depends
on chance or the will partly on the will of
of a third person. the heir and partly on
chance or the will of
a third person.
General Rule: May be fulfilled at any time
(before or after testator’s death), unless
testator provides otherwise.
Exception: If already fulfilled at the time of
execution of will:
1. If testator unaware of the fact of fulfillment –
deemed fulfilled
2. If testator aware:
● can no longer be fulfilled again: deemed
fulfilled
● can be fulfilled again: must be fulfilled
again.
Constructive Compliance:
1. If casual – not applicable
2. If mixed – applicable only if dependent
partly on the will of a third party not
interested.
Prohibited conditions: (considered as not
imposed)
1. Any charge, condition or substitution
whatsoever upon the legitimes [Art. 872,
Civil Code];
2. Impossible and illegal conditions [Art. 873,
Civil Code];
SUCCESSION CIVIL LAW
3. Absolute condition not to contract a first Caución Muciana
marriage [Art. 874, Civil Code]; A security to guarantee the return of the value
4. Absolute condition not to contract a of property, fruits, and interests, in case of
subsequent marriage unless imposed on contravention of condition, term or mode.
the widow or widower by the deceased
spouse, or by the latter’s ascendants or Instances when it is needed:
descendants [Art. 874, Civil Code]; 1. Suspensive term [Art. 885, Civil Code]
5. Scriptura captatoria or legacy-hunting 2. Negative potestative condition - when the
dispositions - dispositions made upon the condition imposed upon the heir is negative,
condition that the heir shall make some or consists in not doing or not giving
provision in his will in favour of the testator something [Art. 879, Civil Code]
or of any other person [Art. 875, Civil 3. Mode [Art. 882, par. 2, Civil Code]
Code].
O. Legitime
Dispositions with a Term:
A term may either be suspensive or resolutory. It is that part of the testator’s property which he
Suspensive Resolutory cannot dispose of because the law has
reserved it for his compulsory heirs [Art. 886,
Civil Code].
Before the arrival of Before the arrival of Every renunciation or compromise as regards
the term, the property the term, the a future legitime between the person owing it
should be delivered property should be and his compulsory heirs is void, and the latter
to the legal or delivered to the may claim the same upon the death of the
intestate heirs. Upon instituted heir. former; but they must bring to collation
the arrival of the term, whatever they may have received by virtue of
the inheritance the renunciation or compromise [Art. 905, Civil
should be delivered Code].
to the heir.
Classes of Compulsory Heirs [Art.
A caución muciana, No caución muciana 887, Civil Code]:
or bond, has to be required. 1. Primary: Legitimate Children and
posted by the legal or Legitimate Descendants with respect to
intestate heirs. their Legitimate Parents and Ascendants
2. Secondary: Those who succeed only in the
absence of the primary compulsory heirs:
Modal Dispositions: a. Legitimate Parents and Legitimate
Dispositions with an obligation imposed upon Ascendants, with respect to their
the heir, without suspending the effectivity of Legitimate Children and Descendants.
the institution, as a condition does. (They will inherit only in default of
legitimate children and their
A mode functions similarly to a resolutory descendants)
condition. b. Illegitimate Parents with respect to their
Illegitimate Children. (They will inherit
In modal institutions, the testator states: only in default of the illegitimate and
● the object of the institution; legitimate children and their respective
● the purpose or application of the property descendants)
left by the testator; or Note that other illegitimate ascendants
● the charge imposed by the testator upon are not included.
the heir [Rabadilla v. CA, G.R. No. 113725 3. Concurring: Those who succeed together
(2000)]. with the primary or the secondary
compulsory heirs:
● Surviving Spouse
● Illegitimate Children and Illegitimate
Descendants
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Specific Rules on Legitime: Steps in Determining the Legitime of
1. Direct Descending Line Compulsory Heirs [Arts. 908-910, Civil
a. Rule of Preference between lines [Arts. Code]:
978 and 985, Civil Code]
● Those in the direct descending line Value of the Estate
shall exclude those in the direct - Taxes
ascending and collateral lines; and - Less Liabilities
● Those in the direct ascending line NET ESTATE
shall, in turn, exclude those in the + collationable donations
collateral line. THEORETICAL* HEREDITARY ESTATE
● Rule of Proximity [Art. 962, Civil
Code]: The relative nearest in *Because this amount is what the legitime will
degree excludes the farther one. be based on, but the actual amount available
b. Right of representation ad infinitum in for physical distribution is the net estate
case of predecease, incapacity, or
disinheritance [Arts. 972 and 992, Civil Remedy of a Compulsory Heir in Case
Code]
● For decedents who are Legitimate
of Impairment of Legitime:
Children, only the Legitimate Extent and Nature Remedy
Descendants are entitled to right of of Impairment
representation.
● For decedents who are Illegitimate Total omission of a Annulment of
Children, both the Legitimate and compulsory heir institution and
the Illegitimate Descendants can who is a direct reduction of legacies
represent, only with respect to the descendant or and devises [Art. 854,
decedent’s illegitimate parents. ascendant Civil Code]
c. If all the Legitimate Children repudiate (preterition)
their legitime, the next generation of
Legitimate Descendants may succeed Testamentary Reduction of the
in their own right. dispositions disposition insofar as
impairing or they may be
2. Direct Ascending Line diminishing the inofficious or
a. Rule of division between lines legitime excessive [Art. 907,
● The father and the mother shall Civil Code]
inherit equally if both living. One
parent succeeds to the entire Partial impairment Completion of the
estate of the child if the other legitime [Art. 906, Civil
parent is dead [Art. 986, Civil Code]
Code].
● In default of the mother and the Impairment by Collation – reduction
father, the ascendants nearest in inofficious of donations [Arts. 771
degree will inherit [Art. 987, Civil donations and 911, Civil Code]
Code].
● If there is more than one relative of
Method of Reduction [Art. 911, Civil
the same degree but of different
lines, one half will go to the paternal Code]:
ascendants and the other half to Order of priorities to be observed in the
the maternal ascendants [Art. 987, reduction [Balane]:
Civil Code]. 1. Reduce pro rata the non-preferred legacies
b. Rule of equal division and devises, and the testamentary
● The relatives who are in the same dispositions to heirs
degree shall inherit in equal shares 2. Reduce pro rata the preferred legacies and
[Art. 987, Civil Code]. devises

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3. Reduce the donations inter vivos according
to the inverse order of their dates (oldest is
the most preferred)
How are Devises and Legacies with
usufructs, life annuities and pensions
reduced?
If the value of these grants exceeds the free
portion, it impairs the legitimes and should be
reduced.
The compulsory heir has 2 options:
1. Delivering to the devisee or legatee the free
portion
2. Complying with the testamentary provision
Note: If the devise subject to reduction should
consist of real property, which cannot be
conveniently divided, it shall go to the devisee
if the reduction does not absorb ½ of its value;
and in a contrary case, to the compulsory heirs;
but the former and the latter shall reimburse
each other in cash for what respectively
belongs to them.
The devisee who is entitled to a legitime may
retain the entire property, provided its value
does not exceed that of the disposable portion
and of the share pertaining to him as a legitime
[Art. 912, Civil Code].
If the heirs or devisees do not choose to avail
themselves of the right granted by the
foregoing, any heir or devisee who did not have
such right may exercise it; should the latter not
make use of it, the property shall be sold at
public auction at the instance of any one of the
interested parties [Art. 913, Civil Code].
Note: Rule on Reduction of Legitimes
(Shares)
Legitimate Never reduced, they are
children primary and preferred
Surviving Never reduced
spouse
Illegitimate Subject to reduction, pro rata,
children without preference (you get
the remaining portion, divide it
by the number of illegitimate
children)
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Reserva Troncal:
The ascendant who inherits from his
descendant any property which the latter may
have acquired by gratuitous title from another
ascendant, or a brother or sister, is obliged to
reserve such property as he may have
acquired by operation of law for the benefit of
relatives who are within the third degree and
who belong to the line from which said property
came [Art. 891, Civil Code].
Concept of Reserva Troncal:
1. A descendant (prepositus) inherits or
acquires property from an ascendant or
from a brother or sister (origin or mediate
source) by gratuitous title.
2. The same property is inherited by another
ascendant (reservista) or is otherwise
acquired by him by operation of law from the
said descendant (prepositus).
3. The said ascendant (reservista) must
reserve the property for the benefit of the
relatives of the deceased descendant within
the third civil degree and who belong to the
line from which the said property came
(reservatarios).
Parties: [Balane]
1. Origin or Mediate Source – either an
ascendant of any degree of ascent or a
brother or sister of the Prepositus;
responsible for the 1st transfer
2. Prepositus – the first transferee of the
reserved property
3. Reservista – an ascendant of the
Prepositus other than the Origin or Mediate
Source; the one obligated to reserve the
property
4. Reservatarios – within the 3rd degree of
consanguinity from the Prepositus
[Cabardo v. Villanueva, G.R. No. L-19003
(1922)] belonging to the line from which the
property came
Requisites for Reserva Troncal [Chua v.
CFI, G.R. No. L-29901 (1977)]:
1. That the property was acquired by a
descendant (Prepositus) from an
ascendant or from a brother or sister
(Origin or Mediate Source) by gratuitous
title;
2. That the Prepositus died without
(legitimate*) issue;
SUCCESSION
3. That the property is inherited by another
ascendant (Reservista) by operation of
law; and
4. That there are relatives within the 3 rd
degree (Reservatarios) belonging to the
line from which said property came.
Note: Only legitimate descendants will prevent
the property from being inherited by the
legitimate ascending line by operation of law
[Balane].
Three transmissions involved: [Balane]
1. 1st transfer – by gratuitous title, from a
person to his descendant, brother or sister
2. 2nd transfer – by operation of law, from the
transferee in the 1st transfer to another
ascendant. This creates the reserva.
3. 3rd transfer – from the transferee in the
second transfer to the relatives
The 1st transfer from the origin does not
make the property reservable.
The 1st transferee owns the property he
receives in full and in fee simple. If he sells the
property, then there is no reserva that can be
created. It is at this point, however, that a
reserva may ignite, because if the 1 st
transferee has no legitimate descendants, the
property, by operation of law, will go back up to
his ascendant.
The 2nd transferee is the reservor.
The reservor can enjoy the property, but his
title is subject to a double resolutory condition.
So, if he dies, you need to ask 2 questions:
1. Does the prepositus have relatives?
2. Are these relatives qualified to inherit from
the prepositus?
If the answers are YES: then a reserva
occurs.
Note: The reservatarios actually inherit, by
delayed intestacy, from the prepositus.
Nature of the reservista’s right: [Edroso v.
Sablan, G.R. No. 6878 (1913)]
1. The reservista’s right over the reserved
property is one of ownership;
2. The right of ownership is subject to a
resolutory condition, i.e., the existence of
reservatarios at the time of the reservista's
death;
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3. The right of ownership is alienable, but
subject to the same resolutory condition;
4. The reservista’s right of ownership is
registrable.
Nature of reservatarios’ right: [Sienes v.
Esparcia, G.R. No. L-12957 (1961)]
1. The reservatarios have a right of
expectancy over the property;
2. The right is subject to a suspensive
condition, i.e., the expectancy ripens into
ownership if the reservatarios survive the
reservistas;
3. The right is alienable but subject to the
same suspensive condition;
4. The right is registrable.
Reserva Minima vs. Reserva Maxima:
1. The prepositus acquired property
gratuitously from an ascendant, a brother or
sister
2. In his will, he institutes as his heir his
ascendant (who is also a compulsory heir)
such that the ascendant receives half of the
estate by operation of law as legitime and
the other half by testamentary disposition
Two Views
1. Reserva Maxima: As much of the
potentially reservable property as possible
must be deemed included in the part that
passes by operation of law (maximizing the
scope of the reserva)
2. Reserva Minima: every single property in
the prepositus’s estate must be deemed to
pass, partly by will and partly by operation
of law, in the same proportion that the part
given by will bears to the part not so given
[Balane]
Either view is defensible, but Reserva Minima
finds wider acceptance in the Philippines
[Balane].
Extinguishment of the Reserva:
1. Loss of the reservable property
2. Death of the reservista
3. Death of all the relatives within the third
degree belonging to the line from which the
property came
4. Renunciation by the reservatarios, but a
future reservatario is not bound by such
renunciation → a conditional
extinguishment.
SUCCESSION CIVIL LAW
5. Prescription, when the reservista holds the How do you reconcile unworthiness and
property adversely against the disinheritance as regards Restoration to
reservatarios, as free from reservation Capacity?
Under the rules on Under the rules
P. Disinheritance Disinheritance on Unworthiness

A compulsory heir may, in consequence of Note: This is Note: This is by

disinheritance, be deprived of his legitime, for expressly made by operation of law
causes expressly stated by law [Art. 915, testator
Civil Code].
A subsequent Either:
Effect of Disinheritance: reconciliation is 1. written pardon,
A disinherited heir is totally excluded from the enough or
inheritance. This means that he forfeits not only 2. subsequent
his legitime, but also his intestate portion (if will
any), and any testamentary disposition made in reconciliation
a prior will of the disinheriting testator [Balane]. is not enough

Requisites of a Valid Disinheritance: Overlap of Rules: If he did not know

1. Heir disinherited must be designated by Remedy the cause
name or in such a manner as to leave no 1. If the offended ● Unworthiness
room for doubt as to who is intended to be party does not stays
disinherited; make a will
2. It must be for a cause designated by law; subsequent to the
3. It must be made in a valid will; occurrence of the
4. It must be made expressly, stating the cause
cause in the will itself; ● Unworthiness
5. The cause must be certain and true and sets in
must be proved by the interested heir if the ● Written
person should deny it; condonation is
6. It must be unconditional; and necessary to
7. It must be total. restore
2. If the offended
Note: The burden of proving the truth of the party makes a will
cause for disinheritance shall rest upon the subsequent to the
other heirs of the testator, if the disinherited occurrence of the
heir should deny it [Art. 917, Civil Code]. cause
● If he knew the
Causes Common to Disinheritance cause
and Unworthiness ● If he disinherits
Article 1032 enumerates five acts of - Art. 922
unworthiness which likewise constitute ● If he institutes
grounds to disinherit a compulsory heir. or pardons the
offender
The effect of the concurring causes of ● Restored to
unworthiness and grounds for disinheritance is capacity
as follows: If the testator failed to disinherit the ● If will silent –
offender, the law nonetheless intervenes by unworthiness
excluding the offender from the inheritance of stays
the testator or the decedent by reason of
unworthiness.

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Modes of Revocation of
Disinheritance:
1. Reconciliation [Art. 922, Civil Code]
2. Subsequent institution of the disinherited
heir
3. Nullity of the will which contains the
disinheritance.
Note: The moment that testator uses one of the
acts of unworthiness as a cause for
disinheritance; he thereby submits it to the
rules on disinheritance. Thus, reconciliation
renders the disinheritance ineffective.
Reconciliation [Art. 922, Civil Code]:
Effect of Reconciliation between Offender
and Offended Person:
● If no disinheritance has been made yet, the
offended person will be deprived of his right
to disinherit.
● If disinheritance has been effected, it will
be rendered ineffectual.
Rights of Descendants of Person
Disinherited [Art. 923, Civil Code]:
Disinheritance gives rise to the right of
representation in favor of the children and
descendants of the disinherited person with
respect to his legitime.
Ineffective Disinheritance [Art. 918,
Civil Code]:
Instances of Ineffective disinheritance:
1. There is no specification of the cause.
2. The cause is not proved.
3. The cause is not among those specified in
the provisions.
Effect of Ineffective Disinheritance: if the
disinheritance lacks one or other of the
requisites mentioned in this article, the heir in
question gets his legitime [Balane].
Ineffective Preterition
Disinheritance
Person disinherited Person omitted
may be any must be a
compulsory heir compulsory heir in
the direct line
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Only annuls the Annuls the entire
institution in so far institution of heirs
as it prejudices the
person disinherited
Q. Legacies and Devises
Legacy Devise
A gift of personal A gift of real property
property given in a given in a will
will
It is bequeathed It is devised
Persons Charged with the Duty to
Give Legacies and Devises in a Will
1. Compulsory heir, provided, their legitimes
are not impaired [Art. 925, Civil Code]
2. Voluntary heir
3. Legatee or devisee can be charged with
the duty of giving a sub-legacy or sub-
devise but only to the extent of the value of
the legacy or devise given him [Art. 925,
Civil Code]
4. The estate represented by the executor
or administrator, if no one is charged with
this duty to pay or deliver the legacy or
devise in the will
If there is an administration proceeding, it
constitutes a charge upon the estate. If there
is no administration proceeding, it is a charge
upon the heirs.
Validity and Effect of Legacy or
Devise:
Legacy or Devise of a thing owned in
part by the testator [Art. 929, Civil Code]
The legacy or devise shall be understood to
be limited to such part or interest
Exception If testator expressly declares
that he gives the thing in its
entirety.
SUCCESSION CIVIL LAW

Legacy or Devise of a thing belonging to Delivery of Legacy/Devise [Art. 951,

another [Art. 930, Civil Code] Civil Code]:
The very thing bequeathed shall be delivered
Testator erroneously Void and not its value
believed that the 1. With all its accessions and accessories
property belonged to 2. In the condition in which it may be upon the
him death of the testator
3. Legacies of money must be paid in cash
The thing Effective
bequeathed Effect of Ineffective Legacies or
afterwards becomes Devises [Art. 956, Civil Code]:
his by whatever title In case of repudiation, revocation or incapacity
of the legatee or devisee, the legacy or devise
Testator knew Valid – estate must shall be merged with the mass of the hereditary
property did not try to acquire estate, except in cases of substitution or
belong to him property or else give accretion.
heir monetary value.
Revocation of Legacies and Devises
[Art. 957, Civil Code]:
Legacy or Devise of a thing belonging to
1. Testator transforms the thing such that it
the legatee or devisee
does not retain its original form or
The thing already Ineffective denomination.
belongs to the legatee or 2. Testator alienates the thing by any title or
devisee at the time of the for any cause. Reacquisition of the thing by
execution of the will [Art. the testator does not make the legacy or
932, Civil Code] devise valid, unless it is effected by right of
repurchase.
The thing is subject to an Valid only as to 3. Thing is totally lost during the lifetime or
encumbrance or interest the interest or after the death of the testator.
of another person [Art. encumbrance 4. Other causes: nullity of will, non-
932, Civil Code] compliance with suspensive condition, sale
of the thing to pay the debts of the
Legatee or devisee Ineffective deceased during the settlement of his
subsequently alienates estate.
the thing [Art. 933, Civil
Code]

After alienating the thing, Ineffective

the legatee or devisee
subsequently reacquires
it gratuitously [Art. 933,
Civil Code]

After alienating the thing, Legatee or

the legatee or devisee devisee can
acquires it by onerous demand
title [Art. 933, Civil Code] reimbursement
from the heir or
estate

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III. LEGAL AND INTESTATE
SUCCESSION
A. General Provisions;
Relationship and Right of
Representation
Intestacy – that which takes place by
operation of law in default of compulsory and
testamentary succession. Not defined in the
Civil Code.
Legal succession is a mode of transmission
mortis causa which takes place in the absence
of the expressed will of the decedent embodied
in a testament [Tolentino].
Instances When Legal or Intestate
Succession Operates [Art. 960, Civil Code]:
1. If a person dies without a will, or with a void
will, or will has subsequently lost its validity;
2. When the will does not institute an heir;
3. Upon the expiration of term, or period of
institution of heir [Balane];
4. Upon fulfillment of a resolutory condition
attached to the institution of heir, rendering
the will ineffective [Balane];
5. When the will does not dispose of all the
property belonging to the testator. Legal
succession shall take place only with
respect to the property which the testator
has not disposed (mixed succession);
6. If the suspensive condition attached to the
institution of the heir does not happen or is
not fulfilled;
7. If the heir dies before the testator;
8. If the heir repudiates the inheritance, there
being no substitution, and no right of
accretion takes place;
9. When the heir instituted is incapable of
succeeding, except in cases provided in
the Civil Code;
10. Preterition – Intestacy may be total or
partial depending on whether or not there
are legacies or devises [Balane].
Note: In all cases where there has been an
institution of heirs, follow the ISRAI order:
1. If the Institution fails, Substitution occurs.
2. If there is no substitute, the right of
Representation applies in the direct
descending line to the legitime if the
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vacancy is caused by predecease,
incapacity, or disinheritance.
3. The right of Accretion applies to the free
portion when the requisites in Art. 1016 are
present.
4. If there is no substitute, and the right of
representation or accretion is not proper,
the rules on Intestate succession shall
apply.
Fundamental Principles in Intestate
Succession:
Rule of Preference Between Lines:
● Those in the direct descending line shall
exclude those in the direct ascending and
collateral lines;
● Those in the direct ascending line shall,
in turn, exclude those in the collateral line.
Rule of Proximity: The relative nearest in
degree excludes the farther one [Art. 962(1),
Civil Code], saving the right of representation
when it properly takes place.
Rule of Equal Division:
General Rule: The relatives who are in the
same degree shall inherit in equal shares [Arts.
962(2), 987 and 1006, Civil Code].
Exceptions [Balane]:
1. Rule of preference between lines;
2. Distinction between legitimate and
illegitimate filiation. The ratio under the
present law is 2:1 [Art. 983, in relation to
Art. 895, Civil Code as amended by Art.
176, Family Code];
3. Rule of division by line in the ascending line
[Art. 987 (2), Civil Code];
4. Distinction between full-blood and half-
blood relationship among brothers and
sisters, as well as nephews and nieces [Art.
1006 and 1008, Civil Code];
5. Right of representation.
Rule of Barrier between the legitimate
family and the illegitimate family (the iron-
curtain rule): The illegitimate family cannot
inherit by intestate succession from the
legitimate family and vice-versa [Art. 992, Civil
Code].
Note: In Aquino v. Aquino [G.R. No. 208912
(2021)], the Supreme Court ruled that children,
regardless of their parents’ marital status, can
SUCCESSION
now inherit from their grandparents and other
direct ascendants by right of representation.
This decision, however, was promulgated
beyond the cut off period of June 30, 2021.
Rule of Double Share for full blood
collaterals: When full and half-blood brothers
or sisters, nephews or nieces, survive, the full
blood shall take a portion in the inheritance
double that of the half-blood [Arts. 895 and 983,
Civil Code].
Note:
1. If one of the legitimate ascendants,
illegitimate parents, legitimate children or
illegitimate children survives, the brother,
sisters, nephews, and nieces (BSNN) are
excluded.
2. If one of the legitimate ascendants,
illegitimate parents, legitimate children,
illegitimate children or surviving spouse
survives, the other collateral relatives and
the state are excluded.
3. If any of the heirs concur in legitimes, then
they also concur in intestacy.
Relationship:
Proximity of Relationship: determined by the
number of generations. Each generation forms
one degree [Art. 963, Civil Code].
Note: It is important to distinguish between
direct and collateral, as the direct has
preference over the collateral.
In a line, as many degrees are counted as there
are generations [Art. 966, Civil Code].
Note: Descending line is preferred over
ascending.
Blood relationship is either full or half-blood
[Art. 967, Civil Code].
Note: As among brothers and sisters and
nephews and nieces, there is a 2:1 ratio for full-
blood and half-blood relatives. Direct relatives
are preferred. But this distinction does not
apply with respect to other collateral relatives.
Incapacity [Art. 968, Civil Code]
General Rule: If there are several relatives of
the same degree, and one or some of them are
unwilling or incapacitated to succeed, his
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portion shall accrue to the others of the same
degree.
Exception: When the right of representation
should take place.
Note: This accretion in intestacy takes place in
case of predecease, incapacity, or renunciation
among heirs of the same degree. The relatives
must be in the same relationship because of
the Rule of Preference of Lines.
Repudiation [Arts. 968-969, Civil
Code]
There is no right of representation in
repudiation. If the nearest relative/s
repudiates the inheritance, those of the
following degree shall inherit in their own right.
In case of repudiation by all in the same
degree, the right of succession passes on the
heirs in succeeding degrees: descending line
first, ascending line next, and collateral line
next [Balane].
Adoption [Art. 189, Family Code]
In adoption, the legal filiation is personal and
exists only between the adopter and the
adopted. The adopted is deemed a legitimate
child of the adopter, but still remains as an
intestate heir of his natural parents and other
blood relatives.
Note: Section 16 of the Domestic Adoption Act
(RA 8552) provides that all legal ties between
the biological parent(s) and the adoptee shall
be severed and the same shall then be vested
on the adopter(s).”
Right of Representation:
Representation – Right created by fiction of
law, by virtue of which the representative is
raised to the place and the degree of the
person represented, and acquires the rights
which the latter would have if he were living or
if he could have inherited [Art. 970, Civil Code].
Effect of Representation
The representative heir acquires the rights
which the person represented would have if he
were living or if he could have inherited.
SUCCESSION CIVIL LAW
When it occurs
Representation is allowed with respect to
inheritance conferred by law (legitime and
intestate based on Art. 923).

It occurs only in the following instances:

(DIP)
1. Predecease of an heir;
2. Incapacity or unworthiness;
3. Disinheritance [Art. 923, Civil Code].

Note: There is no right of representation in a

devise or a legacy.

An heir who renounces can represent, but

cannot be represented. Rationale is found in
Art. 971 which states that “The representative
does not succeed the person represented but
the one whom the person represented would
have succeeded.”

Representation in the Direct Descending

Line:
Representation takes place ad infinitum in the
direct descending line but never in the direct
ascending line [Art. 972, Civil Code].

General Rule: Grandchildren inherit from the

grandparents by right of representation, if
proper.

Exception: Whenever all the children

repudiate, the grandchildren inherit in their own
right because representation is not proper [Art.
969, Civil Code].

Representation in Collateral Line:

In the collateral line, representation takes place
only in favor of the children of the brothers or
sisters (i.e., nephews and nieces) whether of
the full or half-blood [Art. 972, Civil Code] and
only if they concur with at least one.

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B. Order of Intestate Succession
Decedent is a Legitimate Decedent is an Illegitimate Decedent is an Adopted Child
Child Child

Legitimate children or Legitimate children or Legitimate children or

descendants (LCD) descendants (LCD) descendants (LCD)

Legitimate parents or Illegitimate children or Illegitimate children or

ascendants (LPA) descendants (LPA) descendants (ICD)

Illegitimate children or Illegitimate parents (IP) Legitimate or illegitimate parents,

descendants (ICD) or legitimate ascendants,
adoptive parents

Surviving spouse (SS) Surviving spouse (SS) Surviving spouse (SS)

Brothers and sisters, Illegitimate brothers and sisters, Brothers and sisters, nephews,
nephews, nieces (BS/NN) nephews, nieces (IBS/NN) nieces (BS/NN)

Legitimate collateral
relatives within the 5th State State
degree (C5)

State

RULES OF EXCLUSION AND CONCURRENCE IN INTESTATE SHARES

Intestate Heirs Excludes Excluded By Concurs With

LC + LD Ascendants, No one SS + ILC

Collaterals and State

ILC + D ILP, Collaterals and No one SS, LC, LP

State

LP + LA Collaterals and State LC ILC + SS

ILP Collaterals and State LC and ILC SS

SS Collaterals other than No one LC, ILC, LP, ILP,

siblings, nephews and Siblings, Nephews,
nieces, State Nieces

Siblings, Nephews, All other collaterals and LC, ILC, LP, ILP SS
Nieces State

Other collaterals Collateral more remote LC, ILC, LP, ILP and Collaterals in the same
within 5th degree in degree and State SS degree

State No one Everyone No one

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SUCCESSION CIVIL LAW
Note: In partial intestacy, the testamentary dispositions can reduce the shares of intestate heirs,
provided that their legitimes, if they are also compulsory heirs, are not impaired. More specifically:
1. The law of legitimes must be brought into operation in partial intestacy.
2. If among the concurring intestate heirs there are compulsory heirs whose legal or intestate portions
exceed their respective legitimes, the amount of the testamentary disposition must be deducted
from the disposable portion, to be borne by all the intestate heirs in the proportions that they are
entitled to receive from such disposable portion as intestate heir.
3. If the legal or intestate share of a compulsory heir is equal to his legitime, then the amount of the
testamentary disposition must be deducted only from the legal or intestate shares of the others.
4. If the testamentary dispositions consume the entire disposable portion, then the intestate heirs
who are compulsory heirs will get only their legitimes, and those who are not compulsory heirs will
get nothing [Tolentino].

Outline of Intestate Shares

Legitimate children only ● Divide entire estate equally among all legitimate children [Art.
979, Civil Code]
● Legitimate children include an adopted child.

Legitimate children and ● Divide entire estate such that each illegitimate child gets ½ of
Illegitimate children what a legitimate child gets [Art. 983, Civil Code and Art. 176,
Family Code]
● Ensure that the legitime of the legitimate children are first
satisfied.

Legitimate children and Divide entire estate equally between the legitimate children and the
surviving spouse surviving spouse, the latter deemed as one child. The same rule
holds where there is only one child.

Legitimate children, ● Divide the entire estate such that the surviving spouse is
Surviving spouse, and deemed one legitimate child and each illegitimate child getting
Illegitimate children ½ of what the legitimate child gets [Art. 996, Civil Code and Art.
176, Family Code]
● Ensure that the legitime of the legitimate children and the spouse
are first satisfied.

Legitimate parents only Divide the entire estate equally [Art. 985, Civil Code].

Legitimate ascendants Divide the entire estate equally but with the observance of the rule
only (excluding parents) of division by line [Art. 987, Civil Code].

Legitimate parents and Legitimate parents get ½ of the estate, illegitimate children get the
illegitimate children other ½ [Art. 991, Civil Code].

Legitimate parents and Legitimate parents get ½ of the estate; The surviving spouse gets
surviving spouse the other ½ [Art. 997, Civil Code].

Legitimate parents, Legitimate parents get ½ of the estate; surviving spouse and the
surviving spouse and illegitimate child each get ¼ each, the latter to share among
illegitimate children themselves if more than one [Art. 1000, Civil Code].

Illegitimate children only Divide the entire estate equally [Art. 988, Civil Code].

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Illegitimate children and Illegitimate children get ½ of the estate; the surviving spouse gets
surviving spouse the other ½ [Art. 998, Civil Code].

Surviving spouse only Entire estate goes to the surviving spouse [Art. 995, Civil Code].

Surviving spouse and Illegitimate parents get ½ and the spouse gets the other ½ [by
illegitimate parents analogy with Art. 997, Civil Code].

Surviving spouse and Surviving spouse gets ½ of the estate, while the rest gets the other
legitimate brothers and ½ with the nephews and nieces inheriting by representation if proper
sisters, nephews and [Art. 1001, Civil Code].
nieces

Surviving spouse and Surviving spouse gets ½ of the estate while the rest gets the other
illegitimate brothers and ½ with the nephews and nieces inheriting by representation, if
sisters, nephews and proper; Note that all the other relatives should be “illegitimate”
nieces because of the iron-curtain rule [Art. 994, Civil Code].

Illegitimate parents only Entire estate goes to the illegitimate parents [Art. 993, Civil Code].

Illegitimate parents and Illegitimate parents are excluded and do not inherit.
children of any kind
(whether legitimate or
illegitimate child)

Legitimate brothers and Divide the entire estate such that full-blood brothers/sisters get a
sisters only share double the amount of a half-blood brother or sister [Art. 1004
and 1006, Civil Code].

Legitimate brothers and Divide the entire estate observing the 2 is to 1 ratio for full and half-
sisters, nephews and blood relationships with respect to the brothers and sisters, with the
nieces nephews and nieces inheriting by representation, if proper [Art. 1005
& 1008, Civil Code].

Nephews and nieces only Divide the entire estate per capita, observing the 2 is to 1 ratio [Art.
975 and 1008, Civil Code].

Other collaterals [Arts. ● Divide entire estate per capita. Collateral relatives must be with
1009 and 1010] the 5th degree of consanguinity.
● Note: the nearer relative excludes the more remote relatives.

State ● If there are no other intestate heirs, the State inherits the entire
estate through escheat proceedings [Art. 1011, Civil Code].

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IV. PROVISIONS COMMON
TO TESTATE AND
INTESTATE SUCCESSION
A. Right of Accretion:
Definition of Accretion [Art. 1015, Civil
Code]
It is a right by virtue of which, when two or more
persons are called to the same inheritance,
devise or legacy, the part assigned to one who
renounces or cannot receive his share or who
died before the testator is added or
incorporated to that of his co-heirs, co-
devisees, or co-legatees.
Basis
The right of accretion is based upon the
presumed will of the decedent. Thus, the
testator can expressly provide that there shall
be no accretion among persons who would
otherwise be entitled thereto. Conversely, the
testator may validly provide for accretion in a
case where no accretion would take place
under the provisions of the law [Tolentino].
Requisites [Tolentino]
1. Unity of object and plurality of subjects (two
or more persons are called to the same
inheritance or same portion thereof); and
2. Vacancy of share (one of the heirs dies
before the testator, or renounces the
inheritance, or is incapacitated)
When does Accretion Occur?
Accretion happens when there is repudiation,
incapacity, or predecease of an heir.
It is the mechanism where the share of an heir
is increased by vacant shares vacated by heirs
who cannot inherit for various reasons.
Rationale: The decedent intended to give the
property to nobody but the co-heirs.
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There can only be accretion if there is an
institution of heirs with respect to specific
properties [Art. 1016, Civil Code]. In other
words, both heirs were called to inherit the
same whole.
If there was “earmarking” – there can be no
accretion.
● What is “earmarking?” – when the whole
has been subdivided into specific portions
Example: Heir #1 was called to inherit the
southern part of Plot A, and Heir #2 was called
to inherit the northern part of Plot A.
Among compulsory heirs, there can only be
accretion with respect to the free portion. There
can be no accretion with respect to the
legitimes [Arts. 1021 and 1018, Civil Code].
The heirs to whom the portion goes by the right
of accretion take it in the same proportion that
they inherit [Art. 1019, Civil Code].
Exceptions [Balane]
1. In testamentary succession, if the testator
provides otherwise;
2. If the obligation is purely personal, and
hence intransmissible.
The heirs to whom the inheritance accrues
shall succeed to all the rights and obligations
which the heir who renounced or could not
receive it would have had [Art. 1020, Civil
Code].
In testamentary succession, when the right of
accretion does not take place, the vacant
portion of the instituted heirs, if no substitute
has been designated, shall pass to the legal
heirs of the testator, who shall receive it with
the same charges and obligations [Art. 1022,
Civil Code].
Accretion shall also take place among
devisees, legatees and usufructuaries under
the same conditions established for heirs [Art.
1023, Civil Code].
SUCCESSION
Effect of Predecease, Incapacity, Disinheritance or Repudiation:
Cause of Testamentary Succession
Vacancy
Legitime
Predecease Representation
Intestate Succession
Incapacity Representation
Intestate Succession
Disinheritance Representation
Intestate Succession
Repudiation Intestate Succession
B. Capacity to Succeed by Will or
by Intestacy
Requisites for Capacity to Succeed by
Will or by Intestacy [Art. 1024 – 1025,
Civil Code]:
1. The heir, legatee or devisee must be living
or in existence at the moment the
succession opens [Art. 1025, Civil Code];
and
2. He must not be incapacitated or disqualified
by law to succeed [Art. 1024, par.1, Civil
Code].
Persons Incapable of Succeeding
[Arts. 1027, 739, 1032, Civil Code]:
Based on undue influence or interest [Art.
1027, Civil Code]
1. Priest who heard the last confession of the
testator during his last illness, or the
minister of the gospel who extended
spiritual aid to him during the same period;
2. Individuals, associations and corporations
not permitted by law to inherit;
3. Guardian with respect to testamentary
dispositions given by a ward in his favor
before the final accounts of the
guardianship have been approved, even if
the testator should die after the approval
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Intestate Succession
Free Portion
Accretion Intestate Representation
Succession Intestate Succession
Accretion Representation
Intestate Intestate Succession
Succession
- -
Accretion Accretion
thereof; except if the guardian is his
ascendant, descendant, brother, sister, or
spouse;
4. Relatives of the priest or minister of the
gospel within the fourth degree, the church,
order, chapter, community, organization, or
institution to which such priest or minister
may belong;
5. Attesting witness to the execution of a will,
the spouse, parents, or children, or anyone
claiming under such witness, spouse,
parents, or children;
6. Physician, surgeon, nurse, health officer or
druggist who took care of the testator during
his last illness.
Based on Morality or Public Policy
[Arts. 739 and 1028, Civil Code]:
1. Those made in favor of a person with whom
the testator was guilty of adultery or
concubinage at the time of the making of the
will;
2. Those made in consideration of a crime of
which both the testator and the beneficiary
have been found guilty;
3. Those made in favor of a public officer or
his spouse, descendants and ascendants,
by reason of his public office.
SUCCESSION CIVIL LAW
Based on Acts of Unworthiness [Art. Effect of Pardon:
1032, Civil Code]: Once the act of unworthiness has been
The following are incapable of succeeding by pardoned, whether expressly or tacitly, the heir
reason of unworthiness: is restored to full capacity to succeed the
1. Parents who have abandoned their children decedent, as if the cause of unworthiness had
or induced their daughters to lead a corrupt never existed.
or immoral life, or attempted against their
virtue; Unworthiness vs. Disinheritance:
2. Any person who has been convicted of an Unworthiness Disinheritance
attempt against the life of the testator, his or
her spouse, descendants, or ascendants;
3. Any person who has accused the testator of Unworthiness Disinheritance is the
a crime for which the law prescribes renders a person act by which a
imprisonment for six years or more, if the incapable of testator, for just
accusation has been found groundless; succeeding to the cause, deprives a
4. Any heir of full age who, having knowledge succession, whether compulsory heir of his
of the violent death of the testator, should testate or intestate. right to the legitime
fail to report it to an officer of the law within [Art. 915, Civil Code].
a month, unless the authorities have already
taken action; this prohibition shall not apply
to cases wherein, according to law, there is
no obligation to make an accusation;
5. Any person convicted of adultery or
concubinage with the spouse of the testator; Determination of Capacity [Tolentino]
6. Any person who by fraud, violence, General Rule: At the death of the decedent
intimidation, or undue influence should [Art. 1034, Civil Code].
cause the testator to make a will or to
change one already made; Exceptions:
7. Any person who by the same means 1. Those falling under 2, 3, and 5 of Art. 1032
prevents another from making a will, or from – when the final judgment is rendered;
revoking one already made, or who 2. Those falling under 4 of Art. 1032 – when
supplants, conceals, or alters the latter's the month allowed for the report expired;
will; 3. If the institution is conditional – when the
8. Any person who falsifies or forges a condition is complied with.
supposed will of the decedent.
C. Acceptance and Repudiation
Pardon of Acts of Unworthiness: of Inheritance:
Express Implied
Definition of Acceptance
The act by which the person called to succeed
Made by the Effected when the by universal title either by the testator or by law
execution of a testator makes a will manifests his will of making his own the
document or any instituting the universality of the rights and obligations which
writing in which the unworthy heir with are transmitted to him [Tolentino].
decedent condones knowledge of the
the cause of cause of incapacity. Definition of Repudiation
incapacity. The manifestation by an heir of his desire not
to succeed to the rights and obligations
Cannot be revoked. Revoked when the transmitted to him [Tolentino].
testator revokes the
will or the institution. Requisites [Art. 1043, Civil Code]
1. Certainty of death of the decedent; and
2. Certainty of the right to the inheritance.

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Forms of Acceptance [Arts. 1049 –
1050, Civil Code]:
1. Express Acceptance – one made in a
public or private document [Art. 1049, par.
2, Civil Code].
2. Tacit Acceptance – one resulting from acts
by which the intention to accept is
necessarily implied or from acts which one
would have no right to do except in the
capacity of an heir.
3. Implied Acceptance - Within thirty days
after the court has issued an order for the
distribution of the estate in accordance with
the Rules of Court, the heirs, devisees and
legatees shall signify to the court having
jurisdiction whether they accept or
repudiate the inheritance; if they do not do
so within that time, they are deemed to have
accepted the inheritance [Art. 1057, Civil
Code].
An inheritance is deemed accepted:
1. If the heir sells, donates, or assigns his right
to a stranger, or to his co-heirs, or to any of
them – the heir must first accept the
inheritance before he can dispose of it.
2. If the heir renounces the same, even though
gratuitously, for the benefit of one or more
of his co-heirs – this is actually a donation.
The heir must first accept the inheritance
before he can donate it.
3. If the heir renounces it for a price in favor of
all his co-heirs indiscriminately – this is
actually an onerous disposition. The heir
must first accept the inheritance before he
can dispose of it.
CIVIL LAW
Heirs in Two Capacities [Art. 1055,
Civil Code]:
1. If a person is called to the same inheritance
as an heir by will and by law and he
repudiates the inheritance in his capacity as
a testamentary heir, he will be considered to
have also repudiated the inheritance as a
legal heir.
2. If he repudiates it as a legal heir, without
knowledge of his being a testamentary heir,
he may still accept it in the latter capacity.
Irrevocability of Acceptance or
Repudiation
General Rule: The acceptance or repudiation
of an inheritance, once made, is irrevocable
and cannot be impugned.
Exceptions
1. When the acceptance or repudiation suffers
from any of the vices which annul consent;
and
2. When an unknown will appears [Art. 1056,
Civil Code].

Note: But if the renunciation should be

gratuitous, and in favor of all the co-heirs (to
whom the portion renounced should devolve by
accretion), the inheritance shall not be deemed
as accepted [Art. 1050, Civil Code]. This is a
true case of renunciation.

Forms of Repudiation [Art. 1051, Civil

Code]
1. In a public instrument acknowledged before
a notary public; or
2. In an authentic document – equivalent of an
indubitable writing or a writing whose
authenticity is admitted or proved; or
3. By petition presented to the court having
jurisdiction over the testamentary or
intestate proceeding
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D. Partition and Distribution of
the Estate
Definition of Partition: Separation, division
and assignment of a thing held in common
among those to whom it may belong.
CIVIL LAW
What acts are deemed partition?
Every act which is intended to put an end to
indivision among heirs and legatees or
devisees is deemed a partition, although it
should purport to be a sale, an exchange, a
compromise, or any other transaction [Art.
1082, Civil Code].

What can be divided? A void partition may be valid if:

The thing itself or its value may be divided
[Art. 1079, Civil Code].
Before Partition: Whole estate of the
decedent is owned in common by the heirs [Art.
1078, Civil Code].
1. The will was in fact a partition
2. The beneficiaries of the void will were legal
heirs
The titles of acquisition or ownership of each
property shall be delivered to the co-heir to
whom said property has been adjudicated [Art.
1089, Civil Code].

JUDICIAL vs. EXTRAJUDICIAL PARTITION

Judicial Extra-judicial

Partition done by Partition made by the decedent himself by an act inter vivos or by will or by
Court pursuant to an a third person entrusted by the decedent or by the heirs themselves [Paras].
Order of Distribution
which may or may Partition Inter Vivos: It is one that merely allocates specific items or pieces
not be based on a of property on the basis of the pro-indiviso shares fixed by law or given under
project of partition. the will to heirs or successors [Art. 1080, Civil Code].

Who may effect 1. The Decedent, during his lifetime by an act inter vivos or by will [Art.1080,
Partition? Civil Code];
2. The decedent’s heirs [Art.1083, Civil Code];
3. A competent court [Art. 1083, Civil Code]; or
4. A third person not an heir designated by the decedent [Art.1081, Civil
Code].

Who may demand 1. Compulsory heir;

partition? 2. Voluntary heir upon fulfillment of condition, if any [Art. 1084, Civil Code];
3. Legatee or devisee;
4. Any person who has acquired interest in the estate.

When Partition 1. When expressly prohibited by the testator for a period not exceeding 20
cannot be years [Art. 1083, Civil Code];
demanded? 2. When the co-heirs agreed that the estate shall not be divided for a period
not exceeding 10 years, renewable for another 10 years [Art. 494, Civil
Code];
3. When prohibited by law;
4. When to partition the estate would render it unserviceable for the use for
which it is intended.

Prohibition to 1. The prohibition to partition for a period not exceeding 20 years can be
Partition imposed even on the legitime.

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2. If the prohibition to the partition is for more than 20 years, the excess is
void.
3. Even if a prohibition is imposed, the heirs by mutual agreement can still
make the partition.
Effects of Inclusion of Intruder in
Partition [Art. 1105, Civil Code]
1. Between a true heir and several mistaken
heirs – partition is VOID
2. Between several true heirs and a mistaken
heir – transmission to mistaken heir is void
3. Through error or mistake, share of true heir
is allotted to mistaken heir – partition shall
not be rescinded unless there is bad faith or
fraud on the part of the other persons
interested, but the latter shall be
proportionately obliged to pay the true heir
of his share. The partition with respect to the
mistaken heir is void [Sempio-Dy].
Right of Redemption in Partition
Should any of the heirs sell his hereditary rights
to a stranger before the partition, any or all of
the co-heirs may be subrogated to the rights of
the purchaser by reimbursing him for the price
of the sale, provided they do so within the
period of one month from the time they were
notified in writing of the sale by the vendor [Art.
1088, Civil Code].
Strangers – those who are not heirs on the
succession.
Legal Redemption by Co-Heir;
Requisites
1. That there are several heirs of the common
inheritance;
2. That one of them sells his hereditary rights;
3. That the sale is made to a stranger, and
before the partition has been made;
4. That one or more of the co-heirs demand
the repurchase within a period of one
month, counted from the time he or they
were notified in writing of the sale; and
5. That the buyer is reimbursed the price of the
sale [Garcia v. Calaliman, G.R. No. L-26855
(1989)].
Note: The redemption can be exercised only by
a co-heir.
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Effects of Partition
Effect: A partition legally made confers upon
each heir the exclusive ownership of the
property adjudicated to him [Art. 1091, Civil
Code].
No partition shall be construed so as to
prejudice, defeat, or destroy the right or title of
any person claiming the real estate involved in
the action for partition by title under any other
person, or by title paramount to the title of the
parties among whom the partition may have
been made [Rule 69, Sec. 12, Rules of Court].
Warranty: After the partition has been made,
the co-heirs shall be reciprocally bound to
warrant the title to, and the quality of, each
property adjudicated [Art. 1092, Civil Code].
Reciprocal obligation of warranty: shall be
proportionate to the respective hereditary
shares of the co-heirs.
In case of insolvency of any of the co-heirs:
Other co-heirs shall be liable for his part in the
same proportion, deducting the part
corresponding to the one who should be
indemnified.
Right of Action for Reimbursement: Those
who pay for the insolvent heir shall have a right
of action against him for reimbursement,
should his financial condition improve [Art.
1093, Civil Code].
Prescription period for action to enforce
warranty among the co-heirs: Ten (10) years
from the date the right of action accrues [Art.
1094, Civil Code].
If a credit should be assigned as collectible:
Co-heirs shall not be liable for the subsequent
insolvency of the debtor of the estate, but only
for his insolvency at the time the partition is
made [Art. 1095, Civil Code].
SUCCESSION
Prescription period of the warranty of the
solvency of the debtor: Can only be enforced
during the five (5) years following the partition.
Warrant of bad debts
General Rule: Co-heirs do not warrant bad
debts, if so known to, and accepted by the
distributee.
Exception: But if such debts are not assigned
to a co-heir, and should be collected, in whole
or in part, the amount collected shall be
distributed proportionately among the heirs
[Art. 1095, Civil Code].
Cessation of Obligation of Warranty Among
Co-heirs: The obligation of warranty among
co-heirs shall cease in the following cases:
1. The testator himself has made the partition.
Unless it appears, or it may be reasonably
presumed, that his intention was otherwise,
but the legitime shall always remain
unimpaired;
2. When it has been so expressly stipulated in
the agreement of partition. Unless there has
been bad faith;
3. When the eviction is due to a cause
subsequent to the partition, or has been
caused by the fault of the distributee of the
property [Art. 1096, Civil Code].
Rescission and Nullification of
Partition
Causes for Rescission or Annulment
1. A partition may be rescinded or annulled for
the same causes as contracts [Art. 1097,
Civil Code].
2. A partition, judicial or extrajudicial, may also
be rescinded on account of lesion, when
any one of the co-heirs received things
whose value is less by at least one-fourth
(¼) than the share to which he is entitled,
considering the value of the things at the
time they were adjudicated [Art. 1098, Civil
Code].
● This article applies only to cases of
partition among-coheirs
● Lesion is the injury suffered in
consequence of inequality of situation
by one party who does not receive the
full equivalent for what she gives in a
sale or any commutative contract
3. The partition made by the testator cannot
be impugned on the ground of lesion,
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except when the legitime of the compulsory
heirs is thereby prejudiced, or when it
appears or may be reasonably presumed
that the intention of the testator was
otherwise [Art. 1099, Civil Code].
4. Preterition of a compulsory heir in the
partition [Art. 1104, Civil Code]:
● Partition shall not be rescinded unless
bad faith or fraud on the part of other
heirs is proved.
● The culpable heirs shall share in the
damages of the prejudiced compulsory
heir proportionately.
5. A partition which includes a person
believed to be an heir, but who is not, shall
be void only with respect to such person
[Art. 1105, Civil Code].
Rescission on Account of Lesion
Prescription: After four (4) years from the time
the partition was made [Art. 1100, Civil Code].
Option of Heir Sued:
1. Indemnifying the plaintiff for the loss; or
2. Consenting to a new partition
Indemnity may be made:
1. By payment in cash; or
2. By the delivery of a thing of the same kind
and quality as that awarded to the plaintiff.
If option of consenting to a new partition
was chosen: Shall affect neither those who
have not been prejudiced nor those who have
not received more than their just share [Art.
1101, Civil Code].
Who cannot maintain an action for
rescission on the ground of lesion?
An heir who has alienated the whole or a
considerable part of the real property
adjudicated to him, but he shall have a right to
be indemnified in cash [Art. 1102, Civil Code].
When is rescission of the partition on the
ground of lesion not allowed?
When there is omission of one or more objects
or securities of the inheritance, but the partition
shall be completed by the distribution of the
objects or securities which have been omitted
[Art. 1103, Civil Code].
SUCCESSION CIVIL LAW
DIFFERENCE OF NULLITY FROM
RESCISSION
● Nullity – the act is supposed to never have
existed
● Rescission – the act is valid at the origin
though it afterwards became ineffective.

Important Periods in Partition

1 month or less Testator, if publicly known to be insane, burden of proof is on the one
before making a will claiming validity of the will
20 years Maximum period testator can prohibit alienation of dispositions
5 years from delivery To claim property escheated to the State
to the State
1 month To report knowledge of violent death of decedent lest he be considered
unworthy
5 years from the time Action for declaration of incapacity and for recovery of the inheritance,
disqualified person devise or legacy
took possession

30 days from Must signify acceptance/repudiation; otherwise, deemed accepted

issuance of order of
distribution
1 month form written Right to repurchase hereditary rights sold to a stranger by a co-heir
notice of sale
10 years To enforce warranty of title/quality of property adjudicated to co-heir from
the time the right of action accrues
5 years from partition To enforce warranty of solvency of debtor of the estate at the time
partition is made

4 years from partition Action for rescission of partition on account of lesion

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OBLIGATIONS AND
CONTRACTS
CIVIL LAW
OBLIGATIONS
OBLIGATIONS
I. GENERAL PROVISIONS
A. Definition
Article 1156, Civil Code. An obligation is a juridical
necessity to give, to do or not to do.
An obligation is a juridical relation, whereby a
person (called the creditor) may demand from
another (called the debtor) the observance of a
determinative conduct, and in case of breach,
may obtain satisfaction from the assets of the
latter [Makati Stock Exchange v. Campos, G.R.
No. 138814 (2009)].
B. Elements of an obligation
1. Active Subject (Obligee/Creditor)
The person (natural or juridical) who has the
right or power to demand the prestation.
2. Passive Subject (Obligor/Debtor)
The person bound to perform the prestation.
3. Prestation (Object)
The conduct required to be observed by the
debtor/obligor (i.e. to give, to do, or not to do)
[Ang Yu Asuncion v. CA, G.R. No. 109125
(1994)];
a. Must be possible, physically and juridically.
b. Must be determinate or at least
determinable according to pre-established
elements.
c. Must have a possible equivalent in money.
4. Vinculum Juris (Juridical or Legal
Tie)
The efficient cause established by the sources
of obligation [Ang Yu Asuncion v. CA, G.R. No.
109125 (1994)].
That which binds or connects the parties to the
obligation [De Leon].
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C. Sources of obligations
Article 1157, Civil Code. Obligations arise from:
1. Law;
2. Contracts;
3. Quasi-contracts;
4. Acts or omissions punished by law; and
5. Quasi-delicts.
1. Law
Obligations arise when imposed by the law
itself and cannot be presumed [Art. 1158, Civil
Code].
2. Contracts
Obligations arise from the stipulation of the
parties; it has the force of law and should be
complied with in good faith [Art. 1159, Civil
Code].
3. Quasi-Contracts
Certain lawful, voluntary and unilateral acts
give rise to the juridical relation of quasi-
contract to the end that no one shall be
unjustly enriched or benefited at the expense
of another [Art. 2142, Civil Code].
4. Acts or Omissions Punishable by
Law
Responsibility for fault or negligence under a
quasi-delict [Art. 2176, Civil Code] is entirely
separate and distinct from the civil liability
arising from negligence under the penal code.
But the plaintiff cannot recover damages twice
for the same act or omission of the defendant
[Art. 2177, Civil Code].
5. Quasi-Delicts
Obligations arise from damages caused to
another through an act or omission, there being
fault or negligence but no contractual
relations exist between the parties [Art. 2176,
Civil Code].
OBLIGATIONS CIVIL LAW

II. NATURE AND EFFECT

A. Obligation to give
1. Types of Things
Specific/ Generic Thing Limited Generic Thing
Determinate Thing

Particularly designated or Object is designated only by its When the generic objects are
physically segregated from all class, genus, or species. condoned to a particular class.
others of the same class [Art.
1460, Civil Code];
Identified by individuality.

Cannot be substituted against Can be substituted by any of the Can be substituted by any of the
the obligee’s will, although the same class and same kind. same particular class.
thing may be of the same value
as, or more valuable than that
which is due [Art. 1244, Civil
Code]

2. Rights and Duties of Parties

Duties of the Debtor Rights of the Creditor

To Give a Specific Thing

a. To preserve or take care of the a. To compel delivery [Art. 1165, Civil Code]
thing due with the proper b. To the fruits from the time the obligation to
diligence of a good father of a deliver arises [Art. 1164, Civil Code]
family, unless other standard of c. To the accessions and accessories, even if
case is required by the law or not mentioned [Art. 1166, Civil Code]
stipulation of the parties [Art. d. No to be compelled to receive a different
1163, Civil Code] one, although of the same value as, or more
b. To deliver the thing itself [Art. valuable than that which is due [Art. 1244,
1165, Civil Code] Civil Code]
c. To deliver the fruits of the thing e. To recover damages in case of breach,
[Art. 1166, Civil Code] exclusive or in addition to specific
d. To deliver its accessions and performance [Art. 1165, 1170, Civil Code]
accessories, even though not
mentioned [Art. 1166, Civil Code]
1. Accessions - everything which is
produced by a thing, or which is
incorporated or attached thereto,
excluding fruits
2. Accessories - things designed for the
embellishment, use or preservation of
another thing of more importance
e. To pay damages in case of breach [Art. 1170,
Civil Code]

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OBLIGATIONS CIVIL LAW

To Give a Generic Thing

a. To take care of the thing [Art. 1163, Civil
Code]
b. To deliver a thing of the quality intended by
the parties taking into consideration the
purpose of the obligations and other
circumstances [Art. 1246, Civil Code]
c. Creditor cannot demand a thing of superior
quality; neither can the debtor deliver a thing
of inferior quality [Art. 1246, Civil Code]
d. To pay damages in case of breach [Art. 1170,
Civil Code]
a. To ask that the obligation be complied with
at the expense of the debtor [Art. 1165, Civil
Code]
b. To recover damages in case of breach [Art.
1165, Civil Code]
c. Not to be compelled to receive a different
one, although of the same value as, or more
valuable than that which is due [Art. 1244,
Civil Code]
d. To ask that the obligation be complied with by
a third person at the expense of the debtor

B. Obligation to do or not to do
1. Rights and Duties of Parties
Duties of the Debtor Rights of the Creditor

Obligation To Do

a. To do it [Art. 1167, Civil Code]
b. To shoulder the cost of execution should he
fail to do it [Art. 1167, Civil Code]
c. To undo what has been poorly done [Art.
1167, Civil Code]
d. To pay damages in case of breach [Art. 1170,
Civil Code]
a. To have the obligation executed at the cost
of the debtor [Art. 1167, Civil Code]
b. To recover damages in case of breach [Art.
1170, Civil Code]
Note: The debtor cannot be compelled to perform
his obligation. The ultimate sanction of civil
obligations is indemnification of damages. This
would be tantamount to involuntary servitude.

Obligation Not To Do

a. Not to do what should not be done
b. To shoulder the cost of undoing what should
not have been one [Art. 1168, Civil Code]
c. To pay damages in case of breach [Art. 1170,
Civil Code]
a. To ask to undo what should not be done, at
the debtor’s expense [Art. 1168, Civil Code]
b. To recover damages, where it would be
physically or legally impossible to undo what
should not have been done, because of:
1. The very nature of the act itself;
2. Rights acquired by third persons who
acted in good faith
3. When the effects of the acts prohibited
are definite in character and will not
cease even if the thing prohibited be
undone.

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 OBLIGATIONS
C. Transmissibility of obligations
Article 1178, Civil Code. Subject to the laws, all
rights acquired in virtue of an obligation are
transmissible, if there has been no stipulation to the
contrary.
General Rule: All rights acquired by virtue of
an obligation are transmissible [Art. 1178, Civil
Code]. Contracts take effect only between the
parties, their assigned and heirs [Art. 1311,
Civil Code].
Exception: Nature of obligation, law or
stipulation to the contrary provides otherwise
[Art. 1178, Art. 1311, Civil Code].
Only personal obligations, or those identified
with the persons themselves are extinguished
by death [Stronghold Insurance Co. v.
Republic-Asahi Glass Corp., G.R. No. 147561
(2006)].
D. Performance of Obligations
1. Definition
Payment means not only (1) the delivery of
money, but also (2) the performance, in any
other manner, of an obligation [Art. 1232, Civil
Code].
2. General Rule/Requirement
The thing or service in which the obligation
consists [must be] completely delivered or
rendered, as the case may be [Art. 1233, Civil
Code].
3. Exceptions
a. Substantial Performance
Trigger: The obligation has been substantially
performed in good faith.
Effect: The obligor may recover though there
had been a strict and complete fulfillment, less
damages suffered by the obligee [Art. 1234,
Civil Code].
b. Incomplete/Irregular performance
Trigger: Obligee accepts performance despite
knowledge of its incompleteness or irregularity,
and without expression any protest or
objection.
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Effect: The obligation is deemed fully complied
with.
c. Partial prestation
General Rule:
1. The creditor CANNOT be compelled to
receive partial payments.
2. The debtor CANNOT be required to make
partial payments.
Exception: When expressly stipulated [Art.
1248 (1), Civil Code]
d. Partial Liquidation
Trigger: The debt is partly liquidated and partly
unliquidated.
Effect: The creditor may demand and the
debtor may affect the payment of the liquidated
debt without waiting for the liquidation of the
unliquidated debt [Art. 1248 (2), Civil Code].
E. Breaches of Obligations
Those who in the performance of their
obligations are guilty of the following are liable
for damages [Art. 1170, Civil Code]:
1. Fraud (dolo): The fraud contemplated by
the foregoing provision is the deliberate
and intentional evasion of the normal
fulfillment of obligations.
2. Negligence (culpa): Fault or negligence of
the debtor as an incident in the fulfillment
of an existing obligation.
3. Delay (mora): Delay in the fulfillment of the
obligation. The delay however must be
imputable to the debtor/obligor.
4. Those who in any manner contravene
the tenor thereof: Covers any illicit act
which impairs the strict and faithful
fulfillment of the obligation.
1. Failure to Perform
Rule
Rescission of a contract will not be permitted
for a slight or casual breach, but only for such
substantial and fundamental breach as would
defeat the agreement [Vermen Realty Corp v.
CA, G.R. No. 101762 (1993)].
OBLIGATIONS
Effect of Failure to Perform
Substantial Breach Slight or Casual
Breach
a. Total Breach a. Partial breach
b. Amounts to non- b. There is partial/
performance, substantial
basis for performance in
rescission under good faith
Art. 1191 and c. Gives rise to
payment of liability for
damages damages only
[Art. 1234, Civil
Code]
Substantial breach
The question of whether a breach of contract is
substantial depends upon the attending
circumstances and not merely on the
percentage of the amount not paid [Sps. Cannu
v. Sps. Galang, G.R. No. 139523 (2005)].
Substantial performance in good faith
● An attempt in good faith to perform, without
any willful or intentional departure therefrom
● The deviation from the obligation must be
slight, and the omission or defect must be
technical and unimportant, and must not
pervade the whole or be so material that the
object which the parties intended to
accomplish in a particular manner is not
attained [International Hotel Corp. v.
Joaquin, G.R. No. 158361 (2013)].
2. Default, Delay, or Mora
Definition: Delay is the nonfulfillment of an
obligation with respect to time [Gilat Satellite
Networks Ltd. v. UCPB General Insurance Co.
Inc., G.R. No. 189563 (2014)]
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Rules on Default, Delay, or Mora
Unilateral Obligations Reciprocal
Obligations
General Rule: “No Neither party
demand, no delay.” incurs in delay if
the other does not
The mere expiration of comply or is not
the period fixed by the ready to comply in
parties is not enough in a proper manner
order that the debtor with what is
may incur in delay. incumbent upon
him. From the
Those obliged to deliver moment one of the
or to do something parties fulfills his
incur in delay from obligation, delay
the time the obligee by the other
judicially or begins [Art. 1169
extrajudicially (3), Civil Code].
demands from them
the fulfillment of their No delay if
obligation [Art. 1169 neither performs.
(1), Civil Code].
When demand is not necessary in order
that delay may exist [Art. 1169 (2), Civil Code]
a. When demand would be useless, as
when the obligor has rendered it beyond
his power to perform; such as:
1. When the impossibility is caused by
some act or fault of the debtor (e.g.
debtor absconded or has destroyed the
thing to be delivered);
2. When the impossibility is caused by a
fortuitous event, but the debtor has
bound himself to be liable in case of
such event [Tolentino].
b. When from the nature and the
circumstances of the obligation it appears
that the designation of the time when the
thing is to be delivered or the service is
to be rendered was a controlling motive
for the establishment of the contract (time
is of the essence);
c. When the law so provides; or
d. When the obligation expressly declares.
Note: It is insufficient that the law or obligation
fixes a date for performance. It must further
state expressly that after the period lapses,
default will commence.
OBLIGATIONS CIVIL LAW
Kinds of Delay 3. The debtor may relieve himself of the
a. Moral Solvendi obligation by consigning the thing
b. Mora Accipiendi [Tolentino].
c. Compensatio Morae
Compensatio Morae
Mora Solvendi Delay of both parties in reciprocal
Delay on the part of the debtor to fulfill his obligations [Megaworld Properties and
obligation either to give (ex re) or to do (ex Holdings Inc. v. Majestic Finance and
persona). Investment Co., G.R. No. 169694 (2015)].

Requisites Effects
a. Obligation must be liquidated, due and a. Delay of the obligor cancels delay of obligee
demandable (and vice versa) hence it is as if there is no
b. Non-performance by the debtor within the default.
period agreed upon b. The liability of the first infractor shall be
c. Demand, judicial or extra-judicial, by the equitably tempered by the courts. If it cannot
creditor, unless demand is not necessary be determined which of the parties first
under the circumstances enumerated in Art. violated the contract, the same shall be
1169 (2), Civil Code. deemed extinguished, and each shall bear
his own damages [Art. 1192, Civil Code].
Effects
a. The debtor is liable for damages [Art. 1170, Equitable Tempering under Art. 1192 vs.
Civil Code]. under Art. 2215 [Ong v. Bognalbal, G.R. No.
b. For determinate objects, the debtor shall 149140 (2006)]
bear the risk of loss, even if the loss is due Art. 1192 Art. 2215
to fortuitous events [Art. 1165 (3), Civil
Code]. In case both parties In contracts, quasi-
have committed a contracts, and quasi-
Mora Accipiendi breach of the delicts, the court may
Delay on the part of the creditor to accept the obligation, the equitably mitigate the
performance of the obligation [Pantaleon v. liability of the first damages under
American Express International Inc. (AMEX), infractor shall be circumstances other
G.R. No. 174269 (2010)]. equitably tempered than the case referred
by the courts. to in the preceding
Requisites [Pantaleon v. AMEX, supra] article, as in the ff.
a. Debtor offers performance. instances:
b. Offer must be in compliance with the
prestation as it should be performed. (1) That the plaintiff
c. Creditor refuses performance without just himself has
cause. contravened the terms
of the contract -xxx-
Effects
a. The responsibility of the debtor is reduced The second Does not appear to
to fraud and gross negligence. infractor is not liable consider which
b. The debtor is exempted from the risk of loss for damages at all; infractor first
of the thing, which is borne by the creditor. only the first committed the breach.
c. The expenses incurred by the debtor for the infractor is liable,
preservation of the thing after the mora shall but with his liability
be chargeable to the creditor. mitigated.
1. If the obligation bears interest, the debtor
does not have to pay from the time of
delay.
2. The creditor is liable for damages.

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OBLIGATIONS CIVIL LAW
3. Fraud (Dolo) in the Performance of Effect
the Obligation
Art. 1171, Civil Code. Responsibility arising from Voidable and Damages Damages
fraud is demandable in all obligations. Any waiver of
an action for future fraud is void.

Requisites for Fraud to Vitiate a

Definition
Fraud (dolo) is the deliberate or intentional
evasion of the normal fulfillment of an
obligation [Legaspi Oil Co. Inc. v. CA, G.R. No.
96505 (1993)]. It is an inducement through
false representation and insidious machination
[Cathay Pacific Airways Ltd. v. Sps. Vazquez,
G.R. No. 150843 (2003].
Contract (Dolo Causante)
a. It must have been employed by one
contracting party upon the other;
b. It must have induced the other party to
enter into the contract;
c. It must have been serious; and
d. It must have resulted in damage or injury to
the party seeking annulment [Tolentino].

Two Types of Fraud 4. Negligence (Culpa) in the

Dolo Causante
[Art. 1338 (1), Art.
1344, Civil Code]
Definition
Those deceptions or
misrepresentations of a
serious character
employed by one party
and without which the
other party would not
have entered into the
contract [Tankeh v.
DBP, G.R. No. 171428
(2013)].
Dolo Incidente Performance of the Obligation
[Art. 1344 (2), Article 1172, Civil Code. Responsibility arising from
Civil Code] negligence in the performance of every kind of
obligation is also demandable, but such liability may
be regulated by the courts, according to the
circumstances.
Those which are
not serious in Article 1173, Civil Code. The fault or negligence of
character and the obligor consists in the omission of that diligence
without which the which is required by the nature of the obligation and
other party would corresponds with the circumstances of the persons,
still have entered of the time and of the place. x x x x
into the contract
If the law or contract does not state the diligence
[Tankeh v. DBP, which is to be observed in the performance, that
G.R. No. 171428 which is expected of a good father of a family shall
(2013)]. be required.

When Present
Deception is used by
one party prior to or
simultaneous with the
contract, in order to
secure the consent of
the other [Tankeh v.
DBP, G.R. No. 171428
(2013)].
General Rule: Standard of care required is
diligence of a good father of the family.
Deception used by
one party at the Exceptions (Other standards of care)
time of birth or a. Common Carriers
perfection, or They are bound to observe extraordinary
performance of diligence in the vigilance over the goods and
the obligation for the safety of the passengers transported by
them [Art. 1733, Civil Code].

Object b. Hotel and inn-keepers

Essential cause of the Some particular or
obligation without which accident of the
the other party would obligation
not have entered into
the contract
The keepers of hotels or inns shall be
responsible for the deposit of effects, made by
travelers, as depositaries, provided that notice
was given to them, or their employees of such
effects and that they take precautions relative
to the care and vigilance of their effects [Art.
1998, Civil Code].

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This responsibility shall include the loss of, or prima facie to warrant
injury to, the personal property of the guests recovery.
caused by the servants or employees of the
keepers of hotels or inns as well as strangers;
but not that which may proceed from any force Extent of Damages to be Awarded [Art.
majeure [Art. 2000, Civil Code]. 2201, Civil Code]

c. Banks Good Faith Bad Faith

Banks have the obligation to treat the accounts
of its clients ‘meticulously and with the highest Obligor is liable for Obligor shall be
degree of care’ [Poole-Blunden v. UnionBank, those that are the responsible for all
G.R. No. 205838 (2017)]. natural and probable damages which may
consequences of be reasonably
d. Pharmacists the breach of the attributed to the non-
As active players in the field of dispensing obligation, and performance of the
medicines to the public, the highest degree of which the parties obligation.
care and diligence is expected [Mercury Drug have foreseen or
Corporation v. De Leon, G.R. No. 165622 could have Any waiver or
(2008)]. reasonably foreseen renunciation made in
at the time the the anticipation of
Test of Negligence obligation was such liability is null
Whether or not the defendant, in doing the constituted. and void.
alleged negligent act, observed the reasonable
care and caution, which an ordinary and 5. Contravention of the Tenor of the
prudent person would have used in the same
situation. If not, then he is guilty of negligence
Obligation
[Mandarin Villa Inc. v. CA, G.R. No. 119850 The contravention of the tenor includes any
(1996)]. illicit act which impairs the strict and faithful
fulfillment of the obligation. It constitutes every
Kinds of Civil Negligence kind of defective performance [Arrieta v.
National Rice and Corn Corp., G.R. No. L-
Culpa Contractual Culpa Aquiliana 15645 (1964)].

Negligence is merely Negligence is For example, there is a contravention of the

incidental in the direct, substantive, tenor of the obligation when a person tasked to
performance of an and independent. repair a typewriter fails to repair it and, instead,
obligation. returns it in shambles. Under Art. 1167 of the
Civil Code, said person should pay the cost of
There is always a pre- There may or may the labor or service expended in the repair of
existing contractual not be a pre- the typewriter by another person. Under Art.
relation. existing contractual 1170, Civil Code, said person shall also be
obligation. liable for the cost of missing parts because he
failed to return the typewriter in the same
The source of the The source of
condition as it was when he received it [Chaves
obligation of the obligation is the
v. Gonzales, G.R. No. L-27454 (1970)].
defendant to pay defendant’s
damages is the breach negligence itself.
or non-fulfillment of the
contract.

Proof of the existence The negligence of

of the contract and of the defendant must
its breach or non- be proven.
fulfillment is sufficient

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OBLIGATIONS
F. Remedies Available to
Creditor in Cases of Breach
1. Principal Remedies of Creditors
Obligation to Obligation to Give a
Give a Specific Generic Thing and
Thing Obligation to Do
Alternative Remedies
Compel the Ask the obligation to be
debtor to make complied with at the
delivery (specific expense of the debtor
performance) [Art. 1165 (2), Civil
[Art. 1165 (1), Code].
Civil Code]
Rescission [Art. If a person obliged to do
1191, Civil Code] something fails to do it,
the same shall be
executed at his cost [Art.
1167, Civil Code]
What has been poorly
done [may] be undone
[Art. 1167, Civil Code].
Rescission [Art. 1191,
Civil Code]
Damages in any event
Those who in the performance of their
obligations are guilty of fraud, negligence, or
delay, and those who in any manner
contravene the tenor thereof, are liable for
damages [Art. 1170, Civil Code].
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CIVIL LAW
Rescission (Resolution in Reciprocal
Obligations)
Article 1191, Civil Code. The power to rescind
obligations is implied in reciprocal ones, in case one
of the obligors should not comply with what is
incumbent upon him.
The injured party may choose between the
fulfillment and the rescission of the obligation, with
the payment of damages in either case. He may also
seek rescission, even after he has chosen fulfilment,
if the latter should become impossible.
The court shall decree the rescission claimed,
unless there be just cause authorizing the fixing of a
period.
This is understood to be without prejudice to the
rights of third persons who have acquired the thing,
in accordance with Arts. 1385 and 1388 and the
Mortgage Law.
Rescission
The unmaking of a contract, or its undoing from
the beginning, and not merely its termination
[Pryce Corp v. PAGCOR, G.R. No. 157480
(2005)].
Right to Rescind
The rescission on account of breach of
stipulations is not predicated on injury to the
economic interests of the party plaintiff but
on the breach of faith by the defendant, that
violates the reciprocity between the parties
[Universal Food Corporation v. CA, G.R. No. L-
29155 (1970)].
Effect of Rescission Under Art. 1191
Extinguishes the obligatory relation as if it had
never been created, the extinction having a
retroactive effect. Both parties must surrender
what they have respectively received and
return each other as far as practicable to their
original situation [Tolentino].
Rescission may take place extrajudicially, by
the declaration of the injured party. The party
who deems the contract violated may
consider it resolved or rescinded, and act
accordingly, without previous court action,
but it proceeds at its own risk. For it is only
the final judgment of the corresponding court
that will conclusively and finally settle whether
the action taken was or was not correct in law.
But the law definitely does not require that
the contracting party who believes itself
OBLIGATIONS
injured must first file suit and wait for a
judgment before taking extrajudicial steps to
protect its interest [UP v. Delos Angeles, G.R.
No. L-28602 (1970)].
Under Art. 1191, the right to rescind an
obligation is predicated on the violation of the
reciprocity between parties, brought about by a
breach of faith by one of them. Rescission,
however, is allowed only where the breach is
substantial and fundamental to the
fulfillment of the obligation [Del Castillo Vda.
de Mistica v. Naguiat, G.R. No. 137909 (2003);
Sps. Cannu v. Sps. Galang, G.R. No. 139523
(2005)].
It will not be permitted in casual or slight breach
[Song Fo v. Hawaiian Philippines, G.R. No.
23769 (1925)].
Distinguished from Rescission under Art.
1380
Rescission / Rescission [Art.
Resolution [Art. 1380, Civil Code]
1191, Civil Code]
CIVIL LAW
2. Subsidiary Remedies of Creditors
a. Accion Subrogatoria
Article 1177, Civil Code. The creditors, after having
pursued the property in possession of the debtor to
satisfy their claims, may exercise all the rights and
bring all actions of the latter for the same purpose,
save those which are inherent in his person; they
may also impugn the acts which the debtor may
have done to defraud them.
The right of the creditor to exercise all of the
rights and bring all the actions which his debtor
may have against third persons.
In order to satisfy their claims against the
debtor, creditors have the ff. successive
rights:
1. To levy by attachment and execution upon
all the property of the debtor, except those
exempt from execution;
2. To exercise all the rights and actions of the
debtor, except such as are inherently
personal to him; and
3. To ask for rescission of the contracts made
by the debtor in fraud of their rights.

Based on non- Based on lesion or Requisites

performance or fraud upon creditors. 1. The person to whom the right of action
non-fulfillment of pertains must be indebted to the creditor
obligation. 2. The debt is due and demandable
3. The creditor must be prejudiced by the
Action is instituted Action is instituted by failure of the debtor to collect his debts due
only by the injured either party or by a to him from third persons, either through
party. third person. malice or negligence
4. The debtor's assets are insufficient (debtor
Principal action, Subsidiary action, in is insolvent)
retaliatory in the absence of any 5. The right of action is not purely personal to
character. other legal means to the debtor
obtain reparation.
Note: Previous approval of the court is not
Applies only to Applies to either necessary to exercise the accion subrogatoria.
reciprocal unilateral or reciprocal
obligations where obligations even when b. Accion Pauliana
one party is guilty the contract has been Creditors may also impugn the acts which the
of non-fulfillment fully fulfilled.
debtor may have done to defraud them [Art.
In some cases, Court cannot grant a 1177, Civil Code].
court may grant a period or term within
term for which one must Paragraph 3, Article 1381, Civil Code. The
performance. comply. following contracts are rescissible:

Non-performance Non-performance by (3) Those undertaken in fraud of creditors when the

latter cannot in any other manner collect the claims
by the other party is the other party is due them.
important. immaterial.

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Requisites [Cheng v. CA, G.R. No. 144169
(2001)]
1. There is a credit in favor of the plaintiff
prior to the alienation by the debtor
2. The debtor has performed a subsequent
contract conveying patrimonial benefit to
third person/s.
3. The debtor’s acts are fraudulent to the
prejudice of the creditor.
4. The creditor has no other legal remedy to
satisfy his claim
5. The third person who received the
property is an accomplice to the fraud.

An accion pauliana thus presupposes the

following:
1. A judgment;
2. the issuance by the trial court of a writ of
execution for the satisfaction of the
judgment, and;
3. the failure of the sheriff to enforce and
satisfy the judgment of the court.

It requires that the creditor has exhausted the

property of the debtor. The date of the
decision of the trial court is immaterial.
What is important is that the credit of the
plaintiff antedates that of the fraudulent
alienation by the debtor of his property.
After all, the decision of the trial court against
the debtor will retroact to the time when the
debtor became indebted to the creditor [Cheng
v. CA, G.R. No. 144169 (2001)].

Accion Accion Pauliana

Subrogatoria

Not necessary Credit must exist before the

that creditor’s fraudulent act [Tolentino]
claim is prior to
the acquisition Note: Commentators have
of the right by conflicting views on
the debtor whether new debts
contracted by the debtor fall
under the scope of accion
pauliana.

No need for Fraudulent intent is

fraudulent required if the contract
intent rescinded is onerous

No period for Prescribes in 4 years from

prescription the discovery of the fraud

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III. KINDS OF OBLIGATIONS his right [Art. 1188,

A. Pure
Article 1179, Civil Code. Every obligation whose
performance does not depend upon a future or
uncertain event, or upon a past event unknown to
the parties, is demandable at once.
Every obligation which contains a resolutory
condition shall also be demandable, without
prejudice to the effects of the happening of the
event.
A pure obligation is immediately demandable,
regardless of the presence of a condition or a
term/period.
B. Conditional
Article 1181, Civil Code. In conditional obligations,
the acquisition of rights, as well as the
extinguishment or loss of those already acquired,
shall depend upon the happening of the event which
constitutes the condition.
Definition
A condition is a future AND uncertain event.
This includes the acquisition of proof or
knowledge of a past event unknown to the
parties.
1. Kinds of Conditions as to Effect
A. Suspensive
Obligation shall only be effective upon the
fulfillment of the condition [Art. 1181, Civil
Code]. The obligee acquires a mere hope or
expectancy, protected by law, upon the
constitution of the obligation.
Before Fulfillment After Fulfillment
Civil Code].
Doctrine of Constructive Fulfillment of
Suspensive Conditions
Article 1186, Civil Code. The condition shall be
deemed fulfilled when the obligor voluntarily
prevents its fulfillment.
A suspensive condition is deemed fulfilled
when:
1. Obligor intends to prevent obligee from
complying with the condition
2. Obligor actually prevents obligee from
complying with the condition
The two requisites must concur. Mere
intention of the debtor to prevent the happening
of the condition, or to place ineffective
obstacles to its compliance, without actually
preventing the fulfillment, is insufficient
[International Hotel Corporation v. Joaquin,
G.R. No. 158361 (2013)].
Doctrine does not apply to:
1. Resolutory conditions
2. External contingency that is lawfully within
the control of the obligor [Taylor v. Uy Tieng,
G.R. No. L-16109 (1922)]
3. Obligor, in preventing the fulfilment of the
condition, acts pursuant to a right
Principle of Retroactivity in Suspensive
Conditions
Paragraph 1, Article 1187, Civil Code. The effects
of a conditional obligation to give, once the condition
has been fulfilled, shall retroact to the day of the
constitution of the obligation. Nevertheless, when
the obligation imposes reciprocal prestations upon
the parties, the fruits and interests during the
pendency of the condition shall be deemed to have
been mutually compensated.

The demandability The obligation

Rationale: Obligation is constituted when its
and acquisition/ arises or becomes
essential elements concur. The condition
effectivity of the rights effective.
imposed is only an accidental element.
arising from the
obligation is The obligor can be
Applicability: This applies to consensual
suspended, but the compelled to
contracts only.
creditor may bring the comply with what is
appropriate actions incumbent upon
Exception: This does not apply to real
for the preservation of him.
contracts which can only be perfected by
delivery.
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Effects of the Happening of Suspensive 2. Kinds of Conditions as to
Conditions Cause/Origin
To Give To Do/Not To Do a. Potestative
The fulfillment of the condition depends on the
If reciprocal, the In obligations to do or sole act or decision of a party.
fruits and interests not to do, the court
shall be deemed to shall determine the b. Casual
have been mutually retroactive effect of The fulfillment of the condition depends upon
compensated as a the condition that has chance or upon the will of a third person [Art.
matter of justice and been complied with 1182, Civil Code].
convenience [Art. [Art. 1187 (2), Civil
1187 (1), Civil Code] c. Mixed
Code] The fulfillment of the condition depends partly
upon the will of a party to the contract and
If unilateral, the The power of the court partly upon chance and/or will of a third person.
debtor shall includes the
appropriate the determination of
fruits and interests whether or not there Exclusively Condition and obligation
received, unless will be any retroactive upon the are valid.
from the nature and effect. This rule shall Creditor’s Will
circumstance it likewise apply in
should be inferred obligations with a Exclusively Condition and obligation
that the intention of resolutory condition upon the are void because to allow
the persons [Art. 1190 (3), Civil Debtor’s Will such condition would be
constituting the Code] in case of a equivalent to sanctioning
same was different Suspensive obligations which are
[Art. 1187 (1), Civil Condition illusory. It also constitutes
Code] [Art. 1182, a direct contravention of
CC] the principle of mutuality of
contracts.
b. Resolutory
The obligation is demandable at once, without Exclusively Condition and obligation
prejudice to the effects of the happening of the upon the are valid because in such
event [Art. 1179 (2), Civil Code]. Debtor’s Will situation, the position of the
in case of a debtor is exactly the same
Resolutory as the position of the
Before After Fulfillment
Condition creditor when the condition
Fulfillment
[par. 2, Art. is suspensive. It does not
Preservation of Whatever may have 1179, CC] render the obligation
creditor’s rights been paid or delivered by illusory.
[Art. 1188 (1), one or both of the parties
Civil Code] also upon the constitution of The condition that payment should be made by
applies to the obligation shall have Hermosa as soon as he receives funds from
obligations with to be returned upon the the sale of his property in Spain is a mixed
a resolutory fulfillment of the condition condition. The condition implies that the
condition. [Art. 1190 (1), Civil obligor already decided to sell the house
Code]. There is no return and all that was needed to make the
to the status quo. obligation demandable is that the sale be
However, when the consummated and the price thereof
condition is not fulfilled, remitted to the islands.
rights are consolidated
and they become There were still other conditions that had to
absolute in character. concur to effect the sale, mainly that of the
presence of a buyer, ready, able and willing to
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OBLIGATIONS CIVIL LAW
purchase the property under the conditions set
Without With Debtor’s
by the intestate [Hermosa v. Longara, G.R. No.
Debtor’s Fault/Act
L-5267 (1953)].
Fault/Act
Loss, Deterioration, or Improvement of a Loss
Specific Thing before Fulfillment of
Suspensive Condition in Obligations to Obligation is Obligation is converted
Give [Art. 1189, Civil Code] or of Resolutory extinguished. into one of indemnity for
Condition in Obligations to Do or Not to Do damages.
[Art. 1190 (2), Civil Code]
Deterioration
Loss of a A thing is deemed lost:
Impairment to be Creditor may choose
Thing a. When it perishes;
borne by the between bringing an
b. When it goes out of
creditor. action for rescission of
commerce of man; or
the obligation OR
c. When it disappears in such
bringing an action for
a manner that its existence is
specific performance,
unknown or it cannot be
with damages in either
recovered
case.
Deteriorati Any reduction or impairment Improvement
on of a in the substance or value of
Thing a thing which does not Improvement at Improvement by the
amount to a loss the debtor’s thing’s nature or by time
expense, the shall inure to the benefit
Improveme Anything added to, debtor shall of the creditor.
nt of a incorporated in, or attached to ONLY have
Thing the thing that is due. usufructuary
rights.
Re: Obligation to Deliver a Determinate
Thing Re: Obligations To Do and Not To Do
When the conditions have been imposed with
Paragraph 3, Article 1190, Civil Code. As for the
the intention of suspending the efficacy of an obligations to do and not to do, the provisions of the
obligation to give, the following rules shall be second paragraph of article 1187 shall be observed
observed in case of the improvement, loss or as regards the effect of the extinguishment of the
deterioration of the thing during the pendency obligation.
of the condition [Art. 1189, Civil Code]:
Paragraph 2, Article 1187, Civil Code. In
obligations to do and not to do, the courts shall
determine, in each case, the retroactive effect of the
condition that has been complied with.

Re: Obligations With a Resolutory

Condition
Upon the happening of the resolutory
condition, the rules of Art. 1189, Civil Code
shall be applied to the party who is bound to
return (i.e. the creditor in the original
obligation).

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3. Impossible Conditions 3. When the debtor binds himself to pay when
General Rule his means permit him to do so, the
Impossible conditions, those contrary to good obligation shall be deemed to be one with a
customs or public policy and those prohibited period [Art. 1180, Civil Code].
by law shall annul the obligation which
depends upon them [Art. 1183, Civil Code]. Period or Term
Interval of time, which either suspends
Exceptions [Art. 1183, Civil Code] demandability or produces extinguishment.
a. If the obligation is divisible: The part
thereof which is not affected by the A fortuitous event does not interrupt the
impossible or unlawful condition shall be running of the period. It only relieves the
valid. contracting parties from the fulfillment of their
b. If the condition is not to do an respective obligations during the period
impossible thing: Said condition shall be [Victoria’s Planters v. Victoria Milling Co., G.R.
considered as not having been agreed No. L-6648 (1955)].
upon.
Term/Period and Condition Distinguished
4. Positive And Negative Conditions Term/Period Condition
Positive [Art. 1184, Negative [Art.
Interval of time which Fact or event which
Civil Code] 1185, Civil Code]
is future and certain is future and
The condition that The condition that uncertain
some event happen at some event will not
Must necessarily May or may not
a determinate time happen at a
come, although it may happen
shall extinguish the determinate time
not be known when
obligation shall render the
1. as soon as the obligation effective
time expires or from the moment No effect on Gives rise to an
2. if it has become 1. the time existence of the obligation or
indubitable that the indicated has obligation, only its extinguishes one
event will not take elapsed, or demandability or already existing
place. 2. if it has performance
become evident
that the event No retroactive effect Has retroactive
cannot occur. unless there is an effect
agreement to the
Where no date of fulfillment is stipulated, the contrary
condition must be fulfilled within a reasonable
When it is left When it is left
time or the time probably contemplated
exclusively to the will exclusively to the
according to the nature of the obligation [Art.
of the debtor, the will of the debtor, the
1185 (2), Civil Code].
existence of the very existence of the
obligation is not obligation is affected
C. Obligation with a Period or a affected
Term
Kinds of Period [Art. 1193, Civil Code]
1. Obligations for whose fulfillment a day
1. Ex die/ Suspensive Period – Obligation
certain has been fixed ⎯ shall be
becomes demandable after the lapse of the
demandable only when that day comes [Art.
period.
1193, Civil Code].
2. In die/ Resolutory period – Obligation
2. Obligations with a resolutory period ⎯ take
becomes demandable at once but is
effect at once, but terminate upon arrival of extinguished after the lapse of the period.
the day certain [Art. 1193, Civil Code].

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Effect of Advance Payment or Delivery If the period is for the benefit of the debtor
[Art. 1195, Civil Code] alone, he shall lose every right to make use
Trigger: of it:
1. Something has been paid or delivered 1. When after the obligation has been
before the arrival of the period, and contracted, he becomes insolvent, unless
2. The obligor being unaware of the period or he gives a guaranty or security for the debt;
believing that the obligation has become 2. When he does not furnish to the creditor the
due and demandable guaranties or securities which he has
promised;
Effect: That thing paid or delivered may be 3. When by his own acts he has impaired said
recovered with fruits and interests guaranties or securities after their
establishment, and when through a
Loss, Deterioration, or Improvement fortuitous event they disappear, unless he
immediately gives new ones equally
of the Thing Before Period Expires satisfactory;
[Art. 1194, Civil Code] 4. When the debtor violates any undertaking,
Trigger: In case of loss, deterioration or in consideration of which the creditor agreed
improvement of the thing before the arrival of to the period;
the day certain 5. When the debtor attempts to abscond [Art.
1198, Civil Code]
Effect: The rules in Art. 1189 shall apply 6. When required by law or stipulation;
7. If parties stipulated an acceleration clause
Benefit of the Period [Art. 1196, Civil [Tolentino]
Code]
Trigger: Whenever in an obligation a period is When Courts May Fix Period
designated Triggers:
1. If the obligation does not fix a period but it
Effect: It is presumed to have been established can be inferred from its nature and the
for the benefit of both the creditor and the circumstances that a period was intended
debtor [Art. 1197, Civil Code];
2. If the period depends upon the will of the
Exception: From the tenor of the same or debtor [Art. 1197, Civil Code]; or
other circumstances it should appear that the 3. If the debtor binds himself to pay when his
period has been established in favor of one or means permit him to do so and thus the
of the other. obligation is deemed to be one with a period
[Art. 1180, Civil Code].
Period for the benefit of either creditor or
debtor General Rule: The courts may fix the duration
Creditor Debtor of the period. Once fixed by the courts, the
period cannot be changed by the parties. The
Creditor may Debtor may oppose any courts shall determine such period as may,
demand the premature demand on under the circumstances, have been probably
fulfillment or the part of the obligee for contemplated by the parties [Art. 1197, Civil
performance of the performance of the Code].
the obligation at obligation, or if he so
any time but the desires, he may Exception: The court shall not fix a period
obligor cannot renounce the benefit of anymore if the fixing is rendered futile by the
compel him to the period by performing circumstances of the case. For example, if it
accept his obligation in advance. can be deduced that the parties intended that
payment before the obligation be complied with within a
the expiration of reasonable time, and it has been fifty (50) years
the period. since the execution, the reasonable time
contemplated by the parties has already
lapsed. Hence, there is no need to fix a period
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which will only be a mere formality with no other creditor [Art. 1200,
purpose than to delay or lead to an Civil Code].
unnecessary multiplication of suits [Clemente
v. Republic, G.R. No. 220008 (2019)].

“Period probably contemplated by the Loss/impossibility of Loss/impossibility of

parties” all prestations due the prestation due
The seller was given a reasonable time to to a fortuitous event to a fortuitous event
comply with its obligation to construct streets in shall extinguish the is sufficient to
the perimeter of the land. In fixing a period, the obligation. extinguish the
SC ruled that the parties intended that the obligation.
period be indefinite and shall last until the
informal settlers are evicted from the land Loss/impossibility of Loss/impossibility of
where the streets ought to be constructed one of the the substitute/s
[Araneta v. Phil. Sugar Estates, G.R. No. L- prestations does does not extinguish
22558 (1967)]. not extinguish the the obligation,
obligation. provided the
The parents, out of parental love, allowed their obligation which is
children to occupy their land. The SC ruled that due subsists
no period was intended from such agreement.
Hence, the Court has no authority to set a Culpable loss of any Culpable loss of the
period. Rather, the parties implied a resolutory of the objects object which the
condition that the agreement would end upon alternatively due debtor may deliver in
the dissipation of parental love [Macasaet v. before the choice is substitution before
Macasaet, G.R. No. 154391-92 (2004)]. made may give rise the substitution is
to liability on the effected does not
D. Alternative or Facultative part of the debtor. give rise to any
liability on the part of
the debtor.
Alternative and Facultative
Conditions Distinguished
Right of Choice [Art. 1200, Civil Code]
Alternative Facultative
General Rule: Belongs to the debtor
Obligations Obligations

Of the two or more Of the two or more Exceptions

prestations, several prestations, only 1. it is expressly granted to the creditor
are due. one is due, while the 2. it is expressly granted to a third person
other/s may be
performed in Form of notice
substitution of the Notice of selection or choice may be in any
one due. form provided it is sufficient to make the other
party know that the selection has been made.
May be complied May be complied It can be:
with by performance with by performance 1. Oral
of one of the of another prestation 2. In writing
prestations which in substitution of 3. Tacit
are alternatively that which is due. 4. Any other equivocal means [Tolentino]
due.
Consent of other party
The right of choice Choice of prestation The law does not require the other party to
belongs to the pertains only to the consent to the choice made by the party
debtor, unless it debtor. entitled to choose. The only possible exception
has been expressly is when the debtor has chosen a prestation
granted to the which could not have been the object of the

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obligation; the creditor’s consent would bring value may also be
about a novation of the obligation awarded
Debtor cannot make a choice, or delays
selection
If through the creditor's acts the debtor cannot
make a choice according to the terms of the
obligation, the latter may rescind the Some prestations lost/impossible
contract with damages [Art. 1203, Civil
Code].
Debtor to Debtor to perform that
If the debtor does not select at the time perform that which the debtor shall
when performance should be effected, the which he shall choose from among the
choice can be made for him by the creditor choose from remainder, without
by applying Art. 1167 among the liability for damages.
In obligations to do (debtor considered to have remainder.
waived his right, subject to equity
One prestation remains
considerations) [Tolentino].
Effect of notice of choice Debtor to Debtor to perform that
The effect of the notice is to limit the obligation perform that which remains.
to the object or prestation selected. The which remains.
obligation is converted into a simple obligation
to perform the prestation chosen. Once a
selection has been communicated, it is If Creditor’s Choice [Art. 1205, Civil Code]
irrevocable [Ibid]. Fortuitous Debtor’s Fault
Event
Instances when obligation is converted into
a simple obligation All prestations lost/impossible
1. The person with the right of choice has
communicated his choice [Art. 1201 & Debtor is Creditor may claim the
Art.1205 (1), Civil Code] released from price/value of any of
2. Only one prestation is practicable [Art. the obligation. them, with indemnity for
1202, Civil Code] damages.

Loss of Specific Things or Some prestations lost/impossible

Impossibility of Performance of
Prestations in an Alternative Debtor to deliver Creditor may claim any of
that which he those subsisting without
Obligation shall choose a right to damages OR
If Debtor’s Choice [Art. 1204, Civil Code]
from among the price/value of the thing
Fortuitous Debtor’s Fault remainder. lost, with right to
Event damages.

All prestations lost/impossible One prestation remains

Debtor is Creditor shall have a right Debtor to Creditor may claim the
released from to indemnity for damages perform that remaining thing without a
the obligation. based on the value of the which remains. right to damages OR the
last thing which price/value of the thing
disappeared or service lost with right to
which become damages.
impossible, plus
damages other than the

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Facultative Obligations
Only one prestation is agreed upon, but the
obligor may render another in substitution [Art.
1206, Civil Code].
Loss or Deterioration of Substitute in
Facultative Obligations [Art. 1206,
Civil Code]
Before After Substitution is
Substitution is Made
Made
If due to bad faith The loss or deterioration
or fraud of of the substitute on
obligor: obligor is account of the obligor’s
liable. delay, negligence, or
fraud, renders the obligor
If due to the liable because once the
negligence of the substitution is made, the
obligor: obligor is obligation is converted
not liable. into a simple one with the
substituted thing as the
object of the obligation.
E. Joint and Solidary Obligations
1. Joint Obligations
The whole obligation, whether capable of
division into equal parts or not, is to be paid or
performed by several debtors (joint debtors)
and/or demanded by several creditors (joint
creditors).
Each debtor is liable only for a proportionate
part of the debt, and each creditor is entitled
only to a proportionate part of the credit
[Tolentino].
Presumption of Joint Obligation [Art.
1207, Civil Code]
General Rule: An obligation is presumed joint
if there is a concurrence of several creditors, or
of several debtors, or of several creditors and
debtors in one and the same obligation
Exceptions
a. When the obligation expressly states that
there is solidarity
b. When the law requires solidarity, i.e. quasi-
delicts [Art. 2194, Civil Code], joint payees
by mistake [Art. 2157, Civil Code], acts
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under Arts. 19-22, Civil Code, if committed
by two or more persons acting jointly
c. When the nature of the obligation requires
solidarity
d. When a charge or condition imposed upon
heirs or legatees, and the testament
expressly makes the charge or condition in
solidum
e. When the solidary responsibility is imputed
by a final judgment upon several defendants
Presumption of Divisibility in Joint
Obligations [Art. 1208, Civil Code]
Credit or debt shall be presumed to be divided
into as many equal shares as there are
creditors or debtors, the credits or debts being
considered distinct from one another.
Joint Divisible Obligation
One where a concurrence of several creditors,
or of several debtors, or of several creditors
and debtors, by virtue of which, each of the
creditors has a right to demand, and each of
the debtors is bound to render compliance with
his proportionate part of the prestation which
constitute the object of the obligation.
Joint Indivisible Obligation
Article 1209, Civil Code. If the division is
impossible, the right of the creditors may be
prejudiced only by their collective acts, and the debt
can be enforced only by proceeding against all the
debtors. If one of the latter should be insolvent, the
others shall not be liable for his share.
When there are several debtors or creditors,
but the prestation is indivisible, the obligation is
joint, unless solidarity has been stipulated
[Tolentino].
When Indivisible [Art. 1225, Civil Code]
a. Obligations to give definite things
b. Obligations not susceptible of partial
performance
c. Indivisibility is provided by law or intended
by the parties, even though the object or
service may be physically divisible
c. In obligations not to do, when character of
prestation requires indivisibility
OBLIGATIONS CIVIL LAW
Summary: in case of Breach debtor is bound to debtor is not bound
Joint Divisible Joint Indivisible pay the entire to pay more than his
Obligations Obligations prestation share

In case of In case of breach where Effect of breach: Effect of breach:

breach of one of the joint debtors Solidarity remains Obligation is
obligation by fails to comply with his converted to
one of the undertaking, the indemnity for
debtors, obligation can no longer damages
damages due be fulfilled or performed.
must be borne Thus, the action must be All debtors are liable Only the debtors
by him alone. converted into one for for breach committed guilty of breach of
indemnity for damages, by a co-debtor obligation is liable for
with each debtor liable damages
only for his part in the
price or value of the All debtors are Other debtors are not
prestation. proportionately liable liable if one debtor is
for insolvency of one insolvent
debtor
2. Solidary Obligations
An obligation where there is concurrence of
several creditors, or of several debtors, or of Kinds of Solidary Obligations
several creditors and several debtors, by virtue As to Source
of which, each of the creditors has the right to a. Legal – imposed by law
demand, and each of the debtors is bound to b. Conventional – agreed upon by parties
render, entire compliance with the prestation c. Real – imposed by the nature of the
which constitutes the object of the obligation. obligation

The indivisibility of an obligation does not As to Parties Bound

necessarily give rise to solidarity. Nor does a. Active (solidarity among creditors) – Each
solidarity of itself imply indivisibility [Art. 1210, creditor has the authority to claim and
Civil Code]. enforce the rights of all, with the resulting
obligation of paying everyone what belongs
Solidarity may exist although the creditors and to him.
the debtors may not be bound in the same b. Passive (solidarity among debtors) – Each
manner and by the same periods and condition debtor can be made to answer for the
[Art. 1211, Civil Code]. others, with the right on the part of the
debtor-payor to recover from the others their
respective shares.
Solidarity Indivisibility c. Mixed (solidarity among creditors and
debtors) – The creditor can commence an
Refers to the legal tie Refers to the
action against anyone of the debtors for the
(vinculum juris), and prestation that is not
compliance with the entire obligation minus
consequently to the capable of partial
the portion or share which corresponds to
subjects or parties of performance
the debtor affected by the condition or
the obligation
period [Art. 1211, Civil Code].
More than one Exists even if there is
creditor or more than only one creditor Active Solidary Obligation (among
one debtor (plurality and/or one debtor creditors)
of subjects) Article 1214, Civil Code. The debtor may pay any
one of the solidary creditors; but if any demand,
Each creditor may Each creditor cannot judicial or extrajudicial, has been made by one of
demand the entire demand more than them, payment should be made to him.
prestation and each his share and each

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OBLIGATIONS
Effects of Active Solidarity [Tolentino]
a. Death of solidary creditor does not
transmit solidarity to his heirs but rather to
all of them taken together (joint)
b. Each represents the other in receiving
payment and all other advantageous acts
(i.e. interrupt prescription and render the
debtor in default for the benefit of all
creditors)
c. Each one of the solidary creditors may do
whatever may be useful to the others, but
not anything which may be prejudicial to the
latter [Art. 1212, Civil Code]
d. One creditor does NOT represent all
others in acts such as novation (even if
advantageous), compensation and
remission. In this case, even if the debtor is
released, the other creditors can still
enforce their rights against the creditor who
made the novation, compensation or
remission [Art. 1215 (2), Civil Code]
e. The creditor who collects the debt, shall
be liable to the others for the share in the
obligation corresponding to them [Art. 1215
(2), Civil Code]
f. The credit and its benefits are divided
equally among them, unless agreement to
the contrary.
g. Debtor may pay any one of the solidary
creditors; but if any demand, judicial or
extrajudicial, has been made by one of
them, payment should be made to him who
demanded [Art. 1214, Civil Code]
Passive Solidary Obligation
General Rules
a. The creditor may proceed against any one
of the solidary debtors or some or all of them
simultaneously, so long as the debt has not
been fully collected [Art. 1216, Civil Code].
b. Payment made by one of the solidary
debtors extinguishes the obligation. If two or
more solidary debtors offer to pay, the
creditor may choose which offer to accept
[Art. 1217, Civil Code].
c. A solidary debtor may, in actions filed by the
creditor, avail himself of all defenses which
are derived from the nature of the obligation
and of those which are personal to him, or
pertain to his own share. For defenses
which personally belong to the others, such
debtor may avail himself thereof only as
regards that part of the debt for which the
latter are responsible [Art. 1222, Civil Code].
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Effects of Passive Solidarity [Tolentino]
a. Each debtor can be required to pay the
entire obligation, but after payment he can
recover from the co-debtors their respective
shares
b. Each debtor may set up his own claims
against the creditor as payment of the
obligation
c. Remission of the entire debt affects all
debtors, but when remission is limited to the
share of one debtor, the other debtors are
still liable for the balance of the obligation
1. The remission of the whole obligation,
obtained by one of the solidary debtors,
does not entitle him to reimbursement
from his co-debtors [Art. 1220, Civil
Code].
2. The remission made by the creditor of
the share which affects one of the
solidary debtors does not release the
latter from his responsibility towards the
co-debtors, in case the debt had been
totally paid by any one of them before the
remission was effected [Art. 1219, Civil
Code].
d. All debtors are liable for the loss of the thing
due, even if only one of them is at fault, or
after incurring delay it is lost by fortuitous
event
e. Interruption of prescription as to one debtor
affects all others, but renunciation of
prescription already had does not prejudice
the others. (Reason: prescription
extinguishes the mutual representation
among solidary debtors)
f. Interests due by delay of one is borne by all
of them
Defenses Available to a Solidary Debtor
[Art. 1222, Civil Code]
a. Those derived from the nature of the
obligation
Defenses inherent in an obligation include non-
existence of the obligation because of absolute
simulation or illicit object, nullity due to defect
in capacity or consent of all debtors,
unenforceability, non-performance of
suspension condition or non-arrival of period,
extinguishment of the obligation, res judicata,
and prescription.
b. Those personal to him
Personal defenses such as minority, insanity,
fraud, violence, or intimidation will serve as a
OBLIGATIONS CIVIL LAW
complete exemption of the defendant debtor Loss of the thing or impossibility of
from liability to the creditor performance of the passive/mixed
solidary obligation [Art. 1221, Civil
c. Those pertaining to his own share Code]
d. Those personally belonging to other co- Without The obligation shall be
debtors but only as regards that part of the fault of the extinguished.
debt for which the latter are responsible. debtors

Comparing Demand Upon Solidary Debtor With fault All debtors shall be responsible
and Payment by a Solidary Debtor of any of to the creditor, for the price and
the the payment of damages and
Demand Upon a Payment by a debtors interest, without prejudice to
Solidary Debtor Solidary Debtor their action against the guilty or
negligent debtor.
The demand made Full payment
against one of them made by one of Through a All debtors shall be responsible
shall not be an obstacle the solidary fortuitous to the creditor, for the price and
to those which may debtors event after the payment of damages and
subsequently be extinguishes the one interest, without prejudice to
directed against the obligation [Art. incurred their action against the guilty or
others so long as the 1217, Civil Code]. in delay negligent debtor.
debt has not been fully
collected [Art. 1216,
Civil Code]. F. Obligations with a Penal Clause
The creditor may If two or more Penal Clause
proceed against any solidary debtors An accessory undertaking to assume greater
one of the solidary offer to pay, the liability in case of breach. It is generally a sum
debtors or all creditor may of money, but it can be any other thing like an
simultaneously [Art. choose which act or abstention [Tolentino].
1216, Civil Code]. offer to accept
[Art. 1217, Civil If the principal obligation is void, the penal
Code]. clause shall also be void. However, the nullity
of the penal clause does not carry with it the
A creditor’s right to The solidary nullity of the principal obligation [Art.1230, Civil
proceed against the debtor who made Code].
surety exists the payment shall
independently of his have the right to
Rules on Penalty
right to proceed against claim from his co-
1. The penalty shall substitute the indemnity
the principal. debtors the share
for damages and payment of interest in
which
case of non-compliance [Art. 1226, Civil
corresponds to
Code], unless:
them with interest,
a. There is an express provision to that
UNLESS barred
effect
by prescription or
b. The obligor refuses to pay the penalty
illegality [Art.
c. The obligor is guilty of fraud in non-
1218, Civil Code].
fulfillment
2. Debtor cannot exempt himself from the
performance of the principal obligation by
paying the stipulated penalty unless this
right has been expressly reserved for him
[Art. 1227, Civil Code].
3. Creditor cannot demand the fulfillment of
the principal obligation and demanding the
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OBLIGATIONS CIVIL LAW
satisfaction of the penalty at the same time is addressed to the sound discretion of the
unless the right has been clearly granted to court [Ligutan v CA, G.R. No. 138677 (2002)].
him [Art. 1227, Civil Code]. A tacit or implied
grant is admissible.
a. If the creditor chooses to demand the
satisfaction of the penalty, he cannot
afterwards demand the fulfillment of the
obligation.
b. If there was fault on the part of the
debtor, creditor may demand not only
the satisfaction of the penalty but also
the payment of damages.
c. If the creditor has chosen to demand
the fulfillment of the principal
obligation and the performance
thereof becomes impossible without
his fault, he may still demand the
satisfaction of the penalty.

Enforcement of the Penalty

The enforcement of the penalty can be
demanded by the creditor only when the non-
performance is due to the fault or fraud of the
debtor. However, the creditor does not have to
prove fault or fraud, since the non-performance
gives rise to the presumption of fault
[Tolentino].

Proof of Actual Damage

Proof of actual damage suffered by the creditor
is not necessary in order that the penalty may
be enforced [Art. 1228, Civil Code].

When Penalty may be Reduced [Art.

1229, Civil Code]:
1. If the principal obligation has been partly
complied with.
2. If the principal obligation has been
irregularly complied with.
3. If the penalty is iniquitous or
unconscionable, even if there has been no
performance.

The question of whether a penalty is

reasonable or iniquitous can be partly
subjective and partly objective. Its resolution
would depend on such factors as, but not
necessarily confined to, the type, extent and
purpose of the penalty, the nature of the
obligation, the mode of breach and its
consequences, the supervening realities, the
standing and relationship of the parties, and
the like, the application of which, by and large,

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OBLIGATIONS CIVIL LAW

IV. EXTINGUISHMENT OF b. Object of Payment

Integrity of Prestation
OBLIGATIONS General Rule: A debt shall be understood to
have been paid when the thing or service in
Modes of Extinguishing which the obligation consists has been
completely delivered or rendered [Art. 1233,
Obligations [Par. 1., Art. 1231, Civil Code]
Civil Code]
1. By payment or performance Exceptions:
2. By the loss of the thing due; 1. When the obligation has been substantially
3. By the condonation or remission of the debt; performed in good faith [Art. 1234, Civil
4. By the confusion or merger of the rights of Code]
creditor and debtor; 2. When the obligee accepts performance
5. By compensation; despite its incompleteness or irregularity
6. By novation and without expressing any protest or
correction [Art. 1235, Civil Code]
Other Modes of Extinguishing
Identity of Prestation
Obligations [Par. 2, Art. 1231, General Rules
Civil Code] For obligations to give: The same thing or the
1. By annulment same prestation, in the manner agreed upon,
2. By rescission must be delivered or performed. The debtor of
3. By fulfillment of a resolutory condition a thing cannot compel the creditor to receive a
4. Prescription different one, although the latter may be of the
same value as, or more valuable than that
Other Forms of Extinguishment which is due [Art. 1244, Civil Code].
Not Found in Art. 1231 For obligations to do or not to do: an act or
1. Death of one of the contracting parties in
forbearance cannot be substituted by another
personal obligations [Art. 1311 (1), Civil
act or forbearance against the obligee's will
Code]
[Art. 1244, Civil Code].
2. Will of one of the contracting parties
3. Renunciation or Waiver by the creditor
Exceptions to Art. 1244, Civil Code:
4. Mutual Desistance or withdrawal [Saua
1. If the obligation is facultative [Art. 1206,
Import & Export Co. v. DBP, G.R. No. L-
Civil Code]
24968 (1972)]
2. When creditor agrees to a dation in
5. Happening of a fortuitous event [Art. 1165,
payment [Art. 1245, Civil Code]
Civil Code]
3. When obligee accepts incomplete or
6. Compromise [Art. 2028, Civil Code]
irregular performance without any
7. Impossibility of fulfillment [Art. 1184 & 1266,
protest → obligation deemed fully complied
Civil Code]
with [Art. 1235, Civil Code].
8. Expiration of resolutory term or period [Art.
4. If there is substantial performance by
1193 (2), Civil Code]
debtor → The obligor may recover as
though there had been a strict and complete
A. Payment or performance fulfillment, less damages suffered by the
obligee [Art. 1234, Civil Code]
1. Payment
a. Definition Requisites of substantial performance:
The delivery of money OR the performance of 1. Attempt in good faith to perform without
obligation [Art. 1232, Civil Code] willful or intentional departure
2. Deviation is slight
3. Omission or defect is unimportant
4. Must be not so material that intention of the
parties is not attained [International Hotel
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OBLIGATIONS CIVIL LAW
Corporation v. Joaquin, G.R. No. 158361 Effects of payment by interested third
(2013)] person
a. Obligation is extinguished;
c. Necessity of Complete Performance b. Debtor should fully reimburse the
[Art. 1248, Civil Code] interested third person;
General Rules: c. The interested third person is
1. Creditor cannot be compelled partially to subrogated to the rights of the creditor
receive the prestations in which the [Paras].
obligation consists. 4. A third person not interested in the
2. Debtor may not be required to make partial obligation. However, the creditor is not
payments bound to accept payment by him, unless
there is a stipulation to the contrary [Art.
Exceptions: 1236, Civil Code].
1. There is an express stipulation that permits
partial performance Payment by a third person not interested
2. When the debt is in part liquidated and in in the fulfillment of the obligation
part unliquidated, the creditor may demand General Rule: The creditor is not bound to
and the debtor may effect the payment of accept payment or performance by a third
the former without waiting for the liquidation person who has no interest in the fulfillment of
of the latter the obligation [Art. 1236, Civil Code]
3. When the nature of the obligation is
susceptible to partial fulfillment (e.g. there Exception: Stipulation to the contrary [Art.
are different prestations with different terms 1236, Civil Code]
and conditions, or the obligation cannot be
performed at one time) Reimbursement for Payment Made by a
Third Person
d. By whom
Payor must have: The third party The third party
1. free disposal of the thing due, and pays with the pays without the
2. capacity to alienate it [Art. 1239, Civil consent of the knowledge or
Code]. debtor consent of the
debtor
Free disposal of the thing due means that the
thing to be delivered must not be subject to The third party may The third party may
any claim or lien or encumbrance of a third claim reimbursement only claim insofar as
person. Capacity to alienate means that the for the full amount the payment has
person is not incapacitated to enter into [Art. 1236, Civil been beneficial to the
contracts [Arts. 1327, 1329, Civil Code] and Code]. debtor [Art. 1236,
for that matter, to make a disposition of the Civil Code].
thing due [De Leon].
The third party is The third party
Payor may either be: presumed to be cannot compel the
1. The debtor or his duly authorized agent legally subrogated creditor to subrogate
2. The debtor’s heir or successor in interest [Art. 1302, Civil him on his rights [Art.
3. A third person interested in the Code]. 1237, Civil Code].
fulfillment of the obligation (i.e. co-
debtor, guarantor, surety, owner of
mortgaged property or pledge) whether the
debtor consents to it or not, and even
without debtor’s knowledge [Art. 1302, Civil
Code]. This includes payment by a joint
debtor [Monte de Piedad y Caja de Ahorros
de Manila v. Rodrigo, G.R. No. L-42928
(1936)] but not a solidary co-debtor.
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OBLIGATIONS
Reimbursement and Subrogation
Distinguished
Reimbursement Subrogation
Personal action to Includes
recover amount paid reimbursement, but
also the exercise of
other rights attached
to the original
obligation (e.g.
guaranties,
securities)
Payment made by a third person who does
not intend to be reimbursed by the debtor is
deemed to be a donation, which requires the
debtor's consent. But the payment is in any
case valid as to the creditor who has accepted
it [Art. 1238, Civil Code].
e. To whom
1. Payment shall be made to:
a. the person in whose favor the obligation
has been constituted; or
b. his successor in interest; or
c. any person authorized to receive it [Art.
1240, Civil Code]
● Person authorized to receive
payment refers not only to a person
authorized by the creditor, but also to
a person authorized by law to do so
[Jurado].
2. Payment to a person who is
incapacitated to administer his
property shall be valid if:
a. he has kept the thing delivered, OR
b. insofar as the payment has been
beneficial to him [Art. 1241 (1), Civil
Code].
3. Payment made to a third person may
also be valid
a. Insofar as it has redounded to the benefit
of the creditor
b. Proof that such payment has redounded
to the benefit of the creditor is required.
c. When payment is made to the wrong
party, the obligation is not extinguished
as to the creditor who is without fault or
negligence even if the debtor acted in
utmost good faith and by mistake as to
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the person of the creditor or through error
induced by fraud of a third person [Allied
Banking Corp. v. Lim Sio Wan, G.R. No.
133179 (2008)].
Exceptions:
1. Subrogation: if after the payment, the third
person acquires the creditor’s rights;
2. Ratification: if the creditor ratifies the
payment to the third person;
3. Estoppel: if by the creditor’s conduct, the
debtor has been led to believe that the third
person has authority to receive the payment
[Art. 1241, Civil Code];
4. Payment made in good faith to any person
in possession of the credit shall release the
debtor [Art. 1242, Civil Code];
5. Payment made to the creditor by the debtor
after the latter has been judicially ordered
to retain the debt shall not be valid [Art.
1243, Civil Code].
f. Place of Payment
1. In the place designated in the obligation.
2. In the absence of stipulation and if the
obligation is to deliver a determinate thing
→ wherever the thing might be at the
moment the obligation was constituted.
3. In any other case: domicile of debtor [Art.
1251, Civil Code]
g. Time of Payment
General Rule: Upon demand
Exceptions:
1. When time is of the essence
2. When the debtor loses the benefit of the
period
3. When the obligation is reciprocal
h. Form of Payment
General Rule: Payment must be made in the
currency stipulated
Exception: if payment is not possible in such
currency → pay in legal tender [Art. 1249, Civil
Code].
Legal Tender
Such currency which in a given jurisdiction can
be used in the payment of debts, and which
cannot be refused by the creditor.
OBLIGATIONS
When payment is not in legal tender
General Rule: The creditor may refuse to
accept payment (e.g. checks) not made in legal
tender [Philippine Airlines v. Court of Appeals,
G.R. No. L-49188 (1990)].
● Checks representing demand deposits do
not have legal tender power and their
acceptance in the payment of public and
private debts is at the creditor’s option [Sec.
60, R.A. No. 7653].
● If the creditor accepts the check or no
prompt objection to the form of payment is
made, there is a valid tender of payment
and credit can no longer claim later that
payment is not in legal tender [Pabugais v.
Sahijwani, G.R. No. 156846 (2004)]
● When payment in check is accepted, it
produces the effect of payment only when
the check is cleared and the funds are
transferred to the account of the creditor
[Evangelista v. Screenex, Inc., G.R. No.
211564 (2017)].
The delivery of promissory notes payable to
order, or bills of exchange or other mercantile
documents shall produce the effect of payment
only when:
1. they have been cashed, or
2. through the fault of the creditor they
have been impaired [Art. 1249 (2), Civil
Code].
Extraordinary Inflation or Deflation
In case an extraordinary inflation or deflation of
the currency stipulated should supervene →
the value of the currency at the time of the
establishment of the obligation shall be the
basis of payment
Exception: There is an agreement to the
contrary [Art. 1250, Civil Code].
Requisites for application of Art. 1250, Civil
Code
1. Official declaration of extraordinary inflation
of deflation from the BSP
2. Obligation is contractual in nature
3. Parties expressly agreed to consider the
effects of extraordinary inflation or deflation
[Equitable PCI Bank v. Sheung Ngor, G.R.
No. 171545 (2007)]
Even if the price index of goods and services
may have risen during the intervening period,
this increase, without more, cannot be
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considered as resulting to "extraordinary
inflation" as to justify the application of Art.
1250, Civil Code [Telengtan & Sons, Inc. v.
United States Lines, G.R. No. 132284 (2006)].
Extraordinary Inflation or Deflation
Requires Judicial Determination
The supervening of extraordinary inflation is
never assumed. The party alleging it must lay
down the factual basis for the application of Art.
1250, Civil Code. The effects of extraordinary
inflation are not to be applied without an official
declaration by competent authorities and the
only competent authority so far recognized by
this Court to make such an official
proclamation is the BSP [Citibank v.
Sabeniano, G.R. No. 156132 (2007)].
2. Application of Payments
Requisites If there is plurality of debts, the
debtor, at the time of payment, may declare to
which of the debts the payment must be
applied, provided:
a. Debts are of the same kind
b. Debts are owed to the same creditor and by
the same debtor
c. All debts are due, UNLESS parties so
stipulate, or when application is made by the
party for whose benefit the term has been
constituted
d. Payment made is not sufficient to cover all
debts [Art. 1252, Civil Code]
Rules on Application of Payments
a. Preferential right of debtor - debtor has
the right to select which of his debts he is
paying [Art. 1252, Civil Code].
b. The debtor makes the designation at the
time he makes the payment.
c. If not, the creditor makes the application,
by so stating in the receipt that he issues,
unless there is cause for invalidating the
contract.
d. If neither the creditor nor debtor exercises
the right to apply, or if the application is not
valid, the application is made by operation
of law.
Note: The court will apply the payment
according to the justice and equity of the case,
taking into consideration all its circumstances
[Premiere Development Bank v. Central
Surety, G.R. No. 176246 (2009)].
OBLIGATIONS CIVIL LAW
e. If debt produces interest, the payment of b. Alienation to the creditor of a property by
principal is not deemed to have been made the debtor with the creditor’s consent
unless the interests are covered [Art. 1253, c. Satisfaction of the money obligation
Civil Code].
f. When no application can be inferred from 4. Payment by cession
the circumstances of payment, it is applied: Special form of payment where the debtor
a. to the most onerous debt of the debtor; assigns/abandons ALL his property for the
or benefit of his creditors in order that from the
b. if debts due are of the same nature and proceeds thereof, the latter may obtain
burden, to all the debts in proportion payment of their credits.
[Art. 1254, Civil Code].
g. Rules on application of payment may not Requisites
be invoked by a surety or solidary a. There is a plurality of debts
guarantor. b. There is a plurality of creditors
c. Partial or relative insolvency of debtor
Exceptions: d. Acceptance of the cession by the
a. Rules on application of payment cannot be creditors
made applicable to a person whose e. Debtor is released only for the net proceeds
obligation as a mere surety is both unless there is a stipulation to the contrary
contingent and singular. There must be full [Art. 1255, Civil Code].
and faithful compliance with the terms of the
contract [Reparations Commission v. Remedy if Creditors Refuse Cession
Universal Deep-Sea Fishing Corp., G.R. There will be a proceeding in accordance with
Nos. L-21901 and L-21996 (1978)]. the FRIA such that all of the assets of an
b. The debtor’s right to apply payment can be insolvent debtor are pooled then sold for the
waived and even granted to the creditor if benefit of the creditors [R.A. No. 10142].
the debtor so agrees [Premiere
Development v. Central Surety, G.R. No. Cession and Dation Distinguished
176246 (2009)].
Cession Dacion en Pago
Limitations
Plurality of creditors One creditor
a. Creditor may refuse partial payment [Art.
1248, Civil Code]
b. Payment of principal not yet made if Debtor must be Debtor not
interest has not been covered [Art. 1253, partially or relatively necessarily in state
Civil Code] insolvent of financial difficulty
c. Debtor cannot apply payment to a debt
which is not yet liquidated Universality of Thing delivered is
d. He cannot choose a debt with a period property is ceded equivalent of
(established for the creditor’s benefit) performance
before the period has arrived.
Merely releases Extinguishes
e. Stipulation as to preference of payment
debtor for the net obligation to the
[Tolentino].
proceeds of things extent of the value of
ceded or assigned, the thing delivered,
3. Dation in Payment unless there is as agreed upon,
Definition contrary intention proved or implied
Delivery and transmission of ownership of a from the conduct of
thing by the debtor to the creditor as an the creditor
accepted equivalent of the performance of the
obligation (dacion en pago). Involves all Does not involve all
properties of debtor properties of debtor
Requisites
a. Existence of a money obligation

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Tender of Payment and Consignation
Creditor does not Creditor becomes
Distinguished
become owner of the owner
ceded property Tender of Payment Consignation

5. Tender of Payment and Manifestation made Deposit of the object

Consignation by the debtor to the of obligation in a
a. Definitions creditor of his desire competent court in
1. Tender of payment to comply with his accordance with the
Manifestation made by the debtor to the obligation, with offer rules prescribed by
creditor of his desire to comply with his of immediate law whenever the
obligation, with offer of immediate performance. creditor unjustly
performance [Del Carmen v. Sps. Sabordo, refuses payment or
G.R. No. 181723 (2014)]. because of some
circumstances which
Tender of payment must be made in the lawful render direct
currency. The tender of a check to pay for an payment to the
obligation is not a valid tender of payment creditor impossible
thereof [Soco v. Militante, G.R. No. L-58961 or inadvisable.
(1983)].
Antecedent or Principal act
2. Consignation preparatory act
Deposit of the object of obligation in a
Extrajudicial Judicial
competent court in accordance with the rules
prescribed by law whenever the creditor
unjustly refuses payment or because of some Both Tender and Consignation Needed To
circumstances which render direct payment to Produce Effect of Payment
the creditor impossible or inadvisable. To have the effect of payment and the
consequent extinguishment of the obligation to
b. Requisites of Consignation pay, the law requires the companion acts of
1. There is a debt due; tender of payment and consignation. Tender of
2. Consignation is made because of some payment without consignation only frees the
legal cause: debtor from the obligation to pay interest on the
a. There was tender of payment and amount due from the time the unjustified
creditor refuses without just cause to refusal takes place [Go Cinco v. CA, G.R. No.
accept it 151903 (2009)].
b. Instances when consignation alone
would suffice as provided under Art. c. When tender and refusal not required/
1256, Civil Code Consignation alone is sufficient [Art.
3. Previous notice of consignation was given 1256, Civil Code]
to those persons interested. Previous 1. Creditor is absent or unknown, or does not
notice is essential to the validity of the appear at the place of payment;
consignation and its lack invalidates the 2. Creditor is incapacitated to receive the
same [Soco v. Militante, G.R. No. L- 58961 payment at the time it is due;
(1983)] (1st notice) 3. When without just cause, creditor refuses
4. Actual deposit/consignation with proper to give receipt;
judicial authority 4. Two or more persons claim the same right
5. Subsequent notice of consignation (2nd to collect (i.e. Interpleader);
notice) 5. Title of the obligation has been lost.

Unless there is an unjust refusal by a creditor

to accept payment from a debtor, Art. 1256,

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Civil Code cannot apply [Llobrera v.
Fernandez, G.R. No. 142882 (2006)].
d. What constitutes valid consignation
In order that the consignation of the thing due
may release the obligor, it must first be
announced to the persons interested in the
fulfilment of the obligation. The consignation
shall be ineffectual if it is not made strictly in
consonance with the provisions which regulate
payment [Art. 1257, Civil Code].
e. How consignation is made
Consignation shall be made by depositing the
things due at the disposal of judicial
authority, before whom the tender of payment
shall be proved, in a proper case, and the
announcement of the consignation in other
cases. The consignation having been made,
the interested parties shall also be notified
thereof [Art. 1258, Civil Code].
f. Who bears the expenses
The expenses of consignation, when properly
made, shall be charged against the creditor
[Art. 1259, Civil Code].
The expenses are chargeable to the debtor if
consignation is not properly made [De Leon].
g. Effects of Consignation
If accepted by the creditor or judicial
declaration by the Court that consignation is
properly made:
1. Debtor is released in same manner as if he
had performed the obligation at the time of
consignation
2. Accrual of interest is suspended from the
moment of consignation
3. Deterioration or loss of the thing or
amount consigned, occurring without the
fault of debtor, must be borne by creditor
from the moment of deposit
When Consignation is Completed
Consignation is completed at the time the
creditor accepts the same without objections,
or, if he objects, at the time the court declares
that it has been validly made in accordance
with law [Dalton v. FGR Realty and
Development Corporation, G.R. No. 172577
(2011)].
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h. Withdrawal of Consigned Amount by
the Debtor
1. Amount deposited may be withdrawn by
debtor if made before approval of the
court or acceptance of the creditor. In
such a case, obligation remains in force [Art.
1260 (2), Civil Code].
2. After approval of the court or acceptance by
the creditor, with the consent of the latter →
Obligation remains in force, but guarantors
and co-debtors are released. Preference of
the creditor over the thing is lost [Art. 1261,
Civil Code].
3. After approval of the court or acceptance by
the creditor, and without creditor’s consent
→ debtor can no longer withdraw the
consigned amount since the obligation has
already been extinguished [Pabugais v.
Sahijwani, G.R. No. 156846 (2004)].
4. If the creditor authorizes the debtor to
withdraw, third persons who were benefited
by the consignation are not prejudiced by
the revival of the obligation.
B. Loss of determinate thing due
or impossibility or difficulty
of performance
1. Loss
a. Loss of Determinate Things
General Rule: Obligor shall not be liable for
delivery of a determinate thing when:
1. Thing is lost or destroyed without debtor’s
fault; and
2. Debtor has not incurred in delay [Art. 1262
(1), Civil Code].
Exception: the obligor is still liable for the loss
when:
1. Law or a stipulation provides that obligor
is still liable for fortuitous events; or
2. The nature of the obligation requires an
assumption of risk.
• In such a case, obligor is also liable for
damages [Art. 1262 (2), Civil Code].
3. When the obligation to deliver a determinate
object arises from a criminal act → debtor
shall be liable for the payment of its price
[Art. 1268, Civil Code]
4. Acceptance of payments in bad faith [Art.
2159, Civil Code]
OBLIGATIONS CIVIL LAW
When the legal excuse of fortuitous event is d. Presumption of Fault
not applicable: General Rule: It is presumed that the loss was
1. Obligor delays delivery of determinate thing due to debtor’s fault when the thing is lost while
[Art. 1165 (3), Civil Code]; in his possession [Art. 1265, Civil Code].
2. Obligor promises to deliver the same
thing to two or more persons who do not Exceptions:
have the same interest [Art. 1165 (3), Civil 1. There is proof to the contrary; or
Code]; 2. In case of earthquake, flood, storm or
3. Nature of the obligation requires other natural calamity [Art. 1265, Civil
assumption of risk [Art. 1174, Civil Code] Code].
4. Provided by law or stipulation; [Art. 1174,
Civil Code] e. Loss in Obligations to Give with
5. Liability of a bailee in fortuitous events; Resolutory Conditions
[Art. 1942, Civil Code] When the conditions have been imposed with
6. Liability of a depositary in fortuitous the intention of suspending the efficacy of an
events [Art. 1979, Civil Code] obligation to give, the following rules shall be
7. Liability of the officious manager in observed in case of the improvement, loss or
fortuitous events [Art. 2147, Civil Code]. deterioration of the thing during the pendency
of the condition:
b. Loss of Generic Things 1. If the thing is lost without the fault of the
General Rule: Obligation is NOT extinguished. debtor, the obligation shall be extinguished;
Article 1263, Civil Code. In an obligation to deliver 2. If the thing is lost through the fault of the
a generic thing, the loss or destruction of anything of debtor, he shall be obliged to pay damages;
the same kind does not extinguish the obligation. it is understood that the thing is lost
when it perishes, or goes out of
Exceptions: commerce, or disappears in such a way
1. Delimited Generic Thing - When there is a that its existence is unknown or it cannot
limitation of the generic object to a particular be recovered [Art. 1189, Civil Code].
existing mass or a particular group of things,
the obligation is extinguished by the loss of Effects of Loss [Arts. 1262-1263, Civil Code]
the particular mass or group or limited Obligation to Obligation to
quantity from which the prestation has to be Deliver a Deliver a
taken [Tolentino] Specific Thing Generic Thing
2. Genus goes out of commerce - The
obligation to deliver is extinguished Obligation is Loss of a generic
extinguished if the thing does not
c. Partial Losses thing was destroyed extinguish an
When there is partial loss of the object, the without fault of the obligation, EXCEPT
courts shall determine whether, under the debtor and before he in case of delimited
circumstances, the partial loss is so important has incurred delay. generic things,
as to extinguish the obligation [Art. 1264, Civil where the kind or
Code]. In other words, the court will decide class is limited itself,
whether the partial loss is such as to be and the whole class
equivalent to a complete or total loss [De Leon]. perishes.
Effects of Partial Losses
1. Loss is significant - possible extinguishment f. Creditors’ Rights
of obligation The obligation having been extinguished by the
2. Loss is insignificant - obligation is NOT loss of the thing, the creditor shall have all the
extinguished rights of action which the debtor may have
against third persons by reason of the loss
[Art. 1269, Civil Code].

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Requisites: accomplished by others. Failure of
1. Obligation is extinguished; and performance is imputable to the debtor. Thus,
2. Extinguishment is due to the loss of the the debtor must indemnify the creditor for the
thing damages suffered by the latter [Tolentino].

Effect: Creditor shall have all rights of action 3. Partial Impossibility

which the debtor may have against third The rule in Art. 1264, Civil Code, (partial loss)
persons by reason of the loss. may be applied. Thus, the Courts shall
determine whether it is so important as to
2. Impossibility of Performance extinguish the obligation. If the debtor has
a. In General performed part of the obligation when
impossibility occurred, the creditor must pay
Article 1266, Civil Code. The debtor in obligations
to do shall also be released when the prestation
the part done as long as he benefits from it
becomes legally or physically impossible without the [Tolentino].
fault of the obligor.
3. Unforeseen Difficulty
Impossibility at Constitution and When the service has become so difficult as to
Subsequent Impossibility Distinguished be manifestly beyond the contemplation of
all the parties, the obligor may also be
Impossibility at the Impossibility which released therefrom, in whole or in part [Art.
Time the Supervenes at the 1267, Civil Code].
Obligation was Time of
Constituted [Art. Performance [Art. Requisites:
1348, Civil Code] 1266, Civil Code] a. The event or change in circumstances
could not have been foreseen at the time
Brings about the Brings about a of the execution of the contract;
nullity of the contract modification or b. It makes the performance of the contract
extinguishment of extremely difficult but not impossible;
the obligation, c. The event must not be due to the act of
depending on any of the parties; and
whether or not it is d. The contract is for a future prestation
imputable to the [Tagaytay Realty Co, Inc. v. Gacutan, G.R.
debtor No. 160033 (2015)].

Doctrine of Unforeseen Events

b. Types of Impossibility The parties to the contract must be presumed
1. Physical and Legal to have assumed the risks of unfavorable
Physical Impossibility: There is physical developments. It is therefore only in
impossibility when the act, by reason of its absolutely exceptional changes of
nature, cannot be accomplished [Tolentino]. circumstances that equity demands
assistance for the debtor [PNCC v. CA, G.R.
Legal Impossibility: There is legal No. 116896 (1997)].
impossibility when, the act, by subsequent law,
is prohibited [Tolentino].

2. Subjective and Objective

Objective Impossibility: There is objective
impossibility when the act or service in itself,
without considering the person of the obligor,
becomes impossible [Tolentino].

Subjective Impossibility: There is subjective

impossibility when the act or service cannot be
done by the debtor himself, but it can be
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Fortuitous Events, Loss/Impossibility, and d. One and the other kinds shall be subject to
Unforeseen Difficulty Distinguished the rules which govern inofficious
donations. Express condonation shall,
Fortui- Loss/ Unfore-
furthermore, comply with the forms of
tous Impos- seen
donation [Art. 1270, Civil Code].
Events sibility Difficulty
Requisites [Tolentino]
Elem- Could not Perishes, Could not
a. The debt must be existing and demandable;
ents have been goes out have
b. The renunciation must be gratuitous;
foreseen of been
c. Parties must be capacitated and must
or commerce foreseen.
consent;
foreseen or
d. The debtor must accept the remission -
but disappear Service
implied in mortis causa and express in inter
inevitable. s has
vivos condonation;
become
e. Formalities of a donation are required in the
Causes so
case of an express remission or
loss of the difficult
condonation.
thing or but
obligation not
Effect: The obligation is extinguished
could not impossibl
[Tolentino].
be e.
complied
Definition
with in the
Remission is an act of liberality, by virtue of
normal
which, without receiving any equivalent, the
manner
creditor renounces the enforcement of the
obligation. The obligation is extinguished either
Fault Without May be Without in whole or in such part of the same to which
fault with or Fault remission refers [Tolentino].
without
fault If 2nd Requisite is Not Met
If the renunciation is not gratuitous, the nature
of the act changes and it may become:
a. Dation in payment – when the creditor
Effect Non- If without Release receives a thing different from that
liability for fault, from the stipulated;
delay/ extinguish obligation b. Novation – when the object or principal
damages es the in whole conditions of the obligation have changed;
obligation; or in part or
If with c. Compromise – when the matter renounced
fault, is in litigation or dispute and in exchange of
liability for some concession which the creditor
damages receives [Tolentino].

2. Kinds of Remission
C. Condonation or remission of
As To Form
debt
1. Express Express remission must
1. Definition and General Rules Remission comply with forms of
General Rules: ordinary donations. An
a. Condonation or remission is essentially express remission must
gratuitous, and be accepted in order to be
b. requires the acceptance by the obligor. effective [Art. 1270, Civil
c. It may be made expressly or impliedly. Code].

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Otherwise, the donation shall be void [Art. 748,
Civil Code].
When the debt refers to
movable or personal
Express Remission of Immovable or Real
property, Art. 748 will
Property
govern; if it refers to
In order that the donation of an immovable may
immovable or real
be valid, it must be made in a public
property, Art. 749 applies.
document, specifying therein the property
2. Implied It is inferred from the acts donated and the value of the charges which the
Remission of the parties. donee must satisfy.

As To Extent The acceptance may be made in the same

deed of donation or in a separate public
1. Total Extinguishes the entire document, but it shall not take effect unless it
obligation is done during the lifetime of the donor.

2. Partial Refers to only a particular If the acceptance is made in a separate

aspect of the obligation, instrument, the donor shall be notified thereof
i.e. amount of in an authentic form, and this step shall be
indebtedness or an noted in both instruments [Art. 749, Civil Code].
accessory obligation
[Tolentino]. b. Implied Remission
Presumption of Renunciation
As to Manner The delivery of a private document evidencing
a credit, made voluntarily by the creditor to the
1. Inter Vivos Effective during the debtor, implies the renunciation of the action
lifetime of the creditor which the former had against the latter [Art.
1271, Civil Code].
2. Mortis Effective upon the death
Causa of the creditor. Trigger:
1. Delivery of a private document evidencing a
Rules and Form credit; and
a. Express Remission 2. Delivery was made voluntarily by the
One and the other kind shall be subject to the creditor to the debtor
rules which govern inofficious donations.
Express condonation shall, furthermore, Effect: There will be implied renunciation.
comply with the forms of donation [Art. 1270
(2), Civil Code]. Exception: The contrary is proved.

The law subjects express remission to the Note: If in order to nullify this waiver it should
same formalities as donations. be claimed to be inofficious, the debtor and his
heirs may uphold it by proving that the delivery
Express Remission of Movable or Personal of the document was made in virtue of payment
Property of the debt [Art. 1271, Civil Code].
The donation of a movable may be made orally
or in writing. Presumption of Renunciation of
Accessory Obligation
An oral donation requires the simultaneous Accessory obligation of pledge has been
delivery of the thing or of the document remitted when the thing after its delivery is
representing the right donated. found in the possession of the debtor or third
person [Art. 1274, Civil Code].
If the value of the personal property donated
exceeds five thousand pesos, the donation and Trigger:
the acceptance shall be made in writing. 1. A thing is pledged;
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2. There has been a delivery of such thing to
the creditor; and
3. The thing pledged is found in the
possession of the debtor, or of a third
person who owns the thing.
Effect: It is presumed that the accessory
obligation of pledge has been remitted.
Presumption of Delivery
Whenever the private document in which the
debt appears is found in the possession of the
debtor, it shall be presumed that the creditor
delivered it voluntarily, unless the contrary is
proved [Art. 1272, Civil Code].
Trigger: The private document in which the
debt appears is found in the possession of the
debtor.
Effect: There is a presumption that it has been
voluntarily delivered by the creditor.
Exception: The contrary is proved.
c. Partial Remission
Article 1273, Civil Code. The renunciation of the
principal debt shall extinguish the accessory
obligations; but the waiver of the latter leaves the
former in force.
d. Other Rules on Donation Applicable to
Remission
Condonation or remission is essentially a
donation. It is a bilateral act which requires
acceptance by the debtor. It is therefore
subject to the rule on donations with respect to
acceptance, amount and revocation; where
donor refers to the creditor, and donee to the
debtor, and donation to the remission
[Tolentino].
On Acceptance
1. The donee must accept the donation
personally, or through an authorized
person with a special power for the
purpose, or with a general and sufficient
power; otherwise, the donation shall be void
[Art. 745, Civil Code].
2. Acceptance must be made during the
lifetime of the donor and of the donee
[Art. 746, Civil Code].
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On Amount
1. The donation may comprehend all the
present property of the donor, or part
thereof, provided he reserves, in full
ownership or in usufruct, sufficient means
for the support of himself, and of all relatives
who, at the time of the acceptance of the
donation, are by law entitled to be supported
by the donor. Without such reservation, the
donation shall be reduced on petition of any
person affected [Art. 750, Civil Code].
2. The provisions of Art. 750 notwithstanding,
no person may give or receive, by way of
donation, more than he may give or receive
by will. The donation shall be inofficious in
all that it may exceed this limitation [Art.
752, Civil Code].
D. Confusion
1. Definition
The meeting in one person of the qualities of
creditor and debtor of the same obligation
[Tolentino].
When the characters of creditor and debtor are
merged in the same person [Art. 1275, Civil
Code].
2. Requisites
a. It should take place between principal
debtor and creditor;
b. The very same obligation must be involved;
and
c. The confusion must be total, i.e. as regards
the whole obligation [Valmonte v. CA, G.R.
No. L-41621 (1999)].
3. Effects
a. In general
The obligation is extinguished from the time the
characters of the debtor and creditor are
merged in the same person [Art. 1275, Civil
Code].
b. Confusion among the Guarantors
A merger which takes place in the person of the
principal debtor or creditor benefits the
guarantors. Confusion which takes place in the
person of any of the latter does not extinguish
the obligation [Art. 1276, Civil Code].
OBLIGATIONS CIVIL LAW
c. In case of joint or solidary obligations To warrant the application of set off under Art.
1278, Civil Code, the debtor’s admission of
Confusion in Confusion in
his obligation must be clear and categorical
Joint Obligation Solidary
and not one which merely arise by inference or
Obligation
implication from the customary execution of
official documents in assuming the
Confusion DOES Extinguishes the
responsibilities of a predecessor [Bangko
NOT extinguish a entire obligation, but
Sentral v. COA, G.R. No. 168964 (2006)].
joint obligation the other debtors
EXCEPT as regards may be liable for
the share of the reimbursement if 2. Nature and Effects
person in whom the payment was made a. General Rule
two characters prior to remission. When all requisites mentioned in Art. 1279 are
concur [Art. 1277, present, compensation takes effect by
Civil Code] operation of law, and extinguishes both debts
to the concurrent amount, even though the
creditors and debtors are not aware of the
Obligation is not extinguished when confusion compensation [Art. 1290, Civil Code].
takes place in the person of subsidiary debtor
(i.e. guarantor), but merger in the person of the b. By Operation of Law
principal debtor shall benefit the former. Compensation takes place by operation of law,
even though the debts may be payable at
Note: Where, however, the mortgagee different places, but there shall be an indemnity
acquires ownership of the entire mortgaged for expenses of exchange or transportation to
property, the mortgage is extinguished; but this the place of payment [Art. 1286 Civil Code].
does not necessarily mean the extinguishment
of the obligation secured thereby, which may Compensation takes effect by operation of law
become an unsecured obligation. even without the consent or knowledge of
the parties concerned when all the
E. Compensation requisites mentioned in Art. 1279, Civil
Code are present [Trinidad v. Acapulco, G.R.
Mode of extinguishing the obligations of two No. 147477 (2006)].
persons, who in their own right, are reciprocal
creditors and debtors of each other [Art. 1278, c. Compensation Distinguished from
Civil Code]. Other Modes of Extinguishment
1. Requisites Compensation Confusion
a. Each obligor is bound principally, and at the
There must always Involves only one
same time a principal creditor of the other;
be two obligations. obligation.
b. Both debts must consist in a sum of money,
or if the things due are consumable, they be
There are two There is only one
of the same kind and quality;
persons who are person whom the
mutually debtors and characters of the
Note: The term ‘consumable’ is erroneously
creditors of each creditor and debtor
used in Art 1279. The appropriate term is
other in two separate meet.
‘fungible’ [Tolentino].
obligations, each
arising from the
c. Both debts are due;
same cause.
d. Debts are liquidated and demandable; and
e. There must be no retention or controversy There is indirect There is impossibility
over either of the debts, commenced by payment. of payment.
third persons and communicated in due
time to the debtor [Art. 1279, Civil Code].

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b. Bank deposits, against the accounts of a
Compensation Payment
depositor whose checks were dishonored
Capacity to dispose Requires capacity to [BPI v. CA, G.R. No. 116792 (1996)]
and receive the thing dispose of the thing
is unnecessary since paid and capacity to 2. Voluntary Compensation
compensation receive Takes place when parties who are mutually
operates by law creditors and debtors of each other agree to
compensate their respective obligations even
May be partial Must be total though one of the requisites of compensation
performance may be lacking.

The parties may agree upon the compensation

Compensation Counterclaim of debts which are not yet due [Art. 1282, Civil
Code].
Takes place by Must be pleaded to
operation of law be effectual Requisites of conventional compensation
a. That each of the parties can dispose of the
credit he seeks to compensate, and
3. Kinds of Compensation b. That they agree to the mutual
a. As to extent extinguishment of their credits [United
1. Total Planters v. CA, G.R. No. 126890 (2009)].
When two debts are of the same amount. If
they are of different amounts, compensation is 3. Judicial Compensation
total as regards the smaller debt, and partial Takes place by judicial decree, needs pleading
only with respect to the larger debt [Art. 1281, and proof. All requirements must concur except
Civil Code]. liquidation.

2. Partial If one of the parties to a suit over an obligation

When the two obligations are of different
amounts and a balance remains [Art. 1281,
Civil Code]
b. As to cause
1. Legal Compensation
Takes place by operation of law from the
moment all requisites are present.
Since it takes place ipso jure, when used as a
defense, it retroacts to the date when all its
requisites are fulfilled.
When all the requisites mentioned in Art. 1279,
Civil Code are present, compensation takes
effect by operation of law, and extinguishes
both debts to the concurrent amount, even
though the creditors and debtors are not aware
of the compensation [Art. 1290, Civil Code].
Legal compensation may apply to:
a. Awards of attorney’s fees, against the
litigant and not his lawyer [Gan Tion v. CA,
G.R. No. L-22490 (1969)]
has a claim for damages against the other, the
former may set it off by proving his right to said
damages and the amount thereof [Art. 1283,
Civil Code].
“Judicial Compensation” is NOT contemplated
by the Civil Code. In reality, what is set off
against the other party is a counterclaim. A
counterclaim must be pleaded to be effectual;
whereas, a compensation takes place by mere
operation of law. Hence, the counterclaim
defined by the Rules of Court is not the legal
compensation contemplated by the Code
[Jurado].
4. Facultative Compensation
When it can be claimed by one of the parties
who, however, has the right to object to it.
This kind of compensation can only be set up
at the option of a creditor, when legal
compensation cannot take place because
some legal requisites in favor of the creditor are
lacking.

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Obligations which cannot be compensated b. Substituting the person of the debtor; or
a. Contracts of depositum c. Subrogating a third person in the rights of
b. Contracts of commodatum the creditor [Art. 1291, Civil Code].
c. Future support due by gratuitous title
d. Civil liability arising from a penal offense Unlike other modes of extinguishment, it is a
e. Obligations due to the government juridical act of dual function—it extinguishes an
f. Damage caused to the partnership by a obligation, and at the same time, it creates a
partner [Arts. 1287-1288, Civil Code] new one in lieu of the old. It operates as a
relative, not an absolute, extinction.
Right of a Guarantor
A guarantor may set up compensation as This is not to say however, that in every case
regards what the creditor may owe the principal of novation the old obligation is necessarily
debtor [Art. 1280, Civil Code]. extinguished. Our Civil Code now admits of the
so-called imperfect or modificatory novation
Effect of Assignment of Rights by the where the original obligation is not
Creditor to a Third Person [Art. 1285, Civil extinguished but modified or changed in
Code] some of the principal conditions of the
obligation. Thus, Art. 1291, Civil Code
With debtor’s Debtor cannot set up
provides that obligations may be modified
consent against assignee
[Modomo v. Sps. Layug, G.R. No. 197722
compensation pertaining to
(2019)].
him against assignor
UNLESS he reserved such
right at the time he gave his a. Requisites:
consent 1. A previous valid obligation
2. Agreement of all the parties to the new
With debtor’s Debtor may set up obligation
knowledge compensation of debts 3. Animus novandi or intent to novate
but without previous to the assignment 4. Substantial difference between old and new
consent but not of subsequent ones obligations and, consequently,
extinguishment of the old obligation
5. Validity of the new obligation [Tomimbang v.
Without Debtor may set up Tomimbang, G.R. No. 165116 (2009)]
debtor’s compensation of all credits
knowledge prior and also later to the b. Effects
assignment until he had In General If Original If New
knowledge of the Obligation Obligation
assignment is Void is Void

Order of Compensation Old Novation is New

If a person should have against him several obligation void if the obligation is
debts which are susceptible of compensation, is original void, the old
the rules on application of payments shall apply extinguish obligation was obligation
to the order of the compensation [Art. 1289, ed and void, EXCEPT subsists,
Civil Code]. replaced when UNLESS the
by the new annulment parties
one may be intended that
F. Novation stipulated. claimed only the former
by the debtor, relations shall
1. In General or when be
It is the substitution or change of an obligation ratification extinguished
by another resulting in its extinguishment or validates acts in any event
modification by: that are [Art. 1297,
a. Changing their object or principal voidable [Art. Civil Code]
conditions;
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OBLIGATIONS CIVIL LAW

In General If Original If New obligation: old the condition

Obligation Obligation obligation is affecting it.
is Void is Void revived; new
obligation loses
1298, Civil force.
Code] a. New 3. Fulfillment of
Obligation condition
a. Original void: concerning the
obligation is No novation. new obligation:
void: no novation;
No novation. b. New requisite of a
obligation previous valid
b. Original voidable: and effective
obligation Novation is obligation
voidable: effective. lacking.
Effective if
contract is
ratified before 2. Kinds of Novation
novation. a. As to Form
1. Express
Declared in unequivocal terms
Accessory Obligations
Accessory obligations are also extinguished,
2. Implied
but may subsist only insofar as they may
The old and new obligations are on every point
benefit third persons who did not give their
incompatible with each other [Jurado].
consent to the novation [Art. 1296, Civil Code].
Novation is not presumed
Accidental Modifications
In the absence of an unequivocal declaration of
The extension or shortening of the period for
extinguishment of the pre-existing obligation,
the performance of the obligation is generally
only proof of incompatibility between the old
considered as merely accidental and does not
and new obligation would warrant a novation
bring about a novation [Tolentino].
by implication [California Bus Line v. State
Investment, G.R. No. 147950 (2003)].
Original or new obligation with suspensive
or resolutory condition
Test of Incompatibility
If the original obligation was subject to a
The test of incompatibility is whether or not the
suspensive or resolutory condition, the new
two obligations can stand together, each one
obligation shall be under the same condition,
having its independent existence. If they
unless it is otherwise stipulated [Art. 1299, Civil
cannot, they are incompatible and the latter
Code].
obligation novates the first.

Compatible Incompatible The incompatibility must take place in any of

Conditions Conditions the essential elements of the obligation, such
as its object, cause or principal conditions
1. Fulfillment of both 1. Original obligation thereof; otherwise, the change would be
conditions: new is extinguished, merely modificatory in nature and insufficient to
obligation while new extinguish the original obligation [Quinto v.
becomes obligation exists. People, G.R. No. 126712 (1999)].
demandable. 2. Demandability
2. Fulfillment of shall be subject to b. As to extent or effect
condition fulfillment/ 1. Total
concerning the nonfulfillment of 2. Partial [Jurado]
original

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c. As to Essence or Object a. Consent of the Consent of
1. Objective/Real creditor and the a. old debtor
When the object (or cause) or principal new debtor; (delegante);
conditions of the obligation are changed [Art.
1291, Civil Code] Note: Implied b. new debtor
consent by the (delegatario); and
2. Subjective/Personal creditor is allowed
Substitution of debtor or by subrogation [Art. [Asia Banking Corp. c. Creditor
1291, Civil Code] v. Elser, G.R. No. (delegado).
30266 (1929)]
3. Mixed
Change in the object or principal condition and b. Knowledge or
change in the persons of either creditor and consent of the old
debtor of an existing obligation [Art. 2191, Civil debtor is not
Code]. required.

Objective/Real Subjective/
Personal Expromision Delegacion

a. Change of the a. Substitution of Effects

subject matter; debtors
a. Expromision a. Old debtor is a. Insolvency of the
b. Change of cause b. Delegacion released new debtor
or consideration; revives the
or b. Subrogation of a b. Insolvency of the obligation of the
third person to the new debtor does old debtor if it was
c. Change of the rights of the not revive the old anterior and
principal creditor obligation in case public, and known
conditions or a. Conventional the old debtor did to the old debtor.
terms b. Legal not agree to
expromision. b. New debtor can
demand
3. Substitution of Debtors c. If with the reimbursement of
knowledge and the entire amount
Expromision Delegacion
consent of the old he has paid from
Initiative for change Debtor (delegante) debtor, the new the original
does not emanate offers or initiates the debtor can debtor. He may
from the debtor, and change, and the demand compel the
may even be made creditor (delegatorio) reimbursement of creditor to
without his accepts a third the entire amount subrogate him to
knowledge. person (delegado) as paid and with all of his rights.
consenting to the subrogation of
substitution. creditor’s rights.

d. If without
Requisites knowledge of the
old debtor, the
new debtor can
demand
reimbursement
only up to the
extent that the
latter has been

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Difference between Conventional
benefited without
Subrogation and Assignment of Credit
subrogation of
[Licaros v. Gatmaitan, G.R. No. 142838 (2001)]
creditor’s rights.
Conventional Assignment of
subrogation credit
For subjective novation, it is insufficient
that the juridical relation between the
parties to the original contract is extended Debtor’s consent is Debtor’s consent is
to a third person. If the old debtor is not necessary. not required.
released, no novation occurs and the third
person who has assumed the debtor’s Extinguishes an Refers to the same
obligation becomes merely a co-debtor or obligation and gives right which passes
surety or co-surety [Cochingyan, Jr. v. R&B rise to a new one. from one person to
Surety and Insurance Company, G.R. No. L- another, without
47369 (1987)]. modifying or
extinguishing the
An accessory surety may not be released if obligation.
he expressly waives his discharge from the
obligation in case of change or novation in the Defects/vices in the Defects/vices in the
original agreement [Molino v. Security Diners old obligation are old obligation are not
International Corp, G.R. No. 136780 (2001)]. cured. cured.

4. Subrogation Legal Subrogation

Transfers to the person subrogated the credit Takes place by operation of law.
with all the rights thereto appertaining, either
against the debtor or against third persons, be Legal subrogation is not presumed, except
they guarantors or possessors of mortgages, in the following circumstances:
subject to stipulation in a conventional a. When creditor pays another creditor who is
subrogation [Art. 1303, Civil Code]. preferred, even without the debtor’s
knowledge
Effects b. When a third person, not interested in the
Total Partial obligation, pays with the express or tacit
approval of the debtor
Transfers to the A creditor, to whom c. When, even without the knowledge of the
person subrogated, partial payment has debtor, a person interested in the fulfillment
the credit with all the been made, may of the obligation pays, without prejudice to
rights thereto exercise his right for the effects of confusion as to the latter’s
appertaining, either the remainder, and share [Art. 1302, Civil Code]
against the debtor or shall be preferred to
third persons. the person Art. 1303, Civil Code particularly provides that
subrogated in his the effect of legal subrogation is to transfer to
place in virtue of the the new creditor the credit and all the rights and
partial payment. actions that could have been exercised by the
former creditor either against the debtor or
against third persons [BDO Unibank v. Pua,
Conventional Subrogation – takes place by G.R. No. 230923 (2019)].
agreement of parties

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CONTRACTS b. Real – delivery, actual or constructive, is

required in addition to consent [Art. 1316,
I. GENERAL PROVISIONS Civil Code]
c. Solemn or formal – where special
A. Stages of Contract formalities are required for perfection [Art.
1356, Civil Code]
1. Preparation (conception or “generation” or
negotiation) – begins from time the parties 3. According to relation to other
manifest their interest and ends prior to the contracts
moment of agreement a. Principal – may exist alone (e.g. lease)
2. Perfection (or birth) – when the parties b. Accessory – depends on another contract
agreed upon essential elements of contract for its existence (e.g. guaranty)
3. Consummation (or death) - when parties c. Preparatory – a preliminary step towards
fulfill or perform the agreement the celebration of a subsequent contract
(e.g. agency)
Preparation Perfection Consumma-
tion
4. According to form
a. Common or informal – may be entered
Exchanges Parties come Parties into in whatever form as long as there is
of offers and to an perform their consent, object and cause
counter- agreement. obligations b. Special or formal – required by law to be in
offers. under the a certain specified form
All the contract
No contract essential 5. According to cause/by equivalence
yet, thus no requisites of prestations
binding concur a. Onerous – there is an exchange of
effect correlative values (e. g. sale)
b. Remuneratory – where the outstanding
The stage to The stage to prestation is premised upon services or
look at to look at to benefits already received
determine the determine c. Gratuitous – where no correlative
status of the whether prestation is received by one party (e.g.
contract (i.e., there has donation, commodatum)
valid, been a
voidable, breach of the 6. According to purpose
void, contract a. Transfer of ownership (e.g. sale)
unenforceabl b. Conveyance of use (e.g. commodatum)
e) c. Rendition of service (e.g. agency)

7. According to time of fulfillment

B. Classifications
1. According to subject matter
a. Things - to give (e.g. sale, deposit, pledge)
b. Services - to do (e.g. agency, lease of
services)
a. Executed – where the obligations are
fulfilled at the time the contract is entered
into
b. Executory – where fulfillment of obligations
does not take place at the time the contract
is made

2. According to formation or
perfection
a. Consensual – consent is sufficient to
perfect the contract [Art. 1315, Civil Code]

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8. According to risk
a. Commutative – fair exchange of values;
fulfillment is predetermined in advance (e.g.
sale, lease)
b. Aleatory – fulfillment is dependent upon
chance (e.g. insurance)
9. According to the nature of the
vinculum produced
a. Unilateral – only one party is bound by the
prestation (e.g. commodatum)
b. Bilateral – both parties are bound by
reciprocal prestations (e.g. sale)
Note: All contracts are bilateral in the consent,
but not all are bilateral in terms of effects.
10. According to their
designation/name
a. Nominate – where the law gives the
contract a special designation or particular
name; e.g. deposit
b. Innominate – where the contract has no
special name or designation in law
• Do ut des (I give so that you may give)
• Do ut facias (I give so that you may do)
• Facio ut facias (I do so that you may do)
• Facio ut des (I do so that you may give)
Article 1307, Civil Code. Innominate contracts shall
be regulated by the stipulations of the parties, by the
provisions of Titles I and II of this Book, by the rules
governing the most analogous nominate contracts,
and by the customs of the place.
C. Characteristics
1. Obligatory force
Article 1159, Civil Code. Obligations arising from
contracts have the force of law between the
contracting parties and should be complied with in
good faith.
2. Mutuality
a. General Rule
Article 1308, Civil Code. The contracts must bind
both contracting parties; its validity or compliance
cannot be left to the will of one of them.
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b. Exception
A contract shall be valid even though its
fulfillment or implementation is left to the will of
either party as long as there is a finding of the
presence of equality of the parties, which thus
prevents the perpetration of injustice on the
weaker party [GF Equity v. Valenzona, G.R.
No. 156841 (2005)].
Example: Escalation clause
A bank’s unilateral determination and
imposition of the monthly adjustment of interest
rates without the other party’s assent, in the
event of changes in the rates prescribed by law
or the Bangko Sentral ng Pilipinas, violates the
principles of mutuality. Such escalation clause
shall be void [Floirendo Jr. v. Metropolitan
Bank & Trust Co., G.R. No. 148325 (2007)].
However, the escalation clause may still be
valid if the creditor has anyway notified the
debtor in order to give the latter the option to
reject the repricing, or if the repricing of the
interest rates resulted in a decrease and not an
increase of rates [Villa Crista Monte Realty &
Dev’t Corp. v. Equitable PCI Bank, G.R. No.
208336 (2018)].
3. Relativity
a. General Rule
Paragraph 1, Article 1311, Civil Code. Contracts
take effect only between the parties, their assigns
and heirs, except in case where the rights and
obligations arising from the contract are not
transmissible by their nature, or by stipulation or by
provision of law. The heir is not liable beyond the
value of the property he received from the decedent.
b. Exceptions
1. Contracts creating real rights
Article 1312, Civil Code. In contracts creating real
rights, third persons who come into possession of
the object of the contract are bound thereby, subject
to the provisions of the Mortgage Law and the Land
Registration Laws.
2. Contracts in fraud of creditors
Article 1313, Civil Code. Creditors are protected in
cases of contracts intended to defraud them.
CONTRACTS CIVIL LAW
3. Stipulations in favor of a third person
(stipulation pour autrui)

Requisites [Art. 1311 (2), Civil Code]

a. If a contract should contain some stipulation
in favor of a third person
b. The third person communicated his
acceptance to the obligor before its
revocation
c. The stipulation is not a mere or incidental
benefit or interest; and
d. The contracting parties clearly and
deliberately conferred a favor upon a third
person.

Rule: The third person may demand its

fulfillment [Art. 1311 (2), Civil Code]

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II. ESSENTIAL REQUISITES
Article 1318, Civil Code. There is no contract
unless the following requisites concur:
a. Consent of the contracting parties;
b. Object certain which is the subject matter of the
contract;
c. Cause of the obligation which is established.
A. Consent
1. Definition
The meeting of the minds of the parties on
the subject matter and cause of the contract.
The fact that the signatures of the witnesses
and the notary public were forged does not
negate the existence of the contract for as
long as the parties consented to it. The
signatures of the witnesses and the notary
public are necessary simply to make the
contract binding on the third person [Soriano v.
Soriano, G.R. No. 130348 (2007)].
2. Requisites for Valid Consent
a. It must be manifested by the concurrence
of the offer and acceptance [Arts. 1319-
1326, Civil Code].
b. The contracting parties must possess the
necessary legal capacity [Arts. 1327-
1329, Civil Code].
c. It must be intelligent, free, spontaneous,
and real (not vitiated) [Arts. 1330-1346,
Civil Code].
3. Concurrence of Offer and
Acceptance
A contract is perfected by mere consent. From
the moment of a meeting of the offer and the
acceptance upon the object and the cause
that would constitute the contract, consent
arises. However, “the offer must be certain”
and “the acceptance seasonable and
absolute; if qualified, the acceptance would
merely constitute a counteroffer [Insular Life v.
Asset Builders Corp., G.R. No. 147410 (2004)].
a. Offer
A unilateral proposition which one party makes
to the other for the celebration of the contract
[Tolentino].
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Requisites for a Valid Offer [Tolentino]
1. Certain or definite - liability of the parties
must be fixed
2. Seriously intended - offer made in jest,
anger, or while emotionally upset, or in other
ways indicating that the same was not
seriously intended is not a valid offer.
Invitation to Make Offers (Advertisements)
1. Business Advertisements of things for
sale are NOT definite offers, but just
invitations to make an offer, UNLESS the
contrary appears [Art. 1325, Civil Code].
2. Advertisement for bidders are invitations
to make proposals, the advertiser is NOT
bound to accept the lowest or highest
bid; UNLESS the contrary appears. The
bidder is the offeror [Art. 1326, Civil Code].
The Terms and Conditions of the bidding
disseminated constitutes the advertisement to
bid on the project. The bid proposals or
quotations submitted by the prospective
suppliers are the offers. The reply constitutes
the acceptance or rejection of the respective
offers [Jardine Davies Inc. v. CA, G.R. No.
128066 (2000)].
3. Statements of intention: no contract
results even if accepted.
In a letter informing another that the sender
was “in a position and is willing to entertain” the
purchase of a yacht under some terms, the
word “entertain” applied to an act does not
mean the resolution to perform said act, but
simply a position to deliberate for deciding to
perform or not to perform said act. It was
merely a position to deliberate whether or not
he would purchase the yacht and invitation to a
proposal being made to him, which might be
accepted by him or not [Rosenstock v. Burke,
G.R. No. 20732 (1924)].
Temporary Suspension of Offer
When a contract is suspended temporarily, it
provisionally ceases to be operative until the
occurrence of a condition or situation that
warrants the lifting of the suspension of the
contract. It is different from a cancellation of
a contract which terminates the contract such
that it does not become operative again [Metro
Rail Transit Development Corporation v.
CONTRACTS
Gammon Philippines, Inc., G.R. No. 200401
(2018)].
Termination of Offer
1. Rejection by the offeree
2. Incapacity (death, civil interdiction,
insanity, or insolvency) of the offeror or
offeree before acceptance is conveyed [Art.
1323, Civil Code]
3. Submission of a counter-offer
4. Lapse of the time stated in the offer without
acceptance being conveyed
5. Revocation of the offer before learning of
acceptance
6. Supervening illegality before acceptance
[Reyes and Puno].
b. Acceptance
Acceptance must be absolute, unconditional,
and without variance of any sort from the offer.
It must also be made known to the offeror.
An acceptance not made in the manner
prescribed is not effective but constitutes a
counter-offer [Malbarosa v. CA, G.R. No.
125761 (2003)].
Requisites of Acceptance
1. Unqualified and unconditional, i.e. it must
conform with all the terms of the offer,
otherwise it is a counter-offer [Art. 1319,
Civil Code].
2. Directed and communicated to the offeror
and learned by him [Art. 1319, Civil Code].
If made through an agent, the offer is
accepted from the time the acceptance is
communicated to such agent [Art. 1322,
Civil Code].
3. Made within the proper time
4. May be express/implied, but is not
presumed [Art 1320, Civil Code]. Time,
place and manner of acceptance may be
fixed by offeror [Art 1321, Civil Code].
Cognition Theory
Acceptance made by letter or telegram does
not bind the offeror except from the time it
came to his knowledge. The contract, in such a
case, is presumed to have been entered into in
the place where the offer was made [Art. 1319
(2), Civil Code].
Option Contract
A preparatory contract in which one party
grants to the other, for a fixed period, the option
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to decide whether or not to enter into a principal
contract [Art. 1324, Civil Code].
With consideration Without
consideration
Offeror cannot Offeror may
unilaterally withdraw withdraw by
his offer. communicating
withdrawal to the
offeree before
acceptance.
General Rule: When the offerer gives to the
offeree a certain period to accept, "the offer
may be withdrawn at any time before
acceptance," except when the option is
founded upon consideration [Art. 1324, Civil
Code]
Exception: Applies to "a promise to buy and
sell" specifically [Art. 1479, Civil Code]. This
rule requires that a promise to sell to be valid
and binding must be supported by a
consideration distinct from the price. Otherwise,
the option can still be withdrawn, even if
accepted [Tuazon v. Del Rosario-Suarez, G.R.
No. 168325 (2010)].
4. Necessary Legal Capacity
Two types of void contracts:
a. Those where one of the essential
requisites of a valid contract as provided for
by Art. 1318, Civil Code is totally wanting;
and
b. Those declared to be so under Art. 1409,
Civil Code. By contrast, a voidable or
annullable contract is one in which the
essential requisites for validity under Art.
1318 are present, but vitiated by mistake,
violence, intimidation, undue influence, or
fraud [Art. 1330, Civil Code].
Persons incapacitated to give consent
[Art. 1327, Civil Code]
a. Minors, EXCEPT:
1. Where necessaries are sold or delivered
[Art 1489, Civil Code]
2. Where the minor actively misrepresents
his age (estoppel) [Mercado v. Espiritu,
G.R. No. L-11872 (1917)]
CONTRACTS
Note: There is no estoppel if the minority
was known by the other party, and
there was no active misrepresentation on
the part of the minors [Bambalan v.
Maramba, G.R. No. L-27710 (1928)].
3. When it involves a natural obligation and
such obligation is fulfilled voluntarily by
the minor [Arts. 1425-1427, Civil Code]
4. Contracts entered into by guardians or
legal representatives
5. When upon reaching the age of majority
they ratify the same
6. When a minor opens a savings account
without the assistance of his parents,
provided that the minor is at least 7 years
old and can read and write [PD 734].
b. Insane or demented persons, UNLESS
they contract during a lucid interval [Art.
1328, Civil Code]
c. Deaf-mutes who do not know how to read
AND write.
Persons Disqualified to Contract
a. Those under civil interdiction for transactions
inter vivos [Art. 34, RPC]
b. Undischarged insolvents [Sec. 24,
Insolvency Law]
c. Husband and wife cannot donate to each
other [Art. 87, Family Code], nor sell to each
other if the marriage is under the regime of
Absolute Community of Property [Art. 1490,
Civil Code]
d. The ff. cannot purchase, whether in public or
private sale [Art. 1491, Civil Code]:
1. Guardian - Property of the ward
2. Agent - Property of the Principal
3. Executors and Administrators -
Property under administration
4. Public Officers - Property under their
administration
5. Justices, judges, prosecutors, clerks
of court, lawyers - property attached in
litigation
Incapacity to Give Consent vs.
Disqualification to Contract
Incapacity to Give Disqualification to
Consent Contract
Restrains the exercise Restrains the very
of the right to contract right itself
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Based upon subjective Based upon public
circumstances of policy and morality
certain persons
Voidable Void
6. Consent Must be Intelligent, Free,
Spontaneous and Real
Vices of Consent (makes contract voidable)
[Art. 1330, Civil Code]
a. Mistake
b. Intimidation
c. Violence
d. Undue influence
e. Fraud
a. Mistake
A misunderstanding of the meaning or
implication of something” or a “wrong action or
statement proceeding from a faulty judgment
[Domingo Realty v. CA, G.R. No. 126236
(2007)].
Inadvertent and excusable disregard of a
circumstance material to the contract [Reyes
and Puno].
In order that mistake may invalidate consent, it
should refer to the substance of the thing
which is the object of the contract, or to those
conditions which have principally moved one or
both parties to enter into the contract [Art.1331,
Civil Code].
There is no mistake if the party alleging it
knew the doubt, contingency or risk affecting
the object of the contract [Art. 1333, Civil
Code].
Requisites
1. The error must be substantial regarding:
a. The object of the contract (error in re)
which may be:
• Mistake as to the identity of the
thing (error in corpore)
• Mistake as to the substance of the
thing (error in substantia)
• Mistake as to the conditions of the
thing provided, or
• Mistake as to the quantity of the
thing (error in quantitate)
CONTRACTS
b. The condition which primarily moved or
induced one or both parties to enter the
contract.
c. Identity or qualifications of one of the
parties (error in persona), but only if such
was the principal cause of the contract.
2. The error must be excusable
3. The error must be a mistake of fact and not
of law.
Mistake which vitiates consent is an error of
fact, and not an error of law. Ignorance of the
law excuses no one from compliance therewith
[Art. 3, Civil Code]; but the modern tendency is
to allow an excusable mistake of law to be
invoked as vitiating consent [Tolentino].
On Possession: Mistake upon a doubtful or
difficult question of law may be the basis of
good faith [Art. 526, Civil Code].
CIVIL LAW
spouse, descendants or ascendants, to give
his consent [Art. 1335, Civil Code].
To determine the degree of intimidation, the
age, sex and condition of the person shall be
borne in mind [Art. 1335, Civil Code].
Requisites
1. One party is compelled to give his consent
by a reasonable and well-grounded fear of
an evil;
2. The evil must be imminent and grave;
3. The evil must be upon his person, property,
spouse, descendants or ascendants;
4. The evil must be unjust.
c. Violence
Serious or irresistible force used to wrest
consent [Art. 1335, Civil Code]

Ignorantia Facti Excusat vs. Ignorantia Violence Intimidation

Legis Neminem Excusat Serious or irresistible Reasonable and
Mistake of Fact Mistake of Law force well-grounded fear
of an imminent and
grave evil upon his
One or both One or both parties person or property,
contracting parties arrive at an or person or property
believe that a fact erroneous conclusion of his spouse,
exists when in reality on the interpretation descendants, or
it does not, or vice of a question of law or ascendants
versa its legal effects
Physical compulsion Moral compulsion
Vitiates consent Does not vitiate
consent except when External or prevents Internal or induces
it involves mutual the will to manifest the performance of
error as to the effect itself an act
of an agreement
when the real
purpose is frustrated. Determined by: 1. Age
1. Intention 2. Sex
2. Means employed 3. Condition
Note: The obligation to show that the terms of
the contract had been fully explained to the
party who is unable to read or understand the Violence Intimidation
language of the contract, when fraud or
mistake is alleged, devolves on the party 1. Physical force 1. Intimidation must
seeking to enforce it [Art. 1332, Civil Code]. employed must be be the determining
irresistible, or of cause of the contract
b. Intimidation such degree that OR must have
One of the contracting parties is compelled by victim has no other caused the consent
a reasonable and well-grounded fear of an recourse under the to be given
imminent and grave evil upon his person or circumstances but to
property, or upon the person or property of his submit 2. Threatened act
must be unjust or
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2. Such force is the unlawful
Intimidation Undue Influence
determining cause in
giving of consent 3. The threat must be
real and serious Must be an unlawful There need not be
act or unjust act which an unjust or
4. Produces a is threatened and unlawful act.
reasonable and well- which causes the
grounded fear from consent to be given
the fact the person
has the necessary e. Fraud
means or ability to When, through insidious words or
inflict threatened machinations of one of the contracting
injury parties, the other is induced to enter into a
contract which, without them, he would not
Note: Violence or intimidation shall annul the have agreed to [Art. 1338, Civil Code].
obligation, although it may have been
employed by a third person who did not take In order that fraud may make a contract
part in the contract [Art. 1336, Civil Code]. voidable, it should be serious and should not
have been employed by both contracting
d. Undue Influence parties [Art. 1344, Civil Code].
When a person takes improper advantage of
his power over the will of another, depriving the Requisites:
latter of a reasonable freedom of choice [Art. 1. It must be made in bad faith
1337, Civil Code]. 2. One party must have employed fraud or
insidious words or machinations
Requisites 3. Damage or injury resulted to the other
1. Improper advantage party
2. Power over the will of another 4. It must have been serious
3. Deprivation of the latter’s will of a 5. It induced the other party to enter into a
reasonable freedom of choice contract
6. It must have been employed by one
Circumstances to consider contracting party upon the other and not
1. Relationship of the parties (family, spiritual, employed by both contracting parties nor by
confidential etc.) third persons.
2. That the person unduly influenced was
suffering from mental weakness, ignorance Determining the existence of Fraud
or in financial distress [Art.1337, Civil Code] Not Fraudulent
1. Usual exaggerations in trade, when the
Note: By analogy, undue influence employed other party had an opportunity to know the
by a third person may annul the contract. facts [Art. 1340, Civil Code]
2. A mere expression of an opinion UNLESS
Test of Undue Influence: Whether or not the made by an expert and the other party has
influence exerted has so overpowered or relied on the former’s special knowledge
subjugates the mind of a contracting party [Art. 1341, Civil Code]
as to destroy his free agency, making him 3. Misrepresentation made in good faith [Art.
express the will of another rather than his own 1343, Civil Code]
[Coso-Fernandez v. Deza, G.R. No. L-16763
(1921)]. Note: Not fraudulent, but this may constitute
error

Fraudulent
Failure to disclose facts, when there is a duty
to reveal them, as when the parties are bound
by confidential relations [Art. 1339, Civil Code]
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Dolo Causante vs. Dolo Incidente 7. Simulation of Contracts
Dolo Causante Dolo Incidente Simulation is the declaration of a fictitious
(Causal Fraud) (Incidental Fraud) will, deliberately made by agreement of the
parties, in order to produce, for the purposes
Refers to those Refers to those of deception, the appearances of a judicial act
deceptions or deceptions or which does not exist or is different with that
misrepresentations of misrepresentations which was really executed [Nautica Canning
a serious character which are not Corporation v. Yumul, G.R. No. 164588
employed by one serious in character (2005)]. There exists an instrument, but there
party and without and without which is no contract.
which the other party the other party
would not have would have still Requisites of Simulation
entered into the entered into the a. An outward declaration of will different from
contract contract [Art. 1344, the will of the parties
Civil Code] b. The false appearance must have been
Determines or is the intended by mutual agreement
essential cause of the Refers only to some c. The purpose is to deceive third persons
consent [Tankeh v. particular or [Penalosa v. Santos, G.R. No. 133749
DBP, G.R. No. accident of the (2001)]
171428 (2013)] obligation [Tankeh
v. DBP, G.R. No. The primary consideration in determining the
171428 (2013)] true nature of a contract is the intention of the
parties. Such intention is determined not only
Renders the contract Renders the party from the express terms of their agreement, but
voidable liable for damages also from the contemporaneous and
subsequent acts of the parties [Spouses
Lopez v. Sps. Lopez, G.R. No. 161925 (2009)].
Fraud to vitiate consent must fulfill two
conditions
Absolute vs. Relative Simulation [Art.
1. The fraud must be dolo causante or it
must be fraud in obtaining the consent of 1345, Civil Code]
the party. The deceit must be serious. Absolute Relative Simulation
Simulation (Disimulados)
The fraud is serious when it is sufficient to (Simulados)
impress, or to lead an ordinarily prudent person
into error; that which cannot deceive a prudent
The parties have no The parties conceal
person cannot be a ground for nullity. The
intention to be their true
circumstances of each case should be
bound at all agreement.
considered, considering the personal
conditions of the victim.
Fictitious contract Disguised contract
2. The fraud must be proven by clear and
convincing evidence and not merely by a Void. (Because Bound to their real
preponderance thereof [ECE Realty v. there is an absolute agreement, so long
Mandap, G.R. No. 196182 (2014)]. lack of cause) [Art. as it does not
1346, Civil Code] prejudice a third
Note: However, fraud in its general sense person and is not
(false representation of a fact) coming about in contrary to law,
the consummation stage of the sale, as morals, good
opposed to the negotiation and perfection customs, public order
stages, entitles the aggrieved party to the or public policy [Art.
rescission of the sales contract [Sps. Tongson 1346, Civil Code].
v. Emergency Pawnshop, G.R. No. 167874
(2010)].

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If the parties merely state a false cause in the
contract to conceal their real agreement, the
contract is relatively simulated and the parties
are still bound by their real agreement.
Hence, where the essential requisites of a
contract are present and the simulation refers
only to the content or terms of the contract, the
agreement is absolutely binding and
enforceable between the parties and their
successors in interest [Valerio v. Refresca,
G.R. No. 163687 (2006)].
B. Object
The subject matter; the thing, right or service
which is the subject matter of the obligation
arising from the contract [Tolentino].
1. Requisites
a. Within the commerce of men [Art. 1347,
Civil Code]
b. Not legally or physically impossible [Art.
1348, Civil Code]
c. In existence or capable of coming into
existence [Arts. 1461, 1493, 1495, Civil
Code]
d. Determinate or determinable, without the
need of a new contract between the parties
[Arts. 1349 and 1460 (2), Civil Code]
2. What may be the object of a
contract
a. General Rule
All things or services may be the object of
contracts, which includes future things [Art.
1347, Civil Code]
In order that a thing, right, or service may be
the object of a contract, it should be in
existence at the moment of the celebration
of the contract, or at least, it can exist
subsequently or in the future [Tolentino].
A showing of mere inconvenience, unexpected
impediments, or increased expenses is not
enough to relieve a party of the obligation [De
Castro v. Longa, G.R. No L-2152-53 (1951)].
A future thing may be the object of a contract.
Such contract may be interpreted as:
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1. Conditional contract, where its efficacy
should depend upon the future existence of
the thing.
2. Aleatory contract, where one of the
contracting parties assumes the risk that
the thing will never come into existence,
e.g. insurance [Tolentino].
b. Exceptions [Art. 1347-1349, Civil
Code]
1. Things which are outside the commerce of
men
2. Intransmissible rights
3. Future inheritance except in cases
authorized by law
Requisites
a. The succession has not yet been
opened;
b. The object of the contract forms part of
the inheritance; and
c. The promisor has an expectancy of a
right which is purely hereditary in
nature
4. Services that are contrary to law, morals,
good customs, public order, or public policy
5. Impossible things or services
6. Objects which are indeterminable as to their
kind, the genus should be expressed
c. Exceptions to the Exception
1. In case of marriage settlements under Art.
130, Civil Code
2. In case of partition of properties inter vivos
by the deceased under Art. 1080, Civil Code
[JLT Agro v. Balansag, G.R. No. 141882
(2005)]
C. Cause
The essential and impelling reason why a
party assumes an obligation.
Motive, on the other hand, is the particular
reason for a contracting party which does not
affect the other [Manresa].
1. Requisites
a. Exists at the time the contract is entered into
[Art. 1409 (3), Civil Code]
b. Lawful [Art. 1352, Civil Code]
c. True or real [Art. 1353, Civil Code]
CONTRACTS CIVIL LAW
2. Presumption Illegality affects Illegality does not
The law presumes that even if the contract existence or validity affect existence or
does not state a cause, one exists and is of the contract validity of contract
lawful; and it is incumbent on the party
impugning the contract to prove the contrary.
If the cause is stated in the contract and it is 5. Cause in contracts [Art. 1350, Civil
shown to be false, then it is incumbent upon Code]
the party enforcing the contract to prove the
legality of the cause [Sepe v. Heirs of Kilang, Onerous Remunerato- Pure
G.R. No. 199766 (2019)]. Contracts ry Contracts Beneficence

3. Cause vs. Object The The service or Mere

Cause Object undertaking benefit which liberality of
or the is the
As to Remuneration promise of remunerated benefactor
the thing or
The service or The thing which is service by
benefit which is given in remuneration the other
remunerated party

As to Donation
6. Effect of Lack of Cause, Unlawful
The liberality of the The thing which is Cause, False Cause and Lesion [Arts.
donor or benefactor given or donated 1352-1355, Civil Code]
Cause Effect
As to the Thing
Lack of Cause VOID.
– absence or
Prestation or The thing or service total lack of Note: Cause must exist at
promise of a thing or itself cause the time of the perfection of
service by the other the contract; it need not
exist later.
As to Contracting Parties

Different with May be the same for

respect to each part both parties Contrary to VOID.
law, morals,
good If parts of a contract are
4. Distinguished from Motive customs, illegal but the rest are
public policy supported by lawful
Cause Motive
and public cause, claimant of such
Proximate reason Remote reason for order has the burden of showing
for contract the contract (unlawful proof; otherwise, the whole
cause) contract is VOID.
Objective or juridical Psychological and
reason purely personal Contracts with illegal cause
reason may still produce effect in
certain cases where parties
Always the same for Differs for each are not of equal guilt:
each contracting contracting party (1) innocent party cannot
party be compelled to perform
his obligation and he may
recover what has already
been given;
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(2) if both parties are guilty,

neither can sue the other,
the law leaving them as
they are (in pari delicto)
[Art. 1411, Civil Code]

Falsity of REVOCABLE/VOIDABLE
cause – cause Parties are given a chance
is stated but to show that a cause really
is untrue exists, and that said cause
is true and lawful.

Lesion or General Rule: NO

inadequacy of EFFECT.
cause – cause
is not Exception: Inadequacy of
proportionate cause shall invalidate the
to object contract when:
(1) there is fraud,
mistake, undue influence
(2) when parties
intended a donation

Note: Inadequacy of cause may be a badge of

fraud.

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III. FORMALITY Contract of The amount of the

antichresis principal and the
A. General Rule interest, if any, must
be specified in writing;
No form necessary for contracts provided that otherwise, the contract
all the essential requisites for their validity are of antichresis shall be
present [Art. 1356, Civil Code] void [Art. 2134, Civil
Code]
B. Exceptions Agency to sell land Authority of the agent
or any interest must be in writing;
1. When the law requires that a contract be in therein otherwise, the sale
some form in order that it may be valid [Art. shall void [Art. 1874,
1356, Civil Code] Civil Code]
2. When the law requires that a contract be
proved in a certain way to be enforceable Stipulation to pay Must be expressly
(Statute of Frauds) [Art. 1356, Civil Code] interest on loans, made in writing [Art.
3. When the law requires a contract to be in interest for the use 1956, Civil Code]
some form for convenience, or to be of money
effective against third parties [Arts. 1357
and 1358, Civil Code] Stipulation limiting Must be (1) in writing,
common carrier’s signed by the shipper
Kinds of Formalities Required by Law duty of or owner; (2)
1. For the Validity of Contracts (Ad extraordinary supported by a
diligence to valuable
Essentia/ Ad Solemnitatem/ Solemn
ordinary diligence consideration; and (3)
Contracts) reasonable, just, and
Formal or Solemn Special Form not contrary to public
Contract Required by Law policy [Art. 1744, Civil
Code]
Donation of Must be in a public
Immovables instrument, specifying Transfer of large Requires transfer of
therein the property cattle the certificate of
donated and the value registration [Sec. 523,
of the charges which Administrative Code]
the donee must satisfy
[Art. 749, Civil Code] 2. For the Purpose of Proving the
Donation of Must be in writing; Existence of the Contract (Ad
movables when the otherwise, the Probationem/ Statute of Frauds)
value of the donation is void [Art. The following contracts are
personal property 748, Civil Code]. UNENFORCEABLE, UNLESS they are
donated exceeds ratified:
P5,000 a. Those entered into in the name of another
person by one who has been:
Partnerships where An inventory of said 1. given no authority, or
immovable property property must be 2. legal representation, or
is contributed made, signed by the 3. who has acted beyond his powers;
parties and attached b. Those that do not comply with the Statute of
to the public Frauds
instrument. Otherwise, c. Those where both parties are incapable of
the contract of giving consent to a contract [Art. 1403, Civil
partnership is void Code].
[Art. 1773, Civil Code].

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Statute of Frauds
An agreement as to the following shall be
unenforceable UNLESS:
a. The agreement, or some note or
memorandum, thereof, be in writing, and
b. Subscribed by the party charged, or by his
agent; evidence, therefore, of the
agreement cannot be received without the
writing, or a secondary evidence of its
contents [Art. 1403, Civil Code]
Agreements under the Statute of Frauds
[Art. 1403, Civil Code]:
a. An agreement that by its terms is not to be
performed within a year from the making
thereof;
b. A special promise to answer for the debt,
default, or miscarriage of another;
c. An agreement made in consideration of
marriage, other than a mutual promise to
marry;
d. An agreement for the sale of goods,
chattels or things in action, at a price not
less than five hundred pesos, unless the
buyer accept and receive part of such goods
and chattels, or the evidences, or some of
them, of such things in action or pay at the
time some part of the purchase money; but
when a sale is made by auction and entry is
made by the auctioneer in his sales book, at
the time of the sale, of the amount and kind
of property sold, terms of sale, price, names
of the purchasers and person on whose
account the sale is made, it is a sufficient
memorandum;
e. An agreement of the leasing for a longer
period than one year, or for the sale of
real property or of an interest therein;
f. A representation as to the credit of a
third person
An unenforceable contract under the Statute of
Frauds is not necessarily void since it can be
ratified by failure to object to the presentation
of oral evidence to prove the contract itself, or
by the acceptance of benefits [Estate of Bueno
v. Estate of Peralta, G.R. No. 205810 (2020)].
This article applies to executory contracts
only [Almirol v. Monserrat, G.R. No. 23717
(1925)].
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3. For the Effectivity of the Contract
Against Third Persons
If the law requires a document or other special
form [Art. 1357, Civil Code]
a. The contracting parties may compel each
other to observe that form, once the contract
has been perfected.
b. This right may be exercised simultaneously
with the action upon the contract.
Art. 1358, Civil Code which requires the
embodiment of certain contacts in a public
instrument, is only for convenience, and
registration of the instrument only adversely
affects third parties.
Formal requirements are, therefore, for the
benefit of third parties. Non-compliance
therewith does not adversely affect the validity
of the contract nor the contractual rights and
obligations of the parties thereunder [Fule v.
CA, G.R. No. 112212 (1998)].
Article 1358, Civil Code. The following must appear
in a public document:
1. Acts and contracts which have for their
object the creation, transmission,
modification or extinguishment of real
rights over immovable property; sales of
real property or of an interest therein as
governed by Arts. 1403, No. 2, and 1405;
2. The cession, repudiation or renunciation of
hereditary rights or of those of the conjugal
partnership of gains;
3. The power to administer property, or any
other power which has for its object an act
appearing or which should appear in a
public document, or should prejudice a
third person;
4. The cession of actions or rights proceeding
from an act appearing in a public
document.
All other contracts where the amount involved
exceeds five hundred pesos must appear in writing,
even a private one. But sales of goods, chattels or
things in action are governed by Arts. 1403, No. 2
and 1405.
Enumerated contracts in Art. 1358, Civil Code
are valid even when not reduced into writing,
although parties may have recourse under Art.
1357, Civil Code to compel execution of the
writing, except in the following cases:
a. Solemn Contracts (action under Art. 1357,
Civil Code is not available at all)
CONTRACTS CIVIL LAW
b. Real Contracts (action under Art. 1357,
Civil Code is available if there is consent,
subject matter, cause, and delivery)
c. Contracts under the Statutes of Fraud
(remedy under Art. 1357, Civil Code is
applicable only if the defense of the Statute
is waived expressly or impliedly by the party
charged)

Actions under Art. 1357, Civil Code may be

exercised simultaneously with (i.e. need not be
separate nor need it precede) the action to
enforce the contract, although questions of
form must be decided first.

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IV. REFORMATION OF Reformation v. Annulment [Veluz v. Veluz,

supra]
INSTRUMENTS Reformation of Annulment
Instrument
A. In General
Presupposes a valid, Presupposes a
Reformation is a remedy in equity by means of existing contract, in defective contract
which a written instrument is made or which there had been in which the minds
construed so as to express or conform to the a meeting of the minds of the parties did
real intention of the parties when some error or of the parties but the not meet, or the
mistake has been committed [Reyes and instrument drawn up consent of one was
Puno]. and signed by them vitiated.
does not correctly
Requisites [Art. 1359, Civil Code] express the terms of
1. There must be a meeting of the minds of their agreement.
the contracting parties
2. Their true intention is not expressed in Equity of reformation is Intended to declare
the instrument; ordinarily limited to the inefficiency
3. Such failure to express their true intention written agreements, which the contract
is due to mistake, fraud, inequitable and its purpose is to already carries in
conduct, or accident; and establish and itself and to render
4. There is clear and convincing proof of perpetuate the true the contract
mistake, fraud, inequitable conduct, or agreement. inefficacious.
accident.

The appellant’s complaint states no cause of

B. Burden of Proof
action, for it fails to allege that the instrument to
The presumption is that an instrument sets out
be reformed does not express the real
the true agreement of the parties and that it
agreement or intention of the parties. Such
was executed for valuable consideration. Thus,
allegation is essential since the object sought
when there is some error or mistake in the
in an action for reformation is to make an
contract, the onus probandi is upon the party
instrument conform to the real agreement
who insists that the contract should be
or intention of the parties. Moreover, courts
reformed.
do not reform instruments merely for the sake
of reforming them, but only to enable some
While intentions involve a state of mind,
party to assert right under them as reformed
subsequent and contemporaneous acts of
[Garcia v. Bisaya, G.R. No. L-8060 (1955)].
the parties as well as the evidentiary facts as
proved and admitted can be reflective of one’s
Note: If mistake, fraud, inequitable conduct, or
intention [Multi-Ventures Capital Management
accident has prevented a meeting of the minds
Corporation v. Stalwart Management, G.R. No.
of the parties, the proper remedy is not
157439 (2007)].
reformation of the instrument but annulment of
the contract [Art. 1359 (2), Civil Code].
C. Effect of Reformation
The action for reformation of instrument should
not be confused with the action for annulment In granting reformation, the remedy in equity is
of contract [Veluz v. Veluz, G.R. No. L-23261 not making a new contract for the parties, but
(1968)]. establishing and perpetuating the real
contract between the parties which, under the
technical rules of law, could not be enforced but
for such reformation [Quiros v. Arjona, G.R.
No. 158901 (2004)].

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D. Cases Where Reformation is No fraud exists in the sense that neither of the
parties took part therein.
Proper
5. Severe Pacto de Retro / Relative
1. Mistake Simulation
The mistake should be of fact generally, and
not of law [BPI v. Fidelity and Surety Co., G.R. Article 1365, Civil Code. If two parties agree upon
No. L-26743 (1927)]. the mortgage or pledge of real or personal property,
but the instrument states that the property is sold
absolutely or with a right of repurchase, reformation
Mutual of the instrument is proper.
Mutual mistake of parties that causes failure to
disclose real agreement [Art. 1361, Civil Code]
E. Who May Ask for Reformation
Unilateral
a. One party was mistaken, while the other
acted fraudulently [Art. 1362, Civil Code] Trigger Rule
b. One party was mistaken, while the other
knew or believed that the instrument did not If the mistake was Reformation may be
state their real agreement, but concealed it mutual ordered at the
from the former [Art. 1363, Civil Code] instance of either
party or his
2. Fraud successors in
Active interest [Art. 1368,
If one party was mistaken and the other acted Civil Code]
fraudulently in such a way that the instrument
If the mistake was Reformation may be
does not show their true intention [Art. 1362,
not mutual ordered upon
Civil Code]
petition of the injured
party, or his heirs
Passive
and assigns [Art.
When one party was mistaken and the other
1368, Civil Code]
knew or believed that the instrument did not
state their real agreement [Art. 1363, Civil When through the The courts may
Code] ignorance, lack of order that the
skill, negligence or instrument be
3. Inequitable conduct bad faith on the part reformed [Art. 1364,
If one party was mistaken and the other acted of the person Civil Code]
fraudulently or inequitably in such a way that drafting the
the instrument does not show their true instrument or of the
intention [Art. 1362, Civil Code] clerk or typist, the
instrument does not
4. Accident express the true
When, through the ignorance, lack of skill, intention of the
negligence or bad faith on the part of the parties
person drafting the instrument or of the clerk or
typist, the instrument does not express the true
intention of the parties [Art. 1364, Civil Code] F. Cases Where Reformation is
Not Proper
4. Wills. There can be no reformation before 5. When the real agreement is void, there is
the testator dies because the making of a nothing to reform. The power of the court to
will is strictly personal [Art. 784, Civil Code], reform is not for accomplishing a vain thing
a free act [Art. 839, Civil Code], and [Tolentino].
essentially revocable [Art. 828, Civil Code]. 6. Implied Ratification/Estoppel: The party
who has brought an action to enforce the
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instrument cannot subsequently ask for its
reformation [Art. 1367, Civil Code]
7. Simple donations inter vivos—wherein
no condition is imposed. Donation is an act
of liberality [Art. 725, Civil Code] and cannot
be compelled.

G. Prescriptive Period for

Reformation
The prescriptive period for actions based upon
a written contract and for reformation of an
instrument is ten (10) years under Art. 1144,
Civil Code [Rosello-Bentir v. Leanda, G.R. No.
128991 (2000)].

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V. INTERPRETATION OF CONTRACTS
A. Primacy of Language or
Intention
1. Cardinal/First Rule of Interpretation
– Literal Meaning Governs
If the terms of a contract are clear and leave no
doubt upon the intention of the contracting
parties, the literal meaning of its stipulations
shall control [Art. 1370 (1), Civil Code].
In contract interpretation, courts must first
determine whether a stipulation is ambiguous
or susceptible of multiple interpretations. If no
ambiguity is found and the terms of the contract
clearly reflect the intentions of the contracting
parties, the stipulation will be interpreted as it
is written [Cezar Yatco Real Estate Services,
Inc. v. Bel-Air Village Association, Inc., G.R.
No. 211780 (2018)].
Application
Where the language of a contract is plain and
unambiguous, its meaning should be
determined without reference to extrinsic facts
or aids. The intention of the parties must be
gathered from that language, and from that
language alone.
Courts cannot make for the parties better or
more equitable agreements than they
themselves have been satisfied to make, or
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rewrite contracts because they operate harshly
or inequitably as to one of the parties, or alter
them for the benefit of one party and to the
detriment of the other, or by construction,
relieve one of the parties from the terms which
he voluntarily consented to, or impose on him
those which he did not [Bautista v. CA, G.R.
No. 123655 (2000)].
2. Rule if Language Contrary to Intent
– Intent over Literal Interpretation
If the words appear to be contrary to the
evident intention of the parties, the latter
shall prevail over the former [Art. 1370 (2), Civil
Code].
The cardinal test is the intention of the parties,
to be derived from the terms/language of the
contract.
In order to judge the intention of the contracting
parties, their contemporaneous and
subsequent acts shall be principally
considered [Art. 1371, Civil Code].
Absent any showing that its provisions are
contrary to law, morals, good customs, public
order, or public policy, it should be enforced to
the letter. Contracts cannot be altered for the
benefit of one party and to the detriment of
another. Neither can the Court, by
CONTRACTS
construction, relieve a party from the terms to
which he voluntarily consented to, or impose
on him those which he did not [National Power
Corporation v. Southern Philippines Power
Corp., G.R. No. 219627 (2016)].
3. Exclusion to Rules – Distinct and
Different Cases
However general the terms of a contract may
be, they shall not be understood to
comprehend things that are distinct and cases
that are different from those upon which the
parties intended to agree [Art. 1372, Civil
Code].
4. Stipulation Rendered to be
Effectual
If some stipulation of any contract should admit
of several meanings, it shall be understood as
bearing that import which is most adequate to
render it effectual [Art. 1373, Civil Code].
5. Stipulations Interpreted Together
The various stipulations of a contract shall be
interpreted together, attributing to the doubtful
ones that sense which may result from all of
them taken jointly [Art. 1374, Civil Code].
Difference between Art. 1373 and Art. 1374,
Civil Code
Art. 1373 Provides that which of the
several meanings of a
stipulation would most
adequately render the contract
effectual would be adopted.
Art. 1374 Provides that the various
stipulations of a contract would
be interpreted together,
attributing to doubtful
stipulations the sense resulting
from the joint interpretation.
6. Interpretation According to Nature
and Object of Contract
Words which may have different significations
shall be understood in that which is most in
keeping with the nature and object of the
contract [Art. 1375, Civil Code].
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Trigger: Words which may have different
significations.
Effect: They shall be understood in what is
most keeping with the contract’s nature and
object.
7. Interpretation against Party
Causing Obscurity
The interpretation of obscure words or
stipulations in a contract shall not favor the
party who caused the obscurity [Art. 1377, Civil
Code].
Interpretation of Contracts of Adhesion
A contract of adhesion is just as binding as
ordinary contracts. Contracts of adhesion are
not invalid per se; they are not entirely
prohibited. The one who adheres to the
contract is in reality free to reject it entirely; if
he adheres, he gives his consent.
While ambiguities in a contract of adhesion
are to be construed against the party that
prepared the same, this rule applies only if
the stipulations in such contract are
obscure or ambiguous. If the terms thereof
are clear and leave no doubt upon the intention
of the contracting parties, the literal meaning of
its stipulations shall control. In the latter case,
there would be no need for construction [RCBC
v. CA, G.R. No. 133107 (1999)].
8. Nomenclature NOT Decisive of the
Character
A contract is what the law defines it to be, and
not what it is called by the contracting parties.
The Title of the contract does not necessarily
determine its nature [Tolentino].
9. Separability Clause
Another fundamental rule in the interpretation
of contracts is that the terms, clauses and
conditions contrary to law, morals and public
order should be separated from the valid and
legal contract and when such separation can
be made because they are independent of the
valid contract [Kasilag v. Rodriguez, G.R. No.
46623 (1939)].
Exceptions:
a. Where the statute expressly or by
necessary implication declares the entire
contract void; or
CONTRACTS CIVIL LAW
b. Where the terms, clauses, and conditions, C. Other rules from the Rules of
by an established connection or by manifest
intention of the parties, is inseparable from Court
the principal obligation, and is a condition,
juridically speaking, of that the nullity of Article 1379, Civil Code. The principles of
which it would also occasion [Manresa]. interpretation stated in Rule 123 of the Rules of
Court shall likewise be observed in the construction
of contracts.
B. In case of doubt
When it is absolutely impossible to settle Note: This is now found in Secs. 10-19, Rule
doubts by the rules established in the 130, Rules of Court.
preceding articles [Art. 1378, Civil Code]:
1. Writing is to be interpreted according to its
When doubts are cast The contract shall legal meaning unless parties intended
upon the principal be null and void. otherwise [Sec. 10].
object/s of any 2. Instrument must be construed to give effect
contract and it cannot to all provisions [Sec. 11].
be known what may 3. Particular provisions are paramount to
have been the general ones when they are inconsistent
intention or will of the [Sec. 12].
parties 4. The circumstances under which the
instrument was made must be considered
When doubts refer to The least [Sec. 13].
the incidental transmission of 5. The terms of a writing are presumed to
circumstances of rights and have been used in their primary and
gratuitous contracts interests shall general acceptation unless contrary
and it is absolutely prevail. evidence is presented [Sec. 14].
impossible to settle 6. Written words prevail over printed ones
doubts by the rules [Sec. 15].
7. Experts and interpreters may be used in
When doubts refer to The doubt shall
explaining language not understood by the
the incidental be settled in favor
court [Sec. 16].
circumstances of of the greatest
8. When conflicting constructions of
onerous contracts and reciprocity of
provisions are equally proper that which is
it is absolutely interests.
the most favorable to the party in whose
impossible to settle
favor the provision was made shall be
doubts by the rules
accepted [Sec. 17].
9. When an instrument is equally susceptible
In interpreting a contract to sell, the partial of two interpretations, one in favor of
payments on a failed contract to sell may be natural right and the other against it, the
retained by the seller as reasonable former is to be adopted [Sec. 18].
compensation for use of the property. The 10. An instrument may be construed according
conversion of partial payments into rentals is to usage, in order to determine its true
also consistent with Art. 1378, Civil Code which character [Sec. 19].
teaches that doubts in the interpretation of
onerous contracts "should be settled in favor of
the greatest reciprocity of interests" [Godinez
v. Norman, G.R. No. 225449 (2020)].

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VI. DEFECTIVE CONTRACTS preferential right [Aquino v. Tañedo, G.R. No.

L-12457 (1919)].

Rescissible A contract that has caused Rescission in Art. 1380 distinguished

a particular damage to from rescission in Art. 1191, Civil
one of the parties or to a Code [Universal Food Corp. v. CA, L-
third person and which for 29155 (1970)]
equitable reasons may
be set aside even if valid. Rescission Art. Rescission Art.
1191 1380
Annulable or A contract in which
Voidable consent of one of the Premised on breach Based on economic
(contrato nulo) parties is defective, either damage or prejudice
because of want of A primary remedy
capacity or because it is Rescission is
vitiated, but which subsidiary
contract is valid until
judicially set aside. Lesion
Unenforceable A contract that for some The injury which one of the parties suffers by
reason cannot be virtue of a contract which is disadvantageous
enforced, unless ratified for him. To give rise to rescission, the lesion
in the manner provided must be known or could have been known at
by law. the time of making of the contract [Tolentino].

Void or A contract which is an Lesion does not invalidate a contract except

Inexistent absolute nullity and
produces no effect, as if it
had never been executed
or entered into.
[Tolentino]
A. Rescissible contracts
Contracts which are valid until rescinded. All
essential requisites of a contract exist but there
is injury or damage to one of the parties or to
third persons – external or extrinsic defect
consisting of an economic damage or lesion
[Paras].
1. Rescission
Rescission is a remedy granted to contracting
parties and to third persons, to secure
reparation for damages caused to them by a
contract, by means of the restoration of things
to their condition at the moment prior to the
celebration of said contract [Ada v. Baylon,
G.R. No. 182435 (2012)].
Relief to protect one of the parties or a third
person from all injury and damages which the
contract may cause, to protect some
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only in special cases provided by law [Art.
1355, Civil Code]
Subsidiary Remedy
Rescission is not a principal remedy, but a
subsidiary one. It can only be availed of only if
the injured party proves that he has no other
legal means to obtain redress for the damage
caused [Art. 1177, Civil Code]
Necessary Extent
The rescission shall only be to the extent
necessary to cover the damages caused, i.e.
partial rescission [Art. 1384, Civil Code].
2. Characteristics of Rescissible
Contracts
a. The defect consists in injury or damage
either to one of the contracting parties or to
third persons;
b. Before rescission, they are valid, and
therefore, legally effective;
c. They can only be attacked directly only and
not collaterally;
d. They can be attacked only by a contracting
party or a third person who is injured or
defrauded;
e. They are susceptible of convalidation only
by prescription and not ratification; and
CONTRACTS
f. They must be rescinded within four years,
the prescription for actions to claim
rescission [Art.1389, Civil Code].
3. Rescissible Contracts and Their
Requisites
Article 1381, Civil Code. The following contracts
are rescissible:
1. Those which are entered into by guardians
whenever the wards whom they represent suffer
lesion by more than one-fourth of the value of
the things which are the object thereof;
2. Those agreed upon in representation of
absentees, if the latter suffer the lesion stated in
the preceding number;
3. Those undertaken in fraud of creditors when the
latter cannot in any other manner collect the
claims due them;
4. Those which refer to things under litigation if
they have been entered into by the defendant
without the knowledge and approval of the
litigants or of competent judicial authority;
5. All other contracts specially declared by law to
be subject to rescission
Requisites for Rescission under Pars. 1
& 2, Art. 1381, Civil Code
a. Contract was entered into by a guardian in
behalf of his ward or by a legal
representative in behalf of an absentee [Art.
1381, Civil Code].
Note: A guardian is authorized only to
manage the estate of the ward; should he
dispose a portion thereof without authority
from the court by way of a contract, the
same is unenforceable under Art. 1403
(1), Civil Code, irrespective of whether
there is lesion or not.
b. It was entered into without judicial approval
[Art. 1386, Civil Code].
c. Ward or absentee suffered lesion of more
than one-fourth of the value of the property
which is the object of the contract [Art. 1381
(1) & (2), Civil Code].
d. There is no other legal means of obtaining
reparation for the lesion [Art. 1383, Civil
Code].
e. The person bringing the action must be able
to return whatever he may be obliged to
restore [Art. 1385 (1), Civil Code].
f. The object of the contract must not be
legally in the possession of a third person
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who did not act in bad faith [Art. 1385 (2),
Civil Code].
Note: Art. 1381 (4), Civil Code: Any disposition
of the thing subject of litigation or any act which
tends to render inutile the court’s impending
disposition in such case without the knowledge
and approval of the litigants or of the court, is
unmistakably and irrefutably indicative of bad
faith.
However, even without knowledge or approval
from the court, the conveyance of a property
subject of litigation may still be valid but is
susceptible for rescission under Art. 1381 (4),
Civil Code.
A definitive judicial determination with respect
to the thing subject of litigation is not a
condition sine qua non before the rescissory
action contemplated under Par. 4, Art. 1381,
Civil Code may be instituted. The primordial
purpose of Par. 4, Art. 1381, Civil Code is to
secure the possible effectivity of the impending
judgment by a court with respect to the thing
which is the subject of litigation [Ada v. Baylon,
G.R. No. 182435 (2012)].
Requisites before a Contract Entered
into In Fraud of Creditors May Be
Rescinded under Par. 3, Art. 1381, Civil
Code
a. There is a credit existing prior to the
celebration of the contract, although not yet
due or demandable;
b. There is fraud, or at least, the intent to
commit fraud to the prejudice of the creditor
seeking rescission, which may be presumed
or proved [Art 1387, Civil Code];
c. Creditor cannot in any legal manner collect
his credit; insolvency of the debtor is not
required; and
d. The object of the contract must not be
legally in the possession of a third person
who did not act in bad faith.
General Rule: Rescission requires the
existence of creditors at the time of the alleged
fraudulent alienation, and this must be proved
as one of the bases of the judicial
pronouncement setting aside the contract.
Without any prior existing debt, there can
neither be injury nor fraud.
 CONTRACTS
While it is necessary that the credit of the
plaintiff in the accion pauliana must exist prior
to the fraudulent alienation, the date of the
judgment enforcing it is immaterial. Even if the
judgment is subsequent to the alienation, it is
merely declaratory, with retroactive effect to
the date when the credit was constituted
[Siguan v. Lim, G.R. No. 134685 (1999)].
Accion Pauliana
The action to rescind contracts in fraud of
creditors. Consequently, accion pauliana
presupposes a judgment and unsatisfied
execution which cannot exist when the debt is
not yet demandable at the time the rescissory
action is brought [Tolentino].
Note: Even secured creditors are entitled to
accion pauliana.
Payments made in a state of insolvency for
obligations to whose fulfillment the debtor
could not be compelled at the time they were
effected, are also rescissible [Art. 1382, Civil
Code].
Requisites Before Payment Made by
Insolvent can be Rescinded
a. It was made in a state of insolvency;
b. Obligation must have been one which
debtor could not be compelled to pay at the
time such payment was effected.
Note: A debtor can be compelled to pay by the
creditor even before the expiration of the period
since by his insolvency he has already lost his
right to the benefit of such period [Art. 1198 (1),
Civil Code].
4. Effects of Rescission [Art. 1385, Civil
Code]
It creates an obligation of mutual restitution
or the obligation to return the things which were
the object of the contract, together with their
fruits, and the price with its interests.
However, if the object of the contract is in the
possession of third persons in good faith,
rescission cannot take place and indemnity for
damages may be demanded from the person
causing the loss [Art. 1385, Civil Code].
Rescission prescribes in a period of four
years. For persons under guardianship and for
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absentees, the period of four years shall not
begin until the termination of the former's
incapacity, or until the domicile of the latter is
known [Art. 1389, Civil Code].
Do all creditors benefit from the rescission?
The rescission should benefit only the creditor
who obtained the rescission, because the
rescission is to repair the injury caused to him
by the fraudulent alienation. If a balance is left
after satisfying the claim of the creditor who
brought the action, other creditors who are
qualified to bring an accion pauliana should be
given the benefit of rescission, instead of
requiring them to bring other rescissory
actions. However, creditors who only became
such after the fraudulent alienation, cannot
benefit from the rescission.
5. Presumption of Fraud
When alienation of property presumed in fraud
of creditors:
a. Alienation by gratuitous title if the debtor has
not reserved sufficient property to pay all of
his debts contracted before alienation [Art.
1387, Civil Code]
b. Alienation by onerous title if made by a
debtor against whom some judgment has
been rendered in any instance or some writ
of attachment has been issued [Art. 1387,
Civil Code].
Badges of Fraud
A conveyance leaving no property for other
creditors to attach is an evidence of fraud
[China Banking v. CA, G.R. No. 129644
(2000)]:
a. Consideration is fictitious or inadequate;
b. Transfer was made while suit had begun or
pending;
c. Sale was upon credit by insolvent debtor;
d. There was large indebtedness or complete
insolvency;
e. Transfer consisted of all or nearly all
property especially when insolvent or
greatly;
f. The transfer was made between father and
son when other above circumstances
present; and
g. There was failure of vendee to take
exclusive possession of all property
embarrassed financially.
CONTRACTS CIVIL LAW
6. Resolution and rescission Note: Not all
distinguished forms of
Tolentino notes that Art. 1191, Civil Code is economic
taken from Art. 1124 of the Old Civil Code, but prejudice are
the present Code uses the term “rescission” recognized by
instead of the original “resolution” in the old law as a
Code. Nevertheless, the Code uses the terms ground to
synonymously. rescind

Definition As to The cause of The reparation

effect action is of damages for
Rescission Resolution
subordinated the breach is
A subsidiary action As referred to in Art. to the purely
based on injury to 1191, Civil Code the existence of secondary.
the plaintiff’s action is based on the an economic
economic interests defendant’s breach of prejudice.
as described in Arts. faith, a violation of the Hence, where
1380 & 1381, Civil reciprocity between the defendant
Code. the parties. makes good
the damages
caused, the
action cannot
be maintained
[Heirs of Sofia Quirong v. Development Bank
or continued.
of the Philippines, G.R. No. 173441 (2009)]
As to Prejudiced Only party to
Similarities According to Tolentino: parties- third party the contract
a. Both presuppose contracts validly entered in- may also seek may seek
into and existing (this distinguishes interest remedy remedy
rescission from annulment, in which there is
a defect which vitiates the contract) As to Equity Non-
b. Both require mutual restitution when grounds compliance or
declared proper. non-
performance
Differences
As to Right to seek May be denied
Rescission Resolution
action by remedy is not if court finds
[Arts. 1380 & [Art. 1191, Civil courts affected by that there is
1381, Civil Code] extension of sufficient
Code] time reason to
As to Subsidiary Principal justify
Nature of Action Action, extension
Action involving retaliatory in As to Four years Ten years
partial nature prescript [Art. 1389,
resolution ive Civil Code]
As to Economic Breach of faith period
Basis prejudice [Congregation of the Religious Virgin Mary v.
rendering the Orola, G.R. No. 169790 (2008)]
contract
legally B. Voidable contracts
rescissible
Voidable or annullable contracts are existent,
valid and binding, although they can be
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annulled because of want of capacity or vitiated A remedy A sanction
consent of one of the parties [Tolentino].

Article 1390, Civil Code. The following contracts
are voidable or annullable, even though there may
have been no damage to the contracting parties:
1. Those where one of the parties is incapable of
giving consent to a contract;
2. Those where the consent is vitiated by mistake,
violence, intimidation, undue influence or fraud.
These contracts are binding, unless they are
annulled by a proper action in court. They are
susceptible of ratification.
Note: Art. 1390 refers to a “proper action in
court”. The validity of a voidable contract may
only be attacked either by way of a direct action
or by way of defense via a counterclaim, and
not a special or affirmative defense [Jurado].
1. Characteristics of Voidable
Contracts
a. Its defect consists of the vitiation of
consent of one of the contracting parties;
b. It is binding until it is annulled;
c. It is susceptible of convalidation by
ratification or prescription; once ratified,
they become absolutely valid and can no
longer be annulled [Art. 1392, Civil Code];
and
d. Its defect or voidable character cannot be
invoked by third persons.
Rescission Annulment
Merely produces the Declares the
inefficacy of the inefficacy which the
contract, which did contract already
not essentially exist carries in itself
in the contract
Equity The law
predominates predominates
May be demanded Can be demanded
by third parties only by parties to the
affected by the contract
contract
2. Who may institute action for
annulment
General Rule: Action for annulment may be
instituted by all who are thereby obliged
principally or subsidiarily.
Exceptions:
a. Persons capable of giving consent and
b. Guilty parties who have caused the vitiation
of consent cannot allege the incapacity or
want of consent of those they contracted
with [Art. 1397, Civil Code].
Requisites:
a. Plaintiff must have an interest in the
contract;
b. The victim and not the party responsible
for the vice or defect must assert the same
Exception: If a third person is prejudiced in his
rights with respect to one of the contracting
parties and can show detriment which would
positively result to him from the contract in
which he has no intervention [Teves v.
People’s Homesite and Housing Corp., G.R.
No. L-21498 (1968)].

Needs ratification to Requires an act of

be effective ratification to be cured

Private interest Direct influence of the

alone governs public interest is
involved

May be compatible Based on a vice of the

with the perfect contract which
validity of the invalidates it
contract

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3. Effects of Annulment
Contract has been Contract has not
Consummated been
Consummated
The parties shall be Mutual Restitution -
released from the the contracting
obligations arising parties shall restore
therefrom. to each other the
things which have
been the subject
matter of the
contract, with their
fruits, and the price
with its interest,
except in cases
provided by law [Art.
1398-1402, Civil
Code].
Mutual Restitution
Vitiation of Parties shall restore to each
Consent other the subject matter of
the contract with its fruits and
the price thereof with legal
interest.
In obligations to render
service, the value thereof
shall be the basis for
damages [Art. 1398, Civil
Code].
Incapacity Incapacitated person is not
obliged to make any
restitution except insofar as
he has been benefited by the
thing or price received by him
[Art. 1399, Civil Code].
4. Modes of Convalidating a Voidable
Contract
a. By prescription of the action for annulment
[Art.1391, Civil Code]
b. By ratification or confirmation [Art. 1392-
1396, Civil Code]
c. By loss of the thing which is the object of the
contract through the fraud or fault of the
person who is entitled to institute the action
for the annulment [Art.1401, Civil Code]
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a. Prescription
Prescription of the Action for Annulment
Grounds for being Reckoning Point
voidable
Intimidation, Four years from the
violence, or undue time the defect of the
influence consent ceases
Fraud or Mistake Four years from
discovery thereof
Minors and Four years from the
Incapacitated time the guardianship
Persons ceases.
Constructive Notice
Discovery or fraud must be reckoned from the
time the document was registered in the office
of the Register of Deeds. Registration
constitutes constructive notice to the whole
world [Carantes v. CA, G.R. No. L-33360
(1977)].
b. Ratification
The act or means by virtue of which efficacy is
given to a contract which suffers from a vice of
curable nullity [Arts. 1392-1396, Civil Code].
Ratification is either express or tacit.
1. EXPRESS or
2. TACIT
When the person who has the right to invoke it,
with the knowledge of the reason which
renders the contract voidable and such reason
having ceased, executes an act implying an
intention to waive his right [Art. 1393, Civil
Code].
Requisites of Ratification
1. Contract is tainted with a vice susceptible
of being cured;
2. Confirmation is effected by the person who
is entitled to do so under the law;
3. It is effected with knowledge of the vice or
defect of the contract;
4. Cause of the nullity or defect has already
disappeared.
The right to ratify may be transmitted to the
heirs of the party entitled to such right. It may
likewise be exercised by the guardian of the
CONTRACTS CIVIL LAW
incapacitated person having such right [Art. 1. Characteristics
1394, Civil Code]. a. Cannot be enforced by a proper action in
court;
Ratification does not require the conformity of b. Susceptible of ratification;
the contracting party who has no right to bring c. Cannot be assailed by third persons [Art.
an action for annulment [Art. 1395, Civil Code]. 1408, Civil Code].

Effect of Ratification 2. Kinds of Unenforceable Contracts

It extinguishes the action for annulment of a [Art. 1403, Civil Code]
voidable contract [Art. 1392, Civil Code]. a. Unauthorized contracts – those entered into
by one who has no authority or legal
It cleanses the contract from all its defects from representation, or who has acted beyond
the moment it was constituted [Art. 1396, Civil his powers [Art. 1403 (1), Civil Code]
Code]. b. Those which did not comply with the Statute
of Frauds [Art. 1403 (2), Civil Code]
c. Loss of the Thing
Loss of thing by Loss of thing by The Statute of Frauds embodied in Par. 2,
Plaintiff Defendant Art. 1403, Civil Code requires certain
contracts enumerated therein to be
If the loss of the If it is lost through the evidenced by some note or memorandum in
object in his defendant’s fault, he order to be enforceable. The Statute does
possession is due to is liable for fruits not deprive the parties of the right to
his fault or fraud, the received, value of the contract with respect to the matters therein
action for annulment thing at the time it was involved, but merely regulates the
of contracts shall be lost, with interest from formalities of the contract necessary to
extinguished. He the same date [Art. render it enforceable. Evidence of the
cannot ask for 1400, Civil Code]. agreement cannot be received without the
annulment [Art. writing or a secondary evidence of its
1401, Civil Code]. content [Swedish Match v. CA, G.R. No.
128120 (2004)].
C. Unenforceable contracts c. Those where both parties are incapable of
giving consent to a contract [Art. 1403 (3),
Contracts that by reason of statutory defects do Civil Code]
not confer any action to enforce the same until
and unless they are ratified in the manner
prescribed by law [Reyes].

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SUMMARY OF UNENFORCEABLE CONTRACTS
Contract entered Contracts covered by Contract where both
into without Statute of Frauds parties are incapable of
authority giving consent

Effect on the No effect unless ratified. Cannot be enforced by a proper action in court
Contract

How to assail Not by direct action. Not by direct action. Not by direct action.

As a defense, by As a defense, by motion to As a defense, by motion to

motion to dismiss dismiss on the ground that dismiss the complaint on
the complaint on the the contract is the ground that the contract
ground that the unenforceable is unenforceable
contract is
unenforceable Objection to the
presentation of oral
evidence to prove an oral
contract [Art. 1405, Civil
Code]

Who can assail By the person whose By the party against whom By the party against whom
- cannot be name the contract the contract is being the contract is being
assailed by was entered into / by enforced; or his privies enforced; or his privies; or
third persons owner of property parents or guardians, as it
[Art. 1408, Civil is a personal defense
Code]

When When a party asks the court to enforce the contract

How to Cure Ratification by Ratification by party against Ratification of party against

Defect person whose name whom the contract is being whom the contract is being
the contract was enforced enforced; or his privies; or
entered into parents or guardians
Failure to object to the
presentation of oral The ratification by one
evidence to prove the party converts the contract
contract amounts to waiver into a voidable contract
[Art. 1405, Civil Code]; [Art. 1407, Civil Code]
makes it as binding as if
written

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D. Void or inexistent contracts conditions set forth in Art. 1177, Civil Code,
exercise the rights and actions of the latter,
Those which, because of certain defects, except only those which are inherent in his
generally produce no effect at all. They are person, including therefore, his right to the
considered as inexistent from its inception or annulment of said contract, even though
from the very beginning [De Leon]. such creditors are not affected by the same,
except indirectly, in the manner indicated in
Includes not only those contracts in which one said legal provision [Pascual v. Secretary of
of the essential requisites is totally wanting, but Public Works, G.R. No. L-10405 (1960)].
also those which are declared void by positive
provision of law or statute. Note: A contract which is a direct result of a
previous illegal contract is also void and
inexistent [Art 1422, Civil Code]. The novation
Article 1409, Civil Code. The following contracts is void if the original obligation was void, except
are inexistent and void from the beginning:
1. Those whose cause, object or purpose is
when annulment may be claimed only by the
contrary to law, morals, good customs, debtor or when ratification validates acts which
public order or public policy; are voidable [Art. 1298, Civil Code].
2. Those which are absolutely simulated or
fictitious; Void vs. Inexistent Contracts
3. Those whose cause or object did not exist at
the time of the transaction; Void Inexistent
4. Those whose object is outside the commerce
of men;
5. Those which contemplate an impossible Those where all the Those where one or
service; requisites of a some or all of the
6. Those where the intention of the parties relative contract are present requisites essential for
to the principal object of the contract cannot be but the cause, the validity of a
ascertained; object or purpose is contract are
7. Those expressly prohibited or declared void
by law
contrary to law, absolutely lacking
morals, good
These contracts cannot be ratified. Neither can the customs, public
right to set up the defense of illegality be waived. order or public
policy, or the
contract itself is
1. Characteristics prohibited or
a. It does not produce any legal effect;
declared void by
b. It is not susceptible of ratification;
law
c. The right to set up the defense of
inexistence or absolute nullity cannot be Principle of pari Principle of pari
waived or renounced; delicto is applicable delicto is inapplicable
d. The action or defense for the declaration of
their inexistence or nullity is May produce legal Cannot produce any
imprescriptible [Art. 1410, Civil Code]; effects effect

Note: This provision does not apply to wills Covers Pars. 1, 2, 4, Covers Pars. 2 & 3,
[Gallanosa v. Arcangel, G.R. No. L-29300 6 & 7, Art. 1409, Art. 1409, Civil Code
(1978)]. Civil Code

e. The inexistence or absolute nullity of a

contract cannot be invoked by a person
whose interests are not directly affected
[Art. 1421, Civil Code].

Note: Art. 1421, Civil Code is subject to

exceptions. For instance, the creditors of a
party to an illegal contract may, under the
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CONTRACTS CIVIL LAW
Void vs. Voidable Contracts act constitutes a criminal offense [Art.
Void Voidable 1411, Civil Code]
a. Parties shall have no cause of action
against each other
Those where one of Those where all the b. Both parties shall be prosecuted.
the essential essential requisites c. Things or price of the contract which are
requisites is are present, but considered as effects or instruments of a
wanting, either in consent is vitiated by crime are forfeited in favor of the
fact or in law, or is want of capacity, or by government.
declared void by error, violence,
statute. intimidation, or deceit The act in which the unlawful or forbidden
cause consists does not constitute a
Void; no contract at Valid until annulled criminal offense [Art. 1412, Civil Code]
all
When both When only one of the
May be assailed Must be assailed parties are contracting parties is at
indirectly through an action for at fault fault
that purpose by a
party to the contract, Neither may Guilty Party Innocent
and never by a third recover what Party
person (direct attack) he has given
by virtue of 1. He cannot 1. He may
Nullity may be set- Nullity may only be the contract, recover what demand the
up against anyone set-up against a party or demand he has given return of
who asserts a right thereto. the by reason of what he has
arising from it. performance the contract, given
of the other's
Not susceptible to May be validly ratified undertaking 2. He cannot 2. He is
ratification ask for the without any
fulfillment of obligation to
Action to declare Action for annulment what has comply with
nullity does not prescribes been his promise.
prescribe [Art. 1410, promised
Civil Code] him.

2. Divisibility of Contracts Exceptions to the Principle of In Pari

Trigger: A contract has separate provisions of
which only one or more provisions is invalid
Rule: If the illegal terms can be separated from
the legal ones, the latter may be enforced [Art.
1420, Civil Code]
3. In Pari Delicto Principle (in pari
delicto, non oritur actio) [Art. 1411,
Civil Code]
Parties to a void agreement cannot expect the
aid of the law; the courts leave them as they
are, because they are deemed in pari delicto or
"in equal fault" [Menchavez v. Teves, G.R. No.
153201 (2005)].
General Rules
Nullity proceeds from the illegality of the
cause or object of the contract, and the
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Delicto:
a. Payment of usurious interest paid in
excess of the interest may be recovered by
the debtor [Art. 1413, Civil Code].
b. Payment of money or delivery of property
for an illegal purpose, where the party who
paid or delivered repudiates the contract
before the purpose has been accomplished,
or before any damage has been caused to
a third person. May allow the repudiating
party to recover money or property [Art.
1414, Civil Code; Hulst v. PR Builders Inc.,
G.R. No. 156364 (2007)].
c. Payment of money or delivery of property
made by an incapacitated person. It is not
necessary that the illegal purpose has not
been accomplished, or no damage has yet
been caused [Art. 1415, Civil Code].
CONTRACTS CIVIL LAW
d. Agreement or contract not illegal per se but
merely prohibited by law, and the
prohibition is designed for the plaintiff’s
protection. Plaintiff may recover as
allowing recovery enhances public policy
[Art. 1416, Civil Code].

Note: When the assailed contracts are void

ab initio, Art. 1416 cannot be applied, as in
the case of aliens purchasing property
despite knowing fully well the constitutional
prohibition against foreigners owning land in
the Philippines at the time of purchase
[Frenzel v. Catito, G.R. No. 143958 (2003)].

e. Payment of any amount in excess of the

maximum price of any article or commodity
fixed by law [Art. 1417, Civil Code]
f. Contract whereby a laborer undertakes to
work longer than the maximum number of
hours fixed by law [Art. 1418, Civil Code]
g. Contract whereby a laborer accepts a wage
lower than the minimum wage fixed by law.
He may recover the deficiency with legal
interest, and the employer shall be
criminally liable [Art. 1419, Civil Code].
h. In case of divisible contracts, the legal
portions/terms may be enforced separately
from the illegal portions/terms [Art. 1420,
Civil Code]; and
i. One who lost in gambling because of
fraudulent schemes practiced on him. He is
allowed to recover his losses [Art. 315(3)(b),
RPC] even if gambling is prohibited

The principle of in pari delicto admits of an

exception under Art. 1416, Civil Code.
Recovery for what has been paid or delivered
pursuant to an inexistent contract is allowed
only when the following requisites are met:
a. the contract is not illegal per se but merely
prohibited;
b. the prohibition is for the protection of the
plaintiffs; and
c. if public policy is enhanced thereby
[Acabal v. Acabal, G.R. No. 148376
(2005)].

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NATURAL OBLIGATIONS CIVIL LAW

NATURAL OBLIGATIONS Natural Civil

Obligations Obligations
I. IN GENERAL
As to Not by court Court action
A. Concept enforceabil- actions, but or the
Natural obligations, not being based on ity by good coercive
positive law but on equity and natural law, do conscience of power of
not grant a right of action to enforce their debtor public
performance, but after voluntary fulfillment by authority
the obligor, they authorize the retention of what
has been delivered or rendered by reason
thereof [Art. 1423, Civil Code]. As to basis Equity and Positive law
natural [Art. 1157,
General Rule: Do not grant a right of action to justice Civil Code]
enforce their performance.

Exception: After voluntary fulfillment, they Natural Obligations Imperfect

authorize the retention of what has been Obligations
delivered/rendered by reason thereof.
Only the Existence of the
In order that there may be a natural obligation performance of the obligation depends
there must exist a juridical tie which is not obligation is left to exclusively upon the
prohibited by law and which in itself could give the will of the debtor judgment of debtor
a cause of action but because of some special
circumstances is actually without legal sanction
or means of enforcing compliance by Natural Obligations Moral Obligations
intervention of courts [Tolentino].

B. Conditions Necessary for There is a juridical tie No juridical tie

between the parties whatsoever
Natural Obligations which is not
enforceable by court
1. That there be a juridical tie between two action.
persons; (this distinguishes it from moral
obligations) and Voluntary fulfillment Voluntary fulfillment
2. That this tie is not given effect by law (this of such produces of such does not
distinguishes it from civil obligations). legal effects which produce any legal
the court will effect which the court
C. Types of Obligations in recognize and will recognize and
protect. protect.
Juridical Science
Within the domain of Within the domain of
1. Moral Obligations – duties of conscience law morals
completely outside the field of law
2. Natural Obligations – duties not
sanctioned by any action but have a
relative judicial effect
3. Civil Obligations – juridical obligations
that are in conformity with positive law but
are contrary to juridical principles and
susceptible of being annulled; enforceable
by action
4. Mixed Obligations – full juridical effect;
falls under civil obligations

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NATURAL OBLIGATIONS
II. CONVERSION TO CIVIL
OBLIGATIONS
Rule
Partial payment of a natural obligation does not
make it civil; the part paid cannot be recovered
but the payment of the balance cannot be
enforced.
This is applicable only to natural obligations
because of prescription or lack of formalities
(nullity due to form e.g. Art. 1430) and not to
natural obligations subject to ratification or
confirmation.
Note: Payment by mistake is not voluntary and
may be recovered. Payment is voluntary when
the debtor knew that the obligation is a natural
one. The debtor, however, has the burden of
proving the mistake.
Natural obligations may be converted to
civil obligations by way of:
1. Novation
2. Ratification or confirmation
Rules on Natural Obligation:
1. The promise to perform a natural obligation
is as effective as performance itself and
converts the natural obligation to a civil
obligation.
2. Partial payment of a natural obligation does
not make it civil; the part paid cannot be
recovered, but payment of the balance
cannot be enforced. The exception would
be if the natural obligation is susceptible of
ratification.
3. Guaranties for the performance of a natural
obligation are valid [Art. 2052, Civil Code].
4. In principle, however, natural obligations
cannot be guaranteed. The guaranty
changes the character of obligation. The
debtor impliedly accepts coercive remedies
to enforce the guaranty, and the
transformation into civil [Tolentino].
5. Payment of a natural obligation is not
subject to reduction by reason of
inofficiousness, appearance of children or
ingratitude.
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CIVIL LAW
III. EXAMPLES OF NATURAL
OBLIGATIONS
A. Performance after Prescription
1. Voluntary Performance by Obligor
Article 1424, Civil Code. When a right to sue upon
a civil obligation has lapsed by extinctive
prescription, the obligor who voluntarily performs the
contract cannot recover what he has delivered or the
value of the service he has rendered.
Requisites
a. There is a civil obligation
b. The right to sue upon it has already lapsed
by extinctive prescription
c. Obligor performs contract voluntarily
Consequence: Obligor cannot recover what
he has delivered or value of the service he
rendered. Obligee gains the right to retain what
has been paid.
2. When Third Person Pays the Debt
Article 1425, Civil Code. When without the
knowledge or against the will of the debtor, a third
person pays a debt which the obligor is not legally
bound to pay because the action thereon has
prescribed, but the debtor later voluntarily
reimburses the third person, the obligor cannot
recover what he has paid.
Requisites (Prescribed Civil Obligation –
Payment to 3rd Person)
a. There is a debt
b. Action upon the debt has prescribed
c. A third person, without the knowledge or
against the will of the debtor, pays the debt
d. Debtor voluntarily reimburses the third
person
Consequence: Obligor cannot recover what
he has paid.
B. Contracts Made by a Minor
1. Minor Voluntarily Returns Payment
Article 1426, Civil Code. When a minor between
eighteen and twenty-one years of age who has
entered into a contract without the consent of the
parent or guardian, after the annulment of the
contract voluntarily returns the whole thing or price
NATURAL OBLIGATIONS
received, notwithstanding the fact that he has not
been benefited thereby, there is no right to demand
the thing or price thus returned.
Note: Majority commences at the age of 18
years [Art. 234, Family Code, as amended by
RA 6809]. This article may no longer have any
application [Tolentino].
Requisites
a. There is a civil obligation
b. Minor between 18 and 21 entered into the
contract without consent of parent or
guardian
c. Obligation is annulled after minor has
received the price or whole thing
d. Minor returns whole thing or price received
voluntarily
Consequence: There is no right to demand
the thing or price returned.
2. Minor Voluntarily Pays
Article 1427, Civil Code. When a minor between
eighteen and twenty-one years of age, who has
entered into a contract without the consent of the
parent or guardian, voluntarily pays a sum of money
or delivers a fungible thing in fulfillment of the
obligation, there shall be no right to recover the
same from the obligee who has spent or consumed
it in good faith.
Requisites
a. There is a civil obligation
b. Minor between 18 and 21 entered into the
contract without consent of parent or
guardian
c. Minor pays a sum of money or delivers a
fungible thing voluntarily
d. Obligee spends the money or consumes the
thing in good faith
Consequence: There is no right to recover the
money paid or thing delivered.
Note: It is not the voluntary payment that
prevents recovery, but the consumption or
spending of the thing or money in good faith.
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CIVIL LAW
3. Arts. 1426 and 1427, Civil Code,
distinguished
Art. 1426 Art. 1427
Presupposes a prior No prior annulment is
annulment involved
Refers to any object Refers to money or
fungible things
Consumption in good Requires
faith is not required consumption in good
faith
C. Performance by Winning
Party
Article 1428, Civil Code. When, after an action to
enforce a civil obligation has failed the defendant
voluntarily performs the obligation, he cannot
demand the return of what he has delivered or the
payment of the value of the service he has rendered.
Requisites
1. There is a civil obligation
2. An action to enforce such has failed
3. Defendant voluntarily performs the
obligation
Consequence: Defendant cannot demand
return of what he has delivered or the payment
of the value of the service.
D. Payment beyond Inheritance
Article 1429, Civil Code. When a testate or
intestate heir voluntarily pays a debt of the decedent
exceeding the value of the property which he
received by will or by the law of intestacy from the
estate of the deceased, the payment is valid and
cannot be rescinded by the payer.
Requisites under Art. 1429 (Payment made
by Heir)
1. Decedent incurred in debt during his lifetime
2. Heir voluntarily pays debt
3. Value of debt exceeds value of heir’s
inheritance
Consequence: Payment is valid and heir
cannot rescind it.
NATURAL OBLIGATIONS CIVIL LAW
E. Payment of a Void Legacy

Article 1430, Civil Code. When a will is declared

void because it has not been executed in
accordance with the formalities required by law, but
one of the intestate heirs, after the settlement of the
debts of the deceased, pays a legacy in compliance
with a clause in the defective will, the payment is
effective and irrevocable.

Requisites
1. There is a will providing for a legacy
2. The will is declared void because it was not
executed in accordance with the formalities
required by law
3. Heir pays legacy in compliance with a
clause in the defective will

Consequence: Payment is effective and

irrevocable.

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ESTOPPEL CIVIL LAW

ESTOPPEL D. Estoppel by laches

I. DEFINITION
A condition or state by virtue of which an
admission or representation is rendered
conclusive upon the person making it, and
cannot be denied or disproved as against the
person relying thereon [Art. 1431, Civil Code].
Estoppel is a bar which precludes a person
from asserting anything contrary to that
which has been established as the truth, either
by the acts of judicial or legislative officers or
by his own deed or representation, either
express or implied [De Leon].
II. KINDS OF ESTOPPEL
A. Equitable Estoppel or Estoppel in
pais [Art. 1433, Civil Code]
1. Estoppel by silence [Art. 1437, Civil Code]
2. Estoppel by acceptance of benefits
III. PERSONS BOUND
Estoppel is effective only as between the
parties thereto or their successors-in-
interest [Art. 1439, Civil Code].
The government is not estopped by mistake
or error on the part of its officials or agents.
In Manila Lodge No. 761 Benevolent and
Protective Order of the Elks v. CA [G.R. No. L-
41001 (1976)], the sale executed by the City of
Manila to Manila Lodge was certainly a
contract prohibited by law, and that estoppel
cannot be urged even if the City of Manila
accepted the benefits of such contract of sale
and the Manila Lodge No. 761 had performed
its part of the agreement, for to apply the
doctrine of estoppel against the City of Manila
in this case would be tantamount to enabling it
to do indirectly what it could not do directly.

B. Technical Estoppels

1. Estoppel by Deed – a party to a deed is

precluded from asserting as against the
other party, a material fact asserted therein;
[Art. 1433, Civil Code]
2. Estoppel by Record – a party is precluded
from denying the truth of the matters set
forth in a record whether judicial or
legislative and also to deny the facts
adjudicated by a court of competent
jurisdiction.

C. Estoppel by Judgment

A party to a case is precluded from denying the

facts adjudicated by a court of competent
jurisdiction.

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ESTOPPEL
IV. CASES WHERE
ESTOPPEL APPLIES
A. Sale or alienation of a thing
which does not belong to the
seller or grantor and later on
acquire title thereto [Art. 1434,
Civil Code]
Requisites:
1. The seller or grantor is not the owner of a
thing
2. The person sells or alienates and delivers it
to another
3. The person later on acquires title to the
thing
Effect: Title passes by operation of law to the
buyer or grantee.
B. Agent sells or alienates a
thing [Art. 1435, Civil Code]
Requisite: Person in representation of another
sells or alienates a thing
Effect: The person cannot set up his own title
as against the buyer or grantee.
C. Title of the lessee or bailee
against the lessor or bailor [Art.
1436, Civil Code]
Requisite: There exists a lessor-lessee
relationship
Effect: The lessee or bailee is estopped from
asserting title to the thing leased or received.
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D. Contract between third
persons concerning immovable
property where one of them is
misled by a person with respect
to the ownership or real right
over the real estate [Art. 1437,
Civil Code]
Requisites:
1. There must be fraudulent representation or
wrongful concealment of facts known to the
party estopped;
2. The party precluded must intend that the
other should act upon the facts as
misrepresented;
3. The party misled must have been unaware
of the true facts; and
4. The party defrauded must have acted in
accordance with the misrepresentation
Effect: The guilty party is precluded from
asserting his legal title or interest therein,
provided all these requisites are present.
E. One who has allowed another
to assume apparent ownership
of personal property for the
purpose of making any transfer
of it, cannot, if he received the
sum for which a pledge has been
constituted, set up his own title
to defeat the pledge of the
property, made by the other to a
pledgee who received the same
in good faith and for value [Art.
1438, Civil Code]
ESTOPPEL CIVIL LAW

IV. LACHES
Laches is the failure or neglect for an
unreasonable and unexplained length of
time to do that which, by exercising due
diligence, could or should have been done
earlier; it is negligence or omission to assert a
right within a reasonable time, warranting a
presumption that the party entitled to assert
it either has abandoned it or declined to
assert it [Pangasinan v. Disonglo-Almazora,
G.R. No. 200558 (2015)].

Elements [Pangasinan v. Disonglo-Almazora,

supra]
1. Conduct on the part of the defendant, or of
one under whom he claims, giving rise to
the situation of which complaint is made for
which the complaint seeks a remedy;
2. Delay in asserting the complainant’s
rights, the complainant having had
knowledge or notice, of the defendant’s
conduct and having been afforded an
opportunity to institute a suit;
3. Lack of knowledge or notice on the part
of the defendant that the complainant
would assert the right on which he bases his
suit; and
4. Injury or prejudice to the defendant in the
event relief is accorded to the complainant,
or the suit is not held to be barred.

Prescription Laches

Concerned with the fact of delay Concerned with the effect of delay

Question or matter of time Question of inequity of permitting the claim to be

enforced

Statutory Not statutory

Applies in law Applies in equity

Cannot be availed of unless it is specifically Being a defense in equity, it need not be

pleaded as an affirmative allegation specifically pleaded

Based on a fixed time Not based on a fixed time

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TRUSTS CIVIL LAW

TRUSTS
I. IN GENERAL
A. Definition
A trust is the legal relationship between one person having an equitable ownership of property and
another person owning the legal title to such property, the equitable ownership of the former entitling
him to the performance of certain duties and the exercise of certain powers by the latter [Estate of
Cabacungan v. Laigo, G.R. No. 175073 (2011)].

B. Characteristics of Trust
1. It is a relationship
2. The relationship is of fiduciary character
3. The relationship is with respect to property, not one involving merely personal duties
4. It involves the existence of equitable duties imposed upon the holder of the title to the property to
deal with it for the benefit of another
5. It arises as a result of a manifestation of intention to create the relationship

C. Distinguished from Other Concepts

Trust Stipulation pour autrui

Refers to a specific property Involves any stipulation in favor of a third person

Trust Condition

Performance of trust is enforceable Performance or accomplishment is not

enforceable

Trust Guardianship or Executorship

Trustees has legal title to the property Guardians or Executors do not have legal title but
mere actual possession and limited powers over
the property

Trust Contract

Always involves ownership, embracing a set of A legal obligation based on an undertaking

rights and duties fiduciary in character, which may supported by a consideration, which obligation
be created by a declaration without consideration may or may not be fiduciary in character.

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Trust Debt

The beneficiary of a trust has a beneficial interest A creditor has merely a personal claim against the
in the trust property. debtor.

There is a fiduciary relationship between a trustee There is no fiduciary relationship between a

and a beneficiary. debtor and a creditor.

Trust Sale

An express trust is not perfected by mere Seller obliges himself to transfer ownership and
consent, but requires the actual delivery of the deliver possession to the buyer
naked or legal title to the trustee for the
relationship of legality to arise.

Trustee in an express trust only takes naked or Buyer takes full ownership of the subject matter
legal title and for the benefit of another person, for his sole benefit.
the beneficiary.

Constituted merely as a preparation, Entered into for its own end, the acquiring of title
arrangement, medium, by which the trustee is of the subject matter by the buyer.
expected to pursue other juridical acts for the
benefit of the beneficiary.

Trust Lease

Naked title is transferred to the trustee; full Lessor retains naked title.
beneficial ownership is for the account of the
beneficiary.

Essence of the contract is for the trustee to Essence of the contract is the enjoyment of the
manage the rust property as the legal title holder possession and use of the leased property.
for benefit or interest of the beneficiary.

Benefits enjoyed by the beneficiary are usually Benefits enjoyed by the lessee are only for a
of a permanent nature. limited contracted period.

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Trust Donation

An existing legal relationship which involves the There is a transfer of property as well as the
separation of legal and equitable title disposition of both legal and equitable ownership
except in cases of gifts in the trust.

The beneficiary of a trust may demand The donee must comply with the legal
performance of the obligation without having requirements in accepting donations.
formally accepted the benefit of the trust in public
document, upon mere acquiescence in the
formation of the trust and acceptance under the
second paragraph of Art. 1311.

II. GOVERNING RULES Trust is created:

The principles of the general law of trusts
insofar as they are not in conflict with this Code,
the Code of Commerce, the Rules of Court and
special laws are hereby adopted [Art. 1442,
Civil Code].
III. PARTIES
1. Trustor – the person who establishes the
trust
2. Trustee – one in whom the confidence is
reposed as regards property for the benefit
of another person
3. Beneficiary or cestui que trust – person
for whose benefit the trust has been
created [Art. 1440, Civil Code]
IV. KINDS OF TRUST
A. Express Trust
Created by the intention of the trustor or of the
parties [Art. 1441, Civil Code]
Elements:
1. Competent trustor or settlor
2. Trustee
3. Ascertainable trust res / Trust property
4. Sufficiently certain beneficiaries
1. By declaration of the trustor or settlor that
he holds property in trust,
2. By conveyance to the trustee,
3. Inter vivos, or
4. By testament.
Proof Required:
1. No express trusts concerning an immovable
or any interest therein may be proved by
parol evidence [Art. 1443, Civil Code].
Trusts over real property are unenforceable
unless in writing, although writing is not
required for validity, only for proof
2. Where the trust is over personal property,
an oral trust is sufficient between the
parties.
3. But to bind third persons the trust must be
in a public instrument [Art. 1358 (1) & (3),
Civil Code]
Form of Express Trusts
No particular words are required for the
creation of an express trust, it being sufficient
that trust is clearly intended [Art. 1444, Civil
Code].
Want of Trustee
No trust shall fail because the trustee
appointed declines the designation, unless the
contrary should appear in the instrument
constituting the trust [Art. 1445, Civil Code].

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TRUSTS
Acceptance by beneficiary
Acceptance by beneficiary is necessary [Art.
1446, Civil Code]. It may be:
1. Express
2. Implied – acceptance by the beneficiary is
not subject to the formal rules of
donations [Cristobal v. Gomez, G.R. No. L-
27014 (1927)]
3. Presumed – if the trust imposes no onerous
condition upon the beneficiary
Termination of Express Trusts
1. Revocation or modification by the trustor
under a reserved power
2. Rescission
3. Expiration of the period or happening of the
resolutory condition
4. Accomplishment of the purpose or its
becoming impossible or illegal
5. Dissolution by the Court if continuation will
defeat the purpose of the trust
6. Dissolution by the consent of all the
beneficiaries and/or the settlor
7. Merger
B. Implied Trust
Implied trusts come into being by operation of
law [Art. 1441, Civil Code].
The essential idea involves a certain
antagonism between the cestui que trust and
the trustee even where the trust has not arisen
out of fraud or an immoral transaction [Reyes]
Proof required
An implied trust may be proved by oral
evidence [Art. 1457, Civil Code].
A trust must be proven by clear, satisfactory
and convincing evidence. It cannot rest on
vague and uncertain evidence or on loose,
equivocal or indefinite declarations [De Leon v.
Molo-Peckson, G.R. No. L-17809 (1962)].
As a rule, the burden of proving the existence
of a trust is on the party asserting its existence,
and such proof must be clear and satisfactorily
show the existence of the trust and its
elements. While implied trusts may be proved
by oral evidence, the evidence must be
trustworthy and received by the courts with
extreme caution, and should not be made to
rest on loose, equivocal or indefinite
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declarations. Trustworthy evidence is required
because oral evidence can easily be fabricated
[Morales v. Court of Appeals, G.R. No. 117228
(1997)].
Kinds of Implied Trusts
1. Resulting Trusts
A trust raised by implication of law and
presumed to have been contemplated by the
parties, the intention as to which is to be found
in the nature of their transaction, but not
expressed in the deed or instrument of
conveyance [Salao v. Salao, G.R. No. L- 26699
(1976)].
Rules on Resulting Trusts
a. There is an implied trust when property is
sold, and the legal estate is granted to one
party but the price is paid by another for the
purpose of having the beneficial interest of
the property. The former is the trustee, while
the latter is the beneficiary. However, if the
person to whom the title is conveyed is a
child, legitimate or illegitimate, of the one
paying the price of the sale, no trust is
implied by law, it being disputably presumed
that there is a gift in favor of the child [Art.
1448, Civil Code].
b. There is also an implied trust when a
donation is made to a person but it appears
that although the legal estate is transmitted
to the donee, he nevertheless is either to
have no beneficial interest or only a part
thereof [Art. 1449, Civil Code].
c. When land passes by succession to any
person and he causes the legal title to be
put in the name of another, a trust is
established by implication of law for the
benefit of the true owner [Art. 1451, Civil
Code].
d. If two or more persons agree to purchase
property and by common consent the legal
title is taken in the name of one of them for
the benefit of all, a trust is created by force
of law in favor of the others in proportion to
the interest of each [Art. 1452, Civil Code].
e. When property is conveyed to a person in
reliance upon his declared intention to hold
it for, or transfer it to another or the grantor,
there is an implied trust in favor of the
person whose benefit is contemplated [Art.
1453, Civil Code].
TRUSTS CIVIL LAW
Express and Implied Trust Distinguished
Express Trust Implied Trust

As to Creation Created by the intention of the trustor Comes into being by operation of law.
or the parties.
Those, without being expressed, are
Created by the direct and positive acts deductible from the nature of the
of the parties by some writing or deed transaction by operation of law as
or will or by words evidencing an matters of equity, independent y of the
intention to create a trust. particular intention of the parties.

As to Proof An express trust over an immovable An implied trust may be proved by oral
property or any interest therein cannot evidence
be proved by parol evidence

As to Action must be made within 10 years In resulting trust: Action must be

Prescription from knowledge of the repudiation, made within 10 years from knowledge
otherwise prescribed. of repudiation, otherwise prescribed.

In constructive trust: It must be

made within 10 years from date of
registration.

As to Laches An express repudiation made known In constructive trusts, even if

to the beneficiary is necessary in
order that laches or acquisitive
prescription may bar an action to
enforce an express trust.
there is no repudiation, laches may
bar an action to enforce an implied
trust
Exception: If there is concealment.

As to Suability Trustee can sue and be sued alone Trustee cannot sue and be sued
[PAL, Inc. v. Heald Lumber Co., G.R. alone.
No. L-11497 (1957)]

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TRUSTS CIVIL LAW
2. Constructive Trusts
A trust not created by any words, either
expressly or impliedly evincing a direct
intention to create a trust, but by the
construction of equity in order to satisfy the
demands of justice [Salao v. Salao, G.R. No.
26699 (1976)].

Rules on Constructive Trusts

a. If the price of a sale of property is loaned or
paid by one person for the benefit of another
and the conveyance is made to the lender
or payor to secure the payment of the debt,
a trust arises by operation of law in favor of
the person to whom the money is loaned or
for whom it is paid. The latter may redeem
the property and compel a conveyance
thereof to him [Art. 1450, Civil Code].
b. If an absolute conveyance of property is
made in order to secure the performance of
an obligation of the grantor toward the
grantee, a trust by virtue of law is
established. If the fulfillment of the
obligation is offered by the grantor when it
becomes due, he may demand the
reconveyance of the property to him [Art.
1454, Civil Code].
c. When any trustee, guardian or other person
holding a fiduciary relationship uses trust
funds for the purchase of property and
causes the conveyance to be made to him
or to a third person, a trust is established by
operation of law in favor of the person to
whom the funds belong [Art. 1455, Civil
Code].
d. If property is acquired through mistake or
fraud, the person obtaining it is, by force of
law, considered a trustee of an implied trust
by prescription, the title thereto may be
attacked, either directly or collaterally, by
the State which is not bound by any
prescriptive period provided by the Statute
of Limitation [Martinez v. CA, G.R. No. L-
31271 (1974)].

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QUASI-CONTRACTS
QUASI-CONTRACTS
I. IN GENERAL
A quasi-contract is that juridical relation
resulting from a lawful, voluntary and unilateral
act, and which has for its purpose the payment
of indemnity to the end that no one shall be
unjustly enriched or benefited at the expense
of another [Art. 2142, Civil Code].
Based on presumed will or intent of the obligor
dictated by equity and by the principles of
absolute justice [Padcom v. Ortigas Center,
G.R. No. 146807 (2002)].
Consent is absent in quasi-contracts. They are
voluntary and unilateral [Casis].
II. NEGOTIORUM GESTIO
(UNAUTHORIZED
MANAGEMENT)
Negotiorum gestio takes place when a person
voluntarily takes charge of another’s
abandoned business or property without the
owner’s authority [Art. 2144, Civil Code]. As a
rule, reimbursement must be made to the
gestor (i.e., one who carried out the business)
for necessary and useful expenses.
Requisites:
1. Person voluntary takes charge;
2. Takes charge of the agency or management
of a business or property belonging to
another;
3. Property or business is neglected or
abandoned; and
4. Manager has not been tacitly authorized by
the owner.
The obligation does not arise:
1. When the property or business is not
neglected or abandoned;
2. If in fact the manager has been tacitly
authorized by the owner.
In the first case, the provisions of Arts. 1317,
Par. 1, 1403, and 1404, Civil Code regarding
unauthorized contracts shall govern. In the
second case, the rules on agency shall be
applicable [Art. 2144, Civil Code].
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A. Obligations of a Gestor
1. Observe the requisite standard of
diligence
Article 2145, Civil Code. The officious manager
must perform his duties with all the diligence of a
good father of a family, and pay the damages which
through his fault or negligence may be suffered by
the owner of the property or business under
management.
The courts may, however, increase or moderate the
indemnity according to the circumstances of each
case.
2. Liability in the management of the
property
Solidary liability
The officious manager is liable for the acts of
the persons to whom he delegated all or some
of his duties. The responsibility of two or more
gestors shall be solidary, unless the
management was assumed to save the thing
or business from imminent danger [Art. 2146,
Civil Code].
Note: This is without prejudice to the direct
obligation of the delegate to the owner of the
business.
Liability for fortuitous events
The officious manager is liable for any
fortuitous event under the following conditions:
a. If he undertakes risky operations which the
owner was not accustomed to embark upon
b. If he has preferred his own interest to that of
the owner
c. If he fails to return the property or business
after demand of the owner
d. If he assumed management in bad faith [Art.
2147, Civil Code]
e. If he is manifestly unfit to carry on the
management
f. If by his intervention he prevented a more
competent person from taking up the
management [Art. 2148, Civil Code].
Note: The gestor shall not be liable for (e) and
(f) if the management was assumed to save the
property or business from imminent danger.
Personal liability
Be personally liable for contracts which he
entered into with third persons, even though he
QUASI-CONTRACTS CIVIL LAW
acted in the name of the owner, and there shall 3. By the death, civil interdiction, insanity or
be no right of action between the owner and insolvency of the owner or the gestor [Art.
third persons. 2153, Civil Code].

The gestor shall NOT be personally liable for

such contracts, provided:
a. The owner has expressly or tacitly ratified
the management, or
b. When the contract refers to things
pertaining to the owner of the business [Art.
2152, Civil Code].

B. Obligations of the Owner of

the Property or Business
Although the management was not expressly
ratified, the owner who enjoys the advantages
of the same shall:
1. Be liable for the obligations incurred in his
interest
2. Reimburse the gestor for the necessary and
useful expenses and for the damages the
latter may have suffered in the performance
of his duties

The above obligations shall be incumbent upon

the owner if the management had for its
purpose the prevention of an imminent and
manifest loss, although no benefit may have
been derived [Art. 2150, Civil Code].

The owner would still be liable, even if the

owner did not derive any benefit and there was
no imminent and manifest danger to the
property or business, provided:
1. The gestor has acted in good faith; and
2. The property or business is intact, ready to
be returned to the owner [Art. 2151, Civil
Code].

C. Effect of Ratification

Article 2149, Civil Code. The ratification of the

management by the owner of the business produces
the effects of an express agency, even if the
business may not have been successful.

D. Extinguishment of Management
1. When the owner repudiates or puts an end
thereto
2. When the gestor withdraws from the
management, subject to Art. 2144
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III. SOLUTIO INDEBITI
(UNDUE PAYMENT)
Solutio indebiti takes place when something is
received when there is no right to demand it,
and it was unduly delivered through mistake.
The recipient has the duty to return it [Art. 2154,
Civil Code].
A. Requisites
1. Something has been unduly delivered
through mistake; and
2. Something was received when there was no
right to demand it [Metrobank v. Absolute
Management Corp., G.R. No. 170498
(2013)]
This situation may cover payment by reason of
a mistake in the construction or application of a
doubtful or difficult question of law [Art. 2155,
Civil Code].
The Government also comes within the scope
of solutio indebiti. Tax refunds are based on
such [CIR v. Acesite, G.R. No. 147295 (2007)].
B. When Debt not yet Due
If the payer was in doubt whether the debt was
due, he may recover if he proves that it was not
due [Art. 2156, Civil Code].
C. Responsibility of Two or More
Payees
When there has been payment of what is not
due, their responsibility is solidary [Art. 2157,
Civil Code].
D. When Money or Thing
Delivered is Owned by Third
Person
The payee cannot demand that the payor
prove his ownership of the thing delivered.
Nevertheless, should he discover that the thing
has been stolen and who its true owner is, he
must advise the latter.
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If the owner, in spite of such information, does
not claim it within the period of one month, the
payee shall be relieved of all responsibility by
returning the thing deposited to the payor.
If the payee has reasonable grounds to believe
that the thing has not been lawfully acquired by
the payor, the former may return the same
[Arts. 2158 & 1984, Civil Code].
E. Liability of Payee
If in bad faith, he shall be liable:
1. For legal interest if a sum of money is
involved, or
2. For the fruits received or which should have
been received if the thing produces fruits,
and
3. For any loss or impairment of the thing for
any cause, and
4. For damages to the person who delivered
the thing, until it is recovered [Art. 2159,
Civil Code].
If in good faith, he shall be liable:
1. For the impairment or loss of the thing
certain and determinate or its accessories
and accessions insofar as he has thereby
been benefited.
2. For the return of the price or assign the
action to collect the sum if he has alienated
the same [Art. 2160, Civil Code].
F. Exemption from the
Obligation to Restore the
Payment Unduly Made
A person who, believing in good faith that the
payment was being made of a legitimate and
subsisting claim,
1. destroyed the document, or
2. allowed the action to prescribe, or
3. gave up the pledges, or
4. cancelled the guaranties for his right shall be
exempt from the obligation to restore.
The person who paid unduly may proceed only
against the true debtor or the guarantors with
regard to whom the action is still effective [Art.
2162, Civil Code].
QUASI-CONTRACTS CIVIL LAW
G. Presumption of Payment by
Mistake, Defense
The presumption of payment by mistake arises
if something which had never been due or had
already been paid was delivered; but he from
whom the return is claimed may prove that the
delivery was made out of liberality or for any
other just cause [Art. 2163, Civil Code].

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QUASI-CONTRACTS
IV. OTHER QUASI-
CONTRACTS
1. When, without the knowledge of the person
obliged to give support, it is given by a
stranger, the latter shall have a right to
claim the same from the former, unless it
appears that he gave it out of piety and
without intention of being repaid [Art. 2164,
Civil Code].
2. When the person obliged to support an
orphan, or an insane or other indigent
person unjustly refuses to give support to
the latter, any third person may furnish
support to the needy individual, with the
right of reimbursement from the person
obliged to give support. The provisions of
this article apply when the father or mother
of a child under eighteen years of age
unjustly refuses to support him [Art. 2166,
Civil Code].
3. When funeral expenses are borne by a
third person, without the knowledge of
those relatives who were obliged to give
support to the deceased, said relatives shall
reimburse the third person, should the latter
claim reimbursement [Art. 2165, Civil Code].
Note: Only necessary expenses. The third
person must claim [Casis].
4. When through an accident or other cause a
person is injured or becomes seriously ill,
and he is treated or helped while he is not
in a condition to give consent to a contract,
he shall be liable to pay for the services of
the physician or other person aiding him,
unless the service has been rendered out of
pure generosity [Art. 2167, Civil Code].
5. When during a fire, flood, storm, or other
calamity, property is saved from
destruction by another person without the
knowledge of the owner, the latter is bound
to pay the former just compensation [Art.
2168, Civil Code].
6. When the government, upon the failure of
any person to comply with health or safety
regulations concerning property,
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undertakes to do the necessary work,
even over his objection, he shall be liable to
pay the expenses [Art. 2169, Civil Code].
7. When by accident or other fortuitous
event, movables separately pertaining to
two or more persons are commingled or
confused, the rules on co-ownership shall
be applicable [Art. 2170, Civil Code].
8. The rights and obligations of the finder of
lost personal property shall be governed
by Arts. 719-720, Civil Code [Art. 2171, Civil
Code].
9. The right of every possessor in good faith
to reimbursement for necessary and
useful expenses is governed by Art. 546,
Civil Code [Art. 2172, Civil Code].
Note: Possessor in good faith may retain the
thing until he has been reimbursed [Casis].
10. When a third person, without the
knowledge of the debtor, pays the debt,
the rights of the former are governed by
Arts. 1236 and 1237, Civil Code [Art. 2173,
Civil Code].
Note: Cannot compel the creditor to
subrogate him in his rights.
11. When in a small community, a majority of
the inhabitants of age decide upon a
measure for protection against
lawlessness, fire, flood, storm or other
calamity, anyone who objects to the plan
and refuses to contribute to the expenses
but is benefited by the project as executed
shall be liable to pay his share of said
expenses [Art. 2174, Civil Code].
12. Any person who is constrained to pay the
taxes of another shall be entitled to
reimbursement from the latter [Art. 2175,
Civil Code].
Note: The list of quasi-contracts in the Civil
Code is not exhaustive. A quasi-
contractual relation may be forced upon
the parties to prevent unjust enrichment
[PNB v. Court of Appeals, G.R. No. 97995
(1993)].
SALES
CIVIL LAW
SALES
I. NATURE AND FORM
Contract of Sale – one of the contracting
parties obligates himself to transfer the
ownership and to deliver a determinate thing,
and the other to pay therefor a price certain in
money or its equivalent [Art. 1458, Civil Code].
A. Essential requisites [Art.
1318, Civil Code]
1. Consent of contracting parties
2. Object certain which is the subject matter
of the contract
3. Cause of the obligation which is
established
1. Consent of contracting parties
Consent refers to seller’s consent to transfer
ownership of, and deliver, a determinate thing,
and to buyer’s consent to pay the price certain.
Being a consensual contract, the contract of
sale is perfected at the moment there is a
“meeting of the minds” upon the thing which is
the object of the contract and upon the price
[Art. 1475, Civil Code].
Can there be sales without consent?
a. Expropriation [Art. 1488, Civil Code]
b. Ordinary Execution Sale [Rule 39, Sec.
15, Rules of Court]
c. Judicial Foreclosure Sale [Rule 68, Rules
of Court], and
d. Extra-Judicial Foreclosure Sale [Act.
3135, as amended]
Special Case
If the sale involves the conjugal property of
spouses, consent must be given by both.
2. Object certain which is the subject
matter of the contract
The things must be licit and the vendor must
have a right to transfer the ownership thereof
at the time it is delivered [Art. 1459, Civil Code].
Requisites of a Valid Subject Matter
[Arts. 1459-1465, Civil Code]
a. Licit
b. Existing, Future, Contingent
c. Determinate or determinable
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a. Must be licit
● Within the commerce of man
● When right is not intransmissible [Art. 1347,
Civil Code]
● It does not contemplate a future inheritance,
unless expressly authorized by law
● Example of illicit things per se (of its nature)
and per accidens (due to provisions of law)
○ Sale of animals if the use or service for
which they are acquired has been stated
in the contract, and they are found to be
unfit therefor [Art. 1575, Civil Code]
○ Sale of animals suffering from
contagious diseases [Art. 1575, Civil
Code]
○ Sale of future inheritance is void [Art.
1347, Civil Code]
○ Sale of land in violation of Constitutional
prohibition against the transfer of lands
to aliens [Art. XII of Constitution]
b. Existing, Future, Contingent
● Existing goods owned or possessed by the
seller;
● Goods to be manufactured, raised, OR
acquired by the seller – “Future Goods;”
[Art. 1462, Civil Code]
● Things having potential existence may be
the object of a contract of sale [Art. 1461,
Civil Code].
A sale may be made of a thing which, though
not yet actually in existence is reasonably
certain to come into existence as the natural
increment or usual incident of something in
existence already belonging to the seller, and
the title will vest in the buyer the moment the
thing comes into existence [Sibal v. Valdez,
G.R. No. L-26278 (1927)].
SALES CIVIL LAW

Sale of Things Having Potential c. Determinate or Determinable

Existence Determinate
When it is particularly designated or physically
Emptio Rei Emptio Rei Spei segregated from all others of the same class
Speratei [Art. 1460, Civil Code].

Mere Hope Vain Hope Determinable

When it is capable of being made determinate
at the time the contract was entered into
Sale of a Sale of a Sale of a without the necessity of a new or further
thing MERE HOPE VAIN HOPE agreement between the parties [Art. 1460, Civil
expected or or expectancy or Code].
future thing expectancy
3. Cause of the obligation which is
Valid General Rule: Exception: established
Valid Void This refers to the “price certain in money or its
equivalent” [Art. 1458, Civil Code]. It does not
include goods or merchandise although they
Example: Example: Example: have their own value in money.
Sale of the Sale of a valid Sale of a
grain a field lottery ticket fake lottery However, the words “its equivalent” have been
may grow in ticket interpreted to mean that payment need not be
a given time in money, so that there can be a sale where the
thing given as token of payment has “been
Deals with a Deals with a thing that assessed and evaluated and [its] price
future thing currently exists – the hope or equivalent in terms of money [has] been
that is expectancy determined” [De Leon].
currently not
in existence a. Requisites of a valid price
1. Certain or ascertainable at the time of
Subject to Not subject to any condition; perfection
the condition The contract comes into 2. In money or its equivalent
that the thing existence immediately ● If price is partly in money and partly
will exist in another thing: determine manifest
intention of the parties to see whether
it was barter or sale [Art. 1468, Civil
Future thing Code]
is certain as ● If intention does not clearly appear:
to itself, but it shall be considered a barter if the
uncertain as value of the thing exceed the amount of
to quantity money or its equivalent [Art. 1468, Civil
and quality Code]
3. Real
● When buyer has an intention to pay
In case of doubt, the presumption is in favor and the seller has an expectation to
of emptio rei speratae since it is more in receive the price
keeping with the commutative character of ● If simulated: Sale is VOID; BUT act
the contract. may be shown to have been a donation
or some other act or contract [Art.
1471, Civil Code]
● If price is false: when the real
consideration is not the price stated in
the contract:
○ Sale is void
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SALES
■ UNLESS proved to be founded
on another true and lawful price
[Art. 1353, Civil Code]
b. How price is determined/when certain
1. Fixed by agreement of the parties and
cannot be left to the discretion of one of the
parties – BUT if such is accepted by the
other, sale is perfected [Art. 1473, Civil
Code].
2. Determination is left to the judgment of a
specified person.
General Rule: Price fixed by 3rd persons
designated by the parties is binding upon them.
Exceptions:
● If 3rd person is unable or unwilling: Sale is
inefficacious unless parties subsequently
agree about the price.
● If 3rd person fixed the price in bad faith/by
mistake: Courts may fix price (but mere
error in judgment cannot serve as basis for
impugning price fixed).
● If 3rd person is prevented from fixing price
by fault of seller or buyer: Innocent party
may avail of remedies (rescission or
fulfillment of obligation, with damages).
● If 3rd person disregards specific
instructions/data/procedure, thereby fixing
an arbitrary price.
● The price is made in reference to another
thing, or when the price fixed is the price of
the commodity on a definite day, or in a
particular exchange or market, or when the
amount fixed is above or below the price on
such day, exchange or market [Art. 1472,
Civil Code].
General Rule: When the price is not certain,
the contract is without effect and no obligation
arises from it.
Exception: When the thing is already
delivered, the buyer must pay a reasonable
price therefor. This exception only arises when
the means contemplated by the parties for
fixing the price have become ineffectual.
c. Inadequacy of price
The stipulation in a contract of sale which
states that the consideration is “PhP1 and
other valuable considerations” does not make
the contract void. Gross inadequacy of price
does not affect the contract of sale except that
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it may indicate a defect in consent [Bagnas v.
CA, G.R. No. L-38498 (1989)].
General Rule: Does not affect a contract of
sale’s validity [Art. 1470, Civil Code].
Exceptions:
1. In Voluntary sales
● Where low price indicates a vice of
consent, sale may be annulled.
● Where price is so low to be shocking to
the conscience (fraud, mistake, undue
influence), then sale may be set aside.
● Where price is simulated such as when
the real intention was a donation or
some other contract.
● Where the parties did not intend to be
bound at all, sale is void.
2. In Involuntary sales
● A judicial or execution sale is one made
by a court with respect to the property
of a debtor for the satisfaction of his
indebtedness.
● Rescissible contracts of sale -
Inadequacy of price is a ground for
rescission of conventional sale under
Art. 1381 (a) and (b), Civil Code.
d. When no price agreed
1. Sale is inefficacious [Art. 1474, Civil Code]
2. But if the thing or part thereof has been
delivered and appropriated by the buyer,
he must pay a reasonable price therefore
● What is a reasonable price is a
question of fact dependent on the
circumstances of each particular case
[Art. 1474, Civil Code]
● The reasonableness of a price may be
determined on the basis of a
company’s balance sheet showing the
book value or fair market value of its
shares [Philippine Free Press v. CA,
G.R. No. 132864 (2005)]
3. Generally, the reasonable price is the
market price at the time and place fixed by
the contract or by law for delivery of goods
e. False price vs. simulated price
False Price Simulated Price
Price stated in the Price stated in the
contract is not the contract is not
intended to be paid.
SALES CIVIL LAW

true price. Parties Parties never Status of Contract with regard to Price
intended to be bound. intended to be
bound.
Void 1. Parties did not agree on
Effect: Effect: price
Binds the parties to Void for lack of 2. Fixing of price left to one
their real agreement cause/consideration contracting party and
when it does not , but can be shown other party does not
prejudice 3rd persons as a donation or accept
and is not intended some other contract. 3. Lack of cause or
for any purpose Parties may recover consideration
contrary to law, from each other 4. Involuntary judicial sale
morals, public policy, what they may have where price is so low and
etc. given under the shocking
contract. • EXC: right to
repurchase
available
f. Earnest money vs. option money 5. Voluntary sale where
Earnest Money – paid in advance of the price is so low it is
purchase price agreed upon by the parties in a shocking
contract of sale, given by the buyer to the • But may be
seller, to bind the latter to the bargain. declared equitable
mortgage
Option Money Earnest Money 6. Simulated price
• But may be
declared donation
Separate and distinct Part of purchase 7. Unlawful Price
consideration from the price [Art. 1482,
purchase price Civil Code] Inefficacious 1. Price cannot be
determined
2. Third party is unable
Given when sale is Given only when to fix price and the
not yet perfected there is already a parties do not agree on
sale the price

Voidable 1. Low price indicates a

When given, the When given, the defect in the consent
would-be-buyer is not buyer is bound to
required to buy, but pay the balance Rescissible 1. Guardian lesion
may even forfeit it contracts
depending on the
terms of the option Valid 1. Fixing of price left to
one contracting party
Grantee of option is Buyer manifests his and other party accepts
still undecided earnest desire to 2. Third party is unable
whether or not to buy buy the property to fix price and the
or sell the property parties agree on the
[Baviera] price
3. Third party acted in
bad faith or by mistake in
[Limson v. CA, G.R. No. 135929 (2001)] fixing the price (but the
court may fix the price)

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SALES
4. False (relatively
simulated contract) or
mistake price
B. Perfection
1. Meeting of Minds
Article 1475, Civil Code. The contract of sale is
perfected at the moment there is a meeting of minds
upon the thing which is the object of the contract and
upon the price.
From that moment, the parties may reciprocally
demand performance, subject to the provisions of
the law governing the form of contracts.
Essential elements of a perfected contract
of sale. There must be a meeting of minds
a. Upon the thing which is the object of the
contract [Art. 1475, Civil Code]
b. Upon the price [Art. 1475, Civil Code], and
c. Upon the manner of payment [Toyota
Shaw Inc. v. CA, G.R. No. L-116650
(1995)].
Offer and Acceptance
● The offer must be certain and the
acceptance absolute [Art. 1319, Civil
Code].
● The person making the offer may fix the
time, place, and manner of acceptance, all
of which must be complied with [Art. 1321,
Civil Code].
● An offer becomes ineffective upon the
death, civil interdiction, insanity, or
insolvency of either party before
acceptance is conveyed [Art. 1323, Civil
Code].
● When the offerer has allowed the offeree
a certain period to accept, the offer may be
withdrawn at any time before acceptance
by communicating such withdrawal,
except when the option is founded upon a
consideration, as something paid or
promised [Art. 1324, Civil Code].
● Unless it appears otherwise, business
advertisements of things for sale are not
definite offers, but mere invitations to
make an offer [Art. 1325, Civil Code].
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2. Option contracts
Option
An accepted unilateral promise to buy or to sell
a determinate thing for a price certain is binding
upon the promisor if the promise is supported
by a consideration distinct from the price [Art.
1479(2), Civil Code; De Leon].
Separate Consideration
A consideration for an optional contract is just
as important as the consideration for any other
kind of contract. If there was no consideration
for the contract of option, then it cannot be
enforced any more than any other contract
where no consideration exists [Enriquez dela
Cavada v. Diaz, G.R. No. 11668 (1918)].
The option is not the contract of sale itself. The
optionee has the right, but not the obligation, to
buy. Once the option is exercised timely, i.e.,
the offer is accepted before a breach of the
option, a bilateral promise to sell and to buy
ensues and both parties are then reciprocally
bound to comply with their respective
undertakings [Ang Yu v. CA, G.R. No. 109125
(1994)].
The offeror is still free and has the right to
withdraw the offer:
● If the period is not itself founded upon or
supported by a consideration and
withdrawn before its acceptance.
● If an acceptance has been made, before
the offeror's coming to know of such fact,
by communicating that withdrawal to the
offeree.
Breach of contract
It will be a breach of contract when the offer
was withdrawn during the agreed period if the
period has separate consideration since the
contract of “option is deemed perfected.”
3. Right of first refusal
While the object might be made determinate,
the exercise of the right, however, would be
dependent not only on the grantor's eventual
intention to enter into a binding juridical relation
with another but also on terms, including the
price, that obviously are yet to be later firmed
up.
Even on the premise that such right of first
refusal has been decreed under a final
 SALES CIVIL LAW
judgment, like here, its breach cannot justify
Contract of Sale Contract to sell
correspondingly an issuance of a writ of
execution under a judgment that merely
recognizes its existence, nor would it sanction Ownership is Ownership is only
an action for specific performance without transferred upon transferred upon full
thereby negating the indispensable element of delivery payment of price
consensuality in the perfection of contracts
[Ang Yu v. CA, G.R. No. 109125 (1994)].
Non-payment is a Full payment is a
4. Mutual promise to buy and sell resolutory condition positive suspensive
The obligation is not to enter into a sale, but condition; hence
rather to negotiate in good faith for the non-payment would
possibility of entering into a sale. When the not give rise to the
promisor has in fact negotiated in good faith, obligation to transfer
but the parties’ minds could not meet on the ownership
price and the terms of payment, then promisor
has complied with his obligation [Villanueva].
Conditional Contract to sell
C. Contract of Sale v. Contract to Contract of Sale
Sell
Sale is already No perfected sale yet
Contract to Sell perfected
Article 1478, Civil Code: The parties may stipulate
that ownership in the thing shall not pass to the
purchaser until he has fully paid the price. A subsequent buyer A subsequent buyer
is presumed to be a is presumed to be a
buyer in bad faith buyer in good faith
Conditional Contract of Sale
Article 1461, Civil Code: Things having a potential
existence may be the object of the contract of sale.

The efficacy of the sale of a mere hope or

expectancy is deemed subject to the condition that
the thing will come into existence.

The sale of a vain hope or expectancy is void.

Article 1462, Civil Code: The goods which form the

subject of a contract of sale may be either existing
goods, owned or possessed by the seller, or goods
to be manufactured, raised, or acquired by the seller
after the perfection of the contract of sale, in this Title
called “future goods.”

There may be a contact of sale of goods, whose

acquisition by the seller depends upon a
contingency which may or may not happen.

Article 1465, Civil Code: Things subject to a

resolutory condition may be the object of the
contract of sale.

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SALES
II. CAPACITY TO BUY OR
SELL
A. Capacity of Parties
General Rule: Any person who has capacity to
act may enter into a contract of sale
[Villanueva].
As a general rule, all persons, whether natural
or juridical, who can bind themselves have also
legal capacity to buy and sell [De Leon].
Kinds of incapacity
1. Absolute [Art. 1327, 1397, 1399, Civil
Code] - In the case of persons who cannot
bind themselves
2. Relative - Married person
3. Special disqualifications [Arts. 1491-
1492, Civil Code]
1. Absolute Incapacity
a. Minors [Art. 1327, Civil Code]
b. Insane or Demented [Art. 1327, Civil Code]
c. Deaf-mutes who do not know how to write
[Art. 1327, Civil Code]
d. Civil Interdiction [Art. 38, Civil Code]
e. Judicially-declared Incompetents [Art. 39,
Civil Code]
1. Prodigal
2. Imbeciles
3. Absence & presumption of death
4. Persons not of unsound mind but by
reason of age, disease, weak mind,
and other similar causes, cannot take
care of themselves and manage their
property without outside aid (Easy prey
for deceit and exploitation)
General Rule: Contracts entered into by a
minor and other incapacitated persons are
voidable.
Exception: Where necessaries are sold and
delivered to him (without parent or guardian),
he must pay a reasonable price therefor.
a. Such contract is VALID
b. But the minor has the right to recover any
excess above a reasonable value paid by
him.
2. Relative incapacity
a. Husband and wife [Art. 1490, Civil Code]
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b. Alienage [Art. 39, Civil Code]
c. Trusteeship [Art. 39, Civil Code]
1. Agents
2. Guardian
3. Executors and administrators
4. Public officers and employees
5. Lawyers
6. Justices, Judges, prosecuting
attorneys, clerks and other officers and
employees connected with the
administration of justice
7. Others specially disqualified by law
a. Husband and wife [Art. 1490, Civil
Code]
General Rule: Spouses cannot sell property to
each other
Exceptions:
1. Separation of property in marriage
settlement, OR
2. Judicial separation of property.
Sale by husband in favor of a concubine after
he had abandoned his family and left conjugal
home where his wife and children lived and
from whence they derived their support, is void
[Ching v. Goyanko, Jr., G.R. No. 165879
(2006)].
Reason for this rule: Such prohibition is for
the protection of third persons who, relying
upon supposed property of either spouse,
enters into a contract with either of them only
to find out that the property relied upon was
transferred to the other spouse [De Leon].
b. Alienage [Art. 39, Civil Code]
General Rule: Aliens are disqualified from
purchasing or acquiring real property.
Exception: If acquisition is through hereditary
succession.
c. Trusteeship [Art. 39, Civil Code]
Such is grounded on public policy
considerations which disallow the transactions
entered into by them (directly or indirectly) in
view of the fiduciary relationship involved or
the peculiar control exercised by these
individuals over the properties or rights
covered [Mananquil v. Villegas, A.M. No. 2430
(1990)].
SALES
1. Agents – Cannot purchase or acquire
property whose administration or sale was
entrusted to them, except if principal gives
consent.
2. Guardian – Cannot purchase property of
person under his guardianship.
3. Executors and administrators –Cannot
acquire or purchase property of estate
under their administration.
The prohibition on executors and
administrators does not apply if the
principal consents to the sale [Distajo v.
CA, G.R. No. 112954 (2000)].
4. Public officers and employees - Cannot
acquire or purchase property of State/any
of its subdivisions, GOCC or
administration, the administration of which
was entrusted to them. Prohibition includes
judges and government experts who, in
any manner, take part in the sale.
5. Lawyers - Cannot acquire or purchase
property or rights in litigation in which they
take part by virtue of their profession.
For the prohibition to operate, the sale or
assignment must take place during the
pendency of the litigation involving the
property [Laig v. Court of Appeals, G.R. No.
L-26882 (1978)].
Exceptions: An assignment to a lawyer by
his client of an interest in the property does
not violate Art 1491, where:
a. A judgment has been rendered and
has become final; and
b. In case of contingency fee
arrangements: the interest of the
lawyer may be annotated as an
adverse claim on the property awarded
to his client [Director of Lands v.
Ababa, G.R. No. L-26096 (1979)]
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6. Justices, Judges, prosecuting
attorneys, clerks and other officers and
employees connected with the
administration of justice - Cannot
acquire or purchase property or rights in
litigation or levied upon on execution
before the court within whose jurisdiction or
territory they exercise their respective
functions.
7. Others specially disqualified by law
a. Unpaid sellers with goods in transit
from buying the goods
b. Officer conducting the execution sale
of deputies
c. Aliens who are disqualified to purchase
private agricultural lands
B. Effects of incapacity
1. Absolute incapacity
If both parties are incapacitated:
unenforceable [Art. 1403 (3), Civil Code].
If only 1 party is incapacitated: voidable.
Exception: Where necessaries are sold and
delivered to a minor or to a person without
capacity to act, he must pay a reasonable price
therefor [Art. 1489, par. 2, Civil Code]. The
resulting sale therefore described in the
foregoing article is valid and binding.
2. Relative incapacity
Sale between spouses is void.
Rationale:
a. To protect 3rd persons who may have
contracted with the spouse
b. To avoid undue advantage of the dominant
spouse over the weaker spouse.
c. To avoid circumvention of the prohibition
against donations between spouses
[Medina v. CIR, G.R. No. L-15113 (1961)].
Such prohibition shall likewise apply to
common law spouses [Calimlim-Canullas v.
Fortun, G.R. No. L-57499 (1984)].
But if already sold to a third person who relied
on the title of his immediate seller,
reconveyance to the seller spouse is no longer
available [Cruz v. CA, G.R. No. 120122
(1997)].
SALES CIVIL LAW
Sale contracted by aliens is void [Art. XII of the
Constitution].

3. Specific incapacity
General Rule: Contracts expressly prohibited
by law are VOID and CANNOT BE RATIFIED.
Neither can the right to set-up the defense of
illegality be waived [Art. 1409 (7), Civil Code].

Those entered into by public

officers/employees, justices and judges, and
lawyers in violation of Art. 1491 are inexistent
and VOID from the beginning [Rubias v.
Batiller, G.R. No. L-35702 (1973)]. It is NOT
subject to RATIFICATION.

Exception: Sales entered into by guardians,

administrators, and agents (specific
incapacities) in violation of Art. 1491 may be
RATIFIED by means of and in the form of a
new contract when the cause of nullity has
ceased to exist. Ratification is valid only from
date of execution of the new contract and does
not retroact.

Status of Contract with regard to

Capacity of Parties

Void 1. Sale between

spouses
2. Sale from
conjugal property
without the authority
of court or consent of
other spouse
3. Public Officers &
Employees
4. Judicial Officers &
Employees and
lawyers
5. Others
disqualified by law

Voidable 1. Guardians
2. Agents
3. Executors and
Administrators
4. One of the parties
is a minor or
incapacitated persons

Unenforceable 1. Both parties are minors

or incapacitated persons

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SALES
III. EFFECTS OF THE
CONTRACT WHEN
THE THING SOLD HAS
BEEN LOST
The Code Commission followed the common
law rule that the OWNER bears the risk of
loss in absence of stipulation to the contrary,
while retaining the rule in Roman Law which
requires delivery by the seller, whether actual
or constructive, to transfer OWNERSHIP to the
buyer.
Article 1263, Civil Code: In an obligation to deliver
a generic thing, the loss or destruction of anything of
the same kind does not extinguish the obligation.
General Rule: Risk of loss shall be borne by
the owner (Note: Owner is not always the
seller)
Exceptions
1. When ownership of the goods has been
transferred to him, the buyer bears the risk
of loss.
2. When there is a stipulation to the contrary.
3. When the seller retains the title for security,
the buyer bears the risk of loss.
4. When there is delay in the delivery, the
party in fault bears the risk of loss.
5. When sale is for “approval or trial”, the
seller bears the risk of loss until the buyer
approves or the trial period lapses.
6. When sale is on “return”, the buyer bears
the risk of loss until he returns it.
A. Res Perit domino [Arts. 1263,
and 1189 Civil Code]
Owner bears risk of loss and deterioration. The
ownership is transferred only upon delivery.
B. Prior to Perfection of Contract
Seller bears risk of loss and deterioration.
Basis: Res perit domino
When there is no proof that the parties have
agreed as to the thing which should be the
subject of the contract and that one has
accepted the terms proposed by the other, it
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cannot be said that the contracting parties have
given their mutual consent as to the subject
and consideration of the contract. The
disappearance or loss of property which the
owner intended or attempted to sell can only
interest the owner, who should suffer the loss,
and not a third party who has acquired no rights
nor incurred any liability with respect thereto
[Roman v. Grimalt, G.R. No. L-2412 (1906)].
C. At Time of Perfection [Arts.
1493 and 1494, Civil Code]
Seller bears risk of loss and deterioration.
Basis: Res perit domino.
Article 1493, Civil Code: If at the time the contract
of sale is perfected, the thing which is the object of
the contract has been entirely lost, the contract shall
be without any effect.
But if the thing should have been lost in part only,
the vendee may choose between withdrawing from
the contract and demanding the remaining part,
paying its price in proportion to the total sum agreed
upon.
Article 1494, Civil Code: Where the parties purport
a sale of specific goods, and the goods without the
knowledge of the seller have perished in part or have
wholly or in a material part so deteriorated in quality
as to be substantially changed in character, the
buyer may at his option treat the sale:
(1) As avoided; or
(2) As valid in all of the existing goods or in so much
thereof as have not deteriorated, and as binding the
buyer to pay the agreed price for the goods in which
the ownership will pass, if the sale was divisible.
Total Loss Partial Loss (Or loss
which results in
substantial change
in character)
Contract is void Buyer may withdraw
because the object from the contract
did not exist at the or
time of the Buy the remainder at a
transaction. proportionate price
Article 1496 of the Civil Code which provides
that “in the absence of an express assumption
of risk by the buyer, the things sold remain at
SALES
seller’s risk until the ownership thereof is
transferred to the buyer,” is applicable to this
case, for there was neither an actual nor
constructive delivery of the thing sold, hence,
the risk of loss should be borne by the seller,
Norkis, which was still the owner and
possessor of the motorcycle when it was
wrecked. This is in accordance with the well-
known doctrine of res perit domino [Norkis v.
CA, G.R. No. 91029 (1991)].
D. After Perfection but Before
Delivery
Loss
General Rule: Stipulations in the contract will
govern.
Exception: In the absence of stipulation, there
are two conflicting views:
1. Res perit creditori or the buyer bears the
risk of loss.
This is an exception to the rule of res perit
domino.
Basis: Art. 1504, Civil Code only covers
goods.
Pursuant to Art. 1262, Civil Code if the
thing is destroyed without the fault of the
debtor/seller, the obligation to pay shall
subsist.
2. Res perit domino or the seller bears the risk
of loss.
Basis: The rule on loss is different from the
rule on deterioration for the loss would be
for the account of the seller, while the
deterioration would be for the account of
the buyer.
In reciprocal obligations, the
extinguishment of the obligation due to loss
of the thing extinguishes the entire juridical
relation.
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Deterioration [Art. 1189, Civil Code]
Impairment is borne by the CREDITOR if the
thing deteriorates without the fault of the
debtor.
If it deteriorates through the fault of the debtor,
the creditor may choose between rescission of
obligation and fulfillment, either case with
indemnity for damages.
E. After Delivery
Article 1504, Civil Code: Unless otherwise agreed,
the goods remain at the seller's risk until the
ownership therein is transferred to the buyer, but
when the ownership therein is transferred to the
buyer the goods are at the buyer's risk whether
actual delivery has been made or not, except that:
(1) Where delivery of the goods has been made to
the buyer or to a bailee for the buyer, in pursuance
of the contract and the ownership in the goods has
been retained by the seller merely to secure
performance by the buyer of his obligations under
the contract, the goods are at the buyer's risk from
the time of such delivery;
(2) Where actual delivery has been delayed through
the fault of either the buyer or seller the goods are at
the risk of the party in fault.
General Rule: Buyer bears risk of loss and
deterioration.
Exceptions: [Art. 1504 (1) and (2), Civil Code]
1. Where delivery has been made either to
the buyer or to the bailee for the buyer, but
ownership in the goods has been retained
by the seller → Seller will bear the risks
• Exception to the Exception: Seller
retained ownership merely to secure
performance by the buyer of his
obligations under the contract; →
Buyer will bear the risks
2. Where actual delivery has been delayed
through the fault of either the buyer or seller
→ The party at fault will bear the risks
SALES CIVIL LAW

SUMMARY OF RULES ON THE RISK OF

LOSS AND DETERIORATION

Before Seller bears risk of loss and

Perfection deterioration

Seller also benefits from the

fruits and improvements
therein

At Entire Loss will be ineffective

Perfection
Substantial Loss or
Deterioration shall allow the
buyer to withdraw or buy the
remainder at a proportionate
price.

After Seller bears risk of loss

Perfection
Buyer bears risk of
deterioration

Buyer also benefits from the

fruits and improvements
therein

Before Buyer bears risk of loss or

Delivery deterioration

Buyer also benefits from the

fruits and improvements
therein

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SALES
IV. OBLIGATIONS OF
VENDOR
Note: Further discussion can also be found in
Section J of this Sales Reviewer, on the
Performance of the Contract.
A. Obligations of the Vendor in
General
1. To transfer ownership of the thing [Art.
1495, Civil Code]
2. To deliver the thing, with its accessions
and accessories, if any [Arts. 1164, 1166,
Civil Code]
3. To warrant against eviction and against
hidden defects [Arts. 1545-1581, Civil
Code]
4. To take care of the thing, pending delivery,
with proper diligence [Art. 1163, Civil Code]
5. To pay for the expenses of the deed of
sale [Art. 1487, Civil Code]
1. To Transfer Ownership of the Thing
and To Deliver the Thing, with its
Accessions and Accessories
The ownership of the thing sold shall be
transferred to the vendee upon the actual or
constructive delivery thereof, or in any manner
signifying an agreement that possession is
transferred from the vendor to the vendee
[Baviera].
Note: The contract of sale constitutes only a
right to the transfer or acquisition of ownership,
while delivery is the method of accomplishing
the same.
a. When Seller is Not the Owner
General Rule: Ownership is not acquired by
the buyer. One cannot give what one does not
have [Art. 1505, Civil Code].
Exceptions:
1. Seller has a right to transfer ownership.
Seller need not be the owner of the thing at
the time of perfection of the contract. It is
sufficient that the seller has a right to
transfer ownership thereof at the time it is
delivered [Art. 1459, Civil Code].
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One who sells something he does not own
yet is bound by the sale when he acquires
the thing later [Bucton v. Gabar, G.R. No.
L-36359 (1974)].
2. Estoppel: Owner is, by his conduct,
precluded from denying the seller’s
authority to sell [Art. 1434, Civil Code].
3. Registered land bought in good faith.
General Rule: Buyer need not go beyond
the Torrens Title.
Exception: When he has actual
knowledge of facts and circumstances that
would impel a reasonably cautious man to
make further inquiry.
4. Order of courts; Statutory Sale - In
execution sale, the buyer merely steps into
the shoes of the judgment debtor [Sec. 33,
Rule 39, ROC].
5. When goods are purchased in Merchant’s
store, Fair, or Market [Art. 1505, Civil
Code].
b. Sale by Person having a Voidable Title
1. True owner may recover the thing when the
ff. requisites concur:
a. Subject matter is movable
b. Owner has either lost the thing or has
been unlawfully deprived [Art. 559, Civil
Code].
2. Reimbursement is necessary before owner
can recover when:
a. Buyer acted in good faith
b. Acquired at a public auction [Art. 559,
Civil Code]
3. Recovery no longer possible when:
a. Buyer in good faith
b. Acquired it at a merchant’s store, fair or
market [Art. 1506, Civil Code].
c. Manner of Transfer [Arts. 1477, 1496-
1501, Civil Code]
General Rule: Ownership of the thing sold
shall be transferred to the vendee upon actual
or constructive delivery thereof [Art. 1477, Civil
Code].
SALES
Exceptions:
1. Contrary stipulation
2. Contract to sell
3. Contract of insurance
4. Sale on acceptance/Trial
5. When seller is not the owner or has
voidable title
Obligation to transfer ownership and to deliver
is implied in every contract of sale [Arts. 1458-
1459, Civil Code]
Transfer of ownership requires delivery [Art.
1495, Civil Code]
General Concepts
Under Article 1495, the seller has twin
obligations to (a) transfer the ownership and (b)
deliver the thing, which is the object of sale to
the buyer. In Article 1164, this includes the
obligation to deliver the fruits and accessories
from the time the obligation to deliver it arises;
however, he shall acquire no real right over
them until the same has been delivered to him.
Transfer of ownership is effected even if the
purchase has been made on credit. Payment
of the purchase price is not essential to transfer
of ownership as long as the property sold was
delivered.
Intention to transfer ownership
● All forms of delivery shall be coupled with
intention of delivering the thing sold.
● Seller must be the owner or authorized by
owner of the thing sold
When right to transfer ownership must
exist: At the time of delivery and not at the time
of perfection of contract of sale.
d. Concept of Delivery
Payment and delivery of the thing sold are
concurrent acts, in consonance with the rule in
reciprocal obligations [Baviera].
The rule is that neither party incurs in delay if
the other does not comply or is not ready to
comply in a proper manner with what is
incumbent upon him.
General Rule: The vendor is not bound to
deliver the thing sold if the vendee has not paid
the price.
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Exception: When the thing is sold on credit.
The Agreement of the parties determines
whether it is for the buyer to take possession of
the goods or for the seller to send them to the
buyer.
Requisites
1. Identity – between what must be delivered
and what is actually delivered
2. Integrity – in a condition suitable for
enjoyment
3. Intentional
Thing, Place, Time and Manner of
Delivery
What to Deliver
1. Thing sold [Art. 1495, Civil Code]
2. Fruits [Art. 1164 & 1537, Civil Code] –
belong to the vendee from day of
perfection.
3. Accessions and accessories [Art. 1166 &
1537, Civil Code] – in the same condition
they were in on day of perfection:
a. Improvements by seller at his expense
grants him a usufructuary right [Art.
1138, 1189, Civil Code]
b. No indemnification
c. But he may remove it to the extent that
there is no damage [Art. 1538, Civil
Code]
Where to Deliver
1. A hierarchy is followed:
a. Stipulation
b. Usage of trade
c. Seller’s place of business (office)
d. Seller’s residence
2. In case of specific goods, which the
parties knew to be at some other place
when the contract was perfected, that
place is the place of delivery
3. If goods at the time of sale are
possessed by a third person, then there
is no delivery until he acknowledges to the
buyer that he holds the goods for the buyer
When to Deliver
Where, by agreement, the seller is bound to
send the goods to the buyer, he is bound to
send them within the time agreed upon.
● If no time fixed: within a reasonable time.
SALES
● The expenses of placing the goods in a
deliverable state shall be borne by the
seller (unless otherwise stipulated)
Note: Demand or tender of delivery shall be
made at a reasonable hour.
Manner of Delivery
Where the goods at the time of the sale are in
the possession of a third person: NO
DELIVERY unless such third person
acknowledges to the buyer that he holds
the goods on the latter’s behalf.
e. When Delivery Does Not Transfer
Title
Sale on Approval or Trial
Title remains with the seller notwithstanding
delivery of the goods.
Buyer becomes the owner when he:
1. Signifies his approval or acceptance to the
seller
2. Does any other act adopting the
transaction (i.e. sale to a third person)
3. Retains the goods without giving notice of
rejection after the time fixed has expired; if
no time has been fixed, after the expiration
of a reasonable time [Art. 1502, Civil Code]
Sale or Return
● Buyer becomes owner of the property on
delivery, BUT has the option to revest
ownership in the seller instead of paying
the price by returning the goods within the
time fixed in the contract, or, if no time is
fixed, within a reasonable time. Otherwise,
the sale becomes absolute.
● Loss or destruction of the property prior to
return falls upon the buyer and makes him
responsible for the purchase price.
Sale on Approval v. Sale or Return
Sale on Approval Sale or Return
Ownership does not Ownership passes
pass upon delivery to buyer on delivery
remaining with the and subsequent
seller until buyer return revests
signifies his approval. ownership in the
seller.
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Depends on the Depends on the will
character or quality of of the buyer
goods
Subject to a Subject to a
suspensive condition resolutory condition
Risk of loss remains Risk of loss remains
with the seller with the buyer
Express Reservation
If it was stipulated that ownership in the thing
shall not pass to the purchaser until he has fully
paid the price, then ownership remains with
seller even when delivery is made [Art. 1478,
Civil Code].
Implied Reservation
The following are instances when there is an
implied reservation of ownership:
1. Goods are shipped, but by the bill of lading
goods are deliverable to the seller or his
agent, or to the order of the seller or his
agent
2. Bill of lading is retained by the seller or his
agent [Art. 1503, Civil Code].
When the seller of the goods draws on the
buyer for the price and transmits the bill of
exchange and bill of lading to the buyer, and
the latter does not honor the bill of exchange
by returning the bill of lading to the seller.
When Sale Not Valid
When the thing sold is a public property.
Sale by Person Having a Voidable Title
1. True owner may recover the thing when the
ff. requisites concur:
a. Subject matter is movable
b. Owner has either lost the thing or has
been unlawfully deprived [Art. 559,
Civil Code]
2. Reimbursement is necessary before owner
can recover when:
a. Buyer acted in good faith
b. Acquired at a public auction [Art. 559,
Civil Code]
3. Recovery no longer possible when:
a. Buyer in good faith
b. Acquired it at a merchant’s store, fair or
market [Art. 1506, Civil Code]
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f. Kinds of Delivery
Actual Delivery
Deemed made when the thing sold is placed in
the control and possession of the vendee [Art.
1497, Civil Code]
Not always essential to passing of title [Art.
1477, Civil Code]
Parties may agree when and on what
conditions the ownership shall pass to the
buyer [e.g.: Art 1478 where ownership will only
pass after full payment of the price]
Constructive Delivery
1. Execution of public instrument
2. Symbolic delivery
3. Traditio longa manu (long hand)
4. Traditio brevi manu (short hand)
5. Traditio constitutum possessorium
6. Quasi-traditio
7. Delivery to a Common Carrier
1. Execution of public instrument [par. 1,
Art. 1498, Civil Code]
General Rule: produces the same legal effects
of actual delivery.
Exceptions:
a. The parties intended otherwise.
b. At the time of execution, the subject matter
was not subject to the control of the seller,
which control must subsist for a reasonable
length of time after execution [Pasagui v.
Villablanca, G.R. No. L-21998 (1975)].
“Control” over thing sold must be such that
the seller is capable of physically
transferring it to buyer.
Although parties may stipulate that the
execution of a public instrument is equivalent
to delivery, this legal fiction holds true only
when there is no impediment that may prevent
the passing of the property from the vendor to
the vendee [Vda. de Sarmiento v. Lesaca, G.R.
No. L-15385 (1960)].
If, notwithstanding execution of the instrument,
the buyer cannot enjoy material tenancy and
make use of the object himself or through
another in his name, there is no delivery
[Power Commercial v. CA, G.R. No. 119745
(1997)].
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Execution of a public instrument gives rise only
to a prima facie presumption of delivery,
negated by failure of the buyer to take actual
possession of land sold. A person who does
not have actual possession cannot transfer
constructive possession by execution and
delivery of public instrument [Spouses
Santiago v. Villamor, G.R. No. 168499 (2012)].
2. Symbolic Delivery
Delivery of keys of the place or depositary
where the movable is stored or kept [Art. 1498,
Civil Code].
Unless otherwise agreed, when symbolic
delivery has been made, the seller is not
obliged to remove tenants to place the buyer in
actual possession of the property as he has
already complied with his obligation to transfer
ownership of and deliver the thing sold [Power
Commercial and Industrial Corp. v. CA, G.R.
No. 119745 (1997); Sabio v. The International
Corporate Bank, Inc., G.R. No. 132709 (2001)].
3. Traditio Longa Manu (Long Hand)
Delivery of movable property by mere consent
or agreement, if the thing sold cannot be
transferred to the possession of the buyer at
the time of sale [Art. 1499, Civil Code].
Example: Seller points to the property without
actually transferring physical possession
thereof.
Delivery by mere agreement; seller points out
to the buyer the property without need of
actually delivering (as when the thing sold
cannot be transferred to the possession of the
vendee at the time of sale). Delivery takes
place when the thing is placed in the sight of
the purchaser so that he can take possession
of it at pleasure. With regard to movable
property, its delivery may also be made by the
delivery of the keys of the place or depository
where it is stored or kept.
When an employer assigned all its rights and
title to all surplus property salvaged by the
contractor, traditio longa manu takes place.
Delivery is upon the moment a thing is
salvaged [Board of Liquidators v. Floro, G.R.
No. L-15155 (1960)].
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4. Traditio Brevi Manu (Short Hand)
Delivery of movable property by mere consent
or agreement, if the buyer already had it in his
possession for any other reason [Art. 1499,
Civil Code].
Happens when the buyer already has
possession of the thing sold before the sale by
virtue of another title (as lessee, borrower,
depositary, etc.)
5. Traditio Constitutum Possessorium
Seller continues to be in possession of the
property sold not as owner but in some other
capacity, like as tenant or lessee.
At the time of perfection, the seller held
possession of the subject matter in the concept
of owner, and pursuant to the contract, the
seller continues to hold physical possession
thereof as lessee or other form of possession
other than the concept of owner.
For example, a seller remains in possession of
the property sold, by virtue of a lease
agreement with the vendee, at the time of the
perfection of the contract of sale.
Vendee became, as lessor, the legal
possessor while the vendor is in material
possession of the property in the name and
representation of the vendee.
Seller continues to be in possession of the
property sold.
6. Quasi-traditio
Mode of delivery of incorporeal things or rights.
Delivery is effected:
a. By execution of public instrument
b. When such is not applicable, by placing the
titles of ownership in the possession of the
buyer
c. By allowing the buyer to use his rights as
new owner with the consent of the seller
7. Delivery to a Common Carrier
General Rule: Delivery to the courier or carrier
is tantamount to delivery to buyer, whether
carrier is named by buyer or not. The buyer
assumes the risk of loss.
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Exceptions:
a. Seller reserved title through the form of the
bill of lading, with intent to remain the
owner, not merely for the purpose of
securing payment, OR
b. Contrary intention appears in the contract
(i.e. seller is required to deliver goods to
buyer at the point of destination)
c. Delivery by the seller is in breach of the
contract
d. F.O.B. (Free on Board or Freight on Board)
- When seller bears the expenses of
transportation up to the F.O.B. point
e. C.I.F. (Cost, Insurance, Freight) - Price
quoted includes the costs of the goods,
insurance, and freight charges on the
goods up to the point of destination
f. F.A.S. (Free Alongside) – Seller bears the
expenses of transportation until he delivers
the goods alongside a vessel at a named
port
g. Double Sales [Art. 1544, Civil Code]
Article 1544 (1), Civil Code: If the same thing
should have been sold to different vendees, the
ownership shall be transferred to the person who
may have first taken possession thereof in good
faith, if it should be movable property.
Article 526, Civil Code: He is deemed a possessor
in good faith who is not aware that there exists in his
title or mode of acquisition any flaw which invalidates
it.
He is deemed a possessor in bad faith who
possesses in any case contrary to the foregoing.
Mistake upon a doubtful or difficult question of law
may be the basis of good faith.
Article 527, Civil Code: Good faith is always
presumed, and upon him who alleges bad faith on
the part of a possessor rests the burden of proof.
General Rule: Prior tempore, prior jure (“First
in time, priority in right”) applies.
Requisites:
1. 2 or more valid sales;
2. Same subject matter;
3. 2 or more buyers with conflicting interests
over the rightful ownership of the thing
sold;
SALES
4. Same seller [Cheng v. Genato, G.R. No.
129760 (1998)].
Rules on Double Sale
There is no double sale when:
1. Not all the elements of a sale are present.
2. The principle of prior tempore, prior jure (he
who is first in time is preferred in right)
should apply.
3. The two different contracts of sale are
made by two different persons, one of them
not being the owner of the property sold.
4. The land sold is not yet registered under
the Torrens system.
5. The first sale occurred when land was not
yet registered, and the second sale was
done when the land was already registered
– prior tempore, prior jure should apply.
Rules on Preference
Personal property
1. First possessor in good faith
Real property
1. First registrant in good faith: second buyer
must register the document in good faith,
otherwise, he does not have a better right
2. First possessor in good faith
3. Person with oldest title in good faith
Caveat emptor: One who purchases real
property which is in actual possession of others
should make some inquiry concerning the
rights of those in possession
Rules Governing Sale of Movables,
Immovables and Unregistered Lands
1. Sale of Movable: Ownership shall be
transferred to the person who may have
first taken possession in good faith.
2. Sale of Immovables: Registered Land –
Ownership belongs to the person who:
a. In good faith first recorded the sale in
the Registry of Property; or
b. If there is no inscription of sale on the
title, ownership passes to the person
who in good faith was first in
possession; or
c. In the absence thereof, to the person
who presents the oldest title,
provided there is good faith.
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Possession refers to any of the modes of
possession in Arts. 1497-1501, Civil Code
Oldest Title as to any public document
showing acquisition of the land in good
faith. To constitute “title,” the transmission
of ownership must appear in a public
document [Art. 1358 (1), Civil Code]
Registration includes any entry made in
the Primary Entry Book of the registry,
including both registration in its ordinary
and strict sense and cancellation,
annotation, and even marginal notes
[Cheng v. Genato, G.R. No. 129760
(1998)].
Penciled entries on the title are not
considered registration [AFPMBAI v. Court
of Appeals, G.R. No. 126745 (1999)].
3. Second Sale Made by Virtue of
Execution and Attachment –
Art. 1544 does NOT apply in cases where
the first sale of an unregistered immovable
occurred prior to an execution sale and the
second sale occurred by virtue of an
execution sale. This is because a buyer of
unregistered land at an execution sale only
steps into the shoes of the judgment debtor
(the person who sold the property prior to
the execution sale). The second buyer
merely acquires the latter’s interest in the
property sold as of the time the property
was levied upon [Carumba v. CA, G.R. No.
L-27587 (1970)].
4. Sale of Immovables: Unregistered Land
Instrument or deeds establishing,
transmitting, acknowledging, modifying or
extinguishing rights with respect to lands
not registered under the Land Registration
Act or the Spanish Mortgage Law, are
required to be registered in the Registry of
Property to prejudice 3rd persons, although
such registration is understood to be
“without prejudice to a third party with a
better right” [PD 1529, Sec 113].
Art. 1544 applies to unregistered land
subject to a conventional sale (because of
Art. 1358) but NOT to unregistered land
subject to judicial sale.
SALES CIVIL LAW
Unregistered by both buyers, the first buyer
Lis Pendens Annotation of
is preferred.
Adverse Claim
If first buyer did not register but second May be cancelled May be cancelled
buyer registered property, second buyer is even before the action only in one
preferred. is finally terminated for instance, i.e., after
causes which may not the claim is
h. Property Registration Decree [P.D. be attributable to the adjudged invalid or
1529] claimant unmeritorious by
the Court
REQUISITES FOR REGISTRATION OF
DEED OF SALE IN GOOD FAITH
The two are not contradictory or repugnant to
a. Purchaser in Good Faith
one another; nor does the existence of one
b. Accompanied by vendors duplicate
automatically nullify the other, and if any of the
certificate of title, payment of capital gains
registrations should be considered
tax, and documentary tax registration fees
unnecessary or superfluous, it would be the
notice of lis pendens [A. Doronila Resources
a. Purchaser in Good Faith - One who
Development Inc v. CA, G.R. Nos. L-42956-
buys the property of another, without
571988 (1988)].
notice that some other person has a
right to or interest in such property, and
b. Accompanied by vendors
who pays a full and fair price for the
duplicate certificate of title,
sale, at the time of the purchase or
before he has notice of the payment of capital gains tax, and
claim/interest of some other person in documentary tax registration fees
the property [Agricultural and Home Must be accompanied by:
Extension Development Group v. CA, 1. Vendor’s duplicate certificate of title
G.R. No. 92310 (1992)]. 2. Payment of capital gains tax – 6% of the
selling price or zonal value, whichever is
General Rule: As a rule, he who asserts the higher
status of a purchaser in good faith and for value 3. Documentary tax registration fees – 1.5%
has the burden of proving such assertion of the selling price or zonal value,
[Mathay v. CA, G.R. No. 115788 (1998)]. whichever is higher
a. Risk of Loss
When buyer is presumed to be in bad faith
● Annotation of adverse claim: Places any (Note: This is discussed under Part III of this
subsequent buyer of the registered land in Sales Reviewer, on Effects of the contract
bad faith [Balatbat v. CA, G.R. No. 109410 when the thing sold has been lost.)
(1996)].
● Annotation of Lis Pendens: Buyer cannot 2. To Warrant Against Eviction and
be considered an innocent purchaser for Against Hidden Defects
value where it ignored the lis pendens on Warranties - A statement or representation
the title. made by the seller contemporaneously and as
● A purchaser of a parcel of land cannot part of the contract of sale, having reference to
close his eyes to facts which should put a the character, quality, or title of the goods, and
reasonable man upon his guard, such as by which he promises or undertakes to ensure
when the property subject of the purchase that certain facts are or shall be as he then
is in the possession of persons other than represents.
the seller. A buyer who could not have
failed to know or discover that the land sold Not every false representation voids the
to him was in the adverse possession of contract, only those matters substantially
another is a buyer in bad faith [Heirs of affecting the buyer’s interest, not matters of
Ramon Durano v. Uy, G.R. No. 136456 opinion, judgment, probability, or expectation.
(2000)]. When the buyer undertakes his own

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investigation, and the seller does nothing to the nonperformance of the condition as a
prevent it from being as full as the buyer breach of warranty [Art. 1545, Civil Code].
chooses, the buyer cannot afterwards allege
misrepresentations [Songco v. Sellner, G.R.
Express Implied
No. L-11513 (1917)].

Economic Loss Doctrine: Where the defect Nature is Contractual; Constituted by Law
makes the goods less valuable Freely Represented

Condition v. Warranty Stipulated by parties, Only seller is bound,

Article 1545, Civil Code: Where the obligation of thereby binding both whether or not
either party to a contract of sale is subject to any the seller and buyer intended or known
condition which is not performed, such party may by the parties.
refuse to proceed with the contract or he may waive
performance of the condition. If the other party has
promised that the condition should happen or be a. Express Warranties
performed, such first mentioned party may also treat
the nonperformance of the condition as a breach of
For there to be express warranty, the following
warranty. requisites must concur:
1. An affirmation of fact or any promise
Where the ownership in the thing has not passed, relating to the thing sold
the buyer may treat the fulfillment by the seller of his 2. The natural tendency of such affirmation or
obligation to deliver the same as described and as promise is to induce the buyer to buy
warranted expressly or by implication in the contract
of sale as a condition of the obligation of the buyer
3. The buyer buys the thing relying thereon
to perform his promise to accept and pay for the [Art. 1546, Civil Code]
thing. 4. Made before the sale, not upon delivery or
any other point

Condition Warranty An express warranty can be made by and also

be binding on the seller even in the sale of a
secondhand article [Moles v. IAC, G.R. No.
Pertains to and Goes into the 73913 (1989)].
affects the existence performance of an
of the obligation obligation and may, Express Warranty v. Dealer’s/Trader’s Talk
in itself, be an
Article 1546, Civil Code: Any affirmation of fact or
obligation
any promise by the seller relating to the thing is an
express warranty if the natural tendency of such
Non-happening does Non-fulfillment affirmation or promise is to induce the buyer to
not amount to breach constitutes breach of purchase the same, and if the buyer purchase the
of contract contract thing relying thereon. No affirmation of the value of
the thing, nor any statement purporting to be a
statement of the seller's opinion only, shall be
construed as a warranty, unless the seller made
Must be stipulated Stipulation or
such affirmation or statement as an expert and it was
operation of law relied upon by the buyer.

May attach either to Always relates to the Article 1340, Civil Code: The usual exaggerations
the seller’s duty to subject matter or the in trade, when the other party had an opportunity to
deliver thing or some seller’s obligations know the facts, are not in themselves fraudulent.
other circumstance as to the subject
Article 1341, Civil Code: A mere expression of an
matter
opinion does not signify fraud, unless made by an
expert and the other party has relied on the former's
special knowledge.
If seller has promised that the condition should
happen or be performed, the buyer may treat

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Express Dealer’s or Trader’s b. Implied Warranties [Art. 1547, Civil

Warranty Talk Code]
An implied warranty is derived by law, by
implication, or inference from the nature of the
What is specifically Affirmation of the value transaction or relativation, or circumstances of
represented as of the thing or the parties, irrespective of any intention of the
true in said statement of only the seller to create it [De Leon].
document cannot seller’s opinion is not a
be considered as warranty unless: Implied Warranty of Title
mere dealer's talk a. The seller 1. Implied Warranty against
[Moles v. IAC, made it as an Encumbrance/Non-Apparent Servitudes
supra]. expert; 2. Implied Warranty against Hidden Defects
b. It was relied [Art. 1547, Civil Code]
upon by the buyer a. Implied Warranty as to Merchantable
[Art.1546, Civil Quality and Fitness of Goods
Code]; b. Implied Warranty against Redhibitory
c. Ordinarily, Defect in the Sale of Animals [Art.
what does not 1572, Civil Code]
appear on the face c. Quality and Fitness of Goods in Sale by
of the written Sample or Description
instrument [Moles 3. Other Warranties
v. IAC, supra]
IMPLIED WARRANTY OF TITLE
Implied warranty arises by operation of law and
Express Warranty v. False Representation
need not be stipulated in the contract of sale.
Article 1342, Civil Code: Misrepresentation by a
third person does not vitiate consent, unless such Warranty of Seller’s Right to Sell: Seller
misrepresentation has created substantial mistake
and the same is mutual. warrants his right to sell at the time the
ownership is to pass.

Express False Representation Inapplicable to a sheriff, auctioneer,

Warranty
Concealment of When concealment of
facts does not facts comes with an active
necessarily misstatement of fact or a
amount to false partial statement of fact,
representation such that withholding of
that unsaid portion makes
that which is stated
absolutely false.
However, a buyer who
fails to inspect the
condition of property
despite ample opportunity
to do so when there is no
opposition on the part of
seller to inspect cannot
later on allege false
representation [Philippine
Manufacturing Co. v. Go
Jocco, G.R. No. L-24256
(1926)].
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mortgagee, pledgee, or other person
professing to sell by virtue of authority in fact or
law [Art. 1547, Civil Code].
Warranty against Eviction: Seller warrants
that buyer, from the time ownership passes,
shall have and enjoy legal and peaceful
possession of the thing. Its requisites are:
1. Buyer is deprived of the whole or a part of
the thing sold;
2. Eviction is by final judgment;
3. Final judgment based on a right prior to the
sale or an act imputable to the vendor;
4. Seller is summoned and made co-
defendant in the suit for eviction at the
instance of the buyer [Power Commercial
and Industrial Corp. v. CA, G.R. No.
119745 (1997)].
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IMPLIED WARRANTY AGAINST
ENCUMBRANCE/NON-APPARENT
SERVITUDES
Requisites for breach:
1. Thing sold is an immovable
2. Burden or servitude encumbering the thing
sold is:
a. Non-apparent to the naked eye
b. Not mentioned in the agreement
c. Of such nature that it must be
presumed that the buyer would not
have bought it had he been aware of it
d. Not recorded in the Registry of
Property unless there is an express
warranty that the thing is free from all
burdens and encumbrances [Art. 1560,
Civil Code]
IMPLIED WARRANTY AGAINST HIDDEN
DEFECTS
Requisites for breach:
1. The defect renders the thing sold unfit for
the use for which it was intended OR
diminishes its fitness for such use to such
an extent that had the buyer been aware
thereof, he would not have bought it or
would have paid a lower price;
2. The defect is not patent or visible;
3. The buyer is not an expert who, by reason
of his trade or profession, should have
known the defect;
4. The seller is aware of the hidden fault or
defect, OR even if he is not aware thereof,
if there is no stipulation to the contrary
[Art.1566, Civil Code].
The buyer must also give notice of such
redhibitory defect within a reasonable time.
The use contemplated must be that which is
stipulated, and in the absence of stipulation,
that which is adopted to the nature of the thing,
and to the business of the buyer.
IMPLIED WARRANTY AS TO
MERCHANTABLE QUALITY AND
FITNESS OF GOODS
Merchantable Quality
1. Where the goods are brought by
description from a seller who deals in
goods of that description [Art. 1562, Civil
Code]
2. In a sale by sample, if the seller is a dealer
in goods of that kind and the defect is not
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apparent on reasonable examination of the
sample [Art. 1566, Civil Code]
Warranty of merchantability is warranty that
goods are reasonably fit for the general
purpose for which the same are sold.
Warranty of fitness is warranty that goods are
suitable for the special purpose of the buyer
which will not be satisfied by mere fitness for
general purposes.
In a sale by sample, there is implied warranty
that goods are free from defects not apparent
on reasonable examination of sample and
which render goods unmerchantable [Mendoza
v. David, G.R. No. 147575 (2004)].
“Fitness for a particular purpose”: Where
the buyer expressly or impliedly makes known
to the seller the particular purpose for which the
goods are acquired AND it appears that the
buyer relied on the seller’s skill or judgment
[Art.1562(1), Civil Code]
IMPLIED WARRANTY AGAINST
REDHIBITORY DEFECT IN THE SALE OF
ANIMALS [Art. 1572, Civil Code]
Redhibitory defect – a hidden defect of
animals of such nature that expert knowledge
is not sufficient to discover it, even in a case
where a professional inspection has been
made
No warranty in case of [Art. 1574, Civil Code]
1. Animals sold at fairs or public auctions
2. Livestock sold as condemned
The following sales are void [Art. 1575, Civil
Code]
1. Sale of animals suffering from contagious
diseases
2. Sale of animals unfit for the purpose for
which they are acquired as stated in the
contract
Veterinarians are liable if they fail to discover
or disclose the hidden defect through
ignorance or bad faith [Art. 1576, Civil Code].
Seller liable if the animal dies within 3 days
after its purchase due to a disease that existed
at the time of sale [Art. 1578, Civil Code].
SALES
c. Effects of Warranties
1. Natural tendency is to induce buyer to
purchase the subject matter
2. Buyer purchases subject matter relying
thereon
3. Seller liable for damages in case of breach
d. Effects of Waiver
Only applicable to waiver of warranty against
eviction; parties may increase or decrease
warranty against eviction but the effect
depends on good/bad faith of the seller:
1. Seller in bad faith and there is warranty
against eviction – null and void
2. Buyer without knowledge of a particular
risk and made general renunciation of
warranty – not waiver but merely limits
liability of seller in case of eviction (pay
value of subject matter at the time of
eviction)
3. Buyer with knowledge of risk of eviction
assumed its consequences and made a
waiver – vendor not liable
4. Waiver to a specific case of eviction –
wipes out warranty as to that specific risk
but not as to eviction caused by other
reasons
One who purchases real estate with knowledge
of defect or lack of title cannot claim he
acquired title thereto in good faith, as against
true owner of land or of interest therein [J.M.
Tuason v. CA, G.R. No. L-41233 (1979)].
The same rule must be applied to one who has
knowledge of facts which should have put him
upon such inquiry and investigation as might
be necessary to acquaint him with the defects
in the title of his vendor. A purchaser cannot
close his eyes to facts which should put a
reasonable man upon his guard and then claim
that he acted in good faith under the belief that
there was no defect in the title of the vendor.
e. Buyer’s Options in Case of Breach of
Warranty
Remedies of buyer for breach of warranty,
both implied and express:
1. Accept goods + demand
diminution/extinction of price
2. Accept goods + damages
3. Refuse to accept goods + damages
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4. Rescind (Refuse to accept or return or offer
to return) + recover price paid [Art. 1599,
Civil Code]
EXPRESS WARRANTY
Prescriptive period: Period specified in
express warranty OR 4 years, if no period is
specified (following the general rule on
rescission of contracts)
Remedies
Rescission not available when buyer:
1. Knew of breach of warranty when he
accepted the goods without protest
2. Fails to notify the seller about election to
rescind within a reasonable period of time
3. Fails to return or offer to return the goods
to the seller in substantially a good
condition as they were when delivered,
unless deterioration was due to breach of
warranty
Measure of damages: Difference between
value of goods at the time of delivery and the
value they would have had if they had
answered to the warranty
Effects of rescission
1. Buyer no longer liable for price: Entitled to
the return of any part of price paid,
concurrently with or immediately after an
offer to return the goods
2. If seller refuses to accept offer to return
goods: buyer deemed as bailee for seller
and has right of lien to secure payment of
part of price paid
SALES CIVIL LAW
IMPLIED WARRANTY AGAINST 3. Buyer made waiver with knowledge of
EVICTION [Arts. 1555, 1556, Civil Code] risks: Seller not liable; buyer assumed the
consequences
Total Eviction Partial Eviction
IMPLIED WARRANTY AGAINST
Enforce liability for Enforce liability ENCUMBRANCES [Art. 1560, Civil Code]
eviction (demand VICED) Rescission: Within 1 year from execution of
deed of sale OR
Demand from seller: OR
(VICED) Damages: Within 1 year from execution of
a. Value of thing sold Rescind within 6 deed of sale or discovery of the burden or
at time of eviction months from servitude
b. Income or fruits, if delivery
he has been a. If he would not IMPLIED WARRANTY AGAINST HIDDEN
ordered to deliver have bought DEFECTS [Arts. 1567-1571, Civil Code]
them to the party the thing sold If thing is not lost:
who won the without the part 1. Withdraw from contract (accion
eviction suit lost; redhibitoria) + damages
c. Costs of eviction b. BUT he must 2. Demand a proportionate reduction of the
suit and in a return the thing price (accion quanti minoris) + damages
proper case, suit without other
against seller for encumbrances If thing is lost:
warranty than those Due to hidden fault Due to fortuitous
d. Expenses of the which it had event or fault of
contract, if buyer when he buyer
has paid them acquired it
e. Damages and
interests, and If seller aware of Demand:
ornamental defect, buyer may 1. Price paid minus
expenses, IF sale demand: value of thing
was made in bad 1. Return of price when it was lost
faith 2. Refund of 2. Damages, if
expenses seller acted in
3. Damages bad faith
Rules
1. Buyer need not appeal from decision to
hold seller liable for eviction
2. When adverse possession commenced If seller not aware of
before sale, but prescription period defect:
completed after transfer: seller is not liable Buyer may demand
3. If property sold for nonpayment of taxes price and expenses
due and not made known to the buyer BUT NOT damages
before the sale: seller liable
4. Judgment debtor also responsible for
eviction in judicial sales, unless it is Prescriptive period: 6 months from delivery
otherwise decreed in the judgment
IMPLIED WARRANTY AGAINST
If there is waiver of warranty: REDHIBITORY DEFECTS OF ANIMALS
1. Seller acted in bad faith: Waiver is void, Remedies
seller liable for eviction ● Withdraw from contract + damages
2. Buyer made waiver without knowledge of ● Demand a proportionate reduction of the
risks of eviction: Seller liable only for the price + damages
value of the thing sold at time of eviction

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SALES CIVIL LAW
If sale is rescinded:
a. Buyer must return animal in the condition in
which it was sold and delivered
b. Buyer shall be liable for injury due to his
negligence

Prescriptive period: 40 days from delivery

f. Warranty in Sale of Consumer Goods

If implied warranty accompanies express
warranty, both will be of equal duration [Sec.
68, RA 7394].

Express Warranty Implied Warranty

a. Demand repair a. Retain the

within 30 days; goods and
extendible for recover
causes beyond damages
the control of the
warrantor OR
b. Demand refund of
price minus b. Reject the
amount directly goods, cancel
attributable to the contract and
use of the recover from
consumer prior to seller so much
the discovery of of the purchase
the non- price as has
conformity been paid +
damages

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SALES
V. OBLIGATIONS OF
VENDEE
A. Inspection and acceptance
1. Inspection/buyer’s right to examine
2. Delivery of goods in installment
B. Pay price
1. Pay interest
2. Suspend payment of price
C. Bear the expenses for the execution and
registration of the sale and putting the
goods in a deliverable state, if so stipulated
A. Inspection and acceptance
Buyer is deemed to have accepted the
goods
Expressly
When he intimates to the seller that he has
accepted them
Impliedly
When the goods have been delivered to him
and he does any act in relation to them which
is inconsistent with the ownership of the
seller
When, after the lapse of a reasonable time,
he retains the goods without intimating to the
seller that he has rejected them [Art. 1585,
Civil Code].
General Rule: Exercise of acts of ownership
over the goods is a manifestation of
acceptance, such as making use of them as
owner, making alterations in the goods, or
subjecting it to the process of manufacture.
Exception: Buyer’s right to make a test of
goods, but only if necessary, to enable him to
determine whether to accept or reject the
goods.
Vendee’s refusal
If vendee has the right to refuse and rightfully
refused upon delivery, he has no obligation to
return them UNLESS otherwise agreed BUT
he has to take reasonable care of the goods.
Where there is a contract of sale of goods
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Note: He is not a depositary thereof UNLESS
he voluntarily agrees to be one.
1. Inspection/buyer’s right to examine
[Art. 1584, Civil Code]
General Rule: The buyer is not deemed to
have accepted the goods delivered which he
has not previously examined unless and until
he has had a reasonable opportunity to
examine them for the purpose of ascertaining
whether they are in conformity with the
contract.
Exception: If there is a stipulation to the
contrary [par. 1, Art. 1584, Civil Code]
General Rule: The seller is bound, when he
tenders delivery to the buyer, on request, to
afford the buyer a reasonable opportunity to
examine the goods for the purpose of
ascertaining whether they are in conformity
with the contract.
Exception: Unless otherwise agreed upon
[par. 2, Art. 1584, Civil Code]
Exception to the right to examine: C.O.D.
Sales
Where goods are delivered to a carrier by the
seller, in accordance with an order from or
agreement with the buyer, upon the terms that
the goods shall not be delivered by the carrier
to the buyer until he has paid the price, whether
such terms are indicated by marking the goods
with the words "collect on delivery," or
otherwise, the buyer is not entitled to examine
the goods before the payment of the price, in
the absence of:
1. agreement; or
2. usage of trade
3. permitting such examination [par. 3, Art.
1584, Civil Code]
2. Delivery of goods in installment
General Rule: The vendee is not bound to
accept delivery of goods in installment.
Exception: Unless otherwise agreed upon
[par. 1, Art. 1583, Civil Code]
Where separate price has been fixed for
each installment [par. 2, Art. 1583, Civil
Code ]
SALES
a. To be delivered by stated installments,
b. To be separately paid for, and
c. The seller makes defective deliveries in
respect of one or more installments, or the
buyer neglects or refuses without just
cause to take delivery of or pay for one or
more installments.
It depends in each case on the terms of the
contract and the circumstances of the case:
a. Whether the breach of contract is so
material as to justify the injured party in
refusing to proceed further and suing for
damages for breach of the entire contract,
or
b. Whether the breach is severable, giving
rise to a claim for compensation but not to
a right to treat the whole contract as
broken.
B. Obligation to pay the price
Article 1582, Civil Code: The vendee is bound to
accept delivery and to pay the price of the thing sold
at the time and place stipulated in the contract.
If the time and place should not have been
stipulated, the payment must be made at the time
and place of the delivery of the thing sold.
1. Obligation to pay interest
If there is a stipulation requiring interests: The
vendee shall owe interest on the price from the
time the thing is delivered up to the time of
payment.
If there is no stipulation: from the time of
judicial or extrajudicial demand for
payment.
● This applies if the thing delivered produces
fruits or income, or if the buyer incurs in
default
The three instances when the vendee shall pay
interest for the period between delivery and
payment of the price:
a. If there was a stipulation;
b. If the thing sold and delivered produces
fruits or income;
c. If the vendee is in default, from the time of
judicial or extrajudicial demand for
payment [Art. 1589, Civil Code].
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2. Right of vendee to suspend
payment of price
The vendee has the right to suspend payment
in two instances:
a. If he is disturbed in the possession or
ownership of the thing bought; or
b. If he has reasonable grounds to fear such
disturbance, by a vindicatory action or a
foreclosure of mortgage [Art. 1590, Civil
Code]
Except
a. If the vendor gives security for the return of
the price in a proper case
b. If it has been stipulated
c. If the vendor caused disturbance or danger
to cease
d. If the disturbance is a mere act of trespass
e. If the vendee has already fully paid the
price [De Leon]
Note: It is absolutely necessary that the cause
of disturbance or danger be based on a fact
arising before the sale or if it arose after the
sale, the cause is imputable to the vendor or
his successor-in-interest [Baviera].
In cases of delay of payment, one should also
be liable for interest and penalties for such
delay in payment. It would be grossly unfair for
respondent to be deprived of the amount it
would have received from the sale of their
properties, while petitioners benefited from the
use and continued possession of the properties
[Sps. Mahusay v. B.E. San Diego, G.R. No.
179675 (2011)].
C. Obligation to bear the
expenses for the execution and
registration of the sale and
putting the goods in a
deliverable state, if so stipulated
Article 1521, par. 5, Civil Code: Unless otherwise
agreed, the expenses of and incidental to putting the
goods into a deliverable state must be borne by the
seller.
SALES CIVIL LAW

VI. BREACH OF CONTRACT REMEDY

A. Remedies Movables Damages, Rescission,

Price through Specific
The following remedies arise from the Performance.
bilateral nature of the contract of sale:
1. Specific performance Special Remedies:
2. Rescission Possessory lien, Stoppage
3. Damages in transitu, Resale,
Rescission
General Rule: Rescission of a contract will not
be permitted for a slight or casual breach, but Movables on Exact fulfillment,
only for such substantial and fundamental Installment Cancellation of the Sale,
breach as would defeat the very object of the Foreclosure of Chattel
parties in making the agreement [Song Fo & Mortgage
Co. v. Hawaiian-Philippine Co., G.R. No.
23769 (1925)].
Immovables Price through Specific
Prescriptive periods [Arts. 1144-1145, Civil Performance, Rescission
Code] (for anticipatory breach and
● 10 years if based on a written contract for non-payment)
● 6 years upon an oral contract
Immovables Contract of Sale:
1. Remedies of the Seller on Rescission through Article
QUICK SUMMARY: REMEDIES OF SELLER Installment 1592, Civil Code
Movables
Contract to Sell:
Damages, Rescission, Price through
Rescission through
Specific Performance
Maceda Law (RA 6552)
Special Remedies:
Possessory lien, Stoppage in transitu, a. Sale of Goods
Resale, Rescission ACTION FOR PRICE [Art. 1595, Civil
Movables on Installment Code]
1. When the ownership of the goods has
Exact fulfillment, Cancellation of the Sale, passed to the buyer and he wrongfully
Foreclosure of Chattel Mortgage neglects or refuses to pay for the price
2. When the price is payable on a certain day
Immovables and the buyer wrongfully neglects to pay
such price, whether or not ownership has
Price through Specific Performance, passed
Rescission (for anticipatory breach and for 3. When the goods cannot readily be resold
non-payment) for a reasonable price, and the buyer
wrongfully refuses to accept the goods,
Immovables on Installment whether or not ownership has passed

Contract of Sale: Rescission through Art. In an action by the seller under (b), buyer can
1592, Civil Code set up the defense that the seller, at any time
before judgment in such action, could not or did
Contract to Sell: Rescission through Maceda not intend to deliver the goods.
Law (RA 6552)
Unless the contrary appears, payment and
delivery are presumed to be concurrent acts,
and the obligation of each party to perform the
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SALES
contract is dependent upon the simultaneous
performance by the other party [De Leon].
If ownership has not yet passed to the buyer,
the seller cannot maintain an action for the
price, unless it involves (a) or (c).
Title to goods passes from the moment the
goods are placed at the buyer’s disposal when
refusal to accept is without just cause [De Leon
citing Art. 1588, Civil Code].
ACTION FOR DAMAGES [Art. 1596, Civil
Code]
When ownership has not yet passed and the
buyer, without lawful cause, neglects or
refuses to ACCEPT and PAY for the goods
General Rule: Measure of damages is the
ESTIMATED LOSS directly and naturally
resulting in the ordinary course of events from
the buyer’s breach.
Exceptions:
1. Where there is available market for goods:
Difference between the contract price and
the market price. The market price is fixed
at the time the goods ought to have been
accepted, or if no time was fixed, at the
time of refusal to accept.
Note: When there are special
circumstances showing proximate
damages of a greater amount than the
difference between the contract price and
market price, seller is entitled to such
higher amount of damages when such
damages may be reasonably attributed to
the non-performance of the obligation [De
Leon; par. 3, Art. 1596 read with par. 2, Art.
2201, Civil Code].
2. Where labor or expense of material amount
is necessary on the part of the seller to
perform the contract: Cost of labor
performed or expenses made before
receiving notice of buyer’s repudiation, and
unrealized profit.
RESCISSION BY GIVING THE BUYER
NOTICE OF THE ELECTION TO RESCIND
[Art. 1597, Civil Code]
When the goods have not yet been delivered to
the buyer, and the buyer repudiated the
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contract of sale, or manifested his inability to
perform his obligations, or has committed a
breach of the contract of sale.
Under this rule, rescission would bar an action
on the contract because it means cancellation
of the contractual obligations between the
parties [Baviera].
The unpaid seller’s right to rescind for non-
performance is not absolute. Not allowed to
rescind when:
1. There are 3rd persons possessing the
objects of the contract to whom no bad faith
is imputable [De Leon; Ocejo Perez & Co.
v. International Bank, G.R. No. L-10658
(1918)]
2. Breach is slight or casual [De Leon; Song
Fo & Co. v. Hawaiian-Phil. Co., supra]
The seller cannot unilaterally and
extrajudicially rescind a contract absent
express stipulation to do so, except as
provided in Art. 1597 [De Leon].
b. Special Remedies of the Unpaid
Seller [Arts. 1525-1535, Civil Code]
1. Possessory lien;
2. Stoppage in transitu;
3. Special right of resale; and
4. Special right to rescind
Note: These special remedies have a
hierarchical application. The special rights to
resell and to rescind can be availed of by the
unpaid seller only when either of the two prior
rights of possessory lien or stoppage in transitu
have been exercised by the unpaid seller
[Villanueva].
Definition of an Unpaid Seller
Seller is deemed to be unpaid seller:
1. When the whole of the price has not been
paid or tendered;
2. When a bill of exchange or other negotiable
instrument has been received as
conditional payment, and the condition on
which it was received has been broken by
reason of the dishonor of the instrument,
the insolvency of the buyer, or otherwise
[Art. 1525, Civil Code].
SALES
Unpaid Seller also includes:
1. The agent of the seller to whom the bill of
lading was endorsed,
2. The consignor or agent who had paid the
price or is responsible for the price,
3. Any other person who is in the position of a
seller (i.e. buyer who paid the price and had
a right to return the goods) [Art. 1525, Civil
Code].
A seller is considered to be an unpaid seller if
the whole price has not been paid or tendered,
or when check received as a conditional
payment was dishonored by non-payment or
insolvency of the buyer [Baviera].
POSSESSORY LIEN OVER THE GOODS
Right to retain possession of goods until
payment or tender of the whole price, or unless
he agrees to sell on credit [Arts. 1526-1529,
1503, 1535, Civil Code].
When lien available
1. The seller is unpaid
2. The unpaid seller has possession over the
thing
3. Ownership of the thing has passed to the
buyer
4. Any of the following: [Art 1527, Civil Code]
● Goods are sold without stipulation as to
credit
● Goods are sold on credit, but term of
credit has expired
● Buyer becomes insolvent
The seller may exercise his right of lien
notwithstanding that he is in possession of the
goods as agent or bailee for the buyer [par. 2,
Art. 1527, Civil Code].
When unpaid seller loses his lien [Art. 1529,
Civil Code]
1. Seller delivers goods to carrier or other
bailee for transmission to the buyer without
reserving ownership or right of possession
(i.e. under a straight or non-negotiable bill
of lading)
2. Buyer or his agent lawfully obtains
possession of goods
3. Seller waives the lien
● But it is not lost with respect to the
remainder of the goods when only
partial delivery is made (unless such is
symbolic delivery of the whole)
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● It is not lost by the mere fact that seller
obtained a judgment for the price
When Lien May Be Revived After Delivery
1. If the buyer refuses to receive the goods
after the same are delivered to the carrier
or other bailee on his behalf, though the
seller has parted with both ownership and
possession. Here, the seller may reclaim
the goods and revest the lien [par. 1 (2). Art
1531, Civil Code].
2. If the buyer returns the goods in wrongful
repudiation of the sale, and the seller, in
accepting the goods from the buyer, says
he does not assent to the rescission.
Possessory lien is lost after the seller loses
possession but his lien as an unpaid seller
remains. His preference can only be defeated
by the government’s claim to the specific tax on
the goods [Arts. 2241, 2247, Civil Code].
RIGHT OF STOPPAGE IN TRANSITU
An extension of the lien for the price; entitles
unpaid seller to resume possession of the
goods while they are in transit before the goods
come in possession of the vendee [Arts. 1530-
1532, 1535, 1636(2) Civil Code].
Requisites for the exercise of stoppage in
transitu
1. The seller is unpaid
2. The buyer is insolvent
3. The goods are in transit
4. The seller either takes actual possession,
or gives notice of claim to the carrier or
other person possessing the goods
5. The seller must surrender the negotiable
instrument or title, if any, issued by the
carrier/bailee
6. The seller must bear the expenses of the
delivery of the goods after exercise of such
right.
When Goods Are In Transit [par. 1, Art 1531,
Civil Code]
1. From the time of delivery to the carrier or
other bailee by the seller, for the purpose
of transmission to the buyer, until the buyer
or his agent takes such delivery from the
carrier.
2. Even when goods have reached their
ultimate destination, if buyer rejects them
and carrier retains possession
SALES
To terminate transit by delivery to a
middleman, delivery must be to keep, not to
transport.
In case of misdelivery, the goods are still
considered in transit, hence, the seller may still
exercise his right pursuant to Article 1523.
When Goods are No Longer in Transit [par.
2, Art. 1531, Civil Code]
1. Buyer obtained delivery of the goods
before they have reached their appointed
destination
2. Goods have arrived at the appointed
destination, and the carrier/bailee
acknowledges to hold the goods on behalf
of the buyer
3. Goods have arrived at the appointed
destination, but carrier wrongfully refuses
to deliver to buyer/his agent
Note: If the goods are delivered to a ship,
freight train, truck, or airplane chartered by the
buyer, it is a question depending on the
circumstances of the particular case, whether
they are in the possession of the carrier as
such or as agent of the buyer.
How Right is Exercised [Art. 1532, Civil
Code]
1. By obtaining actual possession of the
goods
2. By giving notice of his claim to the
carrier/other bailee who has possession of
the goods
● Carrier must redeliver goods to seller,
or according to his instructions
● Carrier not obliged to redeliver until the
negotiable document of title, if any, has
been surrendered for cancellation
Effect When Buyer Has Sold the Goods [Art.
1535, Civil Code]
General Rule: Seller’s right to stoppage in
transitu is not affected even if buyer has sold or
disposed of the goods unless the seller has
given his assent thereto.
Exceptions:
1. When seller has given consent thereto
2. When a negotiable document of title has
been issued for the goods to a purchaser
for value in good faith
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SPECIAL RIGHT OF RESALE
Available to unpaid seller who has a right of lien
or who has stopped the goods in transitu [Art.
1533, Civil Code].
When available
When the unpaid seller has either a right of lien
or has stopped the goods in transitu and under
any of the following conditions:
1. The goods are perishable in nature
2. The right to resell is expressly reserved in
case the buyer should default
3. The buyer delays in paying the price for an
unreasonable time
Note: The right to resell the goods is not
mandatory, but permissive.
How exercised
1. He must do so within a reasonable time
and in such manner as to obtain the best
price possible.
2. The place of sale shall be at the place of
delivery, except if the seller cannot sell the
thing at a fair price at the place of delivery.
3. Resale is deemed to be a fair sale if it is
undertaken in accordance with established
business practices, with no attempt to take
advantage of the original buyer.
4. Resale may be in a private or public sale,
but seller cannot buy directly or indirectly.
5. For resale to be valid, buyer need not be
notified of an intention to resell or the time
and place of the resale.
Exception: if the ground for resale is failure to
pay for an unreasonable amount of time
● The seller must exercise reasonable
judgment in making the sale.
Effects of Resale:
1. Seller is no longer liable to the original
buyer upon the contract of sale or for any
profit made by the resale
2. Buyer at resale acquires good title as
against the original owner
3. In case resale is at a loss, seller is entitled
to recover the difference from the original
buyer
4. Seller may recover damages from original
buyer for breach of contract
SALES
SPECIAL RIGHT TO RESCIND
Return of the title over the undelivered goods
to the seller, and right to recover damages for
breach of contract [Art. 1534, Civil Code]
When available
When the unpaid seller has either a right of lien
or has stopped the goods in transitu and under
any of the following conditions:
1. Seller expressly reserved his right to
rescind in case buyer defaults
2. Buyer has been in default in payment for an
unreasonable time
Transfer of title shall not be held to have been
rescinded by the unpaid seller until he
manifests by notice to the buyer or some other
overt act an intention to rescind.
Communication of rescission to buyer is not
always necessary (it can be an overt act). But
giving/failure to give notice is relevant in
determining reasonableness of time given to
the buyer to make good his obligation under
contract [De Leon].
c. Sale of Immovables
RESCISSION FOR ANTICIPATORY
BREACH [ART. 1591, Civil Code]
Note: This is applicable to both cash sales and
sales in installments.
Requisites
1. There is delivery of immovable property
2. Vendee has not yet paid the price; and
3. Vendor has reasonable grounds to fear the
loss of property and the loss of price
If there is no such reasonable ground, Art. 1191
applies (specific performance or rescission
with damages).
Court has no discretion to compel the seller to
wait for the expiration of the period to pay, or to
grant the buyer more time to pay.
SPECIFIC PERFORMANCE + DAMAGES
OR RESCISSION + DAMAGES [Art. 1191,
Civil Code]
Seller may choose between specific
performance and rescission, with damages in
either case. Court has discretion, for a just
cause, to give the buyer more time to pay even
if the seller chooses rescission.
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If seller chose specific performance, and such
becomes impossible, he may still avail of
rescission. If absolute sale, seller must make a
demand for rescission.
1. Judicially, OR
2. By a notarial act
Demand necessary even if automatic
rescission is stipulated
1. Effect of lack of demand: Buyer can still
pay
2. Effect of demand: Court may not grant
buyer a new term
SECS. 23 AND 24, PD 957
Non-forfeiture of payments
No installment payment made by the buyer
shall be forfeited in favor of the owner or
developer of the condominium or subdivision
project, after due notice, when the buyer
desists from paying due to the failure of the
developer or owner to develop the project
according to the approved plans or within the
time limit stated.
Buyer’s Remedy: At his option, he may
reimburse the total amount paid including
amortization interest with interest thereon at
the legal rate.
If the buyer fails to pay the installments for
reasons other than the failure of the owner or
developer to develop the project, his rights
shall be governed by RA 6552.
2. Remedies of the Buyer
General Rule: Courts will refuse to decree
specific performance with respect to chattels
because damages are a sufficient remedy.
Exception: Buyer is entitled to the specific
thing which to him has special value and which
he cannot readily obtain in the market OR
where damages would not furnish a complete
and adequate remedy [Baviera].
SALES CIVIL LAW
QUICK SUMMARY: REMEDIES OF BUYER Contract to Sell: Maceda
Movables Law (RA 6552)
Damages, Rescission, Price through
Specific Performance
Breach of Warranty
a. Sale of Movables
REMEDY FOR BREACH OF OBLIGATION
Return or Offer to Return (with recovery of TO PRESERVE
price or may become the seller’s bailee)
Acceptance, for recoupment or with If thing is lost:
damages Without fault of Through fault of seller
Refuse to Accept with Damages seller /
Through Fortuitous
Immovables Event (if seller is
liable)
Rescission, Suspension of Payment, PD 957
(Reimbursement of the total amount paid/ NO BREACH Damages
compel the developer to complete facilities) Obligation is
extinguished.
Immovables on Installment

Contract of Sale: Rescission through Art. A thing is lost when it:

1592, Civil Code 1. Perishes;
2. Goes out of commerce of man; or
Contract to Sell: Rescission through Maceda 3. Disappears in such a way that its existence
Law (RA 6552) is unknown or it cannot be recovered

If thing deteriorates:
REMEDY Without fault of Through fault of seller
seller
Movables Damages, Rescission,
NO BREACH. Rescission + damages
Price through Specific
Impairment shall
Performance.
be borne by OR
Breach of Return or Offer to Return buyer
Warranty (with recovery of price or Specific performance +
may become the seller’s damages
bailee)
Acceptance, for
recoupment or with
damages
Refuse to Accept with
Damages

Immovables Rescission, Suspension of

Payment, PD 957
(Reimbursement of the total
amount paid/ compel the
developer to complete
facilities)

Immovables Contract of Sale: Article

on 1592, Civil Code
Installment

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REMEDY FOR BREACH OF OBLIGATION exceeds 1/10
TO DELIVER of price
b. Buyer would
Delivery of wrong quantity [Art. 1522, Civil not have
Code] bought the
LESS THAN what was MORE THAN property has
contracted what was he been
contracted aware of the
inferior quality
Reject the goods Reject the or smaller
excess area
OR
OR
Note: This rule also applies to judicial sales
Accept and pay:
[Art. 1541, Civil Code].
a. At contract rate if Reject the whole,
buyer accepts if indivisible
IF FOR A LUMP SUM
knowing that
seller won’t OR Everything is within Not everything is
perform in full boundaries, even if within the
b. At fair value if Accept the whole less or more than boundaries
goods were used and pay at stated area
before knowing contract rate
that seller won’t No remedy Proportional
be able to reduction in price
perform in full Where both the area
and the boundaries of OR
Buyer becomes the the immovable are
owner of the whole mass declared, the area Rescission
and the seller is bound to covered within the
make good the boundaries of the
deficiency [Art. 1464, immovable prevails
Civil Code] over the stated area
[Rudolf Lietz, Inc. v.
CA, G.R. No. 122463
b. Sale of Immovables [Art 1539 – 1543, (2005)]
Civil Code]
IF AT THE RATE OF A CERTAIN PRICE PER
Prescriptive period: 6 months counted from
UNIT OF MEASURE OR NUMBER
date of delivery.
Less (in area or More (in area or
quality) than what quality) than what B. Recto Law and Maceda Law
was agreed upon: was agreed upon:
1. Recto Law: Sale of Movables on
Proportional reduction Reject the excess Installment – Arts. 1484-1486, Civil
of price Code
OR
OR WHEN APPLICABLE
Accept the whole
Rescission, if: and pay at contract Sale of movables in installment
a. Lack in area is rate The rule is intended to apply to sales of
at least 1/10 movables, the price of which is payable in 2 or
of what is more installments, but not to straight-term
stated, or sales where the price is payable in full, after
inferior value making a down payment because the law aims
of thing sold to protect improvident buyers who may be
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SALES
tempted to buy beyond their means [Levy
Hermanos v. Gervacio, G.R. No. L-46306
(1939)].
Lease of personal property with option to
buy
● When lessor has deprived the lessee of the
possession or enjoyment of the thing (i.e.
lessor files a complaint for replevin against
lessee).
● Also applies when seller assigns his credit
to someone else.
ALTERNATIVE AND EXCLUSIVE
REMEDIES
Note: The exercise of one remedy bars the
exercise of the others.
a. Specific Performance
General Rule: When the seller has chosen
specific performance, he can no longer seek
for rescission or foreclosure of the chattel
mortgage
Exception: If specific performance has
become impossible, the seller may still choose
rescission [Art. 1191, Civil Code]
b. Cancellation of sale if vendee fails to
pay 2 or more installments
When the seller cancels the sale by
repossessing the property sold, he is barred
from exacting payment for its price.
Note: It can only be carried out when he who
demands rescission can return whatever he
may be obliged to restore [Art. 1385, Civil
Code].
c. Foreclosure of Chattel Mortgage if
vendee fails to pay 2 or more
installments
If seller chooses this remedy, he shall have no
further action to recover any unpaid balance,
and any stipulation to the contrary shall be void.
Purpose of the law
1. To remedy the abuses committed in
foreclosure of chattel mortgages.
2. To prevent mortgagees from seizing the
mortgaged property, buying it at
foreclosure sale for a low price and then
bringing the suit against the mortgagor for
a deficiency judgment.
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Otherwise, the mortgagor will find himself
minus the property and still owing practically
the full amount of his original indebtedness
[Bachrach Motor Co., Inc. v. Millan, G.R. No. L-
42256 (1935)].
2. Maceda Law (RA 6552): Sale of
Immovables on Installment
RA 6552 does NOT apply to:
a. Industrial lots
b. Commercial buildings
c. Sale to tenants under Agricultural Reform
Code [RA 3844]
d. Sale of lands payable in straight terms
[Sec. 3, RA 6552]
Rights of the Buyer
The law imposes additional requirements on
the part of the seller for a valid rescission.
a. If buyer has paid at least 2 years of
installments then defaults:
● Buyer has right to a grace period of 1
month per year of installment payment
made BUT the buyer may only avail of
the grace period once every 5 years
● Buyer has right to the refund of Cash
Surrender Value (CSV): 50% of total
amount paid + 5% for every year after
the first 5 years of installments BUT
total CSV should not be greater than
90% of total amount paid
● After the lapse of the grace period,
buyer is given a notice of cancellation
or demand for rescission by notarial
act, effective 30 days from the buyer’s
receipt thereof AND only upon full
payment of CSV
b. If buyer has paid less than 2 years of
installments:
● Grace period of at least 60 days
● After the lapse of the grace period,
buyer is given a notice of cancellation
or demand for rescission by notarial
act, effective 30 days upon receipt
thereof
c. During the grace period, the buyer shall
also have the right:
● To sell or assign his rights, evidenced
in a notarial instrument
● To update his account
● To pay in advance any installment, or
the full unpaid balance of the price,
SALES CIVIL LAW
without any interest, and to have such
full payment of the purchase price
annotated in the certificate of title
covering the property.

Down payments, deposits, or options on the

contract shall be included in the total number of
installments made.

The seller may go to court for judicial rescission

in lieu of a notarial act of rescission.

Cancellation pertains to extrajudicial

cancellation. Absence of notice does not bar
the filing of an action to cancel the contract.

A decision in an ejectment case can operate as

notice of cancellation as required by RA 6552.

However, mere filing of an unlawful detainer

suit by the seller does not operate as such
notice [De Leon].

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SALES
VII. EXTINGUISHMENT
A. In general
Generally, a sale is extinguished by the same
causes as all other obligations [Arts.1600,
1231, Civil Code]
1. Payment/performance
2. Prescription
3. Loss of thing due
4. Annulment
5. Novation
6. Condonation/remission
7. Confusion/merger
8. Compensation
9. Rescission
10. Resolutory condition fulfilled
11. Redemption (Conventional or Legal)
B. Conventional Redemption /
Pacto de retro sale
1. Definition [Art.1601, Civil Code]
Conventional Redemption exists when the
vendor reserves the right to repurchase the
thing sold, with the obligation to:
a. Return price of the sale
b. Expenses of the contract
c. Any other legitimate payments by reason of
the sale
d. Necessary and useful expenses [Art.1601,
Civil Code]
Note: Redemption feature does not prevent the
full consummation of the contract of sale
Available when the seller reserves the right to
repurchase the thing sold in the same
instrument of sale as one of the stipulations of
the contract [Villarica v. CA, G.R. No. L-19196
(1968)]
2. Period [Art.1606, Civil Code]
General Rule: Follow period stipulated in
contract, but should not exceed 10 years.
Otherwise, automatically reduced.
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Exceptions:
a. In the absence of a stipulation, the right
must be exercised within 4 years from the
date of contract.
b. If no period stipulated but the parties
intended a period, then it shall be 10 years
from the date of the contract.
c. But vendor may still exercise the right to
repurchase within thirty days from the time
final judgment was rendered in a civil
action on the basis that the contract was a
true sale with right to repurchase.
3. By Whom Exercised
a. Vendor, after returning to vendee price of
sale plus expenses of the contract, other
legitimate payments made by reason of
sale, and necessary and useful expenses
made on the thing sold [Art. 1616, Civil
Code]
b. His heirs, assigns or agents
c. Creditor, after he has exhausted the
property of the vendor [Art. 1610, Civil
Code]
d. Co-owners of an immovable, if they sold
their interests to the same person, may
only redeem their respective shares [Art.
1612, Civil Code]
Note: Vendee cannot be compelled to agree to
a partial redemption and can compel all sellers
to redeem the entire property or for only one of
them to redeem it [Art. 1613, Civil Code]
4. From Whom to Redeem
a. Vendee a retro
b. His heirs, assigns or agents
c. Subsequent purchaser of property, even if
the right to redeem was not mentioned in
the subsequent contract; except if
registered land, where the right to redeem
must be annotated on the title
d. If several heirs, then the right of redemption
can be exercised against each heir for his
share of the property [Art. 1615, Civil Code]
5. How Exercised
a. By returning the ff. to the buyer:
● Price of the sale; except if the parties
agreed on a redemption price
● Expenses of the contract and other
legitimate payments made by reason of
the sale;
SALES CIVIL LAW
● Necessary and useful expenses made 8. Right to redeem v. Option to
on the thing sold Purchase
b. Complying with any other stipulation
agreed upon, if any. Right to Redeem Option to Purchase

General Rule: It is not sufficient that a person Not a separate Generally a principal
offering to redeem manifests his desire to do contract but part of a contract and may be
so. The statement of intention must be main contract of sale, created independent
accompanied by an actual and simultaneous and cannot exist of another contract
tender of payment for the full amount of the unless reserved at
repurchase price [BPI Family Savings Bank, the time of the
Inc. v. Sps. Veloso, G.R. No. 141974 (2004)]. perfection of the
main contract of sale
6. Effect of Redemption Does not need a Must have a
a. The sale is extinguished
separate consideration
b. The seller shall receive the thing free from
consideration to be separate and distinct
all charges or mortgages constituted by the
valid and effective from the purchase
buyer BUT he shall respect leases
price to be valid and
executed by the buyer in good faith and in
effective [Arts. 1324
accordance with local custom
and 1479, Civil
c. As to fruits:
Code]
1. If parties agreed on a distribution, the
fruits shall be distributed according to The maximum period The period of the
the agreement for the exercise of option contract may
2. If parties did not agree on a distribution, the right to be beyond the 10-
a. If there are growing fruits at the repurchase cannot year period
time of sale and at the time of exceed 10 years
redemption:
1. Buyer receives reimbursement
if the buyer paid indemnity at Requires in addition
the time of the sale a tender of payment May be exercised by
2. Buyer receives no of the amount notice of its exercise
reimbursement or prorating if required by law, to the offeror
the buyer did not pay indemnity including
at the time of sale consignment thereof
b. If there were no growing fruits at if tender of payment
the time of sale, but some exist at cannot be made
the time of redemption: fruits effectively on the
prorated (buyer entitled to part buyer
corresponding to time he
possessed the land in the last year,
counted from the anniversary of the C. Equitable mortgage
date of sale)
An equitable mortgage is defined as one
which, although lacking in some formality, or
7. Effect of non-redemption form or words, or other requisites demanded by
Ownership is consolidated in the buyer BUT a statute, nevertheless reveals the intention of
the consolidation shall not be recorded in the the parties to charge real property as security
Registry of property without a judicial order, for a debt, and contains nothing impossible or
after the vendor has been duly heard contrary to law [Molina v. CA, G.R. No. 125755
[Art.1607, Civil Code]. (2003)].

A pactum commissorium is a stipulation

enabling the mortgagee to acquire ownership
of the mortgaged properties without need of
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foreclosure proceedings which is a nullity being
contrary to the provisions of Article 2088 of the
Civil Code. The inclusion of such stipulation in
the deed shows the intention to mortgage
rather than to sell [Legaspi v. Sps. Ong, G.R.
No. 141311 (2005)].
A pactum commissorium is contrary to the
nature of a true pacto de retro sale since
ownership of the property sold is immediately
transferred to the vendee a retro upon
execution of the sale, subject only to the
repurchase of a vendor a retro within the
stipulated period.
1. Presumption that a contract is an
equitable mortgage
The contract shall be presumed to be an
equitable mortgage, in any of the following
cases:
a. Price unusually inadequate;
b. Possession retained by the seller as lessee
or otherwise;
c. Period of redemption extended (or granted
anew) upon or after the expiration of the
right to repurchase;
d. Part of the purchase price retained by the
seller;
e. Payment of taxes on the thing sold borne
by the seller;
f. Any other case where it may be fairly
inferred that the real intention of the parties
is for the transaction to secure a debt or
other obligation [Art. 1602, Civil Code].
Note: A contract shall be construed as an
equitable mortgage when any of the
circumstances in Art. 1602 is present. When in
doubt whether equitable mortgage or sale,
settle in favor of equitable mortgage because it
involves a lesser transmission of rights.
By itself, no equitable mortgage under the ff.
Instances:
a. Mere tolerated possession
b. Mere delay in transferring title to the buyer
The provisions on equitable mortgage of
Art.1602, Civil Code also applies to a contract
purporting to be a deed of absolute sale.
Remedy: Reformation of the instrument [must
be brought within 10 years]
a. If the agreement is construed to be an
equitable mortgage, any money or other
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benefit received as “rents,” shall be
considered as “interest” (and subject to
usury laws)
b. The court may decree that the vendor-
debtor to pay the outstanding loan to the
vendee-creditor
c. Where the agreement is upheld as a pacto
de retro sale, the vendor may still exercise
the right within 30 days from the time the
judgment becomes final.
The right of repurchase is not a right granted to
the seller by the buyer in a subsequent
instrument, but one reserved by the seller in the
same instrument as the sale contract. Any right
granted after the execution of the sale
instrument is not a right to repurchase, but
some other right like an option to buy [Roberts
v. Papio, G.R. No. 166714 (2007)].
2. Requisites for presumption of an
equitable mortgage
a. That the parties entered into a contract
denominated as a contract of sale, and
b. That their intention was to secure an
existing debt by way of a mortgage [Molina
v. CA, supra].
In case of doubt, a contract purporting to be a
sale with right to repurchase shall be construed
as an equitable mortgage [Art. 1603, Civil
Code].
3. Rationale behind provision on
equitable mortgage
a. Circumvention of usury law
b. Circumvention of prohibition against
pactum commissorium – creditor cannot
appropriate the things given by way of
pledge or mortgage since remedy is
foreclosure.
4. Remedies of apparent vendor
a. If the instrument does not reflect the true
agreement: remedy is reformation
b. If decreed to be an equitable mortgage:
any money, fruits or other benefit to be
received by the buyer as rent or otherwise
considered as interest.
c. If decreed as a true sale with right to
purchase: seller may redeem within 30
days from finality of judgment, even if the
period for redemption has expired.
SALES
5. Period of redemption
No stipulation: 4 years from the date of
contract [Art. 1606, Civil Code]
When there is agreement: Period not to
exceed 10 years [Art. 1606, Civil Code]
General Rule: Period starts to run from the
date of the execution of the contract
Exception: When the efficacy of the sale is
subject to a suspensive condition, period
should be counted not from the date appearing
on the instrument, but from the date when the
condition is fulfilled, marking the
consummation of the sale [Tolentino citing
Manresa].
Additional 30 days for Repurchase
The last paragraph of Art. 1606 giving the
vendor the right to repurchase within 30 days
from the time of the rendition of final judgment
applies only where the nature and the
character of the transaction, whether as a
pacto de retro or an equitable mortgage, was
put in issue before the court [Gonzales v. de
Leon, G.R. No. L-14532 (1965)]
When an unrecorded pacto de retro sale was
construed as an equitable mortgage, the
plaintiff had the right to enforce his lien in a
separate proceeding notwithstanding the fact
that he had failed to obtain judgment declaring
him the sole and absolute owner of the land
[Heirs of Arches v. Diaz, G.R. No. L-27136
(1973)].
Where the petition of the buyer in a pacto de
retro sale is for a judicial orders pursuant Art.
1607, so that there may be consolidation of
ownership since there was failure to redeem
during the redemption period, the right of action
to foreclose or to collect the indebtedness
arises from the court judgment declaring the
contract an equitable mortgage.
6. Exercise of the right to redeem [Art.
1616, Civil Code]
The seller can avail himself of the right of
repurchase by returning to the buyer:
a. the price of the sale;
b. the expenses of the contract and any other
legitimate payments made by reason of the
sale;
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c. the necessary and useful expenses made
on the thing sold [Art.1616, Civil Code].
7. How redemption is exercised
a. The vendor de retro must complete the
repurchase before the expiration of the
redemption period [Panganiban v. Cuevas,
G.R. No. 2001 (1907)]
b. A sincere or genuine tender of payment is
enough. The deposit of the amount of the
repurchase money with the Clerk of Court
was simply an additional security [Legaspi
v. CA, G.R. No. L-45510 (1986)]
c. When tender of payment cannot be validly
made because the buyer cannot be
located, it becomes imperative for the
seller a retro to file a suit for consignation
with the courts of the redemption price
[Catangcatang v. Legayada, G.R. L-26295
(1978)]
d. If the offer or tender of payment for
repurchase is refused, it is not necessary
for the vendor a retro to consign in court or
make judicial deposit of the repurchase
price [Rosales v. Reyes, G.R. No. 8162
(1913)]
The seller a retro is given no option to require
the buyer a retro to remove the useful
improvements on the land subject of the sale a
retro, unlike that granted the owner of a land
under Arts. 546 and 547. Under Art. 1616, the
seller a retro must pay for useful improvements
introduced by the buyer a retro; otherwise, the
latter may retain possession of the land until
reimbursement is made [Gargollo v. Duero,
G.R. No. L-15973 (1961)].
SALES
VIII. ASSIGNMENT OF
CREDITS
An assignment of credits and other incorporeal
rights shall be perfected in accordance with the
provisions of article 1475 [Art. 1624, Civil
Code].
A. Definition
An assignment of credit is a contract by which
the owner (assignor/creditor) of a credit and
other incorporeal rights transfers, either
onerously or gratuitously, to another (assignee)
his rights and actions against a third person
(debtor) [De Leon].
B. Nature
It is a consensual, bilateral, generally onerous,
and commutative or aleatory contract [De
Leon].
Where the assignment is on account of pure
liberality on the part of the assignor, the rules
on donation would be pertinent; where valuable
consideration is involved, the assignment
partakes of the nature of a contract of sale or
purchase [Nyco Sales Corporation v. BA
Finance Corporation, G.R. No. 71694 (1991)].
It merely effects the transfer of rights which the
assignor has at the time [of the assignment] to
the assignee [Casabuena v. CA, G.R. No.
115410 (1998)].
The act of assignment cannot operate to erase
liens or restrictions burdening the right
assigned [Gonzales v. Land Bank of the
Philippines, G.R. No. 76759 (1990)].
C. Perfection
It is perfected from the moment the parties
agree upon the credit or right assigned and
upon the price but the assignee will acquire
ownership only upon delivery [De Leon].
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D. Assignment Distinguished
from Other Terms
● Renunciation is the abandonment of a
right without a transfer to another.
● Agency involves representation, not
transmission wherein the agent acts for the
principal.
● Substitution is the change of the previous
debtor by a new debtor with the credit
remaining in the same creditor.
● Subrogation is the change in the person
of the creditor with his credit being
transferred to the new creditor.
● Dation in payment is the alienation of
property to the creditor in satisfaction of a
debt of in money. It is also governed by the
law on sales. It may be legal or
conventional.
E. Binding Effect
General Rule: An assignment of a credit, right
or action shall produce no effect as against
third persons.
Exceptions:
1. If it appears in a public instrument
2. If it is recorded in the Registry of Property
in case the assignment involves real
property.
The assignee cannot acquire greater rights
than those pertaining to the assignor [Koa v.
Court of Appeals, G.R. No. 84847 (1993)].
The debtor who, before having knowledge of
the assignment, pays his creditor shall be
released from the obligation [Art. 1626, Civil
Code].
F. Consent not Necessary
Consent of debtor is not necessary; merely
notice to him is necessary. Hence, the duty to
pay does not depend on the consent of the
debtor; otherwise, all creditors would be
prevented from assigning their credits because
of the possibility of the debtors’ refusal to give
consent [Sison v. Yap Tico, G.R. No. L-11583
(1918)].
SALES CIVIL LAW
The purpose of the notice by the assignee is to released from his obligation. He acted in bad
inform the debtor that from the date of the faith. He can be made to pay again [De Leon].
assignment he should make payment to the
assignee and not to the original creditor. H. Extent of Assignment of
Credit
G. Effect of Payment by Debtor
after Assignment of Credit General Rule: All the accessory rights (such
as guaranty, mortgage, pledge or preference)
1. After notice are included [Art. 1627, Civil Code].
Payment to original creditor is valid. The
assignee has a right of action against the Exception: The parties may stipulate
assignor, the original creditor. Burden of otherwise [De Leon].
proving that the debtor had knowledge of the
assignment is on the assignee [De Leon citing I. Warranties of the Assignor of
Manresa].
Credit
1. Existence and legality of credit at the
2. After notice, or before notice but perfection of the contract unless the credit
debtor had knowledge of had been sold as doubtful
assignment 2. No warranty as to the solvency of the
Payment by the debtor to the original creditor debtor unless:
after the former had received notice of the a. expressly stipulated
assignment, whether or not he consented, is b. insolvency was already existing prior to
not valid as against the assignee. the sale and of public knowledge at the
time of the assignment
If he had knowledge even before the notice and
still paid to the original creditor, he will not be

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LEASE
I. GENERAL PROVISIONS
A. Definition
Scope: The contract of lease may be of
things, or of work and service [Art. 1642, Civil
Code].
Lease of Things: In the lease of things, one of
the parties binds himself to give to another the
enjoyment or use of a thing for a price certain,
and for a period, which may be definite or
indefinite. However, no lease for more than
ninety-nine years shall be valid [Art. 1643, Civil
Code].
Lease of Work and Service: In the lease of
work or service, one of the parties binds himself
to execute a piece of work or to render to the
other some service for a price certain, but the
relation of principal and agent does not exist
between them [Art. 1644, Civil Code].
Limitation: Consumable goods cannot be the
subject matter of a contract of lease, except
when they are merely to be exhibited or when
they are accessory to an industrial
establishment [Art. 1645, Civil Code].
Record in the Registry of the Property
If a lease is to be recorded in the Registry of
property, the following persons cannot
constitute the same without proper authority:
1. The husband with respect to the wife’s
paraphernal real estate;
2. The father or guardian as to the property of
a minor or ward; and
3. The manager without special power [Art.
1647, Civil Code].
Every lease of real estate may be recorded in
the Registry of Property. Unless a lease is
recorded, it shall not be binding upon third
persons [Art. 1648, Civil Code].
1. Who is Qualified or Disqualified?
The persons disqualified to buy referred to in
Articles 1490 and 1491, are also disqualified to
become lessees of the things mentioned
therein [Art. 1646, Civil Code].
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Those disqualified under Art. 1490
The husband and wife cannot sell property,
except for
a. When a separation of property was agreed
upon in the marriage settlements; or
b. When there has been a judicial separation
of property under Art. 191.
Those disqualified under Article 1941
The following persons cannot acquire by
purchase, even at a public or judicial auction,
either in person or through the mediation of
another:
a. The guardian – The property of the person
or persons who may be under his
guardianship;
b. Agents – The property whose
administration or sale may have been
entrusted to them, unless the consent of
the principal have been given;
c. Executors and administrators – The
property of the estate under their
administration;
d. Public officers and employees – The
property of the State or of any subdivision
thereof, or of any government owned or
controlled corporation, or institution, the
administration of which has been entrusted
to them; this provision shall apply to judges
and government experts who, in any
manner whatsoever take part in the sale;
e. Justices, judges, prosecuting
attorneys, clerks of superior and
inferior courts, and other officers and
employees connected with the
administration of justice – The property
and rights in litigation or levied upon an
execution before the court within whose
jurisdiction or territory they exercise their
respective functions; this prohibition
includes the act of acquiring by assignment
and shall apply to lawyers, with respect to
the property and rights which may be the
object of any litigation in which they may
take part by virtue of their profession;
f. Others specially disqualified by law
LEASE
2. Transfer of Lease
General Rule: The lessee cannot assign the
lease without the consent of the lessor.
Exception: There is a stipulation to the
contrary [Art. 1649, Civil Code].
Rights of a Purchaser of Land Under a
Lease [Art. 1676, Civil Code]
General Rule: The purchaser of a piece of land
which is under a lease that is not recorded in
the Registry of Property may terminate the
lease.
Exceptions:
a. There is a stipulation to the contrary in the
contract of sale; or
b. When the purchaser knows of the existence
of the lease.
If the buyer makes use of this right, the
lessee may demand:
a. That he be allowed to gather the fruits of the
harvest which corresponds to the current
agricultural year; and
b. That the vendor indemnifies him for
damages suffered.
If the sale is fictitious, for the purpose of
extinguishing the lease, the supposed vendee
cannot make use of the right to terminate the
lease.
● The sale is presumed to be fictitious if at the
time the supposed vendee demands the
termination of the lease, the sale is not
recorded in the Registry of Property.
3. Warranties
General Rule: In a contract of sale, there is an
implied warranty on the part of the seller that:
a. He has a right to sell the thing at the time
when the ownership is to pass, and that the
buyer shall from that time have and enjoy
the legal and peaceful possession of the
thing; and
b. The thing shall be free from any hidden
faults or defects, or any charge or
encumbrance not declared or known to the
buyer.
Exception: Unless a contrary intention
appears [Art. 1547, Civil Code]
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Note: Art. 1547 shall not be held to render liable
a sheriff, auctioneer, mortgagee, pledgee, or
other person professing to sell by virtue of
authority in fact or law, for the sale of a thing in
which a third person has a legal or equitable
interest.
a. Eviction [Art. 1548, Civil Code]
Eviction shall take place whenever by a final
judgment based on a right prior to the sale or
an act imputable to the vendor, the vendee is
deprived of the whole or of a part of the thing
purchased.
● The vendor shall answer for the eviction
even though nothing has been said in the
contract on the subject.
● Contracting parties may increase, diminish,
or suppress this legal obligation of the
vendor.
b. Warranty against Defects [Art. 1561,
Civil Code]
General Rule: The vendor shall be responsible
for warranty against the hidden defects which
the thing sold may have:
1. Should they render it unfit for the use for
which it is intended; or
2. Should they diminish its fitness for such
use to such an extent that, had the vendee
been aware thereof, he would not have
acquired it or would have given a lower
price for it.
Exception: Said vendor shall not be
answerable for:
1. Patent defects;
2. Those which may be visible; or
3. For those which are not visible if the
vendee is an expert who, by reason of his
trade or profession, should have known
them.
c. Where Return of the Price is
Required [Art. 1653(2), Civil Code]
Reduction shall be made in proportion to the
time during which the lessee enjoyed the thing.
d. Presumption of Good Condition [Art.
1666, Civil Code]
General Rule: In the absence of a statement
concerning the condition of the thing at the time
the lease was constituted, the law presumes
that the lessee received it in good condition.
LEASE CIVIL LAW
Exception: There is proof to the contrary.

4. Termination
The lease may terminate:
a. By the expiration of the period [Art. 1669];
b. By the total loss of the thing;
c. By the resolution of the right of the lessor,
such as when the lessor is usufructuary
and the usufruct is terminated;
d. By the will of the purchaser or transferee of
the things;
e. By rescission due to nonperformance of
the obligations of one of the parties [Art.
1659, Civil Code];
● The aggrieved party may either ask for
the rescission of the contract and
indemnification for damages, OR only
ask for indemnification for damages
(the contract remains in force).
f. If a dwelling place or any other building
intended for human habitation is in such a
condition that its use brings imminent and
serious danger to life or health [Art. 1660,
Civil Code].

To terminate the lease, the lessee must notify

the lessor, even if at the time the contract was
perfected the former knew of the dangerous
condition or waived the right to rescind the
lease on account of this condition.

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LEASE
II. RIGHTS AND
OBLIGATIONS OF THE
LESSOR
A. Obligations of a Lessor
1. To deliver the thing which is the object of
the contract in such a condition as to render
it fit for the use intended;
2. To make on the same during the lease all
the necessary repairs, unless there is a
stipulation to the contrary;
3. To maintain the lessee in the peaceful
and adequate enjoyment of the lease [Art.
1654, Civil Code];
4. If the lessee makes useful improvements in
good faith, without altering form or
substance, lessor, upon the termination of
the lease, shall pay the lessee one-half of
the value of the improvements at that
time.
If payment is refused, the lessee may
remove the improvements, even though
the principal thing may suffer damage
thereby [Art. 1678, Civil Code].
B. Rights of a Lessor
1. To engage in a business
In cases of business or industrial
establishment, the lessor may continue
engaging in the same business or industry to
which the lessee devotes the thing leased,
unless there is a stipulation to the contrary [Art.
1656, Civil Code].
Lessor is not obliged to answer for a mere act
of trespass which a third person may cause;
however, he or she shall have a direct action
against the intruder [Art. 1664, Civil Code].
Prohibited Acts by the Lessor: Lessor
cannot alter the form of the thing leased in
such a way as to impair the use to which the
thing is devoted [Art. 1661, Civil Code].
2. To Eject the Lessee (Unlawful
Detainer)
If the lessee continues enjoying the thing after
the expiration of the contract, over the lessor's
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objection, he is subject to the responsibilities of
a possessor in bad faith [Art. 1671, Civil Code].
In ejectment cases where an appeal is taken, a
preliminary mandatory injunction may be
granted to restore the lessor in possession if
the higher court is satisfied that:
● The lessee's appeal is frivolous or dilatory,
or
● The lessor's appeal is prima facie
meritorious, by motion filed within 10 days
from the time the appeal is perfected [Art.
1674, Civil Code]
Causes for judicial ejection of the
lessee [Art. 1673, Civil Code]
a. When the period agreed upon, or that
which is fixed for the duration of leases
under Articles 1682 and 1687, has expired
b. When the duration of the lease of rural
land has not been fixed
1. The duration is for all the time
necessary to gather the fruits of the
estate which it may yield in one year, or
which it may yield once, although two
or more years have to elapse for the
purpose [Art. 1682, Civil Code].
c. If the period for the lease has not been
fixed
1. The duration is from year to year, if the
rent is annual; from month to month, if
it is monthly; from week to week, if it is
weekly; and from day to day, if it is to
be paid daily.
2. In case of monthly rent, and there is no
period for the lease, the courts may fix
a longer term if the lessee was in
possession for over one year.
3. In case of weekly rent, the courts may
fix a longer term if the lessee was in
possession for over six months.
4. In case of daily rent, the courts may fix
a longer period if the lessee was in
possession for over one month [Art.
1687, Civil Code].
d. Lack of payment
e. Violation of any of the conditions in the
contract
f. When the lessee devotes the thing leased
to any use or service not stipulated which
causes its deterioration, or if he does not
observe his obligations in Art. 1657
Note: The ejectment of tenants of agricultural
lands is governed by special laws.
LEASE
III. RIGHTS AND
OBLIGATIONS OF THE
LESSEE
A. Obligations of a Lessee
1. To pay the price of the lease according to
the terms stipulated
2. To use the thing leased as a diligent
father of a family, devoting it to the use
stipulated
Note: In the absence of stipulation, the
diligence required is to that which may be
inferred from the nature of the thing leased,
according to the custom of the place
3. To pay expenses for the deed of lease
[Art. 1657, Civil Code]
4. To notify the lessor of usurpation or
untoward act which any third person may
or will commit [Art. 1663, Civil Code]
5. To advise the lessor of need for repairs,
to return the property leased upon
Note: If the lessor fails to make any urgent
repairs, lessee may order the repairs at the
lessor’s cost. Lessee shall be liable for any
damages caused by his own negligence
6. Lessee is obliged to tolerate the need for
urgent repairs made during his lease
Note: If repairs last more than 40 days, rent
may be reduced. If the work is of such nature
to render the dwelling uninhabitable, lessee
may rescind the contract [Art. 1662, Civil Code]
7. To return the thing leased upon
termination of lease just as he received it,
except for impairment due to lapse of time,
ordinary wear and tear or inevitable causes
[Art. 1665, Civil Code]
Note: In the absence of stipulation, the law
presumes that the lessee had received it in
good condition [Art. 1666, Civil Code]
8. To be responsible for the loss or
deterioration of the thing leased, unless
he proves it is without his fault [Art. 1667,
Civil Code]
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Note: This does not apply to cases when
destruction is caused by natural calamity
9. To be liable for any deterioration caused
by members of his household, guests or
visitors [Art. 1668, Civil Code]
B. Rights of a Lessee
1. To Sublease
General Rule: When in the contract of lease of
things there is no express prohibition, the
lessee may sublet the thing leased, in whole or
in part, without prejudice to his responsibility for
the performance of the contract toward the
lessor [Art. 1650, Civil Code].
Liability of sublessee: Without prejudice to
his obligation toward the sublessor, the
sublessee is bound to the lessor for all acts
which refer to the use and preservation of the
thing leased in the manner stipulated between
the lessor and the lessee [Art. 1651, Civil
Code].
The sublessee is subsidiarily liable to the
lessor for any rent due from the lessee.
However, the sublessee shall not be
responsible beyond the amount of rent due
from him, in accordance with the terms of the
sublease, at the time of the extrajudicial
demand by the lessor.
Payments of rent in advance by the sublessee
shall be deemed not to have been made, so far
as the lessor's claim is concerned, unless said
payments were effected in virtue of the custom
of the place [Art. 1652, Civil Code].
2. To Reduce or Rescind in case of FE
If the thing leased is totally destroyed by a
fortuitous event, the lease is extinguished.
If the destruction is partial, the lessee may
choose between
a. Proportional reduction of the rent and,
b. A rescission of the lease [Art. 1655, Civil
Code]
LEASE CIVIL LAW
C. To make use of the period
General Rule: The lessee has the right to
make use of the periods established in Articles
1682 and 1687.

Exceptions: Judicial Ejectment [Art. 1673,

Civil Code]

Right to repurchase: The purchaser in a sale

with the right of redemption cannot make use
of the power to eject the lessee until the end of
the period for the redemption [Art. 1677, Civil
Code].

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PARTNERSHIP AND
AGENCY
CIVIL LAW
PARTNERSHIP
PARTNERSHIP
I. GENERAL PROVISIONS
A. Definition
By the contract of partnership:
1. Two or more persons bind themselves to
contribute to a common fund:
a. money,
b. property, or
c. industry.
2. With the intention of dividing the profits
among themselves.
Two or more persons may also form a
partnership for the exercise of a profession
[Art. 1767, Civil Code].
B. Elements
1. Two or more persons bind
themselves to contribute money,
property, or industry to a common
fund
Money
Must be in legal tender. Checks, drafts,
promissory notes, and other mercantile
documents are not money. There is no
contribution of money until they have been
cashed [Art. 1249, Civil Code].
Property
May be real, personal, corporeal,
incorporeal property.
Industry
Means the active cooperation, the work of the
party associated, which may be either personal
manual efforts or intellectual, and for which he
receives a share in the profits (not salary) of the
business.
Common Fund
The Civil Code requires the parties “bind
themselves to contribute” to a common fund.
The partnership may therefore exist even
before the common fund is created. The
common fund may not even come from the
partners themselves but may be borrowed from
third persons. The form of the common fund
may not even be cash or property; it can be in
the form of credit or industry [Lim Tong Lim v.
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Philippine Fishing Gear, G.R. No. 136448
(1999)].
2. Intention of dividing the profits
among themselves
Intention to Divide Profits
If the common fund’s work is “indispensable,
beneficial and economically useful to the
business” of the partners and the profit motive
is the primordial reason to establish the
partnership, even if there are no actual profits,
then there is partnership [AFISCO v. CA, G.R.
No. 112675 (1999)].
Note: There must be a valid contract.
Additionally, a partnership contract must
comply with the necessary elements of a
contract under the Civil Code (cause, object,
and consideration).
C. Parties & Object
1. Parties
General Rule: Any person capacitated to
contract may enter into a contract of
partnership.
Exceptions: The capacity of the following
persons to enter into a contract of partnership,
though capacitated to contract generally, are
limited.
The following persons cannot enter into a
contract of partnership:
or
a. Those suffering from civil interdiction;
b. Minors;
c. Insane or demented persons;
d. Deaf-mutes who do not know how to write;
e. Incompetents who are under guardianship.
f. Those who are prohibited from giving each
other any donation or advantage cannot
enter into a universal partnership [Art. 1782,
Civil Code].
Void donations:
a. Those made between persons who were
guilty of adultery or concubinage at the time
of the donation [Art. 739, Civil Code]
b. Those made between persons found guilty
of the same criminal offense, in
consideration thereof [Art. 739, Civil Code]
c. Those made to a public officer or his wife,
descendants and ascendants, by reason of
his office [Article 739, Civil Code]
PARTNERSHIP
d. Every donation or grant of gratuitous
advantage, direct or indirect, between the
spouses during the marriage shall be void,
except moderate gifts, which the spouses
may give to each other on the occasion of
any family rejoicing. The prohibition shall
also apply to persons living together as
husband and wife without a valid marriage
[Article 87, Family Code].
e. A corporation cannot enter into a
partnership in the absence of express
authorization by statute or charter [Mendiola
v. CA, G.R. No. 159333 (2006)].
Under Sec. 35 of the Revised Corporation
Code (RCC), every corporation incorporated
under the RCC has the power and capacity to
enter into a partnership, joint venture, merger,
consolidation, or any other commercial
agreement with natural and juridical persons.
There is no prohibition against a partnership
being a partner in another partnership [De
Leon].
2. Object
a. In a Universal Partnership
A universal partnership may refer to:
1. All present property
a. The partners contribute all the property
which belongs to them to a common
fund, with the intention of dividing the
same among themselves, as well as the
profits they may acquire therewith [Art.
1778, Civil Code].
b. The property contributed includes all
those belonging to the partners at the
time of the constitution of the
partnership.
c. A stipulation for the common enjoyment
of any other profits may also be made.
However, the property which the
partners may acquire subsequently by
inheritance, legacy or donation cannot
be included in such stipulation, except
the fruits thereof [Art. 1779, Civil Code].
2. All the profits
a. It comprises all that the partners may
acquire by their industry or work during
the existence of the partnership.
b. Only the usufruct over the property of the
partners passes to the partnership [Art.
1780, Civil Code].
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When the articles of universal partnership do
not specify its nature (all present property or all
the profits), the partnership will be considered
as one only of all the profits [Art. 1781, Civil
Code].
Rule on After-Acquired Properties
Aside from the contributed properties, only the
profits of the contributed common property (no
other profits) are included. Thus, should a
partner subsequently acquire a property as
remuneration for his work, such property and
its fruits are not to be enjoyed by the universal
partnership of all present property [Paras].
Properties subsequently acquired by
inheritance, legacy, or donation, cannot be
included in the stipulation but the fruits thereof
can be included in the stipulation.
b. In a Particular Partnership
A particular partnership has for its object:
1. Determinate things,
2. Their use or fruits, or
3. A specific undertaking, or
4. The exercise of a profession or vocation
[Art. 1783, Civil Code].
c. Effect when the object is unlawful
If the partnership has an unlawful object or
purpose:
1. The contract is void ab initio [Art. 1409 (1),
Civil Code];
2. Once dissolved by judicial decree:
a. The profits shall be confiscated by favor
of the State;
b. The instruments or tools and proceeds of
the crime shall also be forfeited in favor
of the State [Art. 1770, Civil Code];
3. The contributions of partners shall not be
confiscated unless they are instruments or
tools of the crime [De Leon].
D. Form
General Rule
No required form is necessary.
Exceptions: The contract is subject to the
provisions of Arts. 1771, 1772 and 1773, Civil
Code and to the Statute of Frauds.
1. Where immovable property or real rights are
contributed to the partnership, a public
PARTNERSHIP
instrument shall be necessary [Art. 1771,
Civil Code].
a. An inventory of said property, signed by
the parties, must be attached to the
public instrument;
b. Otherwise, the contract of partnership is
void [Art. 1773, Civil Code].
2. Every contract of partnership having a
capital of Php 3,000 or more, in money or
property, shall appear in a public instrument
a. The instrument must be recorded in the
Office of the Securities and Exchange
Commission.
b. Failure to comply with these
requirements shall not affect the liability
of the partnership and the members
thereof to third persons [Art. 1772, Civil
Code].
E. Characteristics
1. Generally [De Leon]
a. Principal – does not depend on other
contracts
b. Preparatory – entered as a means to an
end
c. Commutative – undertaking of each one is
considered equal with others
d. Consensual – perfected by mere consent
e. Bilateral – entered by two or more persons
f. Onerous – contributions have to be made
g. Nominate – has a special designation in
law.
2. Essential Attributes [Villanueva]
1. Informal/Consensual and Weak Juridical
Personality [Arts. 1771, 1785, 1830, Civil
Code]
a. Generally, a partnership may be
constituted in any form;
b. The juridical personality of a partnership
is deemed weak since a partnership may
be dissolved without need of going
through a formal dissolution process.
2. Mutual Agency [Arts. 1803, 1818, Civil
Code]
a. All partners shall be considered agents and
whatever any one of them may do alone
shall bind the partnership;
b. Every partner is an agent of the partnership
for the purpose of its business, and the act
of every partner binds the partnership.
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3. Delectus Personae (Selection of
Persons)
One selects his partners on the basis of their
personal qualifications and qualities. It is for
this reason that there is mutual representation
among the partners so that the act of one is
considered the act and responsibility of the
others as well [Bautista].
4. Partners Burdened with Unlimited
Liability [Arts. 1816, 1817, Civil
Code]
F. Rules to Determine Existence
When the intent of the parties is clear, such
intent shall govern.
When the intent of parties does not clearly
appear, the following rules apply:
1. Persons who are not partners to each other
are not partners as to third persons, subject
to the provisions on partnership by estoppel.
2. Co-ownership or co-possession does not of
itself establish a partnership, even when
there is sharing of profits in the use of the
property.
Exception: The co-ownership of inherited
properties is automatically converted into an
unregistered partnership the moment said
common properties and/or the income
derived therefrom are used as a common
fund with intent to produce profits for the
heirs in proportion to their respective shares
in the inheritance as determined in a project
partition [Ona v. CIR, G.R. L-19342 (1972)].
3. Sharing of gross returns does not of itself
establish a partnership, even when the
parties have joint or common interest in any
property from which the returns are derived.
4. The receipt by a person of a share in the
profits of a business is prima facie evidence
that he is a partner.
Exception: No such inference is drawn if
the profits are received in payment:
a. As a debt by installments or otherwise;
b. As wages of an employee or rent to a
landlord;
c. As an annuity to a widow or
representative of a deceased partner;
PARTNERSHIP
d. As interest on a loan, though the amount
of payment vary with the profits of the
business;
e. As the consideration for the sale of a
goodwill of a business or other property
by installments or otherwise [Art. 1769,
Civil Code].
G. Partnership Term
Article 1784, Civil Code. A partnership begins from
the moment of the execution of the contract, unless
it is otherwise stipulated.
As to period, a partnership may either be:
1. For a fixed term or particular
undertaking; or
2. At will, the formation and dissolution of
which depend on the mutual desire and
consent of the parties. Any one of the
partners may, at his sole pleasure, dictate
the dissolution of the partnership, even in
bad faith, subject to liability for damages
[Ortega v. CA, G.R. No. 109248 (1995)].
A partnership term may be extended by:
1. Express renewal; or
2. Implied renewal, when these requisites
concur:
a. The partnership is for a fixed term or
particular undertaking;
b. It is continued after the termination of the
fixed term or particular undertaking
without any express agreement [Art.
1785, Civil Code].
Note: A continuation of the business by the
partners or such of them as habitually acted
therein during the term, without any settlement
or liquidation of the partnership affairs, is prima
facie evidence of a continuation of the
partnership [Art. 1785 (2), Civil Code].
H. Partnership by Estoppel
1. Definition
Estoppel is a bar which precludes a person
from denying or asserting anything contrary to
that which has been established as the truth by
his own deed or representation, either express
or implied [De Leon].
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2. Partner by Estoppel
A partner by estoppel is a person who, by
words spoken or written or by conduct: (1)
represents himself as a partner or (2) consents
to another representing him to anyone as a
partner
a. In an existing partnership; or
b. With one or more persons not actual
partners [Art. 1825, Civil Code].
3. Liability of a Partner by Estoppel
a. Personal Representation
A partner by estoppel is liable to any such
persons:
1. To whom such representation has been
made; and
2. Who has, on the faith of such
representation, given credit to the actual or
apparent partnership [Par. 1, Art. 1825, Civil
Code].
b. Public Representation
If he has made such representation or
consented to its being made in a public
manner, whether the representation has or has
not been (personally) made or communicated
to such persons so giving credit by or with his
knowledge:
1. When partnership liability results, he is
liable as though he were an actual member
of the partnership.
2. When no partnership liability results, he is
liable pro rata with the other persons, if any,
so consenting to the contract or
representation.
3. When there are no such other persons, he
is separately liable [Par. 1, Art. 1825, Civil
Code].
PARTNERSHIP CIVIL LAW
Effect on Existing Partnership or Other b. There is no existing partnership and all
Persons not Actual Partners [Par. 2, Art. those represented as partners
1825, Civil Code] consented to the representation.
3. He is liable separately when:
Representation Effect
a. There is an existing partnership but none
When a person has He is an agent of the of the partners consented; or
been represented to persons consenting b. There is no existing partnership and not
be a partner (1) in an to such all of those represented as partners
existing partnership, representation: consented to the representation.
or (2) with one or 1. To bind them to
more persons not the same extent Note: Art. 1825, Civil Code does not create a
actual partners and in the same partnership as between the alleged partners.
manner as The law only considers them as partners and
though he were a the association as a partnership insofar as it is
partner in fact favorable to third persons. However,
2. With respect to partnership liability is created only in favor of
persons who rely persons who on the faith of such
upon the representation given credit to the partnership
representation. [De Leon].

I. Partnership as Distinguished
Representation Effect from Joint Venture

When all the A partnership act or Partnership Joint venture

members of the obligation results.
existing partnership Operates with firm Operates without
consent to the name and legal firm name and legal
representation personality personality

In all other cases The representation Generally relates to a Usually limited to a

is the joint obligation
of the person acting
and the persons
consenting to the
representation
Nature of Liability
A partner by estoppel is liable in the following
manner [Art. 1825, Civil Code]
1. He is liable as though he were a partner
when
a. There is an existing partnership;
b. All the partners consented to the
representation; and
c. A partnership liability results.
2. He is liable jointly and pro rata (as though
he were a partner in fact) with those who
consented to the representation when:
a. There is an existing partnership but not
all the partners consented; or
continuing business of single transaction
various transactions of
a certain kind
A joint venture is an agreement between two
parties to enter into a commercial undertaking.
It may fall under a partnership with a limited
purpose.
Under Philippine law, a joint venture is a form
of partnership and should thus be governed by
the laws of partnership [Aurbach v. Sanitary
Wares Manufacturing Corp., G.R. No. 75875
(1989)].
J. Professional Partnership
Definition
Those formed by persons for the sole purpose
of exercising their common profession, no part
of the income of which is derived from

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PARTNERSHIP
engaging in any trade or business [Sec. 22 (B),
National Internal Revenue Code].
Distinguished from an Ordinary Partnership
The distinction between a Partnership and a
General Professional Partnership (GPP) is
material in taxation.
1. A GPP is not taxable as an entity.
2. The income tax is imposed not on the
professional partnership, which is tax
exempt, but on the partners themselves in
their individual capacity computed on their
distributive shares of partnership profits”
[Tan v. Del Rosario, G.R. No. 109289
(1994)].
K. Management
1. In General
The property rights of a partner are:
a. His rights in specific partnership property;
b. His interest in the partnership; and
c. His right to participate in the management
[Art. 1810, Civil Code]
Management of the partnership is primarily
governed by the agreement of the partners in
the articles of partnership.
It may be stipulated that the partnership will
be managed by:
a. All the partners; or
b. A number of partners appointed as
managers which may be appointed
1. In the articles of partnership; or
2. After the constitution of the partnership.
2. Scope of Powers of a Managing
Partner
General Rule: The partner designated as
manager in the articles may execute all acts of
administration, despite opposition by the other
partners.
Exception: He cannot do so when he acts in
bad faith [Art. 1800, Civil Code].
3. Managing Partner’s Power to
Revoke
General Rule: Power is irrevocable without
just or lawful cause.
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The powers of the managing partner may be
revoked:
If appointed in the articles of partnership, when
a. There is just or lawful cause for revocation;
and
b. The partners representing the controlling
interest revoke such power.
If appointed after the constitution of the
partnership, at any time and for any cause [Art.
1800, Civil Code].
Rationale: Such appointment is a mere
delegation of power, not founded on a change
of will on the part of the partners, the
appointment not being a condition of the
contract.
It is merely a simple contract of agency, which
may be revoked at any time. Removal,
however, should also be done by the partners
having the controlling interest [De Leon].
4. In case of Two or More Managing
Partners
When there are two or more managing
partners appointed:
a. Each one may separately execute all acts of
administration.
b. If any of them opposes the acts of the
others, the decision of the majority prevails.
c. In case of a tie, the partners owning the
controlling interest will decide [Art. 1801,
Civil Code].
Requisites for Applicability of Art. 1801:
a. Two or more partners have been appointed
as managers;
b. There is no specification of their respective
duties or no stipulation on how each one will
act; and
c. There is no stipulation that one of them shall
not act without the consent of all the others.
The right to oppose is not given to non-
managers because in appointing their other
partners as managers, they have stripped
themselves of all participation in the
administration [Paras].
The other managers, however, should make
the opposition before the acts produce legal
effects insofar as third persons are concerned.
PARTNERSHIP
Note: Those who vote against the contract
shall prevail, the same having been entered
into without authority [De Leon].
5. Stipulation of Unanimity
General Rule: In case there is a stipulation that
none of the managing partners shall act without
the consent of others
a. The concurrence of all is necessary for the
validity of the acts, and
b. The absence or disability of one cannot be
alleged.
CIVIL LAW
c. Notice to any partner of any matter relating
to partnership affairs is notice to the
partnership [Art. 1821, Civil Code].
d. Wrongful act or omission of any partner
acting for partnership affairs makes the
partnership liable [Art. 1822, Civil Code].
e. Partnership is bound to make good losses
for wrongful acts or misapplications of
partners [Art. 1823, Civil Code].

Exception: Unless there is imminent danger of

grave or irreparable injury to the partnership
[Art. 1802, Civil Code].

6. When Manner of Management was

not Agreed Upon
When there is no agreement as to the manner
of management, the following rules apply:
a. All the partners are considered agents
(mutual agency). Whatever any one does
alone binds the partnership, unless there is
a timely opposition to the act, under Art.
1801, Civil Code.
b. Any important alteration in the immovable
property of the partnership, even if useful to
the partnership, requires unanimity. If the
alteration is necessary for the preservation
of the property, however, consent of the
others is not required [Art. 1803, Civil Code;
De Leon].

If the refusal is manifestly prejudicial to the

partnership, court intervention may be sought
[Art. 1803, Civil Code].

The consent need not be express. It may be

presumed from the fact of knowledge of the
alteration without interposing any objection [De
Leon].

7. Mutual Agency
In addition to the Art. 1801, Civil Code there is
effectively a mutual agency in the following
cases:
a. Partners can dispose of partnership
property even when in partnership name
[Art. 1819, Civil Code].
b. An admission or representation made by
any partner concerning partnership affairs is
evidence against the partnership [Art. 1820,
Civil Code].
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II. OBLIGATIONS OF THE
PARTNERS
A. Obligations of the Partners to
the Partnership
1. Obligation to Contribute and to
Warrant
Art. 1786, Civil Code. Every partner is a debtor of
the partnership for whatever he may have promised
to contribute.
He shall also be bound for warranty in case of
eviction with regard to specific and determinate
things which he may have contributed to the
partnership, in the same cases and in the same
manner as the vendor is bound with respect to the
vendee. He shall also be liable for the fruits thereof
from the time they should have been delivered,
without the need of any demand.
Contribution of Money or Property
With respect to contribution of money or
property, a partner is obliged:
a. To contribute, at the beginning of the
partnership or at the stipulated time, the
money, property or industry which he
undertook to contribute;
Effect of failure to contribute: Makes the
partner ipso jure a debtor of the partnership
even in the absence of demand. The
remedy is not rescission but an action for
specific performance with damages and
interest [Sancho v. Lizarraga, G.R. L-33580
(1931)].
Note: When contribution is in goods, the
amount thereof must be determined by
proper appraisal of the value thereof at the
time of contribution [Art. 1787, Civil Code].
b. In case a specific and determinate thing is
to be contributed:
1. To warrant against eviction in the same
manner as a vendor; and
2. To deliver to the partnership the fruits of
the property promised to be contributed,
from the time they should have been
delivered, without need of demand [Art.
1786, Civil Code];
c. In case a sum of money is to be contributed,
or in case he took any amount from the
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partnership coffers: To indemnify the
partnership for
1. Interest; and
2. Damages from the time he should have
complied with his obligation, or from the
time he converted the amount to his own
use, respectively [Art. 1788, Civil Code].
d. To preserve the property with diligence of a
good father of a family pending delivery to
the partnership [Art. 1163, Civil Code].
e. To indemnify for any interest and damages
caused by the retention of the property or by
delay in its obligation to contribute a sum of
money [Arts. 1788 & 1170, Civil Code].
Amount of Contribution
General Rule: Partners are to contribute equal
shares to the capital of the partnership.
Exceptions
a. When there is an agreement to the contrary,
the contribution shall follow such agreement
[Art. 1790, Civil Code].
b. Industrial partners, unless he has
contributed capital pursuant to an
agreement to that effect.
Additional Capital Contribution
Requisites:
a. There is an imminent loss of the business of
the partnership;
b. The majority of the capitalist partners are of
the opinion that an additional contribution to
the common fund would save the business;
c. The capitalist partner refuses deliberately
(not because of financial inability) to
contribute an additional share to the capital;
and
d. There is no agreement that even in case of
imminent loss of the business, the partners
are not obliged to contribute.
Any partner who refuses to contribute an
additional share to the capital, except an
industrial partner, to save the venture shall be
obliged to sell his interest to the other partners,
unless there is an agreement to the contrary
[Art. 1791, Civil Code].
Contribution of Industry
An industrial partner is obliged to contribute his
industry at the stipulated time.
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2. Obligation to Apply Sums Collected
Pro Rata
General Rule: A partner (a) authorized to
manage, (b) who collects a demandable sum
owed to him in his own name from a person
who also owes the partnership a demandable
sum, is obliged to apply the sum collected to
both credits pro rata, even if he issued a receipt
for his own credit only [Art. 1792, Civil Code].
Exceptions
a. In case the receipt was issued for the
account of the partnership credit only,
however, the sum shall be applied to the
partnership credit alone.
b. When the debtor declares, pursuant to Art.
1252, Civil Code at the time of making the
payment, to which debt the sum must be
applied, and if the personal credit of the
partner is more onerous to him, it shall be
so applied [Art. 1792, Civil Code].
Requisites for Applicability of Art. 1792,
Civil Code
a. There exist at least two debts, one where
the collecting partner is creditor, and the
other, where the partnership is the creditor;
b. Both debts are demandable; and
c. The partner who collects is authorized to
manage and actually manages the
partnership.
3. Obligation to Compensate for
Damages
Every partner is responsible to the partnership
for damages suffered by it through his fault.
a. He cannot compensate the damages with
the profits and benefits which he may have
earned for the partnership by his industry.
b. However, the courts may equitably lessen
this responsibility if through the partner's
extraordinary efforts in other activities of the
partnership, unusual profits have been
realized [Art. 1794, Civil Code].
Set-Off of Liability
General Rule: The liability for damages cannot
be set-off or compensated by profits or benefits
which the partner may have earned for the
partnership by his industry.
Rationale: The partner has the obligation to
secure the benefits for the partnership. As
such, the requirement for compensation that
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the partner be both a creditor and a debtor of
the partnership at the same time, is not
complied with [Art. 1278, Civil Code; De Leon].
Exception: The court may equitably lessen the
liability if, through his extraordinary efforts in
other activities of the partnership, unusual
profits were realized [Art. 1794, Civil Code].
Note, however, that there is still no
compensation in this case.
4. Obligation to Account and Act as
Trustee
Every partner must
a. Account to the partnership for any benefit;
and
b. Hold as trustee for it any profits derived by
him without the consent of the other
partners:
1. From any transaction connected with the
formation, conduct, or liquidation of the
partnership; or
2. From any use by him of its property [Art.
1807, Civil Code].
General Rule: The partner cannot use or apply
exclusively to his own benefit partnership
assets or results of the knowledge or
information gained by him as a partner to the
detriment of the partnership [De Leon].
Exception: If the taking by the partner is with
the consent of all other partners [Lim Tanhu v.
Ramolete, G.R. L-40098 (1975)].
The duty to account continues until the
partnership relation is terminated [De Leon].
This obligation exists even when he issued a
receipt for his share only [Art. 1793, Civil
Code].
Rationale: In this case, the debt becomes a
bad debt. It would be unfair for the partner who
already collected not to share in the loss of the
other partners.
Credit collected after dissolution: The
collecting partner need not bring the same to
the partnership capital. Art. 1793 presupposes
that there exists partnership capital. Upon
dissolution of the partnership and the return to
each principal of what he contributed, the
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community of interest between them
disappears altogether [De Leon].
B. Obligations of the Partners
Among Themselves
1. Obligation to Render True and Full
Information
Partners shall render on demand true and full
information of all things affecting the
partnership to:
a. Any partner;
b. The legal representative of any deceased
partner; or
c. The legal representative of any partner
under legal disability [Art. 1806, Civil Code].
Even without demand, honesty demands the
giving of vital information, the refraining from all
kinds of concealment [Paras].
By “information”, it is meant that which can be
used for partnership purposes, it is in the sense
of a property which the partnership has a
valuable right [De Leon].
2. Obligation not to Engage in
Another Business
a. Industrial Partners
General Rule: An industrial partner cannot
engage in business for himself. Should he do
so, the capitalist partners, as well as industrial
partners may either:
1. Exclude him from the firm; or
2. Avail themselves of the benefit which he
may have obtained with a right to damages
[De Leon].
Exception: He may engage in business for
himself when the partnership expressly permits
him to do so [Art. 1789, Civil Code].
Remedy of the other partners
The other partners have the remedy of either
excluding the erring partner from the firm or of
availing themselves of the benefits which he
may have obtained.
An action for specific performance to compel
the partner to perform the promised work is not
available as a remedy because this will amount
to involuntary servitude.
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Rationale
1. To prevent the industrial partner from
exploiting his services for his own personal
benefit without the permission of the firm.
2. To prevent conflict of interest and to ensure
compliance by said partner with his
prestation.
b. Capitalist Partners
General Rule: For a capitalist partner, the
prohibition on engaging in another business
extends only to any operation which is of the
same or similar kind of business in which the
partnership is engaged
Exception: Unless there is a stipulation to the
contrary.
If the capitalist partner violates this prohibition,
he shall:
1. Bring to the common funds any profits
accruing to him from his transactions; and
2. Personally bear all the losses [Art. 1808,
Civil Code].
The test is the possibility of unfair
competition.
A partner occupies a fiduciary position with
respect to his co-partners imposing duties of
utmost good faith and he may not carry on any
other business in rivalry with the business of
the partnership, whether in his own name or for
the account of another at the expense of the
partnership [De Leon].
3. Obligation to Share in the
Profits/Losses
Rules for Distribution of Profits and
Losses
a. They shall be distributed in conformity with
the agreement.
b. If only the share in profits has been
stipulated, the share in the losses shall be
in the same proportion.
c. In the absence of any stipulation:
1. The share in the profits of the capitalist
partners shall be in proportion to their
contributions.
2. The losses shall be borne by the
capitalist partners, also in proportion to
the contributions.
3. The share of the industrial partners in the
profits is that share as may be just and
equitable. If he also contributed capital,
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he will receive a share of the profits in
proportion to his contribution; and
4. The industrial partner, who did not
contribute capital, is not liable for losses
[Art. 1797, Civil Code].
Exclusion of Partner From Share
General Rule: A stipulation excluding one or
more partners from any share in the profits or
losses is void [Art. 1799, Civil Code].
Exception: A stipulation exempting an
industrial partner from losses is valid, since, if
the partnership fails to realize profits, he can no
longer withdraw his work or labor [De Leon].
Note: But this does not exempt the industrial
partner from liability insofar as third persons
are concerned. He may however, recover what
he has given to third persons from the other
partners, for he is exempted by law from
losses.
C.Obligations of the Partners to
Third Persons
1. Liability for Partnership Debts
The partnership is primarily liable for contracts
entered into:
a. In its name and for its account;
b. Under its signature; and
c. By a person authorized to act for it.
Upon exhaustion of its assets, all partners are
liable pro rata with all their property. Any
partner may enter into a separate obligation to
perform a partnership contract [Art. 1816, Civil
Code].
Nature of Individual Subsidiary Liability
General Rule: The partners are liable
subsidiarily. It only arises upon exhaustion of
partnership assets [La Compania Maritima v.
Muñoz, G.R. No. L-3704 (1907)].
Exceptions:
a. A third person who transacted with the
partnership can hold the partners solidarily
(rather than subsidiarily) liable for the whole
obligation if the case falls under Art. 1822 or
1823, Civil Code [Muñasque v. CA, G.R. L-
39780 (1985)]. The provisions refer to
wrongful acts or omission and
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misapplication of money or property by a
partner in the ordinary course of business.
b. A person admitted as a partner into an
existing partnership is liable for all the
obligations of the partnership arising before
his admission, except that his liability shall
be satisfied only out of partnership property,
unless there is a stipulation to the contrary
[Art. 1826, Civil Code]. In other words, he is
not personally liable.
Pro Rata
The partners are liable pro rata. This liability is
not increased even when a partner:
a. Has left the country and the payment of his
share of the liability cannot be enforced [Co-
Pitco v. Yulo, G.R. No. L-3146 (1907)]; or
b. His liability is condoned by the creditor
[Island Sales v. United Pioneers, G.R. No.
L-22493 (1975)].
Basis for Pro-rating
Pro rata must be understood to mean equally
or jointly and not its literal meaning. After all
partnership assets have been exhausted, pro-
rating is based on the number of partners and
not on the amount of their contributions to the
common fund, subject to adjustment among
the partners [De Leon].
Liability of an Industrial Partner
An industrial partner, who is not liable for
losses, is not exempt from this liability (for
partnership debts). However, he can recover
the amount he has paid from the capitalist
partners, unless there is a stipulation to the
contrary [La Compania Maritima v. Muñoz,
G.R. No. L-3704 (1907)].
Stipulation against Individual Liability
Any stipulation against pro rata liability is void
against third persons but valid among the
partners [Art.1817, Civil Code].
A stipulation which excludes one or more
partners from any share in the profits or losses
is void [Art. 1799, Civil Code].
Note: The exemption of the industrial partner to
pay losses relates exclusively to the settlement
of the partnership affairs among the partners
themselves, and has nothing to do with the
liabilities of the parties to third persons.
PARTNERSHIP
a. Art. 1816 refers to “liabilities” while Art. 1797
speaks of “losses”.
b. There is therefore no conflict between the
two articles [Nachura].
2. Liability of Partners for Partnership
Contracts
a. Acts apparently for the carrying on of
usual business
General Rule: The partnership is liable for any
act of a partner which is apparently for the
carrying on of the usual business of the
partnership binds the latter, including the
execution of any instrument in the partnership
name.
Exception: The partnership is not bound when
the following concur:
1. The partner has in fact no authority to act;
and
2. The person with whom he deals has
knowledge of such fact [Par. 1, Art. 1818,
Civil Code].
b. Acts not apparently for carrying on of
the usual business
General Rule: Acts of a partner which is not
apparently for carrying on of the usual business
does not bind the partnership.
Exception: The partnership is bound if the
other partners authorized him to do the act
[Par. 2, Art. 1818, Civil Code].
c. Acts of strict dominion
General Rule: One or some of the partners
have no authority to do the following acts of
strict dominion:
1. Assign the partnership property in trust for
creditors or on the assignee’s promise to
pay the debts of the partnership;
2. Dispose of the goodwill of the business;
3. Do any other act which makes it impossible
to carry on the ordinary business of the
partnership;
4. Confess a judgment;
5. Enter into a compromise concerning a
partnership claim or liability;
6. Submit a partnership claim or liability to
arbitration;
7. Renounce a claim of the partnership.
Exceptions:
They may do so if:
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1. Authorized by all the partners; or
2. The other partners have abandoned the
business [Par. 3, Art. 1818, Civil Code].
d. Acts in contravention of a restriction
Any act of a partner in contravention of a
restriction on authority does not bind the
partnership to persons having knowledge of
the restriction [Par. 4, Art. 1818, Civil Code].
The partnership is not liable to third persons
having actual or presumptive knowledge of the
restrictions, whether or not the acts are for
apparently carrying on in the usual business of
the partnership [De Leon].
Conveyance of Partnership Real Property
1. Title in Partnership Name
Any partner may convey the real property in the
name of the partnership. The partnership can
recover it, except when:
a. The act of the partner binds the partnership,
when he has authority to carry out the usual
business of the partnership, under Par. 1,
Art. 1818, Civil Code; or
b. If not so authorized, the property has been
conveyed by the grantee, or a person
claiming under him, to a holder for value and
without knowledge that the partner
exceeded his authority [Par. 1, Art. 1819,
Civil Code].
A partner authorized to carry out the usual
business may convey, in his own name, the
equitable interest of the partnership [Par. 2, Art.
1819, Civil Code].
2. Title in the Name of Other Persons
Where the title is in the name of one or more
but not all the partners, and the record does not
disclose the right of the partnership:
a. The partners having title may convey title.
b. The partnership may recover it when the
partners conveying title have no authority to
carry on the usual business of the
partnership, unless the purchaser or his
assignee is:
1. A holder for value; and
2. Without knowledge that the act
exceeded authority [Par. 4, Art. 1819,
Civil Code].
Where the title is in the name of one or more or
all the partners, or in a third person in trust for
PARTNERSHIP
the partnership, a partner authorized to carry
on the usual business may convey equitable
title in the partnership name or in his own name
[Par. 4, Art. 1819, Civil Code].
Where the title is in the names of all the
partners, a conveyance executed by all of them
passes all the rights to the property [Par. 5, Art.
1819, Civil Code].
3. Liability for Admission by a Partner
An admission or representation by any partner
may be used as evidence against the
partnership when:
a. It concerns partnership affairs; and
b. Such affairs are within the scope of his
authority [Art. 1820, Civil Code].
Instances Where Knowledge of a Partner is
Considered Knowledge of the Partnership
a. Knowledge of the partner acting in the
particular matter
1. Acquired while a partner, or
2. Then present to his mind;
b. Knowledge of any other partner who
reasonably could and should have
communicated it to the acting partner [Art.
1821, Civil Code].
4. Liability for Wrongful Acts of a
Partner
The partnership is solidarily liable with the
partner who causes loss or injury to any person
not a partner, or incurs any penalty through any
wrongful act or omission:
a. In the ordinary course of the business of the
partnership, or
b. Not in such ordinary course of business, but
with the authority of his co-partners [Art.
1822, Civil Code].
5. Liability for Misapplication of
Money or Property
The partnership is liable for losses suffered
by a third person whose money or property
was:
a. Received by a partner
1. Acting within the scope of his apparent
authority, and
2. Misapplied it
b. Received by the partnership
1. In the course of its business, and
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2. Misapplied by any partner while it is in
the custody of the partnership [Art. 1823,
Civil Code].
Solidary liability
All partners are solidarily liable with the
partnership for its liabilities under Arts. 1822
and 1823 [Art. 1824, Civil Code].
This is without prejudice to the guilty partner
being liable to the other partners. However, as
far as third persons are concerned, the
partnership is answerable [De Leon].
Applicability of the Rule of Respondeat
Superior
The rule of respondeat superior (also called the
rule of vicarious liability) applies to the law of
partnership in the same manner as other rules
governing the agency relationship [De Leon].
It is not only the partners who are liable in
solidum; it is also the partnership [Art 1824,
Civil Code].
The injured party may proceed against the
partnership or any partner [Paras].
The reason for the law’s imposition of wider
liability on the partnership with respect to torts
and breach of trust is based on public policy
[De Leon].
Criminal Liability for Criminal Acts
A non-acting partner in a partnership engaged
in a lawful business is not criminally liable for
the criminal acts of another partner but he is
criminally liable if the partnership is involved in
an unlawful enterprise with his knowledge or
consent.
Partnership Liability
a. Does Not Extend to criminal liability
where the wrongdoing is regarded as
individual in character (e.g. embezzlement)
b. Extends to criminal liability where the
crime is statutory, especially where it
involves fine or imprisonment [De Leon].
6. Liability in case of Partnership by
Estoppel
Note: Refer to the discussion above on
Partnership by Estoppel.
PARTNERSHIP
7. Liability of an Incoming Partner
A person admitted as a partner is liable for
obligations incurred subsequent to his
admission as the other partners are liable. This
is because he is already part of the partnership.
The partner is liable for obligations incurred
before his admission, but will be satisfied only
out of the partnership property, unless
otherwise stipulated that he fully assumes such
obligations [Art. 1826, Civil Code].
Rationale
a. The new partner partakes of the benefits of
the partnership property and an already
established business.
b. He has every means of obtaining full
knowledge of the debts of the partnership
and remedies that amply protect his interest
[De Leon].
Notice to or Knowledge of the Partnership
The following operate as notice to or
knowledge of the partnership:
a. Notice to any partner of any matter relating
to partnership affairs;
b. Knowledge of the partner acting in the
particular matter acquired while a partner;
c. Knowledge of the partner acting in the
particular matter then present to his mind; or
d. Knowledge of any other partner who
reasonably could and should have
communicated it to the acting partner.
These do not apply in case of fraud on the
partnership committed by or with the consent
of the partner [Art. 1821, Civil Code].
Preference of Partnership Creditors in
Partnership Property
With respect to partnership assets the
partnership creditors are entitled to priority of
payment. However, the private creditors of
each partner may ask for the attachment and
public sale of the share of the latter in the
partnership assets as provided in Art. 1814,
Civil Code [Art. 1827, Civil Code].
Property Preference:
a. Partnership Property – Partnership
creditors are preferred
b. Partner’s Individual Property – Partner’s
individual creditors are preferred [De Leon].
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Remedy in Case of Insufficiency of Assets:
a. Partnership Creditor – After exhaustion of
partnership assets, the creditor may come
after the private property of the partners.
b. Partner’s Individual Creditor – Ask for
attachment and public sale of the share of
the partner in the partnership assets [De
Leon].
8. Liability with Regard to Personal
Creditors of Partners
Interest by Personal Creditors
General Rule: Partnership creditors are
preferred over the personal creditors of the
partners as regards partnership property.
Exception: On due application by any
judgment creditor of a partner, a competent
court may:
a. Charge the interest of the partner for the
satisfaction of the judgment debt;
b. Appoint a receiver of the share of the
profits and of any other money due or to fall
due to the partner; and
c. Make all other orders, directions, accounts
and inquiries, which the debtor partner
might have made, or which the
circumstances may require [Par. 1, Art.
1814, Civil Code].
The interest charged may be redeemed before
foreclosure or, in case of sale directed by the
court, may be purchased without causing
dissolution:
a. With separate property, by one or more of
the partners; or
b. With partnership property, by one or more of
the partners, with consent of all, except the
debtor partner [Par. 2, Art. 1814, Civil
Code].
PARTNERSHIP
III. DISSOLUTION AND
WINDING UP
A. Concepts
Dissolution is the change in the relation of the
partners caused by any partner ceasing to be
associated in the carrying on of the business.
1. It is different from the winding-up of the
business [Art. 1828, Civil Code].
2. It does not terminate the partnership, which
continues until the winding up of partnership
affairs is completed [Art. 1829, Civil Code].
Note:
1. The dissolution of a partnership must not be
understood in the absolute and strict sense
so that at the termination of the object for
which it was created, the partnership is
extinguished [Testate Estate of Mota v.
Serra, G.R. No. L-22825 (1925)].
2. The partnership, although dissolved,
continues to exist until its termination, at
which time the winding up of its affairs
should have been completed and the net
partnership assets are partitioned and
distributed to the partners [Emnace v. CA,
G.R. No. 126334 (2001)].
Winding up is the actual process of settling the
partnership business or affairs after
dissolution. It involves collection and
distribution of partnership assets, payment of
debts, and determination of the value of the
interest of the partners in the partnership.
Termination is the point in time when all
partnership affairs are completely wound up
and finally settled. It signifies the end of the
partnership life [De Leon].
B. Causes of Dissolution
1. Without Violation of the Agreement
Between the Partners
a. By the termination of the definite term or
particular undertaking specified in the
agreement;
b. By the express will of any partner, who must
act in good faith, when no definite term or
particular is specified;
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c. By the express will of all the partners who
have not assigned their interests or suffered
them to be charged for their separate debts,
either before or after the termination of any
specified term or particular undertaking;
d. By the expulsion of any partner from the
business bona fide in accordance with such
a power conferred by the agreement
between the partners [Par. 1, Art. 1830, Civil
Code].
e. If, after the expiration of the definite term or
particular undertaking, the partners
continue the partnership without making a
new agreement, the firm becomes a
partnership at will [Art. 1785, Civil Code].
f. Any one of the partners may, at his sole
pleasure, dictate the dissolution of the
partnership at will. He must, however, act in
good faith, not that the attendance of bad
faith can prevent the dissolution of the
partnership, but that it can result in a liability
for damages [Ortega v. CA, G.R. No.
109248 (1995)].
2. In Contravention of the Agreement
Between the Partners
Where circumstances do not permit dissolution
under any other provision of Art. 1830, Civil
Code, it may also be dissolved by the express
will of any partner at any time.
Thus, even if there is a specified term, one
partner can cause its dissolution by expressly
withdrawing even before the expiration of the
period, with or without justifiable cause. If the
cause is not justified or no cause was given,
the withdrawing partner is liable for damages
but in no case can he be compelled to remain
in the firm [Rojas v. Maglana, G.R. No. 30616
(1990)].
3. By Operation of Law
a. By any event which makes it unlawful for the
business of the partnership to be carried on
or for the members to carry it on in
partnership;
Note: If the business or object had been
unlawful from the very beginning, the firm
never had juridical personality [Paras].
b. When a specific thing which a partner had
promised to contribute, perishes before
delivery, or by the loss of the thing, only the
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use or enjoyment of which has been
contributed; the loss of a specific thing,
however, does not dissolve the corporation
after its ownership has already been
transferred to the partnership;
c. By the death of any partner;
d. By the insolvency of any partner or of the
partnership;
Note: The insolvency of the partner or of the
partnership must be adjudged by the court
[De Leon].
e. By the civil interdiction of any partner;
Civil interdiction deprives the offender
during the time of his sentence of the right
to manage his property and dispose of such
property by any act or any conveyance inter
vivos [Art. 34, Revised Penal Code].
Rationale: One who is without capacity to
manage his own property should not be
allowed to manage partnership property [De
Leon].
4. By Decree of Court
A partner may apply for dissolution in court
when:
a. A partner has been declared insane in any
judicial proceeding or is shown to be of
unsound mind;
Note: The partner may have been
previously declared insane in a judicial
proceeding; otherwise, his insanity must be
duly proved. It must materially affect the
capacity of the partner to perform his
contractual duties as such [De Leon].
b. A partner becomes in any other way
incapable of performing his part of the
partnership contract;
Note: The incapacity must be lasting, from
which the prospect of recovery is remote
[De Leon].
c. A partner has been guilty of such conduct
as tends to affect prejudicially the carrying
on of the business;
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d. A partner willfully or persistently commits a
breach of the partnership agreement, or
otherwise so conducts himself in matters
relating to the partnership business that it is
not reasonably practicable to carry on the
business in partnership with him;
Rationale: They defeat and materially
affect and obstruct the purpose of the
partnership [De Leon].
e. The business of the partnership can only be
carried on at a loss;
Note: A court is authorized to decree
dissolution notwithstanding the partnership
has been making profits where it appears at
the time of the application that the business
can only be carried on at a loss [De Leon].
f. Other circumstances render a dissolution
equitable.
Reason for necessity of court decree: In the
instances mentioned in Art. 1831, the facts
may be so far open to dispute as to make
necessary judicial determination as to
dissolution, rather than allow them to be the
occasion for automatic dissolution by
operation of law [De Leon].
A person who acquires the interest of a
partner may likewise apply:
a. After the termination of the specified term or
particular undertaking;
b. At any time if the partnership was a
partnership at will when the interest was
assigned or when the charging order was
issued.
5. Other Causes
a. When a new partner is admitted into an
existing partnership;
b. When any partner retires;
c. When the other partners assign their rights
to the sole remaining partner;
d. When all the partners assign their rights in
the partnership property to third persons
[Art. 1840, Civil Code]
PARTNERSHIP
C. Effects of Dissolution
1. On Authority of the Partners
In general
Upon dissolution, the authority of the partners
to represent the partnership is confined only to
acts necessary to:
a. Wind up partnership affairs; or
b. Complete transactions began but not then
finished [Par. 1, Art. 1832, Civil Code].
With respect to partners
The authority of partners to act for the
partnership is terminated, with respect to
partners:
a. When the dissolution is not by the act,
insolvency or death of a partner, or
b. When the dissolution is by such act,
insolvency or death, when the partner acting
for the partnership has knowledge or notice
of the cause [Arts. 1832, Civil Code].
In other cases, each partner is still liable for his
share in the liability created by the partner
acting for the partnership [Art. 1833, Civil
Code].
With respect to third persons who are not
partners
a. After dissolution, a partner can bind the
partnership by any act appropriate for
1. Winding up partnership affairs; or
2. Completing transactions unfinished at
dissolution.
b. He can also bind it by any transaction which
would bind the partnership as if dissolution
had not taken place, provided the other
party to the transaction
1. Had extended credit to the partnership
prior to dissolution and had no
knowledge or notice thereof; or
2. Had not so extended credit but had
known of the partnership prior to
dissolution, and having no knowledge or
notice of dissolution, the fact had not
been advertised in a newspaper of
general circulation in the place (or in
each place if more than one) at which the
partnership business was regularly
carried on [Art. 1834, Civil Code].
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Note the character of the notice required:
a. As to persons who extended credit to the
partnership prior to dissolution, notice must
be actual.
b. As to persons who merely knew of the
existence of the partnership, publication in a
newspaper of general circulation in the
place of business of the partnership is
sufficient.
2. On Liability for Transactions after
Dissolution
The liability of a partner, in general, is the same
as in ordinary contracts (pro rata and
subsidiary).
In the following cases, however, the liability
shall be satisfied out of the partnership
assets alone (i.e., there is no subsidiary
liability):
a. When the partner had been, prior to the
dissolution, unknown as a partner to the
person with whom the contract is made;
b. When the partner had been, prior to the
dissolution, so far unknown or inactive in
partnership affairs that the business
reputation of the partnership could not be
said to have been in any degree due to his
connection with it [Art. 1834, Civil Code].
Any act of a partner after dissolution in no
case binds the partnership in the following
cases:
a. Where the partnership is dissolved because
it is unlawful to carry on the business,
unless the act is appropriate for winding up
partnership affairs;
b. Where the partner has become insolvent; or
c. Where the partner has no authority to wind
up partnership affairs, except by a
transaction with one who
1. Had extended credit to the partnership
prior to dissolution and had no
knowledge or notice of his want of
authority; or
2. Had not extended credit to the
partnership prior to dissolution and,
having no knowledge or notice of his
want of authority, the fact of his want of
authority has not been advertised [Art.
1834, Civil Code].
Art. 1834, Civil Code does not affect the liability
under Art. 1825, Civil Code of any person who,
PARTNERSHIP
after dissolution, represents himself or
consents to another representing him as a
partner in a partnership engaged in carrying on
business [Art. 1834, Civil Code].
3. On Liability for Contracts after
Dissolution by Specific Causes
[Art. 1833, Civil Code]
Trigger: A contract
a. Entered into by a partner acting for the
partnership
b. After dissolution by a partner’s:
1. act,
2. death, or
3. insolvency
General Rule: Binds the other partners.
Exceptions:
a. The dissolution being by act of any partner,
the partner acting for the partnership had
knowledge of the dissolution; or
b. The dissolution being by death or
insolvency of a partner, the partner acting
for the partnership had knowledge or notice
of the death or insolvency.
4. On Existing Liability of Partners
[Art. 1835, Civil Code]
General Rule: Dissolution does not of itself
discharge the existing liability of any partner.
Exception: A partner may be relieved when
there is an agreement to that effect between:
a. Himself;
b. The partnership creditor; and
c. The person or partnership continuing the
business.
Such agreement may be inferred from the
course of dealing between:
a. The creditor having knowledge of the
dissolution; and
b. The person or partnership continuing the
business.
In case of dissolution by death, the individual
property of a deceased partner is liable for
obligations of the partnership incurred while he
was a partner, after payment of his separate
debts.
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D. Winding Up
1. Who May Wind Up
The following partners have the right to wind
up the partnership affairs:
a. Those designated in an agreement;
b. Those who have not wrongfully dissolved
the partnership; or
c. The legal representative of the last surviving
partner, who was not insolvent.
Any partner or his legal representative or
assignee may obtain winding up by the court,
upon cause shown [Art. 1836, Civil Code].
2. Manner of Winding Up
a. Extrajudicial, by the partners themselves; or
b. Judicial, under the control and direction of
the proper court.
The action for liquidation of the partnership is
personal. The fact that sale of assets, including
real property, is involved does not change its
character, such sale being merely a necessary
incident of the liquidation of the partnership,
which should precede and/or is part of its
process of dissolution [Claridades v. Mercader,
G.R. No. L-20341 (1966)].
E. Rights of Partners in Case of
Dissolution
1. Dissolution Without Violation of the
Agreement
Each partner may have:
a. The partnership property applied to
discharge the partnership liabilities; and
b. The surplus applied in cash to the net
amount owing to the respective partners.
This is a right as against his co-partners and all
partners claiming through them in respect of
their interests in the partnership. It cannot be
availed if there is an agreement to the contrary
[Art. 1837, Civil Code].
Note: When dissolution is caused by expulsion,
the expelled partner may be discharged from
all partnership liability in the same manner as
above but he shall receive in cash only the net
amount due him from the partnership [De
Leon].
PARTNERSHIP
2. Dissolution in Contravention of the
Agreement
a. Partner who did not cause the
dissolution
The partners who did not cause the dissolution
wrongfully has the following rights:
1. To demand the right under Par. 1, Art. 1837,
Civil Code
2. To be indemnified for damages for breach
of the agreement against the partner who
caused the dissolution wrongfully [Par. 1,
Art. 1837, Civil Code];
3. To continue the business:
a. In the same name
b. By themselves or jointly with others
c. During the agreed term for the
partnership.
For the purpose of continuing the business, the
said partners may possess the partnership
property provided:
1. They secure the payment by bond approved
by the court; or
2. They pay any partner, who has caused the
dissolution wrongfully, the value of his
interest in the partnership, less any
damages recoverable, and indemnity
against all present or future partnership
liabilities [Art. 1837, Civil Code].
b. Partner who caused the dissolution
The partner who caused the dissolution
wrongfully has the following rights:
1. If the business is not continued: All the
rights in Par. 1, Art. 1837, Civil Code,
subject to liability for damages;
2. If the business is continued: The right, as
against his co-partners and all claiming
through them, to:
a. Ascertainment, without considering the
value of the goodwill of the business, and
payment to him in cash the value of his
partnership interest, less any damage, or
have the payment secured by a bond
approved by the court; and
b. Be released from all existing liabilities of
the partnership [Par. 3, Art. 1837, Civil
Code].
The goodwill of a business may be defined to
be the advantage which it has from its
establishment or from the patronage of its
customers, over and above the mere value of
its property and capital. The goodwill (which
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includes the firm name) is part of the
partnership assets and may be subject of a
sale [De Leon].
F. Rights of Partners in Case of
Rescission
Rights
A partner, who is induced by fraud or
misrepresentation to become such partner,
may rescind the contract. Without prejudice to
any other right, he is entitled:
1. To a lien on, or right of retention of, the
surplus of the partnership property after
satisfying the partnership liabilities to third
persons for any sum of money paid by him
for the purchase of an interest in the
partnership and for any capital or advances
contributed by him;
2. To stand, after all liabilities to third persons
have been satisfied, in the place of the
creditors of the partnership for any
payments made by him in respect of the
partnership liabilities; and
3. To be indemnified by the person guilty of the
fraud or making the representation against
all debts and liabilities of the partnership
[Art. 1838, Civil Code].
Nature of Fraud or Deceit
The fraud or deceit must be material or
substantial. Mere exaggerations of one partner
of the prospects of enterprises or of value of
the property which he has put into the firm as
capital is not ground for dissolution [Pineda].
G. Settling of Accounts between
Partners
Subject to any agreement to the contrary, the
following rules shall be observed in settling
accounts between partners after dissolution:
1. Composition of Partnership Assets
a. The partnership property; and
b. The contributions of the partners necessary
for the payment of all the liabilities [Art. 1839
(1), Civil Code].
In accordance with the subsidiary liability of the
partners, the partnership property shall be
applied first to satisfy any liability of the
partnership [Art. 1839 (3), Civil Code].
PARTNERSHIP
2. Amount of Contribution for
Liabilities
The rules for distribution of losses shall
determine the contributions of the partners [Art.
1839 (4), Civil Code]. As such:
a. The contribution shall be in conformity with
the agreement.
b. If only the share in profits has been
stipulated, the contribution shall be in the
same proportion.
c. In the absence of any stipulation, the
contribution shall be in proportion to the
capital contribution [Art. 1797, Civil Code].
3. Enforcement of Contribution
The following persons have the right to enforce
the contributions:
a. An assignee for the benefit of creditors;
b. Any person appointed by the court; or
c. To the extent of the amount which he has
paid in excess of his share of the
partnership liability, any partner or his legal
representative [Art. 1839 (5) & (6), Civil
Code].
The individual property of a deceased partner
shall be liable for the contributions [Art. 1839
(7), Civil Code].
4. Order of Application of Assets
The partnership liabilities shall rank, in order of
payment, as follows:
a. Those owing to creditors other than
partners;
b. Those owing to partners other than for
capital and profits;
c. Those owing to partners in respect of
capital;
d. Those owing to partners in respect of profits
[Art. 1839 (2), Civil Code].
5. Doctrine of Marshaling of Assets
When partnership property and the individual
properties of the partners are in possession of
a court for distribution:
a. Partnership creditors have priority on
partnership property;
b. Separate creditors have priority on
individual property, saving the rights of lien
of secured creditors;
c. Anything left from either shall be applied to
satisfy the other [Art. 1839 (8), Civil Code].
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6. Distribution of Property of Insolvent
Partner
Trigger: Where -
a. A partner has become insolvent; or
b. His estate is insolvent,
Rule: The claims against his separate property
shall rank in the following order:
a. Those owing to separate creditors;
b. Those owing to partnership creditors;
c. Those owing to partners by way of
contribution [Art. 1839 (9), Civil Code].
H. Rights of the Creditors of the
Dissolved Partnership
1. As Creditors of the New Partnership
In the following cases, creditors of the
dissolved partnership are also creditors of the
person or partnership continuing the business:
a. When the business is continued without
liquidation, and the cause of dissolution is:
1. Admission of a new partner into the
existing partnership;
2. Retirement or death of any partner, and
his rights to partnership property are
assigned to [1] two or more of the
partners, or [2] one or more of the
partners and one or more third persons;
3. Retirement of all but one partner, and
their rights to partnership property are
assigned to the remaining partner, who
continues the business, either alone or
with others;
4. Wrongful dissolution by any partner, and
the remaining partners continue the
business, either alone or with others; or
5. Expulsion of a partner, and the
remaining partners continue the
business, either alone or with others.
b. When the cause of dissolution is the
retirement or death of any partner, and
business is continued with the consent of
the retired partner or the representative of
the deceased partner, without assignment
of their rights to partnership property.
c. When the cause of dissolution is the
assignment by all the partners or their
representatives of their rights in
partnership property to one or more third
persons who promise to pay the debts and
PARTNERSHIP
who continue the business of the
partnership [Par. 1, Art. 1840, Civil Code].
2. Liability of A New Partner
The liability to the creditors of the dissolved
partnership of a new partner in the partnership
continuing the business shall be satisfied out of
the partnership property alone. However, he
may, through agreement, assume individual
liability [Par. 2, Art. 1840, Civil Code].
3. Priority of Creditors of Dissolved
Partnership
Creditors of the dissolved partnership have
prior right to any claim of the retired partner or
the representative of the deceased partner
against the person or partnership continuing
the business [Par. 3, Art. 1840, Civil Code].
CIVIL LAW
profits attributable to the use of his right
in the property of the dissolved
partnership [Art. 1841, Civil Code].
Exception: Unless otherwise agreed upon
I. Right to an account
In the absence of any agreement to the
contrary, the right to an account of his interest
shall accrue to any partner, or his legal
representative at the date of dissolution, as
against:
1. The winding up partners;
2. The surviving partners; or
3. The person or partnership continuing the
business [Art. 1842, Civil Code].

This is without prejudice to the right of creditors

to set aside any assignment on the ground of
fraud [Par. 4, Art. 1840, Civil Code].

Ratio: Business will be hampered if outside

creditors are not given superior rights. It will be
risky for them to deal with partnerships.
Moreover, if partners enjoy priority right, in the
natural order of things, they will prefer their own
interests to that of the outside creditors. Such
a state will make it easy to defraud non-partner
creditors [Pineda].

4. Rights of a Retired Partner or a

Representative of Deceased
Partner
Trigger:
a. When any partner retires or dies, and
b. The business is continued without any
settlement of accounts as between him or
his estate and the person or partnership
continuing the business

General Rule: He or his legal representative,

as against such person or partnership, subject
to the prior rights of creditors of the dissolved
partnership:
a. May have the value of his interest at the
date of dissolution ascertained; and
b. Shall receive as an ordinary creditor
1. An amount equal to the value of his
interest in the dissolved partnership with
interest; or
2. At his option or at the option of his legal
representative, in lieu of interest, the
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PARTNERSHIP CIVIL LAW
IV. LIMITED PARTNERSHIP C. General and Limited Partners
Distinguished
A. Definition General partner Limited partner
1. A partnership; Extent of liability
2. Formed by two or more persons;
3. Having as members: Personally, but Liable only to the
a. One or more general partners; and subsidiarily liable extent of his capital
b. One or more limited partners [Art. 1843, for obligations of contributions (subject
Civil Code]. the partnership to exceptions)
The limited partners as such shall not be bound
by the obligations of the partnership [Art. 1843, Right to participate in management
Civil Code], except to the extent of their capital
contributions. Unless otherwise No right to participate
agreed upon, all in management
general partners
B. Characteristics have an equal right
to manage the
1. A limited partnership is formed by partnership
compliance with the statutory
requirements [Art. 1844, Civil Code]. Nature of contribution
2. The business is controlled or managed by Cash, property or Cash or property only,
one or more general partners, who are industry not industry
personally liable to creditors [Arts. 1848 &
1850, Civil Code].
Proper party in proceedings by or
against partnership
3. One or more limited partners contribute to
the capital and share in the profits but do not
Proper party Not a proper party,
manage the business and are not
unless (1) he is also a
personally liable for partnership obligations
general partner; or (2)
beyond their capital contributions [Arts.
where the object of the
1845, 1848 & 1856, Civil Code].
proceedings is to
enforce his right
4. Obligations or debts are paid out of the
against or liability to the
partnership assets and the individual
partnership.
property of the general partners [Art. 1843,
Note: The limited
Civil Code].
partner is a necessary
but not an
5. The limited partners may have their
indispensable party.
contributions back subject to conditions
prescribed by law [Arts. 1844 and 1857, Firm name
Civil Code].
Name may appear Name must not appear
6. A limited partnership has the following in the firm name in the firm name
advantages: (subject to exceptions)
a. For general partners, to secure capital
from others while retaining control and Prohibition to engage in other business
supervision for the business;
b. For limited partners, to have a share in Prohibited (subject Not prohibited
the profits without risk of personal to qualifications)
liability.

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General partner Limited partner May or may not partners, unless: [1]
include the name of it is also the surname
one or more of the of a general partner,
Effect of retirement, death, insanity or partners. or [2] prior to the time
insolvency when the limited
partner became
Dissolves Does not dissolve such, the business
partnership partnership; rights has been carried on
transferred to executor under a name in
or administrator for which his surname
selling his estate appeared
Assignability of interest Rules governing dissolution
Not assignable Assignable Arts. 1828-1842, Arts. 1860-1863,
Civil Code Civil Code
D. General and Limited
Partnership Distinguished E. Formation

General Limited 1. General Requirements

partnership partnership Two or more persons desiring to form a limited
partnership shall:
a. Sign and swear to a certificate stating the
Creation items in Art. 1844, Civil Code; and
b. File, for record, the certificate in the SEC
May be constituted in Partners must: [1] [Art. 1844, Civil Code].
any form, subject to sign and swear to a
exceptions certificate in A limited partnership is formed if there is
compliance with Art.
substantial compliance in good faith with the
1844, Civil Code;
requirements [Art. 1844, Civil Code].
and [2] file the When there is failure to substantially comply
certificate for record
with the requirements:
in the SEC
a. In relation to third persons, the partnership
is general, unless they recognized that the
Composition
firm is a limited partnership; and
Only general One or more general, b. As between the partners, the partnership
partners and one or more remains limited, since they are bound by
limited partners their agreement [De Leon].

2. Purpose of Filing
a. To give actual or constructive notice to
General Limited
potential creditors or persons dealing with
partnership partnership
the partnership; and
b. To acquaint them with its essential features,
Firm name including the limited liability of limited
partners [De Leon].
Must contain the Must include the
word “Company” word “Limited” [SEC
3. Firm Name
[SEC Memo. Circ. Memo. Circ. No. 14-
General Rule: The surname of a limited
No. 14-00], except 00]
partner shall not appear in the partnership
for professional
name.
partnerships. Must not include
name of limited

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PARTNERSHIP
Exceptions:
a. It is also the surname of a general partner;
or
b. Prior to the time when the limited partner
became such, the business had been
carried on under a name in which his
surname appeared.
A limited partner whose surname appears in a
partnership name contrary to this prohibition
is liable as a general partner to partnership
creditors who extend credit without actual
knowledge that he is not a general partner [Art.
1846, Civil Code].
4. False Statement in the Certificate
If the certificate contains a false statement, one
who suffers loss by reliance thereon may hold
liable any party to the certificate who knew the
statement to be false:
a. At the time he signed the certificate; or
b. Subsequently, but within a sufficient time
before the statement was relied upon to
enable him to cancel or amend the
certificate, or to file a petition for its
cancellation or amendment [Art. 1847, Civil
Code].
Requisites:
a. The partner knew the statement to be false:
1. At the time he signed the certificate; or
2. Subsequently, but having sufficient time
to cancel or amend it, or file a petition for
its cancellation or amendment, and he
failed to do so;
b. The person seeking to enforce liability has
relied upon the false statement in
transacting business with the partnership;
and
c. The person suffered loss as a result of
reliance upon such false statement.
5. General and Limited Partner at the
Same Time
A person may be a (1) general; and (2) limited
partner in the same partnership at the same
time.
This fact must be stated in the certificate.
Such person shall have:
a. All the rights and powers of a general
partner; and
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b. Be subject to all the restrictions of a general
partner.
Except that, in respect to his contribution
as a limited partner, he shall have the rights
against the other members which he would
have had if he were not also a general partner
[Art. 1853, Civil Code].
F. Management
General Rule: Only general partners have the
right to manage the partnership.
A general partner shall have the rights and
powers and be subject to all restrictions and
liabilities of a partner in a partnership without
limited partners. Thus, he has general authority
over the business.
Thus, if a limited partner takes part in the
control of the business, he becomes liable as a
general partner [Art. 1848, Civil Code].
However, written consent or ratification by
all limited partners is necessary to
authorize the general partners to:
1. Do any act in contravention of the
certificate;
2. Do any act which would make it impossible
to carry on the ordinary business of the
partnership;
3. Confess a judgment against the
partnership;
4. Possess partnership property, or assign
their rights in specific property, for other
than a partnership purpose;
5. Admit a person as a general partner;
6. Admit a person as a limited partner, unless
the right to do so is given in the certificate;
7. Continue the business with partnership
property on the:
a. Death;
b. Retirement;
c. Insanity;
d. Civil interdiction; or
e. Insolvency of a general partner,
unless the right to do so is given in the
certificate [Art. 1850, Civil Code].
PARTNERSHIP
G. Obligations of a Limited
Partner
1. Obligations Related to Contribution
The contributions of a limited partner may be
cash or other property, but not services [Art.
1845, Civil Code].
A limited partner is liable for partnership
obligations when he contributes services
instead of only money or property to the
partnership [De Leon].
A limited partner is liable to the
partnership:
a. For the difference between his actual
contribution and that stated in the certificate
as having been made; and
b. For any unpaid contribution which he
agreed in the certificate to make in the
future, at the time and on the conditions
stated in the certificate [Par. 1, Art. 1858,
Civil Code].
He holds as trustee for the partnership:
a. Specific property stated in the certificate as
contributed by him, but which was not
contributed or which has been wrongfully
returned; and
b. Money or other property wrongfully paid or
conveyed to him on account of his
contribution [Par. 2, Art. 1858, Civil Code].
These liabilities can be waived or
compromised only by the consent of all
members. Such waiver or compromise,
however, shall not affect the right to enforce
said liabilities of a creditor:
a. Who extended credit; or
b. Whose claim arose, after the filing or before
a cancellation or amendment of the
certificate, to enforce such liabilities [Par. 3,
Art. 1858, Civil Code].
Even after a limited partner has
rightfully received the return in whole or
in part of his capital contribution, he is
still liable to the partnership for any sum, not in
excess of such return with interest, necessary
to discharge its liabilities to all creditors:
a. Who extended credit; or
b. Whose claims arose before such return
[Par. 4, Art. 1858, Civil Code].
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A person designated as general partner
but who exercised the rights of a limited
partner
Trigger: A person:
a. Who has contributed capital to a
partnership;
b. Who erroneously believed that he has
become a limited partner; and
c. Whose name appears in the certificate as a
general partner, or who is not designated as
a limited partner,
Rule: Is not personally liable as a general
partner by reason of his exercise of the rights
of a limited partner, provided:
a. On ascertaining the mistake, he promptly
renounces his interest in the profits of the
business or other compensation by way of
income [Art. 1852, Civil Code];
b. He does not participate in the management
of the business [Art. 1848, Civil Code]; and
c. His surname does not appear in the
partnership name [Art. 1846, Civil Code].
2. Liability to Partnership Creditors
General Rule: A limited partner is not liable as
a general partner. His liability is limited to the
extent of his contributions [Art. 1843, Civil
Code].
Exceptions: The limited partner is liable as a
general partner when:
a. His surname appears in the partnership
name, with certain exceptions [Par. 2, Art.
1846, Civil Code].
b. He takes part in the control of the business
[Art. 1848, Civil Code].
c. The certificate contains a false statement of
which he knows and which was relied upon,
resulting in loss [Art. 1847, Civil Code].
In cases (1) and (2), the limited partner is
entitled to reimbursement by the general
partner/s.
Rationale: The general partner/s may not have
been aware of such false statement.
3. Liability to Separate Creditors
On due application to a court of competent
jurisdiction by any separate creditor of a limited
partner, the court may:
a. Charge his interest with payment of the
unsatisfied amount of such claim;
PARTNERSHIP
b. Appoint a receiver; and
c. Make all other orders, directions and
inquiries which the circumstances of the
case may require.
The interest so charged may be redeemed with
the separate property of any general partner,
but may not be redeemed with partnership
property [Art. 1862, Civil Code].
Note: In a general partnership, the interest may
be redeemed with partnership property with the
consent of all the partners whose interests are
not charged [Art. 1814, Civil Code].
H. Rights of a Limited Partner
1. In General
A limited partner shall have the same rights
as a general partner to:
a. Require that the partnership books be kept
at the principal place of business of the
partnership;
b. To inspect and copy any of them at a
reasonable hour;
c. To demand true and full information of all
things affecting the partnership;
d. To demand a formal account of partnership
affairs whenever circumstances render it
just and reasonable;
e. To ask for dissolution and winding up by
decree of court;
f. To receive a share of the profits or other
compensation by way of income; and
g. To receive the return of his contribution
provided the partnership assets are in
excess of all its liabilities [Art. 1851, Civil
Code].
2. Right to Transact Business with the
Partnership
A limited partner may:
a. Loan money to the partnership;
b. Transact other business with the
partnership; and
c. Receive a pro rata share of the partnership
assets with general creditors if he is not also
a general partner [Par. 1, Art. 1854, Civil
Code].
Limitations: A limited partner, with respect to
his transactions with the partnership, cannot:
a. Receive or hold as collateral security any
partnership property; or
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b. Receive any payment, conveyance, or
release from liability if it will prejudice the
right of third persons [Art. 1854, Civil Code].
Violation of the prohibition is considered a
fraud on the creditors of the partnership [Par.
2, Art. 1854, Civil Code].
3. Right to Share in Profits
A limited partner may receive from the
partnership the share of the profits or the
compensation by way of income stipulated for
in the certificate.
This right is subject to the condition that
partnership assets will still be in excess of
partnership liabilities after such payment [Art.
1856, Civil Code]. The partnership liabilities
being referred to exclude the liabilities to the
limited and general partners.
Rationale: Otherwise, he will receive a share
to the prejudice of third-party creditors.
4. Right to Return of Contribution
A limited partner may have his
contributions withdrawn or reduced when:
a. All the liabilities of the partnership, except
liabilities to general partners and to limited
partners on account of their contributions,
have been paid or there remains property of
the partnership sufficient to pay them;
b. The consent of all members is had, unless
the return may be demanded as a matter of
right; and
c. The certificate is cancelled or so amended
as to set forth the withdrawal or reduction
[Par. 1, Art. 1857, Civil Code].
Note: Once withdrawal has been approved by
the SEC and registered, the partnership may
no longer recover the limited partner’s
contributions.
The return of his contributions may be
demanded, as a matter of right (i.e., even
when not all the other partners consent):
a. On the dissolution of the partnership;
b. Upon the arrival of the date specified in the
certificate for the return; or
c. After the expiration of a 6-month notice in
writing given by him to the other partners, if
no time is fixed in the certificate for:
1. The return of the contribution; or
PARTNERSHIP
2. The dissolution of the partnership [Par. 2,
Art. 1857, Civil Code].
Return of Contribution in the Form of
Cash
General Rule: A limited partner, irrespective of
the nature of his contribution, has only the right
to demand and receive cash in return for his
contribution.
Exceptions: He may receive his contribution in
a form other than cash when:
a. There is a statement in the certificate to the
contrary; or
b. All the members of the partnership consent
[Par. 3, Art. 1857, Civil Code].
5. Preference of Limited Partners
General Rule: The limited partners stand on
equal footing.
Exception: By an agreement of all the partners
(general and limited) stated in the certificate,
priority or preference may be given to some
limited partners over others with respect to:
a. The return of contributions;
b. Their compensation by way of income; or
c. Any other matter [Art. 1855, Civil Code].
Note: Such an agreement shall be stated in the
certificate.
6. Right to Assign Interest
The interest of a limited partner is assignable.
The assignee may become:
a. A substituted limited partner; or
b. A mere assignee.
Substituted limited partner
a. He is a person admitted to all the rights of a
limited partner who has died or has
assigned his interest in a partnership.
b. He has all the rights and powers, and is
subject to all the restrictions and liabilities of
his assignor, except those liabilities which:
1. The assignee was ignorant of; and
2. Cannot be ascertained from the
certificate [Pars. 2 & 6, Art. 1859, Civil
Code].
Assignee
a. An assignee is only entitled to receive the
share of the profits or other compensation
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CIVIL LAW
by way of income, or the return of
contribution, to which the assignor would
otherwise be entitled. He has no right:
1. To require any information or account of
the partnership transactions;
2. To inspect the partnership books [Par. 3,
Art. 1859, Civil Code].
b. An assignee has the right to become a
substituted limited partner if:
1. All the partners consent thereto; or
2. The assignor, being empowered to do so
by the certificate, gives him that right
[Par. 4, Art. 1859, Civil Code].
c. An assignee becomes a substituted limited
partner when the certificate is appropriately
amended [Par. 5, Art. 1859, Civil Code].
7. Right to Ask for Dissolution
A limited partner may have the partnership
dissolved and its affairs wound up when:
a. He rightfully but unsuccessfully demands
the return of his contribution; or
b. He has a right to contribution but his
contribution is not paid because the
partnership property is insufficient to pay its
liabilities [Art. 1857, Civil Code].
I. Dissolution
A limited partnership is dissolved in much the
same way and causes as an ordinary
partnership [De Leon].
General Rule: The retirement, death,
insolvency, insanity or civil interdiction of a
general partner dissolves the partnership.
Exception: It is not so dissolved when the
business is continued by the remaining general
partners:
1. Under a right to do so stated in the
certificate; or
2. With the consent of all members [Art. 1860,
Civil Code].
Upon the death of a limited partner, his
executor or administrator shall have:
1. All the rights of a limited partner for the
purpose of settling his estate; and
2. The power to constitute an assignee as a
substituted limited partner, if the deceased
was so empowered in the certificate.
PARTNERSHIP
The estate of a deceased limited partner shall
be liable for all his liabilities as a limited partner
[Art. 1861, Civil Code].
J. Settlement of Accounts
1. Order of Payment
In settling accounts after dissolution, the
liabilities of the partnership shall be entitled to
payment in the following order:
a. Those to creditors, including limited
partners except those on account of their
contributions, in the order of priority as
provided by law;
b. Those to limited partners in respect to their
share of the profits and other compensation
by way of income in their contributions;
c. Those to limited partners in respect to the
capital of their contributions;
d. Those to general partners other than for
capital and profits;
e. Those to general partners in respect to
profits;
f. Those to general partners in respect to
capital [Par. 1, Art. 1863, Civil Code].
Note: In settling accounts of a general
partnership, those owing to partners in respect
to capital enjoy preference over those in
respect to profits.
2. Share in the Partnership Assets
General Rule: The share of limited partners in
respect to their claims for capital, profits, or for
compensation by way of income, is in
proportion of their contribution [Art. 1863, Civil
Code].
Exceptions: Unless
a. There is a statement in the certificate as to
their share in the profits; or
b. There is a subsequent agreement fixing
their share [Art. 1863, Civil Code].
K. Amendment or Cancellation
of Certificate
1. Cancellation of Certificate
The certificate shall be canceled when:
a. The partnership is dissolved; or
b. All limited partners cease to be such limited
partners.
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2. Amendment of Certificate
A certificate shall be amended when:
a. There is a change in the name of the
partnership or in the amount or character
of the contribution of any limited partner;
b. A person is substituted as a limited
partner;
c. An additional limited partner is admitted;
d. A person is admitted as a general partner;
e. A general partner retires, dies, becomes
insolvent or insane, or is sentenced to
civil interdiction and the business is
continued;
f. There is a change in the character of the
business of the partnership;
g. There is a false or erroneous statement in
the certificate;
h. There is a change in the time as stated in
the certificate for the dissolution of the
partnership or for the return of a
contribution;
i. A time is fixed for the dissolution of the
partnership, or the return of a contribution,
no time having been specified in the
certificate; or
j. The members desire to make a change in
any other statement in the certificate in
order that it shall accurately represent the
agreement among them [Art. 1864, Civil
Code].
3. Requirements for Amendment or
Cancellation
To amend or cancel a certificate:
a. The amendment or cancellation must be in
writing;
b. It must be signed and sworn to by all the
members including the new members, and
the assigning limited partner in case of
substitution or addition of a limited or
general partner; and
c. The writing to amend (with the certificate, as
amended) or to cancel must be filed, for
record, in the SEC [Art. 1865, Civil Code].
In case of refusal to execute the writing
[Art. 1865, Civil Code]
Trigger: If any person, who is designated in
Art. 1865, Civil Code as a person who must
execute the writing, refuses to do so
Rule: A person desiring the cancellation or
amendment of a certificate may petition the
PARTNERSHIP CIVIL LAW
court to order a cancellation or amendment
thereof.

Action of the court: The court shall order the

SEC to record the cancellation or amendment
if it finds that the petitioner has a right to have
the writing executed. From the moment the
amended certificate/writing or a certified copy
of a court order granting the petition for
amendment has been filed, such amended
certificate shall thereafter be the certificate of
partnership.

L. Limited Partnerships Formed

Prior to the Effectivity of the
Civil Code
Limited partnerships formed under the law
prior to the Civil Code may:
1. Continue to be governed by the provisions
of the old law
2. Become a limited partnership under the CC
by compliance with Art. 1844, Civil Code
provided that the certificate states:
a. The amount of the original contribution of
each limited partner and the time it was
made; and
b. That the partnership assets exceed its
liabilities to third persons by an amount
greater than the sum of all limited
partners’ contributions [Art. 1867, Civil
Code].

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AGENCY CIVIL LAW
AGENCY Distinguishing Agency from Lease of
Service
I. NATURE, FORM, AND [De Leon]
KINDS
Agency Lease of Service
A. Nature and Elements Based on Based on
By the contract of agency, a person binds representation employment
himself to render some service or to do
something in representation or on behalf of Agents generally Lessor (employee)
another, with the consent or authority of the exercises discretion only exercises
latter [Art. 1868, Civil Code]. ministerial acts
Based on the definition above, there are two Parties involved Parties involved are
parties in a contract of agency. include agent, lessee (employer)
1. The agent is the one who binds himself to principal, and third and lessor
represent another; while person (employee)
2. The principal is the one who is represented
by the agent.
Distinguishing Agency from Independent
A contract of agency has at least four Contract
essential elements: [De Leon]
1. There is consent, express or implied of the
parties to establish the relationship; Agency Loan
2. The object is the execution of a juridical act
in relation to a third person; Agent may be Independent
3. The agents acts as a representative and controlled and contractor is
not for himself, and directed by the independent from the
4. The agent acts within the scope of his principal principal’s control
authority [Rallos v. Felix Go Chan, G.R. No. and direction
L-24332 (1978)].
Generally, principal Generally, employer
Note: Agency is not always contractual. As is liable for the is not liable for the
will be discussed, even if some of these agent’s acts independent
elements are missing, agency may still be contractor’s acts
created by operation of law, such as in Arts.
1930 and 1931, Civil Code.
Distinguishing Agency from Partnership
Agency distinguished from other contracts [De Leon; Art. 1767, Civil Code]
Distinguishing Agency from Loan
[De Leon] Agency Partnership

Agency Loan Agent acts in Each partner is an

representation of the agent of the
Principal gives funds Lender gives funds principal, not vice partnership and his
to agent to advance to borrower for versa co-partners (i.e.
principal’s own borrower’s own contract of mutual
business purposes agency)

Does not carry with it Carries with it the Unless acting Acting in
the obligation to corresponding outside the scope of representation of the
return the money obligation to return authority, agent does partnership, a
the money not incur personal partner binds
liability himself, the

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partnership, and his Distinguishing Agency from Trust

co-partners [Art. [De Leon; Art. 1440, Civil Code]
1822, Civil Code]
Agency Lease of Service
Agent is subject to Partners do not have
the control of the the right to control Agent acts in Title passes to the
principal co-partners representation of the trustee acting in his
principal own name

Distinguishing Agency from Brokerage May be revoked any Terminated upon

[Hahn v. CA, G.R. No. 113074 (1997)] time [see fulfillment of purpose
Extinguishment of of trust
Agency Brokerage Agency]

“An agent receives a “[B]roker earns his

commission upon the pay merely by B. Form
successful bringing the buyer
conclusion of a sale.” and the seller General Rule: Agency may be written or oral,
together, even if no unless the law requires a specific form [Art.
sale is eventually 1869, Civil Code].
made.”
Exceptions
1. In an agency to sell a piece of land or any
Distinguishing Agency from Sale interest therein, the authority of the agent
[Art. 1458, Civil Code; Quiroga v. shall be in writing. Otherwise, the sale shall
Parsons, G.R. No. L-11491 (1918)] be void [Art. 1874, Civil Code].
2. A corporation may act only through its board
Agency to sell Sale of directors or, when authorized either by
its bylaws or by its board resolution,
Principal does not Seller transfers through its officers or agents in the normal
transfer ownership of ownership of the course of business [San Juan Structural
the goods to the goods Steel v. CA, G.R. No. 129549 (1998)].
agent.
C. Kinds
Agent does not pay Buyer pays the price
the price of the of a thing. A contract of agency may be classified:
goods to principal, 1. As to manner of creation: express and
but delivers the price implied [Arts. 1869-1873, Civil Code]
he obtains from 2. As to scope of business: general and
selling them to third special [Art. 1876, Civil Code]
persons 3. As to authority conferred: couched in
general terms and couched in specific terms
Agent must return No obligation to [Art. 1877-1880, Civil Code]
the goods if the return the goods if 4. As to consideration: gratuitous or onerous
goods remain unsold the buyer is unable to [Art. 1875, Civil Code]
sell it to third persons
1. As to Manner of Creation
An agency may be express or implied [Art.
1869, Civil Code].
a. Express: oral or written
b. Implied from
1. The acts of the principal,
2. His silence or lack of action, or

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3. His failure to repudiate the agency,
necessary, since necessary to invoke
knowing that another person is acting on
there is an actual agency by estoppel.
his behalf without authority [Art. 1869,
agency.
Civil Code].

Acceptance by the agent may also be 2. As to Scope of Business

express or implied.
a. Express: oral or written
b. Implied from
1. His acts which carry out the agency, or
2. His silence or inaction according to the
circumstances [Art. 1870, Civil Code]
An agency is either general or special [Art.
1876, Civil Code]:
a. General: comprises of all the business of
the principal
b. Special: Comprises one or more specific
transactions

Between persons who are present, the
acceptance of the agency may also be
implied if the principal delivers his power of
attorney to the agent and the latter receives it
without any objection [Art. 1871, Civil Code]
Between persons who are absent, the
acceptance of the agency cannot be implied
from the silence of the agent, except:
a. When the principal transmits his power of
attorney to the agent, who receives it
without any objection;
b. When the principal entrusts to him by letter
or telegram a power of attorney with
respect to the business in which he is
habitually engaged as an agent, and he did
not reply to the letter or telegram [Art. 1872,
Civil Code].
Implied agency v. Agency by estoppel
Distinguishing implied agency from
agency by estoppel
[De Leon]
Implied agency Agency by
[Arts. 1881-1882] estoppel [Art. 1911]
Actual or real No actual agency,
agency.. only the presence of
an apparent authority
A general agent is “one authorized to do all
acts pertaining to a business of a certain kind
or at a particular place, or all acts pertaining to
a business of a particular class or series, while
a special agent is “one authorized to do some
particular act or to act upon some particular
occasion. He acts usually in accordance with
specific instructions or under limitations
necessarily implied from the nature of the act
to be done” [Siasat v. IAC, G.R. No. L-67889
(1985)].
3. As to Authority Conferred
An agency may also be couched in general
terms or specific terms [Art. 1877, Civil
Code]:
a. Couched in general terms: comprises
only acts of administration, even if:
1. The principal should state that he
withholds no power or that the agent may
execute such acts as he may consider
appropriate, or
2. Or even though the agency should
authorize a general and unlimited
management [Art. 1877, Civil Code].
The term acts of administration refer to
those acts which do not imply the authority
to alienate for the exercise of which an
express power is necessary [De Leon].

Only the principal is Liability depends b. Couched in specific terms: A special

liable to third whether estoppel is power of attorney is necessary in acts of
persons. caused by the strict dominion [De Leon]. The
principal or the circumstances enumerated in Art. 1878,
agent. Civil Code pertain to this, namely:
1. To make such payments as are not
usually considered as acts of
A third party’s A third party’s administration;
reliance in the reliance in the
representation is not representation is

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2. To effect novations which put an end to
obligations already in existence at the
time the agency was constituted;
3. To compromise, to submit questions to
arbitration, to renounce the right to
appeal from a judgment, to waive
objections to the venue of an action or to
abandon a prescription already acquired;
4. To waive any obligation gratuitously;
5. To enter into any contract by which the
ownership of an immovable is
transmitted or acquired either
gratuitously or for a valuable
consideration;
6. To make gifts, except customary ones for
charity or those made to employees in
the business managed by the agent;
7. To loan or borrow money, unless the
latter act be urgent and indispensable for
the preservation of the things which are
under administration;
8. To lease any real property to another
person for more than one year;
9. To bind the principal to render some
service without compensation;
10. To bind the principal in a contract of
partnership;
11. To obligate the principal as a guarantor
or surety;
12. To create or convey real rights over
immovable property;
13. To accept or repudiate an inheritance;
14. To ratify or recognize obligations
contracted before the agency;
15. Any other act of strict dominion.
CIVIL LAW
his detriment [Litonjua v. Eternit
Corporation, G.R. No. 144805 (2006)].
b. Agency by operation of law
While agency is generally contractual, the Civil
Code admits several exceptions.
1. The agent must finish the business
already begun on the death of the principal,
should delay entail any danger [Par. 2, Art.
1884, Civil Code].
2. The agent, even if he should withdraw
from the agency for a valid reason, must
continue to act until the principal has had
reasonable opportunity to take the
necessary steps to meet the situation [Art.
1929, Civil Code].
3. The agency shall remain in full force and
effect even after the death of the principal,
if it has been constituted in the common
interest of the latter and of the agent, or in
the interest of a third person who has
accepted the stipulation in his favor [Art.
1930, Civil Code].
4. Anything done by the agent, without
knowledge of the death of the principal or
of any other cause which extinguishes the
agency, is valid and shall be fully effective
with respect to third persons who may have
contracted with him in good faith [Art. 1931,
Civil Code].

4. Other Kinds of Agency

a. Agency by estoppel
In an agency by estoppel, there is no agency
at all, but the one assuming to act as agent has
apparent authority, to represent another,
although not real [Yun Kwan Byung v.
PAGCOR, G.R. No. 163553 (2009)].

To establish agency by estoppel, the following

elements must be shown:
1. The principal manifested a representation
of the agent’s authority or knowingly allowed
the agent to assume such authority;
2. The third person, in good faith, relied upon
such representation; and
3. Relying upon such representation, such
third person has changed his position to

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II. OBLIGATIONS OF THE 3. Even if the agent withdraws, continue to
act as an agent until the principal has had
AGENT reasonable opportunity to take the
necessary steps to meet the situation [Art.
1929, Civil Code].
A. Act within the Scope of
Authority The obligation to carry out the agency also
includes the obligation to not carry out the
One of the primary obligations of an agent is to agency if its execution would manifestly result
act within the scope of his authority [Art. in loss or damage to the principal [Art. 1888,
1881, Civil Code]. This includes acting Civil Code].
according to the instructions of the principal;
and in default thereof, according to the C. Prefer the Interest of the
diligence of a good father of a family as Principal Over His Own
required by the nature of the business [Art.
1887, Civil Code].
This obligation is manifested in two ways:
1. An agent shall be liable for damages if,
In the following cases, the acts performed by
there being a conflict between his interests
the agent shall be deemed within the scope
and those of the principal, he should prefer
of his authority:
his own [Art. 1889, Civil Code].
1. Acts that may be conducive to the
2. An agent, who has been authorized to lend
accomplishment of the purpose of the
money, may not borrow it without the
agency [Art. 1881, Civil Code]
consent of the principal [Art. 1890, Civil
2. Acts performed in a manner more
Code].
advantageous to the principal than that
3. An agent cannot acquire by purchase the
specified by him [Art. 1882, Civil Code]
property whose administration or sale may
3. So far as third persons are concerned, acts
have been entrusted to them, even by public
within the terms of the written power of
or judicial auction, either in person or
attorney, even if the agent has in fact
through the mediation of another, unless the
exceeded the limits of his authority
consent of the principal has been given [Art.
according to an understanding between the
1491 (1), Civil Code].
principal and the agent [Art. 1900, Civil
Code]
D. Render an Account, and
Note: Deliver
1. The special power to sell excludes the
power to mortgage; and a special power to
An agent must render an account of his
mortgage does not include the power to sell
transactions and deliver to the principal
[Art. 1879, Civil Code].
whatever he may have received by virtue of the
2. The power to compromise does not
agency, even though it may not be owing to the
authorize submission to arbitration [Art.
principal [Art. 1891, Civil Code].
1880, Civil Code].
A stipulation exempting the agent from the
B. Carry Out the Agency obligation to render an account shall be void
[Art. 1891, Civil Code].
Another primary obligation of an agent is to
carry out the agency [Art. 1884, Civil Code].
Such obligation entails that the agent shall
1. Be liable for the damages caused to the
principal through his non-performance [Art.
1884, Civil Code];
2. Finish the business already begun on the
death of the principal, should delay entail
danger [Art. 1884, Civil Code];
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E. Summary of Liabilities for F. Liability to Pay Interest [Art.
Damages 1896, Civil Code]

Trigger Rule Trigger Rule Reckoning

Period
If the principal may The agent is liable
suffer damages for damages [Art. When the The agent Interest paid
through the agent’s 1884, Civil Code] agent has owes the from the day
non-performance applied to his principal on which the
own use the the interest sums were
Fraud or negligence The agent is sums on the said applied to
responsible not only belonging to sums of the agent’s
for fraud or the principal money. use
negligence, which
shall be judged with When the Interest paid
more or less rigor by agent still from the day
the courts, according owes a sum of of the expiry
to whether the money to the of the
agency was or was principal after agency
not for the expiration
compensation [Art. of the agency
1909, Civil Code]

If there is a conflict The agent shall be G. Liability for Acts of

between the liable for damages Substitutes [Arts. 1892-
interests of principal [Art. 1889, Civil
and agent, and the Code]
1893, Civil Code]
agent prefers his
own Appointment of a substitute
General Rule: An agent may appoint a
If the principal The agent must substitute.
should suffer any indemnify the
damage by reason principal, except Exception: When the principal prohibits the
of the withdrawal of when the withdrawal agent from doing so, all of the substitute’s acts
the agent is based upon the shall be void [Art. 1892, Civil Code].
impossibility of
continuing the Liability of the agent for his
agency without substitutes
grave detriment to General rule: The agent shall not be
the agent [Art. 1928, responsible for the acts of the substitute.
Civil Code]
Exemptions: An agent is responsible for the
acts of the substitute in the following cases:
1. When the agent was not given the power to
appoint one;
2. When the agent was given such power, but
without designating the person, and the
person appointed was notoriously
incompetent or insolvent [Art. 1892, Civil
Code].

Note: In both exceptions above, the principal

may bring an action against the substitute with
respect to the obligations the substitute has
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contracted under the said substitution [Art.
1893, Civil Code].
H. Obligations of Commission
Agents [Arts. 1903-1908, Civil
Code]
Commission agent is one whose business is to
receive and sell goods for a commission, and
who is entrusted by the principal with the
possession of goods to be sold, and is usually
selling in his own name [De Leon].
Responsibility for goods received
[Art. 1903, Civil Code]
General Rule: The commission agent shall be
responsible for the goods received by him in
the terms and conditions, and as described in
the consignment
Exception: Unless, upon receiving them, he
should make a written statement of the
damage and deterioration suffered by the
same.
CIVIL LAW
Sale on credit
General Rule: The commission agent cannot
sell on credit [Art. 1905, Civil Code]
Exception: When there is an express or
implied consent of the principal [Art. 1905, Civil
Code]
1. The agent may sell on credit
2. The agent shall inform the principal, with the
statement of the names of the buyers [Art.
1906, Civil Code]
Special cases of sale on credit
1. If the sale on credit is without the
consent of the principal: The latter may
demand from the agent the payment in
cash, but the commission agent shall be
entitled to any interest resulting from the
sale [Art. 1905, Civil Code]
2. If the agent fails to inform the principal
with the statement of the names of the
buyers: The sale shall be deemed to have
been made for cash insofar as principal is
concerned [Art. 1906, Civil Code]

Goods belonging to different owners

[Art. 1904, Civil Code]
Trigger: When the commission agent:
1. Handles goods of the same kind and mark,
2. Which belong to different owners

Rule: He shall:
1. Distinguish them by counter-marks, and
2. Designate the merchandise respectively
belonging to each principal.

Failure to collect credits [Art. 1908,

Civil Code]
Trigger: The commission agent who
1. Does not collect the credits of his principal
2. At the time when they become due and
demandable

Liability: Shall be liable for damages, unless

he proves that he exercised due diligence for
that purpose.
Note: This does not apply in case of guarantee
commission wherein the agent guarantees the
payment of all debts arising from the agency

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AGENCY
III. OBLIGATIONS OF THE
PRINCIPAL
A. Comply with the Obligations
Contracted by the Agent
The principal must comply with all the
obligations which the agent may have
contracted within the scope of his authority
[Par. 1, Art. 1910, Civil Code].
Doctrine of Representation
All contracts and transactions entered into by
the agent on behalf of the principal within the
scope of his authority are binding on the
principal as though he himself had entered into
them directly [Eurotech v. Cuizon, G.R. No.
167552 (2007].
If the agent acts within the scope of his
authority, then the principal must comply.
Otherwise, the principal is bound to comply
only if he ratifies the agent’s act that was done
beyond the scope of his authority.
Acts Within the Scope of Authority
1. Those expressly specified in the power of
attorney
2. Conducive acts
3. Advantageous acts
4. Collateral acts
Ratified Acts
As for any obligation wherein the agent has
exceeded his power, the principal is not bound
except when he ratifies it expressly or tacitly
[Par. 2, Art. 1910, Civil Code].
The principal must have full knowledge at the
time of ratification of all the material facts and
circumstances relating to the unauthorized act
of the person who assumed to act as agent. If
the material facts were suppressed or
unknown, there can be no ratification [Manila
Memorial v. Linsangan, G.R. No. 151319
(2004)].
By benefitting from the unauthorized act of an
agent, the principal is said to have ratified the
acts of the agent and is estopped from denying
said authority [Filipinas Life v. Pedroso, G.R.
No. 159489 (2008)].
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However, in some cases, the mere acceptance
of benefits is not tantamount to ratification by
the principal.
Acts which are absolutely void cannot be
ratified [De Leon].
When Estoppel Applies
Even when the agent has exceeded his
authority, the principal is solidarily liable with
the agent if the former allowed the latter to act
as though he had full powers [Art. 1911, Civil
Code].
This is termed as agency by estoppel
[Villanueva]. Even if there was no express
authority, the principal is still solidarily liable
because he allowed the agent to act as if he
had authority.
Acts by the Agent in His Own Name but
Involving Things of the Principal [Par. 2, Art.
1883, Civil Code]
When the properties of the principal are
involved, the principal is bound even when the
contract was entered into in the name of the
agent. The purpose of this rule is to protect
third persons against possible collusion
between the agent and the principal [Gold Star
Mining Co. v. Lim-Jimena, G.R. No. L-25301
(1968); PNB v. Agudelo, G.R. No. 39037
(1933)].
B. Advance or Reimburse Sums
Necessary
The principal must advance to the agent,
should the latter so request, the sums
necessary for the execution of the agency.
Should the agent have advanced them, the
principal must reimburse him therefor, even if
the business or undertaking was not
successful, provided the agent is free from all
fault.
The reimbursement shall include interest on
the sums advanced, from the day on which the
advance was made [Art. 1912, Civil Code].
AGENCY
The principal is not liable for the
expenses incurred by the agent in the
following cases [Art. 1918, Civil
Code]:
1. If the agent acted in contravention of the
principal's instructions, unless the latter
should wish to avail himself of the benefits
derived from the contract;
2. When the expenses were due to the fault of
the agent;
3. When the agent incurred them with
knowledge that an unfavorable result would
ensue, if the principal was not aware
thereof;
4. When it was stipulated that the expenses
would be borne by the agent, or that the
latter would be allowed only a certain sum.
General Rule: The principal must advance or
reimburse (with interest) the sums necessary
to execute the agency.
Exceptions:
1. Expenses incurred through acts which
contravene the principal’s instructions, and
the principal does not want to derive benefit
therefrom
2. Expenses due to the fault of the agent
3. Expenses incurred by the agent with the
knowledge that an unfavorable result would
ensue, and the principal was unaware
4. If there is a stipulation that expenses would
be borne by the agent or that he would be
allowed only a certain sum
5. Expenses incurred from acts outside the
authority of the agent.
Sums to be reimbursed include those from
unsuccessful undertakings as well as those
initially in contravention of the principal’s
instructions but later becomes a source of
benefits.
Note: Compare the obligation of the principal
with the obligation of the agent, who is bound
to advance the sums necessary to carry out the
agency only when he so consents or it is
stipulated in the agreement and if the principal
is not insolvent [Art. 1912 vis-à-vis Art. 1886,
Civil Code].
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C. Indemnify the Agent for Injury
The principal must also indemnify the agent for
all the damages which the execution of the
agency may have caused the latter, without
fault or negligence on his part [Art. 1913, Civil
Code].
General Rule: The principal must indemnify
the agent for damages in the execution of the
agency.
Exception: When damage was caused due to
the fault or negligence of the agent.
D. Compensate the Agent
Agency is presumed to be for compensation,
unless there is proof to the contrary [Art. 1875,
Civil Code].
Note:
1. Compensation is not an element of an
agency contract [Casis]. The principal must
prove that the agency is not for a fee if he
contests it. But in itself, compensation is not
an element of an agency contract.
2. The fact that the agency was for
compensation or not, shall be considered by
the court in determining the extent of liability
of an agent for fraud or negligence [Art.
1909, Civil Code].
Procuring Cause
A procuring cause starts a series of events,
which, without break in their continuity, result in
the accomplishment of the prime objective of
the employment of the broker – a sale
[Philippine Health Care Providers v. Estrada,
G.R. 171052 (2008)].
The agent must be the efficient procuring
cause of a sale in order to be entitled to
commission [Danon v. Brimo & Co., G.R. No.
15823 (1921)].
The broker becomes entitled to the usual
commissions whenever he brings to his
principal a party who is able and willing to take
the property and enter into a valid contract
upon the terms then named by the principal,
although the particulars may be arranged and
the matter negotiated and completed between
the principal and the purchaser directly
AGENCY
[Macondray v. Sellner, G.R. No. L-9184
(1916)].
The agent is entitled to commission even if the
(transaction) is consummated after the
revocation of his authority, if the revocation
was done in bad faith by the principal to avoid
payment of commission [Infante v. Cunanan,
G.R. No. L-5180 (1953)].
Test
Even if the agent is not the procuring cause of
the transaction, he may still be awarded a sum
of money if he is “somehow instrumental in
bringing the parties together again and finally
consummating the transaction” [Prats v. CA,
G.R. No. L-39822 (1978)].
When there is a close, proximate and causal
connection between the agent’s efforts and
labor and the principal’s sale of his property,
the agent is entitled to commission [Manotok
Brothers v. CA, G.R. No. 94753 (1993)].
Forfeiture of Right to Commission
An agent who takes a secret profit without
revealing the same to his principal is guilty of a
breach of his loyalty to the principal and forfeits
his right to collect the commission from his
principal, even if the principal does not suffer
any injury, or he obtained better results, or the
agency is gratuitous, or that usage or custom
allows it. The rule is to prevent the possibility of
any wrong, not to remedy an actual damage
[Domingo v. Domingo, G.R. No. L-30573
(1971)].
E. Scope and Nature of the
Liability of the Principal
1. Solidary Liability
The principal is bound and liable for the acts of
the agent done within the scope of his authority
(express, conducive, advantageous, and
collateral acts), for unauthorized acts which the
principal has ratified and for acts which is
estopped from denying [Art. 1911, Civil Code].
Requisites:
a. Agency relationship exists;
b. The agent acts in excess of his authority;
and
c. The principal allowed the agent to act as
though he had full powers
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If two or more persons have appointed an
agent for a common transaction or
undertaking, they shall be solidarily liable to the
agent for all the consequences of the agency
[Art. 1915, Civil Code].
Requisites:
a. There are two or more principals;
b. The principals have all concurred in the
appointment of the same agent; and
c. The agent is appointed for a common
transaction or undertaking
2. If the Contract Involves Things
Belonging to the Principal
If an agent acts in his own name, the principal
has no right of action against the persons with
whom the agent has contracted; neither have
such persons against the principal.
In such case the agent is the one directly bound
in favor of the person with whom he has
contracted, as if the transaction were his own,
except when the contract involves things
belonging to the principal [Art. 1883, Civil
Code].
General Rule: If the agent acts in his own
name, then the contract is between the agent
and the third person. Neither the third person
nor the principal has a right of action against
the other.
Exception: If the contract involves things
belonging to the principal, then the principal is
also liable to the third party (agency with an
undisclosed principal). However, it is not the
case that the agent escapes liability by simply
contracting things belonging to the principal.
The exception has two (2) effects, according
to jurisprudence:
a. Principal and third persons now have a right
of action against each other [Syjuco v.
Syjuco, G.R. No. 13471 (1920)].
b. The principal is not bound by the contract if
the act is beyond the scope of the agent’s
authority [PNB v. Agudelo, G.R. No. L-
39037 (1933)]. This operates as an
exception to the exception.
AGENCY
IV. MODES OF
EXTINGUISHMENT
A. Summary
Agency is extinguished [Art. 1919, Civil
Code]:
1. By its revocation;
2. By the withdrawal of the agent;
3. By the death, civil interdiction, insanity or
insolvency of the principal or of the agent;
4. By the dissolution of the firm or corporation
which entrusted or accepted the agency;
5. By the accomplishment of the object or
purpose of the agency;
6. By the expiration of the period for which the
agency was constituted.
The provision enumerates only those which are
peculiar to agency and is, therefore, not
exclusive. Agency may also be extinguished by
the modes of extinguishment of obligations in
general [De Leon].
The modes of extinguishment may be
classified into three:
1. By agreement [(e) and (f)];
2. By subsequent acts of the parties:
a. By the act of both parties or by mutual
consent; or
b. By the unilateral act of one of them [(a)
and (b)]
3. By operation of law [(c) and (d)]
B. Revocation
1. In General
Article 1920, Civil Code. The principal may revoke
the agency at will, and compel the agent to return
the document evidencing the agency. Such
revocation may be express or implied.
General Rule: The principal may revoke the
agency at will.
Exception: Agency cannot be revoked if it is
coupled with an interest, such that:
a. A bilateral contract depends upon it;
b. It is the means of fulfilling an obligation
already contracted; or
c. A partner is appointed manager of a
partnership in the contract of partnership
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and his removal from the management is
unjustifiable.
The principal can revoke the agency even if the
period fixed in the contract has not yet expired
[CMS Logging v. CA, G.R. No. L-41420
(1992)].
When two or more principals have granted a
power of attorney for a common transaction,
any one of them may revoke the same without
the consent of the others [Art. 1925, Civil
Code].
Note: The rule enunciated by Art. 1925, Civil
Code is consistent with Art. 1915, Civil Code
which provides that, if two or more persons
have appointed an agent for a common
transaction or undertaking, they shall be
solidarily liable to the agent for all the
consequences of the agency.
Qualifications: The right of the principal to
terminate the authority of his agent is absolute
and unrestricted, except that he is liable for
damages in case:
a. He revokes the agency in bad faith [Danon
v. Brimo, G.R. No. 15823 (1921)]; or
b. He revokes the agency before the expiration
of the period stipulated in the agency
contract.
2. When Revocation is Not Binding on
Third Persons
a. When Notice is Required
If the agency has been entrusted for the
purpose of contracting with specified persons,
its revocation shall not prejudice the latter if
they were not given notice thereof [Art. 1921,
Civil Code].
b. When a Third Person in Good Faith
Has No Knowledge of Revocation
If the agent had general powers, revocation of
the agency does not prejudice third persons
who acted in good faith and without knowledge
of the revocation. Notice of the revocation in a
newspaper of general circulation is a sufficient
warning to third persons [Art. 1922, Civil Code].
An agent with general powers is most likely, an
agent authorized to transact with the general
public in contradistinction to the agent who
AGENCY
contracts with specified persons under Art.
1921, Civil Code.
3. Appointment of New Agent
Article 1923, Civil Code. The appointment of a new
agent for the same business or transaction revokes
the previous agency from the day on which notice
thereof was given to the former agent, without
prejudice to the provisions of the two preceding
articles.
Revocation takes effect when notice is given to
the former agent, not when the new agent is
appointed.
4. Direct Management by the Principal
Article 1924, Civil Code. The agency is revoked if
the principal directly manages the business
entrusted to the agent, dealing directly with third
persons.
If the principal believes that the agent is in
breach of the contract and thereby decides to
deal with the business directly, then the agency
is said to be revoked [CMS Logging v. CA, G.R.
No. L-41420 (1992)]. The mere act of direct
management by the principal is not enough to
revoke the agency without such intention.
5. General authority revoked by
special authority
Article 1926, Civil Code. A general power of
attorney is revoked by a special one granted to
another agent, as regards the special matter
involved in the latter.
6. When Agency Cannot be Revoked
Article 1927, Civil Code. An agency cannot be
revoked if a bilateral contract depends upon it, or if
it is the means of fulfilling an obligation already
contracted, or if a partner is appointed manager of a
partnership in the contract of partnership and his
removal from the management is unjustifiable.
Article 1930, Civil Code. The agency shall remain
in full force and effect even after the death of the
principal, if it has been constituted in the common
interest of the latter and of the agent, or in the
interest of a third person who has accepted the
stipulation in his favor.
Even if the agency is coupled with an interest
(which means that it is irrevocable), it may still
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be revoked if there is just cause to terminate
such agency relationship.
C. Withdrawal by the Agent
General Rule: The agent may withdraw from
the agency by giving due notice to the principal.
If the latter should suffer any damage by
reason of the withdrawal, the agent must
indemnify him therefor [Art. 1928, Civil Code].
Exception: Unless the agent should base his
withdrawal upon the impossibility of continuing
the performance of the agency without grave
detriment to himself [Art. 1928, Civil Code].
If the Agent files a complaint against his
principal, then he is understood to have
renounced the agency because his act was
more expressive than words and could not
have caused any doubt [Valera v. Velasco,
G.R. No. L-28050 (1928)].
D. Death, Civil Interdiction,
Insanity or Insolvency
1. In General
Due to the very nature of the relationship
between the principal and agent, agency is
extinguished by the death of the principal or the
agent. Any act of an agent after the death of his
principal is void ab initio unless the same falls
under the exceptions provided for in Arts.
1930-1931, Civil Code.
2. Exceptions
a. Agency Coupled with an Interest
Article 1930, Civil Code. The agency shall remain
in full force and effect even after the death of the
principal, if it has been constituted in the common
interest of the latter and of the agent, or in the
interest of a third person who has accepted the
stipulation in his favor.
b. Contract between Agent Without
Knowledge of Death and Third
Person in Good Faith
Article 1931, Civil Code. Anything done by the
agent, without knowledge of the death of the
principal or of any other cause which extinguishes
the agency, is valid and shall be fully effective with
respect to third persons who may have contracted
with him in good faith.
AGENCY
c. Unfinished business
Paragraph 2, Article 1884, Civil Code. He must
also finish the business already begun on the death
of the principal, should delay entail any danger.
3. In case of the death of an agent
If the agent dies, his heirs must:
a. Notify the principal thereof; and
b. In the meantime adopt such measures as
the circumstances may demand in the
interest of the latter [Art. 1932, Civil Code].
E. Dissolution, Accomplishment,
or Expiration
Dissolution: The dissolution of the firm or
corporation which entrusted (principal) or
accepted (agent) the agency extinguishes the
agency by operation of law [Par. 4, Art. 1919,
Civil Code], except for the purpose of winding
up its affairs. It is equivalent to the death of a
natural person [De Leon].
CIVIL LAW
Expiration
If created for a fixed period: expiration of the
period extinguishes agency [Par. 6, Art. 1919,
Civil Code] even if the purpose was not
accomplished.
If no time is specified: the courts may fix the
period as under the circumstances have been
probably contemplated by the parties [Art.
1197, Civil Code]. Otherwise, the agency
terminates at the end of a reasonable period of
time. Either party can terminate the relationship
at will by giving notice to the other [De Leon].
Note: The period contemplated may be implied
from terms of agreement, purpose of agency,
and the circumstances of the parties.

Accomplishment: The fulfillment of the

purpose for which agency was created ipso
facto terminates agency [Par. 5, Art. 1919, Civil
Code] even though it was expressly made
irrevocable. If the purpose has not been
accomplished, the agency continues
indefinitely for as long as the intent to continue
is manifested through words or actions of the
parties [De Leon].

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CIVIL LAW
CREDIT TRANSACTIONS CIVIL LAW
I. LOAN Commodatum v. Mutuum

Article 1933, Civil Code. By the contract of loan, 1. Nature

one of the parties delivers to another, either Commodatum Mutuum
something not consumable so the latter may use the
same for a certain time and return it, in which case
Purely personal in Not purely personal
the contract is called a commodatum, or money or
other consumable thing, upon the condition that the character [Art. 1939, in character
same amount of the same kind and quality shall be Civil Code]
paid, in which case the contract is simply called a
loan or mutuum. Both are reciprocal obligations

Commodatum is essentially gratuitous.

Simple loan may be gratuitous or with a stipulation
to pay interest.
In commodatum the bailor retains the ownership of
the thing loaned while in simple loan, ownership
passes to the borrower.
Contract of Loan vs. Contract to Loan
Contract of Loan Contract to Loan
Note: As a purely personal obligation,
consequently:
a. The death of either the bailor or the bailee
extinguishes the contract
b. The bailee can neither lend nor lease the
object of the contract to a third person.
However, the members of the bailee’s
household may make use of the thing
loaned unless there is a stipulation to the
contrary, or unless the nature of the thing
forbids such use [Art. 1939, Civil Code]

Real Contract: Consensual Contract: 2. Purpose

perfected, not by perfected by mere Commodatum Mutuum
mere consent, but consent.
by delivery of the Loan for permissive Loan for
object of the An accepted promise to or temporary use consumption
contract. deliver something by [Art.1935, Civil Code]
way of commodatum or
simple loan is binding
upon the parties [Art. 3. As to Object
1934, Civil Code]. Commodatum Mutuum

Two Types of Contracts of Loan General Rule: General Rule:

1. Commodatum – a contract where one Involves non- Involves money or
party delivers to another something not consumable movable other consumable
consumable so that the latter may use the or immovable movable property
same for a certain time and return it [Art. property
1933, Civil Code]. Consumable -
2. Mutuum (Simple Loan) – a contract where Exception: cannot be used in a
one party delivers to another, money or Consumable goods manner appropriate
other consumable thing, upon the condition may be the subject of to their nature
that the same amount of the same kind and commodatum if the without their being
quality shall be paid [Art. 1933, Civil Code]. purpose of the consumed [Art.
contract is NOT 418, Civil Code]
consumption of the
object, as when it is
merely for exhibition
[Art. 1936, Civil Code]
(e.g., stamps for an
exhibition)

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4. As to Ownership of the Thing Loaned 7. As to Liability for Loss
Commodatum Mutuum Commodatum Mutuum

Retained by the bailor Transferred to the Bailor suffers the Borrower suffers the
[Art.1933, Civil Code] borrower loss of the subject loss even if caused
matter since he is the exclusively by a
owner [Arts. 1942 fortuitous event and
5. As to Consideration
and 1174, Civil he is not, therefore,
Commodatum Mutuum Code] discharged from his
duty to pay the same
Essentially gratuitous May be gratuitous amount, kind and
[Art.1933, Civil Code] or onerous, i.e. with quality
stipulated interest

6. As to Obligations of the Borrower

A. Commodatum
Commodatum Mutuum 1. Parties
a. Bailee - debtor
Borrower must return Borrower need only b. Bailor - creditor
the same thing loaned pay an equal
[Art. 1933, Civil Code] amount of the same Who May Be a Bailor in Commodatum?
kind and quality [Art. Anyone. The bailor in commodatum need not
General Rule: Bailor 1953, Civil Code] be the owner of the thing loaned [Art. 1938,
CANNOT demand the Civil Code], but as against the bailee, the bailor
return of the thing until General Rule: retains ownership of the thing loaned.
after the expiration of Lender may NOT
the period stipulated demand the return
2. Use by the Bailee
or the of the thing loaned
accomplishment of nor payment before As to Who May Use of the Property
the use for which the the lapse of the term Loaned
contract was agreed upon General Rule: The bailee acquires permissive
constituted [Art.1946, use of the thing loaned only for himself. He may
Civil Code] not lend nor lease the thing loaned to him to a
third person [Art. 1935, Civil Code].
Exception: Bailor
may demand the Exception: The members of the bailee’s
return of the thing household may make use of the thing loaned.
loaned before the
expiration of the term: Exceptions to the Exception:
1. In case of urgent a. If there is a stipulation to the contrary, or
need [Art. 1946, b. The nature of the thing forbids such use [Art.
Civil Code] 1939(2), Civil Code].
2. If the
commodatum is a As to the Use of Fruits of the Thing
precarium [Art. Loaned
1947, Civil Code] General Rule: The bailee acquires the
3. If the bailee permissive use of the thing loaned but NOT its
commits any of fruits [Art. 1935, Civil Code].
the acts of
ingratitude in Art. Exception: Parties stipulate otherwise; such
765 [Art. 1948, stipulation is considered valid [Art. 1940, Civil
Civil Code] Code].

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3. Obligations of the Bailee
(TUNR-PBS)
a. Take care of the thing loaned with the
proper diligence of a good father of a family
[Art. 1163, Civil Code].
b. Use the thing loaned only for the purpose for
which it was loaned and not for any other
purpose [Art. 1935, 1939(2), 1942 (1), Civil
Code].
c. Not to lend the thing to a third person who is
not a member of his household [Art. 1942
(4), Civil Code].
Exception: The members of the bailee’s
household may make use of the thing
loaned.
Exceptions to the Exception:
1. If there is a stipulation to the contrary,
or
2. The nature of the thing forbids such
use [Art. 1939(2), Civil Code].
d. Return the thing upon the expiration of the
period stipulated or after the
accomplishment of the use for which it has
been constituted [Art. 1944, 1946, Civil
Code].
Exception: Bailee has right of retention for
damages when the bailor who, knowing the
flaws of the thing loaned, does not advise
the bailee of the same [Arts. 1951, 1944,
Civil Code].
e. Pay for the ordinary expenses for the use
and preservation of the thing loaned [Art.
1941, Civil Code].
f. Bear equally (with the bailor) the
extraordinary expenses arising on the
occasion of the actual use of the thing by the
bailee even though bailee acted without
fault [Art. 1949, Civil Code].
Exception: Contrary stipulation.
g. Solidarily liable when there are two or more
bailees to whom a thing is loaned in the
same contract [Art. 1945, Civil Code].
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Note: If, for the purpose of making use of the
thing loaned, the bailee incurs ordinary or
extraordinary expenses which are neither
for the use nor the preservation of the thing,
he is not entitled to reimbursement [Art.
1950, Civil Code].
4. Obligations of the Bailor
(DR-BP)
a. Demand the return of the thing only upon
the expiration of the term or after the
accomplishment of the use [Art. 1946, Civil
Code].
Exceptions:
1. When bailor has urgent need of the
thing, he may demand its return
(extinguish commodatum) or its
temporary use (suspend
commodatum) [Art. 1946, Civil Code].
2. Precarium [Art. 1947, Civil Code] or a
contractual relation where the bailor
may demand the property loaned at
will.
3. If bailee commits any acts of ingratitude
in Art. 765 [Art. 1948, Civil Code]:
• Bailee committed some offense
against the person, honor or
property of the bailor, or of his wife
or children under his parental
authority;
• Bailee imputes to bailor any criminal
offense, or any act involving moral
turpitude, even though he should
prove it, unless the crime or act has
been committed against the bailee
himself, his wife or children under
his authority; or
• Bailee unduly refuses bailor support
when bailee is legally or morally
bound to give support the bailor.
b. Refund the extraordinary expenses during
the contract for the preservation of the thing
loaned [Art. 1949, Civil Code].
Provided that: Bailee brings the same to
the knowledge of the bailor before incurring
them, except when they are so urgent that
the reply cannot be awaited without danger.
CREDIT TRANSACTIONS
c. Bear equally (with the bailee) the
extraordinary expenses arising on the
occasion of actual use of the thing by the
bailee [Art. 1949, Civil Code].
Exception: Contrary stipulation.
d. Pay damages to the bailee for hidden flaws
known to the bailor [Art. 1951, Civil Code].
Note: Bailor has no right of abandonment;
he cannot exempt himself from payment of
expenses or damages to the bailee by
abandoning the thing to the latter [Art. 1952,
Civil Code].
5. Liability for Deterioration
General Rule: The bailee is NOT liable for the
deterioration of the thing loaned when the
deterioration of the thing is due only to the use
thereof and without his fault [Art. 1943, Civil
Code].
Exception: The bailee is liable only when the
deterioration of the thing is due to his fault [Art.
1943, Civil Code].
6. Liability for Loss
General Rule: The bailee is NOT liable for loss
of the thing due to a fortuitous event [Art. 1174,
Civil Code].
Since the bailor retains ownership of the
property loaned, generally, it is the bailor who
bears the liability for loss of the property loaned
due to fortuitous events.
Exceptions: The bailee is liable for loss of the
thing, even if it is through a fortuitous event, if
the bailee: (DDS-KL)
a. Devoted the thing to any purpose different
from that for which it has been loaned;
b. Loaned thing has been Delivered with
appraisal of its value;
Exception: Unless there is a stipulation
exempting the bailee from responsibility in
case of a fortuitous event.
c. Saved his own thing, being able to save
either the thing borrowed or his own thing;
d. Kept the thing longer than the period
stipulated, or after the accomplishment of
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the use for which the commodatum has
been constituted;
e. Lent or leased the thing to a third person,
who is not a member of his household;
Exception: The members of the bailee’s
household may make use of the thing
loaned.
Exceptions to the exception:
1. If there is a stipulation to the contrary, or
2. The nature of the thing forbids such use
[Art. 1939(2), Civil Code].
7. Right of Retention
General Rule: The bailee has no right of
retention of the thing loaned on the ground that
the bailor owes him something, even though it
may be by reason of expenses [Art. 1944, Civil
Code].
Exception: The bailee has the right of
retention for damages arising from hidden
flaws when bailor, knowing the flaws of the
thing loaned, does not advise the bailee of the
same [Art. 1944, 1951, Civil Code].
Note that the thing is retained by way of legal
pledge.
8. Extinguishment
(DEA-PU)
a. Death of either the bailor or the bailee [Art.
1939, Civil Code]
b. Expiration of term or accomplishment of
purpose [Art. 1946, Civil Code]
c. Act/s of ingratitude has/have been
committed by the bailee, and the bailor
demands the return
d. Upon demand in case of Precarium
e. Bailor has Urgent need of the thing loaned,
and he demands the return (and not just
temporary use)
B. Mutuum
Mutuum – a contract where one of the parties
(creditor) delivers to another (debtor/borrower)
money or other consumable thing upon the
condition that the same amount of the same
kind and quality shall be paid [Art. 1953, Civil
Code].
CREDIT TRANSACTIONS
1. Obligations of the Borrower
(EVI)
a. Pay the creditor an Equal amount of the
same kind and quality [Art. 1953, Civil
Code].
b. Pay Value at the time of perfection of loan,
if impossible to deliver the same kind [Art.
1955, Civil Code].
c. Pay Interest, if stipulated in writing [Art.
1956, Civil Code].
Rights of the Borrower
a. Right of ownership; upon delivery/receipt of
the loan of money or any fungible thing, the
person acquires ownership of the
money/fungible thing [Art. 1953, Civil Code]
b. Right to not pay interest, unless stipulated
[Art. 1956, Civil Code]
1. If the debtor however pays interest when
there is no stipulation, the rules on
solutio indebiti, or natural obligations,
shall be applied [Art. 1960, Civil Code]
Obligations of the Creditor
Barred from placing stipulations under any
cloak or device that circumvent laws on usury
[Art. 1957, Civil Code].
Rights of the Creditor
a. Right to receive an equal amount of the
same kind and quality [Art. 1953, Civil Code]
b. Right to impose interest, once stipulated
[Art. 1959, Civil Code]
2. Interest
Interest – The compensation allowed by law or
fixed by the parties for the loan or forbearance
of money, goods or credits (conventional
interest), or the amount imposed by law or by
courts as penalty or indemnity for damages
(compensatory interest).
Requisites for Interest to be Chargeable
(EWL)
a. Must be Expressly stipulated [Art. 1956,
Civil Code].
Exceptions:
1. The debtor in delay is liable to pay legal
interest (6% per annum) as indemnity for
damages [Art. 2209, Civil Code]
2. Interest accruing from unpaid interest –
Interest demanded shall earn interest
from the time it is judicially demanded
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[Art. 2212, Civil Code] or where there is
an express stipulation [Art.1959, Civil
Code]
b. Agreement must be in Writing [Art.1956,
Civil Code]
c. Must be Lawful
Note: If the above-mentioned requisites are not
met, and the borrower:
a. Paid interest by mistake, the creditor is
obliged to return what was delivered [Arts.
1960 and 2154, Civil Code]
b. Voluntarily paid interest (i.e., with
knowledge that the requisites have not been
met), the creditor is authorized to retain
what was paid [Art. 1423, Civil Code]
3. Kinds of Interest
a. Conventional Interest
Simple interest – Paid for the principal at a
certain rate fixed or stipulated by the parties.
b. Interest on Interest
Compound Interest – Interest which is imposed
when interest due and unpaid is capitalized or
added to the principal [Art. 1959, Civil Code].
The accrued interest is added to the principal
sum and the whole (principal and accrued
interest) is treated as a new principal upon
which the interest is calculated for the next
period [De Leon].
General Rule: Compound interest is not
allowed [Art.1959, Civil Code].
Exceptions: Compound interest is allowed:
1. When there is an express written stipulation
to that effect [Art. 1956, Civil Code] or
2. Upon judicial demand [Art. 2212, Civil
Code].
c. Compensatory, Penalty or Indemnity
Interest
Also known as Legal Interest – That which the
law directs to be charged in the absence of any
agreement as to the rate between the parties,
or when there are actual and compensatory
damages imposed by the Court.
CREDIT TRANSACTIONS
Rules for the Award of Interest in the
Concept of Actual and Compensatory
Damages
Note: Jurisprudential basis is Lara's Gifts &
Decors, Inc. v. Midtown Industrial Sales, Inc.,
G.R. No. 225433 (2019)
1. When the obligation is breached, and it
consists in the payment of a sum of money,
i.e, a loan or forbearance of money, goods,
credits or judgments,
a. the interest due shall be that which is
stipulated by the parties in writing,
provided it is not excessive and
unconscionable.
b. In the absence of a stipulated
reckoning date, interest shall be
computed from default, i.e., from
extrajudicial or judicial demand in
accordance with Article 1169 of the
Civil Code, UNTIL FULL PAYMENT,
without compounding any interest
Exception: when compounded
interest is expressly stipulated by the
parties, by law or regulation.
c. Interest due on the principal amount
accruing as of judicial demand shall
SEPARATELY earn legal interest at
the prevailing rate prescribed by the
Bangko Sentral ng Pilipinas, from the
time of judicial demand until full
payment.
2. In the absence of stipulated interest, in a
loan or forbearance of money, goods,
credits or judgments
a. The rate of interest on the principal
amount shall be the prevailing legal
interest prescribed by the Bangko
Sentral ng Pilipinas, which shall be
computed from default, i.e., from
extrajudicial or judicial demand in
accordance with Article 1169 of the
Civil Code, UNTIL FULL PAYMENT,
without compounding any interest
unless compounded interest is
expressly stipulated by law or
regulation.
b. Interest due on the principal amount
accruing as of judicial demand shall
SEPARATELY earn legal interest at
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the prevailing rate prescribed by the
Bangko Sentral ng Pilipinas, from the
time of judicial demand UNTIL FULL
PAYMENT.
3. When the obligation, not constituting a loan
or forbearance of money, goods, credits or
judgments, is breached
a. An interest on the amount of damages
awarded may be imposed in the
discretion of the court at the prevailing
legal interest prescribed by the Bangko
Sentral ng Pilipinas, pursuant to
Articles 2210 and 2011 of the Civil
Code.
b. No interest shall be adjudged on
unliquidated claims or damages until
the demand can be established with
reasonable certainty.
c. Where the amount of the claim or
damages is established with
reasonable certainty, the prevailing
legal interest shall begin to run from the
time the claim is made extrajudicially or
judicially (Art. 1169, Civil Code) UNTIL
FULL PAYMENT.
d. When such certainty cannot be so
reasonably established at the time the
demand is made, the interest shall
begin to run only from the date of the
judgment of the trial court (at which
time the quantification of damages may
be deemed to have been reasonably
ascertained) UNTIL FULL PAYMENT.
e. The actual base for the computation of
the interest shall, in any case, be on the
principal amount finally adjudged,
without compounding any interest
unless compounded interest is
expressly stipulated by law or
regulation.
4. Usury
Unlawful or Usurious Interest – Paid or
stipulated to be paid beyond the maximum
fixed by law.
The Usury Law [Act No. 2566] – an act fixing
rates of interests upon loans and declaring the
effect of receiving or taking usurious rates and
for other purposes [Arevalo v. Dimayuga, G.R.
No. 26218 (1927)].
CREDIT TRANSACTIONS
(MR-IT)
a. A loan or forbearance of Money
b. An understanding between parties that the
loan shall and may be Returned
c. An unlawful Intent to take more than the
legal rate for the use of money or its
equivalent
d. The Taking or agreeing to take for the use
of the loan of something in excess of what
is allowed by law.
Note: A usurious loan transaction is not a
complete nullity but defective only with respect
to the agreed interest, i.e., as if no interest was
stipulated [Carpo v. Chua, G.R. Nos. 150773
and 153599 (2005)]. Hence, if the principal
obligation is the payment of a sum of money,
the debtor will be liable for the principal plus
legal interest, following Article 2209.
The Monetary Board of the Central Bank of the
Philippines (now the Bangko Sentral ng
Pilipinas) issued Circular No. 905, Series of
1982 which lifted the ceilings on interest rates
pursuant to the powers granted to it by the
Usury Law. Thus, usury is legally non-existent.
Interest can be charged based on agreement
of the parties pursuant to Art. 1306.
BUT although usury is legally inexistent, courts
will not hesitate to declare void “excessive,
iniquitous, unconscionable, exorbitant” interest
[Gomez-Somera citing Carpo v. Chua, G.R.
Nos. 150773 and 153599 (2005 ].
5. Finance Charges
Under the Truth in Lending Act
Section 3(3), Truth in Lending Act. "Finance
charge" includes interest, fees, service charges,
discounts, and such other charges incident to the
extension of credit as the Board may be regulation
prescribe.
Note: This law applies to all persons who
extend credit, who require as an incident to
extending credit, the payment of a finance
charge [Sec. 3(4), Truth in Lending Act].
“Credit” is defined in the TILA as “any loan,
mortgage, deed of trust, advance, or discount;
any conditional sales contract; any contract to
sell, or sale or contract of sale of property or
services, either for present or future delivery,
under which part or all of the price is payable
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subsequent to the making of such sale or
contract; any rental-purchase contract; any
contract or arrangement for the hire, bailment,
or leasing of property; any option, demand,
lien, pledge, or other claim against, or for the
delivery of, property or money; any purchase,
or other acquisition of, or any credit upon the
security of, any obligation of claim arising out
of any of the foregoing; and any transaction or
series of transactions having a similar purpose
or effect [Sec. 3(2), Truth in Lending Act].
Requirement for Disclosure
Section 4, Truth in Lending Act. Any creditor shall
furnish to each person to whom credit is extended,
prior to the consummation of the transaction, a clear
statement in writing setting forth, to the extent
applicable and in accordance with rules and
regulations prescribed by the Board, the following
information:
1. the cash price or delivered price of the property
or service to be acquired;
2. the amounts, if any, to be credited as down
payment and/or trade-in;
3. the difference between the amounts set forth
under clauses (1) and (2);
4. the charges, individually itemized, which are
paid or to be paid by such person in connection
with the transaction but which are not incident
to the extension of credit;
5. the total amount to be financed;
6. the finance charge expressed in terms of
pesos and centavos; and
7. the percentage that the finance bears to the
total amount to be financed expressed as a
simple annual rate on the outstanding unpaid
balance of the obligation.
Under Section 4(6), "finance charge"
represents the amount to be paid by the debtor
incident to the extension of credit such as
interest or discounts, collection fees, credit
investigation fees, attorney’s fees, and other
service charges. The total finance charge
represents the difference between (1) the
aggregate consideration (down payment plus
installments) on the part of the debtor, and (2)
the sum of the cash price and non-finance
charges [Sps. Silos v. Philippine National
Bank, G.R. No. 181045 (2014)].
CREDIT TRANSACTIONS
Should the requirement under the TILA be not
complied with, the penalties under Sec. 6 will
apply:
Section 6, Truth in Lending Act.
a. Any creditor who in connection with any credit
transaction fails to disclose to any person any
information in violation of this Act or any
regulation issued thereunder shall be liable to
such person in the amount of P100 or in an
amount equal to twice the finance charged
required by such creditor in connection with
such transaction, whichever is the greater,
except that such liability shall not exceed
P2,000 on any credit transaction. Action to
recover such penalty may be brought by such
person within one year from the date of the
occurrence of the violation, in any court of
competent jurisdiction. In any action under
this subsection in which any person is entitled
to a recovery, the creditor shall be liable for
reasonable attorney's fees and court costs as
determined by the court.
b. Except as specified in subsection (a) of this
section, nothing contained in this Act or any
regulation contained in this Act or any
regulation thereunder shall affect the validity
or enforceability of any contract or
transactions.
c. Any person who willfully violates any provision
of this Act or any regulation issued thereunder
shall be fined by not less than P1,00 or more
than P5,000 or imprisonment for not less than
6 months, nor more than one year or both.
d. No punishment or penalty provided by this Act
shall apply to the Philippine Government or
any agency or any political subdivision
thereof.
e. A final judgment hereafter rendered in any
criminal proceeding under this Act to the effect
that a defendant has willfully violated this Act
shall be prima facie evidence against such
defendant in an action or proceeding brought
by any other party against such defendant
under this Act as to all matters respecting
which said judgment would be an estoppel as
between the parties thereto.
Under the Philippine Credit Card Industry
Regulation Law
Section 5(k), Philippine Credit Card Industry
Regulation Law. Finance charges refer to the
interest charged to the cardholder on all credit card
transactions in accordance with the terms and
conditions specified in the agreement on the use of
the credit card;
Note: This law governs all credit card issuers,
acquirers and all credit card transactions.
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In Relation to Credit Limit
Section 5(i), Philippine Credit Card Industry
Regulation Law. Credit card limit refers to the
maximum total amount for purchases, cash
advances, balance transfers, and finance charges,
service fees, penalties, and other charges which can
be charged to the credit card;
Thus, in computing for the credit limit, the
finance charge is included.
Requirement for Disclosure
Section 11, Philippine Credit Card Industry
Regulation Law. Information to be Disclosed. - A
credit card issuer shall disclose to all credit
cardholders and potential credit cardholders the
following information:
a. Finance charges for unpaid amounts after
payment due date
When Finance Charge is Imposed
Section 10, Philippine Credit Card Industry
Regulation Law. Imposition of Finance Charges. -
Finance charges and other fees arising from
nonpayment in full or on time of the outstanding
balance shall be based on the unpaid amount of the
outstanding balance.
How Finance Charge is Imposed
Credit card issuers shall only charge interest or
finance charges arising from the non-payment
in full or on time of the outstanding balance
based on the unpaid amount of the outstanding
balance as of statement cut-off date, but
excluding:
a. the current billing cycle's purchase
transactions reckoned from the previous
cycle's statement cut-off date; and
b. deferred payments under zero-interest
installment arrangements which are not yet
due
Interest or finance charges shall be imposed on
the unpaid outstanding balance as of cut-off
date each time a cardholder pays less than, or
does not pay on time, the outstanding balance
stated in his/her statement of account. Such
interest or finance charge shall continue to be
imposed until the outstanding balance and
applicable interest are fully paid.
For credit card cash advances, a cardholder
may be charged cash advance fees and
finance charges on the date that the cash is
CREDIT TRANSACTIONS CIVIL LAW
obtained, subject to terms and conditions
under the credit card agreement or contract.

For a loan where the principal is payable in

installments, interest per installment period
shall be calculated based on the outstanding
balance of the loan at the beginning of each
installment period.

All credit card-related documents shall show

repayment schedules in a manner consistent
with this provision. Marketing and advertising
materials shall likewise be consistent with this
provision.

Note: Basis is BSP Circular No. 1003, Series of

2018, “Guidelines on the Establishment and
Operations of Credit Card lssuers to Implement
Republic Act No. 10870 or the Philippine Credit
Card Industry Regulations Law.”

C. Precarium

Article 1947, Civil Code. The bailor may demand

the thing at will, and the contractual relation is called
a precarium, in the following cases:
1. If neither the duration of the contract nor
the use to which the thing loaned should be
devoted, has been stipulated; or
2. If the use of the thing is merely tolerated by
the owner.

Precarium is a kind of commodatum where the

bailor may demand the thing at will. It has been
defined as a “contract by which the owner of a
thing, at the request of another person, gives
the latter the thing for use as long as the owner
shall please” [De Leon].

In either of the two cases mentioned in Article

1947, it is presumed that use of the thing has
been granted subject to revocation by the
bailor at any time, whether or not the use for
which the thing has been loaned has been
accomplished. Hence, the name precarium [De
Leon].

Note: The use of the term “owner” in Art. 1947

(2) is inaccurate. The bailor need not be the
owner of the thing loaned [De Leon].

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II. DEPOSIT
A deposit is constituted from the moment a
person receives a thing belonging to another,
with the obligation of safely keeping it and of
returning the same [Art. 1962, Civil Code].
Object of Deposit
Art. 1966 provides that only movable things
may be the object of a deposit. However, Art.
2006 provides that movable as well as
immovable property may be the object of
sequestration or judicial deposit.
Principal Purpose
Safekeeping of the thing; if safekeeping is NOT
the principal purpose, or is only an accessory
obligation, there is NO DEPOSIT but some
other contract [Art. 1962, Civil Code].
Consideration
A deposit is generally gratuitous, except:
1. If there is an agreement to the contrary
2. When the depositary is engaged in the
business of storing goods [Art. 1965, Civil
Code]
Parties
1. Depositor: the person who delivers, or
formally transfers, gives, or yields
possession or control of the movable
property for purposes of safekeeping
2. Depositary: the person who receives it
Kinds of Deposit
1. Extrajudicial
a. Voluntary – obligation arises as a
consequence of contract;
b. Necessary – obligation arises as a
consequence of law or quasi-contract
2. Judicial – obligation arises as a
consequence of a law allowing the issuance
of a judicial order constituting a deposit
A. Voluntary Deposit
Voluntary deposit – The deposit itself is a real
contract, as it is not perfected until the delivery
of the thing [Art. 1968, Civil Code]. A contract
to deposit, or an agreement to constitute a
deposit, is consensual and binding.
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A deposit may be made by two or more
persons (who believe that they are entitled to
the thing deposited with a third person). The
third person is to deliver the thing to the one to
whom it belongs [Art. 1968, Civil Code].
How Entered Into: Orally or in writing [Art.
1969, Civil Code].
How Perfected: The deposit is perfected upon
delivery, which is made by the will of the
depositor [Arts. 1963 and 1968, Civil Code].
1. Extinguishment
Loss or destruction of thing deposited, or
a. In case of a gratuitous deposit, upon the
death of either the depositor or depositary
[Art. 1995, Civil Code]. The depositary is not
obliged to continue with the contract of
deposit.
b. By other modes provided in the Civil Code,
e.g. novation, merger, etc. [Art.1231, Civil
Code].
2. Obligations of a Depositary
(KRB)
a. Keep the thing safely
b. Return the thing to the depositor, heirs,
successors or person designated in the
contract, when required [Art. 1972, Civil
Code], together with all its products,
accessories and accessions [Art. 1983, Civil
Code] at the place designated when deposit
was made. Otherwise, where the thing may
be [Art. 1987, Civil Code].
Exception to return on demand: there is no
obligation to return on demand when (a) the
thing is judicially attached while in the
depositary’s possession, or (b) when
depositary is notified of the opposition of a
third person [Art. 1988, Civil Code]
Note: The depositary must return the thing
closed and sealed if it is delivered in that
condition [Art. 1981, Civil Code]
c. Bear the expenses for preservation of the
thing deposited if the deposit is onerous
[Art. 1992, Civil Code]
Depositary NOT Liable for Loss
General Rule: The depositary is not liable in
the event of loss. The required degree of care
CREDIT TRANSACTIONS
however, is greater if the deposit is for
compensation.
Exceptions: (NPC-FUTR)
a. Loss is through his fault or Negligence [Art.
1170, Civil Code] or the negligence of his
employee [Art. 1973, Civil Code], even if the
thing was insured [Art. 2207, Civil Code];
b. Loss while in his Possession, ordinarily
raises presumption of fault on his part [Art.
1265, Civil Code]
c. Loss arose from the Character of the thing
deposited, and the depositary was notified
of, or was aware of such character at the
time of the constitution of the deposit [Art.
1993, Civil Code]
d. Loss is through a Fortuitous event, and if
1. It is stipulated that depositary will be
liable;
2. Depositary uses the thing without
Depositor’s permission;
3. Depositary delays its return; or
4. Depositary allows others to use it [Art.
1979, Civil Code]
e. Loss when depositary Uses the thing
Exception: Use with permission or for
preservation
f. Loss when depositary deposits the thing
with a Third person
Exception: if deposit with a third person is
allowed
Exception to the Exception: if such third
person is manifestly careless or unfit [Art.
1973, Civil Code];
g. Loss occurs and the depositary Receives
money/replacement, he must deliver such
to the depositor [Art. 1990, Civil Code]
3. Authority of Depositary
(CC-UR)
a. Depositary may Change way of deposit if he
may reasonably presume that the depositor
would consent if he knew the situation. He
is to notify the depositor thereof and wait for
the latter’s decision, unless delay would
cause danger [Art. 1974, Civil Code].
b. Depositary is required to Collect on interest
earned by certificates, bonds, securities and
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instruments when it becomes due [Art 1975,
Civil Code].
c. Depositary cannot make Use of the thing
deposited unless with depositor’s consent
or its preservation requires its use [Art 1977,
Civil Code].
d. Depositary may Return the thing to the
depositor even before the time designated,
if there is justifiable reason not to keep it.
Exception: when the deposit is for valuable
consideration [Art. 1989, Civil Code]
4. Obligations of a Depositor
a. Depositor is obliged to reimburse the
depositary for expenses incurred for
preservation in a gratuitous deposit
[Art.1992, Civil Code].
b. Depositor is obliged to pay losses incurred
due to the character of thing deposited [Art.
1993, Civil Code].
Exceptions:
1. Depositor was not aware nor expected to
know of the dangerous character of the
thing;
2. Depositor notified the depositary of such
dangerous character;
3. Depositary was aware of the danger without
advice from the depositor.
5. Authority of Depositor
a. When there are two or more depositors and
they are not solidary and the thing admits of
division, one cannot demand more than his
share [Art. 1985, Civil Code].
b. If he should lose his capacity to contract
after having made the deposit, the thing
cannot be returned except to persons who
may have administration of his property and
rights [Art. 1986, Civil Code].
6. Right of Retention
The depositary may retain the thing until the full
payment of what may be due him by reason of
the deposit [Art. 1994, Civil Code].
Note that the thing is retained by way of legal
pledge [Gomez-Somera citing Ortiz v.
Kayanan, G.R. No. 32974 (1979)].
CREDIT TRANSACTIONS
B. Necessary Deposit
Made in compliance with a legal obligation, or
on the occasion of any calamity, or by travelers
with common carriers [Arts.1734-1735, Civil
Code], or by travelers in hotels and inns
[Arts.1996-2004, Civil Code].
1. Kinds of Necessary Deposit
(LCCH)
a. Deposit made in compliance with a Legal
obligation, in which case it is governed by
the law establishing it, and in case of
deficiency, the rules on voluntary deposit,
e.g., Arts. 538, 586 and 2104
b. Deposit taking place on the occasion of any
Calamity [Art. 2168, Civil Code]
Note: There must be a causal relation
between the calamity and the constitution of
the deposit. In this case the deposit is
governed by the rules on voluntary deposit.
c. Deposit made by passengers with Common
carriers [Art.1754, Civil Code].
d. Deposit made by travelers in Hotels or inns
[Art. 1998, Civil Code].
2. Deposit by Travelers in Hotels and
Inns
Before keepers of hotels or inns may be held
responsible as depositaries with regard to the
effects of their guests, the following must
concur:
a. Keepers or their employees have previously
been informed about the effects brought by
the guests; and
b. The latter have taken the precautions
prescribed regarding their safekeeping [Art.
1998, Civil Code].
3. Extent of Liability Under Art. 1998,
Civil Code
a. Those in hotel rooms which come under the
term “baggage” or articles such as clothing
as are ordinarily used by travelers
b. Those lost or damaged in hotel annexes
such as vehicles in the hotel’s garage.
4. When Hotel-Keeper Liable
Regardless of the amount of care exercised,
the hotel-keeper is liable when:
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a. The loss or injury to personal property is
caused by his servants or employees as
well as by strangers [Art. 2000, Civil Code].
b. The loss is caused by the act of a thief or
robber without the use of arms and without
the use of irresistible force [Art. 2001, Civil
Code].
5. When Hotel-Keeper not Liable
a. The loss or injury is caused by force
majeure, like flood, fire, [Art. 2000, Civil
Code], and theft or robbery by a stranger—
not the hotel-keeper’s servant or
employee—with the use of arms or
irresistible force [Art. 2001, Civil Code]
Exception: Hotel-keeper is guilty of fault or
negligence in failing to provide against the
loss or injury from his cause [Arts.1170 and
1174, Civil Code]
b. The loss is due to the acts of the guests, his
family, servants, visitors [Art. 2002, Civil
Code]
c. The loss arises from the character of the
things brought into the hotel [Art. 2002, Civil
Code]
Rule in the Occurrence of Theft or
Robbery
The act of a thief or robber, who has entered
the hotel is not deemed force majeure, unless
it is done with the use of arms or through
irresistible force [Art. 2001, Civil Code].
Exemption or Diminution of Liability
The hotel-keeper cannot free himself from
responsibility by posting notices to the effect
that he is not liable for the articles brought by
the guest [Art. 2003, Civil Code]. This is due to
public policy. The hotel business is imbued with
public interest [YHT Realty Corp. v. CA, G.R.
No. 126780 (2005)].
Any stipulation between the hotel-keeper and
the guest whereby the responsibility of the
former as set forth in articles 1998 to 2001 is
suppressed or diminished shall be void [Art.
2003, Civil Code].
6. Hotel-Keeper’s Right to Retention
The hotel-keeper has a right to retain the things
brought into the hotel by the guest, as a
security for credits on account of:
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a. lodging,
b. supplies usually furnished to hotel guests
[Art. 2004, Civil Code].

The right of retention recognized in this article

is in the nature of a pledge created by operation
of law [Gomez-Somera citing Ortiz v. Kayanan,
G.R. No. 32974 (1979)].

C. Judicial Deposit or
Sequestration
Takes place when an attachment or seizure of
property in litigation is ordered [Arts. 2005-
2009, Civil Code]. It is the only type of deposit
that may involve immovable property.

Examples of Judicial Deposit [De Leon]

1. When properties are attached by the sheriff
upon the filing of a complaint (Rule 57,
Rules of Court)
2. When a receiver (a disinterested party) is
appointed by the court to administer and
preserve the property in litigation (Rule 59,
Rules of Court)
3. When personal property is seized by the
sheriff in suits of replevin or manual delivery
of personal property (Rule 60, Rules of
Court).

1. Nature and Purpose

It is auxiliary to a case pending in court. The
purpose is to maintain the status quo during
pendency of the litigation or to insure the right
of the parties to the property in case of a
favorable judgment.

2. Depositary of Sequestered Property

A person is appointed by the court [Art. 2007,
Civil Code] with the obligations—
a. To take care of the property with the
diligence of a good father of the family [Art.
2008, Civil Code].
b. To continue in his responsibility until the
controversy which give rise thereto is ended
unless the court so orders [Art. 2007, Civil
Code].

3. Applicable Law
Judicial deposit law is remedial or procedural.
The Rules of Court shall govern matters not
provided for in the Civil Code [Art. 2009, Civil
Code].

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III. GUARANTY AND
SURETYSHIP
Guaranty – A contract whereby a person
(guarantor) binds himself to the creditor to fulfill
the obligation of the principal debtor in case the
latter should fail to do so [Art. 2047, Civil Code].
Suretyship – A relation which exists where
one person (surety) binds himself solidarily
with the principal debtor, such that the former
undertakes a direct and primary obligation or
other duty to a third person (creditor), who is
entitled to but one performance, and as
between the two who are bound, the latter
rather than the former should perform.
While a surety undertakes to pay if the principal
does not pay, the guarantor only binds himself
to pay if the principal is unable to pay [See
benefit of excussion, Art. 2058, Civil Code].
A. Nature and Extent of Guaranty
Article 2047, Civil Code. By a guaranty a person,
called the guarantor, binds himself to the creditor to
fulfill the obligation of the principal debtor in case the
latter should fail to do so.
If a person binds himself solidarily with the principal
debtor, the provisions of Section 4, Chapter 3, Title
1 of this Book shall be observed. In such case the
contract is called a suretyship.
General Rule: Guaranty is gratuitous
Exception: When there is a stipulation to the
contrary [Art. 2048, Civil Code]
1. Obligation Secured by Guaranty
a. The guaranty must be founded on a valid
principal obligation [Art. 2052 (1), Civil
Code]
b. A guaranty may secure the performance of
a voidable, unenforceable, and natural
obligation [Art. 2052(2), Civil Code]. This
implies that a guaranty may secure the
performance of a:
1. Voidable contract – such contract is
binding, unless it is annulled by a proper
court action.
2. Unenforceable contract – because
such contract is not void.
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3. Natural obligation – the creditor may
proceed against the guarantor although
he has no right of action against the
principal debtor for the reason that the
latter’s obligation is not civilly
enforceable. When the debtor himself
offers a guaranty for his natural
obligation, he impliedly recognizes his
liability, thereby transforming the
obligation from a natural into a civil one.
c. A guaranty may secure a future debt [Art.
2053, Civil Code]; Continuing Guaranty
1. Not limited to a single transaction but
which contemplates a future course of
dealings, covering a series of
transactions generally for an
indefinite time or until revoked.
2. It is prospective in its operation and is
generally intended to provide security
with respect to future transactions.
3. Future debts, even if the amount is
not yet known, may be guaranteed
but there can be no claim against the
guarantor until the amount of the debt
is ascertained or fixed and
demandable.
2. Parties to a Guaranty
Parties to a Guaranty
a. Creditor
b. Debtor of the Principal Obligation
c. Guarantor [Somera]
Qualifications of a Guarantor [Art. 2056,
Civil Code]
a. He possesses integrity;
b. He has capacity to bind himself;
c. He has sufficient property to answer for the
obligation which he guarantees.
General Rule: Creditor has the right to
demand another guarantor with the
qualifications in Art. 2056 if the previous
guarantor has been convicted in first instance
of a crime involving dishonesty or has become
insolvent [Art. 2057, Civil Code].
Exception: Creditor has no right to demand a
replacement guarantor if he himself required
and stipulated that the specified person should
be the guarantor.
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3. Excussion
The guarantor cannot be compelled to pay the
creditor unless the latter has [Art. 2058, Civil
Code]:
a. Exhausted all of the property of the debtor;
and
b. Resorted to all the legal remedies against
the debtor.
To avail of the benefit of excussion, the
guarantor must [Art. 2060, Civil Code]:
a. Set it up against the creditor upon demand
for payment; and
b. Point out to the creditor available property of
the debtor within PH territory sufficient to
cover the amount of the debt.
General Rule: The guarantor has the right to
benefit from excussion/exhaustion.
Exception: The excussion shall not take place:
(ESIAP)
a. If the guarantor has Expressly renounced it;
b. If he has bound himself Solidarily with the
debtor;
c. In case of Insolvency of the debtor;
d. When he has Absconded, or cannot be
sued within the Philippines unless he has
left a manager or a representative.
e. If it may be Presumed that an execution on
the property of the principal debtor would
not result in the satisfaction of the obligation
[Art. 2059, Civil Code].
Other Exceptions
a. If he does not comply with Art. 2060;
b. If he is a judicial bondsman and sub- surety
[Art. 2084, Civil Code];
c. Where a pledge or mortgage has been
given by him as a special security;
[Southern Motors, Inc. v. Barbosa, G.R. No.
L-9306 (1956)]
d. If he fails to interpose it as a defense before
judgment is rendered against him.
4. Right to Protection
Art. 2071 provides a protective remedy in favor
of the guarantor, which is available BEFORE
he has paid, but after he is made liable for the
debt, and when any of the ff. grounds is
applicable:
a. When he is sued for the payment;
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b. In case of insolvency of the principal debtor
or if he is in imminent danger of becoming
insolvent;
c. When the debtor has bound himself to
relieve him from the guaranty within a
specified period, and this period has
expired;
d. When the period for payment has expired;
e. After the lapse of ten years, when the
principal obligation has no fixed period for
its maturity, unless it be of such nature that
it cannot be extinguished except within a
period longer than 10 years;
f. If there are reasonable grounds to fear that
the principal debtor intends to abscond.
To protect his interest, a guarantor can
proceed against the principal debtor by:
a. Obtaining release from the guaranty; or
b. Demanding a security that shall protect him
from any proceedings by the creditor and
from the danger of insolvency of the debtor
[Art. 2071, Civil Code]
5. Right to Indemnification
The guarantor who pays for a debtor must be
indemnified by the latter.
The indemnity comprises:
a. The total amount of the debt
b. The legal interests thereon from the time the
payment was made known to the debtor,
even though it did not earn interest for the
creditor
c. The expenses incurred by the guarantor
after having notified the debtor that payment
had been demanded of him
d. Damages if they are due [Art. 2066, Civil
Code]
6. Right to Subrogation
The guarantor who pays is subrogated by
virtue thereof to all the rights which the creditor
had against the debtor.
If the guarantor has compromised with the
creditor, he cannot demand of the debtor more
than what he has really paid [Art. 2067, Civil
Code].
7. Rights of Co-Guarantors
a. Right of excussion against the principal
guarantor and the principal debtor [Art.
2064, Civil Code]
CREDIT TRANSACTIONS
b. Benefit of division [Art. 2065, Civil Code].
However, the benefit of division will cease if
1. Solidary liability has been stipulated [Art.
2065, Civil Code]; or
2. If any of the exceptions to the benefit of
excussion are present [Somera, Art.
2059, Civil Code]
c. Right to reimbursement, i.e. to demand
payment from the other co-guarantors their
proportional share owed to him/her. This is
available to the co-guarantor who paid the
debt [Art. 2073, par. 1, Civil Code]
d. Right of an insolvent guarantor to have his
share bore by the others, including the
payor, in the same proportion [Art. 2073,
par. 2, Civil Code]
e. Right to set-up defenses against the paying
co-guarantor those available to the principal
debtor against the creditor
1. Exception: Defenses personal to the
debtor are not available to the guarantor,
hence not available as well to the co–
guarantor [Art. 2081, Civil Code]
f. Right to Benefit from the release of one
guarantor [Art. 2078, Civil Code]
Requisites for the Applicability of Art.
2073, Civil Code
a. There are two or more guarantors of the
same debtor for the same debt;
b. Payment has been made by one guarantor;
c. The payment was made:
1. Because of the insolvency of the debtor,
or
2. By judicial demand
d. The paying guarantor seeks to be
indemnified only to the extent of his
proportionate share in the total
obligation.
For purposes of proportionate reimbursement,
the other guarantors may interpose such
defenses against the paying guarantor as are
available to the debtor against the creditor,
except those that are personal to the debtor
[Art. 2074, Civil Code].
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B. Nature and Extent of
Suretyship
1. Concept
Article 2047, Civil Code. By a guaranty a person,
called the guarantor, binds himself to the creditor to
fulfill the obligation of the principal debtor in case the
latter should fail to do so.
If a person binds himself solidarily with the principal
debtor, the provisions of Section 4, Chapter 3, Title
1 of this Book shall be observed. In such case the
contract is called a suretyship.
Suretyship
A relation which exists where one person
(surety) binds himself solidarily with the
principal debtor, such that the former
undertakes a direct and primary obligation or
other duty to a third person (creditor), who is
entitled to but one performance, and as
between the two who are bound, the latter
rather than the former should perform.
A suretyship is also an agreement whereby a
surety guarantees the performance or
undertakes to answer, under specified terms
and conditions, for the debt, default or
miscarriage of the principal or obligor, such as
failure to perform, or breach of trust,
negligence and the like, in favor of a third party.
It shall be deemed as insurance contract if the
surety’s main business is that of suretyship,
and not where the contract is merely incidental
to any other legitimate business or activity of
the surety.
2. Form of Surety
The contract of a surety is evidenced by a
document called surety bond which is
essentially a promise to guarantee the
obligation of the obligor. In turn, the obligor
executes an indemnity agreement in favor of
the insurer [De Leon].
It is an accessory contract unlike a contract of
insurance which is the principal contract itself.
A suretyship is covered by the Statute of
Frauds since it constitutes a special promise to
answer for the debt, default, or miscarriage of
another [Art. 1403, Civil Code].
CREDIT TRANSACTIONS CIVIL LAW
Therefore, a suretyship is unenforceable Comprehensive or Continuing Surety
unless: Art. 2053 applies to suretyships as well, such
a. The suretyship or some note or that a surety may also be given as security for
memorandum thereof, is in writing; and future debts.
b. The suretyship is subscribed by the party or
by his agent [Art. 1403, Civil Code]. It contemplates a prospective or future course
of dealing, covering a series of transactions
3. Obligations Secured within the stipulations of the contract, until the
A suretyship is valid despite the absence of any expiration or termination of the suretyship.
direct consideration received by the surety,
either from the principal debtor or from the 4. Surety Distinguished from Standby
creditor. Letter of Credit
The consideration necessary to support a Surety Standby L/C
surety’s obligation need not pass directly to the
Upon debtor’s Upon default, the
surety. A consideration moving the principal
default, the creditor creditor-beneficiary
debtor alone is sufficient [Garcia v. CA, G.R.
expects that the expects that it will
No. 80201 (1990)].
surety will perform promptly receive
cash before any
Strictissimi Juris Rule
litigation
The obligation of the surety cannot be
extended by implication beyond the terms of There is no duty to There is a duty to
the contract [La Insular v. Go-Tauco, G.R. No. indemnify the pay the creditor-
L-13307 (1919)]. creditor until the beneficiary upon
creditor establishes presentation of the
The rule will apply only after it has been the fact of the required documents
definitely ascertained that the contract is one of debtor’s non-
suretyship or guaranty. It cannot be used as an performance No need to prove
aid in determining whether a party’s non-performance in
undertaking is that of a surety or guarantor [De litigation.
Leon citing Palmares v. CA, G.R. No. 126490
(1998)].
5. Surety Distinguished from
This rule is applicable only to an Guaranty
accommodation surety. An accommodation
Surety Guaranty
surety acts without motive of pecuniary gain.
Therefore, the accommodation surety should An accessory A collateral
be protected against unjust pecuniary promise by which a undertaking to pay
impoverishment by imposing on the principal, person binds himself the debt of another in
duties akin to those of a fiduciary [De Leon for another already case the latter is
citing Pacific Tobacco Corp. v. Lorenzana, bound, and agrees unable to pay the
G.R. No. 8086 (1957)]. with the creditor to debt
satisfy the obligation
This rule is not applicable to compensated if the debtor does not
sureties. The rule of strictissimi juris was meant
to secure gratuitous obligations, which is not
present in compensated sureties. Thus, in
compensated sureties, if there is any ambiguity
in the surety bond, it should be interpreted
against the surety company that prepared it
[De Leon citing Pao Chuan Wei v. Reposito,
G.R. No. 10292 (1958)].

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A surety is usually The contract of Joint and Solidary
bound with his guaranty is the Surety
Obligations
principal by the same guarantor's own
instrument, executed separate Surety has the right Joint and solidary
at the same time, undertaking, in which to indemnification debtor has only a
and on the same the principal does not and subrogation as right to
consideration. He is join. It is usually against the principal reimbursement as
an original promisor entered into before debtor [Art. 2066- against his co-
and debtor from the or after that of the 2067, Civil Code] debtors [Art. 1217,
beginning, and is principal, and is often Civil Code]
held, ordinarily, to supported on a
know every default of separate Accessory, ancillary, Not dependent on,
his principal. consideration from and collateral or not an incident to
that supporting the obligation a principal obligation
contract of the
principal. The original
contract of his C. Effect of Guaranty
principal is not his
contract, and he is 1. The Guarantor has the Right to
not bound to take Benefit from Excussion/Exhaustion
notice of its non- [Art. 2058, Civil Code]
performance
A surety will not be A guarantor is often
2. The Creditor has the Right to
discharged, either by discharged by the Secure a Judgment Against the
the mere indulgence mere indulgence of Guarantor Prior to the Excussion
of the creditor to the the creditor to the
principal, or by want principal, and is General Rule: An ordinary personal guarantor
of notice of the usually not liable (NOT a pledgor/mortgagor), may demand
default of the unless notified of the exhaustion of all the property of the debtor
principal, no matter default of the before he can be compelled to pay.
how much he may principal
be injured thereby Exception: The creditor may, prior thereto,
secure a judgment against the guarantor, who
A surety is the A guarantor is the shall be entitled, however, to a deferment of the
insurer of the debt, insurer of the execution of said judgment against him, until
and he obligates solvency of the after the properties of the principal debtor shall
himself to pay if the debtor and thus have been exhausted, to satisfy the latter’s
principal does not binds himself to pay obligation [Tupaz v. CA, G.R. No. 145578
pay if the principal is (2005)].
unable to pay
[Zobel, Inc. v. CA, G.R. No. 113931 (1998)] 3. The Creditor has the Duty to Make
Prior Demand for Payment from the
6. Surety Distinguished from Joint and Guarantor [Art. 2060, Civil Code]
Solidary Obligations
The demand is to be made only after judgment
Nature of Liability on the debt.
Although contractual (limited by the terms of
the contract) and accessory (arises only if 4. The Guarantor has the Duty to Set
principal debtor is held liable), a surety’s Up the Benefit of Excussion [Art.
liability is direct, primary, and absolute. 2060, Civil Code]

As soon as he is required to pay, the guarantor

must also point out to the creditor available
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property (not in litigation or encumbered) of the
debtor within the Philippines.
5. The Creditor has the Duty to Resort
to All Legal Remedies [Arts. 2058
and 2061, Civil Code]
After the guarantor has fulfilled the conditions
required for making use of the benefit of
excussion, it becomes the duty of the creditor
to:
a. Exhaust all the property of the debtor
pointed out by the guarantor;
b. If he fails to do so, he shall suffer the loss
for the insolvency of the debtor, but only to
the extent of the value of the said property
6. The Creditor has the Duty to Notify
the Guarantor in the Action Against
the Debtor [Art. 2062, Civil Code]
Notice to the guarantor is mandatory in the
action against the principal debtor. The
guarantor, however, is not duty bound to
appear in the case, and his non-appearance
shall not constitute default, with its
consequential effects.
Rationale: To give the guarantor the
opportunity to allege and substantiate
whatever defenses he may have against the
principal obligation, and chances to set up such
defenses as are afforded him by law.
7. A Compromise Shall Not Prejudice
a Person Not Party to It [Art. 2063,
Civil Code]
A compromise between creditor and principal
debtor benefits the guarantor but does not
prejudice him.
A compromise between guarantor and the
creditor benefits but does not prejudice the
principal debtor.
8. Effects of Guaranty between the
Debtor and the Guarantor
a. The guarantor has the duty to notify the
debtor before paying the creditor [Art. 2068;
see also Arts. 1236 and 1237, Civil Code]
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Should payment be made without
notification or against the debtor’s will, and
supposing the debtor has already made a
prior payment, the debtor would be justified
in setting up the defense that the obligation
has already been extinguished by the time
the guarantor made the payment. The
guarantor will then lose the right of
reimbursement and consequently the right
of subrogation.
b. The guarantor cannot demand
reimbursement for payment made by him
before the obligation has become due [Art.
2069, Civil Code]
General Rule: Since a contract of guaranty is
only subsidiary, the guarantor cannot be liable
for the obligation before the period on which the
debtor’s liability will accrue. Any payment
made by the guarantor before the obligation is
due cannot be indemnified by the debtor. The
guarantor can only demand reimbursement
upon expiration of the period.
Exception: Prior consent or subsequent
ratification by the debtor.
The guarantor may proceed against the debtor
even before payment has been made [Art.
2071, Civil Code].
D. Extinguishment of Guaranty
1. General Rule
The obligation of the guarantor is extinguished
at the same time as that of the debtor and for
the same causes as all other obligations [Art.
2076, Civil Code].
2. Specific Instances that Extinguish
the Guaranty
a. Creditor Voluntary Accepts the
Immoveable for Payment
The guarantor is released if the creditor
voluntarily accepts immoveable or other
property in payment of the debt, even if he
should afterwards lose the same through
eviction [Art. 2077, Civil Code].
CREDIT TRANSACTIONS
b. When an Extension is Granted to the
Debtor without the Consent of
Guarantor
An extension granted to the debtor by the
creditor without the consent of the guarantor
extinguishes the guaranty [Art. 2079, Civil
Code].
CIVIL LAW
pledge or mortgage sufficient to cover the
obligation shall be admitted in lieu thereof.
Bondsman Not Entitled to Excussion [Art.
2084, Civil Code]
A judicial bondsman and the sub-surety are not
entitled to the benefit of excussion.

However, the mere failure on the part of the
creditor to demand payment after the debt has
become due does not, of itself, constitute any
extension of time.
c. When Subrogation is Not Feasible
The guarantors, even though they may be
solidary, are released from their obligation,
whenever by some act of the creditor they
cannot be subrogated to the rights, mortgages
and preference of the latter [Art. 2080, Civil
Code].
E. Legal and Judicial Bonds
Article 2051, Civil Code. A guaranty may be
conventional, legal, or judicial, or gratuitous or by
onerous title.
Reason: They are not mere guarantors, but
sureties whose liability is primary and solidary.
Effect of Negligence of Creditor
Mere negligence on the part of the creditor in
collecting from the debtor will not relieve the
surety from liability.
IV. QUASI-CONTRACTS
Note: Please refer to the Obligations and
Contracts part of the reviewer for the
discussion on quasi-contracts (i.e. negotiorum
gestio, solutio indebiti, and other quasi-
contracts).

It may be constituted, not only in favor of the principal

debtor, but also in favor of the other guarantor, with
the latter’s consent, or without his knowledge, or
even over his objection.

Bond
An undertaking that is sufficiently secured, and
not cash or currency.

Bondsman
A surety offered in virtue of a provision of law
or a judicial order.

Qualifications of Personal Bondsman

[Art. 2082 in relation to Art. 2056, Civil
Code]
1. He possesses integrity;
2. He has capacity to bind himself;
3. He has sufficient property to answer for the
obligation which he guarantees.

Pledge or Mortgage in Lieu of Bond [Art.

2083, Civil Code]
Guaranty or suretyship is a personal security.
Pledge or mortgage is a property or real
security. If the person required to give a legal
or judicial bond should not be able to do so, a
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CIVIL LAW
TORTS AND DAMAGES CIVIL LAW

I. TORTS relation. obligation. contractual

obligation.
Tort
A private or civil wrong violating a right for
which the law provides a remedy in the form of The source The source of The source
damages. of the obligation is of the
obligation of the obligation is
the defendant’s the law
A. Elements defendant to negligence penalizing
pay itself. such act or
1. Duty damages is omission.
2. Breach the breach
3. Injury or non-
4. Proximate Causation fulfillment of
the contract.
Quasi-Delict
Article 2176, Civil Code. Whoever by act or Proof of the The Proof
omission causes damage to another, there being existence of negligence of beyond
fault or negligence, is obliged to pay for the damage
the contract the defendant reasonable
done. Such fault or negligence, if there is no pre-
existing contractual relation between the parties, is and of its must be doubt must
called a quasi-delict and is governed by the breach or proven. be
provisions of this Chapter. non- established,
fulfillment is as it is a
Elements of Quasi-Delict sufficient criminal
1. Act or omission prima facie case.
2. Damage to another to warrant
3. Fault or negligence recovery.
4. Causal connection between the damage
and negligence
5. No pre-existing contractual relationship C. Vicarious liability

B. Culpa aquilana v. culpa 1. Doctrine of Vicarious Liability

Doctrine of Vicarious Liability [Art. 2180,
contractual v. culpa criminal Civil Code]
The obligation imposed under Art. 2176 (i.e., to
Culpa Culpa Culpa pay for injury suffered) is also demandable
Contractual Aquiliana Criminal from those persons (natural or juridical) who
are responsible for the person who has
Negligence Negligence is Negligence committed a quasi-delict (i.e., the direct
is merely direct, is punished tortfeasor).
incidental in substantive by a penal
the and law (e.g., Under this, liability is primary and direct
performance independent. Reckless (solidarily liable with the direct tortfeasor), not
of an Imprudence subsidiary. It is not conditioned upon the
obligation. under Art. insolvency of or prior recourse against the
365 of the direct tortfeasor.
Revised
Penal Note: Art. 2180 only gives rise to a
Code). presumption of negligence on the part of the
persons mentioned. The presumption is
There is There may or There may rebuttable by a showing of the person’s
always a may not be a or may not exercise of the diligence required (Note: See
pre-existing pre-existing be a pre- ‘Available Defense’).
contractual contractual existing

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Rationale
Heads of Apprentices, so long as
To extend liability by legal fiction to those in a
establishments they remain in their
position to exercise absolute or limited control
of arts and custody
over the direct tortfeasor. These persons
trade
become liable for their own omission to
comply with their duty to exercise
supervision over the persons for whom they
are responsible. 3. What must be established for
vicarious liability
When Not Applicable For Employers:
When moral culpability can be directly imputed a. Existence of an employer-employee
to the direct tortfeasor, as when there is actual relationship between company and
intent to cause harm to others. tortfeasor
b. Tortious act had been committed while the
2. Persons Vicariously Liable [Article tortfeasor was acting in the normal course
2180, Civil Code] of employment
Persons For Damages Caused
Defenses available to Employers
Vicariously By:
Proof of due care and diligence in the:
Liable:
a. Selection of employees
• Careful examination of the applicant for
Parents Minor children who live employment as to his qualifications,
in their company experience and record of service
b. Supervision of employees
Guardians Minors or incapacitated • Formulation of standard operating
children who are under procedures, suitable rules and
their authority and live in regulations, and issuance of proper
their company instructions
• Monitoring of their implementation
Owners and Employees in the • Imposition of disciplinary measures in
managers of an service of the branches case of their breach
establishment in which the latter are
or enterprise employed or on the
occasion of their D. Res ipsa loquitur
functions
Definition
Employers Employees and Literally, res ipsa loquitur means “the thing
household helpers speaks for itself” [Professional Services, Inc. v.
acting within the scope Agana, G.R. No. 126297 (2007)].
of their assigned tasks;
even though the former Statement of the Rule
are not engaged in any Where the thing which caused the injury,
business or industry without the fault of the injured, is under the
exclusive control of the defendant and the
State Special agents injury is such that it should not have occurred if
he, having such control used proper care, it
affords reasonable evidence, in the absence of
Teachers of Pupils and students, so explanation that the injury arose from the
academic long as they remain in defendant’s want of care, and the burden of
institutions their custody proof is shifted to him to establish that he has
observed due care and diligence [Professional
Services v. Agana, G.R. No. 126297 (2007)].

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TORTS AND DAMAGES
1. Elements
Elements [Ramos v. CA, G.R. No. 124354
(1999)]
a. The accident is of a kind which ordinarily
does not occur in the absence of someone’s
negligence;
b. It is caused by an instrumentality within the
exclusive control of the defendant or
defendants; and
c. The possibility of contributing conduct,
which would make the plaintiff responsible,
is eliminated.
Note: In Professional Services v. Agana, supra,
the Court added “the absence of explanation
by the defendant” as a fourth element.
1st element: Nature of the accident
As a matter of common knowledge and
experience, the very nature of certain types of
occurrences may justify an inference of
negligence on the part of the person who
controls the instrumentality causing the injury
in the absence of some explanation by the
defendant who is charged with negligence
[Ramos v. CA, supra].
2nd element: Control over the cause
Of the three elements, the fundamental
element is the “control of instrumentality”
which caused the damage. Such element of
control must be shown to be within the
dominion of the defendant [Ramos v. CA,
supra].
General Rule: The instrumentality causing the
injury must be under the exclusive control of
the person sought liable.
Exception: “Control and management” is
sufficient [Professional Services v. Agana,
supra].
3rd element: No contribution to the injury
from the injured
It is not necessary that the plaintiff be
completely inactive, but merely that there be
evidence removing the inference of the
plaintiff’s own responsibility [Prosser and
Keeton].
2. Basis
Nature of the Rule
Res ipsa loquitur is in the nature of a
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procedural rule, a rule of evidence and not a
rule of substantive law; thus, it does not create
or constitute an independent or separate
ground of liability.
It is merely a mode of proof or a mere
procedural convenience. It is a rule peculiar to
the law of negligence that recognizes that
prima facie negligence may be established
without direct proof and furnishes a substitute
for specific proof of negligence and relieves a
plaintiff of the burden of producing specific
proof of negligence [Ramos v. CA, supra].
3. Effect of the Rule
Mere invocation and application of the doctrine
does not dispense with the requirement of
proof of negligence.
It is simply a step in the process of such proof,
permitting the plaintiff to present along with the
proof of the accident, enough of the attending
circumstances to invoke the doctrine, creating
an inference or presumption of negligence, and
to thereby place on the defendant the burden
of going forward with the proof [Ramos v. CA,
supra].
4. Effect of Direct Evidence
Res ipsa loquitur can only be invoked when
under the circumstances involved, direct
evidence of negligence or direct cause of the
injury is absent and not readily available.
It has generally been held that the presumption
of inference arising from the doctrine cannot be
availed of, or is overcome, where plaintiff has
knowledge and testifies or presents evidence
as to the specific act of negligence which is the
cause of the injury complained of or where
there is direct evidence as to the precise cause
of the accident and all the facts and
circumstances attendant on the occurrence
clearly appear [Layugan v. IAC, G.R. No.
73998 (1988)].
However, notwithstanding the doctrine in
Layugan, it does not mean that res ipsa loquitur
can only be invoked in the complete absence
of other evidence. The rule allows the plaintiff
to present enough of the attending
circumstances to invoke the doctrine, “along
with the proof of the accident” [Ramos v. CA,
supra].
TORTS AND DAMAGES
5. Res Ipsa Loquitur vs. Expert
Testimony in Medical Negligence
Cases
It is apparent that medical negligence cases
are best proved by opinions of expert
witnesses belonging in the same general
neighborhood and in the same general line of
practice as defendant physician or surgeon
[Lucas v. Tuaño, G.R. No. 178763 (2009)].
Expert testimony is essential to establish the
standard of care of the profession and whether
or not the physician’s conduct in the treatment
and care falls below such standard.
When the doctrine of res ipsa loquitur is availed
by the plaintiff, the need for expert medical
testimony is dispensed with because the injury
itself provides the proof of negligence. The
reason is that the general rule on the necessity
of expert testimony applies only to such
matters clearly within the domain of medical
science, and not to matters that are within the
common knowledge of mankind which may be
testified to by anyone familiar with the facts
[Ramos v. CA, supra].
CIVIL LAW
had the last fair chance to prevent the
impending harm by the exercise of due
diligence [Canlas v. CA, G.R. No. 112160
(2000)].
F. Damnum absque injuria
Under this principle, the legitimate exercise of
a person's rights, even if it causes loss to
another, does not automatically result in an
actionable injury. The law does not prescribe a
remedy for the loss [Amonoy v. Gutierrez, G.R.
No. 140420 (2001)].
In order that the law will give redress for an act
causing damage, that act must be not only
hurtful, but wrongful. The damage must be
damnum et injuria or legal injury [Orchard
Golf and Country Club v. Yu & Yuhico, G.R. No.
191033 (2016)].

E. Last clear chance

Doctrine of Last Clear Chance
The doctrine of last clear chance, stated
broadly, is that the negligence of the plaintiff
does not preclude a recovery for the
negligence of the defendant where it appears
that the defendant, by exercising reasonable
care and prudence, might have avoided
injurious consequences to the plaintiff
notwithstanding the plaintiff's negligence.
The doctrine of last clear chance means that
even though a person's own acts may have
placed him in a position of peril, and an injury
results, the injured person is entitled to
recovery. As the doctrine is usually stated, a
person who has the last clear chance or
opportunity of avoiding an accident,
notwithstanding the negligent acts of his
opponent or that of a third person imputed to
the opponent is considered in law solely
responsible for the consequences of the
accident [Bustamante v. CA, G.R. No. 89880
(1991)].

The antecedent negligence of a person does

not preclude recovery of damages caused by
the supervening negligence of the latter, who
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TORTS AND DAMAGES
II. NEGLIGENCE
A. Negligence
Article 1173, Civil Code. The fault or negligence of
the obligor consists in the omission of that diligence
which is required by the nature of the obligation and
corresponds with the circumstances of the persons,
of the time and of the place. When negligence shows
bad faith, the provisions of Articles 1171 and 2201,
paragraph 2, shall apply.
If the law or contract does not state the diligence
which is to be observed in the performance, that
which is expected of a good father of a family shall
be required.
Negligence
It is the omission to do something which a
reasonable man, guided by those
considerations which ordinarily regulate the
conduct of human affairs, would do, or the
doing of something which a prudent and
reasonable man would not do [Layugan v. IAC,
G.R. No. 73998 (1988)].
To determine whether or not a person has been
negligent requires determining 2 things:
1. the diligence required of the actor under the
circumstances, and
2. whether the actor has performed the
diligence required.
Failing the second requisite would lead to the
conclusion that one has been negligent.
B. Standard of care
1. Default Standard of Care: Good
Father of a Family
Pursuant to Art. 1173, the diligence of a good
father of a family is the standard of conduct if
the law or contract does not provide otherwise.
Test to determine the existence of
negligence: Did the defendant in doing the
alleged negligent act use that reasonable care
and caution which an ordinarily prudent man
would have used in the same situation? If not,
then he is negligent.
Negligence in a given case is not determined When a person holds himself out as being
by reference to the personal judgment of the competent to do things requiring professional
actor in the situation before him, but is skill, he will be held liable for negligence if he
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CIVIL LAW
determined in the light of human experience
and the facts involved in the particular case.
Conduct is said to be negligent when a prudent
man in the position of the tortfeasor would have
foreseen that an effect harmful to another was
sufficiently probable to warrant his foregoing
the conduct or guarding against its
consequences [Picart v. Smith, G.R. No. L-
12219 (1918)].
2. Standard of Care Needed in Specific
Circumstances
Operators of Motor Vehicles in Relation
to Cyclists
Because of the inherent differences between
motorists and cyclists, the former being
capable of greater speed and destruction,
operators of motor vehicles have a higher
standard in his duty of care [Anonuevo v. CA,
G.R. No. 130003 (2004)].
Banks
The law imposes on banks high standards in
view of the fiduciary nature of banking. Section
2 of Republic Act No. 8791 (R.A. 8791), which
took effect on 13 June 2000, declares that the
State recognizes the ‘fiduciary nature of
banking that requires high standards of
integrity and performance.’
The fiduciary nature of banking requires banks
to assume a degree of diligence higher than
that of a good father of a family [Consolidated
Bank v. CA, G.R. No. 138569 (2003)].
Experts (In General)
Those who undertake any work calling for
special skills are required not only to exercise
reasonable care in what they do but also
possess a standard minimum of special
knowledge and ability.
In all employments where peculiar skill is
requisite, one who offers his services is
understood as holding himself out to the public
as possessing the degree of skill commonly
possessed by others in the same employment
[Far Eastern Shipping v. CA, G.R. No. 130068
(1998)].
TORTS AND DAMAGES
fails to exhibit the care and skill of one
ordinarily skilled in the particular work which he
attempts to do [Culion v. Philippine Motors,
G.R. No 32611 (1930)].
Doctors
Whether or not a physician has committed an
‘inexcusable lack of precaution’ in the
treatment of his patient is to be determined
according to the standard of care observed
by other members of the profession in good
standing under similar circumstances
bearing in mind the advanced state of the
profession at the time of treatment of present
state of medical science.
It is in this aspect of medical malpractice that
expert testimony is essential to establish not
only the standard of care of the profession but
also that the physician’s conduct in the
treatment and care falls below such standard
[Cruz v. CA, G.R. No. 122445 (1997)].
Pharmacists
The profession of pharmacy, it has been said
again and again, is one demanding care and
skill.
Even under the first conservative expression,
“ordinary care” with reference to the business
of a druggist…must be held to signify “the
highest practicable degree of prudence,
thoughtfulness, and vigilance, and most exact
and reliable safeguards consistent with the
reasonable conduct of the business in order
that human life may not constantly be exposed
to the danger flowing from the substitution of
deadly poisons for harmless medicine” [US v.
Pineda, G.R. No. L-12858 (1918)].
Mistake is negligence and care is no defense
[Mercury Drug v. de Leon, G.R. No. 165622
(2008)].
Possessors of Extremely Dangerous
Instrumentalities
A higher degree of care is required of someone
who has in his possession or under his control
an instrumentality extremely dangerous in
character, such as dangerous weapons or
substances. Such person in possession or
control of dangerous instrumentalities has the
duty to take exceptional precautions to prevent
any injury being done thereby.
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Unlike the ordinary affairs of life or business
which involve little or no risk, a business
dealing with dangerous weapons requires the
exercise of a higher degree of care [Pacis v.
Morales, G.R. No. 169467 (2010)].
Children
Take into account the specific
characteristic of the child in question
The conduct of an infant of tender years is not
to be judged by the same rule, which governs
that of an adult. […]The care and caution
required of a child is according to his maturity
and capacity only, and this is to be determined
in each case by the circumstances of the case
[Taylor v. Manila Railroad, G.R. No. 4977
(1910)].
“Age brackets” standard
No contributory negligence can be imputed to
children below 9 years old [Jarco Marketing
Corporation v. CA, G.R. No. 129792 (1999)].
Measure the acts of the child against
“average conduct of persons his age and
experience”
The degree of care required to be exercised
must vary with the capacity of the person
endangered to care for himself. […]The
standard of conduct to which a child must
conform for his own protection is that degree of
care ordinarily exercised by children of the
same age, capacity, discretion, knowledge
and experience under the same or similar
circumstances [Ylarde v. Aquino, G.R. No. L-
33722 (1988)].
Emergency rule
An individual who suddenly finds himself in a
situation of danger and is required to act
without much time to consider the best means
that may be adopted to avoid the impending
danger, is not guilty of negligence if he fails to
undertake what subsequently and upon
reflection may appear to be a better solution,
unless the emergency was brought by his own
negligence [Gan v. CA, G.R. No. L-44264
(1988)].
TORTS AND DAMAGES
C. Presumptions
1. In Motor Vehicle Mishaps
a. Liability of the owner
Article 2184, Civil Code. In motor vehicle mishaps,
the owner is solidarily liable with his driver, if the
former, who was in the vehicle, could have, by the
use of the due diligence, prevented the misfortune.
xxx
If the owner was not in the motor vehicle, the
provisions of Article 2180 are applicable.
Article 2186, Civil Code. Every owner of a motor
vehicle shall file with the proper government office a
bond executed by a government-controlled
corporation or office, to answer for damages to third
persons. The amount of the bond and other terms
shall be fixed by the competent public official.
The owner is solidarily liable with the driver for
motor vehicle mishaps when:
1. The owner was inside the vehicle at the
time; and
2. The owner could have, by the use of due
diligence, prevented the misfortune.
If the owner was not inside the vehicle, he may
be held liable under Art. 2180.
CIVIL LAW
The law does not require that a person must
possess a certain measure of skill or
proficiency either in the mechanics of driving or
in the observance of traffic rules before he may
own a motor vehicle. The test of his negligence,
within the meaning of Article 2184, is his
omission to do that which the evidence of his
own senses tells him he should do in order to
avoid the accident. And as far as perception is
concerned, absent a minimum level imposed
by law, a maneuver that appears to be fraught
with danger to one passenger may appear to
be entirely safe and commonplace to another.
[Caedo v. Yu Khe Thai, G.R. No. L-20392
(1968)].
The owner of the motor vehicle is not liable for
the misfortune unless the negligent acts of the
driver are continued for such a length of time
as to give the owner a reasonable opportunity
to observe them and to direct his driver to
desist therefrom. The act complained of must
be continued in the presence of the owner for
such a length of time that the owner, by his
acquiescence, makes his driver’s act his own
[Chapman v. Underwood, G.R. No. L-9010
(1914)].

The presumption is against the owner of the

motor vehicle. He has the burden of proving
due diligence.

Thus, once a driver is proven negligent in

causing damage, the law presumes the vehicle
owner equally negligent and imposes upon the
latter the burden of proving proper selection
and supervision of the employee as a defense
[Carticiano v. Nuval, G.R. No. 138054 (2000),
citing Sangco, Philippine Law on Torts and
Damages, Vol. II, 1994 ed., pp. 555-556].

The registered owner of a motor vehicle is

primarily liable for the damage or injury caused
to another, but he has a right to be indemnified
by the real owner of the amount he was
required to pay. This rule applies both to private
and to common carriers with respect to their
passengers [Tamayo v. Aquino, G.R. No. L-
12634 (1959)].

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ART. 2180 (5) ART. 2184

Relationship of Employer-employee Need not establish Employer-employee

Owner & Driver relationship

Car owner’s Not required at the time of the Required at the time of the mishap
presence mishap.

Presumption of On owner’s part, when his On driver’s part,

negligence driver is negligent when he has been
found guilty of reckless driving/violating
traffic violations at least twice within the
next preceding 2 months

Defense Good father of a family in Due diligence to prevent mishap (greatly

employment and supervision subjective)

Owner’s liability Primary—He may recover the Solidary—The full

full amount from the driver, as amount may be pursued against him, but
per Art. 2181 he may only recover the pro rata share
as to the amount for which he is liable

b. Liability of the driver substantially contributed thereto [Tison v. Sps.

Article 2184, Civil Code. x x x It is disputably
presumed that a driver was negligent, if he had been
found guilty of reckless driving or violating traffic
regulations at least twice within the next preceding
two months.
Article 2185, Civil Code. Unless there is proof to
the contrary, it is presumed that a person driving a
motor vehicle has been negligent if at the time of the
mishap, he was violating any traffic regulation.
Art. 2184 establishes a presumption of
negligence on the part of the driver based on
previous violations of traffic regulations.
Art. 2185 establishes a presumption of
negligence on the basis of simultaneous
violations.
Pomasin, G.R. No. 173180 (2011)].
Article 2185 was not formulated to compel or
ensure obeisance by all to traffic rules and
regulations. It does not apply to non-motorized
vehicles, in recognition of the unequal footing
of standards applicable to motor vehicles as
opposed to other types of vehicles [Añonuevo
v. CA, supra].
2. Possession of Dangerous Weapons
or Substances
Article 2188, Civil Code. There is prima facie
presumption of negligence on the part of the
defendant if the death or injury results from his
possession of dangerous weapons or substances,
such as firearms and poison, except when the
possession or use thereof is indispensable in his
occupation or business.

Under Article 2185, a legal presumption of

negligence arises if at the time of the mishap,
a person was violating any traffic regulation.
However, a causal connection must exist
between the injury received and the violation of
the traffic regulation. It must be proven that the
violation of the traffic regulation was the
proximate or legal cause of the injury or that it

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TORTS AND DAMAGES
3. Common Carriers
Article 1734, Civil Code. Common carriers are
responsible for the loss, destruction, or deterioration
of the goods, unless the same is due to any of the
following causes only:
1. Flood, storm, earthquake, lightning, or other
natural disaster or calamity;
2. Act of the public enemy in war, whether
international or civil;
3. Act or omission of the shipper or owner of the
goods;
4. The character of the goods or defects in the
packing or in the containers;
5. Order or act of competent public authority.
Article 1735, Civil Code. In all cases other than
those mentioned in Nos. 1, 2, 3, 4, and 5 of the
preceding article, if the goods are lost, destroyed or
deteriorated, common carriers are presumed to
have been at fault or to have acted negligently,
unless they prove that they observed extraordinary
diligence as required in Article 1733.
CIVIL LAW
a. Natural Persons
In order for one to be liable as a direct
tortfeasor, the requisites of Art. 2176 must be
fulfilled:
1. Act or omission
2. Damage to another
3. Fault or negligence
4. No pre-existing contractual relation
In other words, the direct tortfeasor is liable for
quasi-delict. Liability consists in the payment
of damages for the injury suffered.
Note: Damage under the 2nd requisite pertains
to injury [PNR v. Brunty, G.R. No. 169891
(2006)].
b. Juridical Persons
For juridical persons, the rules on vicarious
liability in the next section applies.

2. Persons vicariously liable

Article 1752, Civil Code. Even when there is an
agreement limiting the liability of the common carrier
in the vigilance over the goods, the common carrier
is disputably presumed to have been negligent in
case of their loss, destruction or deterioration.
Article 2180, Civil Code. The obligation imposed by
Article 2176 is demandable not only for one’s own
acts or omissions, but also for those of persons for
whom one is responsible.
xxx

4. Res Ipsa Loquitur The responsibility treated of in this article shall cease
See "Res ipsa loquitur" in the preceding when the persons herein mentioned prove that they
sections for an exhaustive discussion. observed all the diligence of a good father of a family
to prevent the damage.

D. Persons Liable
Note: See "Vicarious Liability" in the preceding
1. The direct tortfeasor, for his own sections for an exhaustive discussion.
acts
3. Persons exercising parental
Article 2176, Civil Code. Whoever by act or
omission causes damage to another, there being
authority
fault or negligence, is obliged to pay for the damage Parental Authority
done. Such fault or negligence, if there is no pre- It consists, to a large extent, of the instruction
existing contractual relation between the parties, is and supervision of the child. May be exercised
called a quasi-delict and is governed by the by:
provisions of this Chapter. a. Parents/Adoptive parents
b. Court-appointed guardians
The direct tortfeasor is one who is made liable c. Substitute Parental Authorities
for a tort committed through his own acts. The 1. Grandparents
tortfeasor may be a natural or juridical 2. Oldest qualified sibling over 21 years
person. 3. Child’s actual custodian, provided he is
qualified and over 21 years
d. Special Parental Authorities
1. School
2. Administrators
3. Teachers

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4. Individual, entity, or institution engaged
in child care
Available Defense
Proof that the parent/guardian observed all
diligence of a good father of a family to prevent
the damage.
a. Parents
Article 2180 (2), Civil Code. The father and, in case
of his death or incapacity, the mother, are
responsible for the damages caused by the minor
children who live in their company.
Article 221, Family Code. Parents and other
persons exercising parental authority shall be civilly
liable for the injuries and damages caused by the
acts or omissions of their unemancipated children
living in their company and under their parental
authority subject to the appropriate defenses
provided by law.
Parents are responsible for their minor
children who live in their company.
“Minors” Defined
Minors refer to those who are below 21 years
old, not below 18 years. The law reducing
majority age did not amend Art. 2180. The
basis is the Art. 236(3) of the Family Code, as
amended by RA 6809, which provides that
nothing in the Family Code shall be construed
to derogate from the duty or responsibility of
parents and guardians for children and wards
below 21 years of age mentioned in Art. 2180,
Civil Code.
Death/Incapacity of Father Irrelevant
The provision in Art. 2180, which makes the
mother liable only upon the death/incapacity of
the father is no longer operative due to Family
Code provisions:
Note: Even if the complaint for damages is filed
when parental authority is already lodged with
the adoptive parents, the parents who shall
be made vicariously liable are those who
exercised parental authority at the time the
quasi-delict was committed. In this case, it
was the biological parents [Tamargo v. CA,
G.R. No. 85044 (1992)].
Basis of liability of parents and adopters
Parental liability is anchored upon parental
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authority coupled with presumed parental
dereliction in the discharge of the duties
accompanying such authority.
The parental dereliction is, of course, only
presumed and the presumption can be
overturned under Article 2180 Civil Code, by
proof that the parents had exercised all the
diligence of a good father of a family to prevent
the damage [Tamargo v. CA, supra].
Illegitimate children
Responsibility is with the mother whom the law
vests with parental authority.
b. Guardians
Article 2180 (3), Civil Code. Guardians are liable
for damages caused by the minors or incapacitated
persons who are under their authority and live in
their company.
The liability of guardians with respect to their
wards is governed by the same rule as in the
liability of parents with respect to their children
below 21 years and who live with them.
“Incapacitated” Defined (Rule 92, Rules of
Court)
Also known as those who are “incompetent:”
1. Those suffering penalty of civil interdiction
2. Prodigals
3. Deaf and dumb unable to read and write
4. Unsound mind, even though they have lucid
intervals
5. Being of sound mind, but by reason of age,
disease, weak mind, and other similar
causes, cannot take care of themselves or
manage their property
Minors or incapacitated tortfeasors without
a parent or guardian [Art. 2182, Civil Code]
Answerable with his own property in an action
against him. A guardian ad litem shall be
appointed.
c. Teachers and schools
Article 2180 (7), Civil Code. Lastly, teachers or
heads of establishments of arts and trades shall be
liable for damages caused by their pupils and
students or apprentices, so long as they remain in
their custody.
TORTS AND DAMAGES
Article 218, Family Code. The school, its
administrators and teachers, or the individual, entity
or institution engaged in child shall have special
parental authority and responsibility over the minor
child while under their supervision, instruction or
custody.
CIVIL LAW
Custody does not connote immediate and
actual physical control. It refers more to the
influence exerted on the student and the
discipline instilled in him [Palisoc v. Brillantes,
G.R. No. L-29025 (1971)].

Authority and responsibility shall apply to all As long as it is shown that the student is in the
authorized activities whether inside or outside the school premises pursuant to a legitimate
premises of the school, entity or institution. student objective, in the exercise of a legitimate
right, or the enjoyment of a legitimate student
privilege, the responsibility of the school
Article 219, Family Code. Those given the authority authorities over the student continues
and responsibility under the preceding Article shall [Amadora v CA, G.R. No. L-47745 (1988)].
be principally and solidarily liable for damages
caused by the acts or omissions of the
unemancipated minor. The parents, judicial Available Defense
guardians or the persons exercising substitute Proof that the teacher/school observed all
parental authority over said minor shall be diligence of a good father of a family to prevent
subsidiarily liable. the damage.
The respective liabilities of those referred to in the
preceding paragraph shall not apply if it is proved Under the Civil Code (Art. 2180)
that they exercised the proper diligence required
under the particular circumstances.
Teachers Heads
All other cases not covered by this and the
preceding articles shall be governed by the
provisions of the Civil Code on quasi-delicts.
Institution Academic Arts and
institutions trades
Under Art. 2180, teachers or heads of establishment
establishments of arts and trades are s
responsible for their pupils and students or
apprentices, so long as they remain in the Liable Teacher in Head of
former’s custody, regardless of age. charge; not establishment
administrator
Under the Family Code, liability attaches to the
school, its administrators and teachers, or the
individual or entity engaged in childcare, so Custody Required
long as the child is under their supervision,
instruction, or custody, and the child is below
18 years old. Rationale Heads of Heads of
academic establishment
Basis of liability institutions s of arts and
The persons vicariously liable stand in loco exercise only trades have
parentis and are called upon to exercise administrative apprentices,
reasonable supervision over the conduct of the authority over who they are
students. the students, in close
and are not in proximity to.
“Custody” Defined close
“Custody” means the protective and proximity to
supervisory custody that the school, its head them.
and teachers exercise over the pupils, for as
long as they are in attendance in school, which
includes recess time. It is not required that the
student must live and board in the school.

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Under the Family Code Nature of employers’ liability

Direct The basis of his liability is not his

School, Parents, employee’s negligence, but his
Administrat Guardians, own negligence in hiring and
ors, etc. supervising the employee.
Teachers,
etc. Primary The amount for which he is liable
may be pursued without having to
Provided by Art. 218 Art. 219 exhaust the employee’s assets,
as opposed to subsidiary liability
under the RPC.
Kind of Special Parental
authority parental authority or Solidary He may recover the full amount of
required authority substitute the liability from his employee, as
parental per Art. 2181, and not merely a
authority prorated amount, unlike in Art.
2184, Civil Code.
Liability if Principal and Subsidiary
tort is solidary What must be established for vicarious
committed liability:
in school 1. Existence of an employer-employee
relationship between company and
tortfeasor
Students covered 2. Tortious act had been committed while the
tortfeasor was acting in the normal course
ARTS. 218-219 ART. 2180 of employment

Minor students only All students, even The basis for liability is not respondeat
those no longer superior, but pater familias.
minors, as long as
they remain in the
Respondeat Pater familias
custody of the persons
superior
responsible
Master is absolutely There is only a
d. Owners/managers of establishments liable to servant’s act presumption of
or omission negligence on the part
or employers of the employer
Article 2180 (4), Civil Code. The owners and
managers of an establishment or enterprise are No defense of Defense of negligence
likewise responsible for damages caused by their negligence available
employees in the service of the branches in which
the latter are employed or on the occasion of their Embodied in the Embodied in primary
functions. subsidiary liability liability under Art.
under RPC – no 2180, where the
defense of diligence; defense of diligence is
Article 2180 (5), Civil Code. Employers shall be only lack of criminal available
liable for the damages caused by their employees
liability
and household helpers acting within the scope of
their assigned tasks, even though the former are not
engaged in any business or industry. Basis of liability
Employer’s negligence in:
1. The selection of their employees (culpa in
eligiendo)
2. The supervision over their employees
(culpa in vigilando)
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TORTS AND DAMAGES
The liability imposed upon employers with
respect to damages occasioned by the
negligence of their employees to whom they
are not bound by contract is based on the
employer’s own negligence, such as when he
places a powerful automobile in the hands of a
servant whom he knows to be ignorant of the
method of managing such vehicle [Cangco v.
Manila Railroad, G.R. No. L-12191 (1918)].
Presumption of Negligence
The presentation of proof of the negligence of
its employee gives rise to the presumption that
the defendant employer did not exercise the
diligence of a good father of a family in the
selection and supervision of its employees
[Lampesa v. De Vera, G.R. No. 155111
(2008)].
Available Defense
Proof of due care and diligence in the:
1. Selection of employees
a. Careful examination of the applicant for
employment as to his qualifications,
experience and record of service
2. Supervision of employees
a. Formulation of standard operating
procedures, suitable rules and
regulations, and issuance of proper
instructions
b. Monitoring of their implementation
c. Imposition of disciplinary measures in
case of their breach
When Applicable
Vicarious liability arises when there is an
employer-employee relationship. To determine
its existence, the “control test” is used.
Under this, a relationship exists if the
“employer” controls both the means and the
details of the process by which the “employee”
is to accomplish his task [Professional Services
v. CA and Agana, G.R. No. 126297 (2010)].
Criminal Negligence
The vicarious liability of the employer for
criminal negligence of his employee is
governed by RPC 103. Conviction of the
employee conclusively binds the employer.
Defense of due diligence in the selection and
supervision of the employee is not available.
The employer cannot appeal the conviction
[Fernando v. Franco, G.R. No. L-27786
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(1971)].
Note: The liability of the employer under Art.
103 RPC is subsidiary.
Registered Owner Rule
The registered owner of the vehicle is primarily
responsible to the public for whatever damage
or injury the vehicle may have caused, even if
he had already sold the same to someone else.
The policy is the easy identification of the
owner who can be held responsible so as not
to inconvenience or prejudice the third party
injured [Cadiente v. Macas, G.R. No. 161946
(2008)].
The registered owner, however, has the right to
be indemnified by the real or actual owner of
the amount that he may be required to pay as
damages for the injury caused to the plaintiff
[Orix Metro Leasing v. Mangalinao, G.R. No.
174089 (2012)].
This rule applies even if the vehicle is leased to
third persons. The liability of the registered
owner is subject to his right of recourse against
the transferee or buyer.
1. Owners and Managers of an
Establishment or Enterprise [par. 4,
Art. 2180, Civil Code]
They are responsible for employees in the
service of the branches in which the latter are
employed or on the occasion of their functions.
“Manager” Defined
This does not include a manager of a
corporation, as such is not an employer, but
merely an employee of the corporation
[Philippine Rabbit v. Philam Forwarders, G.R.
No. L-25142 (1975)].
2. Employers [par. 5, Art. 2180, Civil Code]
They are responsible for employees and
household helpers acting within the scope of
their assigned tasks; even though the former
are not engaged in any business or industry.
“Within the scope of their assigned task” in Art.
2180 includes any act done by an employee in
furtherance of the interests, or for the account
of the employer at the time of the infliction of
the injury or damage [Filamer Christian
TORTS AND DAMAGES
Institute v. CA, G.R. No. 75112 (1990)].
Distinguishing Par. 4 and Par. 5
The distinction is necessary to determine which
paragraph is applicable:
a. Kind of employer made liable:
1. Par. 4: To owners and managers of an
establishment or enterprise
2. Par. 5: To employers in general,
whether or not engaged in any
business or industry
b. Acts of employees responsible for:
1. Par. 4: Negligent acts committed either
in the service of the branches or on the
occasion of their functions
2. Par. 5: Negligent acts done within the
scope of their assigned task
However, essentially, there is no distinction
between the two. It can be said that Par. 5 is
merely an expansion of what has been
provided for under Par. 4 [Castilex v. Vasquez,
G.R. No. 132266 (1999)].
e. The State
Section 3, Article XVI, 1987 Constitution. The
State may not be sued without its consent.
Article 2180 (6), Civil Code. The State is
responsible in like manner when it acts through a
special agent; but not when the damage has been
caused by the official to whom the task done
properly pertains, in which case what is provided in
Article 2176 shall be applicable.
Who may be sued under the State
1. A special agent under Art. 2180
2. Instrumentalities discharging proprietary
functions
a. The power to enter into contracts
implies the consent to be sued
b. The charter of the instrumentality may
expressly provide that it may be sued
3. Those that consent to be sued
Instances where the State gives its consent
to be sued
1. Art. 2180 (6) is an example of an express
legislative consent. Here, the State
assumes a limited liability for the acts of its
special agents.
2. Art. 2189 provides for state liability for
damages caused by defective condition of
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public works.
3. Local Government Code provides for the
liability of local government units for
wrongful exercise of its proprietary (as
opposed to its governmental) functions. The
latter is the same as that of a private
corporation or individual [Mendoza v. de
Leon, G.R. No. L-9596 (1916)].
“Special Agent” Defined
One who receives a definite and fixed order or
commission, foreign to the exercise of the
duties of his office (if he is a special official).
Does not pertain to any executive agent who is
an employee of the active administration and
who on his own responsibility performs
functions which are inherent and naturally
pertain to his office [Merritt v. Government of
the Philippine Islands, G.R. No. 11154 (1916)].
A corporate body (e.g., GOCCs) performing
non-governmental functions becomes liable for
the damage resulting from the tortious act of its
employee. Liability will be that of an ordinary
employer under Par. 4 or 5, Art. 2180
[Fontanilla v. Maliaman, G.R. No. 55963
(1991)].
Why the State Cannot be Sued
Neither fault nor negligence can be presumed
on the part of the State in the organization of
branches of public service and in the
appointment of its agents. Also, suing the
State will divert its focus from the delivery of
necessary public services.
f. Joint tortfeasors
Article 2194, Civil Code. The responsibility of two
or more persons who are liable for quasi-delict is
solidary.
Joint tortfeasors are all persons responsible
for a quasi-delict. They are all persons who
command, instigate, promote, encourage,
advise, countenance, cooperate in, aid or abet
in the commission of a tort, or who approve of
it after it is done, if done for their benefit.
Under Art. 2194, their responsibility is solidary.
When Applicable
When the concurrent or successive negligent
acts or omissions of two or more persons,
TORTS AND DAMAGES CIVIL LAW
although acting independently, are together the
direct and proximate cause of a single injury to
a third person, and it is impossible to determine
in what proportion each contributed to the
injury and either of them is responsible for the
whole injury.

Where their concurring negligence resulted in

injury or damage to a third party, they become
joint tortfeasors and are solidarily liable for the
resulting damage [Far Eastern Shipping v. CA,
G.R. No. 130068 (1998)].

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TORTS AND DAMAGES
III. PROXIMATE CAUSE
A. Concept of Proximate Cause
In order that civil liability for negligence may
arise, there must be a direct causal connection
between the damage suffered by the plaintiff
and the act or omission of the defendant.
Plaintiff, however, must establish a sufficient
link between the act or omission and the
damage or injury. That link must not be remote
or far-fetched; otherwise, no liability will attach.
The damage or injury must be a natural and
probable result of the act or omission [Dy
Teban Trading, Inc. v. Ching, G.R. No. 161803
(2008)].
Note: It is not required that it be shown that the
injury would not have occurred without the act
or omission complained of. It only requires
some reasonable connection between the act
or omission and the injury.
1. Two Definitions
Proximate cause immediately resulting
in injury:
a. That cause, which, in natural and
continuous sequence, unbroken by any
efficient intervening cause, produces the
injury, and without which the result would
not have occurred [Bataclan v. Medina,
G.R. No. 10126 (1957)].
b. Foreseen by a person of ordinary care that
the injury complained of or some similar
injury would result from the cause as a
natural and probable consequence
[Pilipinas Bank v. CA, G.R. No. 105410
(1994)].
Proximate cause not immediately
resulting in injury but sets in motion a
chain of events, which eventually result
in injury:
a. That cause acting first and producing the
injury, by setting other events in motion, all
constituting a natural and continuous chain,
each having a close causal connection with
its immediate predecessor, the final event in
the chain immediately effecting the injury as
a natural and probable result of the first
cause, under such circumstances that the
person responsible for the first event
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should, as an ordinary prudent and
intelligent person, have reasonable ground
to expect at the moment of his act that an
injury might probably result therefrom.
b. Also known as the proximate legal cause
c. A cause is still proximate, although farther
in time to the injury, if the happening of it set
other foreseeable events into motion
resulting ultimately in the damage [Abrogar
v. Cosmos Bottling Co., G.R. No. 164749
(2017)].
2. Differentiated from other causes
Concurrent Cause
A concurrent cause is one, which along with
other causes, produces the injury.
Each cause is an efficient cause without which
the injury would not have happened. Injury is
attributed to any or all the causes, and recovery
may be had against any or all of those
responsible.
Note: These are the same from the point of
view of solidarity.
As a general rule, that negligence in order to
render a person liable need not be the sole
cause of an injury. It is sufficient that his
negligence, concurring with one or more
efficient causes other than the plaintiff’s, is the
proximate cause of the injury.
Remote Cause
A remote cause is one, which would have been
a proximate cause, had there been no efficient
intervening cause after it and prior to the injury.
It cannot be made the basis of an action if such
did nothing more than furnish the condition or
give rise to the occasion by which the injury
was made possible, if there intervened
between such prior or remote cause and the
injury a distinct, successive, unrelated, and
efficient cause of the injury, even though such
injury would not have happened but for such
condition or occasion [Manila Electric v.
Remoquillo, G.R. No. L-8328 (1956)].
Intervening Cause
An intervening cause is an event that takes
place after the first cause and before the injury.
Note: See Efficient Intervening Cause
TORTS AND DAMAGES
Cause in Fact
Whether such negligent conduct is a cause
without which the injury would not have
occurred or is the efficient cause which set in
motion the chain of circumstances leading to
the injury [Bataclan v. Medina, G.R. No. 10126
(1957)].
An act or omission is not regarded as a cause
of an event if the particular event would not
have occurred without it.
Efficient Intervening Cause
The test of determining whether or not the
intervening cause is sufficient to absolve a prior
cause of the injury is as follows: whether the
intervention of a later cause is a significant part
of the risk involved in the defendant’s conduct
or is so reasonably connected with it that the
responsibility should not be terminated.
In the affirmative, such foreseeable intervening
forces are within the scope of the original risk,
and hence of the defendant’s negligence.
In the negative, there exists an efficient
intervening cause that relieves the defendant
of liability.
Foreseeable Intervening Cause
If the intervening cause is one which in ordinary
human experience is reasonably to be
anticipated, or one which the defendant has
reason to anticipate under the particular
circumstances, the defendant may be
negligent, among other reasons, because of
failure to guard against it [Phoenix
Construction v. IAC, G.R. No. L-65295 (1987)].
Efficient Intervening Cause
When there is an intervening cause, which is
not a consequence of the first wrongful cause
(not under the control of the first wrongdoer and
could not be foreseen), that eventually leads to
an injury, the first wrongful cause can no longer
be considered the proximate cause [Abrogar v.
Cosmos Bottling Co., G.R. No. 164749 (2017)].
Cause as distinguished from condition
The distinction between cause and condition
has been almost entirely discredited. So far as
it has any validity at all, it must refer to the type foreseen the extent of the harm or the manner
of case where the forces set in operation by the
defendant have come to rest in a position of
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apparent safety, and some new force
intervenes. But even in such cases, it is not the
distinction between “cause” and “condition”
which is important, but the nature of the risk
and the character of the intervening cause
[Phoenix Construction v. IAC, G.R. No. L-
65295 (1987)].
B. Tests to Determine Proximate
Cause
But-for test
Otherwise known as "sine qua non" test.
The test states that the injury would not have
occurred but for the negligent act/omission.
This is essentially a factual question: "but for
the defendant's negligent act/omission, would
the injury occur?"
That cause, which, in natural and continuous
sequence, unbroken by any efficient
intervening cause, produces the injury, and
without which the result would not have
occurred [Vda. de Bataclan v. Medina, G.R.
No. L-10126 (1957)].
Natural and foreseeable test
"…the legal and proximate cause of the
accident and of Dionisio's injuries was the
wrongful or negligent manner in which the
dump truck was parked — in other words, the
negligence of petitioner Carbonel.
That there was a reasonable relationship
between petitioner Carbonel's negligence on
the one hand and the accident and
respondent's injuries on the other hand, is quite
clear. Put in a slightly different manner, the
collision of Dionisio's car with the dump truck
was a natural and foreseeable consequence of
the truck driver's negligence [Phoenix
Construction, Inc. v. Intermediate Appellate
Court, G.R. No. L-65295 (1987)].
Substantial factor test
It is the rule under the substantial factor test
that if the actor's conduct is a substantial factor
in bringing about harm to another, the fact that
the actor neither foresaw nor should have
in which it occurred does not prevent him from
being liable [Philippine Rabbit Bus Lines, Inc.
TORTS AND DAMAGES CIVIL LAW
v. Intermediate Appellate Court, G.R. Nos.
66102-04 (1990)].

Note: In the case of Philippine Rabbit Bus

Lines, the test was discussed by the appellate
court but not made part of the ratio decidendi
of the Supreme Court. Thus, it cannot be said
to have been adopted in our jurisdiction.

Cause and condition

Many courts have sought to distinguish
between the active "cause" of the harm and the
existing "conditions" upon which that cause
operated. If the defendant has created only a
passive static condition which made the
damage possible, the defendant is said not to
be liable [Phoenix Construction, Inc. v.
Intermediate Appellate Court, G.R. No. L-
65295 (1987)].

Note: See "cause as distinguished from

condition" in the preceding section.

Sufficient link test

Plaintiff must, however, establish a sufficient
link between the act or omission and the
damage or injury. That link must not be remote
or far-fetched; otherwise, no liability will attach.
The damage or injury must be a natural and
probable result of the act or omission [Dy
Teban Trading, Inc. v. Ching, G.R. No. 161803
(2008)].

Mixed considerations test

There is no exact mathematical formula to
determine proximate cause. It is based upon
mixed considerations of logic, common
sense, policy and precedent [Dy Teban
Trading, Inc. v. Ching, G.R. No. 161803
(2008)].

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IV. DAMAGES
A. General provisions
Damages may be defined as the pecuniary
compensation, recompense, or satisfaction for
an injury sustained, or as otherwise expressed,
the pecuniary consequences, which the law
imposes for the breach of some duty or the
violation of some right [People v. Ballesteros,
G.R. No. 120921 (1998)].When Allowed
The obligation to repair the damages exists
whether done intentionally or negligently
and whether or not punishable by law
[Occena v. Icamina, G.R. No. 82146 (1990)].
The mere fact that the plaintiff suffered losses
does not give rise to a right to recover
damages.
To warrant the recovery of damages, there
must be both a right of action for a legal
wrong inflicted by the defendant, and damage
resulting to the plaintiff therefrom.
Wrong without damage, or damage without
wrong, does not constitute a cause of action,
since damages are merely part of the remedy
allowed for the injury caused by a breach or
wrong [Custodio v. CA, supra].
Injury vs. Damage vs. Damages [Custodio
v. CA, supra]
INJURY DAMAGE DAMAGES
The illegal The loss, The
invasion of hurt, or recompense or
a legal right harm, which compensation
results from awarded for
the injury the damage
suffered
Elements for recovery of damages
1. Right of action
2. For a wrong inflicted by the defendant
3. Damage resulting to the plaintiff
Apportionment of Damages
The entire amount of the civil liabilities should
be apportioned among all those who
cooperated in the commission of the crime
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according to the degrees of their liability,
respective responsibilities and actual
participation. Hence, each principal accused-
appellant should shoulder a greater share in
the total amount of indemnity and damages
than someone who was adjudged as only an
accomplice [People v. Halil Gambao, G.R. No.
172707 (2013)].
Start of Delay
1. Extrajudicial: Demand letter
2. Judicial: Filing of complaint
Duty to Minimize
Article 2203, Civil Code. The party suffering loss
or injury must exercise the diligence of a good
father of a family to minimize the damages resulting
from the act or omission in question.
Art. 2203 exhorts parties suffering from loss or
injury to exercise the diligence of a good father
of a family to minimize the damages resulting
from the act or omission in question.
Burden of Proof
The defendant has the burden of proof to
establish that the victim, by the exercise of the
diligence of a good father of a family, could
have mitigated the damages. In the absence of
such proof, the amount of damages cannot be
reduced [Lim and Gunnaban v. CA, G.R. No.
125817 (2002)].
Note: The victim is required only to take such
steps as an ordinary prudent man would
reasonably adopt for his own interest.
B. Kinds of damages
Article 2197, Civil Code. Damages may be:
1. Actual or compensatory;
2. Moral;
3. Nominal;
4. Temperate or moderate;
5. Liquidated; or
6. Exemplary or corrective.
According to Purpose:
1. For adequate reparation of the injury
a. Compensatory damages (reparation of
pecuniary losses)
b. Moral (reparation for non-pecuniary
losses: injury to feelings; physical
TORTS AND DAMAGES
suffering, etc.)
2. For vindication of the right violated:
Nominal damages
3. For less than adequate reparation:
Moderate damages
4. For deterring future violations:
Exemplary or corrective
According to Manner of Determination
1. Conventional (or liquidated)
2. Non-conventional, which may either be:
a. Statutory (fixed by law, as in moratory
interest)
b. Judicial (determined by the courts)
General Damages
Those which are the natural and necessary
result of the wrongful act or omission asserted
as the foundation of liability. It includes those
which follow as a conclusion of law from the
statement of the facts of the injury.
Special Damages
Damages that arise from the special
circumstance of the case, which, if properly
pleaded, may be added to the general
damages which the law presumes or implies
from the mere invasion of the plaintiff’s rights.
Special damages are the natural, but NOT the
necessary result of an injury. These are not
implied by law.
1. Actual and Compensatory Damages
Compensatory damages
Damages in satisfaction of, or in recompense
for, loss or injury sustained. The phrase “actual
damages” is sometimes used as a synonym of
compensatory damages.
Requisites:
To seek recovery of actual damages, it is
necessary to prove the actual amount of loss
with a reasonable degree of certainty,
premised upon competent proof and on the
best evidence obtainable [Asilo, Jr. v. People
and Sps. Bombasi, G.R. No. 159017-18
(2011); ICTSI v. Chua, G.R. No. 195031
(2014)].
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Alleged and proved with certainty
Article 2199, Civil Code. Except as provided by law
or by stipulation, one is entitled to an adequate
compensation only for such pecuniary loss suffered
by him as he has duly proved. Such compensation
is referred to as actual or compensatory damages.
The damages must be proven by competent
evidence (admissible or probative).
There must be pleading and proof of actual
damages suffered for the same to be
recovered.
In addition to the fact that the amount of loss
must be capable of proof, it must also be
actually proven with a reasonable degree of
certainty, premised upon competent proof or
the best evidence obtainable such as receipts,
cash and check vouchers, and other
documentary evidence of the same nature.
The burden of proof of the damage suffered is
imposed on the party claiming the same. Self-
serving statements are not sufficient basis for
an award of actual damages [Oceaneering
Contractors v. Barretto, G.R. No. 184215
(2011)].
Actual or compensatory damages cannot be
presumed, but must be proven with a
reasonable degree of certainty [MCC Industrial
Sales Corp. v. Ssangyong Corp., G.R. No.
170633 (2007)].
When is a person entitled? [PeLoRePLS]
a. When there is a pecuniary loss suffered by
him;
b. When he has alleged and prayed for such
relief [Manchester Dev’t Corp v. CA, G.R.
No. L-75919 (1987)];
c. When he has duly proved it;
d. When provided by law or by stipulation.
No proof of pecuniary loss is necessary for:
moral, nominal, temperate, liquidated or
exemplary damages. The assessment of such
damages is discretionary upon the court,
except liquidated ones [Art. 2216, Civil Code].
If the physical integrity of a person’s body is
violated or diminished, actual injury is suffered
for which actual or compensatory damages are
due and assessable. Such violation entitles a
TORTS AND DAMAGES CIVIL LAW
person to actual or compensatory damages. A Extent or scope of actual damages
scar, especially on a woman’s face, is a
SOURCE EXTENT OF LIABILITY
violation of bodily integrity, giving rise to a
legitimate claim for restoration to her condition
ante [Gatchalian v. Delim, G.R. No. 56487 Art. Contract If the obligor acted in
(1991)]. 2201 s and good faith, he shall be
Quasi- liable for all natural and
a. Components contract probable consequences
Actual damage covers the following: [LIPA] s of the breach, which the
1. Value of loss; unrealized profit parties have foreseen or
2. Attorney’s fees and expenses of litigation could have reasonably
3. Interest foreseen at the time the
obligation was
b. Loss Covered constituted.
IN GENERAL
Article 2200, Civil Code. Indemnification for If the obligor acted with
damages shall comprehend not only the value of fraud, bad faith,
the loss suffered, but also that of the profits which malice, or wanton
the obligee failed to obtain. attitude, he shall be
responsible for all
damages which may be
Two kinds of actual damages [PNOC v. CA,
reasonably attributed to
G.R. No. 107518 (1998)]: the breach or non-
1. Damnum emergens/dano emergente -
performance.
actual loss or loss of what a person already
possesses Crimes Liability extends to all
2. Lucrum cessans/lucro cesante - a and damages which are the
cession of gain or amount of profit lost or Art. Quasi- natural and probable
loss of which would have pertained to a 2202 delicts consequence of the act
person or omission complained
of.
Indemnification for damages is not limited to
damnum emergens but extends to lucrum WON the damage was
cessans. This rule is important when the thing foreseen or could have
lost or damaged either earns income or is used been reasonably
for business. foreseen by the
defendant is irrelevant.
The award of damages for loss of earning
capacity is concerned with the determination of
losses or damages sustained by the [plaintiffs] IN CONTRACTS AND QUASI-
as dependents and intestate heirs of the CONTRACTS
deceased. Such damages consist, not only of Article 2201, Civil Code. In contracts and quasi-
the full amount of his earnings, but also of the contracts, the damages for which the obligor who
support they received or would have received acted in good faith is liable shall be those that are
from him had he not died as a consequence of the natural and probable consequences of the
breach of the obligation, and which the parties have
the negligence of [defendant’s] agent.
foreseen or could have reasonably foreseen at the
time the obligation was constituted.
Only net earnings, and not gross earnings are
to be considered, that is, the total of the In case of fraud, bad faith, malice or wanton
earnings less expenses necessary in the attitude, the obligor shall be responsible for all
creation of such earnings or income and less damages which may be reasonably attributed to the
living and other incidental expenses [Candano non-performance of the obligation.
Shipping Lines, Inc. v. Sugata-on, G.R. No.
163212 (2007)].

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Article 2214, Civil Code. In quasi-delicts, the
contributory negligence of the plaintiff shall reduce
the damages that he may recover.
Article 2215, Civil Code. In contracts, quasi-
contracts, and quasi-delicts, the court may
equitably mitigate the damages under
circumstances other than the case referred to in the
preceding article, as in the following instances:
1. That the plaintiff himself has contravened the
terms of the contract;
2. That the plaintiff has derived some benefit as as
result of the contract;
3. In cases where exemplary damages are to be
awarded, that the defendant acted upon the advice
of counsel;
4. That the loss would have resulted in any event;
5. That since the filing of the action, the defendant
has done his best to lessen the plaintiff's loss or
injury.
The damages recoverable upon breach of
contract are, primarily, the ordinary, natural
and necessary damages resulting from the
breach.
Other damages, known as special damages,
are recoverable where it appears that the
particular conditions which made such
damages a probable consequence of the
breach were known to the delinquent party at
the time the contract was made [Daywalt v.
Recoletos et al., G.R. No. L-13505 (1919)].
Bad faith does not simply connote bad
judgment or negligence; it imports a dishonest
purpose or some moral obliquity and conscious
doing of wrong; it partakes of the nature of
fraud [BPI Family Bank v. Franco, G.R. No.
123498 (2007)].
c. Earning capacity, business standing
Article 2205, Civil Code. Damages may be
recovered:
1. For loss or impairment of earning capacity in
cases of temporary or permanent personal
injury;
2. For injury to the plaintiff's business standing or
commercial credit.
Loss or impairment of earning capacity
The Court did not award actual damages
because it was found that plaintiff’s
employment was lost even before the injury
upon which she was suing. The Court equated
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loss of employment with loss of earning
capacity [Gatchalian v. Delim, G.R. No. 56487
(1991)].
The plaintiff need not be actually engaged in
gainful employment to recover damages due to
loss or impairment of earning capacity.
In determining the amount of damages to be
awarded, the Supreme Court considered the
plaintiff’s age, probable life expectancy, the
state of his health, and his mental and physical
condition before the accident [Mercury Drug v.
Huang, G.R. No. 172122 (2007)].
Injury to business standing or commercial
credit
Loss of goodwill should be proven with the
same standard of proof as other compensatory
damages [Tanay Recreation Center v. Fausto,
G.R. No. 140182 (2005)].
Formula for the net earning capacity
Net earning capacity = Life Expectancy ×
(Gross annual income – Reasonable living
expenses)
[People v. Aringue, G.R. No. 116487 (1997);
Candano v. Sugata-On, G.R. 163212 (2007)]
Where: Life expectancy = 2/3 × (80 – age of
victim at the time of death)
General Rule: Damages for loss of earning
capacity shall be awarded in every case, and
that claimant shall present documentary
evidence to substantiate claim for damages
[Tan, et al. v. OMC Carriers, Inc., G.R. No.
190521 (2011)].
Exceptions:
1. If the deceased was self-employed and
earning less than the minimum wage; or
2. The deceased was a daily wage worker
earning less than the minimum wage under
current labor laws [Philippine Hawk v. Lee,
G.R. No. 166869 (2010)].
Additional Exception: Testimonial evidence
suffices to establish a basis for which the court
can make a fair and reasonable estimate of the
loss of earning capacity [Pleyto v. Lomboy,
G.R. No. 148737 (2004)].
Note: Such an exception to documentary proof
TORTS AND DAMAGES
requirement only exists as to the loss of
earning capacity.
d. Death by Crime or Quasi-Delict
Article 2202, Civil Code. In crimes and quasi-
delicts, the defendant shall be liable for all damages
which are the natural and probable consequences
of the act or omission complained of. It is not
necessary that such damages have been foreseen
or could have reasonably been foreseen by the
defendant.
In cases of crimes, damages are to be
increased or decreased according to
aggravating or mitigating circumstances
present.
Contributory negligence of the plaintiff, in case
of quasi-delicts, shall reduce the damages to
which he may be entitled. However, in cases of
crimes, there is no mitigation for contributory
negligence of the plaintiff.
The principal consideration for the award of
damages is the penalty provided by law or
imposable for the offense because of its
heinousness, and not the public penalty
actually imposed on the offender.
The fact of minority of the offender at the time
of the commission of the offense has no
bearing on the gravity and extent of injury
caused to the victim and her family. Hence,
notwithstanding the fact that the imposable
public penalty against the offender should be
lowered due to his minority, there is no
justifiable ground to depart from the
jurisprudential trend in the award of damages
in the case of qualified rape, considering the
compensatory nature of the award of civil
indemnity and moral damages [People v.
Sarcia, G.R. No. 169641 (2009)].
e. Civil/death indemnity
Note: See table re: “Amount of Civil Indemnity,
Moral Damages, and Exemplary Damages to
be paid for the commission of certain crimes
based on People v. Jugueta (2016)”
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1. Death by Crime or Quasi-Delict
Article 2206, Civil Code. The amount of damages
for death caused by a crime or quasi-delict shall be
at least three thousand pesos, even though there
may have been mitigating circumstances. In
addition:
1. The defendant shall be liable for the loss
of the earning capacity of the deceased, and the
indemnity shall be paid to the heirs of the latter;
such indemnity shall in every case be assessed
and awarded by the court, unless the deceased
on account of permanent physical disability not
caused by the defendant, had no earning
capacity at the time of his death;
2. If the deceased was obliged to give
support according to the provisions of Article
291, the recipient who is not an heir called to the
decedent's inheritance by the law of testate or
intestate succession, may demand support from
the person causing the death, for a period not
exceeding five years, the exact duration to be
fixed by the court;
3. The spouse, legitimate and illegitimate
descendants and ascendants of the deceased
may demand moral damages for mental
anguish by reason of the death of the deceased.
In death caused by breach of conduct by a
common crime
When death occurs as a result of a crime, the
heirs of the deceased are entitled to the
following items of damages:
a. Indemnity for the loss of earning
capacity of the deceased — an amount to
be fixed by the Court according to the
circumstances of the deceased related to
his actual income at the time of death and
his probable life expectancy, the said
indemnity to be assessed and awarded by
the court as a matter of duty, unless the
deceased had no earning capacity at said
time on account of permanent disability not
caused by the accused. If the deceased was
obliged to give support, under Art. 291, Civil
Code, the recipient who is not an heir, may
demand support from the accused for not
more than five years, the exact duration to
be fixed by the court;
b. Moral damages for mental anguish, — an
amount to be fixed by the court. This may
be recovered even by the illegitimate
descendants and ascendants of the
deceased;
c. Exemplary damages, when the crime is
attended by one or more aggravating
circumstances, — an amount to be fixed in
the discretion of the court, the same to be
TORTS AND DAMAGES
considered separate from fines;
d. Attorney's fees and expenses of
litigation, — the actual amount thereof (but
only when a separate civil action to recover
civil liability has been filed or when
exemplary damages are awarded);
e. Interests in the proper cases.
[Heirs of Raymundo Castro v. Bustos, G.R. No.
L-25913 (1969)].
2. Civil or Death indemnity
Mere commission of the crime shall entitle the
heirs of the deceased to such damages.
In Rape Cases
Civil indemnity, in the nature of actual and
compensatory damages, is mandatory upon
the finding of the fact of rape [People v.
Astrologo, G.R. No. 169873 (2007)].
The Court explained that the principal
consideration for the award of damages is not
the public penalty imposed upon the offender,
but based on the heinousness of the offense
of a crime against chastity [People v. Apattad,
G.R. No. 193188 (2011)].
f. Attorney’s fees and expenses of
litigation
Article 2208, Civil Code. In the absence of
stipulation, attorney's fees and expenses of
litigation, other than judicial costs, cannot be
recovered, except:
1. When exemplary damages are awarded;
2. When the defendant's act or omission has
compelled the plaintiff to litigate with third
persons or to incur expenses to protect his
interest;
3. In criminal cases of malicious prosecution
against the plaintiff;
4. In case of a clearly unfounded civil action or
proceeding against the plaintiff;
5. Where the defendant acted in gross and
evident bad faith in refusing to satisfy the
plaintiff's plainly valid, just and demandable
claim;
6. In actions for legal support;
7. In actions for the recovery of wages of
household helpers, laborers and skilled
workers;
8. In actions for indemnity under workmen's
compensation and employer's liability laws;
9. In a separate civil action to recover civil liability
arising from a crime;
10. When at least double judicial costs are
awarded;
11. In any other case where the court deems it just
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and equitable that attorney's fees and
expenses of litigation should be recovered.
In all cases, the attorney's fees and expenses of
litigation must be reasonable.
General Rule: Attorney’s fees and costs of
litigation are recoverable IF stipulated.
Exceptions:
If there is no stipulation, they are recoverable
only in the following cases:
1. By reason of malice or bad faith
a. When exemplary damages are
awarded
b. In case of a clearly unfounded civil
action
c. Where defendant acted in gross and
evident bad faith
d. When at least double judicial costs
are awarded
2. By reason of plaintiff’s indigence in
a. Actions for legal support
b. Actions for recovery of wages of
laborers, etc.
c. Actions for workmen’s compensation
3. By reason of crimes in
a. Criminal cases of malicious
prosecution
b. Separate actions to recover civil
liability arising from crime
4. By reason of equity
a. Where the defendant’s act compelled
plaintiff to litigate with third persons
b. Where the Court deems it just and
equitable
Note: In all cases, attorney’s fees and costs of
litigation must be reasonable.
Even if expressly stipulated, attorney’s fees are
subject to control by the Courts.
Two kinds of attorney’s fees:
1. Ordinary - reasonable compensation paid
to a lawyer for his services
2. Extraordinary - awarded to a successful
litigant; to be paid by the losing party as
indemnity for damages [Aquino v.
Casabar, G.R. No. 191470 (2015)].
Attorney’s fees in Article 2208 is an award
made in favor of the litigant, not of his counsel,
and the litigant is the judgment creditor who
TORTS AND DAMAGES
may enforce the judgment for attorney's fees
by execution [Quirante v. IAC, G.R. No. 73886
(1989)].
Attorney's fees cannot be recovered except in
cases provided for in Article 2208 [MERALCO
v. Ramoy, G.R. No. 158911 (2008)].
Attorney’s fees and expenses of litigation are
recoverable only in the concept of actual
damages, not as moral damages nor judicial
costs. Hence, such must be specifically prayed
for and may not be deemed incorporated within
a general prayer for "such other relief and
remedy as this court may deem just and
equitable” [Briones v. Macabagdal, G.R. No.
150666 (2010)].
For Art. 2208 (2), an adverse decision does not
ipso facto justify an award of attorney’s fees to
the winning party.
Even when a claimant is compelled to litigate
with third persons or to incur expenses to
protect his rights, still attorney’s fees may not
be awarded where no sufficient showing of bad
faith could be reflected in a party’s persistence
in a case other than an erroneous conviction of
the righteousness of his cause [Bank of
America v. Philippine Racing Club, G.R. No.
150228 (2009)].
g. Interest
Article 2209, Civil Code. If the obligation consists
in the payment of a sum of money, and the debtor
incurs in delay, the indemnity for damages, there
being no stipulation to the contrary, shall be the
payment of the interest agreed upon, and in the
absence of stipulation, the legal interest, which is
six per cent per annum.
Article 2210, Civil Code. Interest may, in the
discretion of the court, be allowed upon damages
awarded for breach of contract.
Article 2211, Civil Code. In crimes and quasi-
delicts, interest as a part of the damages may, in a
proper case, be adjudicated in the discretion of the
court.
Article 2212, Civil Code. Interest due shall earn
legal interest from the time it is judicially demanded,
although the obligation may be silent upon this
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point.
Article 2213, Civil Code. Interest cannot be
recovered upon unliquidated claims or damages,
except when the demand can be established with
reasonable certainty.
Interest accrues in the concept of damages
when:
1. The obligation consists in the payment of
a sum of money;
2. Debtor incurs in delay; and
3. There being no stipulation to the contrary.
Interest on the amount of damages awarded
may be imposed at the discretion of the court
and in the prevailing legal interest.
No interest, however, shall be adjudged on
unliquidated claims or damages until the
demand can be established with reasonable
certainty [Lara’s Gifts & Decors, Inc., v.
Midtown Industrial Sales Inc., G.R. No. 225433
(2019)].
Compounding of interest
Interest due shall earn legal interest from the
time it is judicially demanded, although the
obligation may be silent on the point.
Note that interest due can earn only at 6%,
whether the rate of interest of the principal is
greater than 6%.
Determination of legal interest
1. When an obligation, regardless of its source
(i.e., law, contracts, quasi-contracts, delicts
or quasi-delicts) is breached, the
contravenor can be held liable for damages.
2. With regard to an award of in the concept of
actual and compensatory damages, the rate
of interest, as well as the accrual thereof, is
imposed, as follows [Lara’s Gifts & Decors,
Inc. v. Midtown Industrial Sales Inc., supra]:
BASE RATE ACCRUAL
When the obligation is breached and it
consists in the payment of sum of money
(i.e, a loan or forbearance of money, goods,
credits or judgments):
TORTS AND DAMAGES CIVIL LAW

BASE RATE ACCRUAL BASE RATE ACCRUAL

Interest a. That In the absence Interest Legal From the time

due which may of a stipulated due on the interest (6%) of judicial
have been reckoning date, principal demand until
stipulated in shall be amount full payment
writing, computed from accruing as
provided it is default, (i.e., of judicial
not from demand
excessive or extrajudicial shall
unconsciona or judicial separately
ble demand in earn legal
accordance interest
with Art. 1169)
until full
payment No legal interest will be added after the
without judgement becomes final and executory
compounding unlike in Eastern Shipping Lines v. CA, G.R.
any interest No. 97412 (1994) and Nacar v. Gallery
unless Frames, G.R. No. 189871 (2013)
compounded
When an obligation, not constituting a loan
interest is
or forbearance of money, is breached:
expressly
stipulated by When Legal From the time
the parties, by demand is interest (6%) the
law or established claim is made
regulation with extrajudicially
reasonable or judicially
certainty until full
b. In the From
payment
absence of extrajudicial
stipulation, or judicial When Legal From the date
the rate of demand in demand is interest (6%) of the
interest, it accordance not judgment of
shall be 6% with Art. 1169 established the trial court
per annum of the with (at which time
(legal Civil Code, reasonable the
interest) until full certainty) quantification
payment, of damages
without may be
compounding deemed to
any interest have been
unless reasonably
compounded ascertained)
interest is until full
expressly payment
stipulated by
law or No legal interest will be added after the
regulation. judgement becomes final and executory
unlike in Eastern Shipping Lines v. CA, G.R.
No. 97412 (1994) and Nacar v. Gallery
Frames, G.R. No. 189871 (2013)

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Note: The new rate of legal interest (6%) in
Nacar v. Gallery Frames, G.R. No. 189871
(2013), does not apply to judgments that have
become final and executory prior to July 1,
2013.
2. Moral Damages
Article 2217, Civil Code. Moral damages include
physical suffering, mental anguish, fright, serious
anxiety, besmirched reputation, wounded feelings,
moral shock, social humiliation, and similar injury.
Though incapable of pecuniary computation, moral
damages may be recovered if they are the
proximate result of the defendant's wrongful act or
omission.
Article 2218, Civil Code. In the adjudication of
moral damages, the sentimental value of property,
real or personal, may be considered.
Moral damages are emphatically not intended
to enrich a complainant at the expense of the
defendant.
Its award is aimed at the restoration, within the
limits of the possible, of the spiritual status quo
ante, and it must be proportional to the
suffering inflicted [Visayan Sawmill v. CA, G.R.
No. 83851 (1993)].
Mental suffering means distress or serious pain
as distinguished from annoyance, regret or
vexation [Bagumbayan Corp. v. IAC, G.R. No.
L-66274 (1984)].
a. When awarded
Awarded when injury consists of:
1. Physical suffering
2. Besmirched reputation
3. Mental anguish
4. Fright
5. Moral shock
6. Wounded feelings
7. Social humiliation
8. Serious anxiety
9. Similar injury
Requisites for awarding moral damages
The conditions for awarding moral damages
are [InAP-2219]
1. There must be an injury, whether physical,
mental, or psychological, clearly
substantiated by the claimant;
2. There must be a culpable act or omission
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factually established;
3. The wrongful act or omission of the
defendant must be the proximate cause of
the injury sustained by the claimant; and
4. The award of damages is predicated on any
of the cases stated in Art. 2219 of the Civil
Code [Sulpicio Lines v. Curso, G.R. No.
157009 (2010)].
General Principles of Recovery:
1. Moral damages must somehow be
proportional to the suffering inflicted.
2. In culpa contractual or breach of contract,
moral damages may be recovered when the
defendant acted in bad faith or was guilty of
gross negligence (amounting to bad faith) or
in wanton disregard of his contractual
obligation and, exceptionally, when the act
of breach of contract itself is constitutive of
tort resulting in physical injuries.
3. By special rule in Art. 1764, in relation to Art.
2206, moral damages may also be awarded
in case the death of a passenger results
from a breach of carriage.
4. In culpa aquiliana or quasi-delict,
a. When an act or omission causes
physical injuries, or
b. Where the defendant is guilty of
intentional tort, moral damages
may aptly be recovered. This rule
also applies to contracts when
breached by tort.
5. In culpa criminal, moral damages could be
lawfully due when the accused is found
guilty of physical injuries, lascivious acts,
adultery or concubinage, illegal or arbitrary
detention, illegal arrest, illegal search, or
defamation.
6. Malicious prosecution can also give rise to
a claim for moral damages. The term
"analogous cases," referred to in Art. 2219,
following the ejusdem generis rule, must be
held similar to those expressly enumerated
by the law.
7. Although the institution of a clearly
unfounded civil suit can at times be a legal
justification for an award of attorney's fees,
such filing, however, has almost invariably
been held not to be a ground for an award
of moral damages [Expertravel & Tours v.
CA., G.R. No. 130030 (1999)].
8. The burden rests on the person claiming
moral damages to show convincing
evidence for good faith is presumed. In a
 TORTS AND DAMAGES
case involving simple negligence, moral
damages cannot be recovered [Villanueva
v. Salvador, G.R. No. 139436 (2006)].
9. Failure to use the precise legal terms or
"sacramental phrases" of "mental anguish,
fright, serious anxiety, wounded feelings or
moral shock" does not justify the denial of
the claim for damages. It is sufficient that
these exact terms have been pleaded in the
complaint and evidence has been adduced
[Miranda-Ribaya v. Bautista, G.R. No. L-
49390 (1980)].
10. Even if the allegations regarding the amount
of damages in the complaint are not
specifically denied in the answer, such
damages are not deemed admitted
[Raagas, et al. v. Traya et al, G.R. No. L-
20081 (1968)].
11. An appeal in a criminal case opens the
whole case for review and this 'includes the
review of the penalty, indemnity and
damages’. Even if the offended party had
not appealed from said award, and the only
party who sought a review of the decision of
said court was the accused, the court can
increase damages awarded [Sumalpong v.
CA, G.R. No. 123404 (1997)].
12. It can only be awarded to natural persons.
The award of moral damages cannot be
granted in favor of a corporation because,
being an artificial person and having
existence only in legal contemplation, it has
no feelings, no emotions, no senses, It
cannot, therefore, experience physical
suffering and mental anguish, which can be
experienced only by one having a nervous
system [ABS-CBN v. CA, G.R. No. 128690
(1999)].
13. While it is true that besmirched reputation is
included in moral damages, it cannot cause
mental anguish to a corporation, unlike in
the case of a natural person, for a
corporation has no reputation in the sense
that an individual has, and besides, it is
inherently impossible for a corporation to
suffer mental anguish [NAPOCOR v. Philipp
Brothers, G.R. No, 126204 (2001)].
b. When Recoverable
Article 2219, Civil Code. Moral damages may be
recovered in the following and analogous cases:
1. A criminal offense resulting in physical injuries;
2. Quasi-delicts causing physical injuries;
3. Seduction, abduction, rape, or other lascivious
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acts;
4. Adultery or concubinage;
5. Illegal or arbitrary detention or arrest;
6. Illegal search;
7. Libel, slander or any other form of defamation;
8. Malicious prosecution;
9. Acts mentioned in article 309;
10. Acts and actions referred to in articles 21, 26,
27, 28, 29, 30, 32, 34, and 35.
The parents of the female seduced, abducted,
raped, or abused, referred to in No. 3 of this article,
may also recover moral damages.
The spouse, descendants, ascendants, and
brothers and sisters may bring the action
mentioned in No. 9 of this article, in the order
named.
1. In Criminal Offense resulting in
physical injuries and death
Under paragraph (1), Art. 2219 of the Civil
Code, moral damages may be recovered in a
criminal offense resulting in physical injuries. In
its generic sense, "physical injuries" includes
death [People v. Villaver, G.R. No. 133381
(2001)].
Moral damages are awarded despite the
absence of proof of mental and emotional
suffering of the victim’s heirs since a violent
death necessarily brings about emotional pain
and anguish on the part of the victim’s family
[People v. Villarmea, G.R. No. 200029 (2013)].
2. In Quasi-delicts resulting in physical
injuries
In culpa aquiliana, or quasi-delict, moral
damages may be recovered (a) when an act or
omission causes physical injuries, or (b) where
the defendant is guilty of intentional tort.
The SC held that an employer that is
vicariously liable with its employee-driver may
also be held liable for moral damages to the
injured plaintiff [B.F. Metal v. Lomotan, G.R.
No. 170813 (2008)].
3. In seduction, abduction, rape, and
other lascivious acts
Anent the award of damages, civil indemnity ex
delicto is mandatory upon finding of the fact of
rape while moral damages is awarded upon
such finding without need of further proof
because it is assumed that a rape victim has
actually suffered moral injuries entitling the
TORTS AND DAMAGES
victim to such award [People v. Calongui, G.R.
No. 170566 (2006); People v. Lizano, G.R. No.
174470 (2007)].
The award of moral damages in a conviction for
simple rape should equal the award of moral
damages in convictions for qualified rape
[People v. Bartolini, G.R. No. 179498 (2010)].
Where there are multiple counts of rape and
other lascivious acts, the court awarded moral
damages for each count of lascivious acts and
each count of rape [People v. Abadies, G.R.
Nos. 139346-50 (2002)].
Note: Recovery may be had by the offended
party and also by her parents.
4. In illegal or arbitrary detention or arrest
Since the crime committed in this case is
kidnapping and failure to return a minor under
Art. 270 of the RPC, the crime was clearly
analogous to illegal and arbitrary detention or
arrest. Therefore, the award of moral damages
is justified [People v. Bernardo, G.R. No.
144316 (2002)].
5. In case of libel, slander, or any other
form of defamation
The court ruled that the commission of Slight
Oral Defamation caused injury to the
petitioner’s feelings and reputation as a
barangay captain. Hence, the petitioner is
entitled to moral damages in the sum of
₱5,000.00 [Occena v. Icamina, G.R. No. 82146
(1990)].
6. In case of malicious prosecution
A person's right to litigate, as a rule, should not
be penalized. This right, however, must be
exercised in good faith [Industrial Insurance v.
Bondad, G.R. No. 136722 (2000)].
Moral damages cannot be recovered from a
person who has filed a complaint against
another in good faith, or without malice or bad
faith. If damage results from the filing of the
complaint, it is damnum absque injuria [Mijares
v. CA, G.R. No. 113558 (1997)].
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7. In acts referred to in Arts. 21, 26, 27, 28,
29, 32, 34 and 35, Civil Code
Article 21, Civil Code. Any person who wilfully
causes loss or injury to another in a manner that is
contrary to morals, good customs or public policy
shall compensate the latter for the damage.
Acts Contra Bonus Mores
Moral damages are recoverable where the
dismissal of the employee was attended by bad
faith or fraud or constituted an act oppressive
to labor, or was done in a manner contrary to
morals, good customs, or public policy [Triple
Eight v. NLRC, G.R. No. 129584 (1998)].
Article 26, Civil Code. Every person shall respect
the dignity, personality, privacy and peace of mind
of his neighbors and other persons. The following
and similar acts, though they may not constitute a
criminal offense, shall produce a cause of action for
damages, prevention and other relief:
1. Prying into the privacy of another's residence:
2. Meddling with or disturbing the private life or
family relations of another;
3. Intriguing to cause another to be alienated from
his friends;
4. Vexing or humiliating another on account of his
religious beliefs, lowly station in life, place of
birth, physical defect, or other personal
condition.
Violation of Human Dignity
The law seeks to protect a person from being
unjustly humiliated so the court awarded moral
damages to the plaintiff who was accused by
the respondent of having an adulterous
relationship with another woman in the
presence of his wife, children, neighbors and
friends [Concepcion v. CA, G.R. No. 120706
(2000)].
Article 27, Civil Code. Any person suffering
material or moral loss because a public servant or
employee refuses or neglects, without just cause,
to perform his official duty may file an action for
damages and other relief against the latter, without
prejudice to any disciplinary administrative action
that may be taken.
Refusal or Neglect of Duty
Under Art. 27, in relation to Arts. 2219 and
2217, a public officer may be liable for moral
damages for as long as the moral damages
suffered by [the plaintiff] were the proximate
result of [defendant’s] refusal to perform an
TORTS AND DAMAGES
official duty or neglect in the performance
thereof.
Under Arts. 19 and 27 of the Civil Code, a
public official may be made to pay damages for
performing a perfectly legal act, albeit done in
bad faith or in violation of the "abuse of right"
doctrine.
Article 28, Civil Code. Unfair competition in
agricultural, commercial or industrial enterprises or
in labor through the use of force, intimidation,
deceit, machination or any other unjust, oppressive
or highhanded method shall give rise to a right of
action by the person who thereby suffers damage.
Article 29, Civil Code. When the accused in a
criminal prosecution is acquitted on the ground that
his guilt has not been proved beyond reasonable
doubt, a civil action for damages for the same act
or omission may be instituted. Such action requires
only a preponderance of evidence. Upon motion of
the defendant, the court may require the plaintiff to
file a bond to answer for damages in case the
complaint should be found to be malicious.
If in a criminal case the judgment of acquittal is
based upon reasonable doubt, the court shall so
declare. In the absence of any declaration to that
effect, it may be inferred from the text of the
decision whether or not the acquittal is due to that
ground.
Article 32, Civil Code. Any public officer or
employee, or any private individual, who directly or
indirectly obstructs, defeats, violates or in any
manner impedes or impairs any of the following
rights and liberties of another person shall be liable
to the latter for damages:
1. Freedom of religion;
2. Freedom of speech;
3. Freedom to write for the press or to maintain a
periodical publication;
4. Freedom from arbitrary or illegal detention;
5. Freedom of suffrage;
6. The right against deprivation of property
without due process of law;
7. The right to a just compensation when private
property is taken for public use;
8. The right to the equal protection of the laws;
9. The right to be secure in one's person, house,
papers, and effects against unreasonable
searches and seizures;
10. The liberty of abode and of changing the same;
11. The privacy of communication and
correspondence;
12. The right to become a member of associations
or societies for purposes not contrary to law;
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13. The right to take part in a peaceable assembly
to petition the government for redress of
grievances;
14. The right to be free from involuntary servitude
in any form;
15. The right of the accused against excessive bail;
16. The right of the accused to be heard by himself
and counsel, to be informed of the nature and
cause of the accusation against him, to have a
speedy and public trial, to meet the witnesses
face to face, and to have compulsory process
to secure the attendance of witness in his
behalf;
17. Freedom from being compelled to be a witness
against one's self, or from being forced to
confess guilt, or from being induced by a
promise of immunity or reward to make such
confession, except when the person confessing
becomes a State witness;
18. Freedom from excessive fines, or cruel and
unusual punishment, unless the same is
imposed or inflicted in accordance with a
statute which has not been judicially declared
unconstitutional; and
19. Freedom of access to the courts.
In any of the cases referred to in this article,
whether or not the defendant's act or omission
constitutes a criminal offense, the aggrieved party
has a right to commence an entirely separate and
distinct civil action for damages, and for other relief.
Such civil action shall proceed independently of any
criminal prosecution (if the latter be instituted), and
mat be proved by a preponderance of evidence.
The indemnity shall include moral damages.
Exemplary damages may also be adjudicated.
The responsibility herein set forth is not
demandable from a judge unless his act or
omission constitutes a violation of the Penal Code
or other penal statute.
Violation of Civil and Political Rights
The purpose of Art. 32 is to provide a sanction
to the deeply cherished rights and freedoms
enshrined in the Constitution.
Under Art. 32, it is not necessary that the public
officer acted with malice or bad faith. To be
liable, it is enough that there was a violation of
the constitutional rights of the petitioner, even
on the pretext of justifiable motives or good
faith in the performance of one's duties
[Cojuangco v. CA, G.R. No. 119398 (1999)].
Art. 32 of the Civil Code provides that moral
damages are proper when the rights of
individuals, including the right against
TORTS AND DAMAGES
deprivation of property without due process of
law, are violated [Meralco v. Spouses Chua,
G.R. No. 160422 (2010)].
Article 34, Civil Code. When a member of a city or
municipal police force refuses or fails to render aid
or protection to any person in case of danger to life
or property, such peace officer shall be primarily
liable for damages, and the city or municipality shall
be subsidiarily responsible therefor. The civil action
herein recognized shall be independent of any
criminal proceedings, and a preponderance of
evidence shall suffice to support such action.
Article 35, Civil Code. When a person, claiming to
be injured by a criminal offense, charges another
with the same, for which no independent civil action
is granted in this Code or any special law, but the
justice of the peace finds no reasonable grounds to
believe that a crime has been committed, or the
prosecuting attorney refuses or fails to institute
criminal proceedings, the complaint may bring a
civil action for damages against the alleged
offender. Such civil action may be supported by a
preponderance of evidence. Upon the defendant's
motion, the court may require the plaintiff to file a
bond to indemnify the defendant in case the
complaint should be found to be malicious.
If during the pendency of the civil action, an
information should be presented by the prosecuting
attorney, the civil action shall be suspended until
the termination of the criminal proceedings.
Article 2220, Civil Code. Willful injury to property
may be a legal ground for awarding moral damages
if the court should find that, under the
circumstances, such damages are justly due. The
same rule applies to breaches of contract where the
defendant acted fraudulently or in bad faith.
In Willful Injury to Property
To sustain an award of damages, the damage
inflicted upon plaintiff’s property must be
malicious or willful, an element crucial to merit
an award of moral damages under Art. 2220 of
the Civil Code [Regala v. Carin, G.R. No.
188715 (2011)].
In Breach of Contract in Bad Faith
To recover moral damages in an action for
breach of contract, the breach must be
palpably wanton, reckless, malicious, in bad
faith, oppressive, or abusive.
Bad faith imports a dishonest purpose and
conscious doing of a wrong and the person
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claiming moral damages must prove bad faith
by clear and convincing evidence because
good faith is always presumed [Francisco v.
Ferrer, G.R. No. 142029 (2001)].
A conscious or intentional design need not
always be present to award moral damages
since negligence may occasionally be so gross
as to amount to malice or bad faith. Bad faith,
in the context of Art. 2220 of the Civil Code,
includes gross negligence [Bankard, Inc. v.
Feliciano, G.R. No 141761 (2006)].
c. Who may Recover Moral Damages
Relatives of Injured Persons
The omission of brothers and sisters of the
deceased passenger in Art. 2206(3) reveals
the legislative intent to exclude them from the
persons authorized to recover moral damages
for mental anguish by reason of the death of
the deceased (inclusion unius est exclusion
alterius). The usage of the phrase analogous
cases in the provision means simply that the
situation must be held similar to those
expressly enumerated in the law in question
[Sulpicio Lines v. Curso, G.R. No. 157009
(2010)].
Art. 233 of the Family Code states that the
person exercising substitute parental authority
shall have the same authority over the child as
the parents.
Persons exercising substitute parental
authority are to be considered ascendants for
the purpose of awarding moral damages
[Caravan Travel and Tours International, Inc. v.
Abejar, G.R. No. 170631 (2016)].
Juridical Persons
The award of moral damages cannot be
granted in favor of a corporation because,
being an artificial person and having existence
only in legal contemplation, it has no feelings,
no emotions, no senses [ABS-CBN v. CA,
supra].
Although the general rule is that a juridical
person is not entitled to moral damages since
it cannot experience the same suffering that a
natural person does, Art. 2219(7) expressly
authorizes the recovery of moral damages in
cases of libel, slander, or any other form of
defamation.
TORTS AND DAMAGES
Art. 2219(7) does not qualify whether the
plaintiff is a natural or juridical person.
Therefore, a corporation can validly file a
complaint for libel or any other form of
defamation and claim for moral damages
[Filipinas Broadcasting v. Ago, G.R. No.
141994 (2005)].
Factors Considered in Determining Amount
The amount of damages awarded in this
appeal has been determined by adequately
considering the official, political, social, and
financial standing of the offended parties on
one hand, and the business and financial
position of the offender on the other. The SC
further considered the present rate of
exchange and the terms at which the amount
of damages awarded would approximately be
in U.S. dollars, the defendant being an
international airline [Lopez v. Pan American,
G.R. No. L-22415 (1966)].
3. Nominal Damages
Nominal damages consist of damages
awarded not for the purposes of indemnifying
the plaintiff for any loss suffered, but for the
vindication or recognition of a right violated by
the defendant.
Nominal damages are awarded in every
obligation arising from law, contracts, quasi-
contracts, acts or omissions punished by law,
and quasi-delicts [PNOC v. CA, G.R. No.
107518 (1998)].
Requisites and characteristics
a. Invasion or violation of any legal or property
right.
b. No proof of loss is required.
c. The award is to vindicate the right violated.
a. When awarded
Article 2221, Civil Code. Nominal damages are
adjudicated in order that a right of the plaintiff,
which has been violated or invaded by the
defendant, may be vindicated or recognized, and
not for the purpose of indemnifying the plaintiff for
any loss suffered by him.
Article 2222, Civil Coe. The court may award
nominal damages in every obligation arising from
any source enumerated in article 1157, or in every
case where any property right has been invaded.
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Article 2223, Civil Code. The adjudication of
nominal damages shall preclude further contest
upon the right involved and all accessory questions,
as between the parties to the suit, or their
respective heirs and assigns.
1. Violation of a right
Nominal damages "are recoverable where a
legal right is technically violated and must be
vindicated against an invasion that has
produced no actual present loss of any kind.”
Its award is thus not for the purpose of
indemnification for a loss but for the recognition
and vindication of a right. When granted by the
courts, they are not treated as an equivalent of
a wrong inflicted but simply a recognition of the
existence of a technical injury [Gonzales v.
PCIB, G.R. No. 180257 (2011)].
Nominal damages may also be awarded in
cases where a property right has been invaded
[Twin Ace v. Rufina, G.R. No. 160191 (2006)].
2. No actual loss caused or proven
When the plaintiff suffers injury not enough to
warrant an award of actual damages, then
nominal damages may be given [Twin Ace v.
Rufina, supra].
Nominal damages may also be awarded where
there has been a breach of contract and no
substantial injury or actual damages
whatsoever have been or can be shown
[Areola v. CA, G.R. No. 95641 (1994)].
The amount to be awarded shall be equal to or
at least commensurate to the injury sustained
considering the concept and purpose of such
damages [Lufthansa v. CA as cited in PNOC v.
CA, G.R. No. 107518 (1998)].
3. Under conditions of equity
The plaintiffs sought to recover damages from
the hotel due to its breach of contract as
regards food service for the plaintiff’s guests.
The SC did not award actual and moral
damages because it found that the plaintiff’s
failure to inform the hotel of the increase of
guests was the proximate cause of the
plaintiff’s injury. Nevertheless, the SC awarded
nominal damages under considerations of
equity, for the discomfiture that the plaintiffs
were subjected to during the event, averring
TORTS AND DAMAGES
that the hotel could have managed the
"situation" better, it being held in high esteem
in the hotel and service industry [Spouses
Guanio v. Makati Shangri-la, G.R. No. 190601
(2011)].
Nature and determination of amount
The assessment of nominal damages is left to
the discretion of the trial court according to
the circumstances of the case.
Small but substantial
Generally, nominal damages, by their nature,
are small sums fixed by the court without
regard to the extent of the harm done to the
injured party. However, it is generally held that
nominal damages is a substantial claim, if
based upon the violation of a legal right; in such
a case, the law presumes damage although
actual or compensatory damages are not
proven [Gonzales v. People, G.R. No. 159950
(2007)].
Commensurate to the injury suffered
Even if there was no documentary evidence to
justify Maria’s claim for actual damages, she
was still awarded nominal damages to
vindicate her right and its value was
commensurate to the injury she suffered
[Pedrosa v. CA, G.R. No. 118680 (2001)].
Special reasons extant in the case
Since the assessment of damages are being
left to the discretion of the court, the
circumstances of a particular case will
determine whether the amount assessed as
nominal damage is within the scope or intent of
the law [Robes-Francisco v. CFI, G.R. No. L-
41093 (1978)].
4. Temperate Damages
Article 2224, Civil Codes. Temperate or moderate
damages, which are more than nominal but less
than compensatory damages, may be recovered
when the court finds that some pecuniary loss has
been suffered but its amount cannot, from the
nature of the case, be provided with certainty.
Article 2225, Civil Code. Temperate damages
must be reasonable under the circumstances.
These damages are awarded for pecuniary
loss, in an amount that, from the nature of the
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case, cannot be proved with certainty.
Temperate damages are more than nominal
but less than compensatory damages [Tan v.
OMC Carriers, G.R. No. 190521 (2011)].
Temperate damages are incompatible with
nominal damages hence, cannot be granted
concurrently [Citytrust Bank v. IAC, G.R. No.
84281 (1994)].
Requisites
a. Actual existence of pecuniary loss;
b. The nature and circumstances of the loss
prevents proof of the exact amount;
c. They are more than nominal and less than
compensatory;
d. Causal connection between the loss and the
defendant’s act or omission;
e. Amount must be reasonable.
a. When Recoverable
1. Nature of the case prevents
determination of actual loss
2. In addition to civil indemnity
3. Cases where amount of loss is not
proven
Temperate damages are included in the
context of compensatory damages. In cases
where definite proof of pecuniary loss cannot
be offered, temperate damages can be granted
if the court is convinced that there has been
such loss. The court awarded temperate
damages in lieu of actual damages for loss of
earning capacity where earning capacity is
plainly established but no evidence was
presented to support the allegation of the
injured party’s actual income [Pleno v. CA,
G.R. No. 56505 (1988)].
4. In addition to other actual damages
proven when there is a chronic and
continuing injury involved
In cases where the resulting injury might be
continuing and possible future complications
directly arising from the injury, while certain to
occur are difficult to predict, temperate
damages can and should be awarded on top of
actual or compensatory damages; in such
cases, there is no incompatibility between
actual and temperate damages as they cover
two distinct phases [Ramos v. CA, G.R. No.
TORTS AND DAMAGES
124354 (1999)].
b. Factors when Determining Amount
In general
The court awarded temperate damages where
from the nature of the case, definite proof of
pecuniary loss cannot be adduced, although
the court is convinced that the plaintiff suffered
some pecuniary loss [De Guzman v. Tumolva,
G.R. No. 188072 (2011)].
Receipts amounting to less than P25,000
If the actual damages, proven by receipts
during the trial, amount to less than
₱25,000.00, the victim shall be entitled to
temperate damages in the amount of
₱25,000.00, in lieu of actual damages.
In this case, the victim is entitled to the award
of ₱25,000.00 as temperate damages
considering that the amount of actual damages
proven by receipts is only ₱3,858.50. Hence,
the actual damages shall be deleted.
Conversely, if the amount of actual damages
proven exceeds ₱25,000, then temperate
damages may no longer be awarded; actual
damages based on the receipts presented
during trial should instead be granted [People
v. Lucero, G.R. No. 179044 (2010)].
Where no receipts were provided
When no documentary evidence of burial or
funeral expenses is presented in court, the
amount of ₱50,000.00 as temperate damages
shall be awarded [People v. Jugueta, G.R. No.
202124 (2016)].
5. Liquidated Damages
Article 2226, Civil Code. Liquidated damages are
those agreed upon by the parties to a contract, to
be paid in case of breach thereof.
Article 2227, Civil Code. Liquidated damages,
whether intended as an indemnity or a penalty,
shall be equitably reduced if they are iniquitous or
unconscionable.
Requisites and characteristics
a. Liquidated damages must be validly
stipulated.
b. There is no need to prove the amount of
actual damages.
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c. Breach of the principal contract must be
proved.
Rules Governing Breach of Contract
Article 2228, Civil Code. When the breach of the
contract committed by the defendant is not the one
contemplated by the parties in agreeing upon the
liquidated damages, the law shall determine the
measure of damages, and not the stipulation.
A penalty clause, expressly recognized by law,
is an accessory undertaking to assume greater
liability on the part of the obligor in case of
breach of an obligation. It functions to
strengthen the coercive force of obligation and
to provide, in effect, the liquidated damages
resulting from such a breach.
The obligor would then be bound to pay the
stipulated indemnity without the necessity of
proof on the existence and on the measure of
damages caused by the breach [Suatengco v.
Reyes, G.R. No. 162729 (2008)].
General Rule: The penalty shall substitute the
indemnity for damages and the payment of the
interests in case of breach.
Exceptions:
a. When there is a stipulation to the contrary.
b. When the obligor is sued for refusal to pay
the agreed penalty.
c. When the obligor is guilty of fraud.
The amount can be reduced if:
a. It is unconscionable as determined by the
court;
b. There is partial or irregular performance.
In Titan v. Uni-Field, G.R. No. 153874 (2007),
the Supreme Court found that the attorney’s
fees stipulated were too high. Since Uni-Field
was adequately protected by separate
stipulations on the balance, liquidated
damages, and attorney’s fees in case of
breach, the Court reduced the attorney’s fees
to 25% of the principal amount instead of the
whole claim. It also allowed the recovery of
both liquidated damages and attorney’s fees
even if both were in the nature of penalty
clauses.
The question of whether a penalty is
reasonable or iniquitous can be partly
subjective and partly objective. Its resolution
TORTS AND DAMAGES CIVIL LAW
would depend on such factors as, but not to curb socially deleterious actions [PNB v. CA,
necessarily confined to, the type, extent and supra].
purpose of the penalty, the nature of the
obligation, the mode of breach and its a. When Recoverable
consequences, the supervening realities, the
standing and relationship of the parties, and ARISING WHEN
the like, the application of which, by and large, FROM EXEMPLARY
is addressed to the sound discretion of the DAMAGES ARE
court. GRANTED

A penalty may be deleted if there is substantial Art. 2230 Crimes The crime was
performance or if the penalty has a fatal committed with an
infirmity [RCBC v. CA, G.R. No. 128833 aggravating
(1998)]. circumstance/s

6. Exemplary or Corrective Damages

Article 2229, Civil Code. Exemplary or corrective Art. 2231 Quasi- Defendant acted
damages are imposed, by way of example or delicts with gross
correction for the public good, in addition to the negligence
moral, temperate, liquidated or compensatory
damages.
Art. 2232 Contracts Defendant acted
and Quasi- in a wanton,
General Principles
contracts fraudulent,
a. Exemplary damages cannot be awarded
reckless,
alone: they must be awarded IN ADDITION
oppressive, or
to moral, temperate, liquidated or
malevolent
compensatory damages.
manner
b. The purpose of the award is to deter the
defendant (and others in a similar condition)
from a repetition of the acts for which In criminal offenses
exemplary damages were awarded; hence, Article 2230, Civil Code. In criminal offenses,
they are not recoverable as a matter of exemplary damages as a part of the civil liability
right. may be imposed when the crime was committed
c. The defendant must be guilty of malice or with one or more aggravating circumstances. Such
negligence above the ordinary. damages are separate and distinct from fines and
d. Plaintiff is not required to prove the amount shall be paid to the offended party.
of exemplary damages.
1. But plaintiff must show that he is Award of exemplary damages is part of the civil
entitled to moral, temperate, or liability, not of the penalty. Damages are paid
compensatory damage; that is, to the offended party separately from the fines.
substantial damages, not purely An aggravating circumstance, whether
nominal ones. This requirement ordinary or qualifying, should entitle the
applies even if the contract stipulates offended party to an award of exemplary
liquidated damages [PNB v. CA, G.R. damages within the unbridled meaning of Art.
No. 116181 (1996)]. 2230 [People v. Dadulla, G.R. No. 172321
2. The amount of exemplary damage (2011)].
need not be pleaded in the complaint
because the same cannot be proved. It In Rape Cases
is merely incidental or dependent upon Being corrective in nature, exemplary
what the court may award as damages, therefore, can be awarded, not only
compensatory damages. in the presence of an aggravating
Exemplary damages are imposed not to enrich circumstance, but also where the
one party or impoverish another but to serve as circumstances of the case show the highly
a deterrent against or as a negative incentive reprehensible or outrageous conduct of the
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TORTS AND DAMAGES
offender. As in this case, where the offender
sexually assaulted a pregnant married woman,
the offender has shown moral corruption,
perversity, and wickedness. He has grievously
wronged the institution of marriage. The
imposition then of exemplary damages by way
of example to deter others from committing
similar acts or for correction for the public good
is warranted [People v. Alfredo, G.R. No.
188560 (2010)].
In quasi-delicts
Article 2231, Civil Code. In quasi-delicts,
exemplary damages may be granted if the
defendant acted with gross negligence.
While Article 2231 provides that for quasi-
delicts, exemplary damages may be granted if
the defendant acted with gross negligence,
with more reason is its imposition justified
when the act performed is deliberate, malicious
and tainted with bad faith [Globe Mackay v. CA,
G.R. No. 81262 (1989)].
In contracts and quasi-contracts
Article 2232, Civil Code. In contracts and quasi-
contracts, the court may award exemplary
damages if the defendant acted in a wanton,
fraudulent, reckless, oppressive, or malevolent
manner.
The Court held that the airline’s disrespectful
and unhelpful treatment of Andion amounted to
bad faith. Andion was awarded exemplary
damages under Art. 2232 [Singapore Airlines
v. Fernandez, G.R. No. 142305 (2003)].
Exemplary damages may be awarded to serve
as a deterrent to those who, like Arco, use
fraudulent means to evade their liabilities [Arco
Pulp and Paper Co., Inc. v. Lim, G.R. No.
206806 (2014)].
b. Requisites
Article 2233, Civil Code. Exemplary damages
cannot be recovered as a matter of right; the court
will decide whether or not they should be
adjudicated.
Article 2234, Civil Code. While the amount of the
exemplary damages need not be proved, the
plaintiff must show that he is entitled to moral,
temperate or compensatory damages before the
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court may consider the question of whether or not
exemplary damages should be awarded. In case
liquidated damages have been agreed upon,
although no proof of loss is necessary in order that
such liquidated damages may be recovered,
nevertheless, before the court may consider the
question of granting exemplary in addition to the
liquidated damages, the plaintiff must show that he
would be entitled to moral, temperate or
compensatory damages were it not for the
stipulation for liquidated damages.
Article 2235, Civil Code. A stipulation whereby
exemplary damages are renounced in advance
shall be null and void.
Requirements for an award of exemplary
damages [Francisco v. Ferrer, G.R. No.
142029 (2001)]:
1. They may be imposed by way of example in
addition to compensatory damages, and
only after the claimant's right to them has
been established;
2. They cannot be recovered as a matter of
right; their determination depends upon the
amount of compensatory damages that may
be awarded to the claimant;
3. The act must be accompanied by bad faith
or done in a wanton, fraudulent, oppressive
or malevolent manner.
C. Miscellaneous Rules
1. Damages that cannot co-exist
Nominal with other damages
Article 2223, Civil Code. The adjudication of
nominal damages shall preclude further contest
upon the right involved and all accessory questions,
as between the parties to the suit, or their
respective heirs and assigns.
Nominal damages are incompatible with
temperate and exemplary damages.
Nominal damages cannot co-exist with actual
or compensatory damages [Armovit v. CA,
G.R. No. 88561 (1990)].
Actual and liquidated
Article 2226, Civil Code. Liquidated damages are
those agreed upon by the parties to a contract, to
be paid in case of breach thereof.
TORTS AND DAMAGES
2. Damages that must co-exist
Exemplary with moral, temperate,
liquidated or compensatory
There was no legal basis for the award of
exemplary damages since the private
respondent was not entitled to moral,
temperate, or compensatory damages and
there was no agreement on stipulated
damages [Scott Consultants & Resource
Development Corp. v. CA, G.R. No. 112916
(1995)].
3. Damages that must stand alone
Nominal damages
Article 2223, Civil Code. The adjudication of
nominal damages shall preclude further contest
upon the right involved and all accessory questions,
as between the parties to the suit, or their
respective heirs and assigns.
D. Graduation of Damages
1. Duty of Injured Party
Article 2203, Civil Code. The party suffering loss
or injury must exercise the diligence of a good
father of a family to minimize the damages resulting
from the act or omission in question.
This clearly obligates the injured party to
undertake measures that will alleviate and not
aggravate his condition after the infliction of the
injury, and places upon him the burden of
explaining why he could not do so [Chua v.
Colorite Marketing Corporation, G.R. No.
193969-193970 (2017)].
Principle: A party cannot recover damages
flowing from consequences which the party
could have reasonably avoided.
2. Rules
a. In Crimes
Article 2204, Civil Code. In crimes, the damages
to be adjudicated may be respectively increased or
lessened according to the aggravating or mitigating
circumstances.
Generally, in criminal cases, there are three
kinds of damages awarded by the Court,
namely: civil indemnity, moral, and exemplary
damages. Actual damages or temperate
damages may be awarded in some instances.
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These are the damages that are usually
increased or decreased by the court depending
on the attendant circumstances according to
[People v. Jugueta, G.R. No. 202124 (2016)].
1. Civil Indemnity
It is the indemnity authorized in criminal law for
the offended party, in the amount authorized by
the prevailing judicial policy and is set apart
from other proven actual damages.
This award stems from Art. 100 of the RPC
which states that "Every person criminally
liable for a felony is also civilly liable.”
It is technically, not a penalty or a fine; hence,
it can be increased by the Court when
appropriate.
2. Moral Damages
Compensatory damages awarded for mental
pain and suffering or mental anguish resulting
from a wrong.
They may also be considered and allowed "for
resulting pain and suffering, and for
humiliation, indignity, and vexation suffered by
the plaintiff as result of his or her assailant's
conduct, as well as the factors of provocation,
the reasonableness of the force used, the
attendant humiliating circumstances, the sex of
the victim, [and] mental distress.”
The award of moral damages is aimed at a
restoration, within the limits possible, of the
spiritual status quo ante; and therefore, it must
be proportionate to the suffering inflicted
[Lambert v. Heirs of Rey Castillon, G.R. No.
160709 (2005)].
Art. 2220 does not fix the amount of damages
that can be awarded. It is discretionary upon
the court, depending on the mental anguish or
the suffering of the private offended party so
long as it does not exceed the award of civil
indemnity.
3. Exemplary damages
Also known as "punitive" or "vindictive"
damages, exemplary or corrective damages
are intended to serve as a deterrent to serious
wrong doings, and as a vindication of undue
sufferings and wanton invasion of the rights of
TORTS AND DAMAGES CIVIL LAW
an injured or a punishment for those guilty of pecuniary loss although the exact amount was
outrageous conduct. not proved.

It is based on the theory that there should be
compensation for the pain caused by the highly
reprehensible conduct of the defendant
associated with such circumstances as
willfulness, wantonness, malice, gross
negligence or recklessness, oppression, insult
or fraud or gross fraud that intensifies the
injury.
4. Temperate Damages
Under Art. 2224 of the Civil Code, temperate
damages may be recovered, as it cannot be
denied that the heirs of the victims suffered
When no documentary evidence of burial or
funeral expenses is presented in court, the
amount of ₱50,000.00 as temperate damages
shall be awarded.
Amount of Civil Indemnity, Moral
Damages, and Exemplary Damages to be
paid for the commission of certain crimes
based on People v. Jugueta, G.R. No.
202124 (2016):
(e.g. Civil indemnity = 100,000; Moral damages
= 100,000; Exemplary Damages = 100,000)

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TORTS AND DAMAGES CIVIL LAW

Crime Degree of Consummation of Crime

Consummated Frustrated Attempted

I. For those crimes like Murder, Parricide, Serious Intentional Mutilation, Infanticide, and other
crimes involving death of a victim where the penalty consists of indivisible penalties:

1. Where the penalty imposed is ₱100,000.00 ₱75,000.00 ₱50,000.00

death but was reduced to reclusion
perpetua because of RA 9346

2. Where the penalty imposed is ₱75,000.00 ₱50,000.00 ₱25,000.00

reclusion perpetua, other than the
above-mentioned:

II. For Simple Rape/Qualified Rape:

1. Where the penalty imposed is ₱100,000.00 --------- ₱50,000.00

Death but was reduced to reclusion
perpetua because of RA 9346

2. Where the penalty imposed is ₱75,000.00 --------- ₱25,000.00

reclusion perpetua, other than the
above-mentioned:

III. For Complex crimes under Art. 48 of the Revised Penal Code where death, injuries, or sexual
abuse results, the civil indemnity, moral damages and exemplary damages will depend on the
penalty, extent of violence and sexual abuse; and the number of victims where the penalty consists
of indivisible penalties:*

1. Where the penalty imposed is ₱100,000.00 --------- ----------

Death but was reduced to reclusion
perpetua because of RA 9346

2. Where the penalty imposed is ₱75,000.00 --------- ----------

reclusion perpetua, other than the
above-mentioned

*The above Rules apply to every victim who dies as a result of the crime committed. In other complex
crimes where death does not result, like in Forcible Abduction with Rape, the civil indemnity, moral
and exemplary damages depend on the prescribed penalty and the penalty imposed, as the case
may be.

IV. For Special Complex Crimes like Robbery with Homicide Robbery with Rape, Robbery with
Intentional Mutilation, Robbery with Arson, Rape with Homicide, Kidnapping with Murder,
Carnapping with Homicide or Carnapping with Rape, Highway Robbery with Homicide, Qualified
Piracy, Arson with Homicide, Hazing with Death, Rape, Sodomy or Mutilation and other crimes with
death, injuries, and sexual abuse as the composite crimes, where the penalty consists of indivisible
penalties**

1.1 Where the penalty imposed is ₱100,000.00 --------- ----------

Death but was reduced to reclusion
perpetua because of RA 9346

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*In Robbery with Intentional ₱100,000.00 --------- ----------

Mutilation if the penalty imposed is
Death but was reduced to reclusion
perpetua although death did not
occur

1.2 For the victims who suffered ₱75,000.00 --------- ----------

mortal/fatal wounds and could have
died if not for a timely medical
intervention

1.3 For the victims who suffered ₱50,000.00 --------- ----------

non-mortal/non-fatal injuries

2.1 Where the penalty imposed is ₱75,000.00 --------- ----------

reclusion perpetua, other than the
above-mentioned

*In Robbery with Intentional ₱75,000.00 --------- -----------

Mutilation, if the penalty imposed is
reclusion perpetua.

2.2 For the victims who suffered ₱50,000.00 --------- ----------

mortal/fatal wounds and could have
died if not for a timely medical
intervention

2.3 For the victims who suffered ₱25,000.00 --------- ----------

non-mortal/non-fatal injuries:

1. In Robbery with Physical Injuries, the amount of damages shall likewise be dependent on the
nature/severity of the wounds sustained, whether fatal or non-fatal.

2. The above rules do not apply if in the crime of Robbery with Homicide, the robber/s or
perpetrator/s are themselves killed or injured in the incident.

3. Where the component crime is rape, the above rules shall likewise apply, and that for every
additional rape committed, whether against the same victim or other victims, the victims shall be
entitled to the same damages unless the other crimes of rape are treated as separate crimes, in
which case, the damages awarded to simple rape/qualified rape shall apply.

V. In other crimes that result in the death of a victim and the penalty consists of divisible penalties

1. Homicide, Infanticide to conceal ₱50,000.00 ₱30,000.00 ₱20,000.00

the dishonor of the offender, Duel,
Intentional Abortion and
Unintentional Abortion, etc.

Note: The amount indicated here is

for the payment of civil indemnity
and moral damages only. No
exemplary damages are awarded in
these cases.

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2. Crimes where there are no stages ₱50,000.00 --------- ----------

such as Reckless Imprudence and
Death under tumultuous affray

3. If an aggravating circumstance ₱50,000.00 ₱30,000.00 ₱20,000.00

was proven during the trial, even if
not alleged in the Information,
exemplary damages are to be
awarded in the following manner, in
addition to civil indemnity and moral
damages in V.1.:

VI. In the crime of Rebellion

1. Where the imposable penalty is ₱100,000.00 --------- ----------

reclusion perpetua and death
occurs in the course of the rebellion,
the amount the heirs of those who
died are entitled

1.1 For the victims who suffered ₱75,000.00 --------- ----------

mortal/fatal wounds in the course of
the rebellion and could have died if
not for a timely medical intervention

1.2 For the victims who suffered ₱50,000.00 --------- ----------

non-mortal/non-fatal injuries

VII. In all of the above instances, when no documentary evidence of burial or funeral expenses is
presented in court, the amount of ₱50,000.00 as temperate damages shall be awarded.

5. In case of death be fixed by the court;

a. Death by Crime or Quasi-Delict
Article 2206, Civil Code. The amount of damages
for death caused by a crime or quasi-delict shall be
at least three thousand pesos, even though there
may have been mitigating circumstances. In
addition:
1. The defendant shall be liable for the loss of the
earning capacity of the deceased, and the
indemnity shall be paid to the heirs of the latter;
such indemnity shall in every case be assessed
and awarded by the court, unless the deceased
on account of permanent physical disability not
caused by the defendant, had no earning
capacity at the time of his death;
2. If the deceased was obliged to give support
according to the provisions of Article 291, the
recipient who is not an heir called to the
decedent's inheritance by the law of testate or
intestate succession, may demand support
from the person causing the death, for a period
not exceeding five years, the exact duration to
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3. The spouse, legitimate and illegitimate
descendants and ascendants of the deceased
may demand moral damages for mental
anguish by reason of the death of the
deceased.
In death caused by breach of conduct by a
common crime
When death occurs as a result of a crime, the
heirs of the deceased are entitled to the
following items of damages:
1. Indemnity for the loss of earning capacity of
the deceased — an amount to be fixed by
the Court according to the circumstances of
the deceased related to his actual income at
the time of death and his probable life
expectancy, the said indemnity to be
assessed and awarded by the court as a
matter of duty, unless the deceased had no
 earning capacity at said time on account of
permanent disability not caused by the
accused.
If the deceased was obliged to give support,
under Art. 291, Civil Code, the recipient who
is not an heir, may demand support from the
accused for not more than five years, the
exact duration to be fixed by the court;
2. Moral damages for mental anguish, — an
amount to be fixed by the court. This may
be recovered even by the illegitimate
descendants and ascendants of the
deceased;
3. Exemplary damages, when the crime is
attended by one or more aggravating
circumstances, — an amount to be fixed in
the discretion of the court, the same to be
considered separate from fines;
4. Attorney's fees and expenses of litigation,
— the actual amount thereof (but only when
a separate civil action to recover civil liability
has been filed or when exemplary damages
are awarded);
5. Interests in the proper cases.
[Heirs of Raymundo Castro v. Bustos, G.R. No.
L-25913 (1969)]
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b. Civil or Death indemnity.
Mere commission of the crime shall entitle the
heirs of the deceased to such damages.
In Rape Cases
Civil indemnity, in the nature of actual and
compensatory damages, is mandatory upon
the finding of the fact of rape [People v.
Astrologo, G.R. No. 169873 (2007)].
The Court explained that the principal
consideration for the award of damages is not
the public penalty imposed upon the offender,
but based on the heinousness of the offense
of a crime against chastity [People v. Apattad,
G.R. No. 193188 (2011)].
Even though the qualifying circumstance of
minority was not alleged in the information for
rape, the court may still award civil indemnity.
The Court held that the designation of the
offense only affects criminal liability, and not
civil liability because civil liability is for the
benefit of the injured party [People v.
Bartolini, G.R. No. 179498 (2010)].
PROPERTY
CIVIL LAW
PROPERTY
I. CLASSIFICATION OF
PROPERTY
A. Based on Mobility [Immovable
or Movable]
1. Real or Immovable Property [Art.
415, Civil Code]
a. Immovables by Nature
Cannot be moved from place to place; their
intrinsic qualities have no utility except in a
fixed place [Pars. 1 and 8, Art. 415, Civil Code]
[LBCR-MQS]
1. Lands, Buildings, Roads, and
Constructions of all kinds adhered to the
soil [Art. 415 (1), Civil Code]
The dismissal of the complaint was proper.
A house is classified as immovable property
by reason of its adherence to the soil on
which it is built [Art. 415 (1), Civil Code]. This
classification holds true regardless of the
fact that the house may be situated on land
belonging to a different owner. But once the
house is demolished, as in this case, it
ceases to exist as such and hence its
character as an immovable likewise ceases
[Bicerra v. Teneza, G.R. No. L-16218
(1962)].
Art. 415 enumerates lands and buildings
separately. This can only mean that a
building, by itself, is considered an
immovable [Soriano v. Spouses Galit, G.R.
No. 156295 (2003)].
The inclusion of the building, separate and
distinct from the land, in the enumeration of
what may constitute real properties [Art.
415, Civil Code] could only mean one thing
— that a building is by itself an immovable
property irrespective of whether or not
said structure and the land on which it is
adhered to belong to the same
owner [Tumalad v. Vicencio, G.R. No. L-
30173 (1971)].
2. Mines, Quarries, and Slag dumps, while
the matter thereof, forms part of the bed,
and waters either running or stagnant [Art.
415 (8), Civil Code]
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b. Immovables by Incorporation
Movables but are attached to an immovable in
such a way as to be an integral part [Pars. 2, 3,
and 7, Art. 415, Civil Code] [TEF]
1. Trees, plants, and growing fruits while
they are attached to the land or form an
integral part of an immovable [Art. 415(2),
Civil Code]
2. Everything attached to an immovable in
a fixed manner, in such a way that it cannot
be separated therefrom without breaking
the material or deterioration of the object
[Art. 415 (3), Civil Code]
Note: The Code does not require that the
attachment or incorporation be made by the
owner of the land, the only criterion being
the union or incorporation with the soil
[Navarro v. Pineda, G.R. No. L-18456
(1963)].
3. Fertilizer actually used on a piece of land
[Art. 415 (7), Civil Code]
c. Immovables by Destination
Essentially movables, but partake of the nature
of an immovable because of the purpose for
which they have been placed in an immovable
[Pars. 4, 5, 6, and 9, Art. 415, Civil Code]
[OMAD]
1. Statutes, reliefs, paintings or other
objects for use or Ornamentation [Art.
415, (4), Civil Code]
Requisites:
a. The objects must be placed in the
immovable by the owner of the latter; and
Note: If placed by a person other than the
owner (e.g. lessee, usufructuary), they
must be acting as the agent of the owner.
Otherwise, the object will not attain the
character of an immovable [De Leon;
Davao Sawmill v. Castillo, G.R. No. L-
40411 (1935)].
b. With intention to attach them
permanently even if separation will not
involve breakage or injury.
Note: Where the improvement or
ornaments placed by the lessee are not
to pass to the owner at the expiration of
PROPERTY
the lease, they remain movables for
chattel mortgage purposes [Davao
Sawmill v. Castillo, G.R. No. L-40411
(1935)].
The Chattel Mortgage Law was repealed
by the Personal Property Security Act
(PPSA).
2. Machinery, receptacles, instruments, or
implements intended by the owner of the
tenement for an industry or works which
may be carried on in a building or on a piece
of land and which tend to directly meet the
needs of the said industry or works [Art. 415
(5), Civil Code]
Note: These machinery, etc. need not be
attached to an immovable. Their immovable
character depends upon their use in the
industry or works carried on in a building
or on a piece of land [De Leon].
e.g.: Machineries of breweries used in the
manufacture of liquor and soft drinks,
though movable in nature, are immobilized
because they are essential to said
industries [Mindanao Bus Co. v. City
Assessor and Treasurer, G.R. No. L-17870
(1962)].
Requisites:
a. The machinery, etc. must be placed by
the owner of the tenement or his agent;
b. The industry or works must be carried on
in a building or on a piece of land; and
c. The machinery, etc. must tend directly to
meet the needs of the said industry or
works (must also be essential to the
business) [De Leon; Mindanao Bus Co.
v. City Assessor, G.R. No. L-17870
(1962)].
Examples:
a. Gasoline station equipment and
machinery – without these, the gas
station would be useless [Caltex
(Philippines) Inc. v. Central Board of
Assessment Appeals, G.R. No. L-50466
(1982)].
b. Machines for chocolate-making industry
[Serg's Products, Inc. v. PCI Leasing and
Finance, Inc., G.R. No. 137705 (2000)]
c. Sawmill machineries in a sawmill
company [Ago v. Court of Appeals, G.R.
No. L-17898 (1962)]
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Note: The moment the machinery, etc.
are no longer used or needed in the
industry, they revert to being movables
[De Leon].
If they are still needed in the industry,
they continue to be immovable
although temporarily separated from
the tenement [De Leon].
3. Animal houses, etc. or breeding places
of similar nature, and the animals in
these places [Art. 415 (6), Civil Code]
Requisites:
a. Placed by the owner or the tenant as the
owner’s agent;
b. With the intention to have them
permanently attached to the land; and
c. Forming a permanent part of the land
[Art. 415 (6), Civil Code]
4. Docks, and structures which, although
floating, are intended by their nature to
remain at a fixed place on a river, lake, or
coast [Art. 415 (9), Civil Code] (e.g. power
barges [FELS Energy v. The Province of
Batangas, G.R. No. 168557 (2007)]
Note: Vessels are considered as movables,
although they partake the nature of real
property, in view of its importance in the
world of commerce [Rubiso v. Rivera, G.R.
No. L-11407 (1917)]
d. By Analogy
Contracts for public works, servitude, and other
real rights over immovable property (e.g.
usufruct of real property for a period of 1 year,
and registered) [Art. 415 (10), Civil Code]
2. Personal or Movable [Arts. 416 and
417, Civil Code]
a. Everything not included in Art. 415 (by
exclusion);
b. All things that can be transported from
one place to another without substantial
injury to the immovable to which it is
attached, unless it is expressly included in
Art. 415 [De Leon];
c. Real property by any special provision of
law is considered a movable;
d. Forces of nature brought under the
control of science (e.g. electricity, gas,
heat, oxygen)
PROPERTY
e. Obligations and actions which have for
their object movables or demandable sums
(i.e. any credit)
f. Shares of stocks of agricultural,
commercial, and industrial entities, although
they may have real estate (e.g. stock
certificates of a corporation)
g. Other Movables
1. Cultural properties like old buildings,
shrines, documents considered
antiques, relic, or artifacts, etc. [RA 4846
or “Cultural Properties Preservation Act,”
as amended by PD 374]
2. A concession granted to a private person
with the right of usufruct in a building
erected on a lot belonging to the
municipality is personal property [Tufexis
v. Olaguera, G.R. No. 9865 (1915)]
3. Importance and Significance of
Classification under the Civil Code
a. In the determination of the offenses
committed (e.g. Arts. 293, 308, and 312,
Revised Penal Code)
b. In the form of contracts
1. (e.g., REM, Antichresis, Pledge)
2. Donations of real property must be in
a public instrument to be valid [Art.
749, Civil Code]. However, a donation
of a movable may be done orally or in
writing, unless the value of the
movable exceeds five thousand
pesos [Art. 748, Civil Code].
c. For acquisitive prescription
d. Actions for recovery of possession
(discussed under Ownership)
e. Determination of proper venue of
actions; Real Actions v. Personal Actions
[Secs. 1-2, Rule 4, Rules of Court]
f. Determination of governing law (Private
International law; Note: distinction is
unimportant for property situated in the
Philippines) [Art. 16, Civil Code]
g. For transactions involving real property,
the same must be recorded in the
Registry of Property to affect third
persons
h. Preference of credits (Note: Only
applicable in insolvency proceedings
[Art. 2242, Civil Code]
i. Double sales –
1. Immovables: the first one to register
in good faith the sale to him of
immovable property shall be the
owner. If there is no registration the
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first in good faith possession shall be
the owner. If there is no registration
and no possessor in good faith, then
the one with the oldest title in good
faith shall be the owner.
2. Movables: The first person who
takes possession in good faith shall
be the owner [Art. 1544, Civil Code].
j. Taxation – whether the property would
be subjected to real estate taxes
B. Based on Ownership/ Rights-
Holder
Property is either of:
1. Public dominion; or
2. Private ownership [Art. 419, Civil Code].
Note: Churches and other consecrated objects
are outside the commerce of man; they are
considered neither public nor private property
[Tolentino; Barlin v. Ramirez, G.R. No. L-2832
(1906)].
1. Public Dominion
Property of public dominion is outside the
commerce of man [Republic v. Pasig Rizal Co.,
Inc., G.R. No. 213207 (2022)]. As such:
a. It is not alienable or disposable;
b. It is not subject to registration under PD
1529 (Property Registration Decree) and
cannot be the subject of a Torrens title;
c. It is not susceptible to prescription;
d. It cannot be leased, sold, or otherwise be
the object of a contract;
e. It is not subject to attachment and
execution; and
f. It cannot be burdened by any voluntary
easements [Alolino v. Flores, G.R. No.
198774 (2016)].
Public As enumerated by Art. 420,
Dominion Civil Code
All lands of the public
domain, waters, minerals,
coal, petroleum, and other
mineral oils, all forces of
Public potential energy, fisheries,
Domain forests or timber, wildlife,
flora and fauna, and other
natural resources are owned
by the State. With the
exception of agricultural
PROPERTY
lands, all other natural
resources shall not be
alienated [Sec. 2, Art. XII,
1987 Constitution].
Public Land Act, Section 2
Public provides that the statute
Lands applies to lands of the public
domain.
Classifications
Administered by the State [Art. 420, Civil
Code]
a. Those intended for public use. (e.g. roads,
canals, rivers, torrents, ports and bridges
constructed by the State, banks, shores,
roadsteads, and others of similar character)
b. Those which belong to the State, without
being for public use, and are intended for
some public service
Note: May be used only by authorized
persons but exists for the benefit of all. (e.g.,
fortresses, unleased mines, and civil
buildings)
c. Those for the development of the national
wealth (includes natural resources such as
minerals, coal, oil and forests).
Patrimonial Property [Art. 421, Civil Code]
Patrimonial property is held by the State in its
private capacity to attain economic ends
[Republic v. Pasig Rizal Co., Inc., G.R. No.
213207 (2022)]. These include properties
owned by State which are not of the character
stated under Art. 420 of the Civil Code [Art.
421, Civil Code] and property of the public
dominion that are no longer intended for public
use or for public service [Art. 422, Civil Code].
Note: There must be an express declaration by
the State that the public dominion property is
no longer intended for public service; the
development of the national wealth; or that the
property has been converted into patrimonial
[Republic v. Pasig Rizal Co., Inc., supra].
Note: Being private in nature, patrimonial
property is subject to alienation and disposition
in the same way as properties owned by private
individuals, and may thus be subject to
prescription and be the object of ordinary
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contracts or agreements [Republic v. Pasig
Rizal Co., supra].
Conversion of Property of Public
Dominion for Public Use to Patrimonial
Property
Property of public dominion, when no longer
intended for public use or for public
service, shall form part of the patrimonial
property of the State [Art. 422, Civil Code].
There must be an express declaration by the
State, either by Congress or by the President,
if the power was provided by law, that the
property was converted into patrimonial
property, even though it was classified as
alienable or disposable [Heirs of Malabanan v.
Republic, G.R. No. 179987 (2009)].
The fact that the Roppongi site has not been
used for a long time for actual Embassy
service does not automatically convert it to
patrimonial property. Any such conversion
happens only if the property is withdrawn from
public use [Laurel v. Garcia, G.R. No. 92013
(1990) citing Cebu Oxygen and Acetylene Co.
v. Bercilles, G.R. No. L-40474 (1975)].
Administered by Municipal Corporations
[Art. 424 (1), Civil Code]
a. Property for public use, in the provinces,
cities, and municipalities, consist of the
provincial roads, city streets, municipal
streets, the squares, fountains, public
waters, promenades, and public works for
public service paid for by said provinces,
cities, or municipalities.
b. Patrimonial property of Municipal
Corporations:
1. All other property possessed by any of
them (provinces, cities, and
municipalities) [Art. 424 (2), Civil Code]
2. The province or municipality, as a
juridical entity, also possesses private
property to answer for its economic
necessities.
3. General Rule: In the absence of a title
deed to any land claimed by the City of
Manila as its own, showing that it was
acquired with its private or corporate
funds, the presumption is that such land
came from the State upon the creation of
the municipality [Salas v. Jarencio, G.R.
No. L-29788 (1972)]. Such property is
held in trust for the State for the benefit
PROPERTY
of its inhabitants [Sangguniang
Panlalawigan of Bataan v. Garcia, Jr.,
G.R. No. 174964 (2016)]
Exception: Those acquired with its own funds
in its private or corporate capacity will be under
the ownership and control of the political
subdivision [Sangguniang Panlalawigan of
Bataan v. Garcia, Jr., supra]. A municipal
corporation must prove that they acquired the
land with their own corporate funds [Salas v.
Jarencio, supra].
Note: The Local Government Code classifies
property of LGUs into:
a. Property of LGU in its governmental
character, which is broader than Art. 424 of
the Civil Code; and
b. Property of LGU in its proprietary character.
2. Private Ownership
Refers to all property belonging to private
persons and those belonging to the State and
its political subdivisions that are patrimonial in
nature [De Leon].
Kinds
a. Patrimonial property – Property owned by
the State and its political subdivisions in
their private capacity, and all property of the
State not included in Art. 420 of the Civil
Code [Arts. 421-424, Civil Code]
b. Property belonging to private persons
either individually or collectively [Art. 425,
Civil Code]
Conversion
How is alienable Public Land converted to
Private Property through Prescription?
Alienable public land (Patrimonial property
only) held by a possessor – Any hidden and unknown deposit of money,
personally/through predecessors-in-interest,
openly, continuously and exclusively – for 30
years is converted to private property by the
mere lapse or completion of the period. The
application for confirmation is a mere formality
because land had already been converted,
giving rise to a registrable title [Director of
Lands v. IAC, G.R. No. 73002 (1986)].
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Private Land Converted to Property of
Public Dominion Through Abandonment
and Reclamation
Through the gradual encroachment or erosion
by the ebb and flow of the tide, private property
may become public if the owner appears to
have abandoned the land, and permitted it to
be totally eaten up by the sea so as to become
part of the shore. The land having disappeared
on account of the gradual erosion in case of
natural expropriation, and having remained
submerged until they were reclaimed by the
government, they are public land [Government
v. Cabangis, G.R. No. L-28379 (1929)].
3. Based on Consumability
Only applies to movable property and is
determined by nature [Art. 418, Civil Code]
a. Consumable goods: movables which
cannot be used in a manner appropriate
without their being consumed.
b. Non-consumable goods: all those
excluded in the first category.
4. Based on Susceptibility to
Substitution
Only applies to movable property and is
determined by the intention of the parties
a. Fungibles: Those which belong to a
common genus which includes several
species of the same kind, perfectly
permitting substitution of one by the others,
such as grain, wine, oil, etc. [Tolentino]
b. Non-fungibles: Those specifically
determined and cannot be substituted by
others, such as lands, buildings, a horse,
etc. [Tolentino]. (Note: If the parties agreed
that the same thing be returned, it is not
fungible) [De Leon].
5. Hidden Treasure
jewelry or other precious objects, the lawful
ownership of which does not appear [Art. 439,
Civil Code].
General Rule: Hidden treasure belongs to the
owner of the land, building, or other property on
which it is found [Art. 438, Civil Code]
Exceptions: [Art. 438, Civil Code]
Finder of hidden treasure is entitled to one-half
(1/2) if:
a. Finding is by chance;
PROPERTY CIVIL LAW
b. Finder is not co-owner of the property where 6. Based on the Constitution
it is found; a. Public Agricultural Land;
c. Finder is not trespasser; b. Mineral Land;
d. Finder is not an agent of landowner; and c. Timber Land;
e. Finder is not owner of the land, building, or d. National Parks.
other property.

If the things found may be of interest to science

or the arts, the State has a right to acquire them
at their just price, which shall be divided in
conformity with the rule stated [Art. 438, Civil
Code].

For purposes of hidden treasure, a

usufructuary is considered a stranger to
property; naked owner gets owner’s share [Art.
566, CC].

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PROPERTY CIVIL LAW
II. OWNERSHIP Forcible Entry
Unlawful
Detainer
A. General Rules
The possession was The possession
already unlawful from was first lawful,
1. Rights of an Owner the time of entry. but became illegal.
a. Right to enjoy and dispose of a thing, (e.g. a lessee
without other limitations than those
refuses to vacate
established by law. the property after
b. Right of action against the holder and the lease contract
possessor of the thing in order to recover it.
has expired)
c. Jus Utendi: right to use and enjoy
d. Jus Fruendi: right to receive the fruits Lawful possessor Possessor refused
e. Jus Abutendi: right to consume a thing by deprived through to vacate upon
use FISTS: demand by owner
f. Jus Disponendi: right to alienate, 1. Force
encumber, transform or even destroy the 2. Intimidation Note: Legal
thing owned 3. Strategy possession (by
g. Jus Vindicandi: right to recover possession 4. Threats, and permission/
of property based on a claim of ownership 5. Stealth tolerance)
h. Jus Possidendi: right to possess the becomes unlawful
property (Implied from all the other rights) upon failure to
i. Jus Accessionis: right to whatever is vacate
attached to the thing in such a way that they
cannot be separated without injury Period to Bring Period to Bring
j. Jus Tresauris: right to hidden treasure Action: 1 year from Action: 1 year
k. Right to Exclude; Doctrine of Self-Help [Art. dispossession (force, from last demand
429, Civil Code] intimidation, threats) or to vacate.
l. Right to enclose or fence [Art. 430, Civil from knowledge of
Code] dispossession
m. Right to receive just compensation in case (strategy, stealth)
of expropriation [Art. 435, Civil Code] but not
if the property seized by competent
authority in the exercise of police power, Accion Publiciana
unless seizure is unjustified. Accion publiciana, also known as accion
n. Right of owner of land to its surface and plenaria de posesion, is an ordinary civil
everything under it, except natural proceeding to determine the better right of
resources - the owner may make any works, possession of realty independently of title.
plantations, and excavations subject to It refers to an ejectment suit filed after the
servitudes and special laws and ordinances expiration of one year from the accrual of the
and reasonable needs of aerial navigation cause of action or from the unlawful
[Art. 437, Civil Code]. withholding of possession of the realty. The
objective of the plaintiffs in accion publiciana is
a. Actions to Recover Ownership and to recover possession only, not ownership.
Possession of Real Property and its However, where the parties raise the issue of
ownership, the courts may pass upon the issue
Distinctions to determine who between or among the
Accion Interdictal / Action for Ejectment parties has the right to possess the property
A summary action for recovery of actual, [Madrid v. Spouses Mapoy, G.R. No. 150887
material or de facto physical possession (2009)].
through an action for forcible entry or unlawful
detainer. It must be filed in the MTC or MeTC Note: Actions for ejectment/accion interdictal
[Sec. 1, Rule 70, Rules of Court]. not filed within one year must be filed as accion
publiciana.

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Accion Reivindicatoria
Accion reivindicatoria seeks the recovery of
ownership and includes the jus utendi and the
jus fruendi brought in the proper regional trial
court. Accion reivindicatoria is an action
whereby plaintiff alleges ownership over a
parcel of land and seeks recovery of its full
possession [Spouses Cañezo v. Bautista, G.R.
No. 170189 (2010)]. It must be brought in the
proper regional trial court in an ordinary civil
proceeding [Heirs La Madrid v. Tumaliuan,
G.R. No. 243799 (2021)].
Requisites for Accion Reivindicatoria
1. The property must be identified; and
2. The plaintiff must rely on the strength of his
title (E incumbit probatio qui dicit, non qui
negat – “He who asserts, not he who
denies, must prove”) [Art. 434, Civil Code].
b. Actions to Recover Movable Property
For manual delivery of movable property, for
either ownership or possession. The party
praying for the recovery of the possession may,
at the commencement of the action or at any
time before such action, apply for an order for
the delivery of such property to him [Sec. 1,
Rule 60, Rules of Court].
The applicant must show the following:
1. That the applicant is the owner of the
property claimed or that he is entitled to its
possession;
2. Particular description of the property
claimed;
3. That the property is wrongfully detained
by the adverse party, alleging the cause of
detention thereof to the best of his
knowledge, information, and belief;
4. That the property has not been distrained
or taken for tax assessment or a fine
pursuant to law, or seized under a writ of
execution or preliminary attachment, or
otherwise placed under custodia legis.
5. If the property is so seized, the applicant
must show that it is exempt from the
seizure; and
6. The actual market value of the property
[Sec. 2, Rule 60, Rules of Court].
2. Limitations on Ownership
a. General Limitations
a. Taxation
b. Eminent Domain
c. Police power
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b. Specific Limitations
a. Legal servitudes - Once requisites are
satisfied, the servient owner may ask the
Court to declare the existence of an
easement (e.g. Easement of Right of
Way, Easement of Light and View etc.)
[Arts. 2191, 677-679, 670, 644, 666,
684-687, 676, 649, 637, 652, Civil Code].
b. Must not injure the rights of a third
person (Sic Utere Tuo Ut Alienum Non
Laedas) [Art. 431, Civil Code]
c. Actions in a state of necessity - The
owner of a thing has no right to prohibit
the interference of another with the
same, if the interference is necessary to
avert an imminent danger and the
threatened damage, compared to the
damage arising to the owner from the
interference, is much greater. The owner
may demand from the person benefited,
indemnity for the damage to him [Art.
432, Civil Code].
d. Nuisance - A nuisance is any act,
omission, establishment, business,
condition of property, or anything else
which:
1. injures or endangers the health or
safety of others;
2. annoys or offends the senses;
3. shocks, defies or disregards decency
or morality;
4. obstructs or interferes with the free
passage of any public highway or
street, or any body of water; or
5. hinders or impairs the use of property
[Art. 694, Civil Code].
e. Limitations imposed by the owner
himself (e.g. voluntary easements) are
valid, provided they are not contrary to
law)
f. Limitations imposed by the party
transmitting the property either by the
contract or will (e.g. onerous donations
or easement constituted when dividing
one property)
B. Rules on Accession
1. For Immovables
a. Accession Discreta
To the owner belongs [NIC]:
1. Natural fruits;
2. Industrial Fruits; and
3. Civil fruits [Art. 441, Civil Code].
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General Rule: To the owner of the principal
belongs the natural, industrial, and civil fruits.
Exceptions:
1. Possession in good faith – The possessor
is entitled to the fruits received before the
possession is legally interrupted [Arts. 526
and 544, Civil Code]
2. Usufruct – Fruits belong to the usufructuary
[Art. 566, Civil Code]
3. Lease – Fruits belong to the lessee in civil
law lease of agricultural land [Art. 1680, Civil
Code]. The lessors receive the rentals as
civil fruits.
4. Antichresis [Art. 2132, Civil Code]
Kinds of Fruits [NIC]
1. Natural – Spontaneous products of the soil
and the young and other products of
animals [Art. 442(1), Civil Code]. Partus
sequitur ventrem: To the owner of female
animals would also belong the young of
such animals although this cannot apply
when the owner mixes his cattle with those
of another and they interbreed, thus co-
ownership is applied [Siari Valley Estate v.
Lucasan, G.R. No. L-13281 (1960)].
2. Industrial – Fruits produced by the lands of
any kind through cultivation or labor [Art.
442 (2), Civil Code]
3. Civil – Rents of buildings, price of leases of
lands, and other property and the amount of
perpetual or life annuities or other similar
income [Art. 442 (3), Civil Code]
Principles Applicable to Accession Discreta
1. Time of accrual depending on kind
a. Annuals: from the time seedlings
appear on the ground.
b. Perennials: from the time fruits actually
appear on the plants.
c. Young of animals: from the time they
are in the womb, although unborn –
beginning of maximum ordinary period of
gestation.
d. Fowls: from the time of incubation.
2. Pay expenses to third person possessor
in good faith - He who receives the fruits
has the obligation to pay the expenses
incurred by a third person in the production,
gathering and preservation of the fruits [Art.
443, Civil Code].
a. Exception: Owner does not have to pay
if land is recovered before gathering from
a possessor in bad faith.
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Note: But if owner recovers land from
possessor in bad faith, he may choose to
acquire the land and he can make the
possessor, builder, planter, sower
account for the fruits that have been
gathered, with the obligation to deduct
the expenses for producing, harvesting
and preservation of the fruits.
b. Accession Continua
Right pertaining to the owner of a thing over
everything that is incorporated or attached
thereto either naturally or artificially (by
external forces) [Art. 440, Civil Code].
Artificially or Industrially Incorporated
[Arts. 445-456, Civil Code]
Building, planting, or sowing on land owned by
another.
General Rule: Whatever is built, planted, or
sown on the land of another and the
improvements or repairs made thereon,
belong to the owner of the land, subject to the
provisions of the Code with regard to a builder,
planter, and sower in bad faith [Art. 445, Civil
Code].
Presumptions
1. All works, sowing and planting are
presumed made by the owner and at his
expense, unless the contrary is proved [Art.
446, Civil Code].
2. The party in bad faith is always liable for
damages [Art. 447, Civil Code].
3. When both parties are in bad faith, they are
considered to be in good faith [Art. 453, Civil
Code].
4. The owner of the principal thing owns the
natural, industrial and civil fruits, except
when the following persons exist:
a. Possessor in Good Faith [Art. 526, Civil
Code]
b. Usufructuary [Art. 544, Civil Code]
c. Lessee [Art. 1680, Civil Code]
d. Antichretic creditor [Art. 2132, Civil
Code]
Good Faith
On the Part of the Builder
To be deemed a builder in good faith, it is
essential that a person:
1. asserts title to the land on which he builds,
i.e., that he be a possessor in the concept
of owner; and
PROPERTY CIVIL LAW
2. is unaware that there exists in his title or
mode of acquisition any flaw which
invalidates it [Princess Rachel Development
Corporation v. Hillview Marketing
Corporation, G.R. No. 222482 (2020)].

Bad Faith
On the Part of the Landowner
If the building, planting or sowing was done
with his knowledge and without opposition
on his part [Art. 453 (2), Civil Code].

On the Part of the Owner of Materials

If the materials were used with his knowledge
and without opposition on his part [De Leon].

On the Part of the Builder, Planter, and

Sower (BPS)
One who has knowledge of any flaw or defect
in his title or mode if acquisition [Art. 526, Civil
Code]

He is a possessor in bad faith if at the time he

built, planted, or sowed he knew that:
1. He does not have title to the land (and thus
does not have the right to build thereon); or
2. He has no permission to build, plant, or sow
on the land which he possesses but does
not own.

Note: Bad faith leads to liability for damages

and the loss of the works or the improvement
without right to indemnity [Art. 449, Civil Code].

If both parties are in bad faith, then treat them

as if they are both in good faith [Art. 453 (1),
Civil Code].

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Rules (see end of Section for Summary of Rules)
1. Case where the landowner differs from the owner of materials [Art. 447, Civil Code]

Situation #1: Both the landowner (LO) and the owner of materials (OM) are in Good Faith (GF)
Rights: Shall own what is built, planted, or sown (materials/ improvements).
[Accessio cedit principali: the accessory follows the principal]
LO in GF
Liabilities: shall pay for the value of the materials (no one shall be unjustly
enriched at the expense of another)

Rights:
1. Limited right of removal (can only be resorted to if no injury can be
OM in GF
inflicted on the work constructed); or
2. Right to reimbursement for the value of materials.

Situation #2: Both the LO and OM are in Bad Faith (BF)

Parties will be treated as though both acted in GF [Art. 453, Civil Code].
Both LO and
OM in BF

Situation #3: LO in BF, while OM in GF

Rights: To own what is built, planted, or sown (materials /improvements).

Liabilities: shall pay for:

LO in BF 1. Value of materials; and
2. Damages.

Note: This is subject to OM’s absolute right of removal.

Rights:
1. Absolute right of removal (may be removed even if there will be injury) [Art.
OM in GF 447, Civil Code]; or
2. Right to reimbursement for the value of materials.
3. Right to damages in either case

Situation #4: LO in GF, while OM in BF

Right to acquire the improvements without paying indemnity.
LO in GF

Liable for any consequential damages without right of removal whether or not injury
OM in BF would be caused [De Leon].

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2. BPS Rules: Cases where one builds, plants, or sows on land owned by another (BPS v. LO)
[Arts. 448-454, Civil Code]

Situation #1: Builder, planter, or sower (BPS) in Good Faith (GF) [Art. 448, Civil Code]
Options:
Landowner 1. Acquire improvements after paying BPS for their value; or
[Art. 446, 2. Oblige the one who built or planted to pay the price of the land unless
Civil Code] its value is considerably more than that of the building or trees, and the
one who sowed, the proper rent.
Note: Option
is given solely If the value is considerably more, then the court can force the parties to
to LO, GF of enter into a forced lease [Art. 448, Civil Code].
BPS is
immaterial Note: The difference between a builder and a sower.

1. Generally, has right to reimbursement for the improvement.

2. Pending LO’s payment, has right to retention of the land (during this
period, BPS is not required to pay rent).
3. Whatever fruits (rents) he receives during the period of retention must be
deducted from whatever indemnity is due to him; and in case it exceeds
BPS in GF
the value of the indemnity, the excess shall be returned to the owner of the
land [De Leon, citing Mendoza v. De Guzman, G.R. No. L-28721 (1928)].

Note: Right to reimbursement is available if the LO exercises the right to acquire

the improvements [option 1]

Note: The builder in good faith can compel the landowner to make a choice between appropriating the
building by paying the proper indemnity or obliging the builder to pay the price of the land. The choice
belongs to the owner of the land.

The landowner cannot, for instance, compel the owner of the building to remove the building from the
land without first exercising either option. It is only if the owner chooses to sell his land, and the builder
or planter fails to purchase it where its value is not more than the value of the improvements, that the
owner may remove the improvements from the land [Sps. Briones v. Macabagdal, G.R. No. 150666
(2010)].

Note: In every case, the BPS is entitled to reimbursement of necessary expenses for the preservation
of the land [Art. 452, Civil Code].

Situation #2: Both the LO and BPS are in BF

Both LO and Parties will be treated as though both acted in GF, so apply Art. 446 [Art. 453,
BPS in BF Civil Code].

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Situation #3: LO in BF, while BPS in GF
1. Must indemnify BPS for the improvements AND pay damages as if he
himself did the BPS.
LO in BF
2. Has no option to sell the land and cannot compel BPS to buy the land
without the latter’s consent.

Rights:
1. Absolute right of removal; OR
BPS in GF 2. Right to reimbursement for the value of materials.

Right to indemnification for damages in either case

Situation #4: LO in GF, while BPS in BF [Arts. 449-451, Civil Code]

Right to collect damages in any case and option to:
1. Acquire improvements without paying indemnity if the improvements
are still standing on the land;
2. Sell the land to BP or collect rent from the sower unless value of the
LO in GF improvements in which case there will be a forced lease; or
3. Order demolition of improvements or restoration of land to its former
condition at the expense of the BPS.

Landowner must still pay for necessary expenses for preservation.

1. Pay damages to landowner.

2. Lose materials without right to indemnity.
BPS in BF
3. No right to refuse to buy the land.
4. Recover necessary expenses for preservation of land.

Situation #5: Both the LO and BPS are in BF

Both LO and Parties will be treated as though both acted in GF, so apply Art. 446 [Art. 453, Civil
BPS in BF Code].

Situation #6: LO in BF, while BPS in GF

1. Must indemnify BPS for the improvements and pay damages as if he
himself did the BPS.
LO in BF
2. Has no option to sell the land and cannot compel BPS to buy the land
without the latter’s consent.

Rights:
1. Absolute right of removal; or
BPS in GF 2. Right to reimbursement for the value of materials

There is a right to indemnification for damages for either case.

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Situation #7: LO in GF, while BPS in BF [Arts. 449-451, Civil Code]
Right to collect damages in any case and option to:
1. Acquire improvements without paying indemnity if the improvements
are still standing on the land;
2. Sell the land to BP or collect rent from the sower unless value of the
LO in GF improvements in which case there will be a forced lease; or
3. Order demolition of improvements or restoration of land to its former
condition at the expense of the BPS.

Landowner must still pay for necessary expenses for preservation.

1. Pay damages to landowner.

2. Lose materials without right to indemnity.
BPS in BF
3. No right to refuse to buy the land.
4. Recover necessary expenses for preservation of land.

3. Case where LO, BPS, and OM are
different persons [Art. 455, Civil Code]
Note: If there are 3 parties in BPS, solve the
problem by considering the options open to the
landowner vis-à-vis BPS depending on their
good faith or bad faith; apply Art. 455 on one
who acted in good faith. Art. 455 shall not apply
if the owner makes use of the right granted by
Art. 450.
General Rules [De Leon]
a. OM in GF is entitled to reimbursement for
the value of the materials used (regardless
of the GF or BF of the LO and/or the BPS).
Primarily, from the BPS. If the BPS be
insolvent, then the LO shall be subsidiarily
liable to the OM [Art. 455 (1), Civil Code].
However, this is not applicable if the owner
makes use of the right granted under Art.
450 [Art. 455 (2), Civil Code].
Requisites for the LO’s Subsidiary
Liability [Art. 455, Civil Code]
1. The OM acted in GF;
2. BPS is insolvent; and
3. The LO appropriates the accession to
himself.
b. The BPS who has paid the OM may seek
reimbursement from the LO (value of
materials + labor) [Art. 455(2), Civil Code].
Requisites
1. The BPS acted in GF; and
2. The LO appropriates the improvement to
himself.
c. If only the OM is in BF, he loses his
materials, as well as his right to indemnity.
He also becomes liable for damages [Arts.
449, 451, Civil Code].
d. If only the BPS acted in BF, he becomes
liable to the OM for the value of the
materials plus damages. Should he become
insolvent, the LO shall pay for the value of
the materials but he will not be liable for
damages. Additionally, he shall still be liable
to the LO [Arts. 450-451, Civil Code].
e. If only the LO acted in GF, he can exercise
any of his options under Arts. 449 and 450,
both having an additional right to ask for
damages [Art. 451, Civil Code]. He shall
also not be subsidiarily liable to the OM.
f. If ALL acted in BF, they shall be treated as
though all of them acted in GF [Art. 453,
Civil Code]

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c. Naturally Incorporated [Arts. 457-
465, Civil Code]
1. Alluvium [Art. 457, Civil Code]
Soil is gradually deposited on banks adjoining
the river.
Requisites [GCA]
a. Deposit of soil or sediment is Gradual and
imperceptible;
b. As a result of the action of the Currents of
the waters of the river and should have no
human intervention; and
c. Land where the accretion takes place is
Adjacent to the banks of the rivers
(Riparian Land) [Daclison v. Baytion, G.R.
No. 219811 (2016)].
Note: When deemed to exist: When the
deposit of the sediment has reached a level
higher than the highest level of the water
during the year, i.e. higher than the
riverbank [Meneses v. CA, G.R. No. 82220
(1995)].
Effect: Accretions which the banks of rivers
may gradually receive from the effect of the
current become the property of the owners of
the banks. It is likewise settled that "an
accretion does not automatically become
registered land just because the lot that
receives such accretion is covered by a
Torrens Title. Ownership of a piece of land is
one thing; registration under the Torrens
system of that ownership is another” [Republic
v. Tongson, Sr., G.R. No. 233304 (2020)].
Rationale: To compensate the owners of the
land from forces of nature and to encourage
riparian owners to cultivate and enrich the land.
What is Not Considered Alluvium [Art. 458,
Civil Code]
a. Deposits due to human action or
intervention
b. Deposits due to abrupt or unanticipated
flooding brought about by extreme weather
conditions
c. When the sea moved towards the estate
and the tide invaded it, the invaded
property became foreshore land and
passed to the realm of the public domain
[Baguio v. Heirs of Abello, G.R. Nos.
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192956 & 193032 (2019), citing Republic v.
Court of Appeals, G.R. No. 100709 (1997)].
2. Avulsion [Art. 459, Civil Code]
A known portion of land is segregated from one
estate by the forceful current of a river, creek
or torrent and transferred to another.
Requisites [De Leon] [RCT-AI]
a. The segregation and transfer is caused by
the Current of a River, creek, or Torrent;
b. The segregation and transfer must be
sudden or Abrupt; and
c. The portion of land transported must be
known or Identifiable.
Effect: The ownership of the detached
property is retained by the owner provided
that he removes the same within 2 years from
the detachment [Art. 459, Civil Code].
3. Uprooted Trees [Art. 460, Civil Code]
In case of uprooted trees, the owner retains
ownership if he makes a claim within 6 months.
This refers only to uprooted trees and does not
include trees which remain planted on a known
portion of land carried by the force of the
waters. In this latter case, the trees are
regarded as accessions of the land through
gradual changes in the course of adjoining
stream [Payatas v. Tuazon, G.R. No. L-30067
(1929)].
4. Change of Course of River [Arts. 461-
462, Civil Code]
Requisites:
a. Change in the natural course of the waters
of the river;
b. Such change causes the abandonment of
the riverbeds; Note: “Natural Bed”: ground
covered by its waters during the highest
floods [Binalay v. Manalo, G.R. No. 92161
(1991)].
c. Such change is sudden or abrupt; and
d. Change is permanent.
Effects
a. Owners whose lands are occupied by the
new course of the river automatically (ipso
facto) become owners of the old bed, in
proportion to the area they lost [Art. 461,
Civil Code]. Owners of the lands adjoining
the old bed are given the right to acquire the
same by paying the value of the land, not
PROPERTY
exceeding the value of the land invaded by
the new bed (the old property of the owner)
[Art. 461, Civil Code].
b. The new bed opened by the river on a
private estate shall become of public
dominion [Art. 462, Civil Code].
Note:
a. Where the river simply dries up, the
abandoned riverbed belongs to the State as
property of the public dominion [Art. 502,
Civil Code].
b. Sec. 58 of the Water Code (PD 1067)
provides that when a river or stream
suddenly changes its course to traverse
private lands, the owners of the affected
lands may not compel the government to
restore the river to its former river bed, nor
can they restrain the government from
taking steps to revert the river or stream to
its former course. The owners of the land
thus affected are not entitled to
compensation for any damage sustained
thereby. However, the former owners of the
new bed shall be the owners of the
abandoned bed in proportion to the area lost
by it.
5. Division of River into Branches [Art.
463, Civil Code]
Whenever the current of a river divides itself
into branches, leaving a piece of land or part
thereof isolated, the owner of the land retains
his ownership and there is no accession. He
also retains it if a portion of land is separated
from the estate by the current.
6. Formation of Islands [Arts. 464-465,
Civil Code]
They belong to the State if [Art. 464, Civil
Code]:
a. Formed on the seas within the jurisdiction of
the Philippines;
b. Formed on lakes; or
c. Formed on navigable or floatable rivers:
1. Capable of affording a channel or
passage for ships and vessels;
2. Must be sufficient not only to float bancas
and light boats, but also bigger
watercraft;
3. Deep enough to allow unobstructed
movements of ships and vessels.
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Test of whether a river is navigable: Whether
it can be used as a highway of commerce,
trade and travel [De Leon].
They belong to the private owner of the
separated land if:
a. The current of a river divides itself into
branches, leaving a piece of land or part
thereof isolated;
b. A portion of land is separated from the
estate by the current [Art. 463, Civil Code];
and
c. The island is formed in a place not
mentioned in Art. 464.
They Belong to the Owners of the Nearest
Margins or Banks if it is Formed [Art. 465,
Civil Code]:
a. through successive accumulation of alluvial
deposits; and
b. on non-navigable and non-floatable rivers.
Note: If the island is in the middle of the river,
divide longitudinally in half. If it is nearer to one
margin or bank, to the nearer riparian owner
[Art. 465, Civil Code].
Note: If a landowner allows the sea or a lake to
eat up his land completely, it is a case of
natural expropriation and if the land later
reappears, he does not regain ownership
thereof [Republic v. Cabangis, G.R. No. L-
28379 (1929)].
2. For Movables
a. Conjunction/Adjunction [Arts. 466-
471, Civil Code]
Definition: Union, without bad faith, of two
movable things belonging to different owners in
such a way that they form a single object. The
owner of the principal thing acquires the
accessory after indemnifying the owner of the
latter for its value [Art. 466, Civil Code].
General Rule: When the things united can be
separated without injury, their respective
owners may demand their separation [Art. 469
(1), Civil Code].
Exception: The owner of the accessory may
demand the separation of the things united
even if there will be injury if the accessory is
more precious than the principal thing [Art. 467
and 469 (2), Civil Code].
PROPERTY CIVIL LAW
Note: Under Art. 469 (2), an accessory is the
453, Civil Code by
thing united with the principal for the latter’s
analogy]
use, embellishment, or perfection.
Either of the Treat owners as if both
Adjunction Owners made the acted in good faith [Art.
The union of two movable things belonging to Incorporation 470 (3), Civil Code]
different owners in such a way that they form a with the
single object, but each of the component Knowledge and
things preserves its value [De Leon]. Without
Objection of the
Requisites [Art. 467, Civil Code; De Leon] Other
1. There are two movables belonging to two
different owners;
2. They are united in such a way that they form Rules in Determination of the Principal
a single object; and Thing [Art. 467-468, Civil Code]
3. They are so inseparable that their 1. That which the other has been united as an
separation would impair their nature or ornament or for its use or perfection
result in substantial injury to the other 2. If it cannot be determined by applying #1,
component. the one with the greater value
3. If the values are equal, the one with greater
Ownership of New Object Formed by volume
Adjunction 4. The thing of greater merits, taking into
consideration all the pertinent legal
Acquires the thing with provisions, as well as the comparative
Owner of
the duty to indemnify the merits, utility and volume of their respective
Principal Object
owner of the accessory things [Manresa].
in Good Faith
[Art. 466, Civil Code]
Note: In painting and sculpture, writings,
The owner of the printed matter, engraving and lithographs, the
accessory has the right to board, metal, stone, canvas, paper or
choose between: parchment shall be deemed the accessory
1. receiving thing [Art. 468 (2), Civil Code].
payment from the
owner of the When Separation Allowed [Art. 469, Civil
principal (value of
Code]
the accessory; or
Owner of 1. When separation will not cause any injury,
2. the accessory be
Principal Object the respective owners can demand
separated even if
in Bad Faith separation; or
it would be
2. When the accessory is more precious than
necessary to
the principal thing, the owner of the
destroy the
accessory may demand separation, even
principal.
though the principal thing may suffer.
There is indemnity for
Note: Owner who caused the union shall bear
damages in either case
the expenses for separation even if he acted in
[Art. 470(2), Civil Code].
good faith.
Has a right to demand
Owner of separation even though b. Commixtion/Confusion [Arts. 472-
Accessory in there may be damage if 473, 475, Civil Code]
Good Faith the accessory is more Definition
valuable 1. Mixture: Two or more things belonging to
different owners are combined with the
By analogy, they are respective identities of the component parts
Both are in Bad destroyed or lost.
treated as if they were
Faith 2. Commixtion: Mixture of solid things
both in good faith [Art.
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PROPERTY CIVIL LAW
3. Confusion: Mixture of liquid things [De 2. Demand indemnity for the material [Art. 474
Leon] (2), Civil Code]

Rules [Arts. 472-473, Civil Code]
1. Co-ownership based on proportional
value if caused by:
a. the will of the parties;
b. chance, and injury will result if things are
separated; or
c. will of only one owner, but in good faith.
2. If caused by the will of one party in bad
faith:
a. He forfeits the thing belonging to him
b. He must pay damages
3. If the mixture is made with the
knowledge, but without the objection, of
the other owner the parties will be
considered as if they acted in good faith [Art.
470, Civil Code by analogy; De Leon].
Note: Good faith in accession does not
necessarily exclude negligence, which gives
rise to damages [Art. 456, Civil Code by
analogy].
c. Specification [Art. 474-475, Civil
Code]
Definition [Art. 474, Civil Code]
Takes place when the work of a person is done
on the material of another, and such material,
in consequence of the work itself, undergoes a
transformation [De Leon, citing Manresa].
It is the transformation of another’s material by
the application of labor, into a thing of a
different kind.
If the owner of the material was in bad faith,
the maker in good faith may:
1. Appropriate the new thing without paying
the owner of the material; or
2. Require the owner to pay him the value of
the thing, his work, or labor, with damages
[Applying Art. 470 (2), Civil Code by
analogy; De Leon].
Worker/Maker in Bad Faith [Art. 474 (3),
Civil Code]
If the maker was in bad faith, but the owner of
the materials was in good faith, the owner may:
1. Appropriate the work to himself without
paying the maker
a. Exception: if the value of the work, for
artistic or scientific reasons, is
considerably more than that of the
material [in this case, only option 2 is
available]; or
2. Demand the maker to indemnify him for the
value of the material and damages.
Worker/Maker Made Use of Material with
Consent and Without Objection of Owner
Rights shall be determined as though both
acted in good faith [Art. 474 (1), Civil Code].
Note: For the right of accession with regards to
moveable property, sentimental value is duly
appreciated [Art. 475, Civil Code].

Example: Turning grapes into wine, flour into

bread [De Leon]

Worker/Maker in Good Faith [Art. 474, Civil

Code]
General Rule: The worker in good faith who
employs the material of another to make a thing
of a different kind appropriates the thing thus
transformed after indemnifying the owner of the
materials for the value of the material [Art. 474
(1), Civil Code].

Exception: If the material is more valuable or

more precious than the new thing, the owner of
the material may:
1. Appropriate the new thing to himself after
paying indemnity for the value of the work;
or

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PROPERTY CIVIL LAW
SUMMARY OF BPS/LO/OM RULES
Builder/Planter/Sower
Landowner (LO) Owner of Materials (OM)
(BPS)

ALL Acted in Good Faith

1. Right to acquire 1. Right of retention until 1. Collect value of

improvements and pay
indemnity to BPS;
subsidiary liability to OM
2. Sell the land to BP
except if the value of the
land is considerably
more; or
3. Rent to S
necessary and useful material primarily
expenses are paid from BPS and
2. To pay value of subsidiarily to
materials to OM landowner if BPS is
insolvent; and
2. Limited right of
removal (if the
removal will not
cause any injury)

LO in GF BPS in GF OM in BF

1. Right to acquire 1. Right of retention until 1. Lose the material

improvements and pay
indemnity to BPS;
2. Sell land to BP except if
the value of the land is
considerably more; or
3. Rent to S
necessary and useful without right to
expenses are paid indemnity
2. Keep improvements 2. Must pay for
without indemnity to damages to BPS
OM and collect
damages from him

LO in GF BPS in BF OM in BF

1. Right to collect damages Recover necessary expenses 1. Recover from BPS

from BPS in any case for preservation of land from (as if both are in
and the option to either LO unless LO sells land GF)
a. Acquire 2. If BPS acquires
improvements improvements,
w/o paying for remove materials if
indemnity; feasible w/o injury
b. Demolition or 3. No action against
restoration; or LO but may be
c. Sell to BP, or to liable to LO for
rent to sower consequential
2. Pay necessary expenses damages
to BPS

ALL Acted in Bad Faith

Same as when all acted in GF under Art. 453

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PROPERTY
Landowner (LO)
LO in BF
1. Acquire improvement after
paying indemnity and
damages to BPS unless the
latter decides to remove
2. Subsidiarily liable to OM for
value of materials if he
acquires improvements and
pays damages to BPS; no
subsidiary liability if BPS
chooses removal in any
event.
LO in BF
1. Right to acquire
improvements and pay
indemnity to BPS;
subsidiarily liable to OM
2. Has option to:
a. Sell the land to BP
except if the value of
the land is
considerably more; or
b. Rent to S
LO in GF
LO has right to collect damages
from BPS in any case and the
option to either:
1. Acquire improvements
w/o paying for indemnity;
2. Demolition or
restoration; or
3. Sell to BP or rent to S
Pay necessary expenses to BPS
LO in BF
Acquire improvements and pay
indemnity and damages to BPS
unless the latter decides to
remove materials
UP Law Bar Operations Commission 2022
CIVIL LAW
Builder/Planter/Sower
Owner of Materials (OM)
(BPS)
BPS in GF OM in GF
1. May remove 1. Remove materials at
improvements any event
2. Be indemnified for 2. Collect value of
damages in any event materials from BPS;
3. Pay OM the value of the subsidiarily from LO, if
materials LO is made to pay for
improvements and
damages
BPS in BF OM in GF
1. No right of retention 1. Collect value of
2. Pay value of materials to materials primarily from
OM and pay him BPS and subsidiarily
damages from LO if LO acquires
the improvements
2. Collect damages from
BPS
3. Absolute right to
remove materials in
any event (if BPS
acquires
improvements)
BPS in BF OM in GF
1. Right to necessary 1. Collect value of
expenses materials primarily
2. Pay value of from BPS and
materials to OM subsidiarily from LO
3. Pay damages to 2. Collect damages
OM/LO from BPS
3. If BPS acquires
improvements,
absolute right of
removal in any event
BPS in GF OM in BF
1. Receive indemnity for 1. Right to indemnity
damages 2. Loses right to the
2. Absolute right of materials
removal of
improvements in any
event
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PROPERTY CIVIL LAW
III. CO-OWNERSHIP d. Condominium Law: co-ownership of the
common areas by holders of units [Sec. 6,
RA 4726]
A. Requisites
2. Contract
1. Plurality of owners; a. In general [Art. 494, Civil Code]
2. Object must be an undivided thing or right; b. Universal partnership [Art. 1779, Civil Code]
and c. Associations [Art. 1775, Civil Code]
3. Each co-owner’s right must be limited only
to his ideal or abstract share of the
3. Intestate Succession
physical whole [De Leon].
Co-ownership between the heirs before
partition of the estate [Art. 1078, Civil Code]
What Governs Co-Ownership [Art. 484
(2), Civil Code]
4. Testamentary Disposition or
1. Contracts;
2. Special laws; and Donation Inter Vivos
3. The Civil Code. Donations Made to Several Persons Jointly
a. General Rule: When a donation is made to
Characteristics several persons jointly, it is understood to
1. There are 2 or more co-owners. be in equal shares, and there shall be no
2. There is a single object which is not right of accretion among them,
materially or physically divided and his b. Exception: The donor has otherwise
ideal share of the whole. provided [Art. 753, Civil Code].
3. There is no mutual representation by the
co- owners. Donations Made to Spouses Jointly
4. It exists for the common enjoyment of the a. General Rule: In donations to spouses
co- owners. jointly, right of accretion is presumed
5. It has no distinct legal personality. b. Exception: The donor provides otherwise
6. It is governed first of all by the contract of [Art. 753 (2), Civil Code]
the parties; otherwise, by special legal
provisions, and in default of such Prohibition against partition: A donor or
provisions, by the provisions of Title III on testator may prohibit partition for a period
Co-Ownership [De Leon]. which shall not exceed 20 years [Art. 494 (3),
Civil Code].
Only Limitation
Each of the co-owners holds the property pro 5. By Fortuitous Event or by Chance
indiviso and exercises his or her rights with the a. Co-ownership between owners of 2 things
entire property; thus, each co-owner may use that are mixed by chance or by will of the
and enjoy the property with no other limitation owners [Art. 472, Civil Code]
than that he shall not injure the interests of his b. Hidden Treasure [Art. 438, Civil Code] -
co-owners [Silva v. Lo, G.R. No. 206667 When the discovery is made on the property
(2021)]. of another, or of the State or any of its
subdivisions, and by chance, one-half shall
be allowed to the finder.
B. Sources of Co-Ownership
6. By Occupancy
1. Law Harvesting and fishing: co-ownership by two or
a. Cohabitation: co-ownership between more persons who have seized a res nullius
common law spouses [Arts. 147, 148, 90, thing [Art. 713, Civil Code]
Family Code]
b. Purchase creating implied trust [Art. 1452,
Civil Code]
c. Easement of party wall: co-ownership of
part- owners of a party wall [Art. 658, Civil
Code]

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PROPERTY
C. Rights of Co-Ownership
1. Right to Share in the Benefits as
Well as the Charges [Art. 485, CC]
a. Proportionality
The share of the co-owners shall be
proportional to their respective interests. Any
stipulation to the contrary is void [Art. 485 (1),
Civil Code].
b. Presumption of Equal Share
The portions belonging to the co-owners in the
co-ownership shall be presumed equal, unless
the contrary is proved [Art. 485(2), Civil Code]
2. Right to Use the Thing Owned in
Common [Art. 486, Civil Code]
Each co-owner may use the thing owned in
common.
Limitations
a. In accordance with the purpose for which
the co-ownership is intended.
• The purpose of the co-ownership may be
changed by agreement, express or
implied
b. In such a way as to not injure the interest of
the co-ownership
c. In such a way as not to prevent the other co-
owners from using it according to their right.
3. Right to Bring an Action in
Ejectment [Art. 487 Civil Code]
Actions contemplated: All cases for recovery
of possession (forcible entry, unlawful detainer,
accion publiciana, replevin, accion
reivindicatoria).
The Action is considered filed for the benefit of
all the co-owners.
A co-owner may bring such an action without
joining all the other co-owners as co-plaintiffs
because the suit is presumed to have been
filed to benefit his co-owners. If the plaintiff/co-
owner claims to be the sole owner, the action
should be dismissed [Clemente v. Republic,
G.R. No. 220008 (2019)].
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CIVIL LAW
4. Right to Compel Other Co-Owners
to Contribute to the Expenses of
Preservation and to the Taxes [Art.
488, Civil Code]
General Rule: Each co-owner shall have a
right to compel the other co-owners to
contribute:
a. To the necessary expenses (incurred for
preservation of the thing or right). If
practicable, he must first notify his co-
owners of the necessity for such repairs
[Art. 489, Civil Code]
b. To the taxes [Art. 488, Civil Code]
Exception to paying necessary expenses
and taxes: Co-owner no longer has to pay if he
renounces his undivided interest as
equivalent to his share of expenses and
taxes [Art. 488, Civil Code]. This means that
his/her renunciation does not cover all of
his/her interest in the property co-owned.
Exception to the Exception: No waiver shall
be made if prejudicial to co-ownership [Art.
488, Civil Code].
a. Expenses to improve or embellish the thing
shall be decided upon by a majority as
determined in Art. 492, Civil Code.
b. As for the expenses for pure luxury or mere
pleasure, these are not refundable for not
serving purposes of preservation [Art. 548,
Civil Code].
5. Right to Reimbursement for
Necessary Repairs [Art. 488-489,
Civil Code]
General Rule: A co-owner has the right to
compel the other co-owners to contribute to the
expenses of preservation, maintenance, or
necessary repairs of the thing or right owned in
common and to the taxes [Art. 488, Civil Code].
Requirement of notice: If practicable, the co-
owner must first notify the co-owners of the
necessity for the repairs [Art. 489, Civil Code].
Exception to the requirement of notice: If
impracticable or where the repairs are very
urgent, and the other co-owners are in remote
places and cannot be reached by an ordinary
means of communication. This means that
his/her renunciation does not cover all of
his/her interest in the property co-owned.
PROPERTY
Lack of notice even if practicable: Does not
exempt other co-owners to contribute. The co-
owner who advanced them has the burden of
proving that they were properly incurred.
6. Right to Oppose Alterations [Art.
491, Civil Code]
General Rule: Unanimous Consent: None of
the co-owners shall, without the consent of the
others, make alterations in the thing owned in
common, even though benefits for all would
result therefrom.
Rationale: Alteration is an act of ownership.
Alteration – a change in the nature or use of a
thing; it contemplates a permanent change.
Examples:
a. Change of the thing from the state or
essence in which the others believe it
should remain. Withdrawal of the thing from
the use to which they wish it to be intended
b. Any other transformation which prejudices
the condition or substance of the thing or its
enjoyment by the others [Manresa].
Examples of Alterations
a. The construction of a house on the co-
owned property is an act of dominion. It is
an alteration of the property owned in
common [Cruz v. Catapang, G.R. No.
164110 (2008)].
b. Mortgage, donation, or sale of a portion or
the whole of the property co-owned
c. Allowing or entering into an easement
Exception: If the withholding of the consent by
one or more of the co-owners is clearly
prejudicial to the common interest, the
courts may afford adequate relief.
7. Right to Full Ownership of His Part
and of the Fruits and Benefits
Pertaining thereto [Art. 493, Civil
Code]
As a result, the co-owner has a right to:
a. Alienate;
b. Assign;
c. Mortgage; and
d. Substitute another person in its enjoyment.
Note: Actions above can only pertain to the co-
owner’s ideal share prior to partition.
Exception: When personal rights are involved;
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CIVIL LAW
8. Right to Partition [Art. 494, Civil
Code]
Partition is the separation, division and
assignment of a thing held in common among
those to whom it may belong. Every act which
is intended to put an end to indivision among
co-heirs and legatees or devisees is deemed to
be a partition. Partition may be inferred from
circumstances sufficiently strong to support the
presumption. Thus, after a long possession in
severalty, a deed of partition may be presumed
[Spouses Marcos v. Heirs of Bangi, G.R. No.
185745 (2014)].
General Rule
a. No co-owner shall be obliged to remain in
the co-ownership; and
b. Each co-owner may demand at any time the
partition of the thing owned in common,
insofar as his share is concerned [Art. 494
(1), Civil Code].
Note: A creditor or assignee of a co-owner may
take part in the division of the thing owned in
common and object to its being effected
without their concurrence. But they cannot
impugn any partition already executed unless
there has been fraud or in case it was made
notwithstanding a formal opposition to prevent
it, without prejudice to the right of the debtor or
assignor to maintain its validity [Art. 497, Civil
Code]
Exceptions
a. An agreement to keep the thing undivided
for a certain period of time, not exceeding
10 years, shall be valid [Art. 494, Civil
Code].
b. A donor or testator may prohibit partition for
a period which shall not exceed 20 years
[Art. 494, Civil Code].
c. Neither shall there be any partition when it
is prohibited by law [Art. 494, Civil Code].
d. When physical partition would render the
thing unserviceable for the use for which it
is intended [Art. 495, Civil Code].
Note: If the thing owned in common is
indivisible:
a. The co-owners can agree that it be alloted
to one of them, and the latter will indemnify
the others; or
b. If they cannot agree, the thing shall be sold
and its proceeds distributed [Art. 498, Civil
Code]
 PROPERTY
Note: No prescription shall run in favor of a co-
owner or co-heir against his co-owners or co-
heirs so long as he expressly or impliedly
recognizes the co-ownership [Art. 494, Civil
Code].
Elements for Prescription to Run in Favor
of Co-Owner:
a. He has performed unequivocal acts of
repudiation amounting to an ouster of the
other co-owners;
b. Such positive acts of repudiation have been
made known to the other co-owners; and
c. The evidence thereon must be clear and
convincing [Salvador v. CA, G.R. No.
109910 (1995)].
Sample of Acts of Repudiation
a. Filing of actions in court like quieting of title,
accion reivindicatoria and other similar suit
b. Co-owner who causes cancellation of the
existing title and petitions for an issuance of
a new title in his favor
c. Co-owner who permanently fences the
property and hires security personnel to
prevent other co-owners from entering the
property
9. Right to Redemption [Art. 1619, Civil
Code]
Definition
Legal redemption – the right to be
subrogated, upon the same terms and
conditions stipulated in the contract, in the
place of one who acquires a thing by purchase
or dation in payment, or by any other
transaction whereby ownership is transmitted
by onerous title [Art. 1619, Civil Code].
General Rule: A co-owner of a thing may
exercise the right of redemption in case the
shares of all the other co-owners or of any of
them are sold to third person [Art. 1620, Civil
Code].
As legal redemption is intended to minimize co-
ownership, once a property is subdivided and
distributed among the co-owners, the
community ceases to exist and there is no
more reason to sustain any right of legal
redemption. Every act intended to put an end
to indivision among co-heirs is deemed to be a
partition [Avila v. Sps. Barabat, G.R. No.
141993 (2006)].
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CIVIL LAW
10. Right to Participate in
Administration of Property
Owned in Common [Art. 492,
Civil Code]
General Rule
a. For the administration and better enjoyment
of the thing owned in common, the
resolutions of the majority of the co-owners
shall be binding [Art. 492 (1), Civil Code].
b. There shall be no majority unless the
resolution is approved by the co-owners
who represent the controlling interest in the
object of the co-ownership [Art. 492 (2), Civil
Code].
Exceptions to Acts of Administration Only
by Majority
a. If there be no majority; or
b. If the resolution of the majority is seriously
prejudicial to those interested in the
property owned in common.
In which case, the court will intervene: the
court, at the instance of an interested party,
shall order such measures as it may deem
proper, including the appointment of an
administrator.
Examples of Acts Seriously Prejudicial
a. Call for a substantial change of the thing
b. Authorizing leases, loans, and other
contracts without the necessary security,
thereby exposing the property to serious
danger
c. Continued employment of an administrator
who is guilty of fraud or negligence in his
management [Manresa]
Note: A co-owner is entitled to a written notice
from a selling co-owner in order to remove all
uncertainties about the sale, its terms and
conditions, as well as its efficacy and status
[Verdad v. Court of Appeals, G.R. No. 109972
(2000)].
PROPERTY CIVIL LAW
D. Rules Acts of Majority of co-owners
administration [Art. 492, Civil Code]
1. On Renunciation of Share (ex. Payment of
A co-owner may exempt himself from the taxes/association
payment of expenses of preservation by dues, hiring
renouncing his undivided interest in the co- contractors to do
ownership as may be equivalent to his share in minor repairs)
the necessary expenses and taxes [Art. 488,
Civil Code]. Improvement/ Majority of co-owners
Embellishing the [Arts. 489 and 492,
A co-owner who has not waived his share in Thing/ Useful Civil Code]
the co-ownership may be compelled to pay his expenses (ex.
share in the cost of its maintenance, but he Swimming pool,
may not be compelled to renounce. CCTV, landscaped
gardens, etc.)
Waiver of renunciation is not allowed if it is
prejudicial to the co-ownership [Art. 488, Civil
Code].
3. Rules on Multi-Story House [Art.
490, Civil Code]
2. Repairs for Preservation Applies when:
a. The different stories of a house belong to
Embellishments or different owners;
Improvements b. The titles of ownership do not specify the
Requires consent of majority of co-owners terms under which they should contribute to
representing the controlling interest in the the necessary expenses; and
undivided thing [Art. 489 and 492, Civil Code]. c. There exists no agreement on the subject.
Note: The rules under Art. 492 are applicable,
so judicial intervention may be resorted to. Part of the Manner of
House Contribution
Summary
Main and party All owners contribute in
Act of Co-Owner Consent Needed walls, the roof, proportion to the value of
and the other the story belonging to
things used in each
Preservation (ex. May be made at will common
Critical maintenance by any co-owner, but
work – roof leaks, preferably notice is Floor of the All owners contribute pro
cracks in the walls, given to others [Arts. entrance, front rata or equally
electrical wiring 488 and 489, Civil door, common
system which Code]. yard, and
renders property sanitary works
unsafe/unhealthy to common to all
live in)
The floor of each Each owner bears the
co-owner’s story cost of maintaining the
Alterations (ex. Consensus of all co- floor of his story
Sale, mortgage, owners [Art. 491,
assignment) Civil Code]

Lease for more Consensus of all co-

than 1 year owners (considered
an act of alteration,
see Tolentino)

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PROPERTY
Stairs Stairs from the first
entrance to the first story
– pro rata sharing of all
owners except the
owner of the ground floor
Stairs from the first to the
second story - pro rata
sharing of all owners
except the owner of the
ground floor and that of
the first story; and so on.
E. Termination or
Extinguishment
Means of Termination
1. Total destruction of the thing owned in
common
2. Merger of all interests in one person
3. Acquisitive prescription
4. Partition
5. Sale of property co-owned
6. Termination of period agreed upon in co-
ownership
1. Total Destruction of Thing or Loss
of the Property Co-Owned
Exception: If the building is destroyed, there is
still co-ownership over the land and the debris
[Tolentino].
2. Merger of All Interests in One
Person
This may take place by any of the causes which
are sufficient to transmit title to an obligation,
either by assignment, subrogation, and sale of
inheritance.
3. Acquisitive Prescription
This is a mode of acquiring ownership by a
possessor through the requisite lapse of time.
It may be ordinary or extraordinary [Art. 1117,
Civil Code].
Ordinary Acquisitive prescription requires
possession of things in good faith and with a
just title for the time fixed by the law [De Leon].
Extraordinary Prescription is the opposite. No
good faith or just title is required, but long
possession under Art. 1132 (2) [De Leon].
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4. Partition or Division
Modes
a. Extrajudicial partition – The agreement
may be oral or written, done outside of court
[Vda. de Reyes v. CA, G.R. No. 92436
(1991)].
b. Judicial partition – Governed by the Rules
of Court insofar as they are consistent with
the Civil Code [Art. 496, Civil Code].
Action for Partition Will Determine: [Heirs
of Cesar Marasigan v. Marasigan, G.R.
No. 156078 (2008)]
a. Whether or not the plaintiff is indeed a co-
owner of the property
b. How the property will be divided between
the plaintiff and defendant
Incidents of Partition
a. Mutual accounting for benefits received and
reimbursement for expenses made [Art.
500, Civil Code].
b. Payment of damages by each co-owner
caused by reason of his negligence or fraud
[Art. 500, Civil Code].
c. Liability of each co-owner for defects of title
and quality of the portion assigned to each
of the co-owners [Art. 501, Civil Code].
Effects of Partition
a. Confers exclusive ownership of the property
adjudicated to a co-heir [Art. 1091, Civil
Code].
b. Co-heirs shall be reciprocally bound to
warrant the title to, and the quality of each
property adjudicated [Art. 1092, Civil Code].
c. Reciprocal obligation of warranty shall be
proportionate to the respective hereditary
shares of co-heirs [Art. 1093, Civil Code].
d. An action to enforce the warranty must be
brought within 10 years from the date the
right of action accrues [Art. 1094, Civil
Code].
e. The co-heirs shall not be liable for the
subsequent insolvency of the debtor of the
estate, but only for his insolvency at the time
the partition is made [Art. 1095, Civil Code].
Rights of Third Parties in Partition
a. The partition of a thing owned in common
shall not prejudice third persons, who shall
retain the rights of mortgage, servitude, or
any real rights belonging to them before the
division was made [Art. 499, Civil Code].
PROPERTY
Note: A “third person” is defined as all those
who did not in any way participate or
intervene in the partition [Paras citing 3
Manresa 54 and Gonzaga v. Martinez, G.R.
No. L-3196 (1908)].
b. The creditors or assignees of the co-owners
may take part in the division of the thing
owned in common and object to its being
effected without their concurrence [Art. 497,
Civil Code].
Note: All kinds of creditors whether
preferred or ordinary are included within the
scope of creditors; but they must have
become creditors during the existence of
the co-ownership and not before or after
[Paras citing 3 Manresa 528-529].
Exception: If the partition was already
executed, the creditors/assignees cannot
impugn the same.
CIVIL LAW
5. Sale of Property Co-Owned [Art.
498, Civil Code]
The sale shall be resorted to only if:
a. The property is essentially indivisible.
b. The co-owners cannot agree that the entire
property be allotted or assigned to one of
them, who shall reimburse the other co-
owners of their shares.
6. Termination of Period Agreed Upon
by the Co-Owners [Art. 494, Civil
Code]
An agreement to keep the thing undivided for a
certain period of time, not exceeding 10 years,
shall be valid. This term may be extended by a
new agreement.
A donor or testator may prohibit partition for a
period which shall not exceed 20 years.

Exception to the Exception: There was fraud

or a previous formal opposition against the
partition, without prejudice to the right of the
debtor or assignor to maintain its validity [Art.
497, Civil Code].

The law does not expressly require previous

notice to the creditors and assignees before a
partition [Tolentino].

If notice is not given, the partition is not binding

on the creditors and assignees.

But once notice has been given, it is the duty of

creditors and assignees to intervene and make
known their stand. If they fail to do so, they
cannot question the division made, except in
cases of fraud.

Partition of an Indivisible Thing [Art. 498,

Civil Code]
a. 1st option: The co-owners can agree that
one of them shall be the sole owner by
paying the value of the other co-owners’
shares.
b. 2nd option: If they cannot agree who
among them shall be the sole owner, the
property will be sold to a 3rd person and the
proceeds will be distributed among them.

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PROPERTY
IV. POSSESSION
A. Kinds of Possession
1. Possession for Oneself, or
Possession Exercised in One’s
Own Name and Possession in
the Name of Another
a. In One’s Own Name
The fact of possession and the right to such
possession is found in the same person.
b. In the Name of Another
The one in actual possession is without any
right of his own, but is merely an instrument of
another in the exercise of the latter’s
possession. It can either be:
1. Voluntary: When exercised by virtue of an
agreement (e.g. agents or administrators
appointed by the owner or possessor). Third
persons may also voluntarily exercise
possession in the name of another, but it
does not become effective unless ratified by
the person in whose name it is exercised.
2. Necessary or legal: When exercised by
virtue of law (e.g. representatives who
exercise possession in behalf of a
conceived child, juridical persons, persons
not sui juris, and the CPG)
2. Possession in the Concept of a
Holder with the Ownership
Belonging to Another [Art. 525,
Civil Code]
One who possesses as a mere holder, not in
the concept of owner, acknowledges in another
a superior right which he believes to be
ownership, whether his belief is right or wrong,
e.g., tenant, usufructuary, borrower in
commodatum.
Examples of Possession in Concept of
Holder
a. Lessees
b. Trustees, including: parents over the
properties of their children; and husband
and wife over each other’s property
c. Antichretic Creditors
d. Agents
e. Attorneys regarding their client’s properties
f. Depositaries
g. Co-Owners
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CIVIL LAW
3. Possession in the Concept of an
Owner
Possession in the concept of an owner refers
to his overt acts which tend to induce the belief
on the part of others that he is the owner.
Possession in the concept of an owner is jus
possidendi.
If a person possesses in the concept of
owner—he may eventually become the owner
by prescription. Thus, a possessor merely in
the concept of holder cannot acquire property
by acquisitive prescription—one cannot
recognize the right of another and at the same
time claim adverse possession.
4. Possession in Good Faith
a. Possessor in Good Faith
One who is unaware that there exists a flaw
which invalidates his acquisition of the thing.
He believes that the person from whom he
received a thing was the owner of the same
and that therefore he is now the owner based
upon ostensible title or mode of acquisition,
e.g. sale, donation, inheritance, or other means
of transmitting ownership [Art. 526, Civil Code].
b. Rights of a Possessor in Good Faith
1. Fruits [Art. 544, Civil Code]
2. Refund of necessary expenses [Art. 546,
Civil Code]
3. Refund of useful expenses [Art. 546, Civil
Code]
4. Right of retention when there are unpaid
necessary or useful expenses [Art. 546,
Civil Code]
5. Removal of useful/ornamental
improvements without damage to the
principal thing [Arts. 546-547, Civil Code]
6. No liability for deterioration or loss, except
in cases of fraudulent intent or negligence
[Art. 552, Civil Code]
7. May acquire full ownership by prescription
[Arts. 1117-1138, Civil Code]
8. Presumption of just title [Art. 541, Civil
Code]
9. Can ask for the inscription of possession in
the Registry of Property [Art 708, Civil Code]
10. Generally, he/she can do on the things
possessed everything that the law
authorizes an owner to do until he/she is
ousted by one who has a better right
11. Can exercise the right of pre-emption and
is entitled to indemnity in case of
appropriation
PROPERTY
12. Has presumption of continuity of good faith
[Arts. 528-529, Civil Code]
13. Non-interruption of possession
(possession during intermediate period)
[Arts. 554 and 561, Civil Code]
14. Right to be respected and
protected/restored in his/her possession
by the means established by the laws and
the Rules of Court [Art. 539, Civil Code].
These include summary actions (forcible
entry and unlawful detainer), accion
publiciana, and action for replevin. Accion
reivindicatoria is not included. “Every
possessor” – includes all kinds of
possession, from that of an owner to that
of a mere holder, except that which
constitutes a crime.
15. Lawful possessor can employ self-help
[Art. 429, Civil Code]
16. Possession of an immovable extends to
the movables within or inside [Arts. 542
and 426, Civil Code] (Exception: When it
is shown or proven that such movables
should be excluded)
c. Other Consequences
1. Possession is converted into ownership
after the required lapse of time necessary of
prescription [Art. 540, Civil Code]
a. The possession must be under claim of
ownership, and it must be peaceful,
public and uninterrupted [Art. 1118, Civil
Code].
b. Acts of possessory character done by
virtue of a license or mere tolerance on
the part of the real owner are not
sufficient and will not confer title by
prescription or adverse possession [Art.
1119, Civil Code].
c. The following cannot acquire title by
prescription:
1. Lessees, trustees, pledges, tenants
on shares or planters, and all those
who hold in the name or in
representation of another.
2. Mere holders placed in possession of
the property by the owner such as
agents and employees.
3. Those holding the title in a fiduciary
character such as receivers,
attorneys, depositaries, and
antichretic creditors.
4. Co-owner, with regard to common
property (Exception: When he/she
holds the same adversely against all
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CIVIL LAW
of the other co-owners with notice to
them of the exclusive claim of
ownership)
2. Entitlement to fruits/expenses: Possessor in
Good Faith [Arts. 544, 526-527, Civil Code]
As to the Fruits
1. Fruits already received [Art. 544 (1), Civil
Code]: Entitled to all the fruits received
before possession is legally interrupted. (i.e.
before summons)
2. Fruits still pending [Art. 545, Civil Code]:
Entitled to prorate the fruits already growing
when possession is legally interrupted.
As to Necessary Expenses [Art. 546(1), Civil
Code]
1. Imposed by the thing itself and have no
relation to the desire or purpose of the
possessor; hence they are reimbursed,
whatever may be the juridical character
of the person who advanced them.
2. The possessor in good faith may retain the
thing until he/she is reimbursed for
necessary expenses.
As to Useful Expenses [Arts. 546 (2) and
547, Civil Code]
1. Incurred to give greater utility or productivity
to the thing.
2. They are reimbursed only to the possessor
in good faith as a compensation or reward.
A possessor in bad faith cannot recover
such expenses.
3. The possessor in good faith may retain the
thing until he/she is reimbursed for useful
expenses.
4. The other party has the option to:
a. Refund the amount of expenses; or
b. Pay the increase in value which the
thing may have acquired.
PROPERTY
As to Ornamental Expenses or Expenses
for Pure Luxury [Art. 548, Civil Code]
The possessor in good faith is not entitled to a
refund for ornamental improvements but such
improvements may be removed if they do not
cause damage to the principal thing.
5. Possession in Bad Faith
One who is aware that there exists in his/her
title or mode of acquisition any flaw which
invalidates it [Art. 526, Civil Code].
Requisites
a. Possessor has a title or mode of acquisition;
b. There is a flaw or defect in said title or mode;
c. Examples of vice or defect in title:
1. Grantor was not the owner
2. Requirements for transmission were not
complied with
3. Mistake in the identity of the person
4. Property was not really res nullius.
d. The possessor is aware of the flaw or defect
in the title.
Rights of a Possessor in Bad Faith
a. Right to be respected in possession [Art.
539, Civil Code]
b. Right to necessary expenses and the
expenses for production, gathering, and
preservation of fruits [Arts. 545-546, Civil
Code]
c. Does not have right to reimbursement of
expenses for luxury but may remove them
as long as the principal thing suffers no
injury or may sell them to the owner who
opts to buy the removable ornaments [Art.
549, Civil Code]
d. No right to reimbursement for useful
improvements and no limited right of
removal [Art. 546, Civil Code]
e. Right to remove ornamental improvements
or be paid the value of such at the time of
recovery but at the owner’s option.
Obligations of a Possessor in Bad Faith
a. Reimburse the value of fruits received and
which the legitimate possessor could have
received [Art. 549, Civil Code]
b. Pay in proportion to the charges, expenses
of cultivation and the net proceeds upon
cessation of good faith [Art. 545, Civil
Code].
c. Bear the costs of litigation [Art. 550, Civil
Code]
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d. Liability to the deterioration/loss of a thing
possessed in every case, including
fortuitous events [Art. 552, Civil Code].
B. Acquisition of Possession
(including possession based
on tolerance)
1. Ways of Acquiring Possession
a. By the Material Occupation of a Thing
or the Exercise of a Right
Possession is acquired through the following
modes of constructive delivery:
1. Traditio brevi manu – If the
transferee/buyer already had possession of
the object under a different title even before
the sale (e.g., lessee, depositary
subsequently buys the property)
2. Traditio constitutum possessorium – the
transferor/seller continues in the
possession of the object, but not in the
concept of an owner (e.g., owner sells the
property and becomes lessee)
For constructive possession, see the
discussion under Characteristics of
Possession.
b. By the Fact that the Thing is Subject
to the Action of Our Will
Possession is acquired through the following
modes of constructive delivery:
1. Traditio simbolica – delivering an object or
symbol, and placing the thing under the
control of the transferee (ex. Giving a key
where the thing or object is stored, kept or
under custody. Since the key is with the
vendee, then it means that the latter can
gain access to the object)
2. Traditio longa manu – the transferor points
out to the transferee the things which are
being transferred, or they merely agree or
consent that delivery has been effected
c. By the Proper Acts and Legal
Formalities Established for Acquiring
Such Right
Acquisition by virtue of a just title such as when
property is transmitted by succession,
donation, contract, or execution of a public
instrument, etc.
PROPERTY
2. By Whom May Possession be
Acquired [Arts. 532-534, Civil
Code]
Who Acquires Possession [Arts. 532-534,
Civil Code]
a. The same person who is to enjoy it
b. His legal representative
c. His agent
d. Any person without any power whatsoever
General Rule: Only acquired upon
ratification.
Exception: In cases of negotiorum gestio
where a person voluntarily manages the
property or business of another, the
stanger’s possession takes effect even
without ratification by the property owner.
e. His heirs
1. If there is bad faith on the part of the
decedent: The effects of the decedent’s
wrongful possession will not affect his
heirs. The heir suffers the consequences
of such possession only from the
moment he becomes aware of the flaws
affecting the decedent’s title [Art. 528 as
cited in De Leon].
2. If there is good faith on the part of the
decedent: The effects of the decedent’s
possession will benefit the heirs only
from the date of his death.
Legal Capacity to Acquire Possession
[Art. 535, Civil Code]
Minors and incapacitated persons may acquire
possession BUT they need the assistance of
their legal representatives to exercise their
rights arising from such possession.
3. Preference of Possession [Art. 538,
Civil Code]
General Rule: Possession as a fact cannot be
recognized at the same time in two different
personalities
Exception: Co-possession
In case a dispute arises, the order of
preference is as follows:
a. The present possessor shall be preferred
b. If there are two possessors, the one longer
in possession is preferred
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c. If the dates of the possession are the same,
the one who presents a title is preferred
d. If all the foregoing conditions are equal, the
thing shall be placed in judicial deposit
pending determination of its possession or
ownership through proper proceedings.
4. What Does Not Affect Possession
a. Acts Merely Tolerated [Art. 537, Civil
Code]
1. Those which because of neighborliness or
familiarity, the owner of property allows
another person to do on the property
[Tolentino].
2. Permissive use merely tolerated by the
possessor cannot affect possession and
cannot be the basis of acquisitive
prescription [Art. 1119, Civil Code].
a. Possession to constitute the foundation
of prescriptive right must be possession
under claim of title; it must be adverse
[Cuaycong v. Benedicto, G.R. No. L-
9989 (1918)].
3. A possessor by tolerance is necessarily
bound by an implied promise to vacate upon
demand, failing which a summary action for
ejectment is the proper remedy against him
[Peran v. CFI, G.R. No. L-57259 (1983)].
b. Acts Executed Clandestinely and
Without the Knowledge of the
Possessor [Art. 537, Civil Code]
1. Possession by the possessor is not affected
as long as it remains clandestine and
unknown.
2. Clandestine possession” is secret
possession or possession by stealth. The
possession here must be unknown to the
owner [Paras quoting 4 Manresa 199].
3. Possession has to be in the concept of an
owner, public, peaceful and uninterrupted
[Art. 1120, Civil Code].
c. Acts of Violence as long as the
Possessor Objects Thereto [Art. 536,
Civil Code]
1. Possession cannot be acquired through
force or intimidation as long as there is a
possessor who objects thereto.
a. This includes forcibly taking away the
property from another, and also when
one occupies the property in the
PROPERTY
absence of another, and repels the latter
upon his return [Tolentino]
b. Force may be:
1. actual or threatened;
2. done by possessor or agent,
3. done against the owner or any other
possessor or the owner’s
representative;
4. done to oust the possessor [Paras].
c. Art. 536 applies to one who believes
himself the owner of real property. If he
takes justice into his own hands, he is a
mere intruder and he can be compelled
to return the property and must suffer the
NECESSARY and NATURAL
consequences of his lawlessness [De
Leon citing Santiago v. Cruz, G.R. No.
31919 (1930)].
2. He who believes that he has an action or a
right to deprive another of the holding of a
thing must invoke the aid of a competent
court, if the holder refuses to deliver the
thing.
C. Effects of Possession
1. Possession in the Concept of
Owner is Converted into
Ownership After the Required
Lapse of Time Necessary of
Prescription
To consolidate title by prescription, the
possession must be under claim of
ownership, and it must be peaceful, public,
and uninterrupted [Art. 1118, Civil Code].
Acts of possessory character done by virtue of
a license or mere tolerance on the part of the
real owner do not apply for purposes of
acquisitive prescription [Art. 1119, Civil Code].
The following cannot acquire title by
prescription (i.e. they are not adversely
possessing the property): [RPFC]
a. Lessees, trustees, pledges, tenants on
shares or planters and all those who hold in
the name or in Representation of another.
b. Mere holders placed in Possession of the
property by the owner, such as agents,
employees.
c. Those holding in a Fiduciary character like
receivers, attorneys, depositaries and
antichretic creditors.
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d. Co-owner, with regard to common property,
except: when he holds the same adversely
against all of them with notice to them the
exclusive claim of ownership.
2. Entitlement to Fruits/Expenses
a. Possessor in Good Faith
As to the Fruits
Fruits Already Received [Art. 544 (1), Civil
Code]
Entitled to all the fruits until possession is
legally interrupted (i.e. before summons, or
demand; see Art. 528 for when possession in
good faith is interrupted)
Fruits Still Pending [Art. 545, Civil Code]
Entitled pro-rata to the fruits already growing
when his possession is legally interrupted
As to the Necessary Expenses [Art. 546,
(1), Civil Code]
Definition: Necessary for the preservation of
the thing [Art. 452, Civil Code by analogy]. The
possessor in good faith may retain the thing
until he is reimbursed for necessary expenses
As to the Useful Expenses [Arts. 546 (2)
and 547, Civil Code]
Definition:
Incurred to give greater utility or productivity to
the thing
1. They are reimbursed only to the possessor
in good faith as a compensation or reward
for him.
a. Possessor in bad faith cannot recover
such expenses.
2. Possessor in good faith may retain the thing
until he is reimbursed for useful expenses.
3. The person who defeats the possessor in
possession has the option to:
a. Refund the amount of expenses; or
b. Pay the increase in value which the thing
may have acquired.
4. The possessor has the option of removing
the useful improvements, provided there is
no damage to the principal thing [Art. 547,
Civil Code].
a. Exception: When the option to pay for
the value of the expenses or the increase
in value of the thing is exercised by the
person who recovered possession.
PROPERTY CIVIL LAW
As to Ornamental Expenses or Expenses 4. Liability to the deterioration/loss of a thing
for Pure Luxury [Art. 548, Civil Code] possessed in every case, including
The possessor in good faith is not entitled to a fortuitous events [Art. 552, Civil Code].
refund for ornamental expenses. But he may
remove the ornamental improvements if they
do not cause damage to the principal thing.

Exception: The one who recovers possession

decides to refund the ornamental expenses/
expenses for pure luxury

b. Possessor in Bad Faith

Definition: One who is aware that there exists
in his title or mode of acquisition a flaw which
invalidates it [Art. 526, Civil Code].

Rights of a Possessor in Bad Faith [R2NV]

1. Right to be Respected in possession; [Art.
539, Civil Code]
2. Right to Necessary Expenses and the
expenses for production, gathering, and
preservation of fruits [Arts. 545 and 546; Art.
443, Civil Code]
3. Remove ornaments provided that the
principal thing is not injured and the lawful
possessor does not prefer to retain the
ornaments by paying their value when the
latter enters into possession [Art. 549, CC]
a. The possessor in bad faith does not have
a right to reimbursement for expenses for
luxury.

4. Right to be paid for the Value of the

ornaments at the time the lawful possessor
enters into possession, provided the latter
prefers to retain them [Art. 549, CC]

Note: A possessor in bad faith is not entitled to

reimbursement for useful expenses and has no
limited right of removal of useful improvements
[Art. 546-547, CC].

Obligations of a Possessor in Bad Faith:

[RPBL]
1. Reimburse the value of fruits received and
which the legitimate possessor could have
received [Art. 549, Civil Code].
2. Pay in proportion to the charges, expenses
of cultivation and the net proceeds upon
cessation of good faith [Art. 545, Civil
Code].
3. Bear the costs of litigation [Art. 550, Civil
Code].

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PROPERTY CIVIL LAW
V. USUFRUCT will of the parties, or the law may provide
otherwise.
d. Usufruct is extinguished by the death of the
A. In General usufructuary.
e. A person cannot create a usufruct over his
1. Characteristics own property and retain it at the same time
Usufruct is a temporary real right which gives a [De Leon quoting Gaboya v. Cui, G.R. No.
right to enjoy the property as well as its fruits of L-19614 (1971)].
another with the obligation of preserving its
form and substance, unless the title Reasons for Preserving Form and
constituting it or the law otherwise provides Substance
[Art. 562, Civil Code]. a. To prevent extraordinary exploitation;
b. To prevent abuse, which is frequent;
Constituted By: [PILL] c. To prevent impairment.
a. Law
b. Will of private persons expressed in acts Exception: In an abnormal usufruct, alteration
Inter vivos is allowed.
c. Will of private persons expressed in a Last
will 2. Classifications
d. Prescription [Art. 563, Civil Code]
As to Manner of Creation
Can be Constituted Over:
a. The whole or part of the fruits of the thing Voluntary Created by the will of
b. A right, provided it is not strictly personal or private persons
intransmissible [Art. 564, Civil Code].
By act inter vivos – such as
General Characteristics contracts and donations;
a. Nature: It is a real right of the use and
enjoyment of the property, whether or not By donation of the usufruct;
the same be registered in the Registry of
Property; By retention of the usufruct
1. It must be registered in the Registry of by donor;
Property to prejudice third persons [Art
709, Civil Code] Where a usufruct is
2. It is transmissible constituted inter vivos and
for valuable consideration,
b. Term: Of temporary duration; the contract is
c. Purpose: To enjoy the benefits and derive unenforceable unless in
all advantages from the thing due to normal writing;
exploitation;
d. Scope: May be constituted on real or By act mortis causa – such
personal property, consumable or non- as testament
consumable, tangible or intangible, the
ownership of which is vested upon another. Legal As provided by law.

Natural Characteristics Usufruct of parents over the

a. Includes jus abutendi, jus utendi, jus fruendi property of unemancipated
and jus possidendi and jus vindicandi. The children (now limited to the
only thing left with the grantor of the usufruct collective daily needs of the
is the jus disponendi. family) [Art. 226, Family
b. Usufructuary must preserve the form or Code]
substance of the thing.
c. Preservation is a natural requisite, not Mixed Created both by law and
essential because the title constituting it, the the acts of persons, i.e. by
acquisitive prescription.

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The rights and duties of the
usufructuary provided by
law may be modified or
eliminated by the parties. If
the usufructuary is
authorized to alienate the
thing in case of necessity, it
is the usufructuary who
determines the question of
necessity
As to Number of Beneficiaries
Simple Only one usufructuary
enjoys the property.
Multiple Several usufructuaries
enjoy the property as co-
usufructuaries
Simultaneous At the same time.
Successive One after the other.
Limitations:
a. If by donation, all
donees must be
alive [Art. 756, Civil
Code].
b. Fiduciary and the
second heir must
be alive at the time
of the death of the
testator [Art. 863,
Civil Code].
c. If by testamentary
succession, there
must be only 2
successive
usufructuaries, and
both must be alive
or at least already
conceived at the
time of the
testator’s death and
later born alive [Art.
869, Civil Code].
As to Object of Usufruct
Rights Must not be strictly
personal or intransmissible
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Normal Involves non-consumable
things which the
usufructuary can enjoy
without altering their form or
substance (e.g. form and
substance are preserved).
Abnormal or When the usufruct includes
Irregular things which cannot be
used in a manner
appropriate to its nature
without being consumed,
and if not consumed, may
be useless (ex: money,
grain, liquors) [De Leon].
Quasi- Includes things which
Usufruct cannot be used without
being consumed. Money
may be the object of
usufruct [Art. 574, Civil
Code]
As to Effectivity
Pure Without term or condition
With a Term With a period, which may
either be suspensive (from
a certain day) or resolutory
(to a certain day)
Conditional Subject to a condition which
may either be suspensive
(from a certain event) or
resolutory (until a certain
event)
As to Extent of the Usufruct
As to Fruits Total - all consumed by the
usufruct.
Partial - constituted only on
a part or certain aspects of
the usufruct’s fruits
As to the Singular - only on
Object particular property of the
owner.
Universal - pertains to the
usufruct over universal
property, i.e. over an entire
patrimony, a whole
PROPERTY CIVIL LAW

inheritance of a compulsory Without prejudice to Rights of innocent

heir, a dowry; the right of 3rd 3rd parties should not
persons e.g. if the be prejudiced.
fruits arose by
B. Rights and Obligations of the building, planting,
Usufructuary sowing by a
possessor in good
1. Rights faith, the pending
a. Rights as to the Thing and its Fruits crop expenses of
[HIRE FLIERS]: Half of hidden treasure, cultivation and of the
Increase, Remove, Enjoy, Fruits, Lease, net harvest and
Improvements, Expenses, Retain, Set-off charges shall be
a. To receive the Fruits of the property in prorated between
usufruct [Art. 566, CC] said possessor and
b. To enjoy any Increase that the thing in the usufructuary in
usufruct may acquire through accession, proportion to the
servitudes, and all benefits inherent therein time of possession
[Art. 571, CC] [Art. 545, Civil Code]
c. To receive Half of the hidden treasure if he
accidentally finds it on the property [Art. In the case of civil
566, CC] fruits, no need to
d. To personally Enjoy the thing in usufruct prorate, as civil fruits
[Art. 572, CC] accrue daily [Art.
e. To Lease it to another [Art. 568-569 and 544, Civil Code]
572, CC]
f. To make useful improvements or Right to Civil Fruits
Expenses he may deem proper [Art. 579, Deemed to accrue daily and belong to the
CC] usufructuary in proportion to the time the
g. To Remove improvements, provided there usufruct may last [Art. 569, Civil Code].
is no damage to the property [Art. 579, CC]
h. To Set-off improvements he may have Special Rule as to Usufruct on Rent,
made on the property against any damage Pension or Interest
to the same [Art. 580, CC] Whenever a usufruct is constituted on the right
i. To Retain the thing until he is reimbursed to receive a rent or periodical pension, whether
for advances for extraordinary expenses in money or in fruits, or in the interest on bonds
and taxes on the capital [Art. 612, CC] or securities payable to bearer, each payment
due shall be considered as the proceeds or
b. Right to Natural and Industrial Fruits fruits of such right [Art. 570 (1), Civil Code].
Pending at the Beginning of Usufruct
Special Rule as to Benefits from Enterprise
Fruits Pending at Fruits Pending at
with No Date Fixed for Distribution:
the Beginning of the Termination of
Whenever it consists in the enjoyment of
the Usufruct the Usufruct
benefits accruing from a participation in any
Belong to the Belong to the naked industrial or commercial enterprise, the date of
usufructuary owner the distribution of which is not fixed, such
benefits shall have the same character [Art.
Without need to The owner shall 570 (2), Civil Code].
reimburse the reimburse to the
expenses to the usufructuary ordinary Special Rule for a Usufruct Over a Co-
owners cultivation expenses Owned Property
from the proceeds of To exercise all rights of the particular co-owner
the fruits (not to with respect to the administration and
exceed the value of collection of fruits/interests from the aliquot
the fruits) share of property [Art. 582, Civil Code].

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Should co-ownership cease by reason of
partition, the usufruct of the part allotted to the
co-owner shall still belong to the usufructuary.
c. Right to Lease the Thing in Usufruct
Can be Leased Without Consent of the
Owner
Exceptions:
1. Caucion Juratoria, wherein the lease would
show that the property is not needed by the
usufructuary and therefore the use for which
the usufruct was constituted is changed.
2. Condition imposed by naked owner i.e.,
Usufruct is purely personal, e.g., title
creating usufruct provides that usufructuary
shall personally use and enjoy the property
given in usufruct.
3. Legal usufructs cannot be leased.
The Period of the Lease is Coextensive
with the Period of Usufruct.
Exception: Lease of rural lands will subsist
during the agricultural year despite expiration
of the usufruct [Art. 572, Civil Code]
Rules as to Lease:
1. A lease executed by the usufructuary before
the termination of the usufruct and
subsisting after the termination of the
usufruct must be respected, but the rents for
the remaining period will belong to the
owner.
2. If the usufructuary has leased the lands or
tenements given in usufruct, and the
usufruct should expire before the
termination of the lease, he or his heirs and
successors shall receive only the
proportionate share of the rent that must be
paid by the lessee [Art. 568, Civil Code].
3. A lease executed by the owner before the
creation of the usufruct is not extinguished
by such usufruct.
Notes:
Future crops may be sold but such sale would
be void if usufruct terminates prior to harvest of
future fruits. The buyer’s remedy is to recover
from the usufructuary.
The usufructuary-lessor is liable for the act of
the substitute. A usufructuary who alienates or
leases his right of usufruct shall answer for any
damage which the things in usufruct may suffer
through the fault or negligence of the person
who substitutes him [Art. 590, Civil Code].
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d. To Enjoy Any Increase Which the
Thing May Acquire Through Accession
The usufructuary shall have the right to enjoy
any increase which the thing in usufruct may
acquire through accession, the servitudes
established in its favor, and, in general, all the
benefits inherent therein [Art. 571, Civil Code].
e. To Make Improvements on the
Property as He May Deem Proper
1. He may improve the thing without altering its
form and substance.
2. He is not entitled to indemnification.
3. He may also remove improvements made
by him if it is possible to do so without
damage to property.
Note: The option to remove improvements
belongs to the usufructuary, and the naked
owner cannot compel him to do so, neither
can the owner compel the usufructuary to
leave the improvements and just pay for
their value.
4. The usufructuary has the right to set-off the
improvements on the property against any
damage to the same [Art. 580, Civil Code].
Note: Registration of improvements – to protect
usufructuary against 3rd persons
f. Right of Retention
The usufructuary has the right of retention until
he is reimbursed of the amount he paid for
taxes and the increase in value caused by the
extraordinary repairs he made [Art. 612, Civil
Code].
Rights as to the Legal Right of Usufruct
Itself [ABE – Alienate, Bring action, Exercise
all rights]
To Alienate or Mortgage the Right Itself [Art.
572, Civil Code]
The usufructuary may alienate his right of
usufruct, even by a gratuitous title (e.g.
donation); but all the contracts he may enter
into as such usufructuary shall terminate upon
the expiration of the usufruct [Art. 572, Civil
Code].
Except:
1. Parental usufruct [Arts. 225 and 226, Family
Code]
PROPERTY
2. Usufruct given in consideration of the
person of the usufructuary intended to last
during his lifetime
To Bring Action and Oblige the Owner to
Give Him Proper Authority and Necessary
Proof in Cases of Usufruct to Recover Real
Property, Real Right, or Movable Property
[Art. 578, Civil Code]
The action may be brought in the name of the
usufructuary. If a favorable judgment is
obtained, the usufruct shall be limited to the
fruits, and the naked ownership shall belong to
the owner [Art. 578, Civil Code].
To Exercise all rights pertaining to the co-
owner with respect to the administration
and collection of fruits or interest from the
proper (Applicable to usufruct of a part of a
common property) [Art. 582, CC]
2. Rights of the Owner
a. At the Beginning of the Usufruct
See obligations of usufructuary at the
beginning of the usufruct discussed below.
b. During the Usufruct
1. The owner retains title to the thing or
property.
2. He may alienate the property [Art. 581, Civil
Code]. He may not alter the form or
substance of the thing, nor do anything
prejudicial to the usufructuary.
3. He may construct buildings, make
improvements and plantings, provided:
a. The value of the usufruct is not impaired;
and
b. The rights of the usufructuary are not
prejudiced [Art. 595, Civil Code].
4. He can constitute a voluntary easement
over land/building held in usufruct without
the usufructuary’s consent. But if it affects
the usufructuary’s right, the latter must give
his consent [Art. 689, Civil Code].
a. If the easement is perpetual, the consent
of both must be obtained [Art. 690, Civil
Code].
3. Obligations
a. Obligations at the Beginning of the
Usufruct or before Exercising the
Usufruct
To make, after notice to the owner or his
legitimate representative, an inventory of all
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the property, which shall contain an appraisal
of the movables and a description of the
condition of the immovables [Art. 583 (1), Civil
Code].
Exceptions to Making Inventory
1. No one will be injured thereby [Art. 585,
Civil Code]
2. Title constituting usufruct excused the
making of inventory.
3. Title constituting the usufruct already made
the inventory.
To give security, binding himself to fulfill the
obligations imposed upon him in accordance
with this Chapter [Art. 583 (2), Civil Code].
Exceptions to Giving Security
1. No prejudice would result [Art. 585, Civil
Code];
2. Usufruct is reserved by a donor [Art. 584,
Civil Code];
3. Gratitude on the donee’s part demands that
the donor be excused from filing the bond.
4. Title constituting usufruct excused
usufructuary.
5. A usufructuary may take possession under
a caucion juratoria (bond by oath) [Art. 587,
Civil Code]
6. When there is waiver by the naked owner
[Paras].
7. When the usufructuary is the donor of the
property who has reserved the usufruct [Art.
584, Civil Code].
8. When there is a parental usufruct under the
Family Code [Art. 225, Family Code].
Requisites of Caucion juratoria:
1. Proper court petition;
2. Usufruct is over a house, furniture or tools
of a trade and the necessity for delivery of
furniture, implements or house included in
the usufruct;
3. Approval of the court; and
4. Sworn promise.
Note: These requirements are not conditions
precedent to the commencement of the right of
the usufruct but merely to the entry upon the
possession and enjoyment of the property.
Effect of Failure to Give Bond [Art. 586,
Civil Code]:
1. The owner may demand that the immovable
properties be placed under administration;
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2. That the movable properties be sold and the
proceeds of the sale be the property held in
usufruct – legal interest of 6% shall be the
fruits;
3. That the public bonds, instruments of credit
payable to order or to bearer be converted
into registered certificates or deposited in a
bank or public institution; and
4. That the capital or sums in cash and the
proceeds of the sale of the movable
property be invested in safe securities.
5. The owner may, until the usufructuary gives
security, retain in his possession the
property in usufruct as administrator,
subject to the obligation to deliver to the
usufructuary the net proceeds, after
deducting the sums, which may be agreed
upon or judicially allowed him for such
administration.
b. Obligations During the Usufruct
[CAPCORN – Care, Allow improvements, Pay
AIDE (Annual taxes, Interest, Debts, Expenses
for litigation), Collect credit, Ordinary repairs,
Replace animals, Notify UP (Urgent repairs,
Prejudicial act)]
1. To take Care of the property as a good
father of the family [Art. 589, Civil Code]
2. To make Ordinary repairs – required by the
wear and tear due to the natural use of the
thing and are indispensable for its
preservation [Art. 592, Civil Code].
3. To inform/Notify the owner of urgent
extraordinary repairs [Art. 593, Civil Code]
4. To Allow the naked owner to make works
and improvements of which the immovable
in usufruct is susceptible, or plantings, if
rural [Art. 595, Civil Code]
a. Provided:
1. The works or improvements are not
prejudicial to the usufructuary’s rights.
2. No diminution in the value of the
object in usufruct.
5. To Pay annual taxes and charges on the
fruits for the time the usufruct lasts [Art. 596,
Civil Code].
6. To pay interest on taxes on capital paid by
the naked owner [Art. 597, Civil Code].
7. To pay debts if the usufruct is over the
entirety of a patrimony [Art. 598, Civil Code]
8. To secure the approval of the owner or the
court to Collect credit which form part of the
usufruct, if he has not given proper security
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or has been excused from giving security
[Art. 599, Civil Code].
9. To notify owner of any Prejudicial act to the
rights of ownership over the usufruct, by a
third person [Art. 601, Civil Code].
a. Consequence: He is liable for damages
if he fails to give notice.
10. To pay expenses and costs for litigation if
incurred because of the usufruct [Art. 602,
Civil Code].
11. To answer for fault or negligence of the one
he alienated, leased to the object of the
usufruct or the fault or negligence of the
usufructuary’s agent [Art. 590, Civil Code].
c. Obligations at the Time of the
Termination of the Usufruct [RIPP]
1. To Return the thing upon termination.
2. To Pay legal interest for the duration of the
usufruct on the expenses for extraordinary
repairs, if naked owner made the repairs
[Art. 594, Civil Code]
3. To Pay proper interest on sums paid as
taxes by the owner
4. To Indemnify the naked owner for any loss
caused by the negligence of the
usufructuary or his transferees
C. Extinguishment
1. By the Death of the Usufructuary,
unless a Contrary Intention Clearly
Appears
Usufruct is personal and it cannot be extended
beyond the lifetime of the usufructuary
[Eleizegui v. Manila Lawn Tennis Club, G.R.
No. 967 (1903)].
This is true even if a resolutory period or
condition has been stipulated and the
usufructuary dies before the expiration of the
period or the fulfillment of the condition [De
Leon].
Exceptions
a. When a contrary intention clearly appears
[Art. 603, Civil Code]
1. The parties may expressly stipulate that
the usufruct shall continue even after the
death of the usufructuary until the arrival
of a period or the happening of a certain
event [Paras].
PROPERTY CIVIL LAW
b. In cases of multiple usufructs, the usufruct 4. By Merger of the Usufruct and
ends at the death of the last survivor [Art. Ownership in the Same Person
611, Civil Code]
1. If constituted simultaneously: All 5. By Renunciation of the
usufracturies must be alive or at least
conceived at the time of the constitution
Usufructuary
[Art. 863, Civil Code; Paras] Limitations [De Leon]
2. If constituted successively [Paras]: a. May be made expressly or impliedly, but
a. By virtue of a donation: All donees- must comply with the forms of donation
usufracturies must be alive at the time b. Does not require the consent of the naked
of donation [Art. 756, Civil Code] owner
b. By virtue of a will: there should only c. If made in fraud of creditors, they may
be 2 successive usufructuaries’, and rescind the waiver through an action under
both must have been alive at the time Art. 1381, Civil Code (accion pauliana).
of testator’s death [Same rule as in
fideicommissary substitution in Arts. 6. By the Total Loss of the Thing in
863 and 869, Civil Code] Usufruct
Total Loss:
c. If the period is fixed using the life of another When the thing in usufruct is completely
person as reference or there is a resolutory destroyed, or perishes, or disappears in such a
condition way that its existence is unknown or it cannot
1. In this case, the death of the usufructuary be recovered, or it goes out of commerce [Art.
would not affect the usufruct and the right 1189, Civil Code].
is instead transmitted to the heirs of the
usufructuary until the expiration of the
term or the fulfillment of the condition. Situation Effect

2. By the Expiration of the Period for Art. 607, Civil Code

which it was Constituted If destroyed property is not insured
Special Cases of Period:
a. Special case of juridical persons [Art. If usufruct is on the If the owner does not
605, Civil Code] building and the rebuild: Usufruct
1. Usufruct cannot be constituted in favor of land [Art. 607 (1), continues over the land
a town, corporation, or association for Civil Code] and materials (plus
more than 50 years. interests).
2. If before the expiration of such period the
If usufruct is on the If the owner does not
town is abandoned, or the corporation or
building only [Art. rebuild: Usufruct
association is dissolved, the usufruct
607(2), Civil Code] continues over the land
shall be extinguished.
and materials (plus
interests).
b. Special case of third person attaining a
certain age [Art. 606, Civil Code]
If the owner rebuilds:
1. Subsists for the period specified (until the
Owner can occupy the
birthday at which the person would’ve
land and use the
attained that age)
materials.
2. Exception: The usufruct has been
expressly granted only in consideration
If the owner occupies
of the existence of such person
the land and uses the
materials: He must
3. By the Fulfillment of any Resolutory pay the usufructuary
Condition Provided in the Title during the continuance
Creating the Usufruct of the usufruct the
interest on the value of
the land and materials

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Art. 608, Civil Code 8. By Prescription

If destroyed property is insured before a. This refers to acquisitive prescription by a
termination of the usufruct stranger [Paras].
b. It is not the non-use which extinguishes the
When insurance If the owner rebuilds: usufruct by prescription, but the use by a 3rd
premium paid by Usufructuary can person [Tolentino].
owner and continue enjoying the c. There can be no prescription as long as the
usufructuary new building. usufructuary receives the rents from the
lease of the property, or he enjoys the price
If the owner does not of the sale of his right [Tolentino].
rebuild: Usufructuary
shall receive interest Effect of Termination [Art. 612, Civil
on the insurance Code]
indemnity. Obligations and Rights of the Usufructuary
[Paras]
When the Owner shall receive a. Must return the property to the naked
insurance is taken the full amount of the owner [Art. 612, Civil Code]
by the naked insurance indemnity in b. Right to retain the property until he is
owner only case of loss, and either reimbursed
because the of the following, 1. For taxes on the capital which had been
usufructuary depending on the case advanced by him [Art. 597 (2), Civil
refuses to (apply Art. 607, Civil Code]; and
contribute to the Code): 2. Indispensable extraordinary repairs or
premium [Art. expenses insofar as there has been an
608(2), Civil Code] If the owner does not increase in the value [Art. 594 (2), Civil
rebuild: Usufruct Code]
continues over the
remaining land and c. Right to remove removable
materials (plus improvements [Art. 579, Civil Code] or set
interests) them off against damages he has caused
[Art. 580, Civil Code].
If the owner rebuilds:
Usufruct does not Obligations of the Owner [Paras]
continue on the new a. Must cancel the security or mortgage
building, but the owner after delivery is made [Art. 612, Civil Code]
should pay interest on b. Must in case of rural leases, respect leases
the value of the land made by the usufructuary, till the end of the
and materials. agricultural year [Art. 572, Civil Code]
c. Must make reimbursements to the
When insurance Insurance proceeds go usufructuary in the proper cases [Arts. 597
taken by to the usufructuary. No and 594, Civil Code].
usufructuary only obligation to rebuild.
depends on value Usufruct continues on ACTS WHICH DO NOT EXTINGUISH THE
of usufructuary’s the land. Owner has no USUFRUCT
insurable interest share in insurance a. Expropriation of Thing in Usufruct
[Labitag Diagrams] proceeds. [Art. 609, Civil Code]
If the Naked Owner Alone was Given the
7. By the Termination of the Right of Indemnity
General Rule: The naked owner has the
the Person Constituting the option
Usufruct 1. To replace it with an equivalent thing; or
Example: A usufruct constituted by a vendee a 2. To pay to the usufructuary legal interest on
retro terminates upon redemption the indemnity. This requires a security to be
given by the naked owner for the payment
of the interest.
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PROPERTY CIVIL LAW
Exception: If both the naked owner and the
usufructuary were separately given indemnity,
each owns the indemnity given to him, the
usufruct being totally extinguished.

If Both the Naked Owner and the

Usufructuary were Separately Given
Indemnity [Paras]
Each owns the indemnity given to him, the
usufruct being totally extinguished.

If Usufructuary Alone was Given the

Indemnity [Paras]
1. He must give it to the naked owner and
compel the naked owner to return either the
interest or to replace the property.
2. He may even deduct the interest himself, if
the naked owner fails to object.

b. Bad Use of Thing in Usufruct [Art. 610,

Civil Code]
Bad use of the thing in usufruct does not
extinguish the right of the usufructuary whether
there is security or not.

If bad use causes considerable injury to the

owner:
• It does not extinguish the usufruct but the
owner is entitled to demand delivery and
administration of the thing with the
obligation to pay annually the net proceeds.

The usufructuary is liable for damages caused

to property.

c. Usufruct over a Building of Thing in

Usufruct [Art. 607 and 608, Civil Code]
[See table above for the application]

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VI. EASEMENTS 1. By Title or by Something Equivalent
to a Title
Something Equivalent to a Title: Refers to
A. Modes of Acquiring law or juridical acts such as donations,
Easements contracts, or wills.
a. Continuous and apparent easements may
An easement is either acquired through a be acquired by virtue of a title [Art. 620, Civil
title/juridical act or by prescription [Art. 620 and Code].
622, Civil Code]. b. Continuous non-apparent easements, and
discontinuous ones, whether apparent or
not, are acquired only by virtue of a title [Art.
How Acquired 622, Civil Code].
Kind of
Easement c. The absence of a document or proof
Title Prescription showing the origin of an easement which
cannot be acquired by prescription may be
Continuous and YES YES cured by a deed of recognition by the owner
apparent (CA) of the servient estate or by a final judgment
[Art. 623, Civil Code].
Continuous Non- YES NO
apparent (CNA) Deed of recognition: By an affidavit or a
formal deed acknowledging the servitude.
Discontinuous YES NO
and apparent Final judgment: Owner of the dominant estate
(DA) must file a case in court to have the easement
declared by proving its existence through other
Discontinuous YES NO evidence.
Non-apparent
(DNA) The existence of an apparent sign of easement
between two estates, established or
When an easement is established, all rights maintained by the owner of both, shall be
necessary for its use are considered granted considered, should either of them be alienated,
[Art. 625, Civil Code]. as a title in order that the easement may
continue actively and passively. This is also
Continuous – Use of which is or may be applicable to cases of co-ownership [Art. 624,
incessant, without intervention of any act of Civil Code].
man.
Exception: At the time the ownership of the
Discontinuous – Those which are used at two estates is divided, the title of conveyance
intervals and depend upon the actions of man of either of the two estates provides for the
contrary (says the easement will not continue)
Apparent – Those which are made known and or the apparent sign of easement is removed
are continually kept in view by external signs before the execution of the deed of
that reveal the use and enjoyment of the same. conveyance [Art. 624, CC].
Not necessary that its sign be seen; it is
sufficient if it may be known or seen on Illustration: The presence of 4 windows was
inspection considered an apparent sign that created a
negative easement of light and view (altius non
Non-Apparent – Shows no external indication tollendi) i.e. not to build a structure that will
of their existence cover the windows [Amor v. Florentino, G.R.
No. L-48384 (1943)].

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2. By Law (Legal Easements)
Easements imposed by law have for their
object either public use or the interest of private
persons [Art. 634, Civil Code].
CIVIL LAW
Mere passage which was permitted and is
under an implied license cannot be the basis of
prescription [Archbishop of Manila v. Roxas,
G.R. No. L-7386 (1912)].

These easements may be modified by B. Rights and Obligations of the

agreement of the interested parties, whenever
the law does not prohibit it, or no injury is
Owners of the Dominant and
suffered by a third person [Art. 636, Civil Code]. Servient Estates

3. By Prescription 1. Rights of Dominant Estate Owner

Continuous and apparent easements may be a. To use the principal easement, and all
acquired by prescription of 10 years [Art. 620, accessory servitudes.
Civil Code]. b. To make, at his own expense, on the
servient estate, any works necessary for the
Requisites: use and preservation of the servitude, but
a. The easement must be continuous and without altering it or rendering it more
apparent; burdensome [Art. 627 (1), Civil Code].
b. The easement must have been used for c. In a right of way, to ask for change in width
10 years; and of easement sufficient for the needs of the
c. There is no need for good faith or just title. dominant estate [Art. 651, Civil Code].
• The needs of the dominant property
ultimately determine the width of the
Computation of Time passage. These needs may vary from
Kind of
Possession [Art. 621, time to time [Encarnacion v. CA, G.R.
Easement
Civil Code] No. 77628 (1991)].
Positive From the day on which the
d. To renounce totally the easement, if he
Easement owner of the dominant
desires to be exempt from contributing to
estate, or the person who
the expenses [Art. 628, Civil Code].
may have made use of the
easement, commenced to
exercise it upon the servient 2. Obligations of Dominant Estate
estate Owner
a. To use the easement for the benefit of the
Negative From the day on which the immovable and in the manner originally
Easement owner of the dominant established [Art. 626, Civil Code]
estate forbade, by an • If established for a particular purpose,
instrument acknowledged the easement cannot be used for a
before a notary public, the different one. However, if established in
owner of the servient a general way, without specific purpose,
estate, from executing an the easement can be used for all the
act which would be lawful needs of the dominant estate.
without the easement
b. To notify the owner of the servient estate
before making repairs and to make repairs
Whether it is negative or positive depends on in a manner least inconvenient to the
the manner by which it is exercised servient estate [Art. 627(2), Civil Code]
a. Positive – Imposes upon the servient c. Not to alter the easement or render it more
owner the obligation of allowing something burdensome [Art. 627, Civil Code].
to be done, or doing it himself [Art. 616, Civil
• In an easement of a right of way,
Code]
widening the road means making the
b. Negative – Prohibits the servient owner
easement more burdensome
from doing something which he could
[Valderrama v. North Negros Sugar Co.,
lawfully do if the easement did not exist [Art.
G.R. No. L-23810 (1925)].
616, Civil Code]

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d. To contribute to expenses of works
necessary for use and preservation of
servitude, if there are several dominant
estates [Art. 628, Civil Code].
• The contribution is in proportion to the
benefits which each may derive from the
work.
• If one owner does not wish to contribute,
he may exempt himself by renouncing
the easement for the benefit of the
others.
3. Rights of the Servient Estate
Owner
a. To retain the ownership of the portion of the
estate on which the easement is established
[Art. 630, Civil Code]
b. To use the easement, provided he shall also
be obliged to pay the expenses necessary
for the preservation and use of the servitude
[Art. 628 (2), Civil Code]
• Exception to paying expenses: When
there is an agreement to the contrary.
c. To change the place or manner of the use
of the easement, provided it be equally
convenient [Art. 629 (2), Civil Code]
In case the easement becomes very
inconvenient for the servient estate owner, or if
it prevents him from making any important
works, repairs, or improvements, the
easement may be changed, provided:
a. He offers another place/manner equally
convenient.
b. Does not cause injury to the dominant
estate owner.
c. Does not cause injury to those who have a
right to use the easement, if any.
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4. Obligations of Servient Estate
Owner
a. Not to impair the use of the easement [Art.
629(1), Civil Code]
b. To contribute proportionately to expenses if
he uses the easement [Art. 628(2), Civil
Code]
• Exception: Unless there is an
agreement to the contrary.
c. To pay for the expenses incurred for the
change of location or form of the easement
C. Modes of Extinguishment
Ways by which an easement may be
extinguished: [Art. 631, Civil Code]
(MINERRO – Merger, Impossibility, Non-use,
Expiration, Renunciation, Redemption, Other
causes)
a. By Merger in the same person of the
ownership of the dominant and servient
estates – must be absolute, perfect and
definite, and not merely temporary. If the
merger is temporary, there is at most a
suspension of the easement, but no
extinguishment.
b. By Non-user for ten years – there is
inaction, and not outright renunciation. This
is due to the voluntary abstention by the
dominant owner, and not due to a fortuitous
event.
• If discontinuous easement, the period
is counted from the day it ceased to be
used.
• If continuous easement, counted from
the day an act adverse to the exercise of
the right of easement took place.
• Note: use by a co-owner bars
prescription as to others as well [Art. 633,
Civil Code].
c. Impossibility of use – impossibility
referred to must render the entire easement
unusable for all time. Impossibility of using
the easement due to the condition of the
tenements (e.g. flooding) only suspends the
servitude until it can be used again.
• Exception: If the suspension exceeds
10 years, the easement is deemed
extinguished by non-use.
d. By the Expiration of the term or the
fulfillment of the resolutory condition -
PROPERTY
applies only to voluntary temporary or
conditional easements.
e. By the Renunciation of the owner of the
dominant estate – must be specific, clear,
express (distinguished from non-user); or
f. By the Redemption agreed upon
between the owners of the dominant and
servient estates.
Other Causes Not Mentioned in Art. 631,
Civil Code
1. Annulment and rescission of the title
constituting the voluntary easement;
2. Termination of the right of grantor of the
voluntary easement;
3. Abandonment of the servient estate;
Owner of the servient estate gives up
ownership of the easement (e.g. the strip of
land where the right of way is constituted) in
favor of the dominant estate. The easement
is extinguished because ownership is
transferred to the dominant owner, who now
owns both properties.
4. Eminent domain; and the government’s
power to expropriate property for public use,
subject to the payment of just
compensation.
5. Special cause for extinction of legal
rights of way: if right of way no longer
necessary [Art. 655, Civil Code]
Right of Way Ceases to be Necessary
[Art. 655, Civil Code]:
1. Owner of the dominant estate has joined to
another abutting on a public road.
2. A new road is opened giving access to the
isolated estate
3. Requisite: the public highway must
substantially meet the needs of the
dominant estate.
4. Owner of the servient estate may demand
that the easement be extinguished, and he
must return what he may have received by
way of indemnity. The interest thereon shall
be deemed payment for rent for the use of
the easement.
The opening of an adequate outlet to a
highway can extinguish only legal or
compulsory easements, not voluntary
easements. The fact that an easement by grant
may have also qualified as an easement of
necessity does not detract from its permanency
as a property right, which survives the
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termination of the necessity [Spouses Castro v.
Spouses Esperanza, G.R. No. 248763 (2020)].
D. Legal vs. Voluntary Easements
Legal easements are created by law, whether
for public use or for the interest of private
persons [Art. 619 and 634, Civil Code].
For Public Easements
1. Special laws and regulations relating
thereto (e.g. PD 1067 (Water Code) and PD
705 (Forestry Code)).
2. By the provisions of Chapter 2, Title VII,
Book II, Civil Code.
For Private Legal Easements
1. By agreement of the interested parties
whenever the law does not prohibit it and no
injury is suffered by a 3rd person.
2. By the provisions of Chapter 2, Title VII,
Book II.
Voluntary easements are created by the will
of the owners of the estate through contract,
last will or donation. These must be recorded in
the Registry of Property to prejudice third
persons [Art. 619, Civil Code].
Note: Easements cannot be created by courts.
The court’s role is only to declare the existence
of an easement if in reality one exists by virtue
of law or will of the parties. Thus, there are no
judicial easements [Castro v. Monsod, G.R.
No. 183719 (2011)].
E. Kinds of Legal Easement
1. Relating to Waters
a. Natural Drainage [Art. 637, Civil Code]
Lower estates are obliged to receive the waters
which naturally and without the intervention of
man descend from the higher estates (as well
as the stones or earth which they carry with
them).
The owner of the lower estate cannot construct
works which will impede this easement; neither
can the owner of the higher estate make works
which will increase the burden.
Refer to Art. 46 of the Water Code which states
that “when artificial means are employed to
drain water from higher to lower land, the
owner of the highest land shall select the routes
PROPERTY
and methods of drainage that will cause the
minimum damage to the lower lands, subject to
the requirements of just compensation.”
b. Riparian Banks [Art. 638, Civil Code]
The banks of rivers and streams, even in case
they are of private ownership, are subject
throughout their entire length and within a zone
of 3 meters for urban areas, 20 meters for
agricultural areas and 40 meters for forest
areas [Art. 51, Water Code] along their
margins, to the easement of public use in the
general interest of navigation, floatage, fishing,
recreation and salvage.
Estates adjoining the banks of navigable or
floatable rivers are subject to the easement of
towpath for the exclusive service of river
navigation and floatage. If it is necessary to
occupy lands of private ownership, the proper
indemnity shall first be paid.
c. Abutment of a Dam [Art. 639, Civil
Code]
Whenever for the diversion or taking of water
from a river or brook, or for the use of any other
continuous or discontinuous stream, it should
be necessary to build a dam, and the person
who is to construct it is not the owner of the
banks, or lands which must support it, he may
establish the easement of abutment of a dam,
after payment of the proper indemnity.
Note: The Water Code requires a water permit
for the establishment of a dam [Art. 18, Water
Code].
d. Drawing Water and Watering Animals
[Arts. 640 and 641, Civil Code]
Compulsory easements for drawing water or
for watering animals can be imposed only for
reasons of public use in favor of a town or
village, after payment of the proper indemnity
[Art. 640, Civil Code].
Easements for drawing water and for watering
animals carry with them the obligation of the
owners of the servient estates to allow passage
to persons and animals to the place where
such easements are to be used, and the
indemnity shall include this service [Art. 641,
Civil Code].
The width of the easement must not exceed 10
meters [Art. 657, Civil Code].
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e. Aqueduct [Arts. 642-646, Civil Code]
Any person who may wish to use upon his own
estate any water of which he can dispose shall
have the right to make it flow through the
intervening estates, with the obligation to
indemnify their owners, as well as the owners
of the lower estates upon which the waters may
filter or descend [Art. 642, Civil Code].
Requisites to Establish Easement of
Aqueduct [Art. 643, Civil Code]:
1. To prove that he can dispose of the water
and that it is sufficient for the use for which
it is intended;
2. To show that the proposed right of way is
the most convenient and the least
onerous to third persons;
3. To indemnify the owner of the servient
estate in the manner determined by the laws
and regulations.
4. Acquire a water permit [Art. 13, Water
Code]
What it cannot be imposed on: Easement of
aqueduct for private interest cannot be
imposed on buildings, courtyards, annexes, or
outhouses, or on orchards or gardens already
existing [Art. 644, Civil Code].
Right of servient estate owner: This
easement does not prevent the owner of the
servient estate from closing or fencing it, or
from building over the aqueduct in such
manner as not to cause the latter any damage,
or render necessary repairs and cleanings
impossible [Art. 645, Civil Code].
Treatment under law: This easement is
considered as continuous and apparent, even
though the flow of the water may not be
continuous, or its use depends upon the needs
of the dominant estate, or upon a schedule of
alternate days or hours [Art. 646, Civil Code].
In the appropriation of water, there is a need to
apply for water rights.
Any person having an easement for an
aqueduct may enter upon the servient land for
the purpose of cleaning, repairing or replacing
the aqueduct or the removal of obstructions
therefrom [Art. 49, Water Code].
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Easements for aqueduct and of right of way
cannot be acquired by prescription because
although it may be apparent, it is discontinuous
in character. Under the Water Code of the
Philippines, all waters belong to the state.
Water legally appropriated shall be subject to
the control of the appropriator from the moment
it reaches the appropriator from the moment it
reaches the appropriator’s canal or aqueduct
leading to the place where the water will be
used or stored and, thereafter, so long as it is
being beneficially used for the purposes for
which it was appropriated [Art. 8, Water Code].
f. Stop Lock or Sluice Gate [Art. 647,
Civil Code]
The construction of a stop lock or sluice gate in
the bed of the stream from which the water is
to be taken, for the purpose of irrigating or
improving an estate.
Such person may demand that the owners of
the banks permit its construction, after
payment of damages, including those caused
by the new easement to such owners and to
the other irrigators.
2. Right of Way
Who May Demand [Art. 649, Civil Code]
1. The owner of the dominant estate; or
2. Any person with the real right to cultivate or
use the dominant estate e.g. a usufructuary,
a de jure possessor.
Note: A lessee cannot demand such
easement, because the lessor is the one bound
to maintain him in the enjoyment of the
property.
Note: A right of way can be established through
the will of parties as well, and the provisions on
the legal easement of right of way will not
govern.
Requisites for Legal Demand to Establish
the Easement of Right of Way [Art. 649, Civil
Code; Floro v. Llenado, G.R. No. 75723
(1995)]
a. The dominant estate is surrounded by
other immovables owned by other
persons;
b. There must absolutely be no access i.e.
means of entrance or exit/egress to a public
highway;
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c. Even if there is access, it is difficult or
dangerous to use, or grossly
insufficient;
1. Mere inconvenience in the use of an
outlet does not render the easement a
necessity.
2. An adequate outlet is one that is
sufficient for the purpose and needs of
the dominant owner, and can be
established at a reasonable expense.
3. Does not necessarily have to be by land
– an outlet through a navigable river or a
lake or the sea if suitable to the needs of
the tenement is sufficient.
4. The isolation of the immovable is not due
to the dominant owner’s own acts e.g. if
he constructs building to others
obstructing the old way; and
5. There is payment of indemnity.
If right of way is permanent and continuous
for the needs of the dominant estate = value of
the land + amount of damage caused to the
servient estate.
If right of way is limited to necessary passage
for cultivation of the estate and for gathering
crops, without permanent way = damage
caused by encumbrance.
Rules for Establishing Right of Way
The easement of right of way shall be
established at the point least prejudicial to
the servient estate, and, insofar as consistent
with this rule, where the distance from the
dominant estate to a public highway may be
the shortest [Art. 650, Civil Code].
The criterion of least prejudice to the servient
estate must prevail over the criterion of
shortest distance although this is a matter of
judicial appreciation. While shortest distance
may ordinarily imply least prejudice, it is not
always so as when there are permanent
structures obstructing the shortest distance;
while on the other hand, the longest distance
may be free of obstructions and the easiest or
most convenient to pass through [Quimen v.
CA, G.R. No. 112331 (1996)].
The fact that LGV had other means of egress
to the public highway cannot extinguish the
said easement, being voluntary and not
compulsory. The free ingress and egress along
Mangyan Road created by the voluntary
agreement between the parties is thus legally
PROPERTY CIVIL LAW
demandable with the corresponding duty on
the right of way
the servient estate not to obstruct the same [La
without indemnity
Vista Association v. CA, G.R. No. 95252
(1997)]. Seller, Grantor or Donor as Dominant
Owners
The width of the easement of right of way shall
be that which is sufficient for the needs of the The seller or The donee shall grant
dominant estate, and may accordingly be grantor shall pay the right of way without
changed from time to time [Art. 651, Civil indemnity indemnity
Code].

Who has the Burden of Proof in an action Notes on Extinguishment

for Right of Way? Extinguishment is not automatic. The owner of
The burden of proving the existence of the the servient estate must ask for such
prerequisites to validly claim a compulsory right extinguishment.
of way lies on the owner of the dominant estate.
Indemnity paid to the servient owner must be
Obligations in Permanent and Temporary returned without interest. Interest on account of
Easements of Right of Way indemnity is deemed to be rent for use of
easement.
Permanent Right Temporary Right of
of Way Way 3. Light and View [Arts. 667-673, Civil
Indemnity Code]
Easement of Light (jus luminum)
Consists of the Consists of the The right to admit light from the neighboring
damages and the damages only. estate by virtue of the opening of a window or
value of the land. the making of certain openings.

Necessary Repairs Easement of View (jus prospectus)

The right to make openings or windows, to
Dominant owner to Servient owner to enjoy the view through the estate of another
spend spend. and the power to prevent all constructions or
works which would obstruct such view or make
Share in Taxes the same difficult.

The dominant Servient owner to The easement of view necessarily includes the
owner shall spend on such. easement of light, because it is impossible to
reimburse a have a view only without a light. However, it is
proportionate share possible to have light without a view.
of taxes to the
proprietor of the How Acquired
servient estate. Through a period of prescription of 10 years,
counted depending on whether it was positive
Rules on Indemnity for Estates Enclosed or negative in nature.
Through a Sale, Exchange, Partition or
Donation Nature [Art. 668, Civil Code]
a. Positive: Opening a window through a
Sale, Exchange or party wall.
Donation
Partition 1. Period of prescription begins upon the
opening being made through the wall of
Buyer, Grantee or Donee as Dominant another.
Owners 2. When a part owner of a party wall opens
a window therein, such act implies the
The buyer or The donee shall pay
exercise of the right of ownership by the
grantee shall grant the donor indemnity. use of the entire thickness of the wall.
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3. The easement is created only after the
lapse of the prescriptive period.
b. Negative: Opening a window through a wall
on the dominant estate.
1. Period of prescription begins upon the
formal prohibition upon the owner of the
adjoining land or tenement.
a. Formal means that the prohibition has
been notarized. Means notice and
demand was given to the owner of the
possible servient estate [Cortes v. Yu-
Tibo, G.R. No. 911 (1903)].
b. When a person opens a window on
his own building, he is exercising his
right of ownership on his property,
which does not establish an
easement.
• Coexistent is the right of the owner of the
adjacent property to build or plant on his
own land, even if such structures or planting
cover the window.
• If the adjacent owner does not build
structures to obstruct the window, such is
considered mere tolerance and not a waiver
of the right to build.
• An easement is created only when the
owner opens up a window and
subsequently prohibits or restrains the
adjacent owner from doing anything that
may tend to cut off or interrupt the light and
the 10-year prescriptive period has lapsed
by a notarial prohibition.
Note: What is the reason why the easement of
light and view and the easement not to build a
higher easement (altius non tollendi) cannot go
together?
An easement of light and view requires that the
owner of the servient estate shall not build to a
height that will obstruct the window. They are,
as it were, the two sides of the same coin.
While an easement of light and view is positive,
that of altius non tollendi is negative [Amor v.
Florentino, G.R. No. L-48384 (1943)].
Limitations as to Measurements
No windows, apertures, balconies, or other
similar projections which afford a direct view
upon or towards an adjoining land or tenement
can be made, without leaving a distance of two
meters between the wall in which they are
made and such contiguous property. Neither
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can side or oblique views upon or towards such
conterminous property be had, unless there be
a distance of sixty centimeters [Art. 670, Civil
Code].
In cases of direct views from the outer line of
the wall when the openings do not project, the
distance shall be measured from the outer line
of the latter when they do, and in cases of
oblique view from the dividing line between the
two properties [Art. 671, Civil Code].
Exception: In buildings separated by a public
way or alley, not less than 3 meters wide, the
distances required do not apply [Art. 672, Civil
Code].
Exception: The distances may be stipulated
by the parties, provided that the distance
should not be less than what is prescribed by
the law (2 meters and 60 centimeters) [Art. 673,
Civil Code].
Whenever by any title a right has been
acquired to have direct views, balconies or
belvederes overlooking an adjoining property,
the owner of the servient estate cannot build
thereon at less than a distance of three meters
to be measured in the manner provided in
Article 671 [Art. 673, Civil Code].
Note: Breach of the required distances results
into the prescriptive period not running [Art.
670, Civil Code].
Notes on the Acquisition of the Easement
Period of acquisitive prescription depends
upon whether the easement of light and view is
positive or negative.
If positive, then the prescription period is
counted from the day the window is opened. If
negative, then the prescription period is
counted from the formal prohibition made on
the owner of the servient estate [Art. 668, Civil
Code].
PROPERTY
VII. NUISANCE
A. Classes
Definition [Art. 694, Civil Code]
A nuisance is any act, omission, establishment,
condition of property, or anything else which:
1. Injures or endangers the health or safety
of others; (e.g. House in danger of falling,
fireworks or explosives factory, houses
without building permits and without
provisions for disposal of waste matter)
[Ayala v. Barretto, G.R. No. L-9966 (1916)];
or
2. Annoys or offends the senses; (e.g.
leather factory, garbage cans, pumping
station with a high chimney, smoke, noise)
[Bengzon v. Prov. of Pangasinan, G.R. No.
L-41941 (1936)]; or
3. Shocks, defies, or disregards decency or
morality; (e.g. Movie actress strips nude in
the lobby of a movie house for sake of
publicity for a movie) [Paras]; or
4. Obstructs or interferes with the free
passage of any public highway or street, or
any body of water; (e.g. Permanent
obstructions on barrio roads, such as
illegally constructed houses, are injurious to
public welfare and convenience. The
occupation and use of private individuals of
public places devoted to public use
constitute public and private nuisances and
nuisance per se [Alolino v. Flores, G.R. No.
198774 (2016)]; or
5. Hinders or impairs the use of property
(e.g. Illegal constructions or activities on
another person or entity’s land).
Differentiate Nuisance from Negligence:
Negligence is penalized because of lack of
proper care but a nuisance is wrong not
because of the presence or absence of care,
but because of the injury caused [Paras
quoting 39 AmJur 282].
Nuisances have been divided into two classes:
Nuisances per se, and nuisances per accidens
[Iloilo Cold Storage v. Municipal Council, G.R.
No. L-7012 (1913)]
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1. According to Nature
a. Nuisance per se
Those which are unquestionably and under all
circumstances nuisances, such as gambling
houses, houses of ill fame, etc. [Iloilo Cold
Storage v. Municipal Council, supra].
Generally defined as an act, occupation, or
structure, which is a nuisance at all times and
under any circumstances, regardless of
location or surrounding [Aquino v. Municipality
of Malay, G.R. No. 211356 (2014)].
Abatement: Since they affect the immediate
safety of persons and property, they may be
summarily abated under the undefined law of
necessity [Monteverde v. Generoso, G.R. No.
28491 (1928)].
b. Nuisance per accidens
Those that are nuisances because of
particular facts and circumstances
surrounding the otherwise harmless cause of
the nuisance [Iloilo Cold Storage v. Municipal
Council, supra].
Generally a question of fact, to be determined
in the first instance before the term nuisance
can be applied to it.
That which depends upon certain conditions
and circumstances, and its existence being a
question of fact, it cannot be abated without
due hearing thereon in a tribunal authorized to
decide whether such a thing does in law
constitute a nuisance [Aquino v. Municipality of
Malay, G.R. No. 211356 (2014)].
Abatement: No authority has the right to
compel the abatement of a particular thing or
act as a nuisance without reasonable notice to
the person alleged to be maintaining or doing
the same of the time and place of hearing
before a tribunal authorized to decide whether
such a thing or act does in law constitute a
nuisance [Monteverde v. Generoso, G.R. No.
28491 (1928)].
PROPERTY
2. According to Scope of Injurious
Effects
a. Public Nuisance
Nuisance that affects a community or
neighborhood or any considerable number of
persons [Art. 695, Civil Code].
b. Private Nuisance
One that is not included in the foregoing (public
nuisance) definition [Art. 695, Civil Code].
One which violates only private rights and
produces damages to but one or a few specific
persons.
B. Doctrine of Attractive
Nuisance
One who maintains on his premises dangerous
instrumentalities or appliances of a character
likely to attract children at play, and who fails to
exercise ordinary care to prevent children from
playing therewith or resorting thereto, is liable
to a child of tender years who is injured
thereby, even if the child is technically a
trespasser in the premises [Jarco Marketing
Corp. v. CA, G.R. No. 129792 (1999)].
Reason for Doctrine:
Although the danger is apparent to those of
age, it is so enticing or alluring to children of
tender years as to induce them to approach
[Ibid].
Basis of Liability:
When one keeps in his premises dangerous
instrumentalities or appliances that are likely to
attract children, and fails to exercise ordinary
care to prevent children from playing therewith
Application to Bodies of Water
1. General Rule: Not applicable to bodies of
water, artificial [merely duplicating nature] or
natural
2. Exception: There is some unusual
condition or artificial feature other than the
mere water and its location
3. Rationale: Children are earlier instructed so
that they are sufficiently presumed to know
the danger [nature has created streams,
lakes, and pools which attract children]
Note: The attractive nuisance doctrine
generally is not applicable to bodies of water,
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artificial as well as natural, in the absence of
some unusual condition or artificial feature
other than the mere water and its location. If
the owner of private property creates an
artificial pool on his own property, merely
duplicating the work of nature without adding
any new danger, he is not liable because of
having created an “attractive nuisance”
[Hidalgo Enterprises v. Balandan, G.R. L-3422
(1952)].
C. Liability in Case of Nuisance
Who are Liable [PrEsoPp]
1. Person responsible for creating the
nuisance; If the prejudice exceeds the
inconveniences that such proximity
habitually brings, the neighbor who
causes such disturbance is held
responsible for the resulting damage,
being guilty of causing nuisance [Velasco
v. Manila Electric Co., G.R. No. L-18390
(1971)].
2. Every successive owner or possessor of
property who fails or refuses to abate a
nuisance in that property started by a former
owner or possessor is liable therefor in the
same manner as the one who created it [Art.
696, Civil Code];
a. Provided that he knew of the nuisance
and must knowingly fail or refuse to
abate the nuisance [Paras citing Lambs
v. Roberts, 196 Ala. 679].
b. To render the new owner or possessor
liable, it is necessary that he has actual
knowledge of the existence of the
nuisance, and that it is within his power
to abate the same.
c. “If he cannot physically abate the
nuisance without legal action against
another person, then he shall not be
liable for such nuisance.”
3. A Private person or public official shall be
liable for damages if:
a. In an extrajudicial abatement;
b. He causes unnecessary injury; or
c. An alleged nuisance is later declared by
the courts to be not a real nuisance [Art.
707, Civil Code].
PROPERTY
D. Regulation of Nuisances
General Rule
Lapse of time cannot legalize any nuisance,
whether public or private [Art. 698, Civil Code].
Note: Arts. 698 and 1143(2) do not apply to
easements which are extinguished by
obstruction or non-use for ten (10) years under
Art. 631 [Ongsiako v. Ongsiako, G.R. No. L-
7510 (1957)]
The abatement of a nuisance does not
preclude the right of any person injured to
recover damages for its past existence [Art.
697, Civil Code].
Note: Remedies of abatement and damages
are cumulative and may both be demanded.
Extinctive Prescription
No Extinctive Prescription to abate a nuisance
or Acquisitive Prescription for the right to use of
the property that creates such nuisance. The
action to abate a public or private nuisance is
not extinguished by prescription [Art. 1143
(2), Civil Code].
Defenses to Action Remedies of the
Property Owner
A person whose property is seized or
destroyed as a nuisance may resort to the
courts to determine whether or not it was in fact
a nuisance.
1. An action for replevin;
2. To enjoin the sale or destruction of the
property;
3. An action for the proceeds of its sale and
damages if it has been sold; or
4. To enjoin private parties from proceeding to
abate a supposed nuisance.
1. Public Nuisance
Remedies Against a Public Nuisance
a. A prosecution under the Penal Code or any
local ordinance; or
b. A civil action; or
c. Abatement, without judicial proceedings
[Art. 699, Civil Code].
Note: The three remedies against a public
nuisance enumerated under Art. 699 are not
exclusive but cumulative [De Leon].
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Criminal Prosecution as a Remedy
Criminal prosecution is instituted only for
“public nuisance” and not for a private
nuisance. The action is brought in the name of
the “People of the Philippines” since public
nuisances are considered as offenses against
the State [De Leon].
Judgment with Abatement as a Remedy
If a civil action is brought by reason of the
maintenance of a public nuisance, such action
shall be commenced by the city or municipal
mayor [Art. 701, Civil Code].
Process for Judicial Abatement (through
Civil Action):
General Rule: If a civil action is brought by
reason of the maintenance of a public
nuisance, such action shall be commenced by
the city or municipal mayor [Art. 701, Civil
Code].
Exception: A private person may file an action
on account of a public nuisance if it is
especially injurious to him [Art. 703, Civil
Code].
Extrajudicial Abatement as a Remedy
a. It must be reasonably and efficiently
exercised.
b. Means employed must not be unduly
oppressive on individuals.
c. No more injury must be done to the
property or rights of individuals than is
necessary to accomplish the abatement.
d. No right to compensation if property taken
or destroyed is a nuisance.
Process for Extrajudicial Abatement:
a. The district health officer shall take care that
one or all of the remedies against a public
nuisance are availed of [Art. 700, Civil
Code].
b. The district health officer shall determine
whether or not abatement, without judicial
proceedings, is the best remedy against a
public nuisance [Art. 702, Civil Code].
a. Summary Abatement
Nuisances per se
Since they affect the immediate safety of
persons and property, they may be summarily
abated under the undefined law of necessity
[Monteverde v. Generoso, G.R. No. 28491
(1928)].
PROPERTY
Nuisances per accidens
If no compelling necessity requires the
summary abatement of a nuisance, the
municipal authorities, under their power to
declare and abate nuisances, do not have the
right to compel the abatement of a particular
thing or act as a nuisance without reasonable
notice to the person alleged to be
maintaining or doing the same of the time
and place of hearing before a tribunal
authorized to decide whether such a thing or
act does in law constitute a nuisance [Iloilo
Cold Storage v. Municipal Council, G.R. No. L-
7012 (1913)].
b. Need for Abatement
One of the most serious hindrances to the
enjoyment of life and property is a nuisance.
Provisions for its abatement are indispensable
[Report of the Code Commission, p.51].
c. Who May Abate Public Nuisances
District Health Officer
The district health officer shall take care that
one or all of the remedies against a public
nuisance are availed of [Art. 700, Civil Code].
Note: If the district health officer or the city
engineer is not consulted beforehand in the
case of extrajudicial abatement, the person
doing the abating is not necessarily liable. They
would be liable for damages under Art. 707 if
the abatement is carried out with unnecessary
injury, or if the alleged nuisance is later
declared by the courts to be not a real nuisance
[Paras].
Private Persons
Any private person may abate a public
nuisance which is especially injurious to him by
removing or, if necessary, destroying the thing
which constitutes the same, without committing
a breach of the peace, or doing necessary
injury [Art. 704, Civil Code].
Requisites of the Right of a Private
Individual to Bring a Civil Action to Abate
a Public Nuisance [Art. 704, Civil Code]
1. That demand be first made upon the
owner or possessor of the property to abate
the nuisance;
2. That such demand has been rejected;
3. That the abatement be approved by the
district health officer and executed with the
assistance of the local police; and
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4. That the value of the destruction does not
exceed P3,000.
Other Persons Authorized by Law
Other persons may be authorized by law to
remove nuisances such as in Sitchon v. Aquino
[G.R. No. L-8191 (1956)], where the Manila
charter authorized the City Engineer to do so.
Rules on Abatement
1. The right must be exercised only in cases
of urgent or extreme necessity. The thing
alleged to be a nuisance must be existing at
the time that it was alleged to be a nuisance.
2. A summary abatement must be resorted to
within a reasonable time after knowledge
of the nuisance is acquired or should have
been acquired by the person entitled to
abate.
3. The person who has the right to abate must
give reasonable notice of his intention to
do so, and allow thereafter a reasonable
time to enable the other to abate the
nuisance himself.
4. The means employed must be
reasonable and for any unnecessary
damage or force, the actor will be liable. The
right to abate is not greater than the
necessity of the case and is limited to the
removal of only so much of the
objectionable thing as actually causes the
nuisance.
5. The property must not be destroyed
unless it is absolutely necessary to do so.
2. Private Nuisance
Remedies Against a Private Nuisance
[Art. 705, Civil Code]:
a. A civil action; or
b. Extrajudicial abatement
Requisites for a Valid Extrajudicial
Abatement [Art. 706, Civil Code]:
a. The procedure for extrajudicial abatement
of a public nuisance by a private person will
also be followed.
Note: See municipal health officer under
Arts. 700 and 702, Civil Code. No breach of
peace or unnecessary injury
PROPERTY
VIII. MODES OF ACQUIRING
OWNERSHIP
Modes of Acquiring Ownership [Art. 712,
Civil Code]
a. Occupation - Arts. 713-720, Civil Code
b. Donation - Arts. 712, 725-726, Civil Code
c. Prescription and Laches - Arts. 712,
1106-1107, Civil Code
d. Intellectual Creation - Arts. 721-724, Civil
Code; Intellectual Property Code
e. Testate and Intestate Succession - Arts.
774-1105, Civil Code
f. By tradition, in consequence of certain
contracts - Arts. 1458-1637, Civil Code
Note: Only items (a), (b) and (c) are discussed
in Property. Item (d) is discussed in the
Intellectual Property Code part of the
Commercial Law reviewer. Items (e) and (f) are
discussed in the Succession and Sales part,
respectively, of the Civil Law reviewer.
A. Occupation
1. Requisites
a. The subject must have the intention to
acquire ownership and the necessary
capacity to consent.
b. The object must be appropriable by nature
and without an owner.
c. There must be an act of taking
possession of the thing (not necessarily
material holding so long as the thing is
considered subjected to the disposition of
the possessor
2. Rules
a. On Land
Ownership of land cannot be acquired by
occupation [Art. 714, Civil Code].
b. On animals
Wild Animals
Possessed only while under a person’s control
[Art. 560, Civil Code].
Domesticated Animals
Domesticated animals are those who retain the
habit of returning to the premises of their
owner [Art. 560, Civil Code]; and,
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Claimable by prior owner within twenty days
from occupation by another person [Art. 716,
Civil Code].
Swarm of Bees
Prior owner has the right to pursue them to
another’s land, but is liable for damages the
other person may suffer [Art. 716, Civil Code].
Other persons may occupy or retain the swarm
if prior owner:
1. Has not pursued the swarm; or,
2. Ceased to pursue the swarm within two
consecutive days from movement towards
other person’s property [Art. 716, Civil
Code]
Pigeons and Fish
General Rule: Belongs to the owner of the
breeding place into which they have moved
[Art. 717, Civil Code];
Exception: Belongs to prior owner if
movement was enticed by some artifice or
fraud [Art. 717, Civil Code].
c. On Other Personal Property
Abandoned Movables
May be acquired, as long as the abandonment
made by the prior possessor is voluntary and
intentional [De Leon].
Lost Movables (except treasure) [Art. 719,
Civil Code]
Known/Unknown Possessor
1. If prior possessor is known, the thing must
be returned to him/her;
2. If prior possessor is unknown, the thing
must be deposited with the mayor of the
city/municipality where it was found;
Procedure [Arts. 719-720, Civil Code]
1. The mayor publicly announces the finding
of the thing for two consecutive weeks in the
way he deems best.
2. If the item cannot be kept without
deterioration or without expenses that
considerably diminish its value, it shall be
sold at public auction eight days after the
publication.
3. If the owner does not appear within six
months from publication, the thing or its
value shall be awarded to the finder.
PROPERTY
4. If the owner appeared in time, the owner is
obliged to pay the finder one-tenth of the
price of the thing.
Hidden Treasure
Definition: Any hidden and unknown deposit
of money, jewelry, or other precious objects the
lawful ownership of which does not appear [Art.
439, Civil Code].
Ownership
General Rule: Belongs to the owner of the
property where it is found [Art. 438, Civil
Code].
Exceptions [OTI-other, trespasser, interest]:
1. If found on (a) property of another, the
State, or any of its subdivisions and (b) by
chance;
a. Only one-half shall be allowed to the
finder;
2. If finder is a Trespasser;
a. Finder is not entitled to any share; and,
3. If things are of Interest to science or the
arts;
a. The State may acquire them at their just
price, which shall be divided in
conformity with the rules stated
B. Donation
1. Requisites [CADAF]
a. Capacity of donor to make a donation;
b. Donative intent (Animus donandi);
c. Delivery (actual or constructive);
d. Acceptance by the donee; and,
1. Acceptance by the donee is required
because donation is never obligatory.
One cannot be compelled to accept the
generosity of another.
2. Although under Art. 725, donation is an
act, it is really a contract. The essential
requisites of consent, subject matter,
and cause must be present [Tolentino].
e. Necessary Form prescribed by law.
2. Persons Who May Give/Receive a
Donation
General Rule: All persons who may contract
and dispose of their property [Art. 735, Civil
Code].
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Exceptions:
a. Guardians and trustees cannot donate the
property entrusted to them [Art. 736, Civil
Code];
b. Minors and others who cannot enter into a
contract may become donees but
acceptance shall be done through their
parents or legal representatives [Art. 741,
Civil Code];
c. For donation to conceived and unborn
children, acceptance may be made by
persons who would legally represent them if
they were already born [Art. 742, Civil
Code];
d. Donations made to incapacitated persons
shall be void (though simulated under the
guise of another contract or through a
person who is interposed) [Art. 743, Civil
Code]; and,
e. When the same thing is donated to two or
more different donees, rules on double sale
govern [Art. 744, Civil Code];
1. If personal property - ownership goes to
the first possessor in good faith;
2. If immovable property - ownership goes
to the first registrant in good faith [Art.
1544, Civil Code].
3. Effects and Limitations
Effect. – The patrimony or assets of the donor
is decreased, while that of the donee is
increased.
Limitations
a. Reservation of sufficient means for support
of donor and relatives [Art. 750, Civil Code];
1. Donation without reservation is not null
and void in its entirety; it is only subject
to reduction by the court;
2. Limitation applies to simple,
remunerative and modal donations but
not to onerous ones nor to donations
mortis causa;
b. Donations cannot comprehend future
property [Art. 751, Civil Code];
1. Future property: understood as
anything which the donor cannot dispose
of at the time of the donation;
2. Rationale: Nobody can dispose of that
which does not belong to him;
3. Future inheritance cannot be donated
because it is considered future property.
However, upon the death of his
predecessor, the inheritance ceases to
PROPERTY
be future and consequently, may be the
object of donation [Osorio v. Osorio, G.R.
No. 16544 (1921)];
c. Amount of donation limited to what donor
may give by will [Art. 752, Civil Code];
1. A person may not donate more than he
can give by will. A donation, which
exceeds what the donor may give or
receive by will, is considered
inofficious.
2. Limitation applies where the donor has
forced or compulsory heirs.
4. Revocation and Reduction
Distinguished
Reduction Revocation
CIVIL LAW
1. Definition
By prescription, one acquires ownership and
other real rights through the lapse of time in the
manner and under the conditions laid down by
law. In the same way, rights and conditions are
lost by prescription [Art. 1106, Civil Code].
Note: For purposes of acquiring ownership,
only acquisitive prescription is being referred
to.
2. Who May Acquire Ownership by
Prescription
Persons who are capable of acquiring property
or rights by the other legal modes may acquire
the same by means of prescription [Art. 1107
(1), Civil Code].

Total withdrawal of Amount is only Minors and other incapacitated persons may
amount, whether the insofar as the acquire property or rights personally or through
legitime is impaired legitime is their parents, guardians, or legal
or not prejudiced; representatives [Art. 1107 (2), Civil Code].

3. Types
Benefits the donor Benefits the donor’s a. Acquisitive Prescription
heirs (except when The acquisition of ownership and other real
made on the ground rights through possession in the concept of
of the appearance of owner of a thing in the manner and condition
a child). provided by law.

Revocation due to birth, appearance, or Ordinary

adoption of a child applies only to donations
inter vivos and not to donations mortis causa,
onerous donations, and donations propter
nuptias [De Leon].
Situations Contemplated
a. The existence of children, if the donor has
no such child when the donation was made
[Art. 760, Civil Code];
b. The donee’s failure to comply with any of
the conditions the former imposed upon
the latter [Art. 764, Civil Code];
c. The donee’s ingratitude [Art. 765, Civil
Code];
d. Inofficious donations [Art. 752, Civil Code];
or
e. Multiple donations cannot be covered by
the disposable portion in case of succession
[Art. 773, Civil Code].
C. Prescription
Ordinary acquisitive prescription requires
possession of things in good faith and with just
title for the time fixed by law.
Note: Ownership and other real rights over
immovable property are acquired by ordinary
prescription through possession of ten years
[Art. 1134, Civil Code]
Extraordinary
Extraordinary acquisitive prescription is the
acquisition of ownership and other real rights
without need of title or of good faith or any other
condition.
b. Extinctive Prescription
It is the loss or extinguishment of property
rights or actions through the possession by
another of a thing for the period provided by law
or through failure to bring the necessary action
to enforce one’s right within the period fixed by
law.

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Requisites Action to Demand Partition;
1. Capacity to acquire by prescription; Distinguished from Laches
2. A thing capable of acquisition by No prescription shall run in favor of a co-owner
prescription; or co-heir against his co-owners or co-heirs so
3. Possession of the thing under certain long as he expressly or impliedly recognizes
conditions; and the co-ownership [Art. 494, Civil Code].
4. Lapse of time provided by law
Prescription vs. Laches
Periods
Prescription Laches
1. Movables
a. 4 years ‐ If in good faith; and,
Concerned with the Concerned with the
b. 8 years ‐ If in bad faith [Art. 1140 in fact of delay. effect of delay.
relation to Art. 1132, Civil Code]
A matter of time Principally a question
2. Immovables of inequity of
a. 10 years ‐ If in good faith permitting a claim to
b. 30 years ‐ If in bad faith be enforced, this
inequity being
4. When Inapplicable founded on some
By Offender subsequent change
The offender can never acquire, through in the condition or the
prescription, movable properties possessed relation of the
through a crime such as robbery, theft, or parties.
estafa [Art. 1133, Civil Code].
Statutory. Not statutory.
Note: The person who cannot invoke the right
of prescription is the offender or person who Applies at law. Applies at equity.
committed the crime or offense, not a
subsequent transferee who did not participate Cannot be availed of Being a defense of
in the crime or offense, unless the latter knew unless it is equity, need not be
the criminal nature of the acquisition of the especially pleaded specifically pleaded.
property by the transferor. as an affirmative
allegation.
Registered Lands
No title to registered land in derogation of the Based on a fixed Not based on a fixed
title of the registered owner shall be acquired time. time.
by prescription or adverse possession
[Property Registration Decree, PD 1529]. Property of Public Dominion
Prescription, both acquisitive and extinctive,
Actions to Demand a Right of Way; to does not run against the State in the exercise
Abate a Nuisance [Art. 1143, Civil Code] of its sovereign function to protect its interest
Action to Quiet Title if Plaintiff is in except with respect to its patrimonial property
Possession which may be the object of prescription [Art.
When the plaintiff is in possession of the 1113, Civil Code].
property, the action to quiet title does not
prescribe. The reason is that the owner of the 5. Prescription of Ownership and
property or right may wait until his possession Other Real Rights
is disturbed or his title is assailed before taking Ownership and other real rights over
steps to vindicate his right. immovable property are acquired by ordinary
prescription through possession of ten years
Void Contracts [Art. 1134, Civil Code].
The action or defense for the declaration of the
inexistence of a contract does not prescribe
[Art.1410, Civil Code].

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6. Prescription of Actions
a. To Recover Movables
General Rule: Eight (8) years from the time
possession was lost [Art. 1132 and 1140, Civil
Code]
Exception:
1. If action is brought after four (4) years when
the possessor has already acquired title by
ordinary acquisitive prescription [Art.
1132, Civil Code].
2. If the possessor acquired the movable in
good faith at a public sale, the owner
cannot obtain its return without reimbursing
the price paid [Art. 559, Civil Code].
b. To Recover Immovables
General Rule: Real actions prescribe after
thirty (30) years [Art. 1141, Civil Code].
Exception: The possessor has acquired
ownership of the immovable by ordinary
acquisitive prescription through possession of
ten (10) years [Art. 1134, Civil Code].
c. Other Actions
Action for Reconveyance
1. Based on fraud: Four (4) years from the
discovery of fraud [Art. 1391, Civil Code]
2. Based on implied or constructive trust:
Ten (10) years from the alleged fraudulent
registration or date of issuance of certificate
of title over the property [Art. 1144, Civil
Code]
Notes:
1. An action for reconveyance may be barred
by prescription. However, one recognized
exception is when the property in dispute is
in actual possession of the plaintiff.
Prescription does not run against the
plaintiff in actual possession of the disputed
land because such plaintiff has a right to
wait until his possession is disturbed or his
title is questioned before initiating an action
to vindicate his right. As such, his
undisturbed possession gives him the
continuing right to seek the aid of a court of
equity to determine the nature of the
adverse claim of a third party and its effect
on his title [Heirs of Bernardo and Ronquillo
v. Sps. Gamboa and Caballero, G.R. 23305
(2020)].
2. An action for reconveyance and
cancellation of title prescribes in 10 years
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from the time of the issuance of the Torrens
title over the property [Heirs of Sumagang v.
Aznar Enterprises, G.R. No. 214315
(2019)].
Interruption of Prescription
When Interrupted
1. When the action is filed before the court;
2. When there is a written extrajudicial
demand by the creditors; and,
3. When there is any written acknowledgment
of the debt by the debtor.
Note: An interruption of the prescriptive
period wipes out the period that has
elapsed, sets the same running anew, and
creates a fresh period for the filing of an
action [Selerio v. Bancasan, G.R. No.
222442 (2020)].
Types of Interruption
1. Natural – Any natural cause that interrupts
the possession for more than one year [Art.
1121, Civil Code]
2. Civil – [Art. 1123, Civil Code]
a. For acquisitive prescription – starts from
the time judicial summons are received;
b. For extinctive prescription – starts from
the time action is filed in court, written
extrajudicial demand by the creditors is
received, or when there is written
acknowledgment of the debt by the
debtor [Art. 1155, Civil Code].
Suspension in Case of Acquisitive
Prescription. – The period of interruption shall
be counted in favor of prescription (i.e., as if
interruption never happened but is merely
suspended) if:
1. Judicial summons is void;
2. The plaintiff should desist from the
complaint;
3. The possessor was absolved from the
complaint.
Effects of Interruption
1. All the benefits acquired so far from the
possession ceases.
2. When the prescription runs again, it will be
reset (i.e. entirely new prescriptive period
PROPERTY CIVIL LAW
IX. QUIETING OF TITLE B. Who May File [Sec. 1, Rule
63, Rules of Court]
A. Requisites
Any person interested under a deed, will,
1. Plaintiff has a legal or an equitable title to or contract or other written instrument, or whose
interest in the real property subject of the rights are affected by a statute, executive order
action; and he need not be in possession of or regulation, ordinance, or any other
said property [Art. 477, Civil Code]. governmental regulation may, before breach or
2. The deed, claim, encumbrance, or violation thereof, bring an action in the
proceeding claimed to be casting a cloud on appropriate Regional Trial Court to determine
plaintiff’s title must be shown to be in fact any question of construction or validity arising,
invalid or inoperative despite its prima facie and for a declaration of his rights or duties,
appearance of validity or legal efficacy. thereunder [Bar Matter No. 803, 17 February
1998].
Such cloud must be due to some
instrument, record, claim, encumbrance or
proceeding which is apparently valid but is
in truth invalid, ineffective, voidable or
unenforceable, and is prejudicial to the
plaintiff’s title. Plaintiff must return to the
defendant all benefits he may have received
from the latter, or reimburse him for
expenses that may have redounded to his
benefit [Art. 479, Civil Code].

Note: An action to quiet title applies only to

real property; except to some personal
properties like vessels or stock certificates
which partake of the nature of real property,
or when they are considered as real
property because of special registration
requirements [De Leon].

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C. Quieting of Title vs. Removing or Preventing a Cloud
Action to Quiet Title Action to Remove or Prevent a Cloud

A common law remedy for the
removal of any cloud upon a
doubt or uncertainty with respect
Definition to title to real property [Paras].
A semblance of title, either legal (party is
the registered owner) or equitable (party
has beneficial ownership), or a claim or
a right in real property, appearing in
some legal form but which is, in fact,
invalid or which would be inequitable to
enforce

To put a stop to vexatious To cancel, deliver, remove, or release

Purpose
litigation in relation to the property an encumbrance which can be
considered a claim re: plaintiff’s title

1. Plaintiff must show that 1. Plaintiff has a title to a real

there is an instrument,
record, claim,
encumbrance, or
proceeding,
2. Said instrument, etc. must
constitute or cast a
Requisites
cloud; doubt; question; or
shadow,
3. Said cloud, etc. is
adverse to the owner's
title to or interest in real
property [Art. 476, Civil
Code]
property or interest therein;
2. Defendant is bent on creating
a cloud on the title or interest
therein. The danger must not be
merely speculative or imaginary
but imminent; and
3. Unless the defendant is
restrained or stopped, the title
or interest of the plaintiff will be
prejudiced or adversely
affected.

1. To questions involving interpretation of documents;

2. To mere written or oral assertions of claim, except if made in a
legal proceeding or asserts that an instrument or entry in plaintiff’s
favor is not what it purports to be;
When
3. To boundary disputes;
Inapplicable
4. To deeds by strangers to the title unless purporting to convey the
property of the plaintiff;
5. To instruments invalid on their face; or
6. Where the validity of the instrument involves a pure question of law

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D. Prescription/Non-Prescription of Action
Condition Effect on Prescription

Plaintiff is in possession of the property Action does not prescribe

Plaintiff is a possessor with Action prescribes in 10 years

real right
Plaintiff is not in possession of
the property
Plaintiff is owner of the Action prescribes in 30 years
property

Note: An action to quiet title may be defeated by a claim of ordinary or extraordinary acquisitive
prescription by the defendant.

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PROPERTY CIVIL LAW
X. ACTIONS TO RECOVER PROPERTY
Summary of Actions
Right Sought to be Hearing Court Assessed Value
Enforced on Action
Property [Judiciary Reorganization Act, as amended]

Possession of real Regional Trial Court > Php 400,000 Accion interdictal
property (within one
year from
dispossession or Metropolitan/Municipal < Php 400,000
knowledge of /Municipal Circuit Trial
dispossession) Court

Possession of real Regional Trial Court > Php 400,000 Accion publiciana
property (more than
one year from
dispossession or Metropolitan/Municipal < Php 400,000
knowledge of /Municipal Circuit Trial
dispossession) Court

Ownership of real Regional Trial Court > Php 400,000 Accion reivindicatoria
property
Metropolitan/Municipal < Php 400,000
/Municipal Circuit Trial
Court

Possession of Regional Trial Court > Php 2,000,000 Replevin

personal property
Metropolitan/Municipal < Php 2,000,000
/Municipal Circuit Trial
Court

Forcible Entry vs. Unlawful Detainer

Situation Contemplated
Period to Bring Action
Forcible Entry Unlawful Detainer
Lawful possessor deprived Possessor refused to vacate
through FISTS: upon demand after the
1. Force; expiration or termination of
2. Intimidation; his/her right to possess by
3. Strategy; virtue of any contract.
4. Threats; and,
5. Stealth [Sec. 1, Rule
70, Rules of Court)
One year from dispossession One year from last demand to
or on knowledge of vacate.
dispossession.

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CREDIT TRANSACTIONS II
CIVIL LAW
CREDIT TRANSACTIONS II
I. PERSONAL PROPERTY
SECURITIES (R.A. No.
11057)
A. Scope of the Personal
Property Security Act (PPSA)
General Rule: The PPSA applies to ALL
transactions that secure an obligation with
movable collateral
Exceptions
1. Interests in aircrafts
2. Interests in ships
Section 66. Repealing Clause. — The following
laws, and all laws, decrees, orders, and issuances or
portions thereof, which are inconsistent with the
provisions of this Act, are hereby repealed,
amended, or modified accordingly:
a. Sections 1 to 16 of Act No. 1508, otherwise
known as "The Chattel Mortgage Law"
b. Articles 2085-2123, 2127, 2140-2141, 2241,
2243, and 2246-2247 of Republic Act No. 386,
otherwise known as the "Civil Code of the
Philippines";
c. Section 13 of Republic Act No. 5980, as
amended by Republic Act No. 8556, otherwise
known as the "Financing Company Act of
1998";
d. Sections 114-116 of Presidential Decree No.
1529, otherwise known as the "Property
Registration Decree";
e. Section 10 of Presidential Decree No. 1529,
insofar as the provision thereof is inconsistent
with this Act; and
f. Section 5(e) of Republic Act No. 4136,
otherwise known as the "Land Transportation
and Traffic Code"
Implications
Section 66 provides that the PPSA will now
apply over the laws it repeals. The following are
the implications in connection with the
repealing clause:
1. The system of conventional pledges and
chattel mortgages are “replaced with a
framework for secured transactions”
[Somera, The Personal Property Security
Act, 2018].
2. Article 2127 is modified with regard to
property included in a Real Estate
Mortgage. Under Art. 2127, a REM “extends
to natural accessions, to the improvements,
growing fruits and the rents or income not
yet received when the [principal] obligation
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CIVIL LAW
becomes due.” These personal properties
are no longer covered by Art. 2127
[Somera]
a. Articles 2093–2123 on Pledges are
repealed, with the exception of Article
2121 on Legal Pledges.
b. Articles 2140–2141 and Act. No. 1508 on
Chattel Mortgages are repealed.
c. The provisions on special preferred
credits on movables (Articles 2241,
2243, 2246, 2247) are amended.
The creation of the Registry, as defined in Sec.
3(h) of the PPSA repeals the ff. Laws:
1. Sections. 10 & 114–116 of PD No. 1529
(Property Registration Decree) on the
functions of the Register of Deed &
Registration of Chattel Mortgages,
2. Section 13 of the Financing Company Act of
1998 on registry of financial leases and
3. Section 5(3) of Rep. Act No. 4136 (Land
Transportation Code) on the recording of
mortgages, attachments and other
encumbrances on motor vehicles [Somera].
B. Definitions
Security Agreement
The secured transaction under the PPSA is
called the security agreement. It is a
consensual contract, perfected by the meeting
of the minds of the grantor and the secured
creditor [Somera].
The agreement must be contained in a written
contract [Sec. 6]. Writing, for the purposes of
the PPSA, includes electronic records [Sec.
3(k)]. It is an accessory obligation entered into
by a person who grants a property right to
another person, in order to secure the payment
or performance of an obligation [Somera].
Security Interest [Sec. 3(j)]
A security interest is a property right in
collateral that secures payment or other
performance of an obligation, regardless of:
1. Whether the parties have denominated it as
a security interest; and
2. The type of asset, the status of the grantor
or secured creditor, or the nature of the
secured obligation
• Including the right of a buyer of accounts
receivable and a lessor under an
operating lease for not less than one (1)
year
CREDIT TRANSACTIONS II
Proceeds
Under the PPSA, even when the collateral is
disposed, the security interest extends to its
identifiable or traceable proceeds [Sec. 8]. It
covers sales, leases, licenses, exchanges,
other forms of disposition.
Proceeds are:
1. Any property received upon sale, lease or
other disposition of collateral; or
2. Whatever is collected on or distributed with
respect to collateral, claims arising out of
the loss or damage to the collateral, as well
as a right to insurance payment or other
compensation for loss or damage of the
collateral [Sec. 3(f)].
Parties
The parties to a security agreement under the
PPSA are the grantor and the secured
creditor [Sec. 3].
Grantor [Sec. 3(c)]
1. The person who grants a security interest in
collateral to secure its own obligation or that
of another person;
2. A buyer or other transferee of a collateral
that acquires its right subject to a security
interest;
3. A transferor in an outright transfer of an
accounts receivable; or
4. A lessee of goods.
Secured Creditor [Sec. 3(i)]
A secured creditor is a person that has a
security interest.
For the purposes of registration and priority
only, “secured creditor” includes a buyer of
account receivable and a lessor of goods under
an operating lease for not less than one (1)
year.
C. Security Interest
1. Asset-Specific Rules - Accounts
Receivable
Future Property
Section 5. Creation of a Security Interest.
(b) A security agreement may provide for the creation
of a security interest in a future property, but the
security interest in that property is created only
when the grantor acquires rights in it or the
power to encumber it.
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Such security agreement containing a
provision over future property is akin to a
Contract to Mortgage. Both secured
transactions are preparatory contracts wherein
the security interest is only created or perfected
once the grantor is the absolute owner of the
future property.
Rights to Proceeds and Commingled
Funds
When the collateral is disposed, the security
interest extends to the proceeds from such
disposition, in the form of funds, even when
they are credited to a deposit account or
money are commingled with other funds or
money [Sec. 8].
a. Despite the fact that they are no longer
identifiable
b. Only to the extent that they remain traceable
Rules on Commingled Funds [Sec. 8]
a. The security interest in the commingled
funds shall be limited to the amount of the
proceeds immediately before they were
commingled.
b. If at any time after the commingling, the
balance credited to the deposit account or
the amount of the commingled money is
less than the amount of the proceeds
immediately before they were commingled:
1. The security interest against the
commingled funds or money shall be
limited to the lowest amount of the
commingled funds or money.
2. The reckoning period for such amount is
between the time when the proceeds
were commingled and the time the
security interest in the proceeds is
claimed.
Tangible Assets Commingled in a Mass;
Continuity of Security Interest
The PPSA provides rules for the continuity of
the security interest over tangible assets (i.e.,
movable property) which has either:
a. Become a fixture,
b. Undergone accession or
c. Undergone commingling.
According to the PPSA, the security interest
over the said movable will continue, provided
that it can still be reasonably traced.
However, as to the question of ownership over
the said tangible assets, Book II of the Civil
Code will govern [Sec. 25].
CREDIT TRANSACTIONS II
Otherwise, if the tangible asset did not become
a fixture, or underwent accession or
commingling, a party who obtains the asset
in good faith will take it free from any
security interest. However, good faith will not
exist if the movable property was registered
before being obtained [Sec. 21].
Accounts Receivables
Under Sec. 10 of the PPSA, security interests
in accounts receivable shall be effective
notwithstanding any agreement between the
grantor and the account debtor or any secured
creditor limiting in any way the grantor’s right to
create a security interest [Sec. 10(a)].
Likewise, any stipulation limiting the grantor’s
right to create a security interest shall be void
[Sec. 10(c)].
However, the PPSA limits the application of
these provisions to accounts receivable arising
from:
a. A contract for the supply or lease of goods
or services other than financial services;
b. A construction contract or a contract for the
sale or lease of real property; and
c. A contract for the sale, lease or license of
intellectual property [Sec. 10(d)].
Sec. 10 also shall not affect any obligation or
liability of the grantor for breach of the
agreement in Sec. 10(a).
2. Perfection
General Provisions
Section 11. Perfection of Security Interest. —
a. A security interest shall be perfected when it
has been created and the secured creditor
has taken one of the actions in accordance
with Section 12.
b. On perfection, a security interest becomes
effective against third parties.
It is not perfection that gives birth to the
security agreement, since it is a consensual
contract. Rather, perfection gives the security
interest third-party effectiveness [Somera].
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Section 12. Means of Perfection. — A security
interest may be perfected by:
a. Registration of a notice with the Registry;
b. Possession of the collateral by the secured
creditor; and
c. Control of investment property and deposit
account.
A security interest in any tangible asset may be
perfected by registration or possession. A security
interest in investment property and deposit account
may be perfected by registration or control.
Perfection by Registration
A security interest in the ff. may be perfected
by registration of a notice with the Registry
[Sec. 12(a)]:
a. A tangible movable asset
b. Investment property
c. A deposit account
Notice – a statement of information that is
registered in the Registry relating to a security
interest or lien. The term includes an initial
notice, amendment notice, and termination
notice [Sec. 3(e)].
Perfection by Possession
A security interest in a tangible movable asset
may be perfected by possession of the
collateral by the secured creditor [Sec. 12(b)].
Possession in Art. 523 of the Civil Code is
defined as “the holding of a thing or the
enjoyment of a right.”
Perfection by Control
A security interest in the ff. may be perfected
by control [Sec. 12(c)]:
a. Investment property
b. A deposit account
A security interest in a deposit account or
investment property may be perfected by
control through:
a. The creation of the security interest in
favor of the deposit-taking institution or the
intermediary;
b. The conclusion of a control agreement;
or
c. For an investment property that is an
electronic security not held with an
intermediary, the notation of the security
interest in the books maintained by or on
behalf of the issuer for the purpose of
CREDIT TRANSACTIONS II CIVIL LAW
recording the name of the holder of the secured creditor without further consent
securities [Sec. 13(a)]. by the commodity customer or grantor.

The Intermediary’s Role in Control Note: A commodity contract is a

Agreements commodity futures contract, an option on a
Under Sec. 13(b), a deposit-taking institution or commodity futures contract, a commodity
intermediary must consent to the entering of a option, or another contract, if the contract or
control agreement. option is:
a. Traded on or subject to the rules of a
The PPSA does NOT require the intermediary board of trade that has been designated
to enter into such agreements, since its as a contract market for such a contract;
obligation is limited to following the instructions or
of the grantor, who is its depositor. b. Traded on a foreign commodity board of
• i.e., It has the right to refuse to follow the trade, exchange, or market, and is
instructions of the secured creditor carried on the books of a commodity
intermediary for a commodity customer
Should the intermediary refuse to enter into a [Sec. 3(a)].
control agreement, the remedy of the grantor
and secured creditor is to register the security Summary of Perfection of Security
agreement instead, in order to perfect the Interests
security interest.
Regist Posses
Control
ration sion
Three Types of Control Agreements
a. Control Agreement with Respect to Tangible P P
Securities Assets
1. An agreement in writing among the
issuer or the intermediary, the grantor Investment P P
and the secured creditor. Property
2. The issuer or the intermediary agrees to
follow instructions from the secured Deposit P P
creditor with respect to the security, Account
without further consent from the grantor
[Sec. 3(b)(1)].
D. The Registry
b. Control Agreement with Respect to Rights
to a Deposit Account A security interest may be perfected by
1. An agreement in writing among the registration of a notice with the Registry.
deposit-taking institution, the grantor and
the secured creditor. Section 26. Establishment of Electronic Registry. —
2. The deposit-taking institution agrees to a. The Registry shall be established in and
follow instructions from the secured administered by the LRA.
b. The Registry shall provide electronic means for
creditor with respect to the payment of
registration and searching of notices.
funds credited to the deposit account
without further consent from the grantor
[Sec. 3(b)(2)]. Procedure
1. The grantor, or any person authorized by
c. Control Agreement with Respect to the grantor, submits the notice to the
Commodity Contracts Registry, and pays the prescribed fee. The
1. An agreement in writing among the notice is considered sufficient if it:
grantor, secured creditor, and a. Identifies the grantor by an
intermediary. identification number
2. The commodity intermediary will apply b. Identifies the secured creditor by name
any value distributed on account of the c. Provides an address for the grantor
commodity contract as directed by the and secured creditor
d. Describes the collateral [Sec. 28].

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CREDIT TRANSACTIONS II
2. The Registry either accepts or rejects the
notice for registration. However, if the
notice meets the minimum requirements
and the fee is paid, it shall not be rejected
[Sec. 28(a)]
a. The Registry does not determine the
correctness, authenticity, or validity of
the information contained in the notice.
b. Thus, questions regarding the validity
of the security agreement are expected
to be decided in a proper litigation after
registration [Somera].
3. If the Registry rejects the registration of a
notice, it shall promptly communicate the
fact and reason for its rejection to the
person who submitted the notice [Sec.
28(b)]
4. If the Registry accepts the registration of a
notice, it shall be effective, from the time it
is discoverable on the records of the
Registry, until such time that the duration
indicated on the notice lapses [Sec. 30]
a. Any person may search notices
registered in the Registry [Sec. 27].
b. The electronic records of the Registry
shall be the official records [Sec. 27].
Effects of Registration
1. The security interest becomes binding on
third parties [Sec. 11].
2. The registered notice is considered a public
record [Sec. 27].
3. Subsequent purchasers of the collateral are
charged with notice of the security interest
burdening the title of said collateral.
• Such notice cannot be overcome by
proof of good faith [Legarda & Prieto v.
Saleeby, G.R. No. L-8936 (1915)]
4. Establishes the basis of priority of security
of interest according to time of registration
[Sec. 17].
E. Priority of Security Interest
Priority – the right of a person to derive the
economic benefit of its security interest in
preference to the right of a competing claimant
[Somera, 2018, citing UNCITRAL Guidelines].
The perfection of a security interest gives rights
to the secured creditor against other creditors
asserting rights over the same collateral.
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Priority Rules
The priority of security interests and liens on
the same collateral shall be determined
according to the time of registration of a notice
or perfection by other means [Sec. 17].
General Rule: Such priority is without regard
to the order of creation of the security interests
and liens, or to the mode of perfection [Sec.
17].
Exception: Except as provided in Sections 18-
25 of the PPSA or Sections 6.02-6.05 of these
Rules [Rule VI, Sec, 6.01, IRR of R.A. 11057].
1. Priority Rules for Intangible Assets
Security Interests Over Deposit
Accounts/Investment Properties
Section 18. Priority for Perfection by Control. —
a. A security interest in a deposit account with
respect to which the secured creditor is the
deposit-taking institution or the intermediary
shall have priority over a competing security
interest perfected by any method.
b. A security interest in a deposit account or
investment property that is perfected by a
control agreement shall have priority over a
competing security interest except a security
interest of the deposit-taking institution or the
intermediary.
c. The order of priority among competing security
interests in a deposit account or investment
property that were perfected by the conclusion
of control agreements shall be determined on
the basis of the time of conclusion of the
control agreements.
d. Any rights to set-off that the deposit-taking
institution may have against a grantor’s
right to payment of funds credited to a
deposit account shall have priority over a
security interest in the deposit account.
Priority of Security Interests Over Deposit
Accounts/Investment Property
Note: With (1) having the highest priority
1. Right to set-off of the deposit-taking
institution against a grantor’s right to
payment of funds credited to a deposit
account
2. Security interest in a deposit account with
respect to which the secured creditor is the
deposit-taking institution
3. Security interest in a deposit account or
investment property that is perfected by a
control agreement
• The earlier the conclusion of the control
agreement, the higher in priority
CREDIT TRANSACTIONS II
4. Security interest in a deposit account or
investment property that is perfected by
registration
Security Interests Over Electronic
Securities
Section 18. Priority for Perfection by Control. —
---xxx---
f. A security interest in electronic securities not
held with an intermediary perfected by a
notation of the security interests in the
books maintained for that purpose by or on
behalf of the issuer shall have priority over a
security interest in the same securities
perfected by any other method.
g. A security interest in electronic securities
not held with an intermediary perfected by
the conclusion of a control agreement shall
have priority over a security interest in the
same securities perfected by registration of a
notice in the Registry.
h. The order of priority among competing security
interests in electronic securities not held with
an intermediary perfected by the conclusion of
control agreements is determined on the
basis of the time of conclusion of the
control agreements.
Priority of Security Interests Over Non-
Intermediated Electronic Securities
1. Security interest in non-intermediated
electronic securities perfected by a notation
of such interest in the books of the issuer
2. Security interest in non-intermediated
electronic securities perfected by control
• The earlier the conclusion of the control
agreement, the higher in priority
2. Priority Rules for Tangible Assets
Security Interests Over Security
Certificates
Certificated non-intermediated securities are
considered tangible property if the mere
possession of such instruments results in the
ownership of the underlying rights or property
embodied by them [Rule I, Sec. 1.05(kk), IRR
of R.A. 11057].
Section 18. Priority for Perfection by Control.
---xxx---
A security interest in a security certificate
perfected by the secured creditor’s possession
of the certificate shall have priority over a
competing security interest perfected by registration
of a notice in the Registry.
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Priority of Security Interests Over
Security Certificates
a. Security interest in a security certificate
perfected by possession of said certificate
b. Security interest in a security certificate
perfected by registration of a notice in the
Registry.
Security Interests Over Instruments or
Negotiable Documents
Section 19. Priority for Instruments and Negotiable
Documents. – A security interest in an instrument or
negotiable document that is perfected by
possession of the instrument or the negotiable
document shall have priority over a security interest
in the instrument or negotiable document that is
perfected by registration of a notice in the Registry.
Priority of Security Interests Over
Instruments or Negotiable Documents
a. A security interest in an instrument or
negotiable document that is perfected by
possession
b. A security interest in an instrument or
negotiable document that is perfected by
registration
Security Interests Over Livestock
Section 24. Livestock. – A perfected security
interest in livestock securing an obligation incurred to
enable the grantor to obtain food or medicine for the
livestock shall have priority over any other security
interest in the livestock, except for a perfected
purchase money security interest in the
livestock, if the secured creditor providing credit for
food or medicine gives written notification to the
holder of the conflicting perfected security interest in
the same livestock before the grantor receives
possession of the food or medicine.
Priority of Security Interests Over
Livestock
a. A perfected purchase money security
interest in the livestock incurred to enable
the grantor to obtain food or medicine for the
livestock, provided that –
1. The secured creditor providing credit for
said food or medicine gives written
notification to the holder of the
conflicting perfected security interest in
the same livestock.
2. Such notice must be given before the
grantor receives possession of the food
or medicine
b. A perfected security interest in livestock
securing an obligation incurred to enable
CREDIT TRANSACTIONS II
the grantor to obtain food or medicine for the
livestock
c. other security interest in the livestock,
incurred for any other purpose
Note: A purchase money security interest is
a security in goods, taken by:
a. The seller to secure the price; or
b. A person who gives value
to enable the grantor acquire the goods to the
extent that the credit is used for that purpose
[Sec. 3(g)].
3. Priority Rules for Specific Cases
Security Interests Over Goods that are
Subject to the Right of Retention
Section 20. Priority and Right of Retention by
Operation of Law. – A person who provides services
or materials with respect to the goods, in the
ordinary course of business, and retains
possession of the goods shall have priority over
a perfected security interest in the goods until
payment thereof.
Priority of Security Interests Over Goods
a. Lien over goods created by operation of law
in favor of a person who provides services
or materials with respect to the goods, in the
ordinary course of business
b. Any perfected security interest over the
same goods.
Purchase Money Security Interests
A purchase money security interest (PMSI)
is a security in goods, taken by:
a. The seller to secure the price; or
b. A person who gives value
to enable the grantor acquire the goods to the
extent that the credit is used for that purpose
[Sec. 3(g)].
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Section 23. Purchase Money Security Interest. —
a. A purchase money security interest in
equipment and its proceeds shall have
priority over a conflicting security interest, if a
notice relating to the purchase money
security interest is registered within three (3)
business days after the grantor receives
possession of the equipment.
b. A purchase money security interest in
consumer goods that is perfected by
registration of notice not later than three
(3) business days after the grantor
obtains possession of the consumer goods
shall have priority over a conflicting security
interest.
c. A purchase money security interest in
inventory, intellectual property or
livestock shall have priority over a
conflicting perfected security interest in the
same inventory, intellectual property or
livestock if:
1. The purchase money security interest
is perfected when the grantor
receives possession of the
inventory or livestock, or acquires
rights to intellectual property; and
2. Before the grantor receives
possession of the inventory or
livestock, or acquires rights in
intellectual property, the purchase
money secured creditor gives
written notification to the holder of
the conflicting perfected security
interest in the same types of
inventory, livestock, or intellectual
property. The notification sent to the
holder of the conflicting security
interest may cover multiple
transactions between the purchase
money secured creditor and the
grantor without the need to identify
each transaction.
d. The purchase money security interest in
equipment or consumer goods perfected
timely in accordance with subsections (a)
and (b), shall have priority over the rights of
a buyer, lessee, or lien holder which arise
between delivery of the equipment or
consumer goods to the grantor and the time
the notice is registered.
Priority of Security Interests Over
Equipment and its Proceeds [Sec. 23]
a. A PMSI in equipment and its proceeds shall
have priority, provided that –
• A notice relating to the PMSI is
registered within three (3) business
days after the grantor receives
possession of the equipment
b. Right over the same equipment in favor of a
buyer, lessee, or lien holder which arise
CREDIT TRANSACTIONS II
between delivery of the equipment to the
grantor and the time the notice is registered
c. Any perfected security interest in the same
equipment.
Priority of Security Interests Over
Consumer Goods [Sec. 23]
a. A PMSI in consumer goods shall have
priority, provided that –
• A notice relating to the PMSI is
registered within three (3) business
days after the grantor receives
possession of the consumer goods
b. Right over the same goods in favor of a
buyer, lessee, or lien holder which arise
between delivery of the consumer goods to
the grantor and the time the notice is
registered
c. Any perfected security interest in the same
goods.
Priority of Interests Over Inventory,
Intellectual Property or Livestock [Sec. 23 ]
a. A PMSI in inventory, intellectual property or
livestock shall have priority, provided that –
1. The PMSI is perfected when the grantor
receives possession of the inventory or
livestock, or acquires rights to intellectual
property;
2. The secured creditor gives a written
notification to the holder of the
conflicting perfected security interest in
the same types of inventory, livestock, or
intellectual property
• Such notification must be given
before the grantor receives
possession of the inventory or
livestock, or acquires rights in
intellectual property; and
• The notification may cover multiple
transactions between the secured
creditor and the grantor, without the
need to identify each transaction.
b. Any perfected security interest in the same
inventory, intellectual property or livestock.
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4. Priority of Perfected Security
Interest Prior to Insolvency
Proceedings
Section 22. Effect of the Grantor’s Insolvency on the
Priority of a Security Interest. – Subject to the
applicable insolvency law, a security interest
perfected prior to the commencement of
insolvency proceedings in respect of the grantor
shall remain perfected and retain the priority it
had before the commencement of the insolvency
proceedings.
This section amends Art. 2241, 2243, 2246,
2247 of the Civil Code or the provisions on
special preferred credits on movable property.
a. The preference created by these Articles
will be SUBORDINATE to the priority
perfected pursuant to the PPSA [Somera].
b. During insolvency proceedings, the
perfected security interest shall constitute a
lien over the collateral [Rule VI, Sec.
6.04(b), IRR of R.A. 11057].
Tangible Assets; Intangible Assets (Sec.
12)
Tangible asset – any tangible movable asset,
including:
a. Money
b. Negotiable instruments
c. Negotiable documents; and
d. Certificated non-intermediated securities
• Only if the mere possession of such
instruments results in the ownership of
the underlying rights or property
embodied by them [Rule I, Section
1.05(kk), IRR of R.A. 11057].
Intangible asset – any movable property other
than a tangible asset including, but not limited
to, investment property, deposit accounts,
commodity contracts and receivables [Rule 1,
Section 1.05(m), IRR of R.A. 11057].
Means of Perfection [Section 4.02-4.03,
IRR of R.A. 11057]
Intangible
(Investment
Tangible
Property/Deposit
Account)
Registration
Possession Control
CREDIT TRANSACTIONS II CIVIL LAW
F. Enforcement of Security Specific Cases of Recovery [Sec. 48]
Interest Action Available to
Specific Case
Secured Creditor
The creditor with the security interest having
the highest priority will be able to enforce
his/her interests via recovery, disposition or Negotiable Proceed as to the
retention. document negotiable document or
perfected by goods covered by the
possession negotiable document;
Section 46. Right of Higher-Ranking Secured.
Creditor to Take Over Enforcement. —
a. Even if another secured creditor or a lien holder Deposit account Apply the balance of the
has commenced enforcement, a secured
maintained by deposit account to the
creditor whose security-interest has
priority over that of the enforcing secured the secured obligation secured by the
creditor or lien holder shall be entitled to take creditor deposit account
over the enforcement process.
b. The right referred to in subsection (a) of this
section may be invoked at any time before the Security interest Instruct the deposit-
collateral is sold or otherwise disposed of, or in a deposit taking institution to pay
retained by the secured creditor or until the account the balance of the
conclusion of an agreement by the secured
perfected by deposit account to the
creditor for that purpose.
c. The right of the higher-ranking secured creditor control secured creditor’s
to take over the enforcement process shall account
include the right to enforce the rights by
any method available to a secured creditor
under this Act. 2. Disposition
Right to Dispose of Collateral
After default, a secured creditor may:
1. Recovery a. Sell or otherwise dispose of the collateral,
Recovery is an enforcement procedure that
publicly or privately, in its present condition
does not require judicial process. It applies only
or following any commercially reasonable
to the special cases provided in Sec. 48.
preparation or processing;
b. Buy the collateral at any public disposition,
Upon default, the secured creditor may
or at a private disposition but only if the
without judicial process:
collateral is of a kind that is customarily sold
a. Instruct the account debtor to make
on a recognized market or the subject of
payment to the secured creditor, and
widely distributed standard price quotations
b. Apply such payment to the satisfaction of
[Sec. 49].
the obligation secured by the security
interest after deducting the secured
Disposition is a method of enforcement
creditor’s reasonable collection expenses.
similar to the general right of the creditor to
alienate the collateral upon default of the
Note: The account debtor may request the
debtor under the Civil Code. The difference in
secured creditor to provide evidence of its
the PPSA is that, it requires commercial
security interest to the account debtor when it
reasonableness of the disposition [Somera].
delivers the instruction to the account debtor
[Sec. 48].
Procedure
Before disposition may be availed of, a creditor
Recovery is conceptually similar to the
must:
exchange in Yau Chu v. CA [G.R. No. L-78519
a. Repossess the collateral, either: Extra–
(1989)], wherein the collateral was also money
judicially [Sec. 47(a) & (b)] or Judicially
or an exchange of “peso for peso” [Somera].
[Sec. 47(c)], and
b. There must be compliance with notification
requirements in Sec. 51.
c. Let those entitled exercise the right of
redemption under Sec. 45.
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CREDIT TRANSACTIONS II
a. Repossession of Collateral
Extra-Judicial Repossession
The secured creditor may:
1. Take possession of the collateral without
judicial process if the security agreement so
stipulates: Provided, That possession can
be taken without a breach of the peace.
2. Remove the collateral from the real property
to which it is affixed, in case it is a fixture,
without judicial process: Provided that –
a. The secured creditor has priority over all
owners and mortgagees
b. The secured creditor exercises due care
in removing the fixture [Sec. 47(a) & (b)].
Judicial Repossession
If, upon default, the secured creditor cannot
take possession of collateral without breach of
the peace, the secured creditor shall:
1. Be entitled to an expedited hearing upon
application for an order granting the secured
creditor possession of the collateral. Such
application shall include a statement by the
secured creditor, under oath:
a. Verifying the existence of the security
agreement attached to the application;
and
b. Identifying at least one event of default
by the debtor under the security
agreement;
2. Provide the debtor, grantor, and, if the
collateral is a fixture, any real estate
mortgagee, a copy of the application,
including:
a. All supporting documents; and
b. Evidence for the order granting the
secured creditor possession of the
collateral; and
3. Be entitled to an order granting
possession of the collateral
a. Upon the court finding that:
1. A default has occurred under the
security agreement; and
2. The secured creditor has a right to
take possession of the collateral.
b. The court may direct the grantor to take
such action as the court deems
necessary and appropriate so that the
secured creditor may take possession of
the collateral [Sec. 47(c)].
Note: Breach of the peace shall include:
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1. Entering the private residence of the grantor
without permission,
2. Resorting to physical violence or
intimidation, or being accompanied by a law
enforcement officer when taking possession
or confronting the grantor [Sec. 47(c)].
b. Notification of Disposition
Not later than ten (10) days before disposition
of the collateral, the secured creditor shall
notify:
1. The grantor;
Note: The grantor may waive the right to be
notified.
2. Any other secured creditor or lien holder
who, five (5) days before the date
notification is sent to the grantor, held a
security interest or lien in the collateral that
was perfected by registration; and
3. Any other person from whom the secured
creditor received notification of a claim of an
interest in the collateral if the notification
was received before the secured creditor
gave notification of the proposed disposition
to the grantor [Sec. 51].
Sufficiency of Notification
A notification of disposition is sufficient if it:
1. Identifies the grantor and the secured
creditor;
2. Describes the collateral;
3. States the method of intended disposition;
and
4. States the time and place of a public
disposition or the time after which other
disposition is to be made [Sec. 51].
Exceptions to the Notification Requirement
The requirement to send a notification under
this section shall not apply if the collateral is:
1. Perishable; or
2. Threatens to decline speedily in value;
3. Of a type customarily sold on a recognized
market [Sec. 51].
c. Right of Redemption
General Rule: A party who is entitled to a
notification is also entitled to redeem the
property [Sec. 45(a)].
CREDIT TRANSACTIONS II
Exceptions: The right of redemption may be
exercised, unless:
1. The person entitled to redeem has not, after
the default, waived in writing the right to
redeem;
2. The collateral is sold or otherwise disposed
of, acquired or collected by the secured
creditor or until the conclusion of an
agreement by the secured creditor for that
purpose; and
3. The secured creditor has retained the
collateral [Sec. 45(b)].
How Exercised
The right to redeem is exercised by paying or
otherwise performing the secured obligation in
full, including the reasonable cost of
enforcement [Sec. 45(a)].
Disposition and Application of Proceeds
If there is no redeemer, the secured creditor
may dispose of the property, and the proceeds
will be applied according to Section 52, in the
following order:
1. The reasonable expenses of taking,
holding, preparing for disposition, and
disposing of the collateral, including
reasonable attorneys’ fees and legal
expenses incurred by the secured creditor;
2. The satisfaction of the obligation secured by
the security interest of the enforcing
secured creditor; and
3. The satisfaction of obligations secured by
any subordinate security interest or lien in
the collateral if a written demand and proof
of the interest are received before
distribution of the proceeds is completed.
The secured creditor shall account to the
grantor for any surplus, and, unless otherwise
agreed, the debtor is liable for any deficiency
[Sec. 52].
Commercial Reasonableness Requirement
After repossession and notice, the collateral
may be disposed of provided that the creditor
acts in a “commercially reasonable manner”
[Sec. 50(a)].
Under Sec. 50, a creditor acts in such manner
if he/she “disposes of the collateral in
conformity with commercial practices among
dealers in that type of property” [Sec. 50(b)].
1. A disposition is presumed commercially
reasonable when approved in any legal
proceeding [Sec. 50(d)].
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2. A disposition will still be treated as
commercially reasonable even if “a better
price could have been obtained by
disposition at a different time or by a
different method from the time and method
selected by the secured creditor” [Sec.
50(c)].
3. Retention
Retention of collateral is the result of an offer
on the part of the secured creditor and the
acceptance of the proposal by the parties
entitled to receive the same.
After default, the secured creditor may propose
to the debtor and grantor to take all or part of
the collateral in total or partial satisfaction of
the secured obligation, and shall send a
proposal to:
a. The debtor and the grantor;
b. Any other secured creditor or lien holder
who, five (5) days before the proposal is
sent to the debtor and the grantor, perfected
its security interest or lien by registration;
and
c. Any other person with an interest in the
collateral who has given a written
notification to the secured creditor before
the proposal is sent to the debtor and the
grantor [Sec. 54].
When Retention May Be Exercised [Sec. 54]
The secured creditor may retain the collateral
in the case of:
a. A proposal for the acquisition of the
collateral in full satisfaction of the secured
obligation; or
• Unless the secured creditor receives an
objection in writing from any person
entitled to receive such a proposal within
twenty (20) days after the proposal is
sent to that person
b. A proposal for the acquisition of the
collateral in partial satisfaction of the
secured obligation
• Only if the secured creditor receives the
affirmative consent of each addressee of
the proposal in writing within twenty (20)
days after the proposal is sent to that
person.
CREDIT TRANSACTIONS II
G. Transitional Provisions
1. Prior Interests
Prior interest – A security interest that was:
a. Created or provided for by an agreement or
other transaction that was made or entered
into before the effectivity of this Act; and
b. Had not been terminated before the
effectivity of this Act [Sec. 55(c)].
However, a security interest that is renewed or
extended by a security agreement or other
transaction made or entered into on or after the
effectivity of this Act is not considered a prior
interest [Sec. 55(c)].
Creation of Prior Interest
Creation of prior interest shall be determined
by prior laws, which are laws that existed or in
force before the effectivity of this Act [Sec. 56].
Effectivity of Prior Interest
A prior interest remains effective between the
parties, notwithstanding its creation did not
comply with the creation requirements of this
Act [Sec. 56].
Perfection of Prior Interest [Sec. 57]
A prior interest that was perfected under prior
law continues to be perfected under this Act
until the earlier of:
a. The time the prior interest would cease to
be perfected under prior law; and
b. The expiration of the transitional period.
c. If the perfection requirements of the PPSA
are satisfied before the perfection of a prior
interest ceases in accordance with (a), the
prior interest continues to be perfected
under this Act from the time when it was
perfected under the prior law.
d. If the prior interest was perfected by the
registration of a notice under prior law, the
time of registration under the prior law shall
be the time to be used for purposes of
applying the priority rules of this Act.
e. If the perfection requirements of the PPSA
are NOT satisfied before the perfection of a
prior interest ceases in accordance with (a),
the prior interest is perfected only from the
time it is perfected under this Act.
f. A written agreement between a grantor and
a secured creditor creating a prior interest is
sufficient to constitute authorization by the
grantor of the registration of a notice
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covering assets described in that
agreement under this Act.
When a Prior Law Over a Prior Interest
Applies
General Rule: The priority of a prior interest as
against the rights of a competing claimant is
determined by the prior law if:
a. The security interest and the rights of all
competing claimant arose before the
effectivity of this Act; and
b. The priority status of these rights has not
changed since the effectivity of this Act
[Sec. 58(a)].
Exceptions: The priority status of a prior
interest has changed (refer to the 2 nd
instance under the General Rule, i.e. Sec.
58(a)(2)) only if:
a. It was perfected when this Act took effect,
but ceased to be perfected; or
b. It was not perfected under prior law when
this Act took effect, and was only perfected
under this Act [Sec. 58(b)].
Enforcement of Prior Interest [Sec. 59]
If any step or action has been taken to enforce
a prior interest before the effectivity of this Act,
enforcement may continue under prior law or
may proceed under this Act.
Note: Prior law shall apply to a matter that is
the subject of proceedings before a court
before the effectivity of this Act.
2. Transitional Period
Transitional Period
The period from the date of effectivity of this Act
until the date when the Registry has been
established and operational [Sec. 55 (d)].
Thus, the transitional period is from September
7, 2018 until the date when the Registry has
been established and operational
a. All pledges and mortgages created
pursuant to the Civil Code and the Chattel
Mortgage Law remain effective between the
parties.
b. But upon expiration of the transitional
period, the binding effect as against third
parties of chattel mortgages is lost,
UNLESS the requirements of the PPSA are
complied with [Somera].
CREDIT TRANSACTIONS II CIVIL LAW
Establishment of Electronic Registry
Section 68. Implementation. — Notwithstanding the
entry into force of this Act under Section 67, the
implementation of the Act shall be conditioned upon
the Registry being established and operational under
Section 26.

Section 26. Establishment of Electronic Registry.

a. The Registry shall be established in and
administered by the LRA.
b. The Registry shall provide electronic means for
registration and searching of notices.

Based on Sections 68 and 26 of the PPSA, the

implementation of the PPSA is conditioned on
the establishment and operation of the
Registry. The Registry will be administered by
Land Registration Authority (LRA).

To date, the LRA has yet to establish the

Electronic Registry, although it has announced
that it is targeting to launch the same on the
sixth month from the promulgation of the IRR,
which was issued on Nov. 18, 2019.

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CREDIT TRANSACTIONS II
II. REAL ESTATE MORTGAGE
Real Mortgage
A contract whereby the debtor secures to the
creditor the fulfillment of a principal obligation
(real security transaction), immediately making
immovable property or real rights answerable
to the principal obligation in case it is not
complied with at the time stipulated.
A registered real estate mortgage is a right in
rem, a lien that a creditor has on the property;
therefore, it is inseparable from the collateral
and until discharged, it follows the property
[Somera].
Requisites:
a. The mortgage must be constituted to secure
the fulfillment of a principal obligation [Art.
2085, Civil Code];
b. The mortgagor must be the absolute owner
of the immovable or alienable real rights
[Art. 2085, Civil Code];
c. The mortgagor must have free disposal of
the property or is legally authorized for the
purpose [Art. 2085, Civil Code];
d. The mortgage must be subjected to the
condition that when the principal obligation
becomes due, the collateral may be
alienated for payment to the creditor [Art.
2087, Civil Code];
e. Must be recorded in the Registry of Property
[Art. 2125, Civil Code].
However, if the instrument is not recorded, the
mortgage is nevertheless binding between the
parties [Art. 2125, Civil Code].
A. Objects of Real Mortgage
1. Immovables
2. Alienable real rights over immovables.
Note: Article 2127 is modified by the PPSA with
regard to property included in a Real Estate
Mortgage. Under Art. 2127, a REM “extends to
natural accessions, to the improvements,
growing fruits and the rents or income not yet
received when the [principal] obligation
becomes due.” These personal properties are
no longer covered by Art. 2127 [Somera].
Future property cannot be an object of
mortgage; however:
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1. A stipulation subjecting to the mortgage
improvements which the mortgagor may
subsequently acquire, install or use in
connection with real property already
mortgaged belonging to the mortgagor is
valid.
2. A stipulation in a registered (or recorded)
real estate mortgage that all property taken
in exchange or replacement by the
mortgagor (after-acquired property) shall
become subject to the mortgage is binding
[Somera].
1. Obligations Secured
General Rule: A real estate mortgage is
limited to the principal obligations mentioned in
the contract (within its four corners) [Lim Julian
v. Lutero, G.R. No. L-25235 (1926)].
Exception: A real estate mortgage may
contain a dragnet or blanket mortgage clause
which subsumes all debts, whether past or
future [Philippine Bank of Communications v.
CA, G.R. No. 118552 (1996)].
Note: This clause will be strictly construed and
its inclusion makes the mortgage a continuing
security, not to be discharged by repayment of
the amount named, but by payment of the full
amount of the principal obligation [Somera].
Reliance on Security Test: When the
mortgagor takes another loan for which
another security was given, it could not be
inferred that such loan was made in reliance
solely on the original security with the dragnet
clause, but rather, on the new security given
[Prudential Bank v. Alviar, G.R. No. 150197
(2005)].
B. Characteristics
1. Characteristics of the Collateral
As a general rule, the mortgagor retains
possession of the property. He may deliver
said property to the mortgagee without altering
the nature of the contract of mortgage.
Mortgage creates an encumbrance over the
property, but ownership of the property is not
parted with. It merely restricts the mortgagor’s
jus disponendi over the property. The
mortgagor may still sell the property, and any
stipulation to the contrary (pactum de non
alienando) is void [Art. 2130, Civil Code].
CREDIT TRANSACTIONS II
However, a stipulation prohibiting the
mortgagor from entering into second or
subsequent mortgages is valid since there is
no law prohibiting it [Litonjua et al. v. L&R
Corporation, et al., G.R. No. 130722 (1999),
citing Philippine Industrial Co. v. El Hogar &
Vallejo, G.R. No. L-20482 (1923)].
2. Characteristics of the Mortgage
A registered real estate mortgage is a right in
rem, a lien that a creditor has on the property;
therefore, it is inseparable from the collateral
and until discharged, it follows the property
[Gomez-Somera].
A real estate mortgage that is unregistered
binds the parties to the contract and it only
gives the mortgagee the right to demand the
execution and recording of the mortgage. To
bind third parties, a real estate mortgage must
be recorded in the Registry of Property.
It is not an essential requisite that the principal
of the credit bears interest, or that the interest
as compensation for the use of the principal
and the enjoyment of its fruits be in the form of
a certain percentage thereof.
Mortgage extends to the natural accessions, to
the improvements, growing fruits and the rents
or income not yet received when the obligation
becomes due, including indemnity from
insurance, and/or amount received from
expropriation for public use [Art. 2127, Civil
Code].
a. Applies only when the accessions and
accessories subsequently introduced
belongs to the mortgagor.
b. To exclude them, there must be an express
stipulation, or the fruits must be collected
before the obligation becomes due.
c. Third persons who introduce improvements
upon the mortgaged property may remove
them at any time.
The right to alienate the real estate mortgage
credit is the right of the mortgagee to assign its
rights under the principal obligation secured.
Although the mortgagee does not become the
owner of the collateral, it owns the real estate
mortgage credit and may alienate the same to
a third person [Art. 2128, Civil Code; Gomez-
Somera].
A pledge or mortgage is indivisible, even
though the debt may be divided among the
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Pactum de non alienando (Sp. pacto de non
alienando) is prohibited by Art. 2130
a. Stipulations forbidding the mortgagor
from selling the collateral
b. Stipulations forbidding the mortgagor
from selling the collateral without the
consent of the mortgagee
Alienation or assignment of mortgage credit is
valid even if it is not registered.
C. Kinds
1. Voluntary – constituted by the will of the
owner of the property on which it is created
2. Legal – required by law to be executed in
favor of certain persons:
a. Persons in whose favor the law
establishes a mortgage have no other
right than to demand the execution and
recording of the document in which the
mortgage is formalized [Art. 2125, Civil
Code]
b. The bondsman who is to be offered in
virtue of a provision of law or of a judicial
order shall have the qualifications
prescribed in Art 2056 [integrity, capacity
to bind himself, and sufficient property to
answer for the obligation], and in other
laws [Art. 2082, Civil Code]
c. If the person bound to give a bond should
not be able to do so, a pledge or
mortgage considered sufficient to
recover his obligation shall be admitted
in lieu thereof [Art. 2083, Civil Code]
3. Equitable – One which, although lacking
the proper formalities of a mortgage, shows
the intention of the parties to make the
property a security for the debt
a. Lien created by equitable mortgage
ought not to be defeated by requiring
compliance with formalities necessary to
the validity of voluntary real estate
mortgage. Ex.: Pacto de retro
b. Provisions governing equitable
mortgage: Arts. 1365, 1450, 1454, 1602,
1603, 1604 and 1607
D. Principle of Indivisibility of
Pledge/Mortgage
CREDIT TRANSACTIONS II
successors in interest of the debtor or of the
creditor [Art. 2089, Civil Code].
Note: The principle of indivisibility presupposes
several heirs of the debtor or creditor and
DOES NOT APPLY in the absence of such a
situation [Gomez-Somera].
Indivisibility applies only as to
pledgors/mortgagors who are themselves
debtors in the principal obligation, and NOT to
accommodation pledgors/ mortgagors.
CIVIL LAW
E. Recording Required
The real estate mortgage must be recorded in
the Registry of Property in order to be validly
constituted [Art. 2125, Civil Code].
Note: The mortgage would still be binding
between the parties even if the instrument is
not recorded [Art. 2125, Civil Code].
F. Foreclosure of Mortgage

A mortgage directly and immediately subjects
the property upon which it is imposed. It is
indivisible even though the debt may be
divided, and such indivisibility is likewise
unaffected by the fact that the debtors are not
solidarily liable [Dayrit v. CA, G.R. No. L-29388
(1970)].
Where only a portion of the loan is released,
the mortgage becomes enforceable only as to
the proportionate value of the loan [Central
Bank v. CA, G.R. No. L-45710 (1985)].
Foreclosure – is the remedy available to the
mortgagee by which he subjects the
mortgaged property to the satisfaction of the
obligation secured by the mortgage by causing
its alienation in accordance with the
procedures allowed by law.
In general, an action for foreclosure of a
mortgage is limited to the amount mentioned in
the mortgage, except when the mortgage
contract intends to secure future loans or
advancements.

The question is whether or not the written Mortgage may be used as a “continuing
instrument in controversy was a mortgage or a security” which secures future advancements
conditional sale. and is not discharged by the repayment of the
amount in the mortgage.
The correct test, where it can be applied, is the
continued existence of a debt or liability Acceleration Clause Allowed
between the parties. If such exists, the Acceleration clause, or the stipulation stating
conveyance may be held to be merely a that on the occasion of the mortgagor’s default,
security for the debt or an indemnity against the the whole sum remaining unpaid automatically
liability [Reyes v. Sierra, G.R. No. L-28658 becomes due and demandable, is ALLOWED.
(1979), citing Cuyugan v. Santos, G.R. No. L-
10265 (1916)]. Kinds of Foreclosure
1. Judicial Foreclosure
Exception to the Principle of Indivisibility 2. Extrajudicial Foreclosure
When several things are pledged or
mortgaged, each thing for a determinate Judicial Extrajudicial
portion of the debt, the pledges or mortgage, Foreclosure Foreclosure
are considered separate from each other. But
when the several things are given to secure the Court intervenes No court intervention
same debt in its entirety, all of them are liable
for the debt, and the creditor does not have to There is equity of There is right of
divide his action by distributing the debt among redemption – period redemption – period
the various things pledged or mortgaged. Even starts from the start from date of
when only a part of the debt remains unpaid, all finality of the registration of
the things are still liable for such balance [Art. judgment until order certificate of sale
2089, Civil Code; Tolentino]. of confirmation

Decisions are Not appealable

appealable

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CREDIT TRANSACTIONS II
No need for a Special power of
special power of attorney in favor of
attorney in the the mortgagee is
contract of mortgage required in the
contract
1. Judicial Foreclosure [Rule 68, Rules
of Court]
a. May be availed of by bringing an action in
the proper court which has jurisdiction over
the area wherein the real property involved
or a portion thereof is situated [Rule 68,
Sec. 1, Rules of Court].
b. If the court finds the complaint to be well-
founded, it shall order the mortgagor to pay
the amount due with interest and other
charges within a period of not less than 90
days nor more than 120 days from the entry
of judgment [Rule 68, Sec. 2, Rules of
Court].
Note: The mortgagor may exercise the
equity of redemption during this period of
grace in order to extinguish the mortgage
and retain ownership of the collateral by
paying the mortgage obligation [Top Rate
International Services, Inc. v. IAC, G.R.
Nos. L-67496 and L-68257 (1986)].
It is this equity of redemption that is
conferred on the mortgagor’s successors-
in-interest or on third persons acquiring
rights over the collateral from the mortgage
subsequent.
Although these subsequent or junior lien-
holders acquire the equity of redemption,
this right is strictly subordinate to the
superior lien of the first mortgagee [Gomez-
Somera].
c. If the mortgagor fails to pay within the at
time directed, the court, upon motion, shall
order the property to be sold to the highest
bidder at a public auction [Rule 68, Sec. 3,
Rules of Court].
d. Upon confirmation of the sale by the court,
also upon motion, it shall operate to divest
the rights of all parties to the action and to
vest their rights to the purchaser subject to
such rights of redemption as may be
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allowed by law [Rule 68, Sec. 3, Rules of
Court].
Note: A foreclosure sale is not complete
until it is confirmed. Thus, after the
foreclosure sale but before its confirmation,
the court may grant the judgment debtor or
mortgagor the equity of redemption.
e. Before the confirmation, the court retains
control of the proceedings; Secs. 31, 32,
and 34 of Rule 39 on the execution of
judgments apply [Rule 68, Sec. 8, Rules of
Court].
f. A certified copy of the final order of the court
confirming the sale shall be registered in the
registry of deeds.
If no right of redemption exists: The
certificate of title in the name of the
mortgagor shall be cancelled, and a new
one issued in the name of the purchaser.
If a right of redemption exists: The certificate
of sale and the order confirming the sale
shall be registered [Rule 68, Sec. 7, Rules
of Court].
g. The proceeds of the sale shall be applied to
the payment of the:
1. costs of the sale;
2. amount due the mortgagee;
3. claims of junior encumbrancers or
persons holding subsequent mortgages
in the order of their priority; and
4. the balance, if any shall be paid to the
mortgagor [Rule 68, Sec. 4, Rules of
Court]
h. Sheriff’s certificate is executed,
acknowledged and recorded to complete
the foreclosure.
Nature of Judicial Foreclosure Proceedings
a. Quasi in rem action. Hence, jurisdiction may
be acquired through publication.
b. Foreclosure is only the result or incident of
the failure to pay debt.
c. Survives death of mortgagor.
2. Extrajudicial Foreclosure
A real estate mortgage may be extrajudicially
foreclosed only if there is a special power
inserted or attached to the document in which
CREDIT TRANSACTIONS II
the real estate mortgage appears and only in
accordance with the provisions of Act No. 3135
[Gomez-Somera].
Act No. 3135
a. Applies to mortgages where the authority to
foreclose is granted to the mortgagee.
b. Authority is not extinguished by death of
mortgagor or mortgagee. This is an agency
coupled with interest.
c. Public sale should be made after proper
notice to the public; otherwise, it is a
jurisdictional defect which could render the
sale voidable.
1. General Rule: Statutory provisions
governing posting of notice must be
strictly complied with and even slight
deviations will invalidate the notice.
2. Exception: If the objectives are attained,
immaterial errors and mistakes may not
affect the sufficiency of the notice
[Metropolitan Bank and Trust Company
v. Wong, G.R. No. 120859 (2001)
discussing Olizon v. CA, G.R. No.
107075 (1994)].
d. Republication of the notice of sale is
necessary for the validity of the postponed
extrajudicial sale.
e. There is no need to notify the mortgagor,
where there is no contractual stipulation
therefor.
1. Proper notice consists of:
a. posting notice in three public places
and/or
b. publication in newspaper of general
circulation
2. Purpose of notice is to obtain the best bid
for the foreclosed property, and to inform
the public of:
a. the nature and condition of the
collateral, and
b. the time, place, and terms of the sale
f. The foreclosure sale shall be made at public
auction through sealed bids, within the
province in which the property to be sold is
situated.
g. Surplus proceeds of foreclosure sale belong
to the mortgagor.
h. The Clerk of Court shall issue and sign the
Certificate of Sale.
i. Debtor (who must be a natural person), his
successors in interest, or any junior
encumbrancer has the right to redeem the
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property sold within 1 year from and after
the date of sale.
1. If the mortgagee is a bank, quasi-bank or
trust entity and the debtor is a juridical
person, then there is no right of
redemption. However, juridical
mortgagors may redeem the property
before the registration of the TCT to the
buyer, which is similar to the equity of
redemption. The TCT must be registered
within three months after the foreclosure
[Art. III. Sec. 47, General Banking Law]
2. The mortgagor can only legally transfer
the right to redeem and the use of the
property during the period of redemption
because ownership of the collateral is
retained by the mortgagor until the
expiration of such period
j. During the redemption period, the
purchaser may petition the land registration
court to give him possession of the property
by furnishing a bond in an amount
equivalent to the use of the property for a
period of 12 months. Upon approval of the
bond, the Court shall issue a Writ of
Possession.
k. Remedy of party aggrieved by foreclosure is
a petition to set aside sale and the
cancellation of Writ of Possession.
However, if the mortgagee is a bank, the
mortgagor is required to post a bond equal
to the value of the mortgagee’s claim.
l. If no redemption is made within one year
from the date of registration of the
Certificate of Sale, the purchaser is entitled
to a conveyance and possession of the
property (Consolidation of Ownership).
1. General Rule: Upon Consolidation of
Ownership, possession of the property
shall be given to the purchaser or last
redemptioner as a matter of right.
2. Exceptions:
a. A third party is actually holding the
property [Rule 39, Sec. 33, Rules of
Court]
b. The mortgagor filed a separate action
to invalidate the auction sale because
of the unusually low price paid therein
[Cometa v. IAC, G.R. No. 69294
(1987)]
c. The mortgagee failed to deliver the
surplus from the proceeds of the
foreclosure sale [Sulit v. CA, G.R. No.
119247 (1997)]
CREDIT TRANSACTIONS II
3. Nature of Power of Foreclosure by
Extrajudicial Sale
a. Conferred for mortgagee’s protection.
b. An ancillary stipulation.
c. A prerogative of the mortgagee.
Note:
a. Both should be distinguished from
execution sale governed by Rule 39, Rules
of Court.
b. Foreclosure retroacts to the date of
registration of mortgage.
c. A stipulation of upset price, or the minimum
price at which the property shall be sold to
become operative in the event of a
foreclosure sale at public auction, is null and
void.
4. Right to Surplus or Deficiency
Right of the Mortgagor
The mortgagor is entitled to the surplus, if any,
after payment of the proceeds of the sale.
Right of the Mortgagee
a. Mortgagee is entitled to recover deficiency.
This extends to judicial foreclosure of
mortgage arising out of the settlement of
estate, but NOT to extrajudicial foreclosure
arising out of the same [Heirs of Sps.
Maglasang v. Manila Banking Corp., G.R.
No. 171206 (2013)].
b. If the deficiency is embodied in a judgment,
it is referred to as deficiency judgment.
c. Action for recovery of deficiency may be
filed even during redemption period.
d. Action to recover prescribes after 10 years
from the time the right of action accrues.
5. Effect of Inadequacy of Price in
Foreclosure Sale
a. Where there is right to redeem, inadequacy
of price is immaterial because the judgment
debtor may redeem the property.
• Exception: Where the price is so
inadequate as to shock the conscience
of the court, taking into consideration the
peculiar circumstances.
b. Property may be sold for less than its fair
market value, upon the theory that the
lesser the price the easier it is for the owner
to redeem.
c. The value of the mortgaged property has no
bearing on the bid price at the public
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auction, provided that the public auction
was regularly and honestly conducted.
A suit for the recovery of the deficiency after
the foreclosure of a mortgage is in the nature
of a mortgage action because its purpose is
precisely to enforce the mortgage contract
[Caltex v. IAC, G.R. No. 74730 (1989)].
G. Waiver of Security by Creditor
1. Mortgagee may waive the right to foreclose
his mortgage and maintain a personal
action for recovery of the indebtedness.
2. Mortgagee cannot have both remedies.
This is because he only has one cause of
action, the nonpayment of the mortgage
debt.
H. Redemption
It is a transaction by which the mortgagor
reacquires the property which may have
passed under the mortgage or divests the
property of the lien which the mortgage may
have created.
1. Kinds
a. Equity of redemption – in judicial
foreclosure of real estate mortgage under the
Rules of Court, it is the right of the mortgagor
to redeem the mortgaged property by paying
the secured debt within the 120-day period
from entry of judgment or after the foreclosure
sale, but before the sale of the mortgaged
property or confirmation of sale.
A formal offer to redeem preserves the right of
redemption, e.g., by filing an action to enforce
the right to redeem.
b. Right of redemption – in extrajudicial
foreclosure of real estate mortgage, the right of
the mortgagor to redeem the property within a
certain period after it was sold for the
satisfaction of the debt (If the mortgagee is a
bank, the redemption period expires after
registration of the sale).
1. For natural persons – one year from the
registration of the TCT
2. For juridical persons – until, but not later
than, the registration of the certificate of
foreclosure sale (no more than 3 months
after foreclosure)
CREDIT TRANSACTIONS II CIVIL LAW
3. Formal offer to redeem must be with tender Note: Under RA 8791, the amount is the
of redemption price to preserve right of amount due under the mortgage deed
redemption
c. Written notice of the redemption must be
In a judicial foreclosure sale, the right of served on the officer who made the sale and
redemption must be allowed by law. a duplicate filed with the Register of Deeds
of the province
The references in Rule 68 and Rule 39 to the
right of redemption are not grants of this
Equity of Right of
statutory prerogative. To claim a right of
Redemption Redemption
redemption in judicial foreclosure, there must
be a specific law that allows it. Sec. 3, Rule 68 Act No. 3135
Example: RA 8791 (General Banking Law of Right to redeem the Right to redeem
2000) property after default the property within
in the performance of 1 year from the
2. Requisites the obligation but date or registration
Requisites for a Valid Redemption before the foreclosure of the certificate of
a. Redemption must be made within: sale. sale
1. For natural persons: one year from the
registration of the TCT Applies to judicial Applies to
2. For juridical persons: until, but not later foreclosure of real extrajudicial
than, the registration of the certificate of estate and chattel foreclosure of real
foreclosure sale (no more than 3 months mortgage. estate mortgage
after foreclosure)
The rule up to now is that the right of a
b. Payment of the purchase price of the
purchaser at a foreclosure sale is merely
collateral involved, plus 1% interest per
inchoate until after the period of redemption
month, together with the amount of any
has expired without the right being exercised.
assessments or taxes if any, paid by the
The title to land sold under mortgage
purchaser after the sale
foreclosure remains in the mortgagor or his
grantee until the expiration of the redemption
period and conveyance by the master's deed
[Medida v. CA, G.R. No. 98334 (1992)].

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LAND TITLES AND
DEEDS
CIVIL LAW
LAND TITLES AND DEEDS CIVIL LAW
I. THE TORRENS SYSTEM to the parcel of land are quieted upon issuance
of said certificate [Cruz v. Secretary of
Environment and Natural Resources, G.R. No.
A. In General 135385 (2000)].

1. The Torrens System B. Concepts

A system for registration of land under which,
upon landowner’s application, the court may, 1. Land Title
after appropriate proceedings, direct the It is the evidence of the right of the owner or
issuance of a certificate of title [Black’s Law the extent of his interest, by which he can
Dictionary]; those systems of registration of maintain control, and as a rule, assert right to
transactions with interest in land whose exclusive possession and enjoyment of the
declared object is, under governmental property [Peña].
authority, to establish and certify to the
ownership of an absolute and indefeasible title Title and Certificate of Title Distinguished
to realty, and to simplify its transfer [Grey Alba Certificate of
v. De la Cruz, G.R. No. L-5246 (1910)]. Title
Title

2. Nature Lawful cause or ground

Judicial in nature. of possessing that
which is ours. Mere evidence of
3. Purpose ownership; it is not
It aims to decree land titles that shall be final, That which constitutes the title to the land
irrevocable and indisputable [Government of a just cause of itself [Castillo v.
the Philippine Islands v. Abural, G.R. No. exclusive possession, Escutin, G.R. No.
14167 (1919)], and to relieve the land of the or which is the 171056 (2009)].
burden of known as well as unknown claims foundation of
[SM Prime Holdings, Inc. v. Madayag, G.R. No. ownership of property.
164687 (2009)].

General Rule: A title once registered cannot Title is a conclusive evidence of ownership
be impugned, altered, changed, modified, and it cannot be attacked collaterally.
enlarged, or diminished.
2. Deed
Exception: Direct proceeding permitted by A written instrument executed in accordance
law, usually for the protection of innocent third with law, wherein a person grants or conveys
persons to another certain land, tenements or
hereditaments [Peña].
4. Background
The Torrens system was introduced in the Elements of A Deed
Philippines by Act No. 496, which took effect on a. Grantor
Jan. 1, 1903. This was later amended and b. Grantee
superseded by P.D. 1529 which took effect on c. Words of Grant
June 11, 1978. d. Description of the property involved
e. Signature of the grantor
The underlying principle of the Torrens system f. At least two (2) witnesses
is security with facility in dealing with land. It g. Notarial acknowledgment
requires that the government issue an official
certificate of title attesting to the fact that the
person named is the owner of the property
described therein, subject to such liens and
encumbrances thereon noted or the law
warrants or reserves. The certificate of title is
indefeasible and imprescriptible and all claims
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LAND TITLES AND DEEDS
3. Estate
An estate, strictly speaking, represents the
nature, extent, degree, and quantity of a
person’s interest in land.
Types of Estates
a. Freehold Estate – Indicates title of
ownership
1. Fee Simple – An absolute title; Absolute
estate in perpetuity; Title to land is
conferred upon a man and his heirs
absolutely and without any limitation
imposed upon the estate
2. Fee Tail – One designed to pass title
from grantee to his heirs, in the intent of
the grantor being to keep the property in
the grantee’s line of issue
3. Life Estate – One held for the duration
of the life of the grantee; In some cases,
it may terminate earlier as by forfeiture.
b. Less-than-Freehold Estate – Signifies
some sort of right short of title
1. Estate for Years – In the nature of a
lease short of title; grantee or lessee
takes over possession of the land for a
period agreed upon but the grantor
retains the legal title to the property
2. Tenancy from period to period – Also
in the nature of a lease which may run
from month to month or from year to
year, with the peculiarity of automatic
renewal from time to time, unless
expressly terminated by either party
3. Tenancy at will – Another form of lease
agreement where a person is permitted
to occupy the land of another without any
stipulation as to period, but either party
reserves the right to terminate the
occupation at will or at any time
4. Land Registration
A judicial or administrative proceeding whereby
a person’s claim of ownership over a
particular land is determined and confirmed
or recognized so that such land and the
ownership thereof may be recorded in a public
registry.
Note: Registration does not vest title. It is not a proceedings, Presidential Decree No. 1529
mode of acquiring ownership but is merely
evidence of such title over a particular property.
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a. Nature of Land Registration
Judicial proceedings for land registration
throughout the Philippines shall be in rem
[Sec. 2, par. 1, P.D. 1529].
A proceeding in rem is when the object of the
action is to bar indifferently all who might be
mined to make an objection of any sort against
the right sought to be established, and if
anyone in the world has a right to be heard on
the strength of alleging facts which if true, show
an inconsistent interest [Agcaoili].
Land registration is binding on the whole world
because “by the description in the notice (of
initial hearing of the application for registration)
“To Whom It May Concern,” all the world are
made parties defendant” [Aquino, citing
Esconde v. Barlongay, G.R. No. L-67583
(1987)].
In a registration proceeding, the judgment of
the court confirming the title, and ordering its
registration in one’s name constitutes, when
final, res judicata against the whole world [Ting
v. Heirs of Lirio, G.R. No. 16891 (2007)].
There is no need to personally notify the
owners or claimants of the land sought to be
registered if it is involved in a land registration
case since it is a proceeding in rem. This gives
automatic power and authority to the court over
the res [Guido-Enriquez v. Victorino, et al.,
G.R. No. 180427 (2013)].
b. Laws Implementing Land
Registration
1. Public Land Act [CA 141, as amended]
2. Property Registration Decree [P.D.1529, as
amended]
3. Cadastral Act [Act 2259, as amended]
4. Indigenous Peoples Rights Act of 1997 [RA
8371]
5. Emancipation Decree [P.D. 27, as
amended]
6. Comprehensive Agrarian Reform Law of
1988 [RA 6657, as amended]
To simplify and streamline land registration
was issued on June 11, 1978, otherwise known
as the Property Registration Decree, governing
registration of lands under the Torrens system
as well as the recording of transactions relating
to unregistered lands, including chattel
LAND TITLES AND DEEDS
mortgages. This Decree consolidates, in effect,
all pre-existing laws on property registration
with such appropriate modifications as are
called for by existing circumstances [Peña].
c. Purpose of Land Registration
Registration is merely a species of notice.
The act of registering a document is never
necessary in order to give it legal effect as
between the parties. The system maintains a
permanent record of landholdings, in order to
prevent fraudulent claims to land by
concealment of transfers.
Another purpose is to notify and protect the
interests of strangers to a given transaction,
who may be ignorant thereof. However, where
a document so registered is invalid or legally
defective, registration will not in any way render
it valid or cure its defect.
d. Object of Registration
Only real property or real rights may be the
object of registration under the existing land
registration laws.
5. Classification of Lands [Sec, 3, Art.
XII, 1987 Constitution]
a. Agricultural
b. Forestland or timberland
c. Mineral Lands
d. National Parks
Classification of lands is an exclusive
prerogative of the executive department. In
the absence of such classification, the lands
remain as unclassified until it is released
therefrom and rendered open to disposition.
The President, through a Presidential
Proclamation or Executive Order can classify
or reclassify land to be included or excluded
from the public domain. The DENR Secretary
is also empowered to approve a land
classification and declare such land as
alienable and disposable [Agcaoili, citing
Fortuna v. Republic, G.R. No. 173423 (2014)].
Registrable lands are:
a. Alienable public agricultural lands
If the land is in the public domain, the land must
be classified as alienable and disposable. It
must be classified as such at the time of filing
the application for registration [Republic v. CA
and Naguit, G.R. No. 144057 (2005)].
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b. Private lands
Non-registrable lands
Those found in the Civil Code dealing with non-
registrable properties (e.g. property of public
dominion)
C. Administration of the Torrens
System
1. Land Registration Authority
Agency under the executive supervision of the
Department of Justice charged with the
efficient execution of the laws relative to the
registration of lands
Composition:
a. Administrator
b. 2 Deputy Administrators (as assistants)
Functions of LRA
a. Extend speedy and effective assistance to
the Department of Agrarian Reform, the
Land Bank, and other agencies in the
implementation of land reform program of
the government
b. Extend assistance to courts in ordinary and
cadastral land registration proceedings; and
c. Be the central repository of records relative
to original registration of lands titled under
the Torrens system, including the
subdivision and consolidation plans of titled
lands.
2. Register of Deeds
Public repository of records of instruments
affecting registered or unregistered lands and
chattel mortgages in the province or city
wherein such office is situated.
Composition:
a. Register of Deeds
b. Deputy (as assistant)
Functions of Registers of Deeds:
a. Immediately register an instrument
presented for registration dealing with real
or personal property which complies with
the requisites for registration;
b. Shall see to it that said instrument bears the
proper documentary stamps and that the
same are properly cancelled;
c. If the instrument is not registerable, he shall
deny the registration thereof and inform the
LAND TITLES AND DEEDS CIVIL LAW
presentor of such denial in writing, stating
the ground or reason therefore, and
advising him of his right to appeal by
consulta in accordance with Sec. 117 of
P.D. 1529;
d. Prepare and keep an index system which
contains the names of all registered owners
and lands registered.

The function of the ROD with reference to

registration of deeds, encumbrances,
instruments, and the like is ministerial in
nature, provided the applicant complies with all
the requisites [Baranda v. Gustilo, G.R. No.
81163 (1988)].

Note: When the ROD is in doubt as to the

proper action to take on an instrument or deed
presented to him for registration, he should
submit the question to the Administrator of the
LRA en consulta [P.D. 1529, Sec 117]

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LAND TITLES AND DEEDS
II. THE REGALIAN
DOCTRINE
A. Concept of the Regalian
Doctrine
All lands became the exclusive patrimony and
dominion of the Spanish Crown [Agcaoili].
The Regalian Doctrine is enshrined in the 1987
Constitution [Sec, 2 & 3, Art. XII] which states
that all lands of public domain belong to the
State, thus private title to land must be
traced to some grant, express or implied,
from the State, i.e. The Spanish Crown or its
successors, the American Colonial
government and thereafter the Philippine
Republic.
The present Constitution provides that, except
for agricultural lands of the public domain
which alone may be alienated, forest or
timber, and mineral lands, as well as all
other natural resources must remain with
the State, the exploration, development, and
utilization of which shall be subject to its full
control and supervision albeit allowing it to
enter into co-production, joint venture, or
production-sharing agreements, or into
agreements with foreign-owned corporations
involving technical or financial assistance for
large-scale exploration, development, and
utilization [Secs. 2 and 3, Art. XII; La Bugal-
B’laan Tribal Association, Inc. v. Ramos, G.R.
No. 127882 (2004)].
It does not negate native title to lands held in
private ownership since time immemorial [Cruz
v. Sec. of Environment and Natural Resources,
G.R. No. 135385 (2000)].
B. Effects of the Regalian
Doctrine
1. All lands of public domain belong to the
State, and that the State is the source of
any asserted right to ownership in land and
charged with the conservation of such
patrimony [Republic v. IAC, G.R. No. 71285
(1987)].
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2. Under the Regalian doctrine, all lands of
whatever classification and other natural
resources not otherwise appearing to be
clearly within private ownership are
presumed to belong to the State which is
the source of any asserted right to
ownership of land [Republic v. Remman
Enterprises, Inc. G.R. No. 199310 (2014)].
3. The burden of proof in overcoming the
presumption of State ownership of the lands
of the public domain is on the person
applying for registration (or claiming
ownership), who must prove that the land
subject of the application is alienable or
disposable. To overcome this presumption,
incontrovertible evidence must be
established that the land subject of
application (or claim) is alienable or
disposable [Valiao v. Republic, G.R. No.
170757 (2011)].
C. Native Title and Ancestral
Domains
1. Native Title
Recognizes ownership of land by Filipinos
independent of any grant from the Spanish
crown on the basis of possession since time
immemorial [Cariño v. Insular Government,
G.R. No. 2869 (1907)].
Lands under native title are not part of public
domain, “lands possessed by an occupant and
his predecessors since time immemorial, such
possession would justify the presumption that
the land had never been part of the public
domain or that it had been private property
even before the Spanish conquest [Republic v.
CA, G.R. No. 130174 (2000)].
2. Ancestral Domains
Refer to all areas generally belonging to
ICCs/IPs comprising lands, inland waters,
coastal areas, and natural resources therein,
held under a claim of ownership, occupied or
possessed by ICCs/IPs, by themselves or
through their ancestors, communally or
individually since time immemorial,
continuously to the present except when
interrupted by war, force majeure or
displacement by force, deceit, stealth or as a
consequence of government projects or any
other voluntary dealings entered into by
LAND TITLES AND DEEDS CIVIL LAW
government and private
individuals/corporations, and which are
necessary to ensure their economic, social and
cultural welfare. It shall include ancestral lands,
forests, pasture, residential, agricultural, and
other lands individually owned whether
alienable and disposable or otherwise, hunting
grounds, burial grounds, worship areas, bodies
of water, mineral and other natural resources,
and lands which may no longer be exclusively
occupied by ICCs/IPs but from which they
traditionally had access to for their subsistence
and traditional activities, particularly the home
ranges of ICCs/IPs who are still nomadic
and/or shifting cultivators.

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LAND TITLES AND DEEDS
III. ORIGINAL REGISTRATION
A. Concept
This is a proceeding brought before the land
registration court to determine title or
ownership of land on the basis of an
application for registration or answer by a
claimant in a cadastral registration.
A decree of registration merely confirms, but
does not confer ownership [City Mayor of
Parañaque City v. Ebio, G.R. No. 178411
(2010)].
Registration does not vest title or give title to
the land, but merely confirms and thereafter
protects the title already possessed by the
owner, making it imprescriptible by occupation
of third parties. The registration does not give
the owner any better title than he has. He does
not obtain title by virtue of the certificate. He
secures his certificate by virtue of the fact that
he has a fee simple title [Legarda v. Saleeby,
G.R. No. 8936 (1915)].
Original Distinguished From Subsequent
Original Subsequent
Registration Registration
Any transaction
When right of affecting such
ownership or title to originally registered
land is for the first land, if in order, may
time made of public be registered in the
record Office of the Register
of Deeds concerned
B. Voluntary or Involuntary
1. Voluntary – by filing with the proper court
under:
a. P.D. 1529, Property Registration Decree
b. CA 141, Public Land Act
c. R.A. No. 8371, The Indigenous People’s
Rights Act of 1997
2. Involuntary – as in Cadastral Proceedings
a. This is compulsory registration initiated
by the government to adjudicate
ownership of the land
b. Involuntary on the part of the claimant
but they are compelled to substantiate
their claim or interest
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C. Who May Apply
1. Under Sec. 14, P.D. 1529, as
amended by Sec. 6, R.A. No. 11573
a. Those who by themselves or through their
predecessors-in-interest have been in
open, continuous, exclusive and notorious
possession and occupation of alienable and
disposable lands of the public domain not
covered by existing certificates of title or
patents under a bona fide claim of
ownership for at least twenty (20) years
immediately preceding the filing of the
application for confirmation of title except
when prevented by war or force majeure.
• They shall be conclusively presumed to
have performed all the conditions
essential to a Government grant and
shall be entitled to a certificate of title
under this section.
b. Those who have acquired ownership of
private lands or abandoned riverbeds by
right of accession or accretion under the
provisions of existing laws.
c. Those who have acquired ownership of land
in any other manner provided for by law [see
Republic represented by Mindanao Medical
Center v. CA, G.R. No. 40912 (1976)]
1. Land owned in common: ALL co-
owners shall file the application jointly.
2. Land has been sold under pacto de
retro: the vendor a retro may file an
application for the original registration of
the land, provided, however, that should
the period for redemption expire during
the pendency of the registration
proceedings and ownership to the
property consolidated in the vendee a
retro, the latter shall be substituted for
the applicant and may continue the
proceedings.
3. Land subject of a trust agreement: A
trustee on behalf of his principal may
apply for original registration of any land
held in trust by him, unless prohibited by
the instrument creating the trust.
Note: R.A. No. 11573 was signed into
law on 16 July 2021. The cutoff date for
the 2022 Bar Coverage is 30 June 2021.
LAND TITLES AND DEEDS
Before the amendments:
1. Those who by themselves or through
their predecessors-in-interest, have
been in open, continuous, exclusive
and notorious possession and
occupation of alienable and
disposable lands of the public domain
under a bona fide claim of ownership
since June 12, 1945, or earlier.
2. Those who have acquired ownership
of private lands by prescription under
the provisions of existing laws.
3. Those who have acquired ownership
of private lands or abandoned river
beds by right or accession or
accretion under the existing laws.
4. Those who have acquired ownership
of land in any other manner provided
for by law [see: Republic represented
by Mindanao Medical Center v. CA,
G.R. No. 40912 (1976)].
2. Under Sec. 16, P.D. 1529; Land
Applied for Registration by a Non-
Resident of the Philippines
He shall file his application:
a. An instrument in due form;
b. Appointing a duly authorized representative
or attorney-in-fact, whose authority shall
accompany the application;
c. Giving his full name and postal address; and
d. Shall therein agree that the service of any
legal process in the proceedings under or
growing out of the application made upon
his agent or representative shall be of the
same legal effect as if made upon the
applicant within the Philippines.
3. Under Sec. 12, CA 141
Any person who:
a. Is a citizen of the Philippines over the age of
18, or the head of a family;
b. Does not own more than 24 hectares of land
in the Philippines, or has not had the benefit
of any gratuitous allotment of more than 24
hectares of land since the occupation of the
Philippines by the United States
Note: they may enter a homestead of not
exceeding 24 hectares of agricultural land of
the public domain
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4. Under R.A. No. 8371:
a. Formal recognition of ancestral domains by
virtue of Native Title may be solicited by
ICCs/IPs concerned [Sec. 11]
b. Option to secure certificate of title under CA
141 or Land Registration Act 496 [Sec. 12]
1. Individual members of cultural
communities, with respect to individually-
owned ancestral lands who, by
themselves or through their
predecessors-in -interest, have been in
continuous possession and occupation
of the same in the concept of owner
since time immemorial or for a period of
not less than thirty (30) years
immediately preceding the approval of
this Act and uncontested by the
members of the same ICCs/IPs shall
have the option to secure title to their
ancestral lands
2. Option granted shall be exercised within
20 years from the approval of RA 8371
D. Jurisdiction
Where to File: The court that should take
cognizance of a registration case is that which
has territorial jurisdiction over the property.
General Rule: RTC of the province, city, or
municipality where the property is situated.
The RTC shall have exclusive jurisdiction over
all applications for original registration of title,
with power to hear and determine all questions
arising upon such applications or petition [Sec.
2 (2), P.D. 1529].
Exceptions: Delegated jurisdiction to the
MTC, MeTC, and MCTC by the Supreme Court
in cadastral and land registration cases if:
1. There is no controversy over the land, OR
2. Its value is less than P100,000 [Sec. 34, BP
129]
LAND TITLES AND DEEDS
IV. CERTIFICATE OF TITLE
A. The Torrens Title
Certificate of ownership issued by the Register
of Deeds naming and declaring the owner of
the real property described therein free from
all liens and encumbrances, except such as
may be expressly noted thereon or otherwise
reserved by law.
1. Original Certificate of Title (OCT)
It is the first certificate of title issued in the
name of the registered owner by the Register
of Deeds covering a parcel of land which had
been registered under the Torrens System, by
virtue of judicial or administrative proceedings.
2. Transfer Certificate of Title (TCT)
The subsequent certificate of title pursuant to
any deed of transfer or conveyance to another
person. The Register of Deeds shall make a
new certificate of title and give the registrant an
owner’s duplicate certificate. The previous
certificate shall be stamped “cancelled.”
3. Patents
Whenever public land is by the Government
alienated, granted or conveyed to any person,
the same shall be brought forthwith under the
operation of this Decree [Sec. 103, P.D. 1529]
a. Patents only involve public lands which are
alienated by the Government pursuant to
the Public Land Act [CA 141, as amended]
b. The patent (even if denominated as a deed
of conveyance) is not really a conveyance
but a contract between the grantee and the
Government and evidence of authority to
the Register of Deeds to make registration.
c. The act of registration is the operative act to
affect and convey the land.
B. Probative Value
A Torrens Certificate of Title is valid and
enforceable against the whole world. It may
be received in evidence in all courts of the
Philippines, and shall be conclusive as to all
matters contained therein, principally the
identity of the owner of the covered land
thereby and identity of the land.
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A Torrens title, once registered, cannot be
defeated, even by adverse, open and
notorious possession. A registered title
under the Torrens system cannot be defeated
by prescription. The title, once registered, is
notice to the whole world. All persons must take
notice. No one can plead ignorance of the
registration [Egao v. CA, G.R. No. L-79787
(1989)].
C. Effects of Registration under
the Torrens System
1. Land is placed under the operation
of the Torrens system.
2. Claims and liens prior to the decree
of registration
General Rule
Claims and liens of whatever character existing
against the land prior to the issuance of the
certificate of title are cut off by such certificate
and the certificate so issued binds the whole
world, including the government.
A decree of registration bars all claims and
rights which arose or may have existed prior to
the decree of registration. By the issuance of
the decree, the land is bound and title thereto
quieted, subject only to certain exceptions
under the property registration decree [Heirs of
Delfin, v. Rabadon, G.R. No. 165014 (2013)].
Exceptions:
a. Those claims noted on the certificate
b. Liens, claims, or rights arising or existing
under the laws and the Constitution, which
are not by law required to appear on record
in the Register in order to be valid
c. Unpaid real estate taxes levied and
assessed within 2 years immediately
preceding the acquisition of any right over
the land by an innocent purchaser for value
3. Title to the land becomes non-
prescriptible
General Rule
a. Even adverse, notorious, and continuous
possession under claim of ownership for the
period fixed by law is ineffective against a
Torrens title [JM Tuason and Co. Inc. v. CA,
G.R. No. L-41233 (1979)].
LAND TITLES AND DEEDS
b. The fact that the title to the land was lost
does not mean that the land ceased to be
registered land before the reconstitution of
its title. It cannot perforce be acquired by
prescription [Ruiz v. CA, G.R. No. 29213
(1977)].
c. Lands under a Torrens title cannot be
acquired by prescription or adverse
possession. Section 47 of P.D. No. 1529,
the Property Registration Decree, expressly
provides that no title to registered land in
derogation of the title of the registered
owner shall be acquired by prescription or
adverse possession [Dream Village
Neighborhood Association, Inc., v. Bases
Development Authority, G.R. No.192896
(2013)].
Exceptions:
a. If previous valid title of the same land exists
b. When the land covered is not capable of
registration
c. When acquisition of certificate is attended
by fraud
4. Torrens certificate is presumed
valid and devoid of flaws.
Note: Registration is not equivalent to legal
title. Under the Torrens system, registration
only gives validity to the transaction or creates
a lien upon the land. It merely confirms, but
does not confer, ownership [Lu v. Sps. Orlando
and Manipon, G.R. No. 147072 (2002)].
D. Effect of Non-Registration
General Rule
If a purchaser, mortgagee or grantee should
fail to register his deed the conveyance,
considering our existing registration laws, it
shall not be valid against any person unless
registered.
Exceptions:
1. The grantor,
2. His heirs and devisees, and
3. Third persons having actual notice or
knowledge thereof.
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E. Dealings in Land before
Issuance of Decree
With the filing of an application for registration,
the land described therein does not cease to
become open to any lawful transaction. If the
transaction takes place before the issuance of
the decree of registration, Section 22 of P.D.
1529 provides that the instrument is to be
presented to the RTC, together with a motion
praying that the same be considered in relation
with the pending application.
However, if the motion is filed after the decision
of adjudication has become final but before the
issuance of the decree by the Administrator of
Land Registration Authority, the court shall
require the interested party to pay the fees
prescribed as if such instrument had been
presented for registration in the office of the
Register of Deeds [Peña].
F. Laches, When Applicable
Laches sets in if it takes 18 years for a person
to file an action to annul the land registration
proceedings, especially so if the registrant has
already subdivided the land and sold the same
to innocent third parties. A party’s long inaction
or passivity in asserting his rights over disputed
property precludes him from recovering the
same [Heirs of Teodoro dela Cruz v. CA, G.R.
No. 117384 (1998); Ignacio v. Basilio, et al.,
G.R. No. 122824 (2001)].
LAND TITLES AND DEEDS CIVIL LAW
Voluntary Dealings Compared to
V. SUBSEQUENT Involuntary Dealings
Involuntary
REGISTRATION Voluntary Dealings
Dealings
Refer to deeds, Refer to the writs,
A. In General instruments, or orders, or processes
documents which issued by the court
A proceeding where incidental matters after are results of the free of record affecting
original registration may be brought before the and voluntary acts of registered land, also
land registration court by way of motion or the parties thereto. other instruments
petition filed by the registered owner or a party which are not willful
in interest. acts of the registered
owner, executed
Necessity and Effects of Registration without his
[Sec. 51 and 52, P.D. 1529] knowledge or
1. The deed, mortgage, lease, or other consent.
voluntary instrument, except a will shall
ONLY operate as: 1. Sale 1. Attachment
a. A contract between the parties and 2. Real property 2. Mandamus
b. Evidence of authority to the Register of mortgage 3. Sale on
Deeds to make registration. 3. Lease execution of
2. The act of registration shall be the 4. Pacto de retro judgment or
operative act to convey or affect the land sale sales for taxes
insofar as third persons are concerned. 5. Extra-judicial 4. Adverse claims
3. Also, by registration, it creates constructive settlement 5. Notice of lis
notice to the world. 6. Free pendens
patent/homestea 6. Expropriation
Registration of a document is ministerial on d 7. Forfeiture
the part of the Register of Deeds. The purpose 7. Powers of 8. Auction sale on
of registering an instrument is to give notice attorney foreclosure of
thereof to all persons, not to destroy or affect 8. Trusts mortgage
already registered rights over the land at the
time of the registration. Registration must first Presentation of the Entry in the day book
be allowed, and validity or effect litigated owner’s duplicate of ROD is sufficient
afterwards [Gurbax Singh Pabla & Co. v. certificate of title is notice to all persons
Reyes, G.R. No. L-3970 (1952)]. required to notify;
mere entry in the day
As between the parties to a contract of sale, book of the Register
registration is not necessary to make it valid of Deeds (ROD) is
and effective, for actual notice is equivalent to insufficient
registration [Agcaoili].

The act of registration creates a constructive

notice to the whole world and binds third
persons [Campillo v. Court of Appeals, G.R.
No. L-56483 (1984)].

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LAND TITLES AND DEEDS CIVIL LAW
Involuntary Santiago, G.R. No.
Voluntary Dealings
Dealings 147559 (2008)].
An innocent Entry thereof in the
purchaser for value day book of the ROD
of registered land is sufficient notice to
B. Voluntary Dealings
becomes the all persons even if
registered owner the the owner’s Voluntary dealings are deeds, instruments,
moment he presents duplicate certificate documents which are the results of free and
and files a duly of title is not voluntary acts of parties thereto.
notarized and valid presented to the
deed of sale and the ROD [Saberon v. The act of registration shall be the operative
same is entered in Ventanilla, Jr., G.R. act to convey or affect the land insofar as third
the day book of the No. 192669 (2014)]. persons are concerned [Sec. 51, P.D. 1529].
ROD and at the
same time he 1. Innocent purchaser for value and in
surrenders or good faith
presents the owner’s An innocent purchaser for value refers to
duplicate certificate someone who "buys the property of another
of title covering the without notice that some other person has a
land sold and pays right to or interest in it, and who pays a full and
the registration fees. fair price at the time of the purchase or before
It is necessary to Entry in the day book receiving any notice of another person’s claim"
register the deed or of the ROD is [Sps. Villamil v. Villarosa, G.R. No. 177187
instrument in the sufficient notice to all (2009)].
entry book of the persons of an
ROD and a adverse claim Good faith consists in the possessor’s belief
memorandum without the same that the person from whom he received the
thereof shall also be being annotated at thing was the owner of the same and could
made in the owner’s the back of the convey his title, and there was an honest
duplicate certificate certificate of title intention to abstain from taking any
and its original [Director of Lands v. unconscientious advantage from another
[Villasor v. Camon, Reyes, G.R. No. L- [Duran v. IAC, G.R. No. L-64159 (1985); Fule
R-C.A. No. 8551 27594 (1976)]. v. De Legare, G.R. No. 17951 (1963)].
(1951)].
At the time of the Entry of the Where innocent third persons relying on the
filing of the petition attachment in the correctness of the certificate of title issued
for cancellation of books is sufficient acquire rights over the property, the court
encumbrance, the notice to all persons. cannot disregard such rights and order the
lease contract Hence, the fact that total cancellation of the certificate of title for
already lost its the deed of sale was that would impair the public confidence in the
efficacy. Thus, there already annotated is certificate of title [Duran v. IAC, G.R. No. L-
is no basis to save its of no moment with 64159 (1985)].
annotation on regard to third
defendant’s title. persons. The
2. Mortgagee in good faith
The fact that the preference created
cancellation of the by the levy on Even if the mortgagor is not the rightful owner
lease contract was attachment is not of, or does not have the valid title to the
forged is of no diminished by the mortgaged property, the mortgagee in good
moment, for there subsequent faith is entitled to protection [Llanto v. Alzona,
was no violation of a registration of the G.R. No. 150730 (2005)].
right [Sps. Labayen deed of sale [Armed
v. Serafica, G.R. No. Forces and Police 3. Reliance on title
178443 (2008)]. Mutual Benefit General Rule: A person dealing with
Association, Inc. v. registered property need not go beyond, but

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LAND TITLES AND DEEDS
only has to rely on, the title [Campillo v. PNB,
G.R. No. L-19890 (1969)].
He is charged with notice only of such burdens
and claims which are annotated on the title, for
registration is the operative act that binds the
property.
Exceptions: When should a purchaser
investigate?
a. Banks are required to exercise more care
and prudence in dealing with registered
lands for their business is one affected with
public interest. The general rule does not
apply [Omengan v. PNB, G.R. No. 161319
(2007)].
b. When the purchaser or mortgagee is a
financing institution [Dela Merced v. GSIS,
G.R. No. 140398 (2001)].
c. When party concerned has actual
knowledge of facts and circumstances that
would impel a reasonably cautious man to
make inquiry [Leung Yee v. Strong
Machinery Company, G.R. No. L-11658
(1918)].
d. When purchaser is in bad faith; e.g. he had
full knowledge of a previous sale [Jomoc v.
CA, G.R. No. 92871 (1991)].
e. Purchaser of land where the certificate of
title contains a notice of lis pendens.
f. When a person buys land from one whose
rights over the land is evidenced only by a
deed of sale and an annotation in the
certificate of title but no TCT [Reyes v. CA,
G.R. No. L-28466 (1971)].
4. Double Sales
Where two certificates of title are issued to two
different persons covering the same parcel of
land in whole or in part, the earlier in date must
prevail as between the original parties and in
case of successive registration where more
than one certificate is issued over the land, the
person holding title under the prior certificate
is entitled to the property as against the person
who relies on the second certificate [National
Housing Authority v. Laurito, G.R. No. 191657
(2017)].
The purchaser from the owner of the later
certificate and his successors should resort to
the vendor for redress, rather than molest the
holder of the first certificate and his
successors, who should be permitted to rest
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secure in their title [Gatioan v. Gaffud, G.R.
No. L-21953 (1969)].
5. Forged Deed
General Rule: A forged deed is an absolute
nullity and conveys no title.
Exception: If there is good faith, a TCT has
already been issued to the purchaser, the
latter being an innocent purchaser for value
according to Sec. 39, P.D. 1529, then the title
is good.
6. Registration of Voluntary
Instruments in General
Process of Registration [Sec. 55, P.D. 1529]
a. The deed or other voluntary instrument
must contain:
1. The following details of the grantee or
other person acquiring or claiming
interest:
● Full name
● Nationality
● Residence
● Postal address
● Civil status (if married, include name
in full of spouse)
2. If grantee is a corporation: It must
contain a recital showing that such
corporation or association is legally
qualified to acquire private lands.
b. It must be executed in accordance with
Sec. 112. It shall be:
1. In a public instrument executed in
accordance with law;
2. Signed by the parties in the presence of
at least 2 witnesses who shall likewise
sign thereon;
3. Where the instrument has for its object
2 or more parcels of land, the number
thereof shall also be stated in the
acknowledgment;
4. Each page of the copy of the instrument,
except the page where the signatures
already appear at the foot of the
instrument, shall be signed on the left
margin thereof by the parties and their
witnesses, and sealed with the notarial
seal. This fact as well as the number of
the pages shall be stated in the
acknowledgment.
LAND TITLES AND DEEDS CIVIL LAW
c. File instrument creating or transferring Process of Registration for Dealings less
interest and certificate of title with Register than Ownership
of Deeds together with: a. Filing of the instrument with the Register of
1. Owner’s duplicate Deeds
● Serves as conclusive authority from b. A brief memorandum thereof is made:
the registered owner to the Register 1. On the certificate of title by the Register
of Deeds to enter a new certificate or of Deeds and signed by him, and
to make a new memorandum of 2. On the owner’s duplicate
registration in accordance with the
voluntary instrument presented [Sec. Cancellation or extinguishment of such
107, P.D. 1529] interests shall be registered in the same
● The issuance of a new transfer manner.
certificate without presentation of an
owner’s duplicate is unwarranted Registration of Deeds of Sale and
and confers no right on the Transfers
purchaser [PNB v. Fernandez, G.R.
a. If entire property is the subject [Sec. 57,
No. 42109 (1935)]
P.D. 1529]
2. Payment of fees & documentary stamp
1. Owner executes and registers the deed
tax
which must be sufficient in form.
3. Evidence of full payment of real estate
2. A new certificate of title is issued and
tax
Register of Deeds prepares and delivers
4. Document of transfer – 1 copy additional
to grantee his owner's duplicate
for city/provincial assessor
certificate
3. Register of Deeds notes upon the OCT
d. Payment of fees and DST
and the duplicate certificate the date of
1. After payment of entry fee, the Register
transfer, the volume and page of the
of Deeds shall enter the instruments in
registration book where the new
a primary entry book [Sec. 56, P.D.
certificate is registered
1529].
4. The original and the owner's duplicate of
2. The national, provincial and city
the grantor's certificate shall be
governments are exempted from
stamped "cancelled".
payment of entry fees.
5. The deed of conveyance shall be filed
3. R.A. No. 456 prohibits registration of
and indorsed with the number and the
documents affecting real property which
place of registration of the certificate of
is delinquent in the payment of real
title of the land conveyed.
estate taxes. Further, if evidence of
such payment is not presented with 15
b. If only a portion of property is the subject
days from the date of entry of said
[Sec. 58, P.D. 1529]
document in the primary entry book of
1. Include a plan which shows all the
the register of deeds the entry shall be
portions already subdivided with verified
deemed cancelled.
and approved technical description.
2. That plan with the certified copy of the
e. Entry of the Instrument in the Primary
technical descriptions shall be filed with
Entry Book: Instruments are regarded as
the Register of Deeds for annotation in
registered from the time the Register of
the TCT.
Deeds enters them in the book.
3. Register of Deeds shall issue a TCT and
cancel the grantor's certificate partially
f. TCT shall then be issued.
OR it may be cancelled totally and a
new one issued describing therein the
Registration of Dealings Less than remaining portion
Ownership [Sec. 54, P.D. 1529]
If an instrument does not divest ownership or c. If there are SUBSISTING encumbrances
title from owner or from transferee of the and annotations: They shall be carried
registered owners, then no new certificate over in the new certificate or certificates;
shall be entered or issued.
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except when they have been
simultaneously discharged.
Registration of Mortgages and Leases
[Sec. 60, P.D. 1529]
Mortgages and leases shall be registered in
the manner provided in Sec. 54 (Dealings less
than ownership).
The deed shall take effect upon the title only
from the time of registration.
When a deed of mortgage is presented, the
Register of Deeds will enter upon the OCT and
upon the owner’s duplicate a memorandum
thereof and shall sign said memorandum.
Registration of Powers of Attorneys
[Sec. 64, P.D. 1529]
Powers of attorney and revocations shall be
registered with the Register of Deeds of the
province or city where the land lies.
Any instrument revoking such power shall be
registered in like manner.
Registration of Trusts
Registration is by memorandum:
a. A memorandum by the words “in trust” or
“upon condition” or other apt words is made
if a deed or other instrument is filed in order
to:
1. Transfer registered land in trust, or upon
any equitable condition or limitation
expressed therein, or
2. Create or declare a trust or other
equitable interests in such land without
transfer [Sec. 65, P.D. 1529]
b. A memorandum by the words “with power
to sell,” or “power to mortgage” or other apt
words is made when: The instrument
creating or declaring a trust or other
equitable interest contains an EXPRESS
POWER to sell, mortgage, or deal with the
land in any manner
However, if an implied or constructive trust is
claimed, person claiming such must execute a
sworn statement thereof with the Register of
Deeds, containing a description of the land,
the name of the registered owner and a
reference to the number of the certificate of
title. Such claim shall not affect the title of a
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purchaser for value and in good faith before its
registration [Sec. 68, P.D. 1529].
C. Involuntary Dealings
Involuntary dealings refer to the writ, order, or
process issued by the court of record affecting
registered land, also other instruments which
are not willful acts of the registered owner,
executed without his knowledge or consent.
The entry thereof in the day book is sufficient
notice to all persons of such adverse claim
[Agcaoili].
The following involuntary dealings affecting
registered land must be registered:
1. Attachments [Sec. 69, P.D. 1529]
2. Adverse claim [Sec. 70, P.D. 1529]
3. Sale on execution or for taxes or for any
assessment [Sec. 74, P.D. 1529]
4. Notice of lis pendens [Sec. 76, P.D. 1529]
1. Attachments
Attachment is a writ issued at the institution or
during progress of an action commanding the
sheriff to attach the property, rights, credits or
effects of the defendant to satisfy demands of
the plaintiff.
Kinds
a. Preliminary
b. Garnishment
c. Levy on execution
Process of Registration
a. Copy of writ in order to preserve any lien,
right or attachment upon registered land
shall be filed with the Register of Deeds
where the land lies, containing number of
certificate of title of land to be affected or
description of land [Sec. 69, P.D. 1529]
b. Register of Deeds to index attachment in
names of both plaintiff & defendant or
name of person whom property is held or in
whose name stands in the records
1. If duplicate of certificate of title is not
presented:
● Register of Deeds shall within 36
hours send notice to registered
owner by mail stating that there has
been registration & requesting him to
produce duplicate so that
memorandum be made
LAND TITLES AND DEEDS
● If owner neglects or refuses –
Register of Deeds shall report matter
to court.
2. Court after notice shall enter an order to
owner to surrender certificate at time &
place to be named therein.
c. Although notice of attachment is not noted
in duplicate, notation in book of entry of
Register of Deeds produces effect of
registration already
Effect of registration of attachment
a. Creates real right
b. Has priority over execution sale
c. But between 2 attachments – one that is
earlier in registration is preferred
Duty of Register of Deeds
Duty is ministerial but may refuse registration
in the following circumstances:
a. Title to land is not in the name of defendant
Exception: If petitioner is an heir
b. No evidence is submitted to show that he
has present or possible future interest in
land
2. Adverse Claim
A claim is adverse when: [Sec. 70, par. 1, P.D.
1529]
a. Claimant’s right or interest in registered
land is adverse to the registered owner,
and
b. Such right arose subsequent to date of
original registration, and
c. No other provision is made in the Decree
for the registration of such right or claimant
Requisites for registration of an adverse
claim:
a. The adverse claimant must give a
statement of the following in writing:
1. His alleged right or interest
2. How and under whom such alleged right
or interest is acquired
3. The description of the land in which the
right or interest is claimed and
4. The number of the certificate of title
b. The statement must be:
1. Signed by the adverse claimant
2. Sworn before a notary public
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c. The statement must also state his
residence or the place to which all notices
may be served upon him [Lozano v
Ballesteros, G.R. No. 49470 (1991)].
Duration of an adverse claim
a. 30 days from the date of registration.
b. After that, the annotation of adverse claim
may be cancelled upon filing of a verified
petition by the party in interest.
When cancelled, no second adverse claim
based on the same ground may be registered
by the same claimant.
Adverse claim is not ipso facto cancelled after
30 days, hearing is necessary [Sajonas v. CA,
G.R. No. 102377 (1996)].
3. Sale on Execution or For Taxes or
Assessments
Execution sale
a. To enforce a lien of any description on
registered land, any execution or affidavit
to enforce such lien shall be filed with
Register of Deeds where the land lies
b. Register in the registration book &
memorandum upon proper certificate of
title as adverse claim or as an
encumbrance
c. To determine preferential rights between 2
liens: priority of registration of attachment
Tax sale
a. Sale of land for collection of delinquent
taxes and penalties due the Government
b. In personam (all persons interested shall
be notified so that they are given
opportunity to be heard)
1. Notice to be given to delinquent
taxpayer at last known address
2. Publication of notice must also be made
in English, Spanish & local dialect &
posted in a public & conspicuous place
in place wherein property is situated &
at the main entrance of the provincial
building
c. Sale cannot affect rights of other lien
holders unless they are given the right to
defend their rights: due process must be
strictly observed
d. Tax lien superior to attachment
Note: No need to register tax lien because it is
automatically registered once the tax accrues.
LAND TITLES AND DEEDS
However, sale of registered land to foreclose
a tax lien needs to be registered.
Process of Registration
a. Officer’s return shall be submitted to
Register of Deeds together with duplicate
title
b. Register in the registration book
c. Memorandum shall be entered in the
certificate as an adverse claim or
encumbrance
d. After the period of redemption has expired
& no redemption (2 years from registration
of auction sale) is made: cancellation of title
and issuance of a new one
e. Before cancellation, notice shall be sent to
registered owner: to surrender title & show
cause why it shall not be cancelled
Note: Actual knowledge of a person is
equivalent to registration as against him
4. Lis Pendens
Literally means “pending suit.” It is an
announcement to the whole world that a
particular real property is in litigation. The
inscription serves as a warning that one who
acquires an interest over litigated property
does so at his own risk, or that he gambles on
the result of the litigation over the property
[Marasigan v. Intermediate Appellate Court,
G.R. No. L-69303 (1987)].
When notice of lis pendens is proper:
a. To recover possession of real estate
b. To quiet title
c. To remove clouds upon the title thereof
d. For partition
e. Other proceedings of any kind in court
directly affecting the title to land or the use
or occupation thereof or the buildings
thereon
When notice of lis pendens is NOT proper:
a. Proceedings for the recovery of money
judgments
b. Attachments
c. Proceedings on the probate of wills
d. Administration of the estate of deceased
persons
e. Levies on execution
f. Foreclosure [Magdalena Homeowners
Association, Inc. v. Court of Appeals, G.R.
No. 60323 (1990)]
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Process of Registration:
By Memorandum or Notice stating
a. The institution of the action or proceeding
b. The court wherein the same is pending
c. The date of the institution of the action
d. Reference to the number of the certificate
of title
e. Adequate description of the land affected
and registered owner thereof
Other parties who need to register
a. Assignee in involuntary proceeding for
insolvency
1. Duty of the officer serving notice to file a
copy of the notice to the Register of
Deeds where the property of debtor lies
2. Assignee elected or appointed by court
shall be entitled to entry of new
certificate of registered land upon
presentment of copy of assignment with
bankrupt’s certificate of title (duplicate)
3. New certificate shall note that it is
entered to him as assignee or trustee in
insolvency proceedings
b. Government in eminent domain
1. Copy of judgment shall be filed in the
Register of Deeds which states
description of property, certificate
number, interest expropriated, nature of
public use
2. Memorandum shall be made or new
certificate of title shall be issued
Effect of registration
a. Impossibility of alienating the property in
dispute during the pendency of the suit –
may be alienated but purchaser is subject
to final outcome of pending suit
b. Register of Deeds is duty bound to carry
over notice of lis pendens on all new titles
to be issued
Cancellation of lis pendens [Sec. 77,
P.D. 1529]
Under Sec. 19, Rule 13 of the Rules of Court,
a notice of lis pendens may cancelled on the
following grounds:
a. The annotation was for the purpose of
molesting the title of the adverse party;
b. The annotation is not necessary to protect
the title of the party who caused it to be
recorded.
Requisites:
a. Before final judgment
LAND TITLES AND DEEDS CIVIL LAW
b. Upon order of the court
c. Upon Action by the Register of Deeds at
the instance of the party that caused the
registration or upon verified petition of the
latter; and
d. Must be due to the grounds mentioned
[Pena].

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LAND TITLES AND DEEDS
VI. NON-REGISTRABLE
PROPERTIES
Section 2, Article XII, 1987 Constitution. All lands
of the public domain, waters, minerals, coal,
petroleum, and other mineral oils, all forces of
potential energy, fisheries, forests or timber, wildlife,
flora and fauna, and other natural resources are
owned by the State. With the exception of
agricultural lands, all other natural resources shall
not be alienated. xxxx
The classification of public lands is an
exclusive prerogative of the Executive
Department of the Government and not of the
courts. In the absence of such classification,
the land remains as unclassified land until it is
released therefrom and rendered open to
disposition [Aquino citing Director Lands and
Director of Forest Development v. CA, G.R.
No. L-58867 (1984)].
A. Civil Code provisions dealing
with non-registrable
properties
1. Properties of public dominion [Art.
420, Civil Code]
a. Those intended for public use, such as
roads, canals, rivers, torrents, ports and
bridges constructed by the State, banks,
shores, roadsteads, and others of
similar character;
b. Those which belong to the State,
without being for public use, and are
intended for some public service or for
the development of the national wealth.
2. Waters under Art. 502, Civil Code
c. Rivers and natural beds
d. Continuous or intermittent waters of
springs and brooks running in their
natural beds and the beds themselves
e. Waters rising continuously or
intermittently on lands of public
dominion
f. Lakes and lagoons formed by Nature on
public lands, and their beds
g. Rain waters running through ravines or
sand beds, which are also part of public
dominion
h. Subterranean waters on public lands
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i. Waters found within the zone of
operation of public works, even if
constructed by a contractor
j. Waters rising continuously or
intermittently on lands belonging to
private persons, to the State, to a
province, or to a city or municipality from
the moment they leave such lands
k. The waste waters of fountains, sewers,
and public establishments
B. Specific kinds of non-
registrable properties or
lands
1. Forest or timberland, public forest,
forest reserves
2. National parks
Under the present Constitution, national parks
are declared part of the public domain, and
shall be conserved and may not be increased
nor diminished, except by law [Republic v AFP
Retirement and Separation Benefits System,
G.R. No. 180463 (2013)].
3. Mangrove swamps
Mangrove swamps or mangroves should be
understood as comprised within the public
forests of the Philippines as defined in Sec.
1820, Administrative Code of 1917 [Director of
Forestry v. Villareal, G.R. No. L-32266
(1980)].
4. Mineral lands
Both under the 1987 Constitution and Sec. 2
of the Public Land Act, mineral lands are not
alienable and disposable [Lepanto
Consolidated Mining Co. v. Dumyung, G.R.
No. L-31666 (1979)].
5. Foreshore land and seashore and
reclaimed lands
Seashore, foreshore, and/or portions of
territorial waters and beaches, cannot be
registered. Even alluvial formation along the
seashore is part of public domain [Aquino
citing Dizon v. Rodriguez, G.R. Nos. L-20300-
01 (1965)].
LAND TITLES AND DEEDS
6. Lakes
Lakes are part of public dominion [Art. 502 (4),
Civil Code].
7. Creeks and Streams
A dried up creek bed is property of public
dominion [Fernando v. Acuna, G.R. No.
161030 (2011)].
8. Military or Naval Reservations
The reservation made segregates it from the
public domain and no amount of time in
whatever nature of possession could have
ripen such possession into private ownership
[Republic v. Marcos, G.R. No. L-32941
(1973)].
9. Watershed
The Constitution expressly mandates the
conservation and utilization of natural
resources, which includes the country’s
watershed [Tan v. Director of Forestry, G.R.
No. L-24548 (1983)].
10. Grazing lands
While the 1987 Constitution does not
specifically prove that grazing lands are not
disposable, yet if such lands are part of a
forest reserve, there can be no doubt that the
same are incapable of registration [Aquino,
citing Director of Lands v. Rivas, G.R. No. L-
61539 (1986)].
11. Previously titled land
Proceeds from the indefeasibility of the
Torrens title.
12. Alluvial deposit along river when
man-made
Such deposit is really an encroachment of a
portion of the bed of the river, classified as
property of the public domain under Art. 420
(1) and Art. 502 (1) of the Civil Code, hence
not open to registration [Republic v. CA, G.R.
No. L-61647 (1984)].
13. Reservations for public and semi-
public purposes
Sec. 14, Chapter 4, Book III of EO No. 292
provides that the President shall have the
power to reserve for settlement or public use,
and for specific public purposes, any of the
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lands of public domain, the use of which is not
otherwise directed by law.
The land registration court has no jurisdiction
over non-registrable property and cannot
validly adjudge the registration of title thereof
in favor of a private applicant [Peña].
Thus, where it has so been adjudged, the river
not being capable of private appropriation or
acquisition by prescription, the title thereto
may be attacked, either directly or collaterally,
by the State which is not bound by any
prescriptive period provided by the Statute of
Limitation [Martinez v. CA, G.R. No. L-31271
(1974)].
C. Patrimonial Property
Refers to property that is open to disposition
by the Government, or otherwise property
pertaining to the national domain, or public
lands.
The property of provinces, cities, and
municipalities is divided into property for public
use and patrimonial property [Art. 423, Civil
Code].
Property for public use, in the provinces, cities,
and municipalities, consist of the provincial
roads, city streets, municipal streets, the
squares, fountains, public waters,
promenades, and public works for public
service paid for by said provinces, cities, and
municipalities. All other property possessed by
any of them is patrimonial and shall be
governed by the Civil Code, without prejudice
to the provisions of special laws [Art. 424, Civil
Code].
LAND TITLES AND DEEDS CIVIL LAW
VII. DEALINGS WITH the party in interest in writing of the
ground or grounds for his refusal
UNREGISTERED
The latter may appeal the matter to the
LANDS Commissioner of Land Registration.

No deed, conveyance, mortgage, lease, or Recording by the Register of Deeds is

other voluntary instrument affecting land not
registered under the Torrens system shall be
valid, except as between the parties thereto,
unless such instrument shall have been
recorded in the manner herein prescribed in
the office of the Register of Deeds for the
province or city where the land lies [Sec. 113,
par. 1, P.D. 1529].
Effects of Transactions Covering
Unregistered Land
1. As between the parties – The contract is
binding and valid even if not registered
2. As among third persons – There must
be registration for the transaction to be
binding against third persons
ministerial. Recording shall be without
prejudice to a third party with a better right
[Sec. 113, P.D. 1529].
Better right
Refers to a right which must have been
acquired by a third party independently of the
unregistered deed, such, for instance, as title
by prescription, and that it has no reference to
rights acquired under that unregistered deed
itself [Peña].
Involuntary Dealings in Unregistered
Lands
P.D. 1529 now permits the registration of
involuntary dealings in unregistered lands.

Primary Entry Book and Registration Book
The Register of Deeds for each province or
city shall keep a Primary Entry Book and a
Registration Book.
1. The Primary Entry Book shall contain,
among other particulars:
a. Entry number
b. Names of the parties
c. Nature of the document
d. Date, hour and minute it was presented
and received
Tax sale, attachment and levy, notice of lis
pendens, adverse claim and other instruments
in the nature of involuntary dealings with
respect to unregistered lands, if made in the
form sufficient in law, shall likewise be
admissible to record under Sec. 113 [Sec. 113
(d), P.D. 1529].

2. The Registration Book – Provides spaces

whereon the annotation is made after the
instrument has been entered in the Primary
Entry Book

Process of Registration
1. Registration is by way of annotation
2. The instrument dealing with unregistered
land is presented before the Register of
Deeds
3. The Register will then determine if it can be
registered:
a. If, on the face of the instrument, it
appears that it is sufficient in law, the
Register of Deeds shall forthwith record
the instrument
b. In case the Register of Deeds refuses its
administration to record, he shall advise

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LAND TITLES AND DEEDS CIVIL LAW
VIII. ASSURANCE FUND B. Limitation of Action

Upon the entry of a certificate of title in the
name of the registered owner, and also upon
the original registration on the certificate of title
of a building or other improvements on the
land covered by said certificate, as well as
upon the entry of a certificate pursuant to any
subsequent transfer of registered land, there
shall be paid to the Register of Deeds one-
fourth of one per cent of the assessed value of
the real estate on the basis of the last
assessment for taxation purposes, as
contribution to the Assurance Fund. Where
the land involved has not yet been assessed
for taxation, its value for purposes of this
decree shall be determined by the sworn
declaration of two disinterested persons to the
effect that the value fixed by them is to their
knowledge, a fair valuation.
Nothing in this section shall in any way
preclude the court from increasing the
valuation of the property should it appear
during the hearing that the value stated is too
small [Sec. 93, P.D. 1529].
Any action for compensation against the
Assurance Fund by reason of any loss,
damage or deprivation of land or any interest
therein shall be instituted within a period of six
years from the time the right to bring such
action first occurred:
Requisites:
1. That the right of action herein provided
shall survive to the legal representative of
the person sustaining loss or damage,
unless barred in his lifetime; and
2. That if at the time such right of action first
accrued the person entitled to bring such
action was a minor or insane or imprisoned,
or otherwise under legal disability, such
person or anyone claiming from, by or
under him may bring the proper action at
any time within two years after such
disability has been removed,
notwithstanding the expiration of the
original period of six years first above
provided [Sec. 102, P.D. 1529].

A. Action of compensation from

funds
Requisites:
1. That a person sustains loss or damage, or
is deprived of any estate or interest in land;
2. On account of the bringing of land under
the operation of the Torrens System arising
after original registration;
3. Through fraud, error, omission, mistake or
misdescription in a certificate of title or
entry or memorandum in the registration
book;
4. Without negligence on his part; and
5. Is barred or precluded from bringing an
action for the recovery of such land or
estate or interest therein [Agcaoili].

Reversion
Action instituted by the government, thru the
Solicitor General in all cases where lands of
public domain are held in violation of the
Constitution or were fraudulently conveyed.
Indefeasibility of title, prescription, laches, and
estoppel do not bar reversion suits.

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LAND TITLES AND DEEDS CIVIL LAW
IX. CADASTRAL SYSTEM Cadastral Distinguished from Ordinary
Registration
OF REGISTRATION Ordinary Cadastral
Registration Registration
Voluntary Compulsory
A. In General
Applicant is a
Applicant is the
A proceeding in rem, initiated by the filing of person claiming title
Director of Lands
a petition for registration by the to the land
government, not by the persons claiming Usually involves
ownership of the land subject thereof, and the private land; it may
latter are, on the pain of losing their claim also refer to public
thereto, in effect compelled to go to court to agricultural lands if
All classes of land
make known their claim or interest therein, and the object of the
are covered (private
to substantiate such claim or interest. action is judicial
and public alienable
confirmation of
lands)
Unlike other kinds of registration, this is imperfect or
compulsory as it is initiated by the incomplete title (in
government. which case CA 141
applies)
The government does not seek the Applicant comes to
registration of land in its name. The objective Government asks the
court to confirm his
of the proceeding is the adjudication of title to court to settle and
title and seek
the lands or lots involved in said proceeding adjudicate the title of
registration of the
[Agcaoili]. the land
land in his name
In cadastral
Purpose: registration, if the
1. To serve the public interest by requiring applicant cannot
that the titles to any unregistered lands be prove that he is
settled and adjudicated entitled to the land,
2. To settle all disputes over the land; and If the applicant fails
the land becomes
3. To remove all clouds over land titles, as far to prove his title,
public land.
as practicable application may be
dismissed without
However, the
Period of Filing: Extended up to December prejudice [Santiago
cadastral case
31, 2020 [Sec. 2, R.A. No. 9176] v. Santos, G.R. No.
decision does not
31568 (1930);
constitute res
Only unregistered lands may be the Verzosa v. Nicolas,
judicata as to bar
subject of a Cadastral Survey G.R. No. 9227
even the same
The object of cadastral proceedings is to (1915)].
claimant from
“settle and adjudicate” lands. Private lands are subsequently filing
not contemplated since ownership thereof had If the judgment
an application for
already been finally determined and determines
judicial confirmation
adjudicated [Agcaoili]. ownership, then it is
of title to the same
res judicata upon
land, provided the
When once decreed by a court of competent the parties.
requisites are
jurisdiction, the title to the land thus complied with
determined is already res judicata, and [Director of Lands v.
binding on the whole world, the proceeding CA & Pastor, G.R.
being in rem [Duran v. Olivia, G.R. No. L- No. L-47847 (1981)].
16589 (1961)].

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LAND TITLES AND DEEDS
B. Procedure in Cadastral
Registration [Secs. 35 and
36, P.D. 1529]
STEP 1:
Determination of the President that public
interest requires title to unregistered lands be
settled and adjudicated.
President then orders the Director of Lands to
conduct a cadastral survey.
STEP 2: Director of lands shall make a
cadastral survey.
STEP 3: Director of Lands gives notice to
interested persons and to the general public.
Contents of the Notice:
1. Day on which the survey will begin
2. Full and accurate description of the lands
to be surveyed
STEP 4: Publication of notice
1. Published once in the Official Gazette
2. A copy of the notice in English or the
national language shall be posted in a
conspicuous place on the bulletin board of
the municipal building of the municipality in
which the lands or any portion thereof is
situated
A copy of the notice shall also be sent to:
1. Mayor of the municipality
2. Barangay captain
3. Sangguniang Panlalawigan and
Sangguniang Bayan concerned
STEP 5:
Geodetic engineers or other Bureau of Land
employees in charge of the survey shall give
notice reasonably in advance of the date of the
survey. They shall also mark the boundaries
of the lands with monuments.
STEP 6: Interested persons should
communicate with the geodetic engineer if he
requests for any information about the land.
STEP 7: Actual survey and plotting of the
land.
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STEP 8:
Director of Lands represented by Solicitor
General shall institute original registration
proceedings.
1. Petition is filed in the appropriate RTC
where the land is situated
2. Contents of the Petition:
a. That public interest requires that the title
to such lands be settled and adjudicated
and praying that such titles be so settled
and adjudicated
b. Description of the lands
c. Accompanied by a plan thereof
d. Such other data as may serve to furnish
full notice to the occupants of the lands
and to all persons who may claim any
right or interest therein
STEP 9: Publication, mailing posting
STEP 10: Hearing
Jurisdiction of the Cadastral Court:
1. Adjudicate title to any claimant thereto
2. Declare land as a public land
3. Order correction of technical description
4. Order the issuance of new title in place of
the title issued under voluntary registration
proceedings
5. Determine the priority of overlapping title
6. Order the partition of the property
STEP 11: Decision
STEP 12: Issuance of the decree and
certificate of title
Note: Reopening of cadastral cases no longer
allowed. R.A. No. 931, effective June 20, 1953
for five (5) years, authorizing the reopening of
cadastral cases under certain conditions and
which had been extended until Dec. 31, 1968,
is no longer in force.
Courts are thus without jurisdiction or authority
to reopen a cadastral proceeding since Dec.
31, 1968 [Aquino citing Republic v. Estenzo,
G.R. No. L-35512 (1988)].
LAND TITLES AND DEEDS
X. REGISTRATION THROUGH
ADMINISTRATIVE
PROCEEDINGS
A. Registration Process and
Requirements
STEP 1: Survey
Survey of the land by the Bureau of Lands or a
duly registered private surveyor drawn on a
tracing cloth plan.
Note: No plan of such survey, whether it be
original or subdivision, may be admitted in land
registration proceedings until approved by the
Director of Lands [Sec. 1858, Administrative
Code]
STEP 2: Filing of Application
Filing for application for registration by the
applicant at the RTC of the province, city, or
municipality where the property is located [Sec.
17, P.D. 1529].
1. Form of the application
a. In writing
b. Signed by the applicant/s or person duly
authorized in his behalf
c. Sworn before any officer authorized to
administer oath for the province or city
where the application was actually signed
d. Application is presented in duplicate
2. Contents of the application:
a. Full description of the land as evidenced
by the survey plan;
b. The citizenship and civil status of the
applicant, whether single or married, and,
if married, the name of the wife or
husband, and, if the marriage has been
legally dissolved, when and how the
marriage relation terminated.
c. The full names and addresses of all
occupants of the land and those of the
adjoining owners, if known, and, if not
known, it shall state the extent of the
search to find them.
d. Whether the property is conjugal,
paraphernal, or exclusively owned by the
applicant.
e. Assessed value of the land and the
buildings and improvements thereon;
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f. Whether or not there are Mortgages or
encumbrances of any kind affecting the
land;
g. The manner by which the applicant has
acquired the land in accordance with Sec.
14, P.D. 1529
h. Original muniments of title, and
i. If the land is bounded by a public or
private way or road [Sec. 15, P.D. 1529]
3. Documents to accompany the application
[from Regulations in Ordinary Land
Registration Cases]
a. Tracing-cloth plan duly approved by the
Director of Lands, together with two
blueprint or photographic copies thereof;
b. Three copies of the corresponding
technical descriptions;
c. Three copies of the surveyor’s certificate;
d. All original muniments of title in the
possession of the applicant which prove
his rights, to the title he prays for or to the
land he claims; and
e. Certificate in quadruplicate of the city or
provincial treasurer of the assessed value
of the land, at its last assessment for
taxation, or, in the absence thereof, that
of the next preceding year. However, in
case the land has not been assessed, the
application may be accompanied with an
affidavit in quadruplicate of the fair market
value of the land, signed by three
disinterested persons.
4. Land Registration Application Covering
Two or More Parcels:
An application may include two or more parcels
of land belonging to the applicant/s provided
that they are situated within the same province
or city. The Court may at any time order an
application to be amended by striking out one or
more parcels or by a severance of the
application [Sec. 18, P.D. 1529].
5. Amendments to the Application
a. Sec. 19, P.D. 1529 permits the applicants
to amend the application including
joinder, substitution, or discontinuance as
to parties at any stage of the proceedings
upon such just and reasonable terms as
the court may order:
● Joinder – inclusion of additional
applicants; amended by adding names
of new applicants;
● Substitution – replacement of the
original party by another
LAND TITLES AND DEEDS
● Discontinuance – removal of names
of one or more applicants
b. However, substantial amendments shall
be subject to the same requirements of
publication and notice as in an original
application under Sec. 23 of P.D. 1529.
Such substantial amendments include:
● A change in the boundaries
● An increase in the area of the land
applied for; or
● The inclusion of an additional land
c. Only where the original survey plan is
amended during the registration
proceedings, by the addition of land not
previous included in the original plan,
should publication be made in order to
confer jurisdiction on the court to order
the registration of the area added after the
publication of the original plan. If the
amendment involves a reduction in the
original area, no new publication is
required [Republic v. Court of Appeals
and Ribaya G.R. No. 113549 (1996)].
6. Special Cases:
a. If the land is bounded by a road, the
applicant must state in his application if
he claims any portion of the land within
the limits of the road, or if he likes to have
the boundaries determined [Sec. 20, P.D.
1529].
b. If the applicant is a non-resident, he shall
appoint an agent or representative who is
a Philippine resident [Sec. 16, P.D. 1529]
c. A person claiming ownership of real
property must clearly identify the land
claimed by him [Intestate Estate of Don
Mariano San Pedro v. CA G.R. No.
103727 (1996)].
d. An applicant in a land registration case
must prove the facts and circumstances
evidencing the alleged ownership of the
land applied for [In re: Application for
Land Registration v. Republic, G.R. No.
147359 (2008)]. General statements
which are mere conclusions of law and
not factual proof of possession are
unavailing. The deeds in its favor only
proved possession of its predecessors-in-
interest as early as 1948. (The law now
stands that a mere showing of possession
for 30 years is not sufficient. Open,
continuous, exclusive, and notorious
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(OCEN) possession must be shown to
have started on June 12, 1945 or earlier)
STEP 3: Setting of the date for the
initial hearing of the application by the
Court
1. The Court shall issue an order setting the
date and hour of the initial hearing within 5
days from filing of the application
2. The initial hearing shall be 45 – 90 days from
the date of the order [Sec. 23, P.D. 1529]
● If the date of the initial hearing was set
beyond the 90-day period, the Court will
still acquire jurisdiction where the
applicant has complied with all the
requirements of the law [Republic v. San
Lorenzo Dev’t, G.R. No. 170724 (2007)].
STEP 4: Transmittal to the LRA
The application and the date of initial hearing
together with all the documents or other
evidences attached thereto are transmitted by
the Clerk of Court to the Land Registration
Authority (LRA).
STEP 5: Publication of a Notice of the
Filing of the Application and date and
place of hearing
1. Publication shall be sufficient to confer
jurisdiction upon the court [Sec. 23, P.D.
1529].
2. It is done to charge the whole world of
knowledge of the application of the land
involved, and invite them to take part in the
case and assent and prove their rights over
the subject property thereof [Agcaoili].
3. Form and contents of the notice:
a. Addressed to all persons appearing to
have an interest in the land involved
b. Requires all persons concerned to
appear in court on the date and time
indicated to show cause why the
application for registration should not be
granted
4. The public shall be given notice of the initial
hearing of the application by publication
a. The Commissioner of Land Registration
(CLR) shall cause it to be published
once in the Official gazette AND once
in a newspaper of general circulation
LAND TITLES AND DEEDS
b. This is sufficient to confer jurisdiction to
the court
5. It is not necessary to give personal notice to
the owners or claimants of the land sought to
be registered to vest the court with authority
over the res. Land registration proceedings
are actions in rem [Director of Lands v. CA,
G.R. No. 102858 (1997)].
6. Once the registration court had acquired
jurisdiction over a certain parcel, or parcels,
of land in the registration proceedings in
virtue of the publication of the application,
that jurisdiction attaches to the land or lands
mentioned and described in the application.
If it is later shown that the decree of
registration had included land or lands not
included in the original application as
published, then the registration proceedings
and the decree of registration must be
declared null and void insofar — but only
insofar — as the land not included in the
publication is concerned [Benin v. Tuason,
G.R. No. L-26127 (1974)].
STEP 6: Service of Notice
Service of notice upon contiguous owners,
occupants and those known to have interest in
the property by the Sheriff;
1. Mailing:
a. Within 7 days from publication, the CLR
shall mail a copy of the notice
b. Copies of the notice shall be mailed to:
● Every person named in the notice
whose address is known.
● The Secretary of Public Highways, to the
Provincial Governor, and to the Mayor of
the municipality or city, in which the land
lies, if the applicant requests to have the
line of a public way or road determined
● Secretary of Agrarian Reform, the
Solicitor General, the Director of Lands,
the Director of Mines and/or the Director
of Fisheries and Aquatic Resources, (as
appropriate) if the land borders on a river,
navigable stream or shore, or on an arm
of the sea where a river or harbor line has
been established, or on a lake, or if it
otherwise appears from the application or
the proceedings that a tenant-farmer or
the national government may have a
claim adverse to that of the applicant
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2. Posting:
a. CLR shall cause the sheriff or his deputy
to post the notice at least 14 days before
the hearing:
• In a conspicuous place on each parcel
of land included in the application and
in a conspicuous place on the bulletin
board of the municipal building of the
municipality or city in which the land or
portion thereof is situated.
b. The court may also cause notice to be
served to such other persons and in such
manner as it may deem proper.
3. Notice of application and initial hearing
by publication is sufficient and the mere
fact that a person purporting to have a
legitimate claim in the property did not
receive personal notice is not a sufficient
ground to invalidate the proceedings
although he may ask for the review of the
judgment or the reopening of the decree of
registration, if he was made the victim of
actual fraud [Republic v. Abadilla, CA-G.R.
No. 6902-R (1951)].
STEP 7: Answer
Filing of answer or opposition to the application
by any person whether named in the notice or
not:
1. Who may file? Any person claiming an
interest, whether named in the notice or not.
2. When to file? On or before the date of initial
hearing, or within such further time as may
be allowed by the court.
3. What shall it contain? It shall state all the
objections and the interest claimed by the
party the remedy desired.
4. How shall it be made? It shall be signed
and sworn to by him or by some other duly
authorized person. Sec. 25, P.D. 1529
provides for the requisites of an opposition:
a. It shall set forth “all the objections to the
application” and
b. It shall state the “interest claimed by the
party filing the same”
5. Effect of Failure to Answer:
a. If no one appears/files an answer, upon
motion, the court shall order a default to
be recorded.
LAND TITLES AND DEEDS
b. By the description in the notice "To all
Whom It May Concern", all the world are
made parties defendant and shall be
concluded by the default order.
c. Where an appearance has been entered
and an answer filed, a default order shall
be entered against persons who did not
appear and answer.
d. Absence of opposition does not justify
outright registration [Director of Lands v.
Agustin, G.R. No. L-16173 (1921)].
6. Order of Default:
If no person appears and answers within the
time allowed, the court shall, upon motion of
the applicant, no reason to the contrary
appearing, order a general default to be
recorded and require the applicant to present
evidence. By the description in the notice “To
all Whom It May Concern,” all the world are
made parties defendant and shall be
concluded by the default order.
Where an appearance has been entered
and an answer filed, a special default order
shall be entered against persons who did
not appear and answer [Sec. 26, P.D.
1529].
7. Effects of Default:
a. With respect to the Applicant – he has the
right to present or adduce evidence ex
parte
b. With respect to those covered by the
default order – they have no legal
standing in court; therefore, they are no
longer allowed to participate and no
opportunity to present evidence
8. For relief from an order of default, see
Sec. 3, Rule 9, Rules of Court.
STEP 8: Hearing of the case by the
court
1. Proof necessary in land registration
a. Proof that land has been declassified
from the forest zone, is alienable or
disposable, and is registrable (e.g.
Presidential proclamation, legislative acts
b. Identity of the land (survey plan)
c. Possession and occupation of the land for
the length of time and in the manner
required by law [Sec. 4, P.D. 1073
amending Sec. 48(b) and (c) of the Public
Land Act]
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d. If he claims private ownership not
because of his possession, he must prove
the basis of such claim by submitting
muniments of title.
2. Proving Private Ownership
a. Spanish titles are inadmissible and
ineffective proof of ownership in land
registration proceedings filed AFTER
Aug. 16, 1976 [P.D. 892 as discussed in
Santiago v. SBMA, G.R. No. 156888
(2006)].
b. Tax declaration and receipts are not
conclusive but have strong probative
value when accompanied by proof of
actual possession [Municipality of
Santiago v. CA, G.R. No. L-49903
(1983)].
c. Other proofs such as testimonial
evidence.
3. Applicable procedural law:
a. Reception of evidence is governed by
P.D. 1529
b. Rules of Court shall, insofar as not
inconsistent with the provisions of the
Decree, be applicable to land registration
and cadastral cases by analogy or in a
suppletory character and whenever
practicable and convenient [Sec. 34, P.D.
1529]
c. The trial court shall see to it that all
registration proceedings are disposed
within ninety days from the date the case
is submitted for decision [Sec. 27, P.D.
1529]. The Court may either:
1. Hear the parties and their evidence, or
2. Refer the case or any part thereof to a
referee
● Referee shall hear the parties, receive
their evidence, and submit his report
thereon to the Court within 15 days
after termination of such hearing
● Hearing before a referee may be held
at any convenient place within the
province or city as may be fixed by him
and after reasonable notice thereof
shall have been served to the parties
concerned
● Upon receipt of the report the Court
may:
a. Adopt the same
b. Set aside the report
c. Modify the report
LAND TITLES AND DEEDS
d. Refer back or recommit the case to
the referee for presentation of
evidence
● According to Heirs of Mario
Malabanan v. Republic [G.R. No.
179987 (2014)], the following matters
must be established:
a. Issue of ownership;
b. Possession and occupation of the
land;
c. Identity and description of the land;
d. That the land is alienable and
disposable of the public domain;
and
e. The applicant has acquired the land
through any other modes of
acquiring ownership
STEP 9: Promulgation of Judgment by
the Court
1. This is the adjudication, determination, and
resolution of the issue of ownership
2. Forms of Judgment:
a. Dismissal of the application
● With prejudice – principle of res
judicata applies and the party can no
longer re-file the case
● Without prejudice – the party may
refile the case
b. Partial Judgment – in a case where only
a portion of the land subject of registration
is contested, the court may render partial
judgment provided that a subdivision plan
showing the contested and uncontested
portions approved by the Director of Land
is previously submitted to said court [Sec.
28, P.D. 1529].
c. Judgment Confirming Title - Judgment
may be rendered confirming the title of
the applicant, or the oppositor as the case
may be, to the land or portions thereof
upon finding that the party concerned has
sufficient title proper for registration [Sec.
29, P.D. 1529].
3. Finality of Judgment - Sec. 30 (1), P.D.
1529 provides that the judgment becomes
final upon the expiration of 30 days counted
from receipt of notice of judgment.
Note: This has been MODIFIED to the lapse of
15 days counted from receipt of notice of
judgment as per Sec. 39, B.P. 129.
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STEP 10: Issuance of the decree
1. If the court finds after hearing that the
applicant or adverse claimant has title as
stated in his application or adverse claim and
proper for registration, a decree of
confirmation and registration shall be
entered
2. The Court declares the decision final and
instructs the LRA to issue a decree of
confirmation and registration within 15 days
from entry of judgment
Note: It is not the court that issues the
decree, but the LRA who issues the decree
of confirmation and registration. This duty to
issue the decree of registration does not
prescribe [Republic v. Nillas, G.R. No.
159595 (2007)].
3. One year after issuance of the decree, it
becomes incontrovertible and amendments
of the same will not be allowed except in
cases of clerical errors
Court retains jurisdiction over the case until
after the expiration of 1 year from the
issuance of the decree of registration
[Gomez v. CA, G.R. No. 77770 (1988)].
Note: While a decision in land registration
proceeding becomes final after the
expiration of thirty days from the date of
service of its notice, the decree of
registration does not become final until after
the lapse of one year from the date of its
issuance and entry.
STEP 11: Entry of the decree of
registration
This serves as the reckoning date to determine
the 1-year period from which one can impugn
the validity of the registration [Sec. 32, P.D.
1529].
1. Decree is entered in the LRA
2. Every decree of registration shall:
a. Bear the day of the year, hour, and minute
of its entry,
b. Be signed by the Administrator of the
Land Registration Authority in his ex
officio capacity as Clerk of Court in land
registration matters
c. State whether the owner is:
LAND TITLES AND DEEDS
● Married or unmarried, and if married,
the name of the husband or wife,
provided that if the land adjudicated is
conjugal property, it shall be issued in
the names of both spouses.
● If the owner is under disability, it shall
state the nature of the disability,
● If the owner is a minor, his age
d. Contain a description of the land as finally
determined by the court,
e. Set forth the estate of the owner, and
also, in such manner as to show their
relative priority, all particular estates,
mortgages, easements, liens,
attachments and other encumbrances,
including rights of tenant-farmer, if any, to
which the land or owner’s estate is
subject,
f. Contain any other matter properly to be
determined [Sec. 31, P.D. 1529].
STEP 12: Sending of copy of the
decree of registration to the
corresponding Register of Deeds
(Registrar of Land Titles and Deeds)
STEP 13: Transcription of the decree
of registration
1. It is transcribed in the registration book of the
Registrar of Land Titles and Deeds
2. Registrar issues owner’s duplicate OCT of
the applicant by the Registrar of Land Titles
and Deeds, upon payment of the prescribed
fees.
B. Remedies
Remedies of an Aggrieved Party
An aggrieved party in a registration proceeding
may avail himself of the following remedies:
1. Motion for New Trial [Rule 37, Rules of
Court] or Relief from Judgment [Rule 38,
Rules of Court]
2. Appeal
3. Relief from Judgment
4. Petition for Review of Decree of Registration
5. Action for Reconveyance
6. Quieting of Title
7. Cancellation of Title
8. Action for Damages
9. Action for Compensation from the Assurance
Fund
10. Annulment of Judgment or Final Orders
and Resolutions
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11. Reversion
12. Criminal Prosecution
1. Motion for New Trial
The aggrieved party may move the trial court to
set aside the judgment or final order and grant
a new trial for one or more of the causes
materially affecting the substantial rights of the
said party [Herrera].
Grounds:
a. Fraud, accident, mistake, or excusable
negligence which ordinary prudence could
not have guarded against and by reason of
which such aggrieved party has probably
been impaired in his rights;
b. Award of excessive damages, or
insufficiency of the evidence to justify the
decision; and
c. Newly discovered evidence which with
reasonable diligence could have not been
discovered and produced at the trial and
which if presented would probably alter the
result.
Period of filing: Within the 15 day period of
perfecting an appeal [Sec. 39, B.P. 129].
2. Appeal
Sec. 30, P.D. 1529 as amended by B.P. 129
provides that an appeal may be taken from the
judgment of the court as in ordinary civil cases.
Modes of appeal:
a. Ordinary appeal – Appeal to the Court of
Appeals in cases decided by the Regional
Trial Court in the exercise of its original
jurisdiction
b. Petition for review – Appeal to the Court of
Appeals in cases decided by the Regional
Trial Court in the exercise of its appellate
jurisdiction, in accordance with Rule 42.
c. Appeal by certiorari – In all cases where only
questions of law are raised or involved, the
appeal shall be to the Supreme Court, in
accordance with Rule 45.
Period of ordinary appeal: Within 15 days
from notice of the judgment of final order
appealed from. Where a record on appeal is
required, the appellant shall file a notice of
appeal and a record on appeal within 40 days
from notice of the judgment or final order [Sec.
39, B.P. 129].
LAND TITLES AND DEEDS
Perfection of appeal:
a. A party’s appeal by notice of appeal is
deemed perfected as to him upon the filing
of the notice of appeal in due time. The Court
loses jurisdiction over the case upon the
perfection of the appeals filed in due time
and the expiration of the time to appeal of the
other parties.
b. A party’s appeal by record on appeal is
deemed perfected as to him with respect to
the subject matter thereof upon the approval
of the record on appeal filed in due time. The
court loses jurisdiction only over the subject
matter thereof upon the approval of the
records on appeal filed in due time and the
expiration of the time to appeal of the other
parties [Sec. 9, Rule 41, Rules of Court].
Unlike ordinary civil actions, the adjudication of
land in a cadastral or land registration
proceeding does not become final in the sense
of incontrovertibility until after the expiration of
one (1) year after the entry of the final decree of
registration. As long as a final decree has not
been entered by the LRA and the period of 1
year has not elapsed from date of such decree,
the title is not finally adjudicated and the
decision in the registration proceeding
continues to be under the control and sound
discretion of the court rendering it [Gomez v.
CA, G.R. No. 77770 (1988)].
3. Relief from Judgment
Grounds:
a. When a judgment or final order is entered, or
any proceeding is thereafter taken against a
party in any court through accident, mistake,
or excusable negligence.
b. When a judgment or final order is rendered
by any court in a case, and a party thereto,
by fraud, accident, mistake, or excusable
negligence, has been prevented from taking
an appeal.
Period of filing: Within 60 days after the
petitioner learns of the judgment, final order, or
other proceedings to be set aside, and not
more than 6 months after such judgment or
final order was entered, or such proceeding
was taken.
4. Petition for Review of Decree of
Registration
Requisites:
a. The petitioner has a real and dominical right;
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b. That he has been deprived thereof (through
fraud);
c. That the action is filed within one year from
the issuance and entry of the decree of
registration; and
d. That the property has not been transferred to
an innocent purchaser for value [Agcaoili,
citing Walstrom v. Mapa, G.R. No. 38387
(1990)].
• An innocent purchaser for value is one
who buys the property of another
without notice that some other person
has a right to or interest in it, and who
pays a full and fair price at the time of
the purchase or before receiving any
notice of another person’s claim
[Rosales v. Burgos, G.R. No. 143573
(2009)]
To whom available: Only to an aggrieved
party who has been deprived of land or any
estate or interest therein by decree of
registration
When to file: Any time after the rendition of the
court’s decision and before the expiration of 1
year from entry of decree of registration
a. Upon expiration of the 1 year period, every
decree becomes incontrovertible
b. The Court held that the petition may be filed
at any time after rendition of the court’s
decision (no need to wait for actual entry in
the LRA) and before expiration of one year
from entry of the final decree of registration
[Rivera v. Moran, G.R. No. L-24568 (1926);
Director of Lands v. Aba, G.R. No. L-45648
(1939)].
Sole and ONLY Ground: Actual Fraud
a. Actual fraud proceeds from an intentional
deception practiced by means of
misrepresentation or concealment of
material fact
b. The fraud must consist in an intentional
omission of fact required by law to be stated
in the application or a willful statement of a
claim against the truth
c. Any fraudulent act of the successful party in
a litigation which is committed outside the
trial of a case against the defeated party, or
his agents, attorneys or witnesses, whereby
said defeated party is prevented from
presenting fully and fairly his side of the case
[Sterling Investment Corporation v. Ruiz,
G.R. No. L-30694 (1969)].
LAND TITLES AND DEEDS
5. Action for Reconveyance
An action for reconveyance is the remedy
granted to the rightful owner of land which has
been wrongfully or erroneously registered in the
name of another for the purpose of compelling
the latter to transfer or reconvey the land to him
[Esconde v. Barlongay, G.R. No. L-67583
(1987)].
Reconveyance is also available to the person
with a better right than the person under whose
name said property was erroneously registered
[Gasataya v. Mabasa, G.R. No. 148147 (2007)].
When to file:
a. Before issuance of decree, or within/after 1
year from entry
b. If based on implied trust, 10 years;
c. If based on express trust and void contract,
or if the plaintiff is in possession of the land,
imprescriptible
d. If based on fraud, 4 years from the discovery
It does not reopen proceedings but a mere
transfer of the land from registered owner to the
rightful owner [Esconde v. Barlongay, supra].
CIVIL LAW
6. Quieting of Title
Quieting of title is the remedy for the removal of
any cloud of doubt or uncertainty with respect to
real property.
Who may file: See Sec. 1, Rule 63, Rules of
Court
Requisites:
a. Plaintiff or complainant has a legal or an
equitable title to or interest in the real
property subject of the action; and
b. The deed, claim, encumbrance or
proceeding claimed to be casting a cloud on
his title must be shown to be in fact invalid or
inoperative despite its prima facie
appearance of validity or legal efficacy.
c. Plaintiff or complainant has a legal or an
equitable title to or interest in the real
property subject of the action; and
d. The deed, claim, encumbrance or
proceeding claimed to be casting a cloud on
his title must be shown to be in fact invalid or
inoperative despite its prima facie
appearance of validity or legal efficacy.

Requisites:
a. The action must be brought in the name of a
person claiming ownership or dominical right
over the land registered in the name of the
defendant;
b. The registration of the land in the name of
the defendant was procured through fraud or
other illegal means;
c. The property has not yet passed to an
innocent purchaser for value; and
d. The action is filed after the certificate of title
had already become final and
incontrovertible but within 4 years from the
discovery of the fraud [Balbin v. Medalla,
G.R. No. L-46410 (1981)] or not later than 10
years in the case of an implied trust [New
Regent Sources, Inc. v. Tanjuatco, G.R. No.
168800 (2009)].

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XI. RECONSTITUTION OF
TITLES
1. The restoration of the instrument which is
supposed to have been lost or destroyed in
its original form and condition, under the
custody of the Register of Deeds
2. To have the same reproduced after proper
proceedings in the same form they were
when the loss or destruction occurred [Heirs
of Pedro Pinote v. Dulay, G.R. No. 56694
(1990)].

Kinds:
1. Judicial
a. A petition is filed before the RTC
b. Petition is published in the Official Gazette
for 2 consecutive issues and posted on
main entrance of municipality for at least 30
days before hearing
c. Hearing is then conducted
d. Court may then order reconstitution if
meritorious

2. Administrative, which may be

availed only in case of:
a. Substantial loss or destruction of original
land titles due to fire, flood, or other force
majeure as determined by the LRA
b. Number of certificates of title lost or
damaged should be at least 10% of the total
number in possession of the Register of
Deeds
c. In no case shall the number of certificates of
title lost or damaged be less than 500; and
d. Petitioner must have the duplicate copy of
the certificate of title [R.A. No. 6732]

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PRACTICAL EXERCISES CIVIL LAW

I. DEMAND AND AUTHORIZATION LETTERS

A. Demand Letter
[DATE]

[NAME OF ADDRESSEE]
[ADDRESS]
RE: [SUBJECT]

Dear [NAME],

We are writing on behalf of our client [NAME], in the matter of [SUBJECT].

Records disclose that [SUMMARY OF BASIC FACTS SUPPORTING YOUR CLIENT’S

DEMAND/CAUSE OF ACTION].

We wish to inform you that your acts constitute violation of [APPLICABLE LAW OR
CONTRACTUAL STIPULATION].

Accordingly, a demand is hereby made upon you to settle the amount of [AMOUNT] within ___
days from the receipt of this letter. Otherwise, we will be constrained to find recourse in the courts
of law and file the necessary legal action against you to protect the interest of our client.

We trust that you will give this matter your urgent attention.

Sincerely yours,

(Sgd.)
[COUNSEL]

B. Authorization Letter
[DATE]

[BRANCH CLERK OF COURT]

Regional Trial Court
Branch [NUMBER], [VENUE]
RE: [SUBJECT]

To the Branch Clerk of Court:

I am [NAME OF CLIENT], [Plaintiff/Defendant] in [Civil/Criminal] Case No. [NUMBER]

pending before this Honorable Court.

I am writing this letter to introduce my counsel, [FIRM] and to authorize its lawyers and
apprentices, including, but not limited to, [NAMES OF LAWYERS] to obtain copies of records
pertaining to the aforementioned case on my behalf.

For any clarifications or concerns, you may reach me through [NUMBER/E-MAIL

ADDRESS]

Thank you for your kind consideration.

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Sincerely yours,

(Sgd.)
[NAME OF CLIENT]

C. Special Power of Attorney for Sale of Real Property

REPUBLIC OF THE PHILIPPINES )
City/Municipality of ____________ ) S.S.

SPECIAL POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

I, [NAME], of legal age, Filipino citizen, with residence and postal address at [ADDRESS],
do hereby NAME, CONSTITUTE, AND APPOINT [NAME OF AGENT/ATTORNEY IN FACT], of
legal age, Filipino citizen, with postal address at [ADDRESS], as my true and lawful attorney-in-fact
to act for and in my name, place and stead and to perform the following acts:

(A) To sell, offer for sale, and come to an agreement as to the purchase price;
(B) To sign for me and in my name; and
(C) To receive payment from the sale of my property more particularly described as follows:

[DESCRIPTION OF PROPERTY]

HEREBY GRANTING unto said attorney-in-fact full power and authority to execute and
perform every act necessary to render effective the power to sell the foregoing properties, as though
I myself have performed it, and HEREBY APPROVING ALL that he/she may do by virtue hereof
with full right of substitution of his/her person and revocation of this instrument.

IN WITNESS WHEREOF, I have hereunto affixed my signature on this ___ day of [MONTH,
YEAR], in [PLACE OF EXECUTION OF INSTRUMENT].

_____________________ __________________
[NAME OF PRINCIPAL] [NAME OF AGENT]

Signed in the presence of:

__________________ __________________

[PLUS ACKNOWLEDGMENT]

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D. Special Power of Attorney for Purchase of Real Property
REPUBLIC OF THE PHILIPPINES )
City/Municipality of ____________ ) S.S.

SPECIAL POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

I, [NAME], of legal age, Filipino citizen, with residence and postal address at [ADDRESS],
do hereby NAME, CONSTITUTE, AND APPOINT [NAME OF AGENT/ATTORNEY IN FACT], of
legal age, Filipino citizen, with postal address at [ADDRESS], as my true and lawful attorney-in-fact
to act for and in my name, place and stead and to perform the following acts:

(A) To purchase real property or properties situated anywhere in the Philippines, in an

amount acceptable to him/her;
(B) To sign and/or execute any deed conveyance to effect the sale of the property in my
name; and
(C) To receive all documents pertinent to the purchase of any property:

HEREBY GRANTING unto said attorney-in-fact full power and authority to execute and
perform every act necessary to render effective the power to purchase properties, as though I myself
have performed it, and HEREBY APPROVING ALL that he/she may do by virtue hereof with full
right of substitution of his/her person and revocation of this instrument.

IN WITNESS WHEREOF, I have hereunto affixed my signature on this ___day of [MONTH,

YEAR], in [PLACE OF EXECUTION OF INSTRUMENT].

_____________________ __________________
[NAME OF PRINCIPAL] [NAME OF AGENT]

Signed in the presence of:

__________________ __________________

[PLUS ACKNOWLEDGMENT]

E. Special Power of Attorney for Representation in Actions

REPUBLIC OF THE PHILIPPINES )
City/Municipality of ____________ ) S.S.

SPECIAL POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

I, [NAME], of legal age, Filipino citizen, Corporate Secretary of [CORPORATION] (“ABC”),

a corporation duly organized and existing under Philippine laws, by virtue of this authority given to
me pursuant to Board Resolution duly issued by the Board of Directors of [“ABC”] in its meeting on
[DAY MONTH YEAR], as evidenced by the secretary’s certificate attached hereto, do hereby
NAME, CONSTITUTE, AND APPOINT [NAME OF AGENT/ATTORNEY IN FACT], of legal age,
Filipino citizen, with postal address at [ADDRESS], to be [“ABC”]’s true and lawful attorney-in-fact
in Civil Case No. 21324 entitled [TITLE] (“Case”), to act for on its behalf to:

(A) Appear for and represent [ABC] whether at the original or appellate stage, and whether
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as appellant of appellee, petitioner or respondent;

(B) Sign, under oath or otherwise, all necessary and appropriate pleadings, motions,
verifications, certifications, papers and documents;
(C) Act as agent and appear on behalf of [ABC] in the mandatory conciliation, mediation
conference, judicial dispute resolution, and pre-trial proceedings and all other hearings
in the Case, with full power and authority to consider:
(i) The possibility of an amicable settlement or of submission to alternative modes
of dispute resolution;
(ii) The simplification of issues;
(iii) The necessity or desirability of amending the pleadings;
(iv) The possibility of obtaining stipulations or admissions of fact and of documents
to avoid unnecessary proof;
(v) The limitation of the number of witnesses;
(vi) The advisability of a preliminary reference of issues to a commissioner;
(vii) The propriety of rendering judgment on the pleadings, or summary judgment,
or of dismissing the Case should a valid ground therefor be found to exist;
(viii) The advisability or necessity of suspending proceedings; and
(ix) Such other matters as may aid in the prompt disposition of this Case.
(D) Negotiate, conclude, enter into, and execute a compromise or amicable settlement of
the Case, if appropriate.

HEREBY GRANTING unto said attorney-in-fact full power and authority to execute and
perform every act necessary, as though ABC itself has performed it, and HEREBY APPROVING
ALL that he/she may do by virtue hereof with full right of substitution of his/her person and
revocation of this instrument.

IN WITNESS WHEREOF, I have hereunto affixed my signature on this ___ day of [MONTH,
YEAR], in [PLACE OF EXECUTION OF INSTRUMENT].

_____________________ __________________
[NAME OF PRINCIPAL] [NAME OF AGENT]

Signed in the presence of:

__________________ __________________

[PLUS ACKNOWLEDGMENT]

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II. SIMPLE CONTRACTS

A. Unilateral Deed of Sale of Registered Land
REPUBLIC OF THE PHILIPPINES )
City/Municipality of ____________ ) S.S.

DEED OF ABSOLUTE SALE

KNOW ALL MEN BY THESE PRESENTS:

I, [NAME OF SELLER], Filipino, single/married to [SPOUSE, IF APPLICABLE], and
resident of [ADDRESS OF SELLER] for and in consideration of the amount of [TOTAL AMOUNT
IN WORDS (TOTAL AMOUNT IN NUMBERS)], paid to me today by [NAME OF BUYER], Filipino,
single and resident of [ADDRESS OF BUYER] do hereby SELL, TRANSFER and CONVEY
absolutely and unconditionally unto said [NAME OF BUYER] that certain parcel(s) of land, together
with the buildings and improvements thereon situated in the [CITY/MUNICIPALITY OF ___], free
from all liens and encumbrances whatsoever and more particularly described as follows:
(Technical Description of property as indicated in the title)
of which I am the registered owner in fee simple, my title thereto being evidenced by
[TRANSFER/ORIGINAL CERTIFICATE TITLE NO.___], issued by the Register of Deeds of
[CITY/MUNICIPALITY].
IN WITNESS WHEREOF, I have signed this instrument this ___ day of [MONTH, YEAR] at
[PLACE OF SIGNING]

(Sgd.)
[NAME OF SELLER]

[If Seller is married, include spousal consent as follows:]

With my consent:

(sgd.)
[NAME OF SPOUSE OF SELLER]

Signed in the presence of:

_________________ _________________

[PLUS ACKNOWLEDGMENT]

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B. Unilateral Deed of Sale of Unregistered Land
REPUBLIC OF THE PHILIPPINES )
City/Municipality of ____________ ) S.S.

DEED OF ABSOLUTE SALE

KNOW ALL MEN BY THESE PRESENTS:

I, [NAME OF SELLER], Filipino, single/married to [SPOUSE, IF APPLICABLE], and

resident of [ADDRESS OF SELLER] for and in consideration of the amount of [TOTAL AMOUNT
IN WORDS (TOTAL AMOUNT IN NUMBERS)], paid to me today by [NAME OF BUYER], Filipino,
single and resident of [ADDRESS OF BUYER] do hereby SELL, TRANSFER and CONVEY
absolutely and unconditionally unto said [NAME OF BUYER] that certain parcel(s) of land, together
with the buildings and improvements thereon situated in the [CITY/MUNICIPALITY OF ___], free
from all liens and encumbrances whatsoever and more particularly described as follows:
(Description: state the nature of each piece of land and its improvements, situations and boundaries,
area in square meters, e.g. “Bounded on the N. by ___; on the E. by___; on the S. by ___; and on
the W. by ___; with an area of ___ square meters, more or less.”)
THAT the SELLER does hereby declare that the boundaries of the foregoing land are visible
by means of [MONUMENTS, CREEKS, TREES ETC.] that the permanent improvements existing
thereon consist of [LIST VARIOUS IMPROVEMENTS, IF NONE, STATE SO.]; that the land is
assessed for the current year at [TOTAL AMOUNT IN NUMBERS] as per Tax Declaration No.___,
and that the property is in present possession of the SELLER.
The above described real estate, not having been registered under Act No. 496 nor under
the Spanish Mortgage Law, I have agreed to register this instrument under the provisions of Sec.
194 of the Revised Administrative Code, as amended by Sec. 113 of P.D 1159.
IN WITNESS WHEREOF, I have signed this instrument this ___ day of [MONTH, YEAR] at
[PLACE OF SIGNING].
(sgd).
[NAME OF SELLER]

[If Seller is married, include spousal consent as follows:]

With my consent:

(sgd.)
[NAME OF SPOUSE OF SELLER]

Signed in the presence of:

_________________ _________________

[PLUS ACKNOWLEDGMENT]

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C. Bilateral Deed of Sale of Registered Land
REPUBLIC OF THE PHILIPPINES )
City/Municipality of ____________ ) S.S.

DEED OF ABSOLUTE SALE

KNOW ALL MEN BY THESE PRESENTS:

This DEED OF ABSOLUTE SALE is made, executed and entered into by:

[NAME OF SELLER], Filipino, single/married to [SPOUSE, IF APPLICABLE], and resident

of [ADDRESS OF SELLER] (SELLER)

-and-

[NAME OF BUYER], Filipino, single/married to [SPOUSE, IF APPLICABLE] and resident

of [ADDRESS OF BUYER] (BUYER)

WITNESSETH

That the SELLER is the registered owner in fee simple of a parcel of land with improvements
situated in the [CITY/MUNICIPALITY OF ___] with [TRANSFER/ORIGINAL CERTIFICATE TITLE
NO.___], issued by the Register of Deeds of [CITY/MUNICIPALITY] and more particularly
described as follows:

(Technical Description of property as indicated in the title)

That the SELLER for and in consideration of the amount of [TOTAL AMOUNT IN WORDS
(TOTAL AMOUNT IN NUMBERS)], does hereby SELL, TRANSFER and CONVEY absolutely and
unconditionally unto the BUYER that certain parcel(s) of land, together with the buildings and
improvements thereon free from all liens and encumbrances whatsoever.
That it is hereby mutually agreed that the BUYER shall bear all expenses for the execution
and registration of this deed of sale.
IN WITNESS WHEREOF, the parties have signed this contract on this ___ day of [MONTH,
YEAR] at [PLACE OF SIGNING].

(sgd.) (sgd.)
[NAME OF BUYER] [NAME OF SELLER]
BUYER SELLER

[If Buyer and/or Seller are married, include spousal consent as follows:]

With my consent:

(sgd.) (sgd.)
[NAME OF SPOUSE OF BUYER] [NAME OF SPOUSE OF SELLER]

Signed in the presence of:

_________________ _________________

[PLUS ACKNOWLEDGMENT]

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D. Bill of Sale (Personal Property)
REPUBLIC OF THE PHILIPPINES )
City/Municipality of ____________ ) S.S.

BILL OF SALE

KNOW ALL MEN BY THESE PRESENTS:

I, [NAME OF SELLER], Filipino, single, and resident of [ADDRESS OF SELLER] for and
in consideration of the amount of [TOTAL AMOUNT IN WORDS (TOTAL AMOUNT IN
NUMBERS)], paid to me today by [NAME OF BUYER], Filipino, single and resident of [ADDRESS
OF BUYER] do hereby SELL, TRANSFER and CONVEY absolutely and unconditionally unto said
[NAME OF BUYER] the following property:

(Description of property)
I own and have the right to sell and transfer the title and ownership of the above–described
property; I will defend the same against the claims of any and all persons whatsoever.
IN WITNESS WHEREOF, I have signed this instrument this ___ day of [MONTH, YEAR] at
[PLACE OF SIGNING].
(sgd).
[NAME OF SELLER]

Signed in the presence of:

_________________ _________________

[PLUS ACKNOWLEDGMENT]

E. Deed of Sale of Motor Vehicle

REPUBLIC OF THE PHILIPPINES )
City/Municipality of ____________ ) S.S.

DEED OF SALE OF MOTOR VEHICLE

KNOW ALL MEN BY THESE PRESENTS:

That I, [NAME OF SELLER], Filipino, of legal age, single/married to [SPOUSE, IF

APPLICABLE], a resident of [ADDRESS OF SELLER], is the lawful owner of a certain motor vehicle
which is more particularly described as follows:

MAKE : MOTOR NO. :

SERIES : SERIAL/CHASSIS NO. :
TYPE OF BODY: PLATE NO. :
YEAR MODEL : FILE NO. :
C.R. NO. :

That for and in consideration of the sum of [TOTAL AMOUNT IN WORDS (TOTAL AMOUNT
IN NUMBERS)], Philippine Currency, receipt whereof is hereby acknowledged to my entire
satisfaction, I hereby sell, transfer and convey by way of Absolute Sale unto [NAME OF BUYER],
Filipino, of legal age, and resident of [ADDRESS OF BUYER], the above described motor vehicle,

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free from all liens and encumbrances.

IN WITNESS WHEREOF, the parties have signed this agreement this ___ day of [MONTH,
YEAR] at [PLACE OF SIGNING].

(sgd.) (sgd.)
[NAME OF BUYER] [NAME OF SELLER]
VENDEE VENDOR

[If Seller is married, include spousal consent as follows:]

With my consent:

(sgd.)
[NAME OF SPOUSE OF SELLER]

Signed in the presence of:

_________________ _________________

[PLUS ACKNOWLEDGMENT]

F. Contract of Lease
REPUBLIC OF THE PHILIPPINES )
City/Municipality of ____________ ) S.S.

CONTRACT OF LEASE

KNOW ALL MEN BY THESE PRESENTS:

This Agreement made and entered into at [PLACE] this ___ day of [MONTH, YEAR] by and
between [NAME OF LESSOR], of legal age, single/married to [SPOUSE, IF APPLICABLE],
(LESSOR) and resident of [ADDRESS], and [NAME OF LESSEE], of legal age, single and resident
of [ADDRESS] (LESSEE), WITNESSETH that:

1. In consideration of a monthly rental of [TOTAL AMOUNT IN WORDS (TOTAL AMOUNT

IN NUMBERS)] and the covenants made below, the LESSOR hereby LEASES to the LESSEE a(n)
[PROPERTY] located at [ADDRESS OF PROPERTY TO BE LEASED] covered by
[TRANSFER/ORIGINAL CERTIFICATE TITLE NO.___/TAX DECLARATION NO.___] for a period
of TWELVE (12) MONTHS from signing of this contract.

2. The LESSEE covenants, as follows:

2.1. To pay the rentals on or before the fifth day of each month, without need of demand at
the residence of LESSOR;

2.2. To keep the premises in good and habitable condition, making the necessary repairs
inside and outside the house;

2.3. Not to make major alterations and improvements without the written consent of the
LESSOR and in the event of such unauthorized major alterations and improvements,
surrendering ownership over such improvements and alterations to the LESSOR upon

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expiration of this lease;

IN WITNESS WHEREOF, the parties have signed this contract on the date and the place
first mentioned.

(sgd.) (sgd.)
[NAME OF LESSOR] [NAME OF LESSEE]
LESSOR LESSEE

[If Lessor is married, include spousal consent as follows:]

With my consent:

(sgd.)
[NAME OF SPOUSE OF LESSOR]

Signed in the presence of:

_________________ _________________

[PLUS ACKNOWLEDGMENT]

1. Acknowledgment
ACKNOWLEDGMENT

REPUBLIC OF THE PHILIPPINES )

City/Municipality of ____________ ) S.S.

BEFORE ME, this ___ day of [MONTH, YEAR] in the [CITY/ MUNICIPALITY OF___],
personally appeared:

NAME, TYPE OF I.D, AND I.D NO. DATE AND PLACE ISSUED
__________________________________ _____________________________
__________________________________ _____________________________
__________________________________ _____________________________

Known to me and to me known to be the same persons who executed the foregoing instrument, and
who acknowledged to me that the same is their free act and deed.

IN WITNESS WHEREOF, I have set my hand and affixed my Notarial seal on the day, year
and place written.

(Sgd.)
NOTARY PUBLIC

Doc. No.
Page No.
Book No.
Series of [YEAR]

Note: If the instrument consists of 2 or more pages, include the following after the 1st paragraph:
This instrument, consisting of ___ pages, including the page on which this acknowledgment is

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written, has been signed on the left margin of each and every page thereof by ___________ and
his witnesses (if any), and sealed with my Notarial seal.

2. Acknowledgment (Affiant Representing a Corporation)

REPUBLIC OF THE PHILIPPINES )
City/Municipality of ____________ ) S.S.

BEFORE ME, this ___ day of [MONTH, YEAR] in the [CITY/ MUNICIPALITY OF ___],
personally appeared [NAME OF AFFIANT], representing to be [POSITION IN THE
CORPORATION] of [NAME OF CORPORATION] with [VALID IDENTIFICATION DOCUMENT]
(No. ___) issued by the [OFFICIAL AGENCY] on [DATE OF ISSUANCE], known to me to be the
same person who executed the foregoing instrument, and who acknowledged to me that the same
is his free act and deed.

IN WITNESS WHEREOF, I have set my hand and affixed my Notarial seal on the day, year
and place written.

(Sgd.)
NOTARY PUBLIC

Doc. No.
Page No.
Book No.
Series of [YEAR]

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III. COMPLAINT
A. Complaint for Sum of Money
REPUBLIC OF THE PHILIPPINES
[JUDICIAL REGION]
REGIONAL TRIAL COURT
[BRANCH NUMBER], [CITY/MUNICIPALITY]

[NAME OF PLAINTIFF],
Plaintiff,

-versus- Civil Case No. ___

For: Sum of Money
[NAME OF DEFENDANT],
Defendant.
x---------------------------------x

COMPLAINT

PLAINTIFF, by counsel, respectfully states that:

1. Plaintiff is a Filipino, of legal age, and resident of [ADDRESS OF PLAINTIFF]; defendant

is also a Filipino, of legal age and resident of [ADDRESS OF DEFENDANT] where he may be
served with summons and other processes.

2. Sometime in [DATE OF TRANSACTION] and over a period of ___, defendant borrowed

certain amounts from plaintiff. Defendant promised to pay these amounts on an installment basis
monthly. These amounts now total [TOTAL AMOUNT IN WORDS (TOTAL AMOUNT IN
NUMBERS)].

3. Despite repeated demands, both oral and written, defendant failed or has refused to pay
any amount to plaintiff as no installment payment has ever been made. A copy of each of plaintiff's
two (2) demand letters is attached as ANNEX A and B.

4. Resort to the Barangay Conciliation process proved fruitless as defendant failed to

appear, despite notice on him to appear. Thus, a Certification to File Action, a copy of which is
attached as ANNEX C, was issued by the Barangay Chairman.

4. Defendant’s obligation is due and demandable, and plaintiff is entitled to the payment of
the entire amount of [TOTAL AMOUNT IN WORDS (TOTAL AMOUNT IN NUMBERS)] plus legal
interest.

5. By reason of defendant’s unreasonable failure or refusal to pay his due and demandable
obligation, plaintiff was forced to engage the services of counsel to vindicate his rights, thereby
committing himself to pay legal expenses amounting to [TOTAL AMOUNT IN WORDS (TOTAL
AMOUNT IN NUMBERS)].

WHEREFORE, plaintiff respectfully prays for judgment in his favor through a Decision
directing defendant to pay him [TOTAL AMOUNT IN WORDS (TOTAL AMOUNT IN NUMBERS)],
with legal interest, as ACTUAL DAMAGES, and [TOTAL AMOUNT IN WORDS (TOTAL AMOUNT
IN NUMBERS)] as Attorney’s Fees.

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Other just and equitable reliefs are also prayed for.

[CITY/MUNICIPALITY], [DATE OF EXECUTION]

(Sgd.)
[NAME OF COUNSEL]
Counsel for Plaintiff
[Address]
[Contact details, e.g. telephone no., cellular phone
no., fax no., email address]
[Roll of Attorneys No.]
[IBP Official Receipt No. OR Lifetime Membership
No.]
[Professional Tax Receipt (PTR) No.]
[Number and Date of Issue of MCLE Certificate of
Compliance or of Exemption]

[PLUS VERIFICATION AND CERTIFICATE OF NON-FORUM SHOPPING]

B. Replevin
REPUBLIC OF THE PHILIPPINES
[JUDICIAL REGION]
REGIONAL TRIAL COURT
[BRANCH NUMBER], [CITY/MUNICIPALITY]

[NAME OF PLAINTIFF],
Plaintiff,

-versus- Civil Case No. ___

For: Replevin
[NAME OF DEFENDANT],
Defendant.
x---------------------------------x

COMPLAINT

PLAINTIFF, by counsel, respectfully states that:

1. Plaintiff is a Filipino, of legal age, and resident of [ADDRESS OF PLAINTIFF]; defendant

is also a Filipino, of legal age and resident of [ADDRESS OF DEFENDANT] where he may be
served with summons and other processes.

2. Plaintiff is the registered owner of a [CAR MAKE AND MODEL (e.g. Toyota Fortuner)]
with [LICENSE PLATE NO.], which defendant, on 20 July 2021, rented from plaintiff for a period of
one (1) week.

3. On [DATE], plaintiff demanded from defendant the return of the car but defendant failed
and refused to do so. A copy of plaintiff’s letter to defendant is attached as ANNEX A.

4. Resort to the Barangay Conciliation process proved fruitless as defendant failed to

appear, despite notice on him to appear. Thus, a Certification to File Action, a copy of which is
attached as ANNEX B, was issued by the Barangay Chairman.

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5. The car has not been taken for a tax assessment or a fine pursuant to law nor has it been
seized on execution or attachment. Its present value is approximately [TOTAL AMOUNT IN
WORDS (TOTAL AMOUNT IN NUMBERS)].

6. Plaintiff is ready, willing and able to give bond in defendant’s name in double the value of
the property for the return of the property to defendant should that be adjudged or for the payment
of such sum that the defendant may recover from plaintiff in this action.

WHEREFORE, plaintiff respectfully prays that the writ of replevin issue directing the Sheriff
or any other authorized officer to take possession of the car and dispose of it in accordance with the
Rules of Court and, after hearing, judgment be rendered declaring plaintiff to be lawfully entitled to
the possession of the car and sentencing defendant to pay its value.

Other just and equitable reliefs are also prayed for.

[CITY/MUNICIPALITY], [DATE OF EXECUTION]

(Sgd.)
[NAME OF COUNSEL]
Counsel for Plaintiff
[Address]
[Contact details, e.g. telephone no., cellular phone
no., fax no., email address]
[Roll of Attorneys No.]
[IBP Official Receipt No. OR Lifetime Membership
No.]
[Professional Tax Receipt (PTR) No.]
[Number and Date of Issue of MCLE Certificate of
Compliance or of Exemption]

[PLUS VERIFICATION AND CERTIFICATE OF NON-FORUM SHOPPING]

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C. Complaint for Ejectment with Damages
REPUBLIC OF THE PHILIPPINES
[JUDICIAL REGION]
METROPOLITAN TRIAL COURT
[BRANCH NUMBER], [CITY/MUNICIPALITY]

[NAME OF PLAINTIFF],
Plaintiff,

-versus- Civil Case No. ___

For: Ejectment
[NAME OF DEFENDANT],
Defendant.
x---------------------------------x

COMPLAINT

PLAINTIFF, by counsel, respectfully states that:

1. Plaintiff is a Filipino, of legal age, and resident of [ADDRESS OF PLAINTIFF]; defendant

is also a Filipino, of legal age and resident of [ADDRESS OF DEFENDANT] where he may be
served with summons and other processes.

2. Plaintiff owns that property located at [ADDRESS OF PROPERTY] which is leased to

defendant under the terms and conditions stated in the Contract of Lease dated [DATE], which
contract expires on [DATE]. A copy of the contract is attached as ANNEX A.

3. Upon expiration of the contract, the plaintiff informed the defendant of its intention not to
renew the lease as it would use the property for its business expansion. Plaintiff then asked
defendant to vacate the premises. A copy of plaintiff’s letter to defendant is attached as ANNEX B.

4. Despite demand duly made and received, defendant has refused to vacate the premises
and continues to occupy the property without plaintiff’s consent. Resort to the Barangay Conciliation
system proved useless as defendant refused to appear before the Lupong Tagapamayapa. A
Certification to File Action is attached as ANNEX C.

5. Defendant’s act of dispossession has caused plaintiff to suffer material injury because
plaintiff’s business expansion plans could not be implemented despite the arrival of machineries
specifically leased for this purpose at the rental rate of [TOTAL AMOUNT IN WORDS (TOTAL
AMOUNT IN NUMBERS)] per month. Defendant’s continued occupation of the premises has also
forced plaintiff to sue and to incur legal expenses amounting to [TOTAL AMOUNT IN WORDS
(TOTAL AMOUNT IN NUMBERS)].

WHEREFORE, plaintiff respectfully prays for judgment in its favor by ordering defendant to
vacate the property and peacefully turn over possession to plaintiff, and for defendant to pay plaintiff
the amount of [TOTAL AMOUNT IN WORDS (TOTAL AMOUNT IN NUMBERS)]representing
rentals on the machineries for seven (7) months and [TOTAL AMOUNT IN WORDS (TOTAL
AMOUNT IN NUMBERS)] for Attorney’s fees.

Other just and equitable reliefs are also prayed for.

[CITY/MUNICIPALITY], [DATE OF EXECUTION]

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(Sgd.)
[NAME OF COUNSEL]
Counsel for Plaintiff
[Address]
[Contact details, e.g. telephone no., cellular phone
no., fax no., email address]
[Roll of Attorneys No.]
[IBP Official Receipt No. OR Lifetime Membership
No.]
[Professional Tax Receipt (PTR) No.]
[Number and Date of Issue of MCLE Certificate of
Compliance or of Exemption]

[PLUS VERIFICATION AND CERTIFICATE OF NON-FORUM SHOPPING]

1. Verification
REPUBLIC OF THE PHILIPPINES )
City/Municipality of ____________ ) S.S.

VERIFICATION

I, [NAME], of legal age, [CITIZENSHIP], and with address at [ADDRESS], after having been duly
sworn to in accordance with law, hereby depose and say:

1. I am the [PARTY (e.g. complainant, plaintiff, defendant)] in the above case and have
caused the preparation of the foregoing [TYPE OF PLEADING] filed with the
[COURT/OFFICE] last [DATE];

2. I have read and understood the contents therein, and all allegations stated are true
according to my personal knowledge and based on authentic records.

3. The foregoing [TYPE OF PLEADING] is not filed to harass, cause unnecessary delay, or
needlessly increase the cost of litigation.

4. The factual allegations therein have evidentiary support or if specifically so identified, will
likewise have evidentiary support after a reasonable period for a reasonable opportunity
for discovery.

AFFIANT FURTHER SAYETH NAUGHT.

IN WITNESS WHEREOF, I have hereunto set my hand this ___th day of [MONTH/YEAR] at
[CITY], [COUNTRY].

(Sgd.)
[NAME OF AFFIANT]
Affiant

SUBSCRIBED AND SWORN TO before me this [DAY] of [MONTH/YEAR], in [CITY, COUNTRY],

affiant exhibiting to me her [ID] with No. [ID NUMBER] issued on [DATE OF ISSUANCE OF ID] in
[PLACE OF ISSUANCE OF ID].

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Doc. No. ___;

Page No. ___;
Book No. ___;
Series of [YEAR].

2. Certificate of Non-Forum Shopping

REPUBLIC OF THE PHILIPPINES )
City/Municipality of ____________ ) S.S.

CERTIFICATE OF NON-FORUM SHOPPING

I, [NAME], [CITIZENSHIP], of legal age and with address at [ADDRESS], after having been duly
sworn to in accordance with law, hereby depose and say:

1. I am the [PARTY (e.g. complainant, plaintiff, defendant)] in the above case.

2. I have not commenced any other action or filed any claim involving the same issues in any
court, tribunal, or quasi-judicial agency, and to the best of my knowledge, no such other
action or claim is pending therein.

3. If I should thereafter learn that the same or similar action or claim has been filed or is
pending, I shall report that fact within five (5) calendar days therefrom to the court wherein
the aforesaid [TITLE OF PLEADING] has been filed.

[CITY/ MUNICIPALITY], [DATE]

(Sgd.)
[NAME OF AFFIANT]
Affiant

SUBSCRIBED AND SWORN TO before me this [DAY] of [MONTH/YEAR], in [CITY, COUNTRY],

affiant exhibiting to me her [ID] with No. [ID NUMBER] issued on [DATE OF ISSUANCE OF ID] in
[PLACE OF ISSUANCE OF ID].

Doc. No. ___;

Page No. ___;
Book No. ___;
Series of [YEAR].

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IV. CHECKLIST
1. Caption and Title
2. Parties/Capacity and Address of Parties
3. Material Allegations
4. Statement of Causes of Action
5. Prayer/Reliefs
6. Date and Place of Execution
7. Signature of Counsel. An unsigned
pleading produces no legal effect [Rule 7,
Sec. 3, Rules of Court].
8. Other information on the counsel:
a. The En Banc Resolution on Bar Matter
No. 1132 (2003) requires counsels to
indicate the ff. in all papers and
pleadings submitted to the various
judicial or quasi-judicial bodies:
• Roll of Attorneys No.
• IBP Official Receipt No. OR Lifetime
Membership No.
• Current Professional Tax Receipt
(PTR) No.

b. A.M. NO. 07-6-5-SC (2007) requires

counsels to indicate in their pleadings or
other legal documents their contact
details aside from addresses such as
telephone number, fax number, cellular
phone number, or email address.
c. Bar Matter No. 1922 (2008) requires
practicing members of the bar to indicate
in all pleadings filed before the courts or
quasi-judicial bodies, the number and
date of issue of their MCLE Certificate of
Compliance or Certificate of Exemption,
as may be applicable, for the
immediately preceding compliance
period.

9. Verification and Certificate of Non-Forum

Shopping (CNFS)
a. CNFS is required for initiatory pleadings
[Rule 7, Sec. 5, Rules of Court]
b. Except when otherwise specifically
required by law or rule, pleadings need
not be under oath, verified [Rule 7, Sec.
4, Rules of Court].

10. Miscellaneous portions

11. Copy furnished

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