The Law Pertaining to Private Personal and Commercial Relations
a. CIVIL LAW Essential Requisites of a Valid Marriage (2014 2009 2006
Legal Personality, Capacity to act
Determination of personality (2019 2014 2012 2008 2003
1999 BQ)
Birth determines personality, but the conceived child shall be
considered born for all purposes that are favorable to it, provided
it is born later with the conditions specified in Art. 41.
Civil personality of the child shall commence from the time of his
conception, for all purposes favorable to him.
A foetus with an intra-uterine life of: (2014 2012 2008 1999
1995 BQ)
1. Less than 7 months – Must survive for at least 24 hours
after its complete delivery from the maternal womb.
2. At least 7 months – If born alive, it shall be considered born
even if it dies within 24 hours after complete delivery.
Effect of death on civil personality (2011 1998 BQ)
Death extinguishes civil personality. However, the rights and
obligations of the deceased are not necessarily extinguished by
his death.
Survivorship Rule under the Civil Code (2009 2008 2000
1999 1998 BQ)
If there is doubt as to who died first between 2 or more persons
who are called to succeed each other, as to which of them died
first:
1. Burden of Proof: Whoever alleges the death of one prior to
the other has the burden of proving such claim.
2. Absent such proof: Presumption is they died at the same
time. There shall be no transmission of successional rights
Intersex; Diagnosed to have Congenital Adrenal Hyperplasia
(2018 BQ)
If it is determining that the respondent to be a female, then there
is no basis for a change in the birth certificate entry for gender.
But if it is determining, based on medical testimony and scientific
development showing the respondent to be other than female,
then a change in the subject’s birth certificate entry is in order.
Where the person is biologically intersex the determining factor
in his gender classification would be what the individual, having
reached the age of majority, with good reason thinks of his/her
sex.
Juridical Capacity vs Capacity to act
Juridical capacity, which is the fitness to be the subject of legal
relations, is inherent in every natural person and is lost only
through death. Capacity to act, which is the power to do acts
with legal effect, is acquired and may be lost.
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 not proved
ii. Marital Relationship
Marriage is a special contract of permanent union between a
man and a woman entered for the establishment of conjugal and
family life. It is the foundation of the family and an inviolable
social institution whose nature, consequences, and incidents are
governed by law and not subject to stipulation, except that
marriage settlements may fix the property relations during the
marriage.
JC POGI PRE-WEEK NOTES 2022
1999 1996 BQ)
1. Legal capacity of the contracting parties who must be a
male and a female;
2. Consent freely given in the presence of the solemnizing
officer.
Other requirements needed for the validity of such marriage
depending upon the age of the contracting party (2018 2006
1999 BQ)
AGE ADDITIONAL REQUIREMENTS
18 to 21 years Parental consent and Marriage
old counseling
NOTE: Absence of parental consent,
Marriage may be annulled existing at
the time of the marriage. (2018 BQ)
22 to 25 years Parental advice and Marriage counseling
old
NOTE: Absence of parental advice, it
does not make the marriage voidable.
Ratification of Voidable Marriage (2018 BQ)
Such voidable marriage may be ratified by free cohabitation of
the parties over 18 years old but below 21 who married without
the consent of his/her parents, by living together as husband
and wife after attaining the age of 21.
Formal Requisites of a Valid Marriage (2011 2009 2002 BQ)
1. Marriage Ceremony
2. Authority of the solemnizing officer
3. Valid marriage License, except in a marriage of exceptional
character
Effect in the status of marriage (2009 2008 1999 1996 BQ)
1. Absence of any of the essential requisites - Void ab initio
2. Absence of any of the formal requisites – Void ab initio
3. Defect in essential requisites – Voidable
4. Irregularity in formal requisites - Valid, but the party
responsible for such irregularity shall be civilly, criminally
or administratively liable
Marriage Ceremony will take place with the: (2016 2014 2012
2009 2007 2004 1999 BQ)
1. Personal appearance of the contracting parties before the
solemnizing officer;
2. Their personal declaration that they shall take each other
as husband and wife; and
3. In the presence of not less than 2 witnesses of legal age.
NOTE: No particular form of ceremony or religious rite for
solemnization of the marriage is required by law.
Solemnizing Authority; Persons authorized to solemnize
marriage (2006 1999 1995 1994 BQ)
1. Under ordinary circumstances (FC, Art. 7):
a. Incumbent judiciary member – Provided, within his court’s
jurisdiction.
NOTE: Before performing the marriage ceremony, the judge must
personally interview the contracting parties and examine the
requirements they submitted. The parties must have complied
with all the essential and formal requisites of marriage. Among
these formal requisites is a marriage license. A marriage license
is issued by the local civil registrar to parties who have all the
qualifications and none of the legal disqualifications to contract
marriage. Before performing the marriage ceremony, the judge
must personally examine the marriage license presented. If the
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 The Law Pertaining to Private Personal and Commercial Relations
contracting parties have cohabited as husband and wife for at
least five years and have no legal impediment to marry, they are
exempt from the marriage license requirement. Instead, the
parties must present an affidavit of cohabitation sworn to before
any person authorized by law to administer oaths. The judge, as
solemnizing officer, must personally examine the affidavit of
cohabitation as to the parties having lived together as husband
and wife for at least five years and the absence of any legal
impediment to marry each other. (Tupal vs. Rojo, A.M. No. MTJ-
14-1842 February 24, 2014, J. Leonen)
Priest, rabbi, imam or minister of any church/religious sect duly
authorized (2006 BQ) Provided at least one of the parties belongs
to such church or religious sect.
b. Consul general, consul or vice-consul – Provided both
parties are Filipinos and marriage takes place abroad in the
country where the consul holds office.
c. Mayors – including “Acting Mayor” (1999 BQ)
NOTE: From the time of the effectivity of the Family Code
(August 3, 1988) up to the time of the effectivity of the Local
Government Code (January 1, 1992), mayors do not have
the authority to solemnize marriage.
2. Marriages in articulo mortis:
a. Ship captain or airplane chief – provided the marriage is
performed:
i. During voyage, even during stopovers
ii. Between passengers or crew members.
b. Military commander of a unit who is a commissioned
officer – provided the marriage is performed:
i. In absence of chaplain;
ii. Within zone of military operation;
iii. Between members of the armed forces or civilians.
Validity of marriage license (2017 2016 2008 2002 BQ)
The license shall be valid in any part of the Philippines for a
period of 120 days from the date of issue, and shall be deemed
automatically cancelled at the expiration of said period if the
contracting parties have not made use of it. If the parties
contracted marriage after the lapse of 120 days from the issuance
of the marriage license, such marriage shall be considered void
for lack of marriage license.
Marriages exempt from the license requirement (2017 2008
2002 BQ)
1. Marriages among Muslims or members of ethnic cultural
communities – Provided they are solemnized in accordance
with their customs, rites or practices;
2. Marriages in Articulo mortis
a. In case either or both of the contracting parties are at
the point of death;
b. Solemnized by a ship captain or airplane pilot;
c. Within zones of military operation.
3. Marriages in Remote places
4. Marriages between parties living together as husband and
wife for at least five years for at least 5 years and without
legal impediment to marry each other;
5. Marriages solemnized Outside the Philippines where no
marriage license is required by the country where it was
solemnized.
Requisites for the 5-year cohabitation as an exception to the
marriage license requirement (2017 2008 2002 BQ)
1. Living together as husband and wife at least 5 years before
the marriage.
2. No legal impediment to marry each other During the period
of cohabitation.
3. Fact of absence of legal impediment must be Present at the
time of the marriage.
JC POGI PRE-WEEK NOTES 2022
4. Parties must execute an Affidavit that they are living
together as husband and wife for 5 years and that they do
not have any impediment to marry.
5. Solemnizing officer must execute a Sworn statement that he
had ascertained the qualifications of the parties and found
no legal impediment to their marriage.
Marriages celebrated abroad
Marriages between Filipinos solemnized abroad in
accordance with the law in force in said country (2019 2018
2016 2014 2012 2009 2007 2004 1999 BQ)
Art. 26. All marriages solemnized outside the Philippines in
accordance with the laws in force in the country where they were
solemnized, and valid there as such, shall also be valid in this
country, except those prohibited under Art 35(1), (4), (5) and (6),
36, 37 and 38. Where a marriage between a Filipino citizen and
a foreigner is validly celebrated and a divorce is thereafter validly
obtained abroad by the alien spouse capacitating him or her to
remarry, the Filipino spouse shall likewise have capacity to
remarry under Philippine law.
NOTE: What is material is the citizenship of the spouse who
obtained a divorce decree abroad at the time the decree was
obtained and not their citizenship at the time the marriage was
celebrated. If the Filipino spouse was naturalized as a citizen of
a foreign country before he/she obtains a divorce decree and was
thereafter capacitated to remarry, the Filipino spouse will be
capacitated to remarry. (2016 2009 BQ)
Foreign divorce
Filipino spouse initiated the Foreign Divorce (2019 BQ)
Foreign divorce decrees obtained to nullify marriages between a
Filipino and an alien citizen may already be recognized,
regardless of who between spouses initiated the divorce provided,
that the party petitioning for the recognition of the foreign divorce
decree, presumably the Filipino citizen, must prove the divorce
as a fact and demonstrate its conformity to the foreign law
allowing it.
NOTE: Judicial recognition of a foreign divorce requires that the
national law of the foreign spouse and the divorce decree be
pleaded and proved as a fact before the Regional Trial Court. The
Filipino spouse may be granted the capacity to remarry once our
courts find that the foreign divorce was validly obtained by the
foreign spouse according to his or her national law, and that the
foreign spouse’s national law considers the dissolution of the
marital relationship to be absolute. Once a divorce decree is
issued, the divorce becomes “validly obtained” and capacitates
the foreign spouse to marry. The same status should be given to
the Filipino spouse. (Racho vs. Tanaka, 868 SCRA 25, G.R. No.
199515 June 25, 2018, J. Leonen)
Void
The following marriages shall be void from the beginning:
(2006 2005 2004 1999 1993 BQ)
1. Those contracted by any party below eighteen years of age
even with the consent of parents or guardians;
2. Those solemnized by any person not legally authorized to
perform marriages unless such marriages were contracted
with either or both parties believing in good faith that the
solemnizing officer had the legal authority to do so;
3. Those solemnized without license
4. Those bigamous or polygamous marriages
5. Those contracted through mistake of one contracting party
as to the identity of the other; and
6. Those subsequent marriages that are void under Art 53.
NOTE: Validity of Mixed marriage: If the national law of the
foreigner recognizes 17-year-old persons to be capacitated to
marry, then their marriage is valid, otherwise it is void.
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 The Law Pertaining to Private Personal and Commercial Relations
A person CANNOT contract a valid subsequent marriage
before a first marriage is declared void ab initio by a
competent court (2016 2014 2009 BQ)
A judicial declaration of nullity is required before a valid
subsequent marriage can be contracted; or else, what transpires
is a bigamous marriage. However, if the marriage solemnized
before the effectivity of the Family Code and where the marriage
is illegal and void, NO Judicial declaration is necessary to
establish its invalidity. (2016 BQ)
Marriages between the following are incestuous and void
from the beginning, whether relationship between the
parties be legitimate or illegitimate:
1. Between ascendants and descendants of any degree; and
2. Between brothers and sisters, whether of the full or half
blood.
The following marriages shall be void from the beginning for
reasons of public policy: (2018 2017 2011 2008 2007 1999
BQ)
1. Between collateral blood relatives whether legitimate or
illegitimate, up to the fourth civil degree;
2. Between step-parents and step-children;
3. Between parents-in-law and children-in-law;
4. Between the adopting parent and the adopted child;
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.
NOTE: The list is EXCLUSIVE. If not falling within this
enumeration, the marriage shall be valid. Such as marriages
between:
a. Adopted and Illegitimate child of the adopter;
b. Step brother and step sister; (2018 2006 BQ)
c. Brother-in-law and sister-in-law;
d. Parties who have been guilty of adultery or
concubinage.
Psychological Incapacity
A marriage contracted by any party who, at the time of the
celebration, was psychologically incapacitated to comply with the
essential marital obligations of marriage, shall likewise be void
even if such incapacity becomes manifest only after its
solemnization.
Requisites of Psychological Incapacity (2016 2015 2014
2013 2012 2006 2002 1997 1996 BQ)
a. Juridical antecedence– Must be rooted in the history of the
party antedating the marriage, although overt
manifestations may arise only after such marriage.
b. Gravity – Grave enough to bring about the disability of the
party to assume the essential marital obligations.
c. Permanence or incurability – Must be incurable. If curable,
the cure should be beyond the means of the parties involved.
NOTE: Psychological incapacity as a ground to nullify the
marriage should refer to the most serious cases of personality
disorders clearly demonstrative of an utter insensitivity or
inability to give meaning and significance to the marriage. An
expert opinion is not absolutely necessary if the totality of the
evidence shows that psychological incapacity exists and its
gravity, juridical antecedence, and incurability can be duly
established. (Tani-De la Fuente vs. De la Fuente, Jr., G.R. No.
188400 March 8, 2017, J. Leonen)
JC POGI PRE-WEEK NOTES 2022
State of unsound mind, drug addiction, habitual alcoholism,
lesbianism or homosexuality (2016 2012 2011 2006 2002
BQ)
It may be indicia of psychological incapacity, depending on the
degree of severity of the disorder if existing at the inception of
marriage. However, the concealment of drug addiction, habitual
alcoholism, lesbianism or homosexuality is a ground of
annulment of marriage.
Instances where allegations of psychological incapacity were
not sustained (2016 2015 2013 BQ)
1. Mere showing of irreconcilable differences and conflicting
personalities
2. Disagreements regarding money matters
3. Mere abandonment (2015 BQ)
4. Mere sexual infidelity or perversion do not by themselves
constitute psychological incapacity, as well as immaturity
and irresponsibility. (2015 BQ)
5. Living an adulterous life when specific evidence was shown
that promiscuity as a trait already existing at the inception
of marriage (Baccay v. Baccay, G.R. No. 173138,
December 1, 2010, J. Villarama) (2013 BQ)
Effects of Judicial Declaration of Nullity of Marriage (2011
2010 2009 1990 BQ)
1. The children of the subsequent marriage conceived prior to
its termination shall be considered legitimate; (2009 BQ)
2. The absolute community of property or the conjugal
partnership, as the case may be, shall be dissolved and
liquidated, but if either spouse contracted said marriage in
bad faith, his or her share of the net profits of the community
property or conjugal partnership property shall be forfeited
in favor of the common children or, if there are none, the
children of the guilty spouse by a previous marriage or in
default of children, the innocent spouse; (2009 BQ)
3. Donations by reason of marriage shall remain valid, except
that if the donee contracted the marriage in bad faith, such
donations made to said donee are revoked by operation of
law; (2011 BQ)
4. The innocent spouse may revoke the designation of the other
spouse who acted in bad faith as beneficiary in any
insurance policy, even if such designation be stipulated as
irrevocable; and
5. The spouse who contracted the subsequent marriage in bad
faith shall be disqualified to inherit from the innocent spouse
by testate and intestate succession. (FC, Art. 43).
Voidable marriages
Voidable Marriage (2017 2011 2006 2003 2002 1997 1996
BQ)
A marriage may be annulled, existing at the time of the marriage:
1. That the party was eighteen years of age or over but below
twenty-one, and the marriage was solemnized without the
consent of the parents unless after attaining the age of
twenty-one, such party freely cohabited with the other and
both lived together as husband and wife;
2. That either party was of unsound mind, unless such party
freely cohabited with the other as husband and wife;
3. That the consent of either party was obtained by fraud,
unless such party afterwards freely cohabited with the other
as husband and wife;
4. That the consent of either party was obtained by force,
intimidation or undue influence, unless such party
thereafter freely cohabited with the other as the spouse;
5. That either party was physically incapable of consummating
the marriage with the other, and such incapacity continues
and appears to be incurable; or
6. That either party was afflicted with a sexually-transmissible
disease found to be serious and appears to be incurable.
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 The Law Pertaining to Private Personal and Commercial Relations
Impotence (impotentia copulandi) refers to lack of power of
copulation and NOT to mere sterility (impotentia genrandi) which Conjugal Partnership of Gains
refers to ability to procreate. Although impotency carries with it
sterility, a sterile person is not necessarily impotent. Hence, Mere CPG shall commence at the precise moment when the marriage
sterility is not one of the grounds for the annulment of marriage. ceremony is celebrated.
(2017 2008 2007 2003 BQ)
Exclusive Property of the Spouses (Fc, Art. 109) (20191998
For a marriage to be annulled under Art 45 (6), the sexually- BQ)
transmissible disease or AIDS must be: (2017 2003 BQ)
1. Those brought into the marriage as his/her own;
1. existing at the time of marriage;
2. found to be serious and incurable; and a. A property purchased before the marriage and fully paid
3. unknown to the other party. during the marriage remains to be a separate property
of either spouse
Property Relations of the Spouses b. Fruits and income of said properties shall be included
the conjugal partnership
Property relations between husband and wife (2005 1995 BQ) c. Those included therein in the marriage settlement,
subject to the 1/5 limitation under Art 84 and the rule
The future spouses may, in the marriage settlements, agree upon in Art 92(3) of the FC which apply by analogy
the regime of absolute community, conjugal partnership of gains,
complete separation of property, or any other regime. In the 2. Those acquired during the marriage by gratuitous title;
absence of a marriage settlement, or when the regime agreed 3. Those acquired by right of redemption, barter or exchange
upon is void, the system of absolute community of property with exclusive property;
as established in this Code shall govern. 4. That purchased with exclusive money of either spouse.

Requisites of a valid Marriage Settlement (2011 2005 BQ) Consent of the Spouse

a. In Writing; A spouse’s consent is indispensable for the disposition or

b. Signed by the parties; encumbrance of conjugal properties. Under the Family Code,
c. Executed before the celebration of marriage; their property regime is Conjugal Partnership of Gains. Art. 124.
d. Registration (to bind 3rd persons) The administration and enjoyment of the conjugal partnership
NOTE: A marriage settlement need not be notarized. The law shall belong to both spouses jointly. In case of disagreement, the
merely requires it to be in writing. The marriage settlements must husband’s decision shall prevail, subject to recourse to the court
be registered in the proper local civil registry where the marriage by the wife for proper remedy, which must be availed of within
contract was recorded. five years from the date of the contract implementing such
decision. Any disposition or encumbrance of a conjugal property
Absolute Community of Property by one spouse must be consented to by the other; otherwise, it is
void. (PNB vs. Reyes, Jr., G.R. No. 212483 October 5, 2016,
A property regime wherein the spouses are considered co-owners J. Leonen)
of all property brought into the marriage, as well as those
acquired during the marriage, which are not otherwise excluded Conjugal Partnership Property (2011 2008 2005 2004 1998
from the community either by the provisions of the Family Code 1995 BQ)
or by the marriage settlement. (2015 BQ)
1. Those acquired by onerous title during the marriage with
Properties included in the absolute community (2017 BQ) conjugal funds;
2. Those obtained from labor, industry, work or profession of
1. All the property owned by the spouses: either or both spouses;
a. At the time of the celebration of the marriage; or 3. Fruits of conjugal property due or received during the
b. Acquired thereafter; marriage and net fruits of separate property;
2. Property acquired during the marriage by gratuitous title, if 4. Share of either spouse in hidden treasure;
expressly made to form part of the community property by 5. Those acquired through occupation such as hunting or
the donor, testator or grantor; fishing;
3. Jewelry or properties with monetary value; 6. Livestock in excess of what was brought to the marriage;
4. Winnings in gambling. 7. Those acquired by chance such as winnings in gambling and
betting.
Properties excluded in the Absolute Community (2019 BQ)
NOTE: However, Losses in gambling or betting are borne
1. Property acquired during the marriage by gratuitous title exclusively by the loser-spouse. (2004 BQ)
and its fruits as well as income thereof unless the grantor
expressly provide they shall form part of the community
property;
2. Property for personal and exclusive use of either spouse
but jewelries shall form part of the ACP because of their
monetary value;
3. Property acquired before the marriage by one with legitimate
descendants by former marriage and its fruits and income,
if any;
4. Those excluded by the marriage settlement.
NOTE: The sale or encumbrance of a conjugal property requires
the consent of both the husband and the wife. The absence of the
consent of one renders the entire sale or encumbrance null and
void, including the portion of the conjugal property pertaining to
the husband who contracted the sale. Neither would the conjugal
partnership be liable for the loan on the ground that it redounded
to the benefit of the family. PNB vs. Reyes, Jr., G.R. No. 212483
October 5, 2016, J. Leonen) (2017 2015 BQ)
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 The Law Pertaining to Private Personal and Commercial Relations
8. Property regime of unions without marriage

ART. 147 ART. 148

Parties WITHOUT legal impediment to marry Parties WITH legal impediment to marry
(2018 2016 2015 2012 2011 2010 2009 2006 2000 1997 BQ) (2009 2006 2000 1998 1992 BQ)
Applicability
1. Parties without legal impediment to marry; With legal impediment caused by:
2. Void marriage on the ground of psychological incapacity. (2018 1. Adulterous relationships
BQ) 2. Bigamous/polygamous marriages
3. Incestuous void marriages under Art. 37
4. Void marriages by reason of public policy (FC, Art. 38).
As to requisites
1. The man and the woman must be capacitated to marry each 1. The man and the woman must be incapacitated to marry each
other; other or they do not live exclusively with each other as
2. live exclusively with each other as husband and wife; and husband and wife; and
3. their union is without the benefit of marriage or their marriage 2. Their union is without the benefit of marriage or their marriage
is void is void (FC, Art. 148).
Salaries & wages
Owned in equal shares (2018 BQ) Separately owned by the parties. If any is married, his/her salary
pertains to the CPG of the legitimate marriage.
Property exclusively acquired
Belongs to party Belongs to such party
upon proof of acquisition through exclusive funds
Property acquired by both through their work or industry
Governed by rules of co-ownership (2018 BQ) Owned in common in proportion to their respective contributions
Presumption
Property acquired while living together presumed obtained by their No presumption of joint acquisition.
joint efforts, work or industry and owned by them in equal shares.
(2018 BQ) Actual joint contribution of money, property or industry shall be
owned by them in common proportion.
If one party did not participate in acquisition: presumed to have
contributed through care and maintenance of family and However, their contributions are presumed equal, in the absence if
household. proof to the contrary.
Forfeiture
When only one of the parties to a void marriage is in good faith, the If one of the parties is validly married to another, his/her share in
share of the party in bad faith in the co-ownership shall be forfeited the co-ownership shall accrue to the ACP or CPG existing in the
in favor of: marriage.
1. their common children If the party who acted in BF is not validly married to another or if
2. in case of default of or waiver by any or all of the common both parties are in BF, such share be forfeited in manner provided
children or their descendants, each vacant share shall belong in the last par. of Art. 147
to the respective surviving descendants
3. In the absence of descendants, such share shall belong to the
innocent party.
Proof of actual contribution
Not necessary Necessary

Property regime in case the marriage is declared null and
void on the ground of psychological incapacity (2014 BQ)
The property relation between the parties is governed by Art. 147
of the FC. Property acquired by both spouses through their work
and industry shall be governed by the rules on equal co-
ownership. Any property acquired during the union is prima facie
presumed to have been obtained through their joint efforts. A
party who did not participate in the acquisition of the property
shall still be considered as having contributed thereto jointly if
said party's efforts consisted in the care and maintenance of the
family household.
iii. Property
Concept of Property
Not all rights are considered as Property (2017 BQ)
Only right which are patrimonial in character can be considered
property. Rights which are not patrimonial, such as the right to
liberty, the right to honor, family rights, and political right cannot
be considered property.
Categories of immovable property: (2007 1997 1995 BQ)

Delivery of Presumptive Legitime Not applicable to Void
Marriage under Art 36 of FC (2018 BQ)
The liquidation of the co-ownership under Art 147 did not provide
for the obligation to pay the presumptive legitime of the common
children.
1. Nature – Those which cannot be carried from place to place.
2. Incorporation – Those which are attached to an immovable
in a fixed manner and considered as an integral part thereof,
irrespective of its ownership.
3. Destination – Things placed in buildings or on lands by the
owner of the immovable or his agent in such a manner that
it reveals the intention to attach them permanently thereto.
4. Analogy – Classified by express provision of law.

Par. 3, Art. 415. Everything attached to an immovable in a fixed

manner, in such a way that it cannot be separated therefrom

JC POGI PRE-WEEK NOTES 2022 5

 The Law Pertaining to Private Personal and Commercial Relations
without breaking the material or deterioration of the object.
(2007 BQ)
Machinery placed by a tenant or by a usufructuary is NOT a
real property. (2019 BQ)
Since it is placed by a person having only a temporary right, it
does not become immobilized.
Where a tenant places the machinery under lease that it shall
become a part of the land belonging to the owner upon the
termination of the lease without compensation to the lessee, the
tenant acts as an agent of the owner and the immobilization of
the machineries arises from the act of the owner in giving by
contract a permanent destination to the machinery.
Equipment and living quarters of the crew permanently
attached are immovable properties (2007 BQ)
Rule regarding discovery of hidden treasure (NCC, Art. 438
in relation to Art. 718)
GR: If the finder is the owner of the land, building, or other
property where it is found, the entire hidden treasure belongs to
him.
XPN: If the finder is not the owner or is a stranger (includes the
lessee or usufructuary, he is entitled to ½ thereof.
The finder is not entitled to the hidden treasure if it was
deliberately searched (1976 BQ)
It was not found by chance. Moreover, treasure is defined as
hidden and unknown deposit of precious objects, the lawful
ownership of which does not appear. There being a tip, the
deposit is known.

The equipment partakes of the nature of the immovable upon Nature and ownership of the old notes and coins (2010 BQ)
which it has been placed. The living quarters, if attached to the
immovable platform with permanence, becomes an immovable as The ownership of the vault, together with the notes and coins can
well. If the attachment is not permanent, or not merely now legally be considered as hidden treasure because its
superimposed on the platform, then the living quarters are ownership is no longer apparent. The contractor is not a
movable properties. trespasser and therefore entitled to one-half of the hidden
treasure and the owner of the property is entitled the other half.
NOTE: Article 415(5) of the New Civil Code defines “machinery”
as that which constitutes an immovable property: Article 415.
The following are immovable property: (5) 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 directly to meet
the needs of the said industry or works. (Provincial Assessor of
Agusan del Sur vs. Filipinas Palm Oil Plantation, Inc., G.R.
No. 183416 October 5, 2016, J. Leonen)

Floating platform is an immovable property (2007 BQ)

The platform is an immovable property by destination. It was

intended by the owner to remain at a fixed place on a river or
coast. Docks and structures which, though floating are intended
by their nature and object to remain at a fixed place on a river,
lake, or coasts considers as real property.

Personal or Movable properties (1995 BQ)

1. Movables Susceptible of appropriation which are not

included in Art. 415;
2. Real property which by any Special provision of law
considers as personality; e.g. growing crops under the
Chattel Mortgage Law
3. Forces of nature which are brought under the control of
science; e.g. electricity generated by electric powers, solar
light for batteries power.
4. In general, all things which can be Transported from place
to place without impairment of the real property to which
they are fixed;
5. Obligations and actions which have for their object movables
or demandable sums; and
6. Shares of stock of agricultural, commercial and industrial
entities, although they have real estate.

Ownership

Hidden Treasure (2014 2010 2008 1997 BQ)

By treasure is understood, for legal purposes, any hidden and

unknown deposit of money, jewelry, or other precious objects,
the lawful ownership of which does not appear.
Oil or gold NOT considered as hidden treasure.

These are natural resources. The Regalian Doctrine applies and

not the provisions on hidden treasure.

JC POGI PRE-WEEK NOTES 2022 6

 The Law Pertaining to Private Personal and Commercial Relations
Rules of accession

For immovables

Rule when the land owner, builder, planter, sower and owner of materials are different persons (2019 2018 2017 2016 2015 2013
2008 2000 1999 1996 BQ)

Land Owner Builder, Planter, Sower Owner of Materials

Good Faith Good Faith Good Faith
He shall answer subsidiarily for their value Pay value of materials to its owner without a. Collect value of materials primarily from
and only in the event that the one who made paying damages. and builder, planter, sower, subsidiarily
use of them has no property with which to from land owner; or
pay; and If the Land Owner: b. Remove the materials only if w/o injury
1. Acquires the improvement, Builder, to the work constructed, or without the
He can either: Planter, or Sower may demand from the plantings, constructions or works being
1. Acquire improvements after paying landowner the value of the materials and destroyed.
indemnity for: labor.
a. Necessary expenses, and
b. Useful expenses which could either And he has the right to retain the thing
be: until indemnity is paid.
i. Original costs of
improvements If the useful improvements can be
ii. Increase in the value of the removed without damage to the principal
whole (NCC, Art. 546 & 443) thing, the possessor in good faith may
2. Sell the land to builder and planter or remove them, unless the person who
collect rent from sower unless the value recovers the possession exercises the
of the land is considerably greater than other.
the building etc., in which case, the
builder and planter shall pay rent. 2. Sells the land or rents it, Builder or
Planter cannot be obliged to buy the land
if its value is considerably more than that
of the building or trees.
Good Faith Good Faith Bad Faith
Land Owner can either: If the Land Owner: 1. Loses materials without right to
indemnity (NCC, Art. 449)
1. Acquire improvements after paying 1. Acquires the improvement, Builder, 2. Pays damages (NCC, Art. 451)
indemnity for: Planter, or Sower has the right to retain
a. Necessary expenses, and the thing (and cannot be required to pay The builder, planter or sower would be
b. Useful expenses which could either rent) until indemnity is paid considered merely an agent of the owner
be: of materials.
i. Original costs of If the useful improvements can be
improvements removed without damage to the principal
ii. Increase in the value of thing, the possessor in good faith may
the whole remove them, unless the person who
2. Sell the land to builder and planter or recovers the possession exercises the
collect rent from sower unless the value other.
of the land is considerably greater than
the building etc., in which case, the 2. Sells or rents it, Builder or Planter
builder and planter shall pay rent. cannot be obliged to buy the land if its
value is considerably more than that of
the building or trees.
Good Faith Bad Faith Bad Faith
1. Option to: 1. Lose improvements without right to be 1. Recover value from builder, planter,
a. Acquire improvements without indemnified unless the landowner sells sower (in pari delicto)
paying indemnity and collect the land 2. If builder, planter, sower acquired
damages. 2. Recover necessary expenses for improvements, remove the materials
b. Order the demolition of work or preservation of land without the right to only if w/o injury to the work
restoration to former condition and retain the thing until the indemnity is constructed, or without the plantings,
collect damages in both cases paid. constructions or works being destroyed
c. Sell the land to builder and planter 3. Pay the value of the materials to the 3. No action against land owner; and
or rent it to the sower, and collect owner of the materials. Since both the 4. May be liable to the land owner for
damages in both cases owner of the materials and the builder, damages
2. Has right to demand damages from etc. acted in bad faith, as between them,
both. they are treated as having both acted in
3. Pay necessary expenses for good faith.
preservation. 4. Pay damages to land owner
4. Not subsidiarily liable to the owner of
the materials because as to him, the two
acted in bad faith.
Bad Faith Bad Faith Bad Faith
Same as though both acted in good faith (in pari delicto)( NCC, Art. 453).

JC POGI PRE-WEEK NOTES 2022 7

 The Law Pertaining to Private Personal and Commercial Relations
Builder in Good Faith vs Builder in Bad Faith
Builder, planter, or sower in good faith refers to one who, not
being the owner of the land, builds, plants, or sows on that land
believing himself to be its owner and unaware of the defect in his
title or mode of acquisition. Builder, planter, or sower in bad
faith may only be attributed to a landowner when the act of
building, planting, or sowing was done with his knowledge and
without opposition on his part.
Art 453 of the NCC provides that where both the landowner and
the builder, planter, or sower acted in bad faith, they shall be
treated as if both of them were in good faith, whenever both the
landowner and the builder/planter/sower are in good faith, the
landowner is given two (2) options under Art 448: (2019 BQ)
a. he may appropriate the improvements for himself after
reimbursing the buyer (the builder in good faith) the
necessary and useful expenses; or
b. he may sell the land to the buyer, unless its value is
considerably more than that of the improvements, in which
case, the buyer shall pay reasonable rent(Padilla, Jr. vs.
Malicsi, G.R. No. 201354 September 21, 2016, J.
Leonen)
NOTE: Article 448 on builders in good faith does not apply where
there is a contractual relation between the parties.
Right of accession is that right of ownership of which an owner
of a thing has over the products of said thing (accession discreta),
as well as to all things inseparably attached or incorporated
thereto whether naturally or artificially (accession continua)
Obligation of the owner who receives the fruit from a third
person (2009 BQ)
He who receives the fruits has the obligation to pay the expenses
made by a third person in their production, gathering and
preservation.
Requisites of accretion (2017 2016 BQ)
1. Deposit be gradual and imperceptible
2. Resulted from the effects of the current of the water
3. The land where the accretion takes place is adjacent to the
banks of a river
Options available to the landowner if crops are planted in
good faith in his property (2000 BQ)
As to the pending crops planted in good faith, the landowner has
the option of allowing the planter in good faith to continue the
cultivation and to harvest the crops, or to continue the cultivation
and harvest the crops himself. However, the landowner shall
have the right to a part of the expenses of cultivation and to a
part of the net harvest, both in proportion to the time of
possession.
The builder is entitled to a refund of the expenses he
incurred and not on the market value of the improvement
(2000 BQ)
The builder in good faith is entitled to a refund of the necessary
and useful expenses incurred by him, or the increase in value
which the land may have acquired by reason of the improvement,
at the option of the landowner. The builder is entitled to a refund
of the expenses he incurred, and not to the market value of the
improvement.
JC POGI PRE-WEEK NOTES 2022
The landowner is entitled to the rentals of the building if he
opted to appropriate it, subject to the right of retention of
the builder in good faith (2000 BQ)
The landowner is entitled to the rentals of the building. As the
owner of the land, he is also the owner of the building being an
accession thereto. However, the builder in good faith is entitled
to retain the building until indemnity is paid. Consequently, he
is also entitled to retain the rentals. He, however, shall apply the
rentals to the indemnity payable to him after deducting
reasonable cost of repair and maintenance.
Alluvium or alluvion (2017 2016 2009 2008 2003 2001 BQ)
The rule on accretion is to the owners of lands adjoining the
banks of rivers belong the accretion which they gradually receive
from the effects of the current of the waters. Alluvial deposits
along the banks of a creek or a river do not form part of the public
domain as the alluvial property automatically belongs to the
owner of the estate to which it may have been added.
Accretion v. Alluvium (2017 2016 2001 BQ)
Accretion is the process whereby the soil is deposited while
alluvium is the soil deposited.
Avulsion (2014 2003 2001 BQ)
It is the deposit of known identifiable portion of land detached
from the property of another which is attached to the property of
another as a result of the effect of the current of a river, creek or
torrent Whenever the current of a river, creek, or torrent
segregates from an estate on its banks a known portion of land
and transfers it to another estate, the owner of the land to which
the segregated portion belonged retains the ownership of it,
provided that he removes the same within 2 years. (2001 BQ)
Co-Ownership
There is co-ownership whenever the ownership of an undivided
thing or right belongs to different persons. (2009 2008 BQ)
Alienation of property co-owned (2018 BQ)
A person can only sell what he owns or is authorized to sell and
the buyer can as a consequence acquire no more than what the
seller can legally transfer. Each co-owner shall have the full
ownership of his part and of the fruits and benefits pertaining
thereto, and he may therefore alienate, assign or mortgage it, and
even substitute another person in its enjoyment, except when
personal rights are involved. But the effect of the alienation or
the mortgage, with respect to the co-owners, shall be limited to
the portion which may be allotted to him in the division upon the
termination of the co-ownership.
Any of the co-owners may bring an action in ejectment (2019
BQ)
It covers all kinds of actions for the recovery of possession,
including an accion publiciana and a reinvidicatory action. A co-
owner may bring such an action without the necessity of joining
all the other co-owners as co-plaintiffs because the suit is deemed
to be instituted for the benefit of all.
Duration of the co-ownership (2015 2008 2002 2000 BQ)
An agreement to keep the thing undivided for a certain period of
time, not exceeding ten years, shall be valid which may be
extended by a new agreement. A donor or testator may prohibit
partition for a period which shall not exceed twenty years.
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 The Law Pertaining to Private Personal and Commercial Relations
Share of the co-owners in the benefits and charges arising
from the co-ownership (2014 2009 BQ)
The share of the co-owners, in the benefits as well as in the
charges, shall be proportional to their respective interests. Any
stipulation in a contract to the contrary shall be void. The
portions belonging to the co-owners in the co-ownership shall be
presumed equal, unless the contrary is proved.
Right to demand partition (2015 2008 2002 2000 BQ)
GR: Every co-owner has the right to demand partition
XPNs:
1. When partition would render the thing Unserviceable; or
2. When the thing is essentially Indivisible;
3. When partition is prohibited by Law by reason of their origin
or juridical nature- ex. party walls and fences;
4. When the co-owners Agree to keep the property undivided
for a period of time but not more than 10 yrs;
5. When partition is Prohibited by the transferor but not more
than 20 yrs;
6. When a co-owner possessed the property as an Exclusive
owner for a period sufficient to acquire it through
prescription. (Acquisitive Prescription)
7. When Co-owners may agree that it be Allotted to one of them
reimbursing the others; and
8. If they cannot agree, they may Sell the thing and distribute
the proceeds.
NOTE: The right to ask for partition CANNOT be waived or
renounced permanently. Such waiver or renunciation is void.
3. Rights of co-owners
Unless all the co-owners have agreed to partition their property,
none of them may sell a definite portion of the land. The co-owner
may only sell his or her proportionate interest in the co-
ownership. A contract of sale which purports to sell a specific or
definite portion of unpartitioned land is null and void ab initio.
Sale of a portion of the property is considered an alteration of the
thing owned in common. Under the Civil Code, such disposition
requires the unanimous consent of the other co-owners.
However, the rules also allow a co-owner to alienate his or her
part in the co-ownership. (Cabrera vs. Ysaac, G.R. No. 166790
November 19, 2014, J. Leonen)
NOTE: The heirs cannot alienate the shares that do not belong
to them. Each co-owner shall have the full ownership of his part
and of the fruits and benefits pertaining thereto, and he may
therefore alienate, assign or mortgage it, and even substitute
another person in its enjoyment, except when personal rights are
involved. But the effect of the alienation or the mortgage, with
respect to the co-owners, shall be limited to the portion which
may be allotted to him in the division upon the termination of the
coownership. (Heirs of Lopez vs. DBP, G.R. No. 193551
November 19, 2014, J. Leonen)
Easements
As to source
a. Legal – those created by law for public use or private
interests.
b. Voluntary - constituted by will or agreement of the parties
or by testator.
c. Mixed – created partly by agreement and partly by law.
NOTE: Like any other contract, a voluntary easement could be
extinguished only by mutual agreement or by renunciation of the
owner of the dominant estate.
JC POGI PRE-WEEK NOTES 2022
Relating to waters
Scope of easement of natural drainage (2019 2002 BQ)
Negal easement pertaining to the natural drainage of lands,
which obliges lower estates to receive from the higher estates
water which naturally and without the intervention of man
descends from the latter. 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.
NOTE: The water facility in a subdivision is continuous and
apparent easement, because it is used incessantly without
human intervention, and because it is continually kept in view
by the overheard water tank, which reveals its use to the public.
If continuously used for more than 30 years, an easement of
water facility has already been acquired through prescription.
Easement on Riparian Property
The banks of rivers and streams throughout their entire length
and within a zone of 3 meters in urban areas, 20 meters in
agricultural areas, and 40 meters in forest areas along their
margins are subject to the easement of public use in the interest
of recreation, navigation, floatage, fishing and salvage.
No person shall be allowed to stay in this zone bigger than what
is necessary for recreation, navigation, floatage, fishing or salvage
or to build structures of any kind
Right of way
Easement of right of way is the right to demand that the owner
of an estate surrounded by other estates be allowed to pass thru
the neighboring estates after payment of proper indemnity. (2017
2013 2010 2005 2000 1996 BQ)
Nature of easement of right of way
An easement of right of way is a real right. When an easement of
right of way is granted to another person, the rights of the
property’s owner are limited. An owner may not exercise some of
his or her property rights for the benefit of the person who was
granted the easement of right of way.
NOTE: Easement of right of way CANNOT be acquired by
prescription because it is discontinuous. (2005 BQ)
Requisites for easement on right of way (2017 2013 2010
2005 2000 1996 BQ)
1. The easement must be established at the point least
Prejudicial to the servient estate
2. Claimant must be an Owner of enclosed immovable or with
real right
3. There must be no adequate Outlet to a public highway
4. The right of way must be absolutely Necessary not mere
convenience
5. The isolation must not be Due to the claimant’s own act
6. There must be payment of proper Indemnity. (Reyes vs.
Valentin, G.R. No. 194488 February 11, 2015, J.
Leonen)
Least prejudicial to the servient estate in determining the right
of way means it is the shortest way and the one which will cause
the least damage to the property to the servient estate in favor of
the dominant estate. (2010 2005 2000 1996 BQ)
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 The Law Pertaining to Private Personal and Commercial Relations
If the property is not the shortest way but will cause the least
damage to the servient estate (2017 BQ)
The way which will cause the least damage should be used even
if it will not be the shortest. The easement of right of way shall be
established at the point least prejudicial to the servient estate
and where the distance from the dominant estate to a public
highway is the shortest. In case of conflict, the criterion of least
prejudice prevails over the criterion of shortest distance.
Light and View
The easement of light and view is the right to open windows and
apertures and to bar the owner of the servient estate to block the
view. The owner of the servient estate cannot build within 3
meters from the boundary between the servient and the
dominant estate. Thus, there is 5 meters between the wall of the
opening and any structure of the servient estate. The obligation
not to build higher accompanies the easements of light and view.
Lateral and Subjacent Support
Lateral and Subjacent Support (2018 BQ)
In lateral support, there is an obligation to see to it that the
structures on your neighbor’s land will not collapse from your
land’s lack of support.
In subjacent support, the owner of the surface and the sub-
surface are different.
NOTE: The annotation of an adverse claim over registered land
under Section 70 of PD 1529 requires a claim on the title of the
disputed land. However, an annotation of the existence of the
lateral and subjacent support is NO longer necessary because it
exists whether or not it is annotated or registered in the registry
of property. (Castro v. Monsod G.R. 183719 February 2, 2011,
J. Peralta) (2018 BQ)
Modes of acquiring easements
Doctrine of apparent sign (2014 BQ)
Easements are inseparable from the estate to which they actively
or passively pertain. The existence of apparent sign is equivalent
to a title. It is as if there is an implied contract between the two
new owners that the easement should be constituted, since no
one objected to the continued existence of the windows.
NOTE: A right-of-way easement or burden becomes a “taking”
under eminent domain when there is material impairment of the
value of the property or prevention of the ordinary uses of the
property for an indefinite period. The intrusion into the property
must be so immediate and direct as to subtract from the owner’s
full enjoyment of the property and to limit his or her exploitation
of it. The right-of-way easement resulting in a limitation on
property rights over the land traversed by transmission lines also
falls within the ambit of the term “expropriation.” (NPC vs.
Asoque, G.R. No. 172507 September 14, 2016, J. Leonen)
Rights and obligations of the owners of the dominant and
servient estates
Dominant estate refers to the immovable for which the easement
was established.
Servient estate the estate which provides the service or benefit.
Rights of the dominant owner
1. Exercise all rights necessary for the use of the easement;
2. Make on the servient estate all works necessary for the use
and preservation of the servitude;
JC POGI PRE-WEEK NOTES 2022
3. Renounce the easement if he desires to be exempt from
contributing necessary expenses; and
4. Ask for mandatory injunction to prevent impairment of his
right.
Obligations of the dominant owner
1. He cannot Exercise the easement in any other manner than
that previously established;
2. He cannot Alter the easement or render it more burdensome;
3. He shall Notify the servient owner of works necessary for the
use and preservation of the servitude;
4. He must Choose the most convenient time and manner of
making the necessary works as to cause the least
inconvenience to the servient owner; and
5. If there are several dominant estates he must Contribute to
the necessary expenses in proportion to the benefits derived
from the works
Servient owner is the owner of the immovable whose property is
subject to easement for the benefit of the dominant owner.
Rights of the servient owner
1. Retain the ownership of the portion of the estate on which
easement is imposed;
2. Make use of the easement unless there is an agreement to
the contrary and
3. Change the place or manner of the use of the easement,
provided it be equally convenient.
Obligations or limitations imposed on the servient owner
1. He cannot Impair the use of the easement.
2. He must Contribute to the necessary expenses in case he
uses the easement, unless otherwise agreed upon
I. NUISANCE
Nuisance is any act, omission, establishment, business,
condition of property, or anything else which: (2006 2005 BQ)
1. Injures or endangers the health or safety of others; or
2. Annoys or offends the senses; or
3. Shocks, defies or disregards decency or morality; or
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.
Nuisances with respect to the object or objects that they
affect may either be:
a. a public nuisance or one which affects a community or
neighborhood or any considerable number of persons,
although the extent of the annoyance, danger or damage
upon individuals may be unequal; or
b. a private nuisance, one which violates only private rights
and produces damages to but one or a few persons
Nuisances in relation to their legal susceptibility to summary
abatement may either be:
a. a nuisance per se or one which affects the immediate safety
of persons and property and may be summarily abated
under the undefined law of necessity; or
b. a nuisance per accidens or 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.
Hotel in Boracay NOT Nuisance per se
The hotel cannot be considered as a nuisance per se since this
type of nuisance is generally defined as an act, occupation, or
10
 The Law Pertaining to Private Personal and Commercial Relations
structure, which is a nuisance at all times and under any
circumstances, regardless of location or surrounding. Here, it is
merely the hotel’s particular incident, its location and not its
inherent qualities that rendered it a nuisance.
Attractive Nuisance (2011 BQ)
One who maintains on his premises dangerous instrumentalities
or appliances of a character likely to attract children in play, and
who fails to exercise ordinary care to prevent children from
playing, is liable to a child of tender years who is injured thereby,
even if the child is technically a trespasser in the premises.
Swimming Pool NOT attractive nuisance (2005 BQ)
GR: A swimming pool or water tank is not an attractive nuisance,
for while it is attractive, it is merely an imitation of the work of
nature.
XPN: Swimming pool with dangerous slide characteristics
iv. Obligation
An obligation is a juridical necessity to give, to do, or not to do.
It is a juridical relation or a juridical necessity whereby a person
(creditor) may demand from another (debtor) the observance of a
determinative conduct (giving, doing, or not doing), and in case
of breach, may demand satisfaction from the assets of the latter.
NATURE AND EFFECT OF OBLIGATIONS
Obligation to Give
If the obligation is determinate, the rights of the creditor are:
1. To compel specific performance
2. To recover damages in case of breach of the obligation
If the obligation is indeterminate or generic, the rights of the
creditor are:
1. To ask for performance of the obligation
2. To ask that the obligation be complied with at the expense
of the debtor
3. To recover damages in case of breach of the obligation
Delay (Mora)
In order that the debtor may be in default, it is necessary that:
a. the obligation be demandable and already liquidated;
b. the debtor delays performance; and
c. the creditor requires the performance judicially or
extrajudicially, unless demand is not necessary; where the
law so provides; when the period is the controlling motive or
the principal inducement for the creation of the obligation;
and where demand would be useless. (Gotesco Properties.
vs. Solidbank Corporation G.R. No. 209452 July 26,
2017, J. Leonen)
Mora Solvendi
The following are its requisites:
1. Obligation pertains to the debtor;
2. Obligation is determinate, due and demandable, and
liquidated;
3. Obligation has not been performed on its maturity date;
4. There is judicial or extrajudicial demand by the creditor;
When shall demand by the creditor be NOT necessary in order
that delay may exist (2019 BQ)
1. When the obligation or the law expressly so declares; or
JC POGI PRE-WEEK NOTES 2022
2. When from the nature and the circumstances of the
obligation it appears that the designation of time when the
thing is to be delivered or the service is to be rendered was a
controlling motive for the establishment of the contract; or
3. When demand would be useless, as when the obligor has
rendered it beyond his power to perform.
Mora Accipiendi (2018 BQ)
The following are its requisites:
1. Offer of Performance by a capacitated debtor;
2. Offer must be to Comply with the prestation as it should be
performed; and
3. Refusal of the creditor without just cause.
Fortuitous Event / Caso Fortuito (2015 2008 2002 2000 BQ)
Fortuitous events are extraordinary events not foreseeable or
avoidable. To constitute a fortuitous event, the following elements
must concur:
a. the cause of the unforeseen and unexpected occurrence or
of the failure of the debtor to comply with obligations
must be independent of human will;
b. it must be impossible to foresee the event that constitutes
the caso fortuito or, if it can be foreseen, it must be
impossible to avoid;
c. the occurrence must be such as to render it impossible for
the debtor to fulfill obligations in a normal manner; and,
d. the obligor must be free from any participation in the
aggravation of the injury or loss.
Liability for loss due to fortuitous event
GR: There is no liability for loss in case of fortuitous event.
XPNs:
1. Law;
2. Nature of the obligation requires the assumption of risk;
3. Stipulation;
4. The debtor is guilty of dolo, malice or bad faith, has Promised
the same thing to two or more persons who does not have
the same interest;
5. The debtor Contributed to the loss
6. The possessor is in Bad faith; or
7. The obligor is Guilty of fraud, negligence or delay or if he
contravened the tenor of the obligation.
KINDS OF OBLIGATIONS
Pure obligation is an obligation whose performance does not
depend upon a future or uncertain event, or upon a past event
or upon a past event unknown to the parties, demandable at
once. (Olivarez Realty vs. Castillo, G.R. No. 196251 July 9,
2014, J. Leonen)
Conditional obligation is an obligation subject to a condition
and the effectivity of which is subordinated to the fulfillment or
non-fulfillment of a future and uncertain event, or upon a past
event unknown to the parties.
Suspensive condition is a condition the fulfillment of which will
give rise to the acquisition of a right. While the condition has not
arrived yet, in the meantime, the rights and obligations of the
parties are suspended.
NOTE: In a contract with a suspensive condition, if the condition
does not happen, the obligation does not come into effect. (DBP
vs. Sta. Ines Melale, G.R. No. 193068, G.R. No. 193099
February 1, 2017, J. Leonen)
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 The Law Pertaining to Private Personal and Commercial Relations
Positive suspensive condition is a condition which requires a
positive act on the part of the obligor that gives rise to the
acquisition of rights. In case of a contract to sell, the obligation
to deliver the subject properties becomes demandable only upon
the happening of the positive suspensive condition (payment of
full purchase price). Without full payment, there can be no
breach of contract to speak of because the seller has no obligation
yet to turn over the title. (2003 BQ)
Resolutory condition is a condition where the rights already
acquired are lost upon fulfillment of the condition. (1999 BQ)
Suspensive condition vs Resolutory condition
performance of the obligation, or if he so desires, he may
renounce the benefit of the period by performing his
obligation in advance.
Means permit me to do so (2017 2003 1997 BQ)
When the debtor binds himself to pay when his means permit
him to do so, the obligation is deemed with a period. As the time
of payment is not fixed, the court must fix the same before any
action for collection may be entertained, unless, the prior action
of fixing the term or period will only be a formality and will serve
no purpose but delay.

SUSPENSIVE CONDITION RESOLUTORY CONDITION Instances where the court may fix the period (2017 2003
Effect of fulfilment 1997 1991 BQ)
Obligation arises or becomes Obligation is extinguished
effective. 1. If the obligation does not fix a period, but from its nature
Effect of non-fulfillment and circumstances it can be inferred that a period was
intended by the parties.
If not fulfilled, no juridical If not fulfilled, juridical relation
2. If the duration of the period depends upon the will of the
relation is created. is consolidated.
debtor
When rights are acquired 3. In case of reciprocal obligations, when there is a just cause
Rights are not yet acquired, Rights are already vested, but for fixing the period.
but there is hope or expectancy subject to the threat or danger 4. If the debtor binds himself when his means permit him to do
that they will soon be acquired. of extinction. so.

Negative Resolutory condition is an act, which if not done,
would give rise to a cause of action against the obligor. It
contemplates a situation where rights are already acquired but
subject to an obligation, the non-fulfillment of which does not
affect the rights already acquired but merely gives a cause of
action in favor of the other party. In a contract of sale, the buyer’s
non-payment of the price is a negative resolutory condition. In
such case, the seller has lost and cannot recover the ownership
of the property unless he takes action to set aside the contract of
sale. (2003 BQ)
Potestative Condition is a condition which depends upon the
will of one of the contracting parties. (2003 2000 1997 BQ)
Effects of Potestative Conditions (1997 BQ)
If the condition is potestative in the sense that its fulfillment
depends exclusively upon the will of the debtor, and the same
is suspensive, both the condition and obligation are VOID.
Instances where the debtor loses his right to make use of the
period
1. When after the obligation has been contracted he becomes
insolvent, unless he gives a guaranty or security for the debt;
2. When he does not furnish to the creditor the guaranties or
securities which he has promised;
3. When by his own acts he has Impaired said guaranties or
securities after their establishment;
4. When through a fortuitous event they disappear, unless he
immediately gives new ones or equally satisfactory;
5. When the debtor violates any undertaking, in consideration
of which the creditor agreed to the period; and
6. When the debtor attempts to abscond. (DBP vs. Sta. Ines
Melale, G.R. No. 193068, G.R. No. 193099 February 1,
2017, J. Leonen)
Joint obligation v. Solidary obligation (2015 2011 2008 2001
1992 BQ)

However, if the condition is a pre-existing one or the condition is JOINT OBLIGATION SOLIDARY OBLIGATION
resolutory, only the condition is void, leaving the obligation itself Presumption by law
valid because what is left to the sole will of the debtor is not the Presumed by law. Not presumed. Must be
existence or the fulfillment of the obligation but merely its (NCC, Art. 1208) expressly stipulated by the
extinguishment. parties, or when the law or the
nature of the obligation
Casual Condition is the performance or the fulfillment of the
requires solidarity (NCC, Art.
condition which depends upon chance and/or the will of a third 1207).
person. (2003 BQ)
Liability of each debtor
Mixed Condition is the performance or fulfillment of the Proportionate part of the Obliged to pay the entire
condition which depends partly upon the will of a party to the entire debt. obligation.
obligation and partly upon chance and or the will of a third Right of the creditor to the fulfillment of the obligation
person. Each creditor, if there are Each creditor has the right to
several, is entitled only to a demand from any of the
Obligation with a period or a term proportionate part of the debtors, the payment or
credit. fulfillment of the entire
Obligations for whose fulfillment a day certain has been fixed, obligation.
shall be demandable only when that day comes.
In cases of solidary creditors, one may act for all (2015 2013
Effect of the term/period 2003 1998 BQ)

1. When it is for the benefit of the creditor – Creditor may
demand the performance of the obligation at any time but
the debtor cannot compel him to accept payment before the
expiration of the period.
2. When it is for the benefit of the debtor – Debtor may
oppose any premature demand on the part of the creditor for
JC POGI PRE-WEEK NOTES 2022
Each one of the solidary creditors may execute acts which may
be useful or beneficial to the others, but he may not do anything
which may be prejudicial to them.
Divisible obligations vs Indivisible obligations
12
 The Law Pertaining to Private Personal and Commercial Relations
Divisible obligations are those which have as their object a
prestation which is susceptible of partial performance with the
essence of the obligation being changed.
Indivisible obligations are those which have as their object a
prestation which is not susceptible of partial performance,
because otherwise the essence of the obligation will be changed.
The obligation is clearly indivisible because the performance of
the contract cannot be done in parts, otherwise, the value of what
is transferred is diminished. (Lam vs. Kodak Philippines, Ltd.,
G.R. No. 167615 January 11, 2016, J. Leonen)
EXTINGUISHMENT OF OBLIGATIONS
Obligations are extinguished either by payment or performance,
the loss of the thing due, the condonation or remission of the
debt, the confusion or merger of the rights of creditor and debtor,
compensation or novation.
Payment is the fulfillment of the obligation by the realization of
the purposes for which it was constituted. (2009 1998 BQ)
Acceptance by a creditor of a partial payment NOT an
abandonment of its demand for full payment
When creditors receive partial payment, they are not ipso facto
deemed to have abandoned their prior demand for full payment.
NOTE: While creditors cannot be compelled to accept partial
payments, it does not prohibit them from accepting such
payments.
Special Forms of Payment
Dation in Payment (dacion en pago) is the delivery and
transmission of ownership of a thing by the debtor to the creditor
as an accepted equivalent of the performance of the obligation.
(2016 2009 BQ)
Application of Payment is the designation of the debt to which
the payment must be applied when the debtor has several
obligations of the same kind in favor of the same creditor.
Payment by Cession is the assignment or cession contemplated
here is the abandonment of the universality of the property of the
debtor for the benefit of his creditors. In order that such property
may be applied to the payment of the credits. The initiative comes
from the debtor, but it must be accepted by the creditors in order
to become effective.
Tender of Payment is the definitive act of offering to the creditor
what is due him together with the demand that the creditor
accept the same. Tender of payment is the manifestation by
debtors of their desire to comply with or to pay their obligation.
(2011 BQ)
Consignation is act of depositing the object of the obligation with
the court or competent authority after the creditor has
unjustifiably refused to accept the same or is not in a position to
accept it due to certain reasons or circumstances. (2014 2011
BQ)
NOTE: Consignation is necessarily judicial. Consignation shall
be made by depositing the thing or things due at the disposal of
judicial authority. Substantial compliance is not enough. The
giving of notice to the persons interested in the performance of
the obligation is mandatory. Failure to notify the persons
interested in the performance of the obligation will render the
consignation void (Dalton v. FGR Realty G.R. No. 172577,
January 19, 2011, J. Carpio).
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Loss of the Thing Due; when a thing is considered lost
1. It Disappears in such a way that its existence is unknown;
2. It goes Out of commerce;
3. It Perishes; or
4. Its Existence is unknown or if known, it cannot be recovered.
Rebus sic stantibus is a principle in international law which
means that an agreement is valid only if the same conditions
prevailing at the time of contracting continues to exist at the time
of performance. It is the basis of the principle of unforeseen
difficulty of service. (2017 BQ)
Condonation or remission of debt is an act of liberality by
virtue of which the creditor, without receiving any price or
equivalent, renounces the enforcement of the obligation, as a
result of which it is extinguished in its entirety or in that part or
aspect of the same to which the condonation or remission refers.
(2015 2000 BQ)
There is a Confusion or merger of rights of creditor and debtor
when there is a meeting in one person of the qualities of a creditor
and debtor of the same obligation.
Effect of confusion or merger of rights
The creditor and debtor becomes the same person involving the
same obligation. Hence, the obligation is extinguished.
Compensation is a mode of extinguishing obligations whereby
two persons in their capacity as principals are mutual debtors
and creditors of each other with respect to equally liquidated and
demandable obligations to which no retention or controversy has
been timely commenced and communicated by third parties.
(2019 2009 2008 2002 1998 1997 BQ)
NOTE: Compensation shall not be proper when one of the debts
arises from a depositum or from the obligations of a depositary
or of a bailee in commodatum. Neither can compensation be set
up against a creditor who has a claim for support due by
gratuitous title without prejudice.
In order that compensation may be proper, it is necessary:
(2019 2009 2008 2002 1998 1997 BQ)
1. That each one of the obligors be bound principally, and that
he be at the same time a principal creditor of the other;
2. That both debts consist in a sum of money, or if the things
due are consumable, they be of the same kind, and also of
the same quality if the latter has been stated;
3. That the two debts be due;
4. That they be liquidated and demandable;
5. That over neither of them there be any retention or
controversy, commenced by third persons and
communicated in due time to the debtor.
Novation is the substitution or change of an obligation by
another, resulting in its extinguishment or modification, either
by changing the object or principal conditions, or by substituting
another in the place of the debtor or by subrogating a third
person to the rights of the creditor. (2019 2016 2014 2011 2008
BQ)
NOTE: Novation, may either be extinctive or modificatory. It is
extinctive when an old obligation is terminated by the creation
of a new obligation that takes the place of the former; it is merely
modificatory when the old obligation subsists to the extent it
remains compatible with the amendatory agreement. In either
case, however, novation is never presumed, and the animus
novandi, whether totally or partially, must appear by express
agreement of the parties, or by their acts that are too clear and
unequivocal to be mistaken. (Arco Pulp vs. Lim, G.R. No.
206806 June 25, 2014, J. Leonen)
13
 The Law Pertaining to Private Personal and Commercial Relations
Novation by substitution of debtor (2014 BQ)
To constitute novation by substitution of debtor, the former
debtor must be expressly released from the obligation and the
third person or new debtor must assume the former’s place in
the contractual relations. The fact that the creditor accepts
payments from a third person, who has assumed the obligation,
will result merely in the addition of debtors and not novation.
Novation is never presumed, whether totally or partially, must
appear by express agreement of the parties, or by their acts that
are too clear and unequivocal to be mistaken. (The Wellex
Group, Inc. vs. U-Land Airlines Co., Ltd., G.R. No. 167519
January 14, 2015, J. Leonen)
Subrogation is the active subjective novation characterized by
the transfer to a third person of all rights appertaining to the
creditor in the transaction concerned including the right to
proceed against the guarantors or possessors of mortgages and
similar others subject to any applicable legal provision or any
stipulation agreed upon by the parties in conventional
subrogation. (2018 BQ)
NOTE: Whoever pays on behalf of the debtor without the
knowledge or against the will of the latter cannot compel the
creditor to subrogate him in his rights. (2018 BQ)
v. Contract
A contract is a meeting of minds between two persons whereby
one binds himself, with respect to the other, to give something or
to render some service.
Contracts undergo three distinct stages.
1. Negotiation begins from the time the prospective
contracting parties manifest their interest in the contract
and ends at the moment of their agreement.
2. Perfection or birth of the contract takes place when the
parties agree upon the essential elements of the contract.
3. Consummation occurs when the parties fulfill or perform
the terms agreed upon in the contract, culminating in the
extinguishment thereof. (MRTDC vs. Gammon Philippines,
Inc., G.R. No. 200401 January 17, 2018, J. Leonen)
The Characteristics of a contract:
Principle of relativity or Principle of limited effectivity of
contracts means that the contracts can only bind the parties
who had entered into it and it cannot favor or prejudice third
persons. Contracts take effect only between the parties, their
successors in interest, heirs and assigns 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. (2011 2002 1996 1991 BQ)
XPNs:
1. Rights and obligations that are not transmissible by their
nature, or by the stipulation or by provisions of law;
2. Stipulation pour autrui (stipulation in favor of a third person)
object of the contract creating real rights;
3. Contracts entered into in fraud of creditors;
4. When a third person induces a party to violate the contract
(1998 1991 BQ)
In order that a third person benefited by stipulation pour
autrui, may demand its fulfillment, the following requisites
must concur:
1. There is a stipulation in favor of a third person;
2. The stipulation is a part, not the whole, of the contract;
3. The contracting parties clearly and deliberately conferred a
favor to the third person―the favor is not merely incidental;
JC POGI PRE-WEEK NOTES 2022
4. The favor is unconditional and uncompensated;
5. The third person communicated his or her acceptance of the
favor before its revocation; and
6. The contracting parties do not represent, or are not
authorized, by the third party.
Mutuality of Contracts means that the contract must bind both
contracting parties and its validity or compliance cannot be left
to the will of one of them. (Limso vs. PNB, G.R. No. 158622
January 27, 2016, J. Leonen) (2018 2008 2004 2001 BQ)
NOTE: A stipulation allowing the bank to increase the interest
rate unilaterally is a solely-potestative condition which violates
the principle of mutuality of contracts and as such is null and
void. (2018 BQ)
A Contract of Adhesion is one wherein one party imposes a
ready-made form of contract on the other. It is a contract whereby
almost all of its provisions are drafted by one party, with the
participation of the other party being limited to affixing his or her
signature or “adhesion” to the contract. Contracts of adhesion
are not void per se. It is binding as any other ordinary contract
and a party who enters into it is free to reject the stipulations in
its entirety. If the terms thereof are accepted without objection,
then the contract serves as the law between them. (2018 BQ)
Autonomy of Contracts means that the contracting parties may
establish such stipulations, clauses, terms, and conditions as
they may deem convenient, provided they are not contrary to law,
morals, good customs, public order or public policy. (Saudia vs.
Rebesencio, G.R. No. 198587 January 14, 2015, J. Leonen)
(2004 1996 BQ)
Obligations arising from contracts have the force of law
between the contracting parties and should be complied with in
good faith. As such, the stipulations in contracts are binding on
them unless the contract is contrary to law, morals, good
customs, public order or public policy.
Essential requisites
The following are the essential requisites of contract (2005 BQ)
1. Consent;
2. Object or subject matter; and
3. Cause or consideration (Limso vs. PNB, G.R. No. 158622
January 27, 2016, J. Leonen)
Simulation of contract takes place when the parties do not
really want the contract they have executed to produce the legal
effects expressed by its wordings. Simulation of a contract may
be absolute or relative. The absolute takes place when the parties
do not intend to be bound at all; the relative when the parties
conceal their true agreement. An absolutely simulated or
fictitious contract is void. A relative simulation, when it does not
prejudice a third person and is not intended for any purpose
contrary to law, morals, good customs, public order or public
policy binds the parties to their agreement.
GR: All things or services may be the object of contracts.
XPNs:
1. Things outside the commerce of men;
2. Intransmissible rights;
3. Future inheritance, except in cases expressly authorized by
law;
4. Services which are contrary to law, morals, good customs,
public order or public policy;
5. Impossible things or services; and
6. Objects which are not possible of determination as to their
kind.
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 The Law Pertaining to Private Personal and Commercial Relations
REFORMATION OF INSTRUMENTS
Requisites in reformation of instruments (2016 BQ)
1. Meeting of the minds to the contract;
2. True intention is not expressed in the instrument;
3. By reason of:
a. Mistake;
b. Accident;
c. Relative simulation;
d. Fraud; or
e. Inequitable conduct
NOTE: When there is no meeting of the minds, the proper remedy
is annulment and not reformation. In reforming an instrument,
no new contract is created for the parties, rather, the reformed
instrument establishes the real agreement between the parties as
intended, but for some reason, was not embodied in the original
instrument. (Makati Tuscany vs. Multi-Ready Development
Corporation, G.R. No. 185530 April 18, 2018, J. Leonen)
INTERPRETATION OF CONTRACTS
If the terms of a contract are clear and leave no doubt upon the
intention of the contracting parties, the literal meaning of its
stipulations shall control. The rule is that where the language of
a contract is plain and unambiguous, its meaning should be
determined without reference to extrinsic facts. Where the
language of a written contract is clear and unambiguous, the
contract must be taken to mean that which, on its face, it
purports to mean, unless some good reason can be assigned to
show that the words should be understood in a different sense.
(The Wellex Group, Inc. vs. U-Land Airlines Co., Ltd., G.R. No.
167519 January 14, 2015, J. Leonen)
DEFECTIVE CONTRACTS
Rescissible contracts
These are contracts validly constituted but nevertheless maybe
set aside due to a particular economic damage or lesion caused
to either to one of the parties or to a third person.
Contracts that may be rescinded (2017 2008 2003 1998 BQ)
Under Art. 1381, those
a. Entered into by guardians whenever the wards whom they
represent suffer lesion by more than ¼ of value of the
property;
NOTE: Contracts entered by a guardian over the property of
his ward, without court approval is void, not merely
rescissible regardless of the existence of lesion.
b. Agreed upon in representation of absentees, if absentee
suffers lesion by more than ¼ of value of property;
c. Contracts where rescission is based on fraud committed on
creditor and cannot collect the claim due; (accion pauliana)
d. Contracts where the object involved is the subject of
litigation; contract entered into by defendant without
knowledge or approval of litigants or judicial authority
e. Payment by an insolvent – on debts which are not yet due;
prejudices the claim of others
Voidable contracts
Voidable contracts are those where consent is vitiated either by
the incapacity of one of the contracting parties or by mistake,
violence, intimidation, undue influence or fraud. These contracts
are binding, unless they are annulled by a proper action in court.
(2004 BQ)
JC POGI PRE-WEEK NOTES 2022
Classes of voidable contracts (2017 2015 BQ)
1. Those where one of the parties is incapable of giving consent;
2. Those where the consent is vitiated by mistake, violence,
intimidation, undue influence or fraud.
NOTE: For there to be a valid contract, all the three (3) elements
of consent, subject matter, and price must be present. Consent
wrongfully obtained is defective. The party to a contract whose
consent was vitiated is entitled to have the contract rescinded.
Accordingly, Article 1390 of the Civil Code stipulates that a
contract is voidable or annullable even if there is no damage to
the contracting parties where “consent is vitiated by mistake,
violence, intimidation, undue influence or fraud.” (Poole-
Blunden vs. UBP, G.R. No. 205838 November 29, 2017, J.
Leonen)
Unenforceable contracts
Those contracts which cannot be enforced by action or
complaint, unless they have been ratified by the party or parties
who did not give consent.
Kinds of unenforceable contracts (2017 2009 BQ)
The following contracts are unenforceable unless they are
ratified:
1. Those entered into the name of another person by one who
has been given no authority/legal representation or acted
beyond his powers;
NOTE: A contract of sale over a piece of land entered by an
agent whose authority is not in writing, even if he acted
beyond the scope of his authority is void, not merely
unenforceable
2. Those that do not comply with the Statute of Frauds; and
Statute of Frauds (2019 2018 2013 2009 BQ)
The Statute of Frauds is descriptive of statutes which require
certain classes of contracts to be in writing.
The Statute of Frauds applies only to executory contracts, not to
those that are partially or completely fulfilled.
Contracts or agreements covered by the Statute of Frauds
(2019 2018 2017 2009 BQ)
1. An agreement that by its terms is not to be performed
within a year from the making thereof;
2. A special promise to answer for the debt, default or
miscarriage of another;
3. An agreement made in consideration of marriage, other
than a mutual promise to marry;
4. An agreement for the sale of goods, chattels or things in
action, at a price not less than 500 pesos, unless the
buyer accepts and receives part of such goods
5. An agreement for the leasing for a longer period than
one year, or for the sale of real property or of an interest
therein;
6. A representation as to the credit of a third person
3. Those where both parties are incapable of giving consent to
a contract. (Vitug vs. Abuda, G.R. No. 201264 January
11, 2016, J. Leonen) (2017 BQ)
Void or inexistent contracts
A void contract is equivalent to nothing; it produces no civil effect;
and it does not create, modify or extinguish a juridical relation.
A contract whose purpose is contrary to law, morals, good
customs, public order or public policy is considered void and as
15
 The Law Pertaining to Private Personal and Commercial Relations
such, creates no rights or obligations or any juridical relations.
Loria vs. Muñoz, Jr. G.R. No. 187240 October 15, 2014, J.
Leonen) (2004 BQ)
Kinds of void contracts (2017 2011 BQ)
a. Those lacking in essential elements
b. Those whose cause, object or purpose is contrary to law,
morals, good customs, public order or public policy: illicit
cause, or object;
c. Those which are absolutely simulated or fictitious: no cause;
d. Those whose cause or object did not exist at the time of the
transaction: no cause or object;
e. Those whose object is outside the commerce of man: no
object;
f. Those which contemplate an impossible service: no object;
g. Those where the intention of parties relative to principal
object of the contract cannot be ascertained.
Loan
Loan is a contract where one of the parties delivers to another,
either something not consumable so that the latter may use the
same for a certain time and return it, in which case is called a
commodatum; or money or other consumable things, upon the
condition that the same amount of the same kind and quality
shall be paid, in which case the contract is simply called a loan
or mutuum. (2018 2005 2004 1993 BQ)
Commodatum
Commodatum is a contract where one of the parties (bailor)
delivers to another (bailee) something not consumable so that the
latter may use the same for a certain time and thereafter returns
the identical thing.
Kinds of commodatum
1. Ordinary commodatum – bailor cannot just demand the
return of the thing at will, because there is a period agreed
upon by the parties.
2. Precarium – one whereby the bailor may demand the thing
loaned at will in the following cases:
a. If the duration of the contract had not been stipulated;
b. If the use to which the thing loaned should be devoted
had not been stipulated; or
c. If the use of the thing is merely by tolerance of the owner
Characteristics of a contract of commodatum (2013 2007
2006 BQ)
1. Real contract – delivery of the thing loaned is necessary for
the perfection of the contract;
2. Unilateral contract – once subject matter is delivered, it
creates obligations on the part of only one of the parties (the
borrower);
3. Essentially gratuitous; otherwise, contract of lease;
4. Purpose is to transfer the temporary use of the thing loaned;
5. Principal contract;
6. Purely personal contract (because of the trust) (2007 2006
BQ)
7. It contemplates use by the borrower of the subject matter
and its return in specie.
Consequence of purely personal character of commodatum
1. Death of a party
GR: Commodatum is purely personal in character hence death of
either bailor or bailee extinguishes the contract.
XPN: By stipulation, the commodatum is transmitted to the heirs
of either or both party.
JC POGI PRE-WEEK NOTES 2022
2. Lease of the thing subject of commodatum
GR: The bailee can neither lend nor lease the object of the
contract to a third person.
XPN: Members of the bailee’s household may make use of the
thing loaned because members of the bailee’s household are not
considered as third persons.
3. Right of retention (2014 BQ)
GR: The bailee cannot exercise the right of retention against the
bailor.
XPN: However, he can exercise the right of retention on the
account of damages suffered by the bailee because of flaws that
the bailor knew of but did not disclose to the bailee.
Use of fruits of the property by the bailee
The bailee in commodatum acquires only the use of the thing
loaned but not its fruits. A stipulation that the bailee may make
use of the fruits of the thing loaned is valid. The stipulation that
the bailee may make use of the fruits of the thing loaned will not
impair the essence of commodatum because the actual cause or
consideration therefore is still the liberality of the bailor or lender.
Rights of the Bailor; Demand the return of the thing loaned
(2005 BQ)
GR: The return of the thing loaned may be demanded by the
bailor only (1) after the expiration of the period stipulated or (2)
after the accomplishment of the use for which it is constituted.
XPNs:
1. In case of urgent need by the bailor;
2. In case of precarium – the bailor may demand the thing at
will, and the contractual relation is called a precarium, in
the following cases: (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.
3. If the bailee commits an act of ingratitude, to wit:
a. If the bailee should commit some offenses against the
person, honor or the property of the bailor, or his wife
or children under his parental authority;
b. If the bailee imputes to the bailor any criminal offense,
or any act involving moral turpitude
c. If the bailee unduly refuses the bailor support when the
bailee is legally or morally bound to give support to the
bailor.
Mutuum
Mutuum is a contract whereby one of the parties called the
“lender” delivers to another called the “borrower”, money or other
consumable thing subject to the condition that the same amount
of the same kind and quantity shall be paid.
Perfection of the contract of mutuum
Real contracts, such as deposit, pledge and commodatum, are not
perfected until the delivery of the object of the obligation. While
mutuum or simple loan is not mentioned, it has the same
character as commodatum. Hence, mutuum is also a real contract
which cannot be perfected until the delivery of the object.
16
 The Law Pertaining to Private Personal and Commercial Relations
Commodatum v. Mutuum (2017 2004 1996 BQ) Generally non-consumable
things but may cover
COMMODATUM MUTUUM consumables if the purpose of
Object the contract is for exhibition.
Non-consumable and Non- Money or consumable thing. Ownership of the thing
fungible. Retained by the bailor Passes to the debtor
Cause Thing to be returned
Gratuitous, otherwise it is a May or may not be gratuitous. Exact thing loaned Equal amount of the same
lease. kind and quality
Purpose
Use or temporary possession of Consumption Who bears risk of loss
the thing loaned Bailor Debtor
GR: Not its fruit because the When to return
bailor remains the owner In case of urgent need even Only after the expiration of the
XPNs: before the expiration of term term
Use of the fruits is stipulated; (the contract is in the
enjoyment of the fruits is meantime suspended)
stipulated; or enjoyment of the Contract
fruits is incidental to its use. Contract of use Contract of consumption
Subject Matter
Real or personal property Only personal property

vi. Torts, Quadi-delicts

CULPA CONTRACTUAL CULPA AQUILIANA/ CULPA EXTRA- CULPA CRIMINAL

(CONTRACT)
Negligence is merely an incident in the
performance of an obligation.
There is always a pre-existing contractual
relation.
The source of obligation of defendant to
pay damages is the breach or non-
fulfillment of the contract.
Proof of the existence of the contract and of
its breach or non-fulfillment is sufficient
prima facie to warrant recovery.
Defense of “good father of a family” in the
selection & supervision of the employees is
not a proper complete defense though it
may mitigate damages.
Respondeat superior or command
responsibility or the master and servant
rule.
Preponderance of evidence.
CONTRACTUAL (DELICT)
(QUASI-DELICT) (2019 BQ)
Existence of negligence
Negligence is substantive and independent. Negligence is substantive and independent.
Contractual relations
GR: There is no pre-existing contractual There is no pre-existing contractual
relation. relation.
Source of obligation
The source of obligation is defendant’s The source of obligation is an act or
negligence itself. omission punishable by law.
Proof of negligence
The negligence of the defendant must be Accused shall be presumed innocent until
proved. the contrary is proved beyond reasonable
doubt.
Defense available
Defense of “good father of a family” in the Defense of “good father of a family” in the
selection & supervision of the employees is selection & supervision of the employees is
a proper and complete defense. not a proper defense.
The employee’s guilt is automatically the
employer’s civil guilt, if the former is
insolvent.
Proof needed
Preponderance of evidence. Proof of guilt beyond reasonable doubt.

Vicarious liability Nature of responsibility of Vicarious Obligor

Principle of Vicarious Liability or Law on Imputed Negligence
(2010 2009 2006 2005 2002 2001 BQ)
The obligation imposed for quasi-delicts is demandable not only
for one's own acts or omissions, but also for those persons for
whom one is responsible.
NOTE: A person or juridical entity is made liable solidarily with
a tortfeasor simply by reason of his relationship with the latter.
Primary and direct, not subsidiary. He is solidarily liable with the
tortfeasor. His responsibility is not conditioned upon the
insolvency of or prior recourse against the negligent tortfeasor.
Common Defenses
The vicarious liability shall cease when the defendants prove that
they observed all the diligence of a good father of a family to
prevent damage.

Presumption of negligence on persons indirectly responsible
The presumption of law is that there was negligence on the part
of the master or employer either in the selection of the servant or
employee or in the supervision over him after the selection or
both.
Vicarious Liability: Employers (2015 2013 2009 2006 2005
2004 2003 2002 2001 2000 1998 1997 BQ)
Presumption on the negligence of the employer
The negligence of the employee is presumed to be the negligence
of the employer because the employer is supposed to exercise

JC POGI PRE-WEEK NOTES 2022 17

 The Law Pertaining to Private Personal and Commercial Relations
supervision over the work of the employees. This liability of the
employer is primary and direct
The employer can then be made liable on the basis of the
presumption that the employer failed to exercise diligentissimi
patris familias (diligence of a good father of a family) in the
selection and supervision of its employees.
NOTE: Where the security agency, as here, recruits, hires and
assigns the work of its watchmen or security guards, the agency
is the employer of such guards and watchmen. Liability for illegal
or harmful acts committed by the security guards attaches to the
employer agency, and not to the clients or customers of such
agency. As a general rule, a client or customer of a security
agency has no hand in selecting who among the pool of security
guards or watchmen employed by the agency shall be assigned
to it; the duty to observe the diligence of a good father of a family
in the selection of the guards cannot, in the ordinary course of
events, be demanded from the client whose premises or property
are protected by the security guards. (Mamaril vs. Boy Scout,
G.R. No. 179382 January 14, 2013, J. Perlas-Bernabe)
Vicarious Liability: Owners and Managers of Establishments
And Enterprises (2005 BQ)
The owners and managers of an establishment or enterprise are
likewise responsible for damages caused by their employees in
the service of the branches in which the latter are employed or
on the occasion of their functions.
Employers shall be liable for the damages caused by their
employees and household helpers acting within the scope of their
assigned tasks, even though the former are not engaged in any
business or industry.
Requisites before an employer may be held liable for the act
of its employees (2005 2002 2001 2000 1998 1997 BQ)
1. The employee was chosen by the employer personally or
through another;
2. The service is to be rendered in accordance with orders
which the employer has the authority to give all times; and
3. That the illicit act of the employee was on the occasion or by
reason of the functions entrusted to him.
Vicarious liability Owners and Managers of Establishment
under Art 2180(5) (2001 1991 BQ)
GR: It is required that the employee must be performing his
assigned task at the time that the injury is caused.
XPN: However, it is not necessary that the task performed by the
employee is his regular job or that which was expressly given to
him by the employer. It is enough that the task is indispensable
to the business or beneficial to the employer.
Vicarious Liability: Teachers and Heads of Establishments of
Arts and Trades
Teachers or directors of arts and trades are liable for any
damages caused by their pupils or apprentices while they are
under their custody.
Rationale of vicarious liability of school heads and teachers
(2010 2005 BQ)
The rationale of school heads and teachers liability for tortious
acts of their pupil and students, so long as they remain in
custody, is that they stand, to a certain extent, as to their pupils
and students, in loco parentis and are called upon to exercise
reasonable supervision over the conduct of the child.
JC POGI PRE-WEEK NOTES 2022
Age of student immaterial
Even if the student has already reached the age of majority, the
liability can be imputed to the teacher-in-charge. Age does not
matter.
Limitation to the liability of teachers and heads of Schools
Teachers and Heads of schools are only liable if the students
remain in schools. If they are no longer in such premises, their
responsibility shall attach no more. Their parents become
responsible for them.
Last clear chance
Where both parties are negligent but the negligent act of one
succeeds that of the other by an appreciable interval of time, the
one who has the last reasonable opportunity to avoid the
impending harm and fails to do so, is chargeable with the
consequences, without reference to the prior negligence of the
other party. (2007 1990 BQ)
Negligence
Standard of care
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.
Presumption of Negligence (2018 2009 2000 BQ)
A person is generally presumed to have taken ordinary care of
his concerns. There are however exceptions when negligence is
presumed:
1. It is disputably presumed that a driver was negligent, if he
had been found guilty of reckless driving or violating traffic
regulations at least twice within the next preceding two
months.
2. 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.
3. 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 possession or use thereof
is indispensable in his occupation or business.
4. In case of death or injuries of passengers, common carriers
are presumed to have been at fault or acted negligently,
unless they prove that they observed extraordinary
diligence.
5. Captain of the ship doctrine - A surgeon is likened to a
captain of the ship, such that it is his duty to control
everything going on in the operating room. The surgeon in
charge of an operation is liable for the negligence of his
assistants during the time when those assistants are under
the surgeon’s control. (Orient Freight International, Inc.
vs. Keihin-Everett, G.R. No. 191937 August 9, 2017, J.
Leonen)
Disputable presumptions of negligence (2018 2014 BQ)
1. Motor vehicle mishaps – a driver is presumed negligent if he:
a. was found guilty of reckless driving or violating traffic
regulations at least twice within the preceding two
months; orwas violating any traffic regulation at the
time of the mishap.
2. Possession of dangerous weapons or substances, results in
death or injury, except when the possession or use thereof
is indispensable in his occupation or business.
3. Common carriers are presumed to have been at fault or
acted negligently in cases of death or injuries to passengers.
18
 The Law Pertaining to Private Personal and Commercial Relations
Unless they prove that they observed extraordinary Exemplary damages or corrective damages are imposed, by
diligence. way of example or correction for the public good, in addition to
the moral, temperate, liquidated or compensatory damages.
Obligation of Ticket-issuing Airlines (2018 BQ) (Arco Pulp vs. Lim, G.R. No. 206806 June 25, 2014, J.
Leonen) (2009 2005 2003 BQ)
The obligation of the ticket-issuing airline remained and did not
cease, regardless of the fact that another airline had undertaken 3. In case of death
to carry the passengers to one of their destinations. The Supreme
Court held that the ticket-issuing carrier assumes full Rules when crimes and quasi-delict has caused death
responsibility for the entire trip and shall be held accountable for
the breach of guaranty. The amount of damages for death caused by a crime or quasi-
delict shall be at least P75,000, even though there may have been
vii. Damages mitigating circumstances. In addition:

1. General provisions
Damages is the sum of money which the law awards or imposes
as a pecuniary compensation, a recompense or satisfaction for
an injury done or wrong sustained as a consequence either of a
breach of a contractual obligation or a tortious act.
2. Kinds of damages
Actual damages must be proved with reasonable degree of
certainty and a party is entitled only to such compensation for
the pecuniary loss that was duly proven. Thus, absent any
competent proof of the amount of damages sustained, the CA
properly deleted the said awards. (Mamaril vs. The Boy Scout
of the Philippines, 688 SCRA 437, G.R. No. 179382 January
14, 2013 J. Perlas-Bernabe) (2019 2018 2004 1996 BQ)
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, 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
(Torreon vs. Aparra, Jr., G.R. No. 188493 December 13,
2017, J. Leonen)

Moral Damages include physical suffering, mental anguish,

fright, serious anxiety, besmirched reputation, wounded feelings,
moral shock, social humiliation, and similar injury (2019 2004
2003 2002 2000 1991 BQ)

In order that moral damages under Art 2219 of the NCC may be
awarded, there must be pleading and proof of moral suffering,
mental anguish, fright and the like. While no proof of pecuniary
loss is necessary in order that moral damages may be awarded,
the amount of indemnity being left to the discretion of the court,
it is nevertheless essential that the claimant should satisfactorily
show the existence of the factual basis of damages and its causal
connection to defendant’s acts. (Arco Pulp vs. Lim, G.R. No.
206806 June 25, 2014, J. Leonen)

NOTE: Moral damages apply both to natural and juridical

persons. It is only when a juridical person has good reputation
that is debased, resulting in social humiliation, that moral
damages may be awarded (San Fernando Regala v. Cargill,
G.R. No. 178008, October 9, 2013, J. Abad).

Nominal damages are adjudged in order that a right of the

plaintiff, which has been violated or invaded by the defendant,
may be vindicated or recognized, and not for the purpose of
indemnifying the plaintiff for any loss suffered by him (2005
2004 2000 1994 1991 BQ)

Temperate or Moderate Damages, which are more than

nominal but less than compensatory damages, may be recovered
when the court finds that some pecuniary loss has been suffered
but its amount cannot, from the nature of the case, be proved
with certainty.” Though incapable of pecuniary computation,
moral damages may be recovered if they are the proximate result
of the defendant’s wrongful act or omission. Exemplary damages
are imposed only “by way of example or correction for the public
good, in addition to the moral, temperate, liquidated or
compensatory damages.”

Liquidated damages are those that the parties agree to be paid

in case of a breach. They are attached to the obligation in order
to ensure performance. (PEZA vs. Pilhino Sales Corporation,
G.R. No. 185765 September 28, 2016, J. Leonen)

JC POGI PRE-WEEK NOTES 2022 19

 The Law Pertaining to Private Personal and Commercial Relations
Commercial Law 2. All issued stock shall be subject to one or more specified
restrictions on transfer; and
i. Corporation 3. The corporation shall not list in any stock exchange or make
any public offering of any of its stock of any class.
A corporation is an artificial being created by operation of law,
having the right of succession and the powers, attributes and Notwithstanding the foregoing, a corporation shall not be deemed
properties expressly authorized by law or incident to its a close corporation when at least 2/3 of its voting stock or voting
existence. rights is owned or controlled by another corporation which is not
a close corporation.
Corporation is Not Entitled to Moral Damages
Any corporation may be incorporated as a close incorporation,
GR: a corporation is not entitled to moral damages. Being a mere except:
artificial being, it is incapable of experiencing physical suffering
or sentiments 1. Mining or oil companies;
2. Stock exchanges;
XPNs: A corporation may recover moral damages if it has a good 3. Banks;
reputation that is debased, resulting in social humiliation is an 4. Insurance companies;
obiter dictum. 5. Public utilities;
6. Educational institutions; and
Stock Corporation vs. Non-stock Corporation (2004 2001 BQ) 7. Corporations declared to be vested with public interest

STOCK- CORPORATION NON-STOCK CORPORATION Corporation sole

Existence of Capital Stock
Has capital stock divided into No capital stock. It is one formed for the purpose of administering and managing,
shares (CC, Sec. 3) as trustee, the affairs, property and temporalities of any religious
denomination, sect, or church, by the chief archbishop, bishop,
Purpose priest, rabbi, or other presiding elder of such religious
Organized for profit. Not organized for profit. denomination, sect or church. [Sec. 108]
Distribution of Profit
Profits are distributed to the Profits are not distributed to A corporation sole has no nationality but for the purpose of
stockholders through members. Any profit earned by applying nationalization laws, nationality is determined not by
dividends (CC, Sec. 3) the non-stock corporation is the nationality of its presiding elder but by the nationality of its
used for the furtherance of the members constituting the sect in the Philippines. Thus, the
purpose or purposes for which Roman Catholic Church can acquire lands in the Philippines
it is organized. even if it is headed by the Pope.
Election of Officers
Officers are elected by the BOD Members may directly elect De facto corporation vs. Corporation by estoppel (2004 BQ)
and not by the stockholders officers.
Right to vote DE FACTO CORPORATION CORPORATION BY
Stockholders can resort to No cumulative voting unless ESTOPPEL
cumulative voting. allowed by AOI. (2011 BQ) There is existence in law There is no existence in law
Transferability of Shares/ Membership The dealings among the The dealings among the
Shares may be transferred by Membership is personal in parties on a corporate basis is parties on a corporate basis is
the stockholder with or character and is not not required required
without the consent of the transferable unless allowed by The State reserves the right to Quo warranto proceeding is
corporation. the AOI or by-laws. question its existence through not applicable
Right to expel members a quo warranto proceeding
Stockholders may be expelled Membership shall be Stockholders in a de facto Stockholders are liable as
only for grounds provided by terminated in the manner and corporation are liable as a de general partners for all debts,
law. for the causes provided in the jure corporation liabilities and damages
articles of incorporation or the incurred
by-laws.
Board of Directors and Trustees
One Person Corporations
Composition of Board:
A corporation with a single stockholder. Only a natural person,
trust, or an estate may form a One Person Corporation. If organized as a non-stock corporation

Banks and quasi-banks, pre-need, trust, insurance, public and
publicly-listed companies, and non-chartered government owned
and controlled corporations may not incorporate as One Person
Corporations. A natural person who is licensed to exercise a
profession may not organize as a One Person Corporation for
the purpose of exercising such profession except as otherwise
provided under special laws.
Close corporation
Trustees of educational institutions organized as non-stock
corporations shall not be less than five (5) nor more than fifteen
(15).
Provided, however, that –
The number of trustees shall be in multiples of five
They shall classify themselves in such a way that the term of 1/5
of them expires every year.

One whose articles of incorporation provide that: If organized as a stock corporation

1. All issued stock, exclusive of treasury shares, shall be held For institutions organized as stock corporations, the number and
by persons not exceeding 20; term of directors shall be governed by the provisions on stock
corporations.

JC POGI PRE-WEEK NOTES 2022 20

 The Law Pertaining to Private Personal and Commercial Relations
The powers and authority of trustees shall be defined in the
bylaws.
Doctrine of Centralized Management (2012 2008 BQ)
The Doctrine of Centralized Management states that a
corporation exercises its powers through its board of directors
and/or its duly authorized officers and agents, except in
instances where the Corporation Code requires stockholders’
approval for certain specific acts.
The power of a corporation to sue and be sued in any court is
lodged with the board of directors and/or its duly authorized
officers and agents.
Business Judgment Rule
GR: Contracts intra vires entered into by the board of directors
are binding upon the corporation beyond the interference of
courts. The courts are barred from intruding into business
judgments of corporations, when the same are made in good
faith.
XPNs: Courts can inquire unto contracts which are:
1. Unconscionable and oppressive and
2. Bad faith or gross negligence by the directors.
Majority Rule Doctrine in the dealings of directors with
stockholders
The majority rule states that a director has a fiduciary duty with
respect to the corporation as an entity, and not to the
stockholders as individuals. Consequently, he is subject to the
duty to disclose all material facts only to the corporation and not
to the stockholders.
Doctrine of Limited Liability (2018 BQ)
The limited liability rule means that the liability of a stockholder
who is not a director, officer or agent of the corporation, is limited
to his subscription to the capital stock of the corporation.
Requisites before a Director or Officer of a Corporation can
be held personally liable for corporate obligations: (2018
2012 2011 BQ)
A director, trustee, or officer of a corporation may be made
solidarily liable with it for all damages suffered by the
corporation, its stockholders or members, and other persons in
any of the following cases:
a. they assent to a patently unlawful act of the corporation, or
when they are guilty of bad faith or gross negligence in
directing its affairs, or when there is a conflict of interest
resulting in damages to the corporation, its stockholders or
other persons;
b. they consent to the issuance of watered down stocks or
when, having knowledge of such issuance, do not forthwith
file with the corporate secretary their written objection;
c. they agree to hold themselves personally and solidarily liable
with the corporation; or
d. they are made by specific provision of law personally
answerable for their corporate action. Lanuza, Jr. vs. BF
Corporation, G.R. No. 174938 October 1, 2014, J.
Leonen)
An ultra vires act refers to an act outside or beyond express,
implied and incidental corporate powers. (2011 2009 BQ)
When is there an ultra vires act: (2011 2009 2002 BQ)
JC POGI PRE-WEEK NOTES 2022
a. On the part of the Corporation: no corporation shall
possess or exercise any corporate power except those
conferred by the Code or by its articles of incorporation and
except such as are necessary or incidental to the exercise of
the powers so conferred. When a corporation does act or
engage in an activity which is outside of its express, implied
or incidental powers set out in its articles of incorporation,
the act is deemed to be ultra vires.
b. On the part of the Board of Directors: When the Board
engages in an activity or enters into a contact without the
ratificatory vote of the stockholders. The board resolution
not ratified by stockholders owning or representing at least
two-thirds of the outstanding capital stock would make the
transactions void., as being ultra vires. (2002 BQ)
c. On the part of the Corporate officer: When the corporate
officer enters into a contract on behalf of the corporation
without having been so expressly or impliedly authorized by
the Board of Directors, even when the act or contract falls
within the corporation’s express, implied or incidental
power, then the unauthorized act of the corporate officer is
deemed to be ultra vires. (UMI vs. BSP, G.R. Nos. 194964-
65 January 11, 2016, J. Leonen)
Trust Fund Doctrine (2019 2015 2007 BQ)
The subscribed capital stock of the corporation is a trust fund for
the payment of debts of the corporation which the creditors have
the right to look up to satisfy their credits.
Under the trust fund doctrine, the capital stock, property, and
other assets of a corporation are regarded as equity in trust for
the payment of corporate creditors which are preferred over the
stockholders in the distribution of corporate assets.
Stockholders and Members
Doctrine of equality of shares
Where the articles of incorporation do not provide for any
distinction of the shares of stock, all shares issued by the
corporation are presumed to be equal and enjoy the same rights,
privileges and subject to the same liabilities.
NOTE: Holders of shares not fully paid which are not delinquent
shall have all the rights of a stock holder.
Right to dividend of a stockholder (2018 2008 BQ)
It is the right of the stockholder to demand payment of dividends
after the board’s declaration.
Preferred cumulative participating share of stock (2018 BQ)
It is a kind of share which gives the holder preference in the
payment of dividends ahead of common stockholders and to be
paid the dividends due for prior years and to participate further
with common stockholders in dividend declaration.
NOTE: While the preferred shares are cumulative and
participating, the holders thereof are entitled to dividends only if
the unrestricted retained earnings are sufficient to pay such
dividends.
Right to inspect (2017 BQ)
The right to inspect is the right of a stockholder to inspect the
books of the corporation is subject to the following limitations:
(2017 BQ)
1. The person demanding the right has not improperly used
any information obtained through any previous examination
of the books and records of the corporation.
2. The demand is made in good faith or for legitimate purpose
germane to his interest as a stockholder. (CC, Sec. 74)
21
 The Law Pertaining to Private Personal and Commercial Relations
3. The right does not extend to trade secrets. (Philippine Articles of Incorporation
Associated Smelting vs. Lim, G.R. No. 172948 October
5, 2016, J. Leonen) The AOI is a basic contract document, defining the charter of the
corporation, and serves as the basis by which to judge whether
NOTE: this right does not apply where the corporation is not it exists for legal purposes.
organized under the Philippine law as in such a case, the right of
the stockholder is governed by the inspection requirements in the The charter of the corporation is a contract between 3
jurisdiction in which the corporation was organized. parties:

Pre-Emptive Right (2019 2018 2004 2001 BQ) (a) between the State and the corporation;
(b) between the stockholders and the State;
All stockholders of a stock corporation shall enjoy pre-emptive (c) between the corporation and its stockholders.
right to subscribe to all issues or disposition of shares of any (d) among the stockholders
class, in proportion to their respective shareholdings. Pre-
emptive right is personal right to each stockholder. The AOI must be filed with the SEC for the issuance of the
Certificate of Incorporation. The AOI and its amendments
NOTE: The stockholder must be given a reasonable time within can be filed electronically.
which to exercise their pre-emptive rights. Upon the expiration of
said period, any stockholder who has not exercised such right Contents
will be deemed to have waived it.
The Articles of Incorporation must contain:
Right of first refusal is the right of a stockholder to demand
from other stockholder/s who may wish to sell or assign their (a) Corporate Name;
shares to first offer their shares to the corporation or to the other (b) Purpose Clause;
existing stockholders of the corporation. (c) Principal Office;
(d) Corporate Term if the corporation has not elected
PRE-EMPTIVE RIGHT RIGHT OF FIRST REFUSAL perpetual existence;
Description (e) Incorporators;
Right to subscribe to all Right to purchase shares of a (f) Trustees/Directors;
issuance or dispositions of stockholder. (g) For stock corporations:
shares of the corporation even
to the subsequent sale of 1. The authorized capital stock,
treasury stocks. 2. Number of shares into which it is divided,
To what does it pertain? 3. The par value of each share,
Pertains to unsubscribed Pertains to the sale of the 4. Names, nationalities, and residence addresses of
portion of the authorized stocks by another stockholder the original subscribers,
capital stock. 5. Amount subscribed and paid by each on the
Against who is it exercised? subscription, and
Right exercised against the Right exercised against a co- 6. A statement that some or all of the shares are
corporation. stockholder. without par value, if applicable
Effect of the absence of express provision in the AOI
(h) For nonstock corporations:
May be exercised even when Can only be exercised when
there is no express provision so provided in the AOI, by-
1. Amount of its capital,
in the AOI or amendment laws and printed in the stock
2. The names, nationalities, and
thereto. certificate.
3. Residence addresses of the contributors, and
4. Amount contributed by each
Treasury shares
(i) Other matters (including arbitration agreement
It includes treasury shares. Does not include treasury
pursuant to Sec. 181).
shares
ii. Intra-corporate disputes
Appraisal Rights
Intra-Corporate Controversy (2019 2015 2014 2009 2006
Any stockholder of a corporation shall have the right to dissent
BQ)
and demand payment of the fair value of his shares in the
following instances:
An intra-corporate controversy is a dispute between a
stockholder and the corporation of which he is a stockholder, or
1. In case any amendment to the articles of incorporation has
between a stockholder and another stockholder of the same
the effect of changing or restricting the rights of any
corporation, where the subject of the dispute or controversy arose
stockholders or class of shares, or of authorizing preferences
out of such relationship.
in any respect superior to those of outstanding shares of any
An intra-corporate controversy is one which pertains to any of
class, or of extending or shortening the term of corporate
the following relationships:
existence;
1. between the corporation, and the public;
2. In case of sale, lease, exchange, transfer, mortgage, pledge
2. between the corporation, and the State insofar as its
or other disposition of all or substantially all of the corporate
franchise, permit or license to operate is concerned;
property and assets as provided in this Code; and
3. between the corporation and its stockholders, members or
3. In case of merger or consolidation, the Corporation Code
officers; and
provides that the stockholder may exercise the right if he or
4. among the stockholders themselves.
she voted against the proposed corporate action and if he
made a written demand for payment on the corporation Jurisdiction over a derivative suit (2019 2015 2014 2009
within thirty (30) days after the date of voting. (Villamor, Jr. 2006 1997 BQ)
vs. Umale, G.R. No. 172881 September 24, 2014, J.
Leonen)
A derivative suit is an intra-corporate controversy. Actions
involving intra-corporate controversies are cognizable by the
JC POGI PRE-WEEK NOTES 2022 22
 The Law Pertaining to Private Personal and Commercial Relations
Regional Trial Court, designated by the Supreme Court, which
has jurisdiction over the principal office of the corporation,
partnership or association concerned.
Under Section 8, Rule 1 of the Interim Rules of Procedure for
Intra-Corporate Controversies, a motion to dismiss is a
prohibited pleading.
b. Individual vs. representative vs. derivative suits
Individual Suit
Individual suits are filed when the cause of action belongs to the
individual stockholder personally, and not to the stockholders as
a group or to the corporation, e.g., denial of right to inspection
and denial of dividends to a stockholder. If the cause of action
belongs to a group of stockholders, such as when the rights
violated belong to preferred stockholders, a class or
representative suit may be filed to protect the stockholders in the
group. (Villamor, Jr. vs. Umale, G.R. No. 172881 September
24, 2014, J. Leonen)
Representative Suit
A representative suit is one filed by the shareholder individually,
or on behalf of a class of shareholders to which he or she belongs,
for injury to his or her interest as a shareholder.
Derivative Suit (2019 2016 2004 1993 BQ)
Stockholder’s right to institute a derivative suit is not based on
any express provision of the Corporation Code, or even the
Securities Regulation Code, but is impliedly recognized when the
said laws make corporate directors or officers liable for damages
suffered by the corporation and its stockholders for violation of
their fiduciary duties. (Florete, Jr. vs. Florete, Sr., G.R. No.
174909, January 20, 2016, J. Leonen)
Stockholder is not a real party in interest in a derivative suit
The corporation is the real party-in-interest while the suing
stockholder, on behalf of the corporation, is only a nominal party.
Requisites for the existence of a derivative suit (2019 2016
2004 BQ)
a. Stockholder at the time the acts or transactions subject of
the action occurred and at the time the action was filed;
b. exhaustion of intra-corporate remedies available;
c. it is not a nuisance suit; and
d. appraisal right is not available (Villamor, Jr. vs. Umale,
G.R. No. 172881 September 24, 2014, J. Leonen)
Intellectual Property
Copyrights
Copyrightable works
Literary and Artistic Works (2013 2011 2010 BQ)
a. Books, pamphlets, articles and other writings
b. Lectures, sermons, addresses, dissertations prepared for
Oral delivery, whether or not reduced in writing or other
material form (2011 BQ)
c. Letters
d. Musical compositions
e. Works of Art (2013 BQ)
f. Periodicals and Newspapers
g. Photographic works (2010 BQ)
Non-copyrightable works (2017 2011 BQ)
1. Idea, procedure, system, method or operation, concept,
principle, discovery or mere data as such (2011 BQ)
2. News of the day and other items of press information
3. Pleadings
JC POGI PRE-WEEK NOTES 2022
4. Decisions of courts and tribunals
5. TV programs, format of TV programs
6. Systems of bookkeeping; and
7. Statutes.
News Footage is Copyrightable (2017 BQ)
Works are protected by the sole fact of their creation, irrespective
of their mode or form of expression, as well as of their content,
quality and purpose. Under Sec 175 of the IPO, news of the day
are considered unprotected subject matter. However, the Code
does not state that expression of the news of the day, particularly
when it underwent a creative process, is not entitled to
protection.
News or the event itself is not copyrightable. However, an event
can be captured and presented in a specific medium. Thus,
television news footage is an expression of the news. (ABS-CBN
v. Felipe Gozon, et al., G.R. 195056 753 SCRA 38 March 11,
2015, J. Leonen)
Rights of copyright owners (2010 2009 1995 BQ)
1. Economic rights – The right to carry out, authorize or
prevent the following acts:
a. Reproduction of the work or substantial portion thereof
(2009 BQ)
b. Carry-out derivative work
c. First distribution of the original and each copy of the
work by sale or other forms of transfer of ownership
2. Moral rights – For reasons of professionalism and propriety,
the author has the right:
a. To require that the authorship of the works be
attributed to him (attribution right)
b. To make any alterations of his work prior to, or to
withhold it from publication
3. Droit de suite or “art proceeds right” is the artist’s resale
right, which requires that a percentage of the resale price of
an artistic work is paid to the author. The right is exercisable
even after the author’s death, provided the work is still in
copyright.
Ownership of a copyright
Type of work Owner
Original literary and artistic works - Author of the work.
Joint authorship (2008 2004 BQ)
Co-authors – in case of works of joint authorship; in the absence
of agreement, their rights shall be governed by the rules on co-
ownership.
NOTE: If work of joint authorship consists of parts that can be
used separately, then the author of each part shall be the original
owner of the copyright in the part that he has created.
Anonymous and pseudonymous works
The publishers shall be deemed to represent the authors of
articles and other writings published without the names of the
authors or under pseudonyms, unless the contrary appears.
Commissioned work (2008 2004 1995 BQ)
The person who commissioned the work shall own the work but
the copyright hereto shall remain with the creator, unless there
is a written stipulation to the contrary.
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 The Law Pertaining to Private Personal and Commercial Relations
Doctrine of Fair Use (2019 2018 2017 BQ)
Fair use permits a secondary use that serves the copyright
objective of stimulating productive thought and public
instruction without excessively diminishing the incentives for
creativity. The fair use of a copyrighted work for criticism,
comment, news reporting, teaching including limited number of
copies for classroom use, is not an infringement of copyright.
(ABS-CBN vs. Gozon, G.R. No. 195956 March 11, 2015, J.
Leonen)
In determining whether the use made of a work in any
particular case is fair use, the factors to be considered shall
include: (2019 BQ)
a. The purpose and character of the use, including whether
such use is of a commercial nature or is for non-profit
educational purposes;
b. The nature of the copyrighted work;
c. The amount and substantiality of the portion used in
relation to the copyrighted work as a whole; and
d. The effect of the use upon the potential market for or value
of the copyrighted work.
Copyright Infringement (2014 2011 2007 2006 1998 1997
1994 BQ)
It is the doing by any person, without the consent of the owner of
the copyright, of anything the sole right to do which is conferred
by statute on the owner of the copyright. The act of lifting from
another’s book substantial portions of discussions and examples
and the failure to acknowledge the same is an infringement of
copyright. The gravamen of copyright infringement is not merely
the unauthorized manufacturing of intellectual works but rather
the unauthorized performance of any of the rights exclusively
granted to the copyright owner. (ABS-CBN vs. Gozon, G.R. No.
195956 March 11, 2015, J. Leonen)
NOTE: In copyright infringement, intent is irrelevant. A person
may consciously or unconsciously copy or infringe a copyrighted
material and still be held liable for such act. (1997 BQ)
Plagiarism (2006 BQ)
Plagiarism means the theft of another person’s language,
thoughts, or ideas. The passing off of the work of another as one’s
own is thus an indispensable element of plagiarism.
Plagiarism presupposes intent and a deliberate, conscious effort
to steal another’s work and pass it off as one’s own.
iv. Insurance
What may be insured
1. Future contingent event resulting in loss or damage;
2. Past unknown event resulting in loss or damage;
3. Contingent liability
Peril is a contingent or unknown event which may cause a loss.
Its existence creates the risk. Ex. fires, floods, accident, etc.
2. Insurable interest
Insurable Interest (2017 BQ)
A person is deemed to have insurable interest in the subject
matter insured where he has a relation or connection with, such
that he will derive pecuniary benefit or advantage from its
preservation and will suffer pecuniary loss or damage from its
destruction, termination or injury by the happening of the event
insured against.
JC POGI PRE-WEEK NOTES 2022
Mere hope or expectancy is not insurable
A mere contingent or expectant interest in anything, not founded
on an actual right to the thing is not insurable.
Change of beneficiary (2018 2014 BQ)
GR: The insured shall have the right to change the beneficiary he
designated in the policy
XPN: If the insured expressly waived this right in the said policy.
In the event the insured does not change the beneficiary during
his lifetime, the designation shall be deemed irrevocable.
NOTE: Under Sec. 64 of the FC, the innocent spouse is allowed
to revoke the designation of the other spouse as irrevocable
beneficiary after legal separation.
Irrevocable designation of the beneficiary to the assignment
of the policy (2005 BQ)
The insured cannot assign the policy if the designation of the
beneficiary is irrevocable. The irrevocable beneficiary has a
vested right.
Effects of Irrevocable Designation of a Beneficiary: (2005 BQ)
The beneficiary designated in a life insurance contract cannot be
changed without the consent of the beneficiary.
Claims For Life Insurance
Two general classes of life policies (2014 2011 2002 BQ)
1. Insurance upon one’s life – are those taken out by the insured
upon his own life, for the benefit of himself, or of his estate,
in case it matures only at his death, for the benefit of third
person who may be designated as beneficiary. (2014 2002
BQ)
A person who insures his own life can designate any person
as his beneficiary, whether or not the beneficiary has an
insurable interest in the life of the insured.
2. Insurance upon life of another – are those taken out by the
insured upon the life of another. Where a person names
himself beneficiary in a policy he takes on the life of another,
he must have insurable interest in the life of the latter. This
class includes the following: (2014 2011 BQ)
a. His spouse and of his children;
b. Any person on whom he depends for education or
support, or in whom he has a pecuniary interest;
c. Of any person under a legal obligation to him for the
payment of money;
d. Of any person upon whose life any estate or interest
vested in him depends (IC, Sec. 10).
NOTE: The interest of the creditor over the life of the debtor
ceases upon full payment.
Persons prohibited from being designated as beneficiaries
(2018 1998 BQ)
The following are prohibited designation of beneficiaries:
1. Those made between persons who were guilty of adultery or
concubinage at the time of donation.
2. Those made between persons found guilty of the same
criminal offense, in consideration thereof.
3. Those made to a public officer or his wife, descendants or
ascendants by reason of his office.
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 The Law Pertaining to Private Personal and Commercial Relations
NOTE: The designation of the above persons is void but the policy
is binding. The estate will get the proceeds.
Beneficiary willfully brought about the death of the insured
(2008 BQ)
GR: The interest of a beneficiary in a life insurance policy shall
be forfeited when the beneficiary is the principal, accomplice, or
accessory in willfully bringing about the death of the insured.
Scope
Applies to the processing of all types of personal information
and to any natural and juridical person involved in personal
information processing including those personal information
controllers and processors who, although not found or
established in the Philippines.
Exceptions to the application of the Data Privacy Act:

XPNs: Data Privacy Act does not apply to the following:

1. The beneficiary acted in self-defense;
2. The insured’s death was not intentionally caused (e.g., thru
accident);
3. Insanity of the beneficiary at the time he killed the insured.
Claims settlement is the indemnification of the loss suffered by
the insured. The claimant may be the insured or reinsured, the
insurer who is entitled to subrogation, or a third party who has
a claim against the insured.
Where a policy gives the insurer the control of the decision to
settle claim or litigate it, the insurer nevertheless is required to
observe a certain measure of consideration for the interest of the
insured.
Claims For Life Insurance
a. Information about any individual who is or was an officer or
employee of a government institution that relates to the
position or functions of the individual;
b. Information about an individual who is or was performing
service under contract for a government institution;
c. Personal information processed for journalistic, artistic,
literary or research purposes;
d. Information necessary in order to carry out the functions of
public authority which includes the processing of personal
data for the performance by the independent, central
monetary authority
e. Information necessary for banks and other financial
institutions under the jurisdiction of the independent,
central monetary;
f. Personal information originally collected from residents of
foreign jurisdictions

Either: Processing of personal information

1. Upon death of the person insured; Sensitive Personal Information and Privileged Information
2. Upon his surviving a specific period; or
3. Otherwise contingently on the continuance or cessation of The processing of sensitive personal information and privileged
life. information shall be prohibited, except in the following cases:
a. The data subject has given his or her consent, specific to the
v. RA No. 10173 or Data Privacy Act OF 2012 purpose prior to the processing,
b. the consent of the data subjects are not required by law or
Personal vs. sensitive personal information regulation permitting the processing of the sensitive
personal information
Personal information refers to any information whether recorded c. The processing is necessary to protect the life and health of
in a material form or not, from which the identity of an individual the data subject or another person
is apparent or can be reasonably and directly ascertained by d. The processing is necessary to achieve the lawful and
the entity holding the information, or when put together with noncommercial objectives of public organizations
other information would directly and certainly identify an e. The processing is necessary for purposes of medical
individual. treatment, is carried out by a medical practitioner
5. The processing concerns such personal information as is
Sensitive personal information refers to personal information: necessary for the protection of lawful rights and interests of
natural or legal persons in court proceedings
1. About an individual’s race, ethnic origin, marital status, age,
color, and religious, or political affiliations; Rights of data subject
2. About an individual’s health, education, genetic or sexual
life of a person, or to any proceeding for any offense The data subject is entitled to the following rights: (2019 BQ)
committed
3. Issued by government agencies peculiar to an individual a. Right to be informed.
4. Specifically established by an executive order or an act of b. Right to object.
Congress to be kept classified. c. Right to Access.
d. Right to rectification.
Does the difference between Personal information and e. Right to Erasure or Blocking
Sensitive personal information matter? f. Right to damages.

Yes. The law treats both kinds of personal information differently.
Personal information may be processed, provided that the
requirements of the Data Privacy Act are complied with. The
processing of sensitive personal information is, in general,
prohibited. The Data Privacy Act provides the specific cases
where processing of sensitive personal information is allowed.
Right to Data Portability
Where his or her personal data is processed by electronic means
and in a structured and commonly used format, the data subject
shall have the right to obtain from the personal information
controller a copy of such data in an electronic or structured
format that is commonly used and allows for further use by the
data subject.

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