RGCT - BAR OPERATIONS

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2023 EDITION
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confidently.

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Father, we humbly come before you as one family to ask that for your
Divine providence we implore the help of the Holy Spirit to work in the
hearts of those who are preparing for the 2023 Bar
Examination, especially members of our Bedan family.
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 CIVIL LAW

PERSONS AND FAMILY RELATIONS

I. PERSONS ....................................................................................................... 1
A. WHEN THE LAW TAKES EFFECT ........................................................................................1
B. IGNORANCE OF THE LAW ......................................................................................... 1
C. RETROACTIVITY OF LAWS ................................................................................................ 1
D. MANDATORY OR PROHIBITORY LAWS ........................................................................... 2
E. WAIVER OF RIGHTS ............................................................................................................ 2
F. PRESUMPTION AND APPLICABILITY OF CUSTOM .........................................................2
G. LEGAL PERIODS ................................................................................................................... 2
H. TERRITORIALITY PRINCIPLE ..............................................................................................3
I.CONFLICT OF LAWS….................................................................................................... 3
J. HUMAN RELATIONS IN RELATION TO PERSONS ............................................................4
K. CAPACITY TO ACT ..................................................................................................... 4
L. SURNAMES…........................................................................................................................ 4
M. RULES GOVERNING PERSONS WHO ARE ABSENT ....................................................... 5

II. MARRIAGE… ...................................................................................................... 5

A. GENERAL PRINCIPLES ........................................................................................................5
B. MIXED MARRIAGES AND FOREIGN DIVORCE .................................................................. 5
C. VOID MARRIAGES ................................................................................................................ 6
D. VOIDABLE MARRIAGES ....................................................................................................... 7
E. EFFECT OF DEFECTIVE MARRIAGES .........................................................................................8
F. FOREIGN MARRIAGES… ..................................................................................................... 8
G. LEGAL SEPARATION ............................................................................................................ 8
H. PROPERTY RELATIONS BETWEEN SPOUSES… ..................................................................... 8
I.THE FAMILY AND FAMILY HOME ...................................................................................... 9
J. PATERNITY AND FILIATION ................................................................................................. 9
K. SUPPORT ............................................................................................................................. 12
L. PARENTAL AUTHORITY ...................................................................................................... 12

PROPERTY, OWNERSHIP, AND ITS MODIFICATIONS

I. CLASSIFICATION OF PROPERTY ........................................................................... 12

II. BUNDLE OF RIGHTS ............................................................................................ 13

A. OWNERSHIP ........................................................................................................................ 13
B. RIGHTS OF ACCESSION ..................................................................................................... 13
C. ACTIONS TO RECOVER OWNERSHIP AND POSSESSION OF PROPERTY .................. 13
D. CO-OWNERSHIP ................................................................................................................. 14
E. POSSESSION ................................................................................................................................... 15
F. USUFRUCT ........................................................................................................................... 17
G. EASEMENTS ........................................................................................................................ 17

III. DIFFERENT MODES OF ACQUIRING OWNERSHIP .......................................... 19

A. OCCUPATION ..................................................................................................................... 19
B. TRADITION ................................................................................................................ 19
C. DONATION........................................................................................................................... 19
D. PRESCRIPTION ................................................................................................................... 21

IV. LAND TITLES AND DEEDS..................................................................................21

A. TORRENS SYSTEM ............................................................................................................. 21
B. REGALIAN DOCTRINE ........................................................................................................ 22
C. NATIONALITY RESTRICTIONS ON LAND OWNERSHIP ................................................. 22
D. ORIGINAL REGISTRATION (PD 1529) .............................................................................. 22
E. AN ACT IMPROVING THE CONFIRMATION PROCESS FOR IMPERFECT LAND TITLES (RA 11573),
AMENDING CA 141 AND PD 1529............................................................................. 24
F. CERTIFICATE OF TITLE ...................................................................................................... 24
 G. SUBSEQUENT REGISTRATION ...................................................................................................24
H. NON-REGISTRABLE PROPERTIES ............................................................................................ 25
I.DEALINGS WITH UNREGISTERED LANDS ............................................................................ 26
J. ASSURANCE FUND ............................................................................................................ 26
K. RECONSTITUTION OF TITLE ............................................................................................. 27

V. WILLS AND SUCCESSION ................................................................................... 27

A. GENERAL PROVISIONS ...................................................................................................... 27
B. TESTAMENTARY SUCCESSION ................................................................................................... 28
C. INTESTATE SUCCESSION ............................................................................................................. 34
D. PROVISIONS COMMON TO TESTATE AND INTESTATE SUCCESSION ......................... 37

OBLIGATIONS AND CONTRACTS

I. Obligations ...................................................................................................... 38
A. General Provisions ..................................................................................................... 38
B. Nature and Effects of Obligations ...................................................................... 38
C. Different Kinds of Obligations ............................................................................ 39
D. Extinguishment of Obligations ........................................................................... 39

II. Contracts ............................................................................................................. 40

A. General Provisions ...................................................................................................... 40
B. Basic Principles of Contracts ............................................................................... 41
C. Essential Requisites of a Contract ....................................................................... 42
D. Defective Contracts ............................................................................................ 42
E. Natural Obligations…......................................................................................... 44

SPECIAL CONTRACTS

I. Sales ..................................................................................................................... 44
A. Definition and Essential Requisites...................................................................... 44
B. Contract of Sale.................................................................................................. 44
C. Earnest Money ................................................................................................... 45
D. Double Sales ...................................................................................................... 45
E. Risk of Loss ........................................................................................................ 45
F. Breach of Contract of Sale .................................................................................. 46
G. Extinguishment of the Sale ................................................................................. 46
H. Equitable Mortgage ............................................................................................ 47
I.Pacto de Retro Sales................................................................................................ 47

II. Lease ......................................................................................................................48

A. Kinds of Lease .................................................................................................... 48
B. Rights and Obligations of Lessor ......................................................................... 48
C. Rights and Obligations of Lessee ........................................................................ 49

III. Agency ................................................................................................................ 50

IV. Credit Transactions ............................................................................................52

A. Loans........................................................................................................................... 52
B. Deposit ............................................................................................................... 53
C. Guaranty and Suretyship ............................................................................................. 54
D. Real Estate Mortgage ......................................................................................... 55
E. Antichresis .......................................................................................................... 57

V. Compromise ........................................................................................................57

VI. Quasi-Contacts .................................................................................................... 57

 A. Negotiorum Gestio.............................................................................................. 57
B. Solutio Indebiti ................................................................................................... 57

VII. Torts and Damages ............................................................................................. 58

A. Principles ..................................................................................................................... 58
B. Classification of Torts ...............................................................................................59
C. The Tortfeasor .................................................................................................... 59
D. Quasi-Delict vs. Culpa Contractual vs. Culpa Criminal ............................................... 59
E. Proximate Cause ................................................................................................ 61
F. Vicarious Liability ................................................................................................ 62
G. Res Ipsa Loquitur ................................................................................................ 63
H. Damnum Absque Injuria .............................................................................................. 64
I.Defenses .......................................................................................................................... 64
J. Negligence .................................................................................................................. 64
K. Damages ..................................................................................................................... 65
L. Damages in Case of Death.......................................................................................... 67
M. Duty of Injured Party .......................................................................................... 68
 1

PERSONS AND FAMILY RELATIONS

I. PERSONS
A. When Law Takes Effect
(1) Under RA 8291 or the “The GSIS Act of 1997,” the employer is mandated to remit the share of the
employer and the share of the employee directly to the GSIS within the first 10 days of the calendar
month following the month to which the contributions apply. In view thereof, GSIS issued Resolutions
additionally obligating member-employees to ensure that their employer-agency includes the
government share in the budget, deducts the employee share, as well as loan amortizations, and timely
remits them; and that the GSIS receives, processes, and posts the payments. However, these
Resolutions were not published in a newspaper of general circulation and were enforced before they
were even filed with the Office of the National Administrative Register. Are the Resolutions valid?
No, the policies are invalid for lack of publication. The requirements of publication and filing must be strictly
complied with, as these were designed to safeguard against abuses on the part of lawmakers and to guarantee
the constitutional right to due process and to information on matters of public concern. Administrative rules and
regulations must be published if their purpose is to enforce or implement existing law pursuant also to a valid
delegation. The resolutions cannot be viewed simply as a construction of RA 8291, as they substantially
increase the burden of GSIS members with additional obligations imposed. When an administrative rule goes
beyond merely providing for the means that can facilitate or render least cumbersome the implementation of
the law but substantially adds to or increases the burden of those governed, it behooves the agency to accord
at least to those directly affected a chance to be heard, and thereafter to be duly informed, before that new
issuance is given the force and effect of law (Manila Public Schools Teachers’ Association v. Garcia, G.R. No.
192708, October 2, 2017).

Note: The publication must be of the full text of the law since the purpose of publication is to inform the public
of the contents of the law. Mere referencing the number of the presidential decree, its title or whereabouts and
its supposed date of effectivity would not satisfy the publication requirement (Cojuangco Jr. v. Republic, G.R.
No. 180705, November 27, 2012).

B. Ignorance of the Law

(1) Is there a difference in the legal effects of ignorance of the law and ignorance of a fact?
Yes, there is a difference. While ignorance of the law is not an excuse for non-compliance therewith, ignorance
of fact may excuse non-compliance, as when it eliminates the criminal intent in the commission of a criminal
act, as long as there is no negligence.

Note: Mistake on a doubtful or difficult question of law may be the basis of good faith (CIVIL CODE, Art. 526);
Mistake of fact may vitiate consent in a contract and make it voidable (CIVIL CODE, Arts. 1330-1331; Art.
1390); Mutual mistake as to the legal effect of a contract, which frustrates the real purpose of the parties may
also vitiate consent (CIVIL CODE, Art.1334).

C. Retroactivity of Laws
(1) How are laws applied?
As a general rule, laws shall have no retroactive effect (CIVIL CODE, Art. 4). Thus, laws are generally applied
prospectively.

Exceptions (OFTEN-PIC):
1. When the law Otherwise provides (CIVIL CODE, Art. 4)
Exceptions:
a. Impairment of a vested right (Heirs of Gabriel Zari and Hermenegildo Concepcion v. Santos, G.R.
Nos. L-21213 – 14, March 28, 1968);
b. Ex post facto law (Salvador v. Mapa, G.R. No. 135080, November 28, 2007); or
c. Impairment of contracts (Francisco v. Certeza, G.R. No. L-16849, November 29, 1961).
2. Penal laws Favorable to the accused who is not habitually delinquent (REVISED PENAL CODE, Art.
22.);
3. Tax laws, when the same is expressly declared or when it is clearly the legislative intent (Cebu Portland
Cement Co. v. Collector of Internal Revenue, G.R. No. L-20563, October 29, 1968);
4. Emergency laws (1 PARAS, Civil Code of the Philippines Annotated (2021 ed.) p. 30);
 2

5. Laws creating New rights (Bona v. Briones, G.R. No. L-10806, July 6, 1918);
6. Procedural or remedial laws (1 PARAS, Civil Code of the Philippines Annotated (2021 ed.) p. 29);
7. An administrative rule Interpretive of a statute, which is not declarative of certain rights and
corresponding obligations (Commissioner of Internal Revenue v. Reyes, G.R. No. 159694, January 27,
2006); and
8. Curative laws (1 PARAS, Civil Code of the Philippines Annotated (2021 ed.) p. 30)

D. Mandatory or Prohibitory Laws

(1) What is the status of an act that is contrary to mandatory or prohibitory laws?
As a general rule, acts contrary to mandatory and prohibitory laws are void (CIVIL CODE, Art. 5).

Exceptions: (V-MAN)
1. Where the law merely makes the act Voidable (e.g., marriage celebrated through violence);
2. When the law Makes the act valid, but punishes the violator (e.g., marriage solemnized by person without
legal authority);
3. When the law itself Authorizes its validity (e.g., lotto and sweepstakes); and
4. Where the law declares the act Null and void but recognizes the legal effects arising from it (e.g., void
marriage under Art. 36 and 53, children conceived thereunder are considered legitimate) (RABUYA,
Persons and Family Relations (2021 ed.), p. 22 ).

E. Waiver of Rights
(1) Can rights be waived?
Yes. The general rule is that rights can be waived (CIVIL CODE, Art. 6). The requisites are the following:
(KWELP)
a. Knowledge of the existence of the right;
b. Capacity to Waive;
c. Clearly and convincingly shown, either by Express stipulation or acts admitting no other reasonable
explanation;
d. Not contrary to Law, public order, public policy, morals, or good customs;
e. Not Prejudicial to the right of a third person.

Note: Some express waivers would require a particular form as in donations.

F. Presumption and Applicability of Custom

(1) What are the requisites before the courts can consider the customs of a place in deciding a case?
(PRUNIL)
Before courts may consider a custom, the following are the requisites:
a. A custom must be Proved as a fact, according to the rules of evidence (CIVIL CODE, Art. 12);
b. There must be a number of Repeated acts;
c. The repeated acts must have been Uniformly performed;
d. It must Not be contrary to law, public order, or public policy;
e. There must be a juridical Intention to make a rule of social conduct; and
f. There must be a sufficient Lapse of time (1 PARAS, Civil Code of the Philippines Annotated (2021
ed.) p. 75).

G. Legal Periods
(1) In computation of periods, the Administrative Code prevails over Art. 13 of the Civil Code which
provides that a year is 12 calendar months instead of 365 days.
The Administrative Code, being the later law, prevails over Article 13 of the Civil Code. Lex posteriori derogat
priori. Under the Administrative Code of 1987, a year is composed of 12 calendar months. The number of days
(in a leap year) is irrelevant (Commissioner of Internal Revenue v. Primetown Property Group, Inc., G.R. No.
162155, August 28, 2007; Commissioner of Internal Revenue v. Aichi Forging Co. of Asia, Inc., G.R. No.
184823, October 6, 2010).
 3

Note: In the recent case of Abello v. Banco Filipino, G.R. 232706, July 18, 2022, the Supreme Court clarified
that the Administrative Code DID NOT repeal Article 13 of the Civil Code. Section 31 of the Administrative
Code providing that a year consists of 12 calendar months applies ONLY to periods referred to in the
Administrative Code, like prescription of proceedings and appeals in administrative cases (Specific provision).
A year is still 365 days under Article 13 of the Civil Code (General provision) in relation to other periods, like
prescription of actions (revival of judgment) governed by the Civil Code. This case was decided beyond the
cut-off date which is June 30, 2022.

H. Territoriality Principle
(1) What is the territoriality principle?
Penal laws and those of public security and safety shall be obligatory upon all who live or sojourn in the
Philippine territory, subject to the principles of public international law and to treaty stipulations (CIVIL CODE,
Art. 14).

I. Conflict of Laws
Lex Nationalii Lex Rei Sitae Lex Loci Celebrationis

Article 15 of the Civil Code. Article 16 of the Civil Code. Article 17 of the Civil Code.

We follow the Nationality Law
theory, thus the personal law of a
citizen of the Philippines shall be
governed by Philippine law even
if abroad.
Thus, the personal law of a
foreigner in the Philippines is his
national law (FAMILY CODE, Art.
21).
Real or personal property shall be governed by the law of the Forms and solemnities of
place they are situated. contracts are governed by
the law of the place of
Exception: Even if properties are involved, it is the national execution.
law of the person whose succession is under consideration
(the decedent) and not the law of the country where the Exception:
property is situated that will govern with respect to the 1. Marriages executed
following aspects of succession, whether testate or intestate: before diplomatic or consular
1. Order of succession officials (FAMILY CODE, Art.
2. Amount of successional rights 10);
3. Intrinsic validity of testamentary provisions 2. Some contracts affecting
4. Capacity to succeed from the decedent (1 RABUYA, Civil property (i.e. donation);
Law Reviewer (2021 ed.) p. 20; CIVIL CODE, Art. 16 Par. 2 3. As provided by law (i.e.
and Art. 1039) will of a foreigner executed
abroad following formalities
Exception to the exception: Renvoi doctrine wherein under the Civil Code).
Philippine courts will accept the referral back allowing the
application of Philippine law to succession issues (Aznar v.
Garcia, G.R. No. L-16749, January 31, 1963).

Covers family rights and duties, Covers both real and personal property. Covers only the forms and
status, condition, and legal solemnities (extrinsic
capacity of persons. validity) of contracts, wills,
and other public instruments.

(1) What is the Doctrine of Renvoi?

Renvoi Doctrine is a procedure whereby a jural matter presented is referred by the conflict of laws rules of the
forum to a foreign state, the conflict of laws rule of which in turn refers the matter back to the law of the forum
(remission) or a third state (transmission) (COQUIA, Conflict, (2000 ed.) p. 102).
 4

J. Human Relations in Relation to Persons

Salient points in Articles 19, 20, and 21, Civil Code
Article 19 Article 20 Article 21

Describes the degree of care required, Concerns violations of existing law as Concerns injuries that may be caused by
so that the failure to observe the same basis for an injury acts which are not necessarily proscribed
may justify an actionable tort when it is by law, but are contrary to morals, good
alleged together with Article 20 or Article customs and public policy.
21;
Contains what is commonly referred to
as the principle of abuse of rights, it sets
certain standards which must be
observed not only in the exercise of
one's rights, but also in the performance
of one's duties.

By itself, it is not a basis of an actionable May be used as a basis of an action for May be used as a basis of an action for
tort. damages damages

It does not provide a remedy for its It allows recovery should the act have This article requires that the act be willful.
violation. been willful or negligent.

Lays down a rule of conduct for the Applies to both willful and negligent Applies only to willful acts done contra
government of human relations and for acts that are done contrary to law bonus mores
the maintenance of social order

(St. Martin Polyclinic, Inc. v. LMV Construction Corp., G.R. No. 217426, December 04, 2017).

K. Capacity to Act
(1) R donated Php1,000,000.00 to the unborn child of his pregnant girlfriend, which she accepted on behalf
of the unborn child. After seven (7) months of pregnancy, the fetus was born and baptized as X.
However, X died 20 hours after birth. R sought to recover the Php1,000,000.00. Is R entitled to recover?
No. For civil purposes, the foetus is considered born if it is alive at the time it is completely delivered from the
mother’s womb. However, if the foetus had an intra-uterine life of less than seven months, it is not deemed
born if it dies within twenty-four hours after its complete delivery from the maternal womb (CIVIL CODE, Art.
41). X is still considered born because he had an intra-uterine life of not less than seven (7) months. Thus, the
conceived child, X, shall be considered born for all purposes that are favorable to it (CIVIL CODE, Art. 40).

L. Surnames
(1) What are the rules in the use of a surname by the child?
1. Legitimate child shall principally use the surname of the father (CIVIL CODE, Art. 364);
2. Legitimated child shall principally use the surname of the father (CIVIL CODE, Art. 364);

Note: They may also use the surname of the mother. Reading Article 364 of the Civil Code together with the
State’s declared policy to ensure the fundamental equality of women and men before the law, a legitimate child
is entitled to use the surname of either parent as a last name. The provision states that legitimate children shall
"principally" use the surname of the father, but "principally" does not mean "exclusively" (Alanis III v. Court of
Appeals, G.R. No. 216425, November 11, 2020).

3. Child conceived before the decree annulling a voidable marriage is legitimate, hence, shall principally
use the surname of the father (CIVIL CODE, Art. 369);
4. Illegitimate child shall use the surname of the mother (CIVIL CODE, Art. 368), but may also use the
surname of the father, if recognized by the latter;

Notes: Illegitimate children may use the surname of their father if their filiation has been expressly recognized
by the father through the record of birth appearing in the civil register, or when an admission in a public
document or private handwritten instrument is made by the father. Provided, the father has the right to institute
an action before the regular courts to prove non-filiation during his lifetime (FAMILY CODE, Art. 176, as
amended by R.A. No. 9255 otherwise known as An Act Allowing Illegitimate Children to Use the Surname of
 5

Their Father, Amending for the Purpose Article 176 of Executive Order No. 209, otherwise known as the
"Family Code of the Philippines", Sec. 1).

Additional Note: Ultimately, an illegitimate child has the right to decide to use the surname of the father who
has recognized him/her. The father or mother cannot dictate the surname of their illegitimate child (Grande v.
Antonio, G.R. No. 206248, February 18, 2014).

5. Adopted child shall use the surname of the adopter (CIVIL CODE, Art. 365).

M. Rules Governing Persons Who are Absent

(1) What are the four requisites for a grant of a petition for declaration of presumptive death under Article
41 of the Family Code? (4RWS)
The four requisites for a grant of a petition for declaration of presumptive death are the following:
1. The absent spouse has been missing for 4 consecutive years, or two consecutive years if the
disappearance occurred where there is danger of death under the circumstances laid down in
Article 391 of the Civil Code;
2. The present spouse wishes to Remarry;
3. The present spouse has a Well-founded belief that the absent spouse is dead; and
4. The present spouse files a Summary proceeding for the declaration of presumptive death of the
absentee.

Note: A well-founded belief requires diligent and reasonable efforts to locate the absent spouse, which
necessitates exertion of active effort (not a mere passive one). Mere absence of the spouse (even beyond
the period required by law), lack of any news that the absentee spouse is still alive, mere failure to
communicate, or general presumption of absence under the Civil Code would not suffice (Republic v. Ponce-
Pilapil, G.R. No. 219185. November 25, 2020, Hernando Case).

II. Marriage
A. General Principles
(1) Discuss the effect of absence of, defect or irregularity in the requisites of marriage.
The Family Code provides that marriages lacking any essential or formal requisite are void ab initio (with the
exception of marriages solemnized by any person not legally authorized to perform marriages where either or
both parties believed in good faith that the solemnizing officer had the legal authority to do so; and the instances
when a marriage license is not required), that marriages attended by a defective essential requisite (consent
of the parties) are voidable, and that marriages attended by an irregularity in the formal requisites are valid,
subject to the potential criminal, civil, or administrative liability of those responsible for the irregularity (Ado-an-
Morimoto v. Morimoto, G.R. No. 247576, March 15, 2021).

(2) What are the requisites of marriage? LeCo-ALiCe

The essential requisites of marriage are:
1. Legal capacity of the contracting parties who must be a male and a female; and
2. Consent freely given in the presence of the solemnizing officer (FAMILY CODE, Art. 2).

The formal requisites of marriage are:

1. Authority of the solemnizing officer;
2. A valid marriage License except in the cases provided for marriages exempt from the license
requirement; and
3. A marriage Ceremony which takes place with the appearance of the contracting parties before the
solemnizing officer and their personal declaration that they take each other as husband and wife in
the presence of not less than two (2) witnesses of legal age (FAMILY CODE, Art. 3).

B. Mixed Marriages and Foreign Divorce

(1) J filed a petition for judicial recognition of foreign divorce, alleging that she was married to F, but later
jointly filed for divorce before the City Hall of Sakado City, Saitama Prefecture. The divorce was
accepted. J sought the recognition of the divorce in the Philippines. During the presentation of
evidence, J presented: (1) the Acceptance Certificate issued by the Mayor of Sakado City, Saitama
Prefecture, Japan; (2) an Authentication from the Consul of the Philippine Embassy in Tokyo, Japan;
and (3) A photocopy of the Civil Code of Japan in English text. The Republic, through the OSG, argued
that J failed to comply with the requirements of authentication and proof of documents concerning the
 6

Acceptance Certificate, and the Authentication by the Philippine Embassy in Tokyo, Japan. Should the
petition be granted?
No for J failed to prove the existing law on divorce in Japan. Under Article 26 of the Family Code, a divorce
between a foreigner and a Filipino may be recognized in the Philippines as long as it was validly obtained
according to the foreign spouse's national law. Before a foreign divorce decree can be recognized by the court,
the party pleading it must first prove the fact of divorce and its conformity to the foreign law allowing it. The SC,
in the case of Moraña v. Republic admitted as evidence the Divorce Report because there was no divorce
proceeding coursed through Japanese Courts but through the Office of the Mayor of Fukuyama City. Here, the
divorce was coursed not through Japanese courts but through the Mayor of Sakado City, Saitama Prefecture.
The Acceptance Certificate was issued to J and F when they filed their divorce before the mayor. Hence, it
already suffices as proof of the fact of divorce.

Nevertheless, J was unable to establish the law of Japan on divorce as she submitted a photocopy of the
English translation of the Civil Code of Japan, which is not considered as an official translation. The document
submitted by J does not prove the existing law on divorce in Japan. Unfortunately, without such evidence, there
is nothing on record to establish that the divorce between J and F was validly obtained and is consistent with
the Japanese law on divorce (Republic v. Kikuchi, G.R. No. 243646; June 22, 2022, Hernando Case).

C. Void Marriages
(1) L married N when he was 16 years old. After 12 years, L married another person, R. Their marriage
certificate indicated that L is single at the time of the second marriage. This prompted N to file a bigamy
case against L who unlawfully contracted a second marriage while L and N’s marriage was still
subsisting. L contended that the first marriage is void because of the absence of a marriage license. L
was nevertheless convicted of Bigamy by the RTC. During the pendency of L’s appeal from his
conviction, a judicial declaration of nullity of the first marriage was issued. L now argues that the first
marriage is void by virtue of the judicial declaration of nullity. Will L’s contention prosper?
Yes, L’s contention will prosper as the first marriage is considered as a void ab initio marriage and L should be
exonerated from the crime of Bigamy. To be convicted of bigamy, the following elements must be present: (1)
the offender has been legally married; (2) the marriage has not been legally dissolved or, in case his or her
spouse is absent, the absent spouse could not yet be presumed dead according to the Civil Code; (3) that he
contracts a second or subsequent marriage; and (4) the second or subsequent marriage has all the essential
requisites for validity. Bigamy is absent in this case since there is no prior valid marriage. There was no
marriage license issued for L and N’s first marriage. The fact that the judicial declaration of nullity was obtained
after the accused had contracted the second marriage will still not give rise to bigamy because a void marriage
is inexistent from the very beginning. Moreover, the prior judicial declaration of nullity of the marriage is
a requirement only for purposes of remarriage and that Article 40 should not have been construed as
imposing a requirement for the accused to raise the defense of nullity of the first marriage (Pulido v.
People, G.R. No. 220149, July 27, 2021, Hernando Case).

(2) What are the things to be considered in invoking and proving psychological incapacity?
The guidelines in the interpretation and application of Article 36 of the Family Code, which provides that a
marriage may be declared void on the ground of psychological incapacity, are summarized in the case of
Santos-Macabata v. Macabata, Jr., (G.R. No. 237524, April 6, 2022, Hernando Case; citing Tan-Andal v.
Andal, G.R. No. 196359, May 11, 2021) as follows:

1. The plaintiff-spouse in an action to nullify a valid marriage based on Article 36 of the Family Code has the
burden of proving his or her case with clear and convincing evidence;

2. Proof of the durable or enduring aspects of a person's personality, called "personality structure," which
manifests itself through clear acts of dysfunctionality that undermines the family;

Note: Psychological incapacity is neither a mental incapacity nor a personality disorder that must be
proven through expert opinion. The spouse's personality structure must make it impossible for him or her
to understand and, more important, to comply with his or her essential marital obligations. Proof of these
aspects of personality need not be given by an expert. Ordinary witnesses who have been present in the
life of the spouses before the latter contracted marriage may testify on behaviors that they have
consistently observed from the supposedly incapacitated spouse. From there, the judge will decide if these
behaviors are indicative of a true and serious incapacity to assume the essential marital obligations.

3. Psychological incapacity must be proven to be existing at the time of the celebration of marriage;
 7

4. Psychological incapacity must be incurable, not in the medical, but the legal sense;

Note: The requirement of incurability means that the incapacity is so enduring and persistent with respect
to a specific partner, and contemplates a situation where the couple's respective personality structures are
so incompatible and antagonistic that the only result of the union would be inevitable and irreparable
breakdown of marriage. An undeniable pattern of such persisting failure to be a present, loving, faithful,
respectful, and supportive spouse must be established as to demonstrate that there is indeed a
psychological anomaly or incongruity in the spouse relative to the other.

5. The illness must be grave enough to bring about disability to assume essential marital obligations;

Note: There must be a clear and convincing evidence showing that such incapacity is caused by a
genuinely serious psychic cause.

6. Marital obligations refer to Articles 68-71 the Family Code as regards the husband and wife as well as
Articles 220, 221, and 225 of the same code in regard to parents and their children;

Note: It must be clearly shown that it is of such grievous nature that it reflects on the capacity of one of
the spouses for marriage. The easy cases are when one of the spouses sexually abuses one of their
children; or, when unknown to the other spouse, a child is subjected to domestic violence; or when due to
the spouse's refusal to go through counseling or rehabilitation, his or her substance abuse puts a child
through a situation of neglect or outright danger. As in all cases, the context of the whole case, shown by
clear and convincing evidence, should be taken into consideration (Tan-Andal v. Andal, G.R. No. 196359,
May 11, 2021). Such non-complied marital obligation(s) must also be stated in the petition, proven by
evidence and included in the text of the decision.

Additional Note: Irreconcilable differences, conflicting personalities, emotional immaturity and

irresponsibility, physical abuse, habitual alcoholism, sexual infidelity or perversion, and abandonment, by
themselves, also do not warrant a finding of psychological incapacity (Carullo-Padua v. Padua, G.R. No.
208258, April 27, 2022, Hernando Case)

7. Interpretations given by the National Appellate Matrimonial Tribunal of the Catholic Church in the
Philippines, while not controlling or decisive, are persuasive; and

8. The trial court must order the prosecuting attorney or fiscal and the Solicitor General to appear as counsel
for the state.

Note: In Tan- Andal v Andal, G.R. No. 196359, May 11, 2021, which is indicated in the 2023 Bar Civil
Law Syllabus, a footnote appears that the eighth guideline regarding the certification from the Solicitor
General briefly stating his or her reasons for agreeing or opposing the petition for declaration of nullity of
marriage on the ground of psychological incapacity has been dispensed with under A.M. No. 02-11-10-
SC.

D. Voidable Marriages
(1) If the first marriage is merely voidable, can the accused interpose an annulment decree as a defense
in the criminal prosecution for bigamy?
No, since the voidable first marriage is considered valid and subsisting when the second marriage was
contracted. The crime of bigamy, therefore, is consummated when the second marriage was celebrated during
the subsistence of the voidable first marriage. The same rule applies if the second marriage is merely
considered as voidable (Pulido v. People, G.R. No. 220149, July 27, 2021, Hernando Case).

E. Effect of Defective Marriages

(1) What are the effects of the declaration of absolute nullity or judgment of annulment of a marriage?
The effects are the following:
1. Either of the former spouses may marry again after complying with the requirements of Article 52
(FAMILY CODE, Art. 53).
2. As to the status of the children the general rule is that children conceived and born outside of a valid
marriage are illegitimate. The exceptions are:
a. Those conceived or born before the judgment of annulment or absolute nullity of the marriage
under Article 36 (psychological incapacity) has become final and executory, shall be
considered legitimate; and
 8

b. Those conceived or born of the subsequent void marriage under Article 53 (Failure to record
judgment and to partition and distribute properties and deliver the children’s presumptive
legitime) shall likewise be legitimate (FAMILY CODE, Art. 54).

Note: The effects provided for by pars. (2), (3), (4) and (5) of Article 43 and by Article 44 shall also apply in the proper
cases to marriages which are declared void ab initio or annulled by final judgment under Articles 40 and 45.

F. Foreign Marriages
(1) When is a marriage solemnized outside the Philippines not valid?
The following marriages solemnized outside the Philippines are not valid:
1. In case a Filipino contracts a foreign marriage which is null and void in the place where it was solemnized
for non-compliance with formal requisites, the same shall also be null and void in the Philippines even if
such was valid if celebrated under Philippine laws;
2. Foreign marriages shall not be recognized in the Philippines if: (18B-MAPIP)
a. Contracted by a national who is below 18 years of age (FAMILY CODE, Art. 35, Par. 1);
b. Bigamous or polygamous except as provided in Art. 41 (FAMILY CODE, Art. 35, Par. 4);
c. Contracted through Mistake of one party as to the identity of the other (FAMILY CODE, Art. 35, Par.
5);
d. Contracted following the Annulment or declaration of nullity of a previous marriage but before
compliance with the requirements of Article 52 on recording, partition, and delivery of presumptive
legitimes (FAMILY CODE, Art. 35, Par. 6);
e. Void due to Psychological incapacity (FAMILY CODE, Art. 36);
f. Incestuous (FAMILY CODE, Art. 37); and
g. Void for reasons of Public policy (FAMILY CODE, Art. 38).

G. Legal Separation
(1) W and L have been married for more than 20 years when L filed a complaint for legal separation on the
ground of repeated physical violence or grossly abusive conduct against her and their children. One
day, W hit L on different parts of her body, pointed a gun at her, and asked her to leave the house,
which she did. W contends that L abandoned the family, thus, the complaint for legal separation should
be denied because they have both given grounds for legal separation. Is the contention of W correct?
No, W’s contention is not correct because L’s act did not constitute abandonment under Article 55 of the Family
Code. Following Article 56 (4) of the Family Code, when both parties have given ground for legal separation,
the petition for the same should be denied. However, the abandonment referred to by the Family Code as a
ground for legal separation is abandonment without justifiable cause for more than one (1) year. The act of L
of leaving the house due to W’s abusive conduct does not constitute the abandonment contemplated in the
aforementioned provision (Ong v. Ong, G.R. No. 153206, October 23, 2006).

H. Property Relations Between Spouses

(1) Spouses H and W agreed upon a property regime of absolute community property, with the exception
that community property shall exclude all the property owned by the spouses at the time of the
celebration of the marriage, and that their property relations would commence from the time a child is
born. They married in 2001. Is the entire agreement valid?
No, the entire agreement is not valid. The stipulation that their property relations would commence from the
time a child is born is void. The stipulation that community property shall exclude all the property owned by the
spouses at the time of the celebration of the marriage is valid. The absolute community of property between
spouses shall commence at the precise moment that the marriage is celebrated. Any stipulation, express or
implied, for the commencement of the community regime at any other time shall be void. Unless otherwise
provided in the Chapter on the System of Absolute Community of the Family Code or in the marriage
settlements, the community property shall consist of all the property owned by the spouses at the time of the
celebration of the marriage or acquired thereafter (FAMILY CODE, Arts. 88, and 91).

(2) Does separation from bed and board at the time of the supposed sale of a conjugal property exempt
the disposition by the spouse from the requirement of obtaining the other spouse’s consent?
No, the fact that the husband and wife were separated from bed and board (a mensa et thoro) at the time of
the supposed sale of the conjugal property by one of the spouses to a third person did not exempt the
disposition from the requirement of obtaining the other spouse’s consent under Article 116 of the Family Code
(Spouses Anastacio, Sr. v. Heirs of Coloma, G.R. No. 224572; August 27, 2020).
 9

(3) Is it necessary to prove that the property was acquired with conjugal funds in order for the presumption
that all properties acquired during the marriage to be applicable?
No, it is not necessary to prove that the property was acquired with conjugal funds and the presumption still
applies even when the manner in which the property was acquired does not appear. Once the condition sine
qua non that the property was acquired during the marriage is established, then the presumption that all
properties acquired during the marriage, whether the acquisition appears to have been made, contracted or
registered in the name of one spouse or both spouses, are conjugal, remains until the contrary is proved
(Spouses Anastacio, Sr. v. Heirs of Coloma, G.R. No. 224572; August 27, 2020).

(4) Discuss the effects of alienations or encumbrances by one spouse without the consent of the other
under the Civil Code, and under the Family Code.
Article 166, when read in relation to Article 173 of the Civil Code, leads to the inescapable conclusion that a
contract disposing or encumbering conjugal real property without the wife’s consent is not void but merely
voidable. Articles 96 and 124 of Family Code now expressly declares that alienations or encumbrances of
community or conjugal property without the consent of the other spouse are null and void. However, there is a
special nature of these void transactions under the Family Code, as this can become binding contracts upon
the acceptance by the other spouse or authorization by the court before the continuing offers are withdrawn
by either or both spouses (Spouses Cueno v. Spouses Bautista, G.R. No. 246445; March 2, 2021).

(5) Is it necessary that there be proof of actual contribution by both live-in partners who are incapacitated
to marry each other before the property becomes co-owned by them in proportion to their
contribution?
Yes, a reading of Article 148 of the Family Code readily shows that there must be proof of “actual joint
contribution” by both live-in partners who are incapacitated to marry each other before the property becomes
co-owned by them in proportion to their contribution. The presumption of equality of contribution arises only in
the absence of proof of their proportionate contributions, subject to the condition that actual joint contribution
is proven first. Simply put, proof of actual contribution by both parties is required, otherwise there is no co-
ownership and no presumption of equal sharing (Villanueva v. Court of Appeals, G.R. No. 143286, April 14,
2004).

Note: The rule that the care and maintenance of the family and the household by a spouse could be his or her
contribution to the joint acquisition of property applies only when both are not incapacitated to marry each other
(FAMILY CODE, Art. 147).

I. The Family and Family Home

(1) Is a minor entitled to the continued use and non-partition of a family home despite the death of the
head of the family who constituted the same?
Yes, provided the following requisites concur: (154FaSu)
1. The relationship enumerated in Article 154 of the Family Code;
2. They live in the Family home, and
3. They are dependent for legal Support upon the head of the family (Patricio v. Dario III, G.R. No. 170829,
November 20, 2006).

Note: Article 154 provides that the beneficiaries of a family home are:
1. The husband and wife, or an unmarried person who is the head of a family; and
2. Their parents, ascendants, descendants, brothers and sisters, whether the relationship be legitimate or
illegitimate, who are living in the family home and who depend upon the head of the family for legal support.

(2) Do the beneficiaries of the family home include the grandchildren and great grandchildren of the
spouses who constitute a family home?
Yes. The term “descendants” under Article 154 of the Family Code contemplates all descendants of the person
or persons who constituted the family home without distinction; hence, it must necessarily include the
grandchildren and great grandchildren of the spouses who constitute a family home. Ubi lex non distinguit nec
nos distinguire debemos (Patricio v. Dario III, G.R. No. 170829, November 20, 2006).

J. Paternity and Filiation

(1) Chandler and Monica have been married for twenty (20) years without children. Desirous to have a
baby, they consulted Dr. Drake Ramoray, a prominent medical specialist on human fertility. He advised
Monica to undergo artificial insemination. It was found that Chandler’s sperm count was inadequate to
 10

induce pregnancy. Hence, the couple looked for a willing donor. Joey, the brother of Chandler, readily
consented to donate his sperm. After a series of tests, Joey’s sperm was medically introduced into
Monica’s ovary. She became pregnant and 9 months later, gave birth to a baby boy, named Bing. Is
Bing the legitimate son of Chandler?
Yes, provided the following are present:
1. The artificial insemination has been authorized or ratified by the spouses in a written instrument executed
and signed by them before the birth of the child; and
2. The written instrument is recorded in the civil registry together with the birth certificate of the child (FAMILY
CODE, Art. 164, Par. 2).

(2) What are the instances when the right to file an action to claim legitimate filiation under Article 173 of
the Family Code passes to the child’s heirs?
The only three instances when the right to file an action to claim legitimate filiation under Article 173 of the
Family Code passes to the child’s heirs are: (MIC)
1. When the child dies during Minority;
2. When the child dies in a state of Insanity; or
3. When the child dies after the Commencement of the action (Bernardo v. Fernando, G.R. Nos.
211034 & 211076; November 18, 2020).

(3) A has a child named C who was born from a previous relationship. A then met B and during their
relationship, A bore two more children namely, D and E. To legalize their relationship, A and B married
and thereafter, the birth certificates of the children, including C, was amended to change their civil
status to “legitimated” by virtue of the said marriage. A and B’s relationship turned sour, lived
separately and thereafter, A filed against B a claim for support of C. Will the case prosper?
Yes, the case will prosper because B is estopped from claiming that C is not his child. While C is not B’s
biological child, he was legitimated under the latter’s name. Like D and E, C is entitled to receive support from
B. Article 178 states that “legitimation shall take place by a subsequent valid marriage between parents.” Since
B is not C’s biological father, it was improper to have C legitimated after the celebration of B and A’s marriage.
B voluntarily but falsely acknowledged C as his son. Article 1431 of the Civil Code provides that through
estoppel an admission or representation is rendered conclusive upon the person making it, and cannot be
denied or disproved as against the person relying thereon. The principle of estoppel now bars B from making
an assertion contrary to his previous representations. C remains to be B’s son, and pursuant to Article 179 of
the Family Code, the former is entitled to the same rights as those of a legitimate child, including the receipt of
his father’s support (BBB v. AAA, G.R. No. 193225, February 9, 2015).

Note: It is opined that this is without prejudice to the filing of a direct action to impugn the legitimacy of C, which if
granted by the court, shall exempt B from the obligation of supporting C.

(4) Who may adopt under RA 11642 or the Domestic Administrative Adoption and Alternative Child Care
Act? (2F-3G)
The following may adopt under RA 11642:
1. Any Filipino citizen at least twenty-five (25) years of age, who is in possession of full civil capacity and
legal rights; has not been convicted of any crime involving moral turpitude; is of good moral character
and can model the same; is emotionally and psychologically capable of caring for children; at least
sixteen (16) years older than the adoptee; and who is in a position to support and care for adopted
children in keeping with the means of the family: Provided, That the requirement of sixteen (16)-years
difference between the age of the adopter and the adoptee may be waived when the adopter is the
biological parent of the adoptee, or is the spouse of the adoptee’s parent
2. The legal Guardian with respect to the ward after the termination of the guardianship and clearance of
financial accountabilities
3. The legal Guardians with respect to the foster child
4. Philippine Government officials and employees deployed or stationed abroad: Provided, that they are
able to bring the child with them; and
5. Foreign nationals who are permanent or habitual residents of the Philippines for at least five (5) years
possessing the same qualifications as above stated for Filipino nationals prior to filing of the petition:
Provided, That they come from a country with diplomatic relations with the Republic of the Philippines
and that the laws of the adopter’s country will acknowledge the Certificate of Adoption as valid,
acknowledge the child as a legal child of the adopters, and allow entry of the child into such country
as an adoptee: Provided, further, That requirements of residency may be waived for the following:
a. A former Filipino citizen, habitually residing in the Philippines, who seeks to adopt a relative within
the fourth (4th) civil degree of consanguinity or affinity; or
b. One who seeks to adopt the legitimate child of the Filipino spouse; or
 11

c. One who is married to a Filipino citizen and seeks to adopt jointly with the spouse a relative within
the fourth (4th) degree of consanguinity or affinity of the Filipino spouse (RA 11642, Sec. 21).

(5) Must spouses adopt jointly?

Yes, spouses shall jointly adopt, except in the following cases:
1. If one spouse seeks to adopt the legitimate child of the other; or
2. If one spouse seeks to adopt his or her own illegitimate child: Provided, That the other spouse has
signified consent thereto; or
3. If the spouses are legally separated from each other (Id).

(6) Who may be adopted under RA 11642? (CSA-3FoResDiRe)

The following may be adopted under RA 11642:
1. Any child who has been issued a Certificate Declaring a Child Legally Available for Adoption (CDCLAA);
2. The legitimate child of one Spouse by the other spouse;
3. An illegitimate child by a qualified Adopter to improve status of legitimacy;
4. A Filipino of legal age if, prior to the adoption, said person has been consistently considered and treated
by the adopters as their own child for a period of at least three (3) years;
5. A Foster child;
6. A child whose adoption has been previously Rescinded;
7. A child whose biological or adoptive parents have Died: Provided, That no proceedings shall be initiated
within six (6) months from the time of death of said parents; or
8. A Relative of the adopter. RA 11642, Sec. 22).

(7) What are the effects of a Decree of Adoption?

Under Sections 41, 42, and 43 of RA 11642, the following are the effects of adoption:
Legitimacy – The adoptee shall be considered the legitimate child of the adopter for all intents and purposes
and as such is entitled to all the rights and obligations provided by law to legitimate children born to them
without discrimination of any kind. To this end, the adoptee is entitled to love, guidance, and support in keeping
with the means of the family. The legitimate filiation that is created between the adopter and adoptee shall be
extended to the adopter’s parents, adopter’s legitimate siblings, and legitimate descendants.

The adopter is also given the right to choose the name by which the child is to be known, consistent with the
best interest of the child.

Parental Authority – Upon issuances of the Order of Adoption, adoption shall cease as alternative care and
becomes parental care. Adoptive parents shall now have full parental authority over the child. Except in cases
where the biological parent is the spouse of the adopter, all legal ties between the biological parents and the
adoptee shall be severed and the same shall then be vested on the adopters.

In case spouses jointly adopt or one spouse adopts the legitimate child of the other, joint parental authority
shall be exercised by the spouses.

Succession – In testate and intestate succession, the adopters and the adoptee shall have reciprocal rights
of succession without distinction from legitimate filiations. However, if the adoptees and their biological parents
have left a will, the law on testamentary succession shall govern.

Note: Since the provisions of Article 189 and 190 of the Family Code on intestate succession to the estate of
an adopted were not expressly repealed, it is opined that they are still effective in the absence of clear
incompatibility with the provisions of RA 11462.

(8) Did RA 11642 repeal the Inter-Country Adoption Act (RA 8043)?
No, R.A 11642 did not repeal the Inter-Country Adoption Act. RA 11642 simply provided and allowed for a
simpler and inexpensive domestic administrative adoption proceedings which streamline services for
alternative child care. It also created the National Authority for Child Care which exercises all powers and
functions relating to alternative child care, including, declaring a child legally available for both domestic,
administrative adoption and inter-country adoption, foster care, kinship care, family-like care or residential care.
(RA 11642, Sec. 3 and Sec. 62)
 12

K. Support
(1) May an action for support resolve an issue of paternity?
Yes, an action for support may resolve an ineluctable issue of paternity if it involves the same parties, is brought
before a court with the proper jurisdiction, prays to impel recognition of paternal relations, and invokes judicial
intervention to do so. Filiation proceedings need not be separately instituted first to ascertain the minor child’s
paternity before a complaint for support could be filed. The direct filing of an action for support, where the issue
of compulsory recognition may be integrated and resolved, is allowed. (Abella v. Cabañero, G.R. No. 206647,
August 9, 2017).

L. Parental Authority
(1) During an enrolment campaign conducted by the students in SM School, some high school students
boarded a jeep owned by V, driven by J who is a minor. J drove the jeep in a reckless manner and as
a result, the jeep turned turtle. Student S died as a result of the accident. The parents of S filed a case
against the school. During the trial, the evidence points to the detachment of the steering wheel guide
of the jeep as the cause of the accident. Is the school liable?
No, the school is not liable. Under Article 219 of the Family Code, if the person under custody is a minor, those
exercising special parental authority are principally and solidarily liable for the damages caused by the acts or
omissions of the unemancipated minor while under their supervision, instruction, or custody. However, to be
liable, there must be a finding that the act or omission considered as negligent was the proximate cause of the
injury. In this case, the school cannot be held liable because the accident was not shown to be due to the
negligence of the school but rather the detachment of the steering wheel guide of the jeep. The negligence of
the school was only a remote cause of the accident (St. Mary’s Academy v. Carpitanos, G.R. No. 143363,
February 6, 2002).

Note: The special parental authority and responsibility under Article 218 of the Family Code applies to field
trips, excursions and other affairs of the minor pupils and students outside the school premises whenever
authorized by the school or its teachers (Id.).

(2) On December 10, 1981, spouses S and F filed a petition to adopt A, a minor. During the pendency of
the petition for adoption, spouses S and F went to the US. On October 20, 1982, A shot J with an air
rifle which resulted to the latter’s death. The parents of J filed a civil complaint for damages against
the natural parents of A, spouses V and C, with whom A was living with at the time of the incident. The
petition for adoption was granted on November 18, 1982. The natural parents of A, spouses V and C,
contended that they are free of parental authority for A’s conduct, because by virtue of the decree of
adoption in favor of the spouses S and F, the parental authority had been retroactively lodged in the
latter which would cover the time A had shot J. Is the contention of spouses V and C tenable?
No, the contention of spouses V and C is untenable. Article 221 of the Family Code requires that the child,
doer of the tortious act, shall have been in the actual custody of the parents sought to be held liable for the
ensuing damage. Moreover, the parental authority is not properly regarded as having been retroactively
transferred to and vested in the adopting parents, spouses S and F, at the time the air rifle shooting happened.
The retroactive effect should not be applied to impose liability upon the adopting parents for an act that
occurred at a time when they had no actual or physical custody over the adopted child. In the instant case, to
hold that parental authority had been retroactively lodged in spouses S and F, so as to burden them with liability
for a tortious act that they could not have foreseen and which they could not have prevented, would be unfair
and unconscionable (Tamargo v. Court of Appeals, G.R. No. 85044, June 3, 1992).

PROPERTY, OWNERSHIP, AND ITS MODIFICATIONS

I. CLASSIFICATION OF PROPERTY
(1) M is a public utility engaged in electric distribution, and its transformers, electric posts, transmission
lines, insulators, and electric meters constitute the physical facilities through which M delivers
electricity to its consumers. May the transformers, electric posts, transmission lines, insulators, and
electric meters of M be subject to real property tax?
Yes, the transformers, electric posts, transmission lines, insulators, and electric meters of M may be subject to
real property tax. As between the Civil Code, a general law governing property and property relations, and the
Local Government Code (LGC), a special law granting local government units the power to impose real
property tax, the latter shall prevail. Therefore, in determining whether machinery is real property subject to
real property tax, the definition and requirements under the LGC are controlling. The machinery subject to real
 13

property tax under the LGC “may or may not be attached, permanently or temporarily to the real property,” and
even those which are “mobile” (Manila Electric Co. v. City Assessor, G.R. No. 166102, August 5, 2015).

Note: The machinery subject to real property tax under the LGC “may or may not be attached, permanently or
temporarily to the real property;” and the physical facilities for production, installations, and appurtenant service
facilities, those which are mobile, self-powered or self-propelled, or are not permanently attached must (a) be
actually, directly, and exclusively used to meet the needs of the particular industry, business, or activity; and
(b) by their very nature and purpose, be designed for, or necessary for manufacturing, mining, logging,
commercial, industrial, or agricultural purposes. The properties under Article 415, paragraph (5) of the Civil
Code are immovables by destination, or “those which are essentially movables, but by the purpose for which
they have been placed in an immovable, partake of the nature of the latter because of the added utility derived
therefrom.” These properties, including machinery, become immobilized if the following requisites concur:
1. They are placed in the tenement by the owner of such tenement;
2. They are destined for use in the industry or work in the tenement; and
3. They tend to directly meet the needs of said industry or works.

The first two requisites are not found anywhere in the LGC (Manila Electric Co. v. City Assessor, G.R. No. 166102,
August 5, 2015).

II. BUNDLE OF RIGHTS

A. Ownership
(1) A is the registered owner of Lot A, and adjoining the same was the lot owned by C. A filed an action to
quiet title and to recover possession, claiming that C had extended his possession up to the former’s
property. To support his action, he presented an Affidavit of Self-Adjudication, a Free Patent
Certificate, a Transfer of Certificate of Title, and tax declarations. C, on the other hand, presented a
deed of sale and several tax declarations in the name of his predecessors-in-interest. However, based
on the survey by the geodetic engineer, it was discovered that C’s deed of sale and tax declarations
covered Lot A. Decide.
Even if C’s tax declarations refer to the same property, A’s certificate of title cannot be defeated by the deed
of sale and tax declarations presented by C. A certificate of title serves as evidence of an indefeasible and
incontrovertible title to the property in favor of the person whose name appears therein. As against an array of
proof consisting of tax declarations and/or tax receipts which are not conclusive evidence of ownership nor
proof of the area covered therein, an original certificate of title indicates true and legal ownership by the
registered owners over the disputed premises (Spouses Alcantara v. Spouses Belen, GR No. 200204, April
25, 2017).

B. Rights of Accession
(1) What is accession?
Accession is the right by virtue of which the owner of a thing becomes the owner of everything that is produced
(accession discreta involving natural, industrial and civil fruits) thereby or which is incorporated or attached
thereto, either naturally or artificially (accession continua) (CIVIL CODE, Art. 440). Industrial accession on real
property includes building, planting, and sowing (Art. 445), and accession natural, such as alluvion (Art. 457),
avulsion (Art. 459), change of course of rivers (Arts. 461-462), and formation of islands (Arts. 464-465). For
movable properties, accession can be by adjunction, mixture, and specification.

Note: Accessories are things joined to, or included with, the principal thing for the latter’s embellishment, better
use, or completion.

C. Actions to Recover Ownership and Possession of Property

(1) What is an action for replevin?

Replevin is an action whereby the owner or person entitled to repossession of personal property such as goods
or chattels may recover these from one who has wrongfully distrained or taken, or who wrongfully detains such
goods or chattels. It is designed to permit one having right to possession to recover property in specie from
one who has wrongfully taken or detained the property. The term may refer either to the action itself, for the
recovery of personalty, or to the provisional remedy traditionally associated with it, by which possession of the
property may be obtained by the plaintiff and retained during the pendency of the action (Smart
Communications, Inc. v. Astorga, G.R. Nos. 148132, 151079 & 151372, January 28, 2008).
 14

(2) What are the three usual actions to recover possession of real property. Discuss.
The three usual actions to recover possession of real property are:
1. Accion interdictal or a summary ejectment proceeding, which may be either for forcible entry (detentacion)
or unlawful detainer (desahucio), for the recovery of physical or material possession (possession de facto)
where the dispossession has not lasted for more than one year, and should be brought in the proper
inferior court;
2. Accion publiciana or the plenary action to recover the better right of possession (possession de jure), which
should be brought in the proper inferior court or Regional Trial Court (depending upon the value of the
property) when the dispossession has lasted for more than one year (or for less than a year in cases other
than those mentioned in Rule 70 of the Rules of Court); and
3. Accion reivindicatoria or accion de reivindicacion or reivindicatory action, which is an action for recovery
of ownership which must be brought in the proper inferior court or Regional Trial Court (depending upon
the value of the property) (Heirs of Cullado v. Gutierrez, G.R. No. 212938, July 30, 2019).

(3) What are the jurisdictional facts that the plaintiff must allege and prove to sustain an action for unlawful
detainer?
To sustain an action for unlawful detainer, the plaintiff bears the burden of alleging and proving, by
preponderance of evidence, the following jurisdictional facts: (CoIRD)
1. Initially, possession of property by the defendant was by Contract with or by tolerance of the plaintiff;
2. Eventually, such possession became Illegal upon notice by plaintiff to defendant of the termination of the
latter’s right of possession;
3. Thereafter, the defendant Remained in possession of the property and deprived the plaintiff of the
enjoyment thereof; and
4. Within one year from the last Demand on defendant to vacate the property, the plaintiff instituted the
complaint for ejectment (Spouses Liu v. Espinosa, G.R. No. 238513; July 31, 2019, Hernando Case).

(4) B asserted ownership over a subject property and demanded that A vacate said land. However, A
refused citing that he has been occupying the lot and living therein since 1978. A showed several
documents to establish his own claim to the lot. B filed an action for recovery of possession, claiming
that the subject property is covered by their own land title. The lower court deemed that the technical
description is sufficient to establish the location, area and boundaries of the property. Is the technical
description enough to show the identity of the property?
No, the technical description is not enough to show the identity of the property. The technical description that
provides for the metes and bounds of a parcel of land cannot stand alone, much more be considered as
foolproof evidence exactly pointing to the subject property. The identity of the disputed land sought to be
recovered or of the subject property in this case may be established through a survey plan of the said property
(Gemina v. Heirs of Espejo, Jr., G.R. No. 232682, September 13, 2021, Hernando Case).

(5) Q filed a complaint for Quieting of Title with Damages, alleging that G surreptitiously and without their
knowledge and consent caused the subject property to be surveyed for the purpose of claiming
ownership. To bolster their claim, Q averred that their mother mortgaged the subject property on
several occasions with various banks, and presented pieces of documentary evidence like cancellation
of mortgages and tax declarations. G maintained that his family owned the subject property by virtue
of succession from a common ancestor. Should the action for quieting of title prosper?
No, the action for quieting of title should not prosper. The requirements for an action to prosper are the
following: (1) the plaintiff or complainant has a legal or an equitable title to or interest in the real property subject
of the action; and (2) the deed, claim, encumbrance, or proceeding claimed to be casting cloud on his title must
be shown to be in fact invalid or inoperative despite its prima facie appearance of validity or legal efficacy. Q
failed to establish the first requirement of having legal or equitable title over the property in dispute. There were
no certificates of title in their respective names to prove legal title. Moreover, tax declarations and receipts are
not conclusive evidence of ownership or of the right to possess land when not supported by other evidence.
Mere allegation of open, continuous, and exclusive possession of the property in dispute without substantiation
does not meet the requirements of the law. In view of the lack of legal or equitable title, there is no cloud to be
prevented or removed and there is no case of quieting of title to speak of (Viloria v. Heirs of Gaetos, G.R. No.
206240, May 12, 2021, Hernando Case).

D. Co-Ownership
(1) Y died leaving a big parcel of land. He was survived by his wife and 3 children. B, one of the 3 children
executed a SPA in favor of the mother, X to represent her in the partition case pending in court. B
revoked the authority granted to the mother and filed the revocation in court, but she did not give a
copy to the mother. Sometime thereafter, X entered into a Kasunduan with the tenants pursuant to the
 15

Agrarian Reform Law and transferred the ownership of half of the subject property to the eight (8)
tenants while the other half remained with the heirs of Y. B claimed that the Kasunduan is void because
it lacked her signature since she had already revoked the agency relationship with her mother and that
the tenants are not real parties in interest to the partition of the property. Was the transfer of the
property to the tenants void as it lacks the signature of B and that she revoked the authority given to
her mother?
No, the transfer is not void even if it lacks the signature of B. The partition and alienation of half of the subject
property, through the 2006 Kasunduan, is not completely void and cannot be annulled as to the share of X,
who is a co-owner to the extent of her share in the conjugal partnership and her share as an heir. Articles 493-
495 and 498 of the Civil Code allow the alienation by a co-owner of his or her share in the co-owned property,
termination of the co-ownership, and partition of the property. 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. No co-owner shall be obliged to remain
in the co ownership. Each co-owner may demand at any time the partition of the thing owned in common,
insofar as his share is concerned (CIVIL CODE, Arts. 493-494,). Moreover, the revocation of the agency was
not effected because of lack of notice to the agent. The failure to object to the Kasunduan despite knowledge
can even be considered a ratification.

The transfer of half of the subject property was under the aegis of the Department of Agrarian Reform (DAR)
pursuant to the law which the heirs cannot ignore or circumvent by their claim that the Kasunduan was not
validly executed. Given the compulsory requirement of the law, there is no validity to the assertion that property
of the decedent was distributed to non-heirs. Plainly, the partition of the subject property, and the consequent
transfer and titling of half thereof to qualified beneficiaries, is valid, just and binding on all the heirs of the
decedent (Silva v. Lo, G.R. No. 206667, June 23, 2021, Hernando Case).

E. Possession
(1) How is possession classified under the Civil Code? (OwnCoFa)
Possession under the Civil Code is classified as follows:
1. Possession in one’s Own name or the name of another (CIVIL CODE, Art. 524)
2. Possession in the Concept of owner or possession in the concept of holder (CIVIL CODE, Art. 525); and
3. Possession in good Faith or possession in bad faith (CIVIL CODE, Art. 526).

(2) L filed an action for ejectment against N. N claims that they were allowed by M, co-owner of L to develop
and occupy the land provided they pay rent. Since M did not want to receive the rent after sometime,
they had been depositing the rent to the bank, although they cannot produce any other evidence of the
alleged lease agreement. Can N be ejected from the land?
Yes. From the absence of proof of any contractual basis for N’s possession of the subject premises, the only
legal implication is that his possession thereof is by mere tolerance. A person who occupies the land of another
at the latter’s tolerance or permission, without any contract between them, is necessarily bound by an implied
promise that he will vacate upon demand, failing which, a summary action for ejectment is the proper remedy
against him.

The alleged consignation has no effect in the absence of a creditor-debtor relationship between L and N. The
possession of the property by N being by mere tolerance, L has no obligation to receive any payment from N.
Since L is not a creditor to N as far as the alleged rental payment is concerned, L cannot be compelled to
receive such payment even through consignation under Article 1256. The bank deposit made by N intended
as consignation has no legal effect insofar as L is concerned (Llobrera vs. Fernandez, G.R. No. 142882, May
2, 2006).

(3) What are the rights of every possessor? (RPS)

Every possessor, whether in the concept of an owner or in the concept of holder, is given the following rights:
1. The right to be Respected in his possession (CIVIL CODE, Art. 539);
2. The right to be Protected in or restored to said possession by legal means should he be disturbed
therein (CIVIL CODE, Art. 539); and
3. The right to Secure from a competent court in an action for forcible entry the proper writ to restore him in
his possession (CIVIL CODE, Art. 428).

(4) Spouses P are the registered owners of a certain parcel of land. M, in turn, on the basis of
representations made by D, a complete stranger, that he is the owner of said property, rented the same
 16

from him and thereon, constructed a house. Upon discovery that M built a house on said lot, Spouses
P made repeated demands for him to vacate. M, however, refused to comply. Aggrieved, Spouses P
filed a complaint for recovery of possession against M. In their Answer with Compulsory Counterclaim,
M alleged that they are builders in good faith since they truly believed that the lot belonged to D. Is M
considered a builder in good faith?
M is not a builder in good faith. A builder in good faith is a builder who was not aware of a defect or flaw in his
or her title when he or she introduced improvements on a lot that turns out to be owned by another. In the
given facts, M claims that he believed D when he claimed that the lot belonged to her. Yet, as also stated in
the facts, D was a complete stranger to him. The lack of blood relation should have been enough to put him
on guard and convince him not to rely on her claim of ownership. If M had looked into the ownership of the
lot, he would have easily discovered that it was titled to Spouses P. Therefore, Spouses P as landowners
became the owners of the improvements on the lot if they chose to appropriate the accessions. However, they
could instead choose the demolition of the improvements at M’s expense or compel M to pay the price of the
land under Article 450 of the Civil Code. (Padilla v. Malicsi, G.R. No. 201354, September 21, 2016).

(5) Y sold to G a Pajero, which turned out to be a vehicle stolen from the Office of the President. Y delivered
the same to G, who had no knowledge that the vehicle was stolen. Is the possession of the Pajero by
G, acquired in good faith and therefore equivalent to a title under Article 559?
No, the possession of the Pajero by G was not acquired in good faith. The general rule that the possession of
movable property acquired in good faith is equivalent to a title, does not apply in cases where the owner of
said movable property has been unlawfully deprived of the same, as in this case where the vehicle subject of
the sale had been stolen. Y had no right to transfer the ownership of the subject Pajero at the time it was
delivered to G, as the object of the contract of sale is clearly illicit (Spouses Gaspar v. Disini, Jr., G.R. No.
239644; February 3, 2021).

(6) A inherited an untitled property from his father. Despite the lack of title, he diligently paid its real
property taxes from that time on. However, Spouses P occupied the entire portion of A's lot. Spouses
P refused to vacate the land claiming that they bought the same from A’s brother. A filed a complaint
for recovery of possession and damages with receivership against Spouses P. Spouses P insisted that
they own and have the right to possess the subject land pursuant to the Deed of Absolute Sale which
they entered into with A’s brother and that they are possessors in good faith for more than twenty (20)
years. The brother of A however clarified that the land he sold to spouses P is a different lot. In fact
the contract of sale made no mention of the subject lot. Under the circumstances, may the tax
declarations of A sufficiently prove ownership of the subject property?
Yes, tax declarations can sufficiently prove ownership of the subject property. Although tax declarations or
realty tax payment of property are not conclusive evidence of ownership, nevertheless, they are good indicia
of possession in the concept of owner, for no one in his right mind would be paying taxes for a property that is
not in his actual or constructive possession. They constitute at least proof that the holder has a claim of title
over the property. The voluntary declaration of a piece of property for taxation purposes manifests not only
one's sincere and honest desire to obtain title to the property and announces his adverse claim against the
State and all other interested parties, but also the intention to contribute needed revenues to the Government.
Such an act strengthens one's bona fide claim of acquisition of ownership (Spouses Ponce v. Aldanese, G.R.
No. 216587, August 4, 2021, Hernando Case).

(7) M, L’s father conveyed portions of a subject property to three individuals (including M’s agent, D). D
caused the delineation and segregation of his portion of the subject property which he sold to R.
Thereafter, R, with the consent of M, allowed L to till Lots 1 and 2 on his behalf. L remitted to R his
share of the fruits thereof. When R learned that L attempted to sell R’s portion of the property, he filed
a Complaint for Partition of Property and Damages against L. L denied R’s ownership of Lots 1 and 2,
alleging that M was an illiterate who did not learn how to write his name and who, could not have signed
the Agreement and the Deed of Sale of the subject property to D, and that D did not validly transfer
ownership of Lots 1 and 2 to R. Was R’s possession over the land in the concept of an owner?
Yes, R’s possession over the land was in the concept of an owner, thus he is the true owner of Lots 1 and 2.
Article 1477 of the Civil Code provides that the ownership of the thing sold shall be transferred to the vendee
upon the actual or constructive delivery thereof. Unequivocally, delivery to R of Lots 1 and 2 produced its
natural effects in law, the principal and most important of which being the conveyance of ownership. The fact
that R did not physically possess the purchased lots is of no moment since at the time of sale to him, R’s
possession was exercised by L, M’s son, on his behalf. M proposed to R, who consented thereto, that L will till
the subject property, including the portion R had purchased and deliver the fruits thereof to R. R’s indicia of
ownership of Lots 1 and 2 are his possession in the concept of an owner and his receipt of fruits from the
cultivation of the land, which L regularly remitted to him (Willy v. Julian, G.R. No. 207051, December 1, 2021,
Hernando Case).
 17

F. Usufruct
(1) F is the usufructuary under a will of the income of a building. The will provides that F, as usufructuary,
has the power to collect rents, pay at her own cost and expense real taxes, special assessments,
insurance premiums, necessary repairs, and such other acts of administration. G is the naked owner
over said property, with whom E entered into a lease contract with, as lessee. F then instituted an
action of ejectment against E, the tenant, because F needs the premises for her to live in. E argues that
F has no right to eject her from the premises because she has a contract of lease with G, the naked
owner, and that F has no authority at all with respect to leasing the property but only of collecting the
rents. Who has the right to choose the tenant?
F, as the usufructuary, has the right to choose the tenant and administer the property in question. In this case,
F has been made the usufructuary of the income of the property under a will. Subsequently, all the acts of
management and administration such as those to collect the rents for herself, and to conserve the property by
making all necessary repairs and paying all the taxes, special assessments, and insurance premiums thereon
were vested in F as usufructuary. Therefore, F has the right to choose the tenant as a corollary to her right to
administer such property as a usufructuary (Fabie vs. David, G.R. No. L-123, December 12, 1945).

(2) On January 1, 2020, upon the birth of Spouses C’s daughter R, J, the owner of a parcel of land, granted
Spouses C a usufruct over the property until January 1, 2040 when R would have reached her 20th
birthday. R, however, died on June 1, 2030 when she was only 10 years old due to an unidentified blood
disease. J notified Spouses C that the usufruct had been extinguished by the death of R and demanded
that the latter vacate the premises and deliver the same to the former. The spouses, still grief-stricken
over the death of their daughter, refused to vacate the place on the ground that the usufruct in their
favor would expire only on January 1, 2040, when R would have reached her 20th birthday and that the
death of R before her 20th birthday did not extinguish the usufruct. Whose contention is correct?
Spouses C’s contention is correct. Under Article 606 of the Civil Code, “a usufruct granted for the time that
may elapse before a third person reaches a certain age shall subsist for the number of years specified even if
the third person should die before the period expires, unless such usufruct has been expressly granted only in
consideration of the existence of such person.” In the case at bar, there was no express stipulation that the
consideration for the usufruct is the existence of R. Thus, the usufruct is not extinguished and shall subsist
until January 1, 2040.

G. Easements
(1) What are the modes of acquiring easements?
Under Article 620 of the Civil Code, easements are acquired either by virtue of a title or by prescription of ten
(10) years. To acquire such easement by prescription, Article 620 states that, the time of possession shall be
computed thus: in positive easements, from the day on which the owner of the dominant estate, or the person
who may have made use of the easement, commenced to exercise it upon the servient estate; and in negative
easements, from the day on which the owner of the dominant estate forbade, by an instrument acknowledged
before a notary public, the owner of the servient estate, from executing an act which would be lawful without
the easement. Easement may be acquired by virtue of title, namely through acts such as: (1) a deed of
recognition by the owner of the servient estate; (2) a final judgment; and (3) an apparent sign between two
estates, established by the owner of both, under Article 624 of the Civil Code (Spouses Garcia vs Spouses
Santos, G.R. No. 228334, June 17, 2019).

(2) A is the owner of a parcel of land which was being surrounded by the property of Spouses R. Following
an ocular inspection, it was discovered that a public road fronted A’s property. To reach the same,
however, she needs to traverse other properties and a four-meter-wide irrigation canal. It was likewise
discovered that the owners of the neighboring properties have already constructed their own bridges
to cross said irrigation canal. Claiming that the property of Spouses R is the only adequate and most
convenient outlet from her property to the highway, A filed a complaint for easement of right of way
against Spouses R. On the other hand, Spouses R argued that the proposed easement would traverse
their fixed improvements. Decide the case.
A has no right to an easement of right of way. Article 649 and 650 of the Civil Code provide the requisites of
an easement of right of way – (1) an immovable is surrounded by other immovables belonging to other persons;
(2) it is without adequate outlet to a public highway; (3) payment of proper indemnity by the owner of the
surrounded immovable; (4) the isolation of the immovable is not due to its owner’s acts; and (5) the proposed
easement of right of way is established at the point least prejudicial to the servient estate, and insofar as
consistent with this rule, where the distance of the dominant estate to a public highway may be the shortest.
 18

Here, there is an adequate outlet from A’s property to the public highway, which is through the irrigation canal.
Although said outlet may be longer and more inconvenient to A, because she will have to construct a bridge
over the irrigation canal, such inconvenience will not justify the imposition of an easement of right of way.
Verily, the convenience of the owner of the dominant estate is not the gauge in determining whether to impose
an easement right of way, especially if the owner’s needs may be satisfied without imposing the easement.
Hence, A has no right to said easement (Reyes v. Spouses Ramos, G.R. No. 194488, February 11, 2015).

(3) What are the modes of extinguishing easements? (MePeConE-RenRed)

The modes of extinguishment of easements are:
1. By Merger in the same person of the ownership of the dominant and servient estates;
2. By non-use for 10 years; with respect to discontinuous easements, this Period shall be computed from
the day on which they ceased to be used; and, with respect to continuous easements, from the day on
which an act contrary to the same took place;
3. When either or both of the estates fall into such Condition that the easement cannot be used; but it shall
revive if the subsequent condition of the estates or either of them should again permit its use, unless
when the use becomes possible, sufficient time for prescription has elapsed, in accordance with the
provisions of the preceding number;
4. By the Expiration of the term or the fulfillment of the condition, if the easement is temporary or
conditional;
5. By the Renunciation of the owner of the dominant estate; and
6. By the Redemption agreed upon between the owners of the dominant and servient estates (CIVIL
CODE, Art. 631)

(4) Distinguish legal easements from voluntary easements.

A legal or compulsory easement is that which is constituted by law for public use or for private interest, while
a voluntary easement on the other hand is constituted simply by will or agreement of the parties (CIVIL CODE,
Articles 619 & 634).

(5) X is the owner of a lot which is isolated by several surrounding estates, including the lot owned by A.
He needs a right-of-way in order to have access to a public road. The shortest and most convenient
access to the nearest public road passes through A’s lot. A objected to the establishment of the
easement because it would cause substantial damage to the 2 houses already standing on his
property. A alleged that X has other right-of- way alternatives, such as the existing wooden bridge over
Sipac Creek bounding X’s lot on the northeast; that the bridge, if made concrete, could provide ingress
or egress to the public road. May X compel A to grant him a right of way?
No, X may not compel A to grant him a right of way. Article 650 of the Civil Code provides that the easement
of right of way shall be established at the point least prejudicial to the servient estate, and, insofar as consistent
with this rule, where the distance from the dominant estate to a public highway may be the shortest. If these
two criteria (shortest distance and least damage) do not concur in a single tenement, the least prejudice
criterion must prevail over the shortest distance criterion. Here, the establishment of a right-of-way through A’s
lot would cause destruction of the house already standing on the premises. Thus, although this right of-way
has the shortest distance to a public road, it is not the least prejudicial. An option to traverse two vacant lots
without causing any damage, albeit not the shortest distance, is available (Calimoso v. Roullo, G.R. No.
198594, January 25, 2016).

(6) Spouses G purchased Lot B from Spouses S. At the time of the purchase, a one-storey house was
already constructed thereon. Lot A, the adjoining lot owned by Spouses S, was an idle land without
any improvements until the latter started the construction of a two-storey residential house therein.
Spouses G claims that, prior to said construction, they received enough bright and natural light from
their windows but the construction rendered their house dark that they are unable to do their normal
undertakings without switching on their lights. The windows and other openings, were now prevented
from receiving light and view due to the bigger structure built in the wall of Spouses G’s one-storey
house by the Spouses S on Lot A. Spouses G filed a complaint for easement of light, air and view,
against Spouses S asserting that they acquired by title an easement of light and view. Spouses S
contended that the mere presence of windows on the one-storey house does not give rise to an
easement by title and that Spouses G also failed to acquire an easement by prescription because they
never alleged that they made a formal prohibition of the construction of a taller structure on the subject
lot. Decide on the case.
I would rule in favor of Spouses G for they have already acquired an easement of light and view with respect
to Lot A owned by the Spouses S. Under Article 624 of the Civil Code, there arises a title to an easement of
light and view, even in the absence of any formal act undertaken by the owner of the dominant estate, if this
apparent visible sign, such as the existence of a door and windows, continues to remain and subsist. In this
case, prior to the purchase of the subject property by Spouses G, the subject property and its adjoining lot,
 19

were both owned by the Spouses S. On the subject property, a one-storey house laden with several windows
and openings was built and the windows and openings remained open. There exists an apparent sign of
servitude between two estates. Spouses S are prohibited from building any structures or improvements that
will obstruct the window of the one-storey house. Thus, Spouses G have acquired an easement of light and
view by title despite the lack of any formal notice or prohibition made upon the owner of the servient estate
(Spouses Garcia vs Spouses Santos, G.R. No. 228993, June 17, 2019).

III. DIFFERENT MODES OF ACQUIRING OWNERSHIP

A. Occupation
(1) What are the requisites of occupation? (SCAWIL)
The following are the requisites of occupation:
1. Seizure of the thing;
2. Thing must be Corporeal personal property;
3. Thing must be susceptible of Appropriation by nature;
4. Must be Without an owner;
5. Must be with Intention to appropriate
6. The requisites or conditions laid down by Law must be complied with (DE LEON, Property (2015 ed.) p.
602).

B. Tradition
(1) What are the kinds of tradition?
The following are the kinds of tradition:
1. Real Tradition - actual delivery;
2. Constructive Tradition - delivery of the thing, not real or material, but consists merely in certain facts
indicative of the same;
a. Traditio Symbolica - parties make use of a token or symbol to represent the thing delivered;
b. Traditio Longa Manu – delivery by long hand where the transferor places the article in the hands of
the transferee or delivers the same to the transferee’s house on his order;
c. Traditio Brevi Manu - when the vendee already has possession of the thing sold by virtue of another
title;
d. Traditio Constitutum Possessorium - when the vendor continues in possession of the thing sold not
as owner but in some other capacity; and
e. Tradition by public instrument - the execution is equivalent to the delivery of the thing which is the
object of the contract.
3. Quasi-Tradition - exercise of the right of the grantee with the consent of the grantor; and
4. Tradicion por Ministerio de la ley - delivery by operation of law

C. Donation
(1) What are the distinctions between donation inter vivos and donation mortis causa?
The distinctions are as follows:
Inter Vivos Mortis Causa

As to Takes effect during the lifetime of Takes effect after the death of the donor
effect the donor
As to Must follow the formalities of Must follow the formalities of wills or codicils
formalities donations

As to revocation Cannot be revoked except on Can be revoked any time and for any reason while
grounds provided for by law the donor is still alive

As to preference in case of Donations inter vivos are preferred Donations mortis causa are reduced ahead of
impairment of legitime to donations mortis causa donations inter vivos, the latter being preferred

As to transfer of right of Right of disposition is completely Right of disposition is not transferred to the donee
disposition transferred to the donee while the donor is still alive

As to time of acceptance Acceptance by donee must be Acceptance by donee mortis causa can only be
during lifetime of donor done after the donor’s death
 20

(2) J and O are childhood best friends. J, having a more affluent lifestyle, remembered how O always
wanted a car of his own and sent him a letter via snail mail, since there was no cell site yet in O’s barrio,
offering him his latest Ford Everest. Two (2) months have passed but there still was no reply from O.
J, thinking that O is not interested, offered the same car to U. U immediately said yes and wrote his
letter of acceptance to J, and the latter prepared for the transfer of the car. A few days later, J was
killed in a freak accident. Found among J’s effects was the letter of acceptance from O, mixed together
with other unread letters, which was dated a month before J offered the car to U. Decide who has the
rightful ownership of the car.
U has the right over the car. Even though O’s letter of acceptance, required for donations of personal property
having a value exceeding five thousand pesos (CIVIL CODE, Art. 748), is dated before U’s, such donation to
the former was never perfected. According to Article 734 of the Civil Code, the donation is perfected the
moment the donor knows of the acceptance by the donee. J never read O’s letter of acceptance as it was filed
together with other unread messages. Moreover, O does not have any remedy since acceptance must be
made during the lifetime of both the donor and the donee (CIVIL CODE, Art. 746), therefore, J’s donation to
him can never be perfected since the latter already passed away.

(3) A filed a complaint for quieting of title over a parcel of land against B. He alleged that he is the true and
registered owner of the parcel of land after acquiring it through a Deed of Donation executed by his
mother. His mother acquired the same property from C and her co-owner D through a Deed of Sale
dated December 16, 1994 which finds its origin from OCT No. R-578. B, in his defense, alleged that his
title was based on authentic documents while the title of A’s predecessor-in-interest is evidently null
and void ab initio because it was derived from a Deed of Sale which was supposedly signed by vendor
C although she was already dead, having died in 1988. Moreover, the signatory-vendor, D, denied that
she ever signed the Deed of Sale. The conformity signature of her husband, E, is likewise fake because
he was already dead at the time of the execution of the document, having died on June 14, 1980. Can
A be considered an innocent holder for value?
No. The concept of an innocent purchaser for value cannot apply to A for the reason that he is a donee
acquiring the property gratuitously by a Deed of Donation and not by purchase. In cases of falsified documents
involving properties such as deed of donation of titled property, cancellation of affidavit of loss and agreement
of subdivision with sale, being falsified documents, are null and void, and the TCT issued by virtue of the
falsified documents are also null and void. There is fraud on the transfer of the property from C and D to A’s
mother on the basis of fake signatures considering that the vendor-signatories therein are all dead. As such,
the deed is considered a forged deed and hence null and void. Thus, the title that A’s mother had based upon
the fraudulent Deed of Sale is null and void, which, therefore, transferred nothing to A through the Deed of
Donation (Gambito v. Bacena, G.R. No. 225929, January 24, 2018).

(4) What are the distinguishing characteristics of a donation mortis causa?

The distinguishing characteristics of a donation mortis causa are the following:
1. It conveys no title or ownership to the transferees before the death of the transferor; or, what amounts to
the same thing, that the transferor should retain the ownership (full or naked) and control of the property
while alive;
2. That before his death, the transfer should be revocable by the transferor at will, ad nutum; but revocability
may be provided for indirectly by means of a reserved power in the donor to dispose of the properties
conveyed;
3. That the transfer should be void if the transferor should survive the transferee. (Ursulina Ganuelas v. Hon.
Robert Cawed, G.R. No. 123968, April 24, 2003)

(5) What are the different modes by which donation inter vivos may be revoked? (SNAI)
The different modes by which donation inter vivos may be revoked are:
1. Supervening birth, survival or adoption of a child (CIVIL CODE, Art. 760);
2. Non-fulfillment of the condition or charge imposed (CIVIL CODE, Art. 764);
3. Acts of ingratitude of the donee (CIVIL CODE, Art 765); and
4. Inofficious donations (CIVIL CODE, Art. 771).

(6) Brothers P, F, and V, co-owned a parcel of land they inherited from their mother. V and P agreed that
the latter would donate the 10sqm. portion of his land being encroached by the former’s balcony. V
asked P to sign a document, fully written in English, claiming that the purported document was for the
partition of the inherited land, cancellation of title, and transfer of their shares in their respective
names. Convinced by V’s explanation, P signed the document without even reading and understanding
its contents. They were also not given a copy of the document after it was signed. Fourteen (14) years
 21

later, P found out that his inherited portion was already donated to the children of V by virtue of a Deed
of Donation he allegedly executed. Is the Deed of Donation valid?
No, the Deed of Donation is not valid. An agreement between the donor and the donee is essentially like in
any other contract. As such, the requisites of a valid contract under Article 1318 of the Civil Code must concur,
namely: (1) consent of the contracting parties, that is consent to donate the subject land to petitioners; (2)
object certain which is the subject matter of the contract; (3) cause of the obligation which is established.
Moreover, consent, to be valid, must have the following requisites: (1) intelligent or with an exact notion of the
matter to which it refers; (2) free; and (3) spontaneous. Here, absence of consent, and not just a mere vitiation
thereof, on the part of the respondents to donate their land has been satisfactorily established. P categorically
and firmly stated that he did not know that the document which V asked him to sign was a Deed of Donation.
In fact, P did not read the document before affixing his signature because he trusted his brother that it was for
the partition of their inherited land and the cancellation of its title. V neither read the contents of the document
to P nor gave him a copy thereof. The Deed of Donation is an absolute nullity hence it is subject to attack at
any time (Cardinez v. Spouses Cardinez, G.R. No. 213001; August 4, 2021, Hernando Case).

D. Prescription
(1) What are the differences between acquisitive and extinctive prescription?
The differences are as follows:
Acquisitive Prescription Extinctive Prescription

As to the Relationship between the occupant and the land in terms of One does not look to the act of the
Operative Act possession is capable of producing legal consequences; it is the possessor but at the neglect of the owner
possessor who is the actor

As to Requires possession by a claimant who is not the owner Requires inaction of the owner or neglect
Requisites of one with a right to bring his action

As to Applicable to ownership and other real rights Applies to all kinds of rights, whether real
Applicability or personal

As to Legal Vests ownership or other real rights in the occupant Produces the extinction of rights or bars a
Effect Results in the acquisition of ownership or other real rights in a right of action
person as well as the loss of said ownership or real rights in Results in the loss of a real or personal
another right or bars the cause of action to
enforce said right

As a Defense Can be proven under the general issue without its being Should be affirmatively pleaded and
affirmatively pleaded proved to bar the action or claim of the
adverse party

IV. LAND TITLES AND DEEDS

A. Torrens System
(1) What is the purpose of the Torrens System?
The real purpose of the Torrens system of registration is to quiet title to land and to put a stop to any question
of legality of the title except claims which have been recorded in the certificate of title at the time of registration
or which may arise subsequent thereto (Dy v. Aldea, G.R. No. 219500, August 9, 2017).

Note: The principle of indefeasibility of a Torrens title has been carved in case law edicts. This means that a
certificate of title registered under the Torrens System serves as proof of an incontrovertible title over the
property in favor of the individual whose name appears on the title. With the emergence of the Torrens System,
the integrity and conclusiveness of a certificate of title may be guaranteed and preserved. However, this system
frowns upon those who fraudulently secure a certificate of title to the prejudice of the real owner of the land.
Hence, usurpers who intend to enrich themselves cannot hide under the mantle of the Torrens System which
may only be cancelled, altered or modified through a direct attack where the objective of the action is to annul
or set aside the judgment or enjoin its enforcement (Heirs of Leonarda Latoja v Heirs of Gavino Latoja, G.R.
No. 195500, March 17, 2021, Hernando Case).
 22

(2) Does registration under the Torrens system vest ownership?

No, registration under the Torrens system does not vest ownership. Registration under the Torrens System
merely confirms the registrant’s title. It does not vest title where there is none because registration under this
system is not a mode of acquiring ownership (Heirs of De Guzman v. Heirs of Bandong, G.R. No. 215454,
August 9, 2017).

B. Regalian Doctrine
(1) Discuss the Regalian Doctrine.
Under the Regalian Doctrine, all the lands of the public domain belong to the State, and that the State is the
source of any asserted right to ownership in land and charged with the conservation of such patrimony. Thus,
all lands not otherwise appearing to be clearly within private ownership are presumed to belong to the State
(Republic v. Herederos de Ciriaco Chunaco Disteleria Incorporada, G.R. No. 200863, October 14, 2020,
Hernando Case).

(2) What are the classifications of lands of public domain? (AFTMP)

Section 3, Article XII of the 1987 Constitution classifies the lands of public domain as follows:
1. Agricultural;
2. Forest lands
3. Timber lands
4. Mineral lands; and
5. National Parks. (Republic v. Pasig Rizal Co, In, G.R. No. 213207, February 15, 2022) Note: This case is
indicated in the 2023 Bar Civil Law Syllabus

Additional Note: In the case of Republic v. Pasig Rizal cited above, the Supreme Court speaking through Justice
Caguioa mentioned, “At present” in referring to the classifications of lands of public domain. It should also be noted
that the 1987 Constitution provides that lands of the public domain are classified into agricultural, forest or timber,
mineral lands and national parks (CONST. Art. XII, Sec. 3).

C. Nationality Restrictions on Land Ownership

(1) S, sold the Lot nos. 1234 and 5678 to B, a Filipino citizen. The latter rented the lots to Spouses C, both
Chinese nationals for their lumber business. B sold the lots to D and D donated the lot to E, who is the
son of Spouses C. E sought for the registration of the property under his name. F, the sibling of E
asserted that their parents actually bought the lots from S and that B only acted as a trustee of the lot
because Spouses C at the time of buying the lots, were not able to register those under their name for
being Chinese nationals. According to F, B as a trustee has an obligation to transfer the property to
the children of Spouses C and that since F and E co-own the property, E cannot claim sole ownership
over the lots. Is the contention of F with merit?
No, the contention of F is without merit. Our fundamental law dictates that non-Filipinos cannot acquire or hold
title to private lands or to lands of the public domain, except only by way of legal succession. The primary
purpose of the Constitutional provision is the conservation of the national patrimony in the hands of Filipino
citizens. Not even an ownership in trust is allowed. F's working thesis is that Spouses C, Chinese nationals,
were the true and actual buyer of the three subject lots, and that B, a Filipino citizen, was to hold the subject
lots only in trust for the heirs of Spouses C until they finally acquire Philippine citizenship. Certainly, there is a
palpable circumvention and intent to circumvent the Constitutional prohibition. Since the trust being insisted by
F cannot have legal effect, he cannot assert ownership of the land as his parents were incapacitated to acquire
the lots (Gaw v. Chua; G.R. No. 206404; February 14, 2022, Hernando Case).

D. Original Registration (PD 1529)

(1) Who may apply for land registration? (OPA)
The following may apply for original registration:
1. Those who by themselves or through their predecessors-in-interest have been in Open, continuous,
exclusive and notorious possession and occupation of alienable and disposable lands of the public
domain not covered by existing certificates of title or patents under a bona fide claim of ownership for at
least twenty (20) years immediately preceding the filing of the application for confirmation of title except
when prevented by war or force majeure. They shall be conclusively presumed to have performed all
the conditions essential to a Government grant and shall be entitled to a certificate of title under this
section;
2. Those who have acquired ownership of Private lands or abandoned riverbeds by right of accession or
accretion under the provisions of existing laws; and
 23

3. Those who have acquired ownership of land in Any other manner provided for by law

Note: Where the land is owned in common, all the co-owners shall file the application jointly.

Where the land has been sold under pacto de retro, the vendor a retro may file an application for the original
registration of the land: Provided, however, that should the period for redemption expire during the pendency
of the registration proceedings and ownership to the property consolidated in the vendee a retro, the latter
shall be substituted for the applicant and may continue the proceedings.

A trustee on behalf of the principal may apply for original registration of any land held in trust by the trustee,
unless prohibited by the instrument creating the trust (PD No. 1529, Sec.14 as amended by RA 11573).

(2) On June 26, 1990, R filed an application for land registration involving a parcel of agricultural land that
he had bought from B identified as Lot 1. During the trial, R alleged and proved that he and his
predecessors-in-interest had been in open, continuous, uninterrupted, public and adverse possession
and occupation of the land for more than thirty (30) years. He also presented as evidence a certification
dated January 12, 1991, citing an Executive Order that on August 11, 1990, agricultural lands of the
public domain, including the subject matter of the application, were declared alienable and disposable
agricultural land. Should the application for land registration be granted?
Yes, the application for land registration should be granted. Once property of public dominion is classified by
the State as alienable and disposable land of the public domain, it immediately becomes open to private
acquisition, since alienable lands of the public domain form part of the patrimonial property of the State. The
operative act which converts property of public dominion to patrimonial property is its classification as alienable
and disposable land of the public domain, as this classification precisely serves as the manifestation of the
State’s lack of intent to retain the same for some public use or purpose (Republic v. Pasig Rizal Co., Inc., G.R.
No. 213207, February 15, 2022).

(3) How can an applicant clearly establish the existence of a positive act of the government to prove the
alienable and disposable nature of the subject land?
Section 7 of RA 11573 now prescribes the nature of proof sufficient to establish the status of land as alienable
and disposable. Hence, at present, the presentation of the approved survey plan bearing a certification signed
by a duly designated DENR geodetic engineer stating that the land subject of the application for registration
forms part of the alienable and disposable agricultural land of the public domain shall be sufficient proof of its
classification as such, provided that the certification bears references to: (i) the relevant issuance (e.g., Forestry
Administrative Order, DENR Administrative Order, Executive Order, or Proclamation); and (ii) the Land
Classification (LC) Map number covering the subject land. In addition, the DENR geodetic engineer must be
presented as witness for proper authentication of the certification so presented (Republic v. Pasig Rizal Co.,
Inc., G.R. No. 213207, February 15, 2022).

(4) Discuss the nature of possession when it is used to acquire property by prescription.
Prescription is another mode of acquiring ownership and other real rights over immovable property. It is
concerned with lapse of time in the manner and under conditions laid down by law, namely, that the possession
should be in the concept of an owner, public, peaceful, uninterrupted and adverse. Possession is open when
it is patent, visible, apparent, notorious and not clandestine. It is continuous when uninterrupted, unbroken and
not intermittent or occasional; exclusive when the adverse possessor can show exclusive dominion over the
land and an appropriation of it to his own use and benefit; and notorious when it is so conspicuous that it is
generally known and talked of by the public or the people in the neighborhood (Republic v. Northern Cement
Corp., G.R. No. 200256; April 11, 2018).

(5) Can a property be registered despite scarcity of records?

Yes, a property can be registered despite scarcity of records. There are cases where the court has allowed
registration of the property despite scarcity of records since "it would be the height of injustice for the heirs to
be held hostage or punished by reason of the plain scarcity of the records" (Republic v. Tapay, G.R. No.
157719, March 2, 2022, Hernando Case).

(6) Who is an innocent purchaser for value?

A purchaser in good faith and for value is one who buys the property of another without notice that some other
person has a right to or interest in such property and pays a full and fair price for the same, at the time of such
purchase, or before he has notice of the claims or interest of some other person in the property. Under Section
32 of P.D. 1529, the definition of an innocent purchaser for value has been expanded to include an innocent
lessee, mortgagee, or other encumbrancer for value (Heirs of Macalalad v. Rural Bank of Pola, Inc., G.R. No.
200899, June 20, 2018)
 24

E. An Act Improving the Confirmation Process for Imperfect Land Titles

(RA 11573), amending CA 141 and PD 1529
(1) What is the required proof to establish the status of land as alienable and disposable?
For purposes of judicial confirmation of imperfect titles filed under Presidential Decree No. 1529, a duly signed
certification by a duly designated DENR geodetic engineer that the land is part of alienable and disposable
agricultural lands of the public domain is sufficient proof that the land is alienable. Said certification shall be
imprinted in the approved survey plan submitted by the applicant in the land registration court. The imprinted
certification in the plan shall contain a sworn statement by the geodetic engineer that the land is within the
alienable and disposable lands of the public domain and shall state the applicable Forestry Administrative
Order, DENR Administrative Order, Executive Order, Proclamations and the Land Classification Project Map
Number covering the subject land.

Should there be no available copy of the Forestry Administrative Order, Executive Order or Proclamation, it is
sufficient that the Land Classification (LC) Map Number, Project Number, and date of release indicated in the
land classification map be stated in the sworn statement declaring that said land classification map is existing
in the inventory of LC Map records of the National Mapping and Resource Information Authority (NAMRIA) and
is being used by the DENR as land classification map (R.A. 11573, Sec. 7).

Note: An application for original registration must be accompanied by (1) a CENRO or Provincial Environment
and Natural Resources Office (PENRO) Certification; and (2) a copy of the original classification approved by
the DENR Secretary and certified as a true copy by the legal custodian of the official records (Republic v.
Philippine National Police, G.R. No. 198277, February 8, 2021, Hernando Case).

F. Certificate of Title

(1) Do tax declarations and tax receipts as evidence of ownership prevail over a certificate of title?
No, tax declarations and tax receipts as evidence of ownership cannot prevail over a certificate of title, which
is a presumptive proof of ownership (Quinol v. Inocencio, G.R. No. 213517, April 10, 2019).

(2) Title to a property in Cavite had been subdivided and later on transferred to National Housing Authority
(NHA), with the latter subdividing and offering the same to the public. Spouses A and B, alleging that
their parents were the registered owners of the subject property, which land was covered by TCT No.
T-9943 on September 7, 1956, and which title was then reconstituted and a replacement title issued on
March 23, 1962, sent demand letters for NHA to recall the subdivision scheme plan it submitted to the
Register of Deeds (RD) for registration. As the demand went unheeded, Spouses A and B filed a
complaint for quieting of title and recovery of possession against NHA. NHA on the other hand, based
their claims on derivative titles (reconstituted TCT No. (T-8237) RT 3909) dating back to February 21,
1960. Between the NHA and Spouses A and B, whose claim should prosper?
The claim of Spouses A and B should prosper. Where two certificates of title are issued to different persons
covering the same parcel of land in whole or in part, the earlier in date must prevail as between the original
parties and, in case of successive registration where more than one certificate is issued over the land, the
person holding title under the prior certificate is entitled to the property as against the person who relies on the
second certificate. Here, the title of the Spouses, on its face, shows that it was a transfer from the parent title,
TCT No. T-8237. On the other hand, it is not clear from the records where the reconstituted TCT No. (T-8237)
RT 3909, upon which NHA traces its title, was sourced from (National Housing Authority v. Laurito, G.R. No.
191657, July 31, 2017).

G. Subsequent Registration
(1) What are the situations when a petition for surrender of withheld duplicate certificate of title may be
availed of pursuant to Section 107 of PD 1529?
Section 107 of PD 1529 contemplates only two situations when a petition for surrender of withheld duplicate
certificate of title may be availed of. These are:
1. Where it is necessary to issue a new certificate of title pursuant to any involuntary instrument which
divests the title of the registered owner against his consent, and
2. Where a voluntary instrument cannot be registered by reason of the refusal or failure of the holder to
surrender the owner’s duplicate certificate of title (Privatization and Management Office v. Quesada, G.R.
No. 224507; September 20, 2017).
 25

(2) What is a voluntary instrument?

A voluntary instrument is a willful act of the registered owner of the land to be affected by registration (Autocorp
Group v. Court of Appeals, G.R. No. 157553 September 8, 2004).

(3) How is a voluntary instrument registered to effect a conveyance of the property?

For the registration of a voluntary instrument, it is necessary not only to register the deed, instrument or
assignment, mortgage, or lease in the entry book of the register of deeds, but a memorandum thereof must
also be made on the owner’s duplicate and on its original. The mere entry by the register of deeds in the entry
or diary book, without the presentation of the owner’s duplicate certificate of title for corresponding annotation
of the conveyance, does not have the effect of a conveyance of the property (Id).

(4) What is an involuntary instrument?

An involuntary instrument is one pertaining to a transaction affecting lands in which the registered owner’s
cooperation is not needed and which transaction may even be done against his will (Id).

(5) Does the law require the presentation of the owner’s duplicate certificate of title for the registration of
an involuntary instrument?
No, the law does not require the presentation of the owner’s duplicate certificate of title for the registration of
an involuntary instrument. The law considers the annotation of such instrument upon the entry book as
sufficient to affect the real estate to which it relates. As the registration of an involuntary instrument is contrary
to the interest of the registered owner or will affect him adversely, it is but natural that he will not willingly
present or produce his duplicate certificate or at least delay the production as long as possible (Id).

(6) Discuss the nature of an adverse claim.

A notice of adverse claim, by its nature, does not however prove private respondent’s ownership over the
tenanted lot. It is nothing but a notice of a claim adverse to the registered owner, the validity of which is yet to
be established in court at some future date, and is no better than a notice of lis pendens which is a notice of a
case already pending in court (Acap v. Court of Appeals, G.R. No. 118114, December 7, 1995).

(7) In what cases may a litigant avail himself of the notice of lis pendens?
A litigant may avail himself of the notice of lis pendens in any of the following case: (ReQuiC-P2)
1. An action to Recover possession of real estate;
2. An action to Quiet title thereto;
3. An action to remove Clouds thereon;
4. An action for Partition; and
5. Any other Proceedings of any kind in court directly affecting the title to the land or the use or occupation
thereof or the building thereon (Equitable PCI Bank, Inc. v. South Rich Acres, Inc., G.R. Nos. 202384
& 202397, May 4, 2021).

(8) What are the elements that must be present to annotate a notice of lis pendens?
To annotate a notice of lis pendens, the following elements must be present:
1. The property must be of such character as to be subject to the rule;
2. The court must have jurisdiction both over the person and the res; and
3. The property or res involved must be sufficiently described in the pleadings (Villanueva v. Court of Appeals,
G.R. No. 117108, November 5, 1997).

H. Non-Registrable Properties
(1) Discuss the rule with respect to non-registrable properties.
The Land Registration Court has no jurisdiction over non-registrable properties, such as public navigable rivers
which are parts of the public domain, and cannot validly adjudge the registration of title in favor of private
applicant. Hence, the judgment therein may be attacked at any time, either directly or collaterally, by the State
which is not bound by any prescriptive period provided for by the Statute of Limitations (Republic v. Heirs of
Paus, G.R. No. 201273, August 14, 2019).

(2) Is there a need for an express government manifestation that the land constitutes patrimonial property
before it can be registered?
The answer must be qualified. Once property of public dominion is classified by the State as alienable and
disposable land of the public domain, it immediately becomes open to private acquisition, since "alienable
 26

lands of the public domain form part of the patrimonial property of the State." The operative act which converts
property of public dominion to patrimonial property is its classification as alienable and disposable land of the
public domain, as this classification precisely serves as the manifestation of the State's lack of intent to retain
the same for some public use or purpose.

However, and to be clear, where the property subject of the application had been previously utilized by the
State for some public purpose, proof of conversion requires the establishment of a positive fact — the
abandonment by the State of its use and the consequent withdrawal of the property from the public dominion.
To establish this positive fact, it becomes incumbent upon the applicant to present an express government
manifestation that the land subject of his application already constitutes patrimonial property, or is no longer
retained for some public purpose (Republic v. Pasig Rizal Co., Inc., G.R. No. 213207, February 15, 2022).

I. Dealings With Unregistered Lands

(1) Can a sale of an unregistered land be valid?
Yes, the sale of unregistered land is valid between the parties. No deed, conveyance, mortgage, lease, or
other voluntary instrument affecting land not registered under the Torrens system shall be valid, except as
between the parties thereto, unless such instrument shall have been recorded in the office of the Register of
Deeds for the province or city where the land lies (PD 1529, Sec. 113).

(2) A sold a piece of unregistered land to C who immediately took possession and improved the same
while registration proceedings under the Torrens System was still pending. The deed of sale was not
registered. Subsequently, the same land was sold at public auction to satisfy a debt of A to S, the
judgment creditor. The notice of levy, the certificate of sale and the sheriff’s certificate of final sale
were registered before the Register of Deeds. Who has the better right to the land, C or S?
C has the better right to the land. While Article 1544 of the Civil Code, registration in good faith prevails over
possession in the event of a double sale by the vendor of the same piece of land to different vendees, said
article is of no application to the case at bar, even if S, the later vendee, was ignorant of the prior sale made
by his judgment debtor in favor of C. The reason is that the purchaser of unregistered land at a sheriff’s
execution sale only steps into the shoes of the judgment debtor, and merely acquires the latter’s interest in the
property sold as of the time the property was levied upon (Carumba v. Court of Appeals, G.R. No. L-27587,
February 18, 1970).

J. Assurance Fund
(1) Discuss the purpose of the assurance fund.
The Assurance Fund is intended to relieve innocent persons from the harshness of the doctrine that a certificate
is conclusive evidence of an indefeasible title to land. It is intended to safeguard the rights of prejudiced parties
rightfully entitled to an interest in land but shut off from obtaining titles thereto. As suppletory to the registration
of titles, pecuniary compensation by way of damages was provided for in certain cases for persons who had
lost their property. For this purpose, an assurance fund was created. However, the assurance fund was not
intended to block any right which a person might have against another for the loss of his land. Damages were
not to be recoverable from the assurance fund when they could be recovered from the person who caused the
loss (Register of Deeds of Negros Occidental v. Anglo, Sr., G.R. No. 171804, August 5, 2015).

(2) Is the constructive notice rule on registration applicable in cases involving a claim against the
Assurance Fund?
No, the constructive notice rule on registration is not applicable in cases involving a claim against the
Assurance Fund. Prescription, for purposes of determining the right to bring an action against the Assurance
Fund, should be reckoned from the moment the innocent purchaser for value registers his or her title and upon
actual knowledge thereof of the original title holder/claimant. It bears to note that the registration of the innocent
purchaser for value’s title is a prerequisite for a claim against the Assurance Fund on the ground of fraud to
proceed, while actual knowledge of the registration is tantamount to the discovery of the fraud. The actual title
holder cannot be deprived of his or her rights twice — first, by fraudulent registration of the title in the name of
the usurper and second, by operation of the constructive notice rule upon registration of the title in the name
of the innocent purchaser for value (Spouses Stilianopoulos v. Register of Deeds for Legazpi City, G.R. No.
224678, July 3, 2018).
 27

K. Reconstitution of Title
(1) What is the purpose of reconstitution of title?
The reconstitution of a certificate of title denotes restoration in the original forth and condition of a lost or
destroyed instrument attesting the title of a person to a piece of land. The purpose of the reconstitution of title
is to have, after observing the procedures prescribed by law, the title reproduced in exactly the same way it
has been when the loss or destruction occurred. A reconstitution of title does not pass upon the ownership of
land covered by the lost or destroyed title but merely determines whether a re-issuance of such title is proper
(Heirs of Borras v. Heirs of Borras, G.R. No. 213888, April 25, 2022, Hernando Case).

(2) Should the successors-in-interest of the registered owners of the subject property be considered
interested parties that should be notified of the petition for reconstitution proceedings?
Yes, the successors-in-interest of the registered owners of the subject property can be considered interested
parties that should be notified of the petition for reconstitution proceedings. Being the registered owners of the
subject property, as heirs, whose rights are now transferred by succession, should have been given sufficient
opportunity to be heard in the petition for reconstitution proceedings. When an owner’s duplicate certificate of
title is lost or destroyed, a person who is a transferee of the ownership over the property, who is not necessarily
the registered owner, may also file the petition for reconstitution. In this situation, the registered owner must
also be duly notified of the proceedings. By his or her very status as registered owner, the latter is an interested
party in the petition for reconstitution case. The registered owner will be in the best position to account for the
whereabouts of the owner’s duplicate certificate (Heirs of Spouses Ramirez v. Abon, G.R. No. 222916, July
24, 2019).

(3) Is reconstitution synonymous with the issuance of title?

No, reconstitution is not and should not be made synonymous to the issuance of title. When reconstituting, a
new title is not thereby issued; rather, the title alleged to have been previously issued but is now lost or
destroyed, is merely reproduced to reflect the way it was before (National Housing Authority v. Laurito, G.R.
No. 191657, July 31, 2017).

(4) What must be shown for a reconstitution of title to be made?

For an order of reconstitution to be issued, it must be clearly shown that the certificate of title had been lost or
destroyed. If a certificate of title has not been lost, but is in fact in the possession of another person, then the
reconstituted title is void and the court that rendered the decision had no jurisdiction (Gaoiran v. CA, G.R. No.
215925, March 07, 2022, Hernando Case).

V. WILLS AND SUCCESSION

A. General Provisions
(1) Z purchased from the Spouses B a parcel of land including the house thereon. A contract to sell, deed
of absolute sale, and agreement to purchase and to sell were executed by the parties. Spouses B failed
to comply with their obligation for they had a sudden change of mind and found M who is willing to
pay more. Z sent verbal and written demands to the spouses for the delivery of the house and lot, but
the spouses failed to do so. Later, Z found out that the subject property was sold to M, who
immediately occupied the property. Z filed a complaint for nullity of sale, specific performance, and
damages against the Spouses B. During the pendency of the case, Spouses B died. Are the contractual
obligations of Spouses B extinguished because of their death?
No. Article 776 of the Civil Code provides that the “inheritance includes all the property, rights and obligations
of a person which are not extinguished by his or her death.” Further, Article 1311 of the Civil Code provides
that “contracts take effect only between the parties, their assigns and heirs except in case where the rights and
obligations arising from the contract are not transmissible by their nature, or by stipulation or by provision of
law. The heir is not liable beyond the value of the property received from the decedent.” A contract of sale and
contract to sell involving land or immovable property involve patrimonial rights and obligations, which by their
nature are essentially transmissible or transferrable. Thus, the heirs of the seller and the buyer are bound
thereby as they are not deemed non-privies to the contract of sale or contract to sell, as the case may be (Heirs
of Gonzales v. Spouses Basas, G.R. No. 206847; June 15, 2022, Hernando Case). Hence, the contractual
obligations of Spouses B are not extinguished.

(2) Is there a legal bar to an heir disposing of his/her hereditary share immediately after the death of the
decedent?
 28

No, there is no legal bar to an heir disposing of his/her hereditary share immediately after the death of the
decedent. Under Article 777 of the Civil Code, the transmission by succession occurs at the precise moment
of death and, therefore, at that precise time, the heir is already legally deemed to have acquired ownership of
his/her share in the inheritance, “and not at the time of declaration of heirs, or partition, or distribution.” A sale
made by a legal or intestate heir of his share in an inheritance does not interfere with the administration of the
estate (Spouses Salitico v. Heirs of Felix, G.R. No. 240199, April 10, 2019).

B. Testamentary Succession
(1) Mrs. C was married to Mr. A who passed away on August 14, 1985. They had two daughters, R and N.
R predeceased Mrs. C in 1985 and left behind her children, which included T and M. Mrs. C at 91 years
old, passed away leaving behind an estate consisting of several personal and real properties. T, one
of the children of the deceased, filed a petition before the RTC of Pasay City to settle the intestate
estate of Mrs. C and prayed, among others, for his appointment as the special administrator of Mrs.
C’s estate. N filed a Motion to Dismiss stating that she already filed a petition for the probate of the
Last Will and Testament of Mrs. C which they found from the decedent's belongings. T argued that the
will is fatally defective because it did not conform to the formalities required under Article 805 of the
Civil Code and the attestation clause failed to state the number of pages upon which the will is written.
He added that a statement in the acknowledgment clause about the number of pages cannot be raised
to the level of an attestation clause. Thus, the will is null and void. Should the will of Mrs. C be
disallowed for non - compliance with Article 805 of the Civil Code?
No. Article 809 provides that “in the absence of bad faith, forgery, or fraud, or undue and improper pressure
and influence, defects and imperfections in the form of attestation or in the language used therein shall not
render the will invalid if it is proved that the will was in fact executed and attested in substantial compliance
with all the requirements of Article 805.” Although there should be strict compliance with the substantial
requirements of the law in order to insure the authenticity of the will, the formal imperfections should be brushed
aside when they do not affect its purpose and which, when taken into account, may only defeat the testator's
will (Tanchanco v. Santos, G.R. No. 204793, June 8, 2020, Hernando Case).

(2) Atty. A seeks the probate of the holographic will of the late Ms. Y. The testatrix, who died single,
parentless and childless at the age of 70 years. In her will, several of her real properties were devised
to specified persons. With the conformity of all the relatives and heirs of the testatrix except M, the
court appointed Atty. A as Special Administrator of the testate estate of deceased. M, the only surviving
sister of the deceased but who was not named in the said will, filed her opposition to Probate of Will,
alleging that the testatrix was not in full possession of her mental faculties to make testamentary
dispositions; that undue influence was exerted upon the person and mind of the testatrix by the
beneficiaries named in the will; that the will failed to institute a residual heir to the remainder of the
estate. M alleged that witnesses have been located whose testimonies could shed light as to the
sickness of the testatrix as well as undue influence exerted on the latter. Is the exclusion by the
testatrix of her only surviving sister from the holographic will and her failure to dispose all of her estate
demonstrates her lack of testamentary capacity and an indication of the unsoundness of her mind.
No. It is within the right of the testatrix not to include her only sister who is not a compulsory heir in her will.
Article 841 of the Civil Code provides that “a will shall be valid even though it should not contain an institution
of an heir, or such institution should not comprise the entire estate, and even though the person so instituted
should not accept the inheritance or should be incapacitated to succeed. The testamentary dispositions made
in accordance with law shall be complied with and the remainder of the estate shall pass to the legal heirs.”
Neither is undue influence present just because blood relatives, other than compulsory heirs have been
omitted, for while blood ties are strong in the Philippines, it is the testator's right to disregard non-compulsory
heirs. The fact that some heirs are more favored than others is proof of neither fraud nor undue influence.
Diversity of apportionment is the usual reason for making a testament, otherwise, the decedent might as well
die intestate. The will itself is the most authentic proof of testator's testamentary capacity (Montinola-Sanson
vs. CA, G.R. No. 76648; February 26, 1988).

(3) What are the requisites for a notarial will to be valid? (W2-SAMPAL)
A notarial will is valid when the following requisites are complied with:
1. In Writing;
2. Attested and subscribed by 3 or more credible Witnesses in the presence of the testator and of one
another;
3. Subscribed at the end thereof by the testator himself or by testator’s name written by some other
person in his presence and by his express direction;
4. Attestation clause executed by the witnesses;
5. All of the pages are signed, except the last, on the left Margin by:
 29

a. The testator or the person requested by him to write his name, in the presence of the
witnesses; and
b. The instrumental witness, in the presence of the testator and of one another;
6. All the Pages are numbered correlatively in letters placed on the upper part of each page;
7. Properly Acknowledged before a notary public by the testator and the said witnesses; and
8. Executed in a Language or dialect known to the testator (CIVIL CODE, Arts. 804-806).

(4) What are the requisites for a holographic will to be valid? (D-LaWS)
The requisites of a valid holographic will are as follows:
1. The will must be entirely Dated by the hand of the testator;
2. The will must be executed in a Language or dialect known to the testator;
3. The will must be entirely Written by the hand of the testator himself; and
4. The will must be entirely Signed by the hand of the testator himself (CIVIL CODE, Arts. 804 and 810).

Note: A holographic will is subject to no other form, and may be made in or out of the Philippines, and need not be
witnessed (CIVIL CODE, Art. 810).

(5) Witnesses to a will must be: (SARN-CD)

1. Of Sound mind;
2. At least 18 years of Age;
3. Able to Read and write;
4. Not blind, deaf or dumb;
5. Not have been Convicted by final judgment of falsification of a document, perjury or false testimony;
and
6. Domiciled in the Philippines (CIVIL CODE, Arts. 820-821).

(6) Are lawyers disqualified from being witnesses to the will?

No. Lawyers are not disqualified from being witnesses to a will since Article 820 of the Civil Code provides that,
“any person of sound mind and of the age of eighteen years or more, and not blind, deaf or dumb, and able to
read and write, may be a witness to the execution of a will mentioned in Article 805 of this Code.” They are not
disqualified from being witnesses under Article 821 of the Civil Code even if they all worked at the same law
firm at the time (Tanchanco v. Santos, G.R. No. 204793, June 8, 2020, Hernando Case).

(7) How do we interpret the words of the will?

The words of a will are to be taken in their ordinary and grammatical sense, unless a clear intention to use
them in another sense can be gathered, and that other can be ascertained (CIVIL CODE, Art. 790).

(8) What is the effect of the revocation of a will on the recognition of an illegitimate child?
The recognition of an illegitimate child does not lose its legal effect, even though the will where it was made
should be revoked (CIVIL CODE, Art. 834).

(9) A, during her lifetime, was a successful lawyer. By her own choice, she remained unmarried and
devoted all her time to taking care of her nephew and two (2) nieces: B, C and D. She wrote a will giving
all her properties remaining upon her death to the three (3) of them. The will was admitted to probate
during her lifetime. Later, she decided to make a new will giving all her remaining properties only to
the two (2) girls, C and D. She then tore up the previously probated will. The second will was presented
for probate only after her death. However, the probate court found the second will to be void for failure
to comply with formal requirements. (2018 Bar)

(a) Will the doctrine of dependent relative revocation apply?

Yes, the doctrine will apply. The doctrine of dependent relative revocation applies if a testator revokes a will
with a present intention of making a new one immediately and as a substitute, and the new one is not made,
or, if made, fails of effect for any reason, it will be presumed that the testator preferred the old will to intestacy,
and the old one will be admitted to probate in the absence of evidence overcoming the presumption, provided
its contents can be ascertained. The failure of a new testamentary disposition upon whose validity the
revocation depends, is equivalent to the nonfulfillment of a suspensive condition, and hence prevents the
revocation of the original will (Testate Estate of the Deceased Molo v. Molo, G.R. No. L-2538, September 21,
1951). Here: 1) the first will for the nephew and nieces was revoked by tearing, 2) a new will was made, and
3) the new will failed to comply with formal requirements which makes it invalid. Hence, the doctrine falls
squarely on the facts.
 30

(b) Will your answer be the same if the second will was found to be valid but both C and D renounce
their inheritance?
No, my answer will not be the same because the doctrine will not apply anymore. For the doctrine to apply, a
substitute will must be intended to be made but is actually not made, or, if made, fails of effect for any reason.
It must be noted that in Article 841 of the Civil Code, “a will shall be valid even though it should not contain an
institution of an heir, or such institution should not comprise the entire estate, and even though the person so
instituted should not accept the inheritance or should be incapacitated to succeed.” Here, the will was valid
according to the formalities prescribed by the law, but the heirs did not accept the inheritance.

(10) A, single, named his sister B in his will as a devisee of a parcel of land which he owned. The will
imposed upon B the obligation of preserving the land and transferring it, upon her death, to her
illegitimate daughter C who was then only one year old. A later died, leaving behind his D mother, B
and C.

(a) Is the condition imposed upon B, to preserve the property and to transmit it upon her death to C,
valid?
Yes, the condition is valid. Article 863 of the Civil Code expressly provides that the imposition of an obligation
to preserve and transmit the property by the first heir to a second heir shall be valid, provided that substitution
does not go beyond one degree from the heir originally instituted, and provided further that the fiduciary or first
heir and the second heir are living at the time of the death of the testator. In the instant case, the daughter C
is admittedly one degree from B, and it is also implied from the facts that B and C were both living at the time
of the death of the testator. Hence, the condition is valid.

(b) If C predeceases B, who inherits the property?

The heirs of C will inherit the property. In a fideicommissary substitution, the second heir inherits not from the
first heir but from the testator (Perez v. Garchitorena, G.R. No. 31703, February 13, 1930). This means that
his right is not dependent on the first heir, but upon the death of the testator. As provided in Article 866 of the
Civil Code, “the second heir shall acquire a right to the succession from the time of the testator’s death, even
though he should die before the fiduciary. The right of the second heir shall pass to his heirs.” Consequently,
even if C predeceases the first heir B, her right shall devolve upon her legal heirs.

(c) If B predeceases A, can C inherit the property? (2008 Bar)

Yes, C can inherit the property. In a fideicommissary substitution, the first and the second heirs inherit from
the testator, hence, both should be qualified to inherit from the testator at the time of his death. It has been
consistently held that the fideicommissarius is entitled to the estate from the time the testator dies, since she
is to inherit from the latter and not from the fiduciary (Perez v. Garchitorena, G.R. No. L-31703, February 13,
1930). Here, since the fiduciary already died, the fideicommissarius is now entitled to full enjoyment of the
property inherited from A.

(11) What is the legitime of compulsory heirs?

The legitime of compulsory heirs are as follows:
Surviving Heir Legitime Notes

LC ½ Divide by the number of LC, whether they survive alone or with concurring CH.
The remaining ½ shall be at the free disposal of the testator (CIVIL CODE, Art. 888).

1 LC ½ The legitime of the SS shall be taken only from the free portion (CIVIL CODE, Art. 892).

In case of legal separation, the surviving spouse may inherit if it was the deceased who
SS ¼ had given cause for the same (CIVIL CODE, Art. 892).

2 or more LC ½ Divide ½ of the estate by the number of LC

SS Same as that If there are 2 or more LC, the legitime of the SS is the same as that of each LC and
of each LC shall be taken from the free portion (CIVIL CODE, Art. 892).
After deducting the legitime of the SS, the remaining shall be at the free disposal of the
testator.
 31

LC ½ The legitime of the IC shall be taken from the free portion (CIVIL CODE, Art. 895).
In case of several IC: If the free portion is sufficient, each IC gets ½ of the share of 1
IC ½ of 1 LC LC, but if the free portion is insufficient, there must be an equal division among the IC.

LC ½ If there are 2 or more LC, the legitime of the SS is the same as that of each LC and it
shall be taken from the free portion (CIVIL CODE, Arts. 897-898).

The legitime of the IC shall be taken from the free portion provided the total legitime of
SS ¼ such IC shall not exceed the free portion and that the legitime of the SS must first be
fully satisfied (CIVIL CODE, Art. 895, Par. 3).

The presence of several illegitimate children results to division of the legitime equally
among them, if such exceeds the free portion – this is based on the principle that their
legitime are first to be reduced due to preference.
IC ½ of 1 LC

LPA ½ Legitime is fixed at ½ whether they survive alone or with other classes of CH. Rule
applies in default of LCD of decedent; otherwise, they are excluded (CIVIL CODE, Art.
889).

LPA ½ The ¼ to which IC is entitled is taken from the free portion (CIVIL CODE, Art. 896).

The ¼ shall be divided in equal shares among several IC.

IC ¼
The remaining ¼ shall be at the free disposal of the testator.

LPA ½ The legitime of the SS shall be taken from the free portion (CIVIL CODE, Art. 893).

SS ¼ The remaining ¼ shall be at the free disposal of the testator.

LPA ½ The legitime of the SS and IC shall be taken from the free portion, provided that the
total legitime of such IC shall not exceed the free portion, and that the legitime of the
SS must first be full satisfied (CIVIL CODE, Art. 895, Par. 3).
SS 1/8
The remaining 1/8 may be freely disposed of by the testator (CIVIL CODE, Art. 899).
IC ¼

IC ½ If there are more than 1 IC, divide equally among the IC (CIVIL CODE, Art. 901).

The remaining ½ shall be at the free disposal of the testator.

SS 1/3 The remaining 1/3 shall be at the free disposal of the testator (CIVIL CODE, Art. 894).

IC 1/3

SS ½ If marriage is in articulo mortis and the deceased dies within 3 months but they have been
living as husband and wife for more than 5 years, the remaining 1/2 shall be at the free
disposal of the testator (CIVIL CODE, Art. 900).

1/3 If marriage is in articulo mortis and spouse dies within 3 months after the marriage, the
remaining 2/3 shall be at the free disposal of the testator (CIVIL CODE, Art. 900).
 32

IP ½ The remaining 1/2 shall be at the free disposal of the testator (CIVIL CODE, Art. 903).

IP Excluded Children inherit in the amounts established in the foregoing rules.

Any child It depends

IP ¼ Only the parents of IC are included.

SS ¼ Grandparents and other ascendants are excluded (CIVIL CODE, Art. 903).

LPA/IP of the ½ When parents (legitimate or illegitimate), or the legitimate ascendants of the adopted
adopted; concur with the adopters, ½ shall be inherited by the parents or ascendants and the
Adopters remaining half by the adopters (FAMILY CODE, Art. 190, Par. 3).

AC; LCD Same share As a rule, adopted children are entitled to the same successional right as legitimate
as LCD children (CIVIL CODE, Art. 979).

LCD – Legitimate Children and Descendants

SS – Surviving Spouse

LPA – Legitimate Parents and Ascendants

ICD – Illegitimate Children and Descendants

IP – Illegitimate Parents

CH – Compulsory Heirs

(12) A died in 1962, single and without descendants. Surviving were her parents, X and Y and siblings, B,
C, D, E and F. F then filed a petition for probate of the will of A which instituted her as universal heir of
the deceased. X and Y opposed the petition on the ground that X and Y who are compulsory heirs of
the deceased in the direct ascending line — were illegally preterited and that in consequence the
institution is void. The court then declared that the will is invalid. Is the will valid?
No, the will is invalid. Under Article 854 of the Civil Code, “the preterition or omission of one, some, or all of
the compulsory heirs in the direct line, whether living at the time of the execution of the will or born after the
death of the testator, shall annul the institution of heir; but the devises and legacies shall be valid insofar as
they are not inofficious.” The will herein is invalid because the nullification of such institution of universal heir
— without any other testamentary disposition in the will — amounts to a declaration that nothing at all was
written. While Article 854 merely nullifies “the institution of heir” and declares that legacies and devises are
valid, there must be, in addition to such institution of universal heir, a testamentary disposition granting him
bequests or legacies apart and separate from the nullified institution of heir. Considering that the will in this
case solely provides for the institution of F as universal heir, and nothing more, the entire will is null (Nuguid v.
Nuguid, G.R. No. L-23445, June 23, 1966).

(13) J died rich. Prior to his death, however, he executed a will. In the said will, he disinherited his son, R,
based on the following acts:
 33

1. He disdained his honor in front of the members of the family;

2. Besmirched his honor and reputation in the business community as he refused to settle his loan
with a bank where he was a valuable client; and
3. Stole his business from him.

(a) Do the acts constitute a valid ground for disinheritance?

Yes. Under Article 919 of the Civil Code, one of the grounds for disinheritance is the maltreatment of the
testator by word or deed, by the child or descendant. In the case at bar, the incidents mentioned in the will,
taken as a whole, can be considered a form of maltreatment by R to J (Seangio v. Reyes, G.R. nos. 140371-
72, November 27, 2006). Therefore, the acts constitute maltreatment, a valid ground for disinheritance.

(b) Do the children of the disinherited person have the right to represent the latter?
Yes. The children and descendants of the person disinherited shall take his or her place and shall preserve
the rights of compulsory heirs with respect to the legitime; but the disinherited parent shall not have the usufruct
or administration of the property which constitutes the legitime (CIVIL CODE, Art. 923).

(14) What are the instances wherein legacies and devises are revoked by operation of law?
The instances wherein legacies and devises are revoked by operation of law are as follows:
1. If the testator transforms the thing bequeathed in such a manner that it does not retain either the
form or the denomination it had;
2. If the testator by any title or for any cause alienates the thing bequeathed or any part thereof, it
being understood that in the latter case the legacy or devise shall be without effect only with respect
to the part thus alienated. If after the alienation the thing should again belong to the testator, even if
it be by reason of nullity of the contract, the legacy or devise shall not thereafter be valid, unless the
reacquisition shall have been effected by virtue of the exercise of the right of repurchase;
3. If the thing bequeathed is totally lost during the lifetime of the testator, or after his death without the
heir’s fault. Nevertheless, the person obliged to pay the legacy or devise shall be liable for eviction if
the thing bequeathed should not have been determinate as to its kind.
4. The legacy of a credit against a third person or the remission or release of a debt of the legatee
shall lapse if the testator, after having made it, should bring an action against the debtor for the
payment of his debt, even if such payment should not have been effected at the time of his death
(CIVIL CODE, Arts. 935, 936 and 957).

(15) Decedent A died on April 26, 1997, leaving a will dated February 8, 1997. The will was admitted to
probate. In the will, a three-door apartment, which includes two apartment units, were devised to A’s
four grandchildren. Prior to his death, on November 15, 1996, A executed a Real Estate Mortgage
covering the apartment Unit 1 in favor of Spouses E, and on February 21, 1997, and A executed a deed
of Sale of Real Estate on Installment (SREI) covering the other apartment Unit 2 also in favor of Spouses
E. However, the SREI never attained obligatory force or did not become binding by virtue of the
nonpayment of the purchase price as stipulated. Determine the provisional effects of the transactions
made by A.
The provisional effects would be that: A’s estate is obliged to pay the debt in connection with the mortgage of
Unit 1, while SREI revoked de facto the devise of Unit 2. Under Article 934 of the Civil Code, if the testator
should bequeath or devise something pledged or mortgaged to secure a recoverable debt before the execution
of the will, the estate is obliged to pay the debt, unless the contrary intention appears. Hence, Since A devised
in his will Unit 1, which had been mortgaged prior to the execution of his will, his estate is obliged to pay the
debt. Pursuant to Article 957, one of the instances of revocation de facto of a legacy or devise is the alienation
by the testator by any title of the thing bequeathed subsequent to the execution of the will. There might be here
an intention on the part of A to alienate through the SREI Unit 2 subsequent to the execution of his will although
it subsequently became inefficacious, or without obligatory force, by reason of the nonfulfillment of the positive
suspensive condition of full payment of the purchase price (Estipona v. Estate of Aquino, G.R. No. 207407
(Resolution), September 29, 2021)

Note: The probate court may pass upon the title and ownership thereto, but such determination is provisional, not
conclusive, and is subject to the final decision in a separate action to resolve title and ownership (Estipona v. Estate of
Aquino, G.R. No. 207407 (Resolution), September 29, 2021)
 34

(16) What are the effects of the status of the property given on the legacy/devise?
The effects of the status of the property given on the legacy/devise are the following:
Status of Property Given by Legatee/Devisee Effect on the Legacy/Devise

1. Belongs to the testator at the time of the execution of the will until his death Effective

2. Belongs to the testator at the time of the execution of the will but alienated in favor of a Revoked
third person (CIVIL CODE, Art. 957, Par. 2)

3. Belongs to the testator at the time of the execution of the will but alienated in favor of Legatee/devisee can demand
the legatee or devisee onerously (CIVIL CODE, Art. 933, Par. 2) reimbursement from the heir or
estate

4. Does not belong to the testator at the time the will is executed but he has ordered that Effective
the thing be acquired in order that it be given to the legatee/devisee (CIVIL CODE, Art.
931)

5. Does not belong to the testator at the time the will is executed and the testator Void
erroneously believed that the thing pertained to him (CIVIL CODE, Art. 930)

6. Does not belong to the testator at the time the will is executed but afterwards becomes Effective
his by whatever title (CIVIL CODE, Art. 930)

7. Already belongs to the legatee/devisee at the time of the execution of the will, even Ineffective
though another person may have interest therein (CIVIL CODE, Art. 932)

8. Already belongs to the legatee or devisee at the time of the execution of the will even Ineffective
though it may have been subsequently alienated by him (CIVIL CODE, Art. 933)

9. Testator had knowledge that the thing bequeathed belongs to a third person and the Legatee/devisee can claim nothing
legatee/devisee acquired the property gratuitously after the execution of the will (CIVIL by virtue of the legacy/devise
CODE, Art. 933, Par. 2)

10. Testator had knowledge that the thing bequeathed belongs to a third person and the Legatee/devisee can demand
legatee/devisee acquired the property by onerous title (CIVIL CODE, Art. 933, Par. 2) reimbursement from the heir or
estate

C. Intestate Succession

(1) F had three (3) legitimate children: A, B, and C. B has one (1) legitimate child X. C has two (2) legitimate
children: Y and Z. F and A rode together in a car and perished together at the same time in a vehicular
accident. F and A died, each of them leaving substantial estates in intestacy. (2008 Bar)

(a) Who are the intestate heirs of F? What are their respective fractional shares?
The intestate heirs of F are B and C. Since B and C are the only heirs left, they shall have 1/2 each,
dividing by 2 the whole estate. Article 43 of the Civil Code states that “if there is a doubt, as between two
or more persons who are called to succeed each other, as to which of them died first, whoever alleges
the death of one prior to the other, shall prove the same; in the absence of proof, it is presumed that they
died at the same time and there shall be no transmission of rights from one to the other.” Here, F and A
presumably died at the same time. Hence, no transmission of rights can be made between them.
Consequently, A will not qualify as an heir pursuant to Article 980 of the Civil Code which states that the
children of the deceased shall always inherit from him in their own right, dividing the inheritance in equal
shares (CIVIL CODE, Art. 980).
 35

(b) Who are the intestate heirs of A? What are their respective fractional shares?
B and C are the intestate heirs of A and they exclude X, Y and Z. They shall inherit the whole estate
dividing between them the entirety into 1/2 each. Since Article 43 applies as discussed above, F does not
qualify to be an intestate heir. Consequently, the rule on preference between the lines applies and the
next in the order of succession would be the collateral relatives, B and C. Article 1003 of the Civil Code
provides that if there are no descendants, ascendants, illegitimate children, or a surviving spouse, the
collateral relatives shall succeed to the entire estate of the deceased. Article 962 states that in every
inheritance, the relative nearest in degree excludes the more distant ones, saving the right of
representation when it properly takes place.

(c) If B and C both predeceased F, who are F’s intestate heirs? What are their respective fractional
shares? Do they inherit in their own right or by representation?
X inherits the share of B which is 1/2 while Y and Z will divide the inheritance of C, which is also 1/2,
hence, they will be getting 1/4 each. They inherit by the right of representation. Under Article 982 of the
Civil Code, the grandchildren and other descendants shall inherit by right of representation, and if any
one of them should have died, leaving several heirs, the portion pertaining to him shall be divided among
the latter in equal portions.

(d) If B and C both repudiated their shares in the estate of F who are F’s intestate heirs? What are their
respective fractional shares? Do they inherit in their own right or by representation?
The heirs are X, Y and Z, inheriting in their own right. They shall divide the whole estate among
themselves, apportioning 1/3 to each heir. Under Article 969 of the Civil Code, “if the inheritance should
be repudiated by the nearest relative, should there be one only, or by all the nearest relatives called by
law to succeed, should there be several, those of the following degree shall inherit in their own right and
cannot represent the person or persons repudiating the inheritance.”

(2) M died intestate leaving properties, both personal and real. The estate of his first wife was already
settled. He was survived by his second wife, A, his sons on his first marriage, B and C, the heirs of D,
the latter being his son with his first wife, and he was predeceased by E, also his son. C filed a petition
for the letters of administration of his father’s estate. F moved that she be included in the distribution
because she alleges that she is the daughter of E. She argued that even though her parents were not
married, there was no legal impediment for them to do so. Can F inherit from the estate of M?
Yes, F can inherit from the estate of M as long as she can prove her filiation. Article 982 of the Civil Code
provides that “the grandchildren and other descendants shall inherit by right of representation, and if any one
of them should have died, leaving several heirs, the portion pertaining to him shall be divided among the latter
in equal portions.” The language of Article 982 does not make any distinctions or qualifications as to the birth
status of the "grandchildren and other descendants" granted the right of representation. Hence, F can inherit
from the estate of M (Aquino v. Aquino, G.R. No. 208912, December 07, 2021). Note: This case is indicated
in the 2023 Bar Civil Law Syllabus.

(3) Can the adopting parents inherit from the adopted child?
Yes. In testate and intestate succession, the adopters and the adoptee shall have reciprocal rights of
succession without distinction from legitimate filiations. However, if the adoptees and their biological parents
have left a will, the law on testamentary succession shall govern (Sec. 43, RA 11642)

(4) What are the successional rights of marital and non-marital children?
The successional rights of marital and non-marital children are as follows:

Marital children only Inherit in equal shares (CIVIL CODE, Art. 979, Art. 980).

1. Marital children Share of illegitimate children is one-half of the share of each of the legitimate
2. Non-marital children children or descendants (CIVIL CODE, Art. 983; Art. 895).

Non-Marital children only Inherit entire estate (CIVIL CODE, Art. 988).
 36

Non-Marital children with descendants of Non-Marital Children shall succeed in their own right and descendants of another
another Non-Marital child who is dead non-marital children who is dead shall inherit by right of representation (CIVIL
CODE, Art. 989).

Non-Marital children with Marital Divide the inheritance with them, taking one-half of the estate, whatever be the
ascendants number of the ascendants or of the non-marital children. (CIVIL CODE, Art. 991).

(5) What are the inheritance of the surviving spouse?

The inheritance of the surviving spouse is as follows:

Inherit the entire estate, without prejudice to the rights of brothers and sisters,
Surviving spouse only nephews and nieces, should there be any (CIVIL CODE, Art. 995).

1. Surviving spouse Same share as that of each of the children (CIVIL CODE, Art. 996).
2. Legitimate children or
descendants

1. Surviving spouse One-half (½) of the estate to the surviving spouse, other half to legitimate
2. Legitimate parents or ascendants parents or ascendants (CIVIL CODE, Art. 997).

1. Surviving spouse One-half (½) of the inheritance to the surviving spouse, other half to illegitimate
2. Illegitimate children or their children, and the illegitimate children or their descendants, whether legitimate
descendants, whether legitimate or or illegitimate (CIVIL CODE, Art. 998).
illegitimate

1. Surviving spouse, Same share as that of a legitimate child (CIVIL CODE, Art. 999).
2. Legitimate children or their
descendants
3. Illegitimate children or their
descendants, whether legitimate or
illegitimate

1. Surviving spouse One-half (½) to legitimate ascendants, the surviving spouse shall have one-
2. Legitimate ascendants, and fourth (1/4) of the estate, and the illegitimate children the other fourth (CIVIL
3. Illegitimate children CODE, Art. 1000).

1. Surviving spouse The surviving spouse shall be entitled to (½)one-half of the inheritance and the
2. Brothers and sisters or their brothers and sisters or their children to the other half (CIVIL CODE, Art. 1001).
children

(6) What are the shares of collateral relatives?

The shares of collateral relatives are as follows:

Collateral relatives only Inherit the entire estate (CIVIL CODE, Art. 1003; Art. 1009).
 37

Brother and sisters of the full-blood Inherit in equal share (CIVIL CODE, Art. 1004).

1. Brothers and sisters

2. Nephews and nieces (children of decedent’s Brothers and sisters, inherit per capita. Nephews and nieces
brothers and sisters full-blood) per stirpes. (CIVIL CODE, Art. 1005).

1. Full-blood brothers and sisters

2. Half-blood brothers and sisters Full-blood shall be entitled to a share double that of the half-
blood (CIVIL CODE, Art. 1006).

Half-blood brothers and sisters, some father’s side, some Inherit in equal share without distinction as to the origin of the
mother’s side property (CIVIL CODE, Art. 1007).

D. Provisions Common to Testate and Intestate Succession

(1) Ms. A was best friends with Ms. B. After a few years, their friendship turned sour because Ms. A blamed
Ms. B for the death of the former’s husband. Courts decided on a definite acquittal for Ms. B, finding
the claims were groundless. They made amends and years later, Ms. B wanted to leave a portion of her
estate to Ms. A. Upon Ms. B’s death, Ms. A tried claiming her share of the estate. Will she be able to
receive it?
No. According to Article 1032 Par. 3 of the Civil Code, one of those incapable of succeeding by reason of
unworthiness are those who has accused the testator of a crime for which the law prescribes imprisonment for
6 years or more, if the accusation has been found groundless. It was found by the courts that Ms. B was not
guilty as accused by Ms. A, which calls for the application of such provision.

(2) Mr. X has a terminal illness. Knowing his death is nearing, he went to a priest who happened to be his
only son for a confession. Hours later, he passed away. He left a will giving Php750,000 out of his
Php1,000,000 estate to his son. He allotted the remaining amount to his brother. How much will his son
actually receive?
His son will receive Php500,000 only, which is his share as a legitime based on Article 888 of the Civil Code.
He cannot receive by virtue of the will the whole of Php750,000. According to Article 1027 of the Civil Code,
those incapable of succeeding are “priests who heard the confession of the testator during his last illness, or
minister of the gospel who extended spiritual aid to him during the same period.” The remaining Php250,000
shall form part of the free portion that will be given to his brother.

(3) T, the testator has 2 sons, A and B. A has 2 children, X and Y. On March 6, 2016, T was involved in a
vehicular accident which led to his death. During a drinking session between the 2 brothers, A verbally
told B that he is repudiating his share in their father’s estate. Thereafter A died on October 8, 2016 due
to cardiac arrest. A’s children, X and Y now claims for their father’s share in T’s estate, with B opposing
their claim stating that A has already repudiated his share in T’s estate. Can X and Y validly claim A’s
inheritance even after the latter’s repudiation?
Yes, X and Y can validly claim A’s inheritance. For repudiation to be valid it must be written in a public or
authentic instrument, or in a petition to the court which has jurisdiction over the testate or intestate proceeding
(CIVIL CODE, Art. 1051). In the case at hand, since the repudiation of A’s share was done verbally, it cannot
be considered as a valid repudiation. In cases where an heir dies prior to accepting or repudiating properly his
inheritance, his right shall be transmitted to his heirs (CIVIL CODE, Art. 1053). Therefore, A’s share in the
estate of T shall be transmitted to his heirs, X and Y.

(4) A, B and C are the legitimate children of X. Unknown to them, X had an illegitimate child D. A, B and C
obtained a partition of the estate of X. Are A, B and C obliged to pay D for his share?
Yes. Under Art. 1104 of the Civil Code, “a partition made with preterition of any of the compulsory heirs shall
not be rescinded, unless it be proved that there was bad faith or fraud on the part of the other persons
interested; but the latter shall be proportionately obliged to pay to the person omitted the share which belongs
to him.” In this case, A, B, and C did not know the existence of D, hence there is no fraud or bad faith on their
part, but still, they are obliged to pay for D’s share in the partition.
 38

(5) Spouses J and E left their six (6) children, A, B, C, D, E and F a 219 sqm. lot. Upon the demise of the
spouses, the estate was not settled in accordance with the procedure in the Rules of Court. A sold a
portion of the property to X. Supposing thereafter, an unnotarized extrajudicial settlement of the estate
was made among the heirs becoming the basis for the order for segregation of the property sold to X.
Is the act of A in selling a portion of the co-owned property deemed as a partition?
Yes, the act of A is deemed as a partition. Article 1082 of the Civil Code provides that “every act which is
intended to put an end to indivision among co-heirs and legatees or devisees is deemed to be a partition,
although it should purport to be a sale, an exchange, a compromise, or any other transaction.” By this provision,
it appears that when a co-owner sells his inchoate right in the co-ownership, he expresses his intention to “put
an end to indivision among his co-heirs.” Partition among co-owners may thus be evidenced by the overt act
of a co-owner of renouncing his right over the property regardless of the form it takes. In effect, A expressed
her intention to terminate the co-ownership by selling her share to X. Moreover, the execution of the deed of
extrajudicial settlement of the estate reflected the intention to physically divide the property (Alejandrino v. CA,
G.R. No. 114151, September 17, 1998).

OBLIGATIONS AND CONTRACTS

I. Obligation
A. General Provisions
(1) What are the essential elements of an obligation? (EOS)
The obligation is constituted upon the concurrence of the essential elements thereof, viz:
1. The vinculum juris or juridical tie which is the Efficient cause established by the various sources of
obligations (law, contracts, quasi-contracts, delicts and quasi-delicts);
2. The Object which is the prestation or conduct, required to be observed (to give, to do or not to do);
and
3. The Subject-persons who, viewed from the demandability of the obligation, are the active (obligee)
and the passive (obligor) subjects (The Wellex Group, Inc. v. U-Land Airlines, Co., G.R. No.
167519, January 14, 2015).

(2) Is the list of sources of obligation provided in Article 1157 of the Civil Code exclusive?
Yes. An obligation imposed on a person, and the corresponding right granted to another, must be rooted in at
least one of the five sources in Article 1157 (i.e., law, contracts, quasi-contracts, delicts, and quasi-delicts).
Thus, a practice or custom is, as a general rule, not a source of a legally demandable or enforceable right
(Makati Stock Exchange, Inc. vs. Campos, G.R. No. 138814, April 16, 2009).

B. Nature and Effects of Obligations

(1) What are the acts or omissions of the obligor which will result in the breach of an obligation? (FNDC)
Those who in the performance of their obligations are guilty of:
1. Fraud (dolo)
2. Negligence (culpa)
3. Delay (mora)
4. In Contravention of the tenor thereof (violation) (CIVIL CODE, Art. 1170)

(2) Discuss the concept of default or mora.

Default or mora, which is a kind of voluntary breach of an obligation, signifies the idea of delay in the fulfillment
of an obligation with respect to time. In positive obligations, like an obligation to give, the obligor or debtor
incurs in delay from the time the obligee or creditor demands from him the fulfillment of the obligation. Demand
may be judicial — if the creditor files a complaint against the debtor for the fulfillment of the obligation — or
extrajudicial — if the creditor demands from the debtor the fulfillment of the obligation either orally or in writing.
Whether the demand is judicial or extrajudicial, if the obligor or debtor fails to fulfill or perform his obligations,
he is in mora solvendi, and, thus, liable for damages (Pineda v. De Vega, G.R. No. 233774, April 10, 2019).

(3) What are the instances when demand is not necessary to constitute the debtor in default? (SLU-P)
There are four instances when demand is not necessary to constitute the debtor in default, namely:
1. When there is an express Stipulation to that effect;
 39

2. Where the Law so provides;

3. Where demand would be Useless; and
4. When the Period is the controlling motive or the principal inducement for the creation of the obligation
(i.e., time is of the essence) (Rivera v. Spouses Chua, G.R. Nos. 184458 & 184472, January 14,
2015).

C. Different Kinds of Obligations

(1) Discuss the concept of an alternative obligation.
In an alternative obligation, there is more than one object, and the fulfillment of one is sufficient, determined
by the choice of the debtor who generally has the right of election. The right of election is extinguished when
the party who may exercise that option categorically and unequivocally makes his or her choice known. The
choice of the debtor must also be communicated to the creditor who must receive notice of it (Arco Pulp and
Paper Co., Inc. v. Lim, G.R. No. 206806, June 25, 2014).

(2) In 2019, IJ Corp., as lessor, and C Corp., as lessee, entered into a lease contract for a period of three
(3) years over a portion of a warehouse building. In 2020, C Corp. requested for the pre-termination of
the lease effective on the same date, which IJ Corp. rejected on the ground that the pre-termination of
the lease contract was not stipulated therein. C Corp. argued that by virtue of Article 1267 of the Civil
Code, it was released from its obligation from the lease contract. It explained that the consideration
thereof had become so difficult due to the pandemic. Is C Corp.’s act of treating the lease contract
terminated correct?
No. Article 1267 of the Civil Code applies only to obligations to do and not to obligations to give. An obligation
“to do” includes all kinds of work or service; while an obligation “to give” is a prestation which consists in the
delivery of a movable or an immovable thing in order to create a real right, or for the use of the recipient, or for
its simple possession, or in order to return it to its owner. The obligation to pay rentals or deliver the thing in a
contract of lease falls within the prestation “to give”. Considering that C Corp.’s obligation of paying rent is not
an obligation to do, it could not rightfully invoke Article 1267. Even so, its position is still without merit as
financial struggles is not enough reason for the courts to grant reprieve from contractual obligations (Iloilo Jar
Corporation v. Comglasco Corp., G.R. No. 219509, January 18, 2017).

(3) What is a reciprocal obligation?

A reciprocal obligation has been defined as that “where each of the parties is a promissee of a prestation and
promises another in return as a counterpart of equivalent of the other. The most salient feature of this obligation
is reciprocity” (Chua Ping Hian v. Manas, G.R. No. 198867, October 16, 2019).

(4) What are the requisites for the demandability of the penal clause?
The requisites for the demandability of the penal clause are:
1. That the total non-fulfillment of the obligation or the defective fulfillment is chargeable to the fault of
the debtor; and
2. That the penalty may be enforced in accordance with the provisions of law (D.M. Ragasa Enterprises,
Inc. v. Banco De Oro, G.R. No. 190512, June 20, 2018).

Note: When an obligation or a contract contains a penal clause, the penalty shall substitute the indemnity for
damages and the payment of interests in case of noncompliance with or breach of the principal obligation (Id).

D. Extinguishment of Obligations
(5) What are the requisites for legal compensation to take place? (PM-DeLiC)
Under Article 1279 of the Civil Code, for legal compensation to take place, the following requisites must concur:
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; and
5. That over neither of them there be any retention or Controversy, commenced by third persons and
communicated in due time to the debtor (CIVIL CODE, Art. 1279; BDO Unibank, Inc. v. Ypil, Sr.,
G.R. No. 212024, October 12, 2020, Hernando Case).
 40

Note: When all the requisites mentioned in Article 1279 are present, compensation takes effect by operation
of law, and extinguishes both debts to the concurrent amount, even though the creditors and debtors are not
aware of the compensation (CIVIL CODE, Art. 1290).

(6) F Corporation entered into a Construction Agreement with ACD Corporation for finalization of
construction works for Exposition Theme Park. On the other hand, M Structures submitted to ACD
Corporation a Structure Proposal for the said Exposition Theme Park. ACD Corporation, submitted the
proposal of M Structures to F Corporation, which the latter approved. Thereafter, ACD Corporation,
informed M Structures that the latter would be paid after F Corporation’s payment of the materials. M
Structures then requested that it be paid directly by F Corporation, to which ACD Corporation did not
object. However, the demands for payment by M Structures against F Corporation and ACD
Corporation were unheeded, hence, M Structures filed a complaint for Collection for Sum of Money
against the two corporations. ACD Corporation contended that its obligation against M Structures was
extinguished by novation as M Structures subrogated its place to collect directly from F Corporation.
Is ACD Corporation’s argument correct?
No, ACD Corporation’s argument is incorrect. Novation extinguishes an obligation between two parties when
there is a substitution of objects or debtors or when there is subrogation of the creditor. It occurs only when
the new contract declares so "in unequivocal terms" or that "the old and the new obligations be on every point
incompatible with each other.” Applying herein, there is nothing in the agreement that states that the obligation
of ACD Corporation to pay M Structures was extinguished, nor was there a mention that M Structures would
substitute or subrogate ACD Corporation as F Corporation’s obligee, as their agreements merely show that M
Structures was allowed by ACD Corporation to try collecting from F Corporation directly. Therefore, since it is
evident that there was neither an express nor implied novation herein, ACD Corporation’s obligation to M
Structures remains valid and existing, the former must still pay what is due to the latter with interest (Asian
Construction and Development Corp. v. Metro Structures Inc., G.R. No. 221147, September 29, 2021,
Hernando Case).

II. Contracts
A. General Provisions
(1) G Inc. received from MRT an invitation to bid for the complete concrete works of the Podium. G Inc.
submitted its bid and won. MRT issued a Letter of Award and Notice to Proceed to G Inc., which was
signed and accepted by the latter. However, due to restructuring of the project, G Inc. was unable to
proceed with the project as it was suspended. A second notice was given to G Inc. based on the
redesigned plan which was accepted and signed by G Inc. A third notice was again issued but was not
accepted by G Inc. A fourth notice was again issued which was qualifiedly accepted by G Inc. MRT
treated the qualified acceptance as a new offer and rejected the same. MRT manifested its intent to
award the project to another company. G Inc. acknowledged MRT’s intent and notified MRT of its claims
for reimbursement for costs, losses, and charges, and damages it had incurred due to the suspension
orders and the consequences of its award to another. G Inc. filed a notice of claim against MRT before
the Construction Industry Arbitration Commission which awarded to the former monetary claims
amounting to Php53M. MRT argued that G Inc. is not entitled to said monetary award as the contract
was not perfected. Is MRT correct?
No, MRT is not correct. There was a perfected contract. There are three (3) stages in a contract: (1) negotiation
which refers to the time the parties agree on its terms and conditions; (2) perfection which occurs when there
is a meeting of the minds of the parties such that there is a concurrence of offer and acceptance, and all
essential elements of the contract are present; and (3) consummation which covers the period when the parties
perform their obligations in the contract until it is finished or extinguished. To determine when the contract was
perfected, the acceptance of the offer must be unqualified, unconditional, and made known to the offeror. Here,
there is a perfected contract between MRT and G Inc. MRT has already awarded the contract to G Inc., and
G Inc.’s acceptance of the award was communicated to MRT before MRT rescinded the contract. Thus, there
is already mutual consent on the object of the contract and its consideration, and an absolute acceptance of
the offer (Metro Rail Transit Development Corporation v. Gammon Philippines, Inc., G.R. No. 200401, January
17, 2018).

(2) C, who was only a Grade 6 graduate and not capable of understanding English, was approached by
her nephew, R, who told her that he obtained a loan from L Bank in order to purchase the property
previously owned by his parents. R needed to borrow C’s owner’s duplicate copy of a certificate of title
over another property because he was advised by L Bank to borrow the owner’s duplicate certificate
of title and submit the same to the bank so that the loan would push through. All she understood was
that, in lending the title to R, she would merely provide a “garantiya” as regards R’s loan with L Bank,
and not a collateral. Without R’s knowledge and consent, L Bank successfully convinced C to sign a
 41

Promissory Note for a P270,000.00 loan and a Deed of Real Estate Mortgage over the subject property
for P1,440,000.00. Are the Promissory Note and Deed of Real Estate Mortgage valid and binding
contracts?
No, the Promissory Note and Deed of Real Estate Mortgage are not valid and binding contracts. There can be
no contract unless all of the following requisites concur: (1) consent of the contracting parties; (2) object certain
which is the subject matter of the contract; and (3) the cause of the obligation which is established. When one
of the elements is wanting, no contract can be perfected. Where the contracting parties do not agree as to the
subject matter of the contract, consent is absent, making the contract null and void. Here, the contract of loan
(i.e., the Promissory Note) and its accessory contract (i.e., Real Estate Mortgage) were entered into without
the consent of C and were absolutely simulated by L Bank, making the same void ab initio. L Bank openly
misrepresented the very substance, tenor, and purpose of these documents, taking advantage of C’s lack of
education and failure to understand English. C had no intention at all to borrow or mortgage the subject property
(Catapang v. Lipa Bank, G.R. No. 240645, January 27, 2020).

B. Basic Principles of Contracts

(1) V, H and P bank entered into the VELI Asset Pool and Trust Agreement (Asset Pool) for the
development of the lots in E Village. Thereafter, V entered into a Contract to Sell with F who in turn,
subsequently entered into Contract to Sell with M. Few months after, P bank declared the Asset Pool
in default and transferred to H the parcels of land as a consequence. V, F and H entered into a MOA
(Contract to Sell between F and H) whereby F agreed to assume to pay H the parcels of land sold to it
by V. However, H canceled the sale due to F’s failure to pay. M filed a complaint for the delivery of title
claiming that despite full payment and demands for delivery, F failed to execute final deed of sale and
deliver the title to his favor. M maintains that as an innocent purchaser for value and as she had fully
paid the purchase price, he should not bear the consequences of the default of the Asset Pool. Should
M be made to suffer the consequences of the default of the Asset Pool and F’s failure to comply with
its obligation to H under their Contract to Sell?
No, M should not be made to suffer the consequences of the default of Asset Pool and F’s failure to comply
with its obligation to H under their Contract to Sell. Jurisprudence teaches us that "the parties to a contract are
the real parties-in-interest in an action upon it." As such, the basic principle of relativity of contracts is that
contracts can only bind the parties who entered into it, and cannot favor or prejudice a third person, even if he
is aware of such contract and has acted with knowledge thereof." Further, Article 1311 of the Civil Code
provides, “contracts take effect only between the parties, their assigns and heirs, except in case where the
rights and obligations arising from the contract are not transmissible by their nature, or by stipulation or by
provision of law” (Home Guaranty Corp. v. Manlapaz, G.R. No. 202820, January 13, 2021, Hernando Case).

(2) G and N are businessmen who obtained loans from M bank under several promissory notes and
secured by a real estate mortgage and a continuing surety agreement. When both G and N experienced
financial difficulties, they requested M bank to modify their interest payment scheme from monthly to
quarterly, which was approved by the latter roughly a month and a half after said request. G, N, and M
bank executed two Debt Settlement Agreements (DSAs), which expressly provide that the remaining
obligation after the reduction of penalty charges and interest agreed upon by the parties, shall be the
principal amount of the new obligation. A year later, G and N sent several requests to M bank to allow
them to pay the equivalent loan value of their collaterals as full payment of the loan for the partial
release of their collateral properties. M bank in return, denied the requests and sent demand letters to
the debtors for the payment of their past due accounts. Were the DSAs violative of the principle of
mutuality of contract?
No, the Debt Settlement Agreements (DSA) executed by the parties are non-violative of the principle of
mutuality of contract. The principle of mutuality of contracts, found in Article 1308 of the Civil Code, states that
a “contract must bind both contracting parties; its validity or compliance cannot be left to the will of one of
them.” By inference, G and N are bound by the valid terms and conditions of the DSAs as their representatives
willingly executed the said contracts. Since the DSAs referred to the restructuring of their loans, such can
hardly be considered as a contract of adhesion. The DSAs were executed after they sought the restructuring
of their accountabilities (Goldwell Properties Tagaytay, Inc. v. Metropolitan Bank and Trust Company, G.R.
No. 209837; May 12, 2021, Hernando Case).

(3) What are the requisites for an action for reformation of instrument to prosper?
There must be a concurrence of the following requisites for an action for reformation of instrument to prosper:
1. There must have been a meeting of the minds of the parties to the contract;
2. The instrument does not express the true intention of the parties; and
 42

3. The failure of the instrument to express the true intention of the parties is due to mistake, fraud,
inequitable conduct or accident (Makati Tuscany Condominium Corp. v. Multi-Realty Development
Corp., G.R. No. 185530, April 18, 2018).

(4) A and M entered into two (2) Franchise Agreements wherein M shall operate two (2) of A’s water refilling
stations under the franchise of A. Section IV-5 of the Agreement provides that in the event of
termination, the franchisee (i.e., M) agrees that it shall not in any way operate a water vending business
within two (2) kilometers of the terminated site for a period of two (2) years from termination. When the
Franchise Agreements were no longer renewed by the parties, M continued to operate under its own
name. Thus, A filed a complaint against M. M argues that Section IV-5 only applies to situations wherein
the Franchise Agreement has been cancelled for reasons other than the mere expiration of the
agreement. Is the contention of M correct?
No, the contention of M is incorrect. According to Article 1370 of the Civil Code, 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. Further, under Article 1374, the various stipulations of a contract shall be interpreted together,
attributing to the doubtful ones that sense which may result from all of them taken jointly. Here, the word
termination includes the expiration of the said agreements. The literal, express, and plain meaning of the word
termination is end of existence or conclusion. Also, there is no provision under the Franchise Agreements
which expressly limits, restricts, or confines the grounds of termination. If the intent of Section IV-5 is to protect
the interests, name, and goodwill of A’s brand, then it would not make sense to restrict the two-year prohibition
clause found therein only to cases wherein the parties cancelled or pre-terminated the agreements (Makati
Water, Inc. v. Agua Vida Systems, Inc., G.R. No. 205604, June 26, 2019).

C. Essential Requisites of a Contract

(1) What are the essential requisites of a contract? (COC)
There is no contract unless the following requisites concur:
1. Consent of the contracting parties;
2. Object certain which is the subject matter of the contract; and
3. Cause of the obligation which is established (CIVIL CODE, Art. 1318).

(2) Ross owned two (2) parcels of unregistered land located in Central Perk, Pangasinan. He died on
December 1, 1944 and was survived by five children, two of whom are Emma and Ben. Emma is an
illiterate person. Emma and Ben executed a deed adjudicating between themselves the two parcels of
land and transferring ownership of the properties to spouses Bing for a consideration of P30,000.00.
Emma affixed her thumbmark in lieu of her signature. The Deed was signed in the presence of
witnesses Joey and Phoebe who knew of Emma’s illiteracy. Consequently, new tax declarations were
issued in the name of spouses Bing. Emma filed before the RTC a complaint for Declaration of Nullity
of Documents, Recovery of Ownership, Reconveyance, and Damages. Will the action prosper?
Yes. Under the Civil Code, consent may be vitiated by mistake, violence, intimidation, undue influence, or
fraud. When consent is vitiated, the contract is voidable. Article 1332 of the Civil Code provides, “when one of
the parties is unable to read, or if the contract is in a language not understood by him, and mistake or fraud is
alleged, the person enforcing the contract must show that the terms thereof have been fully explained to the
former.” For the protection afforded by Article 1332 to be operative, the contracting party who alleges that there
is any defect or vitiated consent must establish the same by full, clear and convincing evidence. Emma was
able to establish that she was unable to read at the time of the execution of the Deed. It was bolstered by the
fact that Joey and Phoebe knew of Emma’s illiteracy. Hence, the presumption of fraud or mistake becomes
operative for the benefit of Emma (Spouses De Vera v. Catungal G.R. No. 211687, February 10, 2021,
Hernando Case).

D. Defective Contracts
(1) Can rescission be maintained if a person has other legal means to obtain reparation for damage
suffered?
No. Under Article 1383 of the Civil Code, the action for rescission is a subsidiary one, and cannot thus be
instituted except when the party suffering damage has no other legal means to obtain reparation for the same
(G. Holdings, Inc. v. Cagayan Electric Power and Light Co., Inc., G.R. No. 226213, September 27, 2017).
 43

(2) What is the prescriptive period of an action for rescission?

Article 1389 of the Civil Code simply provides that, “the action to claim rescission must be commenced within
four years.” Since this provision of law is silent as to when the prescriptive period would commence, the general
rule, i.e., from the moment the cause of action accrues, therefore, applies (Khe Hong Cheng v. Court of
Appeals, G.R. No. 144169, March 28, 2001).

(3) What are voidable contracts?

The following contracts are voidable or annullable, even though there may have been no damage to the
contracting parties:
1. Those where one of the parties is incapable of giving consent to a contract;
2. Those where the consent is vitiated by mistake, violence, intimidation, undue influence or fraud (CIVIL
CODE, Art. 1390).

(4) X Co. is a domestic corporation, whose controlling interest is owned by A. Y Co., on the other hand, is
also a domestic corporation, owned by B. X Co. allegedly sold its shares of common stock in C bank
to Y Co. The shares of common stock in C Bank are part of the sequestered properties that were
allegedly illegally amassed by B during the twenty-year reign of the former President Ferdinand
Marcos. According to X Co., the shares were obtained by Y Co. through fraud and that at the time, the
composition of the Board of Directors were mere dummies of Marcos. Such being the case, their
acquisition is either voidable or void or unenforceable. Is the acquisition void, voidable, or
unenforceable?
The acquisition is voidable. Article 1390 provides that a contract is voidable where the consent is vitiated by
mistake, violence, intimidation, undue influence, or fraud. These contracts are not void ab initio since voidable
or annullable contracts are existent, valid, and binding, although they can be annulled because of want of
capacity or the vitiated consent of one of the parties. In this case, the mere allegation of X Co. that the persons
who composed the Board of Directors of Y Co. that approved the contract were mere dummies of Marcos,
does not make the said contract void. If that allegation of vitiated consent were true so as to incapacitate the
Board from giving its consent freely, the defect only renders the contract voidable (First Philippine Holding
Corporation v. Trans Middle East Equities Inc., G.R. No. 179505, December 4, 2009).

(5) A owns a land situated in Paranaque. On July 1, 2022, A and B orally entered into a contract of sale
where A bound himself to transfer ownership of his land to B on December 31, 2022, and for B to pay
on November 1, 2022. Is the contract enforceable?
No. Under Article 1403 of the Civil Code, an agreement for the sale of real property or of an interest therein
must be reduced in writing to be enforceable. The Statute of Frauds mentioned under Article 1403 applies to
executory contracts which have not been consummated partially or completely. Here, notwithstanding the fact
that the obligation is to be completely consummated on December 31, 2022, which is less than a year from
July 1, 2022, the object of the contract is a real property. Hence, the oral sale of A’s land is unenforceable.

(6) C Electric Corp. supplied power to F Inc. When F Inc. defaulted in payment, C Electric Corp. filed a
collection suit against F Inc. Notices of levy and sale upon the personal and real properties of F Inc.
were eventually issued. Thereafter, G Holdings filed a case seeking nullification of the levy on
execution and auction sale. G Holdings averred that it owns some levied properties as evidenced by a
Deed of Assignment executed by F Inc. in its favor. C Electric Corp. contends that the said Deed was
absolutely simulated since it was made to defraud C Electric Corp. as the creditor, and hence,
rescissible. Is the Deed of Assignment rescissible?
No, the Deed of Assignment is void, not rescissible. Void or inexistent contracts are those which produce no
legal effect and are considered inexistent from the very beginning because of certain imperfections while
rescissible contracts are valid until rescinded. These two defective contracts are distinct from each other and
belong to two mutually exclusive groups. Here, there was complete lack of intention on the part of F Inc. to
divest ownership and control over all of its properties, equipment, and facilities in spite of the wording in the
Deed of Assignment in favor of G Holdings. The Deed of Assignment was just a sham. It cannot be rescinded
because the Deed of Assignment is an absolutely simulated contract, which is void (G. Holdings, Inc. v.
Cagayan Electric Power and Light Company, G.R. No. 226213, September 27, 2017).

(7) What is the distinction between inexistent contracts and void ones as to their effects?
Inexistent contracts produce no legal effect whatsoever. In case of void contracts where the nullity proceeds
from the illegality of the cause of object, when executed (and not merely executory) they have the effect of
barring any action by the guilty to recover what he has already given under the contract in accordance with the
in pari delicto principle (Id.).
 44

Natural Obligations
(1) Discuss the concept of natural obligations.
Natural obligations, not being based on positive law but on equity and natural law, do not grant a right of action
to enforce their performance, but after voluntary fulfillment by the obligor, they authorize the retention of what
has been delivered or rendered by reason thereof (CIVIL CODE, Art. 1423).

(2) Can the debtor demand the return of the amount paid if he made the payment after the right of the
creditor to file an action upon it has prescribed?
No. When a right to sue upon a civil obligation has lapsed by extinctive prescription, the obligor who voluntarily
performs the contract cannot recover what he has delivered or the value of the service he has rendered (CIVIL
CODE, Art. 1424).

(3) X filed a complaint against Y praying for a 20% Christmas bonus for the years 2021 and 2022. X admits
that Y is not under any legal duty to give such bonus, and merely asks that the Christmas bonus be
given to them since it is a moral obligation of Y. Can the court order the performance of giving such
bonus?
No, the court cannot order the performance of giving such bonus. Under Article 1423 of the Civil Code, an
element of natural obligation, before it can be cognizable by the court, is voluntary fulfillment by the obligor.
Certainly, retention can be ordered but only after there has been voluntary performance. Here, there has been
no voluntary performance, thus, the court cannot order the performance (Ansay v. The Board of Directors of
the National Dev. Co., G.R. No. L-13667, April 29, 1960).

SPECIAL CONTRACTS

I. Sales
A. Definition and Essential Requisites
(1) What is a contract of sale?
By the contract of sale one of the contracting parties obligates himself to transfer the ownership of and to
deliver a determinate thing, and the other to pay therefor a price certain in money or its equivalent (CIVIL
CODE, Art. 1458). It must evince the consent on the part of the seller to transfer and deliver and on the part of
the buyer to pay (Spouses Edrada v. Spouses Ramos, G.R. No. 154413, August 31, 2005).

(2) What are the elements of a valid contract of sale? (ConSuMo)

The elements of a contract of sale are:
1. Consent or meeting of the minds, that is, consent to transfer ownership in exchange for the price;
2. Determinate Subject matter; and
3. Price certain in Money or its equivalent (Seming v. Alamag, G.R. No. 202284, March 17, 2021,
Hernando Case).

Note: A contract of sale is a consensual contract. Under Article 1475 of the Civil Code, the contract of sale is perfected
at the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price (Id.).

B. Contract of Sale
(1) Is ownership acquired from the perfection of the contract of sale?
No, ownership of the thing sold is acquired only upon its delivery to the buyer. Upon the perfection of the sale,
the seller assumes the obligation to transfer ownership and to deliver the thing sold, but the real right of
ownership is transferred only "by tradition" or delivery thereof to the buyer (Cabalhin v. Lansuela, G.R. No.
202029, February 15, 2022).

(2) Is a contract of sale void for failure to pay consideration?

No, failure to pay consideration is different from lack of consideration. Actual payment of the obligation is not
one of the three (3) essential requisites of a valid contract. In other words, non-payment of an obligation does
not render a contract void, in which case, the remedy of the injured party is to simply demand fulfillment, or
 45

rescission of the contract under Article 1191 of the Civil Code (Chingkoe v. Chingkoe, G.R. No. 244076, March
16, 2022).

C. Earnest Money
(1) What are the distinctions between earnest money and option money?
The following are the distinctions between earnest money and option money:

Earnest Money Option Money

Transfer of Ownership Title passes to buyer upon delivery of Ownership is reserved to the seller and is not to
the thing sold pass until full payment

Effect of An action for specific performance or There can be an action for specific performance
non-payment for rescission can be filed by the injured
party

Consideration Part of the purchase price (CIVIL Money is given as a distinct consideration or an
CODE, Art. 1482) option contract

Obligation of the buyer upon When given, the buyer is bound to pay The would-be buyer is not required to buy
payment of consideration the balance

Perfection There is already a sale Applies to a sale not yet perfected (Adelfa
of Sale Properties, Inc., v. CA, G.R. No. 111238,
January 25, 1995)

D. Double Sales
(1) What are the requisites for double sales to apply? (Va-S-Bu2-Re)
The requisites for double sales to apply are:
1. There must be 2 or more Valid sales
2. The 2 or more sales must pertain to exactly the same Subject matter
3. The 2 or more Buyers at odds over the rightful ownership must each represent conflicting interests
4. The 2 or more Buyers at odds over the rightful ownership must each have bought from the very same
seller (decedent to heir applies)
5. With land, the same must be Registered under the Torrens System (CIVIL CODE, Art. 1544).

E. Risk of Loss
(1) Who bears the risk of loss when loss occurs before perfection?
The seller and not the one who intends to purchase it bears the loss in accordance with the principle that the
thing perishes with the owner. Res perit domino applies because there is no delivery or transfer of ownership
yet (Roman v. Grimalt, G.R. No. L-2412, April 11, 1906).

(2) Who bears the risk of loss when loss occurs upon perfection?
The party who owns it at the time of perfection bears the risk of loss. Res perit domino applies because the
contract is void or inexistent (CIVIL CODE, Art. 1409, Par.3).

Note: If at the time the contract of sale is perfected, the thing which is the object of the contract has been
entirely lost, the contract shall be without any effect (CIVIL CODE, Art. 1493 Par. 1).
 46

F. Breach of Contract of Sale

(1) Does the non-payment of the entire purchase price, despite repeated assurances to pay the same,
constitute a substantial and fundamental breach?
Yes. The non-payment of the entire purchase price, despite repeated assurances to pay the same clearly
constitutes a substantial and fundamental breach as would defeat the very object of the parties in making the
agreement (Nuñez v. Moises-Palma, G.R. No. 224466; March 27, 2019).

(2) What are the four conditions under Section 4 of the Maceda Law that should be met before the seller
may cancel the contract:
The four conditions under Section 4 of the Maceda Law that should be met before the seller may cancel the
contract are:
1. The defaulting buyer has paid less than two (2) years of installments;
2. The seller must give such defaulting buyer a sixty (60)-day grace period, reckoned from the date the
installment became due;
3. If the buyer fails to pay the installments due at the expiration of the said grace period, the seller must
give the buyer a notice of cancellation and/or a demand for rescission by notarial act; and
4. The seller may actually cancel the contract only after the lapse of thirty (30) days from the buyer’s
receipt of the said notice of cancellation and/or demand for rescission by notarial act (Integrated Credit
and Corporate Services v. Cabreza, G.R. No. 203420, February 15, 2021, Hernando Case citing
Pryce Properties Corp. v. Nolasco, Jr., G.R. No. 203990, August 24, 2020, Hernando Case).

(3) What constitutes a notarial rescission in RA 6552?

A notarial rescission contemplated under RA 6552 is a unilateral cancellation by a seller of a perfected contract
thereunder acknowledged by a notary public and accompanied by competent evidence of identity (Pryce
Properties Corp. v. Nolasco, Jr., G.R. No. 203990, August 24, 2020, Hernando Case).

(4) What are the remedies of the unpaid seller, after ownership of the real property not covered by RA 6552
or the Maceda Law, has been vested to the buyer?
The remedies of the unpaid seller, after ownership of the real property not covered by the Maceda Law, has
been vested to the buyer, are:
1. To compel specific performance by filing an action against the buyer for the agreed purchase price;
or
2. To rescind or resolve the contract of sale either judicially or by a notarial act; and
3. In either (1) or (2), to recover damages for the breach of the contract (Nuñez v. Moises-Palma, G.R.
No. 224466; March 27, 2019).

(5) Discuss the nature of the remedies provided for in Act No. 4122 or the Recto Law.
The three (3) remedies provided for in the Recto Law are alternative and not cumulative such as the exercise
of one would preclude the other remedies. Consequently, should the vendee-mortgagor default in the payment
of two or more of the agreed installments, the vendor-mortgagee has the option to avail of any of these three
(3) remedies: either to exact fulfillment of the obligation, to cancel the sale, or to foreclose the mortgage on the
purchased chattel, if one was constituted (Spouses De la Cruz v. Asian Consumer and Industrial Finance
Corp., G.R. No. 94828, September 18, 1992).

G. Extinguishment of the Sale

(1) What are the requisites of legal redemption in case of a sale of co-owner of his share to a stranger?
(Sa-V-A-Co-Ex-St)
1. The Sale must be before partition;
2. The Vendee must be reimbursed for the price of the sale;
3. There must be Alienation of all or any of the shares of the co-owners;
4. There must be subsisting Co-ownership;
5. The right must be Exercised within the period provided in Article 1623 of the Civil Code; and
Note : The right of legal pre-emption or redemption shall not be exercised except within thirty days
from the notice in writing by the prospective vendor, or by the vendor, as the case may be (CIVIL
CODE, Art. 1623);
6. The sale must be made to a Stranger (CIVIL CODE, Art. 1620).

(2) What are the requisites of legal redemption when a credit or other incorporeal right in litigation is sold?
(Sa-A-C-De-R)
 47

1. There must be a Sale or assignment of a credit or other incorporeal right;

2. The Assignee must have demanded payment from the debtor;
3. The Credit or right must be the subject of a pending litigation at the time of its assignment or sale;
4. The Debtor must pay the assignee the price paid, judicial costs, and interest on the price from the
date of payment; and
5. The Right must be exercised by the debtor within 30 days from the date the assignee demands
(judicially or extrajudicially) payment from him (CIVIL CODE, Art. 1634).

(3) What are the requisites of legal redemption in case of sale of adjacent rural lands not exceeding one
(1) hectare? (Ri-L-A-R-Ve-B)
1. Both the land of the one exercising the Right of redemption and the land sought to be redeemed
must be rural;
2. The Land must be adjacent;
3. There must be Alienation in favor of a third person, not in favor of another adjacent owner;
4. The piece of Rural land alienated must not exceed one (1) hectare or 10,000 sqm. in area;
5. The Vendee must already own some rural land; and
6. The rural land sold must not be separated by Brooks, drains, ravines, roads and other apparent
servitudes from the adjoining land (CIVIL CODE, Art. 1621).

H. Equitable Mortgage
(1) What is an equitable mortgage?
An equitable mortgage is one which although lacking in some formality, or form or words, or other requisites
demanded by a statute, nevertheless reveals the intention of the parties to charge real property as security for
a debt, and contains nothing impossible or contrary to law (Spouses Sy vs. De Vera-Navarro, G.R. No. 239088,
April 3, 2019).

(2) Michael Scofield was the registered owner of the parcel of land. In 1994, he started constructing therein
a seven-door apartment, however, due to budget constraints, he had to borrow the amount of
P140,000.00 from Lincoln Burrows, his brother. The construction of the apartment was completed in
1997. According to Michael, a Deed of Sale was entered into by the parties for the amount of
P140,000.00 and a new title was issued under the name of Lincoln only as a security for the loan and
in trust for Michael who remained the beneficial owner of the subject lot. Michael remained in the
property. Is the Deed of Absolute Sale considered as equitable mortgage?
Yes, the Deed of Absolute Sale is an equitable mortgage. Article 1602 (6) of the Civil Code provides that a
contract shall be presumed to be an equitable mortgage, in any other case where it may be fairly inferred that
the real intention of the parties is that the transaction shall secure the payment of a debt or performance of any
other obligation. The two badges of error herein are: (1) gross inadequacy of the price in the Deed of Absolute
Sale, (2) Continued Possession of the Subject Property by Michael as debtor of Lincoln. First, the consideration
for the subject property was only P140,000.00. Second, Michael remained in possession of the same and
exercised acts assertive of their ownership of the subject property. Hence, the transaction entered into by the
parties is equitable mortgage (Dacquel v. Spouses Dacquel-Sotelo, G.R. No.203946; August 4, 2021,
Hernando Case).

I. Pacto de Retro Sales

(1) Discuss the concept of a pacto de retro sale.
In a sale with right to repurchase (pacto de retro), the title and ownership of the property sold are immediately
vested in the vendee, subject to the resolutory condition of repurchase by the vendor within the stipulated
period. The right of repurchase agreed upon is one of conventional redemption governed by Article 1601, in
relation to Article 1616, of the Civil Code. This right is separate and distinct from the legal redemption granted
to co-owners under Article 1620 of the Civil Code. More importantly, the right to repurchase is separate from
the title or ownership over the property subject of the sale with pacto de retro.

As a rule, the right to repurchase under Article 1601 may only be exercised by the vendor, or his successors.
If so exercised, the ownership of the property reverts back to the vendor or his successor. On the other hand,
if a third person redeems the property on behalf of the vendor, he or she does not become owner of the property
redeemed, but only acquires a lien over the property for the amount advanced for its repurchase. As such, the
third person’s right merely consists of the right to be reimbursed for the price paid to the vendee (Heirs of
Jarque v. Jarque, G.R. No. 196733, November 21, 2018).
 48

II. Lease
A. Kinds of Lease
(1) What is a contract of lease of things?
In a contract of lease of things, one of the parties binds himself to give to another the enjoyment or use of a
thing for a price certain, and for a period which may be definite or indefinite. However, no lease for more than
ninety-nine (99) years shall be valid (CIVIL CODE, Art. 1643).

(2) What is a contract of lease of work or service?

In a contract of lease of work or service, one of the parties binds himself to execute a piece of work or to render
to the other some service for a price certain, but the relation of principal and agent does not exist between
them (CIVIL CODE, Art. 1644).

(3) Can consumable goods be the subject matter of a contract of lease?

Yes, consumable goods can be the subject matter of a contract of lease when they are merely to be exhibited
or when they are accessory to an industrial establishment (CIVIL CODE, Art. 1645).

(4) Can the lease agreement pass onto the heirs upon the death of the lessee?
Yes, the lease can pass onto the heirs upon the death of the lessee. The lease agreement is not a right that is
personal in character, as to be extinguished upon the death of the lessee. Hence, the right is transmissible to
the heirs (Heirs of Dimaculangan v. IAC, G.R. No. L-68021, February 20, 1989).

(5) Is an express stipulation allowing the lessee to sublet the thing leased required before he can do so?
No. When in the contract of lease of things there is no express prohibition, the lessee may sublet the thing
leased, in whole or in part, without prejudice to his responsibility for the performance of the contract toward the
lessor (CIVIL CODE, Art. 1650).

B. Rights and Obligations of Lessor

(1) A and B entered into a lease contract over a plantation owned by A. B complained of being pestered
by squatters who claimed portions of the land as their own property. When B defaulted in his monthly
payments, A filed a complaint for damages. B asserted that A committed breach of contract for his
failure to maintain him in peaceful possession and enjoyment of the leased premises, which entitled
him to suspend payment of rentals. Is B entitled to suspension of payment?
No, B is not entitled to suspension of payment. B had not been disturbed in his legal possession of the property
so as to suspend payment pursuant to Article 1654 of the Civil Code. When he was being pestered and
harassed by the squatters, he had all the right to sue the intruders who had disturbed his physical possession
as provided for in Article 1664. Hence, B had no valid reason to suspend the payment of rentals under Article
1658 (Chua Tee Dee vs. CA, G.R. No. 135721, May 27, 2004).

(2) R advertised a house and lot for sale. Spouses A and B were interested but did not have enough money,
thus they offered to rent the property while they raise the funds to buy the house. R agreed. The
spouses consistently paid rent but started to fall behind sometime thereafter. Realizing that Spouses
A and B had no intention of purchasing, R wrote to inform them that he had decided to terminate the
lease agreement and in the same letter demanded that the spouses vacate the property. The spouses
refused to vacate and pay the rentals, thus, R caused the disconnection of the electrical service over
the property. Spouses A and B invoked their right to suspend the payment of rent after R caused the
temporary disconnection of electrical service after the lease had already expired. Are Spouses A and
B correct?
No, spouses A and B are incorrect. The failure to maintain the lessee in the peaceful and adequate enjoyment
of the property leased contemplated under Article 1658 of the Civil Code does not contemplate all acts of
disturbance. Lessees may suspend the payment of rent only if their legal, and not physical, possession is
disrupted. In this case, while the disconnection of electrical service over the leased premises was not just an
act of physical disturbance but one that is meant to remove the lessees from the leased premises and disturb
their legal possession as lessees, they cannot invoke the right accorded by Article 1658, because the lease
had already expired when R requested for the temporary disconnection of electrical service. R demanded the
 49

spouses to vacate and instead of surrendering the premises, the spouses unlawfully withheld possession of
the property and continued to stay thereat. At that point, R was no longer obligated to maintain Spouses A and
B in the “peaceful and adequate enjoyment of the lease for the entire duration of the contract” (Racelis v.
Spouses Javier, G.R. No. 189609, January 29, 2018).

(3) When can the sublessee be held directly liable to the lessor?
Without prejudice to his obligation toward the sublessor, the sublessee is bound to the lessor for all acts which
refer to the use and preservation of the thing leased in the manner stipulated between the lessor and the lessee
(CIVIL CODE, Art. 1651).

The sublessee is subsidiarily liable to the lessor for any rent due from the lessee. However, the sublessee shall
not be responsible beyond the amount of rent due from him, in accordance with the terms of the sublease, at
the time of the extra-judicial demand by the lessor.

Payments of rent in advance by the sublessee shall be deemed not to have been made, so far as the lessor’s
claim is concerned, unless said payments were effected in virtue of the custom of the place (CIVIL CODE, Art.
1652).

C. Rights and Obligations of Lessee

(1) Upon the expiration of the lease contract, A, the landowner, asked B, the lessee, to vacate the premises
and remove his improvements, B asked for reimbursement of the ornamental and useful expenses,
contending that he is a builder in good faith. What are the rights and obligations of B regarding the
reimbursement of ornamental and useful expenses?
If the lessee makes, in good faith, useful improvements which are suitable to the use for which the lease is
intended, without altering the form or substance of the property leased, the lessor upon the termination of the
lease shall pay the lessee one-half (1/2) of the value of the improvements at that time. Should the lessor refuse
to reimburse said amount, the lessee may remove the improvements, even though the principal thing may
suffer damage thereby. He shall not, however, cause any more impairment upon the property leased than is
necessary.

With regard to ornamental expenses, the lessee shall not be entitled to any reimbursement, but he may remove
the ornamental objects, provided no damage is caused to the principal thing, and the lessor does not choose
to retain them by paying their value at the time the lease is extinguished (CIVIL CODE, Art. 1678).

(2) B leased a lot to E subject to a stipulation “effective until replaced by another agreement and until
such time that the parcel of land is sold.” The lease contract further obliged E (1) to expressly include
a 60-day pre-termination clause in his third-party subleasing agreements to ensure that the property
be always available for sale, and (2) to furnish B with copies of the subleasing agreements. Using the
contract of lease, E entered into various subleases with third parties. E also constructed some concrete
structures on the subject lot. Sometime after, B, without stating any grounds, filed a complaint for
unlawful detainer, unilaterally rescinding the lease of contract. Is B’s act justified?
No, B’s act is not justified. The demand did not indicate that E breached the lease contract. There was no
demand for him to pay rent or comply with any of his obligations under the lease. Instead, it merely informs
him that B had unilaterally terminated the lease and demands the surrender of the property. Also, none of the
circumstances which allow a lessor to judicially and summarily eject the lessee for any of the following causes
under Article 1673 of the Civil Code is present in this case (Quesada v. Bonanza Restaurants, G.R. No.
207500, November 14, 2016).

(3) When can the purchaser in a sale with the right of redemption make use of the power to eject the
lessee?
The purchaser in a sale with the right of redemption can make use of the power to eject the lessee only after
the end of the period for the redemption (CIVIL CODE, Art. 1677).
 50

III. Agency
(1) What are the essential elements of an agency? (CORS)
The essential elements of agency are:
1. There is Consent, express or implied of the parties to establish the relationship;
2. The Object is the execution of a juridical act in relation to a third person;
3. The agents act as a Representative and not for himself; and
4. The agent acts within the Scope of his authority (Rallos v. Felix Go Chan & Sons Realty
Corporation, G.R. No. L-24332, January 31, 1978).

(2) When is a special power of attorney necessary for the acts of an agent to be valid? (PNC-LPGS-GLOW-
IRRD)
The special powers of attorney are necessary in the following cases:
1. To make such Payments as are not usually considered as acts of administration;
2. To effect Novations which put an end to obligations already in existence at the time the agency was
constituted;
3. To Compromise, to submit questions to arbitration, to renounce the right to appeal from a judgment,
to waive objections to the venue of an action, or to abandon a prescription already acquired;
4. To Lease any real property to another person for more than one year;
5. To bind the principal in a contract of Partnership;
6. To obligate the principal as a Guarantor or surety;
7. To bind the principal to render some Service without compensation;
8. To make Gifts, except customary ones for charity or those made to employees in the business
managed by the agent;
9. To Loan or borrow money, unless the latter act be urgent and indispensable for the preservation of
the things which are under administration;
10. To enter into any contract by which the Ownership of an immovable is transmitted or acquired either
gratuitously or for a valuable consideration;
11. To Waive any obligation gratuitously;
12. To accept or repudiate an Inheritance;
13. To Ratify or recognize obligations contracted before the agency;
14. To create or convey Real rights over immovable property; and
15. Any other act of strict Dominion (CIVIL CODE, Art. 1878).

(3) A Corp (A) and V Corp (V) executed a Memorandum of Agreement (MOA) where V paid P20 million as
a deposit to A to buy its chicken dressing plant. The parties also executed a Toll Agreement where A
agreed to dress the chickens supplied by V for a toll fee. V made its offer to purchase but A did not
accept the offer. Thus, A needed to return the said deposit. The parties then agreed that the deposit
shall be continuously offset with 15% of the toll fees to be paid by V until satisfied. More than two years
later, V filed a complaint for sum of money with damages against A alleging that A was liable for the
balance from the P20 million deposit. V stated that it was based not only on the toll fees reflected on
the original Toll Agreement but also on the verbal amendments to the toll fees implemented by the
parties. A disputed the computation made arguing that the amount was inaccurate as it was based on
the alleged verbal amendments to the toll fees, which were not binding on A as they were entered into
by V and A’s Finance Manager, C, who allegedly had no authority to amend the original Toll Agreement
from A's Board of Directors. Is A bound by the conduct of C?
Yes, A is bound by the conduct of C. Apparent authority is determined by the acts of the principal and not by
the acts of the agent. As applied to corporations, the doctrine of apparent authority provides that a corporation
is estopped from denying the officer’s authority if it knowingly permits such officer to act within the scope of an
apparent authority, and it holds him out to the public as possessing the power to do those acts. The conduct
by which A clothed C with authority is evident and A never contested the amended toll fees. Hence, A is bound
by the conduct of C (Agro Food and Processing Corp. v. Vitarich Corp., G.R. No.217454, January 11, 2021,
Hernando Case).

(4) What are the general obligations of an agent? (CDF)

The general obligations of an agent are:
1. To Carry out the agency which he has accepted;
2. To answer for the Damages which, through his non-performance, the principal may suffer; and
3. To Finish the business already begun on the death of the principal, should delay entail any danger
(CIVIL CODE, Art. 1884).
 51

(5) When may an agent sue or be sued in his own name? (UPO)
An agent may sue or be sued solely in its own name and without joining the principal when the following
elements concur:
1. The agent acted for the benefit of an Undisclosed principal; and
2. The transaction did not involve the Property of the principal
3. The agent acted in his Own name during the transaction (CIVIL CODE, Art. 1883; V-Gent, Inc. v.
Morning Star Travel and Tours, Inc., G.R. No. 186305, July 22, 2015).

Note: When these elements are present, the agent becomes bound as if the transaction were his own (CIVIL
CODE, Art. 1883).

(6) What are the obligations of the principal? (CARPI)

The obligations of the principal to the agent are:
1. To Comply with all the obligations which the agent may have contracted in his name and within the
scope of his authority (CIVIL CODE, Art. 1910);
2. To Advance, should the agent so request, the sums necessary for the execution of the agency (CIVIL
CODE, Art. 1912, Par 1);
3. To Reimburse the agent for all advances made by him, provided the agent is free from all fault (CIVIL
CODE, Art. 1912, Par 2);
4. To Pay the agent the compensation agreed upon or the reasonable value of the latter’s services
(CIVIL CODE, Art. 1875); and
5. To Indemnify the agent for all the damages which the execution of the agency may have caused the
latter, without fault or negligence on his part (CIVIL CODE, Art. 1913).

(7) What are the modes of extinguishment of an agency? (EDWARD)

Agency is extinguished by:
1. The Expiration of the period for which the agency was constituted;
2. The Death, civil interdiction, insanity, or insolvency of the principal or of the agent;
3. The Withdrawal of the agent;
4. The Accomplishment of the object or purpose of the agency;
5. Its Revocation; and
6. The Dissolution of the firm or corporation which entrusted or accepted the agency (CIVIL CODE, Art.
1919).

(8) A entered into a financing agreement with B in order to finance the former’s imports. A also granted B
a Special Power of Attorney (SPA) which authorized the latter to represent A and engage in business
transactions. A was later surprised by a service of an alias writ of execution to enforce judgment
obtained by XYZ Bank against him despite having submitted already an amortization plan to settle his
account. He learned that the execution has been produced due to a derogatory information received
by XYZ Bank from B. A also learned of the several acts of disloyalty done by B. These caused A to
revoke the SPA previously given to B. May the principal validly revoke an agency coupled with
interest?
Yes, the principal may validly revoke an agency even if coupled with interest. The power of attorney can be
made irrevocable by contract only in the sense that the principal may not recall it at his pleasure; but coupled
with interest or not, the authority certainly can be revoked for a just cause, such as when the attorney-in-fact
betrays the interest of the principal, as what happened in this case. The irrevocability of the power of attorney
may not be used to shield the perpetration of acts in bad faith, breach of confidence, or betrayal of trust, by the
agent for that would amount to holding that a power coupled with an interest authorizes the agent to commit
frauds against the principal (Coleongco v. Claparols, G.R. No. L-18616, March 31, 1964).

(9) CMS is a forest concessionaire engaged in the logging business, while D is engaged in the business
of exporting and selling logs and lumber. In 1957, CMS and D entered into a contract of agency whereby
the former appointed the latter as its exclusive export and sales agent for all logs that the former may
produce, for a period of five (5) years. About six (6) months prior to the expiration of the agreement,
CMS discovered that D had used S as agent, representative, or liaison officer in selling CMS’ logs in
Japan. After this discovery, CMS sold and shipped logs directly to several firms in Japan without the
aid or intervention of D. Does the act of CMS in selling its logs constitute revocation of agency?
Yes, the act of CMS constitutes an implied revocation of the contract of agency. The principal may revoke a
contract of agency at will, and such revocation may be express or implied, and may be availed of even if the
period fixed in the contract of agency has not yet expired. As the principal has this absolute right to revoke the
agency, the agent cannot object thereto; neither may he claim damages arising from such revocation, unless
it is shown that such was done to evade the payment of agent’s commission. Article 1924 of the Civil Code
 52

provides that the agency is revoked if the principal directly manages the business entrusted to the agent,
dealing directly with third persons. Here, CMS appointed D as its agent for the sale of its logs to Japanese
firms. Yet, during the existence of the contract of agency, CMS sold its logs directly to several Japanese firms
(CMS Logging, Inc. v. CA, G.R. No. L-41420, July 10, 1992).

IV. Credit Transactions

A. Loans
(1) What is a contract of mutuum?
By the contract of loan, one of the parties delivers to another money or other consumable thing, upon the
condition that the same amount of the same kind and quality shall be paid, in which case the contract is simply
called a loan or mutuum (CIVIL CODE, Art. 1933).

(2) Distinguish commodatum from mutuum. (2017 Bar)

Commodatum is distinguished from mutuum as follows:
1. As to what must be returned: In mutuum, the debtor shall return to the creditor an equivalent amount
of the subject matter, while in commodatum, the same thing that was delivered should be returned;
2. As to cause: Mutuum may be gratuitous or onerous, while commodatum is gratuitous;
3. As to transmission of ownership: The borrower in mutuum acquires ownership, while in
commodatum, one does not acquire ownership;
4. As to object: Mutuum refers to personal property, while commodatum may refer to real and personal
property (CIVIL CODE, Arts. 1933, 1937, and 1953).

(3) Can a contract of loan be an open-ended contract or a contract with an indefinite period?
No. A period is contemplated in a contract of loan and it cannot be an “open-ended contract” or a contract with
an indefinite period. The distinction between “open-ended contracts” or contracts with indefinite period and
“term contracts” or contracts for a specific period has no legal basis as far as a loan, whether commodatum or
mutuum, is concerned. As provided in Article 1933 of the Civil Code, by the contract of loan, one of the parties
delivers to another, either something not consumable so that the latter may use the same for a certain time
and return it, in which case the contract is called a commodatum; or money or other consumable thing, upon
the condition that the same amount of the same kind and quality shall be paid, in which case the contract is
simply called a loan or mutuum (Bulatao v. Estonactoc, G.R. No. 235020, December 10, 2019).

(4) What are the contracts involved in a credit card transaction?

The three contracts involved in every credit card transaction are:
1. The sales contract between the credit card holder and the merchant or the business establishment
which accepted the credit card;
2. The loan agreement between the credit card issuer and the credit card holder; and lastly,
3. The promise to pay between the credit card issuer and the merchant or business establishment (Rico
v. Union Bank of the Philippines, G.R. No. 210928. February 14, 2022, Hernando Case).

(5) What are the two types of interest?

The two types of interest are monetary interest and compensatory interest. Interest as a compensation fixed
by the parties for the use or forbearance of money is referred to as monetary interest, while interest that may
be imposed by law or by courts as penalty for damages is referred to as compensatory interest (Hun Hyung
Park v. Eung Won Choi, G.R. No. 220826, March 27, 2019).

(6) What are the requisites for the payment of monetary interest in a transaction? (SW)
The concurrence of the two conditions is required for the payment of monetary interest:
1. There was an express Stipulation for the payment of interest; and
2. The agreement for the payment of interest was reduced in Writing (Development Bank of the
Philippines v. Heirs of Danico, G.R. No. 196476, September 28, 2020, Hernando Case).
 53

(7) What are the guidelines on the imposition of legal interest?

With regard to an award of interest in the concept of actual and compensatory damages, the rate of interest,
as well as the accrual thereof, is imposed, as follows:

1. When the obligation is breached, and it consists in the payment of a sum of money, (i.e., a loan or
forbearance of money, goods, credits or judgments), the interest due shall be that which is stipulated by the
parties in writing, provided it is not excessive and unconscionable, which, in the absence of a stipulated
reckoning date, shall be computed from default, (i.e., from extrajudicial or judicial demand in accordance with
Article 1169 of the Civil Code), UNTIL FULL PAYMENT, without compounding any interest unless compounded
interest is expressly stipulated by the parties, by law or regulation. Interest due on the principal amount accruing
as of judicial demand shall SEPARATELY earn legal interest at the prevailing rate prescribed by the Bangko
Sentral ng Pilipinas, from the time of judicial demand UNTIL FULL PAYMENT;

2. In the absence of stipulated interest, in a loan or forbearance of money, goods, credits or judgments, the
rate of interest on the principal amount shall be the prevailing legal interest prescribed by the Bangko Sentral
ng Pilipinas, which shall be computed from default, (i.e., from extrajudicial or judicial demand in accordance
with Article 1169 of the Civil Code), UNTIL FULL PAYMENT, without compounding any interest unless
compounded interest is expressly stipulated by law or regulation. Interest due on the principal amount accruing
as of judicial demand shall SEPARATELY earn legal interest at the prevailing rate prescribed by the Bangko
Sentral ng Pilipinas, from the time of judicial demand UNTIL FULL PAYMENT; and

3. When the obligation, not constituting a loan or forbearance of money, goods, credits or judgments, is
breached, an interest on the amount of damages awarded may be imposed in the discretion of the court at the
prevailing legal interest prescribed by the Bangko Sentral ng Pilipinas, pursuant to Articles 2210 and 2011 of
the Civil Code. No interest, however, shall be adjudged on unliquidated claims or damages until the demand
can be established with reasonable certainty. Accordingly:

a. Where the amount of the claim or damages is established with reasonable certainty, the prevailing legal
interest shall begin to run from the time the claim is made extrajudicially or judicially (Art. 1169, Civil
Code) UNTIL FULL PAYMENT; but
b. When such certainty cannot be so reasonably established at the time the demand is made, the interest
shall begin to run only from the date of the judgment of the trial court (at which time the quantification
of damages may be deemed to have been reasonably ascertained) UNTIL FULL PAYMENT.

Note: The actual base for the computation of the interest shall, in any case, be on the principal amount finally
adjudged, without compounding any interest unless compounded interest is expressly stipulated by law or regulation
(Lara’s Gifts & Decors, Inc., v. Midtown Industrial Sales, Inc., G.R. No. 225433, August 28, 2019).

Additional Note: The guidelines stated above were further amended in Lara’s Gifts & Decors, Inc., v. Midtown
Industrial Sales, Inc., G.R. No. 225433, September 30, 2022, which is beyond the cut-off date of June 30, 2022.

(8) After extrajudicial demand is made, should the time in which an injunctive order preventing a party
from paying was in effect be excluded in the computation of the legal interest?
No, the legal interest is still due during the time in which the injunction is in effect. In the absence of stipulation,
the rate of interest shall be 6% (the rate of interest of 12% applies only until June 30, 2013) per annum to be
computed from default, i.e., from judicial or extrajudicial demand under and subject to the provisions of Article
1169 of the Civil Code (Equitable PCI Bank v. Manila Adjusters & Surveyors, Inc., G.R. No. 166726, November
25, 2019, Hernando Case).

B. Deposit
(1) Are deposits of money in banks and similar institutions, such as savings deposits and current account
deposits, contracts of depositum?
No. Deposits of money in banks and similar institutions, such as savings deposits and current account deposits
are in the nature of a simple loan or mutuum (The Metropolitan Bank and Trust Company v. Rosales, G.R. No.
183204, January 13, 2014). In fact, fixed, savings, and current deposits of money in banks and similar
institutions shall be governed by the provisions concerning simple loan (CIVIL CODE, Art. 1980).
 54

(2) X deposited Php20,000.00 pesos with Y Bank. The money was placed in a box, properly sealed and
marked and identified as X’s property, and such box was found in the vault of Y Bank. Subsequently,
Y Bank was declared insolvent. During the insolvency proceedings, X intervened claiming the
Php20,000.00 deposited does not constitute a part of the assets of Y Bank that will be placed in the
possession of the receiver or assignee because he is still the owner.
(a) Is X the owner of the money?
Yes, X is the owner of Php20,000. Article 1962 of the Civil Code provides that deposit is constituted from
the moment a person receives a thing belonging to another, with the obligation of safely keeping it and of
returning the same. Here, the contract that was perfected is a contract of deposit. Consequently, as the
purpose of the contract is for safekeeping, the ownership of the amount placed in the box was not
transmitted to Y Bank when the deposit was constituted. Therefore, X can properly claim that the amount
cannot constitute a part of the assets of Y Bank that will be placed in possession of the receiver or
assignee, because he is still the owner thereof.

(b) Suppose in the above problem, the Php20,000 was deposited in the current account of X in Y Bank
and was not placed in a box. Would that make any difference in your answer?
Yes, as this time the contract is a simple loan. Article 1962 of the Civil Code provides that if the
safekeeping of the thing delivered is not the principal purpose of the contract, there is no deposit but some
other contract. There is a debtor-creditor relationship between the bank and its depositor. The bank is the
debtor and the depositor is the creditor. The depositor lends the bank money and the bank agrees to pay
the depositor on demand. The savings deposit agreement between the bank and the depositor is the
contract that determines the rights and obligations of the parties (Central Bank of the Phils. v. Citytrust
Banking Corp., G.R. No. 141835, February 4, 2009). Thus, X cannot, in this case, claim ownership over
the money deposited.

(3) Discuss the contractual relation of precarium.

Precarium is a kind of commodatum whereby the bailor may demand the thing loaned at will 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 (CIVIL CODE, Art. 1947; Pajuyo v. Court of
Appeals, G.R. No. 146364, June 3, 2004).

C. Guaranty and Suretyship

(1) C, together with his business colleagues, ventured into a business under the registered name GE, Inc.,
obtained a loan amounting to P2,000,000.00 from Bank DO, where V, the spouse of C, was an employee.
As a consequence, a Deed of Suretyship was executed by Spouses C and V and other stockholders.
Subsequently, Bank DO refused to release the retirement benefits of V and the owner's copy of the
certificate of title over a parcel of land unless she and C would execute a real estate mortgage over the
said parcel of land to secure GE, Inc.’s loan, to which the latter acceded, being pressed for money.
Spouses C and V offered to pay the latter the amount of P500,000.00 to redeem the collateral. However,
Bank DO applied it to the payment of the interest due on GE, Inc.'s loan. Further, when GE, Inc.
defaulted in its payment of the loan, Bank DO foreclosed the subject property and scheduled its auction
sale. Bank DO argued that it was merely an exercise of its right as a creditor to proceed against
Spouses C and V who are solidarily liable under the Deed of Suretyship. Does Bank DO have the right
to apply the P500,000.00 offer for redemption made by Spouses C and V to the interest on GE, Inc’s
loan by virtue of the Deed of Suretyship?
No, Bank DO has no right to apply the P500,000.00 to GE, Inc.’s loan, because the right of the creditor to
proceed against the surety refers to the right to sue the surety independently of the right to sue the principal or
the other sureties. By "proceed," the law means to "sue" or to "institute proceedings" for collection or
enforcement of the surety contract. The creditor's right to proceed against the surety does not give him any
right to deprive said surety of his property without due process of the law. Thus, while Bank DO has the right
to proceed against Spouses C and V, being solidarily liable under the Deed of Suretyship, it must do so through
lawful means, i.e., through the institution of proceedings for collection or enforcement of the surety contract. If
Bank DO indeed rejected the offer for redemption, the proper course of action for them was to return the
amount to Spouses C and V or inquire if the latter would be interested in applying the payment to GE, Inc.'s
due interest. Bank DO may not simply retain the money and apply it to another account under the excuse that
it was exercising its right as a creditor to collect from the sureties (Spouses Genotiva v. Equitable -PCI Bank,
G.R. No. 213796; June 28, 2021, Hernando Case).
 55

(2) RL Corp bound itself to construct a condominium for DL Corp and appointed AF Inc. as its
subcontractor. As sub-contractor, AF Inc. secured a Performance Bond from ML Co. Under the terms
of the performance bond, ML Co. bound itself to pay DL Corp upon first demand. Because of the poor
progress of the works, DL Corp demanded liquidation of the performance bond and terminated the
sub-contract agreement with AF Inc. When negotiations between the parties fell through, DL Corp
reiterated its demand for liquidation but ML Co. denied the claim. Thus, DL Corp filed a case against
AF Inc., and ML Co., as surety.
(a) Distinguish suretyship from guaranty.
A surety is an insurer of the debt; a guarantor is an insurer of the solvency of the debtor. A suretyship is
an undertaking that the debt shall be paid; a guaranty, an undertaking that the debtor shall pay. A surety
binds himself to perform if the principal does not, without regard to his ability to do so; a guarantor, does
not contract that the principal will pay, but simply that he is able to do so. In other words, a surety
undertakes directly for the payment and is so responsible at once if the principal debtor makes default,
while a guarantor contracts to pay if, by the use of due diligence, the debt cannot be made out of the
principal debtor (The Mercantile Insurance Co., Inc. v. DMCI-Laing Construction, Inc., G.R. No. 205007,
September 16, 2019).

(b) Is the Performance Bond considered as a contract of surety, making ML Co.’s liability primary?
Yes, the performance bond is considered as a contract of surety. While the contract of surety stands
secondary to the principal obligation, the surety’s liability is direct, primary and absolute, albeit limited to
the amount for which the contract of surety is issued. The surety’s liability attaches the moment a demand
for payment is made by the creditor. It is not necessary that the original debtor first failed to pay before
the surety could be made liable. Here, while the bond in this case is “conditioned” upon first demand, the
terms of the agreement unequivocally indicate that ML Co.’s liability consists of a pure obligation since
such liability attaches immediately upon demand. Accordingly, the requirement of “first demand” in this
case should be understood in light of Article 1169 of the Civil Code, wherein the debtor is deemed to be
in delay upon judicial or extrajudicial demand (Id.).

(3) Discuss the concept of a continuing guaranty.

A continuing guaranty is one that covers all transactions, including those arising in the future, which are within
the description or contemplation of the contract of guaranty, until the expiration or termination thereof. Under
Article 2053 of the Civil Code, a guaranty may be given to secure even future debts, the amount of which may
not be known at the time the guaranty is executed. A continuing guaranty is not limited to a single transaction,
but contemplates a future course of dealing, covering a series of transactions, generally for an indefinite time
or until revoked. It is prospective in its operation and is generally intended to provide security with respect to
future transactions within certain limits, and contemplates a succession of liabilities, for which, as they accrue,
the guarantor becomes liable (Bank of Commerce v. Spouses Flores, G.R. No. 174006, December 8, 2010).

(4) Discuss the concept of the benefit of division.

Should there be several guarantors of only one debtor and for the same debt, the obligation to answer for the
same is divided among all. The creditor cannot claim from the guarantors except the shares which they are
respectively bound to pay, unless solidarity has been expressly stipulated. The benefit of division against the
co-guarantors ceases in the same cases and for the same reasons as the benefit of excussion against the
principal debtor (CIVIL CODE, Art. 2065).

D. Real Estate Mortgage

(1) What are the requisites to a valid contract of mortgage? (SOFR)
The following requisites are essential to the contract of mortgage:
1. That it be constituted to Secure the fulfillment of a principal obligation;
2. That the mortgagor be the absolute Owner of the thing mortgaged;
3. That the persons constituting the mortgage have the Free disposal of their property, and in the
absence thereof, that they be legally authorized for the purpose; and
4. That the document in which it appears be Recorded in the Registry of Property. If the instrument is
not recorded, the mortgage is nevertheless binding between the parties (CIVIL CODE, Arts. 2085 and
2125).
 56

(2) What are the elements of pactum commissorium?

The elements for pactum commissorium are as follows:
1. That there should be a pledge or mortgage wherein property is pledged or mortgaged by way of
security for the payment of the principal obligation; and
2. That there should be a stipulation for an automatic appropriation by the creditor of the thing pledged
or mortgaged in the event of non-payment of the principal obligation within the stipulated period
(Spouses Pen v. Spouses Julian, G.R. No. 160408, January 11, 2016).

Note: The mortgagee’s consolidation of ownership over the mortgaged property upon the mortgagor’s mere failure to
pay the obligation is the essence of pactum commissorium (Dacquel v. Spouses Sotelo, G.R. No. 203946, August 4,
2021, Hernando Case).

(3) Is personal notice to the mortgagor in extrajudicial foreclosure proceedings necessary?

As a general rule, such personal notice is not required, because Section 3 of Act No. 3135, as amended,
requires only the posting of the notice of sale in three (3) public places and the publication of that notice in a
newspaper of general circulation. An exception to this rule is when the parties stipulate that personal notice is
additionally required to be given to the mortgagor. Failure to abide by the general rule or its exception renders
the foreclosure proceedings null and void (Panacan Lumber Co. v. Solidbank Corp., G.R. No. 226272.
September 16, 2020; Hernando Case).

(4) Is the purchaser of property in an extra-judicial foreclosure sale entitled to the possession of the
property during the redemption period?
Yes. The purchaser in an extra-judicial foreclosure sale is entitled to the possession of the property and can
demand that he be placed in possession of the same either during (with bond) or after the expiration (without
bond) of the redemption period therefor. Section 7 of Act No. 3135 authorizes the purchaser to petition for a
writ of possession during the redemption period by filing an ex parte motion under oath for that purpose. The
order for a writ of possession issues as a matter of course upon the filing of the proper motion and the approval
of the corresponding bond. No discretion is left to the court (Spouses Marquez v. Spouses Alindog, G.R. No.
184045, January 22, 2014).

(5) Is a blanket mortgage or dragnet clause valid?

Yes, provided that the future debts secured by the real estate mortgage must be specifically described in the
mortgage contract. An obligation is not secured by a mortgage unless it comes fairly within the terms of the
mortgage contract (Panacan Lumber Co. v. Solidbank Corp., G.R. No. 226272, September 16, 2020,
Hernando Case).

Note: As a general rule, a mortgage liability is usually limited to the amount mentioned in the contract.
However, the amounts named as consideration in a contract of mortgage do not limit the amount for which the
mortgage may stand as security if from the four corners of the instrument the intent to secure future and other
indebtedness can be gathered. Alternatively, while a real estate mortgage may exceptionally secure future
loans or advancements, these future debts must be specifically described in the mortgage contract (Id.).

(6) E entrusted her title over the lot where she is residing to P, her nephew, for safekeeping because of
her poor eyesight. P, a gambler, prepared a Special Power of Attorney (SPA) empowering him to
mortgage the lot. E’s signature was forged. With the help of J who represented herself as E, M Bank
granted a loan to P secured by a mortgage on E’s lot. Due to nonpayment, M Bank foreclosed the
mortgage and was declared the highest bidder. Title was later registered in the name of the bank. When
E was notified that she should vacate the premises, she filed a complaint to nullify the loan with
mortgage, the auction sale and the title of M Bank on the ground that the bank is not a mortgagee in
good faith. Decide. (2016 Bar)
The mortgage agreement is null and void as against E, and cannot be enforced against her. While a mortgagee
in good faith and for value is entitled to protection, a bank is not relieved from the duty of exercising the due
diligence required of banking institutions simply because the titles offered as security were clean of any
encumbrances or lien. Banks are required to exercise the highest degree of diligence in the conduct of their
affairs and expected to exercise more care and prudence than private individuals in their dealings, even those
involving registered property, for their business is affected with public interest. In granting the loan, the bank
should not have been content merely with the SPA, considering the presence of circumstances indicating the
need for a thorough investigation. Having been wanting in care and prudence, the bank cannot be deemed to
be an innocent mortgagee (Prudential Bank v. Rapanot, G.R. No. 191636, January 16, 2017).
 57

E. Antichresis
(1) What is a contract of antichresis?
A contract of antichresis is one where the creditor acquires the right to receive the fruits of an immovable of
his debtor, with the obligation to apply them to the payment of the interest, if owing, and thereafter to the
principal of his credit (CIVIL CODE, Art. 2132).

(2) When is a contract of antichresis void?

The contract of antichresis shall be void if the amount of the principal and of the interest are not specified in
writing (CIVIL CODE, Art. 2134).

V. Compromise
(1) What are the instances where compromise is not allowed? (SMaL-FuCoLeC)
No compromise upon the following questions shall be valid:
1. The civil Status of persons;
2. The validity of a Marriage or a legal separation;
3. Any ground for Legal separation;
4. Future support;
5. The jurisdiction of Courts;
6. Future Legitime (CIVIL CODE, Art. 2035); and
7. Criminal Liability (CIVIL CODE, Art. 2034).

VI. Quasi-Contacts
(1) What is the basis of a quasi-contract?
Generally, it may be said that a quasi-contract is based on the presumed will or intent of the obligor dictated
by equity and by the principles of absolute justice. Examples of these principles are: (1) it is presumed that a
person agrees to that which will benefit him; (2) nobody wants to enrich himself unjustly at the expense of
another; or (3) one must do unto others what he would want others to do unto him under the same
circumstances (Padcom Condominium Corp. v. Ortigas Center Association, Inc., G.R. No. 146807, May 9,
2002).

A. Negotiorum Gestio
(1) Discuss the principle of negotiorum gestio.
Under the principle of negotiorum gestio, whoever voluntarily takes charge of the agency or management of
the business or property of another, without any power from the latter, is obliged to continue the same until the
termination of the affair and its incidents, or to require the person concerned to substitute him, if the owner is
in a position to do so. This juridical relation does not arise in either of these instances: (1) When the property
or business is not neglected or abandoned; (2) If in fact the manager has been tacitly authorized by the owner
(CIVIL CODE, Art. 2144).

B. Solutio Indebiti
(1) What are the requisites of solutio indebiti?
To establish the application of solutio indebiti, two conditions must concur:
1. A payment is made when there exists no binding relation between the payor who has no duty to pay,
and the person who received the payment, and
2. The payment is made through mistake, and not through liberality or some other cause (Domestic
Petroleum Retailer Corp. v. Manila International Airport Authority, G.R. No. 210641, March 27, 2019).

(2) Pursuant to RA 8240 which took effect on January 1, 1997, an ad valorem tax on liquors was added
which leads to a 12% increase on excise tax of Beer Belly, one of the products of SM. The 12% increase
was based on the Revenue Regulation (RR) issued by the Secretary of Finance. SM contended that the
RR did not conform to the letter and intent of RA 8240, SM filed a claim of tax refund or credit of the
 58

alleged excess excise taxes it paid on its Beer Belly product. The Commissioner of Internal Revenue
(CIR) averred that the claim has prescribed arguing that under the Advance Payment or Deposit
scheme, the filing of the returns and supporting documents may be submitted even a week after the
actual removals. SM posited, however, that the principle of solutio indebiti applies to the Government
and that under Article 1145 of the Civil Code, actions upon a quasi-contract must be filed within six (6)
years. Is SM correct?
No, SM is not correct because the six-year prescriptive period is provided in the Civil Code under the principle
of solutio indebiti. There is solutio indebiti where: (1) payment is made when there exists no binding relation
between the payor, who has no duty to pay, and the person who received the payment; and (2) the payment
is made through mistake, and not through liberality or some other cause. SM is misguided when it relied upon
the six (6)-year prescriptive period for initiating an action on the ground of quasi-contract or solutio indebiti
under Article 1145 of the Civil Code. Given that the excise taxes on the Beer Belly product of SM is imposed
and collected under the Tax Reform Act of 1997, then its claim for refund or credit of said taxes illegally or
erroneously collected shall logically be governed by the same law, including the applicable prescriptive period
for such claim (Commissioner of Internal Revenue v. San Miguel Corporation G.R. No. 180740 & 180910,
November 11, 2019, Hernando Case).

VII. Torts and Damages

A. Principles
(1) What are the requisites of quasi-delict? (DNC)
A quasi-delict has the following elements:
1. The Damage suffered by the plaintiff;
2. The act or omission of the defendant supposedly constituting fault or Negligence; and
3. The Causal connection between the act and the damage sustained by the plaintiff, or proximate cause
(VDM Trading, Inc. v. Carungcong, G.R. No. 206709, February 6, 2019).

(2) Discuss the difference between actions based on contractual negligence and actions based on quasi-
delicts.
Actions based on contractual negligence and actions based on quasi-delicts differ in terms of conditions,
defenses, and proof. They generally cannot co-exist. Once a breach of contract is proved, the defendant is
presumed negligent and must prove not being at fault. In a quasi-delict, however, the complaining party has
the burden of proving the other party’s negligence. If a contracting party’s act that breaches the contract would
have given rise to an extracontractual liability had there been no contract, the contract would be deemed
breached by a tort, and the party may be held liable under Article 2176 and its related provisions. However, if
the act complained of would not give rise to a cause of action for a quasi-delict independent of the contract,
then the provisions on quasi-delict or tort would be inapplicable (Orient Freight International, Inc., v. Keihin-
Everett Forwarding Co., Inc., G.R. No. 191937, August 9, 2017).

(3) What are the requisites in order to be liable for damages under the abuse of rights principle? (LBI)
In order to be liable for damages under the abuse of rights principle, the following requisites must concur:
1. The existence of a Legal right or duty;
2. Which is exercised in Bad faith; and
3. For the sole Intent of prejudicing or injuring another (Van De Brug v. Philippine National Bank, G.R.
No. 207004, June 06, 2018).

Note: The SC explained that the source of the obligation being espoused under Chapter 2, Human Relations of the
Preliminary Title of the Civil Code (which includes Articles 19, 20, and 21) is quasi-delict (Van De Brug v. Philippine
National Bank, G.R. No. 207004, June 6, 2018).

Additional Note: The foregoing three-fold test is not a hard and fast rule. “The principle of abuse of rights may be
invoked if it is proven that a right or duty was exercised in bad faith, regardless of whether it was for the sole intent of
injuring another. Thus, it is the absence of good faith which is essential for the application of this principle” (Tocoms
Philippines, Inc. v. Philips Electronics and Lighting, Inc., G.R. No. 214046, February 5, 2020).
 59

B. Classification of Torts
(1) What are the classification of torts? (INS)
The classification of torts are as follows:
1. Intentional – It include conducts where the actor desires to cause the consequences of his act or
believes the consequences are substantially certain to result from it. Intentional torts include assault,
battery, false imprisonment, defamation, invasion of privacy, and interference of property.
2. Negligent – It involves voluntary acts or omissions that result in injury to others, without intending to
cause the same. The actor fails to exercise due care in performing such acts or omissions.
3. Strict Liability – It is when the person is made liable independent of fault or negligence upon
submission of proof of certain facts. When strict liability is imposed, the conduct is generally not
wrongful in itself but the wrong consists in causing harm by engaging in certain types of risky activities
(AQUINO, Torts and Damages (2019 ed.) pp. 3-7).

C. The Tortfeasor
(1) What is the liability of joint tortfeasors?
The liability of joint tortfeasors is solidary since the responsibility of two or more persons who are liable for
quasi-delict is solidary (CIVIL CODE, Art. 2194).

(2) A was scheduled for her third cesarean section. Being cleared after a preoperative physical
examination, she gave birth to a healthy baby boy. Hours after her operation, A complained of
headache, chilly sensation, restlessness, and shortness of breath. As the nurses failed to check on A,
A initiated to ask for oxygen as she was already becoming cyanotic (bluish) for lack of oxygen. The
oxygen arrived almost 20 minutes later. It was then found out that she was suffering from pulmonary
edema and was subsequently transferred to the Incentive Care Unit. Since her condition did not
improve, she was transferred to WBC Hospital. Here, she was found to be suffering from Rheumatic
Heart Disease which resulted to a cardiopulmonary arrest and subsequently brain damage. A lost the
use of her speech, eyesight, hearing, and limbs. She was discharged, but still in vegetative state. A
case was filed against RBC Hospital along with its health personnel for negligence on the basis of an
expert witness testimony that there was a delay in the administration of oxygen caused by the delayed
response of the nurses in RBC Hospital. Assuming that the nurses are negligent, can RBC Hospital be
held directly liable for the negligence on the part of the nurses?
Yes, RBC Hospital is liable. Under Article 2180, an employer like RBC hospital may be held liable for the
negligence of its employees based on its responsibility under a relationship of patria potestas. The liability of
the employer under this provision is “direct and immediate; it is not conditioned upon a prior recourse against
the negligent employee or a prior showing of the insolvency of that employee.” The employer may only be
relieved of responsibility upon a showing that it exercised the diligence of a good father of a family in the
selection and supervision of its employees. The rule is that once negligence of the employee is shown, the
burden is on the employer to overcome the presumption of negligence on the latter’s part by proving
observance of the required diligence, which in this case, they failed to do (Our Lady of Lourdes Hospital v.
Sps. Capanzana, G.R. No. 189218, March 22, 2017).

D. Quasi-Delict vs. Culpa Contractual vs. Culpa Criminal

(1) Distinguish Culpa Aquiliana, Culpa Contractual, and Culpa Criminal.

Culpa Aquiliana Culpa Contractual Culpa Criminal

As to basis of Fault or negligence resulting in damage or injury Obligation arises from the
liability to another (CIVIL CODE, Art. 2176) breach of the contract
because of defendant’s failure
to exercise due care in its
performance (CIVIL CODE,
Art. 1173)
Existence of a law
clearly punishing
the act (Nullum
crimen sine lege)
 60

As to the Direct, substantive, and independent Negligence is merely

nature of the incidental to the performance Direct,
negligence of an existing obligation substantive, and
because of a contract independent

As to criminal Not necessary Not necessary

intent Necessary

As to quantum Preponderance of evidence (RULES OF Preponderance of evidence

of proof COURT, RULE 133, Section 1) (RULES OF COURT, RULE Proof beyond
133, Section 1) reasonable doubt
(Barredo v.
Garcia, G.R. No.
L-48006, July 8,
1942)

As to the None Exists

existence of None
pre-contractual
obligation

As to defense A complete and proper defense as regards Not a complete and proper
of “Good father vicarious liability (CIVIL CODE, Art. 2180, Par. 8) defense in the selection and Not a proper
of a family” supervision of employees but defense
can mitigate liability for
damages (Cangco v. Manila
Railroad Co., G.R. No. L-
12191, October 14, 1918)

As to None. Injured party must prove the negligence of Presumption of negligence

presumption of the defendant (Cangco v. Manila Railroad Co., immediately attaches by a None. The
negligence supra) failure of a covenant or its innocence of the
tenor (FGU Insurance Corp. v. accused is
Negligence is presumed in the following G.P. Sarmiento Trucking presumed until
instances: Corp., G.R. No. 141910, contrary is proven
August 6, 2002)
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 (CIVIL CODE,
Art. 2184);
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 (CIVIL CODE, Art.
2185); and
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 the possession or
use thereof is indispensable in his
occupation or business (CIVIL CODE,
Art. 2188).

As to nature of Private Right Private Right

right violated Public Right
 61

As to Art. 2176; Arts. 1172-1174 of the Civil Code Arts. 1170-1174 of the Civil
Governing Law Code Art. 365 of the
Revised Penal
Code

E. Proximate Cause
(1) What is proximate cause?
Proximate cause is defined as that cause, which, in natural and continuous sequence, unbroken by any efficient
intervening cause, produces the injury, and without which the result would not have occurred (Spouses Latonio
v. McGeorge Food Industries, G.R. No. 206184, December 6, 2017).

(2) Is proof of proximate causation necessary in order to prove breach of contract?

No. The doctrine of proximate cause is applicable only in actions for quasi-delict, not in actions involving breach
of contract. The doctrine is a device for imputing liability to a person where there is no relation between him
and another party. In such a case, the obligation is created by law itself. But, where there is a pre-existing
contractual relation between the parties, it is the parties themselves who create the obligation, and the function
of the law is merely to regulate the relation thus created (Calalas v. Court of Appeals, G.R. No. 122039 May
31, 2000).

Note: While proximate causation need not be established to prove breach of contract, the moment breach of
contract is established, the plaintiff must also establish the causal connection between the breach and the
damage before he can recover. Proximate causation in breach of contract cases in relation to scope of liability,
is in fact governed by Article 2201 of the Civil Code (AQUINO, Torts and Damages (2019 ed.), pp. 829 - 830).

(3) What is the doctrine of last clear chance?

The doctrine of last clear chance, otherwise known as the doctrine of discovered peril or the humanitarian
doctrine, states that where both parties are negligent in such a way that it would be impossible to determine
whose negligence was the proximate cause of the accident, the party who had the last clear chance or
opportunity to avoid the accident by the use of proper care but failed to do so is considered in law solely
responsible for the consequences of the accident (LBC Air Cargo v. CA, G.R. 101683, February 23, 1995).

(4) In January 2016, L Pawnshop installed a signage in front of its shop. V Electric Co. has a post near
the pawnshop. However, the drainage and road widening project of the government affected V Electric
Co.’s posts and they had to be relocated. The relocation was on October 6, 2017 and was already
completed by the end of November 2017. The post in front of the pawnshop was installed in such a
manner that its wires constantly touched L Pawnshop’s signage, leading to the failure of the insulation
thereby causing a short circuit which eventually led to the breaking and burning of the wire. It was
this burning wire that fell on Mr. A's residence’s roof and burned down their house and store, as well
as Mr. M's adjacent shop. Mr. A and Mr. M then sued V Electric Co. for damages. In its defense, V
Electric Co. claimed that it is not liable since the negligence being imputed against it is not the
proximate cause of the damage. Is V Electric Co. correct?
No. Proximate cause is defined as “that cause which, in natural and continuous sequence, unbroken by any
efficient intervening cause, produces the injury and without which the result would not have occurred." V
Electric Co.’s negligence was the proximate cause of the damage suffered by Mr. A and Mr. M. It is settled that
the confluence of proximity, abrasion, and short-circuiting led to the fire. The first of these-proximity arose
because of V Electric Co.’s relocation of posts and wires. Installed in such a manner that its wires constantly
touched L Pawnshop’s signage, this "led to the failure of the insulation thereby causing a short circuit which
eventually led to the breaking and burning of the wire." It was this burning wire that fell on the Mr. A’s
residence's roof and burned down their house and store, as well as Mr. M’s adjacent shop (Visayan Electric
Company, Inc. v. Alfeche, G.R. No. 209910, April 7, 2014).

(1) Distinguish the persons who are vicariously liable and the defenses that they may raise in order for
them not to be made liable for the negligent acts of another.
Persons Vicariously Liable
Parents (CIVIL CODE, Art. 2180, Acts of their children up to 21
and FAMILY CODE, Arts. 221
and 236)
Note: Article 221 of the
Family code removes the
alternative qualification between
father and mother.
Guardians (CIVIL CODE, Art.
2180)
School, Administrators,
Teachers, and Individual, Entity
or Institution Engaged in Child
Care (FAMILY CODE, Art. 218)
Teachers or Heads of
Establishment of Arts and Trade
(CIVIL CODE, Art. 2180)
Note: Schools and
Administrators are NOT liable.
Employers (CIVIL CODE, Art.
2180)
Note: It is NOT necessary
that they are engaged in any
business or industry
F. Vicarious Liability
Persons For Whose Acts
Liability Is Imputed
years of age who live in their
company (2005 Bar)
Minors or incapacitated persons Direct and Primary
who are under their authority
and live in their company
A child who is:
i. a Minor;
ii. under their supervision,
instruction or custody;
iii. over which they exercise
special parental authority (2005
Bar)
Note: The responsibility
applies to authorized activities
inside or outside the school.
Pupils, students, or apprentices Direct, Primary, and
so long as they remain in
custody – if they are no longer
minors.
(For minor children, apply Arts.
218 and 219 of the Family
Code)
Employees and household
helpers – in the service or, on
occasion of their functions or
the scope of their task (2005
Bar)
62
Nature of Liability Defenses
Direct and Primary 1. The child is not living in their
company.
2. Exercise of diligence of a
good father of a family to
prevent damage.
Exercise of diligence of a good
father of a family to prevent
damage.
1. The activity is not an
Directly, Principally and authorized activity;
Solidarily Liable (2012 2. The child is not under their
Bar). supervision, instruction, or
custody;
3. Exercise of due diligence.
Note: The parents,
guardians, or persons
exercising substitute
parental authority are
subsidiary liable.
1. The student is not in their
custody;
Solidary 2. Exercise of due diligence.
1. The employee is not
Direct, Primary, and performing his functions or is
Solidary with employee acting beyond the scope of his
(1997 Bar) function;
2. Exercise of due diligence in
the selection or supervision of
the employee (1992, 1997, and
2003 Bar)
 63

The State (CIVIL CODE, Art. Special Agents- one who
2180) receives a fixed order, foreign
to the exercise of the duties of
the official.
Direct and Primary The persons who directly
caused the loss is not a special
agent – the official was
performing the task that properly
pertains to him.

A Head of Department of Subordinates that he has Direct and Primary He did not give a written order.
Government or Superior Public authorized by written order the
Officer. (Rev. Adm. Code, Sec. specific act or misconduct.
38)

(2) Discuss the interplay of Article 2180, in relation to Article 2176 of the Civil Code, and the so-called
registered-owner rule.
In cases where both the registered-owner rule and Article 2180 apply, the plaintiff must first establish that the
employer is the registered owner of the vehicle in question. Once the plaintiff successfully proves ownership,
there arises a disputable presumption that the requirements of Article 2180 have been proven. As a
consequence, the burden of proof shifts to the defendant to show that no liability under Article 2180 has arisen
(Caravan Travel and Tours International, Inc. vs. Abejar, G.R. No. 170631 February 10, 2016).

Note: In cases when the registered-owner rule does not coincide with Article 2180 of the Civil Code (as when
the registered owner and the employer are not the same person), the registered owner cannot use the defenses
available under Article 2180 of the Civil Code - that the employee acts beyond the scope of his assigned task
or that it exercised the due diligence of a good father of a family to prevent damage - because the motor vehicle
registration law, to a certain extent, modified Article 2180 of the Civil Code by making these defenses
unavailable to the registered owner of the motor vehicle (Filcar Transport Services v. Espinas, G.R. No.
174516; June 20, 2012).

G. Res Ipsa Loquitur

(1) Discuss the concept of res ipsa loquitur?
Res ipsa loquitur literally means “the thing or the transaction speaks for itself.” It is a maxim for the rule that
the fact of the occurrence of an injury, taken with the surrounding circumstances, may permit an inference or
raise a presumption of negligence, or make out a plaintiff’s prima facie case, and present a question of fact for
defendant to meet with an explanation (BJDC Construction v. Lanuzo, G.R. No. 161151, March 24, 2014).

(2) What are the requisites for the application of the res ipsa loquitur rule?
The requisites for the application of the res ipsa loquitur rule are the following:
1. The accident was of a kind which does not ordinarily occur unless someone is negligent;
2. The instrumentality or agency which caused the injury was under the exclusive control of the person
charged with negligence; and
3. The injury suffered must not have been due to any voluntary action or contribution on the part of the
person injured (Malayan Insurance Co., Inc. v. Alberto, G.R. No. 194320. February 1, 2012).

(3) Claudia Buenavista and Amor Powers are residents of Payatas and their respective townhouse units
are approximately nine (9) meters apart, separated only by a driveway jointly used by the townhouse
unit owners. While Claudia was on board her vehicle which was being driven along the common
driveway by Eduardo who is her driver for twelve (12) years, Yna Macaspac, the six-year-old daughter
of Amor Powers who was on her way to board their car, was sideswiped by Claudia's vehicle. Yna was
dragged for about three (3) meters resulting in her right leg being completely fractured. The RTC ruled
that Eduardo was presumed to be negligent on the basis of res ipsa loquitor. Is the doctrine of res ipsa
loquitur applicable in this case?
Yes, the doctrine of res ipsa loquitur is applicable. It was ruled in Solidum v. People, G.R. No. 192123, March
10, 2014, that it is grounded in the superior logic of ordinary human experience and on the basis of such
experience or common knowledge, negligence may be deduced from the mere occurrence of the accident
itself. Further, in UPCB General Insurance Co. v. Pascual Liner, Inc., G.R. No. 242328, April 26, 2021, the
Court reiterated the applicability of res ipsa loquitur in vehicular accidents, wherein it is sufficient that the
accident itself be established, and once established through the admission of evidence, whether hearsay or
 64

not, the rule on res ipsa loquitur already starts to apply. As applied in the instant case, the fact that Yna was
hit by a moving vehicle owned by Claudia and driven by Eduardo is undisputed. The fact that Yna sustained
injuries in her collision with Claudia's vehicle is also not in question. Thus, since it is clearly established that
there was a vehicular accident that caused injuries, then the rule on res ipsa loquitur shall apply. An inference
of negligence on the part of Eduardo, the person who controls the instrumentality (vehicle) causing the injury,
arises, and he has the burden of presenting proof to the contrary (Maitim v. Aguila G.R. No. 218344, March
21, 2022, Hernando Case).

H. Damnum Absque Injuria

(1) Discuss the principle of Damnum Absque Injuria.
The principle of Damnum Absque Injuria provides that there can be no damage without injury when the loss or
harm was not the result of a violation of a legal duty (Rico v. Union Bank of the Philippines, G.R. No. 210928,
February 14, 2022, Hernando Case). In other words, in order that the law will give redress for an act causing
damage, that act must be not only hurtful, but wrongful. There must be damnum et injuria. If, as may happen
in many cases, a person sustains actual damage, that is, harm or loss to his person (Sps. Custodio v. CA,
G.R. No. 116100, February 9, 1996).

Note: The underlying basis for the award of tort damages is the premise that an individual was injured in
contemplation of law. Thus, there must first be a breach of some duty and the imposition of liability for that
breach before damages may be awarded; and the breach of such duty should be the proximate cause of the
injury (Rico v. Union Bank of the Philippines, G.R. No. 210928, February 14, 2022, Hernando Case).

I. Defenses
(1) What is the emergency rule?
Under the emergency rule, one who suddenly finds himself in a place of danger, and is required to act without
time to consider the best means that may be adopted to avoid the impending danger, is not guilty of negligence,
if he fails to adopt what subsequently and upon reflection may appear to have been a better method, unless
the danger in which he finds himself is brought about by his own negligence (Delsan Transport Lines, Inc., v.
C&A Construction, Inc., G.R. No. 156034, October 1, 2003).

J. Negligence
(1) Define negligence.
Negligence is the omission to do something which a reasonable man, guided by those considerations that
ordinarily regulate the conduct of human affairs, would do, or doing of something which a prudent and
reasonable man would not do (Philippine Savings Bank v. Sakata, G.R. No. 229450, June 17, 2020).

(2) What is the test by which to determine the existence of negligence in a particular case?
The test by which to determine the existence of negligence in a particular case may be stated as follows: Did
the defendant in doing the alleged negligent act use that reasonable care and caution which an ordinarily
prudent person would have used in the same situation? If not, then he is guilty of negligence (Picart v. Smith,
G.R. No. L-12219, March 15, 1918).

(3) LMV is engaged in the business of recruiting Filipino workers for deployment to Saudi Arabia. On the
other hand, SM Polyclinic is authorized to conduct medical examinations of prospective applicants for
overseas employment. As an LMV applicant, B went to SM Polyclinic for pre-deployment medical
examination. B was found “fit for employment” and was then deployed to Saudi. Unfortunately, when
B underwent another medical examination with the General Care Dispensary of Saudi Arabia about two
(2) months after, he purportedly tested positive for HCV or the hepatitis C virus. This resulted to B’s
repatriation to the Philippines. Claiming that SM Polyclinic was reckless in issuing its Medical Report
stating that B is “fit for employment”, LMV filed a complaint for sum of money and damages against
the former. It averred that it relied on SM Polyclinic’s declaration and incurred expenses as a
consequence. SM Polyclinic argued that the complaint failed to state a cause of action as the Medical
Report issued had already expired and that there was no negligence on their part when they release
the report two (2) months before the medical examination in Saudi. Was SM Polyclinic negligent in
issuing the Medical Report?
No, SM Polyclinic cannot be adjudged negligent in the absence of proof. The negligence or fault should be
clearly established, and the burden of proof is upon the plaintiff. Even assuming that B’s diagnosis for HCV
was correct, the fact that he later tested positive for the same does not convincingly prove that he was already
 65

under the same medical state at the time SM Polyclinic issued the Medical Report. It was incumbent upon LMV
to show that there was already negligence at the time the Medical Report was issued, may it be that standard
medical procedures were not carefully observed or that there were already palpable signs that exhibited B’s
unfitness for deployment at that time. There is a reasonable possibility that B became exposed to the HCV
only after his medical examination with SM Polyclinic. B was not deployed to Saudi Arabia immediately after
SM Polyclinic’s medical examination and could have possibly contracted the same only when he arrived
thereat. There being no negligence proven by LMV through credible and admissible evidence, SM Polyclinic
cannot be held liable under Article 2176 of the Civil Code (St. Martin Polyclinic, Inc. v. LWV Construction
Corporation, G.R. No. 217426, December 4, 2017).

(4) M, the bus driver of DG Bus Inc., collided with the vehicle of BC while traversing the national highway
near a bridge resulting to BC’s death. LC, the wife of BC, alleged that the car was hit by the bus due to
M’s negligence when it tried to swerve to the opposite lane to avoid the pile of boulders on the shoulder
of the road placed by DV Construction making the road narrow. LC further averred that M was over
speeding at the time of the incident. On the other hand, M denied the allegations and claimed that he
was on full stop at the time of the incident. LC filed a case for damages. Will the case prosper?
Yes, the case will prosper. It can be presumed that M was negligent under Article 2185 of the Civil Code, which
provides: “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 in violation of any traffic regulation.” M was actually violating a
traffic rule found in RA 4136, otherwise known as the Land Transportation and Traffic Code which provides
that “any person driving a motor vehicle on a highway shall drive the same at a careful and prudent speed, not
greater or less than is reasonable and proper, having due regard for the traffic, the width of the highway, and
of any other condition then and there existing.” Considering that the bus was already approaching the bridge,
M should have already slowed down a few meters away from the bridge. He should have stopped farther away
from the bridge because he would have been able to see that BC’s car was already crossing the bridge. An
experienced and competent bus driver would be able to know how to properly react upon seeing another
vehicle ahead that is about to exit a narrow bridge (Cacho v. Manahan, G.R. No. 203081, January 17, 2018).

K. Damages
(1) Define injury, damage and damages.
Injury is the illegal invasion of a legal right; damage is the loss, hurt, or harm which results from the injury, and
damages are the recompense or compensation awarded for the damage suffered (Spouses Custodio v. Court
of Appeals, G.R. No. 116100, February 9, 1996).

(2) What are the different kinds of damages? Discuss. (MENTAL)

a) Moral Damages.

Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched
reputation, wounded feelings, moral shock, social humiliation, and similar injury. Though incapable
of pecuniary computation, moral damages may be recovered if they are the proximate result of the
defendant’s wrongful act or omission (CIVIL CODE, Art. 2217).

b) Exemplary or Corrective Damages.

Exemplary or corrective damages are imposed, by way of example or correction for the public good,
in addition to the moral, temperate, liquidated or compensatory damages (CIVIL CODE, Art. 2229).

c) Nominal Damages.

Nominal damages are adjudicated in order that a right of the plaintiff, which has been violated or
invaded by the defendant, may be vindicated or recognized, and not for the purpose of indemnifying
the plaintiff for any loss suffered by him (CIVIL CODE, Art. 2221).

d) Temperate or Moderate Damages.

Temperate or moderate damages, which are more than nominal but less than compensatory
damages, may be recovered when the court finds that some pecuniary loss has been suffered but
its amount cannot, from the nature of the case, be provided with certainty (CIVIL CODE, Art. 2224).
 66

Note: The SC already debunked the notion that temperate damages are appropriate only in those cases in
which pecuniary loss cannot, “by its nature” be ascertained. Jurisprudence applying Article 2224 is clear that
temperate damages may be awarded even in instances where pecuniary loss could theoretically have been
proved with certainty (Lorenzo Shipping Corp. v. National Power Corp., G.R. Nos. 181683 & 184568, October
7, 2015).

e) Actual Damages.

DAMAGES THAT REASON

CANNOT CO-EXIST

Nominal Damages Nominal damages are recoverable where a legal right is technically violated and must be vindicated against
and Actual an invasion that has produced no actual present loss of any kind or where there has been a breach of
Damages contract and no substantial injury or actual damages whatsoever have been or can be shown but actual
damages must be proved with a reasonable degree of certainty.

Nominal Damages In nominal damages, it is recoverable where a legal right is technically violated and must be vindicated
and Moral Damages against an invasion that has produced no actual present loss of any kind or where there has been a breach
of contract and no substantial injury have been or can be shown but in moral damages, it must be shown
that plaintiff suffered mental anguish, serious anxiety, wounded feelings, moral shock and other similar
injuries.

Nominal Damages In nominal damages, it is recoverable where a legal right is technically violated and must be vindicated
and Temperate against an invasion that has produced no actual present loss of any kind but in temperate damages, it may
Damages be recovered when the court finds that some pecuniary loss has been suffered.

Temperate Temperate damages may be recovered when the court finds that some pecuniary loss has been suffered
Damages and but its amount cannot, from the nature of the case, be proved with certainty while actual damages must be
Actual Damages proved with a reasonable degree of certainty.

As a matter of exception, temperate damages can be awarded on top of actual damages in instances
where the injury is chronic and continuing (AQUINO, Torts and Damages (2019 ed.), p. 905).

Actual or compensatory damages are those awarded in satisfaction of, or in recompense for, loss or injury
sustained. They simply make good or replace the loss caused by the wrong (Lim vs. Sps. Mendoza, G.R. No.
160110, June 18, 2014).

f) Liquidated Damages.
Liquidated damages are those agreed upon by the parties to a contract, to be paid in case of breach
thereof (CIVIL CODE, Art. 2226).

(3) Allan borrowed Php 1 Million from Bryan. The loan is evidenced by a Promissory Note dated January
15, 2021. The provisions of the Promissory Note include the following: “I/we hereby jointly and
severally promise to pay a late payment charge on any overdue sum under this note at the rate of five
percent (5%) per month. It is further agreed that if upon such default, attorney's services are availed
of, an additional sum equal to five percent (5%) of the total sum due thereon shall be paid to the holder
hereof for attorney's fees plus an additional sum equivalent to twenty five percent (25%) of the total
sum due xxx, for liquidated damages aside from expenses of collection and the legal costs provided
in the Rules of Court.” Later, Bryan sued Allan for the payment of the unpaid balance of the loan plus
late payment charge, attorney’s fees and liquidated damages. Can the trial court award the 5% late
payment charge, 5% attorney’s fees, and 25% liquidated damages in addition to the unpaid principal?
No, the trial court cannot award the late payment charge and liquidated damages at the same time. Only the
5% attorney’s fees and the 5% late payment charge should be awarded. Although it clearly provides for the
penalty charge at the rate of 5% per month as distinct from the imposition of the 25% liquidated damages, it
nevertheless appears that the "late payment charge," as stipulated, was imposed not as an addition to but in
lieu of indemnity for damages and payment of interests in case of default in payment, as squarely described
in Article 1226 of the Civil Code. Consistent with the operative definitions in jurisprudence, the above-quoted
"late payment charge" is clearly reparatory and thereby particularly stipulates the amount of compensatory
damages to be paid by a defaulting party in case of breach.

Since this indemnifying function is already what liquidated damages are for, and since the indemnification is
already served by the imposition of the penalty of the "late payment charge," the Court cannot now
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countenance the separate and simultaneous burdens of a penalty charge and liquidated damages on the part
of the principal debtor or the surety, without agreeing to a carrying out of injustice by way of the unconscionable
redundancy of penalties.

Furthermore, with respect to the amount of damages, the Court also reminds that since the penal clause is
compensatory in purpose, the appropriate amount of damages is resolved without need of proof since the
stipulated indemnity represents a legitimate estimate made by the parties of the damages caused by the
breach.

However, an award of the stipulated attorney’s fees is allowed under the Rules and in jurisprudence. The
stipulation on a lawyer's compensation in a written contract for professional services ordinarily controls the
amount of fees that the contracting lawyer may be allowed, unless the court finds such stipulated amount
unreasonable or unconscionable. In this case, the 5% attorney’s fees appears to be reasonable (Tan v. First
Malayan Leasing and Finance Corp., G.R. No. 254510, 16 June 2021).

(4) What are the constitutive elements of an award of moral damages?

An award of moral damages would require certain conditions to be met, to wit:
1. There must be an injury, whether physical, mental or psychological, clearly sustained by the claimant;
2. There must be a culpable act or omission factually established;
3. The wrongful act or omission of the defendant is the proximate cause of the injury sustained by the
claimant; and

Note : A robotic allegation that one "suffered anxiety and sleepless nights," or a seemingly haphazard
conversion of these disturbed feelings into some pecuniary equivalent, without more, will not automatically
entitle a party to moral damages (Ganancial v. Cabugao, G.R. No. 203348, July 6, 2020, Hernando Case).

4. The award of damages is predicated on any of the cases stated in Article 2219 (Expert Travel & Tours,
Inc. v. Court of Appeals, G.R. No. 130030, June 25, 1999).

(5) May a person claim moral damages for the death of his brother caused by quasi-delict?
No, a person who claims moral damages for the death of his brother caused by quasi-delict, is not entitled to,
and should not be awarded, moral damages. Article 2206 of the new Civil Code — which provides that only
the spouse, legitimate and illegitimate descendants and ascendants may demand moral damages for mental
anguish by reason of the death of the deceased caused by quasi delict — should be applied (Receiver for
North Negros Sugar Co., Inc. v. Ybañez, G.R. No. L-22183, August 30, 1968).

Note: The SC qualified this rule such that persons exercising substitute parental authority are to be considered
ascendants for the purpose of awarding moral damages. The law forges a relationship between the ward and
the person exercising substitute parental authority such that the death or injury of one results in the damage
or prejudice of the other (Caravan Travel and Tours International, Inc. v. Abejar, G.R. No. 170631, February
10, 2016).

L. Damages in Case of Death

(1) What are the rules in awarding damages in case of death caused by crime or quasi-delict?
The amount of damages for death caused by a crime or quasi-delict shall be at least three thousand pesos
(₱3,000), even though there may have been mitigating circumstances. In addition:
1. The defendant shall be liable for the loss of the earning capacity of the deceased, and the indemnity
shall be paid to the heirs of the latter; such indemnity shall in every case be assessed and awarded
by the court, unless the deceased on account of permanent physical disability not caused by the
defendant, had no earning capacity at the time of his death;
2. If the deceased was obliged to give support, 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 (CIVIL CODE, Art.
2206).
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Note: Article 2206 provides that the minimum amount for awards of civil indemnity is ₱3,000 but does not
provide for a ceiling. Thus, although the minimum amount cannot be changed, increasing the amount awarded
as civil indemnity can be validly modified and increased (People v. Jugueta, G.R. No. 202124, April 5, 2016).

Additional Note: In Senate Bill No. 1276, January 20, 2020, Senator Franklin Drilon sought to amend the Civil
Code by increasing the minimum amount for death indemnity, whether caused by crime or quasi-delict
(negligence) to P300,000 from P3,000.

M. Duty of Injured Party

(1) What is the Doctrine of Avoidable Consequences?
The party suffering loss or injury must exercise the diligence of a good father of a family to minimize the
damages resulting from the act or omission in question (CIVIL CODE, Art. 2203).