Civil Law 2022 Ust Golden Notes Confidential

FACULTY OF CIVIL LAW (1734)
CIVIL LAW
2022 GOLDEN NOTES

FACULTY OF CIVIL LAW
UNIVERSITY OF SANTO TOMAS
MANILA
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Released in the Philippines, 2022.

Faculty of Civil Law (1734)
ACADEMIC YEAR 2021-2022

CIVIL LAW STUDENT COUNCIL
NATHAN RAPHAEL D.L. AGUSTIN PRESIDENT
STEPHEN FLOYD A. GOPEZ VICE PRESIDENT INTERNAL
NICOLO B. BONGOLAN VICE PRESIDENT EXTERNAL
PATRICIA INGRID M. SEE SECRETARY
JULIENNE CELINE G. OGAYON TREASURER
JANNODIN D. DIPATUAN AUDITOR
IVAN ARNIE C. QUIAMCO PUBLIC RELATIONS OFFICER
KAREN DARYL L. BRITO CHIEF-OF-STAFF
UST BAR-OPS
SARAH ANGELA D. EVA CHAIRPERSON

JUSTINE RENEE GERVACIO VICE-CHAIRPERSON
MA. ANDREA D. CABATU SECRETARY
JAN YSABEL U. DE LEON HEAD, PUBLIC RELATIONS OFFICER
PAULINNE STEPHANY G. SANTIAGO HEAD, FINANCE COMMITTEE
KAREN DARYL L. BRITO HEAD, HOTEL ACCOMMODATIONS COMMITTEE
RALPH DOMINIC V. MARTINEZ HEAD, LOGISTICS COMMITTEE
JEDIDIAH R. PADUA SENIOR MEMBER
SABINA MARIA H. MABUTAS SENIOR MEMBER
JOSEPHINE GRACE W. ANG SENIOR MEMBER
REBECCA JOY M. MALITAO SENIOR MEMBER
JOHN FREDERICK A. NOJARA SENIOR MEMBER
ATTY. AL CONRAD B. ESPALDON

ADVISER
ACADEMICS COMMITTEE 2022

FRANCINE BLAISE M. LOJA SECRETARY GENERAL
JOANNA NICOLE A. PAZ SECRETARY GENERAL
MARC GABRIEL A. ABELLA EXECUTIVE COMMITTEE for LEGAL ETHICS
KIARA LOUISE T. BALIWAG EXECUTIVE COMMITTEE for CRIMINAL LAW
EXECUTIVE COMMITTEE for LABOR LAW AND
DANIELLE B. BARANDA
SOCIAL LEGISLATION
MA. CARMINA A. DIETA EXECUTIVE COMMITTEE for CIVIL LAW
DAINIELE RENEE R. FAJILAGUTAN EXECUTIVE COMMITTEE for REMEDIAL LAW
GEORJHIA CZARINAH Q. MALALUAN EXECUTIVE COMMITTEE for COMMERCIAL LAW
MARIA CRISANTA M. PALOMA EXECUTIVE COMMITTEE for POLITICAL LAW
MIKAELA CECILLE S. SILVERIO EXECUTIVE COMMITTEE for TAXATION LAW
JERICHO SIMON H. DU COVER DESIGN ARTIST
CIVIL LAW COMMITTEE 2022
CEDRIC EMMANUEL S. VILLARAN

CIVIL LAW SUBJECT HEAD
MARIA ALEXA LOUISE U. DAÑO

MARIA LUCILA MARGARITA P. MANGROBANG ASST. HEADS, PERSONS AND FAMILY RELATIONS
ANGELA BEATRICE S. PEÑA
JAMIE ANNE G. JORGE ASST. HEAD, SUCCESSION
ASST. HEAD, OBLIGATIONS AND CONTRACTS and

JHEA VERONICA V. MENDOZA
TORTS AND DAMAGES
DANIELLA K. DE PERALTA ASST. HEAD, SALES and LAND TITLES AND DEEDS
ASST. HEAD, PARTNERSHIP, AGENCY, and
DANA BERNICE D.J. VELARDE
CREDIT TRANSACTIONS
NICOLE ANNE F. CRUZ ASST. HEAD, PROPERTY
MEMBERS
DIN EVE JAMES F. AMANTE PRISCILLA LEE V. MORALES
RYLE NICOLE Q. CUSTODIO ERIDEEN E. RONQUILLO
JAN YSABEL U. DE LEON ANGELYNN C. SALAZAR
JENELYN D. GALVEZ MARIA MARGARITA G. SANTIAGO
CHELSEA KATE M. LAVILLA ZOE YSABEL L. SULIT
SARAH MAY D. MEDALLE JENILYN B. TOLEDO
ELAINE P. MONTES
ATTY. KENNETH JAMES CARLO C. HIZON

ATTY. KING JAMES CARLO C. HIZON
ATTY. SHEEN JOSHUA B. BARRIETA
ADVISERS

UNIVERSITY OF SANTO TOMAS
ACADEMIC OFFICIALS
ATTY. NILO T. DIVINA REV. FR. ISIDRO C. ABAÑO, O.P.
DEAN REGENT
ATTY. ARTHUR B. CAPILI

FACULTY SECRETARY
ATTY. ELGIN MICHAEL C. PEREZ

LEGAL COUNSEL
UST CHIEF JUSTICE ROBERTO CONCEPCION LEGAL AID CLINIC
JUDGE PHILIP A. AGUINALDO

SWDB COORDINATOR
LENY G. GADIANA, R.G.C.

GUIDANCE COUNSELOR
OUR DEEPEST APPRECIATION TO OUR

MENTORS AND INSPIRATION
Justice Oswaldo D. Agcaoili Atty. Joseph Ferdinand M.
Dechavez
Justice Georgina D. Hidalgo Atty. Enrique V. Dela Cruz, Jr.
Justice Gabriel T. Robeniol Atty. Amado Paolo C. Dimayuga
Dean Augusto K. Aligada† Atty. Irvin Joseph M. Fabella
Dean Eduardo Juan F. Abella Atty. Rafaelito M. Garayblas†
Dean Jose I. dela Rama, Jr. Atty. Alden Francis C. Gonzales
Dean Gezzez Giezi G. Granado Atty. Rene B. Gorospe
Dean Maria Liza A. Lopez-Rosario Atty. Eduardo A. Labitag
Dean Viviana M. Paguirigan Atty. Maria Carolina T. Legarda
Dean Melencio S. Sta. Maria, Jr. Atty. Robert Nomar V. Leyretana
Judge Philip A. Aguinaldo Atty. Glenn R. Luansing
Judge Katlyn Anne C. Aguilar-Bilgera Atty. Kenneth Glenn L. Manuel
Judge Jesusa R. Lapuz-Gaudiano Atty. Anicia C. Marquez
Judge Jose Arturo R. Natividad Atty. Benigno G. Par, Jr.
Judge Myra B. Quiambao Atty. Teofilo R. Ragadio
Judge Rigor R. Pascual Atty. Ismael L. Sarangaya, Jr.
Judge Charito M. Macalintal-Sawali Atty. Carla E. Santamaria-Seña
Atty. Ruben F. Balane† Atty. Avelino M. Sebastian, Jr.
Atty. Vincent Z. Bolivar Atty. Janna Mae B. Tecson
Atty. Arthur B. Capili Atty. Klinton M. Torrralba
Atty. Teresita L. Cruz Atty. Mauricio C. Ulep
For being our guideposts in understanding the intricate sphere of Civil Law.
– Academics Committee 2022
DISCLAIMER
THE RISK OF USE OF THIS BAR

REVIEW MATERIAL SHALL BE
BORNE BY THE USER
TABLE OF CONTENTS
PART I
I. PRELIMINARY TITLE
A. Effect and Application of Laws ............................................................................................................................................................. 1

B. Human Relations ..................................................................................................................................................................................... 13
II. PERSONS AND FAMILY RELATIONS
A. Persons......................................................................................................................................................................................................... 18
1. Civil Personality ..................................................................................................................................................................... 18
2. Use of Surnames ..................................................................................................................................................................... 22
3. Entries in the Civil Registry and Clerical Error Law .............................................................................................. 28
4. Absence ...................................................................................................................................................................................... 30
a. Civil Code Provisions ................................................................................................................................................... 30
b. Presumptive Death under the Family Code ...................................................................................................... 33
B. Marriage ...................................................................................................................................................................................................... 37
1. Requisites of Marriage ......................................................................................................................................................... 38
2. Exemption from License Requirement ........................................................................................................................ 44
3. Marriages solemnized abroad and Foreign Divorce .............................................................................................. 46
4. Void and Voidable Marriages ........................................................................................................................................... 49
a. Null and Void Marriages under Article 36 ......................................................................................................... 52
b. Tan-Andal v. Andal, G.R. No. 196359, May 11, 2021 ..................................................................................... 54
C. Legal Separation ...................................................................................................................................................................................... 77
D. Rights and Obligations between Husband and Wife................................................................................................................ 86
E. Property Relations between Husband and Wife ....................................................................................................................... 88
1. General Provisions ................................................................................................................................................................ 88
2. Donations by Reason of Marriage .................................................................................................................................. 88
3. Absolute Community Property ........................................................................................................................................ 95
4. Conjugal Partnership of Gains........................................................................................................................................102
5. Separation of property and Administration of Common Property ..............................................................110
6. Regime of separation of property ................................................................................................................................111
7. Property regime of unions without marriage .........................................................................................................115
F. Family Home............................................................................................................................................................................................117
G. Paternity and Filiation ........................................................................................................................................................................121
1. Legitimate children .............................................................................................................................................................121
2. Proof of filiation ....................................................................................................................................................................126
3. Illegitimate children ...........................................................................................................................................................130
4. Legitimated children ..........................................................................................................................................................131
H. Adoption ....................................................................................................................................................................................................134
1. Domestic adoption (R.A. No. 8552) .............................................................................................................................134
a. Who may adopt ............................................................................................................................................................134
b. Who may be adopted.................................................................................................................................................135
c. Rights of an adopted child.......................................................................................................................................136
d. Instances and effects of rescission ......................................................................................................................136
2. Inter-country adoption (RA 8043)...............................................................................................................................138
a. When allowed ...............................................................................................................................................................138
b. Who may adopt ............................................................................................................................................................138
c. Who may be adopted ................................................................................................................................................ 139
I. Support ...................................................................................................................................................................................................... 145
J. Parental authority ................................................................................................................................................................................. 152
K. Emancipation .......................................................................................................................................................................................... 161
L. Retroactivity of the Family Code .................................................................................................................................................... 161
III. SUCCESSION
A. General provisions................................................................................................................................................................................ 163

B. Testamentary succession .................................................................................................................................................................. 169
1. Wills........................................................................................................................................................................................... 169
2. Institution of heirs ............................................................................................................................................................. 189
a. Treyes v. Larlar, G.R. No. 232579, September 8, 2020 ............................................................................... 189
3. Substitution of heirs ........................................................................................................................................................... 196
4. Conditional Testamentary Dispositions and with a Term ................................................................................ 199
5. Legitime ................................................................................................................................................................................... 201
6. Disinheritance ....................................................................................................................................................................... 211
7. Legacies and Devises ......................................................................................................................................................... 213
C. Legal and intestate succession ........................................................................................................................................................ 216
1. General Provisions; Relationship and Right of Representation ..................................................................... 216
2. Order of intestate succession ......................................................................................................................................... 221
D. Provisions common to testate and intestate succession ..................................................................................................... 225
1. Right of accretion ................................................................................................................................................................ 225
2. Capacity to succeed by will or by intestacy ............................................................................................................. 227
3. Acceptance and repudiation of inheritance ............................................................................................................. 230
4. Partition and distribution of the estate ..................................................................................................................... 231
IV. OBLIGATIONS AND CONTRACTS
A. Obligations ............................................................................................................................................................................................... 235

1. General Provisions .............................................................................................................................................................. 235
2. Nature and Effect ................................................................................................................................................................. 241
3. Kinds ......................................................................................................................................................................................... 259
4. Extinguishment .................................................................................................................................................................... 277
B. Contracts ................................................................................................................................................................................................... 307
2. Essential Requisites............................................................................................................................................................ 315
3. Reformation of Instruments ........................................................................................................................................... 328
4. Interpretation of Contracts ............................................................................................................................................. 330
5. Rescissible Contracts ......................................................................................................................................................... 335
6. Voidable Contracts .............................................................................................................................................................. 339
7. Unenforceable Contracts .................................................................................................................................................. 343
8. Void and Inexistent Contracts........................................................................................................................................ 343
C. Natural Obligations .............................................................................................................................................................................. 344
D. Estoppel ..................................................................................................................................................................................................... 346
E. Trusts ......................................................................................................................................................................................................... 346
F. Quasi-Contracts ..................................................................................................................................................................................... 352
V. SALES
A. Nature and Form ...................................................................................................................................................................................358

1. Essential Requisites ............................................................................................................................................................361
2. Perfection ................................................................................................................................................................................362
3. Contract of Sale v. Contract to Sell ...............................................................................................................................364
B. Capacity to Buy or Sell.........................................................................................................................................................................372
C. Effects of the Contract when the Thing Sold has been Lost ................................................................................................387
D. Obligations of Vendor ..........................................................................................................................................................................389
E. Obligation of Vendee ............................................................................................................................................................................400
F. Breach of Contract ................................................................................................................................................................................404
1. Remedies .................................................................................................................................................................................404
2. Recto Law and Maceda Law ............................................................................................................................................409
G. Extinguishment ......................................................................................................................................................................................416
1. General Provisions ..............................................................................................................................................................416
2. Pacto De Retro Sale..............................................................................................................................................................417
3. Equitable Mortgage .............................................................................................................................................................418
H. Assignment of Credits .........................................................................................................................................................................425
VI. LEASE
A. General Provisions ................................................................................................................................................................................428

B. Rights and Obligations of the Lessor ............................................................................................................................................440
C. Rights and Obligations of the Lessee ............................................................................................................................................443
VII. PARTNERSHIP
A. General Provisions ................................................................................................................................................................................451

B. Obligations of the Partners ...............................................................................................................................................................468
C. Dissolution and Winding Up .............................................................................................................................................................478
D. Limited Partnership .............................................................................................................................................................................485
VIII. AGENCY
A. Nature, Form and Kinds .....................................................................................................................................................................492

B. Obligations of the Agent .....................................................................................................................................................................502
C. Obligations of the Principal...............................................................................................................................................................512
D. Modes of Extinguishment ..................................................................................................................................................................514
IX. CREDIT TRANSACTIONS
A. Loan .............................................................................................................................................................................................................518
B. Deposit .......................................................................................................................................................................................................530
C. Guaranty and Suretyship ...................................................................................................................................................................539
D. Quasi-Contracts ......................................................................................................................................................................................557
X. TORTS AND DAMAGES
A. Torts ............................................................................................................................................................................................................ 558

1. Elements .................................................................................................................................................................................. 559
2. Culpa Aquilana v. Culpa Contractual v. Culpa Criminal ...................................................................................... 559
3. Vicarious Liability ............................................................................................................................................................... 560
4. Res Ipsa Loquitur .................................................................................................................................................................. 573
5. Last Clear Chance ................................................................................................................................................................ 574
6. Damnum Absque Injuria.................................................................................................................................................... 575
B. Proximate Cause .................................................................................................................................................................................... 577
C. Negligence ................................................................................................................................................................................................ 578
1. Standard of Care .................................................................................................................................................................. 580
2. Presumptions ........................................................................................................................................................................ 583
D. Damages .................................................................................................................................................................................................... 584
2. Kinds of Damages ................................................................................................................................................................ 584
3. In Case of Death .................................................................................................................................................................... 608
PART II
I. PROPERTY
A. Classification of Property...................................................................................................................................................................612
B. Ownership ................................................................................................................................................................................................622
1. General Provisions ..............................................................................................................................................................622
2. Rules on Accession ..............................................................................................................................................................629
a. Rights of Builder/Planter/Sower in Good Faith ...........................................................................................632
C. Co-ownership ..........................................................................................................................................................................................634
D. Possession ................................................................................................................................................................................................646
1. Kinds of Possession.............................................................................................................................................................647
2. Acquisition of Possession .................................................................................................................................................649
3. Effects of Possession ..........................................................................................................................................................653
E. Usufruct .....................................................................................................................................................................................................668
1. In General ................................................................................................................................................................................668
2. Rights and Obligations of the Usufructuary .............................................................................................................671
3. Extinguishment.....................................................................................................................................................................680
F. Easements.................................................................................................................................................................................................683
1. Modes of Acquiring Easements .....................................................................................................................................684
2. Rights and Obligations of the Owners of the Dominant and Servient Estates..........................................686
3. Modes of Extinguishment.................................................................................................................................................688
4. Legal v. Voluntary Easements ........................................................................................................................................689
5. Kinds of Legal Easements.................................................................................................................................................691
d. Relating to Waters ......................................................................................................................................................692
e. Right of Way ..................................................................................................................................................................696
f. Light and View..............................................................................................................................................................700
G. Nuisance ....................................................................................................................................................................................................703
H. Modes of Acquiring Ownership.......................................................................................................................................................707
1. Occupation ..............................................................................................................................................................................707
2. Donation ..................................................................................................................................................................................709
a. Nature ..............................................................................................................................................................................710
b. Persons Who May Give or Receive a Donation ..............................................................................................715
c. Effects and Limitations of Donation ...................................................................................................................716
d. Revocation and Reduction ......................................................................................................................................718
3. Prescription ............................................................................................................................................................................721
a. General Provisions .....................................................................................................................................................721
b. Prescription of Ownership and Other Real Rights .......................................................................................721
c. Prescription of Actions .............................................................................................................................................730
I. Quieting of Title ......................................................................................................................................................................................732
J. Actions to Recover Property ............................................................................................................................................................736
1. Accion Interdictal .................................................................................................................................................................737
2. Accion Publiciana .................................................................................................................................................................738
3. Accion Reinvindicatoria .....................................................................................................................................................738
II. CREDIT TRANSACTIONS
A. Personal Property Securities (R.A. No. 11057)........................................................................................................................ 742

B. Real Estate Mortgage ........................................................................................................................................................................... 753
III. LAND TITLES AND DEEDS
A. Torrens System; General Principles ............................................................................................................................................. 772

B. Regalian Doctrine .................................................................................................................................................................................. 776
C. Original Registration ........................................................................................................................................................................... 780
1. Ordinary Registration........................................................................................................................................................ 780
a. Who May Apply ........................................................................................................................................................... 780
b. Decree of Registration .............................................................................................................................................. 785
c. Review of Decree of Registration; Innocent Purchaser of Value ........................................................... 788
D. Certificate of Title ................................................................................................................................................................................. 796
E. Subsequent Registration .................................................................................................................................................................... 804
1. Voluntary Dealings ............................................................................................................................................................. 804
2. Involuntary Dealings.......................................................................................................................................................... 807
a. Adverse Claim .............................................................................................................................................................. 808
b. Notice of Lis Pendens ................................................................................................................................................. 809
F. Non-registrable Properties ............................................................................................................................................................... 811
G. Dealings With Unregistered Land.................................................................................................................................................. 814
H. Assurance Fund ..................................................................................................................................................................................... 816
1. Action of Compensation From Funds ......................................................................................................................... 816
2. Limitation of Action ............................................................................................................................................................ 817
I. Cadastral System of Registration (Act No. 2259, as amended) ........................................................................................ 819
J. Registration Through Administrative Proceedings (C.A. 141, as amended) .............................................................. 821
K. Reconstitution of Titles ...................................................................................................................................................................... 828
IV. PRACTICAL EXERCISES
A. Demand and Authorization Letters .............................................................................................................................................. 831

B. Simple Contracts ................................................................................................................................................................................... 833
C. Complaint ................................................................................................................................................................................................. 840
Preliminary Title
declares that it shall be effective

PART I “after 15 days following its
publication.”
3. If the law provides for immediate

effectivity or upon approval – It is
I. PRELIMINARY TITLE effective immediately after its complete
publication and NOT after signing by the
President.
A. EFFECT AND APPLICATION OF LAWS 4. If the law is voluminous– Reckoning shall

begin from the release of the last of the
series.
Law
“Unless it is otherwise provided” provision on
effectivity of law
Aquinas defined law as “an ordinance of reason for
the common good, made by him who has care of the
This clause refers to the date of effectivity and not
community, and promulgated.” (Republic v.
to the requirement of publication itself. The
Sandiganbayan, G.R. No. 104768, 21 July 2002)
requirement of publication may not be omitted in
any event. This clause does not mean that the
Effectivity of laws
legislature may make the law effective immediately
upon approval, or on any other date without its
Laws shall take effect after fifteen (15) days
previous publication.
following the completion of their publication either
in the Official Gazette, or in a newspaper of general
Publication requirement
circulation in the Philippines, unless it is otherwise
provided. (Art. 2, New Civil Code (NCC), as amended
Publication is indispensable in every case, but the
by Executive Order (EO) No. 200)
legislature may in its discretion provide that the
usual fifteen-day (15) period shall be shortened or
Effectivity: It depends on whether or not it has
extended. (Umali v. Estanislao, G.R. No. 104037, 29
provided a specific date for its effectivity:
May 1992; Tañada v. Tuvera, G.R. No. L-63915, 29
Dec. 1986)
1. If date is specified – Upon the lapse of the
said period following its complete
Publication must be in full or it is no publication at
publication and not before.
all since its purpose is to inform the public of the
contents of the law. The mere mention of the
2. If date is NOT specified – Only after the
number of the presidential decree, the title of such
fifteen (15)-day period following its
decree, its whereabouts, the supposed date of
complete publication, which may either be
effectivity, and in a mere supplement of the Official
on the 15th or on the 16th day depending
Gazette cannot satisfy the publication requirement.
on the language used by the Congress in
This is not even substantial compliance. (Tañada v.
fixing the effectivity date of the statute.
Tuvera, G.R. No. L-63915, 29 Dec. 1986)
(Rabuya, 2009)
Where to publish
a. Fifteenth (15th) day - If the law
declares that it shall become
1. Official Gazette; or
effective “15 days after its
2. Newspaper of general circulation in the
publication.”
Philippines.
b. Sixteenth (16th) day - If the law
1 UNIVERSITY OF SANTO TOMAS

Civil Law
Newspaper of general circulation Judge Villanueva then directly went to Court to

assail the said policy on the ground it is
For a newspaper to be considered of general unconstitutional; it violates the procedural due
circulation: process for lack of publication. Did the JBC
1. It must be published for the dissemination violate the procedural due process for not
of local news and general information; publishing the questioned policy?
2. It has a bona fide subscription list of paying
subscribers; A: YES. The assailed JBC policy does not fall within
3. It is published at regular intervals; the administrative rules and regulations exempted
4. It must not also be devoted to the interest from the publication requirement. The assailed
or published for the entertainment of a policy involves a qualification standard by which
particular class, profession, trade, calling, the JBC shall determine proven competence of an
race or religious denomination. (China applicant. It is not an internal regulation, because if
Banking Corp. v. Sps. Martir, G.R. No. 184252, it were, it would regulate and affect only the
11 Sept. 2009) members of the JBC and their staff. Notably, the
selection process involves a call to lawyers who
Indispensability of publication meet the qualifications in the Constitution and are
willing to serve in the Judiciary to apply to these
GR: All laws are required to be published in full. vacant positions. Thus, it is but a natural
consequence thereof that potential applicants be
NOTE: The reason for this rule is that the basic informed of the requirements to the judicial
constitutional requirement of due process must be positions, so that they would be able to prepare for
satisfied. Without such notice and publication, there and comply with them. (Villanueva v. JBC, G.R. No.
would be no basis for the application of the maxim 211833, 07 Apr. 2015)
ignoratia legis non excusat. (Rabuya, 2009)
XPNs to the XPNs: (D-E-P)
XPNs to the Publication Requirement: (O-R-L-I)
1. Municipal Ordinances (governed by the Local Administrative rules and regulations that require
Government Code); publication:
2. Rules and regulations which are internal in
nature; 1. The purpose of which is to implement or
3. Letters of Instruction issued by administrative enforce existing laws pursuant to a valid
supervisors on internal rules and guidelines; Delegation;
4. Interpretative regulations regulating only the 2. Penal in nature; and
personnel of administrative agency. 3. If it diminishes Existing rights of certain
individuals.
Q: Judge Ferdinand Villanueva was appointed as
a presiding judge of MTC, Compostela-New NOTE: Circulars issued by the Monetary Board are
Bataan. The following year, Judge Villanueva required to be published if they are meant not
applied as Presiding Judge in several Regional merely to interpret but to “fill in the details” of the
Trial Courts. Central Bank Act which that body is supposed to
enforce. As a rule, circulars which prescribe a
The Judicial and Bar Council (JBC) then penalty for violations should be published before
informed him that he was not included in the becoming effective. However, circulars which are
list. The JBC’s decision upheld its long-standing mere statements of general policies as to how the
policy of opening the chance for promotion to law should be construed do not need publication in
second-level courts to those judges who have the Official Gazette for their effectivity. (Rabuya,
served in their current positions for at least five 2009)
years.
UNIVERSITY OF SANTO TOMAS 2

2022 GOLDEN NOTES
Preliminary Title
Q: Honasan questions the authority and A: YES. An ordinance which increased the stall
jurisdiction of the DOJ panel of prosecutors to rentals of the market vendors has complied with the
conduct a preliminary investigation and to publication requirement when the same was posted
eventually file charges against him, claiming in 3 conspicuous places. Posting was validly made in
that since he is a senator with a salary grade of lieu of publication as there was no newspaper of
31, it is the Office of the Ombudsman, not the local circulation in the Municipality of Hagonoy.
DOJ, that has authority and jurisdiction to This fact was known to and admitted by petitioners.
conduct the preliminary investigation. (Sec. 188, Local Government Code (LGC); Hagonoy
Market Vendors Assoc. v. Mun. of Hagonoy, G.R. No.
DOJ claims that it has concurrent jurisdiction, 137621, 06 Feb. 2002)
invoking an OMB-DOJ Joint Circular which
outlines the authority and responsibilities NOTE: Within ten (10) days after their approval,
among prosecutors of the DOJ and the Office of certified true copies of all provincial, city, and
the Ombudsman in the conduct of preliminary municipal tax ordinances or revenue measures shall
investigations. be published in full for three (3) consecutive days in
a newspaper of local circulation: Provided,
Honasan counters that said circular is however, that in provinces, cities and municipalities
ineffective as it was never published. Is OMB- where there are no newspapers of local circulation,
DOJ Circular No. 95-001 ineffective because it the same may be posted in at least two (2)
was not published? conspicuous and publicly accessible places. (Sec.
188, Local Government Code (LGC))
A: NO. OMB-DOJ Circular No. 95-001 is merely an
internal circular between the two offices which Examples of administrative issuances which were
outlines the authority and responsibilities among not given force and effect for lack of publication:
prosecutors of the DOJ and of the Office of the
Ombudsman in the conduct of preliminary 1. Rules and regulations issued by the Joint
investigations. It does not contain any penal Ministry of Health-Ministry of Labor and
provision nor prescribe a mandatory act or prohibit Employment Accreditation Committee
any under pain of penalty. It does not regulate the regarding the accreditation of hospitals, media
conduct of persons or the public, in general. It need clinics and laboratories.
not be published. (Honasan, II v. The Panel of 2. Letter of Instruction No. 416 ordering the
Investigating Prosecutors of the DOJ, G.R. No. 159747, suspension of payments due and payable by
15 June 2004) distressed copper mining companies.
3. Memorandum Circulars issued by the POEA
Q: The Sangguniang Bayan of Hagonoy, Bulacan regulating the recruitment of domestic helpers
enacted an ordinance which increased the stall to Hongkong.
rentals of the market vendors in Hagonoy. Art. 3 4. Administrative Order No. SOSPEC 89-08-01
of the said ordinance provided that it shall take issued by Philippine International Trading
effect upon approval. The ordinance was posted Corporation regulating applications for
from November 4 to 25, 1996. importation from the People’s Republic of
In the last week of November 1997, petitioners China.
were personally given copies and were 5. Corporate Compensation Circular No. 10 issued
informed that it shall be enforced in January by the Department of Budget and Management
1998. discontinuing the payment of other allowances
The petitioners contended that the subject and fringe benefits to government officials and
ordinance was not published as required by law. employees. (Ulep, 2006)
Did the ordinance comply with the rule of
publication? Q: “A” alleges violation of his right to due process
considering that he is summoned to attend the

Civil Law
Senate hearings without being apprised not only parties. Incidental fraud only obliges the person
of his rights therein through the publication of employing it to pay damages. (Art. 1344, NCC)
the Senate Rules of Procedure Governing
Inquiries in Aid of Legislation. Laws covered
Senate invoked the provisions of R.A. No. 8792, The laws referred to under Art. 3 of the NCC are
otherwise known as the Electronic Commerce those of the Philippine Laws and it applies to all
Act of 2000, to support their claim of valid kinds of domestic laws, whether civil or penal,
publication through the internet. Did the substantive or remedial. However, the article is
publication of the assailed Rules of Procedure limited to mandatory and prohibitory laws. It does
through the Senate’s website satisfy the due not include those which are merely permissive.
process requirement of the law? (Rabuya, 2006)
A: NO. R.A. No. 8792 (Electronic Commerce Act of Non-applicability to Foreign laws
2000) considers an electronic data message or an
electronic document as a functional equivalent of a Ignorance of a foreign law is a mistake of fact. There
written document only for evidentiary purposes. It is no presumption of knowledge of foreign laws. It
does not make the internet a medium for publishing must be alleged and proved as a matter of fact;
laws, rules, or regulations. (Garcillano v. House of otherwise, the doctrine of processual presumption
Representatives Committees, G.R. No. 170338, 23 Dec. will apply.
2008)
Doctrine of Processual Presumption
Presumption of Knowledge of Laws
Also known as presumed-identity approach.;
GR: Everyone is conclusively presumed to know the Where a foreign law is not pleaded, or even if
law. Hence, ignorance of the law excuses no one pleaded, is not proved, the presumption is that the
from compliance therewith. (Art. 3, NCC) foreign law is the same as Philippine Laws. (Orion
Savings Bank v. Suzuki, G.R. No. 205487, 12 Nov.
This conclusive presumption presupposes that the 2014)
law has been published. Without such notice and
publication, there would be no basis for the In international law, the party who wants to have a
application of the maxim ignoratia legis non foreign law applied to a dispute or case has the
excusat. It would be the height of injustice to punish burden of proving the foreign law. The foreign law
or otherwise burden a citizen for the transgression is treated as a question of fact to be properly
of a law of which he had no notice whatsoever, not pleaded and proved, as the judge or labor arbiter
even a constructive one. (Rabuya, 2009) cannot take judicial notice of a foreign law. He is
presumed to know only domestic or forum law.
XPNs: (ATCI Overseas Corp. v. Echin, G.R. No. 17855, 11 Oct.
1. Mistake upon a doubtful or difficult question of 2010)
law may be the basis of good faith. (Art. 526 (3),
NCC)
2. Payment by reason of a mistake in the
construction or application of a doubtful or
difficult question of law may come within the
scope of solutio indebiti. (Art. 2155, NCC)
3. In order that fraud may make a contract

voidable, it should be serious and should not
have been employed by both contracting

2022 GOLDEN NOTES
Preliminary Title
Mistake of fact vs. Mistake of law belief that his first wife was already dead. He should
have adduced in evidence a decision of a competent
MISTAKE OF FACT MISTAKE OF LAW court declaring the presumptive death of his first
wife as required by Art. 349 of the RPC, in relation
Want of knowledge pertains to to Art. 41 of the FC. Such judicial declaration
Want of knowledge or constitutes proof that Eduardo acted in good faith,
Want of knowledge of acquaintance with the and would negate criminal intent on his part when
some fact or facts laws of the land he married Tina and, as a consequence, he could not
constituting or insofar as they apply be held guilty of bigamy in such case. Eduardo,
relating to the subject to the act, relation, however, failed to discharge his burden. (Manuel v.
matter on hand. duty, or matter under People, G.R. No. 165842, 29 Nov. 2005)
consideration.
Q: Complainants who were connected with the
Nature of Mistake Daily Informer (a widely circulated newspaper
in Western Visayas) were charged before the
When some facts
Occurs when a person MTC by Judge Pamonag of the crime of libel.
which really exist are
having full knowledge Respondent judge conducted a preliminary
unknown or some fact
of the facts come to an investigation and thereafter issued warrants for
is supposed to exist
erroneous conclusion the arrest of the complainants. Complainants
which really does not
as to its legal effects. filed an administrative case against the judge for
exist.
gross ignorance of the law. They contended that
Defense the judge neither has authority to conduct a
preliminary investigation nor to issue warrants
Good faith is an Not excusable, even if for their arrest. The judge said that it was his
excuse. in good faith. first libel case and that he issued the warrants in
good faith. Is the respondent guilty of gross
Q: Eduardo was married to Ruby. He then met ignorance of the law?
Tina and proposed marriage, assuring her that
he was single. They got married and lived A: YES. Although the reliance of Judge Pamonag on
together. Tina, upon learning that Eduardo had the provisions of Article 360 of the RPC prior to its
been previously married, charged Eduardo for amendment by R.A. No. 4363, was an honest
bigamy for which he was convicted. Eduardo mistake, the Court does not condone his failure to
testified that he declared he was “single” keep himself updated with the amendments and
because he believed in good faith that his first latest jurisprudence on the said statute. Judges are
wife was already dead, having not heard from expected more than just cursory acquaintance with
her for 20 years, and that he did not know that statutes and procedural rules. They must know the
he had to go to court to seek for the nullification law and apply them properly in good faith. The
of his first marriage before marrying Tina. Is provisions of Art. 360 of the RPC, as amended, on
Eduardo liable for the crime of bigamy? the persons authorized to conduct preliminary
investigation in libel cases is elementary. Not to
A: YES. Eduardo is presumed to have acted with know it constitutes gross ignorance of the law.
malice or evil intent when he married Tina. As a (Miaque v. Judge Pamonag, A.M. No. MTJ-02-1412, 28
general rule, mistake of fact or good faith of the Mar. 2003)
accused is a valid defense in a prosecution for a
felony by dolo; such defense negates malice or Q: Cheong Boo, a native of China, died intestate
criminal intent. However, ignorance of the law is in Zamboanga. He left a property worth
not an excuse because everyone is presumed to P100,000. The estate of the deceased was
know the law. Eduardo has the burden to prove that claimed on one hand by Gee, who alleged that he
when he married Tina, he has a well-grounded was a legitimate child by a marriage contracted

Civil Law
by Boo with Tan Dit in China in 1895. The estate the obligations of contract and hence, is
was claimed, on the other hand, by Mora Adong unconstitutional. (Chavez v. PEA, G.R. No. 133250, 06
who alleged that she had been lawfully married May 2003)
to Boo in 1896. Gee introduced in evidence a
document in Chinese stating the marriage XPNs: (T-I-N-C-R-E-E-P)
ceremony that took place in Amoy, China. Is the 1. Tax laws; same with emergency laws
document presented by Gee sufficient enough to 2. Interpretative statutes;
prove the Chinese marriage of Cheong Boo and 3. Laws creating New substantive rights;
Tan Dit? 4. Curative statutes;
5. Remedial/procedural;
A: NO. The Supreme Court held that the document NOTE: Statutes regulating the procedure of
is not sufficient to prove the Chinese marriage the courts will be construed as applicable
between Cheong Boo and Tan Dit. Gee only to actions pending and undetermined at the
presented a document in Chinese stating the alleged time of their passage. Procedural laws are
marriage ceremony but there is no competent retrospective in that sense and to that
testimony as to what the laws of China in the extent. (Mun. Gov’t of Coron v. Carino, G.R.
Province of Amoy concerning marriage were in No. L-65894, 24 Sept. 1987)
1895. Therefore, there is lacking proof so clear, 6. Emergency laws; because the procedure to pass law takes time,
urgency may require it to be applied retroactively,
strong and unequivocal as to produce a moral 7. When Expressly provided;
conviction of the existence of the alleged prior 8. Penal laws favorable to the accused
Chinese marriage. provided, the accused is not a habitual
delinquent.
Ignorance of a foreign law is not ignorance of the
law but of fact because such foreign law must be XPNs to the XPNs:
first alleged and proved as a matter of fact, there If the application of the retroactive law:
being no judicial notice of said foreign law. Thus, the 1. Impairs obligation of contracts;
Chinese marriage was not adequately proved. 2. Is in the nature of ex post facto law or a bill
(Estate of Boo v. Gee, G.R. No. 18081, 03 Mar. 1922) of attainder,
3. Divests vested rights; or
RETROACTIVITY OF LAWS 4. Is constitutionally forbidden. (Black’s Law
Dictionary, 2009)
Laws shall have no retroactive effect, unless the
contrary is provided. (Art. 4, NCC) NOTE: In case of doubt, laws apply prospectively.
Retroactive law Q: Belen Mejares was adjudged guilty of the

crime of qualified theft of cash and jewelry
A legislative act that looks backward or amounting to P1,056,308.00. Meanwhile, on
contemplates the past, affecting acts or facts that August 29, 2017, the President signed into law
existed before the act come into effect. (Black’s Law R.A. No. 10951 that sought to help indigent
Dictionary, 2009) prisoners and individuals accused of
committing petty crimes. It also increased the
Retroactive effect of laws baseline amounts and values of property and
damage to make them commensurate to the
GR: Laws shall have no retroactive effect. penalties meted on the offenses committed in
relation to them. Should the penalties under the
NOTE: The maxim lex prospicit, non respicit new law benefit Mejares?
means, “the law looks forward not backward”. The
retroactive application of a law usually divests A: YES. R.A. No. 10951 has since come into effect
rights that have already become vested or impairs during the pendency of this case. It likewise

2022 GOLDEN NOTES
Preliminary Title
specifically stipulates that its provisions shall have Permissive law

retroactive effect. Section 100 adds that
this retroactivity applies not only to persons A law or a provision in a statute is said to be
accused of crimes but have yet to be meted their permissive or directory when it allows certain acts
final sentence, but also to those already "serving but does not command them. (Black’s Law
sentence by final judgment." This retroactivity is in Dictionary, 2009)
keeping with the principle already contained in
Article 22 of the RPC that “penal laws shall have a Violation of Mandatory or Prohibitory Laws
retroactive effect in so far as they favor the person
guilty of a felony.” (People v. Mejares, G.R. No. GR: Acts executed against the provisions of
225735, 10, Jan. 2018) mandatory or prohibitory laws shall be void. (Art. 5,
NCC)
Non-retroactivity of laws vis-à-vis judicial
decisions XPNs: When the law:
Judicial decisions have no retroactive effect. When a 1. Itself authorizes its validity (e.g., lotto,
doctrine of the Supreme Court is overruled and a sweepstakes);
different view is adopted, the new doctrine should 2. Makes the act valid but punishes the violator
be applied prospectively and should not apply to (e.g., A widow who remarries before the lapse of
parties who had relied on the old doctrine and acted 300 days after the death of her husband is liable
on the faith thereon. (Co v. CA, G.R. No. 100776, 28 to criminal prosecution but the marriage is
Oct. 1993) valid.);
3. Makes the act merely voidable – the act is valid
Retroactivity clause of the Family Code (2005, until annulled (e.g., A marriage celebrated
2010 BAR) through violence or intimidation or fraud is
voidable.);
The Family Code shall have retroactive effect 4. Declares the nullity of an act but recognizes legal
insofar as it does not prejudice or impair vested or effects as arising from it (e.g., Children born after
acquired rights in accordance with the Civil Code or the nullification of a void marriage due to
other laws. (Art. 256, Family Code (FC)) psychological incapacity are considered
legitimate). (Rabuya, 2006)
MANDATORY AND PROHIBITORY LAWS
WAIVER OF RIGHTS
Mandatory law
Waiver
A law or a provision in a statute is said to be
mandatory when disobedience to it, or want of exact It is a voluntary and intentional relinquishment or
compliance with it, will make the act done under the abandonment of a known existing legal right,
statute absolutely void. (Black’s Law Dictionary, advantage, benefit, claim or privilege, which except
2009) for such waiver the party would have enjoyed.
Prohibitory law The voluntary abandonment or surrender, by a

capable person, of a right known by him to exist,
A law or a provision in a statute is said to be with the intent that such right shall be surrendered
prohibitory when it forbids a certain action. (Ibid.) and such person forever deprived of its benefit;
or such conduct as warrants an inference of the
relinquishment of such right; or the intentional
doing of an act inconsistent with claiming it. (Cruz &

Civil Law
Co., Inc. v. HR Const. Corp., G.R. No. 187521, 14 Mar. the latter may petition the court to authorize them
2012) to accept it in the name of the heir. (Art. 1052, NCC;
Albano, 2013)
NOTE: Waivers can be express or implied, however,
it cannot be presumed. It must be clearly and NOTE: If a candidate for mayor agrees to split his
convincingly shown, either by express stipulation or term of office with the vice-mayor to prevent the
acts admitting no other reasonable explanation. latter from running against him, the contract is void
by reason of public policy. (Albano, 2013)
Right
Waiver of rights
It is a legally enforceable claim of one person against
another, that the other shall do a given act, or shall GR: Rights may be waived.
not do a given act. (Pineda, 2010)
XPNs:
Kinds of Rights under the Constitution 1. If waiver is:
a. Contrary to law, public order, public
1. Natural Rights – Those which grow out of the policy, morals or good customs;
nature of man and depend upon personality b. Prejudicial to a third person with a
(e.g. right to life, liberty, privacy, and good right recognized by law. (e.g. If A owes
reputation); B P10M, B cannot waive the loan if B
owes C and B has no other assets).
2. Political Rights – Consist in the power to 2. If the right is:
participate, directly or indirectly, in the a. A natural right, such as right to life;
establishment or administration of government b. Inchoate, such as future inheritance.
(e.g. right of suffrage, right to hold public office,
right of petition); and A person may waive any matter which affects his
property, and any alienable right or privilege of
3. Civil Rights – Those that pertain to a person by which he is the owner or which belongs to him or to
virtue of his citizenship in a state or community which he is legally entitled, whether secured by
(e.g. property rights, marriage, equal protection contract, conferred with statute, or guaranteed by
of laws, freedom of contract, trial by jury). constitution, provided such rights and privileges
(Pineda, 2010) rest in the individual, are intended for his sole
benefit, do not infringe on the rights of others, and
a. Rights of personality or human rights; further provided the waiver of the right or privilege
b. Family rights; and is not forbidden by law, and does not contravene
c. Patrimonial rights: public policy. (Cruz & Co., Inc. v. HR Const. Corp., G.R.
i. Real rights; No. 187521, 14 Mar. 2012)
ii. Personal rights. (Rabuya, 2009)
Requisites of a valid waiver
Rights which CANNOT be waived
1. Waiving party must actually have the right he is
1. Right to live and right to future support. renouncing;
2. Right to personality and family rights. (Pineda, 2. He must have full capacity to make the waiver;
2010) 3. Waiver must be clear and unequivocal;
3. Right to future inheritance. (Art. 1347, NCC) 4. Waiver must not be contrary to law, public
order, public morals, etc., or prejudicial to a
NOTE: This is especially so if the waiver is intended third person with a right recognized by law; and
to prejudice creditors. Hence, if an heir repudiates 5. When formalities are required, they must be
the inheritance to the prejudice of his own creditors, complied with. (Pineda, 2010)

2022 GOLDEN NOTES
Preliminary Title
Q: Edna filed an action for support against 2. Implied - If the provisions of the subsequent
Colonel Otamias. A deed of assignment was law are incompatible or inconsistent with those
executed by Otamias where he waived 50% of of the previous law, provided, it is impossible to
his pension benefits in favor of Edna and his reconcile the two laws.
children. The RTC issued a notice of
garnishment to AFP Pension and Gratuity Requisites of an Implied repeal
Management Center and ordered the automatic
deduction of support from the pension benefits 1. The laws cover the same subject matter; and
of Colonel Otamias. The CA annulled the order of 2. The latter is repugnant to the earlier. (Rabuya,
the RTC and cited PD No. 1638 which provides 2009)
for the exemption of the monthly pension of
retired military personnel from execution and NOTE: Implied repeals are NOT to be favored
attachment. Did Colonel Otamias validly waive because they rest only on the presumption that
the exemption granted by PD no. 1638 upon the because the old and the new laws are incompatible
execution of the deed of assignment? with each other, there is an intention to repeal the
old. (Ibid.)
A: YES. Under Article 6 of the Civil Code, rights may
be waived, unless the waiver is contrary to law, Instances of implied repeal
public order, public policy, morals or good customs,
or prejudicial to a third person with a right 1. When the provisions in the two acts on the
recognized by law. When Colonel Otamias executed same subject matter are irreconcilably
the Deed of Assignment, he effectively waived his contradictory, in which case, the later act, to the
right to claim that his retirement benefits are extent of the conflict, constitutes an implied
exempt from execution. The right to receive repeal of earlier one; and
retirement benefits belongs to Colonel Otamias. His
decision to waive a portion of his retirement 2. When the later act covers the whole subject of
benefits does not infringe on the right of third the earlier one and is clearly intended as a
persons, but even protects the right of his family to substitute; thus, it will operate to repeal the
receive support. The Deed of Assignment executed earlier law. (Lledo v. Lledo, A.M. No. P-95-1167,
by Colonel Otamias was not contrary to law; it was 09 Feb. 2010)
in accordance with the provisions on support in the
Family Code. Hence, there was no reason for the AFP Revival of repealed law
PGMC not to recognize its validity. (Edna Mabugay-
Otamias v. Republic, G.R. No. 189516, 08 June 2016) EXPRESS REPEAL IMPLIED REPEAL
Manner of Repeal
REPEAL OF LAWS
If the first law is If the first law is
It is the abrogation of an existing law by a legislative expressly repealed by repealed by implication
act. (Black’s Law Dictionary, 2009) the second law and by the second law and
the second law is the second law is
Laws are repealed only by subsequent ones, and repealed by the third repealed by the third
their violation or non-observance shall not be law. law.
excused by disuse, or custom or practice to the
contrary. (Art. 7(1), NCC) Effect of Repeal
Ways of repealing laws The first law is NOT The first law is revived
revived unless unless otherwise
1. Express - If the law expressly provides for such; expressly provided so. provided.

Civil Law
Conflict between general and special laws When a doctrine is overruled and a different view is
adopted, the new doctrine should be applied
If the general law was enacted prior to the special prospectively and should not prejudice parties who
law, the latter is considered the exception to the relied on the old doctrine. (Co v. CA, G.R. No. 100776,
general law. 28 Oct. 1993)
If the general law was enacted after the special law, Doctrine of Stare Decisis
the special law remains.
It is adherence to judicial precedents. Once a
XPNs: question of law has been examined and decided, it
1. There is an express declaration to the should be deemed settled and closed to further
contrary; argument.
2. There is a clear, necessary, and
irreconcilable conflict; or The doctrine, however, does not mean blind
3. The subsequent general law covers the adherence to precedents. If the doctrine is found to
whole subject and is clearly intended to be contrary to law or erroneous, it should be
replace the special law on the matter. abandoned. (Rabuya, 2006)
(Rabuya, 2009)
The precedent may also be abandoned if it has
Self-Lapsing laws ceased to be beneficial and useful to society in the
light of the changing conditions. (Pineda, 2010)
Laws that provide for their limited application. Once
the period for their effectivity lapses, the self- Obiter Dictum
lapsing laws automatically become ineffective. (e.g.
House Rental Law, Annual Appropriations Act, An opinion expressed by a court upon some
Import Control Law). (Pineda, 2010) question of law which is not necessary to the
decision of te case before it. Such are not binding as
Judicial Decisions precedent. (Ibid.)
Judicial decisions applying or interpreting the law, Duty to Render Judgment

or the Constitution shall form a part of the legal
system of the Philippines. (Art. 8, NCC) (1994 BAR) No judge or court shall decline to render judgment
by reason of the silence, obscurity, or insufficiency
Judicial decisions are evidence of what the laws of the laws. (Art. 9, NCC) (2003 BAR)
mean.
In criminal prosecutions, the judge must dismiss the
The application or interpretation placed by the case if a person is accused of a non-existent crime
Supreme Court upon a law is part of the law as of the following the maxim “nullum crimen, nulla poena
date of its enactment since the Court’s application sine lege.” (There is no crime when there is no law
or interpretation merely establishes the punishing it). (Rabuya, 2009)
contemporaneous legislative intent that the NOTE: This duty, however, is not a license for courts
construed law purports to carry into effect. to engage in judicial legislation. The duty of the
courts is to apply or interpret the law, not to make
However, the decisions referred to in Art. 8 of the or amend it.
NCC are only those enunciated by the SC. The
decisions of subordinate courts are only persuasive
in nature, and can have no mandatory effect.
(Rabuya, 2006)

2022 GOLDEN NOTES
Preliminary Title
Guidelines in the Rendition of Decisions under (Pineda, 2010) and

Art. 9 2. a custom is of public knowledge. (Sec. 2,
Rule 129, Rules of Court)
1. When there is no law exactly applicable to the
point in controversy, the custom of the place Requisites to Make a Custom an Obligatory Rule
shall be applied and in default thereof, the
general principles of law; 1. Plurality of acts, or various resolutions of a
2. Decisions of foreign courts; juridical question raised repeatedly in life;
3. Opinions of known authors and professors; 2. Uniformity, or identity of acts or various
4. Applicable rules of statutory construction; and solutions to the juridical question;
5. Principles formulated in analogous cases. 3. General practice by the great mass of the social
(Pineda, 2010) group;
4. Continued performance of these acts for a long
Presumption in case of Doubt in the period of time;
Interpretation of laws 5. General conviction that the practice corresponds
to a juridical necessity or that it is obligatory;
In case of doubt in the interpretation or application and
of laws, it is presumed that the lawmaking body 6. The practice must not be contrary to law, morals
intended right and justice to prevail. (Art. 10, NCC) or public order. (Rabuya, 2006)
(2003 BAR)
Application of customs in Civil cases
In case of silence, obscurity or insufficiency of
the law with respect to a particular controversy In civil cases, customs may be applied by the courts
in cases where the applicable law is:
If the law is silent or is obscure or insufficient with 1. Silent;
respect to a particular controversy, the judge shall 2. Obscure; or
apply the custom of the place, and in default thereof, 3. Insufficient.
the general principles of law and justice. (Rabuya,
2006) NOTE: Provided said customs are not contrary to
law, public morals, etc.
Customs which are contrary to law, public order,
public policy shall not be countenanced. (Art. 11, Non-applicability of customs in Criminal cases
NCC)
In criminal cases, customs cannot be applied
Customs because of the maxim nullum crimen nulla poena
sine lege (There is neither crime nor punishment,
Customs are rules of conduct, legally binding and without a law).
obligatory, formed by repetition of acts uniformly
observed as a social rule. Legal Periods
Necessity of proving customs Computation of period
GR: No judicial notice of customs. A custom must be 1. Year – 12 calendar months. (Sec. 31, Chapter
proved as a fact, according to the rules of evidence. VIII, Administrative Code of 1987, CIR v.
(Art. 12, NCC) Primetown Property Group, Inc., G.R. No. 162155,
28 Aug. 2007)
XPN: Courts may take judicial notice of a custom if:
1. there is already a decision rendered by the NOTE: In the said case, the Supreme Court
same court recognizing the custom; declared that the provision of Section 31,

Civil Law
Chapter VIII, Book I of the Administrative Code c. Any other applicable statute.
of 1987, being a more recent law, governs the
computation of legal periods with respect to The last day will automatically be the next working
counting “a year.” day.
A Calendar Month is “a month designated in the 2. From a contractual relationship – The act will
calendar without regard to the number of days it still become due despite the fact that the last
may contain.” It is the “period of time running from day falls on a Sunday or a legal holiday. This is
the beginning of a certain numbered day of the next because obligations arising from contracts have
month, and if there is not sufficient number of days the force of the law between the contracting
in the next month, then up to and including the last parties. (Pineda, 2010)
day of that month.”
Illustration: One calendar month from December

31, 2007 will be from January 1, 2008 to January 31,
2008; one calendar month from January 31, 2008
will be from February 1, 2008 until February 29,
2008. Hence, twelve calendar months from
December 31, 2007 is December 31, 2008; while
twelve calendar months from January 31, 2008 to
January 31, 2009. (Rabuya, 2009)
2. Month – 30 days, unless designated by their

name, in which case, they shall be computed
according to the number of days which they
respectively have;
3. Day – 24 hours;
4. Nighttime – from sunset to sunrise;
5. Week
a. With reference to the calendar – 7

successive days regardless of which day
it would start; or
b. Without reference to the calendar –
Sunday to Saturday. (Pineda, 2010)
NOTE: In the computation of period, the first day

shall be excluded, and the last day included.
If the last day falls on a Sunday or a Legal Holiday
If the act to be performed within the period is:
1. Prescribed or allowed by:

a. The Rules of Court;
b. An order of the court; or

2022 GOLDEN NOTES
Preliminary Title
Injury is the illegal invasion of a legal right; damage

B. HUMAN RELATIONS is the loss, hurt, or harm which results from the
injury; and damages are the recompense or
compensation awarded for the damage suffered.
(Panteleon v. American Express, G.R. No. 174269, 25
Abuse of right (2006 BAR)
Aug. 2010)
A right, though by itself legal because recognized or

There can be damage without injury in instances
granted by law as such, may nevertheless become
which the loss or harm was not the result of a
the source of some illegality. When a light is
violation of a legal duty. In such cases, the
exercised in a manner which does not conform with
consequences must be borne by the injured person
the norms enshrined in Article 19 and results in
alone (Ibid.)
damage to another, a legal wrong is thereby
committed for which the wrongdoer must be held
Articles 19, 20 and 21 in the enforcement and
responsible. (Tocoms Ph. v. Philips Electronics, G.R.
sanctions of abuse of right
No. 214046, 05 Feb. 2020)
While Article 19 lays down a rule of conduct for the

This principle is based upon the famous maxim
government of human relations and for the
summum jus summa injuria (the abuse of a right
maintenance of social order, it does not provide a
is the greatest possible wrong). (Arlegui v. CA, G.R.
remedy for its violation. Generally, an action for
No. 126437, 06 Mar. 2002)
damages under either Article 20 or Article 21 would
be proper. (Tocoms Ph. v. Philips Electronics, G.R. No.
Rationale: The exercise of a right ends when the
214046, 05 Feb. 2020)
right disappears, and it disappears when it is
abused, especially to the prejudice of others. It
Article 20 speaks of the general sanction for all
cannot be said that a person exercises a right when
other provisions of law which do not especially
he unnecessarily prejudices another or offends
provide for their own sanction. (Rabuya, 2006)
morals or good customs. (Pineda, 2010)
Article 21, on the other hand, speaks of act which is

Elements of abuse of right: (L-B-P)
legal but is contrary to morals, good custom, public
order or public policy and is done with intent to
1. There is a Legal right or duty;
injure. (Ibid.)
2. Such duty is exercised in Bad faith; and
3. It is for the sole intent of Prejudicing or injuring
Sanction for abuse of right under Article 20
another. (Pineda, 2010)
Generally, laws provide for their own sanctions and

Principle of Damnum Absque Injuria
methods of enforcement thereof. Article 20 applies
only in cases where the law does not provide for its
It means damage without injury.
own sanctions.
The legitimate exercise of a person's rights, even if

In view of the general sanction provided for under
it causes loss to another, does not automatically
Art. 20, a person however does not have an absolute
result in an actionable injury. The law does not
right to be indemnified, it is essential that some
prescribe a remedy for the loss. This principle does
right of his be impaired. Without such, he is not
not, however, apply when there is an abuse of a
entitled to indemnification. (Pineda, 2009)
person's right, or when the exercise of this right is
suspended or extinguished pursuant to a court
order. (Amonoy v. Gutierrez, G.R. No. 140420, 15 Feb.
2001)

Civil Law
Contra Bonus Mores (1996, 1998, 2006, 2009 Breach of promise to marry
BAR)
GR: A breach of promise to marry per se is not an
Any person who willfully causes loss or injury to actionable wrong.
another in a manner that is contrary to morals, good
customs, or public policy shall compensate the There is no provision in the NCC authorizing an
latter for the damage. (Art. 21, NCC) action for breach of promise to marry.
It fills countless gaps in the statutes, which leave so XPN: When the act constitutes one where damages
many victims of moral wrongs helpless, even pursuant to Art. 21 of the NCC may be recovered and
though they suffered material and moral damages. is not a mere breach of promise to marry, such as:
(Tolentino, 1987)
1. Where the woman is a victim of moral seduction.
Elements of an action under Art. 21: (Gashem Shookat Baksh v. CA, G.R. No. 97336, 19
Feb. 1993)
1. There is an act which is legal; 2. Where one formally sets a wedding and go
2. Such act is contrary to morals, good customs, through and spend for all the preparations and
public order or policy; and publicity, only to walk out of it when the
3. It is done with intent to injure. (Rabuya, 2006) matrimony was about to be solemnized.
(Wassmer v. Velez, G.R. No. L-20089, 26 Dec.
Civil liability for moral negligence 1964)
3. Where the woman is a victim of abduction and
There is no civil liability for moral negligence. A rape, and thereafter the accused promised to
person is required to act with prudence towards marry her to avoid criminal liability but later
others, but not with charity; the law imposes reneged on his promise. (Buñag, Jr. v. CA, G.R. No.
diligence and not altruism. Hence, the failure to 101749, 10 July 1992)
make sacrifices or egoism does not constitute a
source of liability. (Tolentino, 1987) A breach of promise to marry per se is not an
actionable wrong. But where a man's promise to
Illustration: A person who fails to render marry is the proximate cause of the acceptance of
assistance to a drowning person or to the victim of his love by a woman and his representation to fulfill
an accident, cannot be held liable for damages. (3 that promise thereafter becomes the proximate
Colin & Capitant 826) cause of the giving of herself unto him in a sexual
congress, proof that the promise was only a
While a person can be absolved from criminal deceptive device to inveigle her to obtain her
liability because his negligence was not proven consent to the sexual act, could justify the award of
beyond reasonable doubt, he can still be held civilly damages pursuant to Art. 21 not because of such
liable if his negligence was established by promise to marry but because of the fraud and
preponderance of evidence. The failure of the deceit behind it and the willful injury to her honor
evidence to prove negligence with moral certainty and reputation which followed thereafter. It is
does not negate (and is in fact compatible with) a essential, however, that such injury should have
ruling that there was preponderant evidence of been committed in a manner contrary to morals,
such negligence. And that is sufficient to hold him good customs or public policy. (Gashem Shookat
civilly liable. (Dominguez v. People, G.R. No. 167546, Baksh v. CA, G.R. No. 97336, 19 Feb. 1993)
17 July 2009)
Q: Soledad a high school teacher used to go
around together with Francisco who was almost
ten (10) years younger than her. Eventually,
intimacy developed between them after Soledad

2022 GOLDEN NOTES
Preliminary Title
became an underwriter in Cebu. One evening, 2. Acquisition is undue and at the expense of
they had sexual intercourse in Francisco’s cabin another, which means without any just or legal
on board M/V Escaño, to which he was then ground. (Pineda, 2010)
attached as apprentice pilot. After a few months,
Soledad advised Francisco that she was The principle of unjust enrichment is codified under
pregnant, whereupon he promised to marry her. Article 22 of the Civil Code: Every person who
Later their child was born. However, through an act of performance by another, or any
subsequently, Francisco married another other means, acquires or comes into possession of
woman. Soledad filed a complaint for moral something at the expense of the latter without just
damages for alleged breach of promise to marry. or legal ground, shall return the same to him.
May moral damages be recovered for breach of
promise to marry. For the principle to apply, the following requisites
must concur: (i) a person is unjustly benefited; and
A: NO. It is the clear and manifest intent of our law- (ii) such benefit is derived at the expense of or with
making body not to sanction actions for breach of damages to another. Moreover, to substantiate a
promise to marry. Francisco is not morally guilty of claim for unjust enrichment, the claimant must
seduction, not only because he was approximately unequivocally prove that another party knowingly
10 years younger, and a mere apprentice pilot when received something of value to which he was not
he became intimate with the 36-year old entitled and that the state of affairs are such that it
complainant, who is a highly enlightened former would be unjust for the person to keep the benefit.
high school teacher and a life insurance agent but,
also, because, the Court of First Instance found that, Q: Mekeni Food Corp. offered its employee
complainant “surrendered herself” to Francisco Locsin a car plan. One-half of the cost of the
because, “overwhelmed by her love” for him, she vehicle is to be paid by Mekeni and the other half
“wanted to bind” “by having a fruit of their is to be deducted from Locsin’s salary. The car
engagement even before they had the benefit of was an absolute necessity in Mekeni’s business
clergy. (Hermosisima v. CA, G.R. No. L-14628, 30 Sept. operations. Locsin paid for his 50% share
1960) through monthly salary deductions.
Subsequently, Locsin resigned. By then, a total of
NOTE: To constitute seduction there must be some ₱112,500 had been deducted from his monthly
sufficient promise or inducement and the woman salary and applied as part of his share in the car
must yield because of the promise or other plan. The vehicle remained in the ownership
inducement. If she consents merely from carnal lust and possession of Mekeni, and so Locsin sought
and the intercourse is from mutual desire, there is reimbursement of his amortization payments
no seduction. on the vehicle and posits that if the amount is
not reimbursed, unjust enrichment would
Prohibition against Unjust Enrichment result, as the vehicle remained in the possession
and ownership of Mekeni. Should the
No one shall unjustly enrich himself at the expense amortization payments be refunded in favor of
of another. (Pacific Merchandising Corp. v. Locsin?
Consolacion Insurance and Surety Co., Inc., G.R. No. L-
30204, 29 Oct. 1976) A: YES. The amortization payments must be
refunded in favor of Locsin. In the absence of
NOTE: The article applies only if: specific terms and conditions governing a car plan
agreement between the employer and employee,
1. Someone acquires or comes into possession of the employer may not retain the installment
“something” which means delivery or payments made by the employee on the car plan and
acquisition of things”; and treat them as rents for the use of the service vehicle,
in the event that the employee ceases his

Civil Law
employment and is unable to complete the permit unjust enrichment at Thrift and Save Bank’s
installment payments on the vehicle. expense.
The underlying reason is that the service vehicle The requisites for the application of the principle of
was precisely used in the employer's business; any unjust enrichment are clearly present in this case.
personal benefit obtained by the employee from its Here, it was unequivocally established that
use is merely incidental. Mekeni may not enrich Timothee withdrew and utilized the proceeds of the
itself by charging Locsin for the use of its vehicle Savings Bank Check fully knowing that he was not
which is otherwise absolutely necessary to the full entitled thereto. (Yon Mitori International Industries
and effective promotion of its business. (Locsin v. v. Union Bank of the Philippines, G.R. No. 225538, 14
Mekeni Food Corporation, G.R. No. 192105, 09 Dec. Oct 2020, J. Caguioa)
2001)
Accion In Rem Verso
Q: Timothee, doing business under the name
and style of Chalamet&Chalamet, deposited with It is an action for recovery of what has been paid or
his Thrift and Save Bank account, the amount of delivered without just cause or legal ground.
P420,000.00 through a Savings Bank Check (Rabuya, 2006) Every person who through an act of
which was drawn against the account of Dune performance by another, or any other means,
Hardware, one of Timothee’s alleged clients. acquires or comes into possession of something at
the expense of the latter without just or legal
Timothee then withdrew from the said account ground, shall return the same to him. (Art. 22, NCC)
the amount of P480,000.00. However, the
Savings Bank Check was returned to Thrift and Accion in rem verso is considered merely an
Save Bank as the account against which it was auxiliary action, available only when there is no
drawn had been closed. It was then that Thrift other remedy on contract, quasi-contract, crime,
and Save Bank discovered that Tan's account and quasi-delict. Hence, if there is an obtainable
had been mistakenly credited. Thus, Thrift and action under any other institution of positive law,
Save Bank demanded the return of said amount that action must be resorted to, and the principle of
but Timothee refused on the ground that the accion in rem verso will not lie. (Shinryo Ph. Co. v.
Savings Bank Check proceeded from a valid RRN Incorp. G.R. No. 172525, 20 Oct. 2010)
transaction between Chalamet&Chalamet and
Dune Hardware. Requisites of Accion in Rem Verso (E-L-W-A)
Should Timothee return the proceeds of the 1. The defendant has been Enriched;
check? 2. The plaintiff has suffered a Loss;
3. The enrichment of the defendant is Without just
A: YES. Timothee is bound to return the proceeds of or legal ground; and
the dishonored the Savings Bank Check based on 4. The plaintiff has no other Action based on
the principle of unjust enrichment. contract, quasi-contract, crime or quasi-delict.
(Rabuya, 2006)
The dishonor of the Savings Bank Check is not
disputed. Evidently, Thrift and Save Bank was under Accion in rem verso vs. Solutio Indebiti
no obligation to effect payment in favor of Timothee
precisely because the Savings Bank Check which In accion in rem verso, it is not necessary that there
Timothee deposited for collection had been should have been mistake in the payment unlike in
dishonored. Allowing Timothee to retain the solutio indebiti where mistake is an essential
proceeds of the dishonored Savings Bank Check element. (Ibid.)
despite not being entitled thereto would therefore

2022 GOLDEN NOTES
Preliminary Title
Accion in rem verso vs. Unjust Enrichment
An accion in rem verso is merely an auxiliary action

available only when there is no other remedy on
contract, quasi-contract, crime and quasi-delict,
while unjust enrichment, wherein one is unjustly
enriched at the expense of or from the efforts or
obligations of others, may be availed of as a
prerequisite for the enforcement of the doctrine of
restitution. (Shinryo Ph. Co. v. RRN Incorp. G.R. No.
172525, 20 Oct. 2010)
Liability without fault or negligence
Even when an act or event causing damage to

another’s property was not due to the fault or
negligence of the defendant, the latter shall be liable
for indemnity if through the act or event he was
benefited. (Art. 23, NCC)

Persons and Family Relations
In relation to the other

II. PERSONS AND FAMILY RELATIONS
Can exist without Cannot exist w/o
capacity to act. juridical capacity.
Limitation
A. PERSONS
Art. 38 (restriction)
Art. 39 (modification or
None.
limitation), among
1. CIVIL PERSONALITY
others.
Persons and Personality under the Civil Code

NOTE: A person is presumed to have capacity to act.
A person is every physical or moral, real or juridical (Standard Oil Co. v. Arenas, et al., G.R. No. L-5921, 15
Dec. 1908)
and legal being susceptible of rights and obligations
or being the subject of legal relations.
Status
Personality, on the other hand, is the aptitude to be
The position of an individual in relation to another
the subject, active or passive, of juridical relations.
(Rabuya, 2006) or others. It means a state or condition; social
position. The legal relation of an individual to the
Kinds of Persons rest of the community. (Pineda, 2010)
Civil Personality
1. Natural – Human beings and have physical
existence.
2. Juridical – Artificial persons and product of It is merely the external manifestation of either
juridical capacity or capacity to act. Consequently, it
legal fiction.
may be defined as the aptitude of being the subject
of rights and obligations. (2 Sanchez Roman 114-
JURIDICAL CAPACITY v. CAPACITY TO ACT
147)
CAPACITY Restrictions on capacity to act: (M-I-D-I-P-C)

JURIDICAL CAPACITY
TO ACT (Art. 38, NCC)
Definition
1. Minority - State of a person who is under
Fitness to be the subject the age of legal majority, that is, 18 years
Power to do acts with
of legal relations. (Art. of age;
legal effect. (Art. 37)
37)
2. Insanity – State of a person whose mental
Acquisition
faculties are diseased;
Inherent (co-exists with Through the fulfillment 3. Deaf-mute – Lacking sense of hearing and
the of specific legal the inability to speak;
natural person). activities.
NOTE: Only deaf-mutes who do not know
Loss how to write are declared by law incapable of
giving consent.
Through death and
Only through death.
other causes. 4. Imbecility – State of a person who while
advanced in age has the mental capacity

2022 GOLDEN NOTES
Civil Law
comparable to that of a child between two The enumeration in Articles 38 and 39 is not
and seven years of age; exclusive. There are others spread throughout the
Code (e.g., a lawyer cannot buy property in
NOTE: Imbecility is not insanity. (Pineda, litigation). (Art. 1491(5), NCC)
2010)
Juridical Persons
5. Prodigality – A spendthrift or squanderer
of his money and property without regard 1. The State and its political subdivisions;
to the needs and future of his family; 2. Other corporations, institutions and
entities for public interest or purpose,
NOTE: Prodigality per se does not created by law; their personality begins as
automatically modify or restrict a person’s soon as they have been constituted
capacity to act. There must be a declaration according to law;
thereof and be placed under guardianship 3. Corporations, partnerships and
under the Rules on Special Proceeding. associations for private interest or purpose
to which the law grants a juridical
6. Civil Interdiction – A mandatory personality, separate and distinct from that
accessory penalty imposed upon an of each shareholder, partner or member.
accused who is sentenced to a principal (Art. 44, NCC)
penalty not lower than reclusion
temporal. Rights of a Juridical Person
NOTE: The following are the effects of civil 1. Acquire and possess property of all kinds;
interdiction: 2. Incur obligations; and
1. Deprivation of parental or marital authority; 3. Bring civil or criminal actions (Art. 46, NCC)
2. Deprivation of the right to be the guardian of
the person and property of a ward;
3. Deprivation of his property by act inter vivos; Domicile of juridical persons
and
4. Deprivation of the right to manage one's 1. The place fixed by the law creating or
properties. (Art. 34, RPC) recognizing the juridical person;
2. In the absence thereof, the place where their
They do not exempt the incapacitated person from legal representation is established or where
certain obligations. they exercise their principal functions. (Art. 51,
NCC)
Circumstances that modify or limit capacity to
act (Art. 39, FC) (I-P-A-I-D-F-A-T-P-I-A) BIRTH
1. Insanity; Determination of personality

2. Prodigality;
3. Age; Birth determines personality, but the conceived
4. Imbecility; child shall be considered born for all purposes that
5. Deaf-Mute; are favorable to it, provided it is born later with the
6. Family Relations; conditions specified in Art. 41. (Art. 40, NCC)
7. Alienage;
8. Trusteeship; This provision has been superseded by Art. 5 of P.D.
9. Penalty; 603 (The Child and Youth Welfare Code), which
10. Insolvency; and declares that the civil personality of the child shall
11. Absence. commence from the time of his conception, for all

purposes favorable to him, subject to the 1. Right to Support

requirements of Art. 41. 2. To be Acknowledged
3. To receive Donations. (Rabuya, 2009)
Acquisition of personality through birth
DEATH
GR: Actual/Permanent Personality
Personality begins at birth, not at conception. Civil personality ceases depending upon the
classification of persons
XPN: Presumptive/Temporary – The law
considers the conceived child as born (Conceptus 1. Natural persons – by death
pro nato habetur) 2. Juridical persons – by termination of
existence
The provisional personality of a conceived child
(conceptus pro nato habetur) under Article 40, Effect of death on civil personality
expressly limits such provisional personality by
imposing the condition that the child should be Death extinguishes civil personality. However, the
subsequently born alive: "Provided it be born later rights and obligations of the deceased are not
with the condition specified in the following article." necessarily extinguished by his death. (Pineda,
(Geluz v. CA, G.R. No. L- 16439, 20 July 1961) 2009)
“Born later in accordance with law” (1995, Rules to apply in case there is doubt as to who
1999, 2008 BAR) died first
A fetus with an intra-uterine life of: It depends on whether the parties are called to
1. Less than 7 months – Must survive for at least 24 succeed each other.
hours after its complete delivery from the
maternal womb. 1. If successional rights are involved – Art. 43 of the
2. At least 7 months – If born alive it shall be NCC: Survivorship Rule, and Sec 3 (kk), Rule
considered born even if it dies within 24 hours 131 of the ROC: Presumption of simultaneous
after complete delivery. deaths between persons called to succeed each
other, applies.
Complete delivery
2. If NO successional rights are involved – Sec. 3 (jj),
It means the cutting of the umbilical cord from the Rule 131 of the ROC applies (Presumption of
mother’s womb. Survivorship).
Survivorship is determined from the
Provisional personality of a conceived child probabilities resulting from the strength and
the age of the sexes, according to the following
A conceived child, although as yet unborn, has a rules:
limited and provisional personality for all purposes a. If both were under the age of 15 years,
favorable to it. (Rabuya, 2006) Its personality is the older is deemed to have survived;
provisional because it depends upon the child being b. If both were above the age of 60, the
born alive later under certain conditions. younger is deemed to have survived;
c. If one is under 15 and the other above
Rights of the conceived child 60, the former is deemed to have
survived;
Since a conceived child has a provisional personality d. If both be over 15 and under 60 and the
even while inside the mother’s womb, it is entitled sex be different, the male is deemed to
to the following rights: (S-A-D) have survived, if the sex be the same,

2022 GOLDEN NOTES
Civil Law
the older; and Where there are facts, known or knowable, from
e. If one be under 15 or over 60, and the which a rational conclusion can be made, the
other between those ages, the latter is presumption does not step in, and the rule of
deemed to have survived. preponderance of evidence controls. It is the
"particular circumstances from which survivorship
NOTE: Both are to be applied only in the absence of can be inferred" that are required to be certain as
facts. tested by the rules of evidence. (Joaquin v. Navarro,
G.R. No. L-5426, 29 May 1953)
Q: Jaime, who is 65, and his son, Willy, who is 25,
died in a plane crash. There is no proof as to who Q: At the age of 18, Marian found out that she
died first. Jaime’s only surviving heir is his wife, was pregnant. She insured her own life and
Julia, who is also Willy’s mother. Willy’s named her unborn child as her sole beneficiary.
surviving heirs are his mother, Julia, and his When she was already due to give birth, she and
wife, Wilma. In the settlement of Jaime’s estate, her boyfriend Pietro, the father of her unborn
can Wilma successfully claim that her late child, were kidnapped in a resort in Bataan. The
husband, Willy, had a hereditary share since he military gave chase and after one week, they
was much younger than his father and therefore, were found in abandoned hut in Cavite. Marian
should be presumed to have survived longer? and Pietro were hacked with bolos. Marian and
the baby she delivered were both found dead,
A: NO. Wilma cannot successfully claim that Willy with the baby’s umbilical cord already cut.
had a hereditary share in his father’s estate. Pietro survived.
The presumption of simultaneous death applies in a. Can Marian’s baby be the beneficiary of the
cases involving the question of succession as insurance taken on the life of the mother?
between the two who died, who in this case, are b. Between Marian and the baby, who is
mutual heirs, being father and son. presumed to have died ahead?
c. Will Pietro, as the surviving biological father
Q: Suppose, Jaime had a life insurance policy of the baby, be entitled to claim the proceeds
with his wife Julia, and his son, Willy, as the of the life insurance on the life of Marian?
beneficiaries. Can Wilma successfully claim that (2008 BAR)
one-half of the proceeds should belong to Willy’s
estate? (1998 BAR) A:
a) YES. An unborn child may be designated as the
A: YES. Wilma can invoke the presumption of beneficiary in the insurance policy of the
survivorship and claim that one-half of the proceeds mother. An unborn child shall be considered a
should belong to Willy’s estate, under Sec.3 (jj)(5), person for purposes favorable to it provided it
Rule 131, of the Revised Rules of Court, as the is born later in accordance with the NCC. There
dispute does not involve succession. is no doubt that the designation of the unborn
Under this presumption, the person between the child as a beneficiary is favorable to the child.
ages of 15 and 60 is deemed to have survived one
whose age was over 60 at the time of their deaths. b) If the baby was not alive when completely
The estate of Willy endowed with juridical delivered from the mother’s womb, it was not
personality stands in place and stead of Willy, as born as a person, then the question of whom
beneficiary. between two persons survived will not be an
NOTE: The statutory rules in the determination of issue. The baby had an intra- uterine life of
sequence of death do not absolutely apply in a case more than 7 months; thus, it would be
where indirect and/or inferential evidence considered born if it was alive at the time of its
surrounding the circumstances of the deaths exists. complete delivery from the mother’s womb.
We can gather from the facts that the baby was
completely delivered. But whether or not it

was alive has to be proven by evidence. record of birth appearing

in the civil registry; or
c) Since the baby did not acquire any right under
the insurance contract, there is nothing for 2. When an admission of
Prieto to inherit. Prieto is not married to paternity is made by the
Marian neither was he named as the father in a public
beneficiary of the insurance. document or private
handwritten instrument
2. USE OF SURNAMES PROVIDED, the father has
the right to institute an
CHILDREN action before the regular
courts to prove non-
CHILD filiation during his
SURNAME TO BE USED lifetime. (Art. 176, FC, as
CONCERNED
amended by R.A. 9255)
Legitimate
Father’s Under the amendatory
(Art. 364, NCC) provision of R.A. 9255, the
use of the illegitimate
Note: There is no legal father’s surname is
Legitimated obstacle if the child chooses PERMISSIVE and not
to use the surname of the obligatory. (Rabuya, 2009)
mother, as he is equally Conceived
entitled to. (Sta. Maria, 2017) prior to Father’s
annulment (Art. 369, NCC)
Natural child of marriage
acknowledged Conceived
both parents. Father’s after
Mother’s
(Art. 364, NCC) annulment of
Natural child
marriage
by legal
fiction.
Natural child
acknowledged Recognizing parent
only one (Art. 364, NCC)
parent.
Adopted Adopter’s
Mother’s or father’s if
requisites of R.A. 9255 are
complied with.
NOTE: An illegitimate child

shall have the "option" to use
Illegitimate
the surname of the father in
the following instances:
1. If his/her filiation has

been expressly recognized
by the father through the

2022 GOLDEN NOTES
Civil Law
MARRIED WOMAN Wife shall continue using

Legally
the name and surname
FACTUAL separated
SURNAME employed by her, prior to
CIRCUMSTANCE (Art. 372, NCC)
TO BE USED the legal separation.
OF THE WIFE
1. Maiden first name and Widowed She may use the deceased’s
surname+ husband’s spouse husband’s surname as
surname; (Art. 373, NCC) though he is still living.
2. Maiden first name +

husband’s surname; CHANGE OF NAME
Valid marriage 3. Husband’s full name + Valid grounds for a change of name
(before husband prefix indicating that she is
dies) his wife (e.g., Mrs.); or 1. One has continuously used and been known
(Art. 370, NCC) since childhood by a Filipino name and was
4. Retain the use of her unaware of alien parentage;
maiden name. 2. The change results as a legal consequence, as in
legitimation;
NOTE: Use of husband’s 3. There is a sincere desire to adopt a Filipino
surname is not a duty but name to erase signs of former alienage, all in
merely an option for the good faith and without prejudicing anyone;
wife. 4. The change will avoid confusion;
5. The new first name or surname has been
Wife is the GUILTY spouse: habitually and continuously used by the
petitioner and is publicly known by that first
Shall resume using her name or nickname; (Pineda, 2010) or
maiden name 6. The name is:
a. Ridiculous,
Wife is the INNOCENT b. Extremely difficult to write or pronounce;
spouse: and
c. Dishonorable.
Marriage is 1. Resume using her maiden

name; or Q: Can a person change his registered first name
annulled
and sex, based on sex reassignment?
(Art. 371, NCC)
2. Continue using husband’s
surname. A: NO. Before a person can legally change his
given name, he must present proper or reasonable
XPNs: cause or any compelling reason justifying such
a. Court decrees change. In addition, he must show that he will be
otherwise; or prejudiced by the use of his true and official name.
b. She or the former Under the Civil Register Law, a birth certificate is a
husband is married historical record of the facts as they existed at the
again to another time of birth. Thus, the sex of a person is
person. determined at birth, visually done by the birth
attendant (the physician or midwife) by examining
the genitals of the infant. Considering that there is
no law legally recognizing sex reassignment, the
determination of a person’s sex made at the time of

his or her birth, if not attended by error, is Civil Code which is the general law on the use of
immutable. (Silverio v. Republic, G.R. No. 174689, 22 surnames. A basic tenet in statutory construction is
Oct. 2007) that a special law prevails over a general law. (Remo
v. Sec. of Foreign Affairs, G.R. No. 169202, 05 Mar.
Procedural requirements for a Petition for 2010)
Change of Name
Q: Petitioner filed a petition for change of name
1. 3-year residency in the province where the under Rule 103 of the Rules of Court before the
change is sought prior to the filing; (Sec. 2, Rule RTC, seeking "to correct the name 'Feliciano
103, ROC) Bartholome' as appearing in his birth certificate.
2. Must not be filed within 30 days prior to an He stated that he has been using the name
election; (Sec. 3, Rule 103, Rules of Court) 'Ruben Cruz Bartolome' since his childhood.”
3. Petition must be verified. (Sec. 2, Rule 103, ROC) The RTC denied the petition for failure to
exhaust administrative remedies, insufficiency
Q: Virginia Remo, a Filipino citizen, is married to of evidence, and improper venue. On appeal, the
Francisco Rallonza. In her passport, the CA affirmed the RTC decision ruling that
following entries appear: "Rallonza" as her petitioner should have filed a petition for the
surname, "Maria Virginia" as her given name, correction of entries in his birth certificate
and "Remo" as her middle name. Prior to the under R.A. No. 9048, instead of a Rule 103
expiration of her passport, Virginia applied for petition for change of name. Is the CA correct?
the renewal of her passport with the DFA, with a
request to revert to her maiden name and A: YES. In the instant case, petitioner seeks to
surname in the replacement passport. Virginia, change his first name, to include his middle, and to
relying on Article 370 of the Civil Code, contends correct the spelling of his surname, i.e., from
that the use of the husband’s surname by the "Feliciano Bartholome" as stated in his birth
wife is permissive rather than obligatory. Is certificate to "Ruben Cruz Bartolome". The Court
Virginia correct? agrees with the CA that the aforementioned changes
and corrections are covered by Section 1 of R.A. No.
A: NO. A married woman has an option, but not a 9048, as amended by R.A. No. 10172.
duty, to use the surname of the husband in any of
the ways provided by Art. 370 of the New Civil Code. Petitioner seeks to change his first name from
However, R.A. No. 8239 or the Philippine Passport "Feliciano " to "Ruben, " on the ground that he has
Act of 1996 limits the instances when a married been using the latter since childhood. The change
woman applicant may exercise the option to revert sought is covered by R.A. No. 9048 and should have
to the use of her maiden name. These are death of been filed with the local civil registry of the city or
husband, divorce, annulment, and declaration of municipality where the record being sought to be
nullity of marriage. corrected or changed is kept.
In case of renewal of passport, a married woman The inclusion of petitioner's middle name is covered
may either adopt her husband’s surname or by R.A. No. 9048, as amended. While substantial
continuously use her maiden name. However, once corrections of entries in the civil register are still
she opted to use her husband’s surname in her covered by Rule 108, typographical or clerical
original passport, she may not revert to the use of corrections must now be filed under R.A. No. 9048
her maiden name, except if any of the four grounds as amended. Misspelled names or missing entries
provided under R.A. No. 8239 is present. are clerical corrections if they are visible to the eyes
Further, even assuming R.A. No. 8239 conflicts with or obvious to the understanding and if they may be
the Civil Code, the provisions of R.A. No. 8239 which readily verified by referring to the existing records
is a special law specifically dealing with passport in the civil register. They must not, however, involve
issuance must prevail over the provisions of the any change in nationality, age or status.

2022 GOLDEN NOTES
Civil Law
As herein petitioner's allegedly misspelled agrees with the RTC that the use of the surname
surname, "Bartholome," may be readily corrected "Revilla" would create further confusion rather than
by merely referring to the existing records of the avoid it, given that: (1) petitioner has never legally
civil registrar, such as the surnames of petitioner's used the name "Revilla" despite having been
parents and immediate family members, the acknowledged in 1996; (2) he was legally adopted
petition should have been filed under R.A. 9048 and by Patrick Santos in 2001; (3) he has used the name
not under Rule 103 of the Rules. It likewise follows "Santos'' for all documentary purposes since his
that the petition should have been filed with the adoption; (4) although he is publicly known to be
local civil registry office of the city or municipality the son of Bong Revilla, he is known by his peers as
where the record being sought to be corrected or "Luigi Santos"; (5) even after a change of surname,
changed is kept, in accordance with Section 3 of No. Patrick Santos shall continue to be the father named
R.A. 9048 and not in accordance with the venue in his birth certificate; and (5) he only began using
provided in Rule 103 of the ROC. the surname "Revilla" when he entered show
business. Moreover, as adoption severs all legal ties
In sum, all changes sought by the petitioner fall between the adoptee and his or her biological
within the ambit of R.A. No. 9048. Petitioner may parents, there is no basis to allow petitioner to
only avail of the appropriate judicial remedies when change his name to "Revilla" simply because he is,
the changes/corrections sought through the biologically, the son of Bong Revilla and wants to
administrative proceeding are denied. (Bartolome v. associate himself with the Revilla family. (Santos v.
Republic, G.R. No. 2243288, 28 Aug. 2019, J. Republic, G.R. No. 250520, May 5, 2021, J. Caguioa)
Caguioa).
IDENTITY OF NAMES AND SURNAMES
Q: Petitioner Francis Luigi G. Santos filed a
petition for change of name under Rule 103 of In case of identity of names and surnames, the
the Rules of Court seeking to change his younger person shall be obliged to use such
surname from "Santos" to "Revilla" in his additional name or surname as will avoid confusion.
Certificate of Live Birth. He alleged that his (Art. 374, NCC)
parents, Lovely Maria T. Guzman and Jose Marie
Bautista, Jr., also known as Ramon Bong Revilla, In case of identity of names and surnames between
Jr., met and engaged in an intimate relationship. ascendants and descendants, the word "Junior" can
He was later born as "Francis Luigi Guzman.” be used only by a son. Grandsons and other direct
Lovely Guzman and Bong Revilla were never male descendants shall either:
married as the latter was already married to
Lani Mercado. Thus, petitioner's Certificate of 1. Add a middle name or the mother’s surname, or
Live Birth did not bear the Revilla surname and 2. Add the Roman Numerals II, III, and so on. (Art.
his father was marked as unknown. He filed the 375, NCC)
the petition in order to "avoid confusion," "to
show his sincere and genuine desire to associate NOTE: No person can change his name or surname
himself to Bong Revilla and to the Revillas," and without judicial authority. (Art. 376, NCC)
to ensure that his records show his true identity
as Bong Revilla's son. Should the court deny the USURPATION OF NAME
petition to change petitioner's surname from
"Santos" to "Revilla”? Elements of usurpation of name
A: YES. To justify a change of name, a person "must 1. Actual use of another’s name by the
show not only some proper or compelling reason defendant;
but also that he will be prejudiced by the use of his 2. Use is unauthorized;
true and official name." Unfortunately, none of these 3. Use of another’s name is to designate
reasons justify, in law, the desired change. The Court personality or identify a person. (Tolentino

v. CA, G.R. No. L-41427, 10 June 1988) mother, while illegitimate children, under Art. 176,
as amended by R.A. 9255, shall use the surname of
Remedies available to the person whose name their mother, unless their father recognizes their
has been usurped filiation, in which case, they may bear the father's
surname. In the case of these children, their
1. Civil – insofar as private persons are concerned: registration in the civil registry requires that their
a. Injunction middle names be indicated therein, apart of course
b. Damages from their given names and surnames. (In re:
Petition for Change of Name and/or Correction of
2. Criminal – when public affairs are prejudiced. Entry in the Civil Registry of Julian Lin Carulasan
Wang, G.R. No. 159966, 30 Mar. 2005)
NOTE: If the purpose of the usurpation is to conceal
one’s true identity, then, he is guilty of concealing Q: Does an illegitimate child have a middle
true name under Art. 178 of the RPC. (Pineda, 2010) name?
It can also be a violation of Commonwealth Act A: NO. An illegitimate child whose filiation is not
(C.A.) No. 142 or the Anti-Alias Law. recognized by the father bears only a given name
and his mother's surname and does not have a
Use of another’s name NOT always actionable middle name. It is only when the illegitimate child is
legitimated by the subsequent marriage of his
GR: The unauthorized or unlawful use of another parents or acknowledged by the father in a public
person’s surname gives a right of action to the latter. document or private handwritten instrument that
(Art. 378, NCC) he bears both his mother's surname as his middle
name and his father's surname as his surname.
XPN: It is NOT actionable when it is used as stage, (Ibid.)
screen or pen name.
Q: Honorato filed a petition to adopt his minor
Provided: illegitimate child Stephanie. Stephanie has been
1. Use is in good faith; using her mother's middle name and surname.
2. No injury is caused to the rights of the He prayed that Stephanie's middle name be
person whose name was used; changed from "Astorga" to "Garcia," which is her
3. Use is motivated by: mother's surname and that her surname
a. Modesty "Garcia" be changed to "Catindig," which is his
b. Desire to avoid unnecessary surname. This the trial court denied. Was the
trouble trial court correct in denying Honorato’s
c. Other reason not prohibited by law request for Stephanie’s use of her mother’s
or morals. surname as her middle name?
MIDDLE NAMES A: NO. The name of an individual has two parts – the
given name or proper name and the surname or
A middle name has practical or legal significance as family name. The given name may be freely selected
it serves to identify the maternal pedigree or by the parents for the child, but the surname to
filiation of a person and distinguishes him from which the child is entitled is fixed by law. The Civil
others who may have the same given name and Code (Arts. 364 to 380) is silent as to the use of a
surname as he has. Art. 364 of the Civil Code states middle name. Even Art. 176 of the Family Code, as
that legitimate and legitimated children shall amended by R.A. No. 9225 (An Act Allowing
principally use the surname of their father. Illegitimate Children to Use the surname of Their
Art. 174 of the Family Code gives legitimate children Father) is silent as to what middle name a child may
the right to bear the surnames of the father and use.

2022 GOLDEN NOTES
Civil Law
An adopted child is entitled to all the rights signed by both Andy and Aimee, registered the
provided by law to a legitimate child without status of Gianna as “legitimate”, her surname
discrimination of any kind, including the right to carrying that of Andy’s, and that her parents
bear the surname of her father and her mother. As were married to each other.
she had become a legitimate child on account of her
adoption, it follows that Stephanie is entitled to Can a judicial action for correction of entries in
utilize the surname of her father, Honorato Catindig, Gianna’s birth certificate be successfully
and that of her mother, Gemma Garcia. maintained to:
a. Change her status from “legitimate” to
Since there is no law prohibiting an illegitimate “illegitimate”;
child adopted by her natural father, like Stephanie, b. Change her surname from that of Andy’s to
to use, as middle name her mother's surname, the Aimee’s maiden surname?
High Court found no reason why she should not be c. Instead of a judicial action, can
allowed to do so. administrative proceedings be brought for
the purpose of making the above
NOTE: The Supreme Court granted the petition for corrections?
2 reasons: d. Assuming that Aimee is successful in
declaring her former marriage void, and
1. The adopted child's continued use of her Andy and Aimee subsequently married each
mother's surname as her middle name will other, would Gianna be legitimated? (2008
maintain her maternal lineage; and BAR)
2. It will also eliminate the stigma of her
illegitimacy. A:
a. A judicial action cannot be maintained to
The Supreme Court, in granting the petition, change the status of Gianna from “legitimate” to
predicated its ruling upon the statutory principle “illegitimate” child of Andy and Aimee. While it
that adoption statutes, being humane and salutary, is true that Gianna is the biological daughter of
should be liberally construed to carry out the Andy and Aimee conceived and born without
beneficent purposes of adoption. The modern trend marriage between them, Gianna is presumed,
is to consider adoption not merely as an act to under the law as the legitimate child of Aimee
establish a relationship of paternity and filiation, and her husband. This filiation may be
but also as an act which endows a child with impugned only by the husband. To correct the
legitimate status. (In the Matter of the Adoption of status of Gianna in her birth certificate from
Stephanie Nathy Astorga Garcia, G.R. No. 148311, 31 “legitimate child of Andy and Aimee” to
Mar. 2005) “illegitimate child of Andy and Aimee” will
amount to indirectly impugning her filiation as
NOTE: The touchstone for the grant of a change of the child of Aimee’s husband in a proper action.
name is that there be proper and reasonable cause What cannot be done directly cannot be done
for which the change is sought. (In re: Petition for indirectly.
Change of Name and/or Correction of Entry in the
Civil Registry of Julian Lin Carulasan Wang, G.R. No. b. A judicial action to change the surname of
159966, 30 Mar. 2005) Gianna from the surname of Andy to the maiden
surname of Aimee is also not allowed. Gianna,
Q: Giana was born to Andy and Aimee, who at the being presumed to be the legitimate child of
time of Giana’s birth were not married to each Aimee’s husband is required by law to be
other. While Andy was single at that time, Aimee registered under the surname of Aimee’s
was still in the process of securing a judicial husband. While it is true that Gianna’s
declaration of nullity on her marriage to her ex- registered surname is erroneous, a judicial
husband. Gianna’s birth certificate, which was action for correction of entry to change the

surname of Gianna to that of Aimee’s maiden problem, Gianna was conceived and born
surname will also be erroneous. A judicial before the court has decreed the nullity of her
action to correct an entry in the birth certificate mother’s previous marriage.
is allowed to correct an error and not to commit
another error. NOTE: The word "principally" as used in the codal
provision is not equivalent to "exclusively" so that
Alternative Answers: It may be noted that the there is no legal obstacle if a legitimate or
problems do not show whether Gianna was legitimated child should choose to use the surname
born while Aimee was living with her ex- of its mother to which it is equally entitled. If the
husband. Neither does it show who filed the mother's surname is used by the child since
judicial action to correct the entries. childhood and the child has been using it already in
various records, then there is an ample justification
If the problem is intended only for purpose of for the continuation of the use of the mother’s
determining whether factual changes are in surname. It is, therefore, not whimsical, but on the
order, then the answers are: contrary, is based on a solid and reasonable ground,
i.e. to avoid confusion. (Alfon v. Republic, G.R. No. L-
a. A Change from “legitimate to 51201, 29 May 1980)
illegitimate” is proper upon the proof of
lack of marriage between Andy and 3. ENTRIES IN THE CIVIL REGISTRY AND
Aimee. CLERICAL ERROR LAW
(R.A. NO. 9048, AS AMENDED)
b. If the child is considered
illegitimate, then she should follow the Significance
surname of her mother.
With the passage of R.A. No. 9048, an entry in the
c. Under R.A. No. 9048, only typographical errors civil register may now be changed or corrected
are allowed to be corrected administratively. when it involves clerical or typographical errors and
The change of status from legitimate to change of first name or nickname, the day and
illegitimate is not a typographical error and month in the date of birth or sex of a person where
even assuming that it is, its administrative it is patently clear that there was a clerical or
correction is not allowed under R.A. No. 9048. typographical error or mistake in the entry, which
Typographical errors involving status, age, can be corrected or changed by the concerned city
citizenship, and gender are expressly excluded or municipal registrar or consul general. Under this
from what may be corrected administratively. law, jurisdiction over application for change of first
name is now primarily lodged with administrative
The change of the surname is also not allowed officers. (De Leon & Wilwayco, 2020)
administratively. R.A. No. 9048 provides for an
administrative procedure for change of first Clerical or Typographical Error
name only and not for change of surname.
According to Sec. 2 (3), R.A. No. 9048 as amended,
d. NO, Gianna will not be legitimated. While the clerical or typographical error refers to mistake
court may have declared the marriage void ab committed in the performance of clerical work in
initio and, therefore, no marriage took place in writing, copying, transcribing or typing an entry in
the eyes of the law, Gianna will still not be the civil register that is harmless and innocuous,
legitimated. This is because at the time she was such as misspelled name or misspelled place of
conceived and born, her biological parents birth, mistake in the entry of day and month in the
could not have validly married each other. For date of birth or the sex of the person or the like,
their marriage to be valid, the court must first which is visible to the eyes or obvious to the
declare the first marriage null and void. In the understanding, and can be corrected or changed

2022 GOLDEN NOTES
Civil Law
only by reference to other existing record or Person Who May File the Petition:
records: Provided, however, That no correction must
involve the change of nationality, age, or status of Any person having direct and personal interest in
the petitioner. the correction of a clerical or typographical error in
an entry and/or change of first name or nickname in
Authority to Correct Clerical or Typographical the civil register may file, in person, a verified
Error and Change of First Name or Nickname petition with the local civil registry office of the city
or municipality where the record being sought to be
According to Sec. 1, R.A. No. 9048 as amended, no corrected or changed is kept. (Sec. 3, R.A. No. 9048,
entry shall be changed or corrected without a as amended)
judicial order.
Supporting Documents of the Petition (Sec. 5,
Coverage R.A. No. 9048, as amended)
Under R.A. No. 9048, as amended by R.A. No. 10172,
allows the following entries to be changed through 1. A certified true machine copy of the
administrative proceedings: certificate of the page of the registry book
containing the entry or entries sought to be
1. First Name; corrected or changed;
2. Nickname; 2. At least two (2) public or private
3. Place of Birth; documents showing the correct entry or
4. Day and month in the date of birth; and entries upon which the correction or
5. Sex. change shall be based; and
3. Other documents which the petitioner or
Exclusions (S-A-N) the city or municipal civil registrar or the
consul general may consider relevant and
The law is also clear that administrative correction necessary for the approval of the petition.
of entries must NOT involve:
1. Status; Duties of the City of Municipal Civil Registrar or
2. Age; and the Consul General (Sec. 6, R.A. No. 9048, as
3. Nationality. amended)
Grounds for Change of First Name or Nickname 1. Examine the petition and its supporting
(R-H-C) documents;
2. Post the petition in a conspicuous place
1. The petitioner finds the first name or provided for the purpose for ten (10)
nickname to be Ridiculous, tainted with consecutive days after he finds the petition
dishonor or extremely difficult to write or and its supporting documents sufficient in
pronounce; form and substance;
2. The new first name or nickname has been 3. Act on petition and render a decision not
Habitually and continuously used by the later than five (5) working days after
petitioner and he has been publicly known completion of the posting and/or
by the first names or nicknames in the publication requirement; and
community; or 4. Transmit a copy of his decision together
with records of the proceedings to the
3. The change will avoid Confusion. Office of Civil Registrar General within five
(5) working days from the date of the
decision.

Duties and Powers of Civil Registrar General from his domicile and 2 years thereafter have
(Sec. 7, R.A. No. 9048, as amended) elapsed without any news about him or since
the receipt of the last news, or 5 years have
1. Exercise within ten (10) working days the elapsed in case he left a person to administer his
power to impugn such decision by way of property. (Art. 384, NCC)
an objection based on the following
grounds: 3. Presumptive Death – the absentee is
a. The error is not clerical or presumed dead. (Jurado, 2011)
typographical;
b. The correction of an entry or Provisional absence
entries in the civil register is
substantial or controversial as it 1. When a person disappears from his domicile
affects the civil status of a person; 2. His whereabouts are unknown; and
or a. he did not leave any agent; or
c. The basis used in changing the first b. he left an agent, but the agent’s power
name or nickname of a person has expired.
does not fall under Section 4.
Remedy of an interested party, a relative, or a
2. Notify the city or municipal civil registrar friend of the absentee to protect the latter's
or the consul general of the action taken on interest
the decision. Upon receipt of the notice
thereof, the city or municipal civil registrar They may Petition the court for the Appointment of
or the consul general shall notify the a Representative to represent the absentee in all
petitioner of such action. that may be necessary.
4. ABSENCE Duty of the Court after appointing the

representative
a. CIVIL CODE PROVISIONS
The Court shall:
The special status of a person who has left his 1. Take the necessary measures to safeguard the
domicile and thereafter his whereabouts and fate rights and interests of the absentee;
are unknown, it being uncertain whether he is 2. Specify the powers, obligations, and
already dead or still alive. (Olaguiviel v. Morada, 63 remuneration of the representative;
O.G. 4940) 3. Regulate the powers, obligations and
remuneration according to the circumstances
Kinds of absence by the rules concerning guardians. (Art. 382,
NCC)
1. Physical Absence
2. Legal Absence Order of preference in the appointment of a
representative
Stages of Absence 1. Spouse present, except, when legally separated.

2. In the absence of spouse, any competent
1. Provisional Absence – when a person person. (Art. 383, NCC)
disappears from his domicile his whereabouts
being unknown, without leaving an agent to NOTE: The administrator of the absentee's property
administer his property. (Art. 381, NCC) shall be appointed in accordance with the same
order.
2. Declared Absence – when a person disappears

2022 GOLDEN NOTES
Civil Law
JUDICIAL DECLARATION OF ABSENCE When Administration of the property of the

absentee ceases
Requisites
1. Absentee appears personally or by means
of an agent.
1. The absentee has disappeared from his
2. Death of the absentee is proved, and his
domicile;
testate or intestate heirs appear.
2. His whereabouts are not known; and
3. A third person appears, showing by a
3. He has been absent without any news for 2
proper document that he has acquired the
years, if nobody was left to administer his
absentee's property by purchase or other
property or 5 years if somebody was left to
title. (Art. 389, NCC)
administer such property. (Art. 384, NCC)
When absence may be declared PRESUMPTION OF DEATH UNDER THE NCC
1. The absentee left no agent to administer his Kinds:

property- after two (2) years without any
news about the absentee or since receipt of 1. Ordinary presumption – ordinary
the last news. absence; absentee disappears under
2. The absentee has left a person to normal conditions without danger or idea
administer his property- after five (5) of death.
years. (Art. 387, NCC) 2. Extraordinary presumption – qualified
absence; disappearance with great
Persons who may ask for the declaration of probability of death.
absence
Rules in Ordinary presumption of death (Art.
1. Spouse present; 390, NCC)
2. Heirs instituted in a will, who may present
an authentic copy of the same; In case of:
3. Relatives who may succeed by intestacy;
4. Persons who may have over the property of 1. Disappearance upon or before reaching the age
the absentee some right subordinated to of seventy-five (75) years:
the condition of his death. (Art. 385, NCC) a. After an absence of seven (7) years -
the absentee is presumed dead for all
Effectivity of judicial declaration of absence purposes except succession.
b. After an absence of ten (10) years - the
Judicial declaration of absence takes effect six (6) absentee is presumed dead for all
months after its publication in a newspaper of purposes including succession.
general circulation. (Art. 386, NCC) NOTE: It is only after an absence of ten
(10) years that his succession will be
NOTE: A judicial declaration of absence is necessary opened. In that case, his heirs can now
for interested persons to be able to protect their commence an intestate proceeding, for
rights, interests and benefits in connection with the purposes of dividing or distributing the
person who has disappeared. It is also necessary to estate of the absentee, for by then, the
protect the interest of the absentee. (Sta. Maria, Jr., right of inheritance shall have already
2010) become choate, for under Article 777 of
the Civil Code, it is from the moment of
death that there shall be transmission
of rights, properties, or even
obligations from the decedent to the

heirs because of the presumptive death executory even after the lapse of the reglementary
of the absentee. There is no physical period within which an appeal may be taken, then a
death, but there is only presumptive petition for such a declaration is useless,
death under the situation. (Albano, unnecessary, superfluous and of no benefit to the
2006) petitioner.
2. Disappearance after the age of seventy-five (75) Q: Juana married Arturo in January 1973.
years after an absence of five (5) years -the However, because the latter was unemployed
absentee is presumed dead for all purposes the spouses constantly argued. Thus, Arturo left
including succession. the conjugal dwelling on October 1975. Years
passed without any word from Arturo. Juana
NOTE: The word “absence” in the rule that a didn’t hear any news of Arturo, his whereabouts
presumption of death is raised by the “absence” of a or even if he was alive or not. Believing that
person from his domicile when unheard of for seven Arturo was already dead, Juana married Dante
years, means that a person is not at the place of his on June 1986. Subsequently, however, Dante's
domicile and his actual residence is unknown, and it application for naturalization filed with the
is for this reason that his existence is doubtful, and United States Government was denied because
that, after seven years of such absence, his death is of the subsisting marriage between Juana and
presumed. But removal alone is not enough. (Sta. Arturo. Hence, on March 2007, Juana filed a
Maria, 2010) Petition for declaration of presumptive death of
Arturo with the RTC. The RTC dismissed the
Presumption of death for all purposes petition on the ground that Juana was not able to
prove the existence of a well-grounded belief
The following are presumed dead for all purposes that her husband Arturo was already dead as
including the division of estate among heirs in case required under Article 41 of the Family Code
of extraordinary presumption of death: (FC).
1. Person on board a vessel lost during a sea
voyage, or an airplane which is missing, who a. Was the RTC correct in dismissing the
has not been heard of for four (4) years since petition based on Article 41 of the FC?
the loss of the vessel or airplane; b. Will the petition for declaration of
2. Person in the armed forces who has taken at in presumptive death, therefore, prosper?
war, and has been missing for four (4) years;
3. Person who has been in danger of death under A:
other circumstances and his existence has not a. NO. Since the marriages were both celebrated
been known for four (4) years. (Art. 391, NCC) under the auspices of the NCC, it is the NCC that
applies to this case not Article 41 of the FC.
Q: May a petition for the declaration of Under the NCC, proof of well-founded belief is
presumptive death be the subject of a judicial not required. Juana could not have been
declaration, if it is the only question upon which expected to comply with the requirement of
a competent court has to pass? proof of "well- founded belief" since the FC was
not yet in effect at the time of her marriage to
A: NO. Under the NCC, the presumption of death is Dante. Moreover, the enactment of the FC in
established by law and no court declaration is 1988 does not change this conclusion. The FC
needed for the presumption to arise. Moreover, it is shall have no retroactive effect if it impairs
clear that a judicial declaration that a person is vested rights. To retroactively apply the
presumptively dead, being a presumption juris provisions of the FC requiring Juana to exhibit
tantum only, subject to contrary proof, cannot "well- founded belief" will, ultimately, result in
become final. If a judicial decree declaring a person the invalidation of her second marriage, which
presumptively dead, cannot become final and was valid at the time it was celebrated.

2022 GOLDEN NOTES
Civil Law
Such a situation would be untenable and would b. PRESUMPTIVE DEATH OF ABSENT SPOUSE
go against the objectives that the FC wishes to UNDER THE FAMILY CODE
achieve.
Requisites for issuance of judicial declaration of
b. NO. Under the NCC, the presumption of death is presumptive death
established by law and no court declaration is
needed for the presumption to arise. For the 1. That the absent spouse has been missing for
purposes of the civil marriage law, Art. 83 of the four consecutive years, or two consecutive
NCC, it is not necessary to have the former years if the disappearance occurred where
spouse judicially declared an absentee. The law there is a danger of death under the
only requires that the former spouse has been circumstances laid down in Article 391 of the
absent for seven consecutive years at the time NCC;
of the second marriage, that the spouse present
does not know his or her former spouse to be 2. That the present spouse wishes to remarry;
living, that such former spouse is generally
reputed to be dead and the spouse present so 3. That the present spouse has a well-founded
believes at the time of the celebration of the belief that the absentee is dead; and
marriage. Since death is presumed to have
taken place by the seventh year of absence, NOTE: The "well-founded belief in the
Arturo is to be presumed dead starting October absentee's death requires the present spouse
1982. to prove that his/her belief was the result of
diligent and reasonable efforts to locate the
Further, the presumption of death cannot be the absent spouse and that based on these efforts
subject of court proceedings independent of the and inquiries, he/she believes that under the
settlement of the absentee’s estate. In case the circumstances, the absent spouse is already
presumption of death is invoked independently dead. It necessitates exertion of active effort,
of such an action or special proceeding, there is not a passive one. As such, the mere absence of
no right to be enforced nor is there a remedy the spouse for such periods prescribed under
prayed for by the petitioner against her absent the law, lack of any news that such absentee
husband. Neither is there a prayer for the final spouse is still alive, failure to communicate, or
determination of his right or status or for the general presumption of absence under the NCC
ascertainment of a particular fact, for the would not suffice. The premise is that Article
petition does not pray for a declaration that the 41 of the FC places upon the present spouse the
petitioner's husband is dead, but merely asks burden of complying with the stringent
for a declaration that he be presumed dead requirement of "well-founded belief which can
because he had been unheard of for seven years. only be discharged upon a showing of proper
In sum, the petition for a declaration that the and honest-to-goodness inquiries and efforts
petitioner's husband is presumptively dead, to ascertain not only the absent spouse's
even if judicially made, would not improve the whereabouts, but more importantly, whether
petitioner's situation, because such a the latter is still alive or is already dead.
presumption is already established by law. (Republic v. Tampus, G.R. No. 214243, 16 March
(Valdez v. Republic, G.R. No. 180863, 08 Sept. 2016)
2009)
4. That the present spouse files a summary
proceeding for the declaration of presumptive
death of the absentee. (Republic v. Nolasco, G.R.
No. 94053, 17 Mar. 1993)

The requirement for a judgment of the presumptive Remar's search. Remar also failed to identify which
death of the absent spouse is for the benefit of the of Lovelyn's relatives he had communicated with,
spouse present because she could be charged and and disclose what he learned from these
convicted of bigamy if the defense of good faith communications. Again, this leaves the Court with
based on mere testimony is found incredible. no basis to determine whether the information
(Manuel v. People, G.R. No. 165842, 29 Nov. 2005) Remar learned is sufficient to engender a well-
founded belief that Lovelyn is dead. Remar never
Q: Remar and Lovelyn met in Bislig City got sought the help of the authorities to locate Lovelyn
married in 1997. They begot two (2) children. in the course of her ten (10)-year disappearance.
To support his family, Remar started working as (Republic v. Quiñonez, G.R. No. 237412, 06 Jan. 2020,
a security guard at the National Food Authority J. Caguioa)
Warehouse in October 1997, although later on,
he transferred to Cebu City for an opportunity to Q: Nilda was married to Dante on November 29,
earn a bigger salary. In 2001, Lovelyn went on a 1975. On December 2, 1975, Dante, a member of
3-month vacation in Manila to visit her relatives. the Armed Forces of the Philippines, left Nilda
Initially, they constantly communicated through and went to Jolo, Sulu, where he was assigned.
cellphone. Thereafter, the calls and text Since then, Nilda has heard no news from Dante
messages tapered off until the communication and has tried everything to locate him by
between the spouses ceased altogether. making inquiries with his parents, relatives, and
neighbors as to his whereabouts, but
Remar was told that Lovelyn was already unfortunately, they also did not know where to
cohabiting with another man and would no find him. Thus, on April 14, 2009, she filed
longer be coming back out of shame. In 2003, before the RTC a petition to declare Dante as
Remar's uncle informed him that Lovelyn was in presumptively dead for the purpose of
Bislig City to visit their children. Remar followed remarriage, alleging that after the lapse of
her only to be told that his wife had already left thirty-three (33) years without any kind of
for Lingig, Surigao del Sur. He went after her in communication from him, she firmly believes
Lingig but to no avail. In 2004, Remar went to that he is already dead. Both RTC and CA ruled
Batangas and Cavire to look for her but he was in favor of Nilda. Is the ruling of the courts
not able to find her. In 2013, after almost 10 correct?
years, he filed a Petition for Declaration of
Presumptive Death. Rule on the petition. A: NO. Before a judicial declaration of presumptive
death can be obtained, it must be shown that the
A: Remar’s efforts fell short of the degree of prior spouse had been absent for four consecutive
diligence required by law and jurisprudence. To years and the present spouse had a well-founded
recall, Remar's efforts to locate Lovelyn are belief that the prior spouse was already dead.
marked by the following acts: 1. Remar travelled
to several places where his wife had been The "well-founded belief in the absentee's death
reportedly seen particularly, Bislig City and the requires the present spouse to prove that his/her
Municipality of Lingig in the province of Surigao belief was the result of diligent and reasonable
del Sur, Metro Manila, Batangas and Cavite; and efforts to locate the absent spouse and that based on
2. Remar constantly communicated with these efforts and inquiries, he/she believes that
Lovelyn's relatives for a period of ten (10) years under the circumstances, the absent spouse is
to ascertain Lovelyn's whereabouts. already dead. It necessitates exertion of active
effort, not a passive one. As such, the mere absence
Unfortunately, Remar failed to allege, much less of the spouse for such periods prescribed under the
prove, the extent of the search he had conducted in law, lack of any news that such absentee spouse is
the places where he claims to have gone. This leaves still alive, failure to communicate, or general
the Court with no way to ascertain the extent of

2022 GOLDEN NOTES
Civil Law
presumption of absence under the NCC would not remarriage. Ricardo remarried thereafter. In his
suffice. petition for declaration of absence or
presumptive death, Ricardo alleged that he and
In this case, Nilda testified that after Dante's Celerina rented an apartment somewhere in San
disappearance, she tried to locate him by making Juan, Metro Manila, after they had gotten
inquiries with his parents, relatives, and neighbors married. After a year, they moved to Tarlac City.
as to his whereabouts, but unfortunately, they also They were engaged in the buy and sell business.
did not know where to find him. Other than making Ricardo claimed that their business did not
said inquiries, however, Nilda made no further prosper. As a result, Celerina convinced him to
efforts to find her husband. She could have called or allow her to work as a domestic helper in Hong
proceeded to the AFP headquarters to request Kong. Ricardo initially refused but because of
information about her husband but failed to do so. Celerina's insistence, he allowed her to work
She did not even seek the help of the authorities or abroad. She allegedly applied in an employment
the AFP itself in finding him. (Republic v. Tampus, agency in Ermita, Manila. She left Tarlac two
G.R. No. 214243, 16 Mar. 2016) months after and was never heard from again.
Ricardo further alleged that he exerted efforts to
Finality of judicial declaration of presumptive locate Celerina. He went to Celerina's parents in
death Cubao, Quezon City, but they, too, did not know
their daughter's whereabouts. He also inquired
GR: The order of the trial court granting the petition about her from other relatives and friends, but
for judicial declaration of presumptive death under no one gave him any information.
Article 41 of the FC is immediately final and
executory by the express provision of Article 247 of Ricardo claimed that it was almost 12 years
the FC. (Republic v. Bermudez-Lorino, G.R. No. from the date of his RTC petition since Celerina
160258, 19 Jan. 2005) left. He believed that she had passed away.
According to Celerina, her true residence was in
XPN: Under Article 41 of the FC, the losing party in Neptune Extension, Congressional Avenue,
a summary proceeding for the declaration of Quezon City. This residence had been her and
presumptive death may file a petition for certiorari Ricardo's conjugal dwelling until Ricardo left. As
with the CA on the ground that, in rendering a result of Ricardo's misrepresentation, she was
judgment thereon, the trial court committed grave deprived of any notice of and opportunity to
abuse of discretion amounting to lack of oppose the petition declaring her presumptively
jurisdiction. From the decision of the CA, the dead. Celerina claimed that she never resided in
aggrieved party may elevate the matter to this Court Tarlac. She also never left and worked as a
via a petition for review on certiorari under Rule 45 domestic helper abroad. Neither did she go to an
of the Rules of Court. (Republic v. Granada, G.R. employment agency. She also claimed that it was
No.187512, 13 June 2012) not true that she had been absent for 12 years.
Ricardo was aware that she never left their
The declaration of presumptive death is without conjugal dwelling in Quezon City. It was he who
prejudice to the effect of reappearance of the absent left the conjugal dwelling to cohabit with
spouse. (Sta. Maria, 2010) The declared another woman. Celerina referred to a joint
presumption will still only be prima facie, and can affidavit executed by their children to support
be overthrown by evidence. (People v. Archilla, G.R. her contention that Ricardo made false
No. L-15632, 28 Feb. 1961) allegations in his petition. Is the reappearance
not a sufficient remedy since it will only
Q: The RTC declared Celerina presumptively terminate the subsequent marriage but not
dead after her husband, Ricardo, had filed a nullify the effects of the declaration of her
petition for declaration of absence or presumptive death and the subsequent
presumptive death for the purpose of marriage?

A: YES. The proper remedy for a judicial declaration Moreover, a judgment declaring presumptive death
of presumptive death obtained by extrinsic fraud is is a defense against prosecution for bigamy.
an action to annul the judgment. An affidavit of
reappearance is not the proper remedy when the It is true that in most cases, an action to declare the
person declared presumptively dead has never nullity of the subsequent marriage may nullify the
been absent. effects of the subsequent marriage, specifically, in
relation to the status of children and the prospect of
The filing of an affidavit of reappearance is an prosecuting a respondent for bigamy. However, "a
admission on the part of the first spouse that his or Petition for Declaration of Absolute Nullity of Void
her marriage to the present spouse was terminated Marriages may be filed solely by the husband or
when he or she was declared absent or wife." This means that even if Celerina is a real party
presumptively dead. Moreover, a close reading of in interest who stands to be benefited or injured by
the entire Article 42 reveals that the termination of the outcome of an action to nullify the second
the subsequent marriage by reappearance is subject marriage, this remedy is not available to her.
to several conditions. The existence of these Therefore, for the purpose of not only terminating
conditions means that reappearance does not the subsequent marriage but also of nullifying the
always immediately cause the subsequent effects of the declaration of presumptive death and
marriage's termination. Reappearance of the absent the subsequent marriage, mere filing of an affidavit
or presumptively dead spouse will cause the of reappearance would not suffice. Celerina's choice
termination of the subsequent marriage only when to file an action for annulment of judgment will,
all the conditions enumerated in the Family Code therefore, lie. (Santos v. Santos, G.R. 187061, 08 Oct.
are present. Hence, the subsequent marriage may 2014)
still subsist despite the absent or presumptively
dead spouse's reappearance. NOTE: A mere filing of an affidavit of reappearance
would not suffice for the purpose of terminating the
A subsequent marriage contracted in bad faith, even subsequent marriage and also of nullifying the
if it was contracted after a court declaration of effects of the declaration of presumptive death and
presumptive death, lacks the requirement of a well- the subsequent marriage. Celerina does not admit to
founded belief that the spouse is already dead. The having been absent. She also seeks not merely the
first marriage will not be considered as validly termination of the subsequent marriage but also the
terminated. Marriages contracted prior to the valid nullification of its effects. A subsequent marriage
termination of a subsisting marriage are generally contracted in bad faith, even if it was contracted
considered bigamous and void. Only a subsequent after a court declaration of presumptive death, lacks
marriage contracted in good faith is protected by the requirement of a well-founded belief that the
law. Therefore, the party who contracted the spouse is already dead; the first marriage will not be
subsequent marriage in bad faith is also not immune considered as validly terminated. Hence, Celerina’s
from an action to declare his subsequent marriage choice to file an action for annulment of judgment is
void for being bigamous. the proper remedy as annulment of judgment is the
remedy when the RTC’s judgment, order, or
The prohibition against marriage during the resolution has become final, and the remedies of
subsistence of another marriage still applies. Since new trial, appeal, petition for relief (or other
an undisturbed subsequent marriage under Article appropriate remedies) are no longer available
42 of the FC is valid until terminated, the "children through no fault of the petitioner. (Ibid.)
of such marriage shall be considered legitimate, and
the property relations of the spouses in such Termination of Subsequent Bigamous Marriage
marriage will be the same as in valid marriages." If
it is terminated by mere reappearance, the children The recording of the affidavit of reappearance of the
of the subsequent marriage conceived before the absent spouse in the civil registry of the residence
termination shall still be considered legitimate. of the parties to the subsequent marriage shall

2022 GOLDEN NOTES
Civil Law
automatically terminate the terminable bigamous notice to the spouses in the civil registry of the
marriage (subsequent marriage) unless there is a residence of the parties, the marriage is
judgment annulling the previous marriage or automatically terminated. (Albano, 2006)
declaring it void ab initio. (Art. 42, FC)
In Art. 42, no judicial proceeding to annul a B. MARRIAGE

subsequent marriage contracted under Art. 41 is
necessary. Also, the termination of the subsequent
marriage by affidavit provided for in Art. 42 does
Marriage under the Family Code
not preclude the filing of an action in court to prove
the reappearance of the absentee and obtain a
A special contract of permanent union between a
declaration of dissolution or termination of the
man and a woman entered into in accordance with
subsequent marriage. (SSS v. Vda. De Bailon, G.R. No.
law for the establishment of conjugal and family life.
165545, 24 Mar. 2006)
It is the foundation of the family and an inviolable
social institution whose nature, consequences, and
Q: Gregorio married Janet. When he was
incidents are governed by law and not subject to
employed overseas, he was informed that Janet
stipulation, except that marriage settlements may
left. Five years later, he filed an action for her to
fix the property relations during the marriage
be declared presumptively dead without
within the limits provided by the Family Code. (Art.
alleging that he wishes to remarry. Will his
1, FC)
action prosper?
Nature of Marriage
A: NO. A petition to declare an absent spouse
presumptively dead may not be granted in the
Under the Constitution, “marriage, as an inviolable
absence of any allegation that the spouse present
social institution, is the foundation of the family and
will remarry. (Republic v. Nolasco, G.R. No. 94053, 17
shall be protected by the State.” (Sec. 2, Art. XV, 1987
Mar. 1993)
Constitution)
Q: What is the effect if the parties to the

Marriage is an institution in which the community is
subsequent marriage obtain knowledge that the
deeply interested. The State has surrounded it with
spouse absent has reappeared?
safeguards to maintain its purity, continuity and
permanence. The security and stability of the State
A: NONE. If the absentee reappears, but no step is
are largely dependent on it. It is in the interest and
taken to terminate the subsequent marriage, either
duty of each member of the community to prevent
by affidavit or by court action, such absentee's mere
the bringing about of a condition that would shake
reappearance, even if made known to the spouses in
its foundation and lead to its destruction. The
the subsequent marriage, will not terminate such
incidents of the status are governed by law, not by
marriage. (SSS v. Vda. De Bailon, G.R. No. 165545, 24
will of the parties. (Beso v. Daguman, A.M. No. MTJ-
Mar. 2006)
99-1211, 28 Jan. 2000)
Any interested party of the parties, including the

Marriage as a status
parents, their children, the present spouse, or the
subsequent spouse of the present spouse, may file
As a status, the principle in contracts that the parties
the sworn statement of reappearance of the spouse
may, by mutual agreement, put an end to it, cannot
who was absent. (Sta. Maria, 2010)
certainly apply, for the consequences of the
marriage as a rule are fixed by law. (Paras, 2016)
The law says that if the absent spouse reappears or
if there is registration of an affidavit of
reappearance by any interested person with due

Evidence of Marriage 3. Lack of legal impediment to marry

The legal impediments which may affect legal
The best documentary evidence of a marriage is the capacity are those mentioned in Articles 37 and
marriage contract. However, the failure to present 38 of the FC. Thus, the contracting parties are
it is not, however, proof that no marriage took place, not legally capacitated to marry each other.
as other evidence may be presented to prove
marriage. (Balogbog v. CA, G.R No. 83598, 07 Mar. Other requirements needed for the validity of
1997) such marriage depending upon the age of the
contracting party
Proof of marriage
ADDITIONAL
1. Testimony of a witness to the matrimony; AGE
REQUIREMENTS
2. The couple’s public and open cohabitation as
husband and wife after the alleged wedlock; Parental consent and
3. The birth and baptismal certificate of children 18 to 21 years old
Marriage counseling
born during such wedlock; and
4. The mention of such nuptial in subsequent Parental advice and
22 to 25 years old
documents. (Sarmiento v. CA, G.R. No. 96740, 25 Marriage counseling
Mar. 1999)
Absence of the additional requirement of

1. REQUISITES OF MARRIAGE
parental advice
1. Legal capacity of the contracting parties who
It does not make the marriage void or voidable, it
must be a male and a female; and
only affects the release of the marriage license to be
2. Consent freely given in the presence of the
postponed until (3) three months from the complete
solemnizing officer. (Art. 2, FC)
publication of the application. (Art. 15, FC)
Legal capacity of the parties to marry
Q: A complaint was filed against Judge Rojo for
allegedly violating the Code of Judicial Conduct
1. Age – at least 18 years of age
and for gross ignorance of the law. Rojo
The attainment of the required minimum age
solemnized marriages without the required
for marriage should be reckoned, not on the
marriage license. He instead notarized affidavits
date of filing of the application for issuance of a
of cohabitation and issued them to the
marriage license, but on the date of the
contracting parties. He notarized these
marriage. Pursuant to Article 6 of the Family
affidavits on the day of the parties’ marriage.
Code, parties may contract marriage on the date
of the solemnization of the marriage, i.e., when
Was Judge Rojo’s notarization of affidavits of
they appear personally before the solemnizing
cohabitations proper?
officer and declare in the presence of not less
than two witnesses of legal age that they take
A: NO. Judge Rojo is guilty for violating the Code of
each other as husband and wife. (Rabuya, 2009)
Judicial Conduct and for gross ignorance of the law.
As a solemnizing officer, the judge’s only duty
2. Sex – between a male and a female
involving the affidavit of cohabitation is to examine
Two females are incapable of entering into
whether the parties have indeed lived together for
marriage. There is no constitutional protection
at least five years without legal impediment to
of the rights of marriage between two persons
marry. The guidelines do not state that the judge can
of the same sex. (Jones v. Hallahan, 501 S.W.2d
notarize the parties’ affidavit of cohabitation.
588, 09 Nov. 1973)
Affidavits of cohabitation are documents not
connected with the judge’s official function and duty

2022 GOLDEN NOTES
Civil Law
to solemnize marriages. Notarizing affidavits of law. (Art. 6, FC)

cohabitation is inconsistent with the duty to
examine the parties’ requirements for marriage. If Minimum requirements under the law:
the solemnizing officer notarized the affidavit of
cohabitation, he cannot objectively examine and 1. Personal appearance of the contracting
review the affidavit’s statements before performing parties before the solemnizing officer;
the marriage ceremony. (Tupal v. Rojo, A.M. NO. NOTE: There is no marriage ceremony if what
MTJ-14-1842, 24 Feb. 2014) transpired was a mere private act of signing a
marriage contract by the contracting parties,
FORMAL REQUISITES OF A VALID MARRIAGE without the presence of the solemnizing officer.
(C-A-L) (1996, 2009 BAR) (Morigo v. People, G.R. No. 145226, 06 Feb. 2004)
1. Marriage Ceremony; 2. Their personal declaration that they shall take

2. Authority of the solemnizing officer; each other as husband and wife; and
3. Valid marriage License, except in a marriage of NOTE: The declaration shall be contained in the
exceptional character. (Art. 3, FC) Marriage Certificate and shall be signed by the
contracting parties and their witnesses and
Effect of Absence of Requisites attested by the solemnizing officer.
Effect in the status of marriage (1995, 1996, 3. In the presence of not less than two (2)
1999, 2008 BAR) witnesses of legal age.
Status of Marriage in case of: NOTE: In case of a marriage of articulo mortis, when
1. Absence of any of the essential requisites - Void one or both parties are unable to sign the marriage
ab initio. (Art. 4, FC) certificate, it shall be sufficient for one of the
witnesses to write the name of said party, which
2. Absence of any of the formal requisites – Void shall be attested by the solemnizing officer. (Art. 6,
ab initio. (Art. 4, FC) FC)
XPNs: Valid even in the absence of formal The declaration of consent need not be vocally
requisite: expressed. It can be shown by other manifestations
a. Marriages exempt from license or signs of approval and consent. It is the agreement
requirement itself, and not the form in which it is couched, which
b. Either or both parties believed in good constitutes the contract. (Sta. Maria, 2010)
faith that the solemnizing officer had
the proper authority (Art. 35 (2), FC) Common-law marriages are not recognized in
the Philippines
3. Defect in any of the essential requisites –
Voidable. (Art. 4, FC) A common-law marriage, otherwise referred to as a
live-in relationship, is one where the man and the
4. Irregularity in any of the formal requisites - woman just live together as husband and wife
Valid, but the party responsible for such without getting married. (Paras, 2016) This form of
irregularity shall be civilly, criminally or marriage is not recognized in the Philippines.
administratively liable. (Art. 4, FC)
Validity of marriage by proxy
1. Marriage Ceremony
It depends on the place of celebration of the
marriage:
No particular form of ceremony or religious rite
for solemnization of the marriage is required by

1. If performed in the Philippines – void; ii. Provided at least one of the parties
such marriage is not allowed. belongs to such church or religious
sect.
Philippine laws prohibit marriages by proxy. Since
the marriage is performed in the Philippines, c. Consul general, consul or vice-consul
Philippine laws shall apply following the principle of Provided both parties are Filipinos and
lex loci celebrationis. marriage takes place abroad in the country
where the consul holds office. (Art. 10, FC)
2. If performed abroad –It depends upon the
law of the place where the marriage was d. Mayors (Arts. 444 and 445, LGC) – including
celebrated (lex loci celebrationis). “Acting Mayor”
As to marriages between Filipinos - all marriages NOTE: From the time of the effectivity of
solemnized outside the Philippines, in accordance the Family Code (August 3, 1988) up to the
with the laws enforced in said country where they time of the effectivity of the LGC (January 1,
are solemnized, and valid there as such, shall also be 1992), mayors do not have the authority to
valid here in the country, except those prohibited solemnize marriage.
under Articles 35 (1), (2), (4), (5), (6), 36, 37 and 38.
(Art. 26, FC). 2. Marriages in articulo mortis:
2. Solemnizing Authority a. Ship captain or airplane chief –

Provided the marriage is performed:
i. During voyage, even during
Persons authorized to solemnize marriage
stopovers
(1994 1995, 1999 BAR)
ii. Between passengers or crew members.
(Art. 31, FC)
The following are the persons authorized to
solemnize marriage depending upon the
Such authority may be exercised not only
circumstances:
while the ship is at sea or the plane is in
flight but also during stopovers at ports of
1. Under ordinary circumstances (Art. 7, FC):
call. (Rabuya, 2018)
a. Incumbent judiciary member –

b. Military commander of a unit who is a
Provided, it is within the court’s jurisdiction
commissioned officer – provided the
marriage is performed (Art. 32, FC):
NOTE: Where a judge solemnized a marriage
i. In absence of chaplain;
outside his court’s jurisdiction, this is a mere
ii. Within zone of military operation;
irregularity in the formal requisite, which while
iii. Between members of the armed forces
it may not affect the validity of the marriage,
or civilians.
may subject the officiating official to
administrative liability. (Rabuya, 2009)
Duty of the solemnizing officer in a marriage in
articulo mortis
b. Priest, rabbi, imam or minister of any
church/religious sector
The solemnizing officer in a marriage in articulo
i. duly authorized by his church or
mortis after solemnizing such marriage shall state in
religious sect and registered with
an affidavit executed before the local civil registrar
the civil registrar general, acting
or any other person legally authorized to administer
within the limits of the written
oaths, that the marriage was performed in articulo
authority granted him by his
mortis and that he took the necessary steps to
church or religious sect

2022 GOLDEN NOTES
Civil Law
ascertain the ages and relationship of the both of the parties with the written request
contracting parties and the absence of a legal to the solemnizing officer to that effect.
impediment to the marriage. (Art. 29, FC) (Art. 8, FC)
NOTE: If any of the listed solemnizing officers fails NOTE: This provision is only directory, not
to comply with any of the requisites mandated by mandatory. The requirement that the marriage be
law for them to validly solemnize a marriage, the solemnized in a particular venue or a public place is
marriage is generally void, based on the ground of not an essential requisite for the validity of the
an absence of a formal requisite (authority of marriage.
solemnizing officer)
A marriage solemnized by a judge outside of his
XPN: Unless such marriage was contracted with jurisdiction is valid
either or both parties believing in good faith that the
solemnizing officer had the legal authority to do so. Under Article 3 of the FC, one of the formal
(Art. 35 (a), FC) requisites of marriage is the "authority of the
solemnizing officer." Under Article 7, marriage may
Effect of solemnizing officer’s failure to execute be solemnized by, among others, "any incumbent
an affidavit member of the judiciary within the court's
jurisdiction." Article 8, which is a directory
It will have no effect as to the validity of the provision, refers only to the venue of the marriage
marriage. The marriage will still be valid. ceremony and does not alter or qualify the authority
of the solemnizing officer as provided in the
The local civil registrar is given the original of the preceding provision. If there is defect in such
affidavit which takes the place of a marriage license. requirement, the same would not make the
(Paras, 2016) marriage void, but it merely subjects the officer to
criminal, civil, or administrative responsibility.
Such affidavit is not an essential or formal requisite (Navarro v. Domagtoy, A.M. No. MTJ-96- 1088, 19 July
of marriage, the same with a Marriage Contract. The 1996)
signing of the marriage contract and the affidavit is
only required for the purpose of evidencing the act, NOTE: In case of a marriage solemnized by a mayor
not a requisite of marriage. It is the obligation of the outside of his territorial jurisdiction, the LGC is
solemnizing officer. It does not affect the validity of silent on the matter, hence the abovementioned
marriage. (De Loria v. Felix, G.R. No. L-9005, 20 June case may be applied by analogy.
1958)
Mayors are now authorized to solemnize marriage.
Authorized venues of marriage They have been excluded by the Family Code, but
they are now authorized by the Local Government
GR: Must be solemnized publicly within the Code to solemnize marriages (Sec. 444 [as to
jurisdiction of the authority of the solemnizing municipal mayors] and Sec. 455 [as to city mayors],
officer: R.A. No. 7160). A mayor of Manila cannot solemnize
1. Chambers of the judge or in open court; a marriage in Pasay City because he has no authority
2. Church, chapel or temple; or, there. His authority can only be exercised in Manila.
3. Office of the consul-general, consul or vice- If he performs the ceremony outside of his
consul. (Art. 8, FC) territorial jurisdiction, the marriage is void for lack
of authority. Even a vice mayor, acting as mayor; or
XPNs: a member of the Sangguniang Bayan can solemnize
1. Marriage at the point of death; marriage because if he is an acting mayor, he can
2. Marriage in remote places; exercise the powers of the mayor. (Albano, 2006)
3. Marriage at a house or place designated by

Exception to the rule requiring authority of the (Alcantara v. Alcantara, G.R. No. 167746, 28 Aug.
solemnizing officer 2007)
The exception to the rule requiring authority of the Status of marriages celebrated during the
solemnizing officer is when a marriage is contracted suspension of the issuance of marriage license
with either or both parties believing in good faith
that the solemnizing officer had the authority to do The status of the marriage if the parties get married
so. (Art. 35(2), FC) within the said 3-month period depends:
3. Marriage License 1. If the parties did NOT obtain a marriage license

– the marriage shall be void for lack of marriage
license.
A marriage license is required in order to notify the
2. If the parties were able to obtain a marriage
public that two persons are about to be united in
license – the marriage shall be valid without
matrimony and that anyone who is aware or has
prejudice to the actions that may be taken
knowledge of any impediment to the union of the
against the guilty party.
two shall make it known to the local civil registrar.
3.
The requirement and issuance of marriage license is
Persons authorized to issue the marriage
the State’s demonstration of its involvement and
license
participation in every marriage. (Rabuya, 2018)
The marriage license is issued by the local civil

What is required is the marriage license, not the
registrar of the city or municipality where either
marriage certificate. The latter is not an essential or
contracting party habitually resides. (Art. 9, FC)
formal requisite; thus, an oral solemnization is valid.
In fact, a marriage may be proved by oral evidence.
Obtaining a marriage license in a place other than
(Paras, 2016)
where either party habitually resides is a mere
irregularity.
Validity of marriage license
Requirement in the application for marriage

The license shall be valid in any part of the
license
Philippines for a period of 120 days from the date of
issue, and shall be deemed automatically
Each of the contracting parties is required to file
cancelled at the expiration of said period if the
separately a sworn application for the issuance of
contracting parties have not made use of it. (Art. 20,
marriage license, specifying the following:
FC)
1. Full name of the contracting party;

If the parties contracted marriage after the lapse of
2. Place of birth;
120 days from the issuance of the marriage license,
3. Age and date of birth;
such marriage shall be considered void for lack of
4. Civil status;
marriage license.
5. If previously married, how, when and where the
previous marriage was dissolved or annulled;
NOTE: Issuance of a marriage license in a city or
6. Present residence and citizenship;
municipality, not the residence of either of the
7. Degree of relationship of the contracting
contracting parties, and the issuance of a marriage
parties;
license despite the absence of the 10-day period for
8. Full name, residence and citizenship of the
publication are considered mere irregularities that
father;
do NOT affect the validity of the marriage. An
irregularity in any of the formal requisites of
mother; and
marriage does not affect its validity but the parties
are civilly, criminally and administratively liable.

2022 GOLDEN NOTES
Civil Law
guardian or person having charge, in case the observed that the fact that no marriage license
contracting party has neither father nor mother was issued to Lovelle and Henry cannot be
and is under the age of twenty-one years. (Art. deduced from the Certification. All that it
11, FC) confirms is that the marriage license referred to
in Henry and Lovelle's Certificate of Marriage
Additional requirement for Foreign National pertains to that issued to a certain Mamerto O.
Applicants Yambao (Yambao) and Amelia B. Parado
(Parado). Unperturbed, Lovelle appealed to the
When either or both of the contracting parties are SC. Is the appeal meritorious?
citizens of a foreign country, it shall be necessary for
them to submit a certificate of legal capacity to A: Yes, the Supreme Court held that the
contract marriage, issued by their respective Certification, taken together with applicable law
diplomatic or consular officials. and procedure, the attendant facts, and the evidence
on record, serves as sufficient basis to hold that
Stateless persons or refugees from other country Lovelle and Henry's marriage was solemnized
shall, in lieu of the certificate of legal capacity herein without a valid marriage license. The first part of the
required, submit an affidavit stating the Certification from the Assistant City Civil Registrar
circumstances showing such capacity to of Quezon City confirms that Lovelle and Henry did.
contract marriage. (Art. 21, FC) not file the required application
for marriage license in connection
Marriage without the required certificate of with Marriage License No. 131078. The non-filing of
legal capacity to marry is valid the requisite application for marriage license is
rendered even more apparent by the second part of
The status of the marriage celebrated on the basis of the Certification, which states that the marriage
a license issued without the required Certificate of license referred to in Lovelle and Henry's Certificate
Legal Capacity is valid as this is merely an of Marriage had actually been issued to Yambao and
irregularity in complying with a formal requirement Parado (Cariaga v. Republic, G.R. No. 248643,
of the law in procuring a marriage license, which December 7, 2021, J. Caguioa).
will not affect the validity of the marriage. (Garcia v.
Recio, G.R. No. 138322, 02 Oct. 2001) In Cariaga, the Supreme Court also mentioned of the
doctrine of unclean hands in the context of null
Q: Lovelle and Henry met while they were still and void marriages due to lack of marriage license.
attending college. They became sweethearts in It recognized that Lovelle's testimony to the effect
1991.They got married in November 2000 but that she and Henry did not apply for a marriage
decided to live apart in 2013 due to their license, and that they acquiesced to their parents'
differences. In 2015, Lovelle filed a petition to advice to “assist with the documentary
nullify their marriage as it was allegedly requirements of their intended civil wedding,”
contracted without a valid marriage license. The appears to show that she willingly acceded to the
first part of the Certification from the Assistant possibility that a spurious marriage license had
City Civil Registrar of Quezon City states that been presented to the solemnizing officer during
‘per Registry Records of Marriage License files the ceremony. However, the Court also recognized
xxx, no record of Marriage License No. 131078 that in petitions to declare the absolute nullity of
dated November 9, 2000 allegedly issued in marriage based on the absence of a valid marriage
favor of [Henry] and [Lovelle].” license, testimony of this nature should not ipso
facto preclude a finding of nullity on the ground that
The RTC found the Certification insufficient for parties who come to court must do so with clean
the purpose of establishing that Lovelle and hands. To be sure, a marriage contracted despite the
Henry's marriage was contracted without a absence of a marriage license necessarily implies
valid marriage license. On appeal, the CA some sort of irregularity. Nevertheless, such

irregularity, as well as any liability resulting years before the marriage.

therefrom, must be threshed out and determined in
a proper case filed for the purpose. It is in that The 5-year period must be characterized by:
separate proceeding where the party or parties a. Exclusivity – the partners must live together
responsible for the irregularity would be exclusively, with no other partners, during
ascertained. A contrary ruling would operate to the whole 5-year period.
validate marriages which the law itself declares void b. Continuity – such cohabitation was
(Cariaga v. Republic, G.R. No. 248643, 07 Dec. 2021, J. unbroken.
Caguioa). NOTE: The period is counted from the date
of celebration of marriage. It should be the
NOTE: The case of Cariaga v. Republic falls beyond years immediately before the day of the
the cut-off date for BAR 2022. marriage.
2. EXEMPTION FROM 2. No legal impediment to marry each other

LICENSE REQUIREMENT during the period of cohabitation.
Marriages exempt from the license requirement NOTE: The five-year period of cohabitation
(M-A-R-C-O) must have been a period of legal union had it
1. Marriages among Muslims or members of not been for the absence of marriage.
ethnic cultural communities – Provided they 3. Fact of absence of legal impediment must be
are solemnized in accordance with their present at the time of the marriage.
customs, rites or practices (Art. 33, FC);
2. Marriages in Articulo mortis 4. Parties must execute an Affidavit that they are
a. In case either or both of the contracting living together as husband and wife for 5 years
parties are at the point of death (Art. and that they do not have any impediment to
27, FC); marry.
b. Solemnized by a ship captain or
airplane pilot (Art. 31, FC); and 5. Solemnizing officer must execute a Sworn
c. Within zones of military operation. statement that he had ascertained the
qualifications of the parties and found no legal
3. Marriages in Remote places. (Art. 28, FC) impediment to their marriage. (Manzano v.
Remote Place - no means of transportation to Sanchez, A.M. No. MTJ-00-1329, 08 Mar. 2001)
enable the party to personally appear before
the local civil registrar. (Rabuya, 2018) Q: Pepito was married to Teodulfa. Teodulfa was
shot by him resulting in her death. After 1 year
4. Marriages between parties Cohabiting for at and 8 months, he married Norma without any
least 5 years and without legal impediment to marriage license. In lieu thereof, they executed
marry each other (Art. 34, FC); and an affidavit stating that they had lived together
as husband and wife for at least five years and
5. Marriages solemnized Outside the Philippines were thus exempt from securing a marriage
where no marriage license is required by the license.
country where it was solemnized.
a. What is the status of their marriage?
Requisites for the 5-year cohabitation as an b. Would your answer be the same if Pepito
exception to the marriage license requirement was separated in fact from Teodulfa?
(2002, 2008 BAR)
A:
The requisites are: a. The marriage is void for lack of marriage
1. Living together as husband and wife at least 5 license. To be exempt from the license

2022 GOLDEN NOTES
Civil Law
requirement under the 5-year cohabitation away at work. During their marriage, Faye gave
rule, the cohabitation should be in the birth to a baby girl, Laica. When Faye was 25
nature of a perfect union that is valid under years old, Brad discovered her continued liaison
the law but rendered imperfect only by the with Roderick and in one of their heated
absence of the marriage contract and is arguments, Faye shot Brad to death. She lost no
characterized by continuity, that is, time in marrying her true love Roderick,
unbroken, and exclusivity, meaning no without a marriage license, claiming that they
third party was involved at any time within have been continuously cohabiting for more
the 5 years. It should be a period of legal than 5 years. Was the marriage of Roderick and
union had it not been for the absence of the Faye valid? (2008 BAR)
marriage. In this case, Pepito and Norma
are not exempt from the marriage license A: NO, the marriage is void because there was no
requirement because at the time of Pepito marriage license. Their marriage was not exempt
and Norma's marriage, it cannot be said from the requisite of a marriage license because
that they have lived with each other as Roderick and Faye have not been cohabiting for at
husband and wife for at least five years least 5 continuous years before the celebration of
prior to their wedding day because from their marriage. Their lovers’ trysts and brief
the time Pepito's first marriage was visitations did not amount to “cohabitation.”
dissolved to the time of his marriage with
Norma, only about twenty months had Marriage License vs. Marriage Certificate
elapsed.
MARRIAGE
b. YES. The marriage is still void. Even if they MARRIAGE LICENSE
CERTIFICATE
were separated in fact, and thereafter both
Pepito and Norma had started living with As to their Nature
each other that has already lasted for five
years, the fact remains that Pepito had a Authorization by the Best evidence of the
subsisting marriage at the time when he state to celebrate existence of the
started cohabiting with Norma. It is marriage. marriage.
immaterial that when they lived with each As to Requisite of Marriage
other, Pepito had already been separated in
fact from his lawful spouse. The Neither essential nor
Formal requisite of
subsistence of the marriage even where formal requisite of
marriage.
there was actual severance of the filial marriage.
companionship between the spouses
cannot make any cohabitation by either
Q: Guillermo and Josefa lived together as
spouse with any third party as being one as
husband and wife, but there is doubt as to
"husband and wife". (Niñal v. Bayadog, G.R. whether they got married, since no record of the
No. 133778, 14 Mar. 2000)
marriage existed in the civil registry but their
relatives and friends maintained that the two in
Q: Roderick and Faye were high school fact married each other and lived as husband
sweethearts. When Roderick was 18 and Faye,
and wife for more than half a century. Is
16 years old, they started living together as
Guillermo married to Josefa?
husband and wife without the benefit of
marriage. When Faye reached 18 years of age,
A: They are presumed to be married. In this
her parents forcibly took her back and arranged
jurisdiction, every intendment of the law leans
for her marriage to Brad. Although Faye lived
toward legitimizing matrimony. Persons dwelling
with Brad after the marriage, Roderick
together apparently in marriage are presumed to be
continued to regularly visit Faye while Brad was
in fact married. This is the usual order of things in

society and, if the parties are not what they hold XPNs: It shall be void, even if it is valid in the foreign
themselves out to be, they would be living in country where the marriage was celebrated, if any
constant violation of the common rules of law and of the following circumstances are present:
propriety. Semper praesumitur pro matrimonio –
always presume marriage. Although a marriage 1. Lack of legal capacity even with parental
contract is considered a primary evidence of consent (e.g., party is below 18);
marriage, its absence is not always proof that no 2. Incestuous marriages;
marriage took place. (Vda. de la Rosa v. Heirs of Vda. 3. Contracted through mistake of one party as to
de Damian, G.R. No. 103028, 10 Oct. 1997) the identity of the other;
4. Contracted following the annulment or
3. MARRIAGES SOLEMNIZED ABROAD declaration of nullity of a previous marriage but
AND FOREIGN DIVORCE Before partition, etc.;
5. Bigamous or polygamous marriages except as
Rules governing the validity of marriage (2002, provided in Article 41 of the FC on terminable
2004, 2006, 2009, 2010 BAR) bigamous marriages;
6. Void due to psychological incapacity; and
1. As to its extrinsic validity – Lex loci 7. Void for reasons of public policy.
celebrationis
Requirements to prove a foreign marriage
NOTE: Locus regit actum (the act is
governed by the law of the place where it is 1. The existence of the pertinent provision of the
done) - is adhered to here in the Philippines foreign marriage law.
as regards the extrinsic validity of 2. The celebration or performance of the marriage
marriage. in accordance of said law.
2. As to its intrinsic validity – Personal law Requirements for the application of Article 26
(2) of the Family Code
NOTE: Personal law may either be the
national law or the law of the place where 1. It must be a case of mixed marriage (one party
the person is domiciled. If the person is Filipino and the other is an alien);
involved is a stateless person, domiciliary
rule applies, otherwise, lex nationalii 2. The divorce must be obtained by either the
applies. alien or Filipino spouse; and
The 1st paragraph of Article 26 of the Family Code NOTE: Whether the Filipino spouse initiated
on the validity of foreign marriages applies, the foreign divorce proceeding or not, a
however, only to Filipinos. Foreign marriages of favorable decree dissolving the marriage bond
foreigners or of a Filipino and a foreigner are and capacitating his or her alien spouse to
governed by the Rules on Conflict of Laws. (Sempio- remarry will have the same result: the Filipino
Diy, 1995) spouse will effectively be without a husband or
wife.
Marriages between Filipinos solemnized abroad
in accordance with the law in force in said Divorces obtained abroad by Filipino citizens
country may now be validly recognized in the
Philippines but only in cases of mixed
GR: Marriages between Filipinos solemnized marriages involving a Filipino and a Foreigner.
outside the Philippines in accordance with the law (Republic v. Manalo, G.R. No. 221029, 24 Apr.
of the foreign country where it is celebrated, if valid 2018)
there, shall be valid here as such.

2022 GOLDEN NOTES
Civil Law
3. The divorce obtained by the alien spouse must and wanted to enforce his rights over the
capacitate him or her to remarry. (Rabuya, Filipina to the extent of claiming his rights to
2018) administer the properties of the woman,
contending that they are still married. He also
Q: Suppose in a valid mixed marriage the foreign claimed hereditary rights. Is he correct? Why?
spouse obtained a divorce decree abroad and
was capacitated to remarry. A: NO. The divorce in the U.S. released the Filipina
a. May the Filipino spouse remarry despite the from the marriage. Thus, pursuant to American law,
fact that divorce is not valid in the he is no longer the husband of the Filipina. He would
Philippines? therefore have no standing to sue the Filipina. (Van
b. Will your answer be the same if it was a valid Dorn v. Romillo, Jr., G.R. No. L-68470, 08 Oct. 1985)
marriage between Filipinos?
Burden of proof in Recognition of Foreign
A: Divorce
a. YES. The Filipino spouse may remarry.
Divorce validly obtained abroad by the The naturalization of one of the parties, as well as
alien spouse capacitating him/her to the divorce decree obtained by him or her, must be
remarry will likewise allow the Filipino proven as a fact under our rules on evidence. The
spouse to remarry. (Art. 26 (2), FC) foreign law under which the divorce was obtained
must likewise be proven as our courts cannot take
NOTE: Under the nationality principle judicial notice of foreign laws and judgments; hence,
embodied in Article 16 of the NCC, only like any other facts, both the divorce decree and the
Philippine nationals are covered by the national law of the alien must be alleged and proven
policy against absolute divorces, the same according to our law on evidence. (Garcia v. Recio,
being considered contrary to our concept of G.R. No. 138322, 02 Oct. 2002)
public policy and morality. Nevertheless,
aliens may obtain divorces abroad which However, if the Filipino spouse remained to be a
may be recognized in the Philippines, citizen of the Philippines when he/she obtained a
provided they are valid according to their divorce decree abroad, such decree will not be
national law. (Van Dorn v. Romillo, Jr., G.R. recognized in the Philippines even if that spouse is
No. L- 68470, 08 Oct. 1985) subsequently naturalized as a citizen of a foreign
country because at the time the spouse obtained the
b. It depends. What is material in this case is divorce decree, he/she was still a citizen of the
the citizenship of the spouse who obtained Philippines and being naturalized afterwards does
a divorce decree abroad at the time the not cure this defect. (Republic v. Iyoy, G.R. No.
decree was obtained and not their 152577, 21 Sept. 2005)
citizenship at the time the marriage was
celebrated. If the Filipino spouse was As enunciated in the case of Republic v. Manalo, the
naturalized as a citizen of a foreign country Supreme Court laid down a landmark ruling that
before he/she obtains a divorce decree and allows Filipino Citizens to obtain a foreign divorce
was thereafter capacitated to remarry, the provided that such marriage is a mixed marriage
Filipino spouse will be capacitated to involving a Filipino and a Foreigner.
remarry. (Republic v. Orbecido, G.R. No.
154380, 05 Oct. 2005) Q: A Filipino citizen was married to a Japanese
national. She divorced her husband in Japan and
Q: A Filipina was married to an American who was able to obtain a divorce decree from the
obtained a divorce decree in the U.S. When the Japanese Court. Will the Filipino spouse be
Filipina came back to the Philippines and capacitated to remarry under Philippine law?
started her business, the American followed suit

A: YES. Divorces obtained abroad by Filipino surname of her husband and be able to marry
citizens may now be validly recognized in the again.
Philippines but only in cases of mixed marriages
involving a Filipino and a Foreigner. The RTC denied Luzviminda’s petition, holding
Provided, of course, that the party petitioning for that while a divorce decree held that while a
the recognition of such foreign divorce decree – divorce obtained abroad by an alien spouse may
presumably the Filipino citizen – must prove the be recognized in the Philippines – provided that
divorce as a fact and demonstrate its conformity to such decree is valid according to the national
the foreign law allowing it. (Republic v. Manalo, G.R. law of the alien – the same does not find
No. 221029, 24 Apr. 2018) application when it was the Filipino spouse, i.e.,
petitioner, who procured the same. Invoking the
Q: If a foreigner who was divorced seeks to nationality principle provided under Article 15
obtain a marriage license in the Philippines, of the Civil Code, in relation to Article 26 (2) of
what should he do? the Family Code, the RTC opined that since
petitioner is a Filipino citizen whose national
A: The applicant for marriage license has to prove laws do not allow divorce, the foreign divorce
his legal capacity. If the marriage was dissolved by decree she herself obtained in Japan is not
reason of divorce, he has to file a sworn statement binding in the Philippines. Did the RTC correctly
as to how the marriage was dissolved (Art. 11, FC) deny Luzviminda’s petition for recognition of
and furnish the local civil registrar with the divorce decree she procured?
judgment (Art. 13, FC) and must register the same
with the local civil registrar to bind third persons. A: NO. It has been ruled in Republic vs. Manalo that
(Art. 52, FC) foreign divorce decrees obtained to nullify
marriages between a Filipino and an alien citizen
NOTE: Without the divorce decree and foreign law may already be recognized in this jurisdiction,
as part of the evidence, the Court cannot rule on the regardless of who between the spouses initiated the
issue of whether petitioner has the personality to divorce; provided, of course, that the party
file the petition for declaration of nullity of petitioning for the recognition of such foreign
marriage. After all, petitioner may have the divorce decree – presumably the Filipino citizen –
personality to file the petition, but the divorce must prove the divorce as a fact and demonstrate its
decree obtained was a limited divorce or a mensa et conformity to the foreign law allowing it. A plain
thoro or the foreign law may restrict remarriage reading of the RTC ruling shows that the denial of
even after the divorce decree becomes absolute. Luzviminda's petition to have her foreign divorce
(Garcia v. Recio, G.R. No. 138322, 02 Oct. 2002) decree recognized in this jurisdiction was anchored
on the sole ground that she admittedly initiated the
Q: Luzviminda was married to Ryoji Morisono in divorce proceedings which she, as a Filipino citizen,
Quezon City on December 8, 2009. Thereafter, was not allowed to do.
they lived together in Japan for 1 year and 3
months but were not blessed with a child. In light of the doctrine laid down in Manalo, such
During their married life, they would quarrel ground relied upon by the RTC had been rendered
mainly due to Ryoji’s philandering ways, in nugatory. However, the Court cannot just order the
addition to the fact that he was much older than grant of Luzviminda's petition for recognition of the
Luzviminda. As such, the two of them submitted foreign divorce decree, as Luzviminda has yet to
a “Divorce by Agreement” before the City Hall of prove the fact of her. "Divorce by Agreement"
Mizuho-ku in Nagoya, Japan, which was obtained in Nagoya City, Japan and its conformity
approved and duly recorded. In view of this, with prevailing Japanese laws on divorce. Notably,
Luzviminda filed a petition for recognition of the RTC did not rule on such issues. Since these are
foreign divorce decree obtained by her and questions which require an examination of various
Ryoji before the RTC so that she could cancel the factual matters, a remand to the court a quo is

2022 GOLDEN NOTES
Civil Law
warranted. (Morisono v. Morisono, G.R. No. 226013, 4. Contracted through Mistake of one of the
02 July 2018) contracting parties as to the identity of the
other;
Q: Cynthia, a Filipina, and Park, a South Korean
national, got married in the City of Manila in 5. Bigamous or polygamous marriages not
2012. Unfortunately, their relationship turned falling under Article 41 of the Family Code
sour and ended with a divorce by mutual or those allowed under special laws such as
agreement in South Korea. After the divorce was the Muslim Code;
confirmed in 2012 by the Cheongju Local Court,
Cynthia filed before the RTC a Petition for the 6. Marriages contracted by any party below
Judicial Recognition of a Foreign Divorce, which 18 years of age even with the consent of
was granted in 2015. On appeal, the CA held that parents or guardians;
the divorce decree in question cannot be
recognized in this jurisdiction insofar as Cynthia 7. Marriages contracted by any party, who at
is concerned since it was obtained by mutual the time of the celebration of the marriage,
agreement. Is the CA correct? was Psychologically incapacitated, even if
such incapacity becomes manifest only
A: No, the CA is incorrect. Pursuant to the majority after its solemnization; (Art. 37, FC)
ruling in Manalo, Article 26 (2) applies to mixed
marriages where the divorce decree is: (i) obtained 8. Incestuous Marriages; (Art. 37, FC)
by the foreign spouse; (ii) obtained jointly by the
Filipino and foreign spouse; and (iii) obtained solely 9. Marriages declared void because they are
by the Filipino spouse. As confirmed by Manalo, the contrary to Public policy; (Art. 37, FC)
divorce decree obtained by Park, with or without
Cynthia's conformity, falls within the scope of 10. Subsequent marriages which are void
Article 26 (2) and merits recognition in this under Art. 53;
jurisdiction (Galapon v. Republic, G.R. No. 243722, 22
Jan. 2020, J. Caguioa). 11. Marriages in jest; and
4. VOID AND VOIDABLE MARRIAGES “Marriages in jest is a pretended one, legal

in form but entered as a joke, with no real
intentions of entering into the actual
VOID MARRIAGES
marriage status, and with a clear
understanding that the parties would not
Marriages that are void ab initio (1993, 2004,
be bound (Republic v. Albios, G.R. No.
2005, 2006 BAR)
198780, 16 Oct. 2013); and
1. Solemnized without License, except those

12. Common-law marriages.
marriages that are exempt from the license
requirement;
Marriage between Filipinos who are of the same
sex is VOID
2. Absence of any of the essential or formal
requisites of marriage;
For a marriage to be valid, it must be between
persons of opposite sexes.
3. Solemnized by any person not legally
Authorized to perform marriages unless
Although gay marriages are definitely not covered
such marriages were contracted with
within the purview of Article 2 of the Family Code,
either or both parties believing in good
the emerging issue of transsexuals and intersexual
faith that the solemnizing officer had the
gender identities have called the attention of the
legal authority to do so;

Supreme Court in the cases of Silverio v. Republic marriage could be ratified by free
(G.R. No. 174689, 22 Oct. 2007) and Republic v. cohabitation. Under Article 45(1) of the Family
Cagandahan (G.R. No. 166676, 12 Sept. 2008), Code, such marriage may be ratified by the
respectively. (Sta. Maria, 2010) cohabitation of the contracting parties (after
attaining the age of twenty-one) as husband
Q: Sidley and Sol were married with one (1) and wife.
daughter, Solenn. Sedfrey and Sonia were
another couple with one son, Sonny. Sol and Q: In case of a change in sex, can the person who
Sedfrey both perished in the same plane has undergone said change be allowed to marry
accident. Sidley and Sonia met when the families another of the same sex as he/she originally
of those who died sued the airlines and went had? (2014 BAR)
through grief-counseling sessions. Years later,
Sidney and Sonia got married. At that time, A: It depends upon the cause for the change in sex.
Solenn was four (4) years old and Sonny was five 1. If the change is artificial – No, he/she
(5) years old. These two (2) were then brought cannot.
up in the same household. Fifteen (15) years
later, Solenn and Sonny developed romantic The sex or gender at the time of birth shall
feelings towards each other, and eventually be taken into account. He is still, in the eyes
eloped. On their own and against their parents’ of the law, a man although because of the
wishes, they procured a marriage license and artificial intervention, he now has the
got married in church. physiological characteristics of a woman.
(Silverio v. Republic, G.R. No. 174689, 22 Oct.
a. Is the marriage of Solenn and Sonny valid, 2007)
voidable or void?
b. If the marriage is defective, can the marriage 2. If the change is natural – He/she can. Ex.
be ratified by the free cohabitation of the Hermaphrodite, Congenital Adrenal
spouses? (2018 BAR) Hyperplasia
A: Q: Jennifer was registered as a female in her

a. The marriage is voidable. Under Article 14 of Certificate of Live Birth. In her early years, she
the Family Code, if a party to the marriage is suffered from clitoral hypertrophy and was
between the ages of eighteen and twenty-one; found out that her ovarian structures had
the consent of their father, mother, surviving minimized. She also alleged that she has no
parent or guardian, or persons having legal breasts or menstruation. She was diagnosed to
charge of them, in the order mentioned, is an have Congenital Adrenal Hyperplasia (CAH), a
additional requirement. In the absence of such condition where persons thus afflicted possess
parental consent, the consent given by the secondary male characteristics because of too
party between the ages of eighteen and much secretion of androgen. She then alleged
twenty-one is considered defective. Also, that for all interests and appearances as well as
under Article 4 of the Family Code, a defect in in mind and emotion, she has become a male
the essential requisites of marriage renders person. What is Jennifer’s gender or sex?
the marriage voidable. In this case, Solenn and
Sonny are nineteen and twenty years old A: MALE. Where the person is biologically or
respectively during the time of the celebration naturally intersex the determining factor in his
of their marriage. Thus, the absence of gender classification would be what the
parental consent renders the marriage of individual, having reached the age of majority,
Solenn and Sonny voidable. with good reason thinks of his/her sex. Jennifer
here thinks of himself as a male and considering that
b. YES. Although voidable marriage, their his body produces high levels of androgen, there is

2022 GOLDEN NOTES
Civil Law
preponderant biological support for considering Regional Trial Court. Is the registered marriage
him as being male. Sexual development in cases of between Rosario Ado-an-Morimoto and Yoshio
intersex persons makes the gender classification at Morimoto should be declared null and void?
birth inconclusive. It is at maturity that the gender
of such persons is fixed. (Republic v. Cagandahan, A: YES. As a special contract, consent is, by
G.R. No. 166676, 12 Sept. 2008) definition, indispensable to marriage. Accordingly,
the Family Code stipulates the second essential
Marriage where one or both of the parties are requisite of marriage to be "consent freely given in
below 18 years of age is VOID the presence of the solemnizing officer." It is vital to
distinguish the authentic, underlying consent of the
Such marriage is void for lack of legal capacity even parties from the external manifestation of such
if the parents consented to such marriage. (Sempio- consent during a marriage ceremony. Jurisprudence
Dy, 1995) therefore recognizes that, when there is no bona
fide intention of becoming a spouse to another, a
Validity of the marriage if it is a mixed marriage marriage is void for want of consent even when
where the Filipino is 18 years old but the marriage ceremonies have been conducted and,
foreigner is below 17 years of age there, the parties declared their intent to enter
into married life.
If the national law of the foreigner recognizes 17-
year-old person to be capacitated to marry, then Petitioner categorically declared that her marriage
their marriage is valid, otherwise it is void. with respondent Yoshio was totally simulated,
made for the sole purpose of their ostensible marital
Simulated Marriage relations being used as an artifice to bolster her
chances of obtaining a Japanese visa. One might be
Q: Rosario recalls that sometime before tempted to dismiss this as a self-serving allegation,
December 2007, a friend introduced her to made only to obtain a declaration of nullity of
Yoshio as one with whom she can simulate marriage. However, to the contrary, this Court finds
marriage as a way to facilitate her acquisition of petitioner's declarations of having participated in a
a Japanese visa. She acceded. Thus, she and duplicitous design to be worthy of even greater
Yoshio met at the Manila City Hall. There, they credence, as an admission against interest. A
signed a blank marriage certificate, but were simulated marriage used as a front for illicitly
assured by the solemnizing officer that the obtaining benefits is totally inexistent, as the parties
certificate will never be registered or recorded to it have no genuine intent to enter into marital
in the Civil Registry. It was the last time she saw relations. Courts must recognize such a marriage as
Yoshio. Sometime later, Rosario went to the PSA void. To insist on its validity is to enable a greater
to secure a Certificate of No Marriage. To her affront to the institution of marriage than the
surprise, she found out that a Certificate of perceived dangerous tendency of readily declaring
Marriage, registered in the City of San Juan, it null. Ultimately, the registered marriage between
indicates that she married Yoshio, in a petitioner and respondent Yoshio is totally fictitious
ceremony officiated by a certain Reverend and inexistent, thereby warranting a declaration of
Roberto Espiritu. Rosario filed a Petition for nullity. (Ado-an-Morimoto v. Morimoto, G.R. No.
Declaration of Nullity of Marriage. She 247576, 15 Mar. 2021)
maintained that the marriage attested to by the Effect of lack of authority of solemnizing officer
marriage certificate she discovered never
actually happened and was never backed by a GR: The marriage is void ab initio.
marriage license. Prior to trial, the Assistant
City Prosecutor issued a Report stating that XPNs:
there is no collusion between Rosario and 1. Express- If either or both parties believed
Yoshio to obtain a favorable ruling from the in good faith that the solemnizing officer

had the legal authority to do so. (Art. 35, FC) truly (cognitive) of the basic marital covenants that
concomitantly must be assumed and discharged by
2. Implied - Article 10 in relation to Article 26 the parties to the marriage which include their
of the Family Code. If the marriage between mutual obligations to live together, observe love,
a foreigner and a Filipino citizen abroad respect, fidelity, and to render help and support”.
solemnized by a Philippine consul assigned (Republic v. Iyoy, G.R. No. 152577, 21 Sept. 2005)
in that country is recognized as valid in the
host country, such marriage shall be Psychological incapacity does not refer to mental
considered as valid in the Philippines. (Sta. incapacity tantamount to insanity. (Paras, 2016)
Maria, 2010) Clearly, the ground is restricted to psychological
incapacity to “comply with the essential marital
Q: Judge Palaypayon solemnized marriages even obligations”. (Sta. Maria, 2010)
without the requisite of marriage license. Thus,
some couples were able to get married by the In such case, the spouse declared to be
simple expedient of paying the marriage fees. As psychologically incapacitated cannot be held liable
a consequence, their marriage contracts did not to pay moral damages to the other spouse based on
reflect any marriage license number. In Articles 2217 and 21 of the NCC, which connotes
addition, the judge did not sign their marriage willfulness of the acts complained of, if the same acts
contracts and did not indicate the date of the constitutive of the psychological incapacity were to
solemnization, the reason being that he be made the basis for the award of moral damages.
allegedly had to wait for the marriage license to It is contradictory to characterize acts as a product
be submitted by the parties. Such marriage of psychological incapacity, and hence beyond the
contracts were not filed with the Local Civil control of the party because of an innate inability,
Registry. Are such marriages valid? while at the same time considering the same set of
acts as willful. (Rabuya, 2018)
A: NO. A valid marriage license is necessary for the
validity of marriage, except in the cases provided for Constitutional provision on marriage vis-à-vis
therein. The absence of any of the essential or validity of declarations of nullity of marriage
formal requisites shall generally render the based on psychological incapacity
marriage void ab initio. (Cosca v. Palaypayon, A.M.
No. MTJ-92-721, 30 Sept. 1994) Q: Does the grant of the petition for the
declaration of nullity of marriage based on Art.
Mistake to render the marriage void 36 of the FC destroy the constitutional mandate
to protect the sanctity of marriage and
For marriage to be rendered void, the mistake in promoting such marriage as a foundation of the
identity must be with reference to the actual family?
physical identity of other party, not merely a
mistake in the name, personal qualifications, A: NO. In dissolving marital bonds, the Court is not
character, social standing, etc. (Rabuya, 2018) demolishing the foundation of families, but it is
actually protecting the sanctity of marriage, because
a. NULL AND VOID MARRIAGE it refuses to allow a person afflicted with a
UNDER ARTICLE 36 psychological disorder, who cannot comply with or
assume the essential marital obligations, from
NOTE: Under the 2022 Bar Syllabus, the title of this remaining in that sacred bond. Article 36, in
subheading is “Annulment under Article 36.” classifying marriages contracted by a
However, Art. 36 is not a ground for annulment. psychologically incapacitated person as a nullity,
should be deemed as an implement of this
Psychological incapacity is “no less than a mental constitutional protection of marriage. Given the
(not physical) incapacity that causes a party to be avowed State interest in promoting marriage as the

2022 GOLDEN NOTES
Civil Law
foundation of the family, which in turn serves as the unable to discharge the essential
foundation of the nation, there is a corresponding obligations of a marital state, not merely
interest for the State to defend against marriages ill- youth, immaturity or sexual promiscuity.
equipped to promote family life. (Kalaw v. (Dedel v. CA, G.R. No. 151867, 29 Jan. 2004)
Fernandez, G.R. No. 166357, 14 Jan. 2015)
3. Disagreements regarding money matters.
Determination of psychological incapacity is left (Tongol v. Tongol, G.R. No. 157610, 19 Oct.
solely with the courts on a case- to-case basis 2007)
Every court should approach the issue of nullity 4. Mere abandonment. To constitute
“not on the basis of a priori assumptions, psychological incapacity, it must be shown
predilections or generalizations, but according to its that the unfaithfulness and abandonment
own facts” in recognition of the verity that no case are manifestations of a disordered
would be on “all fours” with the next one in the field personality that completely prevented the
of psychological incapacity as a ground for the erring spouse from discharging the
nullity of marriage; hence, every “trial judge must essential marital obligations. (Republic v.
take pains in examining the factual milieu and the Enselan, G.R. No. 170022, 09 Jan. 2013)
appellate court must, as much as possible, avoid
substituting its own judgment for that of the trial 5. Sexual infidelity (Republic v. Dagdag, G.R
court. No. 109975, 09 Feb. 2001)
By the very nature of Article 36 of the Family Code, 6. Living an adulterous life when specific
courts, despite having the primary task and burden evidence was shown that promiscuity as a
of decision-making, must not discount but, instead, trait already existing at the inception of
must consider as decisive evidence the expert marriage. (Baccay v. Baccay, G.R. No.
opinion on the psychological and mental 173138, 01 Dec. 2010)
temperaments of the parties. (Kalaw v. Fernandez,
G.R. No. 166357, 15 Jan. 2015) Requisites of Psychological Incapacity (1996,
1997, 2002, 2006 BAR)
Instances where allegations of psychological
incapacity were not sustained 1. Juridical antecedence – must be rooted in the
history of the party antedating the marriage,
1. Mere showing of irreconcilable differences although overt manifestations may arise only
and conflicting personalities. (Carating- after such marriage.
Siayngco v. Siayngco, G.R. No. 158896, 27
Oct. 2004) 2. Gravity – must be shown to be serious or
dangerous illness. It cannot be mere refusal,
NOTE: Mere sexual infidelity or perversion, neglect, or difficulty, much less ill will. It must
emotional immaturity and irresponsibility be caused by a genuinely serious psychic cause.
and the like, do not by themselves warrant
a finding of psychological incapacity as the 3. Permanence or Incurability – not in the
same may only be due to a person's refusal medical, but in the legal sense. This means that
or unwillingness to assume the essential the incapacity is so enduring and persistent
obligations of marriage. (Castillo v. with respect to a specific partner, and
Republic, G.R. No. 214064, 06 Feb. 2017) contemplates a situation where the couple’s
respective personality structures are so
2. It must be shown that these acts are incompatible and antagonistic that the only
manifestations of a disordered personality result of the union would be inevitable and
which would make respondent completely irreparable breakdown of marriage.

Proof of Psychological Incapacity 6. The essential marital obligations must be those

embraced by Arts. 68 up to 71 of the FC as
The root cause of psychological incapacity must be: regards the husband and wife, as well as Arts.
1. Medically or clinically identified; 220, 221 and 225 of the same Code in regard to
2. Alleged in the complaint; parents and their children. Such non-complied
3. Sufficiently proven by experts; and marital obligation(s) must also be stated in the
4. Clearly explained in the decision. petition, proven by evidence and included in the
text of the decision;
NOTE: Expert evidence may be given by qualified
psychiatrists and clinical psychologists. 7. Interpretations given by the National Appellate
Matrimonial Tribunal of the Catholic Church in
The physician’s examination is not required in the Philippines, while not controlling or
establishing psychological incapacity as ground decisive, should be given great respect by our
for declaration of nullity courts.
If the totality of evidence presented is enough to No decision shall be handed down unless the
sustain a finding of psychological incapacity, Solicitor General issues a certification, which will be
physician’s examination of the person concerned quoted in the decision, briefly stating therein his
need not be resorted to. (Marcos v. Marcos, G.R. No. reasons for his agreement or opposition, as the case
136490, 19 Oct. 2000) may be, to the petition. (Republic v. CA and Molina,
G.R. No. 108763, 13 Feb. 1997)
Guidelines set by the Court to aid it in its
disposition of cases involving psychological NOTE: In Republic v. Quintero-Hamano, the SC held
incapacity that these guidelines may not be relaxed just
because the spouse alleged to be psychologically
In the landmark case of Republic v. Court of Appeals incapacitated happens to be a foreign national. The
and Molina, the Supreme Court enumerated the norms used for determining psychological
following guidelines in invoking and proving incapacity should apply to any person regardless of
psychological incapacity under Article 36 of the nationality because the rules were formulated on
Family Code: the basis of studies of human behavior in general.
(Rabuya, 2018)
1. Burden of proof to show the nullity of the
marriage belongs to the plaintiff; In Marcos v. Marcos, the Supreme Court held
categorically that psychological incapacity “may be
2. The root cause of the psychological incapacity established by the totality of evidence presented”
must be: (a) medically or clinically identified, and that “there is no requirement that the
(b) alleged in the complaint, (c) sufficiently respondent should be examined by a physician or a
proven by experts and (d) clearly explained in psychologist as a condition sine qua non for such
the decision; declaration.” (Marcos v. Marcos, G.R. No. 136490, 19
Oct. 2000)
3. The incapacity must be proven to be existing at
“the time of the celebration” of the marriage; TAN-ANDAL V. ANDAL
(Totality of Evidence Rule)
4. Such incapacity must also be shown to be
medically or clinically permanent or incurable; In the recent case of Tan-Andal v. Andal, the
Supreme Court held that psychological incapacity is
5. Such illness must be grave enough to bring not a medical but a legal concept. It is thus a
about the disability of the party to assume the personal condition that prevents a spouse to
essential obligations of marriage; perform marital obligations in relation to a specific

2022 GOLDEN NOTES
Civil Law
person that may exist at the time of marriage but 3. Incurability of Psychological Incapacity
may have only revealed through behavior With psychological incapacity not being an
subsequent to the ceremonies. Further, it illness in a medical sense, psychological
emphasized that it need not be a mental or incapacity is not something to be cured. And
personality disorder and need not be permanent even if it were a mental disorder, it cannot be
and incurable. Deviating away from the guidelines described in terms of being curable or incurable.
set in the case of Republic v. Molina, the Tan-Andal Psychological incapacity is so enduring and
v. Andal case set the ground that a testimony of a persistent with respect to a specific partner, and
psychologist or a psychiatrist is not mandatory in all contemplates a situation where the couple’s
cases. (Tan-Andal v. Andal, G.R. No. 196359, 11 May respective personality structures are so
2021) incompatible and antagonistic that the only
result of the union would be the inevitable and
In the case of Tan-Andal v. Andal, the Supreme irreparable breakdown of the marriage.
Court set new guidelines in determining the
existence of psychological incapacity: 4. Juridical Antecedence of Psychological
Incapacity
1. Burden of Proof in Nullity Cases The incapacity must be proven to be existing at
The burden of proof in proving psychological the time of the celebration of the marriage even
incapacity still lies on the plaintiff. The Supreme if such incapacity becomes manifest only after its
Court howeverfore clarified that the quantum of solemnization.
proof required in nullity cases is clear and
convincing evidence which is more than 5. Gravity of Psychological Incapacity
preponderant evidence (ordinary civil cases) It must be shown that the incapacity is caused by
but less than proof beyond reasonable doubt a genuinely serious psychic cause. The gravity is
(criminal cases). This is because marriage is not in the sense that the psychological incapacity
presumed valid and, in this jurisdiction, a must be shown to be a serious or dangerous
presumption can only be rebutted with clear and illness, but that "mild characterological
convincing evidence peculiarities, mood changes, occasional
emotional outbursts" are excluded.
2. Root Cause of Psychological Incapacity
Psychological incapacity is neither a mental 6. Essential Marital Obligations
capacity nor a personality disorder that must be This is not limited to those between spouses.
proven through expert opinion. There must be Hence, those covered by Articles 68 up to 71 of
proof, however, of the durable or enduring the Family Code as regards the husband and wife
aspects of a person's personality, called as well as Articles 220, 221 and 225 of the same
"personality structure," which manifests itself Code as regards parents and their children.
through clear acts of dysfunctionality that
undermines the family. The spouse's personality Q: Rodolfo and Natividad were married. On
structure must make it impossible for him or her December 28, 1998, Rodolfo filed a verified
to understand and, more important, to comply complaint for declaration of nullity of marriage
with his or her essential marital obligations. before the RTC alleging that Natividad was
Proof of these aspects of personality need not be psychologically incapacitated to comply with
given by an expert. Ordinary witnesses who have her essential marital obligations. In support of
been present in the life of the spouses before the his complaint, Rodolfo testified, among others,
latter contracted marriage may testify on that he first met Natividad when they were
behaviors that they have consistently observed students at the Barangay High School of
from the supposedly incapacitated spouse. Sindangan, and he was forced to marry her
barely three (3) months into their courtship in
light of her accidental pregnancy. At the time of

their marriage, he was 21 years old, while legal separation under the Family Code. Should
Natividad was 18 years of age. He had no stable the marriage be dissolved?
job and merely worked in the gambling cockpits
as "kristo" and "bangkero sa hantak." When he A: NO. "Psychological incapacity," as a ground to
decided to join and train with the army, nullify a marriage under Article 36 of the Family
Natividad left their conjugal home and sold their Code, should refer to no less than a mental – not
house without his consent. Thereafter, merely physical – incapacity that causes a party to
Natividad moved to Dipolog City where she lived be truly incognitive of the basic marital covenants
with a certain Engineer Terez (Terez), and bore that concomitantly must be assumed and
him a child named Julie Ann Terez. discharged by the parties to the marriage which, as
so expressed in Article 68 of the Family Code, among
After cohabiting with Terez, Natividad others, include their mutual obligations to live
contracted a second marriage on January 11, together, observe love, respect and fidelity and
1991 with another man named Antonio render help and support. The RTC, as affirmed by
Mondarez and has lived since then with the the CA, heavily relied on the psychiatric evaluation
latter in Cagayan de Oro City. From the time report of Dr. Zalsos which does not, however,
Natividad abandoned them in 1972, Rodolfo was explain in reasonable detail how Natividad’s
left to take care of Ma. Reynilda and Ma. Rizza condition could be characterized as grave, deeply-
and he exerted earnest efforts to save their rooted, and incurable within the parameters of
marriage which, however, proved futile because psychological incapacity jurisprudence. Aside from
of Natividad’s psychological incapacity that failing to disclose the types of psychological tests
appeared to be incurable. For her part, which she administered on Natividad, Dr. Zalsos
Natividad failed to file her answer, as well as failed to identify in her report the root cause of
appear during trial, despite service of summons. Natividad's condition and to show that it existed at
Nonetheless, she informed the court that she the time of the parties' marriage. Neither was the
submitted herself for psychiatric examination to gravity or seriousness of Natividad's behavior in
Dr. Cheryl T. Zalsos (Dr. Zalsos) in response to relation to her failure to perform the essential
Rodolfo’s claims. Rodolfo also underwent the marital obligations sufficiently described in Dr.
same examination. Zalsos's report.
In her two-page psychiatric evaluation report, To hark back to what has been earlier discussed,
Dr. Zalsos stated that both Rodolfo and psychological incapacity refers only to the most
Natividad were psychologically incapacitated to serious cases of personality disorders clearly
comply with the essential marital obligations, demonstrative of an utter insensitivity or inability
finding that both parties suffered from "utter to give meaning and significance to the marriage. In
emotional immaturity [which] is unusual and the final analysis, the Court does not perceive a
unacceptable behavior considered [as] deviant disorder of this nature to exist in the present case.
from persons who abide by established norms of Thus, for these reasons, coupled too with the
conduct." As for Natividad, Dr. Zalsos also recognition that marriage is an inviolable social
observed that she lacked the willful cooperation institution and the foundation of the family, the
of being a wife and a mother to her two instant petition is hereby granted. (Republic v.
daughters. On February 10, 1999, the Office of Gracia, G.R. No. 171557, 12 Feb. 2014)
the Solicitor General (OSG), representing
petitioner Republic of the Philippines Q: Rachel worked as a domestic helper in Hong
(Republic), filed an opposition to the complaint, Kong to provide for the needs of Jose, the love of
contending that the acts committed by Natividad her life. Eventually, the couple got married and
did not demonstrate psychological incapacity as settled in a house they acquired. The married
contemplated by law, but are mere grounds for life ran smoothly up until Rachel filed a petition
for declaration of nullity of marriage. Her

2022 GOLDEN NOTES
Civil Law
petition anchored on the ground that Jose was (OCPD). This gave him a strong obsession for
psychologically incapacitated to fulfill his whatever endeavour he chooses, such as his
essential marital obligations. She alleged that work, to the exclusion of other responsibilities
Jose was a violent man who used to physically and duties such as those pertaining to his roles
abuse her. She added that Jose was a drunkard as father and husband. Dr. Basilio surmised that
and always had sexual relations with different Reghis’ OCPD was the root of the couple’s
women aside from Rachel. On his part, Jose disagreements and that the same is incurable.
simply denied all the allegations in the petition. The Office of the Solicitor General (OSG),
Is Jose psychologically incapacitated? representing the Republic, opposed the petition.
Should the marriage be declared null and void?
A: NO. For psychological incapacity to exist, it
should refer to no less than a mental and not merely A: NO. The requirements for psychological
physical incapacity that causes a party to be truly incapacity do not concur. Reghis’ testimony shows
incognitive of the basic marital covenants as that he was able to comply with his marital
provided for under Article 68 of the Family Code. In obligations which, therefore, negates the existence
other words, it must be a malady that is so grave and of a grave and serious psychological incapacity on
permanent as to deprive one of awareness of the his part. Reghis admitted that he and Olivia lived
duties and responsibilities of the matrimonial bond together as husband and wife under one roof for
one is about to assume. Also, following the case of fourteen (14) years and both of them contributed in
Republic vs Molina, the totality of evidence must purchasing their own house. Reghis also fulfilled his
show that psychological incapacity exists, and its duty to support and take care of his family.
gravity, juridical antecedence, and incurability must Moreover, the OCPD which Reghis allegedly
be duly established. Here, there is no sufficient suffered from was not shown to have juridical
evidence to prove that psychological incapacity antecedence. No specific behavior or habits during
exists. Absent sufficient evidence, Courts are his adolescent years were shown which would
compelled to uphold the indissolubility of the explain his behavior during his marriage with
marital tie. (Del Rosario v. Del Rosario, G.R. No. Olivia. Dr. Basilio simply concluded that Reghis’
222541, 15 Feb. 2017) disorder is incurable but failed to explain how she
came to such conclusion. Based on the appreciation
Q: Reghis and Olivia were married and were of the RTC, Dr. Basilio did not discuss the concept of
blessed with two (2) children. However, the OCPD, its classification, cause, symptoms, and cure,
couple experienced a turbulent and tumultuous and failed to show how and to what extent the
marriage, often having violent fights and jealous respondent exhibited this disorder in order to
fits. Reghis could not forgive Olivia for dragging create a necessary inference that Reghis’ condition
him into marriage and resented her had no definite treatment or is incurable.
condescending attitude towards him. They
became even more estranged when Reghis Article 36 of the Family Code must not be confused
secured a job as a medical representative and with a divorce law that cuts the marital bond at the
became engrossed in his career and focused on time the grounds for divorce manifest themselves;
supporting his parents and siblings. As a result, rather, it must be limited to cases where there is a
he spent little time with his family, causing downright incapacity or inability to assume and
Olivia to complain that Reghis failed to be a real fulfill the basic marital obligations, not a mere
husband to her. In 1986, the couple parted ways. refusal, neglect or difficulty, much less, ill will, on
Reghis then filed a petition for declaration of the part of the errant spouse. (Republic v. Romero II,
nullity of marriage citing his psychological G.R. No. 209180, 26 Feb. 2016)
incapacity to comply with his essential marital
obligations. The clinical psychologist submitted Q: Would the state of being of unsound mind or
a report and testified that Reghis suffered from the concealment of drug addiction, habitual
Obsessive Compulsive Personality Disorder alcoholism, homosexuality or lesbianism be

considered indicia of psychological incapacity, if Q: After living together as husband and wife for
existing at the inception of marriage? (2002 two (2) years, Gina and Marjune formalized
BAR) their marital union through civil rites. As
months passed, the communication between
A: The state of being of unsound mind, the Gina and Marjune became less frequent until it
concealment of drug addiction, habitual alcoholism, ceased altogether. Thus, Gina filed a petition to
lesbianism or homosexuality may be indicia of declare her marriage with Marjune null and void
psychological incapacity, depending on the degree on the basis of the latter's psychological
of severity of the disorder. However, the incapacity.
concealment of drug addiction, habitual alcoholism,
lesbianism or homosexuality is a ground of During trial, Gina presented the findings of
annulment of marriage. (Santos v. CA, G.R. No. Professor Emma Astudillo-Sanchez (Prof.
112019, 04 Jan. 1995) Sanchez), the psychologist who conducted a
psychological examination of the parties. She
Q: Article 36 of the FC provides that a marriage concluded that Gina and Marjune's personality
contracted by any party who, at the time of the disorders "affected their behaviors even before
celebration, was psychologically incapacitated they contracted marriage and, in the presence of
to comply with the essential marital obligations situational factors, became more evident during
of marriage, shall be void. Choose the spouse the time they were together during the
listed below who is psychologically marriage. Is upholding the annulment based on
incapacitated. the expert opinion of the psychologist sufficient
proof of the presence of psychological
a. Nagger incapacity?
b. Gay or Lesbian
c. Congenital sexual pervert A: NO. The said report failed to show that these
d. Gambler traits existed prior to Gina's marriage and that her
e. Alcoholic (2006 BAR) alleged personality disorder is incurable or that the
cure is beyond her means. There was simply no
A: B and C. They may serve as indicia of discernible explanation on the juridical antecedence
psychological incapacity, depending on the degree or incurability of Gina's supposed condition. More
and severity of the disorder. (Santos v. CA, G.R. No. significantly, the relation of such condition to Gina's
112019, 04 Jan. 1995) If the condition of inability to perform her essential marital
homosexuality, lesbianism or sexual perversion, obligations was not sufficiently shown. To reiterate,
existing at the inception of the marriage, is of such a the psychological condition ought to pertain to
degree as to prevent any form of sexual intimacy, personality disorders that are grave and serious
any of them may qualify as a ground for such that the party would be incapable of carrying
psychological incapacity. The law provides that the out the ordinary duties required in a marriage.
husband and wife are obliged to live together, Unfortunately, the Case Analysis Report fails to
observe mutual love, respect and fidelity. (Art. 68, demonstrate this crucial point. In determining the
FC) existence of psychological incapacity, a clear and
understandable causation between the party's
More than just showing the manifestations of condition and the party's inability to perform the
incapacity, the petitioner must show that the essential marital covenants must be shown A
respondent is incapacitated to comply with the psychological report that is essentially comprised of
essential marital obligations of marriage and that it mere platitudes, however speckled with technical
is also essential that he must be shown to be jargon, would not cut the marriage tie. (Republic v.
incapable of doing so due to some psychological, not Tecag, G.R. No. 229272, 19 Nov. 2018)
physical illness. (Republic v. Quintero- Hamano, G.R.
No. 149498, 20 May 2004)

2022 GOLDEN NOTES
Civil Law
Q: Petitioner Maria Teresa and respondent months of courtship. In 1981, they decided to get
Rodolfo De La Fuente, Jr. first met when they married. During the first few years of married
were students at UST before they became life, they lived with Anacleto’s parents. Linda
sweethearts. While they were still sweethearts, would always complain of not having enough
petitioner already noticed that respondent was money as she wanted to live on their own, away
an introvert and was prone to jealousy. She also from her parents-in-law. She would always nag
observed that respondent appeared to have no Anacleto to look for higher paying job so that she
ambition in life and felt insecure of his siblings, could get ahead in life. She wanted a luxurious
who excelled in their studies and careers. In life and only appreciated her husband when he
June 1994, they got married in Mandaluyong bought her expensive gifts.
City and had two children. Respondent’s
attitude worsened and they went on with their In 2005, Linda left Anacleto to live overseas. She
marital life. His jealousy was so severe that he informed Anacleto that she would come back
once poked a gun at his own 15-year old cousin only if he could give her a better life financially.
who was staying at their house because he In 2006, Anacleto filed a petition to declare their
suspected his cousin of being petitioner’s lover. marriage null and void contending that Linda
was suffering from psychological incapacity as
In addition, respondent treated petitioner like a found by Dr. Lopez, a clinical psychiatrist. Dr.
sex slave. They would have sex 4 or 5 times a Lopez based his findings on the information fed
day. At times, he would fetch respondent from by Anacleto, his office secretary and their family
her office during lunch break just so they could driver. Rule on the petition.
have sex. During sexual intercourse, he would
either tie petitioner to the bed or poke her with A: I would deny the petition. While Dr. Lopez
things. He even suggested that they invite a third attributes the gravity of Linda's disorder to her
person with them while having sex. This made alleged unhealthy childhood, none of the informants
petitioner feel molested and maltreated. Should whom he interviewed claims to have known Linda
their marriage be nullified on the ground of since childhood. Moreover, neither Anacleto’s
psychological incapacity? secretary nor their family driver appear to have
known Linda prior to the marriage in question. This
A: YES. Respondent's repeated behavior significantly impairs the weight of Dr. Lopez's
of psychological abuse by intimidating, stalking, and findings, insofar as they are based on the
isolating his wife from her family and friends, as informants' narration of Linda's childhood events
well as his increasing acts of physical violence, are and circumstances which they appear to have no
proof of his depravity, and utter lack of personal knowledge of. (Meneses v. Lee-Meneses,
comprehension of what marriage and partnership G.R. No. 200182, 13 Mar. 2019, J. Caguioa)
entail. It would be of utmost cruelty for this Court to
decree that petitioner should remain married to INCESTUOUS MARRIAGES
respondent. After she had exerted efforts to save
their marriage and their family, respondent simply 1. Between ascendants and descendants of any
refused to believe that there was anything wrong in degree;
their marriage. This shows that respondent truly 2. Between brothers and sisters, whether of the
could not comprehend and perform his marital full or half-blood. (Art. 37, FC)
obligations. This fact is persuasive enough for this
Court to believe that respondent's mental illness is NOTE: Regardless of whether the relationship
incurable. (Tani-De La Fuente v. De La Fuente, Jr., G.R. between the parties is legitimate or illegitimate.
No. 188400, 08 Mar. 2017)
Q: Anacleto and Linda met during college years

and became romantically involved after 15

Void marriages by reason of public policy (1999, has a son, Julian, with his ex-girlfriend Sandra.
2007, 2008 BAR) Can Julian and Thelma get married? (2007 BAR)
Marriages between: A: YES. Marriage between stepbrothers and

1. Collateral blood relatives (legitimate or stepsisters are not among the marriages prohibited
Illegitimate) up to the 4th civil degree; under the Family Code.
2. Step-parents & step-children;
3. Parents-in-law & children-in-law; SUBSEQUENT MARRIAGE
NOTE: The prohibition under Nos. 2 and 3 Q: If a person contracts a subsequent marriage
applies even after the termination of the during the subsistence of a prior marriage, what
marriage, which is the very source of the is the status of the subsequent marriage? (1992,
relationship by affinity, regardless of the cause 2005, 2008 BAR)
of such termination.
A:
Affinity is a relationship gained by marriage and GR: Void for being bigamous or polygamous, even if
a fictive kinship created by law. Also, it is aligned celebrated abroad and valid there as such.
with the spirit of Article. 332 of the RPC. It holds
for all intents and purposes favorable to the XPN: Valid if it is a terminable bigamous marriage.
strengthening of the bond of the family. Bigamous Marriage
(Intestate Estate of Carungcong vs. People, G.R.
No. 181409, 11 Feb. 2010) Bigamy - When a person contracts a second or
subsequent marriage before the former marriage
4. Adopting parent & the adopted child; has been legally dissolved, or before the absent
5. Surviving spouse of the adopting parent & the spouse has been declared presumptively dead by
adopted child; means of a judgment rendered in the proper
6. Surviving spouse of the adopted child & the proceedings. (Art. 349, RPC)
adopter;
7. Adopted child & legitimate child of the adopter; Elements of the crime of bigamy:
8. Adopted children of the same adopter; 1. the offender has been legally married;
9. Parties where one, with the intention to marry 2. the marriage has not been legally dissolved
the other, killed the latter’s spouse or his/her or, in case his or her spouse is absent, the
spouse. (Art. 38, FC) absent spouse could not yet be presumed
dead according to the Civil Code;
NOTE: The list is EXCLUSIVE. If not falling 3. that he contracts a second or subsequent
within this enumeration, the marriage shall be marriage; and
valid. Such as marriages between: 4. that the second or subsequent marriage has
all the essential requisites for validity.
a. Adopted and Illegitimate child of the (Capili v. People. G.R. No. 183805, 13 July
adopter; 2013)
b. Step-brother and step-sister;
c. Brother-in-law and sister-in-law; or NOTE: The same applies to polygamy.
d. Parties who have been guilty of adultery or
concubinage. A subsequent void bigamous marriage
contemplates a situation where such subsequent
Q: Amor gave birth to Thelma when she was 15 marriage was contracted at the time when the first
years old. Thereafter, Amor met David, and they marriage, which is valid in all respects, was still
got married when she was 20 years old. David subsisting. A void bigamous marriage therefore
involves a situation where the first marriage is not

2022 GOLDEN NOTES
Civil Law
void but completely valid or at least annullable. (Sta. as the marital bond or vinculum in the first nuptial
Maria, 2010) subsists. (Mercado v. Tan, G.R. No. 137110, 01 Aug.
2000; Te v. CA, G.R. No. 126746, 29 Nov. 2000)
If the first marriage is void and a party to that first
marriage subsequently remarries without obtaining In the case of Pulido v. People, the Court held that by
a judicial declaration of nullity of the first marriage, the express terms of Article 40, the prior judicial
the subsequent marriage is likewise void. It is void declaration of nullity of the marriage is a
not because it is bigamous but because it failed to requirement only for purposes of remarriage and
comply with the requirements under Article 40 in that Article 40 should not have been construed as
relation to Articles 52 and 53 of the Family Code. imposing a requirement for the accused to raise the
(Valdes v. RTC, G.R. No. 122749, 31 July 1996) defense of nullity of the first marriage.
Q: Arnold, a Filipino, and Britney, an American, A void marriage is ipso facto void without need of
both residents of California, decided to get any judicial declaration of nullity; the only
married in their local parish. Two years after recognized exception under existing law is Article
their marriage, Britney obtained a divorce in 40 of the Family Code where a marriage void ab
California. While in Boracay, Arnold met Jenny, initio is deemed valid for purposes of remarriage,
a Filipina, who was vacationing there. Arnold hence necessitating a judicial declaration of nullity
fell in love with her. After a brief courtship and before one can contract a subsequent marriage.
complying with all the requirements, they got Clearly, when the first marriage is void ab initio, one
married in Hong Kong to avoid publicity, it being of the essential elements of bigamy is absent, i.e., a
Arnold’s second marriage. Is his marriage with prior valid marriage. There can be no crime when
Jenny valid? (2006 BAR) the very act which was penalized by the law, i.e.,
contracting another marriage during the
A: YES. The marriage will not fall under Article subsistence of a prior legal or valid marriage, is not
35(4) of the Family Code on bigamous marriages present. Thus, an accused in a bigamy case should
provided that Britney obtained an absolute divorce, be allowed to raise the defense of a prior void ab
capacitating her to remarry under her national law. initio marriage through competent evidence other
Consequently, the marriage between Arnold and than the judicial decree of nullity. (Pulido v. People,
Jenny may be valid as long as it was solemnized and G.R. No. 220149, 27 July 2021) [This falls beyond the
valid in accordance with the laws of Hong Kong. cut-off date for the 2022 BAR, i.e., 30 June 2021]
Q: May a person contract a valid subsequent Special cases when subsequent marriage is
marriage before a first marriage is declared void allowed
ab initio by a competent court?
1. Marriage between a Filipino and a foreigner and
A: NO. A judicial declaration of nullity is required procurement by either of a valid divorce decree
before a valid subsequent marriage can be abroad, capacitating him/her to remarry;
contracted; or else, what transpires is a bigamous 2. Terminable bigamous marriages. (Art. 41, FC)
marriage, reprehensible and immoral. (Art. 40, FC;
In re: Salvador v. Serafico, A.M. 2008-20-SC, 15 Mar. Q: When are non-bigamous subsequent
2010) marriages void?
NOTE: Before one can contract a second marriage A: The subsequent marriage of a person whose
on the ground of nullity of the first marriage, there prior marriage has been annulled but contracted
must first be a final judgment declaring the first said subsequent marriage without compliance with
marriage void. (Art. 40, FC) If a party fails to secure Art. 52 of the FC, shall be void.
a judicial declaration of nullity of the first marriage,
he or she runs the risk of being charged with bigamy

Before he contracts a subsequent marriage, he must the holding of the ceremony outside the church or
first comply with the requirement provided for in beyond the territorial jurisdiction of the
Art. 52, viz: solemnizing officer, are all irregularities which do
not affect the validity of the marriage.
The recording in the civil registries and registries of
properties of the following: Necessity of Judicial Declaration of Nullity of
Marriage
1. Judgment of annulment;
2. Partition; The absolute nullity of a previous marriage may be
3. Distribution of properties; and, invoked for purposes of remarriage on the basis
4. Delivery of presumptive legitimes. solely of a final judgment declaring such previous
marriage void. (FC, Art. 40)
Q: Ana Rivera had a husband, a Filipino citizen
like her, who was among the passengers There has yet to be a judgment declaring it void, for
onboard a commercial jet plane which crashed it is solely on the basis of that final judgment that a
in the Atlantic Ocean ten (10) years earlier, and party can remarry. (Albano, 2013)
has never been heard of ever since. Believing
that her husband had died, Ana married Adolf Remarriage is not the sole purpose of declaration of
Cruz Staedler, a divorced German national born nullity of a marriage, as it can be declared void for
of a German father and a Filipino mother other purposes. In Valdes v. RTC, it was said that the
residing in Stuttgart. To avoid being required to law aims to do away with any continuing
submit the required certificate of capacity to uncertainty on the status of the second marriage.
marry from the German Embassy in Manila, (Valdez v. Gomez- Valdez, G.R. No. 122749, 31 July
Adolf stated in the application for marriage 1996; Albano, 2013)
license stating that Adolf was a Filipino, the
couple got married in a ceremony officiated by Prescriptive Period
the Parish Priest of Calamba, Laguna in a beach
in Nasugbu, Batangas, as the local parish priest The time for filing an action or defense for the
refused to solemnize marriage except in his declaration of absolute nullity of marriage, whether
church. Is the marriage valid? (2008 BAR) in a direct or collateral manner, does not prescribe.
(Art. 39, FC) (2002, 2006 BAR)
A: If the missing husband was in fact dead at the
time the second marriage was celebrated, the Any of the parties in a void marriage can file an
second marriage was valid. Actual death of a spouse action for the declaration of nullity of marriage even
dissolves the marriage ipso facto whether or not the though such party is the wrongdoer.
surviving spouse had knowledge of such fact. A
declaration of presumptive death even if obtained Effect of death of a party in a petition for
will not make the marriage voidable because declaration of nullity of marriages
presumptive death will not prevail over the fact of
death. 1. Before the entry of judgment – The court shall
order the case closed and terminated without
If the missing husband was in fact alive when the prejudice to the settlement of estate in proper
second marriage was celebrated, the second proceedings.
marriage was void ab initio because of a prior
subsisting marriage. Had Ana obtained a declaration 2. After the entry of judgment – The decision
of presumptive death, the second marriage would shall be binding upon the parties and their
have been voidable. In both cases, the fact that the successors-in-interest in the settlement of the
German misrepresented his citizenship to avoid estate.
having to present his Certificate of Legal Capacity, or

2022 GOLDEN NOTES
Civil Law
Petition for the declaration of nullity of A: NO, it retroacts to the date of the celebration of
marriage by the heirs of a deceased person after the marriage. Although the judicial declaration of
his death nullity of a marriage on the ground of psychological
incapacity retroacts to the date of the celebration of
The heirs cannot file for declaration of nullity of the marriage insofar as the vinculum between the
marriage. The advent of the Rule on Declaration of parties is concerned, it must be noted that the
Absolute Nullity of Void Marriages marks the marriage is not without legal consequences or
beginning of the end of the right of the heirs of the effects. One such consequence or effect is the
deceased spouse to bring a nullity of marriage case incurring of criminal liability for bigamy. To hold
against the surviving spouse. The heirs can still otherwise would be to render nugatory the State’s
protect their successional right, for compulsory or penal laws on bigamy as it would allow individuals
intestate heirs can still question the validity of the to deliberately ensure that each marital contract be
marriage of the spouses, not in a proceeding for flawed in some manner, and to thus escape the
declaration of nullity but upon the death of a spouse consequences of contracting multiple marriages.
in a proceeding for the settlement of the estate of (Tenebro v. CA, G.R. No. 150758, 18 Feb. 2004)
the deceased spouse filed in the regular courts.
Q: Is a decree of nullity of the first marriage
However, with respect to nullity of marriage cases required before a subsequent marriage can be
commenced before the effectivity of A.M. No. 02-11- entered into validly?
10 and marriages celebrated during the effectivity
of the NCC, the doctrine laid down in Niñal v. A:
Bayadog still applies; that the children have the GR: Under Art. 40 of the FC, the absolute nullity of a
personality to file the petition to declare the nullity previous marriage may be invoked for purposes of
of marriage of their deceased father to their remarriage on the basis solely of a final judgment
stepmother as it affects their successional rights. declaring such previous marriage void.
(De Dios Carlos v. Sandoval, G.R. No. 179922, 16 Dec.
2008) XPN: If the second marriage, however, took place
prior to the effectivity of the FC, there is no need for
Q: If the court denies a petition for declaration judicial declaration of nullity of the first marriage
of nullity of marriage based on psychological pursuant to the prevailing jurisprudence at that
incapacity, may a party to the said case file time. (Rabuya, 2006)
another petition for declaration of its nullity
based on the absence of a marriage license? NOTE: Art. 40 is applicable to remarriages entered
into after the effectivity of the FC on 03 Aug. 1988,
A: NO. A petition to declare the marriage void due regardless of the date of the first marriage. Besides,
to the absence of marriage license, filed after the under Art. 256 of the FC, said Article is given
court denied a petition to declare the marriage void “retroactive effect” insofar as it does not prejudice
due to psychological incapacity is barred by res or impair vested or acquired rights in accordance
judicata. There is only one cause of action, which is with the Civil Code or other laws”. (Atienza v.
the declaration of nullity of the marriage. Hence, Brillantes, A.M. No. MTJ-92-706, 29 Mar. 1995)
when the second case was filed based on another
ground, there was a splitting of a cause of action Q: While his first marriage is subsisting,
which is prohibited. (Mallion v. Alcantara, G.R. No. Veronico married Leticia, which marriage was
141528, 31 Oct. 2006) later declared void on the ground of
psychological incapacity. When Veronico got
Q: Is the declaration of nullity of marriage married for the third time, Leticia filed a case for
applied prospectively? bigamy against him. For his defense, Veronico
claims that effects of the nullity of his marriage
with Leticia retroacts to the date when it was

contracted, hence, he is not guilty of bigamy for 53. (Art. 54, sentence), FC)
want of an essential element – the existence of a
valid previous marriage. Rule on Veronico’s 2. Property Relations
argument.
GR: Either Art. 147 or 148 (Co-ownership) of the FC
A: Veronico’s argument has no merit. Art. 349 of the will apply.
RPC penalizes the mere act of contracting a second
or subsequent marriage during the subsistence of a Art. 147 applies if the parties do not suffer any legal
previous valid marriage. Here, as soon as the second impediment or they are legally capacitated to enter
marriage to Leticia was celebrated, the crime of marriage but nonetheless void. All properties
bigamy had already been consummated as the acquired are made through the joint efforts and
second marriage was contracted during the industry of parties, thus properties, wages or
subsistence of the valid first marriage. (Tenebro v. income is divided equally among them.
CA, G.R. No. 150758, 18 Feb. 2004)
Art. 148 applies if the parties suffer legal
Q: When a marriage was declared null and void, impediment, i.e. due to age or relationship pursuant
does it carry with it any legal effects? to Art. 37 of the FC (incestuous marriages) and Art.
38 of the FC (by reason of public policy). Here, the
A: YES. When the ground for the declaration of properties, wages or income acquired during
nullity of marriage is psychological incapacity, the marriage are divided according to actual
Supreme Court ruled that insofar as State’s penal contributions made.
laws on bigamy, the declaration of nullity of
marriage does not retroact from the date of XPN: If the subsequent marriage is void for non-
celebration. Thus, there is still criminal liability of compliance with Art. 40 of the FC, the property
bigamy although there is a declaration of nullity of relations of the void subsequent marriage are
marriage. (Ibid.) governed either by absolute community or the
conjugal partnership of gains, as the case may be,
EFFECTS OF JUDICIAL DECLARATION OF unless the parties agree to a complete separation of
NULLITY OF MARRIAGE property in a marriage settlement before marriage.
(Diño vs. Diño, G.R. 178044, January 29, 2011 29 Jan.
1. On the status of the Children 2011)
GR: Children conceived and born outside a valid Q: Is a decree of nullity of the first marriage
marriage or inside a void marriage are illegitimate. required before a subsequent marriage can be
entered into validly?
XPNs:
a. Legitimate if the marriage is void: A:
i. On the ground of psychological GR: Under the Art. 40 of the FC, the absolute nullity
incapacity of either or both parties; of a previous marriage may be invoked for purposes
ii. Due to the non-compliance with the of remarriage on the basis solely of a final judgment
requirements set forth under Art. 52 of declaring such previous marriage void.
the FC.
b. Legitimate if the children were conceived or XPNs:
born before the judgment of annulment or
absolute nullity of the marriage under Art.36 1. If parties merely signed the marriage contract,
has become final and executory. (Art. 54, first i.e. without the presence of the solemnizing
sentence), FC) officer.
c. Legitimate if the children were conceived or
born of the subsequent marriage under Art. NOTE: The mere private act of signing a

2022 GOLDEN NOTES
Civil Law
marriage contract bears no semblance to a valid is no such declaration the presumption is that the
marriage and, thus, needs no judicial marriage exists. Therefore, he who contracts a
declaration of nullity of marriage. (Morigo vs. second marriage before the judicial declaration of
People, G.R. 145226, 06 Feb. 2004) the first marriage assumes the risk of being
prosecuted for bigamy.
2. If one of the parties was a victim of identity
theft. Here, the victim discovered that she was Finally, it is a settled rule that the criminal
already married to a Korean national upon culpability attaches to the offender upon the
receipt of her NSO’s CENOMAR. The SC commission of the offense, and from that instant,
affirmed the trial court’s order for correction of liability appends to him until extinguished as
entry under Rule 108 of ROC without need of provided by law. It is clear then that the crime
declaration of nullity of the marriage since of bigamy was committed by petitioner from the
there is no marriage to be declared void in the time he contracted the second marriage with
first place. (Republic vs Olaybar, G.R. 189538, 10 private respondent. Thus, the finality of the
Feb. 2014) judicial declaration of nullity of petitioner's
second marriage does not impede the filing of a
3. Proxy marriages conducted in the Philippines. criminal charge for bigamy against him. (Capili v.
People, G.R. No. 183805, 03 July 2013)
4. Same sex marriage celebrated abroad
involving Filipino citizens by reason of public NOTE: If the ground in nullifying the subsequent
policy. Same sex marriage contracted by a marriage is due to psychological incapacity, in such
Filipino citizen is not recognized as a valid ground, it cannot be a prejudicial question in the
marriage in the Philippines pursuant Art. 1 of criminal case of bigamy because as held in Tenebro
FC and Art. 15 of the NCC. v. CA, the nullification still carries the legal effect in
incurring criminal liability for bigamy.
Q: Will the nullity of the subsequent marriage
constitute a prejudicial question in the crime of NOTE: Per Pulido v. People (G.R. No. 220149, 27 July
bigamy? 2021), YES. “The validity of the second marriage is a
prejudicial question to the criminal prosecution for
A: NO. The Supreme Court held that the subsequent bigamy. To our mind, it is time to abandon the
declaration of the second marriage could not be a earlier precedents and adopt a more liberal view
ground for the dismissal of the criminal case for that a void ab initio marriage can be used as a
bigamy. Accordingly, the outcome of the civil case defense in bigamy even without a separate judicial
for annulment of petitioner's marriage to [private declaration of absolute nullity. The accused may
complainant] had no bearing upon the present testimonial or documentary evidence such
determination of petitioner's innocence or guilt in as the judicial declaration of absolute.” This case,
the criminal case for bigamy because all that is however, falls beyond the cut-off date for the 2022
required for the charge of bigamy to prosper is that BAR, i.e., 30 June 2021.
the first marriage be subsisting at the time the
second marriage is contracted. 3. Donations Propter Nuptias
What makes a person criminally liable for bigamy is GR: Donations propter nuptias are revocable at the
when he contracts a second or subsequent marriage instance of the donor.
during the subsistence of a valid first marriage. The
parties to the marriage should not be permitted to XPNs:
judge for themselves its nullity, for the same must
be submitted to the judgment of competent courts 1. If the donation propter nuptias is embodied in a
and only when the nullity of the marriage is so marriage settlement, the donation is void under
declared can it be held as void, and so long as there Art. 86(1) of the FC; or

2. If the subsequent marriage is judicially declared NOTE: The parties are not disqualified to institute
void by reason of Art. 40 of the FC, the donation each other as voluntary heir in their respective wills
remains valid; to be executed after the judicial declaration of
nullity
XPN to the XPN: If the donee spouse contracted the
marriage in bad faith, all donations are revoked by 6. Parental Authority and Custody of Children
operation by law.
GR: Since the children are considered as
When both parties to a subsequent marriage illegitimate, the parental authority and the custody
contracted in bad faith under Art. 44 of the FC, all of the children will be exercised by their mother.
donations propter nuptias are revoked by operation The illegitimate father, even if he admits paternity,
by law. will only have visitation rights.
4. Designation as Beneficiary in Insurance Policy XPN: If the marriage is declared void by reason of
psychological incapacity of either or both of the
If the subsequent marriage is judicially declared parties, the parental authority and the custody will
void by reason of Art. 40 of the FC, the innocent be exercised by the parent designated by the court.
spouse may revoke such designation if the If a child is below seven years old, the law presumes
beneficiary spouse acted in bad faith, even if such the mother is the best custodian unless the court
designation be stipulated as irrevocable. However, decides otherwise for compelling reasons. (Art. 213,
if the marriage was not judicially declared void and FC)
the designation in the insurance policy is
irrevocable, the insured cannot change such Effects of Decree of Annulment
designation.
1. Termination of the marital bond, as if it had
5. Right to Inherit never been entered into, but the effects thereof
are not totally wiped out;
1. Intestate Succession: The parties cannot inherit 2. Children conceived or born before the judgment
from each other by way of intestate succession of annulment has become final and executory
since they are no longer considered as spouses; are considered legitimate;
3. Absolute community property regime or the
2. Testate Succession: conjugal partnership property regime is
terminated or dissolved and the same shall be
GR: Any testamentary provision by one in favor of liquidated in accordance with the provisions of
the other shall remain valid. Arts. 102 and 129;
4. The innocent spouse may revoke the designation
XPNs: of the other spouse who acted in bad faith as
1. If the subsequent marriage is rendered void by beneficiary in the insurance policy even if the
non-compliance with Art. 40 of the FC, the designation is irrevocable;
spouse who contracted the subsequent marriage 5. The spouse who contracted the marriage in bad
in bad faith is disqualified to inherit from the faith shall be disqualified to inherit from the
innocent spouse. innocent spouse by testate and intestate
succession; and
2. If the marriage is void by reason of the bad faith 6. Donation propter nuptias.
of both parties under Art. 41 of the FC, all
testamentary dispositions made by one in favor GR: It shall remain valid.
of the other are revoked by operation of law. XPN: If the donee spouse acted in bad faith, the
donor may revoke the donation.

2022 GOLDEN NOTES
Civil Law
Liquidation of Property if either spouse

contracted the marriage in Bad faith
His or her share of the net profits of the community

property or conjugal partnership property shall be
forfeited in favor of the common children or if there
be none, the children of the guilty spouse by
previous marriage or in default thereof, the
innocent spouse.
The final judgment of nullity or annulment shall

provide the following:
1. Liquidation, partition, and distribution of the

properties of the spouses;
2. Custody and support of the common children;
and
3. Delivery of their presumptive legitimes.
Unless such matters had already been adjudicated

in previous judicial proceedings, in which case, the
final judgment of nullity or annulment need not
provide for those which have already been
adjudicated.
NOTE: Where there was a failure to record in the

civil registry and registry of property the judgment
of annulment or absolute nullity of the marriage, the
partition and distribution of the property of the
spouses, and the delivery of the children’s
presumptive legitimes, it shall not affect third
persons. (Art. 52, FC)
Forms of presumptive legitime:

1. Cash;
2. Property; and
3. Sound security.
Remarriage after declaration of nullity or

annulment
A person must comply with the requirements of Art.

52 of the FC before he can remarry, viz, the
recording and registration of: (Ju-Pa-D-D)
1. Judgment of Annulment
2. Partition
3. Distribution of Properties; and
4. Delivery of Presumptive Legitimes

Void v. Voidable marriages
VOID MARRIAGE VOIDABLE MARRIAGE

As to Status of Marriage
Void ab initio (the marriage is considered never to
Valid until annulled
have taken place)
As to Petition Filed
Declaration of Nullity of Marriage Annulment of Marriage
Who may file
GR: Solely by the husband or wife.
XPNs: Any real party in interest, only in the

following cases:
GR: Offended Spouse
1. Nullity of marriage cases commenced before

XPNs:
the effectively of A.M. No. 02-11-10 – 15 Mar.
2003;
1. Parents or guardians in cases of insanity
2. Marriages celebrated during the effectivity

2. Parents or guardians before the party
of the Civil Code. (De Dios Carlos v. Sandoval,
reaches twenty-one (21) years old on the
G.R. No. 179922, 16 Dec. 2008); or
ground of Lack of Parental Authority.
3. A party to the previous marriage may seek

the nullity of the subsequent marriage on the
ground that the subsequent marriage is
bigamous. (Juliano-Llave v. Republic, G.R. No.
169766, 20 Mar. 2011)
Prescriptive Period
GR: Within five (5) years from discovery of the

ground
For direct proceeding – only during the lifetime of XPNs:

the parties 1. Lifetime of spouse in cases of insanity; or
For collateral attack – no prescriptive period 2. Before the party reaches twenty-one (21) in
cases where parents or guardians may file
Annulment.
How it may be impugned

Either directly or collaterally Judicial declaration is necessary
As to children
GR: Illegitimate;
Legitimate
XPNs: Those conceived or born of marriages

2022 GOLDEN NOTES
Civil Law
declared void under:
1. Art. 36 (Psychological incapacity) of the FC,

or
2. Art. 52 in relation to Art. 53 of the FC
NOTE: If a person falls under a void marriage fails to

get a Judicial Decree of Nullity of Marriage and
remarries, the child in his second marriage is
considered illegitimate. (Art. 40, FC)
As to Property
GR: Property relations are governed by rules on co-
ownership Art. 147 (without legal impediment) or
Art. 148 (with legal impediments mentioned under
Arts. 37 and 38).
XPN: If the marriage is declared void by reason of

non-compliance with Art. 40 of the FC, the absolute
community or the conjugal partnership, as the case GR: Governed by rules on absolute community.
may be, unless parties agree to complete separation
of property in a marriage settlement prior marriage XPN: Unless another system is agreed upon in
shall be dissolved and liquidated. (Art. 43(2) in marriage settlement
relation to Art. 50, FC)
As to Judicial Declaration
GR: There is no necessity to obtain a judicial

declaration.
Necessary.
XPN: For purposes of remarriage, Judicial
declaration of nullity is required.

VOIDABLE MARRIAGES NOTE: Where there has been no misrepresentation

or fraud, that is, when the husband at the time of the
A voidable marriage is considered valid and marriage knew that the wife was pregnant, the
produces all its civil effects until it is set aside by marriage cannot be annulled. (Buccat v. Buccat, G.R.
final judgment of a competent court in an action for No. 47101, 25 Apr. 1941)
annulment. (Rabuya, 2018) Simply put, a voidable
marriage is valid until it is annulled. (Paras, 2016) Q: Aurora prayed for the annulment of her
marriage with Fernando on the ground of fraud
Determination of the unsoundness of mind as a in obtaining her consent after having learned
ground for annulment that several months prior to their marriage,
Fernando had pre-marital relationship with a
It is essential that the mental incapacity must relate close relative of his. According to her, the "non-
specifically to the contract of marriage and the test divulgement to her of such pre-marital secret"
is whether the party at the time of the marriage was constituted fraud in obtaining her consent
capable of understanding the nature and within the contemplation of Art. 46 of the FC. Is
consequences of the marriage. (Rabuya, 2018) the concealment by the husband of a pre-marital
relationship with another woman a ground for
Fraud as a ground for annulment annulment of marriage?
Fraud, as distinguished from fraud as a ground for A: NO. The non-disclosure to a wife by her husband
annulment of contracts, refers to the non-disclosure of his pre-marital relationship with another woman
or concealment of some facts deemed material to is not a ground for annulment of marriage. For fraud
the marital relations. (Rabuya, 2009) as a vice of consent in marriage, which may be a
cause for its annulment, comes under Art. 46 of the
No other misrepresentation or deceit as to FC, the fraud, as vice of consent, is limited
character, health, rank, fortune or chastity shall exclusively by law to those kinds or species of fraud
constitute such fraud as will give ground for action enumerated in Art. 46 in relation to Art. 45(3).
for the annulment of marriage. (Art. 46(5), FC)
Q: Melvin and Janufi met in 1996 while studying
Circumstances constituting fraud under Art. in Cebu City. They became sweethearts but
45(3) (1996, 1997, 2002, 2003, 2006 BAR) eventually separated in 2000. Later, Melvin
heard that Janufi began dating someone. They
1. Non-disclosure of a previous conviction by final lost communication. In March 2001, Melvin
judgment of the other party of a crime involving visited Janufi and asked her about the rumor.
moral turpitude; She denied the same and insisted that no one
touched her" and nothing happened between
her and any third party. They reconciled. In
2. Concealment by the wife of the fact that at the
April 2001, Melvin learned that Janufi was
time of marriage, she was pregnant by a man
pregnant. He was surprised and doubtful to
other than her husband;
learn Janufi was already 1 month pregnant
because they had sexual intercourse only in
3. Concealment of sexually transmissible disease,
March 2001. Although Melvin doubted the
regardless of its nature, existing at the time of
paternity of the child, Janufi supposedly assured
marriage; or
him that he was the only person she had sexual
intercourse with.
4. Concealment of drug addiction, habitual
alcoholism or homosexuality or lesbianism
After 3 years, the couple got married. During
existing at the time of the marriage. (Art. 46, FC)
their marriage, the couple quarreled about
ordinary things. One time, they had a fight and

2022 GOLDEN NOTES
Civil Law
the issue of their child was brought up. This

drove Melvin to finally take a DNA Parentage b. It must be antecedent (existing at the time
Examination which revealed that there was a of marriage), grave, and incurable.
0.0% probability that Melvin was the father of Annulment of Marriage
their child. He decided to file a petition for
annulment of marriage due to fraud. Decide on
a. The drug addiction must be concealed;
the petition.
b. It must exist at the time of marriage;
A: To constitute fraud that
warrants annulment under Article 46 (2): 1) the
c. There should be no cohabitation with full
wife must have been pregnant by a man other than
knowledge of the drug addiction; and
her husband at the time of the marriage and 2) the
wife must have fraudulently concealed the same. In
d. The case is filed within five (5) years from
other words, the concealed pregnancy, which
discovery.
vitiates consent, must have existed at the
time of the marriage.
Legal Separation
In the instant case, the facts readily reveal that their
child was already almost three years old when a. There should be no condonation or
Melvin and Janufi got married in 2004. As Janufi was consent to the drug addiction;
not pregnant at the time of the marriage, any
purported fraud she may have committed to induce b. The action must be filed within five (5)
Melvin to marry her cannot be considered the years from the occurrence of the cause;
fraudulent concealment contemplated under Article and
46 (2). As Janufi's purported fraud does not
squarely fall under Article 46 (2), the same cannot c. Drug addiction arises during the
serve as a ground for annulment. marriage and not at the time of marriage.
Even assuming that Article 46 (2) was applicable,

the Court finds that Melvin failed to discharge his Q: If drug addiction, habitual alcoholism,
burden of proving that Janufi acted with bad faith lesbianism or homosexuality should occur only
and fraudulent intent with clear and convincing during the marriage, would these constitute
evidence. While Janufi may have misrepresented grounds for a declaration of nullity or for legal
the state of her chastity prior to her and Melvin's separation, or would they render the marriage
reconciliation, it appears that she honestly believed void? (2002 BAR)
in good faith that their child was that of Melvin. As
there was no bad faith on her part, she cannot be A: If drug addiction, habitual alcoholism, lesbianism
guilty of concealment (Republic v. Villacorta, G.R. No. or homosexuality should occur during the marriage,
249953, 23 June 2021, J. Caguioa). they will:
Q: Under what conditions, respectively, may
drug addiction be a ground, if at all, for the 1. Not constitute grounds for declaration of nullity
declaration of nullity of marriage, annulment of (Art. 35, FC)
marriage, and legal separation? (1997 BAR) 2. Not constitute grounds to render the marriage
voidable (Arts. 45 and 46, FC); and
A: 3. Constitute grounds for legal separation. (Art. 55,
Declaration of Nullity of Marriage FC)
a. The drug addiction must amount to
psychological incapacity to comply with the
essential obligations of marriage; and

Vitiated consent as a ground for annulment of Impotent.

marriage
Presumption of potency of one spouse
There is vitiation of consent when:
GR: Presumption is in favor of potency.
GR: Consent of either party was obtained by force,
intimidation, or undue influence. XPN: Doctrine of Triennial ohabitation.
Force or violence – There is violence when, in Doctrine Triennial Cohabitation

order to wrest consent, serious or irresistible force
is employed. If after 3 years of living together with her husband,
the wife remained a virgin, the husband is presumed
Intimidation – “There is intimidation when one of to be impotent. (Rabuya, 2018) The husband will
the contracting parties is compelled by a reasonable have to overcome this presumption.
and well-grounded fear of an imminent and grave
evil upon their person or property, or upon the Relative impotency may now be invoked as a
person or property of their spouse, descendants, or ground for annulment. The Committee has decided
ascendants, to give their consent.” (Art. 1335(2), to include relative impotency of one party because
NCC) there are cases where a person is impotent with
respect to their spouse but not with other men or
Undue influence – control over one’s will. women. (Sempio Diy, 1995)
XPN: However, if the same having disappeared or Q: The day after John and Marsha got married,
ceased, such party thereafter freely cohabited with John told her that he was impotent. Marsha
the other as husband and wife. continued to live with John for two years. Is
Marsha now estopped from filing an annulment
A threat to enforce one's claim through competent case against John? (2007 BAR)
authority however, if the claim is just or legal, does
not vitiate consent. A: NO. Unlike the other grounds for annulment of
voidable marriage which are subject to ratification
Impotence or physical incapacity by continued cohabitation, the law does not allow
ratification in case of impotency.
Impotence (impotentia copulandi) refers to lack of
power of copulation and not to mere sterility Requisites of Affliction of a Sexually
(impotentia genrandi) which refers to ability to Transmitted Disease (STD) as a Ground for
procreate. The test is not the capacity to reproduce, Annulment
but the capacity to copulate. (Paras, 2008) Although
impotency carries with it sterility, a sterile person is 1. One of the parties is afflicted with STD;
not necessarily impotent. (Paras, 2016)
2. STD must be:
Requisites for impotence to be a ground for a. Existing at the time the marriage is
annulment of marriage (E-P-I-U-O) celebrated;
b. Serious; and
1. Exists at the time of the Celebration of c. Apparently Incurable;
marriage;
2. Permanent (does not have to be absolute); 3. The other spouse is not aware of the other’s
3. Incurable; affliction; and
4. Unknown to the other spouse; and
5. The Other spouse must not also be 4. The injured party must be free from STD.

2022 GOLDEN NOTES
Civil Law
NOTE: Compulsory HIV testing shall be allowed Art. 45 vs. 46 of the FC on STD as ground for
when it is necessary to resolve relevant issues annulment
under E.O. No. 209, otherwise known as the Family
Code of the Philippines. (Sec. 30(b), R.A. No. 11166) ART. 45 ART. 46
Affliction Concealment
Confidential HIV and AIDS information may be
released by HIV testing facilities without consent As to Ground for Annulment
when responding to a subpoena duces tecum and The act of concealing
The fact of being
subpoena ad testificandum issued by a court with because it constitutes
afflicted
jurisdiction over a legal proceeding where the main fraud
issues it the HIV status of the individual. Provided: As to the Presence of Concealment
Not necessarily Necessary
1. That the confidential medical record, after
having been verified for accuracy shall remain As to the Nature of the Disease
anonymous and unlinked;
Must be serious and Does not have to be
2. Shall be properly sealed by its lawful custodian,
incurable serious and incurable
hand-delivered to the court, and personally
opened by the judge; and
3. That the judicial or administrative proceedings Role of the prosecutor or Solicitor General in
shall be held in executive session. (Sec. 45(c), R.A. cases of annulment and judicial declaration of
No. 11166) nullity
Q: Yvette was found to be positive for HIV virus, The prosecutor or Solicitor General shall take steps
considered sexually transmissible, serious and to prevent collusion between the parties and to take
incurable. Her boyfriend Joseph was aware of care that evidence is not fabricated or suppressed.
her condition and yet married her. After two (2) Even if there is no suppression of evidence, the
years of cohabiting with Yvette, and in his belief public prosecutor has to make sure that the
that she would probably never be able to bear evidence to be presented or laid down before the
him a healthy child, Joseph now wants to have court is no fabricated. Only the active participation
his marriage with Yvette annulled on the ground of the public prosecutor or the Solicitor General will
that Yvette has STD. Yvette opposes the suit ensure that the interest of the State is represented
contending that Joseph is estopped from seeking and protected in proceedings for declaration of
annulment of their marriage since he knew even nullity of marriages by preventing the fabrication or
before their marriage that she was afflicted with suppression of evidence. (Art. 48, FC)
HIV virus. Can the action of Joseph for
annulment of his marriage with Yvette prosper? NOTE: The non-intervention of the prosecutor is
not fatal to the validity of the proceedings in cases
A: NO. Concealment of a sexually transmitted where the respondent in a petition for annulment
disease may annul the marriage it there was fraud vehemently opposed the same and where they do
existing unknown to the party concerned. In this not allege that evidence was suppressed or
case, there was no fraud because Joseph knew that fabricated by any of the parties. (Tuason v. CA, G.R.
Yvette was suffering from HIV when he married her. No. 116607, 10 Apr. 1996)
(Art. 46(3), FC)
Collusion – Where for purposes of getting an
annulment or nullity decree, the parties come up
with an agreement making it appear that the
marriage is defective due to the existence of any of
the grounds for the annulment of marriage or the
declaration of its nullity provided by law and

agreeing to represent such false or non-existent

cause of action before the proper court. (Sta. Maria,
2010)
Actions prohibited in annulment and

declaration of absolute nullity of marriage cases
1. Compromise;
2. Confession of judgment;
3. Stipulation of facts;
4. Summary judgment; and
5. Judgment on the pleadings.
What the law prohibits is a judgment based

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

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

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

2022 GOLDEN NOTES
Civil Law
Voidable marriages and its ratification (1999, 2003, 2006, 2007, 2009 BAR)
RATIFICATION WHO MAY FILE WHEN TO FILE
Marriage of a party 18 years of age or over but below 21 solemnized without the consent of the parents,
guardian or person having substitute parental authority over the party, in that order
Within five (5) years after

Contracting party who failed to By the contracting party whose
attaining the age of twenty-one
obtain parental consent: parent did not give consent.
(21).
Through free cohabitation after
attaining the age of twenty-one
(21).
NOTE: The parents cannot ratify Parent, guardian, or person having At any time before such party has
the marriage. The effect of legal charge of the contracting reached the age of twenty-one
prescription on their part is that party. (21).
they are barred from contesting it,
but the marriage is not yet
cleansed of its defect.
Either party was of unsound mind
GR: Sane spouse who had no

knowledge of the other’s insanity
XPN:
a. Any relative, guardian or
Insane spouse: Through free
person having legal charge of a. At any time before the death of
cohabitation after coming to
the insane; or either party; or
reason.
b. Insane spouse during a lucid

interval or after regaining b. During a lucid interval or after
sanity. regaining sanity.
Consent of either party was obtained by fraud
Injured party: Through free

Within five (5) years after the
cohabitation with full knowledge Injured party
discovery of fraud.
of the facts constituting the fraud.
Vices of consent such as force, intimidation or undue influence
Within five (5) years from the

Injured party: Through free
time the force, intimidation, or
cohabitation after the vices have Injured party
undue influence disappeared or
ceased or disappeared.
ceased.

Impotence (impotencia copulandi) and afflicted with STD

found to be serious and appears to be incurable
Only the potent spouse can file the

May not be ratified but action may
action (,) and they must not have
be barred by prescription only, Within five (5) years after the
been aware of the other’s
which is five (5) years after the celebration of marriage.
impotency at the time of the
marriage.
marriage.

2022 GOLDEN NOTES
Civil Law
if pardoned;
C. LEGAL SEPARATION
NOTE: The final judgment must be
promulgated during the marriage.
Legal separation is a legal remedy available to

5. Drug addiction or habitual alcoholism of
parties in a valid but failed marriage for the purpose
respondent;
of obtaining a decree from the court entitling him or
her certain reliefs such as the right to live separately
NOTE: It must exist after celebration of
from each other (without affecting the marital bond
marriage
that exists between them), the dissolution and
liquidation of their absolute community or conjugal
6. Physical violence or moral pressure to compel
partnership property regime and the custody of
petitioner to change religious or political
their minor children.
affiliation;
Nature of legal separation

7. Bigamous marriage subsequently contracted by
respondent in the Philippines or abroad;
An action for legal separation which involves
nothing more than bed-and-board separation of the
8. Sexual infidelity or perversion;
spouses is purely personal. The Civil Code
recognizes this:
NOTE: Sexual perversion includes all unusual
or abnormal sexual practices which may be
1. By allowing only the innocent spouse and no
offensive to the feelings or sense of decency of
one else to claim legal separation; and
either the husband or wife.
2. By providing that the spouses can, by their

9. Lesbianism or homosexuality of respondent;
reconciliation, stop or abate the proceedings
and
and even rescind a decree of legal separation
already granted. (Lapuz v. Eufemio, G.R. No. L-
NOTE: It must exist after celebration of
31429, 31 Jan. 1972)
marriage
Grounds for Legal Separation (Art. 55, FC)

10. Abandonment of petitioner by respondent
(1997, 2002, 2003, 2006, 2007 BAR)
without justifiable cause for more than one (1)
year.
1. Repeated physical violence or grossly abusive
conduct against petitioner, common child, child
Q: If a person commits several acts of sexual
of petitioner;
infidelity, particularly in 2002, 2003, 2004,
2005, does the prescriptive period to file for
NOTE: Respondent’s child is not included
legal separation run from 2002? (2007 BAR)
2. Attempt to corrupt or induce petitioner,

A: The prescriptive period begins to run upon the
common child, child of petitioner to engage in
commission of each act of infidelity. Every act of
prostitution, or connivance in such corruption
sexual infidelity committed by a person is a ground
or inducement;
for legal separation.
3. Attempt by respondent against the life of

Q: Lucita left the conjugal dwelling and filed a
petitioner;
petition for legal separation due to the physical
violence, threats, intimidation, and grossly
4. Final judgment sentencing respondent to
abusive conduct she had suffered at the hands of
imprisonment of more than six (6) years, even

Ron, her husband. Ron denied such and claimed 6. Attempting to restrict or restricting the woman’s
that since it was Lucita who had left the conjugal or her child’s freedom of movement or conduct
abode, then the decree of legal separation by:
should not be granted, following Art. 56(4) of
the FC which provides that legal separation shall a. Force, or
be denied when both parties have given ground b. Threat of force;
for legal separation. Should legal separation be c. Physical or other harm;
denied on the basis of Ron’s claim of mutual d. Threat of physical or other harm; or
guilt? e. Intimidation directed against the woman or
child.
A: NO. Art. 56(4) of the FC does not apply since the
abandonment contemplated under the law is This shall include, but not limited to, the
abandonment without justifiable cause for more following acts committed with the purpose or
than one year. In this case, Lucita left Ron due to his effect of controlling or restricting the woman’s
abusive conduct. Such act does not constitute the or her child’s movement or conduct:
abandonment contemplated in the said provision.
Therefore, there is no mutual guilt between them as a. Threatening to deprive or actually depriving
there is only one erring spouse. (Ong Eng Kiam v. CA, the woman or her child of custody to her/his
G.R No. 153206, October 23, 2006 23 Oct. 2006) family;
NOTE: No criminal conviction is necessary to issue b. Depriving or threatening to deprive the

a decree of legal separation. In legal separation, woman or her children of financial support
preponderance of evidence is enough. (Gandionco v. legally due their family, or deliberately
Penaranda, G.R. No. 79284, November 27, 1987 27 providing the woman’s children insufficient
Nov. 1987) financial support;
Act considered as acts of violence under R.A. c. Depriving or threatening to deprive the
No. 9262 woman or her child of a legal right;
1. Causing, threatening to cause, or attempting to d. Preventing the woman in engaging in any

cause physical harm to the woman or her child; legitimate profession, occupation, business
or activity, or controlling the victim’s own
2. Threatening to cause the woman or her child money or properties, or solely controlling the
physical harm; conjugal or common money or properties.
3. Attempting to cause the woman or her child e. Inflicting or threatening to inflict physical
physical harm; harm on oneself for the purpose of
controlling her actions or decisions;
4. Placing the woman or her child in fear of
imminent physical harm; f. Causing or attempting to cause the woman or
her child to engage in any sexual activity
5. Attempting to compel or compelling the woman which does not constitute rape, by:
or her child to:
i. Force, or
a. Engage in conduct which the woman or her ii. Threat of force;
child has the right to desist from; or iii. Physical harm, or
b. Desist from conduct which the woman or her iv. Through intimidation directed against
child has the right to engage in; the woman or her child or her/his
immediate family;

2022 GOLDEN NOTES
Civil Law
7. Inflicting or threatening to inflict physical harm 5. Mutual guilt;

on oneself for the purpose of controlling her 6. Prescription: five (5) years from occurrence of
actions or decisions; cause;
7. Death of either party during the pendency of the
8. Causing or attempting to cause the woman or case (Lapuz-Sy v. Eufemio, G.R. No. L-31429,
her child to engage in any sexual activity which January 31, 1972 31 Jan. 1972); or
does not constitute rape, by: 8. Reconciliation of the spouses during the
pendency of the case. (FC, Art. 56)
a. Force, or
b. Threat of force; Prescriptive period for filing a petition for legal
c. Physical harm, or separation
d. Through intimidation directed against the
woman or her child or her/his immediate An action for legal separation shall be filed within
family five (5) years from the time of the occurrence of the
cause. (Art. 57, FC)
9. Engaging in purposeful, knowing, or reckless
conduct, personally or through another that Failure to interpose prescription as a defense
alarms or causes substantial emotional or
psychological distress to the woman or her child. When prescription was not interposed as a defense,
This shall include, but not be limited to, the the courts can take cognizance thereof, because
following acts: actions seeking a decree of legal separation, or
annulment of marriage, involve public interest and
a. Stalking or following the woman or her child it is the policy of our law that no such decree be
in public or private places; issued if any legal obstacles thereto appear upon the
b. Peering in the window or lingering outside record.
the residence of the woman or her child;
c. Entering or remaining in the dwelling or on This is an exception to the Rules of Court provision
the property of the woman or her child that defenses not raised in the pleadings will not be
against her/his will; considered since provisions on marriage are
d. Destroying the property and personal substantive in nature. (Brown v. Yambao, G.R. No. L-
belongingness or inflicting harm to animals 10699, 18 Oct. 1957)
or pets of the woman or her child; and
e. Engaging in any form of harassment or Q: Rosa and Ariel were married in the Catholic
violence; and Church of Tarlac, Tarlac on 05 Jan. 1988. In
1990, Ariel went to Saudi Arabia to work. There,
10. Causing mental or emotional anguish, public after being converted into Islam, Ariel married
ridicule or humiliation to the woman or her Mystica. Rosa learned of the second marriage of
child, including, but not limited to, repeated Ariel on 01 Jan. 1992 when Ariel returned to the
verbal and emotional abuse, and denial of Philippines with Mystica. Rosa filed an action for
financial support or custody of minor children of legal separation on 05 Feb. 1994.
access to the woman’s child/children.
a. Does Rosa have legal grounds to ask for legal
Grounds for denial of petition for legal separation?
separation (2006 BAR) b. Has the action prescribed? (1994 BAR)
1. Condonation of the act complained of; A:

2. Consent to the commission of the offense/act; a. YES. The abandonment of Rosa by Ariel for more
3. Connivance in the commission of the act; than one (1) year is a ground for legal separation
4. Collusion in the procurement of decree of LS; unless upon returning to the Philippines, Rosa

agrees to cohabit with Ariel which is allowed Rule in rendering a judgment of legal separation
under the Muslim Code. In this case, there is based upon a stipulation of facts or confession of
condonation. The contracting of a subsequent judgment
bigamous marriage whether in the Philippines
or abroad is a ground for legal separation under A decree of legal separation cannot be issued solely
Art. 55(7) of the FC. Whether the second based on a stipulation of facts or a confession of
marriage is valid or not, Ariel having converted judgment. The grounds for legal separation must be
into Islam, is immaterial. proved. Neither confession of judgment nor
summary judgment is allowed. In any case, the court
b. NO. The aggrieved spouse must file the action shall order the prosecuting attorney or fiscal to take
within five (5) years from the occurrence of the steps to prevent collusion between the parties and
cause. (Art. 57, FC) The subsequent marriage of to take care that the evidence is not fabricated or
Ariel could not have occurred earlier than 1990, suppressed. (FC, Art. 60) (Art. 60, FC)
the time he went to Saudi Arabia. Hence, Rosa
has until 1995 to bring the action under the FC. What the law prohibits is a judgment based
exclusively or mainly on defendant’s confession.
Cooling-off Period The law does not, however, exclude, as evidence,
any admission or confession made by the
An action for legal separation shall be in no case respondent in a legal separation case outside of the
tried before 6 months has elapsed since the filing of court. (De Ocampo v. Florenciano, G.R. No. L-13553,
the petition, to enable the contending spouses to 23 Feb. 1960)
settle differences. In other words, it is for possible
reconciliation. (Art. 58, FC) Filing of petition for legal separation
GR: The 6 months cooling-off period is a mandatory Who may

Husband or wife
requirement. Petition shall not be granted if it is not file
observed. (Pacete v. Carriaga, G.R. No. L-53880, 17
When to Within five (5) years from the time
Mar. 1994)
file of the occurrence of the cause
Note: Matters other than the merits of legal Family Court of the province or city
separation can be determined by the court without where the petitioner or the
waiting for the lapse of the 6-month period. respondent has been residing for at
Where to least six (6) months prior to the
XPN: There is no cooling-off period if the grounds file date of filing, or in case of a non-
alleged are those under R.A. No. 9262. (Anti-Violence resident, where he may be found in
against Women and Children Act) The court can the Philippines, at the election of
immediately hear the case. the petitioner.
Reconciliation Efforts Effects of Filing a Petition for Legal Separation

(Art. 61, FC)
The Court is required to take steps toward the
reconciliation of the spouses and must be fully The spouses shall be entitled to live separately from
satisfied that, despite such efforts, reconciliation is each other. In the absence of a written agreement
highly improbable. (Art. 59. FC) between the parties, the court shall designate either
the husband or the wife or a third person to
administer the absolute community or conjugal
partnership property.

2022 GOLDEN NOTES
Civil Law
Effect of death of a party in an action for legal 3. Custody of minor children is awarded to the
separation innocent spouse (subject to Art. 213, FC);
4. Offending spouse is disqualified to inherit from

Death of the action itself. Being
innocent spouse by intestate succession;
personal in character, it follows
that the death of one party to the
During 5. Provisions in the will of innocent spouse which
action causes the death of the
Pendency favors offending spouse shall be revoked by
action itself – actio personalis
operation of law;
moritur cum persona. (Rabuya,
2009)
6. Innocent spouse may revoke donations he/she
made in favor of offending spouse; and
Case will be closed. The court
Before shall order the case closed and NOTE: Prescriptive period: five (5) years from
entry of terminated without prejudice to finality of decree of legal separation.
judgment the settlement of estate proper
proceedings in the regular courts. 7. Innocent spouse may revoke designation of
(Sec. 21, A.M. 02-11-11- SC) offending spouse as beneficiary in any
insurance policy, even when stipulated as
irrevocable.
Judgment is binding. If the party
dies after the entry of judgment, Q: In case an action for legal separation is
After the same shall be binding upon granted, what will happen to a child below the
entry of the parties and their successors age of seven? Is the rule absolute?
judgment in interest in the settlement of the
estate in the regular courts. (Sec. A: As a rule, the custody of the child shall be
21, A.M. No. 02-11-11-SC) awarded to the innocent spouse, except if the child
is below the age of seven where the law says that the
child cannot be separated from the mother, except
NOTE: In cases where one of the spouses is dead, or if there is a compelling reason to do so. The
where the deceased’s heirs continue the suit, common-law relationship of a child's mother with a
separation of property and any forfeiture of share married man is a ground to separate the child from
already effected subsists, unless spouses agree to
the mother, because such a situation will not afford
revive former property regime. the child a desirable atmosphere where they can
grow and develop into an upright and moral-
Effects of Legal Separation minded person. (Cervantes v. Fajardo, G.R. No.
79955, 27 Jan. 1989)
1. Spouses entitled to live separately but the
marriage bond is not severed; Q: Which among the following remedies:
2. ACP/CPG shall be dissolved and liquidated. The a. Declaration of nullity of marriage;
share of the offending spouse in the net profits b. Annulment of marriage;
shall be forfeited in favor of: c. Legal separation; and/or
a. Common children; d. Separation of property
b. In default of the common children, children
of the guilty spouse by a previous marriage; may an aggrieved spouse avail themselves of:
or
c. In default of common children and the 1. If the wife discovers after the marriage that
children of the guilty spouse, innocent her husband has “AIDS”?
spouse;

2. If the wife goes abroad to work as a nurse and If the husband discovers after the marriage that his
refuses to come home after the expiration of wife was a prostitute before they got married, he
her three-year contract there? has no remedy. No misrepresentation or deceit as to
character, health, rank, fortune or chastity shall
3. If the husband discovers after the marriage constitute fraud as legal ground for an action for the
that his wife has been a prostitute before annulment of marriage. (Art. 46, FC)
they got married?
4. LEGAL SEPARATION
4. If the husband has a serious affair with his
secretary and refuses to stop The wife may file an action for legal separation. The
notwithstanding advice from relatives and husband’s sexual infidelity is a ground for legal
friends? separation. (Art. 55, FC)
5. If the husband beats up his wife every time he She may also file an action for judicial separation of
comes home drunk? (2003 BAR) property for failure of her husband to comply with
his marital duty of fidelity. (Arts. 135(4) and 101, FC)
A:
1. ANNULMENT OF MARRIAGE 5. LEGAL SEPARATION, AND SEPARATION OF
PROPERTY
Since AIDS is a serious and incurable sexually
transmissible disease, the wife may file an action for The wife may file an action for legal separation on
annulment of the marriage on this ground whether the ground of repeated physical violence on her
such fact was concealed or not from the wife, person. (Art. 55(1), FC)
provided that the disease was present at the time of
the marriage. The marriage is voidable even though She may also file an action for judicial separation of
the husband was not aware that he had the disease property for failure of the husband to comply with
at the time of marriage. his marital duty of mutual respect. (Arts. 101 and
135(4), FC)
2. SEPARATION OF PROPERTY
She may also file an action for declaration of nullity
If the wife refuses to come home for three (3) of the marriage if the husband’s behavior
months from the expiration of her contract, she is constitutes psychological incapacity existing at the
presumed to have abandoned the husband and he time of the celebration of marriage.
may file an action for judicial separation of property.
If the refusal continues for more than one year from Effect to the donations made by the spouses to
the expiration of her contract, the husband may file each other
the action for legal separation under Art. 55(10) of
the FC on the ground of abandonment of petitioner The revocation of the donations shall be recorded in
by respondent without justifiable cause for more the registries of property in the places where the
than one (1) year. A spouse is deemed to have properties are located. Alienations, liens, and
abandoned their spouse when they leave the encumbrances registered in good faith before the
conjugal dwelling without any intention of recording of the complaint for revocation in the
returning. (Art. 101, FC) The intention not to return registries of property shall be respected. The
cannot be presumed during the three-year period of revocation of or change in the designation of the
her contract. insurance beneficiary shall take effect upon written
notification thereof to the insured.
3. NONE

2022 GOLDEN NOTES
Civil Law
The action to revoke the donation must be brought Revival of previous property regime after
within five (5) years from the time the decree of reconciliation
legal separation has become final. (Art. 64, FC)
Effects of Reconciliation Reconciliation does not automatically revive the
former property regime of the spouses. If the
During the pendency of the case: spouses want to revive the previous property
regime, they must execute an agreement to revive
LS proceedings terminated at the former property regime, which agreement shall
As to the whatever stage. be submitted in court, together with a verified
Decree After the issuance of the decree: motion for its approval. (Art. 67, FC)
Final decree of LS to be set aside. The agreement to revive must be under oath
(Art. 66, FC) and specify:
GR: In case there had been

already separation of property 1. The properties to be contributed anew to the
and forfeiture of the share of the restored regime;
guilty spouse, the same shall be 2. Those to be retained as separated properties of
maintained. (Pineda, 2008) each spouse; and
3. The names of all their known creditors, their
XPN: The parties, however, can addresses, and the amounts owing to each.
As to the
come into an agreement to revive (Pineda, 2008)
Property
their previous regime. Their
Regime
agreement must be under oath Effects of reconciliation while the petition is
and must contain a list of the being heard by the court
properties desired to be returned
to the community or conjugal If the spouses should reconcile, a corresponding
property and those which will joint manifestation under oath duly signed by them
remain separate, a list of shall be filed with the court in the same proceeding
creditors and their addresses. for legal separation. The legal separation
proceedings, if still pending, shall thereby be
The FC does not provide for the terminated at whatever stage.
revival of revoked provisions in a
will originally made in favor of
As to
the offending party as a result of
Capacity to
the LS. This absence gives the
Succeed
innocent spouse the right to
choose whether the offending
spouse will be reinstituted.
Those given to the children

cannot be returned since the
As to the
spouses are no longer the owners
Forfeited
of such. But those given to the
Shares
innocent spouse may be
returned.

Declaration of Nullity of Marriage vs. Annulment v. Legal Separation
DECLARATION OF NULLITY OF MARRIAGE ANNULMENT LEGAL SEPARATION

Marriage bond
No effect; marriage
Dissolved Dissolved
bond remains
Status of children
GR: Illegitimate
XPN: Children conceived or born of marriages before Legitimate

declaration of nullity under Arts. 36 and 53 of the FC
considered legitimate
Property relations
ACP/CPG shall be dissolved & liquidated.
GR: Governed either by Article 147 or Article 148 of the (Art. 43 (2), FC)
Family Code FC. Thus, property regime shall be liquidated
pursuant to the ordinary rules on co- ownership. 1. Share of spouse, who contracted the
subsequent marriage in bad faith, in the net
XPN: Marriages declared void under Article 40 which shall profits of the community property or
be liquidated in accordance with Article 43 par. 2 which conjugal partnership, shall be forfeited in
property relations could either be governed by absolute favor of the common children; or
community or conjugal gains unless the parties agree to
complete separation of property in a marriage settlement 2. If there are none, the children of the guilty
prior marriage. (Valdes v. RTC, G.R. No. 122749, 31 Jul. spouse by a previous marriage; or
1996)
3. In default of children, the innocent spouse.
Donations propter nuptias
GR: Donations propter nuptias are revocable at the
instance of the donor.
XPNs:
i. If the donation propter nuptias is embodied in a
GR: Donations propter nuptias shall remain
marriage settlement, the donation is void under Article
valid. (Art. 43[3], FC)
86 par. 1 of the FC.
XPNs:
ii. If the subsequent marriage is judicially declared
1. If donee contracted the marriage in
void by reason of Art. 40 of the FC, the donation remains
bad faith, such donations made to said donee
valid.
shall be revoked by operation of law.
XPNs to the XPNs:

2. If both spouses to the marriage
1. If the donee spouse contracted the marriage in
acted in bad faith, all donations propter
bad faith, all donations are revoked by operation by law.
nuptias shall be revoked by operation of law.
2. When both parties to a subsequent marriage
contracted in bad faith under Article 44 of the FC, all
donations propter nuptias are revoked by operation by
law.

2022 GOLDEN NOTES
Civil Law
Insurance
If the subsequent marriage is judicially declared by void If one spouse acted in bad faith, innocent
by reason of Article 40 of the FC, the innocent spouse may spouse may revoke his designation as
revoke such designation if the beneficiary spouse acted in beneficiary in the insurance policy even if such
bad faith, even if such designation be stipulated as designation be stipulated as irrevocable. (Art.
irrevocable. 43[4], FC)
Succession
Intestate Succession:
The parties cannot inherit from each other by way of
intestate succession since they are no longer considered
as spouses.
Testate Succession:
GR: Any testamentary provision by one in favor of the
other shall remain valid.
XPNs:
1. If the subsequent marriage is rendered void by If one spouse contracted the marriage in bad
non- compliance with Article 40 of the Family Code FC, faith, he shall be disqualified to inherit from
the spouse who contracted the subsequent marriage in innocent spouse by testate and intestate
bad faith is disqualified to inherit from the innocent succession. (Art. 43(5), FC)
spouse.
2. If the marriage is void by reason of the bad faith

of both parties under Article 41 of the Family Code FC, all
testamentary dispositions made by one in favor of the
other are revoked by operation of law.
NOTE: The parties are not disqualified to institute each

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

incapacitated to fulfill an essential marital

D. RIGHTS AND OBLIGATIONS obligation. But he cannot and should not demand
BETWEEN HUSBAND AND WIFE sexual intimacy from her coercively or violently.
(People v. Jumawan, G.R. No. 187495, 21 Apr.
2014)
Rights and obligations of the spouses (2010

Therefore:
BAR)
b. The right to sexual intercourse involves
normal intercourse. The wife may refuse to
1. Essential marital obligations: (L-O-R) (Art.
have sexual intercourse with the husband if
68, FC)
he resorts to abnormal or perverse practices.
c. The wife can also refuse to have sexual
a. Live together which includes consortium
intercourse with the husband if she is ill, if it
(cohabitation) and copulation (sexual
would endanger her health, or if he is
intercourse);
suffering from some venereal disease.
d. If the husband forces the wife to have sexual
XPN: The Court may exempt a spouse from
intercourse with him against her will, he may
the obligation to live together for the
be charged with coercion. (Sempio-Diy, 1995)
following reasons:
2. Fix the family domicile; (Art. 69, FC)

i. The other spouse should live abroad.
ii. If there are other valid compelling
NOTE: In case of disagreement the Court shall
reasons.
decide. The Court may also exempt one spouse
from living with the other if the latter should live
NOTE: The exceptions would not apply if the
abroad or there are other valid and compelling
same is not compatible with the solidarity of
reasons for the exemption. However, such
the family. (Art. 69(2), FC)
exemption shall not apply if the same is not
compatible with the solidarity of the family.
b. Observe mutual love, respect, fidelity; and
Example: The Court may exempt a wife from

c. Render mutual help and support
living with her spouse if the latter were to be
assigned overseas for work. However, in Chi
NOTE: It is true that the FC obligates the spouses
Ming Tsoi v. CA, if Gina Lao asked the Court to be
to love one another but this rule sanctions
exempted from living with her husband so she
affection and sexual intimacy, as expressions of
could live with another man and fulfill her sexual
love, that are both spontaneous and mutual and
needs, the Court cannot allow her because such
not the kind which is unilaterally exacted by
would not be compatible with the solidarity of
force or coercion. Further, the delicate and
the family.
reverent nature of sexual intimacy between a
husband and wife excludes cruelty and coercion.
3. Jointly support the family; (Art. 70, FC)
When sexual intimacy it is egoistically utilized to
despoil marital union in order to advance a
a. Expenses shall be paid from the community
felonious urge for coitus by force, violence or
property;
intimidation, the Court will step in to protect its
b. In the absence thereof from the income or
lofty purpose, vindicate justice and protect our
fruits of their separate properties; and
laws and State policies. Besides, a husband who
c. In the absence or insufficiency thereof from
feels aggrieved by his indifferent or uninterested
their separate properties
wife's absolute refusal to engage in sexual
intimacy may legally seek the court's
4. Manage the household; (Art. 72, FC)
intervention to declare her psychologically

2022 GOLDEN NOTES
Civil Law
5. Not to neglect duties, or commit acts which actually called the attending physician on the
tend to bring danger, dishonor, or injury to ground that he has the obligation to provide
family; (Art. 72, FC) support to his wife. (Pelayo v. Lauron, G.R. No. L-
4089, 12 Jan. 1909)
6. Either spouse may practice any legitimate
profession/business, even without the 2. Wife left the conjugal home for justifiable
consent of the other. reasons, is entitled to separate maintenance.
(Goitia v. Rueda, G.R. No. 11263, 02 Nov. 1916)
NOTE: The other spouse may object on valid,
serious and moral grounds. In case of
disagreement, the court shall decide whether:
a. Objection is proper; and

b. Benefit has accrued to the family prior to the
objection or thereafter. If the benefit accrued
prior to the objection, the resulting
obligation shall be enforced against the
community property. If the benefit accrued
thereafter, such obligation shall be enforced
against the separate property of the spouse
who has not obtained consent. (Art. 73, FC as
amended by R.A. No. 10572)
The foregoing provisions shall not prejudice the

rights of creditors who acted in good faith.
Other obligations of spouses
1. Exercise the duties and enjoy the rights of

parents;
2. Answer for civil liability arising from injuries
caused by children below 18; and
3. Exercise parental authority over children’s
property
Essential marital obligations cannot be

compelled by court
GR: Performance of essential marital obligation

under Art. 68 of the FC cannot be compelled by court
because it will be a violation of personal liberty.
(Arroyo v. Arroyo, G.R. No. L-17014, 11 Aug. 1921)
XPNs:
1. Giving mutual help and support.
NOTE: A husband is liable to pay the expenses
arising from the medical assistance rendered to
his wife even though he is not the one who

Rule on waiver of rights over the share in the

E. PROPERTY RELATIONS community or conjugal property
BETWEEN HUSBAND AND WIFE
GR: Cannot be waived during the marriage.
XPN: In case of judicial separation of property.
1. GENERAL PROVISIONS
NOTE: The waiver must be in a public instrument
and recorded in the office of the local civil registrar
The property relations shall be governed by the
where the marriage contract was recorded as well
following in order:
as in the proper registry of property.
1. Property relation agreed and embodied in the

2. DONATIONS BY REASON OF MARRIAGE
marriage settlement;
2. Provisions of the FC; and
GR: Absolute Community Property. (Art. 75, FC)
3. Local custom. (Art. 74, FC)
XPNs:
Commencement of Property Regime
1. For marriages contracted prior to the effectivity
of the FC on 03 Aug. 1988, conjugal partnership
A property regime commences at the precise
of gains shall govern the property relations and
moment of the celebration of the marriage (i.e.
Art. 116 of the NCC will apply. The provisions of
actual time the marriage is celebrated on a certain
the FC shall have no retroactive effect because
date).
it would impair vested rights.
Any stipulation, express or implied, for the

2. Subsequent marriage contracted within one (1)
commencement of the community regime at any
year from the death of the deceased spouse
other time shall be void. (Art. 88, FC)
without liquidation of the community property
or conjugal partnership of gains, either
Laws that will govern the property relations of
judicially or extrajudicially, as required under
the spouses
Arts. 103 and 130 of the FC. In such case, a
mandatory regime of complete separation of
GR: Philippine laws shall govern, regardless of place
property shall govern the subsequent marriage.
of celebration of marriage and residence of spouses,
(Rabuya, 2009)
in the absence of contrary stipulation in a marriage
settlement. (Art. 80, FC)
Q: Marriage being a contract, may the parties
enter into stipulations which will govern their
XPN: Lex rei sitae applies:
marriage?
1. Where both spouses are aliens;
A: The nature, consequences and incidents of
2. With respect to the extrinsic validity of contracts
marriage are governed by law and not subject to
affecting property not situated in the
stipulation between the spouses. This, however, is
Philippines, and executed in the country where
not an absolute rule. The law allows the spouses to
the property is located; or
fix their property relations during the marriage
3. With respect to extrinsic validity of contracts
through a device known as “marriage settlement”
entered into in the Philippines but affecting
subject only to the condition that whatever
property situated in a foreign country whose
settlement they may have must be within the limits
laws require different formalities for its extrinsic
provided by the FC. (Art. 1, FC)
validity. (FC, Art. 80) (Art. 80, FC)

2022 GOLDEN NOTES
Civil Law
Marriage Settlement
Sentenced with civil Guardian appointed
interdiction by the court
It is a contract entered into by a man and a woman
who intend or plan to get married fixing the
Guardian appointed
property regime that will govern their present and Disabled
by the court
future properties during their marriage. It is also
called as Ante-nuptial Agreement. (Sempio-Diy,
1995) Modification of the marriage settlement (MS)
(Art. 76, FC) (2005 BAR)
Requisites of a valid Marriage Settlement Art. 77,
FC) (W-S-E-R) For any modification in the MS to be valid:
1. The requisites for a valid MS must be present;
1. In Writing; 2. There must be judicial approval; and
2. Signed by the parties; 3. Subject to the provisions of Arts. 66, 67, 128,
3. Executed before the celebration of marriage; and 135, and 136 of FC.
4. Registration (to bind third persons)
Effect on the ante-nuptial agreement in case the
The provisions in the marriage settlement must be marriage is not celebrated (Art. 81, FC)
in accordance with law, morals or public policy;
otherwise, such agreement is void. (Paras, 2008) GR: Everything stipulated in the settlements or
contracts in consideration of the marriage shall be
A marriage settlement need not be notarized. The rendered void.
law is clear that the marriage settlements and any
modification thereof shall be in writing signed by XPN: Those stipulations not dependent upon, or are
the parties and executed before the celebration of not made in consideration of, the marriage, subsist.
the marriage. (Art. 77, FC) The law merely requires
it to be in writing; it does not require that it be in a Those donations which are made before the
public instrument for purposes of its validity. celebration of the marriage, in consideration of the
(Albano, 2013) same, and in favor of one or both of the future
spouses.
The marriage settlements must be registered in the
proper local civil registry where the marriage The formalities of the donation propter nuptias
contract was recorded as well as in the proper follows the same formalities as set forth in the law
registries of property in order that they may on donations.
prejudice or bind third persons. (Art. 77, FC)
NOTE: Donations of future property are governed
Additional requirements for validity of the MS by provisions on testamentary succession and
formalities of wills.
FACTUAL ADDITIONAL
SITUATION REQUIREMENT
If the following must

If one of both of the be made a party to
parties are: the MS, otherwise the
MS is void:
Parents; or those
18-21 years old required to give
consent

Donation propter nuptias v. Ordinary Donation Rule regarding DPN made between spouses
GR: Future spouses cannot donate to each other

DONATION PROPTER ORDINARY
more than 1/5 of their present property and any
NUPTIAS DONATION
excess from which shall be considered void.
As to Formalities
XPN: If they are governed by ACP, then each spouse
Donations of future can donate to each other in their marriage
property are governed settlements present property without limit,
by the provisions on provided there is sufficient property left for their
Governed by Title III,
testamentary support and the legitimes are not impaired.
Book III of the NCC.
succession and the
formalities of wills. Effect of donations of encumbered property
(Art. 84(2), FC)
Such donations are valid. In case of foreclosure of
As to inclusion of present property the encumbrance and the property is sold for less
than the total amount of the obligation secured, the
There is no limit except donee shall not be liable for the deficiency. If the
that the donor shall property is sold for more than the total amount of
leave sufficient the obligation, the donee shall be entitled to the
Present property may
property for their excess. (Art. 85, FC)
be donated up to 1/5 of
support and that of all
the donor’s present
relatives entitled to Donations that may be revoked by the donor
property if the future
support from him (Art. (Art. 86, FC)
spouses have chosen a
750, NCC) and further
regime other than ACP.
no legitimes of A donation by reason of marriage may be revoked
(Art. 84, FC)
compulsory heirs shall by the donor in the following cases:
be impaired. (Art. 752,
NCC) 1. GR: Marriage is not celebrated or is judicially
declared void ab initio.
As to inclusion of future property
Future property may Effect: Donations stipulated in marriage

be included, provided Future property settlement which are made not in consideration
the donation is mortis cannot be included. of the future marriage remains valid. Thus, can
causa. (Art. 84(2), (Art. 751, NCC) be revoked by the donor.
NCC)
XPN:
Revocation a. Donations made in the marriage settlements
in consideration of a future marriage because
Grounds for revocation Grounds for revocation such donations are rendered void when
are found in Art. 86 of are found in law in
marriage did not take place and, thus, there is
FC. donations. nothing to revoke.
Requisites for Donation Propter Nuptias b. If the marriage is judicially declared void by
reason of non-compliance with Art. 40 of the
1. Made before celebration of marriage; FC and the done spouse contracted the
2. Made in consideration of the marriage; and marriage in bad faith. The donation is
3. Made in favor of one or both of the future deemed revoked by operation of law.
spouses.

2022 GOLDEN NOTES
Civil Law
c. If both parties acted in bad faith, all donations PRESCRIPTIVE

GROUNDS
by reason of marriage and testamentary PERIOD
(Art. 86, FC)
dispositions made by one in favor of the other (Reckoning Point)
are revoked by operation of law. (Art. 44, FC) 1. Marriage is not
Five (5) years from
celebrated.
the time the
2. Marriage takes place without the required
marriage was not
consent of parents or guardians. XPN:
solemnized on the
Those automatically
fixed date. (Art. 149,
NOTE: If the donor knew of the absence of rendered void by law.
FC)
consent of the parents before the marriage, they
may not revoke the donation because the parent Ground for Revoked by
can still give their consent any time before the nullity: operation of law.
marriage ceremony takes palace. (Sta. Maria, a.
2017) Contracted
subsequent
3. Marriage is annulled and donee acted in bad 2. marriage
faith. Marriage before
Revoked by
is prior
4. Upon legal separation, the donee being the guilty operation of law.
judicially marriage
spouse. declared has been
void. judicially
NOTE: Prescription is five (5) years from the declared
judicial declaration of legal separation (a decree void.
is necessary for the donor to revoke the b. Any
donation). other Five (5) years
grounds.
5. If with a resolutory condition which was Finality of judicial
complied with. declaration of
nullity (if action is
6. Donee has committed an act of ingratitude as to recover
specified by the provisions of the Civil Code on 3. Marriage took place property).
donations in general. without consent of
parents or guardian, Five (5) years from
Grounds for filing an action for revocation of a when required by law. the time the donor
DPN and their respective prescriptive periods came to know that
the required
The prescriptive periods in other provisions of the parental consent
Civil Code should apply, depending on the ground of was not obtained.
revocation. Except for the action to revoke a 4. Marriage is annulled
donation to the guilty spouse in case of a legal Five (5) years from
and donee acted in bad
separation, which the second paragraph of Art. 64 of finality of decree.
faith.
the Code states must be brought within five (5) Five (5) years from
years from the time of the decree of legal separation 5. Upon legal
the time the decree
has become final, there is no other provision in the separation, donee being
of legal separation
FC on the period of prescription of the action to the guilty spouse.
has become final.
revoke a donation proper nuptias. (Sempio-Diy, 6. Donation subject to Five (5) years from
2010) resolutory condition the happening of
which was complied the resolutory
with. condition.

One (1) year from 2001, Jose asked Maria to live with him in a
donor’s small hut on the land he was cultivating in
7. Donee committed an
knowledge of the Barangay Poblacion, Bustos, Bulacan owned by
act of ingratitude.
commission of an the Gaspar Family. On 25 Apr. 2002, Jose and
act of ingratitude. Maria got married against the wishes of Jose's
children. By then, Jose was 77 years old while
Acts of ingratitude: (Art. 765, NCC) Maria was 61 years old. The Gaspar family then
executed three documents denominated as
1. Commission of an offense against the person, "Deed of Donation" wherein they gave a total of
honor or property of the donor, their spouse or 6,000 square meters of rice land allegedly as
their children under their parental authority; "Disturbance Compensation of Tenant." Of the
6,000 square meters given to Jose, he either sold
2. GR: Imputation to the donor any criminal or donated segregated portions of the property.
offense or any act involving moral turpitude; On 04 December 2007, Jose executed a
Kasulatan ng Pagkakaloob Pala gratuitously
XPN: if the crime was committed against the transferring in favor of Maria 805 sqm. The
donee themselves, their spouse or their children subject portion was further subdivided. As a
under their authority result, the subject property now has an area of
694 sqm. On 01 June 2010, Jose died without a
3. Undue refusal to support the donor when they will. He was survived by Maria and five of his
are legally or morally bound to give such children from his first marriage. After Jose
support. passed away, his surviving children and
grandchildren asked Maria to divide the 694
Rule regarding donations between spouses sqm lot into nine equal portions for distribution
during the marriage (Art. 87, FC) to Jose's children and grandchildren from his
first marriage and Maria opposed, insisting that
GR: Every donation or grant of gratuitous she is the sole owner of the subject property by
advantage, direct or indirect, between spouses is virtue of the Kasulatan ng Pagkakaloob Pala. Is
considered void. Maria’s contention correct?
XPN: Moderate gifts on the occasion of any family A: NO. Art. 87 of the FC states that "Every donation
rejoicing. or grant of gratuitous advantage, direct or indirect,
between the spouses during the marriage shall be
The aforementioned rules also apply to common void except moderate gifts which the spouses may
law spouses. (Matabuena v. Cervantes, G.R. No. L- give each other on the occasion of any family
28771, 31 Mar. 1971) rejoicing." Based on the foregoing provision,
donations between spouses during the marriage are
Other prohibited transactions prohibited. The donation of the subject property
Jose made in favor of Maria through the Kasulatan
1. Selling property between spouses; and ng Pagkakaloob Pala prior to his death is null and
2. Leasing to each other. void. Accordingly, Maria cannot claim to be the sole
owner of the subject property based on the void
Q: Jose, who was then married to Josefa, got donation.
involved in an agricultural tenancy dispute with
his landlord, the Gaspar family. In a DARAB Case, As a general rule, ACP shall consist of all the
Jose was granted the right to "peaceful property owned by the spouses at the time of the
possession of the land cultivated and possessed celebration of the marriage or acquired thereafter.
by him for the past eighteen (18) years." After One of the exceptions is property acquired during
Jose's wife died, he courted Maria. On 17 Mar. the marriage by gratuitous title by either spouse,

2022 GOLDEN NOTES
Civil Law
and the fruits as well as the income thereof, if any, Different property regimes which may be
unless it is expressly provided by the donor, testator adopted by future spouses
or grantor that they shall form part of the
community property. In the present case, since the 1. Absolute Community of Property (ACP);
subject property was acquired by Jose by onerous 2. Conjugal Partnership of Gains (CPG);
title during his marriage to Maria despite being 3. Absolute Separation of Property (ASOP);
denominated as donation. The subject property was 4. A combination of the above regimes; and
acquired by way of disturbance compensation. 5. Any other regime within limits provided by the
Thus, it shall form part of the community property FC.
of Jose and Maria and one-half of the property
belongs to Maria. (Santos v. Santos, G.R. No. 250774, The rule against donation to one another between
16 June 2021) the spouses do not include a spouse being a
beneficiary of an insurance contract over the life of
the other. (Gercio v. Sun Life Assurance Co., of
Canada, G.R. No. 23S703, 28 Sept. 1925)
ACP vs. CPG vs. CSOP
ABSOLUTE CONJUGAL COMPLETE

COMMUNITY OF PROPERTY PARTNERSHIP OF GAINS SEPARATION OF PROPERTY
(ACP) (CPG) (CSOP)
When applicable
1. When future spouses

adopt it in a marriage
When future spouses: settlement;
1. Adopt it in a marriage
settlement; or 2. ACP or CPG is dissolved;
1. When the future spouses
adopt it in a marriage
When spouses: 3. Prior marriage is dissolved
settlement; or
2. Do not choose any due to death of one spouse
economic system property and surviving spouse failed
2. If the marriage is celebrated
regime and the marriage to comply with the
under the NCC or prior the
took place during the requirements under Art.
effectivity of the FC (03 Aug.
effectivity of the FC (on 03 103 (judicial settlement
1988) and they have not
Aug. 1988 or after); or proceeding of the estate of
adopted any economic
deceased spouse); or
system property regime.
3. Adopted a different
property regime and the 4. By judicial order. Judicial
same is void. separation of property
may either be voluntary or
for sufficient cause.

Composition
Each spouse shall own, dispose

Each spouse retains his or her
of, possess, administer and enjoy
property before the marriage
All the properties owned by the his or her own separate
and only the fruits and income of
spouses at the time of marriage property, whether acquired
such properties become part of
become community property. prior to the marriage or during
the conjugal properties during
the marriage, without need of the
the marriage.
consent of the other.
Effect of Separation in Fact
The separation in fact shall not affect the regime of ACP, but:
1. The spouse who leaves the conjugal home or refuses to live

Even though the all the earnings
therein, without just cause, shall not have the right to be
and properties remains to each
supported;
spouse, both of them shall bear in
the same proportion to their
2. When consent of one spouse to any transaction of the other is
income or, as a default, to the
required by law, judicial authorization shall be obtained in a
current market value:
summary proceeding.
1. The family expenses

3. In case of insufficiency of community or conjugal partnership
property, separate property of both spouses shall be solidarily
2. The creditors in connection
liable for the support of the family. Spouse present shall, upon
with such family expenses,
proper petition in a summary proceeding, be given judicial
solidary liability.
authority to administer or encumber any specific separate
property of the other spouse and use the fruits or proceeds
thereof to satisfy the latter’s share. (Arts. 100 and 127, FC)
Effect of Dissolution
Upon dissolution of the

Upon dissolution and
partnership, the separate
liquidation of the community
properties of the spouses are
property, what is divided
returned and only the net profits
equally between the spouses or
of the partnership are divided
their heirs is the net remainder
equally between the spouses of
of the properties of the ACP.
their heirs.

2022 GOLDEN NOTES
Civil Law
Grounds for revival of former property regime Properties included in the absolute community
1. Civil interdiction of the prisoner-spouse 1. All the property owned by the spouses:
terminates; a. At the time of the celebration of the
2. Absentee spouse reappears; marriage; or
3. Court authorizes resumption of administration b. Acquired thereafter;
by the spouse formerly exercising such power;
4. Spouse who has abandoned the conjugal home 2. Property acquired during the marriage by
returns and resumes common life with the gratuitous title, if expressly made to form part
other; of the community property by the donor,
5. Parental authority is judicially restored to the testator or grantor; or
spouse previously deprived thereof;
6. Reconciliation and resumption of common life 3. Jewelry or properties with monetary value; and
of spouse who had been separated in fact for at
least 1 year; or 4. Winnings in gambling.
7. Spouses agree to revive their former property
regime. Properties excluded in the Absolute Community
Grounds for transfer of administration of the 1. Property acquired during the marriage by
exclusive property of each spouse gratuitous title and its fruits as well as income
thereof, unless the grantor expressly provides
When one spouse: that they shall form part of the community
property;
1. Is sentenced to penalty with civil interdiction;
2. Becomes fugitive from justice or is hiding as an 2. Property for personal and exclusive use of
accused in a criminal case; either spouse but jewelries shall form part of
3. Is judicially declared absent; or the ACP because of their monetary value;
4. Becomes guardian of another
3. Property acquired before the marriage by one
NOTE: Transfer of administration of the exclusive with legitimate descendants by former
property of either spouse does not confer marriage and its fruits and income, if any; and
ownership over the same. (Rodriguez v. De la Cruz,
G.R. No. 3629, 28 Sep. 1907) 4. Those excluded by the marriage settlement.
(Art. 92, FC)
3. ABSOLUTE COMMUNITY OF PROPERTY
(ACP) Presumption of inclusion in the absolute
community
A property regime wherein the spouses are
considered co-owners of all property brought into In absence of evidence, property acquired during
the marriage, as well as those acquired during the the marriage is presumed to belong to the
marriage, which are not otherwise excluded from community, unless proven otherwise by strong and
the community either by the provisions of the convincing evidence. (Art. 93, FC)
Family Code or by the marriage settlement.
(Rabuya, 2009) The sale or encumbrance of a conjugal property
requires the consent of both the husband and the
Laws that govern the ACP wife. (Guiang v. CA, G.R. No. 125172, 26 Jun. 1998)
The absence of the consent of one renders the entire
1. Family Code sale or encumbrance null and void, including the
2. Civil Code provisions on co-ownership portion of the conjugal property pertaining to the

husband who contracted the sale. Neither would the and Flora's share of the lot to the latter's father,
conjugal partnership be liable for the loan on the Luis, without Flora's consent (second sale).
ground that it redounded to the benefit of the Thereafter, TCT was issued solely in the name of
family. (Homeowners Savings & Loan Bank v. Dailo, Luis, married to Juana. In a Deed of Absolute Sale
G.R. No. 153802, 11 Mar. 2005) (third sale), Luis allegedly sold the property to
herein respondents. Hence, another TCT was
A wife, by affixing her signature to a deed of sale on registered in the name of Spouses
the space provided for witnesses, is deemed to have Bautista. Thereafter, it appears that
given her implied consent to the contract of sale. respondents took possession of the property
The consent need not always be explicit or set forth and built improvements on the same. Much
in any particular document so long as it is shown by later, respondents donated the subject property
acts of the wife that such consent or approval was in to their four children and TCTs were issued in
fact given. (Pelayo v. Perez, G.R. No. 141323, 08 Jun. the latter's names. Allegedly deprived of their
2005) share in the property through fraud, petitioners
filed a Complaint for recovery of shares and
When the sale was entered into prior to the participation in the subject property, recovery
effectivity of the Art.173 of the FC, in relation to Art. of possession, declaration of nullity of the
166 of the NCC will apply if there was a finding of second sale and donation, and cancellation of
lack of the wife's consent. Under said provisions, the the TCTs issued in the names of the Bautista
sale would have been merely voidable, and not void. children. Should the petitioner’s complaint be
dismissed?
The use of the jurat, instead of an acknowledgment,
does not elevate the marital consent into the level of A: NO. It bears emphasis that under Art. 1413 of
a public document but instead consigns it to the the Spanish Civil Code, the wife's consent was not
status of a private writing. Hence, the presumption required for the sale of conjugal property as the
of regularity does not apply, and the wife still needs husband's right to administer and dispose of the
to prove its genuineness and authenticity as same was considered "full, absolute and complete."
required under the rules of evidence. The fact that On the other hand, Arts. 96 and 124 of the Family
the document contains a jurat, and not an Code unequivocally state that a disposition of
acknowledgment, should not affect its genuineness community or conjugal property without the
or that of the related document of conveyance itself, consent of the other spouse is void but shall
the Deed of Absolute Sale. In this instance, a jurat constitute a "continuing offer on the part of the
suffices as the document only embodies the consenting spouse and the third person and may be
manifestation of the spouse's consent, a mere perfected as a binding contract upon the acceptance
appendage to the main document. (Pan Pacific by the other spouse or authorization by the court
Industrial Sales Co., Inc. v. CA, G.R. No. 125283, 20 Feb. before the offer is withdrawn by either or both
2006) offerors."
Q: Lot No. 2836 was previously owned by the Under our present Code all dispositions, alienations
two sons of Ramon Bonifacio, i.e., Luis Bonifacio, or encumbrances of conjugal real property acquired
and Isidro Bonifacio. These two sons sold part of after the effectivity of the new Civil Code needs the
their interest to the City of Zamboanga and consent of the wife. Also, all donations of real or
retained about 7,991 sq. m. as co- personal property require the consent of the wife
owners. Petitioner Cueno is the daughter of Luis except those to the common children for securing
and Juana. In 1961, petitioners bought the pro their future or finishing a career, and moderate
indiviso share of Isidro in the subject property donations for charity. But should the wife refuse
(first sale). Pursuant to said sale, a TCT was unreasonably to give her consent, the court may
issued in the names of Luis and Eulalio. Prior to compel her to grant the same. (Spouses Cueno v.
the issuance of TCT, Eulalio supposedly sold his

2022 GOLDEN NOTES
Civil Law
Spouses Bautista, G.R. No. 246445, 02 Mar. 2021, J. NOTE: For ante-nuptial debts, those
Caguioa) contracted by one spouse without the consent
of the other during the marriage and those
Charges upon the ACP contracted by the administrator-spouse, the
burden of proof that such debts were
1. The support of: contracted for the benefit of the community or
a. The spouses of the family lies with the creditor-party
b. Their common children litigant claiming as much. (Rabuya, 2009)
c. Legitimate children of either spouse;
4. The value of what is donated or promised by both
NOTE: Support of illegitimate children of either spouses in favor of their common legitimate
spouse is chargeable to exclusive property of the children for the exclusive purpose of
illegitimate parent. (Art. 197, FC) commencing or completing a professional or
vocational course or other activity for self-
XPN: Support of illegitimate children of either improvement;
spouse is chargeable to community in case absence
or insufficiency of the exclusive property of the 5. Payment, in case of absence or insufficiency of
debtor-spouse which shall be considered advances the exclusive property of the debtor-spouse, of:
to be deducted from the share of the debtor-spouse
upon liquidation of the community. (Art. 94(9), FC) a. Ante-nuptial debts of either spouse which
did not redound to the benefit of the family;
2. All debts and obligations contracted during the b. The support of illegitimate children of either
marriage by: spouse;
c. Liabilities incurred by either spouse by
a. the designated administrator-spouse for the reason of a crime or quasi-delict;
benefit of the community;
b. by both spouses; and NOTE: The payment of which shall be considered as
c. by one spouse with the consent of the other; advances to be deducted from the share of the
debtor-spouse upon liquidation of the community.
3. Debts and obligations contracted by either
spouse without the consent of the other to the 6. Expenses of litigation between the spouses.
extent that the family may have been benefited; However, if suit is found to be groundless, it cannot
be charged against the ACP. (Art. 94, FC)
a. All taxes, liens, charges and expenses,
including major or minor repairs, upon the ACP vs. CPG as to charges
community property;
b. All taxes and expenses for mere preservation
CPG
made during marriage upon the separate ACP (Art. 94, FC)
(Art. 121, FC)
property of either spouse used by the family;
Support of the spouses, their common children,
c. Expenses to enable either spouse to and legitimate children of either spouse.
commence or complete a professional or
vocational course, or other activity for self- Debts and obligations contracted during
improvement; marriage:
d. Ante-nuptial debts of either spouse insofar as a. By the administrator spouse designated in

they have redounded to the benefit of the the marriage settlement/appointed by
family; (2007 BAR) court/one assuming sole administration;
b. By one without the consent of the other;

c. By one with the consent of other; or benefit of the satisfied before such
d. By both spouses. family such as debts may be
liabilities incurred chargeable to the
For (a) and (b), creditor has the burden of by the reason of CPG.
proving benefit to the family and ACP/CPG crime or quasi-
chargeable to the extent of benefit proven, delict are
otherwise, chargeable to the separate property chargeable to the
of the obligor spouse. separate property
of the debtor
For (c) and (d), real benefit to family is presumed. spouse.
All taxes, liens, charges and expenses including
minor repairs upon ACP or CPG. 3. In case of
insufficiency of
Expenses to enable either spouse to separate property,
commence/complete a professional, vocational chargeable to ACP
or other activity for self-improvement. but considered
advances
Value donated/promise by both spouses in favor
deductible from
of common legitimate children for exclusive
the share of the
purpose of commencing or completing
debtor-spouse
professional or vocational course or other
upon liquidation.
activity for self-improvement.
Expenses of litigation between spouses unless Q: An individual, while single, purchases a house
the suit is found to be groundless. and lot in 1990 and borrows money in 1992 to
For illegitimate repair it. In 1995, such individual is married
children, support while the debt is still being paid. After the
from separate marriage, is the debt still the responsibility of
For illegitimate children,
property of person such individual? (2007 BAR)
support chargeable from
obliged to give
separate property of
support. In case of A: NO. Ante-nuptial debts of either spouse shall be
person obliged to give
insufficiency or considered as the liability of the absolute
support. In case of
absence of separate community of property insofar as they have
insufficiency or absence
property, CP shall redounded to the benefit of the family.
of separate property, ACP
advance support, There is no presumption that the obligations
shall advance support,
chargeable to share incurred by one of the spouses during the marriage
chargeable to share of
of parent upon are charged against their community of property.
parent upon liquidation.
liquidation, but only Before any obligation may be chargeable against the
(Art. 94(9), FC)
after obligations in community of property, it must first be established
Art. 121 have been that such obligation is among the charges against
covered. Art. 121, the same. (Wong v. IAC, G.R. No. 70082, 19 Aug. 1991)
FC)
1. Ante-nuptial debts For ante-nuptial Insufficiency of the community property to
are chargeable to debts, same as ACP cover liabilities
ACP if they but in case of
redounded to the insufficiency of GR: The spouses shall be solidarily liable for the
benefit of family. separate property, unpaid balance with their separate properties.
obligations
2. Personal debts not enumerated in Art. XPN: Those falling under paragraph 9 of Art. 94. of
redounding to 121 must first be the Family Code (Ante-nuptial debts, support of

2022 GOLDEN NOTES
Civil Law
illegitimate children, liabilities incurred by spouse Disagreement in the administration of

by reason of a crime or quasi-delict) – in which case community property (Art. 96, FC)
the exclusive property of the spouse who incurred
such debts will be liable. However, if the exclusive In case of disagreement, the decision of the husband
property is insufficient, payment will be considered shall prevail but subject to recourse to the court by
as advances to be deducted from share of debtor- the wife for proper remedy.
spouse. (Art. 94(9), FC)
NOTE: Prescriptive period for recourse is within 5
Administration of Community Property years from the date of the contract implementing
such decision.
GR: The administration of community property
belongs to both spouses jointly. Sale or Disposition of Community Property
XPN: Alienation or encumbrance of community property

1. Agreement that only one of the spouses shall must have the written consent of the other spouse
administer the community property; or the authority of the court without which the
2. If one spouse is incapacitated or otherwise disposition or encumbrance is VOID. However, the
unable to participate in the administration of transaction shall be construed as a continuing offer
the common properties – capacitated or able on the part of the consenting spouse and the third
spouse may assume sole powers of person, and may be perfected as a binding contract
administration without the need of court upon the acceptance by the other spouse or
approval or authorization; authorization by the court before the offer is
3. If a spouse without just cause abandons the withdrawn by either or both offerors. (Arts. 96 and
other or fails to comply with his or her 124, FC; Sps. Guiang v. CA, G.R. No. 125172, 26 June
obligations to the family, the aggrieved spouse 1998)
may petition the court for sole administration;
4. During the pendency of the legal separation The absence of consent of one of the spouses
case, the court may designate either of the renders the entire sale null and void, including the
spouses as sole administrator. sale of the portion of the conjugal property
pertaining to the spouse who contracted the sale.
NOTE: But such powers do not include: The consent of one spouse regarding the disposition
1. Disposition; does not always have to be explicit or set forth in
2. Alienation; or any particular document, so long as it is shown by
3. Encumbrance of the conjugal or community acts of the said spouse that such consent or approval
property. was indeed given. (Sps. Cirelos v. Sps. Hernandez, et
al. G.R. No. 146523, 15 June 2006) However, even if
"Court authorization" in the sale of conjugal the other spouse actively participated in negotiating
properties for the sale of the property, that other spouse's
written consent to the sale is required by law for its
Court authorization is resorted to in cases where validity. Being aware of a transaction is not consent.
the spouse who does not give consent is (Jader-Manalo v. Camaisa, G.R. No. 147978, 23 Jan.
incapacitated. If there is no showing that the spouse 2002)
is incapacitated, court authorization cannot be
sought. (Manalo v. Fernandez, G.R. No. 147928, 23 Q: Marco and Gina were married in 1989. In
Jan. 2002) 1999, Gina left Marco and lived with another
man, leaving the two children of school age with
Marco. When Marco needed money for their
children’s education, he sold a parcel of land
registered in his name, without Gina’s consent,

which he purchased before his marriage. Is the XPNs:

sale by Marco valid, void, or voidable? Explain
with legal basis. (2015 BAR) 1. Spouse who leaves the conjugal home or
refuses to live therein without just cause has no
A: The sale is void. The parties were married in right to be supported;
1989. In the absence of a marriage settlement, the 2. When consent of one spouse to any transaction
parties shall be governed by ACP whereby all the of the other spouse is required by law, judicial
properties owned by the spouses at the time of the authorization must be obtained;
celebration of the marriage as well as whatever they 3. If community property is insufficient, the
may acquire during the marriage shall form part of separate property of both spouses shall be
the absolute community. In ACP, neither spouse can solidarily liable for the support of the family.
sell or encumber property belonging to the ACP
without the consent of the other. Any sale or Abandonment (1999, 2003 BAR)
encumbrance made by one spouse without the
consent of the other shall be void although it is If a spouse without just cause abandons the other or
considered as a continuing offer on the part of the fails to comply with his or her obligations to the
consenting spouse upon authority of the court or family, the aggrieved spouse may petition the court
written consent of the other spouse. for:
1. Receivership;
Q: Does the prohibition cited above include 2. Judicial separation of property;
lease by the husband over properties of the 3. Authority to be the sole administrator of the
community of property without the consent of absolute community. (Art. 101, FC)
the wife?
Presumption of Abandonment
A: YES. In the contract of lease, the lessor
transferred his right of use in favor of the lessee. The A spouse is deemed to have abandoned the other
lessor's right of use is impaired therein. He may when he or she has left the conjugal dwelling
even be ejected by the lessee if the lessor uses the without intention of returning. The spouse who has
leased realty. Therefore, the lease is a burden on the left the conjugal dwelling for a period of three (3)
land. It is an encumbrance on the land. Moreover, months or has failed within the same period to give
lease is not only an encumbrance but also a qualified any information as to his or her whereabouts shall
alienation, with the lessee becoming, for all intents be prima facie presumed to have no intention of
and purposes, and subject to its terms, the owner of returning to the conjugal dwelling. (Pineda, 2008)
the thing affected by the lease. (Roxas v. CA, G.R. No.
92245, 26 June 1991) The presumption is rebuttable by the presentation
of clear, strong and convincing evidence that the
Donation of a community property by a spouse absent spouse did not intend to leave the present
spouse and family. (Pineda, 2008)
GR: A spouse cannot donate any community
property without the consent of the other. Prohibition against the sale of property between
spouses
XPN: Moderate donations for charity or on occasion
of family rejoicing or distress. (Art. 98, FC) GR: Spouses cannot sell property to each other.
Separation in fact between husband and wife XPNs:

(Art. 100, FC) 1. When a separation of property was agreed
upon in the marriage settlement;
GR: Such separation does not affect the regime of 2. When there has been a judicial separation of
absolute community. property under Articles 135 and 136 of the

2022 GOLDEN NOTES
Civil Law
Family Code. (Art. 1490, NCC) separation, not at the moment when the parties
enter into a compromise agreement in the course of
NOTE: The proscription against the sale of property the proceedings for separation of property. (Albano,
between spouses under Art. 1490 of the New Civil 2013)
Code applies even to common law relationships. In
an earlier ruling, the Supreme Court nullified a sale Procedure in case of dissolution of ACP
made by a husband in favor of a concubine, after he
had abandoned his family and left the conjugal 1. Inventory of all properties of the ACP, listing
home where his wife and children lived, and from separately the communal properties from
whence they derived their support, for being exclusive properties of each spouse;
contrary to morals and public policy. The sale was
regarded by the court as subversive of the stability 2. Payment of community debts;
of the family, a basic social institution which public NOTE: First, pay out of the community assets. If
policy cherishes and protects. (Ching v. CA, G.R. No. not enough, husband and the wife are solidarily
165879, 10 Nov. 2006) liable for the unpaid balance with their separate
properties.
Dissolution of ACP (2009 BAR) 3. Delivery to each spouse of his/her remaining
exclusive properties;
Absolute Community Property is terminated by:
(Art. 99, FC) 4. Equal division of net community assets Unless
there is:
1. Death of either spouse;
a. An agreement for a different
NOTE: If the surviving spouse contracts proportion; or
another marriage without compliance with the b. A voluntary waiver of such share;
foregoing requirement, a mandatory regime of
complete separation shall govern the property 5. Delivery of the presumptive legitimes of the
relations of the subsequent marriage. common children; and
Upon lapse of the one-year period and 6. Adjudication of conjugal dwelling and custody
liquidation is made, any disposition or of common children. (Art. 102, FC)
encumbrance involving the community
property of the terminated marriage shall be Difference between “net assets” and “net
void. (Art. 103, FC) profits” (Art. 102, FC)
The reason for the law is that, the law seeks to 1. Net assets
protect the children's interest in the first Fair market value of the properties at the
marriage. (Albano, 2013) time of dissolution
+ Debts and obligations of the absolute
2. Legal separation; Community, including those advanced in
3. Annulment; Art. 94 (9), FC
4. When the marriage is declared void under Art. - Reimbursements due from debtor spouse
40 of the Family Code; or from the advances from the community
5. Judicial separation of property during marriage. NET ASSETS
(Art. 99, FC)
GR: Net assets are required to be divided
NOTE: The absolute community of property or the equally between spouses
conjugal partnership is considered dissolved only
upon the issuance of the judicial decree of

XPN: 1. The proceeds, product, fruits and income of

1. If proportion or division was agreed upon in their separate properties;
the marriage settlement; or 2. Those acquired by either or both of them
2. There is voluntary waiver through:
a. Effort – an activity or undertaking which
2. Net profits may or may not be rewarded;
Net Assets b. Chance – activities like gambling or betting.
- Fair market value at time of marriage
NET PROFITS Commencement of CPG
NOTE: in ACP, only the net profits are declared CPG shall commence at the precise moment when
forfeited to the guilty spouse (Arts. 43(2) and the marriage ceremony is celebrated.
63(2), FC) Law that governs the conjugal partnership
Applicable procedure in the dissolution of the The rules on the contract of partnership in all that is
ACP in case the marriage is terminated by death not in conflict with what is expressly determined in
the FC and by the spouses in their marriage
Community property shall be liquidated in the same settlements. (Art. 108, FC)
proceeding for the settlement of the estate of the
deceased. Only inchoate right over conjugal property
If no judicial proceeding is instituted, the surviving The interest of the spouses in the conjugal
spouse shall, judicially or extra-judicially, liquidate properties is only inchoate or a mere expectancy
the community property within 1 year from the and does not ripen into title until it appears the
death of the deceased spouse. (Art. 103, FC) dissolution and liquidation of the partnership that
there are net assets. (Sempio-Diy, 1995)
Consequences of failure to liquidate within 1
year Q: Melinda is the widow of Jose. In December
18, 1984, they acquired a 310-square meter lot.
1. Failure to liquidate the community property Subsequently, a TCT was issued to "Jose,
within 1 year from the death of the deceased married to Melinda," covering the disputed
spouse contrary to Art. 103 of the Family Code, property. Melinda discovered that the TCT had
would render any disposition or encumbrance long been canceled through a string of
involving community property of the transactions, and that the property was
terminated marriage void. registered under the name of Spouses Montano.
The Court found that since Jose acquired the gift
2. If the surviving spouse contracts a subsequent by gratuitous title during marriage, the
marriage without compliance with the property was excluded from the conjugal
foregoing requirements, the subsequent partnership of gains. As it was his exclusive
marriage shall be governed, mandatorily, by a property, Jose can dispose it without Melinda's
regime of complete separation of property. consent. Is the property in dispute a conjugal
(Rabuya, 2006) property?
4. CONJUGAL PARTNERSHIP OF GAINS (CPG) A: YES, it is a conjugal property. The circumstances

here transpired prior to the effectivity of the Family
It is the property relation formed by the husband Code on August 3, 1988. Thus, petitioner and Jose's
and the wife by placing in a common fund: (Art. 106, marriage and property relations are governed by
FC) the Civil Code.

2022 GOLDEN NOTES
Civil Law
Under the Civil Code, property acquired during married, and it was registered in the name of
marriage is presumed to be conjugal. What must be Michael married to Esther.
established is that the property was acquired during
marriage. Only through "clear, categorical, and In 1965, the prevailing property regime between
convincing" proof to the contrary will it be husband and wife was the CPG. There being no
considered the paraphernal property of one (1) of evidence to the contrary, the property regime
the spouses. (Malabanan v. Malabanan, Jr., G. R. No. between Juan and Juliana was the CPG. A rebuttable
187225, 06 Mar. 2019) presumption is established in Art. 116 of the Family
Code and the party who invokes that presumption
Q: Elio and Oliver, respondents, are the heirs of must first establish that the property was acquired
their deceased parents – Michael and Esther. during the marriage because the proof of
The TCT of the subject property shows Michael acquisition during the marriage is a condition sine
as the registered owner thereof since January qua non for the operation of the presumption in
14, 1965, with the certificate of title likewise favor of the conjugal partnership. It is not necessary
carried the inscription of his marriage to Esther. to prove that the property was acquired with
According to respondents, the subject property conjugal funds and the presumption still applies
is under the possession of petitioners by mere even when the manner in which the property was
tolerance of their parents. However, when they acquired does not appear. Once the condition sine
demanded for the surrender of the same, qua non is established, then the presumption that all
petitioners refused, which led to the filing of a properties acquired during the marriage, whether
case for Recovery of Possession and Title against the acquisition appears to have been made,
them. In their Answer, Petitioners claimed right contracted or registered in the name of one spouse
of ownership over the subject property by virtue or both spouses, are conjugal, remains until the
of an alleged Deed of Absolute Sale executed by contrary is proved.
Michael during his lifetime. On account of such
claim of ownership, the MCTC dismissed the said Given the very stipulations and TCT No. 56899,
case. respondents had laid the predicate for the
presumption under Art. 116 to be invoked.
Later on, respondents filed the Complaint before Unfortunately, petitioners' evidence that TCT No.
the RTC, this time for Annulment of Document, 56899 was registered in the name of Juan married
claiming that the Deed of Absolute Sale allegedly to Juliana and the sale from the previous owner,
executed by their father in their favor is void Valete, to Juan only mentioned Juan as the buyer fell
since there is no consent given by their mother, short to overcome the presumption. Since
Esther, to the alleged sale. Petitioners also petitioners have not presented evidence that the
claimed that the consent of Juliana was not subject property was exclusive property of Juan, its
necessary to effect a valid sale since the subject alienation to them required the consent of Juliana to
property was the sole property of Juan and the be valid. (Sps. Anastacio, Sr v. Heirs of. Coloma, G.R.
spouses had long been separated from bed and No. 224572, 27 Aug. 2020, J. Caguioa)
board. Are the petitioners correct?
Exclusive Property of the spouses (Art. 109, FC)
A: NO. Art. 105 of the Family Code provides that the
provisions of Conjugal Partnership of Gains (CPG), 1. Those brought into the marriage as his/her
shall also apply to CPG already established before own;
the effectivity of the Family Code, without prejudice
to vested rights already acquired in accordance with NOTE:
the Civil Code or other laws. Based on the a. A property purchased before the marriage
stipulations of the parties, the subject property was and fully paid during the marriage remains
acquired in 1965 while Michael and Esther were to be a separate property of either spouse.
(Lorenzo v. Nicolas, G.R. No. L-4085, 30 Jul.

1952) Alienation of exclusive properties of either

b. Fruits and income of said properties shall spouse
be included in the conjugal partnership.
c. Those included therein in the marriage Either spouse may mortgage, encumber, alienate or
settlement, subject to the 1/5 limitation otherwise dispose of his or her exclusive property.
under Art. Article 84 and the rule in Art. (Art. 111, FC as amended by R.A. No. 10572)
Article 92(3) of the Family Code which
apply by analogy. Rules in cases of improvement of exclusive
property (Art. 120, FC)
2. Those acquired during the marriage by
gratuitous title; 1. Reverse accession – If the cost of the
improvement and the value of the improvement
NOTE: is more than the value of the principal property
a. Pensions will not form part of the conjugal at the time of the improvement, the entire
partnership of gains when it is given to him property becomes conjugal.
voluntarily and he is not entitled as a
matter of right such as a fruit of industry or NOTE: For reverse accession to apply, the
labor. separate property must be owned by a spouse
b. Proceeds of life insurance policy will not exclusively at the time of the introduction of the
form part of the conjugal partnership of improvement.
gains when the beneficiary of the life
insurance is the estate and the premiums 2. Accession – If the cost of the improvement and
are sourced from the separate property of the value of the improvement is equal to or less
the spouse. than the value of the principal property, the
c. Retirement Benefits will not form part of entire property becomes the exclusive property
the conjugal partnership of gains when it is of the respective spouse.
given to him voluntarily and he is not
entitled as a matter of right such as a fruit NOTE: In either case, there shall be
of industry or labor. reimbursement upon the liquidation of the
conjugal partnership and ownership of entire
3. Those acquired by right of redemption, property shall be vested only upon
barter or exchange with exclusive property; reimbursement.
NOTE: In right of redemption, for it to form part
of the exclusive property of the spouse, the Q: A parcel of land is owned by the father of W.
ownership over such property must still pertain With his permission, H and W constructed their
to the said spouse. house over the said parcel of land. After some
time, the father of W died, leaving W as his sole
4. That purchased with exclusive money of heir. Who now owns the parcel of land and the
either spouse. improvements introduced by the H and W?
Assume that the property regime of the H and W
NOTE: The controlling factor is the source of is conjugal partnership of gains.
the money used, or the money promised to be
paid. A: W. The wife will now own both the parcel of land
the house introduced by H and W. Reverse
Accession under Article 120 of the Family Code will
not apply since at the time of the introduction of the
improvement the parcel of land is owned by the
father of W which she inherited it when her father
died. What will apply here instead is the ordinary

2022 GOLDEN NOTES
Civil Law
rule of accession. However, the conjugal separate property if the property is not used by
partnership of gains will still enjoy the said property the family and not for its preservation.
as a usufructuary and W will be the naked owner
thereof. CONJUGAL PARTNERSHIP PROPERTY
Q: A, prior to his death, sold his lot. There were Composition of CPG (1995, 1998, 2004, 2005,
improvements made on the said lot which was 2008 BAR) (Art. 117, FC)
paid out of the conjugal funds of A and B. When
A died, using Art. 120 of the FC to support her 1. Those acquired by onerous title during the
claim, B sought reimbursement of her half of the marriage with conjugal funds;
sale from C, the buyer of the property. Will the
petition of B prosper? Requisites:
a. Acquisition is made during the
A: NO. The SC ruled that Art. 120 does not give any marriage,
cause of action on the part of B to claim from C, the b. Through onerous title,
subsequent buyer of the property of A, the deceased c. At the expense of common fund;
husband. Art. 120 of the FC only allows claims from
the husband if the latter is still the owner of the lot 2. Livestock in excess of what was brought to the
upon liquidation. (Ferrer vs Ferrer, G.R. No. 166496, marriage;
09 Nov. 2006)
3. Those acquired by chance such as winnings
Presumption of inclusion of property in the from gambling or betting;
Conjugal Partnership of Gains
4. Those obtained from labor, industry, work or
GR: All property acquired during the marriage, profession of either or both spouses;
whether the acquisition appears to have been made,
contracted or registered in the name of one or both 5. Fruits of conjugal property due or received
spouses, is presumed to be conjugal. during the marriage and net fruits of separate
property;
XPN: Unless the contrary is proved.
NOTE: Net fruits refer to the remainder of the
Obligations Chargeable to Separate Property fruits after deducting the amount necessary to
cover the expenses of administration of said
1. Support of illegitimate children; exclusive property.
2. Liabilities incurred by reason of a crime or
quasi-delict; 6. Share of either spouse in hidden treasure; and
3. Expenses of litigation between the spouses if
found to be groundless; 7. Those acquired through occupation such as
4. Debts contracted during the marriage by the hunting or fishing. (Art. 117, FC)
administrator-spouse which does not benefit
the community; Property bought through installment (Art. 118,
5. Debts contracted during the marriage without FC)
the consent of the other which did not benefit
the family; Requisites:
6. Ante-nuptial debts by either spouse which did 1. Property is bought on installment prior to the
not benefit the family; marriage; and
7. Taxes incurred on the separate property which 2. Paid partly from exclusive funds and partly
is not used by the family; and from conjugal funds.
8. Expenses incurred during the marriage on a

Rules in determining ownership A: Recovery is not warranted because rule is all

properties of the marriage are presumed to be
1. If full ownership was vested before the conjugal in nature. However, for this presumption
marriage – it shall belong to the buyer spouse; to apply, the party who invokes it must first prove
that it was acquired during the marriage. Here,
2. If full ownership was vested during the Dolores' evidence consisted of her marriage
marriage – it shall belong to the conjugal contract and the initial tax declaration over the
partnership; property. She did not identify when she and her
husband first occupied and possessed the land.
NOTE: In either case, any amount advanced by
the partnership or by either or both spouses Neither did she present any witness to prove that
shall be reimbursed by the owner/s upon they first occupied the property during their
liquidation of the partnership. marriage and that they both worked on the land.
Q: Yamane asserts that the parcel of land, (Pintiano-Anno v. Anno, G.R. No. 163743, 27 Jan.
which was purchased at auction, belonged 2006)
to the conjugal partnership of him and his
late wife. In the title, his name appeared to The presumption of conjugality of the properties of
be merely descriptive of the civil status of the husband and wife applies only when there is
the registered owner, his late wife. The proof that the property was acquired during the
purchase took place prior to the advent of marriage. If there is no showing as to when the
the Family Code. Is the property conjugal or properties alleged to be conjugal were acquired, the
paraphernal property of his late wife? presumption does not apply (Francisco v. CA, G.R.
No. 102330, 30 Nov. 1998). Proof of acquisition
A: CONJUGAL. In this case, the provisions of the during the coverture is a condition sine qua non to
NCC would apply since the property was the operation of the presumption in favor of the
purchased before the FC took effect. Under Art. conjugal partnership. (Pintiano-Anno, v. Anno, et al.,
160 of the NCC, all properties of the marriage G.R. No. 163743, 27 Jan. 2006)
are presumed to belong to the conjugal
partnership, unless it be proved that it pertains Effect if properties were registered during the
exclusively to the husband or the wife. In this marriage
case, there was no proof that the property had
been acquired exclusively by Yamane's late The fact that the properties were registered in the
wife. The mere registration of a property in the name of the spouses is no proof that the properties
name of one spouse does not destroy its were acquired during the marriage. It is well-settled
conjugal nature in the absence of strong, clear that the registration does not confer title but merely
and convincing evidence that it was acquired confirms one already existing. (Jocson v. CA, G.R. No.
using the exclusive funds of said spouse. L-55322, 16 Feb. 1989)
(Spouses Go v. Yamane, G.R. No. 160762, 03 May.
2006) Q: H & W got married on October 1926. H
subsequently cohabited with X. During the
Q: Dolores seeks to recover a parcel of land, cohabitation of H with X, H acquired certain
alleging that she and her husband acquired such properties and places his status as single. What
during their marriage, that it formed part of is the nature of said properties?
their conjugal properties, and that he sold it
without her consent. She presents their A: They are conjugal properties. Whether a property
marriage contract and the initial tax declaration is conjugal is determined by law and not by the will
over the property as pieces of evidence. Will her of one of the spouses. No unilateral declaration by
action prosper? one spouse can change the character of conjugal
property. The clear intent of H in placing his status

2022 GOLDEN NOTES
Civil Law
as single is to exclude W from her lawful share in the 9. Expenses of litigation between the spouses
conjugal property. The law does not allow this. The unless the suit is found to be groundless. (Art.
cohabitation of a spouse with another person, even 121, FC)
for a long period, does not sever the tie of a
subsisting previous marriage. NOTE: If the conjugal partnership is insufficient to
cover the foregoing liabilities, spouses shall be
H and X’s cohabitation cannot work to the detriment solidarily liable for the unpaid balance with their
of W as the legal spouse. The marriage of H and W separate properties.
continued to exist although H was already living
with X. Hence, all property acquired from the date of Charges against the Separate Property that may
their marriage until the death of W are presumed be charged upon the CPG
conjugal. It was neither claimed nor proved that any
of the subject properties was acquired outside or Requisites:
beyond this period. (Villanueva v. CA, G.R. No. 1. All the responsibilities of the partnership have
143286, 14 Apr. 2004) already been covered; and
2. The spouse who is bound has no exclusive
Q: Suppose a property was acquired by one properties or the same are insufficient.
spouse while they were living separately, is this
property conjugal or not? Charges:
A: It is presumed to be conjugal. All property 1. Personal debts of either spouse contracted

acquired during the marriage regardless of whether before the marriage which did not redound to
the spouses are living together or not, are presumed the benefit of the family;
to be conjugal property. (Flores v. Escudero, G.R. No. 2. Support of the illegitimate children of either
L-5302, 11 Mar. 1953) spouse;
3. Fines and indemnities arising from delicts and
Charges upon and obligations of the CPG quasi-delicts.
1. Support of the spouses, their common children If levy was made on the conjugal property by reason
and the legitimate children of either spouse; of the husband being a guarantor, the levy is
2. Debts and obligation by one without the improper. The payment of personal debts
consent of the other to the extent of the family contracted by the husband or the wife before or
benefited; during the marriage shall not be charged to the
3. Debts and obligations contracted during the conjugal partnership except as they redounded to
marriage by an administrator-spouse, both the benefit of the family. (Art. 122, FC) (2000, 2005
spouses or one with the consent of the other; BAR)
4. Taxes, liens, charges, expenses, including
major or minor repairs upon conjugal Q: If one of the spouses committed the crime of
property; slander and was held liable for damages in a
5. Taxes and expenses for mere preservation damage suit, is it chargeable against the
made during the marriage of separate conjugal partnership?
property;
6. Expenses for professional, vocational or self- A: NO. Unlike in the system of absolute community
improvement courses of either spouse; where liabilities incurred by either spouse by
7. Ante-nuptial debts to the extent the family has reason of a crime or quasi-delict is chargeable to the
been benefited; absolute community of property, in the absence or
8. Value of what is donated or promised to insufficiency of the exclusive property of the debtor-
common legitimate children for professional, spouse, the same advantage is not accorded in the
vocation or self- improvement courses; and system of conjugal partnership of gains. To

reiterate, conjugal property cannot be held liable for recover the loan amount from the conjugal
the personal obligation contracted by one spouse, partnership. (PNB v. Reyes, JR., G.R. No. 212483,
unless some advantage or benefit is shown to have 05 Oct. 2016)
accrued to the conjugal partnership. (Go v. Yamane,
G.R. No. 160762, 03 May 2006) Administration of the CPG (Art.124, FC)
Q: Venancio is married to Lilia since 1973. GR: The right to administer the conjugal
During their union, they acquired three (3) partnership belongs to both spouses jointly.
parcels of land in Malolos, Bulacan. The
properties were mortgaged to Philippine XPN:
National Bank on August 25, 1994 to secure a 1. If one spouse is incapacitated or otherwise
loan worth P1,100,000.00, and was increased to unable to participate in the administration of
P3,000,000.00. According to PNB, the spouses the common properties – capacitated or able
duly consented with the loan. When the Reyes spouse may assume sole powers of
Spouses failed to pay the loan obligations, administration.
Philippine National Bank foreclosed the 2. If a spouse without just cause abandons the
mortgaged real properties. The auction sale other or fails to comply with his or her
happened and PNB emerged as the highest obligations to the family, the aggrieved spouse
bidder and a certificate of sale was issued in its may petition the court for sole administration.
favor. Venancio claimed that his wife undertook 3. During the pendency of a legal separation case,
the loan and the mortgage without his consent the court may designate either of the spouse as
and his signature was falsified on the sole administrator.
promissory notes and the mortgage.
But such powers do not include:
1. What is the status of the real estate 1. Disposition;
mortgage? 2. Alienation; or
2. Can the conjugal partnership be held liable 3. Encumbrance of the conjugal or community
for the loan contracted unilaterally by Lilia? property.
A: NOTE: The sale of conjugal property without the

1. The real estate mortgage over a conjugal consent of the husband is void. If one spouse is
property is void if the non-contracting spouse incapacitated or otherwise unable to assume sole
did not give consent. Any disposition or powers of administration of the conjugal properties,
encumbrance of a conjugal property by one the other spouse may assume sole powers of
spouse must be consented to by the other; administration. These powers do not include
otherwise, it is void. disposition or encumbrance without authority or
written consent of the other spouse. (Aggabao v.
2. YES. They are jointly and solidarily liable with Parulan, G.R. No. 165803, 01 Sept. 2010)
each other with their separate properties if
their conjugal partnership is insufficient to fully Disagreement in the administration of the CPG
pay for the loan. What the lower courts declared
void was the real estate mortgage attached to In case of disagreement, the decision of the husband
the conjugal property of the Reyes Spouses. shall prevail subject to recourse to the court by the
Since the real estate mortgage was an wife for proper remedy.
encumbrance attached to a conjugal property
without the consent of the other spouse, it is NOTE: Prescriptive period for recourse is 5 years
void and legally inexistent. Although petitioner from the date of the contract implementing such
cannot foreclose the mortgage over the decision. (2000, 2002 BAR)
conjugal property in question, it can still

2022 GOLDEN NOTES
Civil Law
Dissolution of CPG Liquidation of community property in the

absence of a judicial settlement proceeding (Art.
Conjugal partnership is terminated by: 130, FC)
1. Death of either spouse;
2. Legal separation; In the absence of a judicial settlement proceeding,
3. Annulment or Declaration of Nullity; or the surviving spouse shall liquidate the community
4. Judicial separation of property during marriage. property either, judicially or extra-judicially within
(Art. 126, FC) 1 year from the death of the deceased spouse.
Procedure in case of dissolution of CPG NOTE: The system of complete separation of

property will govern the property relations
1. Inventory of all the properties; between the spouses only in the following cases:
2. Restitution of advances made to each of the
spouses; 1. When it is expressly provided for in the
3. Reimbursement for use of exclusive funds; marriage settlement.
2. When it is so decreed by a competent court.
4. Debts and obligations of the CP are paid; 3. Mandatory regime of complete separation of
5. Delivery of exclusive properties; property.
6. Payment of losses and deterioration of 4. By failure of the surviving spouse to liquidate
movables belonging to each of the spouses, the absolute community or conjugal
unless the owner had been indemnified from partnership of gains of a previous marriage
whatever source; which has been terminated by death within the
7. Division of the net conjugal partnership; one-year period required by law prior to
8. Delivery of the common children’s presumptive contracting another marriage. The subsequent
legitimes; and marriage is mandatorily governed by a regime
9. Adjudication of conjugal dwelling and custody of complete separation.
of common children. (Art. 129, FC)
If during the liquidation of the CP, the conjugal
Liquidation of community property if the partnership assets are less than the conjugal
termination of the marriage is by death partnership liabilities, the surviving spouse and the
children shall not be entitled to support.
Upon termination of marriage by death, the
community property shall be liquidated in the same Effects if the community property is not
proceeding for the settlement of the estate of the liquidated (Art. 130, FC)
deceased spouse. (Art. 130, FC)
1. Any disposition or encumbrance made by the
Support to the surviving spouse and to the surviving spouse involving community
children during liquidation property of the terminated marriage shall be
void.
The support to be given to the surviving spouse and
to the children during liquidation shall come from 2. Should the surviving spouse contract a
the common mass of property and shall be subsequent marriage a mandatory regime of
particularly charged against the fruits, rents or complete separation of property shall govern
income pertaining to their shares to the inventoried the property relations of the subsequent
property. But where the support given exceeds the marriage.
fruits, rents or income pertaining to their shares, the
excess shall be deducted from their respective Q: Teodulo married twice and has children from
shares as these are deemed advances from the the first marriage. After the death of his first
inventoried property. (Art. 133, FC) wife Perpetua and whole married to his second

wife Perla, Teodulo entered into a contract Code, the provisions are not irreconcilable. The
wherein he sold property acquired in his first disposition or encumbrance is valid only to the
marriage to Apolinario without the consent of extent of the share or interest of the surviving
his second wife. Needless to say, the children spouse in the terminated marriage property, and
from the first marriage did not also consent. Was cannot in no way bind the shares or interests
the consent of Perla, Teodulo's second wife, therein of the other heirs of the deceased spouse.
necessary for the validity of the sale of the (Ibid.)
subject property by Teodulo to Apolinario?
5. SEPARATION OF PROPERTY AND
A: The third paragraph of Article 130 of ADMINISTRATION OF COMMON PROPERTY BY
the Family Code provides that a mandatory regime ONE SPOUSE DURING THE MARRIAGE
of complete separation of property shall govern the
property relations of the subsequent marriage Instances when separation of property is
should the surviving spouse contract a subsequent allowed (Art. 134, FC)
marriage without liquidating the conjugal
partnership property. When a complete or total 1. By agreement through marriage settlement
separation of property governs the property 2. By judicial order
relations, no portion of the properties of the
marriage will be common, and the fruits of the Sufficient causes for judicial separation of
properties of either spouse, as well as his or her property
earnings from any profession, work or industry, will
belong to him or her as exclusive property. 1. Civil interdiction of the spouse of petitioner;
2. Judicial declaration of absence;
Given that complete separation of property 3. Loss of parental authority as decreed by the
governed the subsequent marriage of Teodulo and court;
Perla, his undivided share or interest in the subject 4. Abandonment or failure to comply with family
property belonged to him and remained with him as obligation; (2003 BAR)
his separate property when he married Perla. Thus, 5. Administrator spouse has abused authority;
he could have disposed of this without need of and
consent from Perla. (Heirs of Caburnay v. Heirs of
Sison, G.R. No. 230934, 02 Dec. 2020, J. Caguioa). NOTE: In case such spouse abuses his or her
powers of administration, judicial separation of
Q: Is this right of disposition by the surviving property may be availed of by the aggrieved
spouse under Article 145 of the Family Code, spouse to avoid further depletion of his or her
which is consistent with Article 493 of the Civil interest in the properties. (Sta. Maria, 2019)
Code insofar as the right of alienation by a co-
owner of his or her interest or share in the co- 6. Separation in fact for one year and
ownership is concerned, abrogated by the reconciliation is highly improbable. (Art. 135,
provision of Article 130 of the Family Code FC)
which provides that “any disposition or
encumbrance involving the conjugal NOTE: In cases provided in 1, 2 and 3, the
partnership property of the terminated presentation of the final judgment against the guilty
marriage shall be void” if no liquidation of the or absent spouse shall be enough bases for the grant
terminated marriage property is made upon the of the decree of judicial separation of property.
lapse of one year from the death of the deceased
spouse? Effects of judicial separation of property
between spouses
A: While there appears to be a seeming conflict in
the cited provisions of the Family Code and the Civil 1. The absolute community or conjugal

2022 GOLDEN NOTES
Civil Law
partnership is dissolved; Liabilities of the spouses for family expenses

2. The liability of the spouses to creditors shall be under the regime of separation of property (Art.
solidary with their separate properties; 146, FC)
3. Mutual obligation to support each other
continues except when there is legal GR: Both spouses shall bear the family expenses in
separation; and proportion to their income.
4. Rights previously acquired by creditors are not
prejudiced. XPN: In case of insufficiency or default thereof, to
the current market value of their separate
In case of voluntary agreement for the separation of properties.
property, the law does not require specific reasons
to justify the Court in approving the same. The law Revival of previous property regime
leaves the matter to the discretion of the court.
(Sempio-Diy, 1995) (2005 BAR) If the spouses opted for voluntary separation of
property, the parties may agree to the revival even
6. REGIME OF SEPARATION OF PROPERTY in the absence of a reason/ground. However, a
subsequent voluntary separation of property is no
Rules governing the regime of separation of longer allowed.
property
If the separation of property is for a sufficient cause,
1. Marriage settlement the revival of the previous property regime depends
2. Family Code in supplemental character (Art. upon the cessation of the ground which was the
149, FC) basis of the judicial order. A subsequent judicial
separation of property for a sufficient cause may be
Kinds of separation of property allowed so long as there is a new ground to rely on.
1. As to extent (Art. 144, FC): The procedure of the revival of previous property
a. Total regime is the same as those followed upon
b. Partial – In this case, the property not agreed reconciliation of the spouses after the finality of
upon as separate shall pertain to the legal separation.
absolute community.
Transfer of Administration of Exclusive
2. As to kinds of property (Art. 144, FC): Property to another Spouse during the Marriage
a. Present property
b. Future property 1. By agreement
c. Both present and future property
Requisites:
Rights of the spouses under the regime of a. By means of a public instrument;
separation of property b. To be recorded in the registry of property
of the place where the property is located.
1. Each spouse shall own, dispose of, administer,
possess, and enjoy his or her own separate 2. By order of the court upon petition
property, without need of the consent of the
other. Based on these grounds:
2. Each spouse shall own all earnings from his or a. Other spouse becomes the guardian of the
her profession, business or industry and all other;
fruits, natural, industrial or civil, due or b. The other spouse is judicially declared an
received during the marriage from his or her absentee;
separate property. (Art. 145, FC) c. Other spouse is sentenced to a penalty

which carries with it civil interdiction; or after liquidation, partition, and

d. Other spouse becomes fugitive from justice distribution of the parties’ properties
or hiding as an accused in a criminal case. under Art, 147.
(Art. 142, FC)
Dinah filed a Motion for Partial Reconsideration
NOTE: For as long as it is proven that s property was questioning the portion of the decision on the
acquired during marriage, the presumption of issuance of a decree of nullity of marriage only
conjugality will attach regardless in whose name after the liquidation, partition and distribution
the property is registered. of properties under Article 147. If you are the
judge, how will you decide the petitioner’s
The presumption is not rebutted by the mere fact Motion? Why? (2014 BAR)
that the certificate of title of the property or the tax
declaration is in the name of one of the spouses. A: I will grant the partial reconsideration. If the
(Villanueva v. CA, G.R. No. 143286, 14 Apr. 2004) marriage is declared void under Art. 36, the
provisions of the Family Code on liquidation,
Property regime in case the marriage is partition and distribution of the properties on
declared null and void on the ground of absolute community or conjugal partnership will
psychological incapacity not apply but rather Art 147 or Art. 148 depending
on the presence or absence of the legal impediment
The property relation between the parties is between them.
governed by Art. 147 of the Family Code. Property
acquired by both spouses through their work and Art. 50 of the Family Code, and Sec. 19 of the Rules
industry shall be governed by the rules on equal co- on Declaration of Nullity applies only to marriages
ownership. Any property acquired during the union which are declared void ab initio or annulled by final
is prima facie presumed to have been obtained judgment under Art. 40 and 45 of the Family Code.
through their joint efforts. Art. 50 does not apply to marriages which are
declared void ab initio under Art. 36 which should
A party who did not participate in the acquisition of be declared void without waiting for the liquidation
the property shall still be considered as having of the properties of the parties. (Dino v. Dino, G.R. No.
contributed thereto jointly if said party's "efforts 178044, 19 Jan. 2011)
consisted in the care and maintenance of the family
household." Unlike the conjugal partnership of Co-ownership under Art. 147
gains, the fruits of the couple's separate property
are not included in the co-ownership. When a man and a woman who are capacitated to
marry each other, live exclusively with each other as
Q: Miko and Dinah started to live together as husband and wife without the benefit of marriage or
husband and wife without the benefit of under a void marriage, their wages and salaries
marriage in 1984. 10 years after, they separated. shall be owned by them in equal shares and the
In 1996, they decided to live together again, and property acquired by both of them through their
in 1998 they got married. On February 17, 2001, work or industry shall be governed by the rules of
Dinah filed a complaint for declaration of nullity co-ownership.
of her marriage with Miko on the ground of
psychological incapacity. The Court rendered In the absence of proof to the contrary, properties
the following decision: acquired while they lived together shall be
1. Declaring the marriage null and void; presumed to have been obtained by their joint
2. Dissolving the regime of Absolute efforts, worker industry, and shall be owned by
Community of Property; and them in equal shares. A party who did not
3. Declaring that a decree of absolute participate in the acquisition by the other party of
nullity of marriage shall only be issued any property shall be deemed to have contributed

2022 GOLDEN NOTES
Civil Law
jointly to the acquisition thereof if the former's Co-ownership under Art. 148
efforts consisted in the care and maintenance of the
family and of the household. Co-ownership may ensue in case of cohabitation
where, for instance, one party has a pre-existing
Q: Can the spouses, whose marriage has been valid marriage, provided that the parties prove their
declared null and void, donate their share in the actual joint contribution of money, property or
property acquired during cohabitation, without industry and only to the extent of their
the consent of the other? proportionate interest thereon. (Francisco v. Master
Iron Works Construction Corp., G.R. No. 151967, 16
A: NO. It is true that Art. 147 provides that the Feb. 2005)
property acquired during the cohabitation shall be
governed by the rules on co-ownership, and Q: Romeo and Juliet lived together as husband
pursuant to Art. 493 of NCC in a co-ownership: and wife without the benefit of marriage. During
"Each co-owner shall have the full ownership of his their cohabitation, they acquired a house. When
part and of the fruits and benefits pertaining they broke up, they executed an agreement
thereto, and he may therefore alienate, assign or where he agreed to leave the house provided
mortgage it, and even substitute another person in Juliet will pay his entire share in their
its enjoyment, except when personal rights are properties. She failed to do so but she also
involved; but the effect of the alienation or the ignored his demand for her to vacate. Romeo
mortgage, with respect to the co-owners, shall be sued her for ejectment which the court granted.
limited to the portion which may be allotted to him Was the court correct in granting the same?
in the division upon the termination of the co-
ownership." A: NO. Under Art.147 of the Family Code, the
property is co- owned by the parties. In the absence
However, Art. 493 of the NCC must yield to Art. 147 of proof to the contrary, any property acquired by
of the FC, which expressly mandates that: "Neither common-law spouses during their cohabitation is
party can encumber or dispose by acts inter vivos of presumed to have been obtained thru their joint
his or her share in the property acquired during efforts and is owned by them in equal shares. Their
cohabitation and owned in common, without the property relationship in such a case is essentially
consent of the other, until after the termination of governed by the rules on co-ownership. Thus,
their cohabitation." Romeo cannot seek the ejectment of Juliet
therefrom. As a co- owner, she is as much entitled to
Given the above express prohibition of a party to the enjoy its possession and ownership as him. (Abing v.
cohabitation to encumber or alienate by acts inter CA, G.R. No. 146294, 31 July 2006)
vivos even his or her share in the property acquired
during the cohabitation and owned in common, Q: Bert and Joe, both male and single, lived
without the consent of the other party until after the together as common law spouses and agreed to
termination thereof under Art. 147, then the raise a son of Bert’s living brother as their child
donation of any property acquired during the without legally adopting him. Bert worked while
cohabitation by one party without the consent of the Joe took care of they were able to acquire real
other can only be but void. The rules on ordinary co- estate assets registered in their names as co-
ownership cannot apply to vest validity on the owners. Unfortunately, Bert died of cardiac
undivided share of the disposing party. The arrest, leaving no will. Bert was survived by his
donation is simply void. (Perez v. Perez-Senerpida, biological siblings, Joe and the boy.
G.R. No. 233365, 24 Mar. 2021)
Can Article 147 on co-ownership apply to Bert
and Joe, whereby all properties they acquired
will be presumed to have been acquired by their

joint industry and shall be owned by them in proportion to their respective contributions. Thus,
equal shares? the 37 properties being claimed by Sally is excluded
as part of her conjugal properties with Benjamin
If Bert and Joe had decided in the early years of because Sally was not legally married to Benjamin.
their cohabitation to jointly adopt the boy, As regards the seven remaining properties, only one
would they have been legally allowed to do so? of them is registered in the names of the parties as
Explain with legal basis. spouses. The other four were registered in the name
of either one of them with the description “married
A: to” and the last two were named to Sally as an
a. NO. Article 147 of the Family Code cannot individual. The words “married to” preceding the
apply to Bert and Joe because the law only name of a spouse are merely descriptive of the civil
applies to a man and a woman who are status of the registered owner, which do not prove
capacitated to marry each other who live co-ownership. Without proof of actual contribution
together as husband and wife without the from either or both spouses, there can be no co-
benefit of marriage or under a void marriage. ownership under Article 148 of the Family Code.
In the case of Bert and Joe, they are both men, (Go-Bangayan v. Bangayan, Jr., G.R. No. 201061, 03
so the law does not apply. July 2013)
b. NO. Joint adoption is allowed between Retroactive application of Art. 148 of the Family
husband and wife, even if Bert and Joe are Code
cohabiting with each other, they are not vested
with the right to jointly adopt under the Family Although the adulterous co-habitation of the parties
Code or even under the Domestic Adoption Act. or the acquisition of the property occurred before
(Sec. 7, R.A. No. 8552) the effectivity of the Family Code on August 3, 1998,
Article 148 applies because the said provision was
Q: Benjamin is married to Azucena. While intended precisely to fill up the hiatus in Article 144
Azucena is out of country, Benjamin developed a of the NCC. Before Article 148 of the Family Code
romantic relationship with Sally, but her father was enacted, there was no provision governing
was against this. In order to appease her father, property relations of couples living in a state of
Sally convinced Benjamin to sign a purported adultery or concubinage. (Atienza v. De Castro, G.R.
marriage contract. Eventually, their No. 169698, 29 Nov. 2006)
relationship ended a few years later. Benjamin
asked the court for the partition of the
properties he acquired with Sally in accordance
with Article 148 of the FC, for his appointment as
administrator of the properties during the
pendency of the case. Among the 44 properties
which were the subject of the partition, 7 were
enumerated by Benjamin while Sally named 37
properties in her answer. Is Benjamin’s
contention correct?
A: YES. The property relations of Benjamin and Sally

is governed by Article 148 of the Family Code. They
cohabitated without the benefit of marriage. Thus,
only the properties acquired by them through their
actual joint contribution of money, property, or
industry shall be owned by them in common in

2022 GOLDEN NOTES
Civil Law
7. PROPERTY REGIME OF UNIONS WITHOUT MARRIAGE
ART.147 ART.148
(1997, 2000, 2006, 2009, 2010 BAR) (1992, 1998, 2000, 2006, 2009 BAR)
Applicability
With legal impediment caused by:
1. Parties without legal impediment to

1. Adulterous relationships
marry;
2. Bigamous/polygamous marriages
2. Void marriage on the ground of
3. Incestuous void marriages under Art.37
psychological incapacity.
4. Void marriages by reason of public policy.
(Art. 38, FC)
As to requisites
1. The man and the woman must be

capacitated to marry each other; 1. The man and the woman must be
2. live exclusively with each other as husband incapacitated to marry each other, or they do
and wife; and not live exclusively with each other as husband
3. their union is without the benefit of and wife; and
marriage or their marriage is void. 2. Their union is without the benefit of marriage
(Mercado-Fehr v. Fehr, G.R. No. 152716, 23 or their marriage is void. (Art. 148, FC)
Oct. 2003)
Salaries & wages
Separately owned by the parties. If any is married,

Owned in equal shares his/her salary pertains to the CPG of the legitimate
marriage.
Property exclusively acquired
Belongs to party upon proof of acquisition through

Belongs to such party.
exclusive funds.
Property acquired by both through their work or industry
Owned in common in proportion to their respective

Governed by rules of co-ownership.
contributions.
Presumption
Property acquired while living together presumed No presumption of joint acquisition.

obtained by their joint efforts, work or industry and
owned by them in equal shares. Actual joint contribution of money, property or
industry shall be owned by them in common
If one party did not participate in acquisition: proportion.
presumed to have contributed through care and
maintenance of family and household. However, their contributions are presumed equal, in
(Buenaventura v. CA, G.R. No. 127358, 31 Mar. 2005) the absence of proof to the contrary.

Forfeiture
When only one of the parties to a void marriage is

in good faith, the share of the party in bad faith in
If one of the parties is validly married to another,
the co-ownership shall be forfeited in favor of:
his/her share in the co-ownership shall accrue to the
1. their common children
ACP or CPG existing in the marriage.
2. in case of default of/or waiver by any or all
of the common children or their
If the party who acted in BF is not validly married to
descendants, each vacant share shall
another or if both parties are in BF, such share be
belong to the respective surviving
forfeited in a manner provided in the last par. of Art.
descendants
147
3. In the absence of descendants, such shares
shall belong to the innocent party.
Proof of actual contribution
Not necessary Necessary

2022 GOLDEN NOTES
Civil Law
Beneficiaries of a Family Home (Art. 154, FC)

F. FAMILY HOME
1. Husband and wife, or
2. Unmarried head of the family,
3. Parents (may include parents-in-law),
It is the dwelling house where the husband and wife
4. Ascendants,
and their family reside, and the land on which it is
5. Descendants
situated. It is constituted jointly by the husband and
6. Brothers and sisters (legitimate or illegitimate)
the wife or by an unmarried head of a family. (Art.
living in the FH and dependent on the head of
152, FC)
the family for legal support.
Constitution of Family Home (FH)

NOTE: Beneficiaries are the people who are most
likely to be affected by the constitution of the family
The FH is deemed constituted on a house and lot
home and its disposition. (Sta. Maria, 2009) Thus, in
from the time it is occupied as a family residence.
case the family home has to be sold by the owner, he
(Art. 153, FC)
or she has to obtain the consent, among others, of a
majority of the beneficiaries of legal age. (Art. 158,
Guidelines in the constitution of the Family
FC)
Home
Requisites to be considered as beneficiary (Art.

1. FH is deemed constituted from the time of
156, FC)
actual occupation as a family residence;
2. Only 1 FH may be constituted;
1. They must be among the relationships
3. Must be owned by the person constituting it;
enumerated in Art. 154 of the Family Code;
4. Must be permanent;
2. They live in the FH; and
5. Same rule applies to both valid and voidable
3. They are dependent for legal support upon the
marriages and even to common law spouses;
head of the family.
(Arts. 147 and 148, FC)
6. It continues despite death of one, either
Q: On March 30, 2000, Mariano died intestate
spouses, or an unmarried head of the family for
and was survived by his wife, Leonora and
10 years or as long as there is a minor
children, Danilo and Carlito. One of the
beneficiary. (Art. 159, FC)
properties he left was a piece of land in Alabang
where he built his residential house. After his
The heirs cannot partition the same unless the court
burial, Leonora and Mariano’s children extra-
finds compelling reasons therefor. This rule shall
judicially settled his estate. Thereafter, Leonora
apply regardless of whoever owns the property or
and Danilo advised Carlito of their intention to
constituted the FH. (Ibid.)
partition the property. Carlito opposed invoking
Art. 159 of the Family Code. Carlito alleged that
The FH must be part of the properties of the
since his minor child Lucas still resides in the
absolute community or the conjugal partnership or
premises, the family home continues until the
the exclusive properties of either spouse, with the
minor beneficiary becomes of age. Is the
latter’s consent. It may also be constituted by an
contention of Carlito tenable? (2014 BAR)
unmarried head of a family on his or her own
property. (Art. 156, FC)
A: NO. To qualify as beneficiary of the FH, the person
must be among those mentioned under Art. 154 of
NOTE: Property that is subject of a conditional sale
the Family Code, he/she must be actually living in
on installments where ownership is reserved by the
the FH and must be dependent for legal support
vendor only to guarantee payment of the purchase
upon the head of the family. (Patricio v. Darion, G.R.
price may be constituted as a FH.
No. 170829, 20 Nov. 2006) While Lucas satisfies the

first and second requisites, he cannot, however, the FH will not be exempt from execution, forced
directly claim legal support from his grandmother, sale of attachment, to wit:
Leonora because the person primarily obliged to
give him support is his father Carlito. Thus, the XPNs: Under Art. 155 of the Family Code:
partition may be successfully claimed by Leonora 1. Debts due to laborers, mechanics, architects,
and Danilo. builders, material men and others who
rendered service or furnished materials for the
Occupancy of the FH either by the owner thereof or constitution of the building;
by “any of its beneficiaries” must be actual. That 2. Non-payment of Taxes;
which is “actual” is something real, or actually 3. Debts incurred Prior to its constitution;
existing, as opposed to something merely possible, 4. Debts secured by Mortgages on the premises
or to something which is presumptive and before or after such constitution.
constructive. Actual occupancy, however, need not
be by the owner of the house. Rather, the property NOTE: Exemption is limited to the value allowed in
may be occupied by the “beneficiaries” enumerated the Family Code.
by Art. 154 of the Family Code. (Manacop v. CA, G.R.
No. 97898, 11 Aug. 1997) Rule for the family home to be exempted from
execution
NOTE: This enumeration may include the in-laws
where the FH is constituted jointly by the husband 1. If the FH was constructed before the effectivity
and wife. But the law definitely excludes maids and of the FC, then it must have been constituted
overseers. either judicially or extra-judicially as provided
under Arts. 225, 229-231 and 233 of the NCC.
Effect of death of one or both spouses or of the Judicial constitution of the FH requires the filing
unmarried head of the family upon the family of a verified petition before the courts and the
home registration of the court’s order with the
Registry of Deeds of the area where the
The FH shall continue despite the death of one or property is located. Meanwhile, extrajudicial
both spouses or of the unmarried head of the family constitution is governed by Arts. 240 to 242 of
for a period of 10 years or for as long as there is a the New Civil Code and involves the execution
minor beneficiary and the heirs cannot partition the of a public instrument which must also be
same unless the court finds compelling reasons registered with the Registry of Property.
therefor. This rule shall apply regardless of whoever
owns the property or constituted the FH. (Art. 159, 2. For FH constructed after the effectivity of the
FC) (2010 BAR) FC, there is no need to constitute extra-
judicially or judicially, and the exemption is
Exemption of Family Home from execution, effective from the time it was constituted and
forced sale or attachment lasts as long as any of its beneficiaries actually
resides therein. Moreover, the FH should
GR: FH is exempt from execution, forced sale or belong to the absolute community or conjugal
attachment. partnership, or if exclusively by one spouse, its
constitution must have been with consent of the
From the time of its constitution and so long as any other, and its value must not exceed certain
of its beneficiaries resides therein, the FH continues amounts depending upon the area where it is
to be such and is exempt from execution, forced sale located. Further, the debts incurred for which
or attachment. (Art. 153, FC) the exemption does not apply as provided
under Art. 155 for which the FH is made
However, the rule is not absolute. Art. 155 of the answerable must have been incurred after the
Family Code provides the circumstances wherein effectivity of the Family Code.

2022 GOLDEN NOTES
Civil Law
3. And in both cases, whether under the Civil the proceeds shall be applied as follows:
Code or the Family Code, it is not sufficient that
the person claiming exemption merely alleges a. The obligations enumerated in Art. 155
that such property is a FH. This claim for of the Family Code must be paid
exemption must be set up and proved. (Ramos, b. The judgment in favor of the creditor will
v. Pangilinan, G.R. No. 185920, 20 July 2010) be paid, plus all the costs of execution
Exemption of Family Home must first be set up The excess, if any, shall be delivered to the judgment
and proved debtor. (Art. 160, FC)
The FH’s exemption from execution must be set up NOTE: The actual value of the FH shall not exceed,
and proved to the Sheriff before the sale of the at the time of its constitution, the amount of
property at public auction. It should be asserted that P300,000 in urban areas, and P200,000 in rural
the property is a FH and that it is exempted from areas, or such amounts as may hereafter be fixed by
execution at the time it was levied or within a law. (Art. 157, FC)
reasonable time thereafter. It is not sufficient that
the person claiming exemption merely alleges that Q: A complaint for damages was filed against
such property is a FH. Failure to do so will estop one Hinahon in 1986 when she incurred liabilities as
from later claiming the said exemption. (Sps. de early as 1977, which action prospered in 1989.
Mesa v. Sps. Acero, G.R. No. 185064, 16 Jan. 2012) The house and lot that she owned was levied
upon and sold at auction. She assails the levy and
Requisites for the creditor to avail of the right to sale on the ground that it was her family home
execute (Art. 160, FC) and therefore exempt from execution. Decide.
1. He must be a judgment creditor; A: It is not exempt. Under Art. 155 of the Family
2. His claim must not be among those excepted Code, the FH shall be exempt from execution, forced
under Art. 155; sale, or attachment except for, among other things,
3. He has reasonable grounds to believe that the debts incurred prior to the constitution of the FH.
FH is worth more than the maximum amount The house and lot was not constituted as a FH,
fixed in Art. 157. whether judicially or extra-judicially, at the time
that the debtor incurred her debts. Under prevailing
Procedure in exercising the right to execute jurisprudence, it is deemed constituted as such by
operation of law only upon the effectivity of the
1. Creditor must file a motion in the court Family Code on August 3, 1988, thus, the debts were
proceeding where he obtained a favorable incurred before the constitution of the FH. (Gomez-
judgment for a writ of execution against the FH; Salcedo v. Sta. Ines, G.R. No. 132537, 14 Oct. 2005)
2. There will be a hearing on the motion where the Here, the complaint against Hinahon was instituted
creditor must prove that the actual value of the on June 17, 1986, to seek redress for damages
FH exceeds the maximum amount fixed by the suffered by them due to acts and omissions
Family Code, either at the time of its committed by her as early as 1977. This means that
constitution or as a result of improvements Hinahon’s liability arose long before the levied
introduced after its constitution; property was constituted as FH by operation of law
in August 1988. It is thus clear that the liability
3. If the creditor proves that the actual value incurred by Hinahon falls squarely under one of the
exceeds the maximum amount, the court will instances when a FH may be the subject of
order its sale in execution; execution, forced sale, or attachment to answer for
debts incurred prior to the constitution of the FH.
4. If the FH is sold for more than the value allowed,

(Gomez-Salcedo v. Sta. Ines, G.R. No. 132537, 14 Oct. the original P250,000.00 loan, additional loans,
2005) and subsequent credit accommodations. By
then, the property was covered by TCT No.
Q: Has the residential house and lot of Cesario 234246 under Vitug’s name. Unfortunately,
Montana which he and his family built in 1960 spouses Vitug failed to pay their loans despite
but which was not constituted as a family home, demands. Vitug claimed that the property was
whether judicially or extrajudicially, under the exempt from execution because it was
NCC been constituted as a family home by constituted as a family home before its
operation of law under Art. 153 of the FC, and mortgage. Is Vitug’s contention proper?
therefore, exempt from execution from a money
judgment where the debt or liability was A: NO. Even though Vitug’s property has been
incurred before the effectivity of the FC? constituted as a family home, it is not exempt from
execution. Article 155 of the Family Code explicitly
A: NO. Under Art. 162 of the Family Code, it is provides that debts secured by mortgages are
provided that “the provisions of this Chapter shall exempted from the rule against execution, forced
also govern existing family residences insofar as sale, or attachment of family home. Since the
said provisions are applicable.” It does not mean property was voluntarily used by Vitug as a security
that Arts. 152 and 153 of the Family Code have a for a loan he obtained from respondent, it may be
retroactive effect such that all existing family subject to execution and attachment. (Vitug v.
residences are deemed to have been constituted as Abuda, G.R. No. 201264, 11 Jan. 2016)
a FH at the time of their occupation prior to the
effectivity of the FC and are exempt from execution Requisites in the sale, alienation, donation,
for the payment of obligations before the effectivity assignment or encumbrance of the FH
of the Family Code. Art. 162 simply means that all
existing family residences at the time of the The following must give their written consent:
effectivity of the Family Code are considered FH and
are prospectively entitled to the benefits accorded 1. The person who constituted the FH;
to a family home under the Family Code. (Manacop 2. The spouse of the person who constituted the
v. CA, G.R. No. 97898, 11 Aug. 1997) FH; and
3. Majority of the beneficiaries of legal age.
NOTE: The Family Code does not have a retroactive
effect. Thus, prior to August 5, 1988, the procedure NOTE: In case of conflict, the court shall decide.
mandated by the Civil Code had to be followed for a
Family Home to be constituted as such. There being Limitations on Family Home
no proof that the subject property was judicially or
extrajudicially constituted as a family home, it 1. Each family can have only one FH. After one FH
follows that petitioner cannot avail of the law’s has been constituted, no other FH can be
protective mantle. (Modequillo v. Breva, G.R. No. established without first dissolving the existing
86355, 31 May 1990) one;.
2. FH can be constituted only on the dwelling place,
Q: On March 17, 1997, Evangeline A. Abuda and therefore in the locality where the family has
loaned P250,000.00 to Florante Vitug and his its domicile; and.
wife, Narcisa. As a security for the loan, Vitug 3. The value of the FH must not exceed the limit
mortgaged to Abuda his property in Tondo fixed by law. (Tolentino, 2013)
Foreshore. The property was then subject of a
conditional Contract to Sell between the NHA
and Abuda. Later, the parties executed a
“restructured” mortgage contract on the
property to secure P600,000.00 representing

2022 GOLDEN NOTES
Civil Law
under Art. 36; and

G. PATERNITY AND FILIATION 2. Children of marriages which are declared void
under Art. 53. (Rabuya, 2009)
Requisites for a child conceived by artificial

Paternity is the civil status of a father with regard
insemination to be considered legitimate (Art.
to the child.
164(2), FC)
Filiation is the civil status of a child with regard to
1. The artificial insemination is made on the wife,
his parents.
not on another woman;
2. The artificial insemination on the wife is done
Filiation may be by nature or adoption, legitimate
with the sperm of the husband or of a donor, or
or illegitimate.
both the husband and a donor;
3. The artificial insemination has been authorized
NOTE: Paternity or filiation is established by clear
or ratified by the spouse on a written instrument
and convincing evidence. (Constantino v. Mendez,
executed and signed by them before the birth of
G.R. No. 57227, 14 May 1992)
the child; and
4. The written instrument is recorded in the civil
Classifications of filiation (2009 BAR)
registry together with the birth certificate of the
child. (Art. 164(2), FC)
I. Natural
a. Legitimate – conceived OR born within a
Rights of legitimate children (Art. 174, FC)
valid marriage.
b. Illegitimate – conceived AND born
1. To bear the surname of the father and the
outside a valid marriage.
mother;
2. To receive support from their parents, their
II. Judicial Act
ascendants, and in proper cases, their brothers
a. Legitimated – conceived and born
and sisters; and
outside of wedlock of parents without
3. To be entitled to the legitimate and other
impediment to marry at the time of
successional rights granted to them by the Civil
conception or were so disqualified only
Code.
because either or both of them were
below eighteen (18) years of age. (Art.
Presumption of legitimacy (2006, 2008, 2010
177, FC)
BAR)
b. Adopted – a filiation created by law which

Article 164 of the Family Code provides that the
vests between two persons a relationship
children conceived or born during the marriage of
similar to that which results from
the parents are legitimate.
legitimate paternity and filiation.
The presumption of legitimacy of children does not

1. LEGITIMATE CHILDREN
only flow out from a declaration contained in the
statute but is based on the broad principles of
Legitimate child
natural justice and the supposed virtue of the
mother. The presumption is grounded in a policy to
GR: One who is conceived OR born during the
protect innocent offspring from the odium of
marriage of the parents. (Art. 164, FC)
illegitimacy. (Liyao, Jr. v. Tanhoti-Liyao, G.R. 138961,
07 Mar. 2002)
XPN: Born outside of a valid marriage (void
marriages) but considered as legitimate child:
1. Children of marriages which are declared void

The presumption of legitimacy under Article 164 of have been continuously cohabiting for more
the Family Code may be availed only upon than 5 years.
convincing proof of the factual basis therefor, i.e., a. What is the filial status of Laica?
that the child’s parents were legally married and b. Can Laica bring an action to impugn her own
that their conception or birth occurred during the status on the ground that based on DNA
subsistence of that marriage. Else, the presumption results, Roderick is her biological father?
of law that a child is legitimate does not arise. (2008 BAR)
(Angeles v. Maglaya, G.R. No. 153798, 02 Sept. 2005)
A:
NOTE: Children by themselves cannot choose their a. Having been born during the marriage of
own filiation. Neither can they elect the paternity of Faye and Brad, she is presumed to be the
the husband of their mother when the presumption legitimate child of Faye and Brad. This
of their legitimacy has been successfully presumption had become conclusive because
overthrown. the period of time to impugn her filiation had
already prescribed.
Q: What is the effect of the declaration of a wife
against the legitimacy of the child where the b. NO. She cannot impugn her own filiation. The
child is conclusive presumed to be the legitimate law does not allow a child to impugn their
child of H and W? own filiation. In this case, Laica’s legitimate
filiation was accorded to her by operation of
A: The child shall still be legitimate, although the law which may be impugned only by Brad, or
mother may have declared against their legitimacy. his heirs in the cases provided by law within
This law likewise applies to such instances where the prescriptive period.
the mother may have been sentenced as an
adulteress. (Art. 167, FC) Period to claim Filiation
NOTE: Art. 167 of the Family Code applies only to a Q: Romeo F. Ara and William A. Garcia
situation where the wife denies the paternity of the (petitioners), and Dra. Fely S. Pizarro and Henry
husband. Art. 167 does not apply to a situation A. Rossi (respondents) all claimed to be children
where a child is alleged not to be the child of nature of the late Josefa A. Ara (Josefa). Petitioners,
or biological child of the couple. (Rabuya, 2009) together with Ramon and respondent Rossi
(collectively, plaintiffs a quo), filed a
Q: Roderick and Faye were high school Complaint for judicial partition of properties
sweethearts. When Roderick was 18 and Faye, left by the deceased Josefa. The RTC rendered a
16 years old, they started living together as decision among which is the declaration that the
husband and wife without the benefit of other properties are under the co-ownership of
marriage. When Faye reached 18 years of age, all the plaintiffs and defendant and in equal
her parents forcibly took her back and arranged shares. In omitting petitioners from the
for her marriage to Brad. Although Faye lived enumeration of Josefa's descendants, the CA
with Brad after the marriage, Roderick reversed the finding of the RTC. The CA found
continued to regularly visit Faye while Brad was that RTC erred in allowing petitioners to prove
away at work. During their marriage, Faye gave their status as illegitimate sons of Josefa after
birth to a baby girl, Laica. When Faye was 25 her death. May the petitioners prove their
years old, Brad discovered her continued liaison filiation to Josefa through their open and
with Roderick and in one of their heated continuous possession of the status of
arguments, Faye shot Brad to death. She lost no illegitimate children, found in the second
time in marrying her true love Roderick, paragraph of Art. 172 of the Family Code?
without a marriage license, claiming that they

2022 GOLDEN NOTES
Civil Law
A: NO. In Uyguangco v. Court of Appeals, While the As to the real-party-in-interest

private respondent has admitted that he has none of
the documents mentioned in the first paragraph
GR: Husband.
(which are practically the same documents
mentioned in Art. 278 of the Civil Code except for
XPNs: Heirs, in cases
the "private handwritten instrument signed by the
where:
parent himself), he insists that he has nevertheless
GR: Child.
been "in open and continuous possession of the
1. Husband died
status of an illegitimate child," which is now also
before the XPNs: Heirs of the child,
admissible as evidence of filiation.
expiration of the in cases where:
period for bringing
The problem of the private respondent, however, is
the action; 1. Child died in state of
that, since he seeks to prove his filiation under the
insanity; and
second paragraph of Art. 172 of the Family Code, his
2. Husband died after 2. Child died during
action is now barred because of his alleged father's
filing the minority.
death in 1975. The action must be brought within
complaint, without
the same period specified in Art. 173, except when
having desisted; NOTE: Must be filed
the action is based on the second paragraph of Art.
and within 5 years.
172, in which case the action may be brought during
the lifetime of the alleged parent.
3. Child was born
after the death of
It is clear that the private respondent can no longer
the husband.
be allowed at this time to introduce evidence of his
open and continuous possession of the status of an
illegitimate child or prove his alleged filiation As to prescription
through any of the means allowed by the Rules of 1 year – husband
Court or special laws. The simple reason is that resides in the same GR: During the lifetime
Apolinario Uyguangco is already dead and can no municipality or city of the child.
longer be heard on the claim of his alleged son's where birth took
illegitimate filiation. (Ara v. Pizarro, G.R. No. 187273, place.; XPN: Lifetime of the
15 Feb. 2017) putative father.
2 years – husband
Action to impugn legitimacy v. Action to claim does NOT reside in the In cases where the action
legitimacy same municipality or is for recognition of
city.; or illegitimate child by
“open and continuous
ACTION TO IMPUGN ACTION TO CLAIM
3 years – husband is possession” of the status.
LEGITIMACY LEGITIMACY
living abroad.
(Art. 166, FC) (Art. 173, FC)
As to the remedy Person/s who may attack the legitimacy of the

child
GR: Only the husband can contest the legitimacy of

Action to impugn Action to claim the child.
legitimacy or legitimacy (compulsory
illegitimacy recognition) XPNs: Heirs of the husband may impugn the
filiation of the child within the period prescribed in
Art. 170 of the Family Code only in the following
cases:

1. If the husband should die before the expiration 3. In case of children conceived through artificial
of the period fixed for bringing his action; insemination, the written authorization or
2. If he should die after the filing of the complaint, ratification of either parent was obtained
without having desisted therefrom; or through mistake, fraud, violence, intimidation or
3. If the child was born after the death of the undue influence.
husband. (Art. 171, FC) (2008 BAR)
Sterility and Impotency
Prescriptive period for filing action impugning
the legitimacy of the child (2010 BAR) Sterility is not synonymous with impotency.
Sterility is the inability to procreate, while
GR: The prescriptive period for filing action impotency is the Physical inability to copulate.
impugning the legitimacy of the child shall be (Menciano v. San Jose, G.R. No. L-1967, 28 May 1951)
counted from the knowledge of birth or its
recording in the civil registry. Q: Will an infliction of the last stages of
tuberculosis be a ground for impugnation of the
XPN: If the birth was: legitimacy of the child?
1. Concealed from; or A: Tuberculosis, even in its last stages, is not the

2. Was unknown to the husband or his heirs, the kind of serious illness of the husband that will
periods shall be counted from the discovery or establish physical impossibility of access. (Andal v.
knowledge of the birth of the child or of the act Macaraig, G.R. No. L- 2474, 30 May 1951)
of registration of said birth, whichever is earlier.
(Art. 170, FC) Rule on status of child where the mother
contracted another marriage within 300 days
Grounds in impugning legitimacy of a child (Art. after termination of the former (1999 BAR)
166, FC)
The child shall be considered as conceived during
Legitimacy of the child may be impugned only on the:
the following grounds:
1. Former marriage – if child is born:
1. Physical impossibility for the husband to have
sexual intercourse with his wife within the first Before 180 days after the solemnization of the
120 days of the 300 days which immediately subsequent marriage, provided it is born within
preceded the birth of the child because of: 300 days after termination of former marriage
a. Physical incapacity of the husband to
have sexual intercourse with his wife,; 2. Subsequent marriage – if a child is born:
b. The fact that the husband and wife were 180 days after the celebration of the subsequent
living separately in such a way that marriage, even though it be born within 300 days
sexual intercourse was not possible,; or after the termination of the former marriage.
c. Serious illness of the husband which

absolutely prevented intercourse;
2. Proved that for biological or other scientific

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

2022 GOLDEN NOTES
Civil Law
Illustrations:
180th day takes place before 300th day
180th day from 300th day from

solemnization of termination of former
marriage
Born during this period:

Marriage
Marriage
180th day takes place after 300th day
300th day from
termination of 180th day from
solemnization of
former marriage subsequent
marriage

conceived during Former Marriage
Marriage

2. PROOF OF FILIATION they claimed to be the legal heirs of the late Juan
Santos. On the sole basis of the said Affidavit,
Kinds of proof of filiation (1995, 1999, 2010 respondents caused the cancellation of the titles
BAR) of the subject properties and had them
transferred to their names.
Proof of filiation has two kinds: (Art. 172(1), FC)
Kaloy, on behalf of the heirs of the late Juan
1. Primary proof consists of the following.: Santos filed a complaint for Annulment,
a. Record of birth appearing in civil registrar Reconveyance and Accounting with Prayer for
or final judgment; and Preliminary Injunction against respondents.
Kaloy primarily alleged that his mother, Maria
b. Admission of legitimate filiation in public Santos was born to spouses Juan Santos and
document or private handwritten Juana Mendoza, as shown in the certified
instrument signed by parent concerned. photocopy of her certificate of birth. Kaloy
submitted that he and his siblings are the
2. Secondary consists of the following (Art. 172(2), children of Juana. Hence, being grandchildren of
FC): Juan Santos, they are the ones who are entitled
a. Open and continuous possession of to the subject properties.
legitimacy; and
b. Any means allowed by the Rules of Court On the other hand, respondents, through their
and special laws. Answer with Counterclaim, disputed Kaloy’s
assertions, and argued that their predecessor-
NOTE: To prove open and continuous possession of in-interest, Pedro Mendoza, legally acquired the
the status of an illegitimate child, there must be subject properties from Juan Santos through a
evidence of manifestation of the permanent Deed of Donation. Respondents prayed for the
intention of the supposed father to consider the dismissal of the complaint. To whom should the
child as his, by continuous and clear manifestations subject properties be adjudicated?
of parental affection and care, which cannot be
attributed to pure charity. A: Respondents. An action to claim legitimate
filiation is strictly personal to the child whose
Such acts must be of such a nature that they reveal filiation is in question, and he or she may exercise
not only the conviction of paternity, but also the such anytime within his lifetime. The only three
apparent desire to have and treat the child as such instances when such right passes to the child's heirs
in all relations in society and in life, not accidentally, are: (1) when the child dies during minority; (2)
but continuously. (Jison v. CA, G.R. No. 124853, 24 Feb when the child dies in a state of insanity; or (3)
1998) when the child dies after the commencement of the
action.
Rules in proving filiation
In this case, petitioners seek to establish the
GR: Primary proof shall be used to prove filiation. legitimate status of their mother, Maria. However,
there is nothing in the records of the case which
XPN: In absence of primary proof, secondary proof would show that Maria had died under any of the
may be resorted to. circumstances outlined under Art. 173, which
would have transmitted the right to claim her
Q: The late Juan Santos executed a Deed of legitimate status to her heirs, herein
Donation in favor of Pedro Mendoza, the petitioners. Further, without any proven lawful
predecessor-in-interest of respondents. marriage between Juana and Juan Santos, no
Subsequently, respondents executed an presumption of legitimate filiation arose in favor of
“Affidavit of Identity of Heirs” (Affidavit), where Maria. Since no such presumption arose, it was

2022 GOLDEN NOTES
Civil Law
incumbent on both Mario and Josefina, et al., to Prima facie case of sexual relations with the
prove the same. putative father
A birth certificate, being a public document, offers
prima facie evidence of filiation in accordance with A prima facie case exists if a woman declares —
the rule that entries in official records made in the supported by corroborative proof — that she had
performance of the duties of a public officer are sexual relations with the putative father; at this
prima facie evidence of the facts therein stated. point, the burden of evidence shifts to the putative
However, as the Court has held in several cases, for father. Further, the two affirmative defenses
a birth certificate to prove paternity, it must be available to the putative father are:
shown that the putative father had a hand in its
preparation. Unfortunately, there is nothing to 1. Incapability of sexual relations with the mother
prove that Juan had a hand in the preparation of the due to either physical absence or impotency; or
same. (Bernardo v. Fernando, G.R. No. 211034, 18
Nov. 2020, J. Caguioa) 2. That the mother had sexual relations with other
men at the time of conception. (Charles Gotardo
Pictures or certificate of baptism do not v. Divina Buling, G.R. No. 165166, 15 Aug. 2012)
constitute authentic documents to prove the
legitimate filiation of a child Q: Rosanna, as surviving spouse, filed a claim for
death benefits with the SSS upon the death of her
Pictures or canonical baptismal certificate do not husband, Pablo. She indicated in her claim that
constitute the authentic documents to prove the the decedent is also survived by their minor
legitimate filiation of a child. The baptismal child, Lyn, who was born in 1991. The SSS
certificate of the child, standing alone, is not granted her claim but this was withdrawn after
sufficient. It is not a record of birth. Neither is it a investigation, when a sister of the decedent
public instrument nor a private handwritten informed the system that Pablo could not have
instrument. (Abelle v. Santiago, G.R. No. L-16307, 30 sired a child during his lifetime because he was
Apr. 1963) infertile. However, in Lyn’s birth certificate,
Pablo affixed his signature and he did not
Baptismal certificate does not prove filiation impugn Lyn’s legitimacy during his lifetime. Was
the SSS correct in withdrawing the death
Just like in a birth certificate, the lack of benefits?
participation of the supposed father in the
preparation of a baptismal certificate renders this A: NO. Children conceived or born during the
document incompetent to prove paternity. And marriage of the parents are legitimate. (Art. 164, FC)
“while a baptismal certificate may be considered a This presumption becomes conclusive in the
public document, it can only serve as evidence of the absence of proof that there is physical impossibility
administration of the sacrament on the date of access under Art. 166 of the Family Code. Upon
specified but not the veracity of the entries with the expiration of the periods for impugning
respect to the child’s paternity. Thus, baptismal legitimacy under Art. 170, and in the proper cases
certificates are per se inadmissible in evidence as under Art. 171, of the Family Code, the action to
proof of filiation and they cannot be admitted impugn would no longer be legally feasible and the
indirectly as circumstantial evidence to prove the status conferred by the presumption becomes fixed
same”. (Perla v. Mirasol, G.R. No. 172471, 12 Nov. and unassailable. In this case, there is no showing
2012) that Pablo, who has the right to impugn the
legitimacy of Lyn, challenged her status during his
NOTE: A will which was not presented for probate lifetime. There is adequate evidence to show that
sufficiently establish filiation because it constitutes the child was in fact his child, and this is the birth
a public document or private handwritten certificate where he affixed his signature. (SSS v.
instrument signed by the parent concerned. Aguas, G.R. No. 165546, 27 Feb. 2006)

Q: In an action for partition of estate, the trial Q: Gerardo filed a complaint for bigamy against
court dismissed it on the ground that the Ma. Theresa, alleging that she had a previous
respondent, on the basis of her birth certificate, subsisting marriage when she married him. The
was in fact the illegitimate child of the deceased trial court nullified their marriage and declared
and therefore the latter's sole heir, to the that the son, who was born during their
exclusion of petitioners. However, trial court marriage and was registered as their son, as
failed to see that in said birth certificate, she was illegitimate. What is the status of the child?
listed therein as “adopted.” Was the trial court
correct in dismissing the action for partition? A: The first marriage being found to be valid and
subsisting, whereas that between Gerardo and Ma.
A: NO. The trial court erred in relying upon the said Theresa was void and non-existent; the child should
birth certificate in pronouncing the filiation of the be regarded as a legitimate child out of the first
respondent. However, since she was listed therein marriage. This is so because the child's best
as “adopted”, she should therefore have presented interests should be the primordial consideration in
evidence of her adoption in view of the contents of this case.
her birth certificate. In this case, there is no showing
that she undertook such. A record of birth is merely Q: Gerardo and Ma. Theresa, however, admitted
prima facie evidence of the facts contained therein. that the child was their son. Will this affect the
It is not conclusive evidence of the truthfulness of status of the child?
the statements made there by the interested parties.
(Rivera v. Heirs of Romualdo Villanueva, G.R. No. A: NO. The admission of the parties that the child
141501, 21 July 2006) was their son was in the nature of a compromise.
The rule is that: the status and filiation of a child
Q: In a complaint for partition and accounting cannot be compromised. Art. 164 of the Family Code
with damages, Ma. Theresa alleged that she is is clear that a child who is conceived or born during
the illegitimate daughter of Vicente, and the marriage of his parents is legitimate.
therefore entitled to a share in the estate left (Concepcion v. CA, G.R. No. 123450, 31 Aug. 2005)
behind by the latter. As proof, she presented her
birth certificate which Vicente himself signed Q: What is the effect of Ma. Theresa’s claim that
thereby acknowledging that she is his daughter. the child is her illegitimate child with her second
Is the evidence presented by Ma. Theresa husband, to the status of the child?
sufficient to prove her claim that she is an
illegitimate child of Vicente? A: NONE. This declaration – an avowal by the
mother that her child is illegitimate – is the very
A: YES. Ma. Theresa was able to establish that declaration that is proscribed by Art. 167 of the
Vicente was in fact her father. The due recognition Family Code. This proscription is in consonance
of an illegitimate child in a record of birth, a will, a with, among others, the intention of the law to lean
statement before a court of record, or in any towards the legitimacy of children. (Ibid.)
authentic writing is, in itself, a consummated act of
acknowledgment of the child, and no further court Q: In a petition for issuance of letters of
action is required. (De Jesus v. Estate of Juan Dizon, administration, Cheri Bolatis alleged that she is
G.R. No. 142877, 02 Oct. 2001) Any authentic writing the sole legitimate daughter of decedent, Ramon
is treated not just as a ground for compulsory and Van Bolatis. Phoebe, the decedent’s second
recognition; it is, in itself, a voluntary recognition wife, opposed the petition and questioned the
that does not require a separate action for judicial legitimate filiation of Cheri to the decedent,
approval. (Eceta v. Eceta, G.R. No. 157037, 20 May asserting that Cheri’s birth certificate was not
2004) signed by Ramon and that she had not presented
the marriage contract between her alleged
parents which would have supported her claim.

2022 GOLDEN NOTES
Civil Law
In said birth certificate, it was indicated that her (Macadangdang v. CA, G.R. No. L- 49542, 12 Sept.
birth was recorded as the legitimate child of 1980) Thus, certificates issued by the local civil
Ramon and Van Bolatis, and it also contains the registrar and baptismal certificates are per se
word “married” to reflect the union between the inadmissible in evidence as proof of filiation and
two. However, it was not signed by Ramon and they cannot be admitted indirectly as circumstantial
Vanemon Bolatis. It was merely signed by the evidence to prove the same. (Jison v. CA, G.R. No.
attending physician, who certified to having 124853, 24 Feb 1998)
attended to the birth of a child. Does the
presumption of legitimacy apply to Cherimon? NOTE: In this age of genetic profiling and DNA
analysis, the extremely subjective test of physical
A: NO. Since the birth certificate was not signed by resemblance or similarity of features will not suffice
Cher’s alleged parents but was merely signed by the as evidence to prove paternity and filiation before
attending physician, such a certificate, although a courts of law. This only shows the very high
public record of a private document is, under Sec. standard of proof that a child must present in order
23, Rule 132 of the Rules of Court, evidence only of to establish filiation.
the fact which gave rise to its execution, which is, the
fact of birth of a child. A birth certificate, in order Q: Ann Lopez, represented by her mother
to be considered as validating proof of paternity Araceli Lopez, filed a complaint for recognition
and as an instrument of recognition, must be and support of filiation against Ben-Hur
signed by the father and mother jointly, or by the Nepomuceno. She assailed that she is the
mother alone if the father refuses. There having illegitimate daughter of Nepomuceno
been no convincing proof of respondent’s supposed submitting as evidence the handwritten note
legitimate relations with respect to the decedent, allegedly written and signed by Nepomuceno.
the presumption of legitimacy under the law did not She also demanded for financial support along
therefore arise in her favour. (Angeles v. Angeles- with filial recognition. Nepomuceno denied the
Maglaya, G.R. No. 153798, 02 Sept. 2005) assertions reasoning out that he was compelled
to execute the handwritten note due to the
Q: On the basis of the physical presentation of threats of the National People’s Army. RTC ruled
the plaintiff-minor before it and the fact that the in favor of Ann. Later, the RTC dismissed
alleged father had admitted having sexual Araceli’s complaint for insufficiency of evidence.
intercourse with the child's mother, the trial Is the dismissal of the complaint proper?
court, in an action to prove filiation with
support, held that the plaintiff- minor plaintiff- A: YES. Ann’s demand for support is dependent on
minor is the child of the defendant with the the determination of her filiation. However, she
plaintiff- minor's plaintiff-minor’s mother. Was relies only on the handwritten note executed by
the trial court correct in holding such? petitioner. The note does not contain any statement
whatsoever about her filiation to petitioner. It is,
A: NO. The birth certificate that was presented by therefore, not within the ambit of Art. 172(2) vis-à-
the plaintiff-minor appears to have been prepared vis vis-à-vis Art. 175 of the Family Code which
without the knowledge or consent of the putative admits as competent evidence of illegitimate
father. It is therefore not a competent piece of filiation an admission of filiation in a private
evidence on paternity. The local civil registrar in handwritten instrument signed by the parent
this case has no authority to record the paternity concerned.
of an illegitimate child on the information of a
third person. A baptismal certificate, while The Court is mindful that the best interests of the
considered a public document, can only serve as child in cases involving paternity and filiation
evidence of the administration of the sacrament on should be advanced. It is, however, just as mindful
the date specified therein but not the veracity of the of the disturbance that unfounded paternity suits
entries with respect to the child's paternity. cause to the privacy and peace of the putative

father’s legitimate family. (Nepomuceno v. Lopez, Also, under the R.A. 9255, the illegitimate child has
G.R. No. 181258, 18 Mar. 2010) the option to use the surname of the father.
3. ILLEGITIMATE CHILDREN Republic Act No. 9255
1. Children conceived and born outside a valid This act provides that illegitimate children may
marriage; optionally use the father’s surname provided that:
2. Children born of couples who are not legally
married or of common law marriages; 1. Filiation has been recognized by the father
3. Children born of incestuous marriage; through the record of birth appearing in the civil
4. Children born of bigamous marriage; register; and
5. Children born of adulterous relations between 2. Admission in public document or private
parents; handwritten instrument is made by the father.
6. Children born of marriages which are void for
reasons of public policy under Art. 38, Family NOTE: Provided that the father has the right to
Code; institute an action before the regular courts to
7. Children born of couples below 18; and prove non-filiation during his lifetime.
8. Children born of void marriages under art. 35,
except where the marriage is void for lack of Establishing Illegitimate Filiation (1995, 1999,
authority on the part of the solemnizing officer, 2005, 2010 BAR)
but the parties or either of them believed in good
faith that the solemnizing officer had authority, Q: Julie had a relationship with a married man
in which case the marriage will be considered who had legitimate children. A son was born out
valid and the children will be considered of the illicit relationship in 1981. Although the
legitimate. putative father did not recognize the child in his
birth certificate, he nevertheless provided the
Rights of an illegitimate child (1990, 2003, child with all the support he needed and spent
2006, 2009, 2010 BAR) time regularly with the child and his mother.
When the man died in 2000, the child was
1. They shall use the surname of the mother; already 18 years old so he filed a petition to be
2. They shall be under the parental authority of the recognized as an illegitimate child of the
mother; putative father and sought to be given a share in
3. They shall be entitled to support in conformity his putative father’s estate. The legitimate
with the FC, PROVIDED, only as to the separate family opposed, saying that under the FC his
property of the parent; and action cannot prosper because he did not bring
4. They shall be entitled to a legitime which shall the action for recognition during the lifetime of
consist of ½ of the legitime of a legitimate child. his putative father.
(Art. 176, FC)
1. If you were the judge, how would you rule?
Effect of the Recognition of an illegitimate child 2. Wishing to keep the peace, the child during
by the father the pendency of the case decides to
compromise with his putative father’s family
Such recognition would be a ground for ordering the by abandoning his petition in exchange for
latter to give support to, but not the custody of the what he would have received as inheritance
child. The law explicitly confers to the mother sole if he were recognized as an illegitimate child.
parental authority over an illegitimate child; it As the judge, would you approve such
follows that only if she defaults can the father compromise? (2015 BAR)
assume custody and authority over the minor.
(Briones v. Miguel, G.R. No. 156343, 18 Oct. 2004)

2022 GOLDEN NOTES
Civil Law
A: her subsequent spouse, while a legitimate child

1. If I were the judge, I will not allow the may not?
action for recognition filed after the death
of the putative father. A: To allow the child to adopt the surname of his
mother’s second husband, who is not his father,
Filiation of illegitimate children, like could result in confusion in his paternity. It could
legitimate children is established by: also create the suspicion that the child, who was
born during the covertures of his mother with her
a. Record of birth appearing in the civil first husband, was in fact sired by the second
register or a final judgment; husband, thus bringing his legitimate status into
b. An admission of legitimate filiation in a discredit. (Republic v. Vicencio, G.R. No. 88202., 14
public document or in a private Dec. 1998)
handwritten instrument signed by the
parent concerned; and in the absence 4. LEGITIMATED CHILDREN
thereof;
c. The open and continuous possession of Legitimated children are those who, because of the
the status of a legitimate child; subsequent marriage of their parents to each other,
are by legal fiction considered legitimate.
An illegitimate child who has not been recognized
by options (1) or (2) of the abovementioned Legitimation (2004, 2010 BAR)
enumeration may prove their filiation under
number (3) based on open and continuous Legitimation is a remedy or process by means of
possession of the status of an illegitimate child but which those who in fact not born in wedlock and
pursuant to Article 175 of the NCC, they must file the should therefore be ordinarily illegitimate, are by
action for recognition during the lifetime of the fiction, considered legitimate.
putative father. The provision of Article 285 of the
Civil Code allowing the child to file the action for It takes place by a subsequent valid marriage
recognition even after the death of the father will between parents. Furthermore, it shall retroact to
not apply because in the case presented, the child the time of the child’s birth. (Art. 180, FC)
was no longer a minor at the time of death of the
putative father. NOTE: The annulment of a voidable marriage shall
not affect the legitimation. (Art. 178, FC)
2. NO. I will not approve the compromise
agreement because filiation is a matter to be Children entitled to legitimation
decided by law. It is not for the parties to
stipulate whether a person is a legitimate or Only children conceived and born outside of
illegitimate child of another. (De Jesus v. wedlock of parents who, at the time of conception of
Estate of Dizon, G.R. No. 142877, 02 Oct. 2001) the former, were not disqualified by any
In all cases of illegitimate children, their impediment to marry each other, or were so
filiation must be duly proved. (Art. 887, NCC) disqualified only because either or both of them
were below eighteen (18) years of age. (Art. 177, FC,
Public instrument subscribed and made under as amended by R.A. 9858) (1990, 2004, 2008, 2009
oath by the putative father indicating the BAR)
illegitimate child as his is sufficient to establish
illegitimate filiation Requisites of legitimation
Q: Why is an illegitimate child of a woman, who 1. Child must have been conceived and born
gets married, allowed to bear the surname of outside of wedlock;
2. Child’s parents, at the time of former’s

conception, were not disqualified by any Rights of Legitimate and Illegitimate Children
impediment to marry each other or were so
disqualified only because either or both of them NOTE: Legitimated children shall enjoy the same
were below eighteen (18) years of age; and rights as legitimate children. (Art. 179, FC)
3. The subsequent valid marriage of the parents.
LEGITIMATE ILLEGITIMATE
Q: Who may impugn the legitimation?
CHILDREN CHILDREN
A: Legitimation may be impugned only by those As to surname

who are prejudiced in their rights, within 5 years
from the time their cause of action accrues, that is, Bear the surname of
from the death of the putative parent. (Art. 182, FC) either the mother or
the father under R.A.
NOTE: The right referred to are successional rights. 9255
Hence, only those whose successional rights are
directly affected may impugn the legitimation that Bear the surnames of NOTE: Under the
took place. both parents (mother amendatory provisions
and father) of R.A. No. 9255, the
Q: Roderick and Faye were high school use of illegitimate
sweethearts. When Roderick was 18 and Faye, father's surname is
16 years old, they started living together as permissive and not
husband and wife without the benefit of obligatory. (Rabuya,
marriage. When Faye reached 18 years of age, 2008)
her parents forcibly took her back and arranged
for her marriage to Brad. Although Faye lived As to support
with Brad after the marriage, Roderick Receive support from:
continued to regularly visit Faye while Brad was
away at work. During their marriage, Faye gave 1. Parents;
birth to a baby girl, Laica. When Faye was 25 Receive support
2. Ascendants; and
years old, Brad discovered her continued liaison according to provision
In proper cases,
with Roderick and in one of their heated of Family Code
brothers and sisters
arguments, Faye shot Brad to death. She lost no under Art. 174 of the
time in marrying her true love Roderick, Family Code.
without a marriage license, claiming that they
As to Legitime
have been continuously cohabiting for more
than 5 years. Can Laica be legitimated by the
marriage of her biological parents? (2008 BAR) Full Legitime and other
successional rights ½ of the share of a
A: NO, she cannot be legitimated by the marriage of under the New Civil legitimate child
her biological parents. In the first place she is not, Code
under the law, the child of Roderick. In the second
place, her biological parents could not have validly As to Period for filing action for claim of
married each other at the time she was conceived legitimacy or illegitimacy
and born simply because Faye was still married to For primary proof:
Roderick Brad at that time. Only children conceived Their whole lifetime
their whole lifetime.
or born outside of wedlock of parents who, at the regardless of type of
time of the conception of the child were not proof provided under
For secondary proof:
disqualified by any impediment to marry each Art. 172 of the Family
only during the lifetime
other, may be legitimated. (Art. 177, FC) Code
of the alleged parent.

2022 GOLDEN NOTES
Civil Law
1. During minority;
As to transmissibility of right to file an action
2. In a state of insanity; or
to claim legitimacy
3. After commencing the action for legitimacy.
Yes No
Prescription of action to claim legitimacy or
As to Right to inherit ab intestato
illegitimacy
No right to inherit ab
intestate from An action must be brought:
legitimate children and 1. By the child – during his lifetime; or
Yes relatives of father and
mother under Art. 992, 2. By his heirs – within 5 years should the child
NCC (Iron Curtain dies during minority, in a state of insanity or
Rule) after commencing the action for legitimacy.
NOTE: Provided that the action for illegitimacy is

Action to Claim Filiation
based on admission of paternity or filiation in a
birth certificate or written instrument.
Paternity and filiation or the lack of the same is a
relationship that must be judicially established, and
However, if the action for illegitimacy is based on an
it is for the court to declare its existence or absence.
open and continuous possession of status of
It cannot be left to the will or agreement of the
illegitimate filiation or any other means allowed by
parties. (De Asis v. CA, G.R. 127578, 15 Feb. 1999)
the Rules of Court and special laws, the action must
be brought during the lifetime of the alleged parent.
The manner of claiming filiation is the same for both
legitimate and illegitimate children.
Paternity and filiation or the lack of the same is a
relationship that must be judicially established, and
Persons who may file for claim legitimate
it is for the court to declare its existence or absence.
filiation (Art. 173, FC)
It cannot be left to the will or agreement of the
parties. (De Asis v. CA., G.R. 127578, 15 Feb. 1999)
GR: The right of claiming legitimacy belongs to the
child.
The manner of claiming filiation is the same for both
legitimate and illegitimate children.
XPN: The right is transferred to his heirs when the
child dies:
1. During minority; or
2. In a state of insanity; or.
3. After commencing the action for legitimacy.
NOTE: Questioning legitimacy may not be

collaterally attacked. It can be impugned only in a
direct action.
Person/s who may file for claim illegitimate

filiation
GR: The right of claiming illegitimacy belongs to the

child.
XPN: The right is transferred to his heirs when:

a. Of legal age and at least 16 years older

H. ADOPTION than the adoptee;
NOTE: When the adoptee is the

biological parent of the adoptee, or is
Adoption is the process of making a child, whether
the spouse of adoptee’s parent, the 16-
related or not to the adopter, possess in general, the
year difference may be waived.
rights accorded to a legitimate child. It is a juridical
act, a proceeding in rem which creates between
b. In full possession of full civil capacity
two persons a relationship similar to that which
and legal rights;
results from legitimate paternity and filiation. The
modern trend is to consider adoption not merely as
c. of good moral character and has not
an act to establish a relationship of paternity and
been convicted of any crime involving
filiation, but also as an act which endows the child
moral turpitude; and
with a legitimate status. (In the Matter of the
Adoption of Stephanie Nathy Astorga Garcia, G.R. No.
d. Emotionally and psychologically
148311, 31 Mar. 2005)
capable of caring for children and in a
position to support and care for
The relationship established by the adoption is
his/her children in keeping with the
limited to the adopting parents and does not extend
means of the family. (Sec. 7, Art. 3, R.A.
to their other relatives, except as expressly
No. 8552)
provided by law. Thus, the adopted child cannot be
considered as a relative of the ascendants and
NOTE: If a person is not in possession of full
collaterals of the adopting parents, nor of the
civil capacity and legal rights, as in the case of
legitimate children which they may have after the
insane, imbecile, deaf-mute or a person
adoption, except that the law imposes certain
suffering from civil interdiction, such person
impediments to marriage by reason of adoption.
cannot adopt. (Rabuya, 2006)
Neither are the children of the adopted considered
descendants of the adopter.
2. Alien Adopter
1. DOMESTIC ADOPTION (R.A. No. 8552) If the adopter is an alien, he/she must possess
the following:
a. WHO MAY ADOPT
a. Same qualifications as Filipino
1. Any Filipino citizen; adopter;
2. Any Alien possessing the same b. His/her country must have
qualifications for Filipino nationals; diplomatic relations with the
3. Guardian; Republic of the Philippines;
4. Husband and wife jointly; and c. He/she has been certified by his/her
5. One Spouse in accordance with the law; diplomatic or consular office or any
(Sec. 7, Art. 3, R.A. No. 8552) appropriate government agency to
be legally capacitated to adopt in
Qualifications of Adoptee his/her country;
d. His/her government allows the
1. Filipino Adopter adoptee to enter his/her adopted
son/daughter;
If the adopter is any Filipino citizen, he/she e. He/she has been living in the
must possess the following: Philippines for at least 3 continuous
years prior to the filing of the

2022 GOLDEN NOTES
Civil Law
application for adoption and b. WHO MAY BE ADOPTED

maintains such residence until the
adoption decree is entered; 1. Any person below eighteen (18) years of age
f. The requirements on residency and who has been administratively or judicially
certification of the alien’s declared available for adoption;
qualification to adopt in his/her 2. The legitimate son/daughter child of one
country may be waived for the spouse by the other spouse;
following: 3. An illegitimate son/daughter child by a
i. A former Filipino citizen who qualified adopter to improve his/her their
seeks to adopt a relative within status to that of legitimacy;
the 4th degree of consanguinity or 4. A person of legal age if, prior to the adoption,
affinity; or said person has been consistently considered
ii. One who seeks to adopt and treated by the adopter(s) as his/her their
legitimate son/daughter of own child since minority;
his/her Filipino spouse; or 5. A child whose adoption has been previously
iii. One who is married to a Filipino rescinded; or
citizen and seeks to adopt jointly 6. A child whose biological or adoptive parent(s)
with his/her spouse a relative has died:. Provided, that no proceedings shall be
within the 4th degree of initiated within six (6) months from the time of
consanguinity or affinity of the death of said parent(s). (Sec. 8, Art. 3, R.A. No.
Filipino spouse 8552)
3. Guardian as Adopter Child
May only adopt the ward after the termination of A child is any person below 18 years old. (Sec. 3, Art.
the guardianship and clearance of his/her financial 1, R.A. No. 8552)
accountabilities.
NOTE: The prohibition against physical transfer
4. Joint Adoption of Spouses shall not apply to adoption by a relative or children
with special medical conditions. (Rabuya, 2018)
GR: It is mandatory for both spouses to jointly
adopt. Necessity of written consent
XPN: The written consent of the following is necessary for

a. If one spouse seeks to adopt the adoption:
legitimate son/daughter; or
b. If one spouse seeks to adopt his/her own 1. Biological parent(s) of the child, if known, or the
illegitimate son/daughter, provided, legal guardian, or the proper government
however that the other spouse has instrumentality which has legal custody of the
signified his/her consent thereto; or child;
c. If the spouses are legally separated from 2. Adoptee, if ten (10) years of age or over;
each other. (Sec. 7, Art. 3, R.A. No. 8552) 3. Illegitimate sons/daughters children, ten (10)
years of age or over, of the adopter if living with
NOTE: In case husband and wife jointly adopt, or said adopter and the latter's spouse, if any;
one spouse adopts the illegitimate son/daughter of 4. Legitimate and adopted sons/daughters
the other, joint parental authority shall be exercised children, ten (10) years of age or over, of the
by the spouses. (ibid.) adopter(s) and adoptee, if any; and
5. Spouse, if any, of the person adopting or to be
adopted. (Sec. 9, Art. 3, R.A. No. 8552)

Q: Bernadette filed a petition for adoption of the c. RIGHTS OF AN ADOPTED CHILD

three minor children of her late brother, Ian. She
alleged that when her brother died, the children After undergoing the proceedings required under
were left to the care of their paternal R.A. No. 8552, and adoption is decreed by the court,
grandmother, because their biological mother the following rights shall be vested to the adopted
Amelia went to Italy to work and has allegedly child:
abandoned her children. However, the
grandmother died, so she filed the petition for 1. The child shall be deemed a legitimate child of
adoption. The minors gave their written consent the adopter for all intents and purposes (Sec. 17,
to the adoption and so did all of her own grown- Art. 5, R.A. No. 8552);
up children. The trial court granted the decree 2. The child shall acquire reciprocal rights and
of adoption even though the written consent of obligations arising from parent-child
the biological mother of the children was not relationship; (Ibid.)
adduced by Bernadette. Was the trial court 3. The adoptee is entitled to love, guidance , and
correct in granting the decree of adoption? support in keeping with the means of the family
(Ibid.);
A: NO. The rule is, adoption statutes must be 4. The child shall have the right to use surname of
liberally construed in order to give spirit to their adopter (Art. 365, NCC); and
humane and salutary purpose which is to uplift the 5. In legal and intestate succession, the adopters
lives of unfortunate, needy or orphaned children. and the adoptee shall have reciprocal rights of
However, the discretion to approve adoption succession without distinction from legitimate
proceedings on the part of the courts should not to filiation. However, if the adoptee and his/her
be anchored solely on those principles, but with due their biological parents had left a will, the law on
regard to the natural rights of the parents over the testamentary succession shall govern. (Sec. 18,
child. The written consent of the biological parents Art. 5, R.A. No. 8552)
is indispensable for the validity of the decree of
adoption. d. INSTANCES AND EFFECTS OF RESCISSION
Indeed, the natural right of a parent to his child Who may file the action for rescission
requires that his consent must be obtained before
his parental rights and duties may be terminated GR: The adoptee has the sole right to severe the
and vested in the adoptive parents. In this case, legal ties created by adoption and the one who will
petitioner failed to submit the written consent of file the action for rescission.
Amelia Ramos to the adoption. This is so under
Section 9(b) of R.A. No. 8552, otherwise known as XPN: However, if the adoptee is still a minor or
the Domestic Adoption Act of 1998. Bernadette above 18 years of age but incapacitated, the DSWD
failed in this respect, thus necessitating the as the adoptee’s guardian or counsel may assist the
dismissal of her petition for adoption. (Landingin v. adoptee for rescinding the decree of adoption.
Republic, G.R. No. 164948, 27 June 2006)
NOTE: The adopter cannot seek the rescission of the
Effects of Domestic Adoption adoption, but he may disinherit the adoptee. (Sec.
19, Art. 6, R.A. No. 8552)
GR: Severance of all legal ties between the biological
parents and the adoptee and the same shall then be When an adoptee may seek judicial rescission of
vested on the adopters. (Sec. 16, Art. 5, R.A. No. 8552) the adoption (S-A-R-A)
XPN: In cases where the biological parent is the When the adopter has committed the following:
spouse of the adopter. 1. Sexual assault or violence committed against
the adoptee;

2022 GOLDEN NOTES
Civil Law
2. Attempt on the life of the adoptee; 5. Vested rights acquired prior to judicial
3. Repeated physical and verbal maltreatment by rescission shall be respected. (Sec. 20, Art. 6, R.A.
the adopter despite having undergone No. 8552)
counseling; or
4. Abandonment and failure to comply with Q: Despite several relationships with different
parental obligations. (Sec. 19, Art. 6, R.A. No. women, Andrew remained unmarried. His first
8552) relationship with Brenda produced a daughter,
Amy, now 30 years old. His second, with Carla,
When an adopter may disinherit the adoptee (G- produced two sons: Jon and Ryan. His third, with
A-C-M-C-A-R-L) Donna, bore him two daughters: Vina and
Wilma. His fourth, while Elena, bore him no
1. Groundless accusation against the testator of a children although Elena has a daughter, Jane,
crime punishable by 6 years or more from a previous relationship. His last, with Fe,
imprisonment; produced no biological children but they
2. Found guilty of attempt against the life of the informally adopted without court proceedings,
testator, his/her their spouse, descendant or Sandy, now 13 years old, whom they consider as
ascendant; their own. Sandy was orphaned as a baby and
3. Causes the testator to make changes or changes was entrusted to them by the midwife who
a testator’s will through violence, intimidation, attended to Sandy’s birth. All the children,
fraud or undue influence; including Amy, now live with Andrew in his
4. Maltreatment of the testator by word or deed; house.
5. Conviction of a crime which carries a penalty of
civil interdiction; a. Is there any legal obstacle to the legal
6. Adultery or concubinage with the testator’s adoption of Amy by Andrew?
wife; b. To the legal adoption of Sandy by Andrew
7. Refusal without justifiable cause to support the and Elena?
parent or ascendant; or c. In his old age, can Andrew be legally entitled
8. Leads a dishonorable or disgraceful life. (Art. to claim support from Amy, Jon, Ryan, Vina,
919, NCC) Wilma and Sandy assuming that all of them
have the means to support him?
Effects of rescission of the adoption d. Can Amy, Jon, Ryan, Vina, Wilma and Sandy
legally claim support from each other?
1. If adoptee is still a minor or is incapacitated – e. Can Jon and Jane legally marry? (2008 BAR)
Restoration of:
a. Parental authority of the adoptee’s A:
biological parents, if known; or a. NO, there is no legal obstacle to the legal
b. Custody of the DSWD; adoption of Amy by Andrew. While a person of
age may not be adopted, Amy falls within two
2. Reciprocal rights and obligations of the exceptions: (1) she is an illegitimate child and
adopters and adoptee to each other shall be she is being adopted by her illegitimate father
extinguished; to improve her status; and (2) even on the
assumption that she is not an illegitimate child
3. Court shall order the civil registrar to cancel the of Andrew, she may still be adopted, although of
amended certificate of birth of the adoptee and legal age, because she has been consistently
restore his/her their original birth certificate; considered and treated by the adopter as his
own child since minority. In fact, she has been
4. Succession rights shall revert to its status prior living with him until now.
to adoption, but only as of the date of judgment
of judicial rescission; b. YES. There is a legal obstacle to the adoption of

Sandy by Andrew and Elena. Andrew and Elena 2. INTER–COUNTRY ADOPTION

cannot adopt jointly because they are not (R.A. NO. 8043)
married.
Inter-Country Adoption
c. YES. Andrew can claim support from all of
them, except from Sandy, who is not his
It is a socio-legal process of adopting a Filipino child
legitimate, illegitimate or adopted child.
by a foreigner or a Filipino citizen permanently
residing abroad where the petition is filed, the
d. YES. Amy, Jon, Ryan, Vina and Wilma can ask
supervised trial custody is undertaken, and the
support from each other because they are half-
decree of adoption is issued outside the Philippines.
blood brothers and sisters, and Vina and Wilma
(Sec. 3(a), R.A. No. 8043)
are full-blood sisters (Art. 195(5), FC), but not
Sandy who is not related to any of them.
a. WHEN ALLOWED
e. YES. Jon and Jane can legally marry because

Adoption only as a last resort Sec. 7, Art. 3, R.A.
they are not related to each other. Jane is not a
8043). No child shall be matched to a foreign
daughter of Andrew.
adoptive family unless it is satisfactorily shown that
the child cannot be adopted locally. (Sec. 11, Art. 3,
R.A. No. 8043)
b. WHO MAY ADOPT
An alien or Filipino citizen permanently residing

abroad.
Qualifications for persons who may adopt
1. At least 27 years old and 16 years older than the

child to be adopted at the time of the application
unless:
2. Has undergone the appropriate counselling from

an accredited counselor in his or her country;
a. Adopter is the parent by nature of the

child;
b. Adopter is the spouse of the parent by
nature of the child to be adopted;
3. If married, his/her spouse must jointly file for

the adoption;
4. Has the capacity to act or assume all rights and

responsibilities of parental authority under his
national laws;
5. Not been convicted of a crime of involving moral

turpitude;

2022 GOLDEN NOTES
Civil Law
6. Eligible to adopt under his national law; Filipina. Can the petition be granted? (2000
BAR)
7. Is in a position to give the necessary moral
values and example to all his children, including A: IT DEPENDS. If Sonny and Sarah have been
the child to be adopted; residing in the Philippines for at least three (3)
years prior to the effectivity of R.A. No. 8552, the
8. Agrees to uphold the basic rights of the child as petition may be granted. Otherwise, the petition
embodied under Philippine laws, the U.N. cannot be granted because the American husband is
Convention on the Rights of the Child, and to not qualified to adopt.
abide by the Rules and regulations issued to
implement this Act; While the petition for adoption was filed in 1990, it
was considered refiled upon the effectivity of R.A.
9. Comes from a country whose government No. 8552. The requisites may be waived if they have
maintains a similarly authorized and accredited been residents of the Philippines 3 years prior to the
agency; effectivity of the Act and continues to reside here
until the decree of adoption is entered. Hence, they
10. The adoption is allowed under his or her their are qualified to adopt the nephew of Sarah under
nation laws; and Sec. 7(b) thereof, and the petition may be granted.
11. Possesses all the qualifications and none of the c. WHO MAY BE ADOPTED
disqualifications under the law or other
applicable Philippine laws. (Sec. 9, Art. 3, R.A. No. Only a legally free child may be adopted provided
8043) the following are submitted:
Necessity of written consent for adoption 1. Child study;

2. Birth certificate or foundling certificate;
The written consent of the following is necessary for 3. Deed of Voluntary Commitment / or Decree of
adoption: Abandonment or Death Certificate of parents;
4. Medical evaluation or history;
1. Written consent to the adoption in the form 5. Psychological evaluation; and
of a sworn statement by the biological and/or 6. Recent photo. (Sec. 8, Art. 3, R.A. No. 8043)
adopted children of the applicants who are
ten (10) years of age or over, to be attached Child
to the application filed with the Family Court
or Inter- Country Adoption Board (Sec. 28, A child is any person below 15 years old. (Sec. 3, R.A.
Art. 8, Amended IRRs of R.A. No. 8043); and No. 8043)
2. If a satisfactory pre-adoptive relationship is
formed between the applicant and the child, Child legally free for adoption
the written consent to the adoption executed
by the DSWD is required. (Sec. 50, Art. 8, 1. A child voluntarily or involuntarily
Amended IRRs of R.A. No. 8043 and R.A. No. committed to the DSWD as a dependent,
8043) abandoned or neglected pursuant to the
provisions of the Child and Youth Welfare
Q: Sometime in 1990, Sarah, born a Filipino but Code maybe subject of Inter-Country
by then a naturalized American citizen, and her Adoption (Sec. 3, Art. 1, R.A. No. 8043); and
American husband Sonny Cruz, filed a petition in 2. A legally-free child is freed of his biological
the Regional Trial Court of Makati, for the parents, guardians, or adopters in case of
adoption of the minor child of her sister, a rescission. (Sec. 20, Art. 6, R.A. No. 8552)

GR: There shall be no physical transfer of a

voluntarily committed child earlier than three (3)
months from the date of execution of Deed of
Voluntary Commitment. (Section VI, par. 5,
Administrative Order No. 12, Series of 2011)
XPNs:
1. Adoption by relative; and
2. Child with special medical condition. (Sec.
7, R.A. 9523)

2022 GOLDEN NOTES
Civil Law
Distinctions between Domestic Adoption Act and Inter-country Adoption Act
DOMESTIC ADOPTION ACT INTER-COUNTRY ADOPTION ACT

R.A. No. 8552 R.A. No. 8043
As to governing body
DSWD (Sec. 3(g)) Inter-country Adoption Board (ICAB) (Sec. 4)
As to when may adoption be resorted to
Adoption only as last resort (Sec. 7); No child shall

be matched to a foreign adoptive family unless it is
Adoption need not be the last resort
satisfactorily shown that the child cannot be
adopted locally. (Sec. 11)
As to who may adopt
1. Any Filipino citizen regardless of where 1. Filipino citizen permanently residing abroad
residing: may file an application for inter-country
adoption of a Filipino child if he/she they:
a. Of legal age;
a. Is at least 27 years of age;
b. At least sixteen 16 years older than the
adoptee, (may be waived when the b. At least 16 years older than the child to
adopter is the biological parent of the be adopted, at the time of application
adoptee, or is the spouse of the adoptee’s unless the adopter is the parent by
parent; nature of the child to be adopted or the
spouse of such parent;
c. In possession of full civil capacity and
legal rights; c. Has the capacity to act and assume all
rights and responsibilities of parental
d. Of good moral character, has not been authority under his national laws, and
convicted of any crime involving moral has undergone the appropriate
turpitude, emotionally and counseling from an accredited counselor
psychologically capable of caring for in his/her their country;
children; and
d. Has not been convicted of a crime
e. Who is in a position to support and care involving moral turpitude;
for his/her their children in keeping
with the means of the family. e. Is in a position to provide the proper
care and support to give the necessary
2. Any alien possessing the same qualifications as moral values and example to all his
above stated for Filipino nationals, Provided; children including the child to be
adopted;
a. That he/she has they have been living in
the Philippine for at least 3 continuous f. If married, his/her their spouse must
years prior to the filing of the application jointly file for the adoption;

for adoption and maintains such

residence until the adoption decree is g. Is eligible to adopt under his/her their
entered; national law;
b. That his/her their country has h. Agrees to uphold the basic rights of the
diplomatic relations with the Republic of child as embodied under Philippine
the Philippines; laws, the U.N. Convention on the Rights
of the Child and to abide by the rules and
c. He/she has They have been certified by regulations issued to implement the
his/her their diplomatic or consular provisions of this Act;
office or any appropriate government
agency that he/she has they have the i. Comes from a country with whom the
legal capacity to adopt in his/her their Philippines has diplomatic relations and
country; whose government maintains a similarly
d. That his/her their government allows j. Authorized and accredited agency and
the adoptee to enter his/her their that adoption is allowed under his/her
country as his/her their adopted their national laws; and
son/daughter child; and
k. Possesses all the qualifications and none
e. That the requirements on residency and of the disqualifications provided herein
certification to adopt in his/her their and in other applicable Philippine laws.
country may be waived for the (Sec. 9)
following:
i. A former Filipino citizen who

seeks to adopt a relative within
the 4th degree of consanguinity or
affinity; or
ii. One who seeks to adopt the

legitimate son/daughter child of
his/her their Filipino spouse; or
iii. One who is married to a Filipino

citizen and seeks to adopt jointly
with his/her their spouse a
relative within the 4th degree of
consanguinity or affinity of the
Filipino spouse.
3. The guardian with respect to the ward

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

2022 GOLDEN NOTES
Civil Law
As to who may be adopted
a. Any person below 18 years of age who has been

administratively or judicially declared
available for adoption;
b. The legitimate son/daughter child of one

spouse by the other spouse;
a. Filipino children (Sec. 3(a));
b. Below 15 years of age (Sec. 3(b)); and
c. An illegitimate son/daughter child by a
c. Who are legally free, meaning children who
qualified adopter to improve his/her their
have been voluntarily or involuntarily
status to that of legitimacy;
committed to the DSWD. (Sec. 3(f) and Sec. 8)
d. A person of legal age if, prior to the adoption,

NOTE: Any child who has been voluntarily or
said person has been consistently considered
involuntarily committed to the Department as
and treated by the adopter(s) as his/her their
dependent, abandoned or neglected pursuant to
own child since minority;
the provisions of the Child and Youth Welfare Code
may be the subject of Inter-Country Adoption. (Sec.
e. A child whose adoption has been previously
26, IRR)
rescinded; or
f. A child whose biological or adoptive parent(s)

has died: Provided, that no proceedings shall be
initiated within 6 months from the time of
death of said parent(s). (Sec. 8)
As to venue for filing the petition
Either with the Philippine RTC having jurisdiction

over the child, or with the Inter-Country Board
through an intermediate agency, in the country of
the adoptive parents. (Sec. 10)
Application shall be filed with the Board or the

Petition for adoption shall be filed with Family
Central Authority or the Foreign Adoption Agency
Court of the province or city where the prospective
in the country where the applicant resides. In case
adoptive parents reside. (Sec. 6, Rule on Adoption)
of foreign nationals who file petition for adoption
under RA R.A. 8552 or Domestic Adoption Law, the
Court after finding petition to be sufficient in form
and substance and proper case for inter-country
adoption shall immediately transmit the petition to
the board for appropriate action. (Sec. 30, IRR)
As to trial custody
Where adoptive parents reside (Sec. 10)

Takes place in the Philippines

As to recission of adoption
No provision limiting act of rescission only to
adoptee. In IRR, the procedure is provided for
when adoption process is terminated:
In the event of serious damage in the relationship

between the child and the applicant/s where the
continued placement of the child is not in his/her
their best interests, the Central Authority and/or
the FAA shall take the necessary measures to
protect the child, in particular, to cause the child to
be withdrawn from the applicant/s and to arrange
for his/her their temporary care. The Central
Authority and/or FAA shall exhaust all means to
remove the cause of the unsatisfactory relationship
which impedes or prevents the creation of a
Only upon petition of adoptee, never by adopters. mutually satisfactory adoptive relationship. A
(Sec.19) complete report should be immediately forwarded
to the Board with actions taken as well as
recommendations and appropriate plans. Based on
the report, the Board may terminate the pre-
adoptive relationship. (Sec. 47, IRR)
In the event of termination of the pre-adoptive

relationship, the Board shall identify from the
Roster of Approved Applicants a suitable family
with whom to place the child. The Central
Authority and/or the FAA may also propose a
replacement family whose application shall be filed
for the approval of the Board. No adoption shall
take place until after the Board has approved the
application of such replacement family (Sec. 48,
IRR)

2022 GOLDEN NOTES
Civil Law
Rules on support of illegitimate children of

I. SUPPORT either spouse
1. It depends upon the property regime of the

spouses.
It comprises everything indispensable for
2.
sustenance, dwelling, clothing, medical attendance,
ACP or CPG for the support of the following:
and transportation, in keeping with the financial
a. spouses;
capacity of the family, including the education of the
b. common children of the spouses; and
person entitled to be supported until he completes
c. legitimate children of either spouse.
his they complete their education or training for
d.
some profession, trade or vocation, even beyond the
NOTE: If the community property or the
age of majority. (Art. 194, FC) (2010 BAR)
conjugal partnership is insufficient to cover
them, the spouses shall be solidarily liable for
Characteristics of support (P-R-I-M-P-E-N)
the unpaid balance with their separate
properties. (Arts. 94 and 121, FC)
1. Personal;
2. Reciprocal on the part of those who are by law
3. Separate property of person, for the support of
bound to support each other;
the following:
3. Intransmissible;
a. Illegitimate children;
4. Mandatory;
b. Legitimate ascendants;
5. Provisional character of support judgment;
c. Descendants, whether legitimate or
6. Exempt from attachment or execution; and
illegitimate; and
7. Not subject to waiver or compensation
d. Brothers and sisters, whether legitimately
or illegitimately related. (Art. 197, FC;
Composition of Support
Rabuya, 2009)
Support comprises everything indispensable for:

1. Sustenance; SUPPORT OF SPOUSES TO OTHERS
2. Dwelling; Property Regime to Insufficiency or
3. Clothing; be liable Absence
4. Medical attendance;
5. Education Legitimate children of both or either spouse
NOTE: includes schooling or training for some and common children
profession, trade or vocation, even beyond the
ACP or CPG is
age of majority; and
ACP or CPG is insufficient, separate
principally liable. (Art. property of both
6. Transportation
94 and 121, FC) spouses are solidarily
NOTE: Includes expenses going to and from
liable. (Art. 197, FC)
school, or to from place of work. (Art. 194, FC)
Illegitimate children of either spouse
Kinds of Support Separate property is
principally liable;
1. Legal – required or given by law; If Separate property of
2. Judicial– required by court; may be: ACP can advance the the spouse is
a. Pendente lite; or support; insufficient, the
b. In a final judgment. spouses can use ACP or
3. Conventional – by agreement. (Paras, 2009) CPG can be liable if the CPG. (Art. 197, FC)
responsibilities in Art.
121 are covered.

(Art. 197, FC in relation negligence, the illegitimate brother or sister

to Arts. 94 and 121, FC)) has no right to be supported. (Art. 196, FC;
Parents and siblings Rabuya, 2009)
Separate property is
Q: Rule when:
principally liable;
a. Two or more persons are obliged to give
There must be a
support; and
ACP or CPG can complete absence of
b. Two or more recipients at the same time
advance support, but separate property on
claim support from the same persons who
only if there is the part of the obligor-
does not have sufficient means to satisfy all
complete absence of spouse. (Art. 197, FC)
claims
separate property.
(Art. 197, FC)
A:
a. The payment of the same shall be divided
Persons obliged to support (2008 BAR)
between them in proportion to the resources
of each. However, in case of urgent need and
1. Spouses;
by special circumstances, the judge may
order only one of them to furnish support
NOTE:
provisionally, without prejudice to their right
a. The spouse must be the legitimate spouse
to claim reimbursement from the other
in order to be entitled to support; and
obligors of their corresponding shares. (Art.
200, FC)
b. The spouse who leaves the conjugal home
or refuses to live therein, without just
b. The order established under Art. 199 of the
cause, shall not have the right to be
Family Code shall be followed, unless the
supported. (Art. 100 and 127, FC)
concurrent obligees should be the spouse
and a child, in which case, the child shall be
2. Legitimate ascendants & descendants;
preferred. (Art. 200, FC)
3. Parents and their legitimate children, and the

Sources of Support
legitimate and illegitimate children of the
latter;
DURING PENDING AFTER
4. Parents and their illegitimate children, and MARRIAGE LITIGATION LITIGATION
the legitimate and illegitimate children of the
Spouses
latter; and
ACP GR: No
NOTE: The alleged father of a child must first GR: From the obligation to
recognize the latter before he or she may be community support
entitled to support. property
assets. XPN: If there
5. Legitimate brothers and sisters whether full is Legal
From the
or half- blood. (Art. 195, FC) XPN: Separation.
community
If Art. 203 In which
property.
NOTE: Brothers and sisters not legitimately applies, that case, the
related, whether full or half-blood, are if the court may
likewise bound to support each other. claimant require the
However, when the need for support of the spouse is the guilty spouse
brother or sister, being of age, is due to a guilty to give
cause imputable to the claimant’s fault or spouse, support.

2022 GOLDEN NOTES
Civil Law
he/she is A: YES. There appears to be no dispute that the

they are not children are indeed the daughters of Federico by
entitled to Belen. Under Art. 199 of the Family Code,
support. “Whenever two or more persons are obliged to give
CPG support, the liability shall devolve upon the
following persons in the following order herein
Support is provided:
considered 1. The spouse;
an advance of 2. The descendants in the nearest degree;
such 3. The ascendants in the nearest degree; and
spouses’ 4. The brothers and sisters.
share.
The obligation to give support rests principally on
NOTE: The those more closely related to the recipient.
rule does not However, the more remote relatives may be held to
apply if the shoulder the responsibility should the claimant
spouses are prove that those who are called upon to provide
under ACP support do not have the means to do so. Here, since
based on Art. it has been shown that the girls' father, Federico,
153. had no means to support them, then Francisco, as
the girls’ grandfather, should then extend the
Children
support needed by them.
From the
From the From the NOTE: The second option in Art. 204 of the Family
separate
community community Code, that of taking in the family dwelling the
properties of
property. property. recipient, is unavailing in this case since the filing of
the spouses.
the case has evidently made the relations among the
parties bitter and unpleasant. (Mangonon v. CA, G.R.
Order of Preference in liability to support No. 125041, 30 June 2006)
The liability to support should be observed in the Q: Marcelo and Juana called Dr. Arturo to their
following order: house to render medical assistance to their
daughter-in- law who was about to give birth to
GR: a child. He performed the necessary operation.
1. Spouse; When Dr. Arturo sought payment, Marcelo and
2. Descendants in the nearest degree; Juana refused to pay him without giving any
3. Ascendants in the nearest degree; and good reason. Who is bound to pay the bill for the
4. Brothers and sisters. (Art. 199, FC) services rendered by Arturo?
XPN: Unless the concurrent obligees should be the A: Her husband, not her father and mother-in-law.
spouse and a child, in which case, the child shall be The rendering of medical assistance in case of
preferred. (Art. 200, FC) illness is comprised among the mutual obligations
to which the spouses are bound by way of mutual
Q: Belen, in behalf of her minor children, support. (Arts. 142 and 143, FC)
instituted a petition for declaration of
legitimacy and support against Federico, their If every obligation consists in giving, doing or not
alleged father, and Francisco, father of Federico. doing something (Art. 1088, NCC), and spouses are
It appears that the marriage of the two was mutually bound to support each other, there can be
annulled due to the minority of Federico. May no question but that, when either of them by reason
Francisco be ordered to give support?

of illness should be in need of medical assistance, the ordering in Article 199. (Sps. Lim v. Lim, G.R. No.
the other is under the unavoidable obligation to 163209, 30 Oct. 2009)
furnish the necessary services of a physician in
order that health may be restored, and he or she Support during marriage litigation
may be freed from the sickness by which life is
jeopardized. (Pelayo v. Lauron, G.R. No. L-4089, 12 During the pendency of the action for annulment or
Jan. 1909) declaration of absolute nullity of marriage and
action for legal separation, the court shall provide
Q: Cheryl married Edward Lim and they begot for the support of the spouses and their common
three children. Cheryl, Edward and their children in the absence of a written agreement
children lived at the house of Edward’s parents, between the spouses. (Art. 49, FC)
Prudencio and Filomena, together with
Edward’s ailing grandmother and her husband. Sources of support shall be the properties of the
Edward was employed with the family business, absolute community or conjugal partnership. (Arts.
which provided him with a monthly salary of 94 & 121, FC)
P6,000 and shouldered the family expenses.
Cheryl had no steady source of income. Cheryl Mutual support of the spouses after the final
caught Edward in “a very compromising judgment granting the petition for legal
situation” with the midwife of Edward’s separation, annulment and declaration of
grandmother. After a violent confrontation with nullity of marriage
Edward, Cheryl left the Forbes Park residence.
She subsequently sued, for herself and her GR: Spouses are no longer obliged to render mutual
children, Edward, Edward’s parents and support after final judgment. The obligation of
grandparents for support. Edward and his mutual support ceases after final judgment.
parents were ordered by the RTC to “jointly”
provide, monthly support to Cheryl and her XPN: In case of legal separation the Court may order
children. Is the court’s judgment in making that the guilty spouse shall give support to the
Edward’s parents concurrently liable with innocent one. (Art. 198, FC)
Edward to provide support to Cheryl and her
children correct? Effect of adultery of the wife
A: YES. However, the Supreme Court modified the GR: Adultery of the wife is a valid defense in an
appealed judgment by limiting liability of Edward’s action for personal support (i.e. support coming
parents to the amount of monthly support needed from the spouse’s own funds). If adultery is proved
by Cheryl’s children. Edward’s parents are liable to and sustained, it will defeat the action for support.
provide support but only to their grandchildren.
XPN: But if both are equally at fault, the principle of
There is no showing that Edward is without means in pari delicto applies in which the husband cannot
to support his son; neither is there any evidence to avail of the defense of adultery. (Reyes v. Ines-
prove that petitioner, as the paternal grandmother, Luciano, G.R. No. L48219, 28 Feb. 1979)
was willing to voluntarily provide for her
grandson's legal support. Cheryl is unable to NOTE: Adultery is not a defense when it is to be
discharge her obligation to provide sufficient legal taken from the conjugal properties or the absolute
support to her children. It also shows that Edward community of properties of the spouses. (Rabuya,
is unable to support his children. This inability of 2006)
Edward and Cheryl to sufficiently provide for their
children shifts a portion of their obligation to the Q: H and W are living separately. Both had been
ascendants in the nearest degree, both in the unfaithful to each other. After their separation,
paternal (petitioners) and maternal lines, following H had been giving money to W for her support.

2022 GOLDEN NOTES
Civil Law
Subsequently, W brought an action against H for NOTE: Of course, if the person supporting dies, the
separate maintenance. Will the action prosper? obligation ceases. (Falcon v. Arca, G.R. No. L-18135,
31 July 1963)
A: YES. The principle of in pari delicto is applicable.
Both are at fault. Consequently, H cannot avail of Manner of Payment
himself of the defense of adultery of W. Besides, the
act of H in giving money to W is implied condonation Payment shall be made within first five days of each
of the adultery of W. (Amacen v. Baltazar, G.R. No. L- corresponding month. In case of death of the
10028, 28 May 1958) recipient, his heirs shall not be obliged to return
what he has they have received in advance for such
Amount of Support support. (Art. 203, FC)
Amount shall be in proportion to the resources or Payment by Stranger

means of the giver and to the necessities of the
recipient. (Art. 201, FC) In order that there can be recovery on the part of the
stranger, the following requisites must be present:
Support may be decreased or increased
proportionately according to the reduction or 1. The support of a dependent has been
increase of the necessities of the recipient and the furnished by a stranger;
resources of the person obliged to furnish the same. 2. The support was given without the
(Art. 202, FC) knowledge of the person obliged to give
support; and
When Support is Demandable 3. The support must not have been given
without the intention of being reimbursed
The obligation to give support is demandable from (Art. 206, FC)
the time the person who has a right to receive
support needs it for maintenance. NOTE: The term “stranger” refers to one who does
not have any obligation to give support to the
The support shall be paid only from the date of person who received it. The giver must not be one
judicial or extrajudicial demand. (Art. 203, FC) of those enumerated in Articles 195 and 196 of the
Family Code. (Rabuya, 2006)
NOTE: The right to support does not arise from
mere fact of relationship but from imperative Payment by Third Person under Article 207
necessity without which it cannot be demanded.
The law presumes that such necessity does not exist The obligation to reimburse under this article is one
unless support is demanded. (Jocson v. Empire that likewise arises from quasi-contract. As
Insurance Company, G.R. No. L-10792, 10 Apr. 1958) distinguished from Articles 206 of the Family Code
and 2164 of the Civil Code, “the obligor unjustly
Effect of Reaching Age of Majority refuses or fails to give support.” The law creates a
promise of reimbursement on the part of the person
If a person is of age and no longer studies, they are obliged to furnish support, inspite of the deliberate
still entitled to support unless there are just reasons disregard of his legal and moral duty. (Rabuya,
for the extinguishment of the right. (Javier v. Lucero, 2006)
94 Phil. 634, GR No. L-6706, 29 Mar. 1953) If, upon
the other hand, he has not yet finished his studies Options given to persons giving support
even if already of age, he is still entitled generally to
be supported. 1. To give a fixed allowance; or
2. To receive and maintain the recipient in the
giver’s home or family dwelling. (Art. 204, FC)

NOTE: In cases when there is a moral or legal However, if the lower court’s void decision is not
obstacle, the latter alternative in giving support assailed on appeal which dealt only with the matter
cannot be availed of. (ibid.) of support, the losing party is now estopped from
questioning the declaration of nullity and the SC will
If support is given by a stranger without the not undo the judgment of the RTC declaring the
knowledge of the person obliged to give marriage null and void for being bigamous.
support;
It is axiomatic that while a jurisdictional question
GR: The stranger shall have the right of may be raised at any time, this however admits of an
reimbursement. exception where estoppel has supervened. (Lam v.
Chua, G.R. No. 131286, 18 Mar. 2004)
XPN: Unless it appears that he gave it without any
intention of being reimbursed. (Art. 206, FC) Q: Edward abandoned his legitimate children
when they were minors. After 19 years from the
NOTE: If the person obliged to give support unjustly time Edward left them, they, through their
refuses or fails to give it when urgently needed, any mother, finally sued him for support, which the
third person may furnish support to the needy court granted. The court ordered him to pay 2M
individual, with a right of reimbursement. (Art. 207, pesos as support in arrears.
FC)
Edward assails the grant of the support in
Attachment or execution of the right to receive arrears as erroneous since under Art. 203 of the
support FC, there was never any demand for support,
judicial or extrajudicial extra-judicial, from
GR: The right to receive support and any money or them. Is his contention correct?
property obtained as support cannot be attached
nor be subject to execution to satisfy any judgment A: NO. Edward could not possibly expect his
against the recipient. (Art. 205, FC) daughters to demand support from him considering
their tender years at the time that he abandoned
XPN: In case of contractual support or support given them. In any event, the mother of the girls had made
by will, the excess in amount beyond that required the requisite demand for material support although
for legal support shall be subject to levy on this was not in the standard form of a formal written
attachment or execution. (Art. 208, FC) demand. Asking one to give support owing to the
urgency of the situation is no less a demand just
NOTE: Contractual support shall be subject to because it came by way of a request or appeal.
adjustment whenever modification is necessary due (Lacson v. Lacson, G.R. No. 150644, 28 Aug. 2006)
to changes in circumstances beyond the
contemplation of the parties. (Paras, 2008) Q: Noel helped Lea by extending financial help to
support Lea’s children with Edward. May Noel
Q: Jurisdictional questions may be raised at any seek reimbursement of his contributions? If yes,
time. What is the exception with respect to the from whom may he do so?
provisional character of judgment for support
and the application of estoppel? A: YES. Pursuant to Art. 207 of the Family Code, Noel
can rightfully exact reimbursement from Edward.
A: Judgment for support is always provisional in This provision reads that “When the person obliged
character. Res Judicata does not apply. The lower to support another unjustly refuses or fails to give
court cannot grant a petition based on grounds, support when urgently needed by the latter, any
such as bigamy, not alleged in the petition. Such third person may furnish support to the needy
decision based on grounds not alleged in the individual, with right of reimbursement from the
petition is void on the ground of no jurisdiction. person obliged to give support.” The resulting

2022 GOLDEN NOTES
Civil Law
juridical relationship between the Edward and Noel self-incrimination rights of a person. (Agustin v. CA,
is a quasi-contract, an equitable principle enjoining G.R. No. 162571, 15 June 2005)
one from unjustly enriching himself at the expense
of another. (Lacson v. Lacson, et al., G.R. No. 150644,
28 Aug. 2006)
Q: Fe and her son Martin sued Martin’s alleged

biological father Arnel for support. Arnel denied
having sired Martin, arguing that his affair and
intimacy with Fe had allegedly ended in long
before Martin’s conception. As a result, Fe and
Martin moved for the issuance of an order
directing all the parties to submit themselves to
DNA paternity testing. The said motion was
granted by the court. Did the order of the court
convert the complaint for support to a petition
for recognition?
A: The assailed order did not convert the action for

support into one for recognition but merely allowed
Fe to prove their cause of action. But even if the
order effectively integrated an action to compel
recognition with an action for support, such was
valid and in accordance with jurisprudence. A
separate action will only result in a multiplicity of
suits. Furthermore, the declaration of filiation is
entirely appropriate to the action for support.
(Agustin v. CA, G.R. No. 162571, 15 June 2005)
Q: Can DNA testing be ordered in a proceeding

for support without violating the constitutional
right against self-incrimination?
A: YES. Compulsory DNA testing and the

admissibility of the results thereof as evidence are
constitutional. (People v. Yatar, G.R. No. 150224, 19
May 2004 May 19, 2004)
Moreover, it has mostly been in the areas of legality

of searches and seizure and in the infringement of
privacy of communication where the constitutional
right to privacy has been critically at issue.
If, in a criminal case, an accused whose very life is at

stake can be compelled to submit to DNA testing, so
much more so may a party in a civil case, who does
not face such dire consequences, be likewise
compelled. DNA testing and its results is now
acceptable as object evidence without running afoul

1. The father is certain;

J. PARENTAL AUTHORITY 2. The illegitimate children are living with the said
father and mother, who are cohabiting without
the benefit of marriage or under a void
marriage not falling under Art. 36 and 53. (Sta.
Parental Authority is defined as the mass of rights
Maria, 2017)
and obligations which parents have in relation to
the person and property of their children until their
Parental authority and responsibility are
emancipation and even after this under certain
inalienable and may not be transferred or
circumstances. (Rabuya, 2009)
renounced except in cases authorized by law. The
right attached to parental authority, being purely
Parental authority includes
personal, the law allows a waiver of parental
authority only in cases of adoption, guardianship,
1. Caring for and rearing of such children for
and surrender to a children's home or an orphan
civic consciousness and efficiency; and
institution. (Arts. 222-224, FC; Act No. 3094)
2. Development of their moral, mental and

Visitation rights
physical character and well-being. (Art. 209,
FC)
It is the right of access of a noncustodial parent to
his or her their child or children. (Sec. 5, A.M. No. 02-
Characteristics of parental authority
11-12-SC)
1. Jointly exercised by the father and mother;

Who are entitled of visitation rights
2. Natural right and duty of the parents;
1. The non-custodial parent in cases of:

GR: Cannot be renounced, transferred, or
a. Legal separation;
waived.
b. Separation de facto;
c. Annulment; and
XPN: In cases authorized by law such as in
d. Declaration of nullity on the ground of
cases of adoption, guardianship, and
psychological incapacity or failure to
surrender to a children's home or an
comply with the requirements of Article 52;
orphan institution. (Santos v. CA, G.R. No.
2. Illegitimate father over his illegitimate child.
113054, 16 Mar. 1995)
NOTE: In case of annulment or declaration of

3. Purely personal; and
absolute nullity of marriage, Article 49 of the Family
4. Temporary. (Rabuya, 2009)
Code grants visitation rights to a parent who is
deprived of custody of his children. Such visitation
Exercise of parental authority
rights flow from the natural right of both parent and
child to each other’s company. There being no such
The father and the mother shall jointly exercise
parent-child relationship between them, a person
parental authority over the persons of their
has no legally demandable right of visitation.
common children. In case of disagreement, the
(Concepcion v. CA, G.R. No. 123450, 31 Aug. 2005)
father’s decision shall prevail unless there is a
judicial order to the contrary. (Art. 211, FC)
Q: Carlitos Silva and Suzanne Gonzales had a
live-in relationship. They had two children,
If the child is illegitimate, parental authority is with
namely, Ramon Carlos and Rica Natalia. Silva
the mother. (Art. 176, FC)
and Gonzales eventually separated. They had an
understanding that Silva would have the
NOTE: Joint parental authority may be exercised
children in his company on weekends. Silva
over an illegitimate child when:

2022 GOLDEN NOTES
Civil Law
claimed that Gonzales broke that understanding terms the separation of a mother and her child
on visitation rights. Hence, Silva filed a petition below seven (7) years, unless such separation is
for custodial rights over the children before the grounded upon compelling reasons as determined
RTC. The petition was opposed by Gonzales who by a court. (Lacson v. San Jose-Lacson, G.R. No. L-
claimed that Silva often engaged in gambling 23482, 30 Aug. 1968)
and womanizing which she feared could affect
the moral and social values of the children. In NOTE: The general rule that children less than 7
the meantime, Suzanne had gotten married to a years of age shall not be separated from the mother
Dutch national. She eventually immigrated to finds its raison d'etre in the basic need of minor
Holland with her children Ramon Carlos and children for their mother's loving care. This is
Rica Natalia. Can Silva be denied visitation predicated on the "best interest of the child"
rights? principle which pervades not only child custody
cases but also those involving adoption,
A: guardianship, support, personal status and minors
GR: NO. During the pendency of the action and in in conflict with the law. (Pablo-Gualberto v.
the absence of adequate provisions in a written Gualberto, G.R. No. 154994/G.R. No. 156254, 28 June
agreement between the spouses, the Court shall 2005)
provide for the support of the spouses and the
custody and support of their common children. The This also avoids the tragedy where a mother has
Court shall give paramount consideration to the seen her baby torn away from her. No man can
moral and material welfare of said children and sound the deep sorrows of a mother who is
their choice of the parent with whom they wish to deprived of her child of tender age. (Dacasin v.
remain as provided to in Title IX. It shall also Dacasin, G.R. No. 168785, 05 Feb. 2010)
provide for appropriate visitation rights of the other
parent. (Art. 49, FC) Compelling Reasons
XPN: If the fears and apprehensions were founded The so-called “tender-age presumption” under
as to the father’s corrupting influence over the Article 213 of the Family Code may be overcome
children and if it is proven therefore that indeed the only by compelling evidence of the mother’s
father is a negative influence because of reasons like unfitness. The mother has been declared unsuitable
immorality, drunkenness, etc. on the children, the to have custody of her children in one or more of the
court, taking into consideration the best interest of following instances:
the children, can deny his petition for the exercise of 1. Insanity
his visitation rights. (Silva v. CA, G.R. No. 114742, 17 2. Abandonment
July 1997) 3. Neglect
4. Drug addiction
Tender-Age Presumption 5. Affliction with a communicable disease
6. Maltreatment of the child Immorality
No child under seven (7) years of age shall be 7. Unemployment
separated from the mother, unless the court finds 8. Habitual drunkenness (Perez v. CA, G.R. No.
compelling reasons to order otherwise. (Art. 213(2), 118870, 29 Mar. 1996)
FC) (2006 BAR)
NOTE: The SC ruled that sexual preference or moral
The paramount consideration in matters of custody laxity alone does not prove parental neglect or
of a child is the welfare and well-being of the child. incompetence; to deprive the wife of custody of her
(Espiritu v. CA, G.R. No. 115640, 15 Mar. 1995) minor child, her moral lapses must have an adverse
effect on the welfare of the child or it must have
The use of the word “shall” in Art. 213 of the FC is distracted the offending spouse from exercising
mandatory in character. It prohibits in no uncertain

proper parental care. (Pablo-Gualberto v. Gualberto, contravening Article 2035 (5) of the Civil Code.
G.R. No. 154994 & 156254, 28 June 2005) Is the RTC correct?
Exercise of parental authority in case of absence, A: YES. The contract is not only void ab initio for
death, remarriage of either parent, or legal or de being contrary to law, but it has also been
facto separation of parents repudiated by the mother when she refused to allow
joint custody by the father. The agreement would be
1. Absence or death of either parent – parent valid if the spouses have not divorced or separated
present shall continue exercising parental because the law provides for joint parental
authority. (Art. 212, FC) authority when spouses live together. However,
upon separation of the spouses, the mother takes
2. Remarriage of either parent – it shall not sole custody under the law if the child is below 7
affect the parental authority over the children, years old and any agreement to the contrary is void.
unless the court appoints another person to be Thus, the law suspends the joint custody regime for
the guardian of the person or property of the (1) children under seven of (2) separated or
children. (Art. 213, FC) divorced spouses. Simply put, for a child within this
age bracket (and for commonsensical reasons), the
NOTE: Parental authority is not automatically law decides for the separated or divorced parents
given to the new spouse over the child of the how best to take care of the child and that is to give
surviving parent, unless such new spouse custody to the separated mother. Indeed, the
legally adopts the children. separated parents cannot contract away the
provision in the Family Code on the maternal
3. Legal or de facto separation of parents – the custody of children below 7 years. The Philippine
parent designated by the court. (Art. 213, FC) courts do not have the authority to enforce an
agreement that is contrary to law, morals, good
Considerations in the designation of child customs, public order, or public policy. (Dacasin v.
custody Dacasin, G.R. No. 168785, 05 Feb. 2010)
The Court shall take into account all relevant Q: If the parents are separated de facto, who
considerations in the designation of the parent, between them has custody over their child/
especially the choice of the child over 7 years of age children?
except when the parent chosen is unfit. (Art. 213,
FC) A: In the absence of a judicial grant of custody to one
parent, both of them have custody over their
Q: Herald, an American citizen, and Sharon, child/children. (Art. 211, FC)
Filipino, got married in Manila in 1994. Their
union was blessed with one daughter, Stephanie The parent who has been deprived of the rightful
who was born in 1995. In 1999, Sharon sought custody of the child may resort to the remedy of
and obtained a divorce decree against Herald habeas corpus. (Salientes v. Abanilla, G.R. No. 162734,
from Illinois. The Illinois court dissolved the 29 Aug. 2006)
parties’ marriage and awarded to Sharon the
sole custody of Stephanie. In 2002, Herald and Q: Queenie was born to Renalyn and Ricky
Sharon executed in Manila a contract for the James, who had been living together with
joint custody of Stephanie. In 2004, Herald sued Renalyn's parents without the benefit of
Sharon alleging that she violated their contract marriage. Three (3) years later, the relationship
as she retained sole custody over Stephanie. The ended. Renalyn went to Manila, supposedly
RTC dismissed Herald’s complaint and ruled leaving Queenie behind in the care and custody
that the parties’ contract is void for of her father, Ricky James. Ricky James alleged
that, the parents of Renalyn took Queenie from

2022 GOLDEN NOTES
Civil Law
the school where he had enrolled her. When Parental Preference Rule
asked to give Queenie back, Renalyn's parents
refused. Consequently, Ricky James filed a There is a recognition of the deep ties that bind
petition for habeas corpus and child custody parent and child. Parents are thus placed first in
before the RTC (petition a quo). Upon reaching rank in matters of parental authority.
the CA it remanded the case a quo for
determination of who should exercise custody The father or mother, if suitable, is entitled to
over Queenie. Was such action proper? exercise parental authority over his or her children.
As a consequence of which, the father or the mother,
A: NO, CA erroneously applied Sec. 6 of Rule 99 of if suitable, is entitled to the custody of the child
Rules of Court. This provision contemplates a against all persons, even against the grandparents.
situation in which the parents of the minor are (Rabuya, 2009)
married to each other but are separated either by
virtue of a decree of legal separation or because they Order of preference for substitute parental
are living separately de facto. In the present case, it authority
has been established that petitioner and
Respondent Loreta were never married. Hence, that 1. Surviving Grandparent (Art. 214, FC);
portion of the CA Decision allowing the child to
choose which parent to live with is deleted, but NOTE: The law considers the natural love of a
without disregarding the obligation of petitioner to parent to outweigh that of the grandparents,
support the child. such that only when the parent present is
shown to be unfit or unsuitable may the
General rule is that the father and the mother shall grandparents exercise substitute parental
jointly exercise parental authority over the persons authority. (Santos v. CA, G.R. No. 113054, 16 Mar.
of their common children. However, insofar as 1995)
illegitimate children are concerned, Article 176 of
the Family Code states that illegitimate children 2. Oldest brother or sister, over 21 years unless
shall be under the parental authority of their unfit or disqualified;
mother. Accordingly, mothers (such as Renalyn) are
entitled to the sole parental authority of their 3. Actual Custodian over 21 years unless unfit or
illegitimate children (such as Queenie), disqualified (Art. 216, FC); and
notwithstanding the father's recognition of the
child. In the exercise of that authority, mothers are 4. In case of foundlings, abandoned, neglected, or
consequently entitled to keep their illegitimate abused children similarly situated, parental
children in their company, and the Court will not authority shall be entrusted in summary
deprive them of custody, absent any imperative judicial proceedings to heads of children’s
cause showing the mother's unfitness to exercise homes, orphanages, and similar institutions
such authority and care. (Masbate vs. Relucio, G.R. duly accredited by the proper government
No. 235498, 30 July 2018) agency. (Art. 217, FC)
Substitute Parental Authority (2004 BAR) NOTE:

a. Foundlings – newborn child children
It is the parental authority which the persons abandoned by its their parents who are
designated by law may exercise over the persons unknown.
and property of unemancipated children in case of b. Abandoned – a child children who has have
death, absence or unsuitability of both parents, or in no proper parental care or guardianship.
default of a judicially appointed guardian. c. Neglected – a child children whose basic
needs have been deliberately or
inadequately unattended. (Rabuya, 2009)

Q: Bonifacia Vancil, a US citizen, is the mother of special relation to children under their supervision
Reeder C. Vancil, a US Navy serviceman who died instruction or custody. It is denominated as
in the USA on December 22, 1986. During his “special” because it is limited and is present only
lifetime, Reeder had two children named Valerie when the child is under their supervision
and Vincent by his common-law wife, Helen G. instruction or custody. It can also co- exist with the
Belmes. Bonifacia obtained a favorable court parents’ parental authority. (Rabuya, 2009)
decision appointing her as legal and judicial
guardian over the persons and estate of Valerie Persons who may exercise special parental
Vancil and Vincent Vancil, Jr. She alleged that authority (Art. 218, FC)
Helen was morally unfit as guardian of Valerie
considering that Helen’s live-in partner raped 1. The school;
Valerie several times. Can Bonifacia exercise 2. School administrators;
substitute parental authority over Valerie and 3. School teachers; and
Vincent? 4. Individual, entity or institution engaged in child
care.
A: NO. Bonifacia, as the surviving grandparent, can
exercise substitute parental authority only in case of Scope of special parental authority
death, absence or unsuitability of Helen.
Considering that Helen is very much alive and has The scope of special parental authority and
exercised continuously parental authority over responsibility applies to all authorized activities,
Vincent, Bonifacia has to prove, in asserting her whether inside or outside the premises of the
right to be the minor’s guardian, Helen’s school, entity, or institution. (Rabuya, 2009)
unsuitability. Bonifacia, however, has not proffered
convincing evidence showing that Helen is not NOTE: The nature of the liability of persons having
suited to be the guardian of Vincent. Bonifacia special parental authority over said minors for their
merely insists that Helen is morally unfit as acts or omissions causing damage to another is
guardian of Valerie considering that her live- in principal and solidary. The parents, judicial
partner raped Valerie several times. (But Valerie, guardians or the persons exercising substitute
being now of major age, is no longer a subject of this parental authority over said minor shall be
guardianship proceeding). subsidiarily liable. (Art, 219, FC) (2003, 2010 BAR)
Even assuming that Helen is unfit as guardian of Substitute parental authority vis-à-vis Special
minor Vincent, still Bonifacia cannot qualify as a parental authority
substitute guardian. She is an American citizen and
a resident of Colorado. Obviously, she will not be
SUBSTITUTE SPECIAL
able to perform the responsibilities and obligations
PARENTAL PARENTAL
required of a guardian. In fact, in her petition,
AUTHORITY AUTHORITY
Bonifacia admitted the difficulty of discharging the
duties of a guardian by an expatriate, like her. To be Exercised
sure, she will merely delegate those duties to concurrently with
someone else who may not also qualify as a Exercised in case of:
the parental
guardian. (Vancil v. Belmes, G.R. No. 132223, 19 June (D-A-U)
authority of the
2001) parents;
1. Death
Special Parental Authority (2003, 2004, 2005, 2. Absence, or
It rests on the theory
2010 BAR) 3. Unsuitability of
that while the child is
parents. (Art. 214,
in the custody of the
It is the parental authority granted by law to certain FC)
person exercising
persons, entities, or institutions in view of their special parental

2022 GOLDEN NOTES
Civil Law
authority, the Parents’ right to custody of the child

parents temporarily
relinquish parental GR: Parents are never deprived of the custody and
authority over the care of their children.
child to the latter.
(Rabuya, 2009) XPNS:
1. For cause;
Effects of Parental Authority upon the Person of NOTE: The law presumes that the child’s
the Children welfare will be best served in the care and
control of his parents.
Parental rights mean the sum total of the rights of 2. If in consideration of the child’s welfare or well-
the parents to the child, as well as the rights of the being, custody may be given even to a non-
child in and to the parent or parent. Under the relative. (Rabuya, 2009)
modern concept, however, the concept of parental
rights is merely ancillary to the performance of Basis for the duty to provide support
parental duties. In other words, the obligational
aspect is now supreme. (Rabuya, 2009) Family ties or relationship, not parental authority.
The following are parental rights protected to NOTE: The obligation of the parents to provide
varying degrees by constitution and statutes: support is not coterminous with the exercise of
parental authority. (Rabuya, 2009)
a. Physical possession of child (custody)
NOTE: In case of custodial parent, includes Rule on the parent’s duty of representation
day-to-day care and companionship of
child; GR: Parents are duty-bound to represent their
b. Right to discipline child minor children in all matters affecting their
NOTE: Includes right to inculcate in child interests (Art. 220(5), FC).
parent’s moral and ethical standards; right
to control and manage minor child’s NOTE: This duty extends to representation in court
earnings; litigations. (Sec. 5, Rule 5, ROC)
c. Right to control and manage minor child’s
property; XPN: A guardian ad litem may be appointed by the
d. Right to be supported by adult child; court to represent the child when the best interest
e. Right to have child bear parent’s name; and of the child so requires. (Art. 222, FC)
f. Right to prevent adoption of child without
parents’ consent. (Rabuya, 2009) Scope of the parent’s right to discipline the child
(Art. 223, FC)
Right to Child’s Custody
Persons exercising parental authority may:
The right of parents to the custody of their minor 1. Impose discipline on minor children as may be
children is one of the natural rights incidental to required under the circumstances; or
parenthood, a right supported by law and sound
public policy. The right is an inherent one, which is 2. Petition the court for the imposition of
not created by the state or decisions of the courts appropriate disciplinary measures upon the
but derives from the nature of the parental child, which include the commitment of the
relationship. (Sagala-Eslao v. CA, G.R. No. 116773, 16 child in entities or institutions engaged in
Jan. 1997) childcare or in children’s homes duly accredited
by the proper government agency.

NOTE: Such commitment must not exceed 30 NOTE: Parents, judicial guardians or those
days. exercising substitute parental authority over the
minor are subsidiarily liable for said acts and
Limitations on the exercise of the right to omissions of the minor. (ibid.)
discipline the child and its consequences
Q: Jayson and his classmates were conducting a
Persons exercising such right are not allowed to: science experiment about fusion of Sulphur
1. Treat the child with excessive harshness or powder and iron fillings under the tutelage of
cruelty; or Tabugo, the subject teacher and employee of St.
2. Inflict corporal punishment. Joseph College. Tabugo left her class while the
experiment was ongoing without having
Otherwise, the following are its consequences: adequately secured the students from any
1. Parental authority may be suspended; untoward incident or occurrence. In the middle
2. Parent concerned may be held criminally of the experiment, Jayson checked the result of
liable for violation of R.A. No. 7160 also the experiment by looking into the test tube
known as Special Protection of Children with magnifying glass and it was moved towards
against Abuse, Exploitation and his eyes. At that instance, the compound spurted
Discrimination Act. from the test tube and several particles hit
Jayson’s eyes. His left eye was chemically
Liability of parents for Crimes Committed by burned, for which he had to undergo surgery
their Minor Children and spend for medication. Jayson filed a
complaint for damages against the school and
Parents are also civilly liable for the felonies Tabugo. Can the said school and its teacher,
committed by their minor children under Article Tabugo, be held liable for the unfortunate
101 of the RPC. (Rabuya, 2009) incident of Jayson?
NOTE: The provision of the RPC do not cover A: YES. The proximate cause of the student’s injury
situations where the issue of the civil liability of was the concurrent failure of petitioners to prevent
parents is based on crimes committed by their the foreseeable mishap that occurred during the
minor children over 9 but under 15 years of age, conduct of the science experiment. Petitioners were
who acted with discernment, and also of minors 15 negligent by failing to exercise the higher degree of
years of age. This shall be resolved under Art. 2180 care, caution and foresight incumbent upon the
of the NCC. (Salen v. Balce, G.R. No. L-14414, 27 Apr. school, its administrators, and teachers. Art. 218 of
1960) the Family Code, in relation to Art. 2180 of the New
Civil Code, bestows special parental authority on a
Liability of persons exercising Special Parental school, its administrators and teachers, or the
Authority over the child individual, entity or institution engaged in
childcare, and these persons have responsibility
GR: They are principally and solidarily liable for over the minor child while under their supervision,
damages caused by the acts or omissions of the child instruction or custody. Authority and responsibility
while under their supervision, instruction, or shall apply to all authorized activities whether
custody. inside or outside the premises of the school, entity,
or institution.
XPN: Unless they exercised the proper diligence
required under the particular circumstance. This In this case, the petitioners’ negligence and failure
may extinguish the liability with the minor. (Art. to exercise the requisite degree of care and caution
219, FC) was demonstrated by the following:
(i) petitioner school did not take affirmative
steps to avert damage and injury to its

2022 GOLDEN NOTES
Civil Law
students although it had full information on family;

the nature of dangerous science 4. Administered by
experiments conducted by the students the parents.
during class;
(ii) petitioner school did not install safety Necessity of posting a bond by the parents
measures to protect the students who
conduct experiments in class; A parent is required to post a bond if the market
(iii) petitioner school did not provide protective value of the property or the annual income of the
gears and devices, specifically goggles, to child exceeds P50,000.
shield students from expected risks and
dangers; and NOTE: The bond shall not be less than 10% of the
(iv) petitioner Tabugo (the teacher) was not value of the property or annual income. (Art. 225,
inside the classroom the whole time her FC)
class conducted the experiment,
specifically, when the accident involving Rules regarding the use of the child’s property
the student occurred. (St. Joseph’s College v. (Art. 226, FC)
Miranda, G.R. No. 182353, 29 June 2010)
1. The property of minor children shall be devoted
Effects of Parental Authority upon the Property to their support and education unless the title
of the children or transfer provides otherwise.
2. The parents have the right to use only the fruits
Legal guardianship can be exercised by the father or and income of said property for the following
mother, jointly, without need of court appointment purposes:
over the property of an emancipated child. a. Primarily, to the child’s support;
b. Secondarily, to the collective daily
NOTE: In case of disagreement, the father’s decision needs of the family.
shall prevail unless there is a judicial order to the
contrary. (Art. 229, FC) NOTE: Income of the child may be used to help pay
the daily collective needs of the family when the
Kinds of properties of a minor former’s property or income is more than sufficient
to maintain his or her needs.
ADVENTITIOUS PROSFECTITIOUS
Art. 226, FC Art. 227, FC Rule on lease of property belonging to minor
1. Earned or children
acquired by the
child through his 1. Property given GR: The parents, as legal guardians of the minor’s
work or industry by the parents property, may validly lease the same, even without
by onerous or to the child for court authorization, because lease has been
gratuitous title; the latter to considered as an act of administration.
2. Owned by the administer;
child; 2. Owned by the XPNs: Court authorization is required if:
3. Child is also the parents; 1. If the lease will be recorded in the Registry
usufructuary, 3. Parents are of Property;
but the child’s usufructuary; 2. If the lease is for a period of more than one
use of the 4. Property year, because this is already deemed an act
property shall be administered of dominion. (Art. 1647, NCC)
secondary to all by the child.
collective daily
needs of the

Grounds for Termination of Parental Authority If the ground for suspension of parental authority is
civil interdiction, the suspension is automatic so as
1. Permanently; its reinstatement. (Art. 230, FC)
a. Death of parents; Revocation of suspension of Parental Authority

b. Emancipation of the child; and its revival
NOTE: Child is emancipated upon reaching The suspension may be revoked, and parental
the age of majority. authority revived by filing a case for the purpose, or
in the same proceeding if the court finds that the
c. Death of child. (Art. 228, FC) cause therefore had ceased and will not be repeated.
2. Temporarily – it may be revived Transfer or renunciation of Parental Authority
a. Adoption of the child; GR: Parental authority and responsibility are

b. Appointment of general guardian; Inalienable and may not be transferred and
c. Judicial declaration of abandonment of the renounced.
child in a case filed for the purpose;
d. Final judgment divesting parents of XPN: In cases authorized by law.
parental authority;
e. Incapacity of parent exercising parental Loss of parental authority over the minor under
authority; the Child Abuse Law
f. Judicial declaration of absence or
incapacity of person exercising parental When an ascendant, stepparent or guardian of the
authority. (Art. 229, FC) minor, induces, delivers or offers him to any person
who would keep or have in his company such minor,
NOTE: In case of temporary termination of parental twelve (12) years or under or who in ten (10) years
authority, parental authority may be revived or more his junior, in any public or private place,
through a court judgment. (Rabuya, 2009) hotel, motel, beer joint, discotheque, cabaret,
pension house, sauna or massage parlor, beach
Grounds for Suspension of Parental Authority and/or other tourist resort or similar places.
1. Gives corrupting orders, counsel, or Corporal punishment

example;
2. Treats child with excessive harshness and It is the infliction of physical disciplinary measures
cruelty; to a student. This is absolutely prohibited under the
3. Subjects the child or allows him to be Family Code. (Sta. Maria, 2010)
subjected to acts of lasciviousness;
4. Compels the child to beg; NOTE: While a teacher is administratively liable or
5. Culpable negligence of parent or person civilly liable in the event that he or she inflicts
exercising parental authority (Art. 231, FC); corporal punishment to a student, it has been held
6. Conviction of crime with penalty of civil that where there was no criminal intent on the part
interdiction; (Art. 230, FC) of the teacher who angrily and repeatedly whipped
a student resulting in slight physical injuries to the
NOTE: If the person exercising Parental Authority said student and where the purpose of the teacher
has subjected the child or allowed him to be was to discipline a student, the said teacher cannot
subjected to sexual abuse, he/she shall be be held feloniously liable for the criminal offense of
permanently deprived of parental authority. (Art. slight physical injuries. (Bagajo v. Marave, G.R. No. L-
232, FC) 33345, 20 Nov. 1978)

2022 GOLDEN NOTES
Civil Law
K. EMANCIPATION L. RETROACTIVITY OF FAMILY CODE

Art. 256, FC
Emancipation
GR: The Code shall have retroactive effect.
It is the release of a person from parental authority
whereby he becomes capacitated for civil life. XPN: When retroactivity would prejudice vested
rights. (2005, 2010 BAR)
Emancipation takes place by attainment of majority
at the age of (18) eighteen years. (Art. 234, FC, as Vested right
amended by R.A. No. 6809) (2010 BAR)
Some right or interest in property that has become
Effects of emancipation fixed or established and is no longer open to doubt
1. Parental authority over the person and or controversy. Rights are vested when the right to
property of the child is terminated. enjoyment, present or prospective, has become the
property of some person as present interest.
2. Child shall be qualified and responsible for (Balboa v. Farrales, G.R. No. L-28059, 14 Feb. 1928)
all acts of civil life, save exceptions
established by existing Q: Antonia Aruego and her sister Evelyn filed a
petition in the courts seeking Jose Aruego, Jr.
Rights and obligations retained by the parents and his five children to recognize them as
even after the termination of parental authority illegitimate children and compulsory heirs of
Jose. They claim that there is open and
1. Contracting marriage shall require parental continuous possession of status of illegitimate
consent until the age of 21. children of Jose who had an amorous
2. The responsibility of parents or guardians relationship with their mother Luz Fabian until
for children and wards below 21 under Art. the time of the death of Jose. The court declared
2180(2) and (3) of the NCC shall not be that Antonia Aruego is an illegitimate daughter
derogated. of the deceased with Luz Fabian while Evelyn is
3. The parents are still liable for the quasi- not. Antonia and Evelyn contested the decision
delict committed by said child if the latter is citing provisions of the Family Code particularly
below 21. (Rabuya, 2009) Art. 127 on Filiation, Art. 172 on illegitimate
children’s filiation, and Art. 256 on the
retroactivity of the code. Whether the
provisions of the Family Code can be applied
retroactively, and will it impair the vested rights
of the respondents?
A: The action for compulsory recognition and

enforcement of successional rights which was filed
prior to the advent of the Family Code, must be
governed by Art. 285 of the NCC and not by Art.
175(2) of the FC. The present law cannot be given
retroactive effect insofar as the instant case is
concerned, as its application will prejudice the
vested right of private respondent to have her case
decided under Art. 285 of the NCC. The right was
vested to her by the fact that she filed her action

under the regime of the NCC. Presiding from this,

the conclusion then ought to be that the action was
not yet barred, notwithstanding the fact that it was
brought when the putative father was already
deceased, since private respondent was then still a
minor when it was filed, an exception to the general
rule provided under Art. 285 of the NCC. Hence, the
trial court, which acquired jurisdiction over the case
by the filing of the complaint, never lost jurisdiction
over the same despite the passage of E.O. No. 209,
also known as the Family Code of the Philippines.
(Aruego v. CA, G.R. No. 112193, 13 Mar. 1996)
NOTE: If an action for recognition was filed prior to

the effectivity of the Art. 173, FC cannot be given
retroactive effect because it will prejudice the
vested rights of petitioners transmitted to them at
the time of the death of their father, Eutiquio
Marquino. "Vested right" is a right in property
which has become fixed and established and is no
longer open to doubt or controversy. It expresses
the concept of present fixed interest, which in right
reason and natural justice should be protected
against arbitrary State action. (Marquino v. IAC, G.R.
No. 72078, 27 June 1994)

2022 GOLDEN NOTES
Succession
property, and transmissible rights and obligations

III. SUCCESSION existing at the time of his death (by virtue of
succession), as well as those which have accrued
thereto (by virue of ownership, by right of accession)
since the opening of the succession. (Balus v. Balus,
G.R. No. 168970, 10 Jan. 2010)
A. GENERAL PROVISIONS
In determining which rights are intransmissible
(extinguished by a person's death) or transmissible
Succession is a mode of acquisition by virtue of (not extinguished by his death), the following
which the property, rights and obligations to the general rules have been laid down:
extent of the value of the inheritance of a person, are
transmitted through his death to another or others 1. That rights which are purely personal, not
either by his will or by operation of law. (Art. 774, in the inaccurate equivalent of this term in
NCC; Heirs of Ciriaco Bayog-Ang v. Quinones, G.R. No. contractual obligations, but in its proper
205680, 21 Nov. 2018) sense, are, by their nature and
purpose, intransmissible, for they are
Requisites of succession (D-A-T-E) extinguished by death; examples, those
relating to civil personality, to family rights,
1. Death of decedent; and to the discharge of public office.
2. Acceptance of the inheritance by the successor;
3. Transmissible estate; and 2. That rights which are patrimonial or
4. Existence and capacity of successor, designated relating to property are, as a general
by decedent or law. rule, not extinguished by death and
properly constitute part of the inheritance,
NOTE: The heir cannot be liable beyond the except those expressly provided by law or
inheritance received. Value to the extent of his by the will of the testator, such as usufruct
inheritance means that the heirs will only pay to the and those known as personal servitudes.
extent of the value of his inheritance of the debts of
the decedent, and nothing more than that. 3. That rights of obligation are by
nature transmissible and may constitute
A decedent is a person whose property is part of the inheritance, both with respect to
transmitted through succession whether or not he the rights of the creditor and as regards the
left a will. If the decedent left a will, he is also called obligations of the debtor.
a testator. (Art. 775, NCC)
The third rule stated above has three exceptions,
Inheritance includes all the property, rights and especially with respect to the obligations of the
obligations of a person which are not extinguished debtor. They are: (1) those which are personal, in
by his death. (Art. 776, NCC) the sense that the personal qualifications and
circumstances of the debtor have been taken into
The inheritance of a person includes not only the account in the creation of the obligation, (2) those
property and the transmissible rights and that are intransmissible by express agreement or by
obligations existing at the time of his death, but also will of the testator, and (3) those that are
those which have accrued thereto since the opening intransmissible by express provision of law, such as
of the succession. (Art. 781, NCC) life pensions given under contract. (Heirs of Villaza
v. Aliangan, G.R. Nos. 244667-69, 02 Dec. 2020, J.
NOTE: The rights to a person’s succession are Caguioa)
transmitted from the moment of his death. In
addition, the inheritance of a person consists of the

Civil Law
The heirs succeed not only to the rights of the Liability of heirs for Decedent’s obligations
deceased but also to his obligations subject to the
following rules: The heirs CANNOT be held personally liable with
their own individual properties for the debts or
GR: Rights and obligations arising from contracts obligations left by the decedent. The responsibility
are binding upon the heirs. of the heirs for the debts of their decedent cannot
exceed the value of the inheritance they receive
XPNs: When the rights and obligations arising are from him. (Estate of K.H. Hemady v. Luzon Surety Co.,
not transmissible by: G.R. No. L-8437, 28 Nov. 1965) It is only after the
1. Their nature debts are paid that the residue of the estate is
2. Stipulation distributed among the successors.
3. Provision of law. (Art. 1311, NCC)
Q: Before his death, A borrowed from X P1, 000
INHERITANCE SUCCESSION as evidenced by a promissory note. A died
without paying the debt. A left no property but
It is the objective
he is survived by his son, B, who is making good
element of succession, It is the legal mode
in the buy and sell business. Subsequently, X
to the mass or totality of by which inheritance
brought an action against B for the collection of
the estate of a deceased is transmitted.
P1,000 plus legal interest thereon on the ground
person.
that, since B is the only heir of A, he inherited
from the latter not only the latter’s property, but
Rules on properties acquired AFTER the
also all his rights and obligations. Will the action
execution of a will
prosper? Reason.
GR: Property acquired during the period between

A: NO. The heirs are not personally liable with their
the execution of the will and the death of the
own individual properties for the monetary
testator will not pass under the provisions of the
obligations/debts left by the decedent. As a rule, the
will but by the rules on legal succession. Otherwise
party’s contractual rights and obligations are
stated, the property will NOT form part of the estate
transmissible to the successors except when the
of the testator that will pass on to his instituted
nature of the obligation, stipulation of the parties, or
heirs. (Art. 781, NCC)
by operation of law prevents transmissibility. (Art.
1311, NCC; Estate of K.H. Hemady v. Luzon Surety Co.,
XPNs:
G.R. No. L-8437, 28 Nov. 1956)
1. When a contrary intention expressly appears in
the will (Art. 793, NCC), in which case the
A contract of guaranty is NOT extinguished by
property will be included in that portion of the
death
estate that will pass to the instituted heirs by
way of testamentary succession; and
It is not extinguished by death because a contract of
2. If the property acquired after the execution of
guaranty is not one of the exceptions under Art.
the will is one which the testator has disposed
1311, NCC (Relativity of Contracts). A guarantor’s
of under his will as a legacy or device, i.e., the
obligation is basically to pay the creditor if the
property did not belong to the testator at the
principal debtor cannot pay. Payment does not
time he disposed of it as a device or as a legacy
require any personal qualifications. The personal
and he only acquired the same after making his
qualifications become relevant only at the time the
will. (Art. 930, NCC) In this case, the legacy or
obligation is incurred but not so at the time of
device will be given effect even if the will is
discharge or fulfillment of the obligation. (Ibid.)
silent with regard to such an intention on the
part of the testator.

2022 GOLDEN NOTES
Succession
NOTE: The rationale of Hemady is reiterated in the Q: Can the heir enter into a contract of sale,
case of Santos v. Lumbao, (G.R. No. 169129, 28 Mar. conveyance or any disposition pertaining to his
2007; Balane, 2016) interest in the inheritance even pending the
settlement of the estate?
The death of a party does not excuse
nonperformance of a contract which involves a A: YES, because his hereditary share/interest in the
property right and the rights and obligations decedent’s estate is transmitted or vested
thereunder pass to the personal representatives of immediately from the moment of decedent’s death.
the deceased. Similarly, nonperformance is not (Art. 777, NCC) This is, however, subject to the
excused by the death of the party when the other outcome of the settlement proceedings to
party has a property interest in the subject matter determine the rights and definite portions of the
of the contract. (Santos v. Lumbao, G.R. No. 169129, estate pertaining to the vendees, assignees, or
28 Mar. 2007) creditors.
Q: Fortunata died while her action for quieting Future inheritance

of title of parcels of land was pending. Does her
death result in the extinguishment of the action GR: No contract may be entered into upon future
or may her heirs substitute her in the case? inheritance. (Art. 1347(2), NCC)
A: Her heirs may substitute her because the action XPNs:

is not extinguished by her death. Since the rights to 1. Partition inter vivos (Art. 1080, NCC)
the succession are transmitted from the moment of 2. Donations propter nuptias by future spouses to
the death of the decedent, the heirs become the each other of future property
absolute owners of his property, subject to the
rights and obligations of the decedent, and they Requisites for the contract to be classified as one
cannot be deprived of their rights thereto except by upon Future Inheritance:
the methods provided for by law. The right of the
heirs to the property of the deceased vests in them 1. The succession has not yet been opened.
upon such death even before judicial declaration of 2. The object of the contract forms part of the
their being heirs in the testate or intestate inheritance.
proceedings. 3. The promissory has an expectancy of a right
which is purely hereditary in nature with
When she died, her claim or right to the parcels of respect to the object.
land in litigation was not extinguished by her death
but was transmitted to her heirs upon her death. An heir CANNOT enter into a compromise
Her heirs have thus acquired interest in the agreement to renounce his rights over a future
properties in litigation and became parties in inheritance. (Art. 2035(6), NCC)
interest in the case. (Bonilla v. Barcena, G.R. No. L-
41715, 18 June 1976) Every renunciation or compromise as regards a
future legitime between the person owing it and his
Transmission by succession occurs at the precise compulsory heirs is void, and the latter may claim
moment of death and, therefore, the heir, devisee, or the same upon the death of the former; but they
legatee is legally deemed to have acquired must bring to collation whatever they may have
ownership at that moment (even if, particularly in received by virtue of the renunciation or
the heir’s case, he will generally not know how compromise. (Art. 905, NCC)
much he will be inheriting and what properties he
will ultimately be receiving), and not at the time of A future legitime is merely an expectancy, and the
declaration of heirs, or partition, or distribution. heir does not acquire any right over the same until
(Balane, 2016) the death of the testator. Hence, juridically, there is

Civil Law
nothing on which to compromise. Furthermore, Art. It is immaterial whether a short or long period of
1347 of NCC expressly provides that, “no contract time elapses between the death of the predecessor
may be entered into upon future inheritance except and the entry in the possession of the properties of
in cases expressly authorized by law.” the inheritance, because the right is always deemed
to retroact to the moment of death.
NOTE: An heir may only sell his ideal or undivided
share in the estate, not any specific property The law in force at the time of the decedent’s death
therein. (Lee v. RTC, G.R. NO. 146006, 23 Feb. 2004) will determine who the heirs should be. (Uson v. Del
Rosario, G.R. No. L-4963, 29 Jan. 1953)
Actual delivery NOT necessary for heir to
acquire ownership over inherited property Presumptive Death
The possession of hereditary property is deemed The absentee shall not be presumed dead for the
transmitted to the heir without interruption and purpose of opening his succession till after an
from the moment of the death of the decedent, in absence of ten years. If he disappeared after the age
case, the inheritance is transmitted. of seventy-five years, an absence of five years shall
be sufficient in order that his succession may be
Pending a proceeding determining the rightful opened. (Art. 390, NCC)
heirs, the prospective heirs can demand delivery of
their supposed inheritance because ownership The following shall be presumed dead for all
passes to the heir at the very moment of death. The purposes, including the division of the estate among
basis of the heirs’ rights to the fruits is the (Right of the heirs:
Accession). 1. A person on board a vessel lost during a sea
voyage, or an aeroplane which is missing, who
Succession occurs at the moment of death has not been heard of for four years since the
loss of the vessel or aeroplane;
The rights to the succession are transmitted from 2. A person in the armed forces who has taken
the moment of the death of the decedent. (Art. 777, part in war, and has been missing for four years;
NCC) (2000 BAR) 3. A person who has been in danger of death under
other circumstances and his existence has not
The moment of death is the determining point when been known for four years. (Art. 391, NCC)
the heirs acquire a definite right to the inheritance,
whether such right is pure or conditional. The NOTE: If there is a doubt, as between two or more
possession of hereditary property is therefore persons who are called to succeed each other, as to
deemed transmitted to the heir without which of them died first, whoever alleges the death
interruption and from the moment of death of the of one prior to the other, shall prove the same; in the
decedent. absence of proof, it is presumed that they died at the
same time and there shall be no transmission of
The right to inherit is vested at the moment of death. rights from one to the other. (Art. 43, NCC)
Even if an heir did not know how much she was
going to inherit, she could still dispose of her share KINDS OF SUCCESSION AND SUCCESSORS
in the inheritance. Said right to share was hers from
the moment of death, and she could do whatever she Kinds of succession
wanted with it, even sell it. (De Borja v. Vda. De
Borja, G.R. No. L-28040 18 Aug. 1972) 1. Testamentary Succession - that which results
from the designation of an heir, made in a will
The interest of the heir over the inheritance prior to executed in the form prescribed by law. (Art.
the death of the decedent is merely inchoate or a 770, NCC)
mere expectancy.

2022 GOLDEN NOTES
Succession
2. Legal or Intestate Succession - that which Presentacion applied for and was identified as
takes place if a person dies without a will, or qualified beneficiary of the disputed lots by the
with a void will, or one which has subsequently Department of Agrarian Reform (DAR).
lost its validity. Meanwhile, Presentacion's brother-in-law
Mariano, the husband of her late sister Vicenta,
Intestate succession can take place even if there refuses to vacate the land on the ground that he
is a will, such as when the will does not dispose was a co-owner thereof subject to the law on
of all the disposable property of the decedent. succession. Is Mariano correct?
In such case, the will defaulted pertains to the
remaining property not covered by it. A: NO. Under Memorandum Circular (MC) No. 19,
while the succession or transfer of farmholdings
3. Mixed Succession - that effected partly by will granted under PD 27 recognized the pertinent
and partly by operation of law. (Art. 780, NCC) provisions of the NCC on succession, such was
subject to certain limitations. Accordingly, even as
4. Compulsory Succession – succession to the the successional rights of the original farmer-
legitimes (this prevails over all other kinds). beneficiary were recognized, MC 19 prescribed the
(Balane, 2016) manner through which the succeeding sole owner-
cultivator should be identified. Under MC 19,
Kinds of Heirs priority shall be determined among the heirs
according to age.
1. Voluntary or Testamentary Heirs – called to
succeed by virtue of the will of the testator: As such, in the absence of any extra-judicial
a. Devisee - persons to whom gifts of real settlement assigning in Vicenta's (Mariano's wife)
property are given by virtue of a will favor the priority right to become sole owner and
b. Legatee - persons to whom gifts of personal cultivator of the disputed lots, her husband
property are given by virtue of a will Mariano's claim of possession is left with no leg to
stand on. (Golez v. Abais, G.R. No. 191376, 08 Jan.
NOTE: An heir is one who succeeds to the whole 2020 J. Caguioa)
(universal) or aliquot part of the estate. Devisee
or legatee is one who succeeds to definite,
specific, and individualized properties.
2. Compulsory Heir – called by law to succeed to

a portion of the testator’s estate known as
legitime. They succeed by force of law to some
portion of the inheritance, in an amount
predetermined by law, of which they cannot be
deprived by the testator, except by a valid
disinheritance.
3. Legal or Intestate Heir – those who succeed by

operation of law through intestate succession.
Those who succeed to the estate of the decedent
who dies without a valid will, or to the portion
of such estate not disposed of by will.
Q: The late Ireneo was an Operation Land

Transfer beneficiary of various lots in Iloilo.
Upon his death, his eldest daughter

Civil Law
Distinctions between heirs and legatees, Q: Resurreccion is a devisee in the Huling

devisees Habilin ni Amanda H. Burgos (last will and
testament). Resurreccion sold the land she
inherited in favor of the petitioners Sps. Salitico,
DEVISEES OR
HEIRS who took physical possession of the subject
LEGATEES
property. A proceeding for the probate of
As to representation of decedent’s the huling habilin was undertaken before the
juridical person RTC. Sps. Salitico received a demand letter
requiring them to vacate the subject property
Represent the juridical and surrender possession over it to the heirs of
Never represent the
personality of the Amanda. Sps. Salitico sought the delivery and
personality of the
deceased and acquire return in their favor of the owner's duplicate
deceased no matter
their rights, with copy of OCT P-1908 and the execution of the
how big the legacy or
certain exceptions to corresponding Deed of Absolute Sale by way of
the devise is.
his obligations. confirming the Bilihang Tuluyan ng Lupa. Are
the Sps. Salitico correct?
Determination of amount of inheritance
Inherit an A: NO. There is a valid sale pursuant Art. 777 of the
undetermined NCC. However, this does not necessarily mean that
quantity whose exact the RD may already be compelled to cancel OCT P-
Are always given a
amount cannot be 1908 and issue a new title in the name of the
determinate thing or a
known, and which petitioners Sps. Salitico. Reading Art. 777 of the NCC
fixed amount
cannot be fixed until together with the pertinent provisions of PD 1529
the inheritance is and the Rules of Court, while an heir may dispose
liquidated. and transfer his/her hereditary share to another
Extent of successional right person under Art. 777, before the transferee may
Succeed to the compel the issuance of a new certificate of title
remainder of the Only succeed to the covering specific property in his/her name, a final
properties after all the determinate thing or order of distribution of the estate or the order in
debts and all the quantity which is anticipation of the final distribution issued by the
legacies and devices mentioned in the testate or intestate court must first be had under PD
have been paid or legacy or devise 1529.
given
Therefore, despite the existence of a valid contract
As to when they exist
of sale between Resurreccion and the petitioners
Can exist whether the Sps. Salitico, which ordinarily would warrant the
Only in testamentary
succession be testate delivery of the owner's duplicate copy of OCT P-
succession
or intestate 1908 in favor of the latter, pending the final
settlement of the Estate of Amanda, and absent any
Q: Suppose a person is named to succeed to an order of final distribution or an order in anticipation
entire estate. The estate, however, consists of of a final distribution from the Probate Court, the RD
only one parcel of land. Is he an heir or a cannot be compelled at this time to cancel OCT P-
devisee? 1908 and issue a new certificate of title in favor of
the petitioners Sps. Salitico. (Spouses Salitico v. Heirs
A: It depends on the manner of his designation in of Felix, G.R. No. 240199, 10 Apr. 2019, J. Caguioa)
the will. Here, because he is called to inherit the
entire estate, he is an heir.

2022 GOLDEN NOTES
Succession
Instances where the distinctions between heirs

and devisees/legatees become significant B. TESTAMENTARY SUCCESSION
1. Preterition (Art. 852, NCC)
1. WILLS
The effect is:
a. to annul entirely the institution of heirs,
A will is an act whereby a person is permitted, with
but
the formalities prescribed by law, to control to a
b. the legacies and devises shall be valid
certain degree the disposition of his estate, to take
insofar as they are not inofficious.
effect after his death. (Art. 783, NCC)
2. Imperfect/defective disinheritance (Art.

A will has been defined as “a personal, solemn,
918, NCC)
revocable and free act by which a capacitated
person disposes of his property and rights and
The effect is:
declares or complies with duties to take effect after
a. to annul the institution of heirs insofar
his death.” (Vitug v. CA, G.R. No. 82027, 29 Mar. 1990)
as it may prejudice the person
disinherited,
Characteristics of a Will
b. the devises and legacies and other

1. Purely personal act – the disposition of the
testamentary dispositions shall be valid
property is solely dependent upon the testator
to such extent as will not impair the
legitime.
2. Free from vices of consent – it must be executed
freely, knowingly and voluntarily; the testator’s
consent should not be vitiated by the causes
mentioned in Art. 839, paragraphs 2-6 (insanity,
violence, intimidation, fraud, mistake) (Art. 839,
NCC)
3. Solemn and formal – the testator must comply

with the provisions of the law establishing the
formalities of a will (Art. 783, NCC)
NOTE: The requirements as to the form of the

will depends on whether it is attested or
holographic.
Attested wills – Art. 805-808, 820, and 821, NCC;

Holographic wills – Art. 810-814, NCC; and
Both wills – Art. 804, NCC
4. Revocable or ambulatory – this is because a will

only takes effect upon the testator’s death and
no rights vest yet as long as the testator is alive,
even if the will has already been probated ante-
mortem (Art. 828, NCC)
5. Mortis Causa – expressed in Art. 783, and is also
a necessary consequence of Art. 774 and 777

Civil Law
6. Statutory right – will-making is purely a The exercise of the disposing power is the act that
statutory right and not a natural right (Art. 783, cannot be delegated. But the mere mechanical act of
NCC) drafting the will may be done by a third person as it
does not constitute a delegation of the will or
7. Unilateral act – acceptance is not needed in disposition.
making a will; acceptance comes later, after the
decedent’s death (Art. 783, NCC) Doctrine of Prohibited Designation
8. Individual – joint wills are prohibited in GR: The following cannot be left to the discretion of
Philippine jurisdiction (Art. 818, NCC) a third person:
NOTE: Mutual wills – Separate wills although 1. Duration or efficacy of designation of heirs,
containing reciprocal provisions are not legatees, or devisees.
prohibited, subject to the rule on disposicion 2. Determination of the portions which the heirs,
captatoria. legatees or devisees are to receive when
referred to by name.
9. Dispositive of property – disposition of the 3. Determination as to whether or not a
testator’s estate mortis causa is the purpose of disposition is to be operative. (Arts. 785 and
will-making (Art. 783, NCC) 787, NCC)
NOTE: Disposition of property is NOT an NOTE: It is not only the delegation which is void; the
essential requirement of a valid will. If a will testamentary disposition whose effectivity will
does not dispose of a property, it is a hollow depend upon the determination of the third person
will; it is s still valid but only as to form, and not is the one that cannot be made. Hence, the
substance. (Balane, 2016) disposition itself is void.
Q: The document, a holographic one, contained XPNS: The following may be entrusted to a third
only a clause of disinheritance of one of the person:
testator’s son. Does the document meet the 1. Distribution of specific property or sums of
definition of the will under Art. 783 of NCC money that the testator may leave in general to
although it does not contain any disposition of specified classes or causes.
the estate of the deceased? 2. Designation of the persons, institutions or
establishments to which such property or sums
A: The document, although it may initially come are to be given or applied. (Art. 786, NCC)
across as mere disinheritance instrument, conforms
to the formalities of holographic will. The Reason: This constitutes an exception to the rule of
disinheritance results in the disposition of the non-delegability of will-making. Without this
property of the testator in favor of those who would provision, the things allowed to be delegated here
succeed in the absence of the disinherited heir. would be non-delegable. (Balane, 2016)
(Seangio v. Reyes, G.R. Nos. 140371–72, 27 Nov. 2006)
NOTE: The testator must determine first the class or
Rule on non-delegability of will-making cause to be benefited, and the specific property or
amount of money to be given before the delegation
The making of a will is a strictly personal act; it to a third person is allowed.
cannot be left in whole or in part to the discretion of
a third person, or accomplished through the What is delegable is only the manner of distribution
instrumentality of an agent or attorney. (Art. 784, of property and the designation of who are to
NCC) receive it within the class or cause.

2022 GOLDEN NOTES
Succession
If a third person whom the powers under Art. 786 Parol Evidence Rule in the interpretation of
were delegated to refuses to do his duty, the court wills
can compel him to do so; and if ever the third person
dies, the court must appoint a substitute. 1. When there is an imperfect description, or
when no person or property exactly answers
Construction of a Will’s Provision the description – mistakes and omissions must
be corrected.
If a testamentary disposition admits of different 2. If the error appears from the context of the will
interpretations, in case of doubt, that interpretation or from extrinsic evidence, excluding the oral
by which the disposition is to be operative shall be declarations of the testator as to his intention;
preferred. (Art. 788, NCC) and when an uncertainty arises upon the face of
the will, as to the application of any of its
Construing the provisions of a will, substance rather provisions.
than form must be regarded, and the instrument The testator's intention is to be ascertained
should receive the most favorable construction to from the words of the will, taking into
accomplish the purpose intended by the testator. consideration the circumstances under which it
was made, excluding such oral declarations.
NOTE: The principles in construction and (Art. 789, NCC)
interpretation of wills are based on the principle
that the intent of the testator is supreme. (Balane, Kinds of Ambiguities in a Will
2016)
1. Latent (Intrinsic) – Ambiguities which are not
The words of a will are to receive an interpretation apparent on the face of a will but to
which will give to every expression some effect, circumstances outside the will at the time the
rather than one which will render any of the will was made. E.g. If it contains an imperfect
expressions inoperative; and of two modes of description of person or property. No person or
interpreting a will, that is to be preferred which will property exactly answers the description.
prevent intestacy. (Art. 791, NCC)
E.g., Testator gives a legacy “to my cousin Anna”
Reason: Testacy is preferred over intestacy because and it will turn out that the testator has three
testacy is the express will of the decedent whereas cousins named “Anna”
intestacy is only his implied will.
2. Patent (Extrinsic) – when an uncertainty arises
The invalidity of one of several dispositions upon the face of the will as to the application of
contained in a will does not result in the invalidity any of its provisions. (Art. 789, NCC)
of the other dispositions unless it is to be presumed
that the testator would not have made such other E.g., Testator gives a devise “to some of the
dispositions if the first invalid disposition had not eleven children of my only brother"
been made. (Art. 792, NCC)
Steps in Resolving Ambiguities
Every devise or legacy shall cover all the interest
which the testator could devise or bequeath in the 1. Examine the will itself;
property disposed of, unless it clearly appears from 2. Refer to extrinsic evidence or the surrounding
the will that he intended to convey a less interest. circumstances, (except oral declarations of the
(Art. 794, NCC) testator as to his intention); and
3. In the case of patent ambiguities, the extrinsic
evidence acceptable is limited to those
pertaining to the circumstances under which
the will was executed.

Civil Law
Law governing the validity of wills 1. National law;

2. Law of the place of
Foreign Country
AS TO TIME AS TO PLACE residence;
Extrinsic Validity 3. NCC
- the forms and solemnities required by law
The will can be TESTAMENTARY CAPACITY AND INTENT
executed in accordance
with the formalities of Testamentary capacity refers to the ability as well
the testator’s as the power to make a will, and is considered an
For Filipinos and nationality, domicile, extrinsic/formal requirement for the validity of a
Foreigners: residence, the place will. (2008 BAR; Art. 839, NCC)
The law in force at the where the will was
time of the making of executed depending on Requisites of Testamentary Capacity
the will. (Art. 795) the place where it is
executed and the 1. All persons not expressly prohibited by law
For Foreigners: nationality of the (Art. 796, NCC)
The assumption is that testator
the will is being the testator’s 2. At least 18 years of age; (Art. 797, NCC) and
probated in the citizenship, domicile,
Philippines. residence, the place NOTE: The provisions says, “under eighteen
where the will was years of age cannot make a will”, this does not
executed, or Philippine necessarily mean he is a minor, because prior to
Laws (Art. 815-817, 1989, the age of majority was 21. Thus, before
NCC) such date, some minors (18-21) can execute a
will.
Intrinsic Validity
- the legality of provisions in the will
3. Of sound mind. (Art. 798, NCC)
The national law of the

NOTE: The ability as well as the power to make a
The law in force at the testator governs the
will must be present at the time of the execution of
time of the decedent’s intrinsic validity of the
the will.
death. (Arts. 777 & will regardless of the
2263, NCC) place of execution.
It is not necessary that the testator be in full
(Arts. 16 & 1039, NCC)
possession of all his reasoning faculties or that his
mind be wholly unbroken, unimpaired or
PLACE OF APPLICABLE LAW unshattered by disease, injury, or other cause.
EXECUTION (as to form)
Testator is a Filipino To be of sound mind, it shall be sufficient if the

testator was able at the time of making the will to
Philippines NCC
know the:
a. nature of the estate to be disposed of;
1. Law of the place of
b. proper objects of his bounty; and
Foreign Country execution
c. character of the testamentary act. (Art. 799,
2. NCC
NCC)
Testator is an alien
The requirement that the testator be of sound mind
1. NCC; or is essential only at the time of the making of the will
Philippines
2. National law (or execution). If he is not of sound mind at that

2022 GOLDEN NOTES
Succession
time, the will is invalid regardless of the state of A married woman may dispose by will all her
mind before or after such execution. separate property as well as her share of the
conjugal partnership or absolute community
NOTE: If the testator was of sound mind at the time property. (Art. 803, NCC)
of the making of the will, the will is valid even if the
testator should later on become insane and die in NOTE: Art. 803 has been superseded by Art. 87, FC.
that condition. Supervening incapacity does not It provides that either spouse may dispose by will,
invalidate an effective will, nor is the will of an of his or her interest in the community property
incapable validated by the supervening capacity. since the ACP or CPG is dissolved upon the death of
(Art. 801, NCC) either spouse. (Balane 2016; Arts. 99 & 126, FC)
GR: The law presumes that every person is of sound FORMAL VALIDITY OF WILLS
mind, in the absence of proof to the contrary. (Art.
800(1), NCC) 1. Ordinary or Notarial will - requires an
attestation clause, an acknowledgement before
XPNs: If the testator was: a notary public;
1. Publicly known to be insane, one month or 2. Holographic will - must be entirely written,
less, before making his will; (Art. 800(2), dated and signed in the handwriting of the
NCC) testator.
2. Under guardianship at the time of the
making of the will. (Torres v. Lopez, G.R. No. Time criterion: law at the time of execution;
L-25966, 01 Nov. 1926) subsequent laws cannot apply retroactively.
NOTE: Mere weakness of mind or partial imbecility Place criterion: Under Arts. 815-817 of the NCC, five
from disease of body or from age does not (5) choices are available to the testator; the law of:
necessarily render a person incapable of making a 1. The testator's citizenship;
will. 2. Testator's domicile;
3. Place of execution;
A person suffering from civil interdiction is qualified 4. Testator's residence; and
to make a will. He is deprived of the power to 5. Philippines. (Balane, 2016)
dispose of his properties through acts inter vivos but
not through acts mortis causa. (Art. 34, RPC) The will of an alien who is abroad produces effect in
the Philippines if:
The burden of proving that the testator acted in 1. made with the formalities prescribed by the
lucid interval lies on the person who maintains the law of the place in which he resides, or
validity of the will. (Art. 800(2), NCC) 2. according to the formalities observed in his
country, or
Being forgetful does not necessarily make a person 3. in conformity with those which the Civil Code
mentally unsound so as to render him unfit to prescribes. (Art. 816, NCC) (1990, 1998, 2009
execute a will. Forgetfulness is not equivalent to BAR)
being of unsound mind. (Baltazar, v. Laxa, G.R. No.
174489, 07 Apr. 2012) A will made in the Philippines by a citizen or subject
of another country, which is executed in accordance
Married woman with the law of the country of which he is a citizen
or subject, and which might be proved and allowed
A married woman may make a will without the by the law of his own country, shall have the same
consent of her husband, and without the authority effect as if executed according to the laws of the
of the court. (Art. 802, NCC) Philippines. (Art. 817, NCC) (2002 BAR)

Civil Law
A joint will executed by Filipinos in a foreign NOTARIAL WILLS (1994, 2007, 2008 BAR)
country shall not be valid in the Philippines, even
though authorized by the laws of the country where Formalities in the Execution of a Notarial Will
they may have been executed. (Art. 819, NCC) A joint (La-W-S-P-A2-N2)
will is against the public policy of the Philippines
particularly the policy that the execution of a will is 1. In Writing;
a strictly personal act.
2. Executed in a Language or dialect known to the
GOVERNING LAW AS TO testator;
SUBSTANTIVE VALIDITY
This rule is mandatory. Otherwise, the will is
Laws relating to family rights and duties, or to the void. (Suroza v. Honrado, A.M. No. 2026-CFI, 19
status, condition and legal capacity of persons are Dec. 1981) It is also applicable even if the
binding upon citizens of the Philippines even provisions of the will are interpreted or
though living abroad. (Art. 15, NCC) explained to the testator.
Matters pertaining to intestate and The fact that the will was executed in a
testamentary successions which are regulated language known to the testator need NOT be
by the national law of the deceased: (C-I-A-O) stated in the attestation clause. This fact can be
established by extrinsic evidence or evidence
1. Capacity to succeed aliunde. (Lopez v. Liboro, G.R. No. L-1787, 27
2. Intrinsic validity of testamentary provisions Aug. 1948)
3. Amount of successional rights
4. Order of succession. (Arts. 16 & 1039, NCC) This rule does NOT apply to witnesses in a
notarial or attested will because the witnesses
Formal requirements common to both Notarial do not need to know the contents of the will.
and Holographic wills (2008 BAR) The attestation clause, on the other hand, must
be understood by the witnesses even if it is in a
1. Law governing extrinsic validity of wills; language not known to them. (Art. 805, NCC
2. In writing; states that the attestation clause need not be in
Noncupative wills are oral wills declared or a language known to the witnesses)
dictated by the testator and dependent merely
on oral testimony. Philippine laws do not Presumption that the testator knew the language in
recognize the validity of “noncupative wills.” which the will was written is present when:
3. In a language or dialect known to the testator. a. the will must be in a language or dialect
generally spoken in the place of execution
The object of the solemnities surrounding the b. the testator must be a native or resident of
execution of a will: said locality. (Abangan v. Abangan, G.R. No.
1. to close the door against bad faith and fraud, 13431, 12 Nov. 1919)
2. to avoid substitution of wills and testaments
and 3. Subscribed at the end thereof by the testator
3. to guarantee their truth and authenticity. himself or by the testator’s name written by some
other person in his presence, and by his express
direction;
The signature of the testator of the will must be

at the end of the will, which may be at the logical
end (last testamentary disposition) or physical
end (non-dispositive provisions).

2022 GOLDEN NOTES
Succession
NOTE: In notarial wills, subscription by that they had the opportunity to see the testator
fingerprint is allowed as long as it is voluntarily sign the will. It is not necessary that they
made (Matias v. Salud, G.R. No. L-10751, 23 June actually saw the testator affix his/her signature
1958), but not in holographic wills given the on the will.
explicit requirement for a holographic will to be
entirely written, dated and signed with the The true test of presence of the testator and the
hand of the testator. witnesses in the execution of a will is not
whether they actually saw each other sign, but
Cross as signature whether they might have seen each other sign
had they chosen to do so considering their
GR: A cross is not a sufficient signature mental and physical condition and position
with relation to each other at the moment of
XPNs: The cross appearing on the will is: inscription of each signature.
a. the customary, habitual signature of the
testator; or The question whether the testator and the
b. one of the ways the testator signs his subscribing witnesses to an alleged will sign the
signature. instrument in the presence of each other does
not depend upon proof of the fact that their eyes
The one who alleges that it is the customary, were actually cast upon the paper at the
habitual or one of the ways he sign his signature moment of its subscription by each of them, but
has the burden of proof. (Garcia v. Lacuesta, G.R. whether at that moment existing conditions
No. L-4067, 19 Nov. 1951) and the position of the parties, with relation to
each other, were such that by merely casting
Signing by an Agent of the testator their eyes in the proper direction they could
have seen each other sign. (Nera v. Rimando,
a. must sign in testator’s presence, and G.R. No. L-5971, 27 Feb. 1911)
b. by the testator’s express direction
Actual seeing is not required, but the ability to
The important thing is that it should clearly see each other by merely casting their eyes in
appear that the name of the testator was signed the proper direction and without any physical
at his express direction, in the presence of three obstruction to prevent his doing so. (Jaboneta v.
witnesses, and in the presence of the testator Gustilo, G.R. No. 1641, 19 Jan. 1906)
and of each other. (Barut v. Cabacungan, G.R. No.
6285, 15 Feb. 1912) An attestation must state all the details the third
paragraph of Article 805 of NCC requires. In the
4. Attested and subscribed by three or more absence of the required avowal by the
credible witnesses in the presence of the testator witnesses themselves, no attestation clause can
and of one another; be deemed embodied in the Acknowledgement
Two Requirements: of the Deed of Donation Mortis Causa. (Echavez
a. Attesting – an act of witnessing v. Dozen Cons, G.R. No. 192916, 11 Oct. 2010)
b. Subscribing – an act of signing their names
in the proper places of the will The law is clear that the attestation must state
the number of pages used upon which the will
Test for the Determination of the Presence is written. The purpose of the law is to
of Witnesses safeguard against possible interpolation or
omission of one or some of its pages and
In order that the witnesses be deemed present prevent any increase or decrease in the pages.
at the time of the execution of the will, it suffices (Lopez v. Lopez, G.R. No. 189984, 12 Nov. 2012)
that the witnesses were so situated in a manner

Civil Law
However, in the case of Tanchanco v. Santos 6. Purpose: to prevent the disappearance of the
(G.R. No. 204793, 08 June 2020), the Supreme pages.
Court ruled that even if the attestation clause a. Mandatory – the signing on every page in
failed to mention the number of pages, but the the witnesses’ presence
same is found in the acknowledgment portion b. Directory – the place of the signing (on the
of the will, by there is substantial compliance left margin). The signature can be affixed
with Art. 805 of the NCC. In the case, at bar, the anywhere on the page. (Balane, 2016)
attestation clause indisputably omitted to
mention the number of pages comprising the If the entire document consists only of two
will. Nevertheless, the acknowledgment sheets, the first containing the will and the
portion of the will supplied the omission by second, the attestation clause, there need not be
stating that the will has five pages, to wit: "Ang any marginal signatures at all. (Abangan v.
HULING HABILING ito ay binubuo ng lima (5) Abangan, G.R. No. 13431, 12 Nov. 1919)
na dahon, kasama ang dahong kinaroroonan ng
Pagpapatunay at Pagpapatotoong ito." A will was declared void which contained the
Undoubtedly, such substantially complied with necessary signatures on the margin of each leaf
Article 809 of the Civil Code. Mere reading and (folio), but not in the margin of each page
observation of the will, without resorting to containing written matter. (In the Matter of the
other extrinsic evidence, yields the conclusion Estate of Saguinsin, G.R. No. L-15025, 15 Mar.
that there are actually five pages even if the said 1920)
information was not provided in the attestation
clause. In any case, the CA declared that there The signatures on the left-hand corner of every
was substantial compliance with the directives page signify, among others, that the witnesses
of Article 805 of the Civil Code. are aware that the page they are signing forms
part of the will. On the other hand, the
Q: Clara, thinking of her mortality, drafted a signatures to the attestation clause establish
will and asked Roberta, Hannah, Luisa and that the witnesses are referring to the
Benjamin to be witnesses. During the day of statements contained in the attestation clause
the signing of the will, Clara fell down the itself. (Azuela v. CA, G.R. No. 122880, 12 Apr.
stairs and broke both her arms. Coming 2006)
from the hospital, Clara, insisted on signing
her will by thumbmark. Later Clara was run 7. All the pages shall be Numbered correlatively in
over by a drunk driver while crossing the letters on the upper part of each page;
street in Greenbelt. May the will of Clara be a. Mandatory – pagination by means of a
admitted to probate? Give your reason conventional system purpose of which is to
briefly. (2007 BAR) prevent insertion or removal of pages.
b. Directory – pagination in letters on the
A: YES. Clara’s thumbmark in this case has all upper part of each page. (Balane, 2010) The
the hallmarks of a valid signature. Clara clearly pages may be expressed either in words
intended to use her thumbmark as her (e.g., “Page One of Seven”) or in figures (e.g.,
signature and the circumstances justified her “Page 1 of 7”)
use of her thumbmark. (Garcia v. La Cuesta, G.R.
No. L-4067, 29 Nov. 1951) 8. Must contain an Attestation clause which
expressly states the following:
5. The testator or the person requested by him to a. The number of pages used upon which the
write his name must also sign every Page, except will is written;
the last, on the left margin in the presence of the b. The fact that the testator signed the will
witnesses; and every page thereof, or caused some
other person to write his name, under his

2022 GOLDEN NOTES
Succession
express direction, in the presence of the of the testator and the witnesses. (Javellana v.
instrumental witnesses; Ledesma, G.R. No. L-7179, 30 June 1955)
c. The fact that the witnesses witnessed and
signed the will and all the pages thereof in A jurat is insufficient as the law requires an
the presence of the testator and of one acknowledgment executed by the party before
another. (Art. 805(3), NCC) a notary public, not a declaration of the notary
public.
The signature of the witnesses must be at the
bottom of the attestation clause. An unsigned The notary public before whom the will was
attestation clause cannot be considered as an acknowledged cannot be considered as the
act of the witnesses, since the omission of their third instrumental witness since he cannot
signatures at the bottom thereof negatives their acknowledge before himself having signed the
participation. (Cagro v. Cagro, G.R. No. L-5826, will. He cannot split his personality into two so
29 Apr. 1953) that one will appear before the other to
acknowledge his participation in the making of
Inasmuch as the signatures of the three the will. To permit such a situation to obtain
witnesses to the will do not appear at the would be sanctioning a sheer absurdity. (Cruz v.
bottom of the attestation clause, although the Villasor, G.R. No. L-32213, 26 Nov. 1973)
page containing the same is signed by the
witnesses on the left hand margin, the will is An acknowledgment is the act of one who has
fatally defective. The attestation clause is "a executed a deed in going before some
memorandum of the facts attending the competent officer or court and declaring it to be
execution of the will" required by law to be his act or deed. It involves an extra step
made by the attesting witnesses, and it must undertaken whereby the signatory actually
necessarily bear their signatures. declares to the notary public that the same is his
or her own free act and deed. The
The petitioner and appellee contend that acknowledgment in a notarial will has a two-
signatures of the three witnesses on the left fold purpose: (1) to safeguard the testator’s
hand margin conform substantially to the law wishes long after his demise and (2) to assure
and may be deemed as their signatures to the that his estate is administered in the manner
attestation clause. This is untenable, because that he intends it to be done. (Lee v. Tambago,
said signatures are in compliance with the legal A.C. No. 5281, 12 Feb. 2008)
mandate that the will be signed on the left hand
margin of all its pages. If an attestation clause The issue in this case is whether or not the will
not signed by the three witnesses at the bottom “acknowledged” by the testatrix and the
thereof, be admitted as sufficient, it would be instrumental witnesses before a notary public
easy to add such clause to a will on a subsequent acting outside the place of his commission
occasion and in the absence of the testator and satisfies the requirement under Article 806 of
any or all of the witnesses. (Ibid.) the NCC. Outside the place of his commission, he
is bereft of power to perform any notarial act;
NOTE: An attested will need not be dated, but a he is not notary public. Any notarial act outside
holographic will must be dated. (Art. 810, NCC) the limits of his jurisdiction has no force and
effect. (Guerrero v. Bihis, G.R. No. 174144, 17 Apr.
9. Must be acknowledged before a Notary public by 2007)
the testator and the witnesses. (Art. 806, NCC)
(2008 BAR) The absence of the documentary stamp does
not affect the validity of the will. It merely
The certification of acknowledgment need not prevent it from being presented as evidence.
be signed by the notary public in the presence

Civil Law
(Gabucan v. Manta, G.R. No. L-51546, 28 Jan. However, evidence aliunde are not allowed to fill a
1980) void in any part of the document or supply missing
details that should appear in the will itself. Those
Rules if the Testator is Deaf or Mute omissions which cannot be supplied except by
evidence aliunde would result in the invalidation of
1. If the testator is able to read, he must personally the will itself. (Caneda v. CA, G.R. No. 103554, 28 May
read the will; or 1993)
2. If the testator is unable to read, he must
designate two persons to read it and Q: Consuelo and Anastacio Santos had 2
communicate to him, in some practicable daughters namely Natividad and Remedios.
manner, the contents thereof. (Art. 807, NCC) When Anastacio died, Remedios followed
predeceasing Consuelo and leaving her
Rules if the testator is Blind children. Thereafter, Consuelo died leaving
several properties. Catalino, son of Remedios,
The will shall be read to him twice, once by one of filed a petition to settle the intestate estate of
the subscribing witnesses, and another time by the Consuelo alleging that Consuelo's heirs include
notary public before whom the will is Remedios' children and Natividad. Thereafter,
acknowledged. (Art. 808, NCC) (2008 BAR) Natividad filed a motion to dismiss stating that
she already filed for the probate of Consuelo's
Purpose: The reading is mandatory for the purpose will. Natividad asked that the will be allowed
of making known to the testator the provision of the and approved and as the named executrix in the
will so that he may object if it is not in accordance will, she prayed that letters testamentary be
with his wishes. issued in her favor.
Art. 808 of the NCC applies not only to blind The Tanchancos filed an Opposition to
testators but also to those who, for one reason or Natividad's petition for probate alleging that the
another, are incapable of reading their wills, either will's attestation clause did not state the
because of poor or defective eyesight or because of number of pages. Natividad countered that
illiteracy. (Garcia v. Vasquez, G.R. No. L-26615, 30 there was substantial compliance with Article
Apr. 1970) 805 of the Civil Code. Although the attestation
clause did not state the number of pages
Substantial Compliance comprising the will, the same was clearly
indicated in the acknowledgment portion.
A will is not rendered invalid by reason of defects or Moreover, the Tanchancos' allegations were not
imperfections in the form of attestation or in the supported by proof. Thus, the Tanchancos
language used therein. rebutted that the number of pages should be
found in the body of the will and not just in the
In the absence of bad faith, forgery, or fraud, or acknowledgment portion. Can the will of
undue and improper pressure and influence, defects Consuel be probated despite the fact that the
and imperfections in the form of attestation or in the will does not conform to the formalities
language used therein shall not render the will required by law under Art. 805?
invalid if it is proved that the will was in fact
executed and attested in substantial compliance A: YES. The rule on substantial compliance in Article
with all the requirements of Art. 805. (Art. 809, NCC) 809 presupposes that the defects in the attestation
clause can be cured or supplied by the text of the
In cases of omissions in the will, if it can be supplied will or a consideration of matters apparent
by an examination of the will itself, without the need therefrom which would provide the data not
of resorting to extrinsic evidence it will not be fatal expressed in the attestation clause or from which it
and, correspondingly, would be allowed for probate. may necessarily be gleaned or clearly inferred that

2022 GOLDEN NOTES
Succession
the acts not stated in the omitted textual 5. Not have been Convicted by final judgment of
requirements were actually complied with in the falsification of a document, perjury or false
execution of the will. In other words, the defects testimony.
must be remedied by intrinsic evidence supplied by 6. Domiciled in the Philippines – his habitual
the will itself. residence must be in the Philippines. (Art. 50,
NCC)
In the case, the attestation clause indisputably
omitted to mention the number of pages comprising Determination of qualifications of witnesses
the will. Nevertheless, the acknowledgment portion
of the will supplied the omission by stating that the The presence of the qualifications of witnesses is
will has five pages, to wit: "Ang HULING HABILING determined at the time of the attestation of the will.
ito ay binubuo ng lima (5) na dahon, kasama ang If the witnesses attesting the execution of a will are
dahong kinaroroonan ng Pagpapatunay at competent at the time of attesting, their becoming
Pagpapatotoong ito." Undoubtedly, such subsequently incompetent shall not prevent the
substantially complied with Article 809 of the Civil allowance of the will.
Code. Mere reading and observation of the will,
without resorting to other extrinsic evidence, yields Instrumental witness as beneficiary in a will
the conclusion that there are actually five pages
even if the said information was not provided in the The fact that a person acts as a witness to a will does
attestation clause. In any case, the CA declared that not disqualify him to be a beneficiary. However, it
there was substantial compliance with the renders void any legacy or device given under said
directives of Article 805 of the Civil Code. will to such person or to his spouse, or parent or
child, UNLESS there are three other competent
When the number of pages was provided in the witnesses to the will. (Art. 823, NCC) (2010 BAR)
acknowledgment portion instead of the attestation Such person so attesting shall be admitted as a
clause, "[t]he spirit behind the law was served witness as if such devise or legacy had not been
though the letter was not. Although there should be made or given.
strict compliance with the substantial requirements
of the law in order to insure the authenticity of the Q: Stevie was born blind. He went to school for
will, the formal imperfections should be brushed the blind, and learned to read in Braille
aside when they do not affect its purpose and which, language. He speaks English fluently. Can he:
when taken into account, may only defeat the a. Make a will?
testator's will. (In the matter of the petition for the b. Act as a witness to a will?
probate of the will of Consuelo Santiago Garcia: c. In either of the instances, must the will be
Catalino Tanchanco and Ronaldo Tanchanco v. read to him? (2008 BAR)
Natividad Garcia Santos, G.R. No. 204793, 08 June
2020) A.
a. YES. Stevie may make a notarial will. A blind
Qualifications of witnesses (S-18-A-B-C-D) man is not expressly prohibited from executing
(2008 BAR) a will. In fact, Art. 808 of the NCC provides for
an additional formality when the testator is
1. Of Sound mind. blind. Stevie, however, may not make a
2. At least 18 years of age. holographic will in Braille because the writing
3. Able to read and write in Braille is not handwriting. A holographic will
4. Not Blind, deaf or dumb to be valid must be entirely written, signed, and
NOTE: While a blind or deaf may not be a dated by the testator in his own handwriting.
witness, he could be a testator in a notarial will
b. NO. A blind man is disqualified by law to be a
witness to a notarial will.

Civil Law
c. In case Stevie executes a notarial will, it has notarial will because the law allows a notarial
to be read to him twice. First by one of the will to be written by someone else and in
instrumental witnesses and second by the certain cases, for the will to be read by someone
notary public before whom the will was else not the testator.
acknowledged. (Art. 808, NCC)
NOTE: A will handwritten by a person other
The person signing the testator’s name must NOT than the testator is a not a valid holographic
be one of the 3 instrumental witnesses because he will, but it may nonetheless be made valid by
must sign in the presence of the testator and of three complying with the requirements of a notarial
other instrumental witnesses. will.
It is an established rule that “a testament may not be Effects of Insertions or Interpolations

disallowed just because the attesting witness
declare against its due execution; neither does it GR: When a number of erasures, corrections,
have to be necessarily allowed just because all the cancellation, or insertions are made by the
attesting witness declare in favor of its legalisation; testator in the will but the same have not been
what is decisive is that the court is convinced by noted or authenticated with his full signature,
evidence before it, not necessarily from the only the particular words erased, corrected,
attesting witnesses, although they must testify, that altered will be invalidated, not the entirety of the
the will was or was not duly executed in the manner will.
required by law.” (Baltazar v. Laxa, G.R. No. 174489,
11 Apr. 2012) XPNs:
a. Where the change affects the essence of the
This Court has held in a number of occasions that will of the testator such as where the
substantial compliance is acceptable where the alteration partakes the effect of revoking a
purpose of the law has been satisfied, the reason will;
being that the solemnities surrounding the
execution of a will are intended to protect the NOTE: When the holographic will had only
testator from all kinds of fraud and trickery but are one substantial provision, which was
never intended to be so rigid and inflexible as to altered by substituting the original heir
destroy the testamentary privilege. (Alvarado v. with another, and the same did not carry
Gaviola, Jr., G.R. No. 74695, 14 Sept. 1993) the requisite full signature of the testator,
the entirety of the will is voided or revoked.
HOLOGRAPHIC WILLS
Reason: What was cancelled here was the
A holographic will is one entirely written, dated, very essence of the will; it amounted to the
and signed by the hand of the testator himself. It is revocation of the will. Therefore, neither
subject to no other form, and may be made in or out the altered text nor the original unaltered
of the Philippines, and need not be witnessed. (Art. text can be given effect. (Kalaw v. Relova,
810, NCC) G.R. No. L-40207, 28 Sept. 1984)
Formalities Required in the Execution of Thus, unless the unauthenticated

Holographic Wills: (E-D-S) alterations, cancellations, or insertions
were made on the date of the holographic
1. Entirely handwritten by the testator will or on testator’s signature, their
presence does not invalidate the will itself.
An illiterate cannot make a holographic will The lack of authentication will only result
because it is required to be in writing by the in disallowance of such changes. (Ajero v.
testator. However, he can make an ordinary or CA, G.R. No. 106720, 15 Sept. 1994)

2022 GOLDEN NOTES
Succession
b. Where the alteration affects the date of the dated and signed by him in order to make them
will or the signature of the testator, the valid as testamentary dispositions. (Art. 812,
whole will is void. NCC) If one disposition below the signature of
the testator is not dated, even if signed, that
c. If the words written by a 3rd person were particular disposition is void, without affecting
contemporaneous with the execution of the the validity of the others or of the will itself.
will, even though authenticated by the
testator, the entire will is void for violation When a number of dispositions appearing in a
of the requisite that the holographic will holographic will are signed without being
must be entirely in the testator’s dated, and the last disposition has a signature
handwriting. and a date, such date validates the dispositions
preceding it, whatever be the time of prior
2. Dated by the testator dispositions. (Art. 813, NCC)
GR: The "date" in a holographic will should NOTE: It is not required that the will be
include the day, month, and year of its executed on a single day, at one time and in the
execution. same ink. The unity of the act is not required in
holographic wills.
XPN: When there is no appearance of fraud, bad
faith, undue influence and pressure and the In case of several additional dispositions where
authenticity of the will is established and the the additional ones before the last are dated but
only issue is whether or not the date appearing not signed, only the last will be valid, provided
e.g., “FEB. ‘61” on the holographic will is a valid the last is signed and dated.
compliance with Art. 810 of NCC, probate of the
holographic will should be allowed under the If the additional ones before the last are neither
Principle Of Substantial Compliance. (Roxas v. De signed nor dated, but the last is both signed and
Jesus, G.R. No. L-38338, 28 Jan. 1985) dated, a distinction will have to be made
whether they were made:
The law does not specify a particular location a. on one occasion (in which case the
where the date should be placed in the will. The signature and date under the last
only requirements are the date be in the will addtitional disposition validate all) or
itself and executed in the hand of the testator. b. on different occasions (in which case the
(Labrador v. CA, G.R. Nos. 83843-44, 05 Apr. intermediate additions are void).
1990) Thus, it may be placed either at the
beginning, in the middle, or at the end of the This distinction, though theoretically valid, is
will. almost worthless in practice because the
circumstances of the execution of holographic
3. Signed by the hand of the testator himself wills are often difficult to prove. (Balane, 2016)
In a holographic will, the signature must be at Rules for the Probate of Holographic Wills
the end of the will. This can be inferred from
Art. 812 of the NCC by the reference to In the postmortem probate of holographic wills, the
dispositions “written below his signature.” This following rules are to be observed as to the number
phrase implies that the signature is at the end of of witnesses to be presented:
the will, and any disposition below it must
further be signed and dated. 1. If the will is NOT contested, it shall be necessary
that at least one witness who knows the
In a holographic will, the dispositions of the handwriting and signature of the testator
testator written below his signature must be

Civil Law
explicitly declares that the will and the GR: If not authenticated with the testator’s full
signature are in the handwriting of the testator. signature, it is considered as not made, but the will
is not invalidated. It does not affect the validity of
2. If the will is contested, at least three of such the will itself. The will is not thereby invalidated as
witnesses shall be required to explicitly declare a whole, but at most only as regards the particular
that the signature in the will is the genuine words erased, corrected, or inserted. (Velasco v.
signature of the testator. Lopez, G.R. No. 905, 12 Feb. 1903)
3. In the absence of any competent witness and if XPN: Unless the portion involved is an essential part
the court deems it necessary, expert testimony of the will, such as the date.
may be resorted to. (Art 811, NCC)
Crossing-out of name of heir
Presentation of the will is necessary
Where the testator himself crossed out the name of
The contents and due execution of a lost the original heir, and substituted the name of
holographic will CANNOT be established merely another, without proper authentication, it was held
through oral testimonies of witness who allegedly that this did not result in making the person whose
seen the same. It may not be proved by the bare name was crossed as heir. The cancellation should
testimony of witnesses who have seen or read such not have also been given effect. The Supreme Court,
will. The will itself must be presented; otherwise, it however, ruled that neither the original heir nor the
shall produce no effect. (Gan v. Yap, G.R. No. L-12190, substituted heir can receive the estate on the
30 Aug. 1958) ground that it could not ignore what appeared to be
a change of heart on the part of the testator. One way
By its very nature, a holographic will can only be to justify the ruling of the Supreme Court is to
proven authentic by establishing that the consider the cancellation as tantamount to a
handwriting in which it is written belongs to the revocation of the will. It amounts to a revocation
testator himself and this can only be done through even though the cancellation only pertained to the
an examination of the will. name of the original heir because without the said
name, there remains no other disposition in the will.
A holographic will which was lost or could not be (Kalaw v. Relova, G.R. No. L-40207, 28 Sept. 1984)
found can be proved by means of a photostatic copy
(photocopy). JOINT WILLS (2000, 2008 BAR)
A photostatic copy or xerox copy of the holographic Joint wills are NOT allowed in the Philippines.
will may be allowed because comparison can be
made with the standard writings of the testator. Two or more persons cannot make a will jointly, or
(Rodelas v. Aranza, G.R. No. L-58509, 07 Dec. 1982) in the same instrument, either for their reciprocal
benefit or for the benefit of a third person. (Art. 818,
Requirements in case of Alterations NCC)
In case of insertion, cancellation, erasure or Wills prohibited by Art. 818 of the NCC executed by
alteration in a holographic will, the testator must Filipinos in a foreign country shall not be valid in the
authenticate the same by his full signature. (Art. 814, Philippines, even though authorized by the laws of
NCC) the country where they may have been
executed. (Art. 819, NCC) (2000 BAR)
Full signature refers to the testator’s habitual, usual
and customary signature. Reason: Whether in the Philippines or in foreign
country, Filipino citizens are prohibited from
executing joint wills because it is a matter against

2022 GOLDEN NOTES
Succession
public policy. There is danger of undue influence A:

and of one testator killing the other. (Dacanay v. a. NO, the will cannot be admitted to probate.
Florendo, G.R. No. L-2071, 19 Sept. 1950) Joint wills are void under the Art. 818 of NCC.
Even if the joint will executed by Filipinos
NOTE: Mutual wills – Separate wills although abroad were valid where it was executed, the
containing reciprocal provisions are not prohibited, joint will is still not valid in the Philippines.
subject to the rule on disposition captatoria.
b. NO. If a will is void, all testamentary
What the law expressly prohibits is the making of dispositions contained therein are also void.
joint wills either for the testator’s reciprocal benefit Hence, all testamentary provisions contained in
or for the benefit of a third person. (Art. 818, NCC) In the void joint will are also void.
the case at bench, the Cunanan spouses executed
separate wills. Since the two wills contain c. NO. The testamentary prohibition against the
essentially the same provisions and pertain to division by Peter and Paul of the London estate
properties which in all probability are conjugal in for as long as they live, is not valid. Art. 494 of
nature, practical considerations dictate their joint the NCC provides that a donor or testator may
probate. (Vda. de Perez v. Tolete, G.R. No. 76714, 02 prohibit partition for a period which shall not
June 1994) exceed twenty (20) years.
NOTE: While the execution of joint wills is Q: Alden and Stela were both former Filipino
absolutely prohibited under Philippine laws, the citizens. They were married in the Philippines
filing of a joint petition for the probate of two or but they later migrated to the United States
more wills is allowed. Multiple wills may be where they were naturalized as American
submitted for probate in a single proceeding. citizens. In their union they were able to
accumulate several real properties both in the
Q: John and Paula, British citizens at birth, US and in the Philippines. Unfortunately, they
acquired Philippine citizenship by were not blessed with children. In the US, they
naturalization after their marriage. During their executed a joint will instituting as their common
marriage the couple acquired substantial heirs to divide their combined estate in equal
landholdings in London and in Makati. Paula shares, the five siblings of Alden and the seven
bore John three children, Peter, Paul and Mary. siblings of Stela. Alden passed away in 2013 and
In one of their trips to London, the couple a year later, Stela also died. The siblings of Alden
executed a joint will appointing each other as who were all citizens of the US instituted
their heirs and providing that upon the death of probate proceedings in a US court impleading
the survivor between them the entire estate the siblings of Stela who were all in the
would go to Peter and Paul only but the two Philippines.
could not dispose of nor divide the London a. Was the joint will executed by Alden and
estate as long as they live. John and Paula died Stela who were both former Filipinos valid?
tragically in the London Subway terrorist attack Explain with legal basis.
in 2005. Peter and Paul filed a petition for b. Can the joint will produce legal effect in the
probate of their parents’ will before a Makati Philippines with respect to the properties
Regional Trial Court. and of Alden Stela found here? If so, how?
a. Should the will be admitted to probate? c. Is the situation presented an example of
b. Are the testamentary dispositions valid? depecage? (2015 BAR)
c. Is the testamentary prohibition against the
division of the London estate valid? (2008 A:
BAR) a. YES, the joint will of Alden and Stela is
considered valid. Being no longer Filipino
citizens at the time they executed their joint

Civil Law
will, the prohibition under our Civil Code on If it provides for a full
joint wills will no longer apply to Alden and disposition of the
Stela. For as long as their will was executed in testator’s estate, may
accordance with the law of the place where they Does not, as a rule,
revoke the whole prior
reside, or the law of the country of which they revoke entirely the
will by substituting a
are citizens or even in accordance with the Civil prior will.
new and last
Code, a will executed by an alien is considered disposition for the
valid in the Philippines. (Art. 816, NCC) same.
b. YES, the joint will of Alden and Stela can take A prior will and a
A will and a codicil,
effect even with respect to the properties subsequent will, being
being regarded as a
located in the Philippines because what governs two separate wills, may
single instrument are
the distribution of their estate is no longer be construed
to be construed
Philippine law but their national law at the time independently of each
together.
of their demise. Hence, the joint will produces other.
legal effect even with respect to the properties
situated in the Philippines. If the former will is a notarial will, it is not required
c. NO, because depecage is a process of applying that the codicil be notarial in form as well. The law
rules of different states on the basis of the only requires that a codicil be in the form of a will. It
precise issue involved. It is a conflict of laws does not require that it be of the same kind as the
where different issues within a case may be will it is supplementing. What matters is that the
governed by the laws of different states. In this codicil complies with the formalities required of a
case, no conflict of laws will arise because Alden notarial will or holographic will, as the case may be.
and Stela are no longer Filipino citizens at the
time of the execution of their joint will and the Incorporation by Reference
place of execution is not the Philippines.
It is the incorporation of an extrinsic document or
Codicil paper into a will by reference so as to become a part
thereof.
A codicil is a supplement or addition to a will, made
after the execution of a will and annexed to be taken Requisites of Incorporation by Reference
as part thereof, by which any disposition made in (E-D-I-S)
the original will is explained, added to, or altered.
(Art. 825, NCC) 1. The document or paper referred to in the will
must be in Existence at the time of the execution
The formalities which are required in the execution of the will;
of the codicil are the same as those required in the 2. The will must clearly Describe and identify the
execution of the will. same, stating among other things the number of
pages thereof;
SUBSEQUENT 3. It must be Identified by clear and satisfactory
CODICIL
WILL proof as the document or paper referred to
Forms a part of the It is a new or a separate therein; and
original will. will. 4. It must be Signed by the testator and the
witnesses on each and every page, except in
Supplements the case of voluminous books of account or
Makes dispositions
original will, inventories. (Art. 827, NCC)
without reference to
explaining, adding to,
and independent of the
or altering any of its The documents or papers incorporated in a will be
original will.
dispositions. considered part of the will even though the same are

2022 GOLDEN NOTES
Succession
not executed in the form of a will. The doctrine of 4. It must appear from the will that the testator is
incorporation by reference is not applicable in a Revoking because of the cause which is false.
holographic will unless, of course, the testator
executes a holographic will and, superfluously, had If the revocation is based on a false or illegal cause,
it witnessed. (Balane, 2010) it is null and void. (Art. 833, NCC)
Institution of heir based on false cause as a general
REVOCATION OF WILLS (1997, 2003 BAR) rule does not affect the validity or efficacy of the
institution and shall be considered as not written,
A will may be revoked by the testator at any time unless it appears from the will that the testator
before his death. Any waiver or restriction of this would not have made such institution if he had
right is void. (Art. 828, NCC) known the falsity of such cause. (Art. 850, NCC)
The testator’s right to revoke during his lifetime is Modes of Revoking a Will
absolute because a will is ambulatory. It can neither
be waived nor restricted. As a matter of fact, even if 1. By implication of law;
the will has already been admitted to probate 2. By some will, codicil, or other writing executed
during the testator’s lifetime, it may still be revoked. as provided in case of wills; or
This necessarily follows from the principle that “a 3. By physical destruction through burning,
testament is of force after men are dead; otherwise cancelation or obliteration. (Art. 830, NCC)
it is of no strength at all while the testator lives.”
Revocation by Implication of law
Governing Law in case of Revocation
It takes place when certain acts or events take place
1. If the revocation takes place in the Philippines, subsequent to the making of a will, which nullify or
whether the testator is domiciled in the render inoperative either the will itself or some
Philippines or in some other country – testamentary disposition therein.
Philippine laws
2. If the revocation takes place outside the Instances when revocation by implication of law
Philippines: takes place:
a. By a testator who is domiciled in the 1. Upon the termination of the subsequent
Philippines – Philippine laws marriage in Article 41 of the FC through the
b. By a testator who is not domiciled in this filing of the affidavit of reappearance, the
country: spouse who contracted the marriage in bad
- Laws of the place where the will faith shall be disqualified to inherit from the
was made, or innocent spouse by testate and intestate
- Laws of the place in which the succession. Hence, any testamentary
testator had his domicile at the disposition in the will of the innocent spouse in
time of revocation. (Art. 829, NCC) favor of the guilty spouse shall be revoked by
implication of law. (Art. 43(5), FC)
Revocation based on a false or illegal cause is
null and void 2. If both spouses of the subsequent marriage
referred in Art. 41 of the FC acted in bad faith,
Requisites: (Co-Fa-Fa-R) testamentary dispositions by one in favor of the
other are revoked by operation of law. (Art. 44,
1. The cause must be Concrete, factual and FC)
not purely subjective.
2. It must be False. 3. In case of annulment, the spouse who
3. The testator must not know of its Falsity. contracted the marriage in bad faith shall be
disqualified to inherit from the innocent spouse

Civil Law
by testate and intestate succession. Hence, any 2. The testator must possess testamentary
disposition in the will of the innocent spouse in capacity;
favor of the guilty spouse shall be revoked by 3. The subsequent instrument must either contain
operation of law. (Art. 50 in relation to Art. a revocatory clause or be incompatible, totally
43(5), FC) or partially, with the prior will; and
4. The revoking will must be admitted to probate.
4. Upon issuance of the decree of legal separation,
provisions in favor of the offending spouse Ways of making a revocation by a subsequent will:
made in the will of the innocent spouse shall be 1. Express - by providing for a revocatory clause;
revoked by operation of law. (Art. 63(4)) 2. Implied - provisions are completely
inconsistent with previous will.
5. In case of preterition of compulsory heirs in the
direct line, whether living at the time of the The will containing the revocatory clause must itself
execution of the will or born after the death of be valid, and admitted to probate, otherwise, there
the testator. In such case, the preterition shall is no revocation.
annul the institution of heir; but the devises and
legacies shall be valid insofar as they are not Principle of Instanter
inofficious. (Art. 845, NCC)
1. The express revocation of the 1st will renders it
6. When the heir, devisee or legatee commits any void because the revocatory clause of the 2nd
of the acts of unworthiness which by express will, not being testamentary in character,
provision of law will incapacitate him to operates to revoke the 1st will instantly upon
succeed. In such case, any testamentary the execution of the will containing it.
disposition in favor of such heir, devisee or
legatee is revoked. (Art. 1032, NCC) 2. In implied revocation, the first will is not
instantly revoked by the second will because
7. When in the testator’s will there is a legacy of a the inconsistent testamentary dispositions of
credit against a third person or of the remission the latter do not take effect immediately but
of a debt of the legatee, and subsequently, after only after the death of the testator.
the execution of the will, the testator brings an
action against the debtor for the payment of his The fact that the subsequent will is posterior and
debt. In such case, the legacy is revoked. (Arts. incompatible with the first does not mean that the
935 and 936, NCC) first is entirely revoked because the revocation may
be total or partial. Therefore, it is possible for a prior
8. When the testator (a) transforms the thing will to subsist with a subsequent will even if they
bequeathed in such a manner that it does not are incompatible.
retain either the form or denomination it had,
or (b) when he alienates by any title or for any NOTE: In case of inconsistent wills, the subsequent
cause the thing bequeathed or any part thereof, will prevails over the prior will because it is the
or (c) when the thing bequeathed is totally lost latest expression of testamentary intent of the
during the testator’s lifetime or after his death testator.
without the heir’s fault. In such cases, the legacy
is revoked. (Art. 857, NCC; Rabuya, 2009) A revocation made in a subsequent will shall take
effect even if the new will should become
Requisites of Revocation by Subsequent will or inoperative by reason of the incapacity of the heirs,
codicil devisees, or legatees designated therein, or by their
renunciation. (Art. 832, NCC)
1. The subsequent instrument must comply with
the formal requirements of a will;

2022 GOLDEN NOTES
Succession
Ways of Revocation by Physically Destroying a A: YES, the Doctrine of Presumed Revocation applies.
Will (B-T-C-O) Where a will which cannot be found, is shown to
have been in the possession of the testator when last
1. Burning seen, the presumption is, in the absence of other
2. Tearing competent evidence, that the same was cancelled or
3. Cancelling destroyed. The same presumption arises where it is
4. Obliterating shown that the testator had ready access to the will
and it cannot be found after his death. (Gago v.
Requisites of Revocation by Physical Act of Mamuyac G.R. No. 26317, 29 Jan. 1927)
Destruction (O-T-A-P)
NOTE: The presumption is not conclusive and
1. Overt act of physical destruction; anyone may prove the contrary to rebut the
2. Testamentary capacity of the testator at the presumption.
time of performing the act of revocation;
3. Animus Revocandi - intention to revoke; and Doctrine of Dependent Relative Revocation
4. Performed by testator himself or other person
in the presence and express direction of the Where the testator’s act of destruction is connected
testator. with the making of another will, so as fairly to raise
the inference that the testator meant the revocation
NOTE: It is not necessary that the will be totally of the old to depend upon the efficacy of the new
destroyed. It is sufficient if on the face of the will, disposition, the revocation will be conditional and
there is shown some sign of the physical act of dependent upon the efficacy of the new disposition;
destruction. (Maloto v. CA, G.R. No. 76464, 29 Feb. and if, for any reason, the new will intended to be
1988) made as a substitute is inoperative, the revocation
fails and the original will remains in full force.
Revocation by physical destruction must be
coupled with animus revocandi. But a mere intent to make at some time a will in
place of that which is destroyed will not render the
The physical act of destruction of a will, like burning, destruction conditional. It must appear that the
does not per se constitute an effective revocation, revocation is dependent upon the valid execution of
unless the destruction is coupled with animus a new will.
revocandi on the part of the testator. (Maloto v. CA,
G.R. No. 76464, 29 Feb. 1988) The theory on which this principle is predicated is
that the testator did not intend to die intestate. And
The physical destruction NEED NOT be done by this intention is clearly manifest when he executed
the testator himself. two wills on two different occasions and instituted
his wife as his universal heir. There can therefore be
It may be performed by another person under his no mistake as to his intention of dying testate. (Molo
express direction and in his presence. If the v. Molo, G.R. No. L-2538, 21 Sept. 1951)
destruction done by a person other than the testator
is made not in his presence or not upon his express NOTE: Failure of the new testamentary disposition
direction, there is no revocation. upon whose validity the revocation depends on is
equivalent to the non-fulfillment of a suspensive
Q: In 1919, Miguel executed a will. In the post condition and thus prevents the revocation of the
mortem probate, there was a testimony to the original will.
effect that the will was in the testator’s
possession in 1919, but it can no longer be Q: Mr. Reyes executed a will completely valid as
found. Is the will revoked? to form. A week later, however, he executed
another will which expressly revoked his first

Civil Law
will, upon which he tore his first will to pieces. 2. If there is an implied revocation - The revocation
Upon the death of Mr. Reyes, his second will was of the second will which impliedly revoked the
presented for probate by his heirs, but it was first will revives the latter.
denied due to formal defects. Assuming that a
copy of the first will is available, may it now be ALLOWANCE AND DISALLOWANCE OF WILLS;
admitted to probate and given effect? Why? PROBATE REQUIREMENT
(2003 BAR)
Probate is a special proceeding mandatorily
A: YES. The first will may be admitted to probate required for the purpose of establishing the validity
and given effect because the will that was supposed of a will.
to revoke the same was never admitted to probate
on account of formal defects. Admission to probate No will shall pass either real or personal property
of the subsequent revoking will is one of the unless it is proved and allowed in accordance with
requisites for express revocation to take place. the Rules of Court. (Art. 838, NCC)
REPUBLICATION AND REVIVAL OF WILLS NOTE: Probate determines only the extrinsic or
formal validity of a will.
Republication of wills is the re-execution or the re-
establishment by a testator of a will which is void or Probate of a Holograhic Will
a will which the testator had once revoked.
In the probate of a holographic will, it shall be
Two ways of Republishing Wills necessary that at least one witness who knows the
handwriting and signature of the testator explicitly
1. By Reproduction - the contents of a previous will declare that the will and the signature are in the
are reproduced in a subsequent will (Art. 835, handwriting of the testator. If the will is contested,
NCC) at least three of such witnesses shall be required.
2. By Execution of a Codicil - such codicil referring
to the previous will to be republished (Art. 836, In the absence of any competent witness referred to
NCC) in the preceding paragraph, and if the court deem it
necessary, expert testimony may be resorted to.
NOTE: There can be NO republication by execution (Art. 811, NCC)
of a codicil if the previous will is void as to its form.
If the previous will is void as to its form, it can only Grounds for Disallowance of a Will
be republished by reproducing the provisions
thereof in a subsequent will. The will shall be disallowed in any of the following
cases:
Revival of wills is the process of renewing the
operative force of a will which had once been 1. If the formalities required by law have not been
revoked by the testator. complied with;
2. If the testator was insane, or otherwise
Rules on revival of wills mentally incapable of making a will, at the time
of its execution;
1. If there is an express revocation - If after making 3. If it was executed through force or under
a will, the testator makes a second will duress, or the influence of fear, or threats;
expressly revoking the first, the revocation of 4. If it was procured by undue and improper
the second will does not revive the first will, pressure and influence, on the part of the
which can be revived only by another will or beneficiary or of some other person;
codicil. (Art. 837, NCC) 5. If the signature of the testator was procured by
fraud; or

2022 GOLDEN NOTES
Succession
6. If the testator acted by mistake or did not intend NOTE: Applies only when the heirs are of the
that the instrument he signed should be his will same class or same juridical condition and
at the time of affixing his signature involves only the free portion.
thereto. (NCC, Art. 839)
As between a compulsory heir and a voluntary
2. INSTITUTION OF HEIRS heir and they are instituted without any
designation of shares, the legitime must first be
Institution of heirs is an act by virtue of which a respected and the free portion shall then be
testator designates in his will the person or persons equally divided between them.
who are to succeed him in his property and
transmissible rights and obligations. (Art. 840, NCC) 2. Individuality – heirs collectively instituted are
deemed individually instituted unless contrary
Institution of heirs cannot be allowed to affect the intent is proven.
legitimes of the compulsory heirs.
NOTE: Art. 847 of the NCC provides that when
There can be an instituted heir only in testamentary the testator institutes some heirs individually
succession. and others collectively as when he says, “I
designate my heirs A and B, and the children of
There can be a valid will even if it contains only a C,” those collectively designated shall be
provision for disinheritance or if only legacies and considered as individually instituted, unless it
devises are contained in the will even though it does clearly appears that the intention of the testator
not contain an institution of heir, or such institution was otherwise.
should not comprise the entire estate, and even
though the person so instituted should not accept 3. Simultaneity – when several heirs are
the inheritance or should be incapacitated to instituted, they are instituted simultaneously
succeed. (Art. 841, NCC) and not successively, unless the contrary is
proved.
Requisites of a Valid Institution
TREYES v. LARLAR
1. The will must be extrinsically valid; (Declaration of Heirship)
NOTE: The testator must have the testamentary Prior determination of heirship in separate
capacity to make the institution. special proceeding NOT required before filing
ordinary civil action to enforce ownership rights
2. The institution must be intrinsically valid; and acquired by virtue of succession
NOTE: The legitime must not be impaired, the NOTE: Treyes has effectively established this rule:
person instituted must be identified or unless there is a pending special proceeding for the
identifiable, and there is no preterition. settlement of the decedent's estate or for the
determination of heirship, the compulsory or
3. The institution must be effective. intestate heirs may commence an ordinary civil
NOTE: No repudiation by the heir; testator is action to declare the nullity of a deed or instrument,
not predeceased by the heir. and for recovery of property, or any other action in
the enforcement of their ownership rights acquired
Three Principles in the Institution of Heirs by virtue of succession, without the necessity of a
prior and separate judicial declaration of their
1. Equality – heirs who are instituted without a status as such. The ruling of the trial court shall only
designation of shares inherit in equal parts. be in relation to the cause of action of the ordinary
civil action, i.e., the nullification of a deed or

Civil Law
instrument, and recovery or reconveyance of has not previously established in a prior special
property, which ruling is binding only between and proceeding his status as the husband and heir of
among the parties. Rosie (Treyes v. Larlar, G.R. No. 232579, 08 Sept.
2020, J. Caguioa).
Q: Rosie Treyes, the wife of Dr. Nixon Treyes,
died without any children and without a will. Designation of Heir
She left behind 7 siblings, Antonio, Emilio,
Heddy, Rene, Celeste, Judy, and Yvonne Generally, an heir must be designated by his name
(Antonio, et al.). Dr. Nixon executed two and surname. This rule, however, is not mandatory.
Affidavits of Self-Adjudication, transferring the Even when the name of the heir has been omitted
estate of Rosie unto himself, claiming that he but the testator has designated the heir in such a
was the sole heir. Later, Antonio, et al. filed a manner that there can be no doubt as to who has
complaint for annulment of the said affidavits, been instituted, the institution is valid.
reconveyance of ownership and possession,
partition and damages. Dr. Nixon, thereafter, If two or more persons have the same names, the
filed a Motion to Dismiss on the ground that the testator must indicate some circumstance by which
RTC has no jurisdiction to decide on the the instituted heir may be known.
complaint because the determination of the
legal heirs in a separate special proceeding is a If the testator fails to mention any circumstance
prerequisite to an ordinary suit for recovery of regarding the heir instituted and there appears to
ownership and possession of property be several persons bearing the same name, there is
instituted by the legal heirs. Is his contention latent ambiguity and extrinsic evidence other than
correct? the oral declaration of the testator as to his
intention is admissible to resolve the ambiguity.
A: No. The determination of heirship in a prior
special proceeding is not a prerequisite for the A conceived child may be instituted, provided the
resolution of an ordinary civil action. Otherwise conditions in Arts. 40 and 41 of the NCC are present.
stated, the legal heirs may commence an ordinary (Conceptus pro nato habetur)
civil action arising out of a right based on succession
without the necessity of a previous and separate NOTE: A conceived child, although as yet unborn,
judicial declaration of their status as such. has a limited and provisional personality.
(Quimiguing v. Icao, G.R. No. 26795, 31 July 1970) Its
Here, it would be highly inimical to the very purpose personality is essentially limited because it is only
of the Rules to require a separate and lengthy for purposes favorable to the child. (Art. 40, NCC) Its
special proceeding for the solitary purpose of personality is provisional because it depends upon
establishing the status of Antonio, et al. as legal heirs the child being born alive later under the following
of Rosie, when their heirship has already been conditions:
deemed established by virtue of civil law, with Dr.
Nixon not seriously and substantially refuting that 1. The child must be alive for at least 24 hours
they are siblings of the decedent. If the Court will from complete delivery if it had an intra-uterine
subscribe to Dr. Nixon’s arguments and grant the life of less than 7 months.
instant Petition, it would sanction superfluity and
redundancy in procedure. To accept his stance will 2. If the child had an intra-uterine life of at least 7
necessarily mean that, moving forward, heirs will months, it is enough that the child is alive upon
not even be able to extra-judicially and summarily delivery. (Art. 41, NCC)
settle the estate of a decedent without a prior
judicial declaration of heirship in a special
proceeding. Ironically, even his Affidavits of Self-
Adjudication would be legally baseless as he himself

2022 GOLDEN NOTES
Succession
Disposition in favor of an Unknown Person 3. For a certain purpose or cause (Modal

Institution)
GR: Every disposition in favor of an unknown
person shall be void. PRETERITION
XPNs: Preterition is the omission in testator’s will of one,

1. If the identity can become certain by some some or all of the compulsory heirs in the direct line,
event or circumstance, the disposition is valid. whether living at the time of execution of the will or
It is important, however, that the event or born after the death of the testator. (Art. 854, NCC)
circumstance must appear in the will itself; it (1999, 2000, 2001, 2008 BAR)
cannot be shown by extrinsic evidence, either
oral or documentary. Meaning of “born after the death of the testator”
2. A disposition in favor of a definite class or group It simply means that the omitted heir must have
of persons shall be valid. already been conceived at the time of death of the
testator, but was born only after the death of the
Evidence aliunde CANNOT be presented to identify testator.
the unknown person. The determinate event or
circumstance, sufficient to indicate with certainty Requisites of Preterition
the person whom the testator wants to favor, must
appear in the will itself; it cannot be shown by 1. There is a total omission in the inheritance;
extrinsic evidence, either oral or documentary. 2. The person omitted is a compulsory heir in the
direct line;
If there is merely a latent ambiguity as to the 3. The omitted compulsory heir must survive the
identity of the heir, extrinsic evidence other than the testator, or in case the compulsory heir
oral declaration of the testator may be used, but if predeceased the testator, there is a right of
his identity is unknown, extrinsic evidence is not representation; and
allowed. 4. Nothing must have been received by the heir by
gratuitous title.
Effect if the institution of heir is based on a false
cause Q: Araceli Mayuga alleged that she is one of the
three (3) surviving legitimate and forced heirs
GR: The institution of heir is valid. The false cause of the late Perfecto Atienza who died intestate in
shall be considered simply as not written. 1978 without a will. He left two (2) properties in
Romblon. According to her, she was entitled to
XPN: If from the will itself, it appears that the 1/3 of the disputed lots on the assumption that
testator would not have made the institution if he the decedent left only three legal heirs (his
had known the falsity of the cause, the institution children Araceli, Benjamin, Sr. and Armando)
shall be void. and that the lots were part of the inheritance.
She contends that through the manipulation and
NOTE: The rule is, if the revocation is based on a misrepresentation with intent to defraud a co-
false or illegal cause, it is null and void (Art. 833, heir, Antonio was able to secure Free Patent
NCC) while institution of heir based on false cause 11636 while Benjamin was able to secure Free
as a general rule does not affect the validity or Patent 11637. However, Perfecto executed the
efficacy of the institution. (Art. 850, NCC) Confirmation Affidavit in 1973 almost five years
prior to his death. Was Araceli preterited?
Kinds of institution:
1. With a condition; A: No, Araceli could not claim preterition by virtue
2. With a term; and of the Confirmation Affidavit on the assumption that

Civil Law
the disputed two lots pertained to Perfecto's NOTE: If a compulsory heir has already
inheritance, he had only three legal heirs and he left received a donation from the testator, there is
Araceli with no share in the two lots. Although no preterition.
Araceli was a compulsory heir in the direct
descending line, she could not have been preterited. Reason: A donation to a compulsory heir is
Perfecto left no will. As contemplated in Article 854, considered an advance of the inheritance.
the presence of a will is necessary (Mayuga v.
Atienza, G.R. No. 208197, 10 Jan. 2018, J. Caguioa). 3. The heir will receive nothing by way of intestate
succession. (e.g., if the heir is not mentioned in
A spouse CANNOT be preterited. While a spouse is the will nor a recipient of a donation inter vivos
a compulsory heir, he/she is not in the direct line and all of the estate is disposed by will)
(ascending or descending). (Cain v. IAC, G.R. No.
72706, 27 Oct. 1987) To constitute preterition, the omission must be total
and complete, such that nothing must be given to the
NOTE: The surviving spouse shall only be entitled compulsory heir. (Aznar v. Duncan, G.R. No. L-24365,
to recover his legitime but the institution of heirs 30 June 1966)
shall not be annulled.
Effects of Preterition
There is total omission when the heir:
1. Receives nothing under the will whether as 1. Preterition annuls the institution of heirs;
heir, legatee, or devisee; 2. Devices and legacies are valid insofar as they
are not inofficious;
NOTE: If a compulsory heir is given a share in 3. If the omitted compulsory heir dies before the
the inheritance, no matter how small, there is testator, the institution shall be effectual,
no preterition. without prejudice to the right of representation.
However, if a compulsory heir gets less than his Example: X has two legitimate children: A and
legitime, while this is not a case of preterition, B. X makes a will which results in the preterition
he is entitled to a completion of his legitime of A. A predeceases X but leaves a legitimate
under Art. 906 of the NCC. His remedy is found child A-1, who is himself completely omitted
in Article 906 & 907of the New Civil Code for from the inheritance (A-1 being entitled to
the completion of his legitime. succeed X by representation). There is
preterition, not because A was preterited but
The testator cannot defeat the right of the because A-1 was preterited. (Balane, 2010) In
compulsory heirs to their legitime by the simply such case, the descendant of A, A-1, can now file
expedient of giving them less than what the law an action to annul the institution of heirs.
reserves as their legal share, or by disposing of
the estate in favor of others to such an extent Preterition annuls the institution of an heir and
that the legitime of the compulsory heirs would annulment throws open to intestate succession the
be diminished or devalued. In such eventuality, entire inheritance. The only provisions which do not
the affected compulsory heir may bring an result in intestacy are the legacies and devises made
action for the completion of his legitime or for in the will for they should stand valid and respected,
the reduction of the disposition infringing upon except insofar as the legitimes are concerned. (Acain
his rightful share in the estate of the decedent. v. IAC, G.R. No. 72706, 27 Oct. 1987)
(Paguirigan, 2017)
2. Has received nothing by way of donation inter

vivos or propter nuptias; and

2022 GOLDEN NOTES
Succession
Omission of an illegitimate child in a will the exclusion of Delia Viado, alleged to be a

amounts to preterition retardate. Can Delia Viado rescind the
extrajudicial settlement among other heirs?
Art. 854 of the NCC do not distinguish. It is
immaterial whether the heir omitted in the A: NO. The exclusion of petitioner Delia Viado from
testator’s will is legitimate or illegitimate provided the deed of extrajudicial settlement verily has the
that he is a compulsory heir in the direct line. effect of preterition. This kind of preterition,
however, in the absence of proof of fraud and bad
Omission of an adopted child in a will also faith, does not justify a collateral attack on Transfer
amount to preterition Certificate of Title. The relief instead rests on Article
1104 of the NCC to the effect that where the
An adopted child is by legal fiction considered a preterition is not attended by bad faith and fraud,
compulsory heir in the direct line. An adopted the partition shall not be rescinded but the
person is given the same rights and duties as if he is preterited heir shall be paid the value of the share
a legitimate child of the adopter and makes the pertaining to her. (Non v. CA, G.R. No. 137287, 15 Feb.
adopted person a legal heir of the adopter. (Acain v. 2000)
IAC, G.R. No. 72706, 27 Oct. 1987)
Q: Marionne and Larry, Sr. died testate. Larry, Jr.,
Compulsory Heirs in the Direct Line one of their six children, died intestate after his
mother’s death but before his father’s. Thus, the
1. Legitimate children and descendants with surviving heirs are the five children (and
respect to their legitimate parents or siblings of Larry, Jr.) of Marionne and Larry, Sr.,
ascendants; as well as the four grandchildren (children of
2. Legitimate parents of ascendants, with respect Larry, Jr.) of Marionne and Larry, Sr. namely:
to their legitimate children and descendants; Dianna, Greg, Matthew, and David.
3. Illegitimate children;
4. The father or mother of illegitimate children. Greg filed before the RTC a petition for the
probate of the Wills of Marionne and Larry, Sr.
Where the deceased left no descendants, legitimate which Wills were admitted to probate. Greg was
or illegitimate, but she left forced heirs in the direct appointed as administrator of the estates.
ascending line— her parents, and her holographic However, Darlene filed a Motion for
will does not explicitly disinherit them but simply Intervention stating that she has a legal interest
omits their names altogether, the case is one of in the estate of Marionne and Larry, Sr. because
preterition of the parents, not a case of ineffective she is the surviving spouse of Larry, Jr. having
disinheritance. (Nuguid v. Nuguid, et al., GR No. L- married him. Later on, Darlene filed a motion for
23445, 23 June 1966) intervention in the intestate settlement of Larry
Jr.'s estate proceedings which was granted.
Exclusion of an Heir in the Extrajudicial
Settlement of Estate As to the Motion of Darlene filed before the RTC
having jurisdiction over the testate proceedings
Q: Virginia P. Viado died intestate in 1982. Her of Marionne and Larry, Sr., Greg argued that
part in the conjugal property was transmitted to Darlene’s rights and interests, if any, can be fully
her heirs—her husband Julian and their protected in the settlement of Larry, Jr.'s estate
children Nilo Viado, Rebecca Viado, Leah Viado proceeding, which directly involves the
and Delia Viado. The inheritance, which vested settlement of Larry, Jr.'s intestate estate. Thus,
from the moment of death of the decedent, her intervention in the testate proceedings
remained under a co-ownership regime among which involves the wills of Marionne and Larry,
the heirs until partition. The heirs later on Sr., is completely unnecessary and superfluous.
executed a deed of extrajudicial settlement to Is Greg’s contention correct?

Civil Law
A: YES. Larry, Jr. died after his mother's death but as they are not
before his father's death. When Marionne died, inofficious.
Larry, Jr. would have inherited from her as a
compulsory heir by virtue of Article 887(1) of the The omission is By mere mistake or
Civil Code, which states: intentional in which case inadvertence
the institution of heir is resulting in the fact
Art. 887. The following are compulsory heirs: not wholly void but only in that the compulsory
(1) Legitimate children and descendants, with so far as it prejudices the heir receives nothing
respect to their legitimate parents and ascendants legitime of the person at all. There is total
[xxx] disinherited. deprivation.
As far as Darlene is concerned, she would inherit Similarities

from Larry, Jr. pursuant to Article 887(3) and part
of his estate would be his share in the estate of his In both cases, the omitted heir and the imperfectly
mother, Marionne. Darlene could not inherit from disinherited heir get at least their legitimes.
the estate of Larry, Sr. because Larry, Jr.
Both legacies and devises remain valid insofar as
predeceased Larry, Sr., his father, and the children
the legitime has not been impaired.
of Larry, Jr. would succeed by right of
representation from their grandfather pursuant to
Article 972 of the Civil Code. Moreover, Darlene is The mere fact that an heir was omitted in a will, does
not related by blood, but only by affinity, to Larry, NOT automatically equate to preterition.
Sr. (Tirol v. Nolasco, G.R. No. 230103, 27 Aug, 2020, J.
Caguioa) One must distinguish whether the omission of a
forced heir in the will of the testator is by mistake or
Preterition and Defective Disinheritance in advertence or voluntary or intentional:
1. If by mistake or inadvertence, there is true
preterition and total intestacy results.
DEFECTIVE 2. If the omission is intentional, the effect would
PRETERITION
DISINHERITANCE be a defective disinheritance covered by Art.
918 of the NCC in which case the institution of
Distinctions heir is not wholly void but only in so far as it
prejudices the legitime of the person
A testamentary disinherited. (Tolentino, 1973)
Omission in the
disposition depriving any
testator’s will of the
compulsory heir of his Effect of Preterition on the Will Itself
forced heirs or any of
share in the legitime for a
them.
cause authorized by law. GR: The effect of annulling the institution of heirs
will be, necessarily, the opening of a total intestacy
The institution of
except that proper legacies and devises must be
The institution remains heirs is completely
respected. Here, the will is not abrogated.
valid, but must be reduced annulled. Hence, the
insofar as the legitime has annulment is in toto,
XPN: If the will contains a universal institution of
been impaired. Such unless there are in
heirs to the entire inheritance of the testator, the
nullity of institution is addition,
will is totally abrogated. (Nuguid v. Nuguid, G.R. No.
limited only to that testamentary
L-23445, 23 June 1966)
portion of which, the dispositions in the
disinherited heir has been form of legacies and
Reason: The nullification of such institution of the
unlawfully deprived of. devices which shall
universal heirs without any other testamentary
remain valid so long
disposition in the will amounts to a declaration that
nothing at all was written.

2022 GOLDEN NOTES
Succession
PREDECEASE, INCAPACITY, Heirs who repudiated their share may NOT be

AND REPUDIATION represented. A voluntary heir may NOT also be
represented.
Effect if the Heir Predeceases the Testator
Rules in case of representation
If the heir who predeceases the testator is a
voluntary heir, a devisee, or a legatee, he shall It shall take place in cases of:
transmit no right to his own heirs. Death prevents a. Death
him from acquiring any rights. b. Incapacity
c. Disinheritance
NOTE: The rule is absolute with respect to a
voluntary heir and a devisee or legatee. Representation applies only to those acquired by
virtue of the law (legitime, intestate share, in case of
Effect if the Heir Repudiated or Renounced his reserva troncal).
Inheritance
No representation in cases of repudiation.
An heir who renounced his inheritance, whether as
compulsory or as voluntary heir, does not transmit Representation only occurs in the direct descending
any right to his own heirs. line and never in the ascending.
NOTE: An heir who repudiated his inheritance, may In the direct collateral line, the right of
represent the person whose inheritance he has representation only takes place in favor of children
renounced. (Art. 976, NCC) of brothers or sisters, whether full or half-blood.
The reason for this is found under Art. 971 of the The representation obtains degree by degree, and
NCC: “the representative does not succeed the no jump is made.
person represented but the one whom the person
represented would have succeeded.” Outline of Rules (Balane, 2016)
RIGHT OF REPRESENTATION TN = Transmit Nothing

R = Representation
Right of representation is the right created by fiction
of law, by virtue of which, the representative is
Renuncia- Disinheri-
raised to the place and degree of the person Death Incapacity
tion tance
represented, and acquires the rights which the
latter would have if he were living or if he could Compulsory Heir
have inherited. (Art. 970, NCC)
1. TN 1. TN 1. TN 1. TN
The representative thereby steps into the shoes of 2. R 2. R 2. No R 2. R
the person he represents and succeeds, not from the
latter, but from the person whose estate the person Voluntary Heir
represented would have succeeded.
1. TN 1. TN 1. TN Not
The right of representation is allowed in 2. No R 2. No R 2. No R applicable
compulsory succession with respect to the legitime,
in case the compulsory heir in the descending line Legal Heir
dies before the testator or becomes incapacitated to
1. TN 1. TN 1. TN Not
succeed.
2. R 2. R 2. No R applicable

Civil Law
3. SUBSTITUTION OF HEIRS b. If the charges or conditions are

personally applicable only to the heir
Substitution is the appointment of another heir so instituted. (Art. 862, NCC)
that he may enter into the inheritance in default of
the heir originally instituted. (Art. 857, NCC) (2002 4. Fideicommissary Substitution (Indirect
BAR) Substitution)– It is a substitution by virtue of
which the fiduciary or first heir instituted is
The concept of substitution applies in cases where entrusted with the obligation to preserve and to
the heir or heirs instituted should die before the transmit to a second heir the whole or part of
testator or should not wish, or should be the inheritance. It shall be valid provided such
incapacitated to accept the inheritance. substitution does not go beyond one degree
from the heir originally instituted, and provided
If the Substitute Dies Ahead of the Testator further, that the fiduciary or first heir and the
second heir are living at the time of the death of
The substitute who dies ahead of the testator the testator. (Art. 863, NCC) (2002, 2008 BAR)
prevents him from acquiring any rights, since there
is no substitution to speak of. Parties to a Fideicommissary Substitution
Kinds of substitution 1. Fiduciary or first heir is the one who preserves

and transmits the inheritance to the
1. Simple/common (2002 BAR) – takes place fideicommissary; and
when the heir instituted: 2. Fideicommissary or second heir is the one who
a. Predeceases the testator; eventually receives the inheritance.
b. repudiates the inheritance; or
c. is incapacitated to succeed; Elements of Fideicommissary Substitution
NOTE: Simple substitution without a statement 1. There must be a first heir or fiduciary who takes
of the causes, to which it refers, shall comprise the property upon the testator’s death;
the 3 above mentioned situations unless the 2. An absolute obligation is imposed upon the
testator has provided otherwise. fiduciary to preserve and to transmit to a
second heir the property at a given time;
2. Brief/compendious – when two or more persons 3. There is a second heir who takes the property
are substituted for one; and one person for two subsequently from the fiduciary and must be
or more heirs.; one degree from the first heir; and
4. The first and second heir must both be living
3. Reciprocal – one heir is designated as a and qualified at the time of the death of the
substitute for an instituted heir while the latter testator.
is simultaneously instituted as a substitute for
the former.; NOTE: It should be imposed on the free portion and
not on the legitime. Fideicommissary substitution
GR: The substitute shall be subject to the same can never burden the legitime. (Art. 864, NCC)
charges and conditions imposed upon the
instituted heir. Meaning of "One Degree"
XPNs: It refers to the degree of relationship; it means “one

a. If the testator has expressly provided generation”. As such, the fideicommissary can only
the contrary be either a parent or child of the first heir. (Palacios
v. Ramirez, G.R. No. L-27952, 15 Feb. 1982)

2022 GOLDEN NOTES
Succession
The relationship is always counted from the first 2. The fideicommissary is a sort of naked owner;
heir. However, fideicommissary substitutions are ownership is consolidated in him upon
also limited to one transmission. There can only be transmission of the property to him.
one fideicommissary transmission such that after
the first, there can be no second fideicommissary Fiduciary’s Tenure
substitution.
1. Primary rule – the period indicated by the
Both the first and second heir must be living and testator.
qualified at the time of the death of the testator 2. Secondary rule – if the testator did not indicate
a period, then the fiduciary’s lifetime.
The fideicommissary inherits not from the first heir
but from the testator; thus, the requirement that the Delivery of property to fideicommissary heir
fideicommissary be alive or at least conceived at the
time of the testator’s death. GR: The fiduciary should deliver the property intact
and undiminished to the fideicommissary heir upon
Effect if the fideicommissary Predeceases the arrival of the period.
fiduciary
XPN: The only deductions allowed, in the absence of
If the fideicommissary predeceases the fiduciary a contrary provision in the will are:
but survives the testator, his rights pass to his own 1. Legitimate expenses;
heirs. 2. Credits; and
3. Improvements.
NOTE: The first heir receives property, either upon
the death of the testator or upon the fulfillment of The coverage of legitimate expenses and
any suspensive condition imposed by the will. improvements are limited to necessary and useful
expenses, but not to ornamental expenses.
The first heir is almost like a usufructuary who has
the right to enjoy the property. Thus, like a Express obligation to preserve and transmit the
usufructuary, he cannot alienate the property. The property
first heir is also obliged to make an inventory, but he
is not required to furnish a bond. The obligation to preserve and transmit must be
given clearly and expressly:
Alienation of the property subject to the 1. by giving it a name “fideicommissary
fideicommissary substitution by the first heir substitution”; or
2. by imposing upon the first heir the absolute
Alienation of the property subject to the obligation to preserve and deliver the property
fideicommissary substitution by the first heir is not to the second heir.
valid. The fiduciary cannot alienate the property
either by an act inter vivos or mortis causa. He is Remedy of the fideicommissary to protect
bound to preserve the property and transmit it to himself against alienation to an innocent third
the second heir or fideicommissary. person
NOTE: If the first heir was able to register the property in

1. If the fiduciary registers the property in his his name, the fideicommissary should annotate his
name without the fideicommissary claim on the land on the title to protect himself
substitution, innocent parties are protected. against any alienation in favor of innocent third
However, if the property is unregistered, the parties.
buyer acquires only the seller’s right. i.e.,
subject to the fideicommissary substitution;

Civil Law
When the property passes to the fideicommissary, c. If Ruffa predeceases Raymond, can Scarlet
there is no more prohibition to alienate. inherit the property directly from Raymond?
(2008 BAR)
If the testator gives the usufruct to different persons A:
successively, the provisions on fideicommissary a. When an obligation to preserve and transmit
substitution also apply. the property to Scarlet was imposed on Ruffa,
the testator Raymond intended to create a
Different dispositions related or analogous to fideicommissary substitution where Ruffa is
fideicommissary substitutions which the law the fiduciary and Scarlet is the
considers as void (Art. 867, NCC) fideicommissary. Having complied with the
requirements of Art. 863 and 869 of the NCC,
1. Fideicommissary substitutions which are not the fideicommissary substitution is valid.
made in an express manner, either by giving
them this name, or imposing upon the fiduciary b. If Scarlet predeceases Ruffa, the latter, as the
the absolute obligation to deliver the property former’s heir, will be entitled to the property.
to a second heir; But since it is also Ruffa’s death which will
2. Provisions which contain a perpetual trigger the fideicommissary substitution, the
prohibition to alienate and even a temporary practical effect of her death would be to allow
one, beyond the limit fixed in Art. 863 of the her (Ruffa’s) mother to inherit the property as
NCC (20 years); (Art. 870, NCC) Ruffa’s heir. The transfer of the property from
3. Those which impose upon the heir the charge of Scarlet to Ruffa (as Scarlet’s heir) is what
paying to various persons successively, beyond allows Ruffa’s mother to inherit the property,
the limit prescribed in Art. 863 of the NCC, a which she would otherwise be disqualified to
certain income or pension; inherit under Art. 992 of the NCC.
4. Those which leave to a person the whole or part
of the hereditary property in order that he may c. One requirement of a valid fideicommissary
apply or invest the same according to secret substitution is that both heirs should be alive
instructions communicated to him by the at the time of the testator’s death. Ruffa
testator. predeceasing Raymond means that the
fideicommissary substitution is no longer
The nullity of the fideicommissary substitution does valid. In this regard, the only way by which
NOT prejudice the validity of the institution of the Scarlet can inherit the property directly from
heirs first designated; the fideicommissary clause Raymond is by legal succession. Her right to do
shall simply be considered as not written. (Art. 868, so, however, is negated by (1) the presence of
NCC) Raymond and Ruffa’s mother, who necessarily
excludes her; and (2) the provisions of Art. 992
Q: Raymond, single, named his sister Ruffa in his of the NCC.
will as a devisee of a parcel of land which he
owned. The will imposed upon Ruffa the (NO. Scarlet cannot inherit the property
obligation of preserving the land and directly from Raymond by way of
transferring it, upon her death, to her fideicommissary substitution. Under the law,
illegitimate daughter Scarlet who was then only one of the requisites of a valid fideicommissary
one year old. Raymond later died, leaving substitution is that both heirs must be living
behind his widowed mother, Ruffa and Scarlet. and qualified to succeed at the time of the
a. Is the condition imposed upon Ruffa to testator’s death. However, Scarlet can inherit
preserve the property and to transmit it upon the property from Raymond by way of
her death to Scarlet, valid? compulsory succession.)
b. If Scarlet predeceases Ruffa, who inherits the
property?

2022 GOLDEN NOTES
Succession
4. CONDITIONAL TESTAMENTARY Conditions on the Prohibition to Marry

DISPOSITIONS AND THOSE WITH A TERM
GR: An absolute condition not to contract a first or
CONDITIONAL INSTITUTION OF HEIRS subsequent marriage is not a valid condition and
shall be considered as not written. (Art. 874, NCC).
Condition is a future or uncertain event or a past However, the validity of the disposition itself shall
event unknown to the parties, upon which the not be affected.
performance of an obligation depends.
XPN: If such condition was imposed on the widow
Conditions, terms, and modes are not presumed, or widower by the deceased spouse or by the latter’s
they must be clearly expressed in the will. The ascendants or descendants, in which case, the
condition must fairly appear from the language of condition is valid. (Art. 874, NCC)
the will. Otherwise, it shall be considered pure.
If the prohibition is relative with respect to persons,
Kinds of Condition time or place, such conditions is valid and must be
complied with unless the testator renders it
impossible for the heir to marry at all.
RESOLUTORY SUSPENSIVE
CONDITION CONDITION
Disposition Captatoria is any disposition made upon
The disposition becomes the condition that the heir shall make some
The effectivity of the
effective upon the death provision in his will in favor of the testator or of any
disposition is
of the testator but is other person shall be void. (Art. 875, NCC) Here,
suspended until the
extinguished upon the both the condition and the disposition are void but
fulfillment of the
happening of the the validity of the other provisions, including the
condition.
condition. will itself, shall not be affected.
Effect of Impossible Condition on the Reason for the prohibition: Disposition captatoria is
Testamentary Disposition incompatible with good faith and with the nature of
testaments; it is immoral and contrary to the
Impossible conditions and those contrary to law or freedom to make wills.
good customs shall be considered as not imposed
and shall in no manner prejudice the heir, even if the Effect of a Suspensive Condition
testator should otherwise provide. (Art. 873, NCC)
1. Heir, devisee, or legatee acquires no rights until
GR: The testator CANNOT impose any charge, the condition is fulfilled.
condition or substitution whatsoever upon the
legitimes. If a charge condition or substitution is 2. If he dies before the condition is fulfilled, he
imposed, it shall be considered as not imposed. transmits no rights to his heirs, even though he
survived the testator.
XPN: Testator can validly impose a prohibition 3. Once the condition is fulfilled, its effects
against the partition of the legitimes for a period not retroact to the moment of the death of the
exceeding 20 years. testator.
NOTE: The legitime passes by strict operation of Reason: Capacity to succeed by the conditional
law, independently of the testator’s will. As such, heir must be determined both at the time of the
any condition, burden, or substitution upon the death of the testator and at the time of the
same is merely considered by law as not imposed. fulfillment of the condition.
(Art. 872, NCC)

Civil Law
4. If the suspensive condition is not fulfilled, the SUSPENSIVE

estate will be placed under administration SUSPENSIVE TERM
CONDITION
until:
a. The condition is fulfilled, in which case the The instituted heir does
The right of the heir
estate should be given to the instituted not acquire any
instituted subject to a
heir; successional right upon
term is vested at the
b. It becomes obvious that it cannot be the death of the testator
time of the testator’s
fulfilled, in which case, the estate should be as long as the condition
death. Hence, if he
given to the intestate heirs. is not yet fulfilled.
dies after the testator
Hence, upon the death of
but before the term
Negative potestative condition consists in the non- the instituted heir, prior
expires, he can
performance of an act or not giving something and to the fulfillment of the
transmit his rights to
he shall comply by giving a security that he will not condition, no right is
his own heirs.
do or give that which has been prohibited by the transmitted to his heirs.
testator. (Art. 879, NCC) In this case, the heir
instituted has a right to receive his share in the Q: When the disposition is subject to a term,
inheritance upon the death of the testator and loses what should be done by the instituted heirs or
his right only when he violates the condition. legal heirs so that they can enjoy possession of
the property?
INSTITUTION OF HEIR WITH A TERM
A: If the disposition is subject to a:
A term is any future and certain event upon the 1. Suspensive term - The legal heirs can enjoy
arrival of which the validity or efficacy of a possession of the property until the expiration
testamentary disposition subject to it depends. of the period, but they must put up a bond
(caucion muciana) in order to protect the right
A disposition with a suspensive term does not of the instituted heir.
prevent the instituted heir from acquiring his rights 2. Resolutory term - The legal heirs can enjoy
and transmitting them to his heirs even before the possession of the property but when the term
arrival of the term. arrives, he must give it to the legal heirs. The
instituted heir does not have to file a bond.
Reason: The right of the heir instituted subject to a
term is vested at the time of the testator's death - he A “Caucion Muciana” is a security or bond required
will just wait for the term to expire. from the conditional heir in order to secure the
rights of those who would succeed to the property
If the heir dies after the testator but before the term upon violation of the condition.
expires, he transmits his rights to his own heirs
because of the vested right. Instances when caucion muciana is needed
1. Suspensive term - the legal heir shall be

considered as called to the succession until
the arrival of the period. But he shall not
enter into possession of the property until
after having given sufficient security, with
the intervention of the instituted heir. (Art.
885(2), NCC)
2. Negative potestative condition - If the

potestative condition imposed upon the
heir is negative, or consists in not doing or

2022 GOLDEN NOTES
Succession
not giving something, he shall comply by not affect the efficacy of entitled to succeed the
giving a security that he will not do or give his rights to the testator.
that which has been prohibited by the succession.
testator, and that in case of contravention
he will return whatever he may have Obligates but does not Suspends but does not
received, together with its fruits and suspend obligate
interests. (Art. 879, NCC)
In case of doubt, the institution should be
considered as modal not conditional.
NOTE: If the heirs do not post the required
bond in case of a suspensive term or a
negative potestative condition, the estate Q: The testatrix devised a parcel of land to Dr.
shall be placed under administration. (Art. Rabadilla. It was provided that Dr. Rabadilla will
880, NCC) acquire the property subject to the obligation,
until he dies, to give Maria 100 piculs of sugar,
3. Mode - That which has been left in this and in the event of non-fulfillment, the property
manner may be claimed at once provided will pass to the nearest descendants of the
that the instituted heir or his heirs give testatrix.
security for compliance with the wishes of
the testator and for the return of anything When Dr. Rabadilla died, Maria filed a complaint
he or they may receive, together with its to reconvey the land alleging that the heirs of Dr.
fruits and interests, if he or they should Rabadilla violated the condition. Is the
disregard this obligation. (Art. 882, NCC) institution of Dr. Rabadilla, a modal institution?
(2002 BAR)
A: YES. It imposes a charge upon the instituted heir
MODAL INSTITUTION OF HEIRS without, however, affecting the efficacy of such
institution.
A mode is an obligation imposed upon the heir to do
or to give something In a modal institution, the testator states the object
of the institution, the purpose or application of the
Modal institution – statement of: property left by the testator, or the charge imposed
1. Object of the institution, by the testator upon the heir. A mode imposes an
2. Application of the property left by the testator, obligation upon the heir or legatee, but it does not
3. Charge imposed by him. affect the efficacy of his rights to the succession. The
condition suspends but does not obligate; and the
Modal disposition mode obligates but does not suspend. (Rabadilla v.
CA, G.R. No. 113725, 29 June 2000)
A “mode” imposes an obligation upon the heir,
devisee or legatee, but it does not affect the efficacy 5. LEGITIME
of his rights to the succession. The mode obligates
but does not suspend. Legitime is that part of the testator's property which
he cannot dispose of because the law has reserved it
Mode distinguished from a Condition for certain heirs who are, therefore, called
compulsory heirs. (Art. 886, NCC) (2003 BAR)
MODE CONDITION
It is mandatory on the part of the testator to reserve
Imposes an obligation The condition must that part of the estate to the legitime.
upon the heir, devisee happen or be fulfilled in
or legatee, but it does order for the heir to be

Civil Law
Determination of the Legitime complying with the testamentary provision and

delivering to the devisee or legatee the part of
To determine the legitime, the value of the property the inheritance of which the testator could
left at the death of the testator shall be considered, freely dispose. (Art. 911, NCC)
deducting all debts and charges, which shall not
include those imposed in the will. (Art. 908, NCC) 4. If the devise subject to reduction should consist
of real property, which cannot be conveniently
Donations given to children shall be charged to the divided, it shall go to the devisee if the reduction
legitime. (Art. 909, NCC) does not absorb one-half of its value; and in a
contrary case, to the compulsory heirs; but the
Kinds of Legitime former and the latter shall reimburse each
other in cash for what respectively belongs to
1. Fixed – If the amount (fractional part) does not them.
vary or change regardless of whether there are
concurring compulsory heirs or not. The devisee entitled to a legitime may retain the
a. legitimate children and descendants entire property, provided its value does not
always have ½ legitime (2003, 2005, exceed that of the disposable portion and of the
2010 BAR) share pertaining to him as legitime. (Art. 912,
b. legitimate parents and ascendants in NCC)
the absence of legitimate children and
descendants always have ½ legitime NOTE: If the heirs or devisees do not choose to
(Art. 887(1), NCC) avail themselves of the right granted by the
preceding article, any heir or devisee who did
2. Variable – If the amount changes or varies not have such right may exercise it; should the
depending with whom the compulsory heirs latter not make use of it, the property shall be
concur. sold at public auction at the instance of any one
of the interested parties. (Art. 913, NCC)
After the legitime has been determined in
accordance with Arts. 908 to 910 of the NCC, the The testator may devise and bequeath the free
reduction shall be made as follows: portion as he may deem fit. (Art. 914, NCC)
1. Donations shall be respected as long as the RULES ON LEGITIME

legitime can be covered, reducing or annulling,
if necessary, the devises or legacies made in the There is no obligation on the compulsory heirs to
will; accept their legitimes. (Art. 1041, NCC)
2. The reduction of the devises or legacies shall GR: The testator cannot deprive the compulsory
be pro rata, without any distinction whatever. heirs of their legitimes.
If the testator has directed that a certain devise

or legacy be paid in preference to others, it XPN:
shall not suffer any reduction until the latter 1. When the testator validly disinherited his heir.
have been applied in full to the payment of the (Art. 915, NCC)
legitime; 2. When the partition of the hereditary estate for
a period not exceeding twenty (20) years is
3. If the devise or legacy consists of a usufruct or expressly forbidden by the testator. (Art. 1083,
life annuity, whose value may be considered NCC)
greater than that of the disposable portion, the
compulsory heirs may choose between

2022 GOLDEN NOTES
Succession
NOTE: Only the legitime is reserved. The free Rules governing succession in the Direct
portion may be disposed of by will. Ascending line
Q: Crispin died testate and was survived by Alex 1. Proximity - the nearer excludes the more
and Josine, his children from his first wife; Rene remote;
and Ruby, his children from his second wife; and 2. Division by line; and
Allan, Bea, and Cheska, his children from his 3. Equal division within the line.
third wife. One important provision in his will
reads as follows: "Ang lupa at bahay-sa-Lungsod Limitations on the Testator’s Rights of
ng Maynila ay ililipat at ilalagay sa pangalan nila Ownership
Alex at Rene hindi bilang pamana ko sa kanila
kundi upang pamahalaan at pangalagaan The testator CANNOT make donations inter vivos
lamang nila at nang ang sinuman sa aking mga which upon the legitime or which are inofficious.
anak, sampung apo at kaapuapuhan ko sa
habang panahon, ay may tutuluyan kung NOTE: The prohibition does not cover an onerous
magnanais na mag-aral sa Maynila o sa kalapit disposition (sale) because this involves an exchange
na mga lungsod." Is the provision valid? (2008, of values. (Art. 886, NCC)
2014 BAR)
Rules on the Donations made by the testator in
A: NO, the provision is not valid. At first glance, the favor of his children, legitimate and illegitimate,
provision may appear valid as it provides for the and strangers and those which are Inofficious:
transfer of title in favor of Alex and Rene over the
parcel of land. A legacy or devise is to be construed 1. Donations given to children shall be charged to
as a donation effective mortis causa, and it is their legitimes;
intended to transfer ownership to the legatee or
devisee. Since the ownership is legally transferred Reason: Donations to the compulsory heirs
to the Alex and Rene, they cannot be prohibited by are advances to the legitimes.
the testator from alienating or partitioning the same
perpetually. The dispositions of the testator 2. Donations made to strangers shall be charged
declaring all or part of the estate inalienable for to that part of the estate of which the testator
more than twenty years are void. (Art. 870, NCC) could have disposed by his last will;
Rules governing succession in the Direct 3. Insofar as they may be inofficious or may
Descending line exceed the disposable portion, they shall be
reduced according to the rules established by
1. Preference between lines - descending line is this Code.; (Art. 909, NCC)
preferred over the ascending line;
2. Proximity- the nearer excludes the more 4. Donations which an illegitimate child may have
remote; received during the lifetime of his father or
3. Right of representation, in case of predecease, mother, shall be charged to his legitime.
incapacity and disinheritance;
4. If all the legitimate children repudiate their Should they exceed the portion that can be
legitimes, the next generation of legitimate freely disposed of, they shall be reduced in the
descendants succeed in their own right. manner prescribed by this Code. (Art. 910, NCC)

Civil Law
Remedies of a compulsory heir whose legitime If each of the instituted heirs has been given an
has been impaired aliquot part of the inheritance and the parts
together exceed the whole inheritance, or the whole
1. In case of preterition – annulment of institution free portion, as the case may be, each part shall be
of heirs and reduction of devises and legacies; reduced proportionately. (Art. 853, NCC)
2. In case of partial impairment – completion of
legitime; TABLE OF LEGITIMES
3. In case of inofficious donation –restoration.
(Jurado, 2009) WHEN SURVIVING SPOUSE ALONE
The renunciation or compromise of future legitime ½ of the hereditary estate (Free portion = ½)
is prohibited and considered null and void. (Art. 900, NCC)
Surviving spouse where the

Reason: Prior the predecessor’s death, the heir’s
marriage was solemnized under 1/3 of the
right is simply inchoate. (Balane, 2016)
articulo mortis and the deceased hereditary
died within 3 months from the estate
The prohibition applies only to transactions of
time of marriage.
compromise or renunciation between the
(Free portion
predecessor and the prospective compulsory heir.
NOTE: The deceased was the =2/3)
Any property which the compulsory heir may have
spouse who was at the point of (Art. 900,
gratuitously received from his predecessor by
death at the time of marriage NCC)
virtue of the renunciation or compromise will be
(Tolentino, 1992)
considered an advance on his legitime and must be
duly credited. (Balane, 2016) Surviving spouse where the ½ of the
marriage was solemnized under hereditary
Completion of legitime articulo mortis and the deceased estate
died within 3 months from the
Any compulsory heir to whom the testator has left time of marriage, but the parties (Free portion
by any title less than the legitime belonging to him have been living as husband and = ½)
may demand that the same be fully satisfied. (Art. wife for more than 5 years prior to (Art. 900,
906, NCC) (2001, 2010 BAR) the marriage. NCC)
NOTE: Testamentary dispositions that impair or

diminish the legitime of the compulsory heirs shall WHEN LEGITIMATE CHILD/CHILDREN ALONE
be reduced on petition of the same, insofar as they
½ of the hereditary estate (Free
may be inofficious or excessive. (Art. 907, NCC) Legitimate
portion = ½). (Balane, 2016; Art.
children
888, NCC)
If the testator has instituted only one heir, and the
institution is limited to an aliquot part of the
inheritance, - legal succession takes place with
respect to the remainder of the estate. (Art. 851,
NCC)
If the testator instituted several heirs as sole heirs

but allotted only an aliquot part of the inheritance
and together, they do not cover the whole
inheritance, or the whole free portion - each part
shall be increased proportionately. (Art. 852, NCC)

2022 GOLDEN NOTES
Succession
PRIMARY HEIRS CONCUR WITH CONCURRING

COMPULSORY HEIRS Illegitimate children
(2005, 2010 BAR) = ½ of the share of each
Legitimate child legitimate child
= ½ of the hereditary estate (Art. 892, NCC)
One legitimate Surviving spouse Free portion

child and the = ¼ of the hereditary estate = whatever remains
surviving
spouse Free portion NOTE: The share of the
=¼ surviving spouse shall have
preference over those of the
(Art. 898, NCC) illegitimate children whose
Legitimate children share may suffer reduction pro
= ½ of the hereditary estate in rata because there is no
equal portions (Art. 888, NCC) preference as among
Two or more themselves.
legitimate Surviving spouse
children and = a share equal to that of each Legitimate children
the surviving child (Art. 892, NCC) = ½ of the hereditary estate in
spouse equal portions (Art. 888, NCC)
Free portion
= whatever remains Surviving spouse
= a share equal to that of each
Legitimate child legitimate child (Art. 895, NCC)
= ½ of the hereditary estate (if
there are several, they shall Illegitimate children
Two or more
divide the ½ share in equal = ½ of the share of each
legitimate
portions) legitimate child (Art. 892, NCC)
children,
(Art. 888, NCC)
surviving
Free portion
spouse and
One legitimate Illegitimate children = whatever remains
illegitimate
child and = ½ of the share of each
children
illegitimate legitimate child (if the free NOTE: The share of the
children portion is insufficient, the surviving spouse shall have
illegitimate children shall preference over those of the
divide the free portion equally illegitimate children whose
among themselves) share may suffer reduction pro
(Art. 895, NCC) rata because there is no
preference as among
Free portion themselves.
= whatever remains
Legitimate child
One legitimate
= ½ of the hereditary estate CONCURRENCE AMONG CONCURRING
child, the
(Art. 888, NCC) COMPULSORY HEIRS
surviving
spouse, and
Surviving spouse Surviving spouse
illegitimate Surviving
= ¼ of the hereditary estate = 1/3 of the hereditary estate
children spouse and
(Arts. 879, 898)

Civil Law
illegitimate Illegitimate children Parents

children = 1/3 of the hereditary estate. = excluded
(Rabuya, 2009; Art. 894, NCC)
Children
SECONDARY HEIRS CONCUR WITH
Parents and = ½ if legitimate and ½ of the
COMPULSORY HEIRS
children of the share of each legitimate child if
Legitimate parents Illegitimate illegitimate children
= ½ of the hereditary estate. Decedent
(Arts. 889 and 890, NCC) Free portion
Legitimate = whatever remains
parents and
Surviving spouse
surviving (Art. 903, NCC)
= ¼ of the hereditary estate (Art.
spouse
893, NCC) Parents
(1999 BAR)
= ¼ of the hereditary estate
Free portion
Parents and
=¼ surviving Surviving spouse
Legitimate parents spouse of the = ¼ of the hereditary estate
= ½ of the hereditary estate Illegitimate
Decedent Free portion
Illegitimate children =½
Legitimate = ¼ of the hereditary estate in (Art. 903, NCC)
parents and equal shares
illegitimate Legitime of Illegitimate Children
children Free portion
=¼ The legitime of each illegitimate child shall consist
of one-half of the legitime of a legitimate child. (Art.
(Arts. 889 and 890, NCC) 176, FC)
The legitime of the illegitimate children shall be

Legitimate parents
taken from the portion of the estate at the free
= ½ of the hereditary estate
disposal of the testator, provided:
Illegitimate children
1. The total legitime of the illegitimate children
Legitimate = ¼ of the hereditary estate in
shall not exceed the free portion;
parents, equal shares
2. The legitime of the surviving spouse must be
surviving
first fully satisfied. (Art. 895, last par., NCC)
spouse, and Surviving spouse
illegitimate = 1/8 of the hereditary estate
COLLATION
children
Free portion
Collation is the process whereby the value of all
= 1/8
donations inter vivos made by the decedent is added
to his available assets in order to arrive at the value
(Arts. 889 and 890, NCC)
of the net hereditary estate. (Balane, 2010)
To collate is to bring back or return to the hereditary

mass, in fact or fiction, property which came from
the estate of the decedent, during his lifetime, but
which the law considers as an advance from the

2022 GOLDEN NOTES
Succession
inheritance. Collation is applicable to both Property left by will (legacy or devise) is not
donations to compulsory heirs and donations to deemed subject to collation if the testator has not
strangers. otherwise provided, but the legitime shall remain
unimpaired. (Art. 1063, NCC)
GR: Compulsory heirs are obliged to collate. (Art.
1061, NCC) Steps in determining the legitime of Compulsory
Heirs
XPNs:
1. When testator should have so expressly 1. Determination of the gross value of the estate at
provided; the time of the death of the testator; (Art. 908,
2. When compulsory heir repudiates his NCC)
inheritance. (Art. 1061, NCC) 2. Deduct all the debts and charges which are
chargeable against the estate; (Art. 908, NCC)
Properties to be collated: 3. Collate or add the value of all donations inter
vivos to arrive at the net hereditary estate which
1. Any property or right received by gratuitous will serve as the basis of determining the
title during testator’s lifetime.; (Art. 1061, NCC) legitime; (Art. 1061, NCC)
2. All that may have been received from decedent 4. Impute all the value of donations inter vivos
during his lifetime;(Art. 1064(2) NCC) made to compulsory heirs against their legitime
3. All that their parents have brought to collation and of the value of all donations inter vivos
if alive; (Art. 1064(1), NCC) made to strangers against the disposable free
4. Any sums paid by a parent in satisfaction of the portion; (Art. 909, NCC)
debts of his children, election expenses, fines, 5. If the legitime is impaired, the following
and similar expenses. (Art. 1069, NCC) reductions shall be made:
Properties NOT subject to collation: Order of Preference in Reducing testamentary

dispositions and donations
1. Absolutely no collation – expenses for support,
education (elementary and secondary only), 1. Reduce pro rata the non-preferred legacies and
medical attendance, even in extraordinary devises (Art. 911(2), NCC), and the testamentary
illness, apprenticeship, ordinary equipment, dispositions that impairs or diminish the legitime of
or customary gifts. (Art. 1067, NCC) the compulsory heirs. (Art. 907, NCC) Among these
2. Generally not imputed to legitime: legacies, devises, and testamentary dispositions,
a. Expenses incurred by parents in giving there is no preference.
their children professional, vocational, or
other career unless the parents so provide, NOTE: Preferred legacies and devises are those
or unless they impair the legitimes; (Art. directed by testator to be preferred than the others.
1068, NCC)
b. Wedding gifts by parents and ascendants 2. Reduce pro rata the preferred legacies and
consisting of jewelry, clothing and outfit devises. (Art. 911, last par., NCC)
except when they exceed 1/10 of the sum Reduce the donations inter vivos according to the
disposable by will. (Art. 1070, NCC) inverse order of their dates (i.e., the oldest is the
most preferred). (Art. 773, NCC)
NOTE: Only the value of the thing donated shall be
brought to collation. This value must be the value of NOTE: These reductions shall be to the extent
the thing at the time of the donation. (Sebastian, required to complete the legitimes, even if in the
2020) process the disposition is reduced to nothing.

Civil Law
3. If there are remaining portion of the estate, it shall Table of Compulsory Heirs
be distributed to the devisees and legatees, if there
are any, and according to the provisions of the will.
PRIMARY SECONDARY
(Sec. 1, Rule 89, Rules of Court)
COMPULSORY HEIRS COMPULSORY HEIRS
COMPULSORY HEIRS 1) Legitimate and

4) Legitimate
their
parents and
The following are compulsory heirs: (2003, 2005, descendants;
ascendants;
2006, 2008 BAR)
2) Surviving Spouse
NOTE: Inherit only in
1. Legitimate children and descendants, with (Legitimate);
default of No. (1).
respect to their legitimate parents and
ascendants; 3) Illegitimate
5) Illegitimate
2. In default of the foregoing, legitimate parents Children and
Parents (no other
and ascendants, with respect to their legitimate their
descendants).
children and descendants; descendants;
3. The widow or widower; NOTE: They inherit
4. Acknowledged natural children, and natural NOTE: Nos. 2 and 3 are
only in default of Nos.
children by legal fiction; concurring
(1) and (3)
5. Other illegitimate children referred to in Article compulsory heirs.
287.
Compulsory heirs inherit either:
Compulsory heirs mentioned in Nos. 3, 4, and 5 are 1. In their own right; or
not excluded by those in Nos. 1 and 2; neither do 2. By right of representation.
they exclude one another.
Adopted Child is a Compulsory Heir
In all cases of illegitimate children, their filiation
must be duly proved. Legitimate children include adopted children and
legitimated children. Under R.A. No. 8552 or the
The father or mother of illegitimate children of the Domestic Adoption Law, adopted children have the
three classes mentioned shall inherit from them in same rights granted to the legitimate children.
the manner and to the extent established by this Adopted children, for all intents and purposes are
Code. (Art. 887, NCC) considered as legitimate children.
Classifications of Compulsory Heirs The relationship, however, does not extend to other
relatives of the adopter, thus, disqualifying the
1. Primary – They are not excluded by the adopted from directly inheriting from the adopter’s
presence of other compulsory heirs, and have ascendants. Since the adopted child enjoys
precedence over and exclude other successional rights as a legitimate child, then he
compulsory heirs; e.g., legitimate children and excludes the adopter’s parents and ascendants.
/ or descendants.
2. Secondary – Those who succeed only in default Formal or judicial adoption is necessary before the
of the primary compulsory heirs; E.g., adopted child can inherit from the adopter because
legitimate parents and/ or legitimate adoption is a juridical act, a proceeding in rem,
ascendants; illegitimate parents. which creates between two persons a relationship
3. Concurring – Those who succeed together with similar to that which results from legitimate
the primary or secondary compulsory heirs. paternity and filiation. Without the benefit of formal
(e.g., Surviving spouse and illegitimate (judicial) adoption, the adopted child is neither a
children and descendants) compulsory nor a legal heir. Hence, he is not entitled
to inherit.

2022 GOLDEN NOTES
Succession
Rule on Legitimated Children XPN: If the decedent is illegitimate, his illegitimate

children exclude the illegitimate parents and
Children conceived and born outside a valid ascendants.
marriage are illegitimate, unless otherwise
provided in the Family Code. (Art. 165, FC) Common law spouse NOT a compulsory heir
Legitimation takes place upon the marriage of the A common law spouse cannot be a compulsory heir.
child’s parents, the marriage being valid or at least There must be a valid marriage between the
voidable, the child is automatically raised to the decedent and the surviving spouse. If the marriage
status of legitimacy, without need of any additional is null and void, the surviving spouse cannot inherit.
act on the part of either the child or the parents.
(Rabuya, 2006) Surviving spouse NOT a compulsory heir of her
Parent-in-law
Children conceived and born outside of wedlock of
parents who, at the time of the conception of the Neither is a widow (surviving spouse) a compulsory
former, were not disqualified by any impediment to heir of her parent-in-law in accordance with the
marry each other, or were so disqualified only provisions of Article 887 of the Civil Code. The
because either or both of them were below eighteen aforesaid provision of law refers to the estate of the
(18) years of age, may be legitimated. (Art. 177, FC, deceased spouse in which case the surviving spouse
as amended by R.A. No. 9858) (widow or widower) is a compulsory heir. It does
not apply to the estate of a parent in law. Indeed, the
For purposes of succession, the opening of surviving spouse is considered a third person as
succession must happen after the effectivity of R.A. regards the estate of the parent-in-law. (Rosales v.
No. 9858; otherwise, the child will be considered as Rosales, GR No. L-40789, 27 Feb. 1987)
illegitimate.
Q: Ramon Mayaman died intestate, leaving a net
NOTE: Under the Family Code, there is no more estate of P10, 000, 000.00. Determine how much
distinction between acknowledged natural children each heir will receive from the estate:
and illegitimate children. They are all considered as (a) If Ramon is survived by his wife, three full-
illegitimate. (Art. 163, NCC) blood brothers, two half-brothers, and one
nephew (the son of a deceased full-blood
Compulsory Heirs of an Illegitimate Person brother)? Explain.
1. Legitimate children and descendants; A: Having died intestate, the estate of Ramon shall
2. Illegitimate children and descendants; be inherited by his wife and his full and half-blood
3. In default of the foregoing, parents only; siblings or their respective representatives. In
4. Surviving spouse. intestacy, if the wife concurs with no one but the
sibling of the husband, all of them are the intestate
Parents and ascendants are secondary compulsory heirs of the deceased husband. The wife will receive
heirs. They inherit in default of legitimate children half of the intestate estate, while the siblings or their
and descendants. (Art. 985, NCC) respective representatives will inherit the other half
to be divided among them equally. If some siblings
GR: The presence of the illegitimate children of the are of the full-blood and the others of the half-blood,
decedent does NOT exclude parents and a half blood sibling will receive half of the share of a
ascendants. Parents and ascendants concur with the full-blood sibling.
illegitimate children of the decedent. (Art. 911, NCC)
1. The wife of Ramon will, therefore, receive one
half of the estate or the amount of P5, 000,
000.00;

Civil Law
2. The three (3) full-blood brothers will, therefore, Ramon – P400, 000 (P100, 000 as legitime
receive P1, 000, 000.00 each; and P300, 000 as free portion). (UPLC,
3. The nephew will receive P1, 000, 000.00 by 2009)
right of representation;
4. The two (2) half-brothers will receive P500, Q: Andres and Pedro are the owners Lot 2535.
000.00 each. Pedro sold to Faustina his portion of the subject
land as evidenced by a notarized Deed of Sale.
(b) If Ramon is survived by his wife, a half- After the death of Faustina and her husband,
sister, and three nephews (sons of a their heirs executed a notarized Extra-Judicial
deceased full-blood brother)? Explain. Declaration of Heirs and Deed of Absolute Sale.
(2009 BAR) Lot 2535 consisting of "1,000 square meters,
more or less," was conveyed to one of their heirs,
A: The wife will receive one half of the estate or P5, Alejandra.
000, 000.00. The other half shall be inherited by (1)
the full-blood brother, represented by his 3 Alejandra sold the land through a Deed of
children, and (2) the half-sister. They will divide Absolute Sale to Edith N. Deen, who in turn sold
that other half between them such that the share of it to Atty. Eddy A. Deen. Upon Atty. Deen's death,
the half-sister is just half of the share of the full- an extra-judicial settlement of estate, which did
blood brother. The share of the full-blood brother not include Lot 2535, was executed by his heirs.
shall in turn be inherited by the three (3) nephews Later, they executed an Additional Extra-Judicial
in equal shares by right of representation. Settlement with Absolute Deed of Sale, which
Therefore, the three (3) nephews will receive P1, sold the land to Norberto, who took possession
111, 111.10 each and the half-sister will receive the of and built a house on it.
sum of P1, 666, 666.60. (UPLC, 2009)
Norberto then died without a will and was
Q: Emil, the testator, has three legitimate succeeded by his niece and only heir, Lolita.
children: Tom, Henry, and Warlito; a wife named Subsequently, Lolita learned that a Transfer
Adette; parents named Pepe and Pilar; an Certificate of Title was issued in the names of
illegitimate child, Ramon; brother, Mark; and a Andres and Pedro on the basis of a reconstituted
sister, Nanette. Since his wife Adette is well-off, Deed of Conveyance. Lolita sought to register
he wants to leave to his illegitimate child as her portion in Lot 2535 but was denied by the
much of his estate as he can legally do. His estate Register of Deeds, citing the need for a court
has an aggregate net amount of P1, 200, 000.00, order. Lolita then filed for the cancellation of
and all the above-named relatives are still living. the titles. After trial, the Regional Trial Court
Emil now comes to you for advice in making a ruled in favor of Lolita. On appeal, the Court of
will. How will you distribute his estate according Appeals reversed the Regional Trial Court
to his wishes without violating the law on Decision and dismissed the complaint.
testamentary succession? (2005 BAR) According to the Court of Appeals, Lolita must
first be declared as the sole heir to the estate of
A: In his will, Emil should give his compulsory heirs Norberto in a proper special proceeding.
just their respective legitimes and give all of the free
portion to his illegitimate child in addition to the Is a prior judicial declaration necessary in order
said child’s legitime. He should divide his estate in that Lolita may assert her right to the property
his will as follows : of her predecessor?
Tom – P200, 000 (legitime) A: NO. This Court has stated that no judicial
Henry – P200, 000 (legitime) declaration of heirship is necessary in order that an
Warlito – P200, 000 (legitime) heir may assert his or her right to the property of
Adette – P200, 000 (legitime) the deceased.

2022 GOLDEN NOTES
Succession
In Marabilles v. Quito: The right to assert a cause of Effect of disinheritance

action as an heir, although he has not been judicially
declared to be so, if duly proven, is well settled in this The effect of total exclusion to the inheritance,
jurisdiction. This is upon the theory that the property meaning loss of the legitime, right to intestate
of a deceased person, both real and personal, becomes succession, and of any disposition in a prior will.
the property of the heir by the mere fact of death of
his predecessor in interest, and as such he can deal Disinheritance, however, is without prejudice to the
with it in precisely the same way in which the right of representation of the children and
deceased could have dealt, subject only to the descendants of the person disinherited. But the
limitations which by law or by contract may be disinherited parent shall not have the usufruct or
imposed upon the deceased himself. Thus, it has been administration of the property which constitutes
held that "[t]here is no legal precept or established the legitime. (Art. 923, NCC)
rule which imposes the necessity of a previous legal
declaration regarding their status as heirs to an NOTE: Parents no longer enjoy the right of usufruct
intestate on those who, being of age and with legal over the properties of their children under the
capacity, consider themselves the legal heirs of a Family Code. (Art. 923, NCC)
person, in order that they may maintain an action
arising out of a right which belonged to their Requisites of a Valid Disinheritance
ancestor." (Capablanca v. Heirs of Pedro Bas, G.R. No.
224144, 28 June 2017) 1. It must be made in a valid will; (Art. 915, NCC)
2. It must be for a cause specified by law; (Art. 916,
6. DISINHERITANCE NCC)
3. The will must specify the cause; (Art. 916 and
Disinheritance is the process or act, thru a 918, NCC)
testamentary disposition of depriving a compulsory 4. It must be unconditional;
heir of his legitime for causes expressly stated by 5. It must be total; (Balane, 2010)
law. (Art. 915, NCC) 6. The cause must be true; (Art. 918, NCC)
7. If the truth is denied, it must be proved by the
The only way in which a compulsory heir can be proponent. (Art. 917, NCC)
deprived of his legitime is through valid
disinheritance. It can be effected only through a will Grounds for Disinheritance
wherein the legal cause therefor shall be specified.
(Art. 916, NCC) The following enumeration are exclusive. Only the
grounds enumerated can serve as grounds for
Disinheritance is not automatic disinheritance. (Arts. 919 - 921, NCC)
There must be evidence presented to substantiate 1. Common causes for disinheritance of children or
the disinheritance and must be for a valid and sound descendants, parents or ascendants, and spouse:
cause. (Arts. 916 and 917, NCC) a. When the heir has been found guilty of an
attempt against the life of the testator,
Burden of Proof his/her descendants or ascendants, and
spouse, in case of children or parents;
The burden of proving the truth of the cause for b. When the heir by fraud, violence,
disinheritance shall rest upon the other heirs of the intimidation, or undue influence causes the
testator, if the disinherited heir should deny it. (Art. testator to make a will or to change one
917, NCC) already made;
c. When the heir has accused the testator of a
crime for which the law prescribes

Civil Law
imprisonment of six years or more, if the which the law prescribes

accusation has been found groundless; imprisonment for 6 years or more;
d. Refusal without justifiable cause to support vi. When the parent or ascendant by
the testator who disinherits such heir; fraud, violence, intimidation or
e. Maltreatment of the testator by word or undue influence causes the
deed, by the child or the descendant; testator to make a will or to change
f. When a child or descendant leads a one already made; or
dishonorable or disgraceful life; vii. The refusal to support the children
g. Conviction of a crime which carries with it or descendants without justifiable
the penalty of civil interdiction; or cause.
h. When a child or descendant has been
convicted of adultery or concubinage with c. Spouse:
the spouse of the testator. i. When the spouse has given cause
for legal separation; or
2. Peculiar Causes for Disinheritance ii. When the spouse has given
a. Children and Descendants: grounds for the loss of parental
i. Conviction of a crime which carries authority.
with it a penalty of civil
interdiction; Right of Representation in case of
ii. Maltreatment of the testator by Disinheritance
word or deed by the children or
descendant; The causes of disinheritance are personal to the
iii. When the children or descendant disinherited heir. Hence, in case of valid
has been convicted of adultery or disinheritance, only the disinherited heir is
concubinage with the spouse of the deprived of his right to the legitime. But the children
testator; or or descendants of the disinherited heir can take his
iv. When the children or descendant place and preserve the disinherited heir’s share to
leads a dishonorable or disgraceful the legitime.
life.
Effect of Disinheritance Without Cause
b. Parents or Ascendants:
i. When the parent or ascendant has Disinheritance without a specification of the cause,
been convicted of adultery or or for a cause the truth of which, if contradicted, is
concubinage with the spouse of the not proved, or which is not one of those set forth in
testator; this Code, shall annul the institution of heirs insofar
ii. When the parents have abandoned as it may prejudice the person disinherited; but the
their children or induced their devises and legacies and other testamentary
daughters to live a corrupt or dispositions shall be valid to such extent as will not
immoral life, or attempted against impair the legitime. (Art. 918, NCC)
their virtue;
iii. Loss of parental authority for Reconciliation
causes specified in the Code;
iv. Attempt by one of the parents Reconciliation exists when two persons who are at
against the life of the other, unless odds decide to set aside their differences and to
there has been reconciliation resume their relations. They need not go back to
between them; their old relation. In order to be effective, the
v. When the parent or ascendant has testator must pardon the disinherited heir. The
accused the testator of a crime for pardon whether express or tacit, must refer
specifically to the heir disinherited and to the acts

2022 GOLDEN NOTES
Succession
he has committed, and must be accepted by such b. If the thing bequeathed, though not
heir. In disinheritance, reconciliation need not be in belonging to the testator when he made the
writing. will, afterwards becomes his, by whatever
title, the disposition shall take effect. (Art.
Effects of reconciliation: 930, NCC)
1. If it occurs before disinheritance is made, the
right to disinherit is extinguished; 2. The testator knows that he does not own it but
2. If it occurs after the disinheritance is made, the ordered its acquisition
disinheritance is set aside. (Balane, 2010)
If the thing given as devise or legacy is not
Effects of Setting Aside the Disinheritance owned by the testator at the time he made the
will but he orders his estate to acquire it, it is a
1. The disinherited heir is restored to his legitime; valid legacy or devise. (Art. 931, NCC)
2. If the disinheriting will did not dispose of the
disposable portion, the disinherited heir is GR: If the thing already belonged to the
entitled to his proportionate share if any, of the legatee/devisee at the time of the execution of the
disposable portion; will, the legacy/devise is void. It is not validated by
3. If the disinheriting will or any subsequent will an alienation by the legatee/devisee subsequent to
disposed of the disposable portion in favor of the making of the will. (Balane, 2010)
testamentary heirs, legatees, or devisees, such
dispositions remain valid. (Balane, 2010) XPN: Unless the acquirer is the testator himself.
(Balane, 2010)
7. LEGACIES AND DEVISES
Applicability of Arts. 911 & 950
All things and rights which are within the commerce
of man may be bequeathed or devised. (Art. 924, ART. 911 ART. 950
NCC) Art. 950 will apply if the
Art. 911 will apply if reason for the reduction
Testator can bequeath or devise a thing or reductions have to be is not the impairment of
property belonging to someone else made because the legitimes; e.g., there are
legitimes have been no legitimes because
It occurs when: impaired; i.e., if the there are no compulsory
legacies/devises have heirs, or the legitimes
1. The testator thought that he owned it exceeded the have already been
disposable portion. satisfied through
GR: The legacy or device of a thing belonging to (Balane, 2010) donations inter vivos.
another person is void, if the testator (Balane, 2010)
erroneously believed that the thing pertained to
him. (Art. 930, NCC) Suppose the legatee or devisee acquired the
property after the will has been executed
Reason: Nemo dat quod non habet. You cannot
give what you don’t have. 1. If he acquired it by gratuitous title, then the
legacy or devise is void;
XPN:
a. If subsequent to the making of the Reason: The purpose of the testator that the
disposition, the thing is acquired by the property would go to the devisee or legatee has
testator onerously or gratuitously, such already been accomplished with no expense to
disposition is validated. (Balane, 2010) the legatee or devisee.

Civil Law
2. If he acquired it by onerous title, the legacy or XPN: It will be imputed to the debt if the testator so
devise is valid and the estate may be required to provides. In such case, the creditor shall have the
reimburse the amount. right to collect the excess, if any, of the credit or of
the legacy or device. (Ibid.)
When the property bequeathed or devised has
been pledged or mortgaged Order of Payment of Legacies and Devises
GR: The estate is obliged to pay the debt. (Art. 1. Remuneratory legacies or devises;
934(1), NCC) 2. Legacies or devises declared by testator to be
preferential;
XPN: If the testator provides otherwise. (Art. 934, 3. Legacies for support;
NCC) 4. Legacies for education;
5. Legacies or devises of a specific determinate
However, any other charge such as easements and thing which forms part of the estate;
usufruct, with which the thing bequeathed is 6. All others pro rata. (Art. 950, NCC)
burdened, shall be respected by the legatee or
devisee. (Art 934, third par. Art. 946, NCC) NOTE: The order of preference mentioned above is
applicable when:
Legacy of Credit and Legacy of Remission 1. The estate is insufficient to cover all devises or
legacies; and
A legacy of credit takes place when the testator 2. When the reason for the reduction is not the
bequeaths to another a credit which he has against impairment of legitimes. (e.g., there are no
a third person. In effect, it is a novation of the credit legitimes because there are no compulsory
by the subrogation of the legatee in the place of the heirs or the legitimes have already been
original creditor. (Jurado, 2009) satisfied through donations inter vivos).
(Balane, 2016)
A legacy of remission is a testamentary disposition
of a debt in favor of the debtor. The legacy is valid Distinctions between Art. 911 and Art. 950
only to the extent of the amount of the credit
existing at the time of the testator's death. In effect, ART. 911, NCC ART. 950, NCC
the debt is extinguished.
ORDER OF PREFERENCE
In legacy of remission, the right to collect the debt LDPO: 1. Remuneratory
from the legatee himself is extinguished by 1. Legitime of legacies or
condonation. (Mison, 2010) compulsory heirs; devises;
2. Donations inter 2. Preferential
A legacy of credit or remission: vivos; legacies or
3. Preferential devises;
1. Applies only to amount still unpaid at the time legacies or 3. Legacy for
of the testator’s death; (Art. 935, NCC); devises; support;
2. It is revoked if the testator subsequently sues 4. All Other legacies 4. Legacy for
the debtor for collection; (Art. 936, NCC) or devises pro education;
3. If generic, applies only to those existing at the rata. 5. Legacies or
time of the execution of the will, unless devises of a
otherwise provided. (Arts. 793 & 937, NCC) specific,
(Balane, 2016) determinate thing
which forms a part
GR: A legacy or devise to a creditor shall not be of the estate;
applied to his credit. (Art. 938, NCC) 6. All others pro rata.

2022 GOLDEN NOTES
Succession
WHEN APPLIED 4. If the legacy is a credit against a third person or

the remission of a debt, and the testator,
Art. 911 will apply if Art. 950 will apply if subsequent to the making of the will, brings an
the reductions have to the reason for action against the debtor for payment. (Art. 936,
be made because the reduction is not the NCC)
legitimes have been impairment of
impaired. legitimes.
Grounds for the Revocation of Legacy or Devise
1. Transformation of the thing in such a manner

that it does not retain either the form or the
denomination it had; (Art. 957 par. 1, NCC)
2. Alienation of the thing bequeathed or any part

thereof. In the latter case, the legacy or devise
shall be without effect only with respect to the
part alienated; (Art. 957 par. 2, NCC)
GR: The alienation revokes the legacy/devise,

even if for any reason, the thing reverts to the
testator. (Balane, 2010)
XPN:
a. If the reversion is caused by the annulment
of the alienation and the cause for the
annulment was vitiation of consent on the
grantor’s part, either by reason of
incapacity or of duress; (Fernandez v.
Dimagiba, G.R. No. L-23638, 12 Oct. 1967)
b. If the reversion is by virtue of redemption
in a sale with pacto de retro. (Art. 957, NCC;
Balane, 2010)
3. Total loss of the thing bequeathed. (Ibid.)
This will be a cause for revocation only if it

takes place before the testator’s death. A
fortuitous loss after the testator’s death will
simply be an instance of “res perit domino” and
will be borne by the legatee/devisee. (Balane,
2010)
Reason: The loss shall be borne by the

legatee/devisee because the transmission of
ownership retroacts to the time of the death of
the testator.

Civil Law
Examples: (P-R-T-I)
C. LEGAL AND INTESTATE SUCCESSION
1. When there is a Preterition in the testator’s will;
2. When a testamentary disposition is subject to a
Resolutory condition, and such condition is
Legal or intestate succession is that which is
fulfilled;
effected by operation of law in default of a valid will.
3. When a testamentary disposition is subject to a
Term or period, and such term or period
It is legal because it takes place by operation of law;
expires; or
it is intestate because it takes place in the absence
4. When a testamentary disposition is Impossible
or in default of a last will of the decedent. (Jurado,
of compliance, or is ineffective. (Jurado, 2009)
2009)
RELATIONSHIP
1. GENERAL PROVISIONS; RELATIONSHIP AND
RIGHT OF REPRESENTATION
Rules on Exclusion and Concurrence in Intestate
Succession (Balane, 2016)
GENERAL PROVISIONS
1. Legitimate children
Application of Inheritance
a. Exclude parents, collaterals and State;
b. Concur with surviving spouse and
The following are applied successively (I-S-R-A-I):
illegitimate children;
1. Institution of an heir (bequest, in case of
c. Excluded by no one.
legacies or devises);
2. Substitution, if proper;
2. Illegitimate children
3. Representation, if applicable;
a. Exclude illegitimate parents, collaterals
4. Accretion, if applicable; and
and State;
5. Intestacy, if all of the above are not applicable.
b. Concur with surviving spouse, legitimate
children, and legitimate parents;
Legal or Intestate succession takes place when:
c. Excluded by no one.
1. There is no will, the will is void, or the will is

3. Legitimate parents
revoked;
a. Exclude collaterals and the State;
2. The will does not institute an heir to, or dispose
b. Concur with illegitimate children and
of all the property of the testator (partial
surviving spouse;
intestacy);
c. Excluded by legitimate children.
3. The suspensive condition attached to the
inheritance does not happen or is not fulfilled;
4. Illegitimate parents
4. The heir predeceased the testator or repudiates
a. Exclude collaterals and State;
the inheritance, and no substitution and no
b. Concur with surviving spouse;
right of accretion take place; or
c. Excluded by legitimate children and
5. The heir instituted is incapacitated to succeed.
illegitimate children.
(Art. 960, NCC)
5. Surviving spouse
NOTE: The enumeration is not exclusive; there are
a. Excludes collaterals other than brothers,
other causes for intestacy which are not included in
sister, nephews and nieces, and State;
the enumeration.
b. Concurs with legitimate children,
illegitimate children, legitimate parents,
illegitimate parents, brothers, sisters,
nephews and nieces;

2022 GOLDEN NOTES
Succession
c. Excluded by no one. quasi-delict, considering he had no ticket when

he rode the airplane. Thus, it is the Fatal
6. Brothers and Sister, nephews and nieces Accidents Act of Kenya which is applicable, and
a. Exclude all other collaterals and the State; it clearly defined who the dependents are: the
b. Concur with surviving spouse; spouse, descendants, and ascendants. Esther
c. Excluded by legitimate children, was able to properly plead the Kenyan Law. Do
illegitimate children, legitimate parents the Filipino decedent's collateral relatives be
and illegitimate parents. indemnified along with the surviving widow?
7. Other collaterals A: NO. Courts do not take judicial notice of foreign

a. Exclude collaterals in remoter degrees and law. However, Esther properly pleaded and proved
the State; the applicable Kenyan law. The Kenyan Law
b. Concur with collaterals in the same degree; provides that the action for damages shall be for the
c. Excluded by legitimate children, family of the deceased — wife, husband, parent, or
illegitimate children, legitimate parents, child — which makes no mention of collateral
illegitimate parents, surviving spouse, relatives. Thus, it is clear that the Fatal Accidents Act
brothers and sisters, and nephews and of Kenya applies. Accordingly, petitioner, as the
nieces. wife, is entitled to the totality of the US$430,000.00
indemnity that Kenya Air paid her as settlement.
8. State
a. Excludes no one; Invoking the Civil Code, the collateral relatives of
b. Concurs with no one; Alex seek a share of the settlement proceeds and
c. Excluded by everyone. pray for its division among them. However, as found
that Kenyan law properly applies here, there is no
Q: Alex was an Air Afrique pilot. On January 30, basis to apply Philippine law on the matter. As far as
2000, as a non-paying passenger, he boarded the Fatal Accidents Act of Kenya is concerned, a
Kenya Air flight 431 bound for Nairobi, Kenya. decedent's heirs are only the surviving spouse,
The plane departed from Abidjan, Ivory Coast. ascendants, and descendants. Nowhere does it
While in transit over the Ivory Coast, the plane mention the collateral relatives of a deceased
exploded mid-air, killing everyone on board. person. (Vda. De Alcañeses v. Alcañeses, G.R. No.
Esther is Alex's surviving widow. Esther 187847, 30 June 2021)
executed an Affidavit of Self-Adjudication as
Alex's sole heir, adjudicating to herself two RIGHT OF REPRESENTATION
parcels of land and two motor vehicles. Esther
sought appointment as the legal representative Representation is a right created by fiction of law,
of Efren's estate, which the Regional Trial Court by virtue of which the representative is raised to the
granted. She then filed a claim for damages with place and degree of the person represented, and
Kenya Air for "indemnity and compensation for acquires the rights which the latter would have if he
the loss of her husband," which Kenya Air were living or could have inherited. (Art. 970, NCC)
amicably settled with her. She received an
award of US$430,000.00. Thereafter, Felicidad In order that representation may take place, it is
and Cecilio, representing their siblings and their necessary that the representative himself be
nephews and nieces (Alex's collateral relatives), capable of succeeding the decedent. (Art. 973, NCC)
filed a Complaint for Partition of Estate and
Declaration of Nullity of Affidavit of Self- Effect of Representation
adjudication and Damages. They argued that
they have a rightful share in Efren's estate as his Whenever there is succession by representation,
collateral relatives. On the other hand, Esther the division of the estate shall be made per stirpes,
alleged that her husband died as a result of a in such manner that the representative or

Civil Law
representatives shall not inherit more than what the they cannot represent their adopting parents to the
person they represent would inherit, if he were inheritance of the latter’s parents.
living or could inherit. (Art. 974, NCC)
Reason: The right of representation cannot be
NOTE: Per stirpes means inheritance by group, all invoked by adopted children because the legal
those within the group inheriting in equal shares. relationship created by adoption is strictly between
the adopter and the adopted. It does not extend to
Right of Representation arises because of: the relatives of either party.
1. Predecease;
2. Incapacity or unworthiness; or NOTE: Under Sec. 18 of R.A. No. 8552 or the
3. Disinheritance. (Balane, 2010) Domestic Adoption Law, the adopted child and the
adopting parents have reciprocal successional
When Right of Representation NOT available: rights. However, if the adoptee and his/her
biological parent/s had left a will, the law on
1. As to compulsory heirs: In case of repudiation, testamentary succession shall govern.
the one who repudiates his inheritance cannot
be represented. (Art. 977, NCC) Their own heirs Rule on Equal Division of Lines
inherit in their own right;
2. As to voluntary heirs: Voluntary heirs, legatees, GR: Intestate heirs equal in degree inherit in equal
and devisees who either predecease the shares. (Art. 962(2), NCC)
testator, or renounce the inheritance, cannot be
represented by their own heirs, with respect to XPNs:
their supposed inheritance. a. In the ascending line, the rule of division by line
is ½ to the maternal line and ½ to the paternal
In representation, the representative does NOT line, and within each line, the division is per
inherit from the person represented but from the capita. (Art. 987, NCC)
decedent. (Art. 976, NCC) b. In the collateral line, the full-blood
brothers/sisters will get double that of the half-
The right of representation takes place in the direct blood. (Art. 1006, NCC)
descending line, but never in the ascending. c. The division in representation, where division
is per stirpes – the representative divide only
In the collateral line, it takes place only in favor of the share pertaining to the person represented.
the children of brothers or sisters, whether they are
full or half blood. (Art. 972, NCC) NOTE: Compulsory heirs shall, in no case, inherit ab
NOTE: This rule applies only when the decedent intestato less than their legitimes as provided in
does not have descendants. Also, an illegitimate testamentary succession.
child can represent his father, provided that the
father was also illegitimate. When Children of One or More Brothers or
Sisters of the Deceased Survived
An illegitimate sibling of the decedent can be
represented. An illegitimate brother or sister of the 1. When children of one or more brothers or
deceased can be represented by his children, sisters of the deceased survive, they shall
without prejudice to the application of the Iron inherit from the latter by representation, if they
Curtain Rule. (Tolentino, 1992) survive with their uncles or aunts;
2. But if they alone survive, they shall inherit in
The right of representation does NOT apply to equal portions (division not per stirpes). (Art.
adopted children. The right of representation 975, NCC)
cannot be invoked by adopted children because

2022 GOLDEN NOTES
Succession
IRON CURTAIN RULE Distinctions between Iron Curtain Rule and

Right of Representation
An illegitimate child has no right to inherit ab
intestato from the legitimate children and relatives
of his father or mother; nor shall such children or RIGHT OF
IRON CURTAIN RULE
relatives inherit in the same manner from the REPRESENTATION
illegitimate child. (Art. 992, NCC)
Prohibits absolutely a
Art. 992 of the NCC provides a barrier or iron succession ab intestato Right created by fiction
curtain in that it prohibits absolutely a succession between the of law where the
ab intestato between the illegitimate child and the illegitimate child and representative is raised
legitimate children and relatives of the father or the legitimate children to the place and degree
mother of said illegitimate child. They may have a and relatives of the of the person
natural tie of blood, but this is not recognized by law father or mother of said represented, and
for the purpose of Art. 992. Between the legitimate illegitimate child. acquires the rights
family and the illegitimate family there is presumed which the latter would
to be an intervening antagonism and NOTE: Iron curtain rule have if he were living or
incompatibility. (Diaz v. ICA, G.R. No. L-66574, 21 imposes a limitation on could have inherited.
Feb. 1990) right of representation.
Applies to both
The rule in Art. 992 has consistently been applied in Applies only in intestate
intestate and testate
the following cases: succession
succession
1. where the illegitimate child had half-brothers
who were legitimate, the latter had no right to
the former’s inheritance;
2. the legitimate collateral relatives of the mother
cannot succeed from her illegitimate child;
3. a natural child cannot represent his natural
father in the succession to the estate of the
legitimate grandparent;
4. the natural daughter cannot succeed to the
estate of her deceased uncle who is a
legitimate brother of her natural father; and an
illegitimate child has no right to inherit ab
intestato from the legitimate children and
relatives of his father. (Manuel v. Ferrer, G.R. No.
117246, 21 Aug. 1995)
NOTE: The iron curtain rule only applies in intestate

succession.
Reason: Between the legitimate family and the

illegitimate family there is presumed to be an
intervening antagonism and incompatibility. (Diaz,
et al., v. IAC, G.R. No. L-66574, 21 Feb. 1990)

Civil Law

2022 GOLDEN NOTES
Succession
The right of representation is not available to are pejorative terms when used to describe children
illegitimate descendants of legitimate children in based on their parents’ marital status.
the inheritance of a legitimate grandparent.
This case involves a woman who claims to be the
Petitioners argued that the illegitimate descendant nonmarital child of a man who died before she was
of a legitimate child is entitled to represent by virtue born. After her alleged paternal grandfather died,
of the provisions of Article 982, which provides that she asserted her right to represent her deceased
“the grandchildren and other descendants shall father—a marital child—in inheriting from her
inherit by right of representation.” Such a grandfather’s estate.
conclusion is erroneous. It would allow intestate
succession by an illegitimate child to the legitimate However, in previous cases, the Court had
parent of his father or mother, a situation which interpreted Article 992 as barring nonmarital
would set at naught the provisions of Art. 992 of the children from inheriting from their grandparents
NCC. and other direct ascendants, as they are covered by
the term “relatives.” The Supreme Court had called
Art. 982 of the NCC is inapplicable to instant case this prohibition the “iron curtain rule,” inferred
because Article 992 prohibits absolutely a from a perceived hostility between the marital and
succession ab intestato between the illegitimate nonmarital sides of a family.
child and the legitimate children and relatives of the
father or mother. It may not be amiss to state that Now, the Court reexamined the iron curtain rule,
Article 982 is the general rule and Art. 992 the finding that Article 992 “should be construed to
exception. (Diaz v. IAC, G.R. No. L-66574, 17 Jun. account for other circumstances of birth and family
1987) dynamics. Peace within families cannot be
encouraged by callously depriving some of its
Law on succession is animated by a uniform general members of their inheritance. Such deprivation
intent, and no part should be rendered inoperative may even be the cause of antagonism and alienation
by, but must be construed in relation to, any other that could have been otherwise avoided.”
part as to produce a harmonious whole. (Manuel v.
Ferrer, G.R. No. 117246, 21 Aug. 1995) The Court ruled that grandparents and other direct
ascendants are outside the scope of “relatives”
Children, regardless of their parents’ marital under Article 992. “Both marital and nonmarital
status, can now inherit from their grandparents children, whether born from a marital or nonmarital
and other direct ascendants by right of child, are blood relatives of their parents and other
representation. (Aquino v. Aquino, G.R. Nos. ascendants.” Thus, a nonmarital child’s right of
208912 and 209018, 07 Dec. 2021) representation should be governed by Article 982 of
the Civil Code, which does not differentiate based on
NOTE: The case of Aquino v. Aquino falls beyond the the birth status of grandchildren and other direct
cut-off date for the 2022 BAR. descendants.
In a Decision penned by Associate Justice Marvic 2. ORDER OF INTESTATE SUCCESSION

M.V.F. Leonen, the Court En Banc reinterpreted
Article 992 of the Civil Code, which prohibits Order of Preference Between Lines
nonmarital children from inheriting from their
siblings who are marital children, as well as 1. First, succession takes place in the direct
“relatives of [their] father or mother[.]” The descending line; (Art. 978, NCC)
Decision used the terms “marital” and “nonmarital” 2. Second, in the direct ascending line; (Art. 985,
to replace the terms “legitimate” and “illegitimate” NCC) and
when referring to the children, as the latter terms 3. Finally, in the collateral line. (Art. 1003, NCC)

Civil Law
Order of Intestate Succession to a Legitimate 4. In default of children or descendants, legitimate

Child or illegitimate, and illegitimate parents, the
surviving spouse shall inherit the entire estate.
In general, and without prejudice to the concurrent But if the surviving spouse should survive with
right of other heirs in proper cases, the order of brothers and sisters, nephews and nieces, the
intestate succession to a legitimate child is as surviving spouse shall inherit one-half of the
follows: estate, and the latter the other half. The
1. Legitimate children and descendants; brothers and sisters must be by illegitimate
2. Legitimate parents and ascendants; filiation; otherwise, the Iron Curtain Rule shall
3. Illegitimate children; apply;
4. Illegitimate parents;
5. The surviving spouse; 5. Although the law is silent, illegitimate brothers
6. Brothers, sisters, nephews, nieces; and sisters who survive alone shall get the
7. Other collaterals up to the fifth degree; and entire inheritance. The legitimate children of
8. State. (Rabuya, 2009; Balane, 2016) the illegitimate parents are not entitled to
inherit from the illegitimate child by virtue of
Order of Intestate Succession to an Illegitimate Art. 992 of the NCC;
Child
6. The State (Manuel v. Ferrer, G.R. No. 117246, 21
1. The legitimate children and descendants of a Aug. 1995)
person who is an illegitimate child are
preferred over other intestate heirs, without Q: Bert and Joe, both male and single, lived
prejudice to the right of concurrence of together as common law spouses and agreed to
illegitimate children and the surviving spouse; raise a son of Bert's living brother as their child
without legally adopting him. Bert worked while
2. In the absence of legitimate children and Joe took care of their home and the boy. In their
descendants, the illegitimate children (of the 20 years of cohabitation they were able to
illegitimate child) and their descendants acquire real estate assets registered in their
succeed to the entire estate, without prejudice names as co-owners. Unfortunately, Bert died of
to the concurrent right of the surviving spouse; cardiac arrest, leaving no will. Bert was survived
by his biological siblings, Joe, and the boy. What
3. In the absence of children and descendants, are the successional rights of Joe and the boy
whether legitimate or illegitimate, the third in they raised as their son? (2015 BAR)
the order of succession to the estate of the
illegitimate child is his illegitimate parents. If A: Neither of the two will inherit from Bert. Joe
both parents survive and are entitled to cannot inherit because the law does not recognize
succeed, they divide the estate share and share the right of a stranger to inherit from the decedent
alike. Although the law is silent, if the surviving in the absence of a will. Their cohabitation will not
spouse of the illegitimate child concurs with the vest Joe the right to inherit from Bert. The child will
illegitimate parents, the surviving spouse shall likewise not inherit from Bert because of the lack of
be entitled to one-half of the estate while the formal adoption of the child.
illegitimate parents get the other half;
A ward (ampon), without the benefit of formal
NOTE: In the ascending line, only the (judicial) adoption, is neither a compulsory nor a
illegitimate parents are entitled to inherit from legal heir. (Ibid.)
the illegitimate child; the other illegitimate
descendants are not so entitled. Q: Donato, Sr. was legally married to Anatacia
Santos and they had two children, namely:
Emerenciana, and Milagros. During his

2022 GOLDEN NOTES
Succession
marriage, Donato, Sr. had illicit relation with shall consist of 4/5 of the legitime of an
Emiliana dela Cruz. They begot four children, acknowledged natural child. (Rivera v. Villanueva,
namely: Flora, born on May 9, 1928; Donato, Jr., G.R. No. 197310, 23 June 2021)
born on April 22, 1930; Ruperto, born on March
27, 1934; and Virgilio, born on May 28, 1937. TABLE OF INTESTATE SHARES
Flora and Donato, Jr., now deceased, are
substituted by their heirs in the present action. Legitimate The whole estate divided
On August 21, 1956, Donato, Sr. died intestate, Children alone equally. (Art. 980, NCC)
leaving several properties he acquired during Legitimate The whole estate, each
his lifetime. In said settlement proceedings of children and illegitimate child getting ½
Emerenciana's estate, Judge Cuevas declared Illegitimate share of one legitimate child
that respondents Flora, Donato, Jr., Ruperto and children (Art. 983 & Art. 895, NCC)
Virgilio, all surnamed Pacheco, the illegitimate Legitimate The whole estate, divided
children of the deceased Donato R. Pacheco, Sr. children and equally (the surviving spouse
and are, therefore, entitled not only to intervene surviving counted as one legitimate
in the proceedings but also to inherit from his spouse child) (Art. 996, NCC)
estate pursuant to the pertinent provisions of The whole estate, the
the New Civil Code. According to the RTC and CA, Legitimate
surviving spouse being
the respondents are the illegitimate children Children,
counted as one legitimate
and nephews and nieces of the late Donato, Sr. surviving
child and each illegitimate
and the legitime of each illegitimate child shall spouse and
child getting ½ share of one
consist of one-half (1/2) of the legitime of illegitimate
legitimate child (Arts. 888 &
legitimate child. Are the RTC and CA correct? children
999, NCC; Art. 176, FC)
Legitimate The whole estate, divided
A: NO. Article 895(2) of the Civil Code provide that parents alone equally (Art. 985, NCC)
the legitime of an illegitimate child who is neither an Legitimate
acknowledged natural, nor a natural child by legal The whole estate, observing in
ascendants
fiction, shall be equal in every case to four-fifths of proper cases, the rule of
(other than
the legitime of an acknowledged natural child. division by line (Art. 987, NCC)
parents) alone
Legitimate parents
Flora, Ruperto, Virgilio and Donato, Jr. cannot be Legitimate = ½ of the estate
considered as acknowledged natural children of parents and
Donato, Sr. Children born outside wedlock of illegitimate Illegitimate children
parents who, at the time of the conception of the children = ½ of the estate
former, were not disqualified by any impediment to (Art. 991, NCC)
marry each other, are natural. While they are Legitimate parents
acknowledged or recognized, Flora, Ruperto, Legitimate = ½ of the estate
Virgilio and Donato, Jr. are not natural children. parents and
They are only acknowledged illegitimate children of surviving Surviving spouse
Donato, Sr. spouse = ½ of the estate
(Art. 997, NCC)
Pursuant to the second paragraph of Article 895, the Legitimate parents
legitime of Flora, Ruperto, Virgilio and Donato, Jr., Legitimate = ½ of the estate
being illegitimate children, shall consist of 4/5 of the parents,
legitime of an acknowledged natural child. The surviving Surviving spouse
legitime of an acknowledged natural child shall spouse and = ¼ of the estate
consist of 1/2 of the legitime of each of the illegitimate
legitimate children or descendants. Thus, the children Illegitimate children
legitime of Flora, Ruperto, Virgilio and Donato, Jr., = ¼ of the estate

Civil Law
(Art. 1000, NCC) children, whether legitimate

Illegitimate The whole estate, divided or illegitimate, of such
children alone equally (Art. 988, NCC) brothers and sisters. (Manuel
Illegitimate children v. Ferrer, G.R. No. 117246, 21
Illegitimate = ½ of the estate Aug. 1995)
children and Illegitimate The whole estate
surviving Surviving spouse parents alone (Art. 993, NCC)
spouse = ½ of the estate Illegitimate parents =excluded
(Art. 998, NCC)
Children
Surviving The whole estate a. Child alone (legitimate or
spouse alone (Arts. 994 & 995, NCC) Illegitimate illegitimate)
parents and = whole estate
No article governing, but Art. children of any
997 may be applied by kind b. Legitimate and illegitimate
analogy, thus: children
Surviving
= each illegitimate gets ½
spouse and
Surviving spouse share of one legitimate child
illegitimate
= ½ of the estate
parents
The whole estate, with a
Illegitimate parents brother/sister of the half-
Legitimate
= ½ of the estate blood inheriting ½ the share
brothers and
Surviving spouse of a brother/sister of the full
sister alone
= ½ of the estate blood
Surviving
(Art. 1004, NCC)
spouse and
Legitimate brothers, sisters, The whole estate, observing
legitimate
nephews, nieces Legitimate the 2:1 proportion of full and
brothers and
= ½ of the estate (the nephews brothers and half-blood fraternity and the
sisters,
and nieces inheriting by sisters, nephews and nieces inheriting
nephews and
representation in proper nephews and by representation in the
nieces
cases nieces proper cases
(Art. 1001, NCC) (Art. 1008, NCC)
Surviving spouse Uncles and Aunts
= ½ of the estate = excluded
Nephews and
Illegitimate brothers, sisters, nieces with Nephews and nieces
nephews and nieces Uncles and = whole estate per capita, but
Surviving = ½ of the estate (the nephews aunts observing the 2:1 proportion
spouse and and nieces inheriting by for the full and half blood
illegitimate representation in proper (Art. 1009, NCC)
brothers and cases) The whole estate, observing
Illegitimate
sisters, (Art. 994, second par., NCC) the 2:1 proportion of full and
brothers and
nephews and half-blood fraternity
sisters alone
nieces NOTE: When the law speaks of
brothers and sisters, nephews Illegitimate
No article governing, but Arts.
and nieces as legal heirs of an brothers,
1005 and 1008 may be applied
illegitimate child, it refers to sisters,
by analogy, hence, they
illegitimate brothers and nephews and
acquire the whole estate
sisters as well as to the nieces

2022 GOLDEN NOTES
Succession
The whole estate per capita,

Nephews and but observing the 2:1 D. PROVISIONS COMMON TO
nieces alone proportion for the full and half TESTATE AND INTESTATE SUCCESSION
blood (Art. 1009, NCC)
The whole estate, per capita,
Other the nearer in degree excluding
1. RIGHT OF ACCRETION
collaterals the more remote
(Arts. 1009 & 1010, NCC)
Accretion is a right by virtue of which, when two or
The whole estate. (Art. 1011,
more persons are called to the same inheritance,
NCC)
devise or legacy, the part assigned to the one who
renounces or cannot receive his share, or who died
Assignment/Disposition:
before the testator, is added or incorporated to that
1. If decedent was a resident
of his co-heir, co-devisees, or co-legatees. (Art. 1015,
of the Philippines at any
NCC)
time:
a. Personal property – to
Basis: Accretion is a right based on the presumed
municipality of last
will of the deceased that he prefers to give certain
residence;
properties to certain individuals rather than to his
b. Real property – where
legal heirs. Accretion is preferred over intestacy.
situated;
(Paras, 2008)
2. If decedent was never a
resident of the
Requisites of Accretion (Art. 1016, NCC)
Philippines.
State Personal and real property –
In order that the right of accretion may take place in
where respectively situated
a testamentary succession, it shall be necessary:
1. That two or more persons be called to the same
How property is to be used:
inheritance, or to the same portion thereof, pro
1. For the benefit of public
indiviso; and
educational and
2. That one of the persons thus called die before the
charitable institutions in
testator, or renounce the inheritance, or be
the respective
incapacitated to receive it.
municipalities/cities;
2. Alternatively, at the
In testamentary succession, accretion takes
instance of an interested
place in case of:
party, or motu propio,
court may order creation
1. Predecease;
of a permanent trust for
2. Incapacity;
the benefit of the
3. Renunciation; (Art. 1015, NCC)
institutions concerned.
4. Non-fulfillment of the suspensive condition
imposed upon instituted heir; and
5. Ineffective testamentary disposition. (Paras,
2008)
Accretion takes place in cases of:
1. Predecease of legal heir;

2. Incapacity or unworthiness of legal heir; and
3. Repudiation or renunciation by legal heir. (Art.
1015, NCC)

Civil Law
NOTE: Accretion takes place only if there is no In case of repudiation

representation. In renunciation, there is always
With respect to the The vacant portion
accretion.
legitime: shall go to the other
co-heirs by right of
Reason: No representation in renunciation.
1. The other co-heirs accretion. In legal
shall succeed to it in succession, the share
Distinctions among Substitution,
their own right and of the person who
Representation and Accretion under Testate
not by right of repudiates the
and Intestate Successions
accretion since there inheritance always
is no accretion with accrues to his co-heirs.
TESTAMENTARY INTESTATE respect to legitime.
SUCCESSION SUCCESSION In default thereof, the
2. In default thereof, the vacant share shall go
In case of predecease and incapacity
vacant portion shall to the heirs of next
go to the other degree in their own
secondary and/or right.
compulsory heirs.
With respect to the 1. If the right of
In default thereof, it
legitime: representation takes
NOTE: Representation shall go to the heirs in
1. If the right of place, then the
does NOT take place in the next order of
representation takes representative
repudiation. intestacy.
place, then the succeeds to the
representative vacant portion.
NOTE: Substitution
succeeds to the
CANNOT take place
vacant portion; NOTE: Representation
with respect to
2. If representation is takes place in case of
legitime.
not available, then the predecease and
co-heirs of the same incapacity with With respect to the FREE PORTION in case of
degree shall succeed respect to inheritance predecease, incapacity or renunciation
to it in their own right conferred by law. 1. Substitution shall None
and not by accretion Hence, it takes place in take place if provided
since there is no legal or intestate for by the testator
accretion with succession.
respect to the 2. If no substitution is
legitime; 2. If representation is provided, the vacant
3. In default of the not available, then share shall go to the
above, the vacant the vacant portion co-heir by right of
portion shall go to the shall go to the co- accretion if the
other secondary heirs in their own requisites are present
and/or other right. and the testator has
compulsory heirs. not provided the
In default thereof, contrary
NOTE: Substitution then the vacant share
CANNOT take place shall go to the heirs in 3. If the requisites of
with respect to the next order of accretion are not
legitime. intestacy. present or when the
testator provides that
no accretion shall
take place, the vacant

2022 GOLDEN NOTES
Succession
portion shall pass to Determination of the Capacity to Succeed

the legal heirs if no
substitute has been GR: In order to judge the capacity of the heir,
designated. (Art. devisee, or legatee, his qualification at the time of
1022, NCC) the death of the decedent shall be the criterion.
NOTE: In testamentary XPN: If the institution, devise or legacy should be

succession, conditional (suspensive condition), the capacity is
representation takes to be determined not only at the time of the death of
place only with respect the decedent but also at the time of the fulfillment of
to the legitime; it does the condition.
not take place with
respect to what is NOTE: If the institution is subject to a suspensive
voluntarily given by term, the requirement of being alive applies only at
will. (Art. 856, NCC) the moment of the decedent’s death; the successor
need not be alive when the term arrives. (Balane,
2. CAPACITY TO SUCCEED 2016; Art. 878. NCC)
BY WILL OR BY INTESTACY
NOTE: In case of representation, the representative
Persons not incapacitated by law may succeed by must at least already be conceived when the
will or ab intestato. The provisions relating to decedent dies.
incapacity by will are equally applicable to intestate
succession. (Art. 1024, NCC) The governing law in determining the capacity to
succeed of the heir, devisee, legatee is the law of the
In order to be capacitated to inherit, the heir, nation of the decedent. (1998, 2004 BAR)
devisee or legatee must be living at the moment the
succession opens, except in case of representation, RELATIVE INCAPACITY TO SUCCEED
when it is proper.
Relative incapacity to succeed means the person
A child already conceived at the time of the death of is incapacitated to succeed because of some special
the decedent is capable of succeeding provided it be relation to the testator.
born later under the conditions prescribed in Art. 41
of the NCC. (Art. 1025, NCC) (2007 BAR) Grounds for Relative Incapacity to Succeed (U-
M-A-O)
PERSONS INCAPABLE OF SUCCEEDING
1. Undue influence or interest; (Art. 1027, NCC)
Absolute incapacity to succeed means that the 2. Morality or public policy; (Art. 739, NCC)
person is incapacitated to succeed in any form, 3. Acts of unworthiness; (Art. 1032, NCC)
whether by testate or intestate succession. 4. By Operation of law. (Jurado, 2009)
Persons who are Absolutely Incapacitated to Persons incapacitated to succeed based on

Succeed: Undue Influence or Interest (P-R-G-W-P-I)
1. Those not living at the time of death of the 1. The Priest who heard the confession of the
testator; (Art. 1025, NCC) testator during his last illness, or the
2. Those who cannot be identified. (Art. 845, NCC) minister of the gospel who extended
3. Individuals, associations, and corporations who spiritual aid to him during the same period;
are not permitted by law to inherit. (Art.
1027(6), NCC)

Civil Law
2. The Relatives of such priest or minister of a. The priest is the son of the sick person?
the gospel within the fourth degree, the b. The priest was the sick person’s brother?
church, order, chapter, community,
organization, or institution to which such A:
priest or minister may belong; a. YES. He can get the legitime.
3. A Guardian with respect to testamentary NOTE: A priest is incapacitated to succeed when the
dispositions given by a ward in his favor confession is made prior to or simultaneously with
before the final accounts of the the making of a will. The disqualification applies
guardianship have been approved, even if only to testamentary dispositions.
the testator should die after the approval
thereof; nevertheless, any provision made b. YES. He can inherit by intestacy.
by the ward in favor of the guardian when
the latter is his ascendants, descendant, NOTE: Despite the seemingly restrictive terms of
brother, sister, or spouse, shall be valid; this disqualification, it applies also to all individuals
belonging to other religions, sects, or cults, whose
4. Any attesting Witness to the execution of a office or function is to extend the peculiar spiritual
will, the spouse, parents, or children, or ministrations of their creed. (Balane, 2016)
anyone claiming under such witness,
spouse, parents, or children; Reason: It is conclusively presumed that the
spiritual minister used his moral influence to induce
NOTE: Numbers 1 to 4 do not apply to or influence the sick person to make a testamentary
legitimes. disposition in his favor.
5. Any Physician, surgeon, nurse, health Under paragraph (2), the disqualification of priests
officer or druggist who took care of the and ministers of the gospel is extended to their
testator during his last illness; relatives within the fourth degree as well as to the
church, order, chapter, community, organization, or
NOTE: Number 5 is an absolute institution to which they may belong. The reason for
disqualification. extending the disqualification is of course the
possibility of undue influence. (Jurado, 2009)
6. Individuals, associations and corporations
not permitted by law to inherit. (Art. 1027, Q: When is a guardian disqualified from
NCC) inheriting by testate succession?
Requisites for a Priest or Minister to be A:

Disqualified from Inheriting GR: The disqualification applies when the will is
made before the approval of final accounts or lifting
1. That the priest must have heard the confession of guardianship.
of the testator or that the minister must have
extended spiritual aid to the testator during the XPN: It does not apply even when the will is made
latter’s last illness; and after the guardianship began or before it is
2. That the testator must have executed the will terminated when the guardian is an: (A-D-B-S2)
during such last illness. (Jurado, 2009) 1. Ascendant ;
2. Descendant ;
Q: If the confession was made before the will was 3. Brother;
made, can the priest inherit upon the death of 4. Sister;
the sick person, if: 5. Spouse of the testator. (Jurado, 2009)

2022 GOLDEN NOTES
Succession
Disqualifications of a Witness report it to an officer of the law within a month

unless the authorities have already taken action;
Paragraph 4 nullifies not just legacies and devises,
but all testamentary dispositions made in the NOTE: This prohibition shall not apply to cases
witness’ favor. wherein, according to law, there is no obligation
to make an accusation.
The discrepancy between paragraph 4 and Article
832, which allows for an exception; i.e., if there are v. Person convicted of Adultery or concubinage
three other competent witnesses. That exception with the spouse of the testator;
should be read into this paragraph. (Balane, 2016)
vi. Persons who by Fraud, violence, intimidation,
Requisites for Disqualification of Physician or undue influence should cause the testator to
make a will or to change one already made;
1. The will was made during the last illness;
2. The sick person must have been taken cared of vii. Persons who by the same means Prevent
during his last illness; another from making a will, or from revoking
3. Medical attendance was made; one already made, or who supplant, conceal, or
4. The will was executed during or after he was alter the latter's will ; and
being cared of.
viii. Persons who Falsify or forge a supposed will of
The following are incapacitated to succeed the decedent. (Art. 1032, NCC)
based on morality or public policy (A-C-O)
NOTE: Grounds 1, 2, 3, 5 and 6 are the same
a. Persons guilty of Adultery or concubinage with grounds as in disinheritance. Numbers 6, 7 and
the testator at the time of the making of the will; 8 cover six (6) acts which relate to wills:
b. Persons guilty of the same Criminal offense, in 1. Causing the testator to make a will;
consideration thereof; 2. Causing the testator to change an existing
c. A public officer or his wife, descendants and will;
ascendants, by reason of his Office. (Art. 1028 in 3. Preventing the decedent from making a
relation to Art. 739 of NCC) (2000 BAR) will;
4. Preventing the testator from revoking his
The following are incapacitated to succeed by will;
reason of Unworthiness (P-C-A-V-A-F-P-F) 5. Supplanting, concealing, or altering the
testator's will.;
i. Parents who have abandoned their children or 6. Falsifying or forging a supposed will of the
induced their daughters to lead a corrupt or decedent.
immoral life, or attempted against their virtues;
ii. Persons Convicted of an attempt against the life

of the testator, his or her spouse, descendants
or ascendants;
iii. Persons who Accused the testator of a crime for

which the law prescribes imprisonment for six
years or more, if the accusation has been found
to be groundless;
iv. Heir of full age who, having knowledge of the

Violent death of the testator, should fail to

Civil Law
Unworthiness v. Disinheritance 3. ACCEPTANCE AND REPUDIATION

OF INHERITANCE
DISINHERITANCE UNWORTHINESS The acceptance or repudiation of the inheritance is

a purely voluntary and free act. (Art. 1041, NCC)
Effects on the Inheritance
Principal Characteristics of Acceptance and
Exclusion from the Repudiation
Deprivation of a entire inheritance.
compulsory heir of his However, donations 1. It is voluntary and free; (Art. 1041, NCC)
legitime. inter vivos are not 2. It retroacts to the moment of the death of the
affected. decedent (Art. 1042, NCC)
3. Once made, it is irrevocable.
Effects of Pardon or Reconciliation
XPN:
Reconciliation between 1. When it was made through any of the
the offender and the causes that vitiate consent, or
If the testator pardons
offended party 2. When an unknown will appears. (Art. 1056,
the act of
deprives the latter of NCC)
unworthiness, the
the right to disinherit
cause of unworthiness
and renders ineffectual Inheritance is deemed accepted when:
shall be without effect.
any disinheritance that
may have been made. 1. The heir sells, donates, or assigns his rights to
a stranger, to his co-heirs, or to any of them;
Manner of Reconciliation 2. The heir renounces it, even though
gratuitously, for the benefit of one or more
Written condonation heirs;
Express or implied or execution by the 3. Renunciation is in favor of all heirs
Either an express offended party of a will indiscriminately for a consideration (Art. 1050,
pardon or unequivocal with knowledge of the NCC); or
conduct of the testator. cause of 4. Other tacit acts of acceptance:
(Balane, 2016) unworthiness. (Art. a. Heir demands partition of the inheritance;
1033, NCC) b. Heir alienates some objects of the
inheritance;
c. Acts of preservation or administration if,
Grounds
through such acts, the title or capacity of
There are grounds for disinheritance which are the heir has been assumed; (Jurado, 2009)
also causes for incapacity by reason of d. Failure to signify acceptance or repudiation
unworthiness. within 30 days after an order of
distribution by the probate court. (Art.
Effect of subsequent reconciliation 1057, NCC)
if disinheritance has already been made
on any of the grounds which are also Forms in which Repudiation is made
causes for unworthiness
The moment the testator uses one of the causes 1. By means of a public instrument;
for unworthiness as a ground for disinheritance, 2. By means of an authentic instrument;
he thereby submits it to the rule on 3. By means of a petition presented to the court
disinheritance. (Rabuya, 2009) having jurisdiction over the testamentary or

2022 GOLDEN NOTES
Succession
intestate proceedings. (filed in the settlement 4. PARTITION AND DISTRIBUTION

proceedings) (Art. 1051, NCC) OF THE ESTATE
Effect of Repudiation if an heir is Both a Testate Partition, in general, is the separation, division and
and Legal Heir assignment of a thing held in common among those
to whom it may belong. The thing itself may be
If an heir is both a testate and legal heir and he divided or its value. (Art. 1079, NCC)
repudiated the inheritance as a testate heir, he is
understood to have repudiated in both capacities. Every act which is intended to put an end to
However, should he repudiate as a legal heir, indivision among co-heirs and legatees or devisees
without knowledge of being a testate heir, he may is deemed to be a partition, although it should
still accept the inheritance as a testate heir. (Art. purport to be a sale, an exchange, a compromise, or
1055, NCC) any other transaction. (Art. 1082, NCC)
Remedy if the heir Repudiates the inheritance to Q: What is the rule on the ownership of the
the Prejudice of his creditors whole estate of the decedent who has two or
more heirs, prior to partition?
If the heir repudiates the inheritance to the
prejudice of his own creditors, the latter may A: Article 1078 of the Civil Code provides that where
petition the court to authorize them to accept it in there are two or more heirs, the whole estate of the
the name of the heir. decedent is, before partition, owned in common by
such heirs.
The acceptance shall benefit the creditors only to an
extent sufficient to cover the amount of their Time and again, the Court has outlined the specific
credits. (Art. 1052, NCC) rules that are in play when the seller of a property
co-owns the object of said sale since under Article
This is an instance of accion pauliana, which is the 491 of the Civil Code, a sale of the property owned
right given to creditors to impugn or set aside in common amounts to an alteration thereof which
contracts, transactions or dispositions of their requires the unanimous consent of the other co-
debtors which will prejudice or defraud them. owners. Nevertheless, a co-owner is allowed to
(Balane, 2016) alienate his or her part or pro-indiviso share in the
co-ownership, with attendant limits as provided by
Requisites Article 493 of the NCC. Relatedly, Article 1082
further provides for how an act may be construed as
a. The heir who repudiated his inheritance must one intended to terminate the co-ownership:
have been indebted at the time when the
repudiation is made. Based on these provisions, prior to partition, a sale
b. The heir-debtor must have repudiated his of a definite portion of a common property requires
inheritance according to the formalities the consent of all co-owners because it operates to
prescribed by law. partition the land with respect to the co-owner
c. Such act of repudiation must be prejudicial to selling his or her specific share therein. Operatively,
the creditor or creditors. a co-owner is an owner of the whole and over the
d. There must be judicial authorization. (Art. 1052, whole he exercises the right of dominion, but he is
NCC) at the same time the owner of a portion which is
truly abstract. (Ulay v. Bustamante, G.R. No. 231721-
22, 18 Mar. 2021)

Civil Law
The partition may be effected either: Who can demand partition
1. By the decedent himself through an act inter 1. Compulsory heir;

vivos or by will; (Art. 1080, NCC) 2. Voluntary heir;
2. By a third person designated by the decendent; 3. Legatee or devisee;
(Art. 1081, NCC) or 4. Person who has acquired an interest in the
3. By a competent court in accordance with the estate. (Jurado, 2009)
Rule 69 of the ROC.
When partition CANNOT be demanded (P-A-P-U)
Q: During the mediation conferences, B, V, R, A,
Em, and El who are the compulsory heirs of their 1. When expressly Prohibited by testator for a
late mother, Ceferina Toregosa, have sought to period not exceeding 20 years
partition the estate of the latter. All the parties
attended and successfully arrived at an NOTE: This enforced co-ownership may cover
agreement on the manner of partition of even legitimes.
Ceferina's estate. A meeting was then scheduled
for the signing of the Compromise Agreement, XPN: Despite this imposed indivision, partition
which reduced into writing the prior agreement may be demanded:
reached by the parties during the mediation a. When any of the causes for which
conferences. On said date, V did not appear, partnership is dissolved takes place;
while all her other siblings appeared, because b. When the court finds compelling reasons
she did not have enough money to travel from for partition. (Art. 1083, NCC)
Manila to Calabanga, Camarines Sur. All the
other siblings proceeded to sign the 2. When co-heirs Agreed that estate shall not be
Compromise Agreement and submitted the divided for a period which shall not exceed 10
same before the RTC, which approved the same. years, renewable for another 10 years. (Art. 494,
On appeal, V argued that she cannot be bound by par.2, NCC)
the said compromise agreement partitioning
the property since she did not sign the same. Is 3. When Prohibited by law; (Ibid)
V correct?
4. To partition estate would render it
A: NO. As explicitly held in Vda. de Reyes v. Court of Unserviceable for the use for which it was
Appeals, an oral partition may be valid and binding intended. (Ibid)
upon the heirs; there is no law that requires
partition among heirs to be in writing to be valid. NOTE: An estate can be partitioned inter vivos. Such
Therefore, even if the document titled Compromise partition shall be respected, insofar as it does not
Agreement was not signed by V, there was already prejudice the legitime of compulsory heirs. (Art.
an oral partition entered into by the parties that 1080, NCC)
bound all of the siblings. The written agreement
only served to reduce into writing for the Q: Araceli Mayuga instituted a petition for
convenience of the parties the terms of the Cancellation and Recall of Free Patent
agreement already entered into during the Application and Reconveyance against Antonio
mediation conferences. Independent and in spite of Atienza. In her Petition, Araceli, alleged, that
the statute of frauds, courts of equity have enforced she, Benjamin A. Atienza, Sr. and Armando A.
oral partition when it has been completely or partly Atienza are the surviving legitimate, legal and
performed. (Fajardo v. Cua-Malate, G.R. No. 213666, forced heirs of the late Perfecto Atienza who
27 Mar 2019, J. Caguioa) died intestate on June 1, 1978. She alleged that
through manipulation and misrepresentation
with intent to defraud a co-heir, respondent

2022 GOLDEN NOTES
Succession
Antonio L. Atienza, son of deceased Armando instituted an action for partition or a settlement of
Atienza, and respondent Benjamin A. Atienza estate proceedings instead of her complaint for
were both able to secure Free Patents. Araceli cancellation of free patent and reconveyance.
was not notified of the application filed with (Mayuga v. Atienza, G.R. No. 208197, 10 Jan. 2018, J.
public respondent CENRO nor any notice of Caguioa)
hearings of proceedings as required by law,
being a co-heir and party- in-interest. Thus, she Effects of the Inclusion of an Intruder in
prayed for: (1) The recall and cancellation of Partition
Free patent issued to Antonio Atienza and also
the Free Patent issued to Benjamin Atienza; (2) 1. Between a true heir and several mistaken heirs –
The division of the two lots into 3 equal parts partition is void;
among the 3 forced heirs. Should Araceli’s 2. Between several true heirs and a mistaken heir –
petition be granted? Further, may Araceli claim transmission to mistaken heir is void.
preterition? 3. Through the error or mistake; share of true heir
is allotted to mistaken heir – partition shall not
A: NO. Assuming that Perfecto owned the disputed be rescinded unless there is bad faith or fraud
lots and the Confirmation Affidavit was a deed of on the part of the other persons interested, but
partition, Perfecto could have legally partitioned his the latter shall be proportionately obliged to
estate during his lifetime. Under Art. 1080 of the pay the true heir of his share. (Jurado, 2009)
NCC, "should a person make a partition of his estate
by an act inter vivos, or by will, such partition shall In the partition of the estate, equality shall be
be respected, insofar as it does not prejudice the observed as far as possible, dividing the property
legitime of the compulsory heirs." into lots, or assigning to each of the co-heirs things
of the same nature, quality and kind. ( Art. 1085,
Since the Civil Code allows partition inter vivos, it is NCC)
incumbent upon the compulsory heir questioning
its validity to show that his legitime is impaired. Indivisible Thing
Unfortunately, Araceli has not shown to what extent
the Confirmation Affidavit prejudiced her legitime. Should a thing be indivisible, or would be much
impaired by its being divided, it may be adjudicated
Araceli could not also claim preterition by virtue of to one of the heirs, provided he shall pay the others
the Confirmation Affidavit on the assumption that the excess in case.
the disputed two lots pertained to Perfecto's
inheritance, he had only three legal heirs and he left Nevertheless, if any of the heirs should demand that
Araceli with no share in the two lots. Although the thing be sold at public auction and that strangers
Araceli was a compulsory heir in the direct be allowed to bid, this must be done. (Art. 1086,
descending line, she could not have been preterited. NCC)
Firstly, Perfecto left no will. As contemplated in
Article 854, the presence of a will is necessary. Heir Selling his Hereditary Rights to a Stranger
Secondly, before his death, Perfecto had properties
in Limon, Rizal which was almost 50 hectares, part Should any of the heirs sell his hereditary rights to a
of which was developed for residential and stranger before the partition, any or all of the co-
agricultural purposes, and in Odiongan. Araceli heirs may be subrogated to the rights of the
could not have been totally excluded in the purchaser by reimbursing him for the price of the
inheritance of Perfecto even if she was not allegedly sale, provided they do so within the period of one
given any share in the disputed two lots. (1) month from the time they were notified in
writing of the sale by the vendor. (Art. 1088, NCC)
If Araceli's share in the inheritance of Perfecto as
claimed by her was indeed impaired, she could have

Civil Law
The right of an heir to convey his share vests upon

the decedent’s death. (Balane, 2016)
The right of redemption may be exercised only

before partition, not after. (Caro v. CA, G.R. No. L-
46001, 25 Mar. 1982)
Rescission and Nullity of Partition
A partition may be rescinded or annulled for the

same causes as contracts. (Art. 1097, NCC)
It may also be rescinded on account of lesion, when

any one of the co-heirs received things whose value
is less, by at least 1/4, than the share to which he is
entitled, considering the value of the things at the
time they were adjudicated. (Art. 1098, NCC)
The partition made by the testator cannot be

impugned even on the ground of lesion, EXCEPT:
1. when the legitimes of the compulsory heirs are
thereby prejudiced, or
2. when it appears or may reasonably be
presumed, that the intention of the testator was
otherwise. (Art. 1099, NCC)
Prescriptive Period
The action for rescission on account of lesion shall

prescribe after 4 years from the time the partition
was made. (Art. 1100, NCC)

2022 GOLDEN NOTES
Obligations and Contracts
XPNs:
IV. OBLIGATIONS AND CONTRACTS 1. When the form is essential to the validity of the
contract as required by law. (Art. 1346, NCC)
2. When the contract is unenforceable, unless it is
in a certain form, such as those under the
Statute of Frauds as formulated in Art. 1403.
A. OBLIGATIONS
Obligations arising from other sources (Art. 1157,
NCC) do not have any form at all. (De Leon, 2010)
Elements of an Obligation
An obligation is a juridical necessity to give, to do, or
not to do. (Art. 1156, NCC) The following are the elements of an obligation (J-
A-P-O):
Obligation as Juridical Necessity
1. Juridical tie or vinculum juris or efficient cause -
It is a juridical necessity because in case of non- the efficient cause by virtue of which the debtor
compliance, the courts of justice may be called upon becomes bound to perform the prestation;
by the aggrieved party to enforce its fulfillment or, (Pineda, 2000)
in default thereof, the economic value that it
represents. (De Leon, 2010) NOTE: The vinculum juris is established by:
a. Law;
It is a juridical relation or necessity that allows one b. Bilateral acts;
person (creditor) to demand the observance of c. Unilateral act. (Tolentino, 2002)
determinative conduct (i.e., giving, doing, or not
doing) from another (debtor), and in case of breach, 2. Active subject (creditor or obligee) - The person
the former can demand satisfaction from the assets demanding the performance of the obligation. It
of the latter. (Makati Stock Exchange v. Campos, G.R. is he in whose favor the obligation is
No. 138814, 16 Apr. 2009) constituted, established, or created;
Art. 1156 refers only to civil obligations that are 3. Passive subject (debtor or obligor) - The person
enforceable in court when breached. It does not bound to perform the prestation to give, to do,
cover natural obligations (Arts. 1423 -1430, NCC) or not to do;
because the latter are obligations that cannot be
enforced in court on equity and natural law and not 4. Object or prestation - The subject matter of the
on positive law. (Pineda, 2000) obligation which has a corresponding economic
value or susceptible of pecuniary substitution
When there is a right, there is a corresponding in case of noncompliance. It is a conduct that
obligation. Right is the active aspect while may consist of giving, doing, or not doing
obligation is the passive aspect. Thus, the concepts something. (Pineda, 2000)
of credit and debt are two distinct aspects of a
unitary concept of obligation. (Ibid.) NOTE: In order to be valid, the object or
prestation must be:
Form of Obligation a. Licit or lawful;
b. Possible, physically, and judicially;
GR: The law does not require any form in c. Determinate or determinable; and
obligations arising from contracts for their validity d. Pecuniary value or possible equivalent in
or binding force. (Art. 1356, NCC) money.

Civil Law
The absence of any of the first three makes the 2. Nature

object void. (Tolentino, 2002) a. Personal – to do; not to do;
b. Real – to give.
NOTE: Some writers add a fifth one: the form in
which the obligation is manifested. This element, 3. Object
however, cannot be considered as essential. There a. Determinate / specific - particularly
is no particular form required to make obligations designated or physically segregated from
binding, except in certain rare cases. (Tolentino, all others of the same class;
1991) b. Generic – designated merely by its class or
genus;
The obligation is constituted upon the concurrence c. Limited generic – generic objects confined
of the essential elements thereof, viz: (a) the to a particular class or source (e.g., an
vinculum juris or juridical tie which is the efficient obligation to deliver one of my horses).
cause established by various sources of obligations (Tolentino, 2002)
(law, contracts, quasi-contracts, delicts and quasi-
delicts); (b) the object which is the presentation or 4. Performance
conduct, required to be observed (to give, to do or a. Positive - to give; to do;
not to do); and (c) the subject-persons who are the b. Negative – not to do.
active (obligee) and the passive (obligor) subjects.
(De Leon v. The Manufacturers Life Insurance 5. Person obliged
Company (Phils.) Inc., G.R. No. 243733, 12 Jan. 2021) a. Unilateral – only one party is bound;
b. Bilateral – both parties are bound.
Different Kinds of Prestation
NOTE : A bilateral obligation may be reciprocal
or non-reciprocal. Reciprocal obligations arise
OBLIGATION OBLIGATION OBLIGATION
from the same cause, wherein each party is a
TO GIVE TO DO NOT TO DO
debtor and a creditor of the other, such that the
As to what the obligation consists of performance of one is conditioned upon the
Rendering of simultaneous fulfillment of the other.
works or Meanwhile, in non-reciprocal obligations,
Delivery of a Refraining from performance by one is independent from the
services,
thing to doing certain other. (Paras, 2008)
whether
creditor acts
physical or
mental 6. Existence of burden or condition
a. Pure – not burdened with any condition or
Examples
term. It is immediately demandable; (Art.
Contract for Negative 1179, NCC)
Sale, deposit, professional easement, b. Conditional – subject to a condition which
pledge, services like restraining may be suspensive (e.g., satisfaction of the
donation, painting, order, or condition gives rise to the obligation) or
antichresis modeling, injunction. resolutory (satisfaction of the condition
singing, etc. (Pineda, 2000) terminates the obligation). (Art. 1181, NCC)
Classification of Obligations 7. Character of responsibility or liability

a. Joint – each debtor is liable only for a part
1. Creation of the whole liability and to each creditor
a. Legal – imposed by law; (Art. 1158, NCC) shall belong only a part of the correlative
b. Conventional – established by the rights (8 Manresa 194; Art. 1207, NCC);
agreement of the parties (e.g., Contracts).

2022 GOLDEN NOTES
b. Solidary – debtor is answerable for the Sources of Obligations (L-C-Q-D-Q)

whole of the obligation without prejudice
to his right to collect from his co-debtors 1. Law;
the latter’s shares in the obligation. (Art. 2. Contracts;
1207, NCC) 3. Quasi-contracts;
4. Delict;
8. Susceptibility of partial fulfillment 5. Quasi-delict.
a. Divisible – obligation is susceptible of
partial performance (Arts. 1223 & 1224, This enumeration is exclusive. No obligation exists
NCC); if its source is not one of those enumerated in Art.
b. Indivisible – obligation is not susceptible of 1157 of the NCC. (Navales v. Rias, G.R. No. L-3489, 07
partial performance. (Art. 1225, NCC) Sep. 1907)
9. Right to choose and substitution NOTE: Actually, there are only two sources (i.e., law
a. Alternative – obligor may choose to and contracts) because obligations arising from
completely perform one out of the several quasi-contracts, delicts, and quasi-delicts are
prestations (Art. 1199, NCC); imposed by law. (Leung Ben v. O’Brien, 38 Phil. 182).
b. Facultative – only one prestation has been
agreed upon, but the obligor may render Time of Perfection
one in substitution of the first one. (Art.
1206, NCC) GR:
1. Law – from the time designated by the law
10. Imposition of penalty creating or regulating them;
a. Simple – there is no penalty imposed for 2. Contracts –from the time of the perfection of the
violation of the terms (Art. 1226, NCC); contract (Art. 1319, NCC) (e.g., meeting of the
b. Obligations with a penal clause – obligation minds).
which imposes a penalty for violation of the
terms. (Art. 1226, NCC) XPNs:
a. When the parties made a stipulation on the
11. Sanction right of the creditor to the fruits of the
a. Civil – gives a right of action to compel their thing;
performance; the sanction is judicial b. When the obligation is subject to a
process; suspensive condition, from which it arises
b. Natural– not based on positive law, but on upon fulfillment of the condition;
equity and natural law; does not grant a c. When the obligation is with a period; there
right of action to enforce their is already an existing obligation, but it is
performance, but after voluntary only demandable when the period expires
fulfillment by the obligor, they authorize or becomes due.
retention of what has been delivered
rendered by reason thereof; the sanction is 3. Quasi-contracts, delicts, quasi-delicts – from the
the law; time designated by the law creating or
c. Moral – cannot be enforced by action but regulating them.
are binding on the party who makes it in
conscience and natural law; the sanction is OBLIGATION EX LEGE
conscience or morality.
Obligations derived from law are not presumed.
Only those expressly determined in the Code or in
special laws are demandable and shall be regulated
by the precepts of the law that establishes them and

Civil Law
as to what has not been foreseen by the provisions Binding Force of Obligation Ex Contractu
of Book IV of NCC. (Art. 1158, NCC)
Obligations arising from contracts have the force of
NOTE: If there is conflict between the NCC and a law between the parties and should be complied
special law, the latter prevails unless the contrary with in good faith. (Art. 1159, NCC) This is known as
has been expressly stipulated in the NCC. (Art. 18, the “principle of obligatory force of contracts.”
NCC) (Rabuya, 2017)
Characteristics of a Legal Obligation Good faith is a performance in accordance with the

stipulation, clauses, terms, and conditions of the
1. It does not need the consent of the obligor; contract. (Pineda, 2000)
2. It must be expressly set forth in the law creating
it and not merely presumed; and GR: Neither party may unilaterally evade his
3. For the law to be a source of obligation, it should obligation in the contract.
be the creator of the obligation itself. (Art. 1158,
NCC) XPNs: Unilateral evasion is allowed when the:
1. Contract authorizes such evasion; or
Examples: 2. Other party assents thereto.
1. According to Art. 2014 of the NCC, a loser in a
game of chance may recover his loss from the Q: FBDC entered into a Trade Contract with MS
winner, with legal interest from the time he Maxco Company, Inc. (MS Maxco) for the
paid the amount lost; execution of the structural and partial
2. The obligation of the spouses to support each architectural works of one of its condominium
other; (Art. 68, FC) projects. The Trade Contract provided that MS
3. The obligation of the employers under the Maxco is prohibited from assigning or
Worker’s Compensation Act; transferring any of its rights, obligations, or
4. The obligations of the owners of the dominant liabilities under the said Contract without the
and servient estates in legal easements and written consent of FBDC. FBDC received a letter
others scattered in the NCC and in special laws; from Fong’s counsel, informing it that MS Maxco
(Jurado, 2009) had already assigned its receivables from FBDC
5. The obligation to pay taxes. (Rabuya, 2017) to him. Despite Fong’s repeated requests, FBDC
refused to deliver to Fong the amount assigned
OBLIGATION EX CONTRACTU by MS Maxco. Is FBDC bound by the assignment
between MS Maxco and Fong?
Requisites of a Contractual Obligation
1. It must contain all the essential requisites of a A: NO. Obligations arising from contracts have the
contract; (Art. 1318, NCC) and force of law between the contracting parties and
2. It must not be contrary to law, morals, good should be complied with in good faith. The Court
customs, public order, and public policy. (Art. finds that MS Maxco, as the Trade Contractor,
1306, NCC) cannot assign or transfer any of its rights,
obligations, or liabilities under the Trade Contract
Rules governing Obligation Ex Contractu without the written consent of FBDC. FBDC cannot,
therefore, be bound by the unilateral assignments of
GR: These obligations arising from contracts shall MS Maxco of its receivables from FBDC to Fong.
be governed primarily by the stipulations, clauses, (Fort Bonifacio Dev. Corp. v. Fong, G.R. No. 209370, 25
terms, and conditions of the parties’ agreements. Mar. 2015)
XPN: Contracts with prestations that are

unconscionable or unreasonable. (Pineda, 2009)

2022 GOLDEN NOTES
OBLIGATION EX QUASI-CONTRACT liberality or some other cause. (Land Bank of the

Philippines v. BIR, G.R. No. 242319, 16 June 2021)
Quasi-Contract
Solutio Indebiti (SI) v. Accion in Rem Verso (AIRV)
A juridical relation arising from lawful, voluntary,
and unilateral acts based on the principle that no 1. Mistake is an essential element in SI which is
one shall be unjustly enriched or benefited at the not necessary for AIRV;
expense of another. (Art. 2142, NCC) 2. An AIRV is merely an auxiliary action, available
only when there is no other remedy on contract,
Distinguished from “Implied Contracts” quasi-contract, crime, or quasi-delict. (Rabuya,
2017)
An implied contract requires consent, while a quasi-
contract, being a unilateral contract, does not. The Rule in case of Excess Payment of Interest
basis of an implied contract is the will of the parties,
while the basis of a quasi-contract is law, to the end If the borrower pays interest when there has been
that there be no unjust enrichment. (Rabuya, 2017) no stipulation therefor, the provisions of the Code
concerning solutio indebiti, or natural obligations,
Characteristics of Quasi-Contract (L-U-V) shall be applied.
1. It must be Lawful; If the payment of interest is made out of mistake,

2. It must be Unilateral; and solutio indebiti applies; hence, the amount must be
3. It must be Voluntary. (Pineda, 2000) returned to the debtor. If the payment was made
after the obligation to pay interest has already
Presumptive Consent prescribed, natural obligation applies; hence, the
creditor is authorized to retain the amount paid.
Since a quasi-contract is a unilateral contract
created by the sole act of the gestor, there is no Contract v. Quasi-Contract
express consent given by the other party. The
consent needed in a contract is provided by law CONTRACT QUASI-CONTRACT
through presumption. (Pineda, 2000)
As to Consent
Principal Forms of Quasi-Contracts There is a meeting of
There is no consent,
the minds or consent;
but the same is
1. Negotiorum gestio (inofficious manager) – Arises the parties must have
supplied by fiction of
when a person voluntarily takes charge of the deliberately entered
law to prevent
management of the business or property of another into a formal
injustice.
without any power from the latter (Art. 2144, NCC); agreement.
2. Solutio indebiti (unjust enrichment) – Takes place NOTE: For further discussion on Quasi-Contracts,
when a person received something from another, please see the discussion thereon under Credit
without any right to demand for it, and the thing was Transactions – page 000.
unduly delivered to him through mistake, thereby
the obligation to return it arises (Art. 2154, NCC) OBLIGATION EX DELICTO
NOTE: There is solution indebiti when: (1) payment Delict

is made when there exists no binding relation
between the payor, who has no duty to pay, and the An act or omission punishable under the law.
person who received the payment; and (2) the
payment is made through mistake and not through

Civil Law
Basis civil action might arise did not exist. (Art. 29,
NCC)
GR: Art. 100 of the RPC provides: “Every person
criminally liable for a felony is also civilly liable.” NOTE: Although an acquittal on reasonable doubt
does not necessarily extinguish civil liability, it also
XPNs: Crimes of treason, rebellion, espionage, does not mean that the civil liability of the acquitted
contempt, and others wherein no civil liability nonetheless automatically survives. (De Leon v.
arises on the part of the offender either because Roqson Industrial Sales, Inc., G.R. No. 234329, 23 Nov.
there are no damages to be compensated or there is 2021)
no private person injured by the crime. (Reyes,
2008) OBLIGATION EX QUASI-DELICTO
Implied Institution of the Civil Action in a Quasi-delict

Criminal Case
An act or omission arising from fault or negligence
GR: When a criminal action is instituted, the civil which causes damage to another, there being no
action for the recovery of the civil liability arising pre-existing contractual relations between the
from the offense charged shall be deemed instituted parties. (Art. 2176, NCC)
with the criminal action. (Rule 111, Sec. 1, Rules of
Court) Elements of a Quasi-Delict
XPNs: When the offended party: 1. Negligent or wrongful act or omission;

1. Waives the civil action; 2. Damage or injury caused to another;
2. Reserves the right to institute it separately; and 3. Causal relation between such negligence or
3. Institutes the civil action prior to the criminal fault and damage; and
action. (Rule 111, Sec. 1, Rules of Court) 4. No pre-existing contractual relationship
between the parties. (Art. 2176, NCC)
Scope of Civil Liability (R-R-I)
Instances when Art. 2176 is not applicable
1. Restitution;
2. Reparation for damage caused; and 1. When there was a pre-existing contractual
3. Indemnity for consequential damages. (Art. relation because the breach of contract is the
104, RPC) source of the obligation (Robles v. Yap Wing, G.R.
No. L-20442, 04 Oct. 1971)
Acquittal in Criminal Case
NOTE: If a contracting party's act that breaches
GR: The acquittal of the accused in criminal case on the contract would have given rise to an extra-
the ground of reasonable doubt does not preclude contractual liability had there been no contract,
the filing of a subsequent civil action, and only the contract would be deemed breached by a
preponderance of evidence is required to prove the tort, and the party may be held liable under
latter. Article 2176 and its related provisions. (Orient
or resFreight Intl. Inc. v. Keihin-Everett
XPNs: When the acquittal is on the basis that: Forwarding Co., Inc., G.R. No. 191937, 09 Aug.
2017);
1. The accused did not commit the crime charged;
or 2. When the fault or negligence is punished by law
2. There is a declaration in the decision of as a crime, Art. 100 of RPC shall be applicable;
acquittal that no negligence can be attributed to
the accused, and that the fact from which the

2022 GOLDEN NOTES
3. If the action for quasi-delict is instituted after 2. NATURE AND EFFECT

four years, it is deemed prescribed; (Art. 1146,
NCC) Types of Real Obligations
4. When the injury suffered by a person is the
result of a fortuitous event without human 1. Determinate/specific – Particularly designated
intervention; or physically segregated from all others of the
5. If there is no damage or injury caused to same class;
another. (Art. 2176, NCC) 2. Indeterminate/Generic – Is designated merely
by its class or genus;
Delict v. Quasi-Delict 3. Delimited generic – Generic objects confined to
a particular class (e.g., An obligation to deliver
DELICT QUASI-DELICT one of my horses). (Tolentino, 2002)
As to what must be present Obligations of a Debtor in an Obligation to

Deliver
Presence of criminal or
Only fault or
malicious intent or
negligence. The obligations of the debtor in an obligation to
criminal negligence.
deliver depends upon the kind thing involved:
As to the whether
private or public interest is concerned SPECIFIC GENERIC
Concerned with public Concerned with private What the obligation consists of
interest. interest. Deliver the thing
which is neither of
As to the kind of liability arises superior nor inferior
Deliver the thing
Generally, the act or quality, if quality and
The act or omission agreed upon. (Art.
omission gives rise to circumstances have
gives rise only to civil 1165, NCC)
two liabilities: criminal not been stated by the
liability. parties. (Art. 1246,
and civil liability.
NCC)
As to availability of a compromise Required diligence to be observed
Criminal liability is not Take care of the thing

The civil liability can be
subject to a with the proper
compromised. If the object is generic,
compromise. diligence of a good
but the source is
father of a family unless
specified or delimited,
As to the quantum of evidence is required the law requires or
the obligation is to
parties stipulate
Guilt must be proved Guilt may be proved by preserve the source.
another standard of
beyond reasonable preponderance of care. (Art. 1163, NCC)
doubt. evidence.
What delivery comprises of
NOTE: In as much as civil liability co-exists with Delivery of another
Deliver all accessions,
criminal responsibility in negligence cases, the thing within the same
accessories, and fruits
offended party has the option between an action for genus as the thing
of the thing even
enforcement of civil liability based on culpa criminal promised, if such thing
though they may not
under Art. 100 of the RPC and an action for recovery is damaged due to lack
have been mentioned.
of damages based on culpa aquiliana under Art. of care or a general
(Art. 1166, NCC)
2177, NCC. breach is committed.

Civil Law
Effect of breach of obligation Right of the Creditor to the Fruits

Pay damages in case of Pay damages in case of
The creditor has a right to the fruits of the thing
breach of obligation by breach of obligation by
from the time the obligation to deliver it arises.
reason of delay, fraud, reason of delay, fraud,
However, he shall acquire no real right over it until
negligence, negligence,
the same has been delivered to him. (Art. 1164, NCC)
contravention of the contravention of the
tenor thereof. (Art. tenor thereof. (Art.
SOURCE OF WHEN OBLIGATION
1170, NCC) 1170, NCC)
OBLIGATION ARISES
Effect of fortuitous event
Law, quasi-delict,
Obligation is not Based on specific
Fortuitous event quasi-contract, or
extinguished (genus provisions of law.
extinguishes the crime.
nunquam peruit – Subject to a
obligation. From the happening of
genus never perishes). suspensive
the condition.
condition.
Remedies of the Creditor in case of Failure to Subject to a From the constitution,
Deliver the thing due (Pineda, 2000) suspensive creation, or perfection of
term/period. obligation.
SPECIFIC GENERIC From the constitution,
Specific performance Pure creation, or perfection of
Specific (delivery of anything the obligation.
performance belonging to the same
species) Nature of the Right of Creditor to Fruits
Ask that the obligation be

Rescission (action 1. Before delivery – Personal right;
complied with at the
to rescind under 2. After delivery – Real right.
debtor’s expense with
Art. 1380, NCC)
right to recover damages.
Personal Right v. Real Right
Resolution (action Resolution or specific
for cancellation performance, with PERSONAL RIGHT REAL RIGHT
under Art. 1191, damages in either case The right or power of a The right or interest of
NCC) (Art. 1191, NCC) person (creditor) to a person over a specific
Damages, in both cases (Art. 1170, NCC) demand from another thing (i.e. ownership,
(debtor), as a definite possession, mortgage),
Principle of “Balancing of Equities” in Actions for passive subject, the without a definite
Specific Performance fulfillment of the subject against whom
latter’s obligation to the right may be
In decreeing specific performance, equity requires give, to do, or not to do. personally enforced.
not only that the contract be just and equitable in its There is a definite
There is only a definite
provisions, but that the consequences of specific active subject and a
active subject without
performance likewise be just and equitable. The definite passive
any passive subject.
general rule is that this equitable relief will not be subject.
granted if, under the circumstances of the case, the Binding and
result of the specific performance of the contract enforceable only Directed against the
would be harsh, inequitable, and oppressive or against a particular whole world.
result in an unconscionable advantage to the person.
plaintiff. (Agcaoili v. GSIS, G.R. No. 30056, 30 Aug.
1988)

2022 GOLDEN NOTES
Types of Personal Obligations b. Banks require the highest degree of

deligence, being imbued with public
1. Positive - To do; interest.
2. Negative - Not to do.
Diligence of a Good Father of a Family
Remedies in Personal Obligations
That reasonable diligence which an ordinary
1. Positive personal obligations prudent person would have done under the same
a. Not purely personal act – To have obligation circumstances.
executed at debtor's expense plus damages;
b. Purely personal act - Damages only. Q: Great Harvest hired Tan to transport 430 bags
When positive personal obligations of soya beans from Tacoma to Selecta Feeds. At
considered breached: Selecta Feeds, however, the shipment was
a. If the debtor fails to perform the rejected. The truck and its shipment never
obligation; or reached Great Harvest's warehouse. Great
b. Even in the case of performance but Harvest asked Tan about the missing delivery but
the same is done either in a poor to no avail. Is Anita Tan liable for the lost bags of
manner or in contravention of the soya beans?
tenor of the obligation. (Art. 1167, NCC)
A: YES, Annie Tan should be liable. Common
2. Negative personal obligation – To have the carriers are mandated to internalize or shoulder the
prohibited thing undone at the expense of the costs under the contracts of carriage. This is so
debtor plus damages. However, if thing cannot because a contract of carriage is structured so that
be physically or legally undone, only damages passengers or shippers surrender total control over
may be demanded. (8 Manresa 58) their persons or goods to common carriers, fully
trusting that the latter will safely and timely deliver
Specific Performance is Not a Remedy in them to their destination. Here, the petitioner is a
Positive Personal Obligations common carrier obligated to exercise extraordinary
diligence over the goods entrusted to her. Her
If specific performance is allowed, it will amount to responsibility began from the time she received the
involuntary servitude, which is prohibited by the soya beans from the respondent's broker and would
Constitution. (Pineda, 2000) only cease after she has delivered them to the
consignee or any person with the right to receive
BREACHES OF OBLIGATIONS them. (Tan v. Great Harvest Enterprises, Inc., G.R.
No. 220400, 20 Mar. 2019)
Degree of Diligence Required
Q: Eliza, a condo unit owner, delivered thru
1. That agreed upon; FedEx a check to Sison, who will be paying in
2. In the absence of such, that which is required by behalf of Eliza, however, Sison did not receive
the law; the package. Later, it was found out that the
check was delivered to Sison’s neighbor, but
GR: In the absence of the foregoing, diligence of there was no signed receipt. Hence, Eliza sent a
a good father of a family. demand letter to FedEx, the delivery courier, for
payment of damages since the check was
XPNs: supposed to be used to pay the balance for the
a. Common carriers requiring condo unit, which was foreclosed since it was
extraordinary diligence (Arts. 1998- unpaid. FedEx refused, and thus Eliza filed a
2002, NCC); complaint for damages with the Regional Trial
Court. Is FedEx liable?

Civil Law
A: YES. The Civil Code mandates common carriers Instances where the Remedy under Art. 1168 is
to observe extraordinary diligence in caring for the Not Available
goods they are transporting. Common carriers must
ascertain the identity of the recipient. Failing to 1. Where the effects of the act which is forbidden
deliver shipment to the designated recipient are definite in character – Even if it is possible
amounts to a failure to deliver. The shipment shall for the creditor to ask that the act be undone at
then be considered lost, and liability for this loss the expense of the debtor, consequences
ensues. FedEx is unable to prove that it exercised contrary to the object of the obligation will have
extraordinary diligence in ensuring delivery of the been produced which are permanent in
package to its designated consignee. It claimed to character.
have made a delivery but it even admits that it was 2. Where it would be physically or legally
not to the designated consignee. (Federal Express impossible to undo what has been undone –
Corp. v. Antonino, G.R. No. 199455, 27 June 2018) Because of:
1. The very nature of the act itself;
NOTE: Banks are expected to exercise higher degree 2. A provision of law; or
of diligence in their dealings, including those 3. Conflicting rights of third persons.
involving lands. Banks may not rely simply on the
face of the certificate of title. (LBP v. Musni, G.R. No. NOTE: In either case, the remedy is to seek recovery
206343, 22 Feb. 2017) for damages. (Art. 1168, NCC)
Forms of Breach of Obligations DELAY (MORA) OR DEBTOR’S DEFAULT
1. Voluntary – Debtor is liable for damages if he is Those obliged to deliver or to do something incur in
guilty of: delay from the time the obligee (creditor) judicially
a. Default (mora) or extrajudicially demands from them the
b. Fraud (dolo) fulfillment of their obligation.
c. Negligence (culpa)
d. Breach through contravention of the tenor In reciprocal obligations, neither party incurs in
thereof. (Art. 1170, NCC) delay if the other does not comply or is not ready to
2. Involuntary – Debtor is unable to perform the comply in a proper manner with what is incumbent
obligation due to fortuitous event, thus not upon him. From the moment one of the parties
liable for damages, as a rule. fulfills his obligations, delay by the other begins.
(Art. 1169, NCC)
Effects of Breach of Obligation
Kinds of Delay
If a person obliged to do something fails to do it, the
same shall be executed at his cost. 1. Ordinary delay – This is the mere failure to
perform an obligation at the stipulated time.
This same rule shall be observed if he does it in 2. Extraordinary delay or legal delay – This delay
contravention of the tenor of the obligation. already equates to non-fulfillment of the
Furthermore, it may be decreed that what has been obligation and arises after the extrajudicial or
poorly done be undone. (Art. 1167, NCC) judicial demand has been made upon the
debtor. (Pineda, 2000)
When the obligation consists in not doing, and the
obligor does what has been forbidden him, it shall Kinds of Legal Delay or Default
also be undone at his expense. (Art.1168, NCC)
1. Mora solvendi – Default on the part of the
debtor/obligor
Ex re – Default in real obligations (to give);

2022 GOLDEN NOTES
Ex personae – Default in personal found it difficult to meet its obligation because

obligations (to do); of the 1997 Asian Financial Crisis. Solidbank
sent a demand letter to Gotesco as the loan
2. Mora accipiendi – Default on the part of the became due. Despite having received this
creditor/obligee; demand letter, Gotesco failed to pay the
outstanding obligation. Solidbank then filed a
3. Compensatio morae – Default on the part of Petition for the Extrajudicial Foreclosure of the
both the debtor and creditor in reciprocal lot. Gotesco filed a complaint before the RTC for
obligations. Annulment of Foreclosure Proceedings, Specific
Performance, and Damages against Solidbank.
Causes of Cessation of the Effects of Mora Gotesco assailed the validity of the foreclosure
proceeding, claiming that it was premature and
1. Renunciation (express/implied); or without legal basis. Was the foreclosure
2. Prescription. premature?
Q: American Express Card (AMEX) failed to A: NO. Petitioner defaulted in its obligation. Thus,
approve Pantaleon’s credit card purchases, respondent was within its rights to foreclose the
which urged the latter to commence a complaint property. Under the Civil Code, there is default
for moral and exemplary damages against when a party obliged to deliver something fails to do
AMEX. He said that he and his family so. In Social Security System v. Moonwalk
experienced inconvenience and humiliation due Development & Housing Corp., this Court
to the delays in credit authorization during his enumerated the elements of default:
vacation trip in Amsterdam and in the United
States. Did AMEX commit a breach of its In order that the debtor may be in default, it is
obligations to Pantaleon? necessary that the following requisites be present:
(1) that the obligation be demandable and already
A: YES. Generally, the relationship between a credit liquidated; (2) that the debtor delays performance;
card provider and its cardholders is that of creditor- and (3) that the creditor requires the performance
debtor, with the card company as the creditor judicially and extrajudicially. Default generally
extending loans and credit to the cardholder, who as begins from the moment the creditor demands the
debtor is obliged to repay the creditor. One hour performance of the obligation. (Gotesco Properties,
appears to be patently unreasonable length of time Inc. v. Solid Bank Corporation, G.R. No. 209452, 26
to approve or disapprove a credit card purchase. July 2017)
The culpable failure of AMEX herein is not the
failure to timely approve petitioner’s purchase, but MORA SOLVENDI
the more elemental failure to timely act on the same,
whether favorably or unfavorably. (Pantaleon v. Requisites (P-D-M-J-F)
American Express International, Inc., G.R. No.
174269, 08 May 2009) 1. Obligation Pertains to the debtor;
2. Obligation is Determinate, due and
Elements of Default demandable, and liquidated;
3. Obligation has not been performed on its
Q: Gotesco obtained from Solidbank a term loan Maturity date;
of ₱300 million. To secure the loan, Gotesco was 4. There is Judicial or extrajudicial demand by the
required to execute a Mortgage Trust Indenture creditor; and
naming Solidbank-Trust Division as Trustee. 5. Failure of the debtor to comply with such
The Indenture obliged Gotesco to mortgage demand.
several parcels of land in favor of Solidbank.
When the loan was about to mature, Gotesco

Civil Law
Non-Applicability of Mora Solvendi 2. When the obligation has for its object a
determinate thing, the debtor may bear the risk
Mora solvendi does not apply in natural obligations of loss of the thing even if the loss is due to
because performance is optional or voluntary on the fortuitous event; and
debtor’s part. One can never be late in not giving or
doing something. 3. Rescission or resolution.
Instances when Demand by the Creditor is Not Debtor’s Liability may be Mitigated even if he is
necessary in order that Delay may exist Guilty of Delay
GR: No demand = no default. (Art. 1169, NCC) If the debtor can prove that loss would nevertheless
transpire even if he had not been in default, the
XPNs: Demand by the creditor shall not be court may equitably mitigate his liability. (Art.
necessary in order that delay may exist when: 2215(4), NCC)
1. The law expressly so declares; or
2. The contract expressly stipulates that demand MORA ACCIPIENDI
is not necessary; or
3. From the nature and the circumstances of the Requisites (P-C-R)
obligation it appears that, the designation of
time when the thing is to be delivered or the 1. Offer of Performance by a capacitated debtor;
service is to be rendered, was a controlling 2. Offer must be to Comply with the prestation as
motive for the establishment of the contract or it should be performed; and
when time is of the essence; or 3. Refusal of the creditor without just cause.
4. Demand would be useless, as when the obligor (Pantaleon v. Amex, G.R. No. 174269, 08 May
has rendered it beyond his power to perform. 2009)
(Art. 1169, NCC)
Effects of Mora Accipiendi
Q: “A” borrowed P2,000 from “B” on December
1, 1956. He executed a promissory note 1. Responsibility of debtor is limited to fraud and
promising to pay the indebtedness on December gross negligence;
1, 1958. Upon the arrival of the designated date 2. Debtor is exempted from risk of loss of thing;
for payment, is demand necessary in order that creditor bears risk of loss;
“A” shall incur delay? 3. Expenses by debtor for preservation of thing
A: YES. In the first two paragraphs of Art. 1169 of after delay is chargeable to creditor;
the NCC, it is not sufficient that the law or obligation 4. If the obligation bears interest, debtor does not
fixes a date for performance; it must further state have to pay it from time of delay;
expressly that after the period lapses, default will 5. Creditor liable for damages; and
commence. (Rivera v. Sps. Chua, G.R. No. 184472, 14 6. Debtor may relieve himself of obligation by
Jan. 2015) consigning the thing.
Effects of Mora Solvendi COMPENSATIO MORAE
1. Debtor may be liable for damages (Art. 1155, Delay in Reciprocal Obligations
NCC) or interests;
One party incurs in delay from the moment the
NOTE: The interest begins to run from the filing other party fulfills his obligation, while he, himself
of the complaint when there is no extrajudicial does not comply or is not ready to comply in a
demand. proper manner with what is incumbent upon him.

2022 GOLDEN NOTES
Demand is only necessary for a party to incur delay A: YES. Rescission on account of breach of
when the respective obligations are to be performed reciprocal obligations is provided under Art. 1191
on separate dates. of the NCC. The injured party may choose between
the fulfillment and the rescission of the obligation,
Reciprocal Obligations with the payment of damages in either case. He may
also seek rescission, even after he has chosen
Reciprocal obligations are those which arise from fulfillment, if the latter should become impossible.
the same cause, wherein each party is a debtor and (Camp John Hay Development Corporation v. Charter
a creditor of the other, such the obligation of one id Chemical and Coating Corporation, G.R. No. 19884, 07
dependent upon the obligation of the other. They Aug. 2019)
are to be performed simultaneously such that the
performance of one is conditioned upon the Q: On May 16, 1998, Wellex and U-Land entered
simultaneous fulfillment of the other. (Heirs of Mary into a Memorandum of Agreement (First
Lane R. Kim v. Quicho, G.R. No. 249247, 15 Mar. 2021) Memorandum of Agreement) to expand their
respective airline operations in Asia. The First
Q: Camp John Hay Development entered into a Memorandum of Agreement stated that within
Contractor's Agreement with Charter Chemical. 40 days from its execution date, Wellex and U-
Although the Contractor's Agreement contained Land would execute a share purchase
no date of the units' turnover, it allowed Charter agreement covering U-Land’s acquisition of the
Chemical to choose the units for offsetting under shares of stock of both APIC (APIC shares) and
an offsetting scheme against the 2 Units chosen PEC (PEC shares).
by Charter Chemical.
In this share purchase agreement, U-Land would
The contract price was P13,239,734.16, for purchase from Wellex its APIC shares and PEC
which Camp John Hay Development paid shares. Both parties agreed that the purchase
P7,339,734.16. The balance of P5,900,000.00 price of APIC shares and PEC shares would be
was ought to be settled by offsetting the price of paid upon the execution of the share purchase
the two (2) studio units. Camp John Hay agreement and Wellex’s delivery of the stock
Development had initially estimated that the certificates covering the shares of stock. The
construction would be completed by 2006. transfer of APIC shares and PEC shares to U-
Because of its failure to follow this timetable, the Land was conditioned on the full remittance of
Camp John Hay Suites was estimated to be the final purchase price as reflected in the share
completed by 2012. purchase agreement.
Due to the subsisting construction delay, Further, the transfer was conditioned on the
Charter Chemical, through counsel, wrote Camp approval of the Securities and Exchange
John Hay Development, demanding that it Commission of the issuance of the shares of
transfer the units or pay the value of these units stock, and the approval by the Taiwanese
in the sum of P6,996,517.48. Charter Chemical government of U-Land’s acquisition of these
filed before the Construction Industry shares of stock. Wellex and U-Land agreed that if
Arbitration Commission a Request for they were unable to agree on the terms of the
Arbitration. The arbitral tribunal ruled that share purchase agreement and the joint
Charter Chemical was entitled to its claim for the development agreement within 40 days from
value of the two (2) units because Camp John signing, then the First Memorandum of
Hay Development failed to deliver the units Agreement would cease to be effective.
within the targeted completion date. Is the
remedy of rescission proper? The 40-day period lapsed on June 25, 1998.
Wellex and U-Land were unable to enter into
any share purchase agreement although drafts

Civil Law
were exchanged between the two. Whether or Rules on Compensatio Morae

not the rescission of the First Memorandum of
Agreement can be subject of rescission?
UNILATERAL RECIPROCAL
OBLIGATIONS OBLIGATIONS
A: YES, Respondent U-Land is praying for the
rescission or resolution under Art. 1191 and not Time of delay
rescission under Art. 1381. The failure of one of Default or delay begins
the parties to comply with the reciprocal from extrajudicial or Delay by the other
obligation allows the wronged party to seek the judicial demand – mere party begins from
remedy of Art. 1191. The wronged party is expiration of the period the moment one of
entitled to rescission under Art. 1191 and even fixed is not enough in the parties fulfills his
the payment of damages. It is a principal action order that debtor may obligation.
precisely because it is a violation of the original incur delay.
prestation.
XPNs
Art. 1381 and Art. 1383 pertains to rescission a) The obligation or the
where creditors or even 3rd persons not privy to law expressly so
the contract can file an action due to lesion or dictates;
damage as a result of the contract.
b) Time is of the
Rescission or resolution under Art. 1191, essence;
When different
therefore, is a principal action due to lesion or dates for the
damage because of the contract, and it is a c) Demand would be
performance of
principal action that is immediately available to useless, as debtor has
obligation is fixed by
the party at the time that the reciprocal prestation rendered it beyond
the parties.
was breached. Art. 1383 mandating that his power to perform;
rescission be deemed a subsidiary action cannot or
be applicable to rescission or resolution under
d) Debtor has
Art. 1191.
acknowledged that he
is in default.
Thus, respondent U-Land correctly sought the
principal relief of rescission or resolution under
Fraud (Deceit or Dolo)
Art. 1191. The obligations of the parties gave rise
to reciprocal prestations, which arose from the
It is an intentional evasion of the faithful
same cause: the desire of both parties to enter
performance of the obligation. (8 Manresa 72)
into a share purchase agreement that would allow
both parties to expand their respective airline
Kinds of Fraud
operations in the Philippines and other
neighboring countries. (The Wellex Group, Inc. v.
U-Land Airlines, Co., Ltd., G.R. No. 167519, 14 Jan. FRAUD IN THE FRAUD IN THE
2015) PERFORMANCE PERFECTION
Time of occurrence
Effect of Non-Compliance of Both Parties in
Reciprocal Obligations It occurs after the valid
It occurs before or
execution of the
If neither party complies with his prestation, the simultaneous with the
contract. It is employed
default of one compensates for the default of the creation or perfection
in the performance of a
other. of the obligation.
pre-existing obligation.

2022 GOLDEN NOTES
Consent the contract or causal fraud. It is the intentional

evasion of the normal fulfillment of the obligation.
Consent is vitiated by
Consent is free and not (Pineda, 2000)
serious deception or
vitiated.
misrepresentation.
Waiver of Action Arising from Future Fraud
Effect
It is not a ground for It is a ground for With respect to fraud that has already been
annulment of the annulment of the committed (past fraud), the law does not prohibit
contract. contract. renunciation of the action for damages based on the
same since such can be deemed an act of generosity.
Remedy What is renounced is the effect of fraud, particularly
Action for damages Action for annulment the right to indemnity.
only. with damages.
However, the law prohibits any waiver of an action
for future fraud since the same is contrary to law
Dolo causante v. Dolo incidente
and public policy. Waiver for future fraud is void.
(Art. 1171, NCC)
DOLO INCIDENTE
DOLO CAUSANTE
(INCIDENTAL Remedies of the Defrauded Party
(CAUSAL FRAUD)
FRAUD)
1. Specific performance (Art. 1233, NCC); or
Nature 2. Resolution of the contract (Art. 1191, NCC); and
This is the essential This is the kind of fraud 3. Damages, in either case.
cause of the consent, that is not the efficient
without which the cause for the giving of CULPA OR NEGLIGENCE
party would not have consent to the contract,
agreed to enter into the as it refers merely to an The fault or negligence of the obligor consists of the
contract. incident therein and, omission of that diligence which is required by the
(Art. 1338, NCC) which even if not nature of the obligation, and corresponds with the
present, the circumstances of the persons, of the time and the
contracting party place.
would have still agreed
to the contract. When negligence shows bad faith, the provisions of
Art. 1171 and 2201, paragraph 2, shall apply. If the
Effect law or contract does not state the diligence which is
to be observed in the performance, that which
It renders the contract
It does not affect the expected of a good father of a family shall be
voidable.
validity of the contract. required. (Art. 1173, NCC)
Remedy Test of Negligence

Annulment with
damages. Contract remains valid. Did the defendant in doing the alleged negligent act
The remedy is a claim use the reasonable care and caution which an
for damages only. 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, 15 Mar. 1918)
Fraud as Mentioned in Art. 1171
It is incidental fraud or fraud in the performance of

the obligation and not the fraud in the execution of

Civil Law
Fraud v. Negligence XPN: If the negligent act or omission of the creditor

is the proximate cause of the event, which led to the
FRAUD NEGLIGENCE damage or injury complained of, he cannot recover.
As to the intention to cause damage Q: Wenifredo Salvaña was driving the bus
There is deliberate There is no deliberate owned by Bachelor Express, Inc./Ceres Liner,
intention to cause intention to cause Inc. along the national highway when he
damage. damage or injury even overtook a PUJ jeepney while negotiating a blind
if the act was done curve in a descending road causing him to
voluntarily. intrude into the opposite lane and bump the 10-
As to the mitigation of liability wheeler Hino dump truck of petitioner
Cresencio Baño running uphill from the
Liability cannot be Liability may be
opposite direction. The collision resulted in
mitigated. mitigated.
damage to both vehicles, the subsequent death
As to the waiver of future fraud of the truck driver, Amancio Asumbrado, and
Waiver for future fraud GR: Waiver for future serious physical injuries to bus driver Salvaña.
is void. negligence may be
allowed in certain A complaint for quasi-delict was filed against
cases. Salvaña for negligently driving the bus causing it
to collide with the dump truck. Respondents
XPN: Nature of the denied liability, claiming that prior to the
obligation or public collision, the bus was running out of control
policy requires because of a problem in the steering wheel
extraordinary system, which could not have been avoided
diligence. (e.g. common despite their maintenance efforts. Instead, they
carrier). claimed that Asumbrado had the last clear
chance to avoid the collision had he not driven
NOTE: When negligence is so gross that it amounts the dump truck at a very fast speed. Was Salvaña
to wanton attitude on the part of the debtor or such grossly negligent?
negligence shows bad faith, the laws in case of fraud
shall apply. A: YES. When bus driver Salvaña overtook the
jeepney in front of him, he was rounding a blind
Effect of Good Faith or Bad Faith of the Obligor curve along a descending road. Considering the road
condition and that there was only one lane on each
If the obligor acted in good faith, he is responsible side of the center line for the movement of traffic in
for the natural and probable consequences of the opposite directions, it would have been more
breach of contract and which the parties have prudent for him to confine his bus to its proper
reasonably foreseen at the time of the constitution place. Having thus encroached on the opposite lane
of the obligation. in the process of overtaking the jeepney, without
ascertaining that it was clear of oncoming traffic
If the obligor is guilty of fraud, bad faith, malice or that resulted in the collision with the approaching
wanton attitude, he shall be responsible for all dump truck driven by deceased Asumbrado,
damages which may be reasonably attributed to the Salvaña was grossly negligent in driving his bus. He
non-performance of the obligation. was remiss in his duty to determine that the road
was clear and not to proceed if he could not do so in
Contributory Negligence of the Creditor safety. (Baño v. Bachelor Express, GR No. 191703, 12
Mar. 2012)
GR: It reduces or mitigates the damages which he
can recover.

2022 GOLDEN NOTES
CONTRAVENTION OF TENOR OF OBLIGATION foreseen or anticipated, as is commonly believed,

(VIOLATIO) but it must be one impossible to foresee or to avoid.
The mere difficulty to foresee the happening is not
The act of contravening the tenor or terms or impossibility to foresee the same. (Metro Concast
conditions of the contract is also known as Steel Corp. v. Allied Bank Corp., G.R. No. 177921, 04
“violatio,” i.e. failure of common carrier to safely Dec. 2013)
take its passenger to their destination. (Pineda,
2000) Liability for Loss due to Fortuitous Event
The phrase “in any manner contravene the tenor” of GR: There is no liability for loss in case of fortuitous
the obligation includes any illicit act which impairs event.
the strict and faithful fulfillment of the obligation, or
every kind of defective performance. Such violation XPNs: (La-N-S-P-C-Ba-G)
of the terms of contract is excused in proper cases
by fortuitous events. (Art. 1170, NCC) 1. Law;
2. Nature of the obligation requires the
FORTUITOUS EVENT OR CASO FORTUITO assumption of risk;
3. Stipulation;
An occurrence or happening which could not be 4. The debtor is guilty of dolo, malice or bad faith
foreseen, or even if foreseen, is inevitable. (Art. has Promised the same thing to two or more
1174, NCC) (2002, 2008 BAR) persons, who does not have the same interest
(Art. 1165, NCC);
Requisites: (C-O-D-E) 5. The debtor Contributed to the loss (Tan v.
Inchausti & Co., G.R. No. 6092, 08 Mar. 1912);
1. Cause of breach is independent of the will of the 6. The possessor is in Bad faith (Art. 552, NCC); or
debtor; 7. The obligor is Guilty of fraud, negligence or
2. The Event is unforeseeable or unavoidable; delay or if he contravened the tenor of the
3. Occurrence renders it absolutely impossible for obligation. (Nakpil v. United Construction Co.,
the debtor to fulfill his obligation in a normal Inc. v. CA, G.R. No. L-47851, 15 Apr. 1988)
manner - impossibility must be absolute not
partial, otherwise not force majeure; and Act of God v. Act of Man
4. Debtor is free from any participation in the
aggravation of the injury to the creditor.
ACT OF GOD ACT OF MAN
NOTE: The fortuitous event must not only be the Fortuitous event Force majeure
proximate cause, but it must also be the only and
sole cause. Contributory negligence of the debtor Event caused by the
renders him liable despite the fortuitous event. Event which is legitimate or
(Pineda, 2000) absolutely independent illegitimate acts of
of human intervention persons other than the
If the negligence was the proximate cause, the obligor
obligation is not extinguished. It is converted into a
e.g. Earthquakes, e.g. Armed invasion,
monetary obligation for damages.
storms, floods, robbery, war. (Pineda,
epidemics 2000)
Difficulty to Foresee
Fortuitous events by definition are extraordinary NOTE: There is no essential difference between
events not foreseeable or avoidable. It is therefore fortuitous event and force majeuere; they both refer
not enough that the event should not have been

Civil Law
to causes independent of the will of the obligor. Kristina went back to the shop on February 6,
(Tolentino, 2002) 1999, but she was informed that the ring was
stolen by a thief the night before. Kristina filed
Q: MIAA entered into a compromise agreement an action for damages against the jewelry shop,
with ALA. MIAA failed to pay within the period which put up the defense of force majeure. Will
stipulated. Thus, ALA filed a motion for the action prosper or not? (2000 BAR)
execution to enforce its claim. MIAA filed a
comment and attributed the delays to it being a A: YES. The action will prosper. Since the defendant
government agency and to the Christmas rush. Is was already in default for not having delivered the
the delay of payment a fortuitous event? ring when delivery was demanded by plaintiff at its
due date, the defendant is liable for the loss of the
A: NO. The act-of-God doctrine requires all human thing and even when the loss was due to force
agencies to be excluded from creating the cause of majeure.
the mischief. Such doctrine cannot be invoked to
protect a person who has failed to take steps to Q: AB Corp entered into a contract with XY Corp
forestall the possible adverse consequences of loss for the construction of the research and
or injury. Since the delay in payment in the present laboratory facilities of the XY Corp. XY Corp paid
case was partly a result of human participation - 50% of the 10M contract price on the other hand
whether from active intervention or neglect - the AB agreed to complete the work for 18 months.
whole occurrence was humanized and was After 17 months, work was only 45% completed
therefore outside the ambit of a caso fortuito. as AB Corp experienced work slippage due to
labor unrest.
First, processing claims against the government are
certainly not only foreseeable and expectable, but (a) Can the labor unrest be considered a
also dependent upon the human will. Second, the fortuitous event?
Christmas season is not a caso fortuito, but a (b) Can XY Corp. unilaterally and
regularly occurring event. Third, the occurrence of immediately cancel the contract?
the Christmas season did not at all render (c) Must AB Corp. return the 50% down
impossible the normal fulfillment of the obligation. payment? (2008 BAR)
Fourth, MIAA cannot argue that it is free from any
participation in the delay. It should have laid out on A:
the compromise table the problems that would be (a) NO. Labor unrest is not a fortuitous event that
caused by a deadline falling during the Christmas will excuse AB Corp. from complying with its
season. Furthermore, it should have explained to obligation of constructing the research and
ALA the process involved in the payment of ALA’s laboratory facilities of XY Corp. The labor unrest,
claim. (MIAA v. Ala Industries Corp., G.R. No. 147349, which may even be attributed largely to AB Corp.
13 Feb. 2004) itself, is not the direct cause of non-compliance by
AB Corp. It is independent of its obligation. It does
Effects of Fortuitous Events not excuse compliance with the obligation. (DBP v.
Vda. De Moll, G.R. No. L-25802, 31 Jan. 1972) AB
1. On determinate obligation – The obligation is Corp. could have anticipated the labor unrest
extinguished. caused by delays in paying the laborer’s wages. The
2. On generic obligation – The obligation is not company could have hired additional laborers to
extinguished (genus nun quam peruit – genus make up for the work slowdown.
never perishes).
(b) YES. XY Corp. may unilaterally cancel the
Q: Kristina brought her diamond ring for obligation, but this is subject to the risk that the
cleaning to a jewelry shop that failed to fulfill its cancellation of the reciprocal obligation being
promise to return such ring in February 1, 1999. challenged in court and if AB Corp. succeeds, then

2022 GOLDEN NOTES
XY Corp. will be declared in default and be liable for 3. Damages, in any case; or
damages.
4. Subsidiary remedies of creditors:
(c) NO. Under the principle of quantum meruit, AB a. Accion subrogatoria
Corp. had the right to retain payment corresponding b. Accion pauliana
to his percentage of accomplishment less the c. Accion directa
amount of damages suffered by XY Corp. because of
the delay or default. SPECIFIC PERFORMANCE
Q: X, a dressmaker, accepted clothing materials Remedies in connection with Specific

from Karla to make two dresses for her. On the Performance
day X was supposed to deliver Karla’s dresses, X
had an urgent matter to attend to and told Karla 1. Exhaustion of the properties of the debtor (not
to deliver those the next day. That night, exempt from attachment under the law);
however, a robber broke into her shop and took
everything, including Karla’s dresses. X claims 2. Accion subrogatoria (subrogatory action) – An
she is not liable to deliver Karla’s dresses nor indirect action brought in the name of the
pay for the clothing materials considering she, debtor by the creditor to enforce the former’s
herself, was a victim of the robbery, which was a rights except:
fortuitous event, and over which she had no
control. Do you agree? Why? (2015 BAR) a. Personal rights of the debtor;
b. Rights inherent in the person of the debtor;
A: NO. The law provides that except when it is c. Properties exempt from execution.
otherwise declared by stipulation, or when the law e.g., family home
expressly provides, or when the nature of the
obligation requires the assumption of risk, no 3. Accion pauliana (rescissory action) – An action
person shall be liable for those events which could to impugn or assail the acts done or contracts
not be foreseen or which though foreseen were entered into by the debtor in fraud of his
inevitable. (Art. 1174, NCC) creditor.
In this case, X cannot invoke fortuitous event as a
defense because she had already incurred delay at NOTE: Resort to the remedies must be in the order
the time of the occurrence of the loss. (Art. 1165, stated above. (Art. 1177, NCC)
NCC)
Q: Sacramento Steel Corporation (SSC) executed
REMEDIES five separate deeds of chattel mortgage
constituted over various equipment for
In case of breach of obligation, the following are the International Exchange Bank (IEB) which
remedies available: subsequently, SSC defaulted in the payment of
its obligations. IEB’s demand for payment went
1. Specific performance, or substituted unheeded. Meanwhile, Metropolitan Bank and
performance by a third person in case of an Trust Company (Metro Bank) filed a motion for
obligation to deliver a generic thing, and in intervention as a creditor of SSC. Which it
obligations to do, unless it is a purely personal contends that the mortgage contracts between
act; IEB and SSC were entered into to defraud the
latter’s creditors. Thus, it prayed for the
2. Rescission (or resolution in reciprocal rescission of the chattel mortgaged executed by
obligations); SSC in favor of IEB. Will the action to rescind the
mortgage prosper?

Civil Law
A: NO. Jurisprudence is clear that the following and delivery and rescission in the alternative.
successive measures must be taken by a creditor Jebson, in its defense, claimed that they were not
before he may bring an action for rescission of an able to secure the necessary permits because
allegedly fraudulent contract: Sps. Salonga stubbornly refused to cause the
consolidation and partition of the parcels of
(1) exhaust the properties of the debtor land. Sps. Salonga averred that they were not
through levying by attachment and execution liable to the complainants since there was no
upon all the property of the debtor, except such privity of contract between them, adding that
as are exempt by law from execution; the contracts to sell were unenforceable against
(2) exercise all the rights and actions of the them as they were entered into by Jebson
debtor, save those personal to him (acción without their conformity, in violation of the JVA.
subrogatoria); and HLURB rescinded the Contract to Sell and held
(3) seek rescission of the contracts executed by Sps. Salonga Solidarily liable with Jebson.
the debtor in fraud of their rights HLURB-BOC reversed the former ruling and
(acción pauliana). instead rescinded the swapping arrangement
and maintaining the validity of the Contract to
It is thus, apparent that an action to rescind, or Sell, thereby granting specific performance
an acción pauliana, must be of last resort, availed of instead. Is the grant of the remedy of specific
only after the creditor has exhausted all the performance in Buenviaje's favor proper?
properties of the debtor not exempted from
execution or after all other legal remedies have been A: YES. As between the two remedies made
exhausted and have been proven futile. available to him, Buenviaje, had, chosen the remedy
(Metropolitan Bank and Trust Company v. of specific performance and, therefore, ought to be
International Exchange Bank, G.R. No. 176008, 10 bound by the choice he had made. To add, the
Aug. 2011) fundamental rule is that reliefs granted a litigant are
limited to those specifically prayed for in the
Q: Jebson entered into a Joint Venture complaint. Buenviaje's alternative prayer for
Agreement (JVA) with Sps. Salonga obligated the resolution is textually consistent with that portion
former to construct ten (10) residential units on of Art. 1191 of the NCC provides that an injured
the latter’s three parcels of land. Out of the ten party "may also seek rescission, even after he has
(10) units, seven (7) units will belong to Jebson. chosen fulfillment if the latter should become
It was also allowed to sell its allocated units impossible." Nevertheless, the impossibility of
under such terms as it may deem fit, subject to fulfillment was not sufficiently demonstrated in the
the condition that the price agreed upon was proceedings conducted in this case.
with the conformity of Sps. Salonga. Thereafter,
Jebson entered into a Contract to Sell with Besides, mutual restitution is the proper
Buenviaje over one of its units without the consequence of the remedy of resolution. It cannot
conformity of Sps. Salonga. Buenviaje was able arise - as it is, in fact, theoretically incompatible -
to fully pay for Jebson’s unit through a swapping with the remedy of specific performance, which is
arrangement, which allows the vendee to the relief prayed for and consequently, granted to
convey certain properties as consideration for the injured party herein. (Buenviaje v. Sps. Salonga,
the sale. Despite this full payment, Jebson was GR No. 216023, 05 Oct. 2016)
unable to complete said unit.
This prompted Buenviaje to demand the unit’s Q: While the case was pending, Felix donated his
immediate completion and delivery. Jebson, parcels of land in favor of his children. Judgment
having failed to comply with the demand, was rendered against Felix. Four years after the
Buenviaje filed an action before the HLURB said donation, the sheriff sought to enforce the
against Jebson and Sps. Salonga for specific alias writ of execution and discovered that Felix
performance praying for the unit’s completion no longer had any property and had conveyed

2022 GOLDEN NOTES
the subject properties to his children. Thus, 2. Real obligation:

Philam filed an accion pauliana for rescission of a. Generic thing – Substitute
the donations. Felix countered that an action for performance; delivery may be made by
rescission of the donation had already a person other than the debtor since
prescribed since the time of prescription has to the object is merely designated by its
run from the date of registration. Has the action class or genus. The creditor may ask
filed by Philam prescribed? that the obligation be complied with at
the expense of the debtor. (Art. 1165,
A: NO. Philam only learned about the unlawful NCC)
conveyances made by Felix more than four years b. Specific thing – Specific performance
after the donations were effected, when its counsel may be demanded, that is, the creditor
accompanied the sheriff to Butuan City to attach the may compel the debtor to make the
properties. There they found that he no longer had delivery.
any properties in his name. It was only then that
Philam's action for rescission of the deeds of RESCISSION (ART. 1191, NCC)
donation accrued because then it could be said that
Philam had exhausted all legal means to satisfy the It refers to the cancellation of the contract or
trial court's judgment in its favor. Since Philam filed reciprocal obligation in case of breach on the part of
its complaint for accion pauliana against petitioners one, which breach is violative of the reciprocity
barely a month from its discovery that Felix had no between the parties. This is properly called
other property to satisfy the judgment award resolution. (2005, 2008 BAR)
against him, its action for rescission of the subject
deeds clearly had not yet prescribed. (Khe Hong NOTE: The rescission under Art. 1380 is rescission
Cheng v. CA, G.R. No. 144169, 28 Mar. 2001) based on lesion or fraud upon creditors.
NOTE: The debtor is liable with all his property, Applicability

present and future, for the fulfillment of his
obligations, subject to the exemptions provided by Rescission or resolution is applicable in reciprocal
law. (De Leon, 2003) obligations, since it is implied therein.
Substitute Performance Characteristics of the Right to Rescind
It is a remedy of the creditor in case of non- 1. It can be demanded only if plaintiff is ready,
performance by the debtor where another party willing, and able to comply with his own
performs the obligation or the same is performed at obligation and defendant is not;
the expense of the debtor. 2. It is not absolute;
3. It needs judicial approval in the absence of a
Applicability of Substitute Performance stipulation allowing for extra-judicial
rescission, in cases of non-reciprocal
1. Positive personal obligation: obligations;
If not purely personal – Substitute 4. It is subject to judicial review if availed of
performance; the obligation shall be extrajudicially;
executed at debtor’s cost if he fails to do it. 5. It may be waived, expressly or impliedly; and
(Art. 1167, NCC) 6. It is implied to exist in reciprocal obligations,
Purely personal – No substitute therefore, need not be expressly stipulated
performance may be demanded because of upon.
the personal qualifications taken into
consideration. The only remedy is
damages.

Civil Law
Fulfillment or Rescission of the Obligation Q: Vermen and Seneca entered into an

"offsetting agreement," where Seneca is obliged
GR: The injured party can only choose either to deliver construction materials to Vermen,
fulfillment or rescission of the obligation, and not who is obliged to pay Seneca and to deliver
both. possession of 2 condominium units to Seneca
upon its completion. Seneca filed a complaint for
XPN: He may also seek rescission, even after he has rescission of the offsetting against Vermen,
chosen fulfillment, if the latter should become alleging that the latter had stopped issuing
impossible. (Art. 1191, NCC) purchase orders of construction materials
without a valid reason, thus resulting in the
Q: Pikian Mining Company (PMI) entered into an stoppage of deliveries of construction materials
Operating Agreement (OA) with Golden Valley on its part, in violation of the Offsetting
Exploration, Inc. (GVEI), granting the latter "full, Agreement. Can the agreement be rescinded?
exclusive and irrevocable possession, use,
occupancy, and control over the mining claims A: YES, because the provisions of the offsetting
and the processing and marketing of the agreement are reciprocal in nature. Art. 1191 of the
products for a period of 25 years.” Later, PMC Civil Code provides the remedy of rescission (more
extra-judicially rescinded the OA upon GVEI’s appropriately, the term is "resolution") in case of
violation of Section 5.01, Art. V thereof. GVEI reciprocal obligations, where one of the obligors
contested PMC’s extra-judicial rescission of the fails to comply with that is incumbent upon him.
OA, averring therein that its obligation to pay (Vermen Realty Development Corp. v. CA, G.R. No.
royalties to PMC arises only when the mining 101762, 06 July 1993)
claims are placed in commercial production,
which condition has not yet taken place. PMC no Q: Ong and spouses Robles executed an
longer responded to GVEI’s letter. Is the "agreement of purchase and sale" of two parcels
rescission of the Operating Agreement valid? of land. Ong partially paid the spouses by
depositing sums of money with the BPI in
A: YES. The rescission is valid. As a general rule, the accordance with their stipulation that Ong pay
power to rescind an obligation must be invoked the loan of the spouse with BPI. To answer for
judicially and cannot be exercised solely on a party’s Ong’s balance, he issued four post-dated checks
own judgment that the other has committed a which were dishonored. Ong failed to replace
breach of the obligation. This is so because the checks and to pay the loan in full. Can the
rescission of a contract will not be permitted for a contract entered into by Ong and the spouses be
slight or casual breach, but only for such substantial rescinded?
and fundamental violations as would defeat the very
object of the parties in making the agreement. As a A: NO. The agreement of the parties, in this case,
well-established exception, however, an injured may be set aside, but not because of a breach on the
party need not resort to court action to rescind a part of Ong for failure to complete payment of the
contract when the contract itself provides that it purchase price. Rather, his failure to do so brought
may be revoked or canceled upon violation of its about a situation that prevented the obligation of
terms and conditions. PMC’s unilateral rescission of the spouses to convey title from acquiring an
the Operating Agreement (OA) due to GVEI’s non- obligatory force.
payment of royalties considering the parties’
express stipulation in the OA that said agreement The agreement of purchase and sale shows that it is
may be canceled on such ground. (Golden Valley in the nature of a contract to sell. Ong’s failure to
Exploration, Inc. v. Pinkian Mining Company, G.R. No. complete payment of the purchase price is a non-
190080, 11 June 2014) fulfillment of the condition of full payment which
rendered the contract to sell ineffective and without
force and effect. The breach contemplated in Art.

2022 GOLDEN NOTES
1191 is the obligor’s failure to comply with an of the amounts already paid as well as the
obligation. In this case, Ong’s failure to pay is not remaining post-dated checks issued by
even a breach but merely an event that prevents the respondent representing the remaining
vendor’s obligation to convey title from acquiring monthly amortizations. The CA affirmed. Is the
binding force. (Ong v. CA, G.R. No. 97347, 06 July CA correct?
1999)
A: NO. It cannot be said that petitioners' failure to
Q: Petitioners and respondents entered into a undertake their obligation under paragraph 7 to
Contract to Sell (subject contract) over the cause the transfer of the property to their names
subject land. The subject contract from one Edilberta N. Santos within 90 days from
provides, inter alia, that: (a) the consideration the execution of the said contract defeats the object
for the sale is P33,155,000.00 payable as of the parties in entering into the subject contract,
follows: down payment in the amount of considering that the same paragraph provides
P11,604,250.00 inclusive of the amount of respondents contractual recourse in the event of
P2,000,000.00 previously paid by respondents petitioners' non-performance of the aforesaid
as earnest money/reservation fee, and the obligation, that is, to cause such transfer themselves
remaining balance of P21,550,750.00 payable in in behalf and at the expense of petitioners.
36 monthly installments, each in the amount of Indubitably, there is no substantial breach of
P598,632.00 through post-dated checks; (b) in paragraph 7 on the part of petitioners that would
case any of the checks is dishonored, the necessitate a rescission (or resolution) of the
amounts already paid shall be forfeited in subject contract.
petitioners' favor, and the latter shall be entitled
to cancel the subject contract without judicial Notwithstanding the foregoing facts, the Court
recourse in addition to other appropriate legal cannot grant petitioners' prayer to order the
action; (c) respondents are not entitled to cancellation of the subject contract and the
possess the subject land until full payment of the forfeiture of the amounts already paid by
purchase price; (d) petitioners shall transfer the respondents on account of the latter's failure to pay
title over the subject land from a certain its monthly amortizations, simply because
Edilberta N. Santos to petitioners' names, and, petitioners neither prayed for this specific relief nor
should they fail to do so, respondents may cause argued that they were entitled to the same. Worse,
the said transfer and charge the costs incurred petitioners were declared "as in default" for failure
against the monthly amortizations; and (e) upon to file the required pre-trial brief and, thus, failed to
full payment of the purchase price, petitioners present any evidence in support of their defense.
shall transfer title over the subject land to (Nolasco v. Cuerpo, GR No. 210215, 09 Dec. 2015)
respondents. However, respondents sent
petitioners a letter seeking to rescind the NOTE: If the case involves a contract to sell, wherein
subject contract on the ground of financial full payment of the purchase price is a positive
difficulties. They also sought the return of the suspensive condition, the non-fulfillment of which is
amount they had paid. not a breach of contract, but merely an event that
prevents the seller from conveying title to the
As their letter went unheeded, respondents filed purchaser. (Royal Plains View, Inc. v. Mejia, G.R. No.
a complaint for rescission. Petitioners 230832, 12 Nov. 2018)
countered that respondents' act is a unilateral
cancellation of the subject contract as the Q: Can a contract be rescinded extrajudicially
former did not consent to it. Moreover, the despite the absence of a special contractual
ground of financial difficulties is not a ground to obligation therefor?
effect a valid rescission. The RTC ruled in favor
of respondents and, accordingly, ordered the A: YES. An extrajudicial rescission based on grounds
rescission of the subject contract; and the return not specified in the contract would not preclude a

Civil Law
party to treat the same as rescinded. The rescinding 1300 to 1304. In the latter, there is change of
party, however, by such course of action, subjects creditors, whereas in the former there is no change
himself to the risk of being held liable for damages of creditors; the creditor merely acts in the name
when the extrajudicial rescission is questioned by and for the account of the debtor after exhausting
the opposing party in court. In other words, the the assets of the latter but not enough to satisfy the
party who deems the contract violated may claims of the creditor.
consider it resolved or rescinded, and accordingly,
without previous court action, but it proceeds at its Requisites (I-P-I-N)
own risk. For it is only the final judgment of the
corresponding court that will conclusively and 1. The debtor’s assets must be Insufficient to
finally settle whether the action taken was or was satisfy claims against him;
not correct in law. (Nissan Car Lease Phils, Inc., v. 2. The creditor must have Pursued all
LICA Management and Proton Pilipinas, Inc., G.R. No. properties of the debtor subject to
176986, 13 Jan. 2016) execution;
3. The right of action must Not be purely
DAMAGES personal; and
4. The debtor whose right of action is
Liability for Damages exercised must be Indebted to the creditor.
Those liable under Art. 1170 shall pay damages only Effects of Subrogatory Action
if aside from the breach of contract, prejudice or
damage was caused. (Berg v. Teus, G.R. No. L-6450, 1. The creditor may exercise the subrogatory
30 Oct. 1954) action on behalf of the debtor not only up to the
amount of his credit but in its totality.
NOTE: If action is brought for specific performance,
damages sought must be asked in the same action; NOTE: The excess (if any) must be returned to
otherwise, the damages are deemed waived. the debtor.
(Daywalt v. La Corporacion, G.R. No. L-13505, 04 Feb.
1919) 2. The bringing of action does not entitle the
creditor to preference.
Kinds of Damages (M-E-N-T-A-L)
3. The defendant (the debtor of the debtor) may
1. Moral; avail himself of all defenses available against
2. Exemplary; the creditor.
3. Nominal;
4. Temperate; NOTE: In order to exercise action subrogatoria, a
5. Actual; previous approval of the court is not necessary.
6. Liquidated. (Tolentino, 1991)
SUBSIDIARY REMEDIES Accion Pauliana
Accion Subrogatoria An action where the creditor files in court for the
rescission of acts or contracts entered into by the
An action whereby the creditor, whose claim has not debtor designed to defraud the former. (Art. 1177,
been fully satisfied, may go after the defendant NCC)
debtor’s debtor (third person). (Art. 1177, NCC)
NOTE: When the creditor could not collect in any
Accion subrogatoria is different and distinct from manner, accion pauliana may be resorted by him to
active subjective subrogation governed by Arts. rescind a fraudulent alienation of property.

2022 GOLDEN NOTES
(Regalado, v. Luchsinger and Co., G.R. No. L-2250, 17 NOTE: Other obligations which are demandable at
Feb. 1906) once are:
1. Obligations with a resolutory condition; and
Requisites (P-A-P-I-L) 2. Obligations with a resolutory term or period.
(Arts. 1179 (2) and 1193 (2), NCC)
1. Defendant must be Indebted to plaintiff;
2. The fraudulent act performed by the debtor The most distinctive characteristic of a pure
subsequent to the contract gives Advantage to obligation is its immediate demandability. This
another; quality, however, must not be understood in such a
3. The creditor is Prejudiced by such act; way as to lead to absurd interpretations which
4. The creditor must have Pursued all properties would literally require the obligor or debtor to
of the debtor subject to execution; and comply immediately with his obligation. A
5. The creditor has no other Legal remedy. distinction must be made between:
Example: Alienations of property, payment of debts 1. The immediate demandability of the obligation;
which are not due, renunciation of rights such as the and
right of usufruct or an inheritance, assignment of 2. Its performance or fulfillment by the obligor or
credit, and remission of debts. debtor. Although the obligee or creditor can
demand the performance of the obligation
Accion Directa immediately, the quality of immediate
demandability is not infringed or violated when
The right of a person to go directly against another a reasonable period is granted for performance.
person who is not privy to the contract. (Arts. 1652, (Jurado, 2009)
1608, 1729 and 1893, NCC)
Conditional Obligation
Kinds:
An obligation subject to a condition and the
1. Subsidiary liability of sublessee for the rent effectivity of which is subordinated to the
(Art. 1652, NCC); fulfillment or non-fulfillment of a future and
2. Right of sellers a retro to redeem the property uncertain event or a past event unknown to the
from persons other than the buyer a retro (Art. parties. (Pineda, 2000)
1608, NCC);
3. Subsidiary liability of owners to laborers and Condition
material men (Art. 1729, NCC); and
4. The principal may sue the substitute of the A condition is an event that is future and uncertain,
agent with respect to the obligations which the upon which the efficacy or extinguishment of an
substitute has contracted under the obligation depends. It has two requisites: (i)
substitution. (Art. 1893, NCC) futurity, and (ii), uncertainty.
3. KINDS Uncertain but Past Event as a Condition
PURE AND CONDITIONAL OBLIGATION An uncertain but past event itself can never
constitute a condition because, in order to be
Pure Obligation classified as a condition, the requisites of futurity
An obligation whose performance does not depend and uncertainty are required. Neither can it
upon a future or uncertain event, or upon a past constitute a term or period because, in order to be
event or upon a past event unknown to the parties, classified as a term or period, the requisites of
demandable at once. (Art. 1179, NCC) futurity and certainty are required. However, the
proof or ascertainment of the fact or event, as

Civil Law
distinguished from the fact or event itself, may Characteristic

either constitute a condition or a term depending
upon the circumstances of each case. (Jurado, 2009) Futurity and
Futurity and certainty.
uncertainty.
Constructive Fulfillment of a Condition
The effect of its happening to the obligation
The condition shall be deemed fulfilled when the
obligor voluntarily prevents its fulfillment. (Art.
May give rise to an
1186, NCC)
No effect upon the obligation
existence of the (suspensive) or the
Q: Ramon, the judicial administrator of the
obligation but only in cessation of one
estate of Juan, found out that Rodriguez had
its demandability. already existing
enlarged the area of the land which he
(resolutory).
purchased from Juan before his death. Thus,
Ramon demanded Rodriguez to vacate the
portion allegedly encroached by him. Rodriguez If fulfillment is dependent upon the sole will of
refused and contested there was indeed a the debtor
conditional sale with the balance of the
purchase price payable within five years from
Valid. But the court is
the execution of the deed of sale. Ramon then
empowered to fix the Annulled
filed an action for recovery of possession of the
duration of the period.
disputed lot. Is the contract of sale a conditional
one?
Retroactivity
A: NO. The stipulation that the "payment of the full The moment the
consideration based on a survey shall be due and condition is fulfilled,
payable in five years from the execution of a formal the effects will retroact
No retroactivity.
deed of sale" is not a condition that affects the on the day of the
efficacy of the contract of sale. It merely provides constitution of the
the manner by which the full consideration is to be obligation.
computed and the time within which the same is to
be paid. But it does not affect in any manner the Suspensive Condition
effectivity of the contract. (Heirs of San Andres v.
Rodriguez, G.R. No. 135634, 31 May 2000) A condition the fulfillment of which will give rise to
the acquisition of a right. While the condition has
Period v. Condition not arrived yet, in the meantime, the rights and
obligations of the parties are suspended.
PERIOD CONDITION
NOTE: A contract to sell is akin to a conditional sale
As to time where the efficacy or obligatory force of the
vendor's obligation to transfer title is subordinated
May refer to past event
to the happening of a future and uncertain event, so
Refers to the future. unknown to the
that if the suspensive condition does not take place,
parties.
the parties would stand as if the conditional
As to fulfillment obligation had never existed. The suspensive
It will happen at an condition is commonly full payment of the purchase
exact date or at an May or may not price. (Sps. Serrano v. Caguiat, G.R. No. 139173, 28
indefinite time but is happen. Feb. 2007)
definite to arrive.

2022 GOLDEN NOTES
Effects of Fulfillment of the Suspensive Effect of Loss, Deterioration and Improvement

Condition (1999 BAR) in an Obligation to Deliver a Determinate Thing
Subject to a Suspensive Condition
1. Real obligations
GR: Retroacts to the day of the constitution of
WITH DEBTOR’S WITHOUT DEBTOR’S
the obligation.
FAULT FAULT
XPNs: There is no retroactive effect with
respect to the fruits and interest: Loss
1. In reciprocal obligations, the fruits and
interests shall be deemed to have been Obligation is not
mutually compensated; and extinguished. Obligation
2. In unilateral obligations, the debtor extinguished.
appropriates the fruits and interest Debtor pays damages.
received before the fulfillment of the
condition unless contrary to the intention Deterioration
of the parties. (Art. 1187, NCC)
Creditor may choose
2. Personal obligations – the court determines the between rescission of
retroactive effect of the condition fulfilled. (Art. obligation or Impairment borne by
1187, NCC) fulfillment (with creditor.
indemnity for damages
Rights of the Parties Before the Fulfillment of in either case).
the Condition
Improvement
1. Creditor – May bring the appropriate actions for
By the thing’s nature or through time – Inure to
the preservation of his right (Art. 1188, NCC),
the benefit of the creditor;
such as:
At the debtor’s expense – Debtor shall have no

a. Action for prohibition/restraining the
right other than that granted to a usufructuary.
alienation of the thing pending the
happening of the suspensive condition;
b. Petition for the annotation of the creditor’s NOTE: The abovementioned do not apply to
right with the proper registry; indeterminate or generic things on the basis of the
c. Action to demand security if the debtor has maxim “genus nun quam peruit” (genus never
become insolvent; perishes). It will only apply when the object or thing
d. Action to set aside alienations made by the to be given is specific.
debtor in fraud of creditors; or
e. Action against adverse possessors to Requisites for the Application of Art. 1189 (R–S–
interrupt the running of prescriptive Su–F-L-D-I)
period.
1. Must be a Real obligation;
2. Debtor – May recover what, during the same 2. Object of the obligation is a Specific thing;
time, he has paid by mistake in case of a 3. Obligation is subject to a Suspensive condition.
suspensive condition. (Art. 1188, NCC) 4. The condition is Fulfilled; and
5. There is Loss, Deterioration or Improvement
of the thing during the pendency of the
happening of the condition.

Civil Law
NOTE: The same conditions apply to an obligor in Suspensive Condition v. Resolutory Condition
obligations subject to a resolutory condition. In such
cases, the third requisite must read, “subject to a
SUSPENSIVE RESOLUTORY
resolutory condition.”
CONDITION CONDITION
Positive Suspensive Condition Effect of fulfillment
Obligation arises or Obligation is

A condition which requires a positive act on the part
becomes effective. extinguished.
of the obligor that gives rise to the acquisition of
rights. Effect of non-fulfillment
If not fulfilled, no If not fulfilled, juridical
In case of a contract to sell, the obligation to deliver
juridical relation is relation is
the subject properties becomes demandable only created. consolidated.
upon the happening of the positive suspensive
condition (payment of full purchase price). Without When rights are acquired
full payment, there can be no breach of contract to Rights are not yet
Rights are already
speak of because the seller has no obligation yet to acquired, but there is
vested, but subject to
turn over the title. (Reyes v. Tuparan, G.R. No. hope or expectancy
the threat or danger of
188064, 01 June 2011) that they will soon be
extinction.
acquired.
Resolutory Condition (1999 BAR)
Q: The late Don Lopez, Sr., who was then a
A condition where the rights already acquired are member of the Board of Trustees of CPU,
lost upon fulfillment of the condition. It is also executed a deed of donation in favor of the latter
known as condition subsequent. involving a parcel of land subject to the
Effects of Fulfillment of Resolutory Condition condition that it shall be utilized for the
establishment and use of a medical college.
1. Real obligations: However, the heirs of Don Lopez, Sr., filed an
action for annulment of the donation,
a. The parties shall return to each other what reconveyance, and damages against CPU,
they have received (mutual restitution); alleging that CPU did not comply with the
b. Obligation is extinguished; conditions of the donation. Are the conditions
c. In case of loss, deterioration or imposed resolutory or suspensive?
improvement of the thing, Art. 1189, NCC,
with respect to the debtor, shall be applied A: Under Art. 1181 of the CC, on conditional
to the party who is bound to return. (Art. obligations, the acquisition of rights, as well as the
1190, NCC) extinguishment or loss of those already acquired,
shall depend upon the happening of the event which
2. Personal obligations – The courts shall constitutes the condition. Thus, when a person
determine, in each case, the retroactive effect of donates land to another on the condition that the
the condition that has been complied with. latter would build upon the land a school, the
(Arts. 1187 & 1190, NCC) condition imposed was not a condition precedent or
a suspensive condition but resolutory. It is not
correct to say that the schoolhouse (or the
establishment and use of a medical college in this
case) had to be constructed before the donation
became effective, that is, before the donee could
become the owner of the land, otherwise, it would
be invading the property rights of the donor. The

2022 GOLDEN NOTES
donation had to be valid before the fulfillment of the potestative to the obligor or debtor. Besides, the
condition. If there was no fulfillment or compliance creditor is naturally interested in the fulfillment of
with the condition, the donation may now be the condition since it is only by such fulfillment that
revoked and all rights which the donee may have the obligation arises or becomes effective. (Jurado,
acquired under it shall be deemed lost and 2009; Art. 1181, NCC)
extinguished. (Central Philippine University v. CA,
G.R. No. 112127, 17 July1995) Causal Condition
Negative Resolutory Condition It is the performance or the fulfillment of the

condition which depends upon chance and/or the
An act, which if not done, would give rise to a cause will of a third person.
of action against the obligor. It contemplates a
situation where rights are already acquired but Mixed Condition
subject to an obligation, the non-fulfillment of which
does not affect the rights already acquired but It is the performance or fulfillment of the condition
merely gives a cause of action in favor of the other which depends partly upon the will of a party to the
party. In a contract of sale, the buyer’s non-payment obligation and partly upon chance and/or the will of
of the price is a negative resolutory condition. In a third person.
such case, the seller has lost and cannot recover the
ownership of the property, unless he takes action to NOTE: Casual and mixed conditions are valid, unlike
rescind or set aside the contract of sale. (Royal purely potestative conditions.
Plains View, Inc. v. Mejia, G.R. No. 230832, 12 Nov.
2018) Q: Suppose that the debtor executed a
promissory note promising to pay his obligation
Potestative Condition (1997, 2000, 2003 BAR) to the creditor as soon as he has received funds
derived from the sale of his property in a certain
A condition that depends upon the will of one of the place, is the condition potestative or mixed?
contracting parties. (Art. 1182, NCC)
A: The condition is mixed because its fulfillment
Effects of Potestative Conditions Upon the depends not only upon the will of the debtor but
Obligation also upon the concurrence of other factors, such as
the acceptability of the price and other conditions of
If the condition is potestative in the sense that its the sale, as well as the presence of a buyer, ready,
fulfillment depends exclusively upon the will of able, and willing to purchase the property.
the debtor, and the same is suspensive, both the
condition and obligation are VOID. NOTE: The existing rule in a mixed conditional
obligation is that when the condition was not
However, if the condition is a pre-existing one or the fulfilled but the obligor did all in his power to
condition is resolutory, only the condition is void, comply with the obligation, the condition should be
leaving the obligation itself valid because what is deemed satisfied. (Intl. Hotel Corp. v. Joaquin, Jr., G.R.
left to the sole will of the debtor is not the existence No. 158361, 10 Apr. 2013)
or the fulfillment of the obligation but merely its
extinguishment. Impossible Conditions (1997, 2007 BAR)
If the condition is potestative in the sense that its GR: Impossible conditions annul the obligation
fulfillment depends exclusively upon the will of the which depends upon the parties but not of a third
creditor, the obligation shall be valid. This is so person.
because the provision of the first sentence of Art.
1182 extends only to conditions which are

Civil Law
XPNs: 3. Possible, legally, and physically. (Paras, 2008)

1. Pre-existing obligation;
2. Obligation is divisible; “Day Certain”
3. In simple or remuneratory donations;
4. In case of conditions not to do an impossible It is understood to be that which must necessarily
thing; and come, although it may not be known when.
5. In testamentary dispositions.
Kinds of Terms or Periods
NOTE: In the foregoing, the obligations remain
valid; only the condition is void and deemed to have 1. Ex die – This is a term or period with suspensive
not been imposed. It is applicable only to effect. The obligation begins only from a day
obligations, not to do, and gratuitous obligations. certain, in other words, upon the arrival of the
period.
Other Types of Conditions 2. In diem – A period or term with a resolutory
effect. Up to a certain extent, the obligation
1. Positive – It involves the doing of an act; remains valid, but upon the arrival of said
2. Negative –It involves the omission of an act; period, the obligation terminates.
3. Divisible – It is susceptible of partial 3. Legal – A period granted under the provisions
performance; of the law.
4. Indivisible – It is not susceptible of partial 4. Conventional or voluntary – The period agreed
performance; upon or stipulated by the parties.
5. Conjunctive – There are several conditions in an 5. Judicial – The period or term fixed by the courts
obligation all of which must be performed; for the performance of an obligation or for its
6. Alternative – There are several conditions in an termination.
obligation but only one must be performed; 6. Definite – The exact date or time is known and
7. Possible – It is capable of fulfillment according given.
to the nature, law, public policy, or good 7. Indefinite – It is something that will surely
customs; and happen, but the date of happening is unknown.
8. Impossible – It is not capable of fulfillment e.g., “I will pay when my means permit me to do
according to nature, law, public policy, or good so.”
customs. (Art. 1183, NCC)
When the debtor binds himself to pay when his
OBLIGATIONS WITH A PERIOD means permit him to do so, the obligation is deemed
with a period. (Art. 1180, NCC) This is valid because
Obligation with a Period or a Term it is not the payment itself that is dependent upon
the will of the debtor but the moment of payment.
Obligations for whose fulfillment a day certain has
been fixed, shall be demandable only when that day Benefit of the Period
comes. (Art. 1193, NCC)
GR: Whenever in an obligation a period is
Term or Period designated, it is presumed to have been established
for the benefit of both the creditor and the debtor
A certain length of time which determines the
effectivity or the extinguishment of the obligations. XPN: When it appears from the tenor of the period
or other circumstances that it was established for
Requisites of a Valid Period or Term the benefit of one of the parties. (Art 1196, NCC)
1. Future;
2. Certain; and

2022 GOLDEN NOTES
Effect of the Term or Period 2. When he does not furnish to the creditor the
guaranties or securities which he has promised;
1. When it is for the benefit of the creditor – 3. When by his own acts he has impaired said
Creditor may demand the performance of the guaranties or securities after their
obligation at any time, but the debtor cannot establishment;
compel him to accept payment before the 4. When through a fortuitous event they
expiration of the period. disappear, unless he immediately gives new
e.g., “on demand” ones or equally satisfactory;
5. When the debtor violates any undertaking, in
2. When it is for the benefit of the debtor – Debtor consideration of which the creditor agreed to
may oppose any premature demand on the the period; and
part of the creditor for performance of the 6. When the debtor attempts to abscond. (Art.
obligation, or if he so desires, he may 1198, NCC)
renounce the benefit of the period by
performing his obligation in advance. ALTERNATIVE, FACULTATIVE, AND
CONJUNCTIVE OBLIGATIONS
Effect of a Fortuitous Event to an Obligation with
a Period Alternative Obligation
It only relieves the contracting parties from the It is an obligation where the debtor is alternatively
fulfillment of their respective obligation during the bound by different prestations, but the complete
term or period. performance of one is sufficient to extinguish the
obligation.
Instances where the Court may Fix the Period
(1991, 1997, 2003 BAR) Facultative Obligation
1. If the obligation does not fix a period, but from It is an obligation where the debtor, who has a
its nature and circumstances it can be inferred reserved right to choose another prestation or
that a period was intended by the parties; thing, is bound to perform one of the several
prestations due or to deliver a thing as a substitute
2. If the duration of the period depends upon the for the principal.
will of the debtor (1997, 2003 BAR);
Conjunctive Obligation
3. In case of reciprocal obligations, when there is
a just cause for fixing the period; or An obligation where the debtor has to perform
several prestations; it is extinguished only by the
4. If the debtor binds himself when his means performance of all of them.
permit him to do so.
Facultative Obligations v. Alternative
NOTE: Once fixed by the courts, the period cannot Obligations
be changed by the parties. (Art. 1197, NCC)
Instances where the Debtor Loses his Right to FACULTATIVE ALTERNATIVE

make Use of the Period OBLIGATIONS OBLIGATIONS
1. When after the obligation has been contracted, Number of Prestation

he becomes insolvent, unless he gives a
guaranty or security for the debt; Only one object is due. Several objects are due.

Civil Law
Manner of compliance substitute. validity of the

obligation.
May be complied with May be complied with
by substitution of one by fulfilling any of those Impossibility of Prestation
that is due. alternately due.
If some prestations are
Right to Choose If there is impossibility impossible to perform
to perform or to deliver or to deliver except for
GR: Choice pertains to the principal thing or one - this one must be
debtor. prestation, the delivered.
Choice pertains only to obligation is
debtor. XPN: Expressly granted extinguished, even if If all prestations are
to creditor or a third the substitute impossible to perform,
person. obligation is valid. the obligation is
extinguished.
Effect of Fortuitous Loss
Loss of Substitute
Fortuitous loss of all
Fortuitous loss
prestations will When the choice is
extinguishes the Loss of the substitute
extinguish the given to the creditor,
obligation. before the substitution
obligation. the loss of the
is made through the
alternative through the
Effect of Culpable Loss fault of the debtor
fault of the debtor
doesn’t make him
renders him liable for
Culpable loss obliges liable.
Culpable loss of damages.
the debtor to deliver a
any object due will give
substitute prestation
rise to liability to the
without liability to the Right to Choose Prestation in an Alternative
debtor.
debtor. Obligation
Liability of the Debtor GR: The right of choice belongs to the debtor.
The creditor shall have XPN: Unless it has been expressly given to the
the right of indemnity creditor. (Art. 1200, NCC)
When substitution has
for damages when,
been made and
solely through the fault Limitations on Debtor’s Right to Choose
communicated to the
of the debtor, all things
creditor, the obligor is
which are alternatively 1. The debtor must absolutely perform the
liable for the loss of the
the object of the chosen prestation. He cannot compel the
thing on account of
obligation have been creditor to receive part of one and part of the
delay, negligence, or
lost, or the compliance other undertaking;
fraud.
of the obligation has
become impossible. 2. The debtor shall have no right to choose those
prestations which are impossible, unlawful, or
Void Prestation
which could not have been the object of the
If the principal If one prestation is void, obligation (Art. 1200, NCC);
obligation is void, the the others that are free
creditor cannot compel from any vices of 3. The debtor shall lose the right of choice when
delivery of the consent preserve the among the prestation whereby he is

2022 GOLDEN NOTES
alternatively bound, only one is practicable to make the selection effective because none of
(Art. 1202, NCC); them can extinguish the entire obligation.
If the obligation is solidary and there is no
4. The selection made by the debtor (or the stipulation to the contrary, the choice by one will be
creditor when it has been expressly granted to binding personally upon him; the choice of one will
him) cannot be subjected by him to a be personally binding to him, but not as to the
condition or a term unless the creditor (or others.
debtor in case the choice is with the creditor)
consents thereto. (Tolentino, 2002) Thus, if A and B solidarily bind themselves to deliver
a horse or a carabao to C, the selection of A of the
Effectivity of the Choice in Alternative horse, when communicated to C, will bind him, and
Obligations he cannot, later on, deliver the carabao. It is,
however, not binding on B, who may extinguish the
The choice made takes effect only upon its obligation by delivering the carabao. (Tolentino,
communication to the other party, and from such 2002)
time, the obligation ceases to be alternative. (Art.
1201, NCC; Art. 1205, NCC) Effects of Loss of Objects
NOTE: The notice of selection or choice may be in

DUE TO DUE TO
any form provided it is sufficient to make the other
FORTUITOUS DEBTOR’S
party know that the election has been made.
EVENT FAULT
(Tolentino, 2002)
Choice Belongs to Debtor
When Alternative Obligation becomes a Simple
Obligation Creditor shall
have the right to
1. When the debtor has communicated the choice be indemnified
to the creditor; for damages
2. When debtor loses the right of choice among Debtor is based on the
All are
the prestations whereby the debtor is released from value of the last
lost
alternatively bound, only one is practicable. the obligation. thing which
(Art. 1202, NCC) disappeared or
last service
NOTE: The choice made by the debtor does not which became
require the concurrence of the creditor. Otherwise, impossible.
it would destroy the very nature of the right to select Debtor shall
given to the debtor. Debtor shall
deliver that
deliver that
Some which he shall
Impossibility of Choice Due to Creditor’s Acts which he shall
but not choose from
choose from
all are among the
When the choice is rendered impossible through the among the
lost remainder
creditor’s fault, the debtor may bring an action to remainder.
without
rescind the contract with damages. (Art. 1203, NCC) damages.
Plurality of Parties
Only one
Deliver that which remains.
When there are various debtors or creditors, and remains
the obligation is joint, the consent of all is necessary

Civil Law
Choice Belongs to Creditor a. Joint solidarily;

b. Jointly and severally; or
Creditor may
c. In solidum.
claim the price or
Debtor is
All are value of any of
released from Joint Obligation v. Solidary Obligation
lost them with
the obligation.
indemnity for
damages.
JOINT OBLIGATION SOLIDARY OBLIGATION
Creditor may
claim any of
Presumption by law
Creditor may those subsisting
choose from OR he may Not presumed. Must be
Some
among the choose any of expressly stipulated by
but not
remainder or those which were the parties, or when the
all are Presumed by law.
that which lost, but it is the law or the nature of the
lost (Art. 1208, NCC)
remains if only price or value of obligation requires
one subsists. with right to solidarity. (Art. 1207,
damages that can NCC)
be claimed.
Deliver that which remains. In case of Liability of each debtor
Only one
fault of debtor, creditor has a right to
remains Proportionate part Obliged to pay the entire
indemnity for damages.
of the entire debt. obligation.
JOINT AND SOLIDARY OBLIGATIONS Right of the creditor

(1992, 2001, 2008 BAR) to the fulfillment of the obligation
Each creditor has the
Joint Obligations Each creditor, if
right to demand from any
there are several, is
of the debtors, the
One where the credit or debt shall be presumed to entitled only to a
payment or fulfillment of
be divided into as many equal shares as there are proportionate part
the entire obligation.
creditors or debtors, the credits or debts being of the credit.
(Tolentino, 1999)
considered distinct from one another. (Art. 1208,
NCC) Each debtor is liable only for a proportionate
Character of an obligation
part of the debt and each creditor to his
proportionate share to the credit.
GR: When two or more creditors or two or more
debtors concur in one and the same obligation, the
Other terms for joint obligations are:
presumption is that the obligation is joint.
a. joint simply;
b. mancomunada; or
XPNs: The obligation shall only be solidary when:
c. pro rata.
(L-E-N)
Solidary Obligations
1. Law requires solidarity;
2. Expressly stipulated that there is solidarity;
It is where each of the debtors obliges to pay the
3. Nature of the obligation requires solidarity. Art.
entire obligation, while each one of the creditors has
1207, NCC)
the right to demand from any of the debtors, the
payment or fulfillment of the entire obligation. (Art.
Q: Chua bought and imported to the Philippines
1207, NCC)
dicalcium phosphate. When the cargo arrived at
the Port of Manila, it was discovered that some
Other terms for solidary obligations are:

2022 GOLDEN NOTES
were in apparent bad condition. Thus, Chua filed Q: Mactan Rock Industries, through its President
with Smith Bell and Co., Inc. (claiming agent of and Chief Executive Officer Tompar, entered
First Insurance Co.) a formal statement of claim into a Technical Consultancy Agreement
for the loss. No settlement of the claim having (TCA) with Germo, whereby the parties
been made, Chua then filed an action. Is Smith, agreed, inter alia, that: (a) Germo shall stand as
Bell, and Co., solidarily liable upon a marine MRII's marketing consultant who shall take
insurance policy with its disclosed foreign charge of negotiating, perfecting sales, orders,
principal? contracts, or services of MRII, but there shall be
no employer-employee relationship between
A: NO. Art. 1207 of the Civil Code clearly provides them; and (b) Germo shall be paid on a purely
that "there is a solidary liability only when the commission basis, including a monthly
obligation expressly so states, or when the law or allowance of P5,000.00. During the effectivity of
the nature of the obligation requires solidarity." The the TCA, Germo successfully negotiated and
well-entrenched rule is that solidary obligation closed with International Container Terminal
cannot lightly be inferred. It must be positively and Services, Inc. (ICTSI) a supply contract of 700
clearly expressed. (Smith, Bell & Co., Inc. v. CA, G.R. cubic meters of purified water per day.
No. 110668, 06 Feb. 1997) Accordingly, MRII commenced supplying water
to ICTSI on February 22, 2007, and in turn, the
Q: The labor arbiter rendered a decision, the latter religiously paid MRII the corresponding
fallo of which states the following respondents monthly fees. Despite the foregoing, MRII
as liable, namely: FCMC, Sicat, Gonzales, Chiu allegedly never paid Germo his rightful
Chin Gin, Lo Kuan Chin, and INIMACO. INIMACO commissions amounting to P2,225,969.56 as of
questions the execution, alleging that the alias December 2009, inclusive of interest. Initially,
writ of execution altered and changed the tenor Germo filed a complaint before the National
of the decision by changing their liability from Labor Relations Commission (NLRC), but the
joint to solidary, by the insertion of the words same was dismissed for lack of jurisdiction due
"AND/OR.” Is the liability of INIMACO pursuant to the absence of employer-employee
to the decision of the labor arbiter solidary or relationship between him and MRII. Germo filed
not? the instant complaint praying that MRII and
Tompar pay him for unpaid commissions with
A: INIMACO's liability is not solidary but merely legal interest from the time they were due until
joint. Well-entrenched is the rule that solidary fully paid, moral damages, exemplary damages,
obligation cannot lightly be inferred. There is a and the costs of suit.
solidary liability only when the obligation expressly
so states, when the law so provides or when the MRII and Tompar averred, among others,
nature of the obligation so requires. that: (a) there was no employer-employee
relationship between MRII and Germo as the
In the dispositive portion of the labor arbiter, the latter was hired as a mere consultant; (b) Germo
word "solidary" does not appear. The said fallo failed to prove that the ICTSI account
expressly states the following respondents therein materialized through his efforts as he did not
as liable, namely: Filipinas Carbon Mining submit the required periodic reports of his
Corporation, Sicat, Gonzales, Chiu Chin Gin, Lo Kuan negotiations with prospective clients;
Chin, and INIMACO. Nor can it be inferred therefrom and (c) ICTSI became MRII's client through the
that the liability of the six respondents in the case efforts of a certain Ed Fornes. Are MRII and
below is solidary; thus, their liability should merely Tompar, as the CEO and President, solidarily
be joint. (INIMACO v. NLRC, G.R. No. 101723, 11 May liable to pay Germo?
2000)
A: NO. It is a basic rule that a corporation is a
juridical entity vested with legal and personality

Civil Law
separate and distinct from those acting for and on 6. In indivisible or joint obligation, the defense of
behalf of, and from the people comprising it. As a res judicata of one does not extend to the others
general rule, directors, officers, or employees of a (8 Manresa, 200-201); or
corporation cannot be held personally liable for the 7. The delay on the part of only one of the joint
obligations incurred by the corporation unless it can debtors does not produce effects with respect
be shown that such director/officer/employee is to the others, and if the delay is produced
guilty of negligence or bad faith and that the same through the acts of only one of the joint
was clearly and convincingly proven. creditors, the others cannot take advantage
thereof.
Before a director or officer of a corporation can be
held personally liable for corporate obligations, the JOINT INDIVISIBLE OBLIGATIONS
following requisites must concur:
The obligation is joint because the parties are
(1) the complainant must allege in the merely proportionately liable. It is indivisible
complaint that the director or officer assented because the object or subject matter is not
to patently unlawful acts of the corporation, or physically divisible into different parts. In other
that the officer was guilty of gross negligence or words, it is joint as to liabilities of the debtors or
bad faith; and rights of the creditors but indivisible as to
(2) the complainant must clearly and compliance. This obligation also constitutes the
convincingly prove such unlawful acts, middle ground between a joint obligation and a
negligence or bad faith. solidary obligation. (De Leon, 2010)
In this case, Tompar's assent to the patently A joint indivisible obligation gives rise to indemnity
unlawful acts of the MRII or that his acts were for damages from the time any one of the debtors
tainted by gross negligence or bad faith was not does not comply with his undertaking. The debtors
alleged in Germo's complaint, much less proven who may have been ready to fulfill their promises
during the course of the trial. Therefore, the shall not contribute to the indemnity beyond the
deletion of Tompar's solidary liability with MRII is corresponding portion of the price of the thing or of
in order. (Mactan Rock Industries v. Germo, G.R. No. the value of the service in which the obligation
228799, 10 Jan. 2018) consists. (Art. 1224, NCC)
Consequences of a Joint Obligation Characteristics
1. Each debtor is liable only for a proportionate 1. Obligation is joint, but since it is indivisible,
part of the entire debt; creditor must proceed against all the joint
2. Each creditor, if there are several, is entitled debtors ;
only to a proportionate part of the credit; 2. Demand must be to all debtors ;
2. The demand made by one creditor upon one 3. In case of insolvency of one debtor, others are
debtor, produces effects of default only as not liable for his share ;
between them; 4. If there are joint creditors, delivery must be
3. Interruption of prescription caused by the made to all unless authorized by others; and
demand made by one creditor upon one debtor, 5. Each joint creditor may renounce his share.
will NOT benefit the co-creditors or the co-
debtors; Effects of Different Permutations of Joint
4. Insolvency of a debtor will not increase the Indivisible Obligations
liability of his co-debtor;
5. Vices of each obligation emanating from a 1. If there are two or more debtors, compliance
particular debtor or creditor will not affect the with the obligation requires the concurrence of
others; all the debtors, although each for his own share.

2022 GOLDEN NOTES
The obligation can be enforced only by everyone what belongs to him; there is no merger,
preceding against all of the debtors; much less a renunciation of rights, but only mutual
2. If there are two or more creditors, the representation. It is thus essentially a mutual
concurrence or collective act of all the creditors, agency. Its juridical effects may be summarized as
although each of his own shares, is also follows:
necessary for the enforcement of the obligation; 1. Since it is a reciprocal agency, the death of a
and solidary creditor does not transmit the
3. Each credit is distinct from one another; solidarity to each of his heirs but to all of them
therefore, a joint debtor cannot be required to taken together;
pay for the share of another with debtor, 2. Each creditor represents the others in the act of
although he may pay if he wants to. receiving payment and in all other acts which
tend to secure the credit or make it more
In case of insolvency of one of the debtors, the advantageous. Hence, if he receives only a
others shall not be liable for his shares. To hold partial payment, he must divide it among the
otherwise would destroy the joint character of the other creditors. He can interrupt the period of
obligation. (Art. 1209, NCC) prescription or render the debtor in default, for
the benefit of all other creditors;
Effect of Breach by a Debtor 3. One creditor, however, does not represent the
others in such acts as novation (even if the
If one of the joint debtors fails to comply with his credit becomes more advantageous),
undertaking and the obligation can no longer be compensation and remission. In these cases,
fulfilled or performed, it will then be converted into even if the debtor is released, the other
one of indemnity for damages. Innocent joint debtor creditors can still enforce their rights against
shall not contribute to the indemnity beyond his the creditor who made the novation,
corresponding share of the obligation. compensation, or remission;
4. The creditor and its benefits are divided equally
SOLIDARY OBLIGATIONS among the creditors, unless there is an
agreement among them to divide differently.
Each of the debtors is obliged to pay the entire Hence, once the credit is collected, an
obligation, and each one of the creditors has the accounting and a distribution of the amount
right to demand from any of the debtors the collected should follow ;
payment or fulfillment of the entire obligation. 5. The debtor may pay to any solidary creditor,
but if a judicial demand is made on him, he must
Kinds of Solidary Obligation pay only to the plaintiff; and
6. Each creditor may renounce his right even
1. Passive – Solidarity on the part of the debtors. against the will of the debtor, and the latter
2. Active – Solidarity on the part of the creditors. need not thereafter pay the obligation to the
3. Mixed – Solidarity on both sides. former.
4. Conventional – agreed by the parties.
5. Legal – imposed by law. Passive Solidarity
LEGAL EFFECTS OF ACTIVE AND In passive solidarity, the essence is that each debtor
PASSIVE SOLIDARITY (TOLENTINO, 2002) can be made to answer for the others, with the right
on the part of the debtor-payor to recover from the
Active Solidarity others their respective shares. In so far as the
payment is concerned, this kind of solidarity is
The essence of active solidarity consists in the similar to a mutual guaranty. Its effects are as
authority of each creditor to claim and enforce the follows:
rights of all, with the resulting obligation of paying

Civil Law
1. Each debtor can be required to pay the entire

As to the requirement of
obligation, but after the payment, he can
plurality of parties or subjects
recover from the co-debtors their respective
shares; Requires the Does not require
plurality of parties or plurality of subjects or
2. The debtor who is required to pay may set up subjects. parties.
by way of compensation his own claim against
As to the effect of breach
the creditor. In this case, the effect is the same
as that of payment; In case of breach, the In case of breach, it is
liability of the converted to one of
3. The total remission of a debt in favor of a debtor solidary debtors indemnity for damages
releases all the debtors; but when this although converted and the indivisibility of
remission affects only the share of one debtor, into one of the the obligation is
the other debtors are still liable for the balance indemnity for terminated and so each
of the obligation; damages remains debtor is liable only for
solidary. his part of the indemnity.
4. All the debtors are liable for the loss of the thing As to the effect of death of a party
due, even if such loss is caused by only one of
Death of solidary
them, or by fortuitous event after one of the
debtors has incurred in delay; debtor terminates Heirs of the debtor
the solidarity, the tie, remain bound to
or vinculum being perform the same
5. The interruption of prescription as to one
debtor affects all the others; but the intransmissible to prestation.
the heirs.
renunciation by one debtor of the prescription
already had does not prejudice the others,
because the extinguishment of the obligation by Rules in Solidary Obligations (1998, 2003 BAR)
prescription extinguishes also the mutual
representation among the solidary debtors; and 1. Anyone of the solidary creditors may collect or
demand payment of the whole obligation; there
6. The interest due by reason of the delay by one is mutual agency among solidary debtors; (Arts.
of the debtors is borne by all of them. 1214 & 1215, NCC)
NOTE: Example of words that connote solidary 2. Any of the solidary debtor may be required to
obligation: a) joint and several; b) in solidum; c) pay the whole obligation; there is mutual
individually and collectively; d) each will pay the guaranty among solidary debtors; (Arts. 1216,
whole value; e) “I promise to pay” and there are two 1217 & 1222, NCC)
or more signatures; and f) juntos o separadamente
(jointly or separately). 3. Each one of solidary creditors may do whatever
may be useful to the others, but not anything
Solidarity v. Indivisibility prejudicial to them (Art. 1212, NCC); however,
any novation, compensation, confusion, or
SOLIDARITY INDIVISIBILITY remission of debt made by any solidary
creditors or with any of the solidary debtors
As to the kind of unity it refers to
shall extinguish the obligation without
Refers to the prejudice to his liability for the shares of other
vinculum existing Refers to the prestation solidary creditors. (Arts. 1215 & 1219, NCC)
between the subjects or object of the contract.
or parties. Q: Joey, Jovy, and Jojo are solidary debtors under
a loan obligation of P300,000.00 which has

2022 GOLDEN NOTES
fallen due. The creditor has, however, condoned one year. Because of their lack of business
Jojo's entire share in the debt. Since Jovy has know-how, their business collapsed. Juancho
become insolvent, the creditor makes a demand and Don ended up penniless, but Pedro was able
on Joey to pay the debt. to borrow money and put up a restaurant which
did well. Can Cita demand that Pedro pay the
a. How much, if any, may Joey be compelled to entire obligation since he, together with the two
pay? others, promised to pay the full amount after
b. To what extent, if at all, can Jojo be one year? Defend your answer. (2015 BAR)
compelled by Joey to contribute to such
payment? (1998 BAR) A: NO. The obligation in this case is presumed to be
joint. The concurrence of two or more creditors or
A: two or more debtors in one and the same obligation
a. Joey can be compelled to pay only the does not imply that each one of the former has the
remaining balance of P200,000, in view of the right to demand, or that each one of the latter is
remission of Jojo’s share by the creditor. (Art. bound to render the entire compliance of the
1219, NCC) prestation. (Art. 1207, NCC) In a joint obligation,
b. Jojo can be compelled by Joey to contribute there is no mutual agency among the joint debtors
P50,000. When one of the solidary debtors such that if one of them is insolvent the others shall
cannot, because of his insolvency, reimburse his not be liable for his share.
share to the debtor paying the obligation, such
share shall be borne by all his co-debtors, in To whom payment should be made in a solidary
proportion to the debt of each. (Art. 1217(3)) obligation
Since the insolvent debtor's share, which Joey
paid was P100,000, and there are only two GR: To any of the solidary creditors.
remaining debtors - namely Joey and Jojo -
these two shall share equally the burden of XPN: If demand, judicial or extra-judicial, has been
reimbursement. Jojo may thus be compelled by made by one of the creditors, payment should be
Joey to contribute P50,000. made to him. (Art. 1214, NCC)
Q: Iya and Betty owed Jun P500,000 for In cases of Solidary Creditors, one may act for all
advancing their equity in a corporation they
joined as incorporators. Iya and Betty bound Each one of the solidary creditors may execute acts
themselves solidarily liable for the debt. Later, that may be useful or beneficial to the others, but he
Iya and Jun became sweethearts, so Jun may not do anything which may be prejudicial to
condoned the debt of P500,000. May Iya demand them. (Art. 1212, NCC)
from Betty P250,000 as her share in the debt?
Explain with legal basis? (2015 BAR) NOTE: Prejudicial acts may still have valid legal
effects, but the performing creditor shall be liable to
A: NO. Iya may not demand the P250,000 from Betty his co-creditors. (Pineda, 2000)
because the entire obligation has been condoned by
the creditor Jun. In a solidary obligation, the Effects of Assignment of Rights in a Solidary
remission of the whole obligation obtained by one Obligation
of the solidary debtors does not entitle him to
reimbursement from his co-debtors. (Art. 1220, GR: A solidary creditor cannot assign his right
NCC) because it is predicated upon mutual confidence,
meaning the personal qualification of each creditor
Q: Juancho, Don, and Pedro borrowed P150,000 had been taken into consideration when the
from their friend Cita to put up an internet café, obligation was constituted. (Art. 1213, NCC)
orally promising to pay her the full amount after

Civil Law
XPNs: which the obligation seeks to obtain. It is indivisible

1. Assignment to co-creditor; or if a thing which could be divided into parts and as
2. Assignment is with the consent of co-creditor. divided, its value is impaired disproportionately.
(Pineda, 2000)
DIVISIBLE AND INDIVISIBLE OBLIGATIONS
Factors to Determine whether an Obligation is
Divisible Obligations Divisible or Indivisible
Those which have as their object a prestation which 1. The will or intention of the parties (express
is susceptible of partial performance without the or implied);
essence of the obligation being changed. An 2. The objective or purpose of the stipulated
obligation the object of which, in its delivery or prestation;
performance, is capable of partial performance. 3. The nature of the thing; and
4. The provisions of law affecting the
Indivisible Obligations prestation.
Those which have as their object a prestation which Obligations deemed Divisible
is not susceptible of partial performance, because
otherwise the essence of the obligation will be When the object of the obligation involves:
changed. 1. Certain number of days of work;
2. Accomplishment of work by metrical unit;
An obligation is indivisible when it cannot be validly and
performed in parts, whatever may be the nature of 3. Analogous things which are by their nature
the thing which is the object thereof. The susceptible of partial performance. (Art.
indivisibility refers to the prestation and not to the 1225, NCC)
object thereof. (Sps. Lam v. Kodak Philippines, Ltd.,
G.R. No. 167615, 11 Jan. 2016) Obligations deemed Indivisible
Kinds of Indivisibility 1. Obligations to give definite things;

2. Those which are not susceptible of partial
1. By operation of law performance; and
2. By will of the parties 3. Even the object or service may be physically
3. By the nature of the obligation divisible, an obligation is indivisible if so
provided (i) by law or (ii) intended by the
Divisible v. Indivisible Obligations parties. (Art. 1225, NCC)
DIVISIBLE INDIVISIBLE NOTE: A pledge or mortgage is one and indivisible

by provision of law, and the rules apply even if the
Non-susceptibility to
Susceptibility of an obligation is joint and not solidary. (Art. 2089, NCC)
be performed partially.
obligation to be
Partial performance is
performed partially. Partial Performance in Indivisible Obligation
tantamount to non-
(Pineda, 2009)
performance.
GR: In indivisible obligations, partial performance is
equivalent to non-performance.
Test of Divisibility
XPNs :
Whether or not the prestation is susceptible of
1. Where the obligation has been substantially
partial performance, not in the sense of
performed in good faith, the debtor may
performance in separate or divided parts, but in the
recover as if there had been complete
sense of the possibility of realizing the purpose

2022 GOLDEN NOTES
performance, minus the damages suffered by stipulated by the parties, including an act or
the creditor; and abstention.
2. Where the creditor accepts performance
knowing its incompleteness and without Double Functions
protest, the obligation is deemed fully
performed. (Art 1234 and 1235, NCC) 1. To provide for liquidated damages; and
2. To strengthen the coercive force of the obligation
Effect of Illegality of a Part of a Contract by the threat of greater responsibility in case of
breach.
1. Divisible contract – the illegal part is void and
unenforceable, meanwhile, the legal part is Kinds of penalties
valid and enforceable. (Art. 1420, NCC)
2. Indivisible contract – the entire contract is void 1. As to origin
and unenforceable. 1. Legal - it is legal when it is constituted by
law.
2. Conventional - it is constituted by
OBLIGATIONS OBLIGATIONS
agreement of the parties.
TO GIVE TO DO
In obligations to do, 2. As to purpose
In obligations to give, indivisibility is also a. Compensatory - it is compensatory when it
those for the delivery presumed, and it is only is established for the purpose of
of certain objects when they are under the indemnifying the damages suffered by the
such as an animal or a exceptional cases obligee or creditor in case of breach of the
chair are indivisible. mentioned in Art. obligation.
(Art. 1225(1), NCC) 1225(2) of the NCC that b. Punitive - it is punitive when it is
they are divisible. established for the purpose of punishing
the obligor or debtor in case of breach of
Divisibility or indivisibility in Negative the obligation.
obligations
3. As to effect
In negative obligations not to do, the character of a. Subsidiary - it is subsidiary when only the
the prestation in each particular case shall penalty may be demanded in case of breach
determine their divisibility or indivisibility. (Pineda, of the obligation;
2009) b. Joint - it is joint when the injured party may
demand the enforcement of both the
OBLIGATION WITH A PENAL CLAUSE penalty and the principal obligation.
An obligation with a penal clause is one with an Can the debtor just choose penalty over non-
accessory undertaking by virtue of which the fulfillment?
obligor assumes a greater liability in case of breach
of the obligations. (Jurado, 2009) GR: The debtor cannot exempt himself from the
performance of the obligation by paying the penalty.
Penal Clause (Art. 1227, NCC)
A coercive means to obtain from debtor compliance. XPN: When the right has been expressly reserved to
It is an accessory undertaking to assume greater the debtor. (Art. 1227, NCC)
liability in case of breach. The penalty is generally a
sum of money. But it can also be any other thing

Civil Law
Distinctions between Obligation with a Penal Creditor Cannot Demand Both the Fulfillment of
Clause and Alternative Obligation the Principal Obligation and the Penalty
Obligation with Penal Alternative GR: The creditor cannot demand the fulfillment of
Clause Obligation the obligation and the satisfaction of the penalty at
the same time. (Art. 1227, NCC)
Number of Obligations
There is only one XPNs:
There are two or more
principal obligation, 1. When the right has been clearly granted to him;
pbligations, the
the non-performance 2. If the creditor has decided to require the
fulfillment of one of
of which makes the fulfillment of the obligation, the performance
which is sufficient to
stipulated penalty thereof should become impossible without his
satisfy the obligation.
enforceable. fault, the penalty may be enforced. (Art. 1227,
Impossibility of Obligation NCC)
The impossibility of
NOTE: The creditor need not present proof of actual
The impossibility of one of the obligations,
damages suffered by him in order that the penalty
the principal obligation without fault of the
may be demanded. (Art. 1228, NCC) In this
extinguishes the debtor, leaves the
jurisdiction, there is no difference between a
penalty other prestation
penalty and liquidated damages, so far as the results
subsisting.
are concerned. Whatever differences exist between
Freedom to Choose them, as a matter of language, they are legally
Obligor cannot choose treated the same. (Rabuya, 2017)
to pay the penalty to
The obligor can choose
excuse himself from Effect of Incorporating a Penal Clause in an
which prestation or
the principal Obligation
obligation to fulfill.
obligation, unless
(Pineda, 2009)
given that right GR: The penalty fixed by the parties is
explicitly. compensation or substitute for damages in case of
breach.
Distinctions between Obligation with a Penal
Clause and Facultative Obligation XPNs: Damages shall still be paid even if there is a
penal clause if:
Obligation with a Facultative 1. There is a stipulation to the contrary;
Penal Clause Obligation 2. The debtor refuses to pay the agreed penalty; or
3. The debtor is guilty of fraud in the fulfillment of
Power to make substitution
the obligation. (Art. 1126, NCC)
The obligor cannot
substitute the payment The power of the NOTE: The nullity of the penal clause does not carry
of penalty for the obligor to make with it that of the principal obligation. For example,
principal obligation, substitution is the penal clause may be void because it is contrary
unless expressly absolute. to law, morals, good custom, public order, or public
allowed. policy. In such case, the principal obligation subsists
Demand for fulfillment of both prestations if valid.
Creditor cannot
The creditor may GR: The nullity of the principal obligation carries
demand both
demand both the with it that of the penal clause. (Art. 1230, NCC)
prestations or
principal and
obligations. (Pineda,
accessory obligations.
2009)

2022 GOLDEN NOTES
XPNs: The penal clause subsists even if the principal 6. Novation. (Art. 1231, NCC)
obligation cannot be enforced:
1. When the penalty is undertaken by a third 2. Other Modes (P-A-R-F)
person precisely for an obligation which is a. Annulment;
unenforceable, voidable, or natural, in which b. Rescission;
case, it assumes the form of a guaranty which is c. Fulfillment of a resolutory condition;
valid, under Art. 2052 of the NCC; and d. Prescription. (Art. 1231, NCC)
2. When the nullity of the principal obligation itself
gives rise to the liability of the debtor for NOTE: The enumeration is not exclusive.
damages.
3. Other causes not expressly mentioned
Instances where Penalty may be Reduced by the (Rabuya, 2017)
Courts (P-I-U)
a. Death – in obligations which are of purely
1. Partial performance of the obligation; personal character;
2. Irregular performance of the obligation; b. Arrival of resolutory period;
3. Penalty is Unconscionable even if there has c. Mutual dissent;
been no performance. d. Change of civil status; or
e. Happening of unforseen events.
When Creditor can Demand Enforcement of
Penalty Mutual desistance as another mode of
extinguishing obligations
Only when the non-performance is due to the fault
or fraud of the debtor that the creditor can demand It is a concept derived from the principle that since
enforcement of the penalty. But the creditor does mutual agreement can create a contract, mutual
not have to prove that there was fault or fraud of the disagreement by the parties can likewise cause its
debtor. The non-performance gives rise to the extinguishment. (Saura v. Development Bank of the
presumption of fault; and in order to avoid the Phils., G.R. No. L-24968, 27 Apr. 1972)
payment of penalty, the debtor has the burden of
proving an excuse – either that the failure of the PAYMENT OR PERFORMANCE
performance was due to force majeure or to the acts
of the creditor himself. Payment is the fulfillment of the obligation by the
realization of the purposes for which it was
NOTE: When there are several debtors in an constituted. (Jurado, 2010) (1998, 2009 Bar)
obligation with a penal clause, the divisibility of the
principal obligation among the debtors does not Payment is defined as not only the delivery of
necessarily carry with it the divisibility of the money but also the performance, in any other
penalty among them. manner, of an obligation. It is the satisfaction or
fulfillment of a prestation that is due, resulting in the
4. EXTINGUISHMENT extinguishment of the obligation of the debtor.
(Pineda, 2009)
Modes of Extinguishment of an Obligation
Payment may consist not only in the delivery of
1. Principal modes (Pa-Lo-Co3-N) money but also the giving of a thing (other than
1. Payment or performance; money), the doing of an act, or not doing of an act.
2. Loss of the thing due; (Art. 1232, NCC)
3. Condonation or remission of debt;
4. Confusion or merger;
5. Compensation;

Civil Law
Characteristics of Payment Identity of the Thing
1. Integrity – The payment of the obligation must GR: Thing paid must be the very thing due and
be completely made; cannot be another thing even if of the same or more
2. Identity – The payment of the obligation must quality and value.
consist in the performance of the very thing
due; XPNs:
3. Indivisibility – The payment of the obligation 1. Dation in payment;
must be in its entirety. 2. Novation of the obligation; and
3. Obligation is facultative.
Integrity
NOTE: In an obligation to do or not to do, an act or
GR: Payment or performance must be complete. forbearance cannot be substituted by another act or
(Art. 1233, NCC) forbearance against the obligee’s will.
XPNs: Indivisibility
1. Substantial performance performed in good
faith; (Art. 1234, NCC) GR: Debtor cannot be compelled by the creditor to
2. When the obligee accepts the performance, perform obligation in parts and neither can the
knowing its incompleteness or irregularity and debtor compel the creditor to accept obligation in
without expressing any protest or objection; parts.
(Art. 1235, NCC) or
3. Debt is partly liquidated and partly XPNs : When:
unliquidated, but the liquidated part of the debt 1. Partial performance has been agreed upon;
must be paid in full. 2. Part of the obligation is liquidated and part
is unliquidated; or
Substantial Performance Doctrine 3. To require the debtor to perform in full is
impractical.
It provides the rule that if a good faith attempts to
perform does not precisely meet the terms of an Acceptance by a Creditor of a Partial Payment
agreement or statutory requirements, the NOT an Abandonment of its Demand for Full
performance will still be considered complete if the Payment
essential purpose is accomplished. (Black’s Law
Dictionary, 2009) When creditors receive partial payment, they are
not ipso facto deemed to have abandoned their prior
Requisites demand for full payment.
1. Attempt in good faith to comply with obligation; To imply that creditors accept partial payment as
2. Slight deviation from the obligation; and the complete performance of their obligation, their
omission or defect of the performance is acceptance must be made under circumstances that
technical and unimportant; and does not indicate their intention to consider the performance
pervade the whole, or is not material that the complete and to renounce their claim arising from
object which the parties intended to accomplish the defect.
is not attained. (Tolentino, 2002)
NOTE: While Art. 1248 of the NCC states that
creditors cannot be compelled to accept partial
payments, it does not prohibit them from accepting
the same. (Selegna Management and Development
Corp. v. UCPB, G.R. No. 165662, 03 May 2006)

2022 GOLDEN NOTES
Requisites of a Valid Payment vendor a retro is not a debtor within the meaning of
the law. (Jurado, 2010)
1. The person who pays the debt must be the
debtor; Rights of a Third Person who made the Payment
2. The person to whom payment is made must be
the creditor; 1. If the payment was made with knowledge and
3. The thing to be paid or to be delivered must be consent of the debtor:
the precise thing or the thing required to be a. Can recover the entire amount paid
delivered by the creditor; (absolute reimbursement); or
4. The manner (if expressly agreed upon), time, b. Can be subrogated to all rights of the
and place of payment, etc.; and creditor.
5. Acceptance by the creditor.
2. If the payment was made without the knowledge
Kinds of payment or against the will of the debtor – Can recover
only insofar as payment has been beneficial to
1. Normal - When the debtor voluntarily performs the debtor (right of conditional
the prestation stipulated; reimbursement).
2. Abnormal - When he is forced by means of a
judicial proceeding, either to comply with the NOTE: Payment made by a third person who does
prestation or to pay the indemnity. (Tolentino, not intend to be reimbursed by the debtor is
1991) deemed to be a donation, which requires the
debtor's consent. But the payment is in any case
Person who pays valid as to the creditor who has accepted it. (Art.
1238, NCC)
The following persons may effect payment and
compel the creditor to accept the payment: Persons to whom payment is made
1. Debtor himself;
2. His heirs and assigns; Persons entitled to receive the payment:
3. His agents and representatives; or 1. The person in whose favor the obligation has
4. Third persons who have a material interest in been constituted;
the fulfillment of the obligation. (Art. 1236(1), 2. His successor in interest; or
NCC) 3. Any person authorized to receive it. (Art. 1240,
NCC)
Payment made by Third Persons
NOTE: Payment made to one having apparent
GR: The creditor is not bound to accept payment or authority to receive the money will, as a rule, be
performance by a third person. treated as though actual authority had been given
for its receipt. Likewise, if payment is made to one
XPNs: who by law is authorized to act for the creditor, it
1. When made by a third person who has will work as a discharge. (Sps. Miniano v. Concepcion,
interest in the fulfillment of the obligation; G.R. No. 172825, 11 Oct. 2012)
and
2. Contrary stipulation. (Art. 1236, NCC) Payment to an Unauthorized person
NOTE: The rules on payment by a third person (Art. GR: Payment to an unauthorized person is not a
1236 to 1238, NCC) cannot be applied to the case of valid payment. (Art. 1241, NCC)
a third person who pays the redemption price in
sales with right of repurchase. This is so because the XPNs:
1. Payment to an incapacitated person if:

Civil Law
a. He kept the thing delivered; or

Tender of Payment
b. It has been beneficial to him (Art. 1241,
NCC);
Voluntary act of the debtor whereby he offers to
the creditor for acceptance the immediate
2. Payment to a third person insofar as it
performance of the former’s obligation to the
redounded to the benefit of the creditor; and
latter.
Benefit to the creditor need not be proved: (R- Consignation

R-E)
a. If after the payment, the third person Act of depositing the object of the obligation with
acquires the creditor’s Rights; the court or competent authority after the
b. If the creditor Ratifies the payment to the creditor has unjustifiably refused to accept the
third person; or same or is not in a position to accept it due to
c. If by the creditor’s conduct, the debtor has certain reasons or circumstances.
been led to believe that the third person
had authority to receive the payment
(Estoppel). (Art. 1241, NCC) DATION IN PAYMENT (DACION EN PAGO)
3. Payment in good faith to the possessor of The delivery and transmission of ownership of a
credit. (Art. 1242, NCC) thing by the debtor to the creditor as an accepted
equivalent of the performance of the obligation. The
NOTE: Payment made to the creditor by the debtor property given may consist not only of a thing but
after the latter has been judicially ordered to retain also of a real right. (Tolentino, 2002) (2009 BAR)
the debt shall not be valid. (Art. 1243, NCC)
Dacion en pago is the delivery and transmission of
ownership of a thing by the debtor to the creditor as
SPECIAL FORMS OF PAYMENT an accepted equivalent of the performance of an
existing obligation. It is a special mode of payment
Dation in Payment where the debtor offers another thing to the
creditor who accepts it as equivalent to the payment
Alienation by the debtor of a particular property of an outstanding debt. (Rockville Excel Intl. Exim
in favor of his creditor, with the latter’s consent, Corp. v. Sps. Culla, G.R. No. 155716, 12 Oct. 2009)
for the satisfaction of the former’s money
obligation to the latter, with the effect of For dacion en pago to exist, the following elements
extinguishing the said money obligation. must concur:
a. existence of a money obligation;
Application of Payment b. the alienation to the creditor of a property by
the debtor with the consent of the former;
and
Designation of the particular debt being paid by c. satisfaction of the money obligation of the
the debtor who has two or more debts or debtor. (Ibid.)
obligations of the same kind in favor of the same
creditor to whom the payment is made. Q: Cebu Asiancars Inc., with the conformity of
the lessor, used the leased premises as collateral
Payment by Cession to secure payment of a loan which Asiancars
may obtain from any bank, provided that the
Debtor cedes his property to his creditors so the proceeds of the loan shall be used solely for the
latter may sell the same and the proceeds realized construction of a building which, upon the
applied to the debts of the debtor. termination of the lease or the voluntary
surrender of the leased premises before the

2022 GOLDEN NOTES
expiration of the contract, shall automatically of Agreement where they agreed that some
become the property of the lessor. Meeting parcels of the land mortgaged would be released
financial difficulties and incurring an and sold. The proceeds amounting to
outstanding balance on the loan, Asiancars P15,000,000.00 were deposited with
conveyed ownership of the building on the Metrobank. Elite Union and Metrobank entered
leased premises to MBTC, by way of "dacion en into a Loan Sale and Purchase Agreement where
pago." Is the dacion en pago by Asiancars in the latter sold G & P’s loan account to Elite
favor of MBTC valid? Union. Metrobank claims that it is still entitled
to the P15,000,000.00 proceeds despite the sale
A: YES. MBTC was a purchaser in good faith. MBTC of G & P’s loan account to Elite Union. Is
had no knowledge of the stipulation in the lease Metrobank entitled to the P15,000,000.00
contract. Although the same lease was registered deposit?
and duly annotated, MBTC was charged with
constructive knowledge only of the fact of the lease A: NO. Through the assignment of credit, the new
of the land and not of the specific provision creditor is entitled to the rights and remedies
stipulating transfer of ownership of the building to available to the previous creditor. Moreover, under
the Jaymes upon termination of the lease. While the Article 1627 of the Civil Code, "the assignment of a
alienation was in violation of the stipulation in the credit includes all the accessory rights, such as a
lease contract between the Jaymes and Asiancars, guaranty, mortgage, pledge, or preference." The
MBTC’s own rights could not be prejudiced by Loan Sale and Purchase Agreement entitled Elite
Asiancars’ actions unknown to MBTC. Thus, the Union to all the rights and interests that petitioner
transfer of the building in favor of MBTC was valid had as a creditor of respondent G & P, including the
and binding. (Jayme v. CA, G.R. No. 128669, 04 Oct. securities of the loan account. What was sold to Elite
2002) Union under the Loan Sale and Purchase Agreement
was respondent G & P's total loan obligation
Assignment of Credit inclusive of the remaining securities and proceeds
from the sale of some of the securities as stated in
An agreement by virtue of which the owner of a the first MOA. (MBTC v. G & P Builders, Incorporated,
credit, known as the assignor, by a legal cause, such G.R. No. 189509, 23 Nov. 2015)
as sale, dation in payment, exchange or donation,
and without the consent of the debtor, transfers his FORM OF PAYMENT
credit and accessory rights to another, known as the
assignee. The assignee acquires the power to enforce 1. Payment in cash – all monetary obligations
it to the same extent as the assignor could enforce it shall be settled in Philippine currency.
against the debtor. It may be in the form of a sale, However, the parties may agree that the
but at times it may constitute a dation in payment, obligation be settled in another currency at the
such as when a debtor, in order to obtain a release time of payment. (Sec. 1, R.A. No. 8183)
from his debt, assigns to his creditor a credit he has
against a third person. As a dation in payment, the 2. Payment in check or other negotiable
assignment of credit operates as a mode of instrument – not considered payment, they are
extinguishing the obligation; the delivery and not considered legal tender and may be refused
transmission of ownership of a thing (in this case, by the creditor except when:
the credit due from a third person) by the debtor to a. the document has been encashed; or
the creditor is accepted as the equivalent of the b. it has been impaired through the fault of the
performance of the obligation. creditor. (Art. 1249, NCC)
Q: G & P Builders obtained a loan from

Metrobank and mortgaged parcels of land as
collateral. The parties executed a Memorandum

Civil Law
Legal Tender; Payment in Cash (2008 BAR) fair to preserve the real value of the foreign
exchange-incurred obligation to the date of its
Legal tender means such currency which in a given payment. (C.F. Sharp & Cp., Inc. v. Northwest Airlines,
jurisdiction can be used for the payment of debts, Inc., G.R. No. 133498, 18 Apr. 2002).
public and private, and which cannot be refused by
the creditor. (Tolentino, 2002) When Payment by a Negotiable Instrument
produces effect of payment (2008 BAR)
The legal tender covers all notes and coins issued by
the Bangko Sentral ng Pilipinas and guaranteed by (1) Only when it is encashed, or
the Republic of the Philippines. The amount of coins (2) when through the fault of the creditor, they have
that may be accepted as legal tender are: been impaired. [Art. 1249(2), NCC]
1. One-Peso, Five-Pesos, 10-Pesos coins in amount
not exceeding P1,000.00 A check does not constitute as a legal tender, thus a
2. 25 centavos or less in an amount not exceeding creditor may validly refuse it. However, this does
P100. 00. (BSP Circular No. 537, Series of 2006, not prevent a creditor from accepting a check as
18 July 2006) payment – the creditor has the option and the
discretion of refusing or accepting it. (Far East Bank
Q: Northwest Airlines, through its Japan Branch, & Trust Company v. Diaz Realty, Inc., G.R. No. 138588,
entered into an International Passenger Sales 23 Aug. 2001)
Agency Agreement with CF Sharp, authorizing
the latter to sell its air transport tickets. CF NOTE: While it is true that the delivery of a check
Sharp failed to remit the proceeds of the ticket produces the effect of payment only when it is
sales, thus, Northwest Airlines filed a collection cashed, pursuant to Art. 1249 of the Civil Code, the
suit before the Tokyo District Court which rule is otherwise if the debtor is prejudiced by the
rendered judgment ordering CF Sharp to pay creditor's unreasonable delay in presentment. The
83,158,195 Yen and damages for the delay at the acceptance of a check implies an undertaking of due
rate of 6% per annum. Unable to execute the diligence in presenting it for payment, and if he from
decision in Japan, Northwest Airlines filed a case whom it is received sustains loss by want of such
to enforce said foreign judgment with the RTC of diligence, it will be held to operate as actual
Manila. What is the rate of exchange that should payment of the debt or obligation for which it was
be applied for the payment of the amount? given. It has, likewise, been held that if no
presentment is made at all, the drawer cannot be
A: The repeal of R.A. No. 529 by R.A. No. 8183 has held liable irrespective of loss or injury unless
the effect of removing the prohibition on the presentment is otherwise excused. This is in
stipulation of currency other than Philippine harmony with Article 1249 of the Civil Code under
currency, such that obligations or transactions may which payment by way of check or other negotiable
now be paid in the currency agreed upon by the instrument is conditioned on its being cashed,
parties. Just like R.A. No. 529, however, the new law except when through the fault of the creditor, the
does not provide for the applicable rate of exchange instrument is impaired. The payee of a check would
for the conversion of foreign currency-incurred be a creditor under this provision and if its no-
obligations in their peso equivalent. It follows, payment is caused by his negligence, payment will
therefore, that the jurisprudence established in R.A. be deemed effected and the obligation for which the
No. 529 regarding the rate of conversion remains check was given as conditional payment will be
applicable. Thus, in Asia World Recruitment, Inc. v. discharged. (Evangelista v. Screenex, Inc., G.R. No.
NLRC (G.R. No. 113363, 24 Aug. 1999), the SC, 211564, 20 Nov. 2017)
applying R.A. No. 8183, sustained the ruling of the
NLRC that obligations in foreign currency may be Q: Diaz & Company obtained a loan from Pacific
discharged in Philippine currency based on the Banking Corp which was secured by a real estate
prevailing rate at the time of payment. It is just and mortgage. ABC rented an office space in the

2022 GOLDEN NOTES
building constructed on the properties covered manifestly beyond the contemplation of the parties
by the mortgage contract. The parties then at the time of the establishment of the obligation.
agreed that the monthly rentals shall be paid (Tolentino, 2002)
directly to the mortgagee for the lessor's
account. Thereafter, FEBTC purchased the credit In case an extraordinary inflation or deflation of the
of Diaz & Company in favor of PaBC, but it was currency stipulated should supervene, the value of
only after two years that Diaz was informed the currency at the time of the establishment of the
about it. Diaz asked the FEBTC to make an obligation shall be the basis of payment unless there
accounting of the monthly rental payments is an agreement to the contrary. (Art. 1250, NCC)
made by Allied Bank. Diaz tendered to FEBTC The doctrine of unforeseen risks can be applied
the amount of P1, 450, 000. 00 through an when the currency is devaluated in terms beyond
Interbank check, in order to prevent the what could have been reasonably foreseen by the
imposition of additional interests, penalties and parties, and the effects of the devaluation should not
surcharges on its loan but FEBTC did not accept be borne by the creditor alone. The revaluation of
it as payment, instead, Diaz was asked to deposit the credit in such cases must be made according to
the amount with the FEBTC’s Davao City Branch the principles of good faith and in view of the
Office. Was there a valid tender of payment? circumstances of each particular case, recognizing
the real value of the credit as in consonance with the
A: YES, there was a valid tender of payment. intent of the parties.
Jurisprudence holds that, generally, a check does
not constitute legal tender and that a creditor may NOTE: Requisites for application of Art. 1250, NCC:
validly refuse it. It must be emphasized, however, 1. That there was an official declaration of extra-
that this dictum does not prevent a creditor from ordinary inflation or deflation from the BSP;
accepting a check as payment. In other words, the 2. That the obligation was contractual in nature;
creditor has the option and the discretion of refusing and
or accepting it. (FEBTC v. Diaz Realty Inc., G.R. No. 3. That the parties expressly agreed to consider
138588, 23 Aug. 2001) the effects of the extraordinary inflation or
deflation. (Rabuya, 2017)
Burden of proving payment in an action for sum
of money Place of Payment
In civil cases, the one who pleads payment has the GR: Payment must be made in the place designated
burden of proving payment. The burden of proving in the obligation. (Art. 1251, NCC)
payment, thus, rests on the defendant once proof of
indebtedness is established. When the existence of XPN: If there is no express designation or
a debt is fully established, the burden of proving stipulation in the obligation:
that it has been extinguished by payment devolves 1. At the place where the thing might be at the time
upon the debtor who offers such defense to the the obligation was constituted – If the obligation
claim of the creditor. (Decena v. SPV-AMC, Inc., G.R. is to deliver a determinate thing;
No. 239418, 12 Oct. 2020) 2. At the domicile of the debtor – In any other case
(Art. 1251, NCC)
Extraordinary Inflation or Deflation (2001 BAR)
NOTE: Governs only unilateral obligations since
Extraordinary inflation or deflation exists when reciprocal obligations are governed by special rules.
there is a decrease or increase in the purchasing (Jurado, 2010)
power of the Philippine currency which is unusual
or beyond the common fluctuation in the value of Moreover, if the debtor changes his domicile in bad
said currency, and such decrease or increase could faith or after he has incurred in delay, the additional
not have been reasonably foreseen or was expenses shall be borne by him.

Civil Law
The foregoing are without prejudice, however, to Limitation upon right to apply payment
the venue under the Rules of Court.
If the debt produces interests, payment of the
APPLICATION OF PAYMENTS principal shall not be deemed to have been made
until the interest has been covered. (Art. 1253, NCC)
It is the designation of the debt to which the
payment must be applied when the debtor has Legal Application of Payment
several obligations of the same kind in favor of the
same creditor. (Art. 1252, NCC) If both the creditor and the debtor failed to exercise
the right of application of payment or legal
Requisites: application of payment will now be governed.
1. There is only one debtor and creditor; Rules on Legal Application of Payment
2. The debtor owes the creditor two or more
debts; The payment should be applied to the more onerous
3. Debts are of the same kind or identical nature; debts:
e.g., both debts are money obligations
obtained on different dates; 1. When a person is bound as principal in one
4. All debts are due and demandable, except: obligation and as surety in another, the former
a. When there is mutual agreement is more onerous.
between the parties (Tolentino, 2002); 2. When there are various debts, the oldest ones
b. The application is made by the party for are more burdensome.
whose benefit the term has been 3. Where one bears interest and the other does
constituted. (Art. 1252(1), NCC) not, even if the latter is the older obligation, the
5. The payment made is not sufficient to cover all former is considered more onerous.
obligations. Right of the debtor in the 4. Where there is an encumbrance, the debt with a
application of payments. guaranty is more onerous than that without
security.
GR: The law grants the debtor a preferential right to 5. With respect to indemnity for damages, the
choose the debt to which his payment is to be debt which is subject to the general rules on
applied. But the right of the debtor is not absolute; damages is less burdensome than that in which
he cannot impair the rights granted by law to the there is a penal clause.
creditor. (Tolentino, 2002) 6. The liquidated debt is more burdensome than
the unliquidated one.
XPN: Debtor’s failure to ascertain which debt his 7. An obligation in which the debtor is in default is
payment is to be applied. – The right of the debtor more onerous than one in which he is not.
to choose to which debt his payment will be applied (Tolentino, 2002)
against may be transferred to the creditor when he
fails to make the application, and subsequently, he NOTE: The payment shall be applied
accepts a receipt from the creditor evidencing the proportionately if it happens that the debt is of the
latter’s choice of application. Under this same nature and burden.
circumstance, the debtor cannot complain of the
application made by the creditor unless there be a Effect of Creditor’s Refusal
cause for invalidating such act.
If the debtor makes a proper application of
The right of the debtor to apply payment is merely payment, but the creditor refuses to accept it
directory in nature and must be promptly exercised, because he wants to apply it to another debt, such
lest, such right passes to the creditor. (Sps. Tan v. creditor will incur in delay. (Tolentino, 1991)
China Banking Corp., G.R. No. 200299, 17 Aug. 2016)

2022 GOLDEN NOTES
PAYMENT BY CESSION Extent of the Extinguishment
Cession Payment extinguishes

obligation to the extent Merely releases debtor
Assignment or cession is the abandonment of the of the value of the thing for net proceeds of
universality of the property of the debtor for the delivered as agreed things ceded or
benefit of his creditors in order that such property upon, proved, or assigned, unless there
may be applied to the payment of the credits. implied from the is contrary intention.
conduct of the creditor.
The initiative comes from the debtor, but it must be
Ownership
accepted by the creditors in order to become
effective. A voluntary assignment cannot be Ownership is
imposed upon a creditor who is not willing to accept Ownership is not
transferred to creditor
it. transferred.
upon delivery.
If the offer is not accepted by the creditors, the same Novation

end may be attained by a proceeding in insolvency
instituted in accordance with Insolvency Law. An act of novation. Not an act of novation
Presumption of Insolvency
Circumstances Evidencing Payment by Cession
Does not presuppose Presupposes
Debtor abandons all of his property for the benefit insolvency. insolvency.
of his creditors in order that from the proceeds
thereof, the latter may obtain payment of credits.
Tender of Payment
Requisites:
The definitive act of offering to the creditor what is
due to him together with the demand that the
1. Plurality of debts;
creditor accepts the same. (Cinco v. CA, G.R. No.
2. Partial or relative insolvency of the debtor; and
151903, 09 Oct. 2009)
3. Acceptance of the cession by the creditors.
Tender of payment which is the manifestation by
Dation in Payment v. Payment in Cession
the debtor to the creditor of his desire to comply
with his obligation, with the offer of immediate
PAYMENT IN performance. (Del Carmen v. Sabordo, G.R. No.
DATION IN PAYMENT
CESSION 181723, 11 Aug. 2014)
Number of creditors
NOTE: When a creditor refuses the debtor’s tender
Maybe one creditor. Plurality of creditors. of payment, the law allows the consignation of the
thing or the sum due. (Cinco v. CA, G.R. No. 151903,
Financial condition of the debtor 09 Oct. 2009)
Debtor must be
Not necessarily in state There must be a fusion of intent, ability, and
partially or
of financial difficulty. capability to make good such offer, which must be
relatively insolvent.
absolute and must cover the amount due. (FEBTC v.
Object
Diaz Realty Inc., G.R. No. 138588, 23 Aug. 2001)
Thing delivered is
Universality or
considered as the Tender of payment is a preparatory act which
property of debtor is
equivalent of precedes consignation. The tender of payment by
what is ceded.
performance. itself does not cause the extinguishment of the

Civil Law
obligation unless completed by consignation. NOTE: Tender of payment must be valid and
(Tolentino, 1991) unconditional. (Sps. Rayos v. Reyes, G.R. No. 150913,
20 Feb. 2003)
Consignation
Substantial compliance is not enough. The giving of
Act of depositing the object of the obligation with notice to the persons interested in the performance
the court or competent authority after the creditor of the obligation is mandatory. Failure to notify the
has unjustifiably refused to accept the same or is not persons interested in the performance of the
in a position to accept it due to certain reasons or obligation will render the consignation void. (Dalton
circumstances. (Pineda, 2000) v. FGR Realty and Development Corp., G.R. No.
172577, 19 Jan. 2011)
NOTE: Once the consignation has been duly made,
the debtor may ask the judge to order the Consignation is necessarily judicial. Art. 1258 of the
cancellation of the obligation. (Art. 1260, NCC) CC specifically provides that consignation shall be
made by depositing the thing or things due at the
Requisites of Consignation disposal of judicial authority. The said provision
clearly precludes consignation in venues other than
1. There was a debt due; the courts. (Sps. Cacayorin v. Armed Forces and
2. The consignation of due obligation was made Police Mutual Benefit Association, Inc., G.R. No.
because of some legal cause provided under Art. 171298, 15 Apr. 2013)
1256, NCC;
3. The previous notice of the consignation had Consignation and tender of payment must not be
been given to the person interested in the encumbered by conditions. (Sps. Rayos v. Reyes, G.R.
performance of the obligation; No. 150913, 20 Feb. 2003)
4. The amount or thing due was placed at the
disposal of the court; and Q: Dorotea leased portions of her 2,000 sq. m. lot
5. That after the consignation had been made, the to Monet, Kathy, Celia and Ruth for five (5) years.
persons interested were notified thereof. Two (2) years before the expiration of the lease
contract, Dorotea sold the property to PM Realty
NOTE: Requirement No. 5 may be complied and Development Corp. The following month,
with by the service of summons upon the Dorotea and PM Realty stopped accepting rental
defendant creditor together with a copy of the payments from all the lessees because they
complaint. wanted to terminate the lease contracts. Due to
the refusal to accept rental payments, the
6. After this notice, the creditor may: lessees, Ruth, et al., filed a complaint for
(a) Accept the thing or amount deposited, consignation of the rentals before the RTC of
in which case the matter of the payment is Manila without notifying Dorotea. Is the
terminated; consignation valid? (2014 BAR)
(b) Refuse to accept the thing or amount, in
which case a trial must be held to A: NO, the consignation is not valid. Art. 1257 of the
determine the validity of consignation. NCC provides that in order for the consignation of
the thing due to release the obligor, it must first be
7. The creditor may neither accept nor refuse in announced to the persons interested in the
which case the debtor may ask the court to fulfillment of the obligation. Moreover, Art. 1258 of
cancel the obligation after showing that the the same code provides that consignation having
requisites of consignation have been complied been made, the interested parties shall also be
with. (Art. 1260, NCC) notified thereof. In this case, Dorotea, an interested
party, was not notified of the consignation. The

2022 GOLDEN NOTES
consignation is therefore not valid for non- Tender of Payment v. Consignation

compliance with Art. 1257, NCC.
TENDER OF
Effectivity of Consignation as Payment CONSIGNATION
PAYMENT
GR: Consignation shall produce effects of payment Nature

only if there is a valid tender of payment. Antecedent of Principal or
consignation or consummating act for the
XPNs: It shall, however, not produce the same effect preliminary act to extinguishment of the
in the following cases. When: (A-R-T-I-T) consignation. obligation.
1. Creditor is Absent or unknown, or doesn’t
Effect
appear at the place of payment;
2. Creditor Refuses to issue a receipt without just It does not by itself It extinguishes the
cause; extinguish the obligation when declared
3. Title of the obligation has been lost; obligation. valid.
4. Creditor is Incapacitated to receive payment at
Character
the time it is due; or
5. Two or more persons claim the right to collect. Judicial for it requires the
(Art. 1256, NCC) Extrajudicial. filing of a complaint in
court. (Pineda, 2000)
NOTE: The expenses of consignation, when
properly made, shall be charged against the Q: In an ejectment case, X refused to vacate the
creditor. (Art. 1259, NCC) land, alleging that Y had sold to him the
additional area, the payment of which would be
Right of the Debtor to Withdraw the Thing effected five years after the execution of a formal
Deposited deed of sale. However, the parties failed to
execute a deed of sale. During the pendency of
Before the creditor has accepted the consignation, the action, X deposited the payment for the
or before a judicial declaration that the consignation additional area with the court. Is there a valid
has been properly made, the debtor may withdraw consignation?
the thing or the sum deposited, allowing the
obligation to remain in force. (Art. 1260, NCC) A: NO, there is no valid consignation. Under Art.
1257 of the CC, consignation is proper only in cases
NOTE: If the consignation having been made, the where an existing obligation is due. In this case, the
creditor should authorize the debtor to withdraw contracting parties agreed that full payment of
the same, he shall lose every preference which he purchase price shall be due and payable within five
may have over the thing. The co-debtors, years from the execution of a formal deed of sale. At
guarantors, and sureties shall be released. (Art. the time Rodriguez deposited the amount in court,
1261, NCC) no formal deed of sale had yet been executed by the
parties, and, therefore, the five-year period during
which the purchase price should be paid had not
commenced. In short, the purchase price was not
yet due and payable. (Heirs of San Andres v.
Rodriguez, G.R. No. 135634, 31 May 2000)
Q: Under a pacto de retro sale, X sold to Y his lot

and the building erected thereon. They agreed
that half of the consideration shall be paid to the
bank to pay off the loan of X. After paying the

Civil Law
first installment, Y, instead of paying the loan to Effect of Loss of the Thing/Object of the
the bank, restructured it twice. Eventually, the Obligation
loan became due and demandable. Thus, X paid
the bank. On the same day, Y also went to the If the obligation is a:
bank and offered to pay the loan, but the bank 1. Determinate obligation to give:
refused to accept the payment. Y then filed an Requisites
action for consignation without notifying X. Is a. The thing lost must be determinate;
there a valid consignation by Y of the balance of b. The thing lost is without fault of the debtor;
the contract price? and
c. The thing is lost before the debtor has
A: NO, there is no valid consignation by Y of the incurred delay. (Art. 1262, NCC)
balance of the contract price. Y filed the petition for
consignation against the bank without notifying X, GR: The obligation is extinguished when the
resulting to the former’s failure to prove the object of the obligation is lost or destroyed. (Art.
payment of the balance of the purchase price and 1262, NCC)
consignation. In fact, even before the filing of the
consignation case, Y never notified X of their offer to XPNs: (L-A-S-C-D-P-C-G)
pay. (Sps. Benos v. Sps. Lawilao, G.R. No. 172259, 05 a. Law provides otherwise (Art. 1262, NCC);
Dec. 2006) b. Nature of the obligation requires the
Assumption of risk;
LOSS OF THE THING DUE c. Stipulation to the contrary;
d. Debtor Contributed to the loss;
Loss here is not contemplated in its strict and legal e. Loss the of the thing occurs after the debtor
meaning and is not limited to obligations to give, but incurred in Delay;
extends to those which are personal, embracing, f. When debtor Promised to deliver the same
therefore, all causes which may render impossible thing to two or more persons who do not
the performance of the prestation. In some Codes, have the same interest (Art. 1165, NCC);
this is designated as impossibility of performance. g. When the debt of a certain and determinate
thing proceeds from a Criminal offense
NOTE: The impossibility of performance must be (Art. 1268, NCC); and
subsequent to the execution of the contract in order h. When the obligation is Generic. (Art. 1263,
to extinguish the obligation; if the impossibility NCC)
already existed when the contract was made, the
result is not extinguishment but inefficacy of the 2. Generic obligation to give:
obligation under Articles 1348 and 1493 of the NCC. GR: The obligation is not extinguished because a
generic thing never perishes (genus nunquam
When a Thing is Considered Lost (D-O-P-E) perit). (Art. 1263, NCC)
1. It Disappears in such a way that its existence is XPNs:

unknown; a. In case of generic obligations whose object
2. It goes Out of commerce; is a particular class or group with specific
3. It Perishes; or or determinate qualities (delimited generic
4. Its Existence is unknown or if known, it cannot obligation);
be recovered. b. In case the generic thing has already been
segregated or set aside, in which case, it has
become specific.
3. An obligation to do – The obligation is

extinguished when the prestation becomes

2022 GOLDEN NOTES
legally or physically impossible without the Effect of Unforeseen Difficulty of Fulfilment

fault of the obligor. (Art. 1266, NCC)
When the service has become so difficult as to be
Types of Impossibility to Perform an Obligation manifestly beyond the contemplation of the parties,
To Do the obligor may also be released therefrom, in
whole or in part. (Art. 1267, NCC) The impossibility
1. Legal impossibility – Act stipulated to be of performance of an obligation to do shall release
performed is subsequently prohibited by law. the obligor.
2. Physical impossibility – Act stipulated could not Rebus sic stantibus

be physically performed by the obligor due to
reasons subsequent to the execution of the A principle in international law which means that an
contract. (Pineda, 2000) agreement is valid only if the same conditions
NOTE: The impossibility must be after the prevailing at the time of contracting continue to
constitution of the obligation. If it was before, exist at the time of performance. It is the basis of the
there is nothing to extinguish. principle of unforeseen difficulty of service. (Art.
1267, NCC)
Effect of Partial Loss
NOTE: Principle of unforeseen events applies when
1. Due to the fault or negligence of the debtor – the service has become so difficult as to be
Creditor has the right to demand the rescission manifestly beyond the contemplation of the parties,
of the obligation or to demand specific the obligor may also be released therefrom in whole
performance, plus damages, in either case. or in part. (Art. 1267, NCC) However, this principle
cannot be applied absolutely in contractual
2. Due to fortuitous event: relations since parties are presumed to have
a. Substantial loss – Obligation is assumed the risk of unfavorable developments.
extinguished. (Pineda, 2000) This rule also does not apply to
b. Unsubstantial loss – The debtor shall obligations for the payment of a sum of money when
deliver the thing promised in its impaired there is a change in the value of the stipulated
condition. (Art. 1264, NCC) currency. In such case, Art. 1250 will apply.
(Tolentino, 2002)
Effect when the Thing is Lost in the Possession of
the Debtor Requisites in order to Relieve the Debtor from
his Obligation, in whole or in part, based on
GR: It is presumed that loss is due to debtor’s fault. Unforeseen Difficulty of Fulfillment
The obligation is not extinguished.
1. Event or change in circumstance could not have
XPN: Presumption shall not apply in case loss is due been foreseen at the time of the execution of the
to earthquake, flood, storm, or other natural contract;
calamity. (Art. 1262, NCC) 2. Such event makes the performance extremely
difficult but not impossible;
XPN to the XPN: Debtor still liable even if loss 3. The event must not be due to the act of any of
is due to fortuitous event when: the parties; and
1. Debtor incurred in delay; or 4. The contract is for a future prestation.
2. Debtor promised to deliver the thing to two (Tolentino, 2002)
or more persons with different interests.
(Art. 1165 (3), NCC) Q: The parties entered into a lease agreement
whereby Santos Car Check Center agreed to
lease a property to Comglasco Corp. for five (5)

Civil Law
years. However, a year after, Comglasco advised Creditor’s Right of Action

Santos Car Check Center that it will be pre-
terminating the contract, to which the latter The obligation, having been extinguished by the loss
refused. Despite refusal, Comglasco vacated the of the thing, the creditor shall have all the rights of
property and stopped paying rentals. Santos Car action which the debtor may have against third
Check then filed a suit for breach of contract. persons by reason of the loss. (Art. 1269, NCC)
Comglasco relied on the provision of the lease
contract whereby pre-termination is allowed This refers not only the rights and actions which the
with cause in the first three years. Citing debtor may have against third persons, but also to
business reverses which it ascribed to the 1997 any indemnity which the debtor may have already
Asian Financial Crisis, Comglasco insists that received.
under Article 1267 of the NCC, it is exempted
from its obligation, because its business setback CONDONATION OR REMISSION OF DEBT (2000
is the “cause” contemplated in their lease. Is BAR)
Comglasco correct?
An act of liberality by virtue of which the creditor,
A: NO, Comglasco is not correct. The payment of without receiving any price or equivalent,
lease rentals does not involve a prestation “to do” renounces the enforcement of the obligation, as a
envisaged in Arts. 1266 and 1267. Art. 1267 speaks result of which it is extinguished in its entirety or in
of a prestation involving service which has been that part or aspect of the same to which the
rendered difficult by unforeseen subsequent events condonation or remission refers. (Pineda, 2000)
as to be manifestly beyond the contemplation of the
parties. Additionally, the Asian Currency Crisis Requisites of Condonation (G-A-I-D-E)
befell from July 1997 and for some time thereafter,
but Comglasco cannot be permitted to blame its 1. Must be Gratuitous;
difficulties on the said regional economic 2. Acceptance by the debtor;
phenomenon because it entered into the subject 3. Must not be Inofficious;
lease only on August 2000, more than three years 4. Formalities provided by law on Donations must
after it began, and by then Comglasco had known be complied with if condonation is express; and
what business risks it assumed when it opened a 5. An Existing demandable debt at the time the
new shop in Iloilo City. (Comglasco Corp. v. Santos remission is made.
Car Check Center Corp., G.R. No. 202989, 25 Mar.
2015) NOTE: Remission or condonation of a debt is in
reality a donation. (Jurado, 2010)
Debt which proceeds from a Criminal Offense
Form of Express Remission
GR: Debtor shall not be exempted from the payment
of his obligation regardless of the cause of the loss. It must comply with the forms of donation. (Art.
1270, NCC)
XPN: The thing having been offered by debtor to the
person who should receive it, the latter refused Form of Implied Remission
without justification to accept it. (Art. 1268, NCC)
The Code is silent with respect to the form of
NOTE: Offer referred in Art. 1268 is different from implied remission. There must be acceptance by the
consignation, the former refers to the obligor or debtor. (Jurado, 2010)
extinguishment of obligation through loss, while the
latter refers to the payment of the obligation.

2022 GOLDEN NOTES
Manner and Kinds of Remission: Effect of Remission in General
1. Total – Refers to the remission of the whole of It extinguishes the obligation in its entirety or in the
the obligation; part or aspect thereof to which the remission refers.
2. Partial – Remission of the part of the obligation: (Jurado, 2010)
to the amount of indebtedness or to an
accessory obligation only (such as pledge or Effect of the Remission of the Principal Debt
interest), or to some other aspect of the with respect to the Accessory Obligation and
obligation (such as solidary); vice versa
3. Inter vivos - Effective during the lifetime of the
creditor; The renunciation of the principal debt shall
4. Mortis causa - Effective upon death of the extinguish the accessory, but the waiver of the latter
creditor. In this case, the remission must be shall leave the former in force. (Art. 1273, NCC)
contained in a will or testament; (Tolentino,
1991) NOTE: It is presumed that the accessory obligation
5. Express – When it is made formally, it should be of pledge has been remitted when the thing pledged,
in accordance with the forms of ordinary after its delivery to the creditor, is found in the
donations with regard to acceptance, amount, possession of the debtor, or of a third person who
and revocation; and owns the thing. (Art. 1274, NCC)
6. Implied – When it can be inferred from the acts
of the parties. Effect of Inofficious Condonation
Effect of Delivery of Evidence of Credit to Debtor It may be totally revoked or reduced depending on
whether or not it is totally or only partly inofficious.
If the creditor voluntarily delivers the private (Pineda, 2000)
document evidencing the credit to the debtor, there
is a presumption that he renounces his right of The obligation remitted is considered inofficious if
action against the latter for the collection of the said it impairs the legitime of the compulsory heirs. (Art.
credit. (Jurado, 2010) 752, NCC)
NOTE: The presumption here is only prima facie
and may be overcome by contrary evidence. Acceptance by the Debtor
(Tolentino, 1991)
The acceptance by the debtor is required. There can
Requisites be no unilateral condonation. This is because
condonation or remission is an act of liberality. It is
1. The document evidencing the credit must have a donation of an existing credit, considered a
been delivered by the creditor to the debtor; property right, in favor of the debtor, it is required
2. The document must be a private document; and that the debtor gives his consent thereto by making
3. The delivery must be voluntary. (Art. 1271, NCC) an acceptance. If there is no acceptance, there is no
condonation. (Pineda, 2009)
NOTE: If the document is public, the presumption
does not arise considering the fact that the public CONFUSION OR MERGER OF RIGHTS
character of the document would always protect the
interest of the creditor. (Jurado, 2010) There is confusion when there is a meeting in one
person of the qualities of a creditor and debtor of
the same obligation. (4 Sanchez Roman 421)

Civil Law
Requisites of Confusion or Merger of Rights Effect of Confusion or Merger in One Debtor or

Creditor in a Solidary Obligation
1. It must take place between the creditor and the
principal debtor; (Art. 1276, NCC) If a solidary debtor had paid the entire obligation,
2. The very same obligation must be involved (for the obligation is totally extinguished without
if the debtor acquires rights from the creditor, prejudice to the rights of the solidary debtor who
but not the particular obligation in question, paid, to proceed against his solidary co-debtors for
there will be no merger); and the latter’s individual contribution or liability. (Art.
3. The confusion must be total or as regards with 1215, NCC)
the entire obligation.
Revocation of Confusion or Merger of Rights
Effect of Confusion or Merger of Rights
If the act which created the confusion is revoked for
The creditor and debtor become the same person some causes such as rescission of contracts or
involving the same obligation. Hence, the obligation nullity of the will or contract, the confusion or
is extinguished. (Art. 1275, NCC) merger is also revoked. The subject obligation is
revived in the same condition as it was before the
There can be partial confusion confusion.
It will be definite and complete up to the extent of NOTE: During such interregnum, the running of the
the concurrent amount or value, but the remaining period of prescription of the obligation is
obligation subsists. (Pineda, 2000) suspended. (Pineda, 2000)
Effect of Confusion or Merger in relation to the COMPENSATION

Guarantors
It is a mode of extinguishing obligations that take
1. Merger which takes place in the person of the place when two persons, in their own right, are
principal debtor or principal creditor benefits creditors and debtors of each other. (Art. 1278, NCC)
the guarantors. The contract of guaranty is
extinguished; It is the offsetting of the respective obligation of two
2. Confusion which takes place in the person of persons who stand as principal creditors and
any of the guarantors does not extinguish the debtors of each other, with the effect of
obligation. (Art. 1276, NCC) extinguishing their obligations to their concurrent
amount.
Effect of Confusion or Merger in One Debtor or
Creditor in a Joint Obligation Requisites of Compensation (1998, 2002, 2008,
2009 BAR)
GR: Joint obligation is not extinguished since
confusion is not definite and complete with regard For the compensation to be proper, it is necessary
to the entire obligation. A part of the obligation still that (Art. 1279, NCC):
remains outstanding.
1. Each one of the obligors must be bound
XPN: Obligation is extinguished with respect only to principally, and that he be at the same time a
the share corresponding to the debtor or creditor principal creditor of the other except guarantor
concerned. In effect, there is only partial who may set up compensation as regards what
extinguishment of the entire obligation. (Art. 1277, the creditor may owe the principal; (Arts. 1279-
NCC; Pineda, 2000) 1280, NCC)
2. Both debts consist in sum of money, or if the
things due are consumable, they be of the same

2022 GOLDEN NOTES
kind and also of the same quality if the latter has Entertainment, Inc. v. Team Image Entertainment,
been stated; Inc., And Felix S. Co, G.R. No. 191658, 13 Sept. 2017)
3. Both debts are due;
4. Both debts are liquidated and demandable; Q: X, who has a savings deposit with Y Bank in
5. Neither debt must be retained in a controversy the sum of P1,000,000.00, incurs a loan
commenced by third person and communicated obligation with the said bank in the sum of
in due time to the debtor (neither debt is P800,000.00 which has become due. When X
garnished); (Art. 1279, NCC) and tried to withdraw his deposit, Y Bank allowed
6. Compensation must not be prohibited by law. only P200,000.00 to be withdrawn, less service
(Art. 1290, NCC) charges, claiming that compensation has
extinguished its obligation under the savings
NOTE: When all the requisites mentioned in Art. account to the concurrent amount of X's debt. X
1279 of the CC are present, compensation takes contends that compensation is improper when
effect by operation of law, and extinguishes both one of the debts, as here, arises from a contract
debts to the concurrent amount, even though the of deposit. Assuming that the promissory note
creditors and debtors are not aware of the signed by X to evidence the loan does not
compensation. (Art. 1290, NCC) provide for compensation between said loan
and his savings deposit, who is correct? (1998
Effects of compensation BAR)
1. Both debts are extinguished; A: Y Bank is correct. All the requisites of Art. 1279,
2. Interests stop accruing on the extinguished Civil Code are present. Compensation shall take
obligation or the part extinguished; place when two persons are reciprocally creditor
3. The period of prescription stops with respect to and debtor of each other. In this connection, it has
the obligation or part extinguished; and been held that the relation existing between a
4. All accessory obligations of the principal depositor and a bank is that of creditor and debtor.
obligation which has been extinguished are also As a general rule, a bank has a right of set off of the
extinguished. (4 Salvat 353) deposits in its hands for the payment of any
indebtedness to it on the part of a depositor. (Gullas
Q: Team Image and Solar Team both breached v. PNB, G.R. No. L-43191, 13 Nov. 1935) Hence,
each other’s duties in their compromise compensation took place between the mutual
agreement. As a result, both owe each other obligations of X and Y Bank.
2,000,000. Is compensation proper?
Q: Foodmasters, Inc. (FI) had outstanding loan
A: YES. In order that compensation may be proper, obligations to both Union Bank’s predecessor-
it is necessary: (1) That each one of the obligors be in-interest, Bancom Development Corporation
bound principally, and that he be at the same time a (Bancom), and to DBP. On May 21, 1979, FI and
principal creditor of the other; (2) That both debts DBP, among others, entered into a Deed of
consist in a sum of money, or if the things due are Cession of Property in Payment of Debt (dacion
consumable, they be of the same kind, and also of en pago) whereby the former ceded in favor of
the same quality if the latter has been stated; (3) the latter certain properties (including a
That the two debts be due; (4) That they be processing plant in Marilao, Bulacan
liquidated and demandable; (5) That over neither of [processing plant]) in consideration of the
them there be any retention or controversy, following: (a) the full and complete satisfaction
commenced by third persons and communicated in of FI’s loan obligations to DBP; and (b) the direct
due time to the debtor. (Team Image Entertainment, assumption by DBP of FI’s obligations to Bancom
Inc., And Felix S. Co. v. Solar Team Entertainment, Inc., in the amount of ₱17,000,000.00 (assumed
G.R. No. 191652, 13 Sept. 2017; Solar Team obligations).

Civil Law
On the same day, DBP, as the new owner of the after the satisfaction of FW’s obligation to DBP." In
processing plant, leased back for 20 years the this regard, it cannot be concluded that the same
said property to FI (Lease Agreement) which debt had already been liquidated, and thereby
was, in turn, obliged to pay monthly rentals to be became demandable. (4th requisite of Article 1279 of
shared by DBP and Bancom. DBP also entered the Civil Code) Thus, CA correctly upheld the denial
into a separate agreement with Bancom of Union Bank’s motion to affirm legal
(Assumption Agreement) whereby the former: compensation. (Union Bank Of The Philippines v.
(a) confirmed its assumption of FI’s obligations Development Bank Of The Philippines, G.R. No.
to Bancom; and (b) undertook to remit up to 191555, 20 Jan. 2014)
30% of any and all rentals due from FI to
Bancom (subject rentals) which would serve as Parties may agree upon the Compensation of
payment of the assumed obligations, to be paid Debts NOT Due
in monthly installments.
Under Art. 1282, conventional or voluntary
Claiming that the subject rentals have not been compensation is not limited to obligations which
duly remitted despite its repeated demands, are not yet due. The parties may compensate by
Union Bank filed, on June 20, 1984, a collection agreement any obligations, in which the objective
case against DBP before the RTC, docketed as requisites provided for legal compensation are not
Civil Case No. 7648. In opposition, DBP present. It is necessary, however, that the parties
countered, among others, that the obligations it should have the capacity to dispose of credits which
assumed were payable only out of the rental they compensate, because the extinguishment of the
payments made by FI. Thus, since FI had yet to obligations in this case arise from their wills and not
pay the same, DBP’s obligation to Union Bank from law.
had not arisen. In addition, DBP sought to
implead FW as third party-defendant in its Rescissible or Voidable Debts already
capacity as FI’s assignee and, thus, should be compensated May be Rescinded or Annulled;
held liable to Union Bank. Was there legal Effects
compensation?
Although a rescissible or voidable debt can be
A: There was NO legal compensation. The rule on compensated before it is rescinded or annulled, the
legal compensation is stated in Article 1290 of the degree of rescission or annulment is retroactive,
Civil Code which provides that "when all the and the compensation must be considered as
requisites mentioned in Article 1279 are present, cancelled. And as rescission or annulment requires
compensation takes effect by operation of law, and mutual restitution, the party whose obligation is
extinguishes both debts to the concurrent amount, annulled or rescinded can thus recover to the extent
even though the creditors and debtors are not that his credit was extinguished by the
aware of the compensation." Therefore, compensation; because to that extent, he is deemed
compensation could not have taken place between to have made a payment.
these debts for the apparent reason that requisites
3 and 4 under Article 1279 of the Civil Code are not
present. Since DBP’s assumed obligations to Union
Bank for remittance of the lease payments are – in
the Court’s words – “contingent on the prior
payment thereof by FW to DBP," it cannot be said
that both debts are due. (Art. 1279(3), NCC)
Also, the Court observed that any deficiency that

DBP had to make up for the full satisfaction of the
assumed obligations, "cannot be determined until

2022 GOLDEN NOTES
Compensation v. Payment Compensation v. Confusion
COMPENSATION PAYMENT CONFUSION

COMPENSATION
Definition (Arts. 1275-1277,
(Arts. 1278-1279, NCC)
A mode of NCC)
extinguishing to the
One person where
concurrent amount, Two persons who are
Payment means not qualities of debtor
the obligations of those mutual debtors and
only delivery of money and creditor are
persons who in their creditors of each other.
but also performance merged.
own right are
of an obligation.
reciprocally debtors At least two obligations. One obligation.
and creditors of each
other.
Compensation v. Counterclaim or Set-off
As to the necessity of the capacity of the
parties
COUNTERCLAIM/
COMPENSATION
Debtor must have SET-OFF
Capacity of parties not
capacity to dispose of
necessary. Need not be pleaded;
the thing paid; and
Reason: Compensation and
Creditor must have
operates by law, not by
capacity to receive
the act of the parties. Takes place by
payment.
operation of law and
It must be pleaded to
extinguishes
As the susceptibility of partial extinguishment be effectual.
reciprocally the two
debts as soon as they
The performance must
There can be partial exist simultaneously,
be complete and
extinguishment of the to the amount of their
indivisible unless
obligation. respective sums.
waived by the creditor.
Generally, both debts Does not require that
As to the operation of extinguishing the must be liquidated. debts are liquidated.
obligation Judicial compensation
Legal compensation provided that the
Takes effect by the act Legal or conventional
takes place by requirements of Rules
of the parties and compensation
operation of law of Court, particularly
involves delivery or governed by the Civil
without simultaneous on Counterclaims
action. Code.
delivery. and/or Cross-claims
are observed.
As to the relationship of the parties
Debts or Obligations NOT subject to
It is not necessary that
Parties must be Compensation
the parties be mutually
mutually debtors and
debtors and creditors
creditors of each other. 1. Debts or obligations arising from contracts of
of each other.
depositum (Art. 1287, NCC);
2. Debts arising from obligations of a depositary;
3. Debts arising from obligations of a bailee in
commodatum;
4. Claims for support due by gratuitous title;

Civil Law
5. Obligations arising from criminal offenses (Art. NOTE: The person who has the civil liability arising
1288, NCC); and from crime is the only party who cannot set up the
6. Certain obligations in favor of government. compensation; but the offended party is entitled to
e.g., Taxes, fees, duties, and others of a similar in indemnity can set up his claim in compensation of
nature. his debt.
There can be no off-setting of taxes against the KINDS OF COMPENSATION

claims that the taxpayer may have against the
government. A person cannot refuse to pay a tax on 1. Legal compensation – by operation of law;
the ground that the government owes him an 2. Conventional – by agreement of the parties;
amount equal to or greater than the tax being 3. Judicial (set-off) – by judgment of the court
collected. Internal revenue taxes cannot be the when there is a counterclaim duly pleaded, and
subject of compensation because government and the compensation decreed; and
taxpayer are not mutually creditors and debtors of 4. Facultative – may be claimed or opposed by one
each other. Taxes are not in the nature of contracts of the parties.
between parties. (Francia v. IAC, G.R. No. L-67649, 28
Jun 1988) Q: De Leon sold and delivered to Silahis various
merchandise. Due to Silahis' default, De Leon
NOTE: Compensation takes place by operation of filed a complaint for the collection of said
law, even though the debts may be payable at accounts. Silahis asserts, as affirmative defense,
different places, but there shall be an indemnity for a debit memo as unrealized profit for a
expenses of exchange or transportation to the place supposed commission that Silahis should have
of payment. (Art. 1286, NCC) received from De Leon from the sale made
directly to DOLE Philippines, Inc. (DOLE). Was
If all the requisites under Art. 1279 are present, there legal compensation?
compensation takes place by operation of law.
The parties need not to notify each other that they A: NONE. Silahis admits the validity of his
intend to have thier debts compensated. (Sta. Maria, outstanding accounts with De Leon. But whether De
2017) Leon is liable to pay Silahis a commission on the
subject sale to DOLE is disputed. This circumstance
When Compensation NOT Proper prevents legal compensation from taking place.
(Silahis Marketing Corp. v. IAC, G. R. No. L-74027, 7
Under Art. 1287, compensation shall not be proper Dec. 1989)
when one of the debts arises from a depositum or
from the obligations of a depositary or of a bailee in NOTE: Compensation is not proper where the claim
commodatum. Neither can compensation be set up of the person asserting the set-off against the other
against a creditor who has a claim for support due is not clear or liquidated; compensation cannot
by gratuitous title without prejudice to the extend to unliquidated, disputed claim existing from
provisions of Art. 301 (2). breach of contract. (Ibid.)
NOTE: Only the depositary and the borrower in Q: Atty. Laquihon, in behalf of Pacweld, filed a
commodatum cannot set up compensation. The pleading addressed to MPCC titled “motion to
depositor can set up his deposit against the direct payment of attorney's fee”, invoking a
depositary, and the lender can set up his loan decision wherein MPCC was adjudged to pay
against a credit of the borrower. Pacweld the sum of P10, 000. 00 as attorney's
fees. MPCC filed an opposition stating that the
Neither shall there be compensation if one of the said amount is set-off by a like sum of P10, 000.
debts consists in civil liability arising from a penal 00, collectible in its favor from Pacweld also by
offense. way of attorney's fees which MPCC recovered

2022 GOLDEN NOTES
from the same CFI of Manila in another civil case. Facultative Compensation
Was there legal compensation?
One of the parties has a choice of claiming or
A: YES. MPCC and Pacweld were creditors and opposing the compensation but waives his
debtors of each other, their debts to each other objection thereto such as an obligation of such party
consisting in final and executory judgments of the is with a period for his benefit alone and he
CFI in two separate cases. The two obligations, renounces the period to make the obligation
therefore, respectively offset each other, become due.
compensation having taken effect by operation of
law and extinguished both debts to the concurrent Facultative compensation is unilateral and does not
amount of P10,000.00, pursuant to the provisions of require mutual agreement; voluntary or
Articles 1278, 1279 and 1290 of the Civil Code, since conventional compensation requires mutual
all the requisites provided in Art. 1279 of the said consent.
Code for automatic compensation "even though the
creditors and debtors are not aware of the Example: X owes Y P100,000 demandable and due
compensation" were present. (Mindanao Portland on April 1, 2012. Y owes X P100, 000 demandable
Cement Corp. v. CA, G.R. No. L-62169, 28 Feb. 1983) and due on or before April 15, 2012. Y, who was
given the benefit of the term, may claim
Conventional Compensation compensation on April 1, 2012. On the other hand,
X, who demands compensation, can be properly
It is one that takes place by agreement of the parties. opposed by Y because Y could not be made to pay
until April 15, 2012.
Effectivity of Conventional Compensation
NOTE: Compensation can be renounced either at
For compensation to become effective: the time an obligation is contracted or afterwards.
GR: The mutual debts must be both due. (Art. 1279, (Tolentino, 1991) It can be renounced expressly or
NCC) impliedly.
XPN: The parties may agree that their mutual debts Examples of Implied Renunciation:
be compensated even if the same are not yet due.
(Art. 1282, NCC) 1. By not setting it up in the litigation;
2. By consenting to the assignment of credit under
Judicial Compensation Art. 1285 of the NCC; or
3. By paying debt voluntarily, with knowledge
If one of the parties to a suit over an obligation has that it has been extinguished by compensation.
a claim for damages against the other, the former (Tolentino, 1991)
may set it off by proving his right to said damages
and the amount thereof. (Art. 1283, NCC) Q: Eduardo was granted a loan by XYZ Bank for
the purpose of improving a building which XYZ
NOTE : For judicial set-off to apply, the amount of leased from him. Eduardo executed the
damages or the claim sought to be compensated promissory note in favor of the bank, with his
must be duly proven. (Ong v. CA, G.R. No. 75819, 08 friend Ricardo as cosignatory. In the PN, they
Sept. 1989) both acknowledged that they are “individually
and collectively” liable and waived the need for
All the requisites mentioned in Art. 1279 must be prior demand. To secure the PN, Ricardo
present, except that at the time of filing the pleading, executed a real estate mortgage on his own
the claim need not be liquidated. The liquidation property. When Eduardo defaulted on the PN,
must be made in the proceedings. XYZ stopped payment of rentals on the building
on the ground that legal compensation had set

Civil Law
in. Since there was still a balance due on the PN valid foreclosure of real estate mortgage is
after applying the rentals, XYZ foreclosed the absent.
real estate mortgage over Ricardo’s property.
Ricardo opposed the foreclosure on the ground In the case of DBP v. Licuanan (G.R. No. 150097,
that he is only a co-signatory; that no demand 26 Feb. 2007), it was held that: “the issue of
was made upon him for payment, and assuming whether demand was made before the
he is liable, his liability should not go beyond foreclosure was effected is essential. If demand
half of the balance of the loan. Further, Ricardo was made and duly received by the respondents
said that when the bank invoked compensation and the latter still did not pay, then they were
between the rentals and the amount of the loan, already in default and foreclosure was proper.
it amounted to a new contract or novation, and However, if demand was not made, then the
had the effect of extinguishing the security since loans had not yet become due and demandable.
he did not give his consent (as owner of the This meant that the respondents had not
property under the real estate mortgage) defaulted in their payment and the foreclosure
thereto. was premature.”
a. Can XYZ Bank validly assert legal c. NO. Since none of the three kinds of novation is
compensation? applicable. There is no objective novation,
b. Can Ricardo’s property be foreclosed to whether express or implied, because there is no
pay the full balance of the loan? change in the object or principal conditions of
c. Does Ricardo have basis under the Civil the obligation. There is no substitution of
Code for claiming that the original debtors, either. Compensation is considered as
contract was novated? (2008 Bar) abbreviated or simplified payment and since
Ricardo bound himself solidarily with Eduardo,
A: any facultative compensation which occurs
a. NO. XYZ Bank may validly assert the partial does not result in partial legal subrogation.
compensation of both debts, but it should be Neither Eduardo nor Ricardo is a third person
facultative compensation because not all of the interested in the obligation under Art. 1302,
five requisites of legal compensation are NCC.
present. (Art. 1279, NCC) The payment of the
rentals by XYZ Bank is not yet due, but the Obligations subject to Facultative Compensation
principal obligation of loan where both
Eduardo and Ricardo are bound solidarily and When one of the debts arises from:
therefore any of them is bound principally to 1. Depositum;
pay the entire loan, is due and demandable 2. Obligations of a depositary;
without need of demand. XYZ Bank may declare 3. Obligations in commodatum;
its obligation to pay rentals as already due and 4. Support
demand payment from any of the two debtors.
GR: Claim of support due to gratuitous title.
b. NO, because there was no prior demand on XPN: Future support; and
Ricardo, depriving him of the right to
reasonably block the foreclosure by payment. 5. Civil liability from a crime.
The waiver of prior demand in the PN is against
public policy and violates the right to due NOTE: Art. 1288 of the NCC prohibits compensation
process. Without demand, there is no default if one of the debts consists in civil liability arising
and the foreclosure is null and void. Since the from a penal offense. However, the victim is allowed
mortgage, insofar as Ricardo is concerned is not to claim compensation.
violated, a requirement under Art. 3135 for a

2022 GOLDEN NOTES
If one or both Debts are Rescissible or voidable the place of the debtor or by subrogating a third
person to the rights of the creditor. (Pineda, 2000)
When one or both debts are rescissible or voidable,
they may be compensated against each other before Requisites of Novation (O-I-C-S-N)
they are judicially rescinded or avoided. (Art. 1284,
NCC) If the prescriptive period had already lapsed, 1. Valid Old obligation;
there is automatic compensation and the same will
not be disturbed anymore. Whereas, if the debt is XPNs:
rescinded or annulled, compensation shall be a. When the annulment may be claimed
restitution of what each party had received before only by the debtor and he consented to the
the rescission or annulment. novation; and
b. When ratification validates acts which
Effects of Assignment on Compensation of Debts are voidable.
1. After the compensation took place 2. Intent to extinguish or to modify the old
obligation;
GR: Ineffectual; useless act since there is
nothing more to assign. 3. Capacity and consent of all the parties to the
new obligation (except in case of expromission
XPN: When the assignment was made with the where the old debtor does not participate);
consent of the debtor.
4. Substantial difference of the old and new
NOTE: Such consent operates as a waiver of the obligation – on every point incompatible with
rights to compensation. each other (implied novation); and
XPN to the XPN: At the time he gave his
consent, he reserved his right to the 5. Valid New obligation.
compensation.
NOTE: Subsequent Void Obligation – A subsequent
2. Before compensation took place void obligation intended to novate an old one has no
a. With the consent of the debtor – legal effect and is considered as if the parties have
Compensation cannot be set up except not agreed upon it in the first place. The original
when the right to compensation is obligation shall subsist.
reserved.
b. With the knowledge but without consent of However, if in coming up with the new but void
the debtor – Compensation can be set up obligations, parties agree that it shall in any event
regarding debts previous to the cession or extinguish the old obligation, such old obligation
assignment but not subsequent ones. will not be revived. (Art. 1297, NCC)
c. Without the knowledge of debtor - Can set
up compensation as a defense for all debts Presumption of Novation
maturing prior to his knowledge of the
assignment. Novation is never presumed; it must be proven as a
fact either by:
NOVATION (1994, 2008 BAR)
1. Explicit declaration – If it be so declared in
It is the substitution or change of an obligation by unequivocal terms; or
another, resulting in its extinguishment or 2. Material incompatibility – That the old and the
modification, either by changing the object or new obligations be on every point incompatible
principal conditions, or by substituting another in with each other. (Art. 1292, NCC)

Civil Law
Express Novation b. Subjective or personal novation – Change of

the parties.
Takes place only when the intention to effect a
novation clearly results from the terms of the i. Substituting the person of the debtor
agreement or is shown by a full discharge of the (passive novation) – may be made
original debt. (Jurado, 2010) without the knowledge of or against
the will of the latter, but not without
Implied Novation the consent of the creditor.
Implied novation necessitates that the a. Delegacion – The substitution is

incompatibility between the old and new obligation initiated by the old debtor
be total on every point such that the old obligation himself (delegante) by
is completely superseded by the new one. The test convincing another person
of incompatibility is whether they can stand (delegado) to take his place and
together, each one having an independent to pay his obligation to the
existence; if they cannot and are irreconcilable, the creditor. (1996, 2001 Bar)
subsequent obligation would also extinguish the b. Expromission – The substitution
first. (Interport Resources Corp. v. Securities of the old debtor by a new debtor
Specialist, Inc., G.R. No. 154069, 06 June 2016) is upon the initiative or proposal
of a third person. (1996, 2001
NOTE: Novation is never presumed and the animus Bar)
novandi (intent to make a new obligation) whether c. Mixed – Combination of the
totally or partially, must appear by express objective and subjective
agreement of the parties or by their acts that are too novation.
clear and unequivocal to be mistaken.
ii. Subrogating a third person to the rights
Two-fold Functions of Novation of the creditor (active novation).
1. It extinguishes the old obligation; and NOTE: If it is the creditor who initiated
2. Creates a new obligation in lieu of the old one. the change of debtor, it is considered
expromission.
Kinds of Novation
2. As to form of their constitution
1. As to essence a. Express – The parties declared in
a. Objective or real novation – Changing the unequivocal terms that the obligation is
object or principal conditions of the extinguished by the new obligation.
obligation. (Art. 1291, NCC) b. Implied – No express declaration that the
old obligation is extinguished by the new
NOTE: In payment of sum of money, the one. The old and new obligations are
first obligation is not novated by a second incompatible on every material point. (Art.
obligation that: 1292, NCC)
1. Expressly recognizes the first 3. As to extent of their effects

obligation; a. Total or extinctive – Obligation is originally
2. Changes only the terms of payment; extinguished.
3. Adds other obligation not incompatible
with the old ones; or NOTE: Four requisites of extinctive
4. Merely supplements the first one. novation:

2022 GOLDEN NOTES
1. A previous valid obligation; Requisites of delegación

2. An agreement of all parties concerned
to a new contract; 1. Substitution is upon the initiative or proposal of
3. The extinguishment of the old the old debtor himself by proposing to the
obligation; and creditor the entry of another (third person) as
4. The birth of a valid new obligation. the new debtor who will replace him in
(Sps. Celones v. Metropolitan Bank and payment of the obligation;
Trust Co., G.R. No. 215691, 21 Nov. 2018) 2. The creditor accepts and the new debtor agrees
to the proposal of the old debtor; and
The extinctive novation would thus have 3. The old debtor is released from the obligation
the twin effects of first, extinguishing an with the consent of the creditor.
existing obligation and second, creating a
new one in its stead. Insolvency of the New Debtor in delegación
b. Partial or modificatory – Original obligation
is not extinguished but merely modified. GR: Insolvency of the new debtor (delegado), who
has been proposed by the original debtor
4. As to their origin (delegante) and accepted by the creditor
a. Legal novation – By operation of law. (Arts. (delegatario), shall not revive the action of the latter
1300 and 1302, NCC) against the original obligor. (Art. 1295, NCC)
b. Conventional novation – By agreement of
the parties. (Arts. 1300-1301, NCC) XPNs: Original debtor shall be held liable; if:
1. Insolvency was already existing and of public
5. As to presence of absence of condition knowledge or known to the debtor. (Art. 1295,
a. Pure – New obligation is not subject to a NCC); or
condition. 2. Insolvency of the new debtor was already
b. Conditional – When the creation of the new existing and known to the original debtor at the
obligation is subject to a condition. time of the delegation of the debt to the new
debtor. (Art. 1295, NCC)
Rights of the new debtor
NOTE: In both cases, the creditor must NOT know
1. With the debtor’s consent – Right of that the new debtor is insolvent; otherwise, the
reimbursement and subrogation. creditor would be considered estopped.
2. Without the consent of the old debtor or against
his will – Right to beneficial reimbursement. In both cases, the insolvency must have existed at
the time the old debtor delegated his debt. (Sta.
Novation by Substitution of Debtor Maria, 2017)
The consent of the creditor is mandatory both in Requisites of expromission

delegacion and expromission. (Art. 1293, NCC) It may
be expressed or implied from his acts but not from 1. Substitution is upon the initiative or proposal of
his mere acceptance of payment by a third party, for a third person who will step into the shoes of the
there is no true transfer of debt. debtor;
2. Creditor must give his consent to the proposal
NOTE: Creditor’s consent or acceptance of the of the third person; and
substitution of the old debtor by a new one may be 3. Old debtor must be released from the obligation
given at any time and in any form while the with the consent of the creditor.
agreement of the debtor subsists. (Babst v. CA, G.R.
No. 99398, 26 Jan. 2001)

Civil Law
Insolvency of the New Debtor in expromission (Arco Pulp and Paper Co., Inc. v. Lim, G.R. No. 206806,
25 June 2014)
If substitution is without the knowledge or against
the will of the debtor, the new debtor’s insolvency Q: DBP guaranteed Galleon’s foreign loans. In
or non-fulfillment of the obligation shall not give return, Galleon undertook to secure a first
rise to any liability on the part of the original debtor. mortgage on its five new vessels and two
(Art. 1294, NCC) second-hand vessels. Pursuant to Letter of
Instructions No. 1155, Galleon's stockholders
NOTE: If the old debtor gave his consent and the and NDC entered into a Memorandum of
new debtor could not fulfill the obligation, the old Agreement, where NDC and Galleon undertook
debtor should be liable for the payment of his to prepare and sign a share purchase agreement
original obligation. covering 100% of Galleon's equity for
P46,740,755.00. The share purchase agreement
Q: The Arco and Lim allegedly agreed that Arco also provided for the release of Sta. Ines, Cuenca,
would either pay Lim the value of the raw Tinio and Construction Development
materials or deliver to him their finished Corporation of the Philippines from the
products of equivalent value. Lim alleged that personal counter-guarantees they issued in
when he delivered the raw materials, Arco DBP's favor under the Deed of Undertaking. Sta.
issued a post-dated check as partial payment. Ines, Cuenca, Tinio, Cuenca Investment, and
When he deposited the check, however, it was Universal Holdings claimed that DBP can no
dishonored for being drawn against a closed longer go after them for any deficiency
account. Thereafter, Arco and Sy executed a judgment since NDC had been subrogated in
memorandum of agreement where Arco bound their place as borrowers, hence the Deed of
themselves to deliver their finished products to Undertaking between Sta. Ines, Cuenca
Megapack Container Corporation owned by Sy. Investment, Universal Holdings, Cuenca, and
According to the memorandum, the raw Tinio and DBP had been extinguished and
materials would be supplied by Lim. Was the novated." Did the Memorandum of Agreement
obligation between Arco and Lim novated novate the Deed of Undertaking executed
because of the agreement entered into by Arco between DBP and Sta. Ines, Cuenca Investment,
and Sy? Universal Holdings, Cuenca, and Tinio?
A: NO. Novation must be stated in clear and A: NO. It should be noted that in order to give
unequivocal terms to extinguish an obligation. It novation its legal effect, the law requires that the
cannot be presumed and may be implied only if the creditor should consent to the substitution of a new
old and new contracts are incompatible on every debtor. The general rule is that, “in the absence of an
point. In this case, Lim was not privy to the authority from the board of directors, no person, not
memorandum of agreement, thus, his conformity to even the officers of the corporation, can validly bind
the contract need not be secured. If the the corporation.” Aside from Ongpin being the
memorandum of agreement was intended to novate concurrent head of DBP and NDC at the time the
the original agreement between the parties, Lim Memorandum of Agreement was executed, there
must have first agreed to the substitution of Sy as was no proof presented that Ongpin was duly
his new debtor. The memorandum of agreement authorized by the DBP to give consent to the
must also state in clear and unequivocal terms that substitution by NDC as a co-guarantor of Galleon’s
it has replaced the original obligation of petitioner debts. Ongpin is not DBP, therefore, it is wrong to
Arco to Lim. Neither of these circumstances is assume that DBP impliedly gave its consent to the
present in this case. Since there was no novation, substitution simply by virtue of the personality of its
petitioner Arco’s obligation to respondent remains Governor.
valid and existing. Petitioner Arco Pulp and Paper,
therefore, must still pay respondent the full amount.

2022 GOLDEN NOTES
Novation is never presumed. The animus

Insolvency or Nonfulfillment of the obligation
novandi, whether partial or total, “must appear by
of the New debtor
express agreement of the parties, or by their acts
which are too clear and unequivocal to be With the debtor’s
mistaken.” There was no such animus novandi in consent - If the old
the case at bar between DBP and respondents, thus, Shall not revive the debtor gave his
respondents have not been discharged as Galleon’s action of the latter consent and the new
co-guarantors under the Deed of Undertaking and against the original debtor could not fulfill
they remain liable to DBP. (Development Bank of the obligor. the obligation, the old
Philippines v. Sta. Ines Melale Forest Products Corp., debtor should be liable
G.R. No. 193068, 01 Feb. 2017) Original debtor shall be for the payment of his
held liable. original obligation.
DELEGACION EXPROMISSION Insolvency of the new Without the consent of

Person who Initiated the Substitution debtor was already the old debtor or
existing and of public against his will – the
Old debtor Third person knowledge or known new debtor’s
to the original debtor insolvency or non-
Consent of the Creditor at the time of the fulfillment of the
delegation of the debt obligation shall not
It may be express or implied from his acts but not
to the new debtor. give rise to any liability
from his mere acceptance of payment by a third
on the part of the
party.
original debtor.
Consent of the Old debtor
Q: Metro Corporation obtained a loan from
With the consent of the With or without the Allied Bank covered by promissory notes,
old debtor (since he knowledge of the letters of credit, and trust receipts. By way of
initiated the debtor or against the security, Metro’s officers individually executed a
substitution). will of the old debtor. continuing guaranty in favor of Allied Bank.
Consent of Third Person Metro’s officers failed to settle their obligations
prompting Allied Bank to demand for payment
Consent is needed but to no avail. In order to settle their debts, they
it need not be given Consent is needed. offered the sale of Metro’s remaining assets
simultaneously. (machines and equipment) to the Bank which
Intention of Substitution the latter refused. Meanwhile, Starpeak
Corporation, acting through Allied Bank’s
Released from the obligation with the consent of counsel, entered into an agreement with Metro
the creditor. to buy the machines that were reduced to mere
Rights of the New debtor scraps of metals. Starpeak, unfortunately,
reneged on its obligation to Metro. In this
With the debtor’s regard, Metro asseverates that their failure to
consent – right of pay their outstanding loan obligations to Allied
reimbursement and Bank must be considered as force majeure, and
With the debtor’s subrogation. since Allied Bank was the party, through their
consent – right of counsel, that accepted the terms and conditions
reimbursement and Without the consent of of payment proposed by Starpeak, petitioners
subrogation. the old debtor or must therefore be deemed to have settled their
against his will – right
obligations to Allied Bank. Were the loan
to beneficial obligations under the promissory notes, letters
reimbursement.

Civil Law
of credit, and trust receipts have already been declaration, or by material incompatibility. There is
extinguished? no doubt that the upgrading was a novation of the
original agreement covering the first credit card
A: NO. Art. 1231 of the NCC states that obligations issued to Danilo Alto, basically since it was
are extinguished either by payment or performance, committed with the intent of cancelling and
the loss of the thing due, the condonation or replacing the said card. However, the novation did
remission of the debt, the confusion or merger of the not serve to release Jeanette from her surety
rights of creditor and debtor, compensation or obligations because in the surety undertaking she
novation. Starpeak and Metro’s agreement is a sale expressly waived discharge in case of change or
of assets contract, while Metro’s obligations to novation in the agreement governing the use of the
Allied Bank arose from various loan transactions. first credit card. (Molino v. Security Diners
Absent any showing that the terms and conditions International Corp., G.R. No. 136780, 16 Aug. 2001)
of the latter transactions have been, in any way,
modified or novated by the terms and conditions in Q: J.C. Construction bought steel bars from
the Starpeak-Metro agreement, said contracts Matibay Steel Industries (MSI) which is owned
should be treated separately and distinctly from by Buddy Batungbacal. J.C. failed to pay the
each other, such that the existence, performance or purchased materials worth P500,000 on due
breach of one would not depend on the existence, date. J.C. persuaded its client Amoroso with
performance or breach of the other. The whom it had receivables to pay its obligation to
performance or breach of the agreement bears no MSI. Amoroso agreed and paid MSI the amount
relation to the performance or breach of the subject of P50,000. After 2 other payments, Amoroso
loan transactions, they being separate and distinct stopped making further payments.
sources of obligations. Metro’s loan obligations to
Allied Bank remain subsisting for the basic reason Buddy filed a complaint for collection of the
that the former has not been able to prove that the balance of the obligation and damages against
same had already been paid or, in any way, J.C. J.C. denied any liability claiming that its
extinguished. (Metro Concast Steel Corporation, obligation was extinguished by reason of
Spouses Dychiao v. Allied Bank Corporation, G.R. No. novation which took place when MSI accepted
177921, 04 Dec. 2013) partial payments from Amoroso on its behalf.
Was the obligation of JC to MSI extinguished by
Q: SDIC issued to Danilo a Diners Card (credit novation? Why? (2014 Bar)
card) with Jeannete as his surety. Danilo used
this card and initially paid his obligations to A: NO. Under Art. 1292 of the NCC, in order that an
SDIC. Thereafter, Danilo wrote SDIC a letter obligation may be extinguished by another which
requesting it to upgrade his Regular Diners Club substitute the same, it is imperative that it be so
Card to a Diamond (Edition) one. As a declared in unequivocal terms, or that the old and
requirement of SDIC, Danilo secured from the new obligations be on every point be
Jeanette her approval and the latter obliged. incompatible with each other. Novation by
Danilo's request was granted and he was issued substitution of the debtor requires the consent of
a Diamond (Edition) Diners Club Card. Danilo the creditor as provided in Art. 1293. This
had incurred credit charges plus appropriate requirement is not present in this case.
interest and service charge. However, he
defaulted in the payment of this obligation. Was It was ruled that the mere fact that the creditor
the upgrading a novation of the original received payment from a third person does not
agreement governing the use of Danilo Alto's constitute novation and does not extinguish the
first credit card, as to extinguish that obligation? obligation of the original debtor. Thus, the
obligation of JC to MSI subsists. (Magdalena Estates
A: YES. Novation, as a mode of extinguishing Inc., v. Rodriguez, G.R. No. L-18411, 17 Dec. 1966)
obligations, may be done in two ways: by explicit

2022 GOLDEN NOTES
Effects of Novation ii. If suspensive and did not materialize –

No novation, old obligation is enforced.
1. Extinguishment of principal also (Art. 1181, NCC)
extinguishes the accessory, except:
a. Mortgagor, pledgor, surety or guarantor NOTE: Novation is not a mode of extinguishing
agrees to be bound by the new obligation criminal liability under the penal laws of the
(Tolentino, 1999); or country. (Degaños v. People, G.R. No. 162826, 14 Oct.
b. Stipulation made in favor of a third person 2013)
such as stipulation pour autrui (Art. 1311,
NCC) unless beneficiary consents to the Q: Will a contract of suretyship, which is
novation. Art. 1296, NCC) secondary to a principal obligation, be
extinguished when novation occurs?
2. If old obligation is:
a. Void – Novation is void. (Art. 1298, NCC) A: It depends. A surety is released from its
b. Voidable – Novation is valid provided that obligation when there is a material alteration of the
the annulment may be claimed only by the principal contract in connection with which the
debtor or when ratification validates acts. bond is given, such as a change which imposes a new
(Art. 1298, NCC) obligation on the promising party, or which takes
c. If the old obligation was subject to a away some obligation already imposed, or one
suspensive or resolutory condition, the which changes the legal effect of the original
new obligation shall be under the same contract and not merely its form. (Philippine Charter
condition, unless it is otherwise stipulated. Insurance Corporation v. Petroleum Distributors &
(Art. 1299, NCC) Service Corporation, G.R. No. 180898, 18 Apr. 2012)
3. If old obligation is conditional and the new Furthermore, a surety is not released by a change in
obligation is pure: the contract, which does not have the effect of
a. If resolutory and it occurred – Old obligation making its obligation more onerous. (Stronghold
already extinguished; no new obligation Insurance Company, Inc. v. Tokyu Construction
since nothing to novate. Company, G.R. Nos. 158820-21, 05 June 2009) As
b. If suspensive and it did not occur – It is as if such, a contract is only extinguished by novation
there is no obligation; thus, there is nothing when there is a material alteration in the principal
to novate. contract or if it has the effect of making the
obligation more onerous.
4. If the new obligation is:
a. Void – Original one shall subsist, unless the Subrogation
parties intended that the former relation
should be extinguished in any event. (Art. It is the active subjective novation characterized by
1297, NCC) the transfer to a third person of all rights
b. Voidable – Novation can take place, except appertaining to the creditor in the transaction
when such new obligation is annulled. In concerned including the right to proceed against the
such case, old obligation shall subsist. guarantors or possessors of mortgages and similar
c. Pure obligation – Conditions of old others subject to any applicable legal provision or
obligation deemed attached to the new, any stipulation agreed upon by the parties in
unless otherwise stipulated. (Tolentino, conventional subrogation.
1999)
d. Conditional Obligation: NOTE: Whoever pays on behalf of the debtor
i. If resolutory – Valid until the happening without the knowledge or against the will of the
of the condition. (NCC, Art. 1181) (Art. latter cannot compel the creditor to subrogate him
1181, NCC)

Civil Law
in his rights, such as those arising from a mortgage, 2. When a third person, not interested in the
guaranty, or penalty. (Art. 1237, NCC) obligation, pays with the express or tacit
approval of the debtor; or
Kinds of subrogation 3. When, even without the knowledge of the debtor,
a person interested in the fulfillment of the
1. As to their creation obligation pays, without prejudice to the effects
a. Legal subrogation – constituted by virtue of of confusion as to the latter’s share. (Art. 1302,
a law and does not proceed from an NCC)
agreement of the parties; (Arts. 1300 &
1302, NCC) Conventional Subrogation v. Assignment of
b. Voluntary or conventional subrogation – Credits
created by the parties by their voluntary
agreement; (Art. 1300, NCC)
CONVENTIONAL ASSIGNMENT OF
SUBROGATION CREDITS OR RIGHTS
NOTE: In legal subrogation, the law which
forms the basis of the subrogation must be Governing Law
clearly identified and invoked to enforce
the rights pertinent thereto. (Sta. Maria, Article 1300-1304 Article 1624-1627
2017)
Effect
c. Conventional subrogation of a third person The transfer of the
requires the consent of the original parties credit or right does not
and of the third person. (Art. 1301, NCC) It extinguishes the extinguish or modify
original obligation and the obligation. The
2. As to their extent creates a new one. transferee becomes the
a. Total subrogation – credits or rights of the new creditor for the
creditor in the transaction are totally same obligation.
transferred to the third person.
b. Partial subrogation – only part of the credit Need for Consent of Debtor
or rights of the creditor in the transaction
The consent of the
are transferred to the third person.
debtor is not
The consent of the necessary. Notification
NOTE: A creditor, to whom partial payment
debtor is necessary. is enough for the
has been made, may exercise his right for
(NCC, Art. 1301) validity of the
the remainder and he shall be preferred to
assignment. (NCC, Art.
the person who has been subrogated in his
1626)
place in virtue of the partial payment of the
same credit. (Art. 1304, NCC) Effectivity
Presumption of Legal Subrogation Begins from the Begins from

moment of notification of the
GR: Legal subrogation is not presumed. (Art. 1300, subrogation. debtor.
NCC)
Curability of Defect or Vice
XPN: In cases expressly mentioned in the law: The defect in the old
The defect in the credit
1. When a creditor pays another creditor who is obligation may be
or rights is not cured
preferred, even without the debtor’s cured such that the
by its mere assignment
knowledge; new obligation
to a third person.
becomes valid.

2022 GOLDEN NOTES
Defense
B. CONTRACTS
Debtor cannot set up a
The debtor can still set
defense against the
up the defense
new creditor which he
(available against the 1. GENERAL PROVISIONS
could have availed
old creditor) against
himself of against the
the new creditor. A contract is a meeting of minds between two
old creditor.
persons whereby one binds himself, with respect to
the other, to give something or to render some
NOTE: In the law of subrogation, active subjective
service. (Art. 1305, NCC)
novation is stricter than passive subjective
novation. In the latter, the consent of the old debtor
A contract is a meeting of the minds between two or
is not even required in expromission.
more parties, whereby one party binds himself with
respect to the other, or where both parties bind
themselves reciprocally, in favor of one another, to
fulfill a prestation to give, to do or not to do. (Pineda,
2009)
Meeting of the minds
Speaks of the intention of the parties in entering

into the contract respecting the subject matter and
the consideration thereof. As a rule therefore, a
contract is perfected by mere consent. It does not
require any special form, as a rule, and is binding
from the moment that the essential requisites are
present. Thus, the meeting of the minds between the
parties rise to the binding contract although they
have not affixed their signature to its written form.
(Rabuya, 2017)
Obligation v. Contract
While a contract is one of the sources of obligations,

an obligation is the legal tie or relations itself that
exists after a contract has been entered into. Hence,
there can be no contract if there is no obligation. But
an obligation may exist without a contract. (De Leon,
2010)
Stages in the Making of a Contract
Three stages in the making of a contract (C-P-C):
1. Conception or Generation – the first stage

where the parties begin their initial negotiation
and bargaining for the formation of the contract
ending at the moment of agreement of the
parties.

Civil Law
2. Perfection or Birth – Here, the parties had a i. Donations of real estate or of movables if
meeting of minds as to the object, cause or the value exceeds P5,000;
consideration and other terms and conditions of ii. Partnership to which immovables are
the contract. contributed;
iii. Contract of antichresis – requires that the
3. Consummation or fulfillment – This the last amount of principal and interest be
stage which consists in their performance or specified;
fulfillment by the parties of their obligations iv. Sale of piece of land or interest therein is
under the term of the perfected contract. through an agent;
v. Stipulation to charge interest;
CLASSIFICATION OF CONTRACTS vi. Stipulation limiting common carrier's
duty of extraordinary diligence to
1. According to their names: ordinary diligence;
vii. Chattel mortgage; or
a. Nominate – Those which have been given viii. Transfer of large cattle. (Sec. 22, R.A. No.
particular names or denominations by law. 1147; Art. 1581, NCC)
b. Innominate – Those which have not been
given any particular name and not 4. According to cause:
regulated by special provision of law.
a. Onerous – Those contracts providing for
2. According to their subject matter: exchange of valuable considerations such
as sale where the seller delivers the object
a. Contracts covering things – Such a contract of the contract and the buyer pays the
of sale, deposit, pledge. purchase price therefor.
b. Contracts covering services – Such as
contract of carriage whether common or b. Gratuitous – Those contracts where one of
simple ; agency, deposit the parties give something or renders
c. Contract covering transmissible rights or service to the other without receiving any
credits – Such as a contract of usufruct, equivalent or compensation such as pure
assignment of credits. donation and commodatum. This is also
called a lucrative contract because it
3. According to formation or perfection: provides a gain to the other party for free.
a. Consensual – Those perfected by mere c. Remunerative – Those contracts where one

consent such as sale and lease. (Art. 1305, party gives something or renders service to
NCC) (2005 BAR) another in consideration of a previous or
past deeds of the other.
b. Real – Those which cannot be perfected
without delivery such as commodatum, 5. According to the vinculum produced or
depositum, pledge and loan. according to the party or parties obligated:
c. Formal – Those which cannot be perfected a. Unilateral – Those where only one of the
without compliance with the special parties is bound to fulfill an obligation such
formalities required by law such as as:
donations and mortgages of real property. (i) commodatum where the borrower
They are also called solemn contracts must preserve the property and return
because they have to comply with the it to the lender at the appointed time ;
formalities or solemnities required by law, and
otherwise, they are void.

2022 GOLDEN NOTES
(ii) a promissory note where only the b. Accessory – Those contracts which cannot
promisor had signed it. exist alone but must depend upon another
contract such as mortgage, which depends
b. Bilateral – Those where both parties have upon the existence of a contract of loan. The
reciprocally bound themselves to fulfill principal contract is the loan while the
their obligations in favor of the other such mortgage is the accessory contract.
as sale. These are also known as
synallagmatic contracts. c. Preparatory – Those contracts entered into
for the creation of another contract such as
6. According to the certainty of fulfillment: a contract of agency, as agency does not
stop with the agency because the purpose
a. Commutative – Those contracts where the is to enter other contracts (Rabuya, 2017).
contracting parties contemplate the A partnership is also an example of
assured fulfillment of the terms and preparatory contract.
conditions of their agreement such as
contracts of mortgage and pledge. 9. According to the number of person/s actually
Generally, there is no risk to anticipate. participating in the contract:
b. Aleatory – Those contracts where the a. Ordinary – Those contracts where two (or
fulfillment is dependent upon chance or more) parties are represented by different
event which may not happen within the persons such as in sale. There is a seller and
period stipulated such as an insurance a buyer.
contract. Here, the loss contemplated may
or may not happen. If it happens, the b. Auto-Contracts – Where the two opposite
insurance company shall pay. parties are represented by the one and the
same person, who represents and acts in
7. According to completion of performance: different capacities-such as an agent
representing his principal who authorized
a. Executed – Those contracts which are him to borrow money, may himself lend the
already completed when formally entered money but not the other way around. The
into such as a sale of a thing which has agent, if authorized to lend money, cannot
already been delivered and paid for. There be the borrower without the consent of the
can be a partially executed contract when principal. (Art. 1890, NCC) Auto-contracts
there was already partial payment. are allowed, unless there is a specific law
prohibiting them.
b. Executory – Those contracts where the
prestation promised by the parties have yet 10. According to the dignity accorded by law:
to be fulfilled at some future date such as a
unilateral promise to sell which has been a. Institutional – Those contracts which are
accepted. The sale is not yet executed. given special dignity by law such as a
contract of marriage which is considered a
8. According to the dependence of one contract "social inviolable institution" and as such is
upon the other: considered as the foundation of the family
by the Constitution (Sec. 2, Art. XV, 1987
a. Principal – Those contracts which can exist Constitution) and the Family Code (Art. 1,
by themselves alone without depending FC).
upon another such as sale, lease, deposit,
commodatum. b. Ordinary – Those which are not
institutional such as sale, lease, deposit, etc.

Civil Law
11. According to the freedom of bargain: b. Implied – Those contracts where the
consent of the parties is not given expressly
a. Ordinary – Those where both parties are but is deducible from the conduct or acts of
place on equal footing in the negotiation the parties such as an implied agency when
and perfection of the contract. the principal fails to repudiate the acts of
the person acting in his behalf, knowing
b. Contracts of adhesion – Those where one of such a situation. (Art. 1869, NCC)
the parties had drafted the contract for the
other party to accept or not to accept such c. Presumed – Those contracts where the
as an insurance contract which is already consent was not given by the parties but is
printed. presumed or provided by the law itself, to
prevent unjust enrichment on the part of
12. According to the evidence needed to prove their one party to the prejudice of the other, such
existence: as quasi-contracts. (Pineda, 2009)
a. Contracts covered by Statute of Frauds – CHARACTERISTICS OF A CONTRACT

Those contracts which require a written
evidence, note or memorandum to prove The following are the characteristics of a
their existence. (Art. 1403(2), NCC) contract (A-M-O-R-C):
b. Contracts which can be proven by oral or 1. Autonomy; (Art. 1306, NCC)

parol evidence such a lease contract for a 2. Mutuality; (Art. 1308, NCC)
period of less than one year; a contract of 3. Obligatoriness; (Art. 1315, NCC)
sale where there was already full or partial 4. Relativity; (Art. 1311, NCC)
payment. 5. Consensuality. (Art. 1315, NCC)
13. According to the personality of the parties: Autonomy (or Freedom to Contract) (1996,
2004 BAR)
a. Personal – Those contracts where the
person of the party is essential to the The contracting parties may establish such
existence of the contract such as a contract stipulations, clauses, terms, and conditions as they
for life insurance where the contract shall may deem convenient, provided they are not
cease to exist upon the death of the insured. contrary to law, morals, good customs, public order,
or public policy. (Art. 1306, NCC)
b. Impersonal – Those contracts where the
person/s of a part or parties are not If the stipulation which violates the limitations set
essential to the continuity of the contract forth in the foregoing provision constitute the cause,
such as contract of lease. The death of the object, or purpose of the contract, such contract is
lessor or the lessee will not necessarily denied legal existence, and thus, shall be deemed
terminate the contract. The heirs may void from the beginning. (Casis, 2016)
continue the contract.
Contracting parties may establish any agreement,
14. According to the manner the consent is given: term, and condition they may deem advisable,
provided they are not contrary to law, morals, or
a. Express – Those contracts where the public policy. The right to enter lawful contracts
consent of the parties is given expressly in constitutes one of the liberties guaranteed by the
writing or verbally. Constitution. It cannot be struck down or arbitrarily
interfered with without violating the freedom to
enter into lawful contracts. (Gateway Electronics

2022 GOLDEN NOTES
Corporation v. Land Bank, G.R. No. 155217 and likewise invalid. (Sps. Limso v. PNB, G.R. No. 158622,
156393, 30 July 2003) 27 Jan. 2016)
It is necessary for the existence of a contract that XPN: The legality of contracts which is left to the
two distinct parties enter it (auto-contracts). The will of either of the parties may be upheld if there
existence of a contract is not determined by the was a finding of the presence of essential equality of
number of persons who intervene in it, but by the the parties to the contracts, thus preventing the
number of parties; not by the number of individual perpetration of injustice on the weaker party. (GF
wills but by the number of declarations of will. As Equity v Valenzona, G.R. No. 156841, 30 June 2005)
long as there are two distinct patrimonies, even if
they are represented by the same person, the The determination of the performance may be left
contract will be valid, e.g., an agent representing to a third party as long as:
both the buyer and the seller.
1. The decision has been made known to booth
NOTE: Courts cannot make for the parties better or contracting parties. (Art. 1309, NCC); and
more equitable agreements than they themselves 2. The determination is not evidently inequitable
have been satisfied to make, or rewrite contracts (Art. 1310, NCC). If it is inequitable, the court
because they operate harshly or inequitably as to shall decide what is equitable under the
one of the parties, or alter them for the benefit of circumstances.
one party and to the detriment of the other, or by
construction, relieve one of the parties from terms If a party alleges defects in the contract so that it
which he voluntarily consented to, or impose on him could be set aside, he must prove conclusively the
those which he did not. (Ka Kuen Chua v. Colorite existence of the defects because the validity and
Mktg. Corp., G.R. No. 193969-193970, 05 July 2017) fulfillment of the contract cannot be left to the will
of one of the contracting parties. (Pineda, 2009)
Mutuality
The binding effect of any agreement between
The contract must bind both contracting parties; its parties to a contract is premised on two settled
validity or compliance cannot be left to the will of principles: (1) that any obligation arising from
one of them. (Art. 1308, NCC) (2001, 2004, 2008 contract has the force of law between the parties;
BAR) and (2) that there must be mutuality between the
parties based on their essential equality. Any
Applicability to Contract Modifications: contract which appears to be heavily weighed in
favor of one of the parties so as to lead to an
Contract changes must be made with the consent of unconscionable result is void. Any stipulation
the contracting parties. The minds of all the parties regarding the validity or compliance of the contract
must meet as to the proposed modification, which is left solely to the will of one of the parties, is
especially when it affects and important aspect of likewise, invalid. (Sps. Limso v. PNB, G.R. No. 158622,
the agreement. Thus, any change must be mutually 27 Jan. 2016)
agreed upon; otherwise, it produces no binding NOTE: A contract containing a condition whose
effect. (Lara’s Gifts & Decors, Inc. v. Midtown efficacy or fulfillment is dependent solely on the
Industrial Sales, Inc., G.R. No. 225433, 28 Aug. 2019) uncontrolled will of one of the parties is void.
(Floirendo, Jr. v. Metropolitan Bank and Trust Co., G.R.
GR: Any contract which appears to be heavily No. 03 Sept. 2007)
weighed in favor of one of the parties so as to lead
to an unconscionable result is void. Any stipulation However, the termination of the contract does not
regarding the validity or compliance of the contract necessarily require mutuality, and it can even be
which is left solely to the will of one of the parties is validly left to one party by agreement or under a
resolutory facultative condition. (Vitug, 2006)

Civil Law
Obligatory Force Liability of heirs for the obligation contracted by

the decedent
Obligations arising from contracts have the force of
law between the contracting parties and should be The heirs are liable for the obligation contracted by
complied with in good faith. (Art. 1159, NCC) the decedent when the rights and obligations
arising from the contract are transmissible:
The contract must bind both contracting parties; its
validity or compliance cannot be left to the will of 1. By their nature;
one of them. (Art. 1308, NCC) 2. By stipulation; or
3. By provision of law. (Art. 1311, NCC)
Contracts are perfected by mere consent and from
that moment, the parties are bound not only to the Requisites in order that a Third Person may
fulfillment of what has been expressly stipulated Demand the Fulfillment of the Contract
but also to all consequences which according to
their nature may be keeping in good faith, usage, 1. The contracting parties must have clearly and
and law. (Art. 1315, NCC) deliberately conferred a favor upon the third
person;
Contracts shall be obligatory, in whatever form they 2. The third person’s interest or benefit in such
may have been entered into, provided all the fulfillment must not be merely incidental; and
essential requisites for validity are present. (Art. 3. Such third person communicated his
1356, NCC) acceptance to the obligor before the
stipulations in his favor are revoked.
Requisites for the Application of the Principle
Principle of Relativity or Principle of Limited
Before a contract may be considered obligatory, it is Effectivity of Contracts (2011 BAR)
necessary that:
GR: Contracts take effect only between the parties
1. It is perfected; or their assigns and heirs.
2. It is valid; and
3. It is enforceable. (Rabuya, 2017) Res inter alios acta aliis neque nocit prodest (a thing
done between others does not harm or benefit
Persons affected by a Contract others) – a contract can only obligate the parties
who entered into it, or their successors who
GR: assumed their personalities, and that,
1. Parties to the contract; and concomitantly, a contract can neither favor nor
2. Their corresponding successors. prejudice third persons. (Vitug, 2006)
NOTE: With respect to the heir, he shall not be liable

XPNs: beyond the value of the property he received from
1. Contracts containing a stipulation in favor of the decedent. (Art. 1311, NCC)
a third person (pour autrui); (Art. 1311, NCC)
2. Contracts containing real rights; (Art. 1312, Contracts take effect only between parties, their
NCC) assigns and heirs, EXCEPT in case where the rights
3. Contracts entered into to defraud creditors; and obligations arising from the contract are not
(Art. 1313, NCC) transmissible by their:
4. Contracts which have been violated at the (1) nature;
inducement of 3rd persons; (Art. 1314, NCC) (2) by stipulation; or
5. Quasi-contract of negotiorum gestio. (Art.
2150, NCC)

2022 GOLDEN NOTES
(3) by provision of law. The heir is not liable NOTE: The fairest test to determine
beyond the value of the property he received whether the interest of third person in a
from the decedent. (Art. 1311, Par. 1, NCC) contract is a stipulation pour autrui or
merely an incidental interest, is to rely
No one may contract in the name of another without upon the intention of the parties as
being authorized by the latter, or unless he has by disclosed by their contract. In applying this
law a right to represent him. (Art. 1317, NCC) test, it matters not whether the stipulation
is in the nature of a gift or whether there is
A contract entered in the name of another by one an obligation owing from the promise to
who has no authority or legal representation or who the third person. (Rabuya, 2017)
has acted beyond his powers, shall be
unenforceable, unless it is ratified expressly or 2. Accion directa – the creditor is authorized by
impliedly by the person on whose behalf it has been the statute to sue on his debtor’s contract
executed, before it is revoked by the other
contracting party. (Art. 1317, NCC) Examples:
a) Lessor against Sublessee (Arts. 1651, 1652,
Exceptions to Relativity NCC)
b) Laborers of Contractor against Owner of
Contracts may bind and affect strangers in the the work (Art. 1729, NCC)
following cases:
3. Third Person in Possession of Object of Contract
1. Stipulations Pour Autrui (Art. 1311, par. 2, (Art. 1312, NCC)
NCC) (stipulation in favor of a third
person) – benefits clearly and deliberately In contracts creating real rights, third persons
conferred by parties to a contract upon who come into possession of the object of the
third persons and which stipulation is contract are bound thereby, subject to the
merely part of a contract entered into by provisions of the Mortgage Law and the Land
the parties, neither of whom acted as Registration Laws.
agents of the third person and which favor
can be demanded by the third person if 4. Fraud of Creditors by Contracting Parties
duly accepted by him before it could be (Accion Pauliana) (Art. 1313, NCC)
revoked. Creditors are protected in cases of contracts
intended to defraud them. Creditors of the
Requisites of stipulation pour atrui: contracting parties may rescind contracts
a. Stipulation in favor of a third person; intended to defraud them although they did not
b. Stipulation is just part and not the intervene therein. (Reyes and Puno, 1964)
whole obligations of the contract;
c. Contracting parties must have clearly 5. Tortious Interference (Art. 1314, NCC) (1991,
and deliberately conferred a favor 1998 BAR)
upon a third person;
d. Favor or benefit conferred is not just Any third person who induces another to
an incidental benefit or interest; violate his contract shall be liable for damages
e. Third person must have to the other contracting party (even though the
communicated his acceptance; and third person is not bound by the stipulations).
f. Neither of the contracting parties
bears the legal representation or NOTE: This tort or wrongful conduct is known
authorization of the third person. as “interference with contractual relations.”
(OSPA v. CA, G.R. No. 156660, 24 Aug.
2009)

Civil Law
The word "induce" refers to situations where a between PCGG and Benedicto extinguish the
person causes another to choose one course of liability of Africa?
conduct by persuasion or intimidation.
A: NO. A stipulation pour autrui to be appreciated, it
Requisites: is indispensable that there be a stipulation
deliberately conferring a benefit or favor to a third
1. Existence of a valid contract person. The requisites of a stipulation pour autrui
2. The third person’s knowledge of the third are the following:
person of the existence of the contract
1. There is a stipulation in favor of a third person;
NOTE: Knowledge alone is not sufficient to 2. The stipulation is a part, not the whole, of the
make a third person liable for tortuous contract;
interference. To sustain a case for tortuous 3. The contracting parties clearly and deliberately
interference, the defendant must have acted conferred a favor to the third person — the
with malice or must have been driven by purely favor is not an incidental benefit;
impious reasons to injure the plaintiff. 4. The favor is unconditional and uncompensated;
5. The third person communicated his or her
NOTE: A third person can be held liable for tort acceptance of the favor before its revocation;
interference even if he does not know the and
identity of one of the contracting parties. The 6. The contracting parties do not represent, or are
interference with lawful contracts by strangers not authorized by, the third party.
thereto gives rise to an action for damage in
favor of the injured person. The law does not The Compromise Agreement executed between
require that the responsible person shall have Benedicto and PCGG does not contain any express
known the identity of the injured person. stipulation that confers the benefit of absolute
(Rabuya, 2017) immunity to Africa. Absent any express stipulation
in favor of a third person, the rule on relativity of
3. Interference by third person without legal contract must be applied i.e., that the contract only
justification or excuse. (Inocencio v. Hospicio De takes effect between the parties, their assigns or
San Jose, G.R. No. 201787, 25 Sept. 2013) heirs. (Republic v. Legal Heirs of Jose L. Africa, G.R.
No. 205722, 19 Aug. 2015)
Q: PCGG filed a complaint for reconveyance,
reversion, accounting, restitution, and damages Consensual
before the Sandigan Bayan against Ferdinand
and Imelda Marcos, and several of their cronies GR: Contracts are perfected by mere consent and
including Benedicto and Africa. PCGG, through from that moment, the parties are bound not only to
its Chairman, David M. Castro, entered into a the fulfillment of what has been expressly stipulated
Compromise Agreement with Benedicto where but also to all consequences which according to
the latter undertook to cede to the government their nature may be keeping in good faith, usage,
properties listed in the agreement and transfer and law. (Art. 1315, NCC)
to the government whatever rights he may have
in the assets of the corporations listed in the XPN: Real contracts, such as deposit, pledge and
same agreement. The SB dismissed the case commodatum, are not perfected until the delivery of
against Africa and ruled that since that act being the object of the obligation (Art. 1316, NCC). And
complained of constituted a quasi-delict or tort solemn contracts, which are perfected by
and the obligation of the defendants were compliance with the formalities required by law.
solidary therefore the obligation of Africa has
been extinguished by the Compromise
Agreement. Did the Compromise Agreement

2022 GOLDEN NOTES
2. ESSENTIAL REQUISITES (2005 BAR) grant the Fourth Notice to Proceed to another
party despite having granted the First Notice to
The following are the essential requisites of Proceed to Gammon. Thus, it notified MRT of its
contracts: (C-O-C) claims for reimbursement for costs, losses,
charges, damages, and expenses it had incurred
1. Consent; due to the rapid mobilization program in
2. Object certain or subject matter; and response to MRT's additional work instructions,
3. Cause or consideration. (Art 1318, NCC) suspension order, ongoing discussions, and the
consequences of its award to another party. In a
NOTE : These three requisites are, therefore, the letter dated July 15, 1998, MRT expressed its
essential elements of a consensual contract. In real disagreement with Gammon and its amenability
contracts, however, in addition to the above, the to discussing claims for reimbursement.
delivery of the object of the contract is required as a Whether or not there is a perfected contract
further requisite. Solemn or formal contracts between MRT and Gammon Philippines?
require compliance with the formalities provided
by law. A: YES, there is a perfected contract between MRT
and Gammon. MRT has already awarded the
Elements of a Contract contract to Gammon, and Gammon's acceptance of
the award was communicated to MRT before MRT
1. Natural Elements – Those which are rescinded the contract. The first Letter shows that
derived from the very nature of the Gammon fully consented to the contents and
contract, and as a consequence, ordinarily accepted the prestations of the First Notice to
accompany the same. Proceed. Gammon's acceptance is also manifested in
2. Essential Elements – Those without which its undertakings to mobilize resources, to prepare
there can be no contract. the Performance and Advance Payment Bonds, and
3. Accidental Elements – those which exist to procure materials necessary for the Project. All
only when the contracting parties that remained was the formality of returning the
expressly provide for them. (De Leon, 2010) contract documents and the Letter of Comfort,
which eventually was complied with by Gammon.
Q: MRT thru Parsons Inc., had invited Gammon Thus, there is already mutual consent on the object
Philippines to bid on the construction of the of the contract and its consideration, and an
Podium structure of the MRT 3 and it later won absolute acceptance of the offer. (Metro Rail Transit
the bidding. Then the 2 parties signed the Development Corporation v. Gammon Philippines
contract where it stated that there would be Inc., G.R. No. 200401, 17 Jan. 2018)
three notices that would be sent to Gammon for
the project to proceed. But later on Parsons CONSENT (2005 BAR)
informed Gammon that MRT was temporarily
rescinding the Third Notice to Proceed, noting Consent is manifested by the meeting of the offer
that it remained unaccepted by Gammon. On and the acceptance upon the thing and the cause
June 19, 1998, Gammon qualifiedly accepted the which are to constitute the contract. The offer must
Fourth Notice to Proceed. MRT treated be certain and the acceptance absolute. A qualified
Gammon's qualified acceptance as a new offer. acceptance constitutes a counter-offer. (Art. 1319,
In a Letter dated June 22, 1998, MRT rejected NCC)
Gammon's qualified acceptance and informed
Gammon that the contract would be awarded It is the concurrence of the wills of the contracting
instead to Filsystems if Gammon would not parties with respect to the object and cause, which
accept the Fourth Notice to Proceed within five shall constitute the contract. (De Leon, 2010)
(5) days. In a Letter dated July 8, 1998, Gammon
wrote MRT, acknowledging the latter's intent to

Civil Law
NOTE: Consent is essential to the existence of a manner than that specified by the offerer, unless the
contract; and where it is wanting, the contract is offerer acquiesces in the change. (Sta. Maria, 2017)
non-existent.
Elements of a Valid Offer and Acceptance
Requisites of Consent (L-M-C-R)
1. Definite – unequivocal;
1. Legal capacity of the contracting parties; 2. Intentional ; and
3. Complete – unconditional.
NOTE: The parties must have full civil capacity.
Hence, if any one party to a supposed contract NOTE: It must be so complete that its absolute
was already dead at the time of its execution, acceptance will form an agreement containing all
such contract is undoubtedly simulated and the terms necessary and intended by the parties.
false and, therefore, null and void by reason of (Sta. Maria, 2017)
its having been made after the death of the
party who appears as one of the contracting Requisites of an Effective Offer
parties therein. The death of a person
terminates contractual capacity. Vda. De Cabalu. 1. The one offering must have a serious intention
v. Sps. Tabu, G.R. No. 188417, 24 Sept. 2012) to become bound by his offer;
2. The terms of the offer must be reasonably
2. Manifestation of the conformity of the certain, definite and complete, so that the
contracting parties; parties and the court can ascertain the terms of
the offer; and
NOTE: Manifestation may be in writing bearing 3. The offer must be communicated by the offeror
the signature or marks of the parties, or it may to the offeree, resulting in the offeree’s
be implied from the conduct of the parties like knowledge of the offer. (Rabuya, 2017)
the acceptance of payment.
Q: The husband assumed sole administration of
3. Parties’ Conformity to the object, cause, terms the family’s mango plantation since his wife
and condition of the contract must be worked abroad. Subsequently, without his
intelligent, spontaneous and free from all vices wife’s knowledge, the husband entered into an
of consent; and antichretic transaction with a company, giving it
possession and management of the plantation
NOTE: Intelligence in consent is vitiated by with power to harvest and sell the fruits and to
error; freedom by violence, intimidation or apply the proceeds to the payment of a loan he
undue influence; and spontaneity by fraud. got. What is the standing of the contract? (2011
BAR)
4. The conformity must be Real, not simulated or
fictitious. A: It is considered a continuing offer by the parties;
perfected only upon the wife’s acceptance or the
Offer court’s authorization.
An offer is defined as an expression of willingness to NOTE: The person making the offer may fix the
contract on certain terms, made with the intention time, place and manner of acceptance, all of which
that it shall become binding as soon as it is accepted must be complied with. (Art. 1321, NCC)
by the person to whom it is addressed. (Rabuya,
2017)
NOTE: The offerer will not be bound by an

acceptance made by the acceptor in any other

2022 GOLDEN NOTES
Rules on Advertisements as Offers A conditional acceptance is a counter-offer which

extinguishes the offer. If not accepted by the offeror,
1. Business advertisements – not a definite offer, there is no contract.
but mere invitation to make an offer, unless it
appears otherwise. (Art. 1325, NCC) An acceptance may be express or implied. (Art.
1320, NCC)
NOTE: If the advertisement contains all the
necessary date need in a contract, it is a definite Mirror Image Rule in Law on Contracts
offer for the sale of the thing advertised.
Otherwise, it is not a definite offer, it is a mere This is a common law concept which states that in
invitation to make offer. order for there to be an acceptance, the offeree must
accept the terms as stated in the offer. Our courts
2. Advertisement for bidders – simply invitation to also adhere to the “mirror-image rule.” Thus, it has
make proposals and advertiser is not bound to been ruled that acceptance must be identical in all
accept the highest or lowest bidder, unless the respects with that of the offer so as to produce
contrary appears. (Art. 1326, NCC) consent of meeting of the minds. (Rabuya, 2017)
Grounds rendering the Offer Ineffective Period for Acceptance
1. Death, civil interdiction, insanity or insolvency 1. Stated fixed period in the offer:
of either party before acceptance is conveyed; a. Must be made within the period given by
(Art. 1323, NCC) the offeror.
2. Express or implied revocation of the offer by the
offeree; b. As to withdrawal of the offer:
3. Qualified or conditional acceptance of the offer,
which becomes counter-offer; GR: It can be made by communicating such
4. Subject matter becomes illegal or impossible withdrawal at any time before the
before acceptance is communicated; and acceptance is made
5. Period given to the offeree to signify his
acceptance has already lapsed. XPN: When the option is founded upon a
consideration (something paid or
Requisites of a Valid Acceptance promised, since partial payment of the
purchase price is considered as proof of the
1. Must be absolute; a qualified acceptance perfection of the contract (Art 1324, NCC)
constitutes a counter-offer; (Art. 1319, NCC)
2. No specified form but when the offeror specifies 2. No stated period:
a particular form, such must be complied with. a. Offer is made to a person present –
acceptance must be made immediately.
NOTE: Offer or acceptance, or both, expressed in b. Offer is made to a person absent –
electronic form, is valid, unless otherwise agreed by acceptance may be made within such time
the parties (electronic contracts). that, under normal circumstances, an
answer can be expected from him.
Acceptance not made in a manner as directed by the
offeror constitutes a counter-proposal which NOTE: If there was an acceptance already, the
extinguishes the offer and this may not be accepted offeror cannot just withdraw his offer unilaterally.
by the original offeror. (Pineda, 2009) He will be liable for damages. (Pineda, 2009)

Civil Law
Option Contract this requirement is not complied with, the result is

a defective contract. If only one of the contracting
It is a contract between the offeror and the offeree parties is incapacitated to give his consent, the
whereby the former grants the latter, for a valuable contract is voidable. If both of them are
consideration, the privilege to buy or not to buy incapacitated to give their consent, the contract is
certain objects at anytime within a specified period unenforceable. (Art. 1390(1) & 1403(3), NCC)
and for a fixed price.
Vices of Consent (M-I-V-U-F)
NOTE: The privilege granted to the offeree must be
supported by a consideration, the option is just 1. Mistake
considered an “offer to sell” to the offeree which is 2. Intimidation
not binding until accepted. (Pineda, 2009) 3. Violence
4. Undue influence
Earnest Money 5. Fraud
It is the payment made to a seller by the buyer to NOTE: A threat to enforce a just or legal claim
show his good faith. It will constitute as part of the through a competent authority does not amount to
purchase price, if the sale is finally consummated. If intimidation nor vitiate consent. (Art. 1335, NCC)
the sale is not concluded, the earnest money shall be
returned to the would-be-buyer unless there is a Mistake
contrary stipulation.
GR: Mistake as a vice of consent refers to mistake of
Persons Incapacitated to Give Consent (D-I-M) facts and not of law, thus rendering the contract
voidable. (Jurado, 2010)
1. Deaf-mutes who do not know how to read and
write (illiterates); XPN: When mistake of law involves mutual error as
2. Insane or demented persons, unless the to the legal effect of an agreement when the real
contract was entered into during a lucid purpose of the parties is frustrated. (Art. 1334, NCC)
interval;
3. Minors (Art. 1327, NCC) except: Mistake distinguished from Ignorance
a. Contracts for necessaries ; (Art. 1489,
NCC); Mistake is a false impression on something, while
b. Contracts by guardians or legal Ignorance is absence of any notion or impression
representatives and the court having about a particular thing.
jurisdiction had approved the same;
c. When there is active misrepresentation on Requisites
the part of the minor (minor is estopped);
d. Contracts of deposit with the Postal 1. Mistake must be with respect to the legal effect
Savings Bank provided that the minor is of the agreement;
over 7 years of age; 2. It must be mutual; and
e. Contract of an insurance for life, health and 3. Real purpose of the parties must have been
the accident on the minor’s life; frustrated.
f. Upon reaching age of majority, they ratify
the same. Kinds of Mistakes of Fact which Vitiate Consent
NOTE: Because the law incapacitates them to give 1. Mistake as to the nature of the contract;
their consent to a contract, the only way by which 2. Mistake as to object of the contract;
any one of those enumerated above can enter into a 3. Mistake as to the quality or principal conditions
contract is to act through a parent or guardian. If of the thing;

2022 GOLDEN NOTES
4. Mistake or error in quantity; NOTE: Burden rests upon the party who seeks to
5. Mistake as to identity of the person; and enforce the contract to show that the other party
6. Mistake as to the identity or qualifications of fully understood the contents of the document. If he
one of the parties will vitiate consent only when fails to discharge this burden, the presumption of
such identity or qualifications have been the mistake, if not, fraud, stands unrebutted and
principal cause of the contract. controlling. (Mayor v. Belen, G.R. No. 151035, 03 June
2004)
For mistake (as to the qualification of one of the
parties) to vitiate consent, two requisites must Mutual Error
concur:
a. The mistake must be either regarding the Mutual error as to the legal effect of an agreement
identity or with regard to the qualification of when the real purpose of the parties is frustrated,
one of the contracting parties; and may vitiate consent. (Art. 1334, NCC)
b. The identity or qualification must have been
the principal consideration for the celebration Intimidation
of the contract. (The Roman Catholic Church v.
Pante, G.R. No. 174118, 11 Apr. 2012) There is intimidation when one of the contracting
parties is compelled by a reasonable and well-
Q: Leonardo is the only legitimate child of the grounded fear of an imminent and grave evil upon
late spouses Tomasina and Balbino. She only his person or property, or upon the person or
finished Grade Three and did not understand property of his spouse, descendants or ascendants,
English. The Sebastians, on the other hand, are to give his consent. (Art. 1335(2), NCC)
illegitimate children. Leonardo filed an action to
declare the nullity of the extrajudicial Requisites of Intimidation (C-I-C-U)
settlement of the estate of her parents, which
she was made to sign without the contents 1. One of the parties is compelled to give his
thereof, which were in English, explained to her. Consent by a reasonable and well-grounded
She claims that her consent was vitiated because fear of an evil;
she was deceived into signing the extrajudicial 2. The evil must be Imminent and grave;
settlement. Is the extra-judicial settlement of 3. It must be Unjust; and
estate of Tomasina valid? 4. The evil must be the determining Cause for the
party upon whom it is employed in entering
A: NO. When one of the parties is unable to read, or into the contract. (Art. 1335, NCC)
if the contract is in a language not understood by
him, and mistake or fraud is alleged, the person NOTE: To determine the degree of the intimidation,
enforcing the contract must show that the terms the age, sex and condition of the person shall be
thereof have been fully explained to the former (Art. borne in mind. (Art. 1335, NCC)
1332). Leonardo was not in a position to give her
free, voluntary and spontaneous consent without A threat to enforce one’s claim through competent
having the document, which was in English, authority, if the claim is just or legal, does not vitiate
explained to her. Therefore, the consent of consent. (Sta. Maria, 2017)
Leonardo was invalidated by a substantial mistake
or error, rendering the agreement voidable. The Validity of a Contract if Consent is Reluctant
extrajudicial partition between the Sebastians and
Leonardo should be annulled and set aside on the A contract is valid even though one of the parties
ground of mistake. (Leonardo v. CA, G.R. No. 125485, entered into it against his wishes and desires or
13 Sept. 2004) even against his better judgment. Contracts are also
valid even though they are entered into by one of the
parties without hope of advantage or profit.

Civil Law
(Martinez v. HSBC Corp., G.R. No. L-5496, 19 Feb. NOTE: The enumeration is NOT exclusive. Moral
1910) dependence, indigence, mental weakness, tender
age or other handicap are some of the
Violence circumstances to consider undue influence.
There is violence when in order to wrest consent, Determination of Undue Influence

serious or irresistible force is employed. (Art. 1335,
NCC) The test to determine whether there is undue
influence which will invalidate a contract is to
Requisites of Violence determine whether or not the influence exerted has
so overpowered and subjugated the mind of the
1. Physical force employed must be serious or contracting party as to destroy his free agency,
irresistible; and making him express the will of another rather than
2. The determining cause for the party upon his own. (Jurado, 2011)
whom it is employed in entering into the
contract. Due Influence does NOT Vitiate Consent
A threat to enforce one’s claim through competent When influence consists in persuasive arguments or
authority, if the claim is just or legal, does not vitiate in appeals to the affections which are not prohibited
consent. (NCC, Art. 1335(4)) by law or morals, the consent is not vitiated at all.
(Pineda, 2009)
NOTE: Violence or intimidation shall annul the Influence obtained by persuasion or argument or by
obligation, although it may have been employed by appeals to the affections is not prohibited either by
a third person who did not take part in the contract. law or morals and is not obnoxious even in courts of
(Art. 1336, NCC) equity. Such may be termed “due influence.” (Bañez
v. CA, G.R. No. L-30351, 11 Sept. 1974)
The contracting party who is not the subject of the
violence or the intimidation may not even know that Reverential Fear
the other party has been coerced. (Sta. Maria, 2017)
The fear of displeasing persons to whom respect
Undue Influence and obedience are due does not vitiate consent.
There is undue influence when a person takes Fraud

improper advantage of his power over the will of
another, depriving the latter of a reasonable There is fraud when through the insidious words or
freedom of choice. (Art. 1337, NCC) machinations of one of the contracting parties, the
other is induced to enter a contract which, without
It must in some measure destroy the free agency of them, he would not have agreed to. (Art. 1338, NCC)
a party and interfere with the exercise of that
independent discretion. (Tolentino, 2002) NOTE: The term “insidious words” refers to a
deceitful scheme or plot with an evil design, or a
Circumstances to be Considered for the fraudulent purpose. (Pineda, 2000)
Existence of Undue Influence
Failure to disclose facts, when there is a duty to
1. Confidential, family, spiritual and other reveal them, as when the parties are bound by
relations between the parties; confidential relations, constitutes fraud. (Art. 1339,
2. Mental weakness; NCC)
3. Ignorance; and
4. Financial distress. (Art. 1337, NCC)

2022 GOLDEN NOTES
NOTE: There is fraud under the special and renewed, and that the formal renewal thereof
particular circumstances of the following: would be made upon the arrival of a certain
Tanya Madrigal, based on the letter to him given
1. When a legal or equitable duty is imposed upon by the lessor. When Samson occupied the
the dominant party to reveal certain facts premises, he was forced to vacate due to Santos’
material to the transaction; and failure to renew his lease. Samson filed an action
2. When there is a confidential relationship for damages against Santos for fraud and bad
between the parties. (Sta. Maria, 2017) faith, claiming that the misrepresentation
induced him to purchase the store and the
Requisites of Fraud to Vitiate Consent (in the leasehold right. Decide.
sense of Dolo Causante)
A: Santos was not neither guilty of fraud nor bad
1. It was applied or utilized by one contracting faith in claiming that there was implied renewal of
party upon the other; his contract of lease with his lessor. The letter given
2. It must be serious deception; by the lessor led Santos to believe and conclude that
3. It must have induced the victim to enter the his lease contract was impliedly renewed, and that
contract without which he would not have the formal renewal thereof would be made upon the
agreed to; arrival of Tanya Madrigal. Thus, from the start, it
4. It must have induced the victim to enter the was known to both parties that, insofar as the
contract, which he would not have agreed to, agreement regarding the transfer of Santos’
absent the employment of such fraud; and leasehold right to Samson was concerned, the object
5. It must have resulted in damage or injury. thereof relates to a future right. It is a conditional
contract, the efficacy of which depends upon an
Kinds of Fraud expectancy of the formal renewal of the lease
contract between Santos and lessor. The efficacy of
1. Fraud in the perfection of the contract: the contract between the parties was thus made
dependent upon the happening of this suspensive
a. Causal fraud (dolo causante) – It is condition. (Samson v. CA, G.R. No. 108245, 25 Nov.
employed by one party prior to or 1994)
simultaneous with the creation or
perfection of the contract to secure the Acts considered NOT Fraudulent
consent of the other.
1. Principle of Tolerated Fraud – the usual
b. Incidental fraud (dolo incidente) – It is exaggerations in trade and when the other
the fraud committed in the in the party had an opportunity to know the facts are
performance of an obligation, and its not in themselves fraudulent (Art. 1340, NCC);
existence merely results in breach of an
already existing contract, which entitles 2. Expert Opinion – a mere expression of an
the injured party to damages. opinion does not signify fraud, unless made by
an expert and the other party has relied on the
2. Fraud in the performance of an obligation. (Art. former’s special knowledge (Art. 1341, NCC);
1170, NCC)
3. Misrepresentation by a third person does not
Q: Santos’ lease contract was about to expire but vitiate consent, unless such misrepresentation
it was extended, thus, he continued to occupy has created substantial mistake and the same is
the leased premises beyond the extended term. mutual (Art. 1342, NCC);
Samson offered to buy Santos’ store and his right
to the lease. Santos stated that the lease contract
between him and the lessor was impliedly

Civil Law
4. Misrepresentation made in good faith is not Although there was no fraud that had been
fraudulent but may constitute error. (Art. 1343, undertaken to obtain petitioner's consent, there
NCC) was fraud in the performance of the contract. The
records showed that petitioner had been unjustly
NOTE: The contract just the same is voidable, not excluded from participating in the management of
because of the misrepresentation but because of the affairs of the corporation. This exclusion from
substantial error. In order that fraud may make a the management in the affairs of Sterling Shipping
contract voidable, it should be serious, and should Lines, Inc. constituted fraud incidental to the
not have been employed by both contracting performance of the obligation. (Alejandro Tankeh v.
parties. (Art 1344, NCC) DBP, et al., G.R. No. 171428, 11 Nov. 2013)
Q: Alejandro filed several Complaints against Simulation of Contract

respondents to have the promissory note he
executed in favor of Sterling Shipping Lines, Inc. It is the declaration of a fictitious will, deliberately
to be declared as null and void and that he be made by agreement of the parties to produce, for the
absolved from any liability. According to him, purpose of deception, the appearance of a juridical
Ruperto exercised deceit and fraud in causing act which does not exist or is different from that
him to bind himself jointly and severally to pay which was executed. (Tolentino, 2002)
DBP the amount of the mortgage loan.
Additionally, when he was made director and Kinds of Simulation of Contract
stockholder of SSL, he was invited to attend the
board meeting only once and he was never 1. Absolute (simulados) – The contracting parties
compensated. Furthermore, none of the do not intend to be bound by the contract at all,
conditions he set were complied with. Can the thus the contract is void (Arts. 1345-1346, NCC).
promissory note be declared null and void on In absolute simulation, there is a colorable
the grounds of deceit and fraud? contract but it has no substance as the parties
have no intention to be bound by it. The main
A: NO. The promissory note Alejandro executed characteristic of an absolute simulation is that
cannot be declared null and void as only incidental the apparent contract is not desired or intended
fraud exists in this case. There was no dolo causante to produce legal effect or in any way alter the
or fraud used to obtain the petitioner's consent to juridical situation of the parties. As a result, a
enter the contract. Petitioner had the opportunity to simulated or fictitious contract is void, and the
become aware of the facts that attended the signing parties may recover from each other what they
of the promissory note. He even admitted that he may have given under the contract. (G. Holdings,
has a lawyer-son who the petitioner had hoped Inc. v. CEPALCO, G.R. No. 226213, 27 Sept. 2017)
would assist him in the administration of Sterling
Shipping Lines, Inc. The totality of the facts on NOTE: Absolutely simulated contracts lack the
record belies petitioner's claim that fraud was used element of true consent.
to obtain his consent to the contract given his
personal circumstances and the applicable law. 2. Relative (disimulados) – The contracting
However, in refusing to allow petitioner to parties conceal their true agreement (NCC, Art.
participate in the management of the business, 1345); (Art. 1345, NCC); and the parties are
respondent Ruperto V. Tankeh was liable for the bound by their real agreement when it does not
commission of incidental fraud. In Geraldez, this prejudice third persons or is not intended for
Court defined incidental fraud as "those which are any purpose contrary to law, morals, good
not serious in character and without which the customs, public order or public policy. (Art.
other party would still have entered into the 1346, NCC)
contract."

2022 GOLDEN NOTES
If the concealed contract is lawful, it is absolutely holders. For failure of the Javiers to pay the
enforceable, provided it has all the essential balance due under the two deeds of assignment,
requisites: consent, object, and cause. (Arts. 1345- Tiro filed an action against them. Are the deeds
1346, NCC) of assignment null and void for total absence of
consideration and non-fulfillment of the
As to third persons without notice, the apparent conditions?
contract is valid for purposes beneficial to them. As
to third persons with notice of the simulation, they A: NO. They are not null and void per se. The parties
acquire no better right to the simulated contract are to be bound by their real agreement. The true
than the original parties to the same. cause or consideration of said deed was the transfer
of the forest concession of private respondent to
The primary consideration in determining the true petitioners for P120,000.00. This finding is
nature of a contract is the intention of the parties. supported by the following considerations, viz:
Such intention is determined from the express
terms of their agreement as well as from their 1. Both parties, at the time of the execution of the
contemporaneous and subsequent acts. (Liam v. deed of assignment knew that the
UCPB, G.R. No. 194664, 15 June 2016) Timberwealth Corporation stated therein was
non-existent;
NOTE: If the parties state a false cause in the
contract to conceal their real agreement, the 2. In their subsequent agreement, private
contract is only relatively simulated, and the parties respondent conveyed to petitioners his
are still bound by their real agreement. Hence, inchoate right over a forest concession covering
where the essential requisites of a contract are an additional area for his existing forest
present and the simulation refers only to the concession, which area he had applied for, and
content or terms of the contract, the agreement is his application was then pending in the Bureau
absolutely binding and enforceable between the of Forestry for approval;
parties and their successors in interest.
3. Petitioners, after the execution of the deed of
Q: May the owner-simulator recover? assignment, assumed the operation of the
logging concessions of private respondent;
A: If the absolutely simulated contract does not have
any illegal purpose, the interested party may prove 4. The statement of advances to respondent
the simulation in order to recover whatever he prepared by petitioners stated: "P55,186.39
might have given under the fictitious contract. In the advances to L.A. Tiro be applied to succeeding
event it is intended for an illegal purpose, the shipments. Based on the agreement, we pay
contract is void and the parties have no cause of P10,000.00 every after (sic) shipment. We had
action. (Pineda, 2009) only 2 shipments”; and
Q: Private respondent Tiro is a holder of an 5. Petitioners entered into a Forest Consolidation

ordinary timber license issued by the Bureau of Agreement with other holders of forest
Forestry. He executed a deed of assignment in concessions on the strength of the questioned
favor of the petitioners Javiers. At the time the deed of assignment.
said deed of assignment was executed, Tiro had
a pending application for an additional forest The contemporaneous and subsequent acts of Tiro
concession. Hence, they entered into another and the Javiers reveal that the cause stated in the
agreement. Afterwards, the Javiers, now acting first deed of assignment is false. It is settled that the
as timber license holders by virtue of the deed of previous, simultaneous and subsequent acts of the
assignment, entered into a forest consolidation parties are properly cognizable indicia of their true
agreement with other ordinary timber license intention. Where the parties to a contract have given

Civil Law
it a practical construction by their conduct as by acts XPNs:

in partial performance, such construction may be 1. Things outside the commerce of men (Art.
considered by the court in construing the contract, 1347, NCC);
determining its meaning and ascertaining the 2. Intransmissible rights;
mutual intention of the parties at the time of 3. Future inheritance, except in cases expressly
contracting. authorized by law;
4. Services which are contrary to law, morals,
The first deed of assignment is a relatively good customs, public order or public policy;
simulated contract which states a false cause or 5. Impossible things or services; and
consideration, or one where the parties conceal 6. Objects which are not possible of
their true agreement. A contract with a false determination as to their kind.
consideration is not null and void per se. Under Art.
1346 of the Civil Code, a relatively simulated NOTE: The most evident and fundamental requisite
contract, when it does not prejudice a third person in order that a thing, right or service may be the
and is not intended for any purpose contrary to law, object of a contract is that it should be in existence
morals, good customs, public order or public policy at the moment of the celebration of the contract, or
binds the parties to their real agreement. (Javier v. at least, it can exist subsequently or in the future. (De
CA, G.R. No. L-48194, 15 Mar. 1990) Leon, 2010)
OBJECT Future Inheritance
It is the subject matter of the contract. It can be a GR: Future inheritance cannot be the object of a
thing, right or service arising from a contract. contract because its extent, amount and quantity
cannot be determined. (Sta. Maria, 2017)
NOTE: Only rights which are not intransmissible
can be the object of the contract. (Art. 1347, NCC) XPNS:
1. Under Art. 130 of the FC, which allows the
Requisites of an Object (D-E-Li-C-T-G) future spouses to give or donate to each other
in their marriage settlement their future
1. Determinate as to kind (even if not property to take effect upon the death of the
determinate, provided it is possible to donor and to the extent laid down by the
determine the same without the need of a new provisions of the NCC relating to testamentary
contract); succession; and
NOTE: To qualify as an object for purposes of a 2. Under Art. 1080 of the NCC, which allows a
contract to exist: person to make a partition of his estate among
his heirs by an act inter vivos, provided that the
1. The object must at least be Generic. legitime of the compulsory heirs is not
2. Existing or has the potential to exist prejudiced. (Jurado, 2009; De Leon 2010).
subsequent to the contract;
3. Must be Licit; NOTE: Except in cases authorized by law, future
4. Within the Commerce of man; and inheritance cannot be an object of contract because
5. Transmissible. its extent, amount or quantity is not determinable.
(Sta. Maria, 2003)
Object of Contracts
CAUSE
GR: All things or services may be the object of
contracts. Cause is the essential or more proximate purpose
reason which moves the contracting parties to enter

2022 GOLDEN NOTES
into the contract. It is the immediate and direct As to the Legal Effect
which justifies the creation of an obligation through
Legality or illegality of Legality or illegality of
the will of the contracting parties. (SM Land, Inc. v.
cause affects the motive does not affect
BCDA, G.R. No. 203655, 18 March 2015)
existence or validity of the existence or validity
the contract. of contract.
Requisites of a Cause:
As to the Parties
It must: (L-E-T) Cause is always the same
1. Exist; Motive differs for each
for each contracting
2. Be True; and contracting party.
party.
3. Be Licit.
NOTE: Although the cause is not stated in the As to its Knowability
contract, it is presumed that it exists and is lawful May be known to the
Always known
unless the debtor proves the contrary. (Art. 1354, other
NCC)
NOTE: The motive may be regarded as the cause
Kinds of Cause when the realization of such motive or particular
purpose has been made a condition upon which the
1. Cause of onerous contracts – the cause is contract is made to depend. (Phil. National Const.
understood to be for each contracting party, the Corp. v. CA, G.R. No. 116896, 05 May 1997)
prestation or promise of a thing or service by
the other. E.g., Contract of Sale False Cause
2. Cause of remuneratory contracts – the service or GR: A false cause in a contract makes the contract
benefit remunerated. E.g., Donation in void.
consideration of a past service which does not
constitute a demandable debt XPN: If it is proven that the false cause were
founded upon another cause which is true and
3. Cause of gratuitous contracts – the mere lawful. (Art. 1353, NCC)
liberality of the donor or benefactor; it does not
involve any material thing but rather it involves Example: When a contract, through stating a false
only the generosity of the benefactor. consideration, has in fact a real consideration, the
contract is not void, and is considered valid.
4. Accessory – identical with cause of principal
contract, from which the accessory derived its Rules relating to Cause on Contracts
life and existence. E.g., mortgage or pledge
1. Absence of cause – confers no right and
Cause v. Motive produces no legal effect.
CAUSE MOTIVE 2. Failure of cause – does not render the contract

void.
As to Proximate Reason
Direct and most
Indirect or remote 3. Illegality of cause – contract is null and void.
proximate reason of a
reason
contract
4. Falsity of cause – contract is void; unless the
As to the Kind of Reason parties show that there is another cause which
is true and lawful.
Objective and juridical Psychological or purely
reason of a contract personal reason

Civil Law
5. Lesion or inadequacy of cause – does not The Parties may be Required to Observe the
invalidate the contract, unless: Form Required for their Convenience
a. there is fraud, mistake, or undue
influence; The contracting parties may compel each other to
b. when the parties intended a donation or observe the required form once the contract has
some other contract; or been perfected and is enforceable under the statute
c. in cases specified by law of frauds. This is one of the rights of the creditor.
e.g., contracts entered by guardian with
court approval, when the ward suffers The right to demand the execution of the document
lesion of more than 25%. If there is no required under Art. 1358 is not imprescriptible. It is
court approval, the contract is void subject to prescription. It must be pursued within
regardless of the amount of lesion. the period prescribed by law, which is five (5) years.
(Pineda, 2009)
Q: May a moral obligation constitute a sufficient
cause to support an onerous contract? NOTE: The right must be exercised once the
contract has been perfected, otherwise, the exercise
A: Where the moral obligation arises wholly from will be considered as premature.
ethical considerations, unconnected with any civil
obligation, and as such is demandable only in Formalities required in Specific Contracts
conscience, and not in law, it cannot constitute a
cause to support an onerous contract. Where such 1. Donations:
moral obligation, however, is based upon a previous a. Personal property – if the value exceeds
civil obligation which has already been barred by P5,000, the donation and acceptance must
the statute of limitations at the time when the both be written. (Art. 748, NCC)
contract is entered into, it constitutes a sufficient
cause or consideration to support said contract. b. Real property:
(Villaroel v. Estrada G.R. No. L-47362, 19 Dec. 1940) i. Donation must be in a public
instrument, specifying therein the
FORM property donated and value of
charges which donee must satisfy.
Rules on the Form of Contracts ii. Acceptance must be written, either in
the same deed of donation or in a
GR: Form is not required in consensual contracts. separate instrument.
(Provided, all the essential requisites for their validity iii. Acceptance may either be in the same
are present.) deed of donation, or in a separate
public instrument, but it shall not take
XPNs: When the law requires a contract be in effect unless it is done during the
writing for its: lifetime of the donor.
1. Validity (formal contracts); iv. If acceptance is in a separate
2. Enforceability (under Statute of Frauds); or instrument, the donor shall be
3. For the convenience of the parties. notified thereof in an authentic form,
and this step shall be noted in both
NOTE: The parties may compel each other to reduce instruments. (Art. 749, NCC)
the verbal agreement into writing. (2006 BAR)
2. Partnership where real property contributed:
a. There must be a public instrument
regarding the partnership.

2022 GOLDEN NOTES
b. The inventory of the realty must be made, Contracts which must Appear in a Public
signed by the parties, and attached to the Document
public instrument. (Art. 1773, NCC)
1. Donation of real properties (Art. 719-749, NCC);
3. Antichresis – the amount of the principal and
interest must be in writing. (NCC, Art. 2134) 2. Partnership where immovable property or real
rights are contributed to the common fund
4. Agency to sell real property or an interest (Arts. 1171 & 1773, NCC);
therein – authority of the agent must be in
writing; otherwise, the sale shall be void. (Art. 3. Acts and contracts which have for their object
1874, NCC) the creation, transmission, modification or
extinguishment of real rights over immovable
5. Stipulation to charge interest – interest must be property; sale of real property or of an interest
stipulated in writing. (Art. 1956, NCC) therein is governed by Arts. 1403, No. 2, and
1405 (Art. 1358(1), NCC);
6. Stipulation limiting common carrier's duty of
extraordinary diligence to ordinary diligence: 4. The cession, repudiation, or renunciation of
a. Must be in writing, signed by shipper or hereditary rights or of those of the conjugal
owner; partnership of gains (Art. 1358(2), NCC);
b. Supported by valuable consideration
other than the service rendered by the 5. The power to administer property or any other
common carrier; and power which has for its object an act appearing
c. Reasonable, just, and not contrary to or which should appear in a public document or
public policy. (Art. 1744, NCC) should prejudice a third person (Art. 1358(3),
NCC); and
Contracts which must be In Writing to be Valid
6. The cession of actions or rights proceeding
1. Donation of personal property whose value from an act appearing in a public document.
exceeds five thousand pesos. (Art. 748, NCC) – (Art. 1358(4), NCC)
the donation and acceptance must be in writing.
NOTE: Art. 1358 of the Civil Code which requires
2. Sale of a piece of land or any interest therein the embodiment of certain contracts in a public
through an agent (Art. 1874, NCC) – the instrument, is only for convenience, and
authority of the agent shall appear in writing. registration of the instrument only adversely affects
third parties. Formal requirements are, therefore,
3. Agreements regarding payment of interest in for the benefit of third parties. Non-compliance
contracts of loan. (Art. 1956, NCC) therewith does not adversely affect the validity of
the contract nor the contractual rights and
4. Antichresis – the amount of the principal and obligations of the parties thereunder. (Fule v. CA,
the interest shall be specified in writing. ( Art. G.R. No. 112212, 02 Mar. 1998)
2134, NCC)
Contracts that Must be Registered
1. Real Estate Mortgage (Art. 2125, NCC)

2. Sale or transfer of large cattle. (Cattle
Registration Act)

Civil Law
3. REFORMATION OF INSTRUMENTS Distinctions between Reformation and

Annulment
It is a remedy to conform to the real intention of the
parties due to mistake, fraud, inequitable conduct, REFORMATION ANNULMENT
accident. (Art. 1359, NCC) There is meeting of the
minds between the There is no meeting of
It is a remedy of amending or rectifying the parties as to the object the minds. Consent is
instrument which purports to be the agreement of and cause of the vitiated.
the parties to express their real intention, when the contract.
same is not expressed therein by reason of mistake,
The meeting of the
fraud, inequitable conduct, or accident.
The instrument failed to minds was prevented
express the true by reason of mistake,
Reformation is a remedy in equity by means of
intention of the parties fraud, inequitable
which a written instrument is made or construed to
due to mistake, fraud, conduct or accident
express or confirm the real intention of the parties
inequitable conduct or perpetrated by one
when some error or mistake is committed. (Pineda,
accident. party against the
2009)
other.
Rationale: It would be unjust and inequitable to The purpose of

The purpose of
allow the enforcement of a written instrument reformation is to
annulment is to
which does not reflect or disclose the real meeting establish the true
render inefficacious
of the minds of the parties. (Report of the Code agreement of the
the contract in
Commission) parties, and not to
question.
create a new one.
Requisites in Reformation of Instruments
NOTE: When there is no meeting of the minds, the
1. There is meeting of the minds of the parties to proper remedy is annulment, and not reformation.
the contract; (Pineda, 2000)
2. The parties’ true intention is not expressed in
the instrument; The fundamental distinction between reformation
3. Such failure of the instrument to express the of an instrument and annulment of a contract is that
parties’ intention is by reason of: (M-A-R-F-I) the first presupposes a perfectly valid contract in
a. Mistake; which there has been a valid meeting of the minds
b. Accident; of the contracting parties, while the second is based
c. Relative simulation; on a defective contract in which there has been no
d. Fraud; or meeting of the minds because the consent is
e. Inequitable conduct vitiated. (Jurado, 2010)
4. The facts upon which relief by way of
reformation of the instrument is sought are put Q: Multi-Realty Development Corporation
in issue by the pleadings; and (Multi-Realty) built Makati Tuscany, a 26-storey
5. There is strong, clear, and convincing proof of condominium building located at the corner of
M-A-R-F-I. Ayala Avenue and Fonda Street, Makati City.
Makati Tuscany had a total of 160 units, with
156 ordinary units from the 2nd to the 25th
floors and four (4) penthouse units on the 26th
floor. It also had 270 parking slots which were
apportioned as follows: one (1) parking slot for
each ordinary unit; two (2) parking slots for

2022 GOLDEN NOTES
each penthouse unit; and the balance of 106 "also labored under a mistaken appreciation of the
parking slots were allocated as common areas. nature and ownership of the ninety-eight (98)
parking slots in question."
Pursuant to R.A. No. 4726, or the Condominium
Act, Multi-Realty created and incorporated Both parties recognized Multi-Realty's ownership of
Makati Tuscany Condominium Corporation the parking slots. MATUSCO initially respected
(MATUSCO) to hold title over and manage Multi-Realty's ownership despite the Master Deed's
Makati Tuscany's common areas. That same and Deed of Transfer's stipulations. It was
year, Multi-Realty executed a Deed of Transfer MATUSCO that changed its position decades after it
of ownership of Makati Tuscany's common acted as if it accepted Multi-Realty's ownership.
areas to MATUSCO. (Makati Tuscany Condominium Corporation v. Multi-
Realty Development Corporation, G.R. 185530, 18
Multi-Realty filed a complaint for damages Apr. 2018)
and/or reformation of instrument with prayer
for TRO and/or preliminary injunction against Operation and Effect of Reformation
MATUSCO. Multi-Realty alleged in its complaint
that of the 106 parking slots designated in the It relates back to, and takes effect from, the time of
Master Deed as part of the common areas, only its original execution, especially as between the
eight (8) slots were intended to be guest parking parties. (Tolentino, 2002)
slots; thus, it retained ownership of the
remaining 98 parking slots. Reformation of instruments may be availed of
judicially or extrajudicially.
Multi-Realty claimed that its ownership over the
98 parking slots was mistakenly not reflected in Basis and Nature of the Remedy
the Master Deed "since the documentation and
the terms and conditions therein were all of first The remedy of reformation of an instrument is
impression," considering that Makati Tuscany based on the principle of equity where, to express
was one of the first condominium developments the true intention of the contracting parties, an
in the Philippines. Is there is a need to reform instrument already executed is allowed by law to be
the Master Deed and the Deed of Transfer? reformed. The right of reformation is necessarily an
invasion or limitation of the parol evidence rule,
A: NO. Reformation of an instrument is a remedy in since, when a writing is reformed, the result is that
equity where a valid existing contract is allowed by an oral agreement is by court decree, made legally
law to be revised to express the true intentions of effective. The remedy, being an extraordinary one,
the contracting parties. The rationale is that it must be subject to the limitations as may be
would be unjust to enforce a written instrument provided by law. A suit for reformation of an
which does not truly reflect the real agreement of instrument must be brought within the period
the parties. In reforming an instrument, no new prescribed by law, otherwise, it will be barred by
contract is created for the parties, rather, the the mere lapse of time. (Bentir v. Leanda, G.R.
reformed instrument establishes the real 128991, 12 Apr. 2000)
agreement between the parties as intended, but for
some reason, was not embodied in the original When Remedy Allowed
instrument.
1. Mutual mistake – When the mutual mistake of
MATUSCO does not deny that it stayed silent when the parties causes the failure of the instrument
Multi-Realty sold the parking slots on several to disclose their agreement (Art. 1361, NCC)
occasions or that it offered to buy the parking slots
from Multi-Realty on at least two (2) occasions. It Requisites:
excuses itself by saying that just like Multi-Realty, it a. The mistake should be of fact;

Civil Law
b. The same should be proved by clear and Prescriptive Period

convincing evidence;
c. The mistake should be common to both Within 10 years from the date of the execution of the
parties to the instrument. (BPI v. Fidelity instrument, since the suit is based on a written
Surety, Co. G.R. No. L-26743, 19 Oct. 1927) document.
2. Mistake on one party and fraud on the other – In Persons who can Ask for the Reformation of the
such a way that the instrument does not show Instrument
their true intention, the party mistaken or
defrauded may ask for the reformation of the It may be ordered at the instance of:
instrument (Art. 1362, NCC);
1. If the mistake is mutual: either party or his
3. Mistake on one party and concealment on the successor-in-interest may file an action.
other – When one party was mistaken and the 2. If the cause of reformation is on some other
other knew or believed that the instrument did ground (such as vitiated consent or fraud): the
not state their real agreement, but concealed injured party or his heirs and assigns are the
that fact from the former (Art. 1363, NCC); only person given legal standing to sue.
4. Ignorance, lack of skill, negligence or bad faith – NOTE: In reformation of contracts, what is
When through the ignorance, lack of skill, reformed is not the contract itself, but the
negligence or bad faith on the part of the person instrument embodying the contract. It follows that
drafting the instrument or of the clerk or typist, whether the contract is disadvantageous or not, is
the instrument does not express the true irrelevant to reformation and therefore, cannot be
intention of the parties (Art. 1364, NCC); an element in the determination of the period for
prescription of the action to reform. (Pineda, 2000)
5. Right of repurchase – If the parties agree upon
the mortgage or pledge of real or personal 4. INTERPRETATION OF CONTRACTS
property, but the instrument states that the
property is sold absolutely or with a right of If the terms of a contract are clear and leave no
repurchase. (Art. 1365, NCC) doubt upon the intention of the contracting parties,
the literal meaning of its stipulations shall control.
When Remedy NOT Allowed
If the words appear to be contrary to the evident
1. Simple, unconditional donations inter vivos; intention of the parties, the latter shall prevail over
2. Wills; the former. (Art. 1370, NCC)
3. When the agreement is void; (Art. 1366, NCC)
4. When an action to enforce the instrument is In order to judge the intention of the contracting
filed (by doctrine of estoppel) ; parties, their contemporaneous and subsequent
5. If mistake, fraud, inequitable conduct, or acts shall be principally considered. (Art. 1371, NCC)
accident has prevented a meeting of the minds
of the parties; and However general the terms of a contract may be,
they shall not be understood to comprehend things
NOTE: The remedy here is annulment of that are distinct and cases that are different from
contract. those upon which the parties intended to agree.
(Art. 1372, NCC)
6. When the contract is unenforceable because of
failure to comply with the statute of frauds. If some stipulation of any contract should admit of
several meanings, it shall be understood as bearing

2022 GOLDEN NOTES
that import which is most adequate to render it A: YES. It is basic that a contract is the law between
effectual. (Art. 1373, NCC) the parties. Obligations arising from contracts have
the force of law between the contracting parties and
Duty of Courts in Interpreting Contracts should be complied with in good faith. Unless the
stipulations in a contract are contrary to law,
It is not the province of the court to alter a contract morals, good customs, public order or public policy,
by construction or to make a new contract for the the same are binding as between the parties. Being
parties. Its duty is confined to the interpretation of the law between the parties, courts have no choice
the one which they have made for themselves but to enforce such contracts. Simply put, courts
without regard to its wisdom or folly as the court cannot stipulate for the parties or amend the latter's
cannot supply material stipulations or read into the agreement, for to do so would be to alter the real
contract words which it does not contain. (Sps. intention of the contracting parties when the
Pascual v. Ramos, G.R. No. 144712, 04 July 2002) contrary function of courts is to give force and effect
to the intention of the parties.
Q: Federico Alferez died without leaving any
will. He was survived by his spouse Teodora, and It can be seen from the Deed that Ma. Concepcion
their children, namely: Ma. Concepcion, Antonio, without qualification, sold, transferred, and
and Esperanza. Since Alferez left several bank conveyed to the Spouses the parcels of land, without
debts, Ma. Concepcion, as Alferez's daughter and any mention of their alleged intention to only offer
administratrix of his estate, filed a motion to sell half of the said property. The provisions thereof are
a part of the estate of Alferez. The Deed of Sale categorical and admits of no other interpretation;
executed by Ma. Concepcion with Spouses the sale, transfer, and conveyance of the parcels of
Canencia shows that Ma. Concepcion, without land covered by the aforementioned titles appear
qualification, sold, transferred, and conveyed to absolute, there being no reservation of ownership of
respondents the parcels of land, without any half of the lots therein described, nor a stipulation
mention of their alleged intention to only offer making mention of Teodora' specific share of the
half of the said property. said properties.
Ma. Concepcion filed action for Annulment As mandated by Art. 1370 of the Civil Code, if the
and/or Declaration of Nullity of Deed of Sale, terms of the contract are clear and leave no doubt,
among others, asserting that during the literal meaning of its stipulations shall control.
negotiations with Spouses Canencia, they were The Deed, as the agreement between the parties, is
clear that the land forming part of Alferez’s the formal expression of the parties' rights, duties,
estate was not entirely for sale; what they and obligations. It is the best evidence of the
intended to sell was only the half of Federico. intention of the parties. Thus, when the terms of an
The Spouses Canencia argued that the agreement have been reduced to writing, it is
provisions of the Deed did not even remotely considered as containing all the terms agreed upon
suggest that Ma. Concepcion was only selling and there can be no evidence of such terms other
half of the parcels of land thereof; in fact, there than the contents of the written agreement between
were no doubtful provisions therein that could the parties and their successors in interest. (Alferez
have indicated a different intention on the part v. Spouse Canencia, G.R. No. 244542, 28 June 2021)
of the petitioners. Thus, Ma. Concepcion should
be bound by the terms and conditions of the Disfavor of Interpretation leading to Loss of
Deed and should not be allowed to escape the Rights
obligatory force of their contractual
commitment by contending that the Deed failed The construction of the terms of a contract leading
to correctly embody their true intention. Is the to the impairment or loss of the right is not favored.
contention of the Spouses correct?

Civil Law
Principle of Effectiveness Words which may have different significations shall

be understood in that which is most in keeping with
Pursuant to this principle, where two (2) the nature and object of the contract. (Art. 1375,
interpretations of the same contract language are NCC)
possible, one interpretation having the effect of
rendering the contract meaningless (and one of the The usage or custom of the place shall be borne in
parties merely dishonest for receiving mind in the interpretation of the ambiguities of a
consideration thereunder without parting with contract, and shall fill the omission of stipulations
any), while the other interpretation would give which are ordinarily established. (Art. 1376, NCC)
effect to the contract as a whole, the latter
interpretation must be adopted. (PNB v. Utility The interpretation of obscure words or stipulations
Assurance & Surety, Co., Inc., G.R. No. L-39215, 01 in a contract shall not favor the party who caused
Sept. 1989) the obscurity. (Art. 1377, NCC)
The various stipulations of a contract shall be When it is absolutely impossible to settle doubts by
interpreted together, attributing to the doubtful the rules established in the preceding articles, and
ones that sense which may result from all of them the doubts refer to incidental circumstances of a
taken jointly. (Art. 1374, NCC) gratuitous contract, the least transmission of rights
and interest shall prevail. If the contract is onerous,
The various stipulations in a contract must be read the doubt shall be settled in favor of the greatest
together to give effect to all. (North Negros Sugar Co. reciprocity of interests.
v. Compania Gen. De Tabacos, G.R No. L-9277, 29 Mar.
1957) If the doubts are cast upon the principal object of the
contract in such a way that it cannot be known what
Complementary-Contracts-Construed-Together may have been the intention or will of the parties,
Doctrine the contract shall be null and void.
The various stipulations of a contract shall be The principles of interpretation stated in Rule 123
interpreted together, attributing to the doubtful of the Rules of Court shall likewise be observed in
ones that sense which may result from all of them the construction of contracts. (Art. 1378, NCC)
taken jointly. (Art. 1374, NCC)
NOTE: The provisions of Rule 123 of the Rules of
When there are several provisions in a contract, the Court referred to are Secs. 58-67, now Secs. 8-17,
construction to be adopted should be that one Rule 130, Revised Rules of Court.
which will give effect to all provisions. A contract
must be read in its entirety (BPI v. Sabrino, G.R. No. Q: In response to Araneta Center Inc.’s (“ACI”)
L-36524, 06 Feb. 1933). Piecemeal interpretation invitation to bid on the design and construction
must be avoided. of the Gateway Mall under a lump-sum, fixed
price arrangement, CE Construction
Under this doctrine, an accessory contract must be Corporation (“CECON”) submitted its proposal
read in its entirety and together with the principal on 30 August 2002, which bid was made valid for
agreement. (Rabuya, 2017) acceptance only for ninety days. However, ACI
informed CECON that the contract was being
E.g., A promissory note and a deed of chattel awarded to it only at such time that the bid had
mortgage must be construed together; and the already expired, and instructed it to proceed
surety contract, being an accessory contract, must with excavation work.
be interpreted with its principal contract, for
instance, a loan agreement. (Ibid.) While no formal documents were prepared for
the contract although construction was already

2022 GOLDEN NOTES
underway, ACI introduced major changes in the as to comply with the essential requisite of consent
plans and specifications, changing it into a in the perfection of a contract.
straight construction contract from a former
design-and-construct scheme. ACI decided to In order to judge the intention of the contracting
change and take over the design, such as the parties, their contemporaneous and subsequent
change from concrete to structural steel acts shall be principally considered. It should be
framing, and took out certain equipment from mentioned that ACI had drastically changed the
the scope of the contract. scope and character of the agreement. To tie down
CECON to the unit prices for the proposal for a
Meanwhile, the price levels of cement and steel different scope of work would be grossly unfair.
products had increased, of which CECON Reference to prevailing industry practices in the
notified ACI, with a stern warning that further valuation of the project cost was also warranted and
delays in the formal award of the contract might necessary because of the absence of definitive
affect the contract sum. It was only on 2 June governing instruments. Under Arts. 1375 and 1376
2003 that ACI finally wrote a letter to CECON, of the NCC, the nature and object of the contract as
indicating its acceptance of the latter’s 30 well as the usage or custom of the place shall be
August 2002 tender, but still no formal contracts borne in mind in the interpretation of the
were executed. With the many changes to the ambiguities of the contract, and shall fill the
project coupled with ACI’s delays in delivering omission of stipulations which are ordinarily
drawings and specifications, CECON established. (CE Construction Corp. v. Araneta
increasingly found itself unable to complete the Center, Inc., G.R. 192735, 09 Aug. 2017)
project on time, noting that it had to file a total
of 15 requests for time extension, all of which
ACI failed to timely act on.
Exasperated, CECON filed with the Construction

Industry Arbitration Commission (“CIAC”) its
request for adjudication, praying for project
cost adjustment. In the meantime, CECON
completed the project and turned over Gateway
Mall to ACI, which had its blessing on 26
November 2004. Could ACI insist on the initial
bid price of CECON under the supposed lump-
sum fixed price arrangement of the construction
contract?
A: NO. CECON and ACI should not be bound by the

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

Civil Law
RESCISSIBLE VOIDABLE UNENFORCEABLE VOID/ INEXISTENT

Origin of the Defect
Entered without
Economic damage or
authority or in excess
lesion to either one of the Incapacity of one of Illegality (void) or
thereof; non-compliance
parties or to the 3rd parties to give consent or absence of any of
with Statute of Frauds;
persons; declaration vitiated consent essential requisites of a
incapacity of both parties
by law contract (inexistent)
to give consent
Necessity of Damage/ Prejudice
As to the other
Suffered by – either one
contracting party – Not necessary Not necessary
of parties or 3rd person
not necessary
Curable by Prescription
Curable Curable Not curable Not Curable
Legal Effect
Inoperative until ratified;
Valid & legally Valid & legally
not enforceable in court
enforceable until enforceable until None
without proper
judicially rescinded judicially annulled
ratification
Remedy
Rescission or Declaration of nullity of
Annulment of contract Only personal defense
rescissory action. contract
Nature of Action
Can be attacked directly
Must be a direct action Direct action needed Indirect attack allowed
or indirectly
Who Can File the Action
GR: Contracting party; 3rd persons cannot file
XPN: Defrauded Contracting party Contracting party unless their interest are
Creditors directly affected
Susceptibility of Ratification
Susceptible but not of
Susceptible Susceptible Not Susceptible
ratification proper
Susceptibility of Prescription
Action for recovery,
specific performance, or Action for declaration of
Action for rescission Action for annulment damages prescribes in 10 nullity or putting of
prescribes after 4 years prescribes after 4 years years if based on a defense of nullity does
written contract; 6 years NOT prescribe
if unwritten

2022 GOLDEN NOTES
5. RESCISSIBLE CONTRACTS contract is “unenforceable” for lack of

authority. (Art. 1403(1), NCC)
Rescissible Contracts
b. Agreed upon in representation of
These are contracts which contain all the essential absentees, if absentee suffers lesion by
requisites of a contract which make it valid, but by more than ¼ of value of property; (Art.
reasons of injury or damage to either of the 1381(2), NCC)
contracting parties or to third persons such as
creditors, may be rescinded. (Pineda, 2009) c. Contracts where rescission is based on
fraud committed on creditor and cannot
In a rescissible contract, all of the essential collect the claim due (accion pauliana);
requisites of a contract exist and the contract is (Art. 1381(3), NCC)
valid, but by reason of injury or damage to either of
the contracting parties or to third persons, such as NOTE: Contracts which are rescissible
creditors, it may be rescinded. (Jurado, 2010) under the third paragraph of Art. 1381 are
valid contracts, although undertaken in
Requisites for Rescission fraud of creditors. If the contract is
‘‘absolutely simulated’’, the contract is not
1. There must be, at the beginning, either a valid merely rescissible but inexistent, although
or voidable contract; undertaken as well in fraud of creditors. In
2. There is an economic or financial prejudice to the former, the remedy is rescission; in the
someone; and latter, the remedy is an action to declare the
3. Requires mutual restitution. (Paras, 2016) contract inexistent which action is
imprescriptible. (Rabuya, 2017)
Two (2) Kinds of Rescission
d. Contracts where the object involved is the
1. The rescission mentioned in Art. 1380 of the subject of litigation; contract entered into
New Civil Code by defendant without knowledge or
2. The rescission mentioned in Art. 1391 of the approval of litigants or judicial authority;
New Civil Code as the new Code used the term (Art. 1381(4), NCC)
"resolution." (Paras, 2016)
e. Payment by an insolvent – on debts which
These are contracts validly constituted but are not yet due; prejudices the claim of
nevertheless maybe set aside due to a particular others; (Art. 1382, NCC)
economic damage or lesion caused to either to one
of the parties or to a third person. It may be set aside f. Provided for by law. (Arts. 1526, 1534, 1538,
in whole or in part, or up to the extent of the damage 1539, 1542, 1556, 1560, 1567 & 1659, NCC)
caused. (Art. 1381, NCC)
NOTE: Items c, d, and e are contracts which
Contracts that May be Rescinded are not necessarily entered into by persons
exercising fiduciary capacity. In Art. 1381
1. Under Art. 1381, those – (1 & 2), the contract must be of
a. Entered into by guardians whenever the administration and representation.
wards whom they represent suffer lesion
by more than ¼ of value of the property; 2. Payments made in state of insolvency; (Art. 1382,
(Art. 1381(1), NCC) NCC):
a. Plaintiff has no other means to maintain
If a guardian alienates properties of the reparation;
ward without judicial approval, the

Civil Law
b. Plaintiff must be able to return whatever he Persons who may Institute an Action for the
may be obliged to return due to rescission; Rescission of a Rescissible Contract
c. The things must not have been passed to
third persons in good faith; The action for rescission may be instituted by the:
d. It must be made within 4 years. (Art 1382,
NCC) 1. Injured party;
2. Contracts entered into by guardians – by the
Characteristics of Rescissible Contract ward, or by the guardian ad litem of ward
during the latter’s incapacity in an action
1. It has all the elements of a valid contract. against the original guardian;
2. It has a defect consisting of an injury (generally 3. Contracts in representation of absentees – by
in the form of economic damage or lesion, fraud, the absentee;
and alienation of the property) to one of the 4. Contracts defrauding creditors – by the
contracting parties or to a third person. creditors;
3. It is valid and effective until rescinded. 5. Contracts referring to things in litigation – by
4. It can be attacked only directly. the party litigant;
5. It is susceptible of convalidation only by 6. Their representatives;
prescription. (De Leon, 2010) 7. Their heirs; and
8. Their creditors by virtue of subrogatory action
Nature of an Action for Rescission defined in Art. 1177, NCC. (Jurado, 2009)
The action for rescission is subsidiary. It cannot be Prescriptive Period of Action for Rescission
instituted except when the party suffering damage
has no other legal means to obtain reparation for 1. Under Art. 1381, no. 1 – within 4 years from the
the same (Art. 1383, NCC). Hence, it must be availed time the termination of the incapacity of the
of as the last resort, availed only after all legal ward;
remedies have been exhausted and proven futile. 2. Under Art. 1381, no. 2 – within 4 years from the
(Anchors Savings Bank v. Furigay, G.R. No. 191178, 13 time the domicile of the absentee is known; or
Mar. 2013) 3. Under Art. 1381, nos. 3 & 4 & Art. 1382 – within
4 years from the time of the discovery of fraud.
Rationale: In order not to disturb other contracts (Art. 1389, NCC)
and to comply with the principle of relativity of
contracts. Requisites that must Concur before a Contract
May be Rescinded on the ground of Lesion
However, if it can be proven that the property
alienated was the only property of the debtor at the Whether the contract is entered into by a guardian
time of the transaction, the action for rescission is in behalf of his ward or by a legal representative in
certainly maintainable because it is clear that the behalf of an absentee, before it can be rescinded on
creditor has no other remedy under the the ground of lesion, it is indispensable that the
circumstances. (Pineda, 2009) following requisites must concur:
NOTE: Rescission shall be only to the extent 1. The contract must be entered into by the
necessary to cover the damages. (Art. 1384, NCC) guardian in behalf of his ward or by the legal
representative in behalf of an absentee.
2. The ward or absentee suffered lesion of more
than 1/4 of the value of the property which is
object of the contract.
3. The contract must be entered into without
judicial approval.

2022 GOLDEN NOTES
4. There must be no other legal means for 4. The object of the contract must not be legally in
obtaining reparation for the lesion. possession of a third person in good faith.
5. The person bringing the action must be able to
return whatever he may be obliged to restore. NOTE: If the object of the contract is legally in the
6. The object of the contract must not be legally in possession of a third person who did not act in bad
the possession of a third person who did not act faith, the remedy available to the creditor is to
in bad faith. proceed against the person causing the loss for
damages. Such person is solidarily liable with that of
Statutory Presumptions of Fraud in Art. 1387 transferring creditor as both of them are guilty of
fraud.
1. Alienation by gratuitous title – When a debtor
donates his property without reserving The action to rescind contracts in fraud of creditors
sufficient property to pay all his pre-existing is known as accion pauliana. For this action to
debts, the law presumes that the gratuitous prosper, the following requisites must be present:
dispositions are made in fraud of creditors.
1. The plaintiff asking for rescission has a credit
2. Alienation by onerous title – The contract is prior to the alienation;
presumed fraudulent if at the time of alienation, 2. The debtor has made a subsequent contract
some judgement has been rendered against conveying a patrimonial benefit to a third
him, whether it is on appeal or has already person;
become final and executory; or some writ of 3. The creditor has no other legal remedy to
attachment has been issued against him in any satisfy his claim;
case. 4. The act being impugned is fraudulent;
5. The third person who received the property
NOTE: The decision or writ of attachment need not conveyed, if it is by onerous title, has been an
refer to the very property subject of alienation. The accomplice in fraud. (Sps. Lee v. Bangkok Bank,
person who obtained the judgement or writ of G.R. No. 173349, 09 Feb. 2011)
attachment need not be the same person seeking
the rescission. Badges of Fraud
These presumptions are rebuttable, which means, 1. Consideration for the conveyance of the
they may be overcome by clear, strong and property is inadequate or fictitious;
convincing evidence. 2. Transfer was made by the debtor after a suit has
commenced and during its pending against him;
An alienation made during the pendency of a suit is 3. Sale upon credit by an insolvent debtor;
not enough. There must be a decision or a writ of 4. The presence of evidence of large indebtedness
attachment. or complete insolvency of the debtor;
5. Transfer of all his property by a debtor when he
Requisites before a Contract Entered into in is financially embarrassed or insolvent;
Fraud of the Creditors may be Rescinded 6. Transfer is made between father and son, where
there are present some or any of the above
1. There must be a credit existing prior to the circumstances; and
constitution of the said fraudulent contract; 7. Failure of the vendee to take exclusive
2. There must be fraud, or at least, the intent to possession of the property. (Pioneer Insurance
commit fraud to the prejudice of the creditor Surety Corp. v. Morning Star Travel & Tours, Inc.,
seeking rescission; G.R. No. 198436, 08 July 2015)
3. The creditor cannot in any legal manner collect
his credit (subsidiary character of rescission);

Civil Law
Resolution v. Rescission NOTE: While Art. 1191 uses the term “rescission,”
the original term which was used in the old Civil
RESOLUTION RESCISSION Code, from which the article was based, was
(ART. 1191, NCC) (ART. 1381, NCC) “resolution.” (The Wellex Group, Inc., v. U-Land
Airlines, Co., Ltd., G.R. No. 167519, 14 Jan. 2015)
Both presuppose contracts validly entered into
and subsisting and both require mutual
Effect of Rescission
restitution when proper.
Nature
1. Obligation of mutual restitution (but not
Principal action;
absolute);
Retaliatory in Subsidiary remedy
2. Abrogation of contract (absolute);
character
3. Obligation of third person to restore (if third
Grounds
person has nothing to restore, Article does not
5 grounds under Art.
apply). (De Leon, 2016)
Non-performance of 1381. (lesions or
obligation (only fraud of creditors);
Mutual Restitution
ground) Non-performance is
not important.
Rescission of contract creates an obligation of
Applicability mutual restitution of the objects of the contract,
Applies to both their fruits, and the price with interest.
Only to reciprocal
unilateral and
obligations
reciprocal obligations NOTE: Rescission is possible only when the person
demanding rescission can return whatever he may
Prescriptive Period
be obliged to restore. A court of equity will not
10 years from accrual
rescind a contract unless there is restitution, that is,
of right of action for
the parties are restored to the status quo ante. (Art.
written contracts; 4 years
1385, NCC)
6 years for verbal (Art. 1389, NCC)
contracts (Arts. 1144
Mutual restitution is NOT applicable when:
(2) and 1145 (1), NCC)
1. Creditor did not receive anything from
Person who can Initiate the Action
contract; or
Even third persons 2. Thing already in possession of third persons
Only the injured party
prejudiced by the in good faith; subject to indemnity only, if
to the contract
contract there are two or more alienations – liability of
Fixing of Period by the Court first infractor.
Court may fix a period
or grant extension of Q: Reyes (seller) and Lim (buyer) entered into a
time for the fulfillment contract to sell a parcel of land. Harrison
Court cannot grant
of the obligation when Lumber occupied the property as lessee. Reyes
extension of time
there is sufficient offered to return the P10 million downpayment
reason to justify such to Lim because Reyes was having problems in
extension removing the lessee from the property. Lim
Purpose rejected Reyes’ offer. Lim learned that Reyes
had already sold the property to another.
Reparation for
damage or injury,
Cancellation of the Both Reyes and Lim are now seeking rescission
allowing partial
contract of the contract to sell. However, Reyes does not
rescission of contract.
want to deposit the 10M to the court because
(Pineda, 2000)
according to him, he has the “right to use,

2022 GOLDEN NOTES
possess and enjoy” of the money as its owner balance of the price, especially in the absence of a
before the contract to sell is rescinded. Is Reyes’ clear and express agreement thereon.
contention correct?
Moreover, Goldenrod resorted to extrajudicial
A: NO. There is also no plausible or justifiable rescission of its agreement with Barretto Realty.
reason for Reyes to object to the deposit of the P10 Under Art. 1385, rescission creates the obligation to
million down payment in court. The contract to sell return the things which were the object of the
can no longer be enforced because Reyes himself contract together with their fruits and interest.
subsequently sold the property. Both Lim and Reyes Therefore, by virtue of the extrajudicial rescission of
are seeking for rescission of the contract. By seeking the contract to sell by Goldenrod without opposition
rescission, a seller necessarily offers to return what from Barretto Realty, which in turn, sold the
he has received from the buyer. Such a seller may property to other persons, Barretto Realty, had the
not take back his offer if the court deems it obligation to return the earnest money which
equitable, to prevent unjust enrichment and ensure formed part of the purchase price plus legal interest
restitution, to put the money in judicial deposit. from the date it received notice of rescission. It
would be most inequitable if Barretto Realty would
NOTE: In this case, it was just, equitable and proper be allowed to retain the money at the same time
for the trial court to order the deposit of the down appropriate the proceeds of the second sale made to
payment to prevent unjust enrichment by Reyes at another. (Goldenrod, Inc. v. CA, G.R. No. 126812, 24
the expense of Lim. Depositing the down payment in Nov. 1998)
court ensure its restitution to its rightful owner.
Lim, on the other hand, has nothing to refund, as he 6. VOIDABLE CONTRACTS (BAR 2004)
has not received anything under the contract to sell.
(Reyes v. Lim, Keng, G.R. No. 134241, 11 Aug. 2003) Voidable contracts are those where consent is
vitiated either by the incapacity of one of the
Q: Goldenrod offered to buy a mortgaged contracting parties or by mistake, violence,
property owned by Barreto Realty to which it intimidation, undue influence or fraud. These
paid an earnest money amounting to P1 million. contracts are binding, unless they are annulled by a
It was agreed upon that Goldenrod would pay proper action in court. It is susceptible of
the outstanding obligations of Barreto Realty ratification. (Art. 1390, NCC)
with UCPB. However, Goldenrod did not pay
UCPB because of the bank’s denial of its request NOTE: Annulment may be had even if there be no
for the extension to pay the obligation. damage to the contracting parties.
Thereafter, Goldenrod, through its broker,
informed Barreto Realty that it could not go Characteristics of a Voidable Contract
through with the purchase of the property and
also demanded the refund of the earnest money 1. Effective until set aside;
it paid. 2. Can be ratified;
3. Can be assailed only by the party whose consent
In the absence of a specific stipulation, may the was defective or his heirs or assigns.
seller of real estate unilaterally rescind the 4. A voidable contract, unlike unenforceable and
contract and, as a consequence, keep the earnest void contracts may be attacked indirectly or
money to answer for damages in the event the collaterally, by way of defense to an action
sale fails due to the fault of the prospective under the contract by way of a counterclaim.
buyer? (De Leon, 2016)
A: NO. Goldenrod and Barretto Realty did not intend

that the earnest money or advance payment would
be forfeited when the buyer should fail to pay the

Civil Law
Classes of Voidable Contracts The fraud required to annul or avoid a contract

"must be so material that had it not been present,
1. Those where one of the parties is incapable of the defrauded party would not have entered into the
giving consent; and contract." Poole-Blunden's contention on how
crucial the dimensions and area of the Unit are to his
NOTE: If both parties are incapacitated to give decision to proceed with the purchase is well-taken.
consent, the contract is unenforceable and not As he emphasized, he opted to register for and
merely voidable. participate in the auction for the Unit only after
determining that its advertised area was spacious
2. Those where the consent is vitiated by mistake, enough for his residential needs. Therefore, there is
violence, intimidation, undue influence or fraud for the reason that had Poole-Blunden been
fraud. (Art. 1390, NCC) informed by the Union Bank that the floor area was
actually less than the stipulated, he would not have
Q: Sometime in March 2001, Poole-Blunden entered the Contract to Sell. (Poole-Blunden v. UBP,
came across an advertisement of Unit 2-C of T- G.R. No. 205838, 29 Nov. 2017)
Tower Condominium. The Unit was advertised
to have an area of 95 square meters (sqm). Who may Institute an Action for Annulment
Thinking that it was sufficient and spacious
enough for his residential needs, Poole-Blunden 1. Real party in interest – All who are principally
won the bid and entered into a Contract to Sell or subsidiarily liable; and
with Union Bank. Poole-Blunden started 2. One not responsible for the defect of the
occupying. Thereafter, he decided to construct contract.
two (2) additional bedrooms in the Unit. Upon
examining it, he noticed apparent problems in NOTE: An action for annulment may be instituted
its dimensions. He took rough measurements of by all who are thereby obliged principally or
the Unit, which indicated that its floor area was subsidiarily. He who has capacity to contract may
just about 70 sqm, not 95 sqm, as advertised by not invoke the incapacity of the party with whom he
Union Bank. Poole-Blunden wrote to Union has contracted nor can those who exerted
Bank, informing it of the discrepancy. He asked intimidation, violence or undue influence or
for a rescission of the Contract to Sell, along with employed fraud or caused mistake base their action
a refund of the amounts he had paid, in the event upon these flaws of the contract.
that it was conclusively established that the area
of the unit was less than 95 sqm, but the same Effects of Annulment of a Contract
was denied by the Union Bank. Aggrieved, he
filed an action for rescission of the Contract to 1. If contract not yet consummated – parties shall
Sell under Art. 1390 of the Civil Code. Will the be released from the obligations arising
action prosper? therefrom.
2. If contract has already been consummated –
A: YES. Art. 1390 of the NCC stipulates that a rules provided in Arts. 1398-1402 shall govern.
contract is voidable or annullable even if there is no
damage to the contracting parties where "consent is a. Restitution
vitiated by mistake, violence, intimidation, undue
influence or fraud." Under Art. 1338 of the NCC, GR: Mutual restitution – the contracting
"[t]here is fraud when, through insidious words or parties shall restore to each other things
machinations of one of the contracting parties, the which have been the subject matter of the
other is induced to enter into a contract which, contract, with their fruits and the price with
without them, he would not have agreed to." its interest except in case provided by law.
In an obligation to render services, the

2022 GOLDEN NOTES
value thereof shall be the basis for 1. In cases of intimidation, violence or undue
damages. (Art. 1398, NCC) influence, from the time the defect of the
consent ceases;
NOTE: No restitution – The party 2. In case of mistake or fraud, from the time of the
incapacitated is not obliged to make any discovery of the same; and
restitution except insofar as he has been 3. When the action refers to contracts entered into
benefited by the thing or the price received by minors or other incapacitated persons, from
by him. (Art. 1399, NCC) the time the guardianship ceases. (Art. 1391,
NCC)
XPN : If and when the application of mutual
restitution will result in unjust enrichment Ratification
of one party at the expense of another.
(Tolentino, 1991) Ratification may be effected expressly or tacitly. It is
understood that there is a tacit ratification if, with
b. Whenever the person obliged by the decree knowledge of the reason which renders the contract
of annulment to return the thing cannot do voidable and such reason having ceased, the person
so because it has been lost through his fault, who has a right to invoke it should execute an act
he shall return the fruits received and the which necessarily implies an intention to waive his
value of the thing at the time of the loss, with right. (Art. 1393, NCC)
interest from the same date. (Art. 1400,
NCC) NOTE: Ratification extinguishes the action to annul
a voidable contract. (Art. 1392, NCC)
Causes of Extinction of Action to Annul
Requisites of Ratification
1. Prescription – the action for annulment must be
commenced within 4 years depending on the 1. The contract involved must be voidable;
ground stated. 2. Person ratifying must know the reason for the
voidability;
2. Ratification – cleanses the contract of its defects 3. The cause for the voidability must immediately
from the moment it was constituted. (Art. 1396, cease after the ratification; and
NCC) 4. Ratification must be express or through an act
implying a waiver of the action to annul;
3. By loss of the thing which is the object of the
contract through fraud or fault of the person NOTE: Ratification entered into by the
who is entitled to annul the contract. (Art. 1401, incapacitated person may be effected by the
NCC) guardian of the incapacitated person. (NCC, Art.
1394) However, this rule does not pertain to a
NOTE: If the right of action is based upon the rescissible contract entered into by the
incapacity of any one of the contracting parties, the guardian in behalf of his ward. The right to
loss of the thing shall not be an obstacle to the ratify is transmitted to the heirs of the party
success of the action, unless it took place through entitled to such right. (Tolentino, 2002)
the fraud or fault of the plaintiff. (Art. 1401, NCC)
Party who may Ratify
Prescriptive Period for an Annulment of a
Voidable Contract 1. In contracts entered into by incapacitated
persons –
The action for annulment shall be brought within 4 a. Guardian; and
years, reckoned from: b. Injured party himself, provided he is
already capacitated.

Civil Law
2. In contracts voidable on the ground of mistake of Escalona, as Senior Vice President of TERP
– party whose consent was vitiated. (De Leon, Corp. binding upon it?
2016)
A: YES. Here, TERP Corp.'s subsequent act of twice
Kinds of Ratification paying the additional interest Escalona committed
to Banco Filipino Bank is considered a ratification of
1. Express –the desire of the innocent party to Escalona's acts. Moreover, Escalona likewise had
convalidate the contract, or his waiver or apparent authority to transact on behalf of
renunciation of his right to annul the contract is petitioner. Here, Banco Filipino Bank relied on
clearly manifested verbally or formally in Escalona’s apparent authority to promise interest
writing. (Pineda, 2000) payments, considering that Escalona was TERP
Corp.’s then Senior Vice President. His apparent
2. Implied (tacit) – it is the knowledge of the authority was further demonstrated by TERP Corp.
reason which renders the contract voidable and paying Banco Filipino Bank after Escalona promised
such reason having ceased, the person who has it. (Terp Construction Corporation v. Banco Filipino
a right to invoke it should execute an act which Savings and Mortgage Bank, G.R. No. 221771, 18 Sept.
necessarily implies an intention to waive his 2019)
right. (Art. 1393, NCC)
Confirmation v. Recognition
Effects of Ratification
CONFIRMATION RECOGNITION
Ratification cleanses the contract from all its defects
It is an act whereby a
from the moment it was constituted, thereby
defect of proof is cured
extinguishing the action to annul a voidable
such as when an oral
contract. It results therefore that after a contract is
It is an act by which contract is put into
validly ratified, no action to annul the same can be
a voidable contract writing or when a private
maintained based upon defects relating to its
is cured of its vice or instrument is converted
original validity. (Rabuya, 2017)
defect. into a public instrument.
(Luna v. Linatoc, G.R. No.
Retroactivity in Ratification of Contracts
L-48403, 28 Oct. 1942)
GR: Retroactivity applies in ratification of contracts.

Voidable Contract v. Rescissible Contract
XPN: When the rights of innocent third persons will

be prejudiced, ratification will not take effect. VOIDABLE RESCISSIBLE
As to the Kind of Defect Present
NOTE: Ratification does not require the conformity
Defect is intrinsic. Defect is external.
of the contracting party who has no right to bring
the action for annulment. As to the Source of Defect
The damage or prejudice
Q: The Senior Vice President of TERP Vitiated consent suffered by one of the
Construction Corp., Escalona, made a makes the contract contracting parties or a
commitment to Banco Filipino Savings and voidable. third person makes the
Mortgage Bank that TERP Corp. would pay contract rescissible.
interest differentials to the same. However,
after TERP Corp. subsequently paid the interests As to the Necessity of Damage
as agreed upon, it thereafter refused to pay its Damage / prejudice
unpaid balance arguing that Escalona was not Damage is immaterial.
is material.
authorized to make such commitment. Is the act

2022 GOLDEN NOTES
As to the Source of Remedy Kinds of Unenforceable Contracts

Annullability of the Rescissibility of the
contract is based contract is based The following contracts are unenforceable unless
on law. on equity. they are ratified:
As to the Kind of Interest Predominates 1. Those entered into the name of another person
Public interest Private interest by one who has been given no authority/legal
predominates predominates. representation or acted beyond his powers;
As to the Susceptibility of Ratification “Unauthorized contracts”;
Susceptible of Not susceptible of

NOTE: A contract of sale over a piece of land
ratification ratification
entered by an agent whose authority is not in
As to Sanction or Remedy writing, even if he acted beyond the scope of his
It is a sanction. It is a remedy. authority is void, not merely unenforceable.
As to Who Can Avail the Remedy (Art. 1874, NCC)
Third persons who are

Only parties to the 2. Those that do not comply with the Statute of
affected may file
contract can assail it. Frauds; and
the action.
3. Those where both parties are incapable of
As to the Kind of Sanction giving consent to a contract. (Art. 1403, NCC)
It is a principal action. It is a subsidiary action.
8. VOID OR INEXISTENT CONTRACTS
7. UNENFORCEABLE CONTRACTS A void or inexistent contract is one which has no

force and effect from the very beginning, as if it had
Unenforceable contracts are those contracts which never been entered into, and which cannot be
cannot be enforced by action or complaint, unless validated by either by time or ratification. This
they have been ratified by the party or parties who definition includes not only those contracts in which
did not give consent thereto. (Jurado, 2009) one of the essential requisites is totally wanting, but
also those which are declared by positive provision
Characteristics of Unenforceable Contracts of law or statute. A void or inexistent contract is
equivalent to nothing; it is absolutely wanting in
1. It cannot be enforced by a proper action in civil effects. (Tolentino, 2002)
court;
2. It may be ratified; The Following Contracts are Inexistent and Void
3. It cannot be assailed by third person; from the Beginning
4. May only be assailed as a way of defense, not by
direct action; and 1. Those whose cause, object or purpose is
5. The defect of an unenforceable contract is of a contrary to law, morals, good customs, public
permanent nature and it will exist as long as the order or public policy;
contract is not duly ratified. The mere lapse of 2. Those which are absolutely simulated or
time cannot give efficacy to the contract. fictitious;
(Rabuya, 2017) 3. Those whose cause or object did not exist at the
time of the transaction;
NOTE: An unenforceable contract is valid although 4. Those whose object is outside the commerce of
it produces no legal effect. (Tolentino, 2002) men;
5. Those which contemplate an impossible
service;

Civil Law
6. Those where the intention of the parties

relative to the principal object of the contract C. NATURAL OBLIGATIONS
cannot be ascertained;
7. Those expressly prohibited or declared void by
law.
Natural obligations, not being based on positive
law but on equity and natural law, do not grant a
Characteristics of Void Contracts
right of action to enforce their performance, but
after voluntary fulfillment by the obligor, they
1. The contract produces no effect whatsoever
authorize the retention of what has been delivered
either against or in favor of anyone; hence it
or rendered by reason thereof. (Art. 1423, NCC)
does not create, modify, or extinguish the
juridical relation to which it refers;
Rationale (1947 Code Commission)
2. No action for annulment is necessary, because
the nullity exists ipso jure; a judgment of nullity
1. On the part of the payor – It gives rise to a
would merely be declaratory;
moral, rather than a legal duty to pay or
3. It cannot be confirmed or ratified; and
perform, but the person performing feels that
4. If it has been performed, the restoration of what
in good conscience he should comply with his
has been given is in order. (Tolentino, 2002)
undertaking, which is based on moral grounds.
NOTE: The defect of inexistence of a contract is

2. On the part of the payee – The payee is obliged
permanent. It cannot be cured by ratification nor
to return the amount received by him because
prescription.
the payor was not legally bound to make the
payment.
Parties Affected
NOTE: The foundation of natural law are equity,

Any person may invoke the inexistence of the
morality and natural justice. (Sta. Maria, 2017)
contract whenever juridical effects founded thereon
are asserted against him. (Tolentino, 2002)
Examples of Natural Obligations
1. Paying despite extinctive prescription.
When a right to sue upon a civil obligation has

lapsed by extinctive prescription, the obligor
who voluntarily performs the contract cannot
recover what he has delivered or the value of
the service he has rendered. (Art. 1424, NCC)
e.g., The prescriptive period to file a case based

on a written agreement is 10 years from the
time the right of the action accrues. If the
creditor does not collect the amount of the loan
after 10 years from the time it should be paid,
such creditor can no longer collect from the
debtor.
If the debtor, despite the lapse of the period

and knowing that the debt has already
prescribed, pays the creditor, such debtor can
no longer recover the payment. (Sta. Maria,

2022 GOLDEN NOTES
2017) NOTE: Examples of natural obligations under Title

III are NOT exclusive. (Sta. Maria, 2017)
2. 3rd person paying against the will of the debtor.
When without the knowledge or against the

will of the debtor, a 3rd person pays a debt
which the obligor is not legally bound to pay
because the action thereon has prescribed, but
the debtor later voluntarily reimburses the 3rd
person, such debtor can no longer recover such
payment. (Art. 1424, NCC)
3. Contract made by a minor. (Arts. 1426 & 1427,

NCC)
An incapacitated person is not obliged to make

any restitution except insofar as he has been
benefited by the thing or price received by him.
NOTE: A person who is between 18 and 21

years of age is NOT a minor. In present time, the
age of majority is 18 (R.A. No. 6809)
However, if the law is applicable, the minor

who voluntarily makes payment or restitution
of what he has obtained by contract even
though he has no legal obligation to make any
payment or restitution, can no longer recover
what he has returned. (Sta. Maria, 2017)
4. Performance by winning party.
When, after an action to enforce a civil

obligation has failed the defendant voluntarily
performs the obligation, he cannot demand
return of what he has delivered or the payment
of the value of the service he has rendered.
(Art. 1428, NCC)
5. Voluntary payment of an heir in excess of

inherited property. (Art. 1429, NCC)
E.g., A is indebted to B for P10,000.00. A later

dies, with C as his heir who is entitled only to
P5,000.00 from the estate of A. If C voluntarily
pays B P10,000.00, C can no longer recover
such amount. (Sta. Maria, 2017)
6. Payment of a void legacy. (Art. 1430, NCC)

Civil Law
D. ESTOPPEL E. TRUSTS
An admission or representation is rendered It is the legal relationship between one person

conclusive upon the person making it, and cannot having an equitable ownership in a certain
be denied or disproved as against the person property and another person owning the legal title
relying thereon. (Art. 1431, NCC) to such property. (Jurado, 2019)
Estoppel cannot be sustained by mere argument or NOTE: Trust is founded on equity and can never
doubtful inference; it must be clearly proved in all result from acts violative of law. (Deluao v. Casteel,
its essential elements by clear, convincing and (G.R. No. L-21906, 29 Aug. 1969)
satisfactory evidence. (MIAA v. Ding Velayo Sports
Center, Inc., G.R. No. 161718, 14 Dec. 2011) Three (3) Persons Involved in the Creation of a
Trust
NOTE: Estoppel is not applicable in the following
cases: 1. Trustor – the person who establishes the trust.
2. Trustee – one in whom confidence is reposed
1. When a law or public policy has been violated; as regards property for the benefit of another
2. Against the government suing in its capacity as person.
sovereign or asserting governmental rights; 3. Beneficiary or cestui que trust – person for
3. Against the government owing to the mistakes whose benefit the trust has been created. (Art.
or errors of its officers or agents; and 1440, NCC)
NOTE: The government is never estopped by Trust Property

mistakes on the part of its agents. (La Suerte
Cigar & Cigarette Factory v. CA, G.R. No. 125346, The subject-matter of trust may be any property of
11 Nov. 2014) value – real, personal, funds or money, or choses in
action. The property so held is referred to as “trust
4. To questions of law. property.” (De Leon, 2019)
Estoppel applies only to questions of fact. If an TRUST DISTINGUISHED

act, conduct or misrepresentation of the party FROM OTHER RELATIONS
sought to be estopped is due to the ignorance
founded on innocent mistake, then estoppel TRUST v. DONATION
will not arise. (Sta. Maria, 2017)
TRUST DONATION
Transfer of property
Parties Bound
An existing legal which involves a
relationship and disposition of both legal
Estoppel is applied only as between
involves separation of and equitable
1. Parties thereto; or
legal and equitable title. ownership except gift in
2. Their successors-in-interest. (Art. 1439, NCC)
trust.
The beneficiary of a
trust may demand
Must comply with the
performance of the
legal requirements in
obligation without
accepting donations.
having formally
accepted the trust in a

2022 GOLDEN NOTES
public document, upon CLASSIFICATION OF TRUST

mere acquiescence in
the formation of the 1. As to Creation – From the viewpoint of the
trust and acceptance creative force bringing them into existence,
under Art. 1132(2) of they may be either:
the Civil Code. (De Leon,
2019) a. Express trust (Arts. 1443-1446, NCC) or
TRUST v. CONTRACT one which can come into existence only by
the execution of an intention to create it by
TRUST CONTRACT
the trustor or the parties (De Leon, 2019);
A trust always involves Legal obligation based or
an ownership, on an undertaking
embracing a set of rights supported by a b. Implied trust, or which comes into being
and duties fiduciary in consideration, which by operation of law (Arts. 1447-1457,
character which may be obligation may or may NCC); this latter trust being either:
created by a declaration not be fiduciary in 1. Resulting trust
without a consideration. character. (De Leon, 2. Constructive trust (De Leon, 2019)
(De Leon, 2019) 2019)
2. As to Effectivity – From the viewpoint of
TRUST v. DEBT whether they become effective after the death
TRUST DEBT of the trustor or during his life, they may be
A duty to deal with a either:
specific property for the
A debt implies merely a. Testamentary Trust – one which is to
benefit of another. A
an obligation to pay a take effect upon the trustor’s death. It is
creditor has merely a
certain sum of money. usually included as part of the will and
personal claim against
the debtor. does not have a separate trust deed.
There is a fiduciary
There is no fiduciary b. Inter Vivos trust or “Living Trust” – one
relation between a
relation between a established effective during the owner’s life.
trustee and a
debtor and creditor. The grantor executes a “trust deed,” and
beneficiary.
once the trust is created, legal title to the
The beneficiary of a
A creditor has merely a trust property passes to the named trustee
trust has a beneficial
personal claim against with duty to administer the property for the
interest in the trust
the debtor. (De Leon, benefit of the beneficiary. (De Leon, 2019)
property. (De Leon,
2019)
2019)
3. As to Revocability – From the viewpoint of
TRUST v. BAILMENT whether they may be revoked by the trustor,
TRUST BAILMENT they may be either:
A delivery of a property
in trust necessarily The bailee has a. Revocable trust – one which can be
involves a transfer of possession of without revoked or cancelled by the trustor or
legal title, or at least a legal title to the another individual given the power; or
separation of legal title property subject to the
and equitable interest, bailment. (De Leon, b. Irrevocable trust – one which may not be
with the legal title in the 2019) terminated during the specified term of the
trustee. (De Leon, 2019) trust.

Civil Law
NOTE: Whether a trust is revocable or irrevocable EXPRESS TRUST

depends on the wordings or language used in the
creation of the trust. It will be presumed revocable One which come into existence only by the
unless the creator has expressed a contrary execution of an intention to create it by the trustor
intention in the trust deed. (De Leon, 2019) or the parties. (De Leon, 2019)
KINDS OF TRUST Express trust is created voluntarily and

intentionally. A trust that is created via direct and
Express Trust v. Implied Trust positive act of the trustor, by some writing, deed,
will, or oral declaration evincing an intention to
EXPRESS TRUST IMPLIED TRUST create trust. (De Leon, 2019)
Definition (Art. 1441, NCC)
Elements of an Express Trust
Comes into being by
Created by the
operation of law. It
intention of the 1. A competent trustor and trustee;
may be either
trustor or of the 2. An ascertainable trust res; and
resulting or
parties. 3. Sufficiently certain beneficiaries
constructive.
Manner of Creation
Evidence to Prove Express Trust
Those which, without
Created by the direct being expressed, are
No express trust concerning an immovable or any
and positive acts of deducible from the
interest therein may be proved by parol evidence.
the parties, by some nature of the
(Art. 1443, NCC)
writing or deed or transaction by
will or by words operation of law as
NOTE: The defense that express trusts cannot be
evidencing an matters of equity,
proved by parol evidence may be waived, either by
intention to create a independently of the
failure to interpose timely objections against the
trust. particular intention of
presentation of oral evidence not admissible under
the parties.
the law or by cross-examining the adverse party and
Parole Evidence
his witnesses along the prohibited lines. (De Leon,
An express trust An implied trust 2019)
concerning an concerning an
immovable or any immovable or any An express trust over personal property or any
interest therein interest therein may interest therein, and an implied trust, whether the
cannot be proved by be proved by parole property subject to the trust is real or personal, may
parole evidence. (Art. evidence. (Art. 1457, be proved by oral evidence. (Art. 1457, NCC)
1457, NCC) NCC)
NOTE: To affect third persons, a trust concerning an
Laches or Extinctive Prescription
immovable or any interest therein must be
An action to enforce An action to enforce
embodied in a public instrument and registered in
an express trust, so an implied trust even
the Registry of Property. (De Leon, 2019)
long as there is no when there is no
express repudiation express repudiation
Creation of Express Trust
of the trust by the of the trust by the
trustee and made trustee and made
1. By conveyance to the trustee by an act inter
known to the known to the
vivos or mortis causa (as in a will).
beneficiary, cannot be beneficiary, may be
2. By admission of the trustee that he holds the
barred by laches or barred by laches or by
property, only as trustee. (Paras, 2021)
extinctive extinctive
prescription. prescription.

2022 GOLDEN NOTES
Express trust is voluntarily and intentionally beneficiary is spendthrift.

created by direct and positive act of the trustor, by
some writing, deed, will, or oral declaration d. Sprinkling trust – one that gives the trustee the
evincing an intention to create trust. (Art. 1444, right to determine the income of the
NCC; De Leon, 2019) beneficiaries who should receive income each
year and the amount thereof. (De Leon, 2019)
NOTE: Technical or particular forms of words or
phrases are not essential to the manifestation of an Termination of Express Trust
intention to create a trust. It is possible to create a
trust without using the word “trust” or “trustee.” 1. Loss of subject matter of the trust (physical
(De Leon, 2019) loss or legal impossibility)
2. Revocation by the trustor or Rescission or
Effect if Trustee Declines annulment (as in other contracts)
3. Achievement of the objective, or happening of
The trust ordinarily continues even if the trustee the condition, provided for in the trust
declines. Reason — the court will appoint a new instrument;
trustee, unless otherwise provided for in the trust 4. Death or legal incapacity of the trustee;
instrument (Sec. 3, Rule 98, Rules of Court; Art. 1446, 5. Confusion or merger of legal title and
NCC). A new trustee has to be appointed, otherwise beneficial title in the same person; and
the trust will not exist. 6. Order of the court (breach of trust).
No trust shall fail because the trustee appointed Requisites for Acquisition of Property by
declines the designation, unless the contrary should Trustee through Prescription
appear in the instrument constituting the trust. (Art.
1445, NCC) Acquisitive prescription may bar the action of the
beneficiary against the trustee in an express trust
Acceptance by the beneficiary is necessary. for the recovery of the property held in trust
Nevertheless, if the trust imposes no onerous where:
condition upon the beneficiary, his acceptance shall
be presumed, if there is no proof to the contrary. a) The trustee has performed unequivocal acts of
(Art. 1446, NCC) repudiation amounting to an ouster of the
cestui qui trust;
Kinds of Express Trust b) Such positive acts of repudiation have been
made known to the cestui qui trust; and
a. Eleemosynary or Charitable trust – one designed c) The evidence thereon is clear and conclusive.
for the benefit of a segment of the public or of (Pilapil v. Heirs of Maximino R. Briones, G.R. No.
the public in general. Created for charitable, 150175, 05 Feb. 2007)
educational, social, religious, or scientific
purposes, or for the general benefit of the IMPLIED TRUST
humanity.
Those which, without being express, are deducible
b. Accumulation trust – one that will accumulate from the nature of the transaction as matters of
income to be reinvested by the trustee in the intent, or which are superinduced on the
trust for the period of time specified. transaction by operation of law, as matters of
equity, independently of the particular intention of
c. Spendthrift trust – one established when the the parties (Tong v. Kun, G.R. No. 196023, 21 Apr.
beneficiary needs to be protected because of his 2014). Implied trusts are created by operation of
inexperience or immaturity from his imprudent, law (“trust by operation of law”).
spending habits or simply because the

Civil Law
Kinds of Implied Trust “Y” mortgaged the property to the bank without
the knowledge of “X.” When the mortgage
1. Resulting trust (bare or passive trust) – became due, “Y” did not redeem the mortgage
broadly defined as a trust which is raised or and the property was advertised for sale. “X”
created by the act or construction of law, but in retained you as his lawyer. What advice would
its more restricted sense, it is a trust raised by you give your client and what legal ground
implication of law and presumed always to have provided by the Code would you assert to
been contemplated by the parties, the intention defend his rights? Give reasons. (1959 BAR)
as to which is to be found in the nature of their
transaction, but not expressed in the deed or A: It is clear that in the instant problem, the
instrument of conveyance. (89 C.J.S. 75) provision of Art. 1450 of the Civil Code is
applicable. It must be observed, however, that the
Examples of Resulting Trust mortgage of the property by “Y” to the bank is
perfectly valid inasmuch as the bank was not aware
a. There is an implied trust when property is sold, of any flaw or defect in the title or mode of
and the legal estate is granted to one party but acquisition by “Y” since the right of “X” has not been
the price is by another for the purpose of annotated in the Certificate of Title. Consequently,
having the beneficial interest of the property. the only way by which I would be able to help “X”
The former is the trustee, while the latter is the would be to advise him to redeem the mortgaged
beneficiary. However, if the person to whom property from the bank. After this is done, “X” can
the title is conveyed is a child, legitimate or then institute an action to compel “Y’” to reconvey
illegitimate, of the one paying the price of the the property to him pursuant to Art. 1450 of the
sale, no trust is implied by law, it being Civil Code. In this action for reconveyance, the
disputably presumed that there is a gift in favor amount paid by “X” to the bank in redeeming the
of the child. (Art. 1448, NCC) property can then be applied to the payment of his
debt to “Y.” If there is an excess, he can recover the
b. There is also an implied trust when a donation amount from “Y.” (Jurado, 2019)
is made to a person but it appears that
although the legal estate is transmitted to the d. If two or more persons agree to purchase
donee, he nevertheless is either to have no property and by common consent the legal title
beneficial interest or only a part thereof. (Art. is taken in the name of one of them for the
1449, NCC) benefit of all, a trust is created by force of law in
favor of the others in proportion to the interest
c. If the price of a sale of property is loaned or of each. (Art. 1452, NCC)
paid by one person for the benefit of another
and the conveyance is made to the lender or e. When property is conveyed to a person in
payor to secure the payment of the debt, a trust reliance upon his declared intention to hold it
arises by operation of law in favor of the for, or transfer it to another or the grantor,
person to whom the money is loaned or for there is an implied trust in favor of the person
whom it is paid. The latter may redeem the whose benefit contemplated. (Art. 1453, NCC)
property and compel a conveyance thereof to
him. (Art. 1450, NCC) 2. Constructive trust (trust ex malefacio) – a
trust raised by construction of law or arising by
Q: “X” being unable to pay the purchase price of operation of law. It is a trust not created by any
a house and lot for his residence has requested words, either expressly or impliedly evincing a
“Y,” and “Y” agreed to lend him the money under direct intention to create a trust, but by the
one condition, that the Certificate of Title be construction of equity in order to satisfy the
transferred to him, in Y’s own name for his demands of justice. It does not arise by
protection and as security of the loan. Later on, agreement or intention but by operation of law.

2022 GOLDEN NOTES
(89 C.J.S. 726-727) in favor of the person to whom the funds belong.
(Art. 1455, NCC)
NOTE: A constructive trust is not a trust in a
technical sense. (Pilapil v. Heirs of Maximino R. 4. If property is acquired through mistake or
Briones, supra) It is substantially an equitable fraud, the person obtaining it is, by force of law
remedy against unjust enrichment. (Tong v. considered a trustee of an implied trust for the
Kun, supra) benefit of the person from whom the property
comes. (Art. 1456, NCC)
NOTE: It is otherwise known in American law as
a trust ex maleficio, trust ex delicto, and de son Period of Prescription
tort. (Tong v. Kun, supra)
PRESCRIPTIVE
Q: Explain the concept of trust de son tort BASIS
PERIOD
(constructive trust). (2007 BAR)
Annulment of voidable Four (4) years from
contract based on the discovery of the
A: A constructive trust is a trust not created by any
fraudulent registration of fraud. (Art. 1391(4),
word or phrase, either expressly or impliedly,
the subject property. NCC)
evincing a direct intention to create a trust, but is
Declaration of nullity or
one that arises in order to satisfy the demands of
inexistence of a void or
justice. It does not come about by agreement or
inexistent contract based Imprescriptible. (Art.
intention but mainly by operation of law and
on fraudulent 1410, NCC)
constructed as a trust against one who, by fraud,
registration of the subject
duress or abuse of confidence, obtains or holds the
property.
legal right to property which he ought not, in equity
and good conscience, to hold. (Cañezo v. Rojas, G.R. Based on fraudulent
Ten (10) years from
No. 148788, 23 Nov. 2007) registration of the subject
the discovery of the
property but the action
fraud. (Art. 1144(2),
Examples of Constructive Trust: does not involve
NCC)
annulment of contract.
1. When land passes by succession to any person An action to quiet
If the legitimate owner of
and he causes the legal title to be put in the title, therefore,
the subject property
name of another, a trust is established by imprescriptible.
which was fraudulently
implication of law for the benefit of the true (Heirs of Tappa v.
registered in the name of
owner. (Art. 1451, NCC) Heirs of Malupeg, G.R.
another had always been
No. 187633, 04 Apr.
in possession thereof.
2. If an absolute conveyance of property is made 2016)
in order to secure the performance of an
obligation of the grantor toward the grantee, a Acquisition of Property by Trustee through
trust by virtue of law is established. If the Prescription in Implied Trusts
fulfillment of the obligation is offered by the
grantor when it becomes due, he may demand Express repudiation of the trust by the trustee is
the reconveyance of the property to him. (Art. not required. All that is required is that he must set
1454, NCC) up a title which is adverse to that of the beneficiary.
In other words, the normal requisites for
3. When any trustee, guardian or other person extraordinary acquisitive prescription must be
holding a fiduciary relationship uses trust funds present. (Jurado, 2019)
for the purchase of property and causes the
conveyance to be made to him or to a third
person, a trust is established by operation of law

Civil Law
Conversion of Implied Trust to Express Trust

F. QUASI-CONTRACT
An implied trust may be converted to an express
trust through recognition by the implied trustee of
the right to the property of the owner. (De Leon,
A quasi-contract is that juridical relation resulting
2019)
from a lawful, voluntary, and unilateral act, and
which has for its purpose the payment of indemnity
to the end that no one shall be unjustly enriched or
benefited at the expense of another. (Art. 2142,
NCC)
NOTE: There is actually no agreement between the

parties but there is deemed to be consent that exist
between them; that consent is supplied by the law
and not the parties themselves.
It is the law that presumes that there is consent

between the parties in that quasi contract. This is
in order to prevent unjust enrichment of one at the
expense of another.
Two (2) Principal Kinds of Quasi-Contract
1. Negototiorum gestio (unauthorized

management); and
2. Solutio indebiti (undue payment)
Negotiorum Gestio
This takes place when a person voluntarily takes

charge of another’s abandoned business or
property without the owner’s authority (Art. 2144,
NCC). Reimbursement must be made to the gestor
for necessary and useful expenses, as a rule. (Art.
2150, NCC)
Solutio Indebiti
This takes place when something is received when

there is no right to demand it, and it was unduly
delivered thru mistake. The recipient has the duty
to return it. (Art. 2154, NCC)
Example: If I let a storekeeper change my P50.00

bill and by error he gives me P50.60, I have the duty
to return the extra P0.60.
NOTE: The obligation of the recipient to return

whatever he has received because if he did not,

2022 GOLDEN NOTES
then he will be unjustly enriched at the expense of be deducted from the payment to N.C. Roxas, Inc.
that person mistakenly delivering. Unfortunately, N.C. Roxas, Inc. was paid without
deducting the aforementioned amount.
Requisites for of Solutio Indebiti: Consequently, there was an overpayment in the
progress billings made to N.C. Roxas, Inc. It
1. He who paid was NOT under obligation to do would appear that PSHS incurred a total
so; expenditure of P8,641,470.47, instead of only
2. The payment was made by reason of an P6,793,450.41. Can the government recover the
essential mistake of fact. excess payment (liquidated damages) from N.C.
Roxas, Inc.?
Quasi-Contract NOT an Implied Contract
A: YES. N.C. Roxas, Inc.'s liability to return the
A: No, It is not, an implied contract because in a disallowed amount may be enforced based on the
quasi-contract, unlike in an implied contract, there principle of solutio indebiti. Art. 2154 of the Civil
is no meeting of the minds. Code explains the principle of solutio indebiti. Said
provision provides that if something is received
Examples of Quasi-Contracts when there is no right to demand it, and it was
unduly delivered through mistake, the obligation to
1. When during a fire, flood, or other calamity, return it arises. In such a case, a creditor-debtor
property is saved from destruction by another relationship is created under a quasi-contract
person without the knowledge of the owner, whereby the payor becomes the creditor who then
the latter is bound to pay the former just has the right to demand the return of payment made
compensation. (Art. 2168, NCC). by mistake, and the person who has no right to
receive such payment becomes obligated to return
2. Any person who is constrained to pay the taxes the same.
of another shall be entitled to reimbursement
from the latter. (Art. 2175, NCC) The principle of solutio indebiti applies where (1) a
payment is made when there exists no binding
NOTE: Action in Quasi-Contract must be relation between the payor, who has no duty to pay,
commenced within six (6) years. (Art. 1145, NCC) and the person who received the payment; and (2)
the payment is made through mistake, and not
Example: In Belman Compania, Inc. v. Central Bank through liberality or some other cause. Evidently,
(G.R. No. L-15044, 14 July 1960), it was held that an because of the erroneous computation of liquidated
action to recover a foreign exchange tax damages, the contractor, N.C. Roxas, Inc., through
erroneously collected by the Central Bank (Bangko mistake, received more than what was due to it
Sentral) is one based on the quasi-contract of under the contract. There being no binding
solutio indebiti, and it, therefore, prescribes in six obligation on the part of PSHS to pay the excess
(6) years. amount, N.C. Roxas, Inc. is therefore bound to return
the same| (Collado v. Villar, G.R. No. 193143, 01 Dec.
Q: The Philippine Science High School (PSHS) 2020, J. Caguioa)
entered into a contract with N.C. Roxas, Inc. for
the construction of the PSHS-Mindanao Campus Q: In 2013, the Municipality of Mondragon,
Building Complex. Later, the PSHS Board of Northern Samar, issued resolutions granting
Trustees terminated the contract for failure of various allowances to its officials and employees
the contractor to finish project on time. The including Mayor Mario Madera (Madera) and
PSHS Management erroneously computed the two (2) other local officials. Soon, the COA
liquidated damages against N.C. Roxas, Inc. in Regional Office disallowed the allowances for
the amount of P252,114.79, instead of violating R.A. No. 6758 or the Salary
P2,400,134.65, which amount was supposed to Standardization Law, among others, and

Civil Law
ordered Madera and the other officials who design or some motive of self-interest or ill will for
received the disallowed benefits to return the ulterior purposes. This is absent in this case. Thus,
same. Madera questioned the disallowance and Madera and the other approving and certifying
argued that the grant of additional officers are shielded from civil liability for the
allowances/financial assistance in the disallowance under Sec. 38 of the Administrative
Municipality was a customary scheme over the Code of 1987. (Madera v. COA, G.R. No. 244128, 08
years. Sept. 2020, J. Caguioa)
Soon, the COA affirmed the ruling of the COA Q: How about the other passive payees? May
Regional Office but made clarifications: (a) the they be required to return the disallowed
officials and employees who unwittingly benefits? Is good faith an excuse in accepting
received the disallowed benefits or allowances these benefits?
are not held liable for their reimbursement
since they are recipient-payees in good faith; A: As for other payees, they are also excused. while
and (b) the municipal officials who passed and they are ordinarily liable to return for having
approved the Sangguniang Bayan Ordinance unduly received the amounts validly disallowed by
and Resolutions authorizing the grant of subject COA, the return was properly excused not because
allowances, including those who of their good faith but because it will cause undue
approved/certified the payment thereof, are prejudice to require them to return amounts that
made to refund the entire disallowed benefits or were given as financial assistance and meant to tide
allowances. them over during a natural disaster.
Should Madera and other approving officials In ruling that good faith is not a valid excuse, the
return the disallowed benefits on the ground of Supreme Court held that excusing payees from
solutio indebiti? return on the basis of good faith has been previously
recognized as an exception to the laws on liability
A: NO, Madera and other approving and certifying for unlawful expenditures. However, being civil in
officials need not refund the disallowed amounts nature, the liability of officers and payees for
inasmuch as they had acted in good faith. First, the unlawful expenditures provided in the
allowances were intended as financial assistance to Administrative Code of 1987 will have to be
municipal employees in view of the increase of cost consistent with civil law principles such
on prime commodities, shortage of agricultural as solutio indebiti and unjust enrichment. These civil
products, and the vulnerability of their municipality law principles support the propositions that (1) the
to calamities and disasters. Second, it has been a good faith of payees is not determinative of their
customary scheme of the municipality to grant liability to return; and (2) when the Court excuses
additional allowances during year-end period and payees on the basis of good faith or lack of
which act is legally anchored on yearly participation, it amounts to a remission of an
appropriation ordinance by the sanggunian. obligation at the expense of the government.
(Madera v. COA, supra, J. Caguioa)
Besides, mistakes committed by a public officer are
not actionable, absent a clear showing that he was Q: Petitioners John Celeste (Celeste), Edgar
motivated by malice or gross negligence amounting Buted (Buted), Danilo Gomez, and
to bad faith. It does not simply connote bad moral Luzvimindo Caguioa are employees of the
judgment or negligence. Rather, there must be National Irrigation Administration (NIA). In
some dishonest purpose or some moral obliquity 2010 and 2011, the NIA paid Collective
and conscious doing of a wrong, a breach of a sworn Negotiation Agreement Incentive (CNAI) to its
duty through some motive or intent, or ill will. It managerial and rank-and-file officials. Later, the
partakes of the nature of fraud and contemplates a COA disallowed the said allowance. Should
state of mind affirmatively operating with furtive

2022 GOLDEN NOTES
petitioners be excused from refund on the basis On Dec. 1, 2004, the Court nullified Resolution
of good faith? Nos. 98-30 and 99-11 issued by respondent
MIAA for non-observance of the notice and
A: While the approving and certifying officers may hearing requirements for the fixing rates. Later,
be excused from the solidary liability to return due DPRC advised MIAA of its intention to stop
to good faith, passive recipients or payees of the paying the increased rental rate, and on Jan. 1,
disallowed CNAI may not be excused on the same 2006, it stopped paying the increased rental
ground. Rule 2 (c) and 2 (d) of the Rules on Return rate but continued paying the original rental
states these rules: (a) recipients — whether rate prescribed in the lease contract. On June 22,
approving or certifying officers or mere passive 2006, MIAA required the payment of
recipients — are liable to return the disallowed P645,216.21 allegedly representing the balance
amounts respectively received by them, unless they of the rentals from January up to June 2006.
are able to show that the amounts they received
were genuinely given in consideration of services On July 27, 2006, DPRC sent its reply to MIAA
rendered; (b) the Court may likewise excuse the denying the unpaid obligation, reiterating that
return of recipients based on undue prejudice, the rental could no longer be computed based
social justice considerations, and other bona on the nullified Resolution No. 98-30, and
fide exceptions as it may determine on a case-to- demanding for the refund of its overpayment in
case basis. Neither of these two (2) rules apply in the amount of P9,593,179.87. MIAA ignored its
this case to excuse the return by petitioners-payees demand prompting DPRC to send a final written
of the CNAI they respectively received. Again, being demand dated Nov. 5, 2008. Is MIAA liable to
civil in nature, the liability of officers and payees for DPRC for the overpaid monthly rentals under
unlawful expenditures provided in the the quasi-contract of solutio indebiti?
Administrative Code of 1987 will have to be
consistent with civil law principles such A: NO. In the instant case, the Court finds that the
as solutio indebiti and unjust enrichment. (Celeste v. essential requisites of solutio indebiti are not
COA, G.R. No. 237843, 15 June 2021, J. Caguioa) present.
Q: On June 4, 1998, DPRC and MIAA entered into First, there exists a binding relation between DPRC
a Contract of Lease whereby the former leased and MIAA. It is undisputed by all parties that
from the latter a 1,631.12-square meter (sqm) respondent MIAA and petitioner DPRC are mutually
parcel of land and a 630.88-sqm building both bound to each other under a Contract of Lease,
located at Domestic Road, Pasay City. DPRC was which both parties entered on June 4, 1998,
obliged to pay monthly rentals of P75,357.74 for covering the 1,631.12-sqm parcel of land and a
the land and P33,310.46 for the building. 630.88-sqm building both located at Domestic
Road, Pasay City. Hence, with respondent MIAA and
On April 2, 1998, MIAA passed Resolution No. petitioner DPRC having the juridical relationship of
98-30 increasing the rentals paid by its a lessor-lessee, it cannot be said that in the instant
concessionaires and lessees. DPRC initially case, the overpayment of monthly rentals was made
refused to pay the increased rentals which was when there existed no binding juridical tie or
decreed without prior notice and hearing. On relation between the payor, i.e., petitioner DPRC,
Dec. 8, 1998, DPRC protested in writing the and the person who received the payment, i.e.,
increased rentals and the computation. respondent MIAA.
However, it also signified its intention to comply
in good faith with the terms and conditions of Second, there was no payment by mistake. Instead,
the lease contract by paying the amount DPRC deliberately made the payments in
charged. accordance with respondent MIAA's Resolution No.
98-30, albeit under protest. It must be recalled that
after the issuance of Resolution No. 98-30, on Dec.

Civil Law
8, 1998, DPRC protested in writing to respondent

MIAA, alleging that Resolution No. 98-30 was
invalidly issued.
Solutio indebiti applies when payment was made on

the erroneous belief of facts or law that such payment
is due. In the case at hand, petitioner DPRC's
overpayment of rentals from 1998 to 2005 was not
made by sheer inadvertence of the facts or the
misconstruction and misapplication of the law.
Petitioner DPRC did not make payment because it
mistakenly and inadvertently believed that the
increase in rentals instituted by the subsequently
voided Resolution No. 98-30 was indeed due and
demandable. From the very beginning, petitioner
DPRC was consistent in its belief that the increased
rentals were not due as Resolution No. 98-30 was,
in its view, void. (Domestic Petroleum Retailer Corp.
v. Manila International Airport Authority, G.R. No.
210641, 27 Mar. 2019, J. Caguioa)

2022 GOLDEN NOTES
Sales
b. Sale of a right (assignment of a right, or a

V. SALES credit or other intangibles such as
copyright, trademark, or good will);
NOTE: An intangible object is a chose in

action.
A. NATURE AND FORM
4. Validity or defect of the transaction:
a. Valid;
NATURE b. Rescissible;
c. Voidable;
Sale d. Unenforceable; and
e. Void.
Sale is a contract where one party (seller or vendor)
obligates himself to transfer the ownership of and to 5. Legality of the object:
deliver a determinate thing, while the other party a. Licit object; and
(buyer or vendee) obligates himself to pay for said b. Illicit object.
thing a price certain in money or its equivalent. (Art.
1458, NCC; 2001 BAR) 6. Presence or absence of conditions:
a. Absolute; and
The primary consideration in determining the true b. Conditional.
nature of a contract is the intention of the parties. If
the words of a contract appear to contravene the 7. Wholesale or retail:
evident intention of the parties, the latter shall a. Wholesale; or
prevail. Such intention is determined not only from b. Retail.
the express terms of their agreement, but also from
the contemporaneous and subsequent acts of the 8. Proximate inducement for the sale:
parties. (Liam v. UCPB, G.R. No. 194554, 15 June a. Sale by description;
2016) b. Sale by sample; and
c. Sale by description and sample.
Kinds
9. When the price is tendered:
As to: a. Cash sale; and
1. Nature of the subject matter: b. Sale on installment plan.
a. Sale of real property; and
b. Sale of personal property. Characteristics
2. Value of the things exchanged: 1. Consensual – A sale is perfected by mere

a. Commutative sale; and consent, which is manifested by the meeting of
b. Aleatory sale. the minds as to the offer and acceptance thereof
on the subject matter, price and terms of
3. Tangibility of the object: payment.
a. Sale of property (tangible or corporeal);
NOTE: Delivery of the thing bought or payment
NOTE: A tangible object is also called of the price is not necessary for the protection
chose in possession. of the contract; and failure of the vendee to pay
the price after the execution of the contract
does not make the sale null and void for lack of
consideration but results at most in default on

Civil Law
the part of the vendee, for which the vendor transfer or affect ownership, what it does is to
may exercise his legal remedies. (Rabuya, 2017) create the obligation to transfer ownership.
2. Bilateral – The seller will deliver and transfer a NOTE: A contract of sale may be absolute or
determinate thing to the buyer and the latter conditional.
will pay an ascertained price (or its equivalent).
It imposes obligations on both the seller and Absolute Sale
buyer. The obligations of each party are the
cause for the obligation of the other. A sale is absolute when no condition is imposed and
ownership passes to the vendee upon delivery of
Each party is simultaneously a debtor and the thing subject of the sale. (Art. 1497, NCC)
creditor of the other. (Villanueva, 2018)
A contract of sale is absolute when the title to the
3. GR: Commutative – The thing sold is property passes to the vendee upon delivery of the
considered the equivalent of the price paid and thing sold. (Rabuya, 2017)
the price paid is the equivalent of the thing sold.
(De Leon, 2014) Instance when a Deed of Sale considered
Absolute in Nature
NOTE: There is no requirement that the price
should be equal to the exact value of the subject- A deed of sale is considered absolute in nature
matter of the sale. All that is required is that the where there is neither a stipulation in the deed that
parties believed that they will receive good title to the property sold is reserved in the seller
value in exchange for what they will give. until the full payment of the price, nor one giving the
(Villanueva, 2018) vendor the right to unilaterally resolve the contract
the moment the buyer fails to pay within a fixed
XPN: However, the contract may be aleatory as period.
in the case of the sale of a hope such as
sweepstakes ticket. (De Leon, 2014) Conditional Sale
Aleatory – The consideration is not equivalent It is conditional where the sale contemplates a
of what has been received in the case of contingency, and in general, where the contract is
purchase of a lotto ticket. If the ticket wins, the subject to certain conditions, usually in the case of
prize is much more than the price of the ticket. the vendee, the full payment of the agreed purchase
price, and in the case of the vendor, the fulfillment
4. Principal – Its existence does not depend upon of certain warranties. (De Leon, 2013)
the existence and validity of another contract.
(De Leon, 2014) The full payment of the purchase price partakes of a
suspensive condition, and non-fulfillment of the
5. Onerous – The thing sold is conveyed in condition prevents the obligation to sell from
consideration of the purchase price, and vice arising. (Nuñez v. Moises-Palma, G.R. No. 224466, 27
versa. (De Leon, 2014) Mar. 2019)
6. Nominate –It is given a special name or Q: JCEC filed a Complaint for Specific
designation in the Civil Code, namely, “sale”. (De Performance with Damages against Sps.
Leon, 2014) Mendoza which sought the delivery of the clean
certificates of title and peaceful possession of six
7. Title, not a mode – The contract of sale is not a (6) contiguous parcels of land registered in the
mode, but merely a title. The sale itself does not name of Sps. Mendoza. It must be noted the
contract is a contract to sell and JCEC failed to

2022 GOLDEN NOTES
Sales
pay the purchase price in full. Will the complaint Instance when a Conditional Sale considered an
prosper? Absolute Sale
A: NO, because the agreement is a mere contract to A deed of sale is absolute in nature although
sell, the full payment of the purchase price partakes denominated as a “Deed of Conditional Sale” where
of a suspensive condition. The non-fulfillment of the nowhere in the contract in question is a proviso or
condition prevents the obligation to sell from stipulation to the effect that title to the property
arising; thus, ownership is retained by the seller sold is reserved in the vendor until full payment of
without further remedies by the buyer. Without full the purchase price, nor is there a stipulation giving
payment, there can be no breach of contract to the vendor the right to unilaterally rescind the
speak of because the vendor has no obligation yet to contract the moment the vendee fails to pay within
turn over the title. JCEC has no right to compel Sps. a fixed period. (Dignos v. CA, G.R. No. L-59266, 29 Feb.
Mendoza to deliver the titles over the subject 1988)
property because it failed to pay the purchase price
in full. (Jovil Construction and Equipment Corp. v. Q: A contract of sale of a lot stipulates that the
Sps. Mendoza, G.R. Nos. 250321 & 250343, 03 Feb. “payment of the full consideration based on a
2021) survey shall be due and payable in 5 years from
the execution of a formal deed of sale.” Is this a
Conditional Sale v. Absolute Sale (2001 BAR) conditional contract of sale?
CONDITIONAL SALE ABSOLUTE SALE A: NO, it is not. The stipulation is not a condition
which affects the efficacy of the contract of sale. It
The title to the property
The seller is granted the merely provides the manner by which the full
is not reserved to the
right to unilaterally consideration is to be computed and the time within
seller or if the seller is
rescind the contract which the same is to be paid. But it does not affect in
not granted the right to
predicated on the any manner the effectivity of the contract. (Heirs of
rescind the contract
fulfillment or non- Jesus Mascuña v. CA, G.R. No. 158646, 23 June 2005)
based on the fulfillment
fulfillment, as the case
or non-fulfillment, as
may be, of the Q: MTCL sent a letter-proposal for the delivery
the case may be, of the
prescribed condition. and sale of the machines to be installed at
prescribed condition.
various offices of ACE Company to which the
latter agreed for a purchase price of ₱5,000,000.
Effect of the Non-performance of the Condition
Thereafter, it delivered several machineries at
or if the Condition did NOT Take Place
ACE Company’s premises and installed the same.
Where the obligation of either party to a contract of
MTCL Company demanded payment from ACE
sale is subject to any condition which is not
Company. However, they have sent a letter to
performed, such party may:
MTCL Company stating that they have been
returning the machines to them thru one of their
1. Refuse to proceed with the contract; or
sales representatives who has agreed to pull the
2. Waive performance of the condition.
machines out but failed to do so.
Unlike in a non-fulfillment of a warranty which
would constitute a breach of the contract, the non-
ACE Company filed a complaint against MTCL
happening of the condition, although it may
Company praying that the latter pull out from its
extinguish the obligation upon which it is based,
premises the subject machines. In its defense,
generally does not amount to a breach of a contract
MTCL Company posits that ACE Company
of sale.
refused to pay the purchase price therefor
despite the latter’s use of the machines. As such,
MTCL Company prays that ACE Company be

Civil Law
compelled to pay the purchase price. Should ACE c. Sale of property not to be performed
Company pay MTCL for the purchase price of the within a year from the date thereof; or
machines? d. When an applicable statute requires that
the contract of sale be in a certain form.
A: YES. Considering its consensual nature, a (Art. 1403 (2), NCC)
contract of sale had been perfected at the precise
moment ACE Company accepted the latter’s 3. Sale of large cattle which requires that the
proposal to sell the machines in consideration of the same be recorded with the city/municipal
purchase price of ₱5,000,000. treasurer and that a certificate of transfer be
issued. Otherwise, the sale is not valid. (Art.
From that point in time, the reciprocal obligations of 1851, NCC)
the parties – i.e., on the one hand, of MTCL to deliver
the said machines to ACE Company, and, on the NOTE: The contract of sale of REAL PROPERTIES
other hand, of ACE Company to pay the purchase even if not complete in form, so long as the essential
price therefor after delivery – already arose and requisites of consent of the contracting parties,
consequently may be demanded. From that object, and cause of the obligation concur and they
moment, the parties may reciprocally demand were clearly established to be present, is valid and
performance, subject to the provisions of the law effective between the parties.
governing the form of contracts. (Ace Foods, Inc. v.
Micro Pacific Technologies, G.R. No. 200602, 11 Dec. Under Art. 1357 of the NCC, its enforceability is
2013) recognized as each contracting party is granted the
right to compel the other to execute the proper
FORM public instrument so that the valid contract of sale
of registered land can be truly registered and can
Formal Requirement for the Validity of a bind third persons. (Rabuya, 2017)
Contract of Sale
Q: On 2 Aug. 2002, Dee Hwa Liong Foundation
GR: A contract of sale may be made in writing, or by Medical Center (“DHLFMC”) entered into a
word of mouth, or partly in writing and partly by contract to purchase a GammaMed Plus
word of mouth, or may be inferred from the conduct Brachytheraphy machine and a Gammacell Ellan
of the parties. (Art. 1483, NCC) 3000 blood irradiator from Asiamed Supplies
and Equipment Corporation (“Asiamed”) at a
Contracts shall be obligatory, in whatever form they total price of P31,000,000.00. The machines
have been entered into, provided all the essential were delivered on 20 May 2003 and on 17 July
requisites for their validity are present. (Art. 1356, 2003, whereupon two delivery invoices that
NCC) provided for a 12% annual interest and 25%
attorney’s fees charge on overdue accounts,
XPNs: were signed by petitioner Anthony Dee (“Dee”)
1. If the law requires a document or other special and DHFLMC Vice President for Administration.
form, the contracting parties may compel each
other to observe that form. (Art. 1357, NCC) After the demand for the collection of the unpaid
remaining balance of P25,700,000.00 went
2. Under Statute of Frauds, the following unheeded, Asiamed was constrained to file a
contracts must be in writing; otherwise, they complaint for sum of money against the DHLFMC
shall be unenforceable: and Dee before the RTC. Should DHLFMC be held
a. Sale of personal property at a price not liable for 12% interest and 25% attorney’s fees
less than P500; stipulated in the delivery invoices?
b. Sale of a real property or an interest
therein;

2022 GOLDEN NOTES
Sales
A: YES. DHLFMC should be held liable for the notarization of a document does not guarantee its
interest and attorney’s fees stipulated in the validity because it is not the function of the notary
delivery invoices, although the attorney’s fees public to validate an instrument that was never
should properly be reduced to 10%. These delivery intended by the parties to have any binding legal
invoices formed part of the Contract of Sale, given effect. Neither is the notarization of a document
that a contract need not be contained in a single conclusive as to the nature of the transaction, nor is
writing but may be collected from several different it conclusive of the true agreement of the parties
writings which do not conflict with each other and thereto. (Uy v. Heirs of Uy-Renales, G.R. No. 227460,
which, when connected, show the consent of the 05 Dec. 2019, J. Caguioa)
parties, subject matter, terms and consideration, as
in contracts entered into by correspondence. Instances where the Statute of Frauds is NOT
Essential for the Enforceability of a Contract of
A contract may be encompassed in several Sale
instruments even though every instrument is not
signed by the parties, since it is sufficient if the 1. When there is a note or memorandum in writing
unsigned instruments are clearly identified or and subscribed to by the party or his agent
referred to and made part of the signed instrument (contains essential terms of the contract) (Art.
or instruments. Similarly, a written agreement of 1403, NCC);
which there are two copies, one signed by each of
the parties, is binding on both to the same extent as 2. When there has been partial
though there had been only one copy of the performance/execution (seller delivers with the
agreement and both had signed it.) (DHLFMC, v. intent to transfer title/receives price) (Art. 1405,
Asiamed, G.R. No. 205638, 03 Aug. 2017) NCC);
Q: Labnao had two children, Pablo and Julita. 3. When there has been failure to object to
Labnao died intestate, leaving behind a parcel of presentation of evidence aliunde as to the
land. Julita died after some time, leaving behind existence of a contract without being in writing
heirs. Later, Pablo filed a complaint for and which is covered by the Statute of Frauds
reconveyance against the Heirs of Julita, seeking (Art. 1405, NCC); or
to recover one-half of the property left behind
by Labnao. The Heirs of Julita, however, asserted 4. When sales are effected through electronic
absolute ownership of the property by virtue of commerce. (Villanueva, 2014; Sec. 12, R.A. No.
a Deed of Absolute Sale (DOAS) allegedly 8792 [Electronic Commerce Act of 2000])
executed by Labnao in favor of Julita when the
former was alive. The DOAS was notarized, but NOTE: Rules on forms, and of validity and
it was later found out the notarization was enforceability of contracts of sale, are strictly kept
irregular since the parties presented no within the contractual relationship of the seller and
competent evidence of identity before the buyer pursuant to the characteristic of relativity of
Notary Public. The RTC dismissed Pablo's every contract, and do not necessarily apply to third
complaint, giving full faith to the notarized parties whose rights may be affected by the terms of
DOAS due to the fact of its notarization. Was the a sale.
RTC correct?
1. ESSENTIAL REQUISITES
A: NO. The existence of an alleged notarized deed of
sale is not decisive as to the existence and validity 1. Essential elements – for validity:
of a contract of sale. Since the Deed of Absolute Sale
was not properly notarized, it cannot be a. Consent – meeting of the minds to transfer
presumed to have been regularly executed. Even ownership in exchange for the price (Art.
assuming that the document was notarized, the 1475, NCC);

Civil Law
NOTE: There could be sale against the will 2. PERFECTION

of the owner in case of expropriation of
property for public use. GR: It is deemed perfected at the moment there is
meeting of minds upon the thing which is the object
b. Determinate subject matter – of the contract and upon the price. (Art. 1475(1),
determinate thing which is the object of the NCC; 2002, 2006 BAR)
contract (Art. 1460, NCC); and
NOTE: The acceptance of the offer must be absolute.
c. Consideration – price certain in money or It must be plain, unequivocal, unconditional and
its equivalent. (Art. 1458, NCC) This without variance of any sort from the proposal.
includes the manner of payment and it is
presumed that a contract has sufficient Upon the perfection of the contract, the parties may
consideration. (De Leon, 2014) reciprocally demand performance. (Rabuya, 2017)
2. Natural elements – inherent in the contract and XPN: When the sale is subject to a suspensive
are deemed to exist in the contract in the condition by virtue of law or stipulation.
absence of any contrary provision. (De Leon,
2014) Stages of a Contract of Sale
Examples: 1. Negotiation (or Policitacion) Stage – begins

a. Warranty against eviction; and from the time the prospective contracting
b. Warranty against hidden defects. parties manifest their interest in the contract
and ends at the moment of agreement of the
3. Accidental elements – dependent on parties’ parties. A negotiation is formally initiated by an
stipulations; (De Leon, 2014) offer, which must be certain;
Examples: To convert the offer into a contract, the

a. Conditions; acceptance must be absolute and must not
b. Payment of Interest; qualify the terms of the offer; it must be plain,
c. Time and Place of Payment; and unequivocal, unconditional and without
d. Penalty. variance of any sort form the proposal. (Heirs of
Fausto C. Ignacio v. Home Bankers Savings and
Effect of Absence of Any of the Essential Trust Company, G.R. No. 177783, 23 Jan. 2013)
Elements
It is important to consider that at this stage,
The contract of sale is void. Absent proof of the there is freedom to contract, which signifies
concurrence of all the essential elements of a the right to choose with whom to contract and
contract of sale, the giving of earnest money cannot what to contract. Thus, an owner of a property
establish the existence of a perfected contract of is free to offer the subject property for sale to
sale. (Manila Metal Container Corp. v. PNB, G.R. any interested person, and is not duty bound to
No. 166862, 20 Dec. 2006) sell the same to the occupant thereof, absent
any prior agreement vesting the occupants the
Effect of Reluctant Consent right of first priority to buy. (Villanueva, 2018)
Consent when reluctantly given is not vitiated 2. Perfection or birth – takes place when the
consent. There is no difference in law where a parties agree upon the essential elements of the
person gives his consent reluctantly and even contract; and
against his good sense and judgment as when he
acts voluntarily and freely. (De Leon, 2014)

2022 GOLDEN NOTES
Sales
NOTE: From the point of perfection, parties Consummation Stage

may reciprocally demand performance, subject
to the provisions of the law governing the form Consummation stage in a contract of sale takes place
of contracts. by the delivery of the thing together with the
payment of the price.
Not all contracts of sale becomes automatically
and immediately effective upon perfection. A NOTE: The ownership of the thing is acquired by the
suspensive condition or period suspends the buyer in any of the ways specified by law or in any
demandability of the obligation, but the manner agreed upon by the parties.
contract is still perfected. (Villanueva, 2018)
The Buyer is Deemed to have Accepted the
3. Consummation – occurs when the parties Goods
fulfill or perform the terms agreed upon in the
contract culminating in the extinguishment 1. When he communicates to the seller that he has
thereof. (SM Investments Corp. v. Posadas, G.R. accepted them;
No. 200901, 07 Dec. 2015) 2. When the goods have been delivered and he
does any act inconsistent with the ownership of
PERFECTION CONSUMMATION the seller; and
From the moment 3. When, after the lapse of reasonable time, he
there is a meeting of From the time of retains the goods without intimating to the
minds upon the things mutual delivery by the seller that he rejected them. (Art. 1585, NCC)
promised by each contracting parties of
party in consideration the things promised Rule on Refusal to Accept Goods by Buyer
of the other
The buyer is not bound to return the goods to the
Rules in the Conception Stage about the Offer seller and it is sufficient that he notifies the seller of
his refusal in the absence of a contrary stipulation.
(Art. 1587, NCC)
RULES
Prior to acceptance, may be NOTE: If the refusal is without just cause, the title
Offer is passes to the buyer from the moment the goods are
withdrawn at will by offeror but no
floated placed at his disposal. (Art. 1588, NCC)
authority to modify it.
Must be accepted within the period, Effect of a Qualified Acceptance
otherwise, extinguished at the end of
With a
period and may be withdrawn at will It constitutes merely a counter-offer which must in
period
by offeror but must not be arbitrary, turn be accepted to give rise to a valid and binding
otherwise, liable for damages. contract. (Villanueva, 2009)
With a Extinguished by happening/ non-
condition happening of condition. Q: Licup, through a letter, offered to buy parcels
of land to The Holy See and Philippine Realty
Without Continues to be valid depending
Corporation (PRC). He enclosed a check for
period/ upon circumstances of time, place
P100,000.00 to “close the transaction” and
condition and person.
accepted the responsibility of removing
With a informal settlers. Msgr. Cirilos, representative
counter- Original offer is extinguished. of the Holy See and PRC signed the conforme
offer portion of the letter and accepted the check. A
stop-payment order was issued by Licup and the

Civil Law
latter requested that the titles to the land There is therefore consent on her part as the
instead be given to SSE. consent need not be given in any specific form.
Hence, her consent may be given by implication,
Msgr. Cirilos wrote SSE requesting to remove the especially since she was aware of, and participated
informal settlers, otherwise, the P100,000.00 in the sale of the property (Pelayo v. Perez, G.R. No.
would be returned. SSE replied with an “updated 141323, 08 Jun. 2005). Her action for moral and
proposal” that they will comply provided that exemplary damages will also not prosper because
the purchase price is lowered. The proposal was the case does not fall under any of those mentioned
rejected. The parcel of land was sold to another in Arts. 2219 and 2232 of the Civil Code.
third person. Is there a perfected contract of sale
between the two parties? 3. CONTRACT OF SALE V. CONTRACT TO SELL
A: NO. When Msgr. Cirilos affixed his signature on

CONTRACT OF SALE CONTRACT TO SELL
that letter, he expressed his conformity to the terms
of Licup’s offer appearing on it. There was meeting As regards transfer of ownership
of the minds as to the object and consideration of
the contract. But when Licup ordered a stop-
payment on his deposit and proposed in his April
26, 1988 letter to Msgr. Cirilos that the property be Ownership is
instead transferred to SSE, a subjective novation transferred to the Ownership is
took place. The proposed substitution of Licup by buyer upon delivery of transferred upon full
SSE opened the negotiation stage for a new contract the object to him. payment of the
of sale as between SSE and the owners. (Starbright purchase price.
Sales v. Phil. Realty Corp., G.R. No. 177936, 18 Jan. NOTE: Vendor has lost
2012) and cannot recover NOTE: Prior to full
ownership until and payment, ownership is
Q: Spouses Biong and Linda wanted to sell their unless the contract is retained by the seller.
house. They found a prospective buyer, Ray. resolved or rescinded.
Linda negotiated with Ray for the sale of the
property. They agreed on a fair price of P2
Million. Ray sent Linda a letter confirming his As to numbers of contracts involved
intention to buy the property. Later, another
couple, Bernie and Elena, offered a similar
house at a lower price of P1.5 Million. But Ray
insisted on buying the house of Biong and Linda
There are two
for sentimental reasons. Ray prepared a deed of
contracts:
sale to be signed by the couple and a manager’s
1. The contract to
check for P2 Million. After receiving the P2
sell, i.e.,
Million, Biong signed the deed of sale. However,
There is only one preparatory sale
Linda was not able to sign it because she was
contract executed 2. The deed of
abroad. On her return, she refused to sign the
between the seller and absolute sale
document saying she changed her mind. Linda
the buyer.
filed suit for nullification of the deed of sale and
NOTE: The principal
for moral and exemplary damages against Ray.
contract is executed
Will the suit prosper? (2006 BAR)
after full payment of
the purchase price.
A: NO, the suit will not prosper. The contract of sale
was perfected when Linda and Ray agreed on the
object of the sale and the price (Art. 1475, NCC).

2022 GOLDEN NOTES
Sales
Payment as a condition Q: Dolores Ventura entered into a Contract to

Sell with Spouses Eustacio and Trinidad Endaya
for the purchase of two parcels of land located in
Full payment of the
Marian Road II, Marian Park, Parañaque City.
purchase price is a
The contract to sell provides that the purchase
positive suspensive
price of P347,760.00 shall be paid by Dolores
condition that gives
through: (a) down payment of P103,284.00
rise to the prospective
upon execution of the contract; and (b) the
seller’s obligation to
Non-payment of the balance of P244,476.00 within a 15-year period,
convey title.
purchase price is a plus 12% interest per annum on the outstanding
resolutory condition balance and 12% interest per annum on
NOTE: Failure to fully
that entitles the seller arrearages.
pay the price is not a
to rescind the sale.
breach but an event
Dolores’ children, Frederick Ventura, Marites
that prevents the
Ventura-Roxas, and Philip Ventura filed a
obligation of the
Complaint and, thereafter, an Amended
vendor to convey title
Complaint for specific performance, seeking to
from becoming
compel Sps. Endaya to execute a deed of sale
effective.
over the subject properties. They argued that
their parents’ close friendship with Sps. Endaya,
Remedies available allowed widowed Dolores to pay the down
1. Specific payment stated in the contract to sell and,
Performance 1. Rescission; or instead, allowed her to pay amounts as her
2. Rescission; or 2. Damages means would permit.
3. Damages
The total payments made by Dolores and
petitioners amounted to P952,152.00, more
Contract to Sell than the agreed purchase price of P347,760.00,
including the 12% interest p.a. thereon
A bilateral contract whereby the prospective seller, computed on the outstanding balance.
while expressly reserving the ownership of the
subject property despite delivery thereof to the When Dolores’ children demanded the
prospective buyer, binds himself to sell the said execution of the corresponding deed of sale, Sps.
property exclusively to the prospective buyer upon Endaya refused. Should Sps. Endaya execute a
fulfillment of the condition agreed upon, that is, full deed of sale over the subject properties in favor
payment of the purchase price. (Solid Homes, Inc. v. of Dolores’ children?
Sps. Jurado, G.R. No. 219673, 20 Sept. 2019)
A: NO. Spouses Endaya had no obligation to
NOTE: In a contract to sell, the payment of the petitioners to execute a deed of sale over the subject
purchase price is a positive suspensive condition properties. A contract to sell is defined as a bilateral
that gives rise to the prospective seller's obligation contract whereby the prospective seller, while
to convey title. However, non-payment is not a expressly reserving the ownership of the subject
breach of contract but “an event that prevents the property despite delivery thereof to the prospective
obligation of the vendor to convey title from buyer, binds himself to sell the said property
becoming effective.” The contract would be deemed exclusively to the latter upon his fulfillment of the
terminated or cancelled, and the parties stand “as if conditions agreed upon, i.e., the full payment of the
the conditional obligation had never existed.” purchase price and/or compliance with the other
(Racelis v. Sps. Javier, G.R. No. 189609, 29 Jan. 2018) obligations stated in the contract to sell.

Civil Law
Given its contingent nature, the failure of the for a free patent over the entire lot and was
prospective buyer to make full payment and/or eventually issued an OCT in his name.
abide by his commitments stated in the contract to
sell prevents the obligation of the prospective seller Sabug, Jr., through the 1999 Deed of Absolute
to execute the corresponding deed of sale to effect Sale, sold the lot to Aguado for P2,500,000.00,
the transfer of ownership to the buyer from arising. who, in turn, caused the cancellation of the OCT
(Ventura v. Heirs of Sps. Endaya, G.R. No. 190016, 02 and the issuance of a TCT. Aguado obtained an
Oct. 2013) P8,000,000.00 loan from the Land Bank secured
by a mortgage over the lot. When she failed to
Instances when a Contract to Sell may be pay her loan obligation, Land Bank commenced
Resorted to: extra-judicial foreclosure proceedings and
eventually tendered the highest bid in the
1. Where subject matter is indeterminate; (Arts. auction sale. Upon Aguado’s failure to redeem
1458 & 1460, NCC) and the subject property, Land Bank consolidated its
2. Sale of future goods except future inheritance. ownership and a TCT was issued in its name.
(Art. 1462, NCC) Spouses Roque then filed an action for
reconveyance before the RTC. Will the action for
Q: Project Movers Realty and Development reconveyance prosper?
Corporation (PMRDC) was indebted to Keppel
Bank for P200M. To pay the debt, PMRDC A: NO. This case involves a contract to sell. The
conveyed to the bank 25 properties. Adao Court held that where the seller promises to execute
occupies one of the properties conveyed. The a deed of absolute sale upon the completion by the
bank demanded Adao to vacate the property but buyer of the payment of the purchase price, the
he refused. Hence, an ejectment case was filed contract is only a contract to sell even if their
against him. In his defense, Adao claimed that he agreement is denominated as a Deed of Conditional
entered into a Contract to Sell with PMRDC. To Sale, as in this case. In a contract to sell, there being
prove full payment of the property, he no previous sale of the property, a third person
presented an affidavit. Is Keppel bank bound by buying such property despite the fulfillment of the
the contract to sell between PMRDC and Adao? suspensive condition such as the full payment of the
purchase price, for instance, cannot be deemed a
A: NO. The contract to sell does not by itself give buyer in bad faith and the prospective buyer cannot
Adao the right to possess the property. Unlike in a seek the relief of reconveyance of the property. The
contract of sale, here in a contract to sell, there is yet action for reconveyance shall fail. Roque v. Aguado,
no actual sale nor any transfer of title, until and G.R. No. 193787, 07 Apr. 2014)
unless, full payment is made. The payment of the
purchase price is a positive suspensive condition. DISTINCTIONS OF CONTRACT OF SALE
Adao’s lone affidavit is self-serving, and cannot be WITH OTHER CONTRACTS
considered as substantial evidence to prove that
there was full payment made. (Keppel Bank Phils. 1. Sale v. Donation
Inc., v. Adao, G.R. No. 158227, 19 Oct. 2005)
SALE DONATION
Q: Spouses Roque and the original owners of an Generally
unregistered lot executed a 1997 Deed of Onerous Gratuitous/onerous
Conditional Sale over a portion of a lot for (Art. 726, NCC)
P30,775.00. After the deed’s execution, Spouses Consensual Formal contract
Roque took possession and introduced Law on Sales Law on Donation
improvements on the subject portion which
they utilized as a balut factory. Sabug, Jr, applied NOTE: It is important to know the distinction when
the consideration for the transfer is not clear.

2022 GOLDEN NOTES
Sales
When the price of sale is simulated, the sale is void, Revocability

but the act may be shown to be a donation or some May be revoked
Not unilaterally
other act, other than, Art. 1471 of the NCC (relative unilaterally even
revocable.
simulation). without ground.
As to Profit
Relative simulation – that the contract may be Agent is not allowed to
called a sale, but it may turn out to be really a Seller receives profit.
profit.
donation and will govern as such. (Villanueva, 2018) As to Contract
Real contract Personal contract
2. Sale v. Barter
NOTE: To differentiate Sale and Agency to sell, the
SALE BARTER essential clauses of the whole instrument shall be
Nature considered. (Art. 1466, New Civil Code)
A thing is given in
A thing is given in
exchange of a price 4. Sale v. Dacion en Pago
exchange of another
certain in money or its
thing.
equivalent. SALE DACION EN PAGO
If consideration is partly in money and partly Existence of Credit
in another thing
Contract where
The transaction is characterized by the manifest property is alienated to
intention of the parties. No pre-existing credit.
extinguish pre-existing
If intention is not clear, credit/debt.
If intention is not clear,
and the value of thing is Relationship
and the value of thing is
equal or less than Novates creditor-
more than amount of Buyer-seller
amount of money = debtor relationship
money = Barter relationship.
Sale into seller-buyer.
Applicable Law Obligation
Both are governed by law on sales. Obligations are Obligations are
created. extinguished.
Consideration
3. Sale v. Agency to Sell
On the part of the debtor:
Extinguishment of the
SALE AGENCY TO SELL On the part of the
debt;
Obligation as Regards the Price seller: Price;
Agent not obliged to On the part of the
Buyer pays for price of pay for price; must On the part of the
creditor: The
object. account for the buyer: Acquisition of
acquisition of the object
proceeds of the sale. the object.
offered in lieu of the
Transfer of Ownership original credit.
Principal remains the Determination of the Price
Buyer becomes owner owner even if the Greater freedom. Limited freedom.
of thing. object delivered to
Payment of Price
agent.
The debtor receives the
Warranty Buyer still has to
payment before the
Agent assumes no pay the price.
contract is perfected.
personal liability as
Seller warrants.
long as within
authority given.

Civil Law
5. Sale v. Lease Rules in Determining if the Contract is One of

Sale or a Piece of Work
SALE LEASE
1. Sale
Use of thing is for a. If ordered or manufactured in the
Obligation to
specified period only ordinary course of business (Art. 1467,
absolutely transfer
with obligation to NCC);
ownership of thing.
return. b. It involves the sale of a thing or right; and
c. The obligation of seller is a real obligation
Consideration is the Consideration is the
or an obligation to give.
price. rental.
Seller needs to be 2. Piece of work

owner of thing to a. If manufactured especially for the
transfer ownership. customer and upon his special order, and
not for the general market (Art. 1469,
Lessor need not be NCC);
NOTE: Lease with
owner. b. It involves lease of service; and
option to buy – really a
contract of sale but c. The obligation of seller is personal or
designated as lease in obligation to do.
name.
NOTE: Distinction is important when it comes to the
6. Sale v. Contract for piece-of-work remedy needed in case of non-performance. In a
Sale (real obligation), action for specific
performance is applicable since what is involved is
CONTRACT FOR the obligation to give a determinate thing. While in
SALE
PIECE-OF-WORK a contract for Piece-of-work (personal obligation),
Existence an action for specific performance is NOT applicable
since what is involved is an obligation to do.
Manufacturing in the Manufacturing upon
(Villanueva, 2018)
ordinary course of special order of a
business. customer.
7. Contract of Sale v. Option Contract
To Whom Made
Not for the general CONTRACT OF SALE OPTION CONTRACT
For the general market. market, but especially
Consideration
for the customer.
Applicability of Statute of Frauds Must be a price certain May be anything of
in money value
Governed by the Not within the Statute Bilateral/ Unilateral
Statute of Frauds. of Frauds.
Bilateral Contract Unilateral Contract
Risk of Loss Subject Matter
Borne by the worker or The “option to
Subject matter if the
Borne by the buyer. contractor, not by the purchase” is the
contract of sale itself
employer. subject matter.
Option Contract (2002, 2005 BAR)
An option contract is a continuing offer or contract

by which the owner stipulates with another that the
latter shall have the right to buy the property at a

2022 GOLDEN NOTES
Sales
fixed price within a certain time, or under, or in a. The option contract is not deemed
compliance with, certain terms and conditions, or perfected; and
which gives to the owner of the property the right to b. Offer may be withdrawn at any time prior
sell or demand a sale. (Villanueva, 2009) to acceptance.
Nature of an Option Contract NOTE: Even though the option was not supported
by a consideration, the moment it was accepted,
An option contract is a separate and distinct contract of sale is perfected. (Art. 1324, NCC)
contract from a contract of sale. It is a preparatory
contract in which one party grants to another, for a An option imposes no binding obligation on the
fixed period and at a determined price, the privilege person holding the option aside from the
to buy or sell, or to decide whether or not to enter consideration for the offer. Until accepted, it is not
into a principal contract. treated as a sale. (Tayag v. Lacson, G.R. No. 134971,
NOTE: If the option is perfected, it does not result in 25 Mar. 2004)
the perfection or consummation of the sale. It is
binding upon the promissor if the promise is Elements of a Valid Option Contract
supported by a consideration distinct from the
price. 1. Consent;
Period within which to Exercise the Option 2. Subject Matter – An option right to an
unaccepted unilateral offer to sell/ accepted
1. Within the term stipulated; and unilateral promise to sell or an unaccepted
2. If there is no stipulation, the court may fix the unilateral offer to buy/ accepted unilateral
term. promise to buy a determinate or determinable
object for a price certain including the manner
Exercise of an Option of payment; and
In an option to buy, the party who has an option may 3. Prestation – A consideration separate and
validly and effectively exercise his right by merely distinct from the purchase price for the option
notifying the owner of the former’s decision to buy given. (Villanueva, 2009)
and expressing his readiness to pay the stipulated
price. (De Leon, 2011) Obligations of the Offeror
A notice of acceptance must be communicated to 1. Not to offer to any third party the sale of the
offeror even without actual payment as long as object of the option during the option period;
payment is delivered in the consummation stage 2. Not to withdraw the offer or option during the
provided it still within the period provided. option period; and
3. To hold the subject matter for sale to the offeree
Effect of the Presence and Absence of a Separate in the event that the latter exercises his option
Consideration in an Option Contract during the option period.
1. With separate consideration: Effect of Acceptance and Withdrawal of the Offer

a. Contract is valid;
b. Offeror cannot withdraw offer until after If the offer had already been accepted and such
expiration of the option; and acceptance has been communicated before the
c. Is subject to rescission and damages but withdrawal is communicated, the acceptance
not specific performance. creates a perfected contract, even if no
consideration was as yet paid for the option. In
2. Without separate consideration: which case, if the offeror does not perform his

Civil Law
obligations under the perfected contract, he shall be of first refusal to purchase the property at any
liable for all consequences arising from the breach time during the lease, if Dux decides to sell the
thereof based on any of the available remedies such property at the same price that the property is
as specific performance, or rescission with damages offered for sale to a third party.
in both cases.
23 months after execution of the lease contract,
Right of First Refusal Dux sold the house. Dux said there was no
breach because the property was sold to his
It is a contractual grant, not of the sale of a property, mother who is not a third party. Iris filed an
but of the first priority to buy the property in the action to rescind the sale and to compel Dux to
event the owner sells the same. (PUP v. Golden sell the property to her at the same price.
Horizon Realty Corp., G.R. Nos. 183612 and 184260, Alternatively, she asked the court to extend the
15 Mar. 2010) lease for another 2 years on the same terms. Can
Iris seek rescission of the sale of the property to
NOTE: Where a time is stated in an offer for its Dux’s mother? (2008 BAR)
acceptance, the offer is terminated at the expiration
of the time given for its acceptance. (Pineda, 2010) A: YES. The right of first refusal is included in the
contract signed by the parties. Only if the lessee
Basis of the Right of First Refusal failed to exercise the right of first refusal could the
lessor lawfully sell the subject property to others,
It is based on the current offer to sell of the seller or under no less than the same terms and conditions
offer to purchase of any prospective buyer. Only previously offered to the lessee. Granting that the
after the optionee fails to exercise its right of first mother is not a third party, this would make her
priority under the same terms and within the period privy to the agreement of Dux and Iris, aware of the
contemplated could the owner validly offer to sell right of first refusal. This makes the mother a buyer
the property to a third person, again, under the in bad faith, hence giving more ground for rescission
same terms as offered to the optionee. (Tanay of the sale to her. (Equatorial Realty Development,
Recreation Center & Development Corp. v. Fausto, Inc. v. Mayfair Theater, Inc., supra)
G.R. No. 140182, 12 Apr. 2005)
Option Contract v. Right of First Refusal
Effect of Sale of a Property in Violation of the
Right of First Refusal RIGHT OF FIRST
OPTION CONTRACT
REFUSAL
The resulting contract is rescissible by the person in Nature
whose favor the right of first refusal was given and
even though no particular price is stated in the Principal contract; Accessory; cannot
covenant granting the right of first refusal, the same stands on its own stand on its own
price by which the third-party buyer bought the Consideration
property shall be deemed to be the price by which
the right of first refusal shall therefore be Needs separate Does not need separate
exercisable. (Equatorial Realty Development, Inc. v. consideration consideration
Mayfair Theater, Inc., G.R. No. 106063, 11 Nov. 1996)
Subject matter and Price
Q: Dux leased his house to Iris for a period of 2 There must be subject
Subject matter and
years, at the rate of P25,000.00 monthly, matter but price not
price must be valid.
payable annually in advance. The contract important.
stipulated that it may be renewed for another 2- Condition
year period upon mutual agreement of the
Not conditional Conditional
parties. The contract also granted Iris the right

2022 GOLDEN NOTES
Sales
Offer to Sell government contracts. (PSALM Corp., v. Pozzolanic,

There is no offer to sell, G.R. No. 183789, 24 Aug. 2011)
but only an
opportunity for the There is an offer to sell. Right of First Refusal may be Waived
buyer to enter into a
contract of sale. Like other rights, the right of first refusal may be
waived. For a waiver of right to exist, three elements
Subjectivity to Specific Performance
are essential: (a) existence of a right; (b) the
Not subject to specific Subject to specific knowledge of the evidence thereof; and (c) an
performance performance intention to relinquish such right. (Sps. Valderama v.
Macalde, G.R. No. 165005, 16 Sept. 2005)
Right of First Refusal must be Contained in a

Availment of Sublessee of the Right of First
Written Contract
Refusal of the Lessee
The right of first refusal be embodied in a written

GR: The sublessee is a stranger to the lessor who is
contract and the grant of such right must be clear
bound to respect the right of first refusal in favor of
and express.
the lessee only.
NOTE: It is applicable only to executory contracts XPN: When the contract of lease granted the lessee
and not to contracts which are totally or partially the right to assign the lease, the assignee would be
performed. entitled to exercise such right as he steps into the
shoes of the original assignee. (Villanueva, 2009)
Q: Pozzolanic entered into a long-term contract
with the National Power Corporation (NPC) for Q: Tess leased her 1,500 sq. m. lot in Antipolo
the purchase of all fly ash to be produced by the City to Ruth for a period of three (3) years to
latter’s future power plants. In the contract, NPC February 2013. On March 19, 2011, Tess sent a
granted Pozzolanic a right of first refusal to letter to Ruth, part of which read as follows:
purchase the fly ash that may be generated in
the future. When NPC’s two new power plants
“I am offering you to buy the property you are
started operation, it published an invitation to
presently leasing at P5,000.00 per sq. m. or for a
interested buyers for the purchase of the fly ash.
total of P7,500,00.00. You can pay the contract
Pozzolanic sent letters to NPC reminding its
price by installment for two (2) years without
right of first refusal. NPC deferred its public
interest. I will give you a period of one (1) year
bidding with the first power plant’s fly ash but it
from the receipt of this letter to decide whether
nevertheless continued with the bidding of the
you will buy the property.”
second power plant’s fly ash. Pozzolanic filed a
complaint, but during the pendency of the case,
After the expiration of the lease contract, Tess
NPC decided to likewise dispose the fly ash from
sold the property to her niece for a total
the first power plant without allowing
consideration of P4 Million. Ruth filed a
Pozzolanic to exercise its right of first refusal.
complaint for the annulment of the sale,
Can Pozzolanic exercise its right of first refusal?
reconveyance and damages against Tess and her
niece. Ruth alleged that the sale of the leased
A: NO. The right of first refusal granted in favor of
property violated her right to buy under the
Pozzolanic is invalid for being contrary to public
principle of right of first refusal. Is the allegation
policy as the same violates the requirement of
of Ruth tenable? (2014 BAR)
competitive public bidding in the award of
government contracts. In this jurisdiction, public
A: NO, the allegation of Ruth is not tenable. The
bidding is the established procedure in the grant of
letter written by Tess did not grant a right of first

Civil Law
refusal to Ruth. At most, it is to be construed as an

option contract whereby Ruth was given the right to B. CAPACITY TO BUY OR SELL
buy or not to buy the leased property. An option is
itself not a purchase, but it merely secures the
privilege to buy. However, the option is not valid
Persons who may Enter into a Contract of Sale
because it was not supported by cause or
consideration distinct from the price of the
GR: All persons, whether natural or juridical, who
property. (Art. 1479, NCC) Also, Ruth does not
can bind themselves, have legal capacity to buy and
appear to have exercised her option before the offer
sell. (Art. 1489(1), NCC)
was withdrawn by the subsequent sale of the
property to the niece of Tess.
XPNs:
1. Minors, insane and demented persons and
Parties to a Contract of Sale
deaf-mutes who do not know how to write;
(Art. 1327, NCC)
1. Seller – one who sells and transfers the thing
2. Persons under a state of drunkenness or
and ownership to the buyer; and
during hypnotic spell;
2. Buyer – one who buys the thing upon payment
3. Persons who are senile (Art. 24 in relation to
of the consideration agreed upon.
Art. 1332, NCC)
GR: A senile person may enter into contracts,

he is not incompetent merely because of his
advanced years, or by reason of his physical
infirmities.
XPN: When such age or infirmity have

impaired his mental faculties so as to prevent
him from properly, intelligently, and firmly
protecting his rights, then he is undeniably
incapacitated.
The sale is void, and not mere voidable. The

essence is that there was never any meeting of
the minds, and no real consideration.
(Villanueva, 2018)
4. Husband and wife – sale by and between

spouses. (Art. 1490, NCC)
Rationale for the prohibition:

a. To prevent a spouse from defrauding his
creditors by transferring his properties
to the other spouse; and
b. To avoid a situation where the dominant
spouse would unduly take advantage of
the weaker spouse.

2022 GOLDEN NOTES
Sales
XPNs: Nullity is permanent. Prohibition applies only

a. When a separation of property was to a sale or assignment to the lawyer by a client
agreed upon in the marriage settlement; of the property which is the object of litigation.
or (Rabuya, 2017)
b. When there is a judicial separation of
property under Art. 135 of the Family Q: Sps. Peter and Elizabeth Kingsman owned the
Code has been decreed. (Art. 1490(2), contested parcels of land. Elizabeth died
NCC) intestate and was survived by Peter and her
eight children. Peter subsequently passed away,
5. Sale between guardians and wards – the followed by Danny. Subsequently, Atty. Greg,
contract is void and not merely voidable. The President of petitioner Lite and Light Corp.
prohibition exists only when the guardianship informed the Kingsmans that their parents had
exists. already sold the contested parcels of land to Lite
and Light for P400,000.00 as evidenced by two
6. Sale between agents and principals with undated Deeds of Absolute Sale and that the
respect to property under administration (Art. titles to the properties have already been
1491(2), NCC) transferred to Lite and Light’s name.
XPN: The prohibition does not apply if the Thus, Kingsmans filed a Complaint against Lite
principal consents to the sale of the property in and Light alleging forgery and fraud since
the hands of the agent or administrator. Elizabeth could not have signed the documents
and given her consent thereon since she has
After the termination of the affairs of the been dead for seven years before the alleged
agency, the prohibition no longer applies. execution of the said contracts. Lite and Light
Neither is the agent prohibited from buying denied employing fraud contending that the
properties of the principal which are not Deeds were already signed and notarized when
included among the properties of which he was Peter and Danny delivered them to the office of
commissioned to sell. The transaction may be Atty. Greg. Moreover, Lite and Light averred that
ratified by way of a new contract which will Kingsmans’ claims are barred by prescription.
become valid only from its execution and will
not retroact to the date of the first contract. On rebuttal, Peter, Jr. insisted that during the
lifetime of Felicidad, the Kingsmans formed a
7. Sale between executors and administrators of family corporation in order to consolidate the
estate of the deceased (Art. 1491(3), NCC) properties under the said company through the
waivers. However, only one property was
XPN: Hereditary rights are not included in the transferred since Efren sold all the others. To
prohibition. whom should the subject properties be
adjudicated?
8. Sale involving property of the government (Art.
1491(4), NCC) A: THE KINGSMANS. If any one party to a supposed
contract was already dead at the time of its
The nullity of such prohibited contracts is execution, such contract is undoubtedly simulated
definite and permanent and cannot be cured by and false, and, therefore, null and void by reason of
ratification. The public interest and public its having been made after the death of the party
policy remain paramount and do not permit of who appears as one of the contracting parties
compromise or ratification. therein. Considering that Elizabeth’s signatures
were forged, the Deeds of Absolute Sale are null and
9. Sale of property in litigation (Art. 1491(5), NCC) void and convey no title to Lite and Light. Also, Art.
1410 of the Civil Code states that "the action or

Civil Law
defense for the declaration of the inexistence of a

contract does not prescribe." Hence, the Kingsmans
could assail the validity of the Deeds of Absolute
Sale, in spite of Lite and Light’s claim that they failed
to question the sale several years after Lite and
Light secured the titles to the properties.
Moreover, to prevent unjust enrichment, the

Kingsmans should return the amount of
P400,000.00 with legal interest. (Arakor Const. and
Dev. Corp. v. Sta. Maria, GR. No. 215006, 11 Jan. 2021)
Persons who are Absolutely Incapacitated to

Enter into a Contract of Sale (Art. 1327, NCC)
1. Unemancipated minors; and

2. Insane or demented persons, and deaf-
mutes who do not know how to write.
Persons who are Relatively Incapacitated to

enter into a contract of sale
1. Spouses; (Art. 1490, NCC)

2. Agents, Guardians, Executors and
Administrators;
3. Public Officers and Employees;
4. Lawyers;
5. Court Officers and Employees; and
6. Others specially disqualified by law. (Art.
1491, NCC)

2022 GOLDEN NOTES
Sales
PROPERTY INVOVLED STATUS OF SALE RATIFICATION

Agents
Can be ratified after the inhibition has ceased.
Reason: the only wrong that subsists is the private

Property entrusted to them wrong to the ward, principal or estate; and can be
for administration or sale. condoned by the private parties themselves.
Unenforceable
XPN: When principal gave NOTE: Contracts entered by guardian in behalf of
his consent. ward are rescissible if ward suffers lesion by more
than ¼ of value of property. Sale by guardian of
property belonging to a ward without Court
approval is void regardless of the lesion, hence,
cannot be ratified.
Guardian

wrong to the ward, principal or estate; and can be
condoned by the private parties themselves.
Property of the ward
during period of Voidable
NOTE: Contracts entered by guardian in behalf of
guardianship
ward are rescissible if ward suffers lesion by more
cannot be ratified.
Executors and Administrators

wrong to the ward, principal or estate; and can be
condoned by the private parties themselves.
Property of the estate
Voidable
under administration. NOTE: Contracts entered by guardian in behalf of
ward are rescissible if ward suffers lesion by more
cannot be ratified.

Civil Law
Court Officers and Employees
Property and rights in Cannot be ratified.

litigation or levied upon on
Void
execution before the court Reason: It is not only a private wrong, but also a
under their jurisdiction public wrong. (Villanueva, 2014)
Others Specially Disqualified by Law
Cannot be ratified.
- Void
Reason: It is not only a private wrong, but also a
public wrong. (Ibid.)
Public Officers and Employees
Cannot be ratified.
Property of the State
entrusted to them for Void
Reason: It is not only a private wrong, but also a
administration.
public wrong. (Ibid.)

2022 GOLDEN NOTES
Sales
NOTE: The prohibitions are based upon public between them under Article 191 of the
policy and morality. The law believes that human Family Code.
nature would not be strong enough to resist the
temptations likely to arise of antagonism between b. Contract of sale with 3rd parties:
the interest of the seller and the buyer. (Jurado,
2019) GR: Under the law on sales, it would seem
that a spouse may, without the consent of
The permanent disqualification of public and the other spouse, enter into sales
judicial officers and lawyers grounded on public transactions in the regular or normal pursuit
policy differs from the first three cases of guardians, of their profession, vocation or trade. (In
agents and administrators (Art 1491, NCC), as to relation to Art. 73, FC)
whose transactions it had been opined that they
may be “ratified” by means of and in “the form of a XPN: Even when the property regime
new contract, in which cases its validity shall be prevailing was the conjugal partnership of
determined only by the circumstances at the time gains, the Supreme Court held the sale by the
the execution of such new contract.” The causes of husband of a conjugal property without the
nullity which have ceased to exist cannot impair the consent of the wife is void, not merely
validity of the new contract. (Rubias v. Batiller, G.R. voidable under Art. 124 of the Family Code
No. L-35702, 29 May 1973) since the resulting contract lacks one of the
essential elements of full consent. (Sps.
NOTE: Prohibitions are applicable to sales in legal Guiang v. CA, G.R. No. 125172, 26 June 1998)
redemption, compromises and renunciations.
XPN to the XPN: The following are valid
Status of the following Contracts of Sale even though they involve conjugal property
and are made without the consent of the
1. Sale entered into by minors – other spouse:
GR: It is voidable, subject to annulment or 1. If there is a court order; and

ratification. 2. If such sale of the conjugal property is
necessary to answer for the conjugal
XPN: Where necessaries are sold and delivered liabilities mentioned in art. 161 and 162
to a minor or other person without capacity to of the FC.
act, he must pay a reasonable price. (Art. 1489
(2), NCC) c. Between common law spouses – also null
and void.
2. Sale by & between spouses (Art. 1490, NCC)
Sale between common law spouses is null
a. Status of prohibited sales between and void to prevent the exercise of undue
spouses: influence by one spouse over the other. The
prohibition also applies to a couple living as
GR: Null and void husband and wife without the benefit of
marriage.
XPN: In case of sale between spouses:
1. When a separation of property was A contract of sale made by a husband to a
agreed upon in the marriage concubine was null and void for being
settlements; or contrary to morals and public policy. The
2. When there has been a judicial sale was subversive of the stability of the
separation of property agreed upon family, a basic social institution, which
public policy cherishes and protects.

Civil Law
(Calimlim-Canullas v. Fortun, G.R. No. L- judgment and not during the pendency of the case.
57499, 22 June 1984) As such it is valid stipulation between the lawyer
and client.
Reason: The condition of those who incurred
guilt would turn out to be better than those in Persons Specially Disqualified by Law to Enter
legal union. To render it applicable would put into Contracts of Sale (ALIEN-Un-O-S)
common-law relationships in a better position
than those legally married. (Villanueva, 2018) 1. ALIENs who are disqualified to purchase
private agricultural lands; (Art. XII, Secs. 3 & 7,
Persons who have the Right to Assail the Validity 1987 Constitution)
of the Transaction between Spouses
2. Unpaid seller having a right of lien or having
The following are the only persons who can stopped the goods in transitu is prohibited
question the sale between spouses: from buying the goods either directly or
indirectly in the resale of the same at public or
1. The heirs of either of the spouses who have private sale which he may make or initiate;
been prejudiced; (Arts. 1533(5) & 1476(4), NCC)
2. Prior creditors; and
3. The State when it comes to the payment of the 3. The Officer holding the execution or deputy
proper taxes due on the transaction. cannot become a purchaser or be interested
directly or indirectly on any purchase at an
Status of the Contract Entered into by a Person execution; (Sec. 21, Rule 39, ROC)
who has No Capacity to Act
4. In Sale by auction, seller cannot bid unless
1. If only one of the parties has no capacity: notice has been given that such sale is subject
VOIDABLE to a right to bid in behalf of the seller. (Art.
2. If both parties have no capacity: 1476, NCC)
UNENFORCEABLE
3. If the incapacity is Senility: VOID (Villanueva, Effect of a Sale made by the Seller with Voidable
2018) Title over the Object
NOTE: An incapacitated person is NOT obligated to 1. Perfection stage: Valid – buyer acquires title
make restitution, except insofar as he has been of goods.
benefited by the thing/price.
2. Consummation stage: Valid – if the title has
Q: The stipulation between the lawyer and not yet been avoided at the time of sale and the
counsel is as follows, “the attorney’s fees of the buyer must buy the goods under the following
Atty. X will be ½ of whatever the client might conditions:
recover from his share in the property subject of a. In good faith;
the litigation.” Is the stipulation valid? b. For value; and
c. Without notice of seller’s defect of title.
A: YES. The stipulation made is one of a contingent (Art. 1506, NCC)
fee which is allowed by the CPE and the CPR. It does
not violate the prohibition of acquisition of property NOTE: Art. 1506 is predicated on the principle that
subject of the litigation by the lawyer provided for where loss has happened which must fall on one of
in the Civil Code since the prohibition applies only two innocent persons, it should be borne by him,
to a sale or assignment to the lawyer by his client who is the occasion of the loss. (De Leon, 2005)
during the pendency of the litigation. The transfer
actually takes effect after the finality of the

2022 GOLDEN NOTES
Sales
SUBJECT MATTER The requisite that a thing be determinate is satisfied

if at the time the contract is entered into, the thing is
Requisites of Proper Objects of Sale capable of being made determinate without the
necessity of a new or further agreement between
1. THINGS the parties. (Art. 1460, NCC)
a. Determinate or determinable;
b. Lawful or licit; and B. When a thing is determinable –
c. Should not be impossible (within the
commerce of men). Requisites:
1. Capacity to segregate test – If at
2. RIGHTS perfection of the sale, the subject matter is
capable of being made determinate (the
GR: Must be transmissible. “capacity to segregate” test); and
e.g., right of redemption, right of usufruct, 2. No further agreement test – Without the
assignment or sale of credit, right to necessity of a new or further agreement
inheritance already acquired, etc. between the parties (the “no further
agreement” test).
XPNs:
a. FUTURE INHERITANCE – cannot be Even if the subject matter of the sale was generic,
the subject of sale; the performance of the seller’s obligation would
require necessarily its physical segregation or
Reason: The interest of the heir over particular designation, making the subject matter
the inheritance prior to the death of determinate at the point of performance.
the decent is merely inchoate or a
mere expectancy. This rule is in accord The buyer does not assume the risk of loss of a
with a well-known principle of law generic subject matter under a valid sale until the
that one cannot transmit or dispose of object is made determinate, either by physical
that which he does not have — nemo segregation or particular designation. (Villanueva,
dat quod non-habet. 2009)
b. SERVICE NOTE: The thing may be existing or not at the time

of the perfection of the contract. So long as it has the
Reason: They are not determinate possibility of existence at some future time. The law
things and no transfer of ownership is says things that having a potential existence may be
available but it can be the object of the object of the contract of sale. (Art. 1461(1), NCC;
certain contracts such as contract for a Rabuya, 2017)
piece of work. (Pineda, 2010)
Sale for a Lump Sum (Art. 1542, NCC)
The Subject Matter of Sale must be Determinate
or at least Determinable. In the sale of real estate, made for a lump sum and
not at the rate of a certain sum for a unit of measure
A. When a thing is determinate – or number, there shall be no increase or decrease of
the price, although there be a greater or less area or
A thing is determinate when it is particularly number than that stated in the contract.
designated or physically segregated from all others
of the same class. The same rule shall be applied when two or more
immovables as s sold for a single price; but if,
besides mentioning the boundaries, which is

Civil Law
indispensable in every conveyance of real estate, its Kinds of Object of Sale

area or number should be designated in the
contract, the vendor shall be bound to deliver all 1. Existing Goods – Owned or possessed by seller
that is included within said boundaries, even when at the time of perfection.
it exceeds the area or number specified in the
contract; and, should he not be able to do so, he shall 2. Future Goods – Goods to be manufactured,
suffer a reduction in the price, in proportion to what raised, acquired by seller after perfection of the
is lacking in the area or number, unless the contract contract or whose acquisition by seller depends
is rescinded because the vendee does not accede to upon a contingency. (Art. 1462, NCC)
the failure to deliver what has been stipulated. (Art.
1542, NCC) 3. Sale of Undivided Interest or Share
The vendors are obligated to deliver all the land a. Sole owner may sell an undivided interest
included within the boundaries, regardless of (Art. 1463, NCC). e.g., A fraction or
whether the real area should be greater or smaller percentage of such property.
than that recited in the deed. This is particularly
true where the area is described as “humigit b. Sale of an undivided share in a specific
kumulang,” that is, more or less. (Semira v. CA, G.R. mass of fungible goods makes the buyer a
No. 76031, 02 Mar. 1994) co-owner of the entire mass in proportion
to the amount he bought. (Art. 1464, NCC)
Q: Lino entered into a contract to sell with
Ramon, undertaking to convey to the latter one NOTE: Each co-owner only possesses a
of the five lots he owns, without specifying which right to sell or alienate his ideal share after
lot it was, for the price of P1 million. Later, the partition. However, in case he disposes his
parties could not agree which of five lots he share before partition, such disposition
owned Lino undertook to sell to Ramon. What is does not make the sale or alienation null
the standing of the contract? (2011 BAR) and void. What will be affected on the sale
is only his proportionate share, subject to
A: It is a void contract since the particular lot sold the results of the partition. The co-owners
cannot be determined. who did not give their consent to the sale
stand to be unaffected by the alienation.
OBJECT OF SALE (Torres, Jr. v. Lapinid, G.R. No. 187987, 26
Nov. 2014)
GR: A person cannot sell or convey what he does not
have or own. 4. Sale of Things in Litigation
XPNs: a. Sale of things under litigation is rescissible

1. Sale of a thing having potential existence; (Art. if entered into by the defendant, without
1461, NCC) the approval of the litigants or the court.
2. Sale of future goods; (Art. 1462, NCC) and (Art. 1381, NCC)
3. Contract for the delivery at a certain price of an
article, which the seller in the ordinary course NOTE: If the property involved belongs to a
of business manufactures/procures for the ward and the guardian enters into a
general market, whether the same is on hand contract involving such property without
at the time or not. (Art. 1467, NCC) court approval, the contract is void, not
merely rescissible.
b. No rescission is allowed where the thing is

legally in the possession of a 3rd person who

2022 GOLDEN NOTES
Sales
did not act in bad faith. Emptio Rei Speratae v. Emptio Spei
5. Things subject to Resolutory Condition EMPTIO REI

EMPTIO SPEI
SPERATAE
e.g., Things acquired under legal or Definition
conventional right of redemption, or subject to
Sale of thing having Sale of mere hope or
reserva troncal. (Art. 1465, NCC)
potential existence expectancy
6. Indeterminate Quantity of Subject Matter Uncertainty

Uncertainty is with Uncertainty is with
NOTE: The fact that the quantity is not regard to quantity & regard to the existence
determinate shall not be an obstacle to the quality of the thing
existence of the contract, provided it is possible Object of the Sale
to determine the same without need of a new
Contract deals with a
contract. (Art. 1349, NCC) Contract deals with a
present thing – the
future thing
hope or expectancy
Sale of Things with Potential Existence
Effectivity
The validity of sale of things with potential existence
depends upon the intention of the parties: Sale is valid only if the
expected thing will
1. Emptio rei speratae / sale of the thing exist. So that if the
expected – If the contract of sale is made condition is not
dependent upon the existence of the things such fulfilled, if the thing Sale is valid even
that if it did not come into existence, the does not come into though expected thing
contract is not effective, and the buyer will have existence, the contract does not come into
no obligation to pay the price. cannot have the effect existence as long as the
for lack of an essential hope itself validly
2. Emptio spei / sale of hope – If the contracting requisite. Although the existed e.g., lotto.
parties intended the contract of sale to exist at vendee may have
all events. reserved his right to NOTE: Sale of a vain
claim indemnity from hope or expectancy
Sale of a Mere Hope or Expectancy the vendor in the event however, is void. (Art.
that the latter knew 1461, NCC)
GR: The sale is valid even if the expected thing did that the thing could not
not materialize. come into existence.
(Rabuya, 2017; Jurado,
XPNs: 2019)
1. The hope or expectancy is vain; or
2. The parties intended that if the hope or
expectancy will not materialize, the sale is NOTE: If there is doubt, the presumption is in favor
void. of emptio rei speratae.
The efficacy of the sale of a mere hope or expectancy PRICE

is deemed subject to the condition that the thing will
come into existence. (Art. 1461, NCC) The sum stipulated as the equivalent of the thing
sold and also every incident taken into
consideration for the fixing of the price put to the
debit of the buyer and agreed to by him. (Villanueva,
2009)

Civil Law
NOTE: A definite agreement on the manner of NOTE: If the price is based on estimates, it is
payment of the price is an essential element in the uncertain.
formation of a binding and enforceable contract of
sale. (Hyatt Elevators and Escalators Corp. v. When Price of Securities, Grains, Liquids and
Cathedral Heights Building Complex Assoc., Inc., G.R. Things is Considered Certain
No. 173881, 01 Dec. 2010)
1. When the price fixed is that which the thing
Requisites for Valid Price would have on a definite day, or in a particular
exchange or market;
It must be: 2. When the amount is fixed above or below the
1. Real, not fictitious (Art. 1471, NCC); price of such day, or in such exchange or market,
2. Paid in money or its equivalent (i.e., valuable provided said amount be certain;
consideration) (Arts. 1458 & 1468, NCC); 3. When it is by reference to another certain thing.
3. Certain or ascertainable at the time of the (Art. 1471, NCC)
perfection of the contract (Art. 1458, NCC); and
4. In some cases, must not be grossly inferior to NOTE: Art. 1469 is not allowed for the
the value of the thing sold. determination of the subject matter of the sale.
NOTE: There is NO effect on the contract of sale in Fixing of the Price CANNOT be Left to the
case of breach in the agreed manner of payment. Discretion of One of the Contracting Parties
Payment of the price has nothing to do with the
perfection of the contract. Payment of the price goes GR: The price cannot be fixed unilaterally by one of
into the performance of the contract. (Pilipinas Shell the contracting parties.
Petroleum Corp. v. Gobonseng, Jr., G.R. No. 163562, 21
Jul. 2006) XPN: If the price fixed by one of the parties is
accepted by the other, the sale is perfected. (Art.
Simulated Price 1473, NCC)
The price is simulated when neither party had the Effect when the Price is Unilaterally Fixed by
intention that the amount will be paid. (Yu Bun Guan One of the Contracting Parties without Consent
v. Ong, G.R. No. 144735, 18 Oct. 2001) of the Other Party
Effect if Price is Simulated There is no meeting of the minds. The sale is

inefficacious. (Pineda, 2010)
GR: The sale is void.
Effect when the Price is Fixed by the Third
XPN: If it can be shown to be a donation or another Person Designated
contract. (Art. 1471, NCC)
GR: Price fixed by a third person designated by the
When Price is Certain parties is binding upon them.
1. If there is a stipulation; XPNs:

2. If it be with reference to another thing certain; 1. When the third person is unable or unwilling
3. If the determination of the price is left to the to fix it, the contract shall be inefficacious,
judgment of specified person(s) (Art. 1469, unless the parties subsequently agree upon
NCC); or the price; (Art. 1469, NCC)
4. By reference to certain facts as referred to in 2. When the third person acts in bad faith or by
Art. 1472 of the Civil Code mistake. The courts may fix the price; (Art.
1469, NCC)

2022 GOLDEN NOTES
Sales
3. When the third person is prevented from Agreement further provided that breach of its
fixing the price or terms by fault of either the terms shall render the Deed of Sale non-effective
seller or the buyer, the party not in fault may and nugatory.
have such remedies such as rescission or
fulfillment, with damages in either case, Aproniana assailed the validity of both
against the party in fault as are allowed the documents for being fictitious and without
seller or the buyer, as the case may be; (Arts. consideration. She claimed that it was
1469, 1191, & 1594) incongruous for Anecito to sell the subject
4. When the third person disregards the specific property for P15,000.00 when it had a market
instructions or the procedure marked out by value of at least P150,000.00 at the time of sale.
the parties. Moreover, Juan allegedly could not afford to pay
the real value of the subject property as he had
Test of Gross Inadequacy of Price no known means of livelihood. She claimed that
the transaction was in reality a donation mortis
The price is grossly inadequate if a reasonable man causa, and since it was not executed in
will not agree to dispose of his property at that accordance with the formalities of the law, it was
amount. (Vda. De Delfin v. Dellota, G.R. No. 143697, null and void.
28 Jan. 2008)
Aproniana also claimed that while Juan knew
Effect of Gross Inadequacy of Price that Aquilino and Ducepino were mentally
incapacitated, the sale transpired without the
GR: It does not affect the validity of the sale. two brothers being represented therein.
Aproniana further averred that Juan and
XPNs: (Co-R-D-S) Corazon took possession of the property and
1. If Consent is vitiated (may be annulled or arrogated unto themselves the full enjoyment
presumed to be equitable mortgage); thereof and its fruits to the detriment of
2. If the parties intended a Donation or some Aquilino and Ducepino who had not been
other act/contract; properly taken care of until she took them under
3. If the price is so low as to be “Shocking to the her custody in 1996. Will gross inadequacy of
conscience;” and the price nullify the contract between Anecito
4. If in the event of Resale, a better price can be and Juan?
obtained. (Art. 1470, NCC)
A: NO. Gross inadequacy of the price did not
NOTE: When the law gives the owner the right of invalidate the subject contract. First, a contract
redemption like in a sale made at public auction, the enjoys the presumption that it is supported by an
sale is not necessarily affected even if the price is existing and lawful cause or consideration. Second,
low. The reason is that the lesser the price, the notarized documents, being public in nature,
easier it is for the owner to redeem the property. require no further proof of their authenticity and
due execution. The Deed of Sale states in plain terms
Q: A Deed of Sale and an Agreement, was that the subject property is being sold for
executed by and between Anecito and Juan. In P15,000.00. Anecito had expressly acknowledged in
the Deed of Sale, Anecito allegedly ceded unto the Deed of Sale his receipt of the said amount as
Juan the subject property for a consideration of consideration of the contract. No further issue on
P15,000.00, while the Agreement stipulated that the regularity of the notarization was raised on
during Anecito's lifetime, Juan shall allow appeal. To debunk the existence of consideration in
Anecito to enjoy the usufruct of the subject the Deed of Sale, there must be more than mere
property, and that upon Anecito's death, Juan preponderant evidence showing that Anecito did
shall continue to support and provide financial not truly execute the disputed document or that the
assistance to Aquilino and Ducepino. The parties had not truly intended a contract of sale.

Civil Law
However, whether preponderant, clear, or property. Nante alleged that the agreement was
convincing, petitioner never submitted any one to sell, which was not consummated as the
controverting evidence. Aproniana only stated that full contract price was not paid. Is the
Anecito had told her that the sale was simulated and contention of Nante tenable? (2014 BAR)
that no consideration was paid. Aside from what
Aproniana stated, nothing else was presented in A: NO. The deed itself states that for consideration
support of the claim that the amount of P15,000.00 received, he sells, transfers, and conveys the land to
was fabricated or actually unpaid. (Bacala v. Heirs of Monica and there was delivery of the property to the
Poliño, G.R. No. 200608, 10 Feb. 2021) latter. The contract is clearly one of sale as there was
no reservation of ownership on the part of the seller
Annulment of Sale NOT the Remedy in a Nante. The non-payment of the price in a contract of
Simulated Sale sale would only entitle the seller to rescind the
contract but it does not thereby prevent the transfer
Where the deed of sale states that the purchase of ownership particularly so as in this case, where
price has been paid but in fact has never been paid, there was already delivery to the buyer.
the deed of sale is null and void ab initio for lack of
consideration. (Sps. Viovicente v. Sps. Viovicente, G.R. OPTION MONEY vis-à-vis EARNEST MONEY
No. 219074, 28 July 2020) Moreover, Art. 1471 of the
Civil Code, provides that “if the price is simulated, Option Money
the sale is void.” (Catindig v. Vda. de Meneses, Roxas
v. CA, G.R. No. 165851 & 168875, 02 Feb. 2, 2011) It is the distinct consideration in case of an option
contract. It does not form part of the purchase price
Effect of Failure to Determine the Price hence; it cannot be recovered if the buyer did not
continue with the sale. (Art. 1479, NCC)
1. Where contract is executory – ineffective.
2. Where the thing has been delivered to and NOTE: Option contract’s distinguishing
appropriated by the buyer – the buyer must pay characteristic is that it imposes no binding
a reasonable price therefor. obligation on the person holding the option, aside
from the consideration for the offer. (Capalla v.
Q: Nante, a registered owner of a parcel of land COMELEC, G.R. Nos. 201112, 201121, 201127,
in Quezon City, sold the property to Monica 201413, 13 June 2012)
under a deed of sale which reads as follows:
Consideration of Payment as Option Money
“That for and in consideration of the sum of
P500,000, value to be paid and delivered to me, Payment is considered option money when it is
and receipt of which shall be acknowledged by given as a separate and distinct consideration from
me to the full satisfaction of Monica, referred to the purchase price.
as a vendee, I hereby sell, transfer, cede, convey,
and assign, as by these presents, I do have sold, Earnest Money or “arras” (2002 BAR)
transferred, ceded, conveyed and assigned a
parcel of land covered by TCT No. 2468 in favor This is the money given to the seller by the
of the Vendee.” prospective buyer to show that the latter is truly
interested in buying the property, and its aim is to
After delivery of the initial payment of bind the bargain (Pineda, 2010). It is actually a
P100,000.00, Monica immediately took partial payment of the purchase price and is
possession of the property. Five (5) months considered as proof of the perfection of the contract.
after, Monica failed to pay the remaining (De Leon, 2011)
balance of the purchase price. Nante filed an
action for the recovery of the possession of the

2022 GOLDEN NOTES
Sales
NOTE: Option money may become earnest money if Effect of Non-payment

the parties agree. (De Leon, 2011)
Action for specific Action for specific
Significance of Giving Earnest Money performance can be performance or
filed. rescission can be filed.
It is considered as:
1. Part of the purchase price – earnest money is Remedy when Seller Refuses to Complete the
deducted from the total price; and Sale Transaction despite Down Payment of the
2. Proof of perfection of the contract. (Art. 1482, Buyer
NCC)
The action for specific performance will lie. There is
Effect of Rescission on Earnest Money Received a perfected contract of sale because there was a
binding agreement of sale, not just an option
When the seller seeks to rescind the sale, he is contract. The sale was perfected upon acceptance
obliged to return the thing which was the object of by the seller of the down payment from the buyer.
the contract along with fruits and interest. (Art.
1385, NCC) Seller’s Refusal to Proceed with the Sale despite
Down Payment of Buyer on the ground that the
Option Money v. Earnest Money Transaction is Disadvantageous to Him (seller)
OPTION MONEY EARNEST MONEY The seller cannot justify his refusal to proceed with
As to Money Given the sale by the fact that the deal is financially
disadvantageous to him. Having made a bad bargain
Money given as distinct is not a legal ground for pulling out of a binding
Forms part of the
consideration for an contract of sale, in the absence of some actionable
purchase price.
option contract. wrong by the other party. (Legaspi y Navera v.
People, G.R. No. 225753, 15 Oct. 2018)
As to Perfection
Sale of a Thing by a Person NOT its Owner
Applies to a sale not yet Given only when there
perfected. is already a sale.
Ownership by the seller on the thing sold at the time
of the perfection of the contract of sale is not an
Obligation of the Buyer Upon
element for its perfection. What the law requires is
Payment of Consideration
that the seller has the right to transfer ownership at
When given, the buyer the time the thing sold is delivered. A perfected
Prospective buyer is
is bound to pay the contract of sale cannot be challenged on the ground
not required to buy.
balance. of non-ownership on the part of the seller at the
time of its perfection. Hence, the sale is still valid.
As to Recovery
(Quijada v. CA, G.R. No. 126444, 04 Dec. 1998)
If sale did not
If buyer does not Right to Transfer Ownership
materialize, it must be
decide to buy, it cannot
returned. (Villanueva,
be recovered. It is during the delivery that the law requires the
2014; Pineda, 2010)
seller to have the right to transfer ownership of the
As to Transfer of Ownership thing sold. In general, a perfected contract of sale
Ownership is reserved cannot be challenged on the ground of the seller’s
Title passes to the
to the seller and is not non-ownership of the thing sold at the time of the
buyer upon delivery of
to pass until full perfection of the contract. (Alcantara-Daus v. Sps. De
the thing sold.
payment. Leon, G.R. No. 149750, 16 June 2003)

Civil Law
This rule is in accord with a well-known principle of agreed but demanded for an initial payment of
law that one cannot transmit or dispose of that ₱1,500.00, which Juan Cabrera paid. On June 15,
which he does not have — nemo dat quod non-habet. 1992, Juan Cabrera tried to pay the balance of
the purchase price to Henry Ysaac. However, at
NOTE: Future inheritance cannot be the subject of that time, Henry Ysaac was in the United States.
sale. The only person in Henry Ysaac’s residence was
his wife who refused to accept Juan Cabrera’s
Legal Effect of Sale by a Non-owner payment.
GR: The buyer acquires no better title to the goods On Sept. 21, 1994, Henry Ysaac’s counsel wrote
than the seller had; caveat emptor (buyer beware). a letter addressed to Juan Cabrera’s counsel,
(Art. 1505, NCC) informing the latter that his client is formally
rescinding the contract of sale because Juan
XPNs: Cabrera failed to pay the balance of the purchase
1. Estoppel or when the owner of the goods is by price of the land between May 1990 and May
his conduct precluded from denying the 1992. The letter also stated that Juan Cabrera’s
seller’s authority to sell (Art. 1505, NCC); initial payment of ₱1,500.00 and the subsequent
2. When the contrary is provided for in recording payment of ₱6,100.00 were going to be applied
laws (Art. 1505, NCC); as payment for overdue rent of the parcel of land
3. When the sale is made under statutory power Juan Cabrera was leasing from Henry Ysaac. Due
of sale or under the order of a court of to Juan Cabrera’s inability to enforce the
competent jurisdiction (Art. 1505, NCC); contract of sale between him and Henry Ysaac,
4. When the sale is made in a merchant’s store in he decided to file a civil case for specific
accordance with the Code of Commerce and performance. Was there a valid contract of sale
special laws (Art. 1505, NCC); between Ysaac and Cabrera?
5. When a person who is not the owner sells and
delivers a thing, and subsequently acquired A: NO. There was no valid contract of sale between
title thereto (Art. 1434, NCC); petitioner and respondent as the contract was null
6. When the seller has a voidable title which has ab initio. The object of the sales contract between
not been avoided at the time of the sale (Art. petitioner and respondent was a definite portion of
1505, NCC); a co-owned parcel of land. At the time of the alleged
7. Sale by co-owner of the whole property or a sale between petitioner and respondent, the entire
definite portion thereof (Art. 493, NCC); or property was still held in common. The rules allow
8. Special rights of unpaid seller. (Arts. 1526- respondent to sell his undivided interest in the
1533, NCC) coownership. However, this was not the object of
the sale between him and petitioner. The object of
Q: Henry Ysaac leased out portions of the the sale was a definite portion. Even if it was
property to several lessees. Juan Cabrera, one of respondent who was benefiting from the fruits of
the lessees, leased a 95 sq. m. portion of the land the lease contract to petitioner, respondent has "no
beginning in 1986. On May 6, 1990, Henry Ysaac right to sell or alienate a concrete, specific or
needed money and offered to sell the 95 sq. m. determinate part of the thing owned in common,
piece of land to Juan Cabrera. He told Henry because his right over the thing is represented by
Ysaac that the land was too small for his needs quota or ideal portion without any physical
because there was no parking space for his adjudication. Sale of a portion of the property is
vehicle. Juan Cabrera accepted the new offer. considered an alteration of the thing owned in
Henry Ysaac and Juan Cabrera settled on the common.
price of ₱250.00 per sq. m., but Juan Cabrera
stated that he could only pay in full after his Under the Civil Code, such disposition requires the
retirement on June 15, 1992. Henry Ysaac unanimous consent of the other co-owners.

2022 GOLDEN NOTES
Sales
However, the rules also allow a co-owner to alienate

his or her part in the co-ownership. These two rules C. EFFECTS OF THE CONTRACT WHEN
are reconciled through jurisprudence. If the THE THING SOLD HAS BEEN LOST
alienation precedes the partition, the co-owner
cannot sell a definite portion of the land without
consent from his or her co-owners. He or she could
A thing is considered as lost
only sell the undivided interest of the co-owned
property. As summarized in Lopez v. Ilustre, “if he is
GR: It is understood that the thing is lost when it:
the owner of an undivided half of a tract of land, he
1. Perishes;
has a right to sell and convey an undivided half, but
2. Goes out of commerce; or
he has no right to divide the lot into two parts, and
3. Disappears in such a way that its existence is
convey the whole of one part by metes and bounds.”
unknown or cannot be recovered. (Art.
(Cabrera v. Ysaac, G.R. No. 166790, 19 Nov. 2014)
1189(2), NCC)
XPN: In an obligation to deliver a generic thing, the

loss or destruction of anything of the same kind
does not extinguish the obligation. (Art. 1263, NCC)
Effect when the Loss occurred Before Perfection
GR: The thing perishes with the owner – Res perit

domino (Art. 1504, NCC; 1999 BAR)
XPNs:
1. Where the delivery has been made either to
the buyer or to the bailee for the buyer, but
ownership in the goods has been retained by
the seller merely to secure performance by the
buyer of his obligations under the contract
(Art. 1504(1), NCC);
2. Where actual delivery has been delayed

through the fault of either the buyer or seller,
the goods are at the risk of the party at fault
(Art. 1504(2), NCC); and
3. Where goods are sent by the seller to the buyer

under circumstances in which the seller knows
or ought to know that it is usual to insure, the
seller must give such notice to the buyer as
may enable him to insure them during their
transit, and, if the seller fails to do so, the goods
shall be deemed to be at his risk during such
transit. (Art. 1523(3), NCC)
NOTE: The seller still owns the thing because there

is no delivery or transfer of ownership yet. Hence,
the seller bears the risk of loss. (Villanueva, 2004)

Civil Law
Effect when the Loss occurred at the time of the part of the buyer is not extinguished.
Perfection of the Contract of Sale (Villanueva, 2009)
GR: Contract is considered void or inexistent NOTE: Pursuant to Art. 1537 of the Civil Code, the
because the object did not exist at the time of the vendee must also bear the resulting disadvantages
transaction (Pineda, 2010). Res perit domino applies. before the delivery but after the contract has been
(Art. 1504, NCC) perfected. This theory is an exception to the rule of
res perit domino. On the other hand, pursuant to Art.
XPN: In case of partial loss, the buyer may choose 1262 of the Civil Code, if the thing is lost or
between withdrawing from the contract and destroyed without the fault of the seller, the
demanding the remaining part. If he chooses the obligation to deliver is extinguished but the
latter, he shall pay the remaining part’s obligation to pay subsist. (Pineda, 2010)
corresponding price in proportion to the total sum
agreed upon. (Art. 1493, NCC) Second view: Res perit domino or seller bears the
risk of loss. (Tolentino, Jurado, Baviera, and
Options of the Buyer with regard to the Sale in Villanueva)
the Total or Partial Loss or Deterioration of a
Mass of Specific Goods without the Knowledge of In reciprocal obligations, the extinguishment of the
the Seller obligation due to loss of the thing affects both
debtor and creditor; the entire juridical relation is
1. He may treat the sale as avoided or cancelled; or extinguished. Under this view, the rule on loss under
2. He may continue with the sale with respect to Art. 1189 of the Civil Code would be different from
the available or remaining goods. (Art. 1494, the rule on deterioration – the loss would be for the
NCC) account of the seller, while deterioration would be
for the account of the buyer. (Tolentino, 2002)
Effect if the Buyer chooses to Continue with the
Sale of the Remaining Goods This view would make Arts. 1480 and 1538 of the
Civil Code consistent with the provisions of Arts.
The remaining goods shall pass in ownership to the 1504 of the Civil Code. (Villanueva, 2009)
buyer but subject to proportionate reduction of the
price. But this is applicable only if the goods are Ownership is transferred only after delivery,
divisible or capable of being divided (Pineda, 2010). further, the contract is reciprocal. If the vendee
If indivisible, the only option available is the cannot have the thing, it is illogical and unjust to
avoidance of the sale. make him pay the price. (Pineda, 2010)
Effect when the Loss occurred After Perfection Effect when Loss occurred After Delivery
but Before Delivery
GR: Res perit domino applies – the buyer is now the
GR: Who bears the risk of loss is governed by the owner; hence, the buyer bears the risk of loss. (Art.
stipulations in the contract. 1504, NCC)
XPN: In the absence of stipulation, there are two XPNs:

conflicting views: 1. Where the delivery has been made either to the
First view: Res perit creditori or buyer bears the buyer or to the bailee for the buyer, but
risk of loss. (Paras, Vitug, Padilla, and De Leon) ownership in the goods has been retained by
the seller merely to secure performance by the
Art. 1504 of the Civil Code which embodies res perit buyer of his obligations under the contract; and
domino, only covers goods. The obligation to pay on

2022 GOLDEN NOTES
Sales
2. Where actual delivery has been delayed

through the fault of either the buyer or seller, D. OBLIGATIONS OF VENDOR
the goods are at the risk of the party at fault.
(Art. 1504(1)(2), NCC)
Obligations of the Seller (D-D-T-W-T-P-I)
SUMMARY: Person who Bears the Risk of Loss or
Deterioration
1. Deliver the thing sold (Arts. 1458 & 1495, NCC);
2. Deliver fruits & accessions/accessories
PERSON WHO BEARS accruing from perfection of sale (Arts. 1164,
THE RISK OF LOSS OR DETERIORATION 1166, & 1537, NCC);
Before Perfection 3. Transfer the ownership (Arts. 1458 & 1495,
SELLER is the owner so seller bears risk of loss. NCC);
4. Warranties (Arts. 1495 & 1545-1581, NCC);
At the Time of Perfection
5. Take care of the thing, pending delivery, with
Contract shall be without any effect – the SELLER proper diligence (Arts. 1163, NCC);
bears the loss since the buyer is relieved of his 6. Pay for the expenses of the deed of sale unless
obligation under the contract. there is a stipulation to the contrary (Arts.
After Perfection but Before Delivery 1487, NCC); and
Two (2) conflicting views 7. Obligation of taking-out the Insurance
Deterioration & fruits – Buyer bears loss. coverage. (Art. 1523, NCC)
(Tolentino, 2002)
Obligation of the Seller in terms of the Nature of
First view: Res perit creditori or buyer bears the Subject Matter of the Sale
the risk of loss. (Paras, Vitug, Padilla,
and De Leon) When the subject matter of the sale is a determinate
or specific thing, the seller must deliver the thing to
Second view: Res perit domino or seller bears the buyer when compelled by the latter.
the risk of loss. (Tolentino, Jurado, Baviera, and
Villanueva) When the subject matter is an indeterminate or
After Delivery generic thing, the seller may be asked that the
Buyer becomes the owner so BUYER bears risk of obligation be complied with at his expense. (Art.
loss. 1165, NCC)
Delivery extinguish ownership vis-à-vis the seller Seller’s Obligation in case of Delay or Promise to
& creates a new one in favor of the buyer; where Deliver the Thing to Two or More Persons who
the application of res perit domino lies. do NOT have the Same Interest
The seller shall be responsible for any fortuitous

event that may occur until he has delivered the
thing. (Art. 1165 in relation to Art. 1174, NCC)
WARRANTIES
Warranty
A statement or representation made by the seller of

goods, as part of the contract of sale, having
reference to the character, quality, or title, of the
goods, and by which he promises or undertakes to

Civil Law
insure that certain facts are or shall be as he then Liability of the Seller for Breach of Express
represents. (De Leon, 2011) Warranties
Effect of a Breach of Warranty The seller is liable for damages. (Villanueva, 2009)
Buyer may: Effect of Expression of Opinion

1. Refuse to proceed with the contract; or
2. Proceed with the contract and waive the GR: A mere expression of opinion, no matter how
condition. positively asserted, does not import a warranty. (De
Leon, 2011)
NOTE: If the condition is in the nature of a promise
that it should happen or be performed, the non- XPN: If the seller is an expert and his opinion was
performance may be treated as a breach of relied upon by the buyer.
warranty. (Art. 1545(1), NCC)
Implied Warranties
Kinds of Warranties
Warranties deemed included in all contracts of sale
1. Express; or by operation of law. (Art. 1547, NCC)
2. Implied
1. Warranty that seller has right to sell – refers
NOTE: Prescriptive period of actions based on to consummation stage, at which time the
express warranty: ownership is to pass. Not applicable to a sheriff,
auctioneer, mortgagee, pledgee or any other
a. That specified in the contract and in the person professing to sell by virtue of authority
absence thereof; or in fact or in law, for the sale of a thing in which
b. Four (4) years. (Rabuya, 2017) a third person has legal or equitable interest
(Art. 1547, NCC);
Express Warranties
2. Warranty against eviction (Art. 1548, NCC);
Any affirmation of fact or any promise by the seller
relating to the thing if the natural tendency of such Requisites: (J-J-P-E-N-S)
affirmation or promise is to induce the buyer to a. Buyer is Evicted in whole or in part from
purchase the same, and if the buyer purchases the the subject matter of sale;
thing relying thereon. (Art. 1546, NCC) b. Final Judgment;
c. Eviction is by Final Judgment;
Requisites: (A-I-R) d. Basis of eviction is a right Prior to sale or
1. It must be an Affirmation of fact or any act imputable to seller;
promise by the seller relating to the subject e. Seller has been Summoned in the suit for
matter of sale; eviction at the instance of buyer, or made
by a third-party defendant through a
2. The natural tendency of such affirmation or third-party complaint brought by the
promise is to Induce buyer to purchase the buyer; and
subject matter; and f. There is No waiver of warranty on the part
of the buyer.
3. The buyer purchases the subject matter
Relying on such affirmation or promise NOTE: For eviction – disturbance in law is
thereon. (Philippine Steel Coating Corp. v. required and not just trespass in fact.
Quinones, G.R. No. 194533, 19 Apr. 2017)

2022 GOLDEN NOTES
Sales
3. GR: Warranty against non-apparent burden or NOTE: Hidden faults or defects pertain only to those
servitude. (Art. 1560, NCC) that make the object of sale unfit for the use for
which it was intended at the time of the sale, or
Requisites: those which considerably decrease such fitness.
a. Immovable sold is encumbered with non-
apparent burden or servitude not Non-applicability of Implied Warranty (A-S-A-P)
mentioned in the agreement; and
b. Nature of non-apparent servitude or 1. “As is and where is” sale;
burden is such that it must be presumed 2. Sale of Second-hand articles;
that the buyer would not have acquired, it 3. Sale by virtue of Authority in fact or law; and
had he been aware thereof. 4. Sale at Public auction for tax delinquency.
XPN: Warranty is not applicable when the Where the Cause of Action is to Hold the Seller of
servitude is mentioned in the agreement, or a Vehicle for Breach of Implied Warranty
when the non-apparent burden or servitude is
recorded in the Registry of Property. Under Art. 1599 of the Civil Code, once an express
warranty is breached, the buyer can accept or keep
XPN to the XPN: Unless there is an express the goods, and maintain an action against the seller
warranty that the thing is free from all burdens for damages. In the absence of an existing express
and encumbrances. warranty, a complaint for damages may be
anchored on the enforcement of an implied
4. Warranty against Hidden Defects (Art. 1561, warranty against hidden defects. However, this
NCC); right must be exercised within six (6) months from
the delivery of the thing sold, or else his cause of
Requisites: (S-H-A-W-N-E) action had become time-barred. (De Guzman v.
Toyota Cubao, G.R. No. 141480, 29 Nov. 2006)
a. Defect is important or Serious;
i. The thing sold is rendered unfit for the Effects of Waiver of an Implied Warranty
use which it is intended; and
ii. Diminishes its fitness for such use to 1. Seller is in bad faith and there is waiver against
such an extent that the buyer would eviction – the waiver is void.
not have acquired it, had he been
aware thereof, or would have at least 2. When the buyer who is without knowledge of a
given a lower price for it. particular risk, made a general renunciation of
warranty – is not a waiver but merely limits
b. Defect is Hidden; liability of seller in case of eviction.
c. Defect Exists at the time of the sale;
d. Buyer gives Notice of the defect to the seller 3. When the buyer with knowledge of risk of
within a reasonable time; eviction assumed its consequences and made a
e. Action for rescission or reduction of the price waiver – seller is not liable (applicable only to
is brought within the proper period; waiver of warranty against eviction).
i. Within six (6) months from delivery of
the thing sold; (Art. 1571, NCC) and WARRANTY AGAINST EVICTION
ii. Within 40 days from delivery, in the
case of a redhibitory action on the sale In a contract of sale, unless a contrary intention
of defective animals. (Art. 1577, NCC) appears, there is an implied warranty on the part of
the seller that he has the right to sell the thing at the
f. There must be no Waiver of warranty on time when the ownership is to pass, and that the
the part of the buyer. buyer shall from that time have and enjoy the legal

Civil Law
and peaceful possession of the thing. (Art. 1547(1), 4. The Expenses of contract if buyer has paid
NCC) them; and
Kinds of Waiver of Eviction by the Buyer 5. The damages, interests and ornamental
expenses if sale was made in bad faith. (Art.
1. Consciente – waiver voluntarily made by the 1555, NCC)
buyer without the knowledge and assumption
of the risks of eviction; and NOTE: Vendor is liable for any hidden defect even if
he is not aware thereof (Caveat Venditor).
2. Intencionada – waiver made by the buyer with
knowledge of the risks of eviction and Purchaser must be aware of the title of the vendor
assumption of its consequences. (Art. 1554, (Caveat Emptor).
NCC)
Rights of Buyer in case of Partial Eviction
NOTE: Every waiver is presumed to be
consciente unless the contrary is proven. 1. Restitution (with obligation to return the thing
without other encumbrances than those which
Coverage of a Warranty against Eviction it had when he acquired it);
It covers eviction by a final judgment based on a 2. Rescission of the contract if the part lost by
right prior to the sale, or an act imputable to the eviction is of such importance, in relation to the
vendor, whereby the vendee is deprived of the whole, that the buyer would not have bought it
whole or of a part of the thing purchased. without said part, provided that he returns the
thing without other encumbrances than those
The vendor shall answer for the eviction even which it had when he acquired it; or
though nothing has been said in the contract on the
subject. 3. Enforcement of the vendor’s warranty against
eviction. (Art. 1556, NCC; Paras, 2013)
NOTE: The contracting parties, however, may
increase, diminish, or suppress this legal obligation Inapplicability of Rescission
of the vendor. (Art. 1548, NCC)
GR: Rescission is not a remedy in case of total
Effect of a Breach of Warranty against Eviction eviction because rescission contemplates that the
one demanding it is able to return whatever he has
The buyer shall have the right to demand the R-I-C- received under the contract. Since the vendee can
E with damages from seller: no longer restore the subject matter of the sale to
the vendor, rescission cannot be carried out. (Art.
1. The Return of the value which the thing sold 1385, NCC)
had at the time of the eviction, be it greater or
lesser than the price of the sale; XPN: The buyer may demand rescission in case of
partial eviction, because there still remains a
2. The Income or fruits, if he has been ordered to portion of the thing sold. (De Leon, 2009)
deliver them to the party who won the suit
against him; WARRANTY AGAINST HIDDEN DEFECT
3. The Costs of suit which caused the eviction, and, Hidden Defect (Art. 1561, NCC)
in a proper case, those of suit brought against
the vendor for the warranty; One which is unknown or could not have been
known to the buyer. (Diaz, 2006)

2022 GOLDEN NOTES
Sales
NOTE: Seller does not warrant patent defects, or Responsibility of a Vendor for Hidden Defects
those which are visible, or even for those which are
not visible if the buyer is an expert or should have If the hidden defects which the thing sold may have:
known them.
1. Render it unfit for the use for which it is
Reason: Caveat emptor (buyer beware). intended; or
2. Diminish its fitness for such use to such an
Application extent that had the vendee been aware thereof,
he would not have acquired it or would have
The seller shall be responsible for warranty against given a lower price for it. (Art. 1561, NCC)
“hidden defect” only when:
Extent of Warranty by the Seller against Hidden
1. The nature of the hidden defect is such that it Defects
should render the subject matter unfit for the
use for which it is intended; or The seller is responsible to the vendee for any
hidden faults or defects in the thing sold, even
2. Should diminish its fitness for such use to such though he was not aware thereof.
an extent that, had the buyer been aware
thereof, he would not have acquired it or would When the Seller is NOT Answerable for the
have given a lower price for it. Defects of the Thing Sold
Redhibitory Defect 1. For patent defects or those which are visible;

2. Even for those which are not visible if the buyer
It is an imperfection or defect in the article sold is an expert who, by reason of his trade or
against which defect the seller is bound to warrant. profession, should have known them; (Art.
The vice must constitute an imperfection, a defect in 1561, NCC) or
its nature, which is of certain importance; and thus, 3. If the contrary has been stipulated, and the
a minor defect does not give rise to redhibition. (De vendor was not aware of the hidden faults or
Leon, 2011) defects in the thing sold. (Art. 1566, NCC)
Redhibitory Defect on Animals (Art. 1576, NCC) Effect of a Breach of Warranty against Hidden
Defects
If the hidden defect of animals, even in case a
professional inspection has been made, should be of It would depend on whether the seller had
such a nature that expert knowledge is not sufficient knowledge of such defect, and whether there has
to discover it, the defect shall be considered as been a waiver of the warranty.
redhibitory.
1. If the thing should be lost in consequence of
NOTE: The warranty against hidden defects shall the hidden faults, and seller was aware of
not apply to animals sold at fairs or at public them – he shall:
auctions, or of livestock sold as condemned. (Art. a. bear the loss;
1574, NCC) b. return the price; and
c. refund the expenses of the contract, with
Void Sale of Animal (Art. 1575, NCC) damages.
The sale is void if the animal is: 2. If the thing is lost and the seller was not
1. Suffering from contagious diseases; or aware of the hidden faults – he shall:
2. Unfit for the use or service for which they were a. return the price and interest thereon;
purchased, as indicated in the contract. and

Civil Law
b. reimburse the expenses of the contract Specific Implied Warranties in Sale of Goods
which the buyer might have paid, but not (Art. 1562, NCC)
for damages. (Villanueva, 2009)
1. Warranty of fitness for the purpose:
3. If the thing sold had any hidden fault at the
time of sale, and should thereafter be lost That goods are suitable for the special purpose
through a fortuitous event or through the of the buyer which will not be satisfied by mere
fault of the buyer: fitness for general purposes.
a. If the seller was not aware of the hidden GR: No implied warranty
of the hidden defects, he shall be liable to
return the price paid less the value of the XPNs:
thing at the time of the loss; a. Buyer expressly or impliedly manifests to
b. If there was bad faith, the seller shall also the seller the particular purpose for which
pay damages to the buyer. the goods are acquired; and
b. Buyer relies upon the seller’s skill or
Prescriptive Period judgment. (De Leon, 2011)
Six (6) months from date of the delivery of the thing 2. Warranty of merchantability:
sold. (Art. 1571, NCC)
That goods are reasonably fit for the general
Remedies of the Buyer in case of Sale of Things purpose for which they are sold.
with Hidden Defects
There is an implied warranty that the goods
The vendee may elect between: shall be of merchantable quality when they are
1. Withdrawing from the contract, with a claim bought by description from a seller who sells
for damages; or goods of such description.
2. Demanding a proportionate reduction of the
price, with a claim for damages. (Art. 1567, REMEDIES IN CASE OF
NCC) BREACH OF WARRANTY
Waiver of Warranty against Eviction Hidden 1. Accept goods and set up against the seller, the
Defects breach of warranty by way of recoupment in
diminution or extinction of the price;
There is waiver of warranty against eviction hidden
defects when the lessee has inspected the premises 2. Accept goods and maintain action against seller
and decides to consummate the contract based on for damages;
such inspection. Under Arts. 1561 and 1653 of the
Civil Code, the lessor is responsible for warranty 3. Refuse to accept goods and maintain action
against hidden defects, but he is not answerable for against seller for damages;
patent defects or those which are visible. (De Ysasi
v. Arceo, G.R. No. 136586, 22 Nov. 2001) 4. Rescind contract of sale, refuse to receive
goods/return them when already received, and
recover the price paid.

2022 GOLDEN NOTES
Sales
Remedies of the Buyer in case of Breach of Goodyear for breach of warranty. It is Sy’s
Warranty NOT Absolute argument that it is Goodyear’s duty to convey
the vehicle to Sy, free from all liens,
The vendee's remedies against a vendor with encumbrances and legal impediments. Was
respect to the warranties against hidden defects or there a breach of warranty by Goodyear?
encumbrances upon the thing sold, in the case of
Arts. 1561, 1562, 1564, 1565 and 1566 of the Civil A: NO. Upon the execution of the Deed of Sale,
Code, may either be to withdraw from the contract Goodyear did transfer ownership of, and deliver the
or demand a proportionate reduction of the price, vehicle to Sy. The impoundment of the vehicle and
with damages in either case. the failure to register it were clearly acts that were
not deliberately caused by Goodyear, but that
The vendee may also ask for the annulment of the resulted solely from the failure of the PNP to lift the
contract upon proof of error or fraud, in which case latter’s own alarm over the vehicle. Assuming there
the ordinary rule on obligations shall be applicable. was a breach of the implied warranty against hidden
Responsibility arising from fraud is demandable in encumbrances, notice of breach was not given to the
all obligations and any waiver of an action for future Goodyear within a reasonable time. Art. 1586 of the
fraud is void. Responsibility arising from negligence Civil Code requires that notice be given after the
is also demandable in any obligation, but such breach, of which Sy ought to have known. (Goodyear
liability may be regulated by the courts, according Philippines, Inc. v. Sy and Lee, G.R. No. 154554, 09
to the circumstances. Nov. 2005)
The vendor could likewise be liable for quasi-delict Condition

under Art. 2176 of the Civil Code, and an action
based thereon may be brought by the vendee. (Coca- An uncertain event or contingency upon the
Cola Bottlers Ph., Inc. v. CA, G.R. No. 110295, 18 Oct. happening of which the obligation or right of the
1993) contract depends. In such case, the obligation of the
contract does not attach until the condition is
Instances when the Buyer Cannot Rescind the performed. (De Leon, 2011)
Sale in case there is a Breach of Warranty
NOTE: There may be a contract of sale of goods,
1. If he knew of the breach of warranty at the time whose acquisition by the seller depends upon a
that he accepted the goods without protest; contingency, which may or may not happen. (Art.
2. If he fails to return or offer to return goods to 1462(2), NCC)
seller in substantially as good condition as they
were at the time the ownership was transferred Effect of Non-fulfillment of a Condition
to the buyer; or
3. If he fails to notify the seller within a reasonable 1. If imposed on the perfection of contract – it
time of his election to rescind. prevents the juridical relation itself from
coming into existence.
Q: Goodyear Philippines sold a car to Anthony
Sy. Later on, Sy sold the car to Jose Lee. When Lee 2. If imposed on the performance of an obligation,
tried to register the car in his name, he failed to the other injured party may:
have it registered because it turned out that the a. Refuse to proceed with the contract; or
car was stolen before, and was only b. Proceed with the contract, waiving the
subsequently recovered by Goodyear. However, performance of the condition.
PNP did not lift the alert alarm over the said car.
Due to this, the car was impounded and Lee was
sued by the PNP. This problem was relayed by
Lee to Sy. It led to Sy filing a case against

Civil Law
Condition v. Warranty (Villanueva, 2009) 3. Sale on return; or

4. There is implied reservation of ownership.
CONDITION WARRANTY (Art. 1503, NCC)
As to Nature
NOTE: Seller bears expenses of delivery.
Goes into the
Goes into the root of the performance of the Kinds of Delivery
existence or perfection obligation and in fact
of the obligation. may constitute an 1. Actual or real – Thing sold is placed under the
obligation itself. control and possession of buyer/agent. (Art.
As to the Need for Stipulation 1497, NCC)
Need not be stipulated;

Must be stipulated to 2. Constructive or legal – Does not confer
may form part of the
form part of the physical possession of the thing, but by
obligation by provision
obligation. construction of law, is equivalent to acts of real
of law.
delivery. (Arts. 1498 to 1500, NCC)
As to Subject Matter
Whether express or Requisites:
May attach itself to the
implied, relates to the a. The seller must have control over the
obligation of seller to
subject matter itself or thing;
deliver possession and
to obligation of the b. The buyer must be put under control; and
transfer.
seller as to the subject c. There must be intention to deliver the
matter of the sale. thing for purposes of ownership.
TRANSFER OF OWNERSHIP i. Traditio Symbolica – delivery of

certain symbols representing the
Q: When is ownership deemed transferred? thing;
A: The thing shall be understood as delivered when ii. Traditio Instrumental – delivery of
it is placed in the control and possession of the the instrument of conveyance;
vendee.
iii. Traditio Longa Manu – Delivery of
NOTE: The most that a sale does is to create the thing by mere agreement; when
obligation to transfer ownership. It is only the title seller points to the property without
while the mode of transferring ownership is need of actually delivering;
delivery.
NOTE: The thing to be transferred
Effect of Delivery must be within sight at that time.
(Rabuya, 2017)
GR: Title/ownership is transferred.
iv. Traditio Brevi Manu – the buyer,
XPN: When the contrary is stipulated as in the case being already in possession of the
of: thing sold due to some other cause,
merely remains in possession after
1. Pactum reservatii in domini – Agreement the sale is effected, but now in the
that ownership will remain with seller until concept of owner., e.g., from lessee to
full payment of price (contract to sell); becoming an owner;
2. Sale on acceptance, approval, satisfaction;
(Art. 1402, NCC)

2022 GOLDEN NOTES
Sales
v. Traditio Constitutum Possessorium Sale made through a Public Instrument

– the seller remains in possession of
the property in a different capacity., Art. 1498 of the Civil Code provides that when the
e.g., from owner to lessee sale is made through a public instrument, the
execution thereof shall be equivalent to the delivery
3. Quasi-Traditio – delivery of rights, credits or of the thing which is the object of the contract, if
incorporeal property, made by: from the deed the contrary does not appear or
a. Placing titles of ownership in the hands of cannot clearly be inferred. In the absence of
the buyer; or stipulation to the contrary, the ownership of the
b. Allowing buyer to make use of the rights. property sold passes to the vendee upon the actual
(Art. 1501, NCC; Paras, 2016) or constructive delivery thereof. (Boy v. CA, G.R. No.
125088, 14 Apr. 2004)
4. Tradition by operation of law – Execution of
a public instrument is equivalent to delivery. Q: On March 3, 2004, Sps. Maranao filed the suit
But to be effective, it is necessary that the seller for recovery of possession against Juan Dela
have such control over the thing sold that, at the Cruz. They alleged that, sometime after causing
moment of sale, its material delivery could have the Certificate of Sale in their favor to be
been made. (Art. 1434, NCC) annotated in the TCT, they conducted an
inspection of the subject property. They
GR: There is presumption of delivery. discovered that the same was in the possession
of Dela Cruz who claimed to be the owner
XPNs: thereof, having bought the property from the
a. Contrary stipulation; Sps. Rivera in 1996. Claiming to be entitled to
b. When at the time of execution, subject the ownership and possession of the property,
matter was not subject to the control of they prayed that Dela Cruz be ordered to vacate
seller; and to surrender the possession thereof to
c. Seller has no capacity to deliver at time of them.
execution; and
d. Such capacity should subsist for a Dela Cruz averred that he is already, and
reasonable time after execution of continues to be, the owner of the subject
instrument. property as he bought the same from Sps. Rivera
way back March 20, 1996 despite failing to cause
Delivery deemed Effective the registration of the sale as he lost the owner's
copy of TCT. Asserting that the Sps. Rivera no
Delivery should be coupled with intention of longer have rights or interests over the subject
delivering the thing, and acceptance on the part of property at the time of the levy, he maintained
the buyer to give legal effect of the act. Without such that the Sps. Maranao acquired no right over the
intention, there is no such tradition. same. Claiming to be an innocent purchaser for
value who cannot be deprived of possession
Delivery of Incorporeal Property over the subject property, he prayed that the
complaint be dismissed, that he be declared the
1. By execution of a public instrument; (Art. 1498, rightful owner of the subject property, and for
NCC) an that he be awarded of damages. Should the
2. By placing the titles of ownership in the complaint by Sps. Maranao be dismissed and the
possession of the buyer; or right to possession be granted to Dela Cruz?
3. By the vendee’s use of his rights as owner with
the consent of the vendor. (Art. 1501, NCC) A: YES. The Deed of Absolute Sale between Sps.
Rivera, the then registered owners of the subject
property, and Dela Cruz was executed in March

Civil Law
1996 and possession was already transferred to delivered “f.o.b.” at the point of shipment or at
Dela Cruz, through constructive delivery when the the point of destination. (Villanueva, 2009)
Deed of Absolute Sale, a public instrument, was
executed conformably to Art. 1498 of the Civil Code, 3. CIF (Cost, Insurance, and Freight) – where the
and through real delivery when actual possession buyer pays a fixed price for which the seller
was turned over to Dela Cruz pursuant to Art. furnishes the goods, pays the freight and
1497 of the Civil Code. Pursuant to the applicable insurance to the point of delivery, and all risks
provisions of the Civil Code on the contract of sale while the goods are in transit are for the
and modes of acquiring ownership, Dela Cruz account of the buyer
acquired ownership of the subject property when
he took actual physical, or at least constructive, 4. COD (Collect on Delivery) – the carrier acts for
possession thereof. The non-registration of the the seller in collecting the purchase price, which
Deed of Absolute Sale with the Registry of Deeds for the buyer must pay to obtain possession of the
the Province of Nueva Ecija did not affect the sale's goods.
validity and effectivity. Since ownership of the
subject property had been transferred to Dela Cruz Seller’s Duties After Delivery to the Carrier
in 1996, it ceased to be owned by Sps. Rivera as
early as then. Not being owned by Sps. Rivera, the 1. To enter on behalf of the buyer into such
subject property could not therefore be made contract reasonable under the circumstances;
answerable for any judgment rendered against and
them. 2. To give notice to the buyer regarding necessity
of insuring the goods.
A judgment creditor or purchaser at an execution sale
acquires only whatever rights that the judgment Effect of Delivery through a Carrier
obligor may have over the property at the time of
levy. Thus, if the judgment obligor has no right, title GR: If the seller is authorized, delivery to carrier is
or interest over the levied property — as in this case considered delivery to the buyer. The premise being
— there is nothing for him to transfer. In conclusion, that the carrier acts as an agent of the buyer.
Dela Cruz has a better right of possession over the (Villanueva, 2009)
subject property having acquired ownership
thereof prior to the levy on execution that Sps. NOTE: Here, the carrier is deemed the bailee of the
Maranao had caused to be made upon the subject buyer and the seller is deemed the agent of the
property. (Miranda v. Sps. Mallari, G.R. No. 218343, buyer in employing the carrier. (Rabuya, 2017)
28 Nov. 2018, J. Caguioa)
XPNs:
Kinds of Delivery through Carrier 1. When the seller reserves his right of
ownership over the goods;
1. FAS (Free along Side) – when goods are 2. When the delivery is directed by the seller to
delivered alongside the ship, there is already the place of destination, to himself or his agent;
delivery to the buyer. The seller pays all charges 3. When the bill of lading is deliverable to the
and is subject to risk until the goods are placed buyer, but the seller retains possession of the
alongside the vessel. (Villanueva, 2009) bill of lading; (Art. 1503, NCC) and
4. When the parties have a different intention as
2. FOB (Free on Board) – when goods are when the parties did not intend to have the
delivered at the point of shipment, delivery to goods delivered to the buyer through the
carrier by placing the goods on vessel is carrier. (Smith Bell & Co., Inc. v. Jimenez, G.R. No.
delivery to buyer. The seller shall bear all L-17617, 29 June 1963)
expenses until the goods are delivered,
depending on whether the goods are to be

2022 GOLDEN NOTES
Sales
When the Object should be Delivered: XPNs:

1. Seller gives security for the return of the price
1. Stipulated time; or in a proper case;
2. If there is none, at a reasonable hour. 2. A stipulation that notwithstanding any such
contingency, the buyer must make payment;
Place of Delivery 3. Disturbance or danger is caused by the seller;
4. If the disturbance is a mere act of trespass; or
The place of delivery shall be: (A-U-B-R-I) 5. Upon full payment of the price.
1. That place Agreed upon, if any stipulation has XPN to the XPN: If the trespass is in law which takes
been made; place when a third person, by judicial or extra-
2. Place determined by Usage of trade; judicial acts, questions the right of the buyer and/or
3. Seller’s place of Business; seller, and claims possession or ownership,
4. Seller’s Residence; or suspension of payment is authorized.
5. In case of specific goods, where they can be
found. (Art. 1521 in relation to Art. 1582, NCC) Necessity of Payment of the Purchase Price to
Transfer Ownership
NOTE: If specific goods are involved in the sale, the
place where they are found shall be the place of GR: Ownership of the thing sold shall be transferred
delivery, in the absence of any agreement or to the vendee upon the actual or constructive
applicable usage of trade. delivery.
Effects of a Sale of Goods on Installment XPN: Unless the contract contains a stipulation that
ownership of the thing sold shall not pass to the
1. Goods must be delivered in full except when purchaser until he has fully paid the price.
stipulated; and
2. When not examined by the buyer – it is not Acceptance of Delivery by the Buyer of the Thing
accepted until examined or at least had Sold
reasonable time to examine
1. Express – he communicates or intimates to the
When Seller NOT Bound to Deliver the Thing seller that he has accepted. (Art. 1585, NCC)
Sold
2. Implied (Art. 1585, NCC)
1. If the buyer has not paid the price; a. Buyer does not act inconsistently with
2. No period for payment has been fixed in the ownership of seller after delivery; and
contract; and b. Retains the thing without communicating
3. A period for payment has been fixed in the to seller that he has rejected.
contract but the buyer has lost the right to make
use of the time. Effect if the Buyer Refuses to Accept Despite
Delivery of the Object of the Sale
Suspension of Payment by the Buyer
Delivery is completed. Since delivery of the subject
GR: matter of the sale is an obligation on the part of the
1. If he is disturbed in the possession or seller, the acceptance thereof by the buyer is not a
ownership of the thing bought; or condition for the completeness of the delivery. Thus,
2. If he has well-grounded fear that his even with such refusal of acceptance, delivery
possession or ownership would be disturbed (actual/constructive), will produce its legal effects
by a vindicatory action or foreclosure of (e.g., transferring the risk of loss of the subject
mortgage. (Art. 1590, NCC) matter to the buyer who has become the owner

Civil Law
thereof). Under Art. 1588 of the Civil Code, when the

buyer’s refusal to accept the goods is without just E. OBLIGATIONS OF VENDEE
cause, the title thereto passes to him from the
moment they are placed at his disposal. (Villanueva,
2009)
Obligations of the Buyer (P-A-E)
1. Payment of the price (Art. 1582, NCC)
GR: Seller is not bound to deliver unless the

purchase price is paid.
XPN: A period of payment has been fixed.
2. Accept delivery of thing sold (Arts. 1582-1585,

NCC)
Modes of Acceptance
1. Express acceptance – Buyer is deemed to have

accepted the goods when he intimates to the
seller that he has accepted them.
2. Implied acceptance
a. When the goods have been delivered to
him, and he does any act in relation to
which is inconsistent with the ownership
of the seller, or
b. When after a lapse of a reasonable time, he
retains the goods without intimating to
the seller that he has rejected them. (Art.
1585, NCC)
Right to refuse – When goods are delivered to the

buyer and he refuses to accept them, having the
right to do so, he is not bound to return to the goods
to the seller, and it is sufficient that he notifies the
seller of his refusal, unless otherwise stipulated.
No right to refuse – When the buyer’s refusal to

accept the goods is without just cause, the title
passes to him from the moment they are placed at his
disposal, unless otherwise stipulated.
3. Bear expenses for the execution and

registration of the sale and putting the goods in
a deliverable state, if such is the stipulation.

2022 GOLDEN NOTES
Sales
Other Obligations of the Buyer exchange by returning the bill of lading to

the sell. (Art. 1503, NCC)
1. To take care of the goods without the obligation
to return, where the goods are delivered to the 4. When sale is not valid;
buyer and he rightfully refuses to accept; (Art.
1587, NCC) 5. When the seller is not the owner of the goods
subject to the exceptions in Art. 1505 of NCC;
NOTE: The goods in the buyer’s possession are
at the seller’s risk. 6. GR: When goods are HELD BY A THIRD PARTY.
2. To be liable as a depositary if he voluntarily XPN: Third person acknowledges to the buyer

constituted himself as such; (Art. 1587, NCC) and that he holds the goods in behalf of the buyer.
(Art. 1521, NCC)
3. To pay interest for the period between delivery
of the thing and the payment of the price in the 7. On sale or return – The ownership passes to
following cases: buyer upon delivery, but he may revest
ownership in the seller by returning or
a. should it have been stipulated; tendering the goods within the time fixed in the
b. should the thing sold and delivered contract or within reasonable time. (Art. 1502,
produces fruits or income; or NCC)
c. should he be in default, from the time of
judicial or extra-judicial demand for the Sale on Trial, Approval or Satisfaction
payment of the price. (Art. 1589, NCC)
Requisites:
When Delivery does NOT Transfer Title 1. When buyer signifies approval or acceptance
to the seller or does any act adopting the
1. Sale on trial, approval, or satisfaction (Art. transaction;
1502, NCC); 2. If buyer did not signify approval or acceptance,
but retains the goods without giving notice of
2. When there is an express reservation; rejection after the expiration of the period
fixed or of reasonable time. (Art. 1502, NCC)
a. If it was stipulated that ownership shall not
pass to the purchaser until he has fully paid Rules in Case of Sale on Trial, Approval or
the price. (Art. 1478, NCC) Satisfaction
3. When there is an implied reservation; TITLE WHO BEARS THE LOSS

GR: Borne by seller
a. When goods are shipped, but the bill of XPNs:
lading states that goods are deliverable to 1. Buyer is at fault
Risk of Loss
the seller or his agent, or to the order of the 2. Buyer expressly
seller or his agent (Art. 1503, NCC); agreed to bear the
loss
b. When the bill of lading is retained by the
GR: Buyer must give goods
seller or his agent (Art. 1503, NCC);
a trial
c. When the seller of the goods draws on the As to trial
XPN: Buyer need not do so
buyer for the price and transmits the bill of
if it is evident that it cannot
exchange and the bill of lading to the buyer,
perform the work.
and the latter does not honor the bill of

Civil Law
c. No registration & no possession in good

When period within It runs only when all the faith – person who presents oldest title in
which buyer must parts essential for the good faith. (Martinez v. CA, G.R. No. 123547,
signify his operation of the object has 21 May 2001)
acceptance runs been delivered.
NOTE: Art. 1544 of the Civil Code has no application
to lands not registered with the Torrens system. If
Validity of
the sale is not registered, it is binding only as
stipulation that a 3rd
Valid, provided the 3rd between the seller and the buyer; it does not affect
person must satisfy
person is in good faith. innocent third persons. (De Leon, 2011)
approval or
satisfaction
Villanueva (2009) proffers that the rules on double
sales for immovables under Article Art, 1544 are
If the sale is made to Generally, it cannot be applicable to unregistered land, but only insofar as
a buyer who is an considered a sale on they do not undermine speciﬁc rules and
expert on the object approval, trial, or legislations that have a higher hierarchical
purchased satisfaction. enforcement value, such as the “without prejudice
to a better right” provision under Act No. 3344, now
Sec. 113 of the Property Registration Decree.
DOUBLE SALE (2001, 2004, 2008 BAR)
(Villanueva, 2009)
There is double sale when the same object of the
Purchaser in Good Faith
sale is sold to different vendees. (Art. 1544, NCC)
1. Buys the property without notice that some

Requisites of Double Sales (Art. 1544, NCC)
other person has a right to, or interest in such
property; and
1. Two (2) or more sales transactions must
constitute valid sales transactions;
2. Pays a full and fair price for the same at the time
2. Two (2) or more sales transactions must
of such purchase, or before he has notice of the
pertain to exactly the same subject matter;
claim or interest of some other person in the
3. Two (2) or more buyers at odds over the
property. (Uy v. Fule, G.R. No. 164961, 30 June
rightful ownership of the subject matter must
2014)
each represent conflicting interests; and
4. Two (2) or more buyers at odds over the
NOTE: Partial payment is not enough. Full
rightful ownership of the subject matter must
payment is a requirement for purposes of
each have bought from the very same seller.
acquiring right over the rules of double sale.
(Sps. Manlan v. Sps. Beltran, G.R. No. 222530, 16
Oct. 2019)
NOTE: This principle applies in a situation where
not all the requisites are present which would
Rules on Preference (Art. 1544, NCC)
warrant the application of Art. 1544 of NCC. The
only requisite of this rule is priority in time. In other
1. Movable / personal property – Owner who is
words, the only one who can invoke this is the first
first to possess in good faith;
vendee. Undisputedly, he is a purchaser in good
2. Immovable / real property –
faith because at the time he brought the real
a. First to register in good faith. (Fudot v.
property, there was still no sale to a second vendee.
Cattleya Land Inc., G.R. No. 171008, 13 Sept.
(Rabuya, 2017)
2007)
b. No registration – first to possess in good
faith.

2022 GOLDEN NOTES
Sales
Principle of prius tempore, potior jure – first in him to place the buyer in possession of such
time, stronger in right property. (Pineda, 2010)
Knowledge gained by the first buyer of the second Caveat Emptor NOT Applicable in Sales of
sale cannot defeat the first buyer’s rights except Registered Land
only as provided by the NCC and that is where the
second buyer first registers in good faith the second The purchaser of a registered land under the
sale ahead of the first. (Jurado, 2019) Torrens system is merely charged with notice of the
burdens and claims on the property which are
Conversely, knowledge gained by the second buyer inscribed on the face of certificate of title. (Pineda,
of the first sale defeats his rights even if he is first to 2010)
register, since such knowledge taints his
registration with bad faith to merit the protection of Application of Caveat Emptor in Judicial Sales
Art. 1544 (2nd par.) of NCC, the second realty buyer
must act in good faith in registering his deed of sale. Caveat emptor is applicable in judicial sales. The
purchaser in a judicial sale acquires no higher or
NOTE: Where one sale is absolute and the other is a better title or right than that of the judgment debtor.
pacto de retro transaction where the period to If it happens that the judgment debtor has no right,
redeem has not yet expired, Art. 1544 of NCC will interest, or lien on and to the property sold, the
not apply. (Pineda, 2010) purchaser acquires none. (Pineda, 2010)
Q: Does prior registration by the second buyer of Effect of Subsequent Foreclosure to a Prior
a property subject of a double sale confer Purchaser in Good Faith (2008 BAR)
ownership or preferred right in his favor over
that of the first buyer? The purchaser in good faith has better title to the
property sold even if subsequently foreclosed by a
A: Principle of caveat emptor – buyer beware. It mortgagor.
literally means, ‘Let the buyer beware’. The rule
requires the purchaser to be aware of the supposed
title of the vendor and one who buys without
checking the vendor’s title takes all the risks and
losses consequent to such failure. (Agcaoili, 2015)
Application of Caveat Emptor in particular Sale

Transactions
1. Sales of animals (Art. 1574, NCC);

2. Double sales (Art. 1574, NCC);
3. In sheriff’s sales; and
4. Tax sales.
NOTE: In the above sales, there is no warranty of

title or quality on the part of the seller. The
purchaser who buys without checking the title of
the vendor is assuming all risks of eviction.
In sheriff’s sales, the sheriff does not guarantee the

title to real property and it is not incumbent upon

Civil Law
Remedies of an Unpaid Seller

F. BREACH OF CONTRACT
I. Ordinary / General Remedies
1. Action for Price (Art. 1595, NCC)

1. REMEDIES
Exercised when:
REMEDIES OF AN UNPAID SELLER
a. Ownership has passed to buyer and he
wrongfully neglects or refuses to pay
Unpaid Seller
for the price;
b. Price is payable on a day certain and
One is considered as unpaid seller when:
the buyer wrongfully neglects to pay
such price, whether or not ownership
1. The whole of the price has not been paid or
has passed; or
tendered; or
c. Goods cannot readily be resold for
reasonable price and the buyer
2. A bill of exchange or other negotiable
wrongfully refuses to accept the goods,
instrument has been received as conditional
whether or not ownership has passed
payment, and the condition on which it was
and Art. 1596 of NCC is inapplicable.
received has been broken by reason of the
dishonor of the instrument, the insolvency of
2. Action for Damages (Art. 1596, NCC) – In
the buyer, or otherwise. (Art. 1525, NCC)
case of wrongful neglect or refusal by the
buyer to accept or pay for the thing sold.
NOTE: The mere delivery of a negotiable
instrument does not ipso facto extinguish the
NOTE: The measure of damages is the
obligation of the buyer to pay because the
estimated loss directly and naturally
instrument which has been delivered may be
resulting in the ordinary course of events
dishonored. In which case, the seller is still an
from the buyer’s breach of contract.
unpaid seller. (US v. Bedoya, G.R. No. 5100, 03
Nov. 1909)
a. Where there is an available market for
the goods in question, the measure of
Moreover, bills of exchange or mercantile
damages is, in the absence of special
documents shall produce the effect of payment
circumstances showing proximate
only when they have been cashed or when
damage of a different amount, the
through the fault of the creditor, they have been
difference between the contract price
impaired.
and the market or current price at the
time or times when the goods ought to
The term “seller” includes any person who is in the
have been accepted, or, if no time was
position of the seller, such as (a) an agent of the
fixed for acceptance, then at the time of
seller to whom the bill of lading has been indorsed;
the refusal to accept.
or (b) a consignor or agent who has himself paid, or
is directly responsible for the price. (Jurado, 2019)
b. Where the labor or expense of material
amount is necessary on the part of the
Q: When is a seller considered unpaid despite
seller to fulfill his obligations under the
the title of the goods passing to the buyer?
contract of sale and the buyer
repudiates the contract or notifies the
A: Whenever the seller was only paid partially, he
seller to proceed no further therewith –
remains an unpaid seller. (Pineda, 2010)
labor performed or expenses made
before receiving notice of the buyer's

2022 GOLDEN NOTES
Sales
repudiation or countermand and Instances when Possessory Lien is Lost

unrealized profit.
The unpaid seller loses his lien on the goods
II. Special Remedies (Art. 1526, NCC*) whenever:
1. Possessory Lien (Art. 1527, NCC) – seller is a. Seller delivers the goods to a carrier or other
not bound to deliver the object of the bailee for the purpose of transmission to buyer
contract of sale if buyer has not paid him without reserving the ownership in the goods
the price. This remedy presupposes that or the right to possession thereof;
the sale is on credit. It is exercisable only in b. The buyer or his agent lawfully obtains
following circumstances: possession of the goods; or
c. By waiver thereof. (Art. 1529, NCC)
a. Where the goods have been sold
without any stipulation as to credit; 2. Loss of Lien (NCC, Art. 1529)
b. Where the goods have been sold on a. When he delivers the goods to the
credit, but term of credit has expired; carrier or other bailee for purpose of
or transmission to the buyer without
c. Where the buyer becomes insolvent. reserving the ownership in the goods
or the right to the possession thereof;
NOTE: When part of goods delivered, may b. When the buyer or his agent lawfully
still exercise right on goods undelivered. obtains possession of the goods; or
c. By waiver thereof.
NOTE: GR: Where an unpaid seller has
made part delivery of the goods, he may 3. Right of Stoppage in Transitu (Art. 1530,
exercise his right of lien on the remainder. NCC)
XPN: Unless such part delivery has been Requisites: (I-S-E-N-T-U)

made under such circumstances as to show a. Insolvent buyer; (Art. 1530, NCC)
an intent to waive the lien or right of b. Seller must Surrender the negotiable
retention. (Art. 1528, NCC) document of title, if any; (Art. 1532,
NCC)
Moreover, when title to the property has c. Seller must bear the Expenses of
passed to the buyer, but possession delivery of the goods after the exercise
remains in the hands of the seller, the latter of the right; (Art. 1532, NCC)
is necessarily holding the goods for the d. Seller must either actually take
buyer. For his protection, the seller is possession of the goods sold or give
entitled to possess the same until he has Notice of his claim to the carrier or
been fully paid, or a tender of the price has other person in possession; (Art. 1532,
been made. NCC)
e. Goods must be in Transit; (Art. 1531,
A lien based on a writ of attachment is NCC) and
inferior to that of the unpaid seller’s right of f. Unpaid seller. (Art. 1525, NCC)
preference under Art. 2241 of the Civil
Code. NOTE: Buyer’s insolvency need not be
judicially declared. A person is insolvent
who either has ceased to pay his debts in
the ordinary course of business or cannot
pay his debts as they become due,
whether insolvency proceedings have

Civil Law
been commenced or not. (Art. 1636(2) The unpaid seller may resume possession of the
NCC) goods at any time while they are in transit, and he
will then become entitled to the same rights in
Basis of Right of Stoppage in Transitu regard to the goods as he would have had if he had
never parted with the possession. (Art. 1530, NCC)
The injustice of allowing the buyer to acquire
ownership and possession of the goods when he has Thereafter, the seller may exercise the following
not paid and, owing to his insolvency, cannot pay rights:
the price which was to be given in return for the 1. Right of lien (Art. 1527, NCC);
goods. (De Leon, 2014) 2. Right to resell (Art. 1533, NCC); and
3. Right to rescind the transfer of title. (Art.
If the buyer, beforehand, knew of the insolvency of 1534, NCC)
the buyer, he cannot exercise the right of stoppage
in transitu because he is under estoppel. Effect of Exercising the Special Right of Resale
However, the right is not impaired even if the The unpaid seller shall not be liable to the original
insolvency of the buyer has been existing at the time buyer upon the sale or for any profit made by such
of the perfection of the sale as long as the seller was resale, but may recover from the buyer damages for
not aware of it. any loss occasioned by the breach of the sale. (Art.
1533, NCC)
When Goods are in Transit
NOTE: The seller cannot, however, directly or
1. From the time when they are delivered to a indirectly buy the goods.
carrier or other bailee until the buyer, or his
agent in that behalf, takes delivery of them from Notice to the Defaulting Buyer
such carrier or other bailee; and
GR: Notice to the defaulting buyer NOT required in
2. If the goods are rejected by the buyer, and the the resale of goods
carrier or other bailee continues in possession
of them, even if the seller has refused to receive XPN: Where the right to resell is not based on the
them back. (Art. 1531(1), NCC) perishable nature of the goods or upon an express
provision of the sale.
When Goods are No Longer in Transit (Art.
1531(2), NCC) NOTE: Notice of time and place of resale is not
essential to the validity of such resale. (Art. 1533,
1. If the buyer, or his agent, obtains delivery of the NCC)
goods before their arrival at the appointed
destination; 4. Special Right to Resell the Goods (Art. 1533,
NCC)
2. If, after the arrival of the goods at the appointed
destination, the carrier or other bailee Exercised when:
acknowledges to the buyer or his agent that he a. Goods are perishable in nature,
holds the goods on his behalf and continues in b. The seller has expressly reserved the
possession of them as bailee for the buyer or his right of resale in case of default; or
agent; c. The buyer has been in default in
payment for an unreasonable time.
3. If the carrier or other bailee wrongfully refuses
to deliver the goods. NOTE: It is essential before the resale can be
made that the unpaid seller should have a

2022 GOLDEN NOTES
Sales
right of lien or should have stopped the goods NOTE: In case of subdivision or condominium
in transitu. (Jurado, 2019) projects, if real estate developer fails to comply
with obligation according to approved plan, the
Art. 1533 of the Civil Code provides that the buyer may rescind or suspend payment until
seller having the right “may resell the goods.” the seller complies. (Secs. 23& 24, P.D. No. 957)
The language is permissive in nature rather
than mandatory. (De Leon, 2014) 2. In the sale of immovable property, even
though it may have been stipulated that
5. Special Right to Rescind (Art. 1597, NCC) upon failure to pay the price at the time
agreed upon the rescission of the contract
Requisites: shall of right take place, the vendee may
a. Goods have not been delivered to the pay, even after the expiration of the
buyer; and period, as long as no demand for
b. Buyer has repudiated the contract of rescission of the contract has been made
sale; or upon him either judicially or by a notarial
c. Has manifested his inability to act. (Art. 1592, NCC)
perform his obligations thereunder;
or NOTE: Art. 1592 of the Civil Code is not
d. Has committed a breach thereof, applicable to:
which must be substantial.
a. Sale on installment of real estate
NOTE: Here, the seller may thereafter in which the parties have laid down
totally rescind the contract of sale by giving the procedure to be followed in the
notice of his election to do so to the buyer. event the vendee failed to fulfill his
obligation. (Albea v. Inquimboy, G.R.
When Available No. L-1601, 20 May 1950)
When the unpaid seller has: b. Contract to sell/conditional sale of

1. The right of lien; or real estate where the title remains
2. Stopped the goods in transit with the vendor until fulfillment of a
a. Where he expressly reserved the right positive condition, such as full
to rescind in case the buyer should make payment of the price. (Roque v.
default, or Lapuz, G.R. No. L-32811, 31 Mar.
b. Where the buyer has been in default in 1980)
the payment of the price for an
unreasonable time. (Art. 1534, NCC) II. Movables
1. Failure of seller to deliver – Action for
REMEDIES OF THE BUYER specific performance without giving the
seller the option of retaining the goods on
I. Immovables payments of damages. (Art. 1598, NCC)
1. Suspension of payment – applicable in
case of: 2. Breach of seller’s warranty – The buyer
a. if he is disturbed in the possession or may, at his election, avail of the following
ownership of the thing acquired; or remedies:
b. if he has reasonable grounds to fear
such disturbance, by a vindicatory a. Recoupment – Accept goods & set
action or a foreclosure of mortgage. up breach of warranty by way of
(Art. 1590, NCC) recoupment in diminution or
extinction of the price;

Civil Law
NOTE: The Theory of Recoupment is 3. If, however, the buyer has used or disposed of
that the seller’s damages are cut down to the goods delivered before he knows that the
an amount which will compensate him seller is not going to perform his contract in full,
for the value of what he has given. (De the buyer shall not be liable for more than the
Leon, 2013) fair value to him of the goods so received. (Art.
1522, NCC)
b. Accept goods & maintain action
against seller for damages; (Art. Rule when the Seller Delivers Goods GREATER
1599(3), NCC) than what he has Contracted to Sell
c. Action or counterclaim for 1. The buyer may accept only the goods which
damages – refuse to accept goods & were included in the contract and reject the
maintain action against seller for excess; or
damages (Art. 1599(3), NCC); or 2. The buyer may accept the entire goods
delivered and he shall pay for them at the
d. Rescission – rescind contract of sale contract rate. (Art. 1522, NCC)
& refuse to receive goods/return
them when already received and Rule when the seller delivers goods which are
recover the price or any part which mixed with other goods of different description
has been paid. (Art. 1599(4), NCC) not included in the contract
3. Disturbed in possession or with 1. The buyer may accept the goods which are in
reasonable grounds to fear disturbance accordance with the contract and reject the rest
(anticipatory breach) – Suspend (Art. 1522, NCC); or
payment until the seller has caused the
disturbance or danger to cease. (Art. 1590, 2. The buyer may also accept them all if he so
NCC) desires, but he must pay for them all.
NOTE: When the buyer has claimed and been Rule if the Subject Matter is Indivisible
granted a remedy in any of these ways, no other
remedy can thereafter be granted, without The buyer may reject the whole of the goods. (Art.
prejudice to the buyer’s right to rescind, even if 1522, NCC)
previously he has chosen specific performance
when fulfillment has become impossible. Duty of the Seller with regard to Accessions and
(Villanueva, 2011; in relation to Art. 1191(2), Accessories
NCC)
The seller has the duty to preserve the thing and its
Rule when the Seller Delivers Goods LESSER accessions and accessories from the time of the
than what he has Contracted to Sell perfection of the contract of sale. (Art. 1537, NCC)
1. The buyer may reject the goods delivered and But all the fruits shall pertain to the vendee from the
he shall have no liability; or day on which the contract was perfected.
2. The buyer may accept the goods delivered, but NOTE: In case of loss or deterioration, the seller is
he will pay the contract rate, if he has knowledge liable for damages or the buyer may seek rescission
that the seller is not going to deliver all the with damages. However, if loss or deterioration is
goods contracted for; or due to a fortuitous event, the seller is not liable. (Art.
1538, NCC)

2022 GOLDEN NOTES
Sales
In accordance with Art. 1480 of the Civil Code, if the

thing is lost after perfection but before its delivery REMEDIES OF THE SELLER
(i.e., before the ownership of the thing is transferred
to the vendee), the risk of loss is shifted to the
vendee as an exception to the general rule of res 2. RECTO LAW AND MACEDA LAW
perit domino.
INSTALLMENT SALES LAW OR “RECTO LAW”
Rule when the Sale of Immovable is by Unit of (1999, 2000 BAR)
Measure or Number
Installment Sales Law
GR: The seller must deliver all that may have been
stated in the contract. Act No. 4122 was passed by the Philippine
Legislature on Dec. 9, 1939, otherwise known as the
XPN: If impossible to deliver all, the buyer may “Installment Sales Law” or the “Recto Law.” It is
choose between: embodied in Art. 1484 of the NCC, which provides
a. Proportional reduction of the price; or for the remedies of a seller in the contracts of sale of
b. Rescission of the contract, provided that the personal property by installments.
deficiency is not less than 1/10 of the area
stated in the contract. (Art. 1539, NCC) Application of Recto Law
NOTE: The buyer is entitled to rescind the contract This law covers contracts of sale of personal
in the following cases: property by installment (Act No. 4122). It is also
applied to contracts purporting to be leases of
1. The lack in area is at least 1/10th than that personal property with option to buy, when the
stated or stipulated in the contract; lessor has deprived the lessee of the possession or
enjoyment of the thing. (PCI Leasing and Finance,
2. The deficiency in the quality specified in the Inc. v. Giraffe-X Creative Imaging, Inc., G.R. No.
contract exceeds 1/10th of the price agreed 142618, 12 July 2007)
upon; and
NOTE: Recto Law applies only to sale payable in
3. The buyer would not have bought the installments and not to a sale where there is an
immovable had he known of its smaller area or initial payment and the balance is payable in the
inferior quality irrespective of the extent of the future, because such is a straight sale, not a sale by
lack in area or quality. (Art. 1539, NCC; De Leon, installments.
2011)
Rationale of Recto Law
Prescriptive Period for the Action of Rescission
of Contract To remedy the abuses committed in connection
with the foreclosure of chattel mortgages and to
Six (6) months from the day of delivery. (Art. 1543, prevent mortgagees from seizing the mortgaged
NCC) property, buying it at foreclosure sale for a low price
and then bringing suit against the mortgagor for a
How Payment is Made by the Buyer deficiency judgment. (Magna Financial Services
Group, Inc. v. Colarina, G.R. No. 158635, 09 Dec. 2005)
Price is paid at the time and place stipulated in the
contract. It is made to the person in whose favor the Requisites of Recto Law:
obligation has been constituted or his successor in
interest, or any person authorized to receive. 1. Valid contract of sale;
(Villanueva, 2009) 2. Subject matter is personal property;

Civil Law
3. Payable in installments; and preparatory to extrajudicial foreclosure is

4. In the case of the second and third remedies, not an action for collection much less for
that there has been a failure to pay two or more foreclosure.
installments. (Art. 1484, NCC)
But if the action for replevin culminated in
Alternative Remedies in case of Sale of Personal the foreclosure of the chattel mortgage
Property in Installments and the sale of the personal property at
the public auction, then Art. 1484 now
1. Specific Performance: Exact fulfillment should applies. (Rabuya, 2017)
the buyer fail to pay
2. Rescission: Cancel the sale if buyer fails to pay
GR: If availed of, the unpaid seller cannot 2 or more installments. Deemed chosen when:
anymore choose other remedies.
a. Notice of rescission is sent;
XPN: If after choosing specific performance, it b. Takes possession of subject matter of sale;
has become impossible to perform it, rescission and
may be pursued. (Villanueva, 2016) c. Files action for rescission.
NOTE: If vendor elected fulfillment or specific NOTE: The stipulation that the installments or
performance: rents already paid shall not be returned to the
vendee shall be valid insofar as the same may
a. The filing of collection suit barred the not be unconscionable under the
foreclosure of the mortgage. A mortgagee circumstances.
who files a suit for collection abandons the
remedy of foreclosure of the chattel 3. Foreclosure: Foreclose on chattel mortgage if
mortgage constituted over the personal buyer fails to pay two (2) or more installments.
properties or security for the debt or value He shall have no further action against the
of the promissory note which he seeks to purchaser to recover any unpaid balance of the
recover in the said suit. price. Any agreement to the contrary shall be
void.
b. Filing of B.P. Blg. 22 does not bar
foreclosure of mortgage. (Sps. Torres v. NOTE: Of the three remedies, only this third
Medina, G.R. No. 166730, 10 Mar. 2010) remedy bars the recovery of unpaid balance.
However, in Chieng v. Sps. Santos (G.R. No. Moreover, payment of damages and attorney’s
169647, 31 Aug. 2007), it was held that the fees are also barred.
filing of the B.P. Blg. 22 case is equivalent
to the filing of a collection suit for the GR: Actual foreclosure is necessary to bar
recovery of the mortgage-loan. The Court recovery of balance.
explained that the civil action for the
recovery of the amount of the dishonored XPN: Mortgagor refuses to deliver property to
checks is impliedly instituted in the effect foreclosure; expenses incurred in
criminal action. Hence, the impliedly attorney’s fees in obtaining the property may be
instituted civil action in the criminal case recovered by the vendor.
for violation of B.P. Blg. 22 is, in effect, a
collection suit or suit for recovery of The Remedies are Alternative, NOT Cumulative
mortgage debt.
GR: The election of one remedy is a waiver of the
c. Action for recovery of possession with right to resort to the other remedies. If the creditor
replevin as provisional remedy chooses one remedy, he cannot avail himself of the

2022 GOLDEN NOTES
Sales
other two. (Delta Motor Sales Corp. v. Niu Kim Duna, property through installment. In the given case, the
G.R. No. 61043, 02 Sept. 1992) amount being claimed by A was to be paid 2 years
thereafter as a lump sum, not through installments.
XPN: If the remedy first chosen was not completed Moreover, the transaction is a loan, not a sale.
or not fully exercised as when there was voluntary
desistance, the vendor may still avail himself of Recto Law does NOT cover a Contract to Sell of
another remedy. Movables
NOTE: In ordinary alternative obligations, a mere There will be nothing to rescind if the suspensive
choice categorically and unequivocally made and condition (payment of full purchase price) upon
then communicated by the person entitled to which the contract is based fails to materialize.
exercise his option concludes the parties. The (Villanueva, 2009)
creditor may not thereafter exercise any other
option unless the chosen alternative proves to be Q: Palces purchased a Hyundai Starex through a
ineffectual or unavailing due to no fault on his part. loan granted by Equitable Savings Bank (ESB). In
(Borbon II v. Servicewide Specialists, Inc., G.R. No. connection therewith, Palces executed a
106418, 11 July 1996) Promissory Note with Chattel Mortgage in favor
of the ESB. Eventually, Palces failed to pay the
Effect of Filing an Action for Specific monthly installments prompting ESB to demand
Performance in case of Default in the Payment of for the payment of the entire balance which
an Installment Sale Secured by a Chattel remained unheeded. Thus, ESB filed a case for
Mortgage on the Subject of the Sale Recovery of Possession with Replevin with
Alternative Prayer for Sum of Money.
The seller can collect from the buyer for the sum of
money the buyer failed to pay. In case the sum In order to update her installment payments,
collected is insufficient, the court can still order for Palces paid ESB P70,000 on March 8, 2007 and
the levy of the property subject of the sale P33,000 on March 20, 2007 (March 2007
transaction to cover the balance. Moreover, if the payments). Despite the aforesaid payments, ESB
action instituted is for specific performance and the filed the instant complaint, resulting in the
mortgaged property is subsequently attached and sheriff taking possession of the subject vehicle.
sold, the sale thereof does not amount to a The RTC ruled in favor of ESB. The CA affirmed
foreclosure of the mortgage. Hence, the seller- the RTC ruling; however, it ordered ESB to
creditor is entitled to a deficiency judgment. return the amounts paid on March 2007 by
(Industrial Finance Corp. v. Ramirez, G.R. No. L- Palces. It ruled that, under Art. 1484 of the Civil
43821, 26 May 1977) Code, ESB had already waived its right to
recover any unpaid installments when it sought
Q: A mortgaged a diamond ring to M as a security a writ of replevin in order to regain possession
for a loan which was to be paid 2 years of the subject vehicle. As such, petitioner is no
thereafter. Since A failed to pay M, she then longer entitled to receive respondent’s late
foreclosed the mortgaged property. However, it partial payments. Is the CA’s ruling correct?
turned out that the proceeds of the sale were
insufficient; thus, M filed an action for specific A: NO. In this case, there was no vendor-vendee
performance. A contends that this is a violation relationship between respondent and petitioner. A
of the Recto law since the foreclosure of the judicious perusal of the records would reveal that
chattel bars subsequent recovery. Is this respondent never bought the subject vehicle from
correct? petitioner but from a third party, and merely sought
financing from petitioner for its full purchase price.
A: NO. A is not correct in invoking the Recto law Indubitably, a loan contract with the accessory
since it is only applicable in case of sale of personal chattel mortgage contract - and not a contract of sale

Civil Law
of personal property in installments - was entered 4. Sale of lands payable in straight terms. (Sec. 3,
into by the parties with respondent standing as the R.A. No. 6552)
debtor-mortgagor and petitioner as the creditor-
mortgagee. NOTE: The enumeration of the transactions not
covered by the Maceda Law is NOT exclusive, since
Thus, ESB is justified in filing his Complaint before other transactions over immovables, although not
the RTC seeking for either the recovery of within the enumerated exclusions are to be
possession of the subject vehicle so that it can considered as excluded because they are not within
exercise its rights as a mortgagee, i.e., to conduct the clearly expressed coverage. An example would
foreclosure proceedings over said vehicle; or in the be the sale on installment of commercial or office
event that the subject vehicle cannot be recovered, condominium units. (Villanueva, 2009)
to compel respondent to pay the outstanding
balance of her loan. Since it is undisputed that ESB Q: What are the so-called “Maceda” and “Recto”
had regained possession of the subject vehicle, it is laws in connection with sales on installments?
only appropriate that foreclosure proceedings be Give the most important features on each law.
commenced in accordance with the provisions of (1999 BAR)
“The Chattel Mortgage Law,” as intended.
Otherwise, Palces will be placed in an unjust A: The Maceda Law is applicable to sales of
position where she is deprived of possession of the immovable property on installments. The most
subject vehicle while her outstanding debt remains important features are:
unpaid, either in full or in part, all to the undue
advantage of petitioner – a situation which law and 1. After having paid installments for at least two
equity will never permit. (Equitable Savings Bank v. years, the buyer is entitled to a mandatory grace
Palces, G.R. No. 214752, 09 Mar. 2016) period of one month for every year of
installment payments made, to pay the unpaid
REALTY INSTALLMENT BUYER ACT OR installments without interest.
“MACEDA LAW” (2000, 2002 BAR) If the contract is cancelled, the seller shall
refund to the buyer the cash surrender value
Realty Installment Buyer Act equivalent to fifty percent (50%) of the total
payments made, and after five years of
Commonly known as the “Maceda Law,” embodied installments, an additional five percent (5%)
in R.A. No. 6552. Sec. 2 of thereof declares as “public every year but not to exceed ninety percent
policy to protect buyers of real estate on installment (90%) of the total payments made.
payments against onerous and oppressive
conditions.” NOTE: This requires a notarial act of rescission and
the refund to the buyer of the full payment of the
Transactions/Sale covered by the Maceda Law cash surrender value of the payments on the
property. Failure to comply with the mandatory
The law involves the sale or financing of twin requirement shall result into the contract
immovables (real estate) on installment remaining to be valid and subsisting. (Rabuya, 2017)
payments. (Sec. 3, R.A. No. 6552)
2. In case the installments paid were less than two
Coverage: Residential Condominium Apartments (2) years, the seller shall give the buyer a grace
period of not less than 60 days. If the buyer fails
Excluded: to pay the installments due at the expiration of
1. Industrial lots; the grace period, the seller may cancel the
2. Commercial buildings (and commercial lots by contract after 30 days from receipt by the buyer
implication); of the notice of cancellation or demand for
3. Sale to tenants under agrarian laws; and rescission by notarial act.

2022 GOLDEN NOTES
Sales
3. NOTE: Essentially, the said provision provides One day after the cancellation of the
for three (3) requisites before the seller may Compromise Agreement, Foothills Realty, as
actually cancel the subject contract: first, the successor-in-interest of Goldland, caused the
seller shall give the buyer a 60-day grace period annotation of its adverse claim on the subject
to be reckoned from the date the installment TCTs. In its application to cancel the adverse
became due; second, the seller must give the claim, Star Asset argued that the cancellation is
buyer a notice of cancellation/demand for in order because the compromise agreement,
rescission by notarial act if the buyer fails to pay upon which Foothills Realty's right was
the installments due at the expiration of the said anchored was already terminated. Moreover,
grace period; and third, the seller may actually Star Asset asserted that the adverse claim was
cancel the contract only after thirty (30) days only valid for 30 days, such that after the lapse
from the buyer’s receipt of the said notice of of said period, the adverse claim must be
cancellation/demand for rescission by notarial cancelled without any positive action on the part
act. (Optimum Dev. Bank v. Sps. Jovellanos, G.R. of Star Asset. Thus, Star Asset prayed for the
No. 189145, 04 Dec. 2013) cancellation and removal of Foothills Realty's
adverse claim annotated on the TCTs of the
NOTE: According to the Supreme Court, the vendor subject properties. Star Asset moved that it be
could go to the court and demand judicial rescission substituted by Dallas Energy because its
in lieu of a notarial act of rescission. An action for interests over the properties were already sold
annulment of contract which is a kindred concept of to the latter. TCTs were issued in Dallas
rescission by notarial act will also suffice. (Rabuya, Energy’s name whereby the same adverse claim
2017) was carried over and annotated therein.
Q: The case involves three parcels of land Foothills Realty also argued that there should
located in Barangay Baliok, Talomo, Davao City have been a notarial act of rescission as
previously registered in the name of Star Asset required by the Maceda Law and failure to serve
under three TCTs with a combined area of the same will not be tantamount to cancellation
300,000 sqm. On Dec. 12, 2012, Star Asset filed a of the compromise agreement. Is the annotation
Petition for Cancellation of Adverse Claim in of the adverse claim anchored on the
said TCTs before the trial court. Star Asset compromise agreement proper?
asserted that the subject properties were
previously owned by Goldland which were A: NO. The cancellation of the compromise
however mortgaged to PBCO. The properties agreement despite lack of notarial act of rescission
were foreclosed by PBCOM and later, the is valid because the subject controversy is not
ownership of the same was transferred to covered by the Maceda Law hence there is no need
Unimark. Star Asset claimed that it eventually for a notarial act of recission. In this case, the buyer
acquired the properties from Unimark. under the compromise agreement, Foothills Realty,
is a company based in Davao City that is engaged in
In the meantime, after the foreclosure of the the business of real estate development,
properties, Goldland impugned the validity of undertaking, establishing, or managing subdivision
the foreclosure proceedings which prompted housing problems, industrial or commercial estates,
Star Asset to enter into a Compromise golf course projects, resort projects and other real
Agreement with the former with an undertaking estate developments. The properties subject of this
to sell back the properties to Goldland under the case have an aggregate land area of 300,000 sqm. By
following schedule. Star Asset claimed that its sheer size, the subject properties can hardly be
Goldland failed to comply with its obligation classified as residential properties as to be covered
under the compromise agreement, hence, Star by the Maceda law. As aforesaid, the Maceda
Asset was constrained to cancel said law was enacted to curb out the bad practices of real
compromise agreement. estate developers like Foothills Realty. For that

Civil Law
reason, the Court find that Foothills Realty is taking cancellation or the demand for rescission of the
an incongruous position by invoking the Maceda contract by a notarial act. (Sec. 4, R.A. No. 6552)
law in as much as the said law was enacted precisely
to guard against its practice. Q: Orbe purchased land from Filinvest. She paid
a total of P608,648.20 for the past two years and
Since the compromise agreement is validly later on failed to pay the balance. She claims that
cancelled, the cancellation of the compromise she is entitled to get 50% of her payments
agreement no longer supports the continued because she paid for at least 2 years. However,
annotation of the adverse claim on the TCTs of the Filinvest denied her claim, alleging that what
subject properties. (Star Asset Mgmt. Ropoas, Inc. v. she paid did not really amount to two years’
RD of Davao City, G.R. No. 233737. 03 Feb. 2021) worth of payments. Is Orbe allowed to get the
50%?
Rights of the Buyer
A: NO. When Act R.A. No. 6552 or the Maceda Law
a. If buyer has paid at least 2 years of speaks of paying “at least two years of installments”
installments: in order for the benefits under its Sec. 3 to become
available, it refers to the buyer's payment of two (2)
The buyer is entitled to the following rights in years’ worth of the stipulated fractional, periodic
case he defaults in the payment of succeeding payments due to the seller. (Orbe v. Filinvest Land,
installments: Inc., G.R. No. 208185, 06 Sept. 2017)
i. To pay, without additional interest, the Other Rights Granted to a Buyer under the
unpaid installments due within the total Maceda Law
grace period earned by him which is hereby
fixed at the rate of one (1) month grace 1. Sell or assign rights to another;
period for every one (1) year of installment 2. Reinstate contract by updating within 30 days
payments made; before and cancellation;
3. Deed of Sale to be done by notarial act;
ii. If the contract is cancelled, the seller shall 4. Pay full installment in advance the balance of
refund to the buyer the cash surrender price anytime without interest; and
value of the payments on the property 5. Have full payment annotated in certificate of
equivalent to fifty percent (50%) of the title.
total payments made, and, after five (5)
years of installments, an additional five NOTE: Applies to contracts even before the law was
percent (5%) every year but not to exceed enacted. Stipulation to the contrary is void.
ninety percent (90%) of the total payments
made. (Sec. 3, R.A. No. 6552) Q: Spouses Dakila entered into a contract to sell
with Honorio Cruz over a parcel of industrial
b. If the buyer has paid less than two (2) years land in Valenzuela, Bulacan for a price of
of installments: P3,500,000.00. The spouses would give a down
payment of P500,000.00 upon the signing of the
The seller shall give the buyer a grace period of contract, while the balance would be paid for the
not less than sixty (60) days from the date the next 3 consecutive months in the amount of
installment became due. P1,000,000.00 per month. The spouses paid the
first 2 installments but not the last installment.
If the buyer fails to pay the installments due at
the expiration of the grace period, the seller After one year, the spouses offered to pay the
may cancel the contract after thirty (3) days unpaid balance which Honorio refused to
from receipt by the buyer of the notice of accept. The spouses filed a complaint for specific

2022 GOLDEN NOTES
Sales
performance against Honorio invoking the 1. Is Art. 1592 applicable?

application of the Maceda Law. If you are the 2. Can the vendor rescind the contract?
judge, how will you decide the case? (2014 BAR)
A:
A: I will rule in favor of Honorio. The invocation of 1. NO. Art. 1592 of the NCC does not apply to a
the Maceda Law is misplaced. The law applies only conditional sale. Art.1592 applies only to a
to sale or financing of realty on installment contract of sale and not to a Deed of
payments including residential units or residential Conditional Sale where the seller has reserved
condominium apartments and does not apply to title to the property until full payment of the
sales of industrial units or industrial lands like in the purchase price. The law applicable is the
case presented. Maceda Law. (Jurado, 2019)
The sale to the Spouses Dakila is not a sale on 2. NO, the vendor cannot rescind the contract
installment but more of a straight sale where a under the circumstances. Under the Maceda
down payment is to be made and the balance to be Law, which is the law applicable, the seller on
paid in a relatively short period of three months. installment may not rescind the contract till
after the lapse of the mandatory grace period of
Q: Priscilla purchased a condominium unit in 30 days for every one year of installment
Makati City from the Citiland Corporation for a payments, and only after 30 days from notice of
price of P10 million, payable P3 million down cancellation or demand for rescission by a
and the balance with interest thereon at 14% notarial act.
per annum payable in 60 equal monthly
installments of P198,333.33. In this case, the refusal of the seller to accept
payment from the buyer on the 49th month was
They executed a Deed of Conditional Sale in not justified because the buyer was entitled to
which it is stipulated that should the vendee 60 days grace period, and the payment was
fail to pay three successive installments, the sale tendered within that period. Moreover, the
shall be deemed automatically rescinded notice of rescission served by the seller on the
without the necessity of judicial action and all buyer was not effective because the notice was
payments made by the vendee shall be not by a notarial act. Besides, the seller may still
forfeited in favor of the vendor by way of rental pay within 30 days from such notarial notice
for the use and occupancy of the unit and as before rescission may be effected. All these
liquidated damages. requirements for a valid rescission were not
complied with by the seller. Hence, the
For 46 months, Priscilla paid the monthly rescission is invalid.
installments religiously, but on the 47th and
48th months, she failed to pay. On the 49th Q: Spouses Jovellanos entered into a Contract
month, she tried to pay the installments due but to Sell with Palmera Homes for the purchase of
the vendor refused to receive the payments a residential house and lot payable for a
tendered by her. period of 10 years. Later, Palmera Homes
assigned all its rights, title, and interest in
The following month, the vendor sent her a favor of Optimum Bank.
notice that it was rescinding the Deed of
Conditional Sale pursuant to the stipulation for After some time, Optimum issued a Notice of
automatic rescission, and demanded that she Delinquency and Cancellation of the Contract
vacate the premises. She replied that the to Sell on April 10, 2006 for the spouses’
contract cannot be rescinded without judicial failure to pay their monthly payments.
demand or notarial act pursuant to Art. 1592 of Thereafter, a final Demand Letter dated May
the Civil Code. (2000, 2014 BAR) 25, 2006, was issued by Optimum requesting

Civil Law
the Sps. Jovellanos to vacate and deliver the

properties which, however, remained G. EXTINGUISHMENT
unheeded. This prompted Optimum to file an
unlawful detainer case against the spouses.
Was the cancellation of the contract to sell
1. IN GENERAL
valid?
Causes for Extinguishment of Sale
A: YES. The Maceda Law, R.A. No. 6552,
recognizes in conditional sales of all kinds of real
A contract of sale is extinguished by:
estate (industrial, commercial, residential) the
right of the seller to cancel the contract upon non-
1. Same causes as how an obligation is
payment of an installment by the buyer, which is
extinguished, namely: (Arts. 1231 & 1600, NCC)
simply an event that prevents the obligation of the
a. Payment or performance;
vendor to convey title from acquiring binding
b. Loss of the thing due;
force. It also provides the right of the buyer on
c. Condonation or remission of the debt;
installments in case he defaults in the payment of
d. Confusion or merger of the rights of
succeeding installments.
creditor and debtor;
e. Compensation;
Three (3) requisites before the seller may actually
f. Novation;
cancel the contract must exist: first, the seller shall
g. Annulment;
give the buyer a 60-day grace period to be
h. Rescission;
reckoned from the date the installment became
i. Fulfillment of resolutory condition; or
due; second, the seller must give the buyer a
j. Prescription
notice of cancellation/demand for rescission by
notarial act if the buyer fails to pay the
2. Conventional Redemption (Arts. 1601-1618,
installments due at the expiration of the said grace
NCC); or
period; and third, the seller may actually cancel
3. Legal redemption. (Arts. 1619-1623, NCC)
the contract only after thirty (30) days from the
buyer’s receipt of the said notice of
Redemption
cancellation/demand for rescission by notarial
act.
It is a mode of extinguishment wherein the seller
has the right to redeem or repurchase the thing sold
It was only after the expiration of the thirty-day
upon return of the price paid.
(30) period did Optimum treat the contract to sell
as effectively cancelled – making as it did a final
Kinds of Redemption
demand upon Sps. Jovellanos to vacate the subject
property only on May 25, 2006. Thus, based on the
1. Legal; and
foregoing, there was a valid and effective
2. Conventional
cancellation of the Contract to Sell and since Sps.
Jovellanos had already lost their right to retain
Incorporation of Right to Redeem in Every
possession of the subject property as a
Contract of Sale
consequence of such cancellation, their refusal to
vacate and turn over possession to Optimum
The right of the vendor to redeem/repurchase must
makes out a valid case for unlawful detainer.
appear in the same instrument. However, parties
(Optimum Development Bank v. Sps. Jovellanos, G.R.
may stipulate on the right of repurchase in a
No. 189145, 04 Dec. 2013)
separate document but in this case, it is valid only
between the parties and not against third persons.
(Pineda, 2010)

2022 GOLDEN NOTES
Sales
CONVENTIONAL REDEMPTION Parole Evidence in Proving Right of Repurchase
Seller reserves the right to repurchase thing sold The right of repurchase may be proved by parol
coupled with the obligation to return the purchase evidence when the contract of sale has been
price of the sale, expenses incurred under the reduced in writing, or when no objection to such
contract, other legitimate payments made by reason parol evidence was made during trial. (MCIAA v. CA,
of the sale as well as the necessary & useful G.R. No. 121506, 30 Oct. 1996)
expenses made on the thing sold. (Art. 1601 in
relation to Art. 1616, NCC) Effect on the Reserved Right to Repurchase if the
Principal Contract of Sale is Void
How Conventional Redemption takes Place
Since the underlying contract of sale was
It shall take place when the vendor reserves the inoperative and consequently void, then the
right to repurchase the thing sold, with the reserved right of repurchase would also be void.
obligation to: (Villanueva, 2009)
a. Return the price of the sale; Pre-emption v. Redemption

b. Shoulder the expenses of the contract and any
other legitimate payments made by the buyer PRE-EMPTION REDEMPTION
by reason of the sale;
As to when it arises
c. Pay the value of the necessary and useful
expenses made on the thing; and Arises before sale Arises after sale
d. Comply with other stipulations agreed upon. As to availability of rescission
(Art. 1601, NCC) There can be rescission
Rescission is
of
inapplicable.
Other Person can Exercise the Right to original sale.
Repurchase As to whom the action is directed
Action is directed
The right to repurchase may be exercised by any Action is directed
against prospective
person to whom the right of repurchase may be against buyer.
seller.
transferred, or in case of legal redemption, by the
person so entitled by law. (Villanueva, 2009) 2. PACTO DE RETRO SALE
NOTE: Right to repurchase must be reserved at the

A sale with pacto de retro transfers the legal title to
time of perfection of sale. (Pineda, 2010) the vendee a retro. The essence of a pacto de retro
sale is that the title and ownership of the property
Reservation of Right to Repurchase sold are immediately vested in the vendee a retro,
subject to the resolutory condition of repurchase by
The right to repurchase is reserved by a stipulation
a vendor a retro within the stipulated period.
to that effect in the contract of sale. Because it is not
(Cadungog v. Yap, G.R. No. 161223, 12 Sept. 2005)
a right granted to the vendor by the vendee, but is a
right reserved by the vendor.
Reservation CANNOT be made in an instrument
different from that of the contract of sale. Once the
instrument of absolute sale is executed, any right
thereafter granted the vendor in a separate
instrument cannot be a right of repurchase but
some other right like the option to buy. (Villanueva,
2009)

Civil Law
Pacto de retro v. Mortgage mortgage, but shows the intention of the parties to
make the property subject of the contract as
PACTO DE RETRO MORTGAGE security for a debt and contains nothing impossible
or contrary to law. (Aludos v. Suerte, G.R. No. 165285,
As to ownership nature
18 June 2012)
Ownership is Ownership is not
Essential Requisites of Equitable Mortgage
transferred but the transferred but the
ownership is subject to property is merely
1. Parties entered into a contract denominated as
the condition that the subject to a charge or
one of sale; and
seller might recover the lien as security for the
2. Their intention was to secure an existing debt
ownership within a compliance of a
by way of a mortgage. (Molina v. CA, G.R. No.
certain period of time. principal obligation.
125755, 24 Feb. 2003)
As to interest
Presumption of an Equitable Mortgage
If the seller does not
Mortgagor does not lose
repurchase the property A sale with conventional redemption is deemed to
his interest in the
upon the very day be an equitable mortgage in any of the following
property if he fails to
named in the contract, cases. (Art. 1602, NCC) (A-I-R-S-T-A-R)
pay the debt at its
he loses all interest
maturity.
thereon. 1. Price of the sale with right to repurchase is
As to foreclosure and redemption unusually Inadequate;
2. Seller Remains in possession as lessee or
It is the duty of the otherwise;
mortgagee to foreclose 3. Upon or after the expiration of the right to
There is no obligation the mortgage if he repurchase, Another instrument extending the
resting upon the wishes to secure a period of redemption or granting a new period
purchaser to foreclose. perfect title thereto. is executed;
Neither does the vendor 4. Purchaser Retains for himself a part of the
have any right to After the maturity of the purchase price;
redeem the property debt secured by the 5. Seller binds himself to pay the Taxes on the
after the maturity of the mortgage and before thing sold;
debt. foreclosure, the 6. In any other case where the real intention of the
mortgagor has a right to parties is that the transaction shall Secure the
redeem. (De Leon, 2013) payment of a debt or the performance of any
other obligation; or
7. Art. 1602 shall also apply to a contract
Subsequent Sale of Property by Vendor a retro purporting to be an Absolute sale. (Art. 1604,
NCC; 2005 BAR)
A sale subsequently made by the vendor to an
innocent purchaser for value could defeat the NOTE: In case of doubt in determining whether it is
vendee’s title and right to possession if the latter’s equitable mortgage or sale a retro (with right of
right is not properly registered or annotated. (De repurchase); it shall be construed as equitable
Leon, 2013) mortgage. The remedy is reformation.
3. EQUITABLE MORTGAGE Inadequacy of Price and Equitable Mortgage
It is one which lacks the proper formalities, form or Inadequacy of price does NOT constitute proof
words or other requisites prescribed by law for a sufficient to declare a contract as one of equitable

2022 GOLDEN NOTES
Sales
mortgage. Mere inadequacy of the price is not asked John to execute an undated Deed of
sufficient. The price must be grossly inadequate, or Absolute Sale with a stated consideration in the
purely shocking to the conscience. (Diaz, 2010) amount of P5 Million, supposedly for the
purpose of providing additional security for the
The Decisive Factor in Evaluating whether or loan. John claimed that they verbally agreed that
not a Deed of Sale Absolute in Form is a the mode of payment for the said loan would be
Mortgage Lourdes’ collection of rental payments from the
tenants of the subject property in the total
In determining whether a deed absolute in form is a amount of P70,000 per month for five (5) years.
mortgage, the court is not limited to the written John remained in possession of the property. To
memorials of the transaction. The decisive factor in the surprise of John, he was informed that the
evaluating such agreement is the intention of the ownership of the property had been transferred
parties, as shown not necessarily by the to Lourdes. John argued that the undated Deed
terminology used in the contract but by all the of Absolute Sale is void for being an equitable
surrounding circumstances, such as the relative mortgage. Is John correct?
situation of the parties at that time, the attitude acts,
conduct, declarations of the parties, the A: YES. An equitable mortgage is defined as one
negotiations between them leading to the deed, and which although lacking in some formality, or form
generally, all pertinent facts having a tendency to fix or words, or other requisites demanded by a statute,
and determine the real nature of their design and nevertheless reveals the intention of the parties to
understanding. (Sps. Raymundo. v. Sps. Bandong, G.R. charge real property as security for a debt, and
No. 171250, 04 July 2007) contains nothing impossible or contrary to law. Its
essential requisites are: (1) that the parties entered
Effects when Sale is adjudged as an Equitable into a contract denominated as a contract of sale;
Mortgage and (2) that their intention was to secure an existing
debt by way of a mortgage.
1. The apparent seller may ask for the reformation
of the instrument (Art. 1605, NCC; 2005 BAR); The purported contract of sale between John and
Lourdes is an equitable mortgage and not a
2. Money, fruit or other benefit to be received by legitimate contract of sale. First, it is not disputed by
the buyer as rent or otherwise shall be any party that the supposed vendor of the property,
considered as interest (Art. 1602, NCC); John, remains to be in possession of the subject
property despite purportedly selling the latter to
3. The court may decree that “vendor” pay his Lourdes. Second, the purchase price of the
outstanding loan to the “vendee” (Banga v. purported sale indicated in the undated Deed of
Bello, G.R. No. 156705, 30 Sept. 2005); and Absolute Sale is inadequate. Third, the evidence on
record shows that respondent Lourdes retained for
4. A remand of the case to the trial court where the herself the supposed purchase price. Fourth, John
latter did not pass upon the mortgagor’s claim established that the real intention of the parties is
that he had paid his mortgage obligation, only for the purported contract of sale to merely secure
for the purpose of the determining whether the payment of their debt owing to respondent De
said obligation has been paid, and if not, how Vera Navarro. (Sps. Sy v. De Vera-Navarro, G.R. No.
much should still be paid. (Ibid.) 239088, 03 Apr. 2019, J. Caguioa)
Q: John borrowed P3 Million from Lourdes, Q: On Dec. 27, 1987, petitioners obtained
secured by a Real Estate Mortgage Contract over a loan of P3,500.00 from Felipe Marquito, the
a parcel of land and a building thereon with a father of respondents. Petitioners used their
market value of P40 Million. Immediately after land as collateral for the loan obligation. On
the execution of the REM Contract, Lourdes said date, respondents' father began occupying

Civil Law
the land. In March 2003, petitioner Ogatia 10-year prescriptive period. (Saclolo v. Marquito,
borrowed an additional P6,000.00, and again G.R. No. 229243, 26 June 2019, J. Caguioa)
used her aliquot share of the land as collateral
for the loan. In June 2004, petitioner Saclolo Pactum Commissorium
also borrowed an additional amount of
P10,000.00 from respondents, using her aliquot A stipulation for automatic vesting of title over the
share of the land as collateral. security in the creditor in case of debtor’s default.
(Villanueva, 2009)
In Oct. 2004, petitioners verbally informed
respondents of their intention to "redeem" the Under Art. 2088 of the Civil Code, the creditor
property. Respondents, however, cannot appropriate the things given by way of
refused. Thus, petitioners were constrained to pledge or mortgage or dispose of them; any
file a Complaint for redemption of mortgaged stipulation to the contrary is null and void because
properties, specific performance with damages that would result in pactum commissorium.
before the RTC. Both the RTC and the CA held
that while the transaction was one of equitable NOTE: Arts. 2088 and 2141 of the Civil Code were
mortgage, petitioners could no longer repealed by R.A. No. 11057, otherwise known as the
repurchase or redeem the subject property as “Personal Property Security Act.” Previously, the
the period for redemption under Art. 1606 of creditor has no right to appropriate to himself the
the NCC has lapsed. Did petitioners’ action to things given by way of pledge or mortgage or
redeem the subject property prescribe? dispose of them because he or she is permitted only
to recover credit from the proceeds of the sale of the
A: No. Since the true transaction between the property at a public auction through a public officer
parties was an equitable mortgage and not a sale in the manner prescribed in Sec. 14 of Act No. 1508.
with right of repurchase, there is no "redemption"
or "repurchase" to speak of and the periods Redemption v. Option to Buy
provided under Art. 1606 do not apply. Instead, the
prescriptive period under Art. 1144 of the Civil REDEMPTION OPTION TO BUY
Code is applicable. In other words, the parties had
As to nature
10 years from the time the cause of action accrued
to file the appropriate action. Principal and
Forms part of the preparatory contract.
The release of additional loans on the basis of the contract of sale. The May exist prior to or
same security, coupled with the fact that right must be after the perfection of
respondents never filed an action to consolidate imbedded in a contract the sale, or be
ownership over the subject property under Art. of sale upon its imbedded in another
1607, evidently shows that for 19 years, perfection. contract upon that
respondents expressly recognized: 1) that contract’s perfection.
petitioners continued to own the subject property As to necessity of separate consideration
and 2) that the loan and equitable mortgage
subsisted. Thus, petitioners' cause of action to Does not need a A separate
recover the subject property can be said to have separate consideration consideration is needed
accrued only in 2004, that is, when respondents to be valid and for it to be valid and
rejected petitioners' offers to pay and extinguish effective. effective.
the loan and to recover the mortgaged property as As to period
it was only at this time that respondents manifested
Redemption period Period for an option
their intention not to comply with the true
cannot exceed 10 right may exceed 10
agreement of the parties. Undoubtedly, the filing of
years. years.
the complaint in 2005 was made well-within the

2022 GOLDEN NOTES
Sales
As to notice requirement Running of Period of Legal Redemption

Notice is required for
its exercise, 1. Right of legal pre-emption or redemption shall
Only notice for the be exercised within 30 days from written notice
accompanied with by a
exercise is required. by the vendor or the prospective vendor – deed
tender of payment/
consignment. of sale not to be recorded in Registry of
As to effect Property unless accompanied by affidavit of the
vendor that he has given notice to all possible
Its exercise Its exercise results into redemptioners; or
extinguishes an the perfection of a
existing contract of contract of sale. 2. When there is actual knowledge, no need to give
sale. (Villanueva, 2009) written notice; and the doctrine of laches may
apply, or when the redemptioner acted as a
NOTE: Once the instrument of absolute sale is middleman or intermediary to effect the sale to
executed, the seller can no longer reserve the right a third party, the period of redemption begins
of repurchase, and any right thereafter granted the to run from actual knowledge.
seller by the buyer cannot be a right of repurchase
but some other rights, like that of an option to buy. Q: The subject property was mortgaged to Dura
Tire and Rubber Industries, Inc. as security for
Period of Redemption credit purchases to be made by Move Overland
Venture and Exploring, Inc. Under the mortgage
1. No period agreed upon – Four (4) years from agreement, Dura Tire was given the express
date of contract; (Art. 1606, NCC) authority to extrajudicially foreclose the
property should Move Overland fail to pay its
2. When there is agreement – should not exceed credit purchases.
10 years; but if it exceeded, valid only for the
first 10 years; (Art. 1606, NCC) On June 5, 1992, A&A Swiss sold the property to
Mahinay. In the Deed of Absolute Sale, Mahinay
3. When period to redeem has expired & there acknowledged that the property had been
has been a previous suit on the nature of the previously mortgaged by A&A Swiss to Dura
contract – seller still has 30 days from final Tire, holding himself liable for any claims that
judgment on the basis that contract was a sale Dura Tire may have against Move
with pacto de retro; and Overland. Thereafter, Mahinay sought to pay
Move Overland's obligation to release the
Rationale: No redemption due to erroneous property from the mortgage. Dura Tire,
belief that it is equitable mortgage which can be however, ignored Mahinay's request.
extinguished by paying the loan.
For Move Overland's failure to pay its credit
4. When period has expired & seller allowed purchases, Dura Tire applied for extrajudicial
the period of redemption to expire – seller is foreclosure of the property. Mahinay protested
at fault for not having exercised his rights so he the impending sale and filed a third-party claim
should not be granted a new period. (i.e., if the before the Office of the Provincial Sheriff of
issue before the court is one whether the Cebu. Despite the protest, Sheriff Romeo Laurel
contract is an absolute sale or a sale a retro) proceeded with the sale and issued a Certificate
NOTE: Tender of payment is sufficient, but it is not of Sale in favor of Dura Tire, the highest bidder
in itself a payment that relieves the seller from his at the sale. The property was purchased at
liability to pay the redemption price. ₱950,000.00, and the Certificate of Sale was
registered on February 20, 1995.

Civil Law
Relying on the Court of Appeals’ finding that he Obligations the Vendor a retro if he Desires to
was a “substitute mortgagor,” Mahinay filed a Redeem (Art. 1616, NCC)
Complaint for judicial declaration of right to
redeem. The RTC dismissed Mahinay’s The vendor a retro must pay or reimburse the
Complaint for judicial declaration of right to vendee a retro the following:
redeem. Was the one (1)-year period of
redemption tolled when Mahinay filed his 1. Price of the sale;
Complaint for annulment of foreclosure sale? 2. Expenses of the contract;
3. Other legitimate expenses made by reason of
A: NO. The right of redemption being statutory, the the sale; and
mortgagor may compel the purchaser to sell back 4. Necessary and useful expenses made on the
the property within the one (1)-year period under thing sold. (Pineda, 2010)
Act No. 3135. If the purchaser refuses to sell back
the property, the mortgagor may tender payment to Written Notice Mandatory for the Right of
the Sheriff who conducted the foreclosure Redemption to Commence
sale. Here, Mahinay should have tendered payment
to Sheriff Laurel instead of insisting on directly Written notice is mandatory for the right of
paying Move Overland's unpaid credit purchases to redemption to commence and the notice must be in
Dura Tire. Since the period of redemption is fixed, it writing stating the execution of the sale and its
cannot be tolled or interrupted by the filing of cases particulars. It may be made in a private or public
to annul the foreclosure sale or to enforce the right document. (Pineda, 2010)
of redemption.
Conversely, the filing of the suit for ejectment or
To rule otherwise would constitute a dangerous collection of rentals against a co-owner actually
precedent. A likely offshoot of such a ruling is the dispenses with the need for a written notice, and
institution of frivolous suits for annulment of must be construed as commencing the running of
mortgage intended merely to give the mortgagor the period to exercise the right of redemption, since
more time to redeem the mortgaged property. the filing of the suit amounted to actual knowledge
of the sale from which the 30-day period of
With Mahinay failing to redeem the property within redemption commences to run. (Villanueva, 2016)
the one (1)-year period of redemption, his right to
redeem had already lapsed. As discussed, the Tender of Payment NOT necessary for
pendency of an action to annul the foreclosure sale Redemption to Take Effect
or to enforce the right to redeem does not toll the
running of the period of redemption. The trial court Tender of payment is not necessary and offer to
correctly dismissed the Complaint for judicial redeem is enough only when the amount of
declaration of right to redeem. (Makilito Mahinay v. repurchase is uncertain and depends upon an
Dura Tire & Rubber Industries, Inc., G.R. No. 194152, accounting of the vendee who has not yet made such
05 June 2017) accounting. (Tolentino, 1999)
Extension of the Time to Redeem Effect of Failure to Redeem
Parties may extend the period to redeem as long as There must be judicial order before ownership of
the total period shall not exceed ten (10) years. real property is consolidated to the buyer a retro.
However, such extension can only be granted when
the original period has not yet expired. Otherwise,
there exists only a promise to sell on the buyer’s
part. (Pineda, 2010)

2022 GOLDEN NOTES
Sales
Vendor a retro CANNOT be Compelled to Right of legal redemption of adjacent owners of

Redeem rural lands
There is no obligation on the part of the vendor a Requisites:

retro to repurchase. He may or may not exercise the
right to repurchase. (Pineda, 2010) 1. Both the land of the one exercising the right of
redemption and the land sought to be redeemed
LEGAL REDEMPTION must be rural;
2. The lands must be adjacent;
It is the right to be subrogated upon the same terms 3. There must be an alienation
and conditions stipulated in the contract, in the 4. The piece of rural land alienated must not
place of one who acquires the thing by: exceed one (1) hectare;
5. The grantee or vendee must already own any
1. Purchase; or other rural land; and
2. Dacion en pago; or 6. The rural land sold must not be separated by
3. Other transaction whereby ownership is brooks, drains, ravines, roads, and other
apparent servitudes from the adjoining lands.
Instances of legal redemption (De Leon, 2013)
1. Sale of a co-owner of his share to a stranger; NOTE: In case two or more adjacent owners desire
(Art. 1620, NCC; 2000, 2002 BAR) to exercise the right of redemption, the following
2. When a credit or other incorporeal right in rules on preference is applied:
litigation is sold (Art. 1634, NCC)
3. Sale of an heir of his hereditary rights to a 1. When the lands have different land area
stranger; (Art. 1088, NCC) – the owner of the adjoining land of smaller
4. Sale of adjacent rural lands not exceeding 1 area.
hectare; (Art. 1621, NCC) and 2. When the lands have similar land area –
5. Sale of adjacent small urban lands bought the owner who first requested the
merely for speculation. (Art. 1622, NCC) redemption. (De Leon, 2011)
Right of legal redemption of co-owner Right of pre-emption and legal redemption of

adjacent owners of urban lands
Requisites:
Requisites:
1. There must be co-ownership of a thing;
2. There must be alienation of all or of any of 1. The one exercising the right must be an
the shares of the other co-owners; adjacent owner;
3. The sale must be to a third person or 2. The piece of land sold must be so small and
stranger; and so situtated that a major portion thereof
4. The sale must be before partition. (De Leon, cannot be used for any practical purpose
2013) within a reasonable time; and
3. Such urban land was bought by its owner
merely for speculation. (De Leon, 2013)
NOTE: In case two or more adjoining owners desire

to exercise the right of legal redemption, the law
prefers the owner whose intended use of the land
appears best justified.

Civil Law
Other instances when the right of legal heirs of the deceased sold their rights to Miguel
redemption is also granted without written notice to Baltazar as the co-
owner. Nevertheless, Baltazar offered Miguel, by
1. Redemption of homesteads; way of redemption, an amount which was more
2. Redemption in tax auction sales; than the purchase price of the subject property.
3. Redemption by judgment debtors; Miguel, however, rejected the offer. Thus, on
4. Redemption in extrajudicial foreclosure; February 2, 2006, Baltazar filed an Action for
5. Redemption in judicial foreclosure of Legal Redemption against Miguel and the heirs.
mortgage;
6. Foreclosures by banking institutions; In December 2016, or more than 10 years after
7. Foreclosures by rural banks; and the action was filed, Miguel filed a Motion to
8. Redemption under the Agrarian Reform Dismiss on the ground that Baltazar's "non-
Code. compliance with a condition precedent
necessarily renders the complaint as having
Basis of legal redemption failed to state or show a cause of action." Miguel
was referring to Baltazar's failure to tender the
It is created partly for reason of public policy and redemption price or consign the same in court
partly for the benefit and convenience of the in a timely manner. Will the motion to dismiss
redemptioner to afford him a way out of what might prosper?
be a disagreeable or inconvenient association into
which he has been in trust. It is intended to A: NO. The period of legal redemption is not a
minimize co-ownership. (Pineda, 2010) prescriptive period but a condition precedent to the
exercise of the right of redemption. It is a period set
Running of period of legal redemption by law to restrict the right of the person exercising
the right of legal redemption. It is not one of
The right of legal redemption shall not be exercised prescription. Baltazar filed the Action for Legal
except within 30 days from the notice in writing by Redemption on February 2, 2006, while he
the prospective seller, or seller, as the case may be. consigned the redemption price with the trial court
The deed of sale shall not be recorded in the only on January 20, 2017, after Miguel filed a Motion
Registry of Property unless accompanied by an to Dismiss. He failed to comply with the condition
affidavit of the seller that he has given written precedent of consigning the redemption price
notice thereof to all possible redemptioners. (Art. within the reglementary period.
1623, NCC)
Besides, as a general rule, the listed grounds must
The Court held that since legal redemption is be invoked by the party-litigant at the earliest
intended to minimize co-ownership, once a opportunity, as in a motion to dismiss or in the
property is subdivided and distributed among the answer; otherwise, such grounds are deemed
co-owners, the community ceases to exist and there waived. (Baltazar v. Miguel, G.R. No. 239859, 28 June
is no more reason to sustain any right of legal 2021)
redemption. (Avila v. Barabat, G.R. No. 141993, 17
Mar. 2006) Written notice indispensable
Q: Baltazar, Florencio, and Hipolita are pro- The right of legal pre-emption or redemption shall
indiviso co-owners of a parcel of land. Florencio not be exercised except within 30 days from the
and his wife died and were survived by notice in writing by the prospective vendor, or by
Patrocinio, while Hipolita and her husband also the vendor, as the case may be. (Art. 1623, NCC;
died and were survived by Angelito, Hipolito, 2001, 2002 BAR)
Aurea, Edilberta, and Jose. The subject property NOTE: The written notice of sale is mandatory.
remained unpartitioned. Subsequently, the Notwithstanding actual knowledge of a co-owner,

2022 GOLDEN NOTES
Sales
the latter is still entitled to a written notice from the

selling co-owner in order to remove all H. ASSIGNMENT OF CREDITS
uncertainties about the sale, its terms and
conditions, as well as its efficacy and status.
(Barcellano v. Banas, G.R. No. 165287, 14 Sept. 2011)
Assignment is the process of transferring
gratuitously or onerously the right of the assignor to
The right of redemption of co-owners excludes that
the assignee, who would then be allowed to proceed
of adjoining owners. (Art. 1623, NCC) This means
against the debtor. (Paras, 2008)
that co-owners are preferred if the property is to be
redeemed by a co-owner and an adjoining owner.
The assignment involves no transfer of ownership
but merely effects the transfer of rights which the
Pre-emption
assignor has at the time to the assignee.
Redemption presupposes that the property was

An assignment of credit is an agreement by virtue of
already sold or transferred to another. In pre-
which the owner of a credit, known as the assignor,
emption, the right is present before the sale; there is
by a legal cause, such as sale, dacion en pago,
a right to purchase ahead of or before it can be sold
exchange or donation, and without the consent of
or transferred to other persons.
the debtor, transfers his credit and accessory rights
to another, known as the assignee, who acquires the
E.g., whenever a piece of urban land which is so
power to enforce it to the same extent as the
small and so situated that a major portion thereof
assignor could enforce it against the debtor. (Lo v.
cannot be used for any practical purpose within a
KJS Eco-Formwork System Phil., Inc., G.R. No. 149420,
reasonable time, having been bought merely for
08 Oct. 2003)
speculation, is about to be re-sold, the owner of any
adjoining land has a right of pre-emption at a
NOTE: In assignments, a consideration is not always
reasonable price. (Art. 1620, NCC)
a requisite, unlike in sale. Thus, an assignee may
maintain an action based on his title and it is
immaterial whether or not he paid any
consideration therefor. Furthermore, in an
assignment, title is transferred but possession need
not be delivered.
Nature of assignment of credit
1. Assignment of credit and other incorporeal

rights is a consensual, bilateral, onerous, and
commutative or aleatory contract; (De Leon,
2013)
2. The assignment involves no transfer of
ownership but merely effects the transfer of
rights which the assignor has at the time to the
assignee; and (Casabuena v. CA, G.R. No.
115410, 27 Feb. 1998)
3. It may be done gratuitously (i.e., by donation)
or onerously. (De Leon, 2013)
4. As a general rule, all principles governing sales
also apply to this transaction. (De Leon, 2013)
The act of assignment could not operate to
erase liens or restrictions burdening the right

Civil Law
assigned. (Gonzales v. Land Bank of the Accessory Rights included in the Assignment of
Philippines, G.R. No. 76759, 22 Mar. 1990) a Credit
Perfection of contract for assignment of credit 1. Guaranty;

2. Mortgage;
The contract for the assignment or transfer of credit 3. Pledge; and
and other incorporeal rights is perfected from the 4. Preference. (Art. 1627, NCC)
moment the parties agree upon the credit or right
assigned and upon the price even if neither has been Effect of Assignment of Credit on Debtor
delivered. (Art. 1475, NCC) However, the assignee
will acquire ownership only upon delivery. (De The “meeting of the minds” in assignment
Leon, 2011) contemplates that between the assignor of the
credit and his assignee, there being no necessity for
Effects of Assignment the consent of the debtor. It is sufficient that the
assignment be brought to the debtor’s knowledge in
1. Transfers the right to collect the full value order to be binding upon him. (C&C Commercial
of the credit, even if the assignee paid a Corp. v. PNB, G.R. No. 42449, 05 July 1989)
price less than such value;
2. Transfers all accessory rights; and Effect of payment by the debtor after assignment
3. Debtor can set up against the assignee all of credit
the defenses he could have set up against
the assignor. 1. Before Notice
Binding Effect of Assignment Payment to the original creditor is valid and

debtor shall be released from his
1. As between the parties, the assignment is obligation.
valid although it appears only in a private
document so long as the law does not NOTE: Assignment is effective as to the
require a specific form for its validity. (Art. debtor only from the time he has
1356, NCC) knowledge of it.
2. To affect third persons: 2. After Notice

a. If personal property is involved – a
public instrument is necessary to make Payment to the original creditor is not valid
the assignment effective against third as against the assignee. Even without
persons. notice, the debtor will not also be released
b. If real property is involved – from his obligation should he pay the
registration in the Registry of Property creditor after having had knowledge of the
is required. assignment of the obligation. He thereby
acts in bad faith. The debtor can be made to
NOTE: The assignee merely steps into the shoes of pay again by the assignee. (De Leon, 2013)
the assignor, the former acquiring the credit subject
to defenses (e.g., fraud, prescription, etc.) available Warranties
to the debtor against the assignor. The assignee is
deemed subrogated to the rights as well as to the In assignment, the assignor shall be responsible for
obligations of the seller. An assignee cannot acquire the existence and legality of the credit at the time of
greater rights than those pertaining to the assignor. sale, unless it has been expressly sold as a doubtful
(Koa v. CA, G.R. No. 84847, 05 Mar. 1993) account, in which case the assignee takes the credit
at his own risk. Consequently, the invalidity of the

2022 GOLDEN NOTES
Sales
credit assigned makes the assignor-vendor liable knowledge of any of the circumstances. (Paras,
for breach of such warranty. 2011)
In addition, assignment does not make the assignor Legal Redemption in Sale or Credit or other
warrant the solvency of the debtor to the credit, incorporeal right in litigation (Art. 1634, NCC)
unless:
Requisites:
1. There is a stipulation to that effect; or
2. The insolvency of the debtor was prior to 1. There must be a sale or assignment of
the assignment and of common knowledge. credit;
2. There must be a pending litigation at the
But even when the assignor warrants the solvency time of the assignment;
of the debtor, the warranty, in the absence of 3. The debtor must pay the assignee:
contrary stipulation, should last for one year only a. price paid by him;
from the time of the assignment if the credit is b. judicial cost incurred by him; and
already due. If the credit should be payable within a c. interest on the price from the date of
term or period which has not yet expired, the payment; and
warranty shall cease one year after the maturity of 4. The right must be exercised by the debtor
the credit. (Art. 1629, NCC) within 30 days from the date the assignee
demands (judicially or extra-judicially)
Reasons: payment from him.
1. To prevent fraud which may be committed
by feigning the solvency of the debtor at the GR: Debtor has the right of legal redemption in sale
time of the assignment when in fact he is of credit or incorporeal rights in litigation.
insolvent; and
2. oblige the assignee to exert efforts in the XPNs:
recovery of the credit and thereby avoid 1. Sale to a co-heir or co-owner;
that by his oversight, the assignor may 2. Sale to a co-owner; and
suffer. (De Leon, 2011) 3. Sale to the possessor of property in
question.
If the assignor in good faith is liable for a warranty,
he is liable only for the expenses of the contract, and
any other legitimate payments made by reason of
the assignment. On the other hand, an assignor in
bad faith who breaches such warranties, shall in
addition be liable to pay for the necessary and useful
expenses, plus damages. (Art. 1628, NCC)
Liabilities of the assignor of credit
The liability of the vendor (assignor) in good faith is

limited only to the price received and to the
expenses of the contract, and any other legitimate
payments by reason of the assignment. (Art. 1616
(1), NCC)
The assignor in bad faith is liable not only for the

payment of the price and all expenses, but also for
damages. An assignor in bad faith is one who has

Lease
more than that of the building or trees. In case

VI. LEASE of the sower, he can also be compelled by the
landowner to pay the proper rent. Here, the
parties shall agree upon the terms of the lease
and in case of disagreement, the court shall fix
the terms thereof. (Art. 448, NCC)
A. GENERAL PROVISIONS
2. Object certain which is the subject matter of the
contract; and
Lease
Art. 1643 applies to lease of things, whether
The contract of lease may be of things, or of work movable or immovable. The Civil Code makes
and service. A lease of a thing is a contract where no special-provisions for the lease of movables.
one of the parties binds himself to give to another Nevertheless, the provisions of the Code on
the enjoyment or use of a thing for a certain price leases of lands are also applicable to leases of
and for a period which may be definite or indefinite, personal property except those provisions
but not longer than 99 years. (Art. 1643, NCC; 1997 which by their nature and intent, can only be
BAR) applied where the object of the lease is
immovable. (De Leon, 2013)
It is a consensual, bilateral, onerous and
commutative contract by which the owner 3. Rent. (Rabuya, 2017)
temporarily grants the use of his property or the
rendering of some service to another who Kinds of Lease according to subject matter
undertakes to pay some rent, compensation or
price. (Rabuya, 2017) 1. Lease of things – whether real or personal,
involving an obligation on the part of the lessor
NOTE: The lessor’s right of use is impaired, therein. to deliver the thing, which is the object thereof,
He may even be ejected by the lessee if the lessor and the correlative right of the lessee to the
uses the leased realty. Therefore, lease is a burden peaceful and adequate enjoyment thereof for a
on the land; it is an encumbrance on the land. (Roxas price certain; (Art. 1654, NCC) or
v. CA, G.R. No. 92245, 26 June 1991)
2. Lease of work – which refers to a contract for a
Essential Elements of Lease piece of work, involving an obligation on the
part of the contractor (lessor) to execute a piece
1. Consent of the contracting parties; of work for the employer (lessee) in
a. On part of owner – nobody can force an consideration of a certain price or
owner to lease out his property if he is not compensation. (Art. 1713, NCC)
willing.
b. On part of lessee NOTE: Duties of a contractor who furnishes
work and materials:
GR: No person can be compelled to become a a. To deliver;
lessee against his will. b. To transfer ownership and warrant
title; and
XPN: In the case of industrial accession where c. To warrant against eviction and hidden
both the landowner, and the builder, planter defects.
and sower acted in good faith, the builder or
planter can be compelled to pay reasonable rent 3. Lease of service – involving an obligation on
if they cannot be obliged by the landowner to the part of the housekeeper, laborer or
buy the land because its value is considerably employee, or common carrier to do or perform

2022 GOLDEN NOTES
Civil Law
a service for the head of a family, or master, 10. Lessor need not be the owner.
employer, or passenger or shipper of goods,
respectively, in consideration of compensation. NOTE: A usufructuary may thus lease out
the premises in favor of a stranger, such
NOTE: Since lease is consensual and is not lease to end at the time that the usufruct
imposed by law, only the lessor has the right to itself ends.
fix the rents, to which the lessee may or may not
agree. However, the increasing of the rent is not Consideration of Lease
an absolute right on the part of the lessor.
The cause of a contract of lease of things must be a
Essence of Lease price certain, generally called “rent” in money or its
equivalent, or some other prestation which the
The transmission of the temporary enjoyment or lessee binds himself to undertake. The important
use by the lessee of a thing for a certain period in thing is that what is given by the lessee has value.
consideration of the undertaking to pay rent (De Leon, 2005)
therefor. (De Leon, 2013)
Rent
Characteristics or Requisites for Lease of Things
"Rent" may be defined as the compensation either
1. Consensual; in money, provisions, chattels, or labor, received by
2. Principal; the owner of the soil from the occupant thereof. It is
3. Nominate; defined as the return or compensation for the
4. Purpose is to allow enjoyment or use of a possession of some corporeal inheritance, and is a
thing; profit issuing out of lands or tenements, in return
for their use. It is that, which is to be paid for the use
NOTE: The person to enjoy is the lessee of land, whether in money, labor or other thing
while the person allowing the enjoyment agreed upon. (Tolentino v. Sy Chiam, G.R. No. 26086,
by another is the lessor. 12 Aug. 1927)
5. Subject matter must be within the Rent under Rent Control Act of 2009 (R.A. No.
commerce of man; 9653)
6. Purpose to which the thing will be devoted
should not be immoral; It is the amount paid for the use or occupancy of a
7. Onerous; residential unit, whether payment is made on a
monthly or other basis. (Sec. (3), R.A. No. 9653)
NOTE: There must be rent or price certain.
Owner has the right to fix the rent because the
8. Period is Temporary; contract is consensual and not imposed by law, but
increasing the rent is not an absolute right of the
NOTE: Not perpetual; hence, the longest lessor. The new rate must be reasonable and in no
period is 99 years. case shall the lessor be allowed to increase the
rental when the term has not yet expired, unless the
9. Period is either definite or indefinite; and tenant consents. (Paras, 2008)
a. If no term is fixed, we should apply Art.
1682 of NCC (for rural leases), and Art.
1687 of NCC (for urban leases).
b. If the term is fixed but indefinite, the
court will fix the term under the law of
obligations and contracts; and

Lease
Form of Lease Contract Manufacturing Corporation v. CA, G.R No. 109966, 31

May 1999)
GR: Lease may be made orally.
Lease v. Usufruct
XPN: If the lease of real property is made for more
than one year, it must be in writing, in compliance LEASE USUFRUCT
with the Statute of Frauds. (Art. 1403 (2) (e), NCC)
As to Nature of Right
Lease v. Sale Real right only in the
case of the lease of real
LEASE SALE property where the
As to Ownership lease is registered.
Only the enjoyment or

A lease of real property
use is transferred.
becomes a real right and
Always a real right.
thereby binds third
NOTE: In lease of things,
persons when the lease
the transfer which one
Ownership is is registered in the
of the parties obligates
transferred. Registry of property.
himself to make is not
However, even if not
one of ownership over
registered, a lease is a
the thing, but merely the
real right if the term is
enjoyment or use
for more than one year.
thereof. (Rabuya, 2017)
As to Transfer As to Creator of Right
Transfer is permanent, The creator of the right
Transfer is temporary. unless subject to a The lessor may or may must be the owner or
resolutory condition. not be the owner. one duly authorized by
As to Necessity of Owning the Object at the him.
Time of Transfer
As to Cause
The lessor has the active
The seller must be the The owner has the
obligation to maintain
owner or at least passive duty to allow the
the lessee in the
The lessor need not be authorized by the owner usufructuary to enjoy or
enjoyment or use of the
the owner. to transfer ownership, use the same.
property.
of the thing sold at the
time it is delivered. As to Taxes
The usufructuary pays

As to Significance of Price of Object The lessee generally
the annual charges and
pays no taxes.
The price of the subject taxes on the fruits.
The price of the thing is
matter is usually not
usually fixed in the As to Repairs
mentioned, being
contract.
immaterial. The usufructuary is
The lessee generally has obliged to make the
NOTE: A lease of personal property with option to no obligation to pay for ordinary repairs needed
buy (at a nominal amount) (Art. 1485, NCC) at the repairs. by the thing given in
end of the lease can be considered a sale. (Elisco Tool usufruct.

2022 GOLDEN NOTES
Civil Law
As to Other Things Lease v. Simple Loan (Mutuum)

The lessee cannot The usufructuary may
constitute a usufruct on lease the thing in SIMPLE LOAN
LEASE
the property. usufruct to another. (MUTUUM)
As to Origin As to Transfer of Ownership
May be created by law,
As a rule, may be created contract, last will and Lessor does not lose
Lender loses ownership
only by contract. testament or ownership
prescription.
As to Relationship Between Parties
As to Coverage
Generally, covers As a rule, covers all Relationship is one of Relationship is one of
particular uses limited possible uses of the lessor and lessee obligor and oblige
by the contract. property.
As to Usury Law
Lease v. Commodatum
Not governed by the Governed by the Usury
Usury Law Law
LEASE COMMODATUM
As to Cause As to Applicability of Statute of Frauds
If what is leased is real
Onerous contract,
property for more than
although the rent may Not governed by the
Essentially gratuitous. one year, the Statute of
subsequently be Statute of Frauds
Frauds must be
condoned or remitted. complied with
As to Nature As to Object
Purely personal in Refers to real and Refers only to personal
Not essentially personal
character, and personal property property. (Paras, 2008)
in character and,
consequently, the death
therefore, the right may
of either the bailor or the
be transmitted to the Lease of Work v. Lease of Service
bailee extinguishes the
heirs.
contract.
LEASE OF WORK LEASE OF SERVICE
Real contract, as it is As to Object of the Contract
perfected only upon
Consensual contract.
delivery of the object The object is the
It is the performance of
thereof. execution of a piece
some service or an employer
of work for an
by a house helper or laborer
As to Transfer of Ownership employer by an
or for a passenger or owner
independent
No transfer of ownership. of goods by common carrier.
contractor.
As to Use As to Liability for Compensation

In both kinds of lease, the employer or passenger
Both contracts consist in the transmission of the or owner of goods binds himself to pay some
enjoyment or use of a thing to another. remuneration or compensation in favor of the
independent contractor, employee, or common
As to Contract
carrier, and the relation of principal and agent
Consensual Real does not exist between the parties.

Lease
Lease of Services v. Contract for Piece of Work As to Type of Contract
CONTRACT FOR A Preparatory Contract.

LEASE OF SERVICES The purpose is for the
PIECE OF WORK
(Locatio Operatum Principal Contract. agent to enter into other
(Locatio Operas
Operarum) contracts which he is
Operis)
authorized to enter.
As to Object of Contract
As to Compensation
The object of the
The object of the contract is the work The work or service
It is presumed for a
contract is the labor or done (the result of the must be for a price or
compensation.
service itself performed labor) without compensation.
by the lessor. considering the labor
As to Extinguishment
that produced it.
The will of both parties
As to Payment of Labor Performed is necessary for the The will of one is
extinguishment of the sufficient.
The result is generally relationship.
The result is generally
important; the price is
not important; hence As to Persons Involved
not payable until the
the laborer is entitled to
work is completed, and Three persons: the
be paid even if there is Only two persons are
said price cannot be principal, the agent and
destruction of the work involved: the lessor and
lawfully demanded if the third person with
through fortuitous lessee.
the work is destroyed whom the agent has
event or the result
before it is finished and contracted.
intended not attained.
accepted. As to Risk of Loss Before Delivery
As to Similarities
The risk of loss before The risk is borne by the
1. There is a price certain (compensation). delivery is borne by the principal since the agent
2. The relation of principal and agent does not independent contractor, acts merely as his
exist between the lessor and lessee. esp. in the lease of work representative.
for a fixed price.
Lease of Services or Work v. Agency
As to Liability to Third Persons
LEASE OF SERVICES The agent is not liable,
AGENCY In the lease of work, the
OR WORK unless he expressly
independent contractor
binds himself or exceeds
As to Basis of Contract is personally liable for
the limits of his
his contracts with third
The basis is It is based on authority.
persons.
employment. representation.
As to Powers Possessed
As to Work to be Done
The lessor performs a In the lease of service,
The agent exercises
material act for the The agent executes a the lessor ordinarily
discretionary powers.
benefit of his employer juridical act for and in performs only
without representation behalf of his principal. ministerial duties.
of the latter.

2022 GOLDEN NOTES
Civil Law
Lease of Things v. Lease of Services NOTE: A price certain exists when the same can be
ascertained according to the customs and usages of
LEASE OF THINGS LEASE OF SERVICES the place.
As to Object of the Contract Lease of Consumable Goods

Object of contract is a Object is some work or
thing. service. GR: Consumable goods cannot be the subject matter
As to Obligation of the Lessor of a contract of lease of things. (Art. 1645, NCC)
Lessor has to deliver the Lessor has to perform Reason: To use or enjoy them, they will have to be
thing leased. some work or service. consumed. This cannot be done by the lessee since
ownership over them is NOT transferred to him by
As to Remedy in Case of Breach the contract of lease. (Art. 1643, NCC)
In case of breach, there In case of breach, no XPNs: They may be leased:

can be an action for action for specific
specific performance. performance may lie. a. If they are merely to be exhibited as for
display purposes; (lease ad pompan et
ostentationem); and
Compensation in Lease of Work or Service b. If they are accessory to the lease of an
industrial establishment. (e.g., oil in an
1. When there is an agreement industrial firm) (Art. 1645, NCC)
The lessee must be compelled to pay the agreed Persons Disqualified to Be Lessees
price unless it is found to be iniquitous or
unreasonable, in which case the courts may fix a 1. Husband and wife cannot lease to each other
reasonable and just remuneration. Where the their separate properties EXCEPT:
compensation is renounced or waived after the a. If a separation of property was agreed
service has been rendered, there is still a lease of upon in the marriage settlement; or
service although it has become gratuitous. b. If there has been a judicial separation
under Art. 135 of the Family Code; (Art.
2. Where the agreement may be implied 1490, NCC);
One who performs work or service in favor of Reasons for the disqualification:
another who impliedly consents thereto and who i. To prevent prejudice to creditors;
benefits thereby, is entitled to compensation by ii. To prevent the stronger spouse from
virtue of an innominate contract of facio ut des (I do influencing unduly the weaker
that you may give) or of the case of services tacitly spouse.
contracted, in which case the courts will fix the
reasonable worth of the services rendered. NOTE: The prohibition applies even
to common law spouses; otherwise,
3. Where no rate or amount is fixed in the said spouses would be placed in a
contract better position than legitimate
spouses
The contract is nevertheless valid if the amount can
be ascertained in the light of the customs and usages 2. Persons referred to under Art. 1491 of NCC are
of the place, or by findings of fact on the basis of disqualified because of fiduciary
evidence submitted in case of disagreement. relationships.

Lease
NOTE: While foreigners in general cannot buy years, renewable for another 25 years upon
rural or urban lands, they are not completely mutual agreement of both parties. (Sec. 1,
excluded by the Constitution from use of lands P.D. No. 471)
for residential purposes. Since their residence
in the Philippines is temporary, they may be Estoppel against Lessee
granted temporary rights such as a lease
contract which is not forbidden by the A lessee is estopped from asserting title to the thing
Constitution. However, if an alien is given not leased as against the lessor (Art. 1436, NCC), or to
only a lease of, but also an option to buy a piece deny the lessor’s title, or to assert a better title not
of land, by virtue of which the Filipino owner only in himself, but also in some third person,
cannot sell or otherwise dispose of his property including the State while he remains in possession
(e.g., for fifty years), then it becomes clear that of the leased property and until he surrenders
the arrangement is a virtual transfer of possession to the lessor. (VSC Commercial
ownership. If this can be done, then the Enterprises, Inc. v. CA, G.R. No. 121159, 16 Dec. 2002)
Constitutional ban against alien landholding in
the Philippines, is indeed in grave peril. (Fullido This estoppel applies even though the lessor had no
v. Grilli, G.R. No. 215014, 29 Feb. 2016) title at the time the relation of lessor and lessee was
created. It may be asserted not only by the original
Hence, foreigners may lease land from others. lessor, but also by those who succeed to his title.
(Art. 1643, NCC) (Century Savings Bank v. Sps. Samonte, G.R. No.
176212, 20 Oct. 2010)
Lease of Private Lands by Foreigners
Q: Fred sold to Juan a parcel of land, belonging to
a. Foreigner investing in the Philippines his minor son, Lino, then under his
guardianship, without judicial approval. After
Any foreigner investing in the Philippines is the sale, Juan immediately took possession of
allowed to lease private lands, provided the land, built a house and religiously paid the
that the lease contract shall be for a period taxes thereon. Nine years thereafter, Lino, no
not exceeding 50 years renewable once for longer a minor, rented the ground floor of the
a period of not more than 25 years, and the house built by Juan. Lino paid the rent for the
lease area shall be used solely for the first month, then stopped paying. Two years
purpose of investment upon the mutual thereafter, when pressed for payment of the
agreement of the parties. (Sec. 4, R.A. No. accrued rent, Lino refused, claiming ownership
7652) over the property, alleging that the sale of the
property to Juan while he was a minor without
NOTE: “Investing in the Philippines” means the approval of the guardianship court rendered
making an equity investment in the the sale null and void. Is the claim of Lino valid
Philippines through actual remittance of and meritorious? Explain. (1987 BAR)
foreign exchange or transfer of assets,
whether in the form of capital goods, A: NO. Lino’s claim is not valid and not meritorious
patents, formulae, or other technological because Lino is in estoppel. A lessee cannot assail the
rights or processes, upon registration with right and title of the lessor and cannot claim
the SEC. ownership as against the lessor. The fact that the
sale was made while Lino was a minor is of no
b. Foreigner not investing in the moment because he recognized and ratified the
Philippines contract Juan’s ownership after he was already of
majority age.
Allowed to lease private lands in the
Philippines but for a maximum period of 25

2022 GOLDEN NOTES
Civil Law
Purpose in Recording a Lease 1. If the lease will be for one year or less, no
other authority is required;
A lease DOES NOT have to be recorded in the 2. If the lease on the real property will be for
Registry of Property to be binding between the more than a year, then a special power of
parties. attorney (aside from the public instrument
transferring administration) is required
Registration is useful only for the purposes of [Art. 1878 (8), NCC]; or
notifying strangers to the transaction. (Art. 1648, 3. Whether it be a) or b), if the lease is to be
NCC) Registration is not essential for the validity of recorded, there must be a special power of
the contract but is needed to make it effective attorney. (Art. 1647, NCC)
regarding third persons. (Rabuya, 2017)
NOTE: If it is the wife who is administering her
However, if the purchaser has actual knowledge of paraphernal real property, the husband has no
the existence of the lease, which knowledge is authority whatsoever, to lease, in any way, or
equivalent to registration, he is bound by the lease. administer the property.
(Lao v. Lao. G.R. No. 149599, 16 May 2005)
Q: If a father, who is administering the real
Proper Authority Required estate of his minor son, wants to record the
lease, should he ask for judicial permission?
If a lease is to be recorded, the following persons
must have special power of attorney to constitute A: YES. A father who is administering the real estate
the lease: of his minor son should ask for judicial permission
if he wants to record the lease. (Art. 1647, NCC) But
1. Husband – with respect to the paraphernal even if no judicial authorization is asked, such defect
real estate of the wife; cannot be invoked by a lessee who has dealt with
2. Father or guardian – with respect to the him. (Summers v. Mahinay, CA 40 O.G. 11th S No. 18)
property of the minor or the ward; Only the son or his own heirs may question the
3. Manager or administrator – with respect validity of the transaction.
to the property under his administration.
(Art. 1647, NCC) Q: Is lease a real or a personal right?
NOTE: The “manager” here may be:
a. The administrator of conjugal property A: Generally, it is a personal right. But it partakes of
(Rodriguez v. Borromeo, G.R. No. L- the nature of a real right if:
17772, 09 June 1922);
b. The administrator of a co-ownership a. the lease of real property is for more than
(Melencio v. Dy Tiao Lay, G.R. No. L- one year; or
32047, 01 Nov. 1930); or
c. The administrator of state patrimonial b. the lease of real property is registered
property. (Tipton v. Andueza Chua- regardless of duration.
Chingco, G.R. No. L-2220, 04 Apr.1906)
NOTE: In both cases a special power of
Q: A husband was properly given by his wife the attorney is required to constitute thereon a
authority to administer her paraphernal real lease by representation and record the same
property. Does this necessarily mean that just with the Property Registry, because these
because the husband is now the administrator, are acts of strict dominion, and not merely of
he can lease said property without any further administration.
authority?
A: It depends.

Lease
Effects if the lease of real property is not c. If terms are violated, DTI can terminate it.
registered (Investor’s Lease Act of 1995)
1. The lease is not binding on innocent third NOTE: The Investor’s Lease Act of 1995 (ILA) did
persons such as a purchaser. (Salonga v. Acuña, not do away with P.D. No. 713, but under ILA the
54 O.G. 2943) consent of DTI is required, while in P.D. No. 713 no
2. Naturally, such an innocent third person is consent is required.
allowed to terminate the lease in case he buys
the property from the owner-lessor, unless Right of a purchaser of a leased property
there is a stipulation to the contrary in the
contract of sale. (Art. 1676, NCC; 2009 BAR) GR: Purchaser of thing leased can terminate the
3. When a third person already knows of the lease.
existence and duration of the lease, he is bound
by such lease even if it has not been recorded. XPNs:
The reason is simple: actual knowledge is, for 1. Lease is recorded in Registry of Property;
this purpose, equivalent to registration. 2. There is a stipulation in the contract of sale that
(Soriano v. CA, G.R. No. 78975, 07 Sept. 7, 1989) the purchaser shall respect the lease;
3. Purchaser knows the existence of the lease;
NOTE: But if the sale is fictitious and was only 4. Sale is fictitious; or
resorted to for the purpose of extinguishing the 5. Sale is made with a right of repurchase.
lease, the supposed vendee cannot terminate
the lease. The sale is presumed fictitious if at Term of lease contract
that time the supposed vendee demands the
termination of the lease, the sale is not recorded GR: The law does not allow perpetual lease. There
in the Registry of Property. [Art. 1676(3), NCC] must be a period which may either be definite or
indefinite. (Art. 1643, NCC)
4. If the stranger knows of the existence of the When no period is fixed:
lease, but has been led to believe that the lease
would expire very soon, or before the new lease 1. In case of lease of rural lands – it is understood
in favor of him begins (when in fact this was not to have been made for all the time necessary for
true), the stranger can still be considered the gathering of the fruits which the whole
innocent. (Quimson v. Suarez, G.R. No. L-21381, estate leased may yield in one year, or which it
05 Apr. 1924) may yield once, although two or more years
may have to elapse for the purpose; (Art. 1682,
Rules on lease of things when lessee is an alien NCC)
1. Personal property – 99-year limit applies (Art. 2. In case of lease of urban lands - from year to
1643); year if rent agreed upon is annual; week to
2. Aliens cannot lease public lands, and cannot week if weekly; or day to day if daily. However,
acquire private lands except through the court may fix a longer term, if the lessee has
succession; occupied the premises for a long period of time;
3. If lease of real property (private lands), (Art. 1687, NCC) or
maximum of 25 years renewable for another 25
years (P.D. 713); and 3. A lease of things during the lifetime of one of the
4. The 25-year period was extended to 50 years parties is valid, which is considered one for life,
provided the following conditions are met: ending upon the death of the party who could
have terminated the contract. (Rabuya, 2017)
a. Lessee must make investments;
b. Lease is approved by DTI; and

2022 GOLDEN NOTES
Civil Law
4. If based on the agreement of the parties, the Nature of Sublease

term of the lease is made to depend upon the
will of one of the contracting parties (e.g., as the It is a separate and distinct contract of lease wherein
lessee shall deem fit), the term shall be fixed by the original lessee becomes a sublessor to a
the courts. (Eleizegui v. Lawn Tennis Club, G.R. sublessee. The reason why assignment is generally
No. 967, 19 May 1903) prohibited while subleasing is generally allowed is
because the assignment of the lease contract is a
ASSIGNMENT OF LEASE novation where the personality of the lessee
(1990, 1994, 2005 BAR) disappears. In sublease, on the other hand, the
lessee remains to be a party to the lease contract,
Assignment of lease by lessee and he remains liable to the lessor. (Rabuya, 2017)
Lessee cannot assign the lease contract without the Right of Lessee to Sublease (1990, 1999, 2005
consent of the lessor, unless there is a stipulation to BAR)
the contrary. (Art. 1649, NCC)
Unlike in assignment, a lessee may generally
In an assignment of lease, the personality of the sublease the property in the absence of express
lessee (assignor/debtor) disappears. The lessee prohibition because the lessee remains a party to
makes an absolute transfer of his lease, involving the lease even if he has already created a sublease
not only his rights but also obligations as such lessee thereon. Hence, for example, he still must pay rents
and thus, dissociates himself from the original to the lessor. (Paras, 2008)
contract of lease. There arises the new juridical
relation between the lessor and the assignee who is Note: Art. 1650 of NCC says “express prohibition.”
converted into a new lessee. There is in effect, a Hence, if the prohibition is merely implied, a
novation by substituting the person of the debtor sublease will still be allowed. (Susana Realty v.
(Art. 1291 (2), NCC), and novation cannot take place Hernandez, et al., CA, 54 O.G. 2206)
without the consent of the creditor. (Art. 1293, NCC)
Hence, the lessee cannot assign the lease without In sublease, the lessee remains a party to the
the consent of the lessor (creditor), unless there is a contract.
stipulation granting him that right.
There are two leases and two distinct juridical
Objective: To protect the lessor or owner of the relations:
leased property. An assignment of lease without the
consent of the lessor is a ground for rescission of the 1. Between the lessor and the lessee, and
lease. 2. Between the sublessor (lessee) and the
sublessee.
SUBLEASE
The lessee is still responsible for the performance of
It is a separate and distinct contract of lease wherein his obligations toward the lessor.
the original lessee becomes a sublessor to a
sublessee of the thing, in whole or in part, without A judgment of eviction against the lessee affects the
prejudice to his responsibility for the performance sublessee even if the latter is not sued in the
of the contract toward the lessor. (Art. 1650, NCC) ejectment case.
The lessee may sublet the thing leased, in whole or Reason: The sublessee (lessee) can invoke no right
in part, unless expressly prohibited in the contract superior to that of the sublessor from which his own
of lease. (Art. 1650, NCC) right is derived, and from the moment the sublessor
is duly ousted from the premises, the sublessee has
no leg to stand on.

Lease
Parties to a Sublease As to Consent
1. Lessor; Can be done even

2. Sublessor (original lessee in the contract of without the permission
Cannot be done unless
lease); and of the lessor unless
the lessor consents.
3. Sublessee. there be an express
prohibition.
Juridical relationships in a sublease
As to Number of Juridical Relations Created
arrangement
There are two leases
1. Principal lease; and There is only one
and two distinct
2. Sublease. juridical relationship,
juridical relationships
that of the lessor and the
although immediately
These relationships co-exist and are intimately assignee, who is
connected and related
related to each other but are distinct from one converted into a lessee.
to each other.
another. (Albano, 2013)
Q: Alfonso was the owner of a building being Liability of Sublessee towards Lessor (1999,
leased to Beatriz. The contract allowed 2000 BAR)
subleasing of the building, thus, Beatriz
subleased it to Charlie. Charlie directly paid his Although the sublessee is not a party to the contract
rent to Alfonso after the lease expired. Was of lease, the sublessee is still directly liable to the
Charlie correct? lessor for acts appertaining to the use and
A: NO. There are two (2) distinct leases involved, preservation of the property. This is of course in
the principal lease and the sublease. In such addition to the sublessee’s obligation to the
agreement, the personality of the lessee does not sublessor. (Paras, 2008)
pass on to or is acquired by the sublessee. Thus, the
payment to the lessor was not payment to the NOTE: The subsidiary liability of the sublessee for
sublessor. Alfonso was a stranger to the sublease rent due to the original lessor is decreed under Art.
agreement. (Blas v. CA, G.R. No. 82813, 14 Dec. 1989) 1652 of NCC, but only to the extent of the rent still
due from him in accordance with the terms of the
Sublease v. Assignment (1990, 1994, 2005 BAR) sublease. 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
SUBLEASE ASSIGNMENT
payments were effected in virtue of the customs of
As to Transfer of Rights the place.
The lessee makes an Direct Action by the Lessor (Accion Directa)

The lessee retains an absolute transfer of his
interest in the lease; he interest as lessee; thus, The lessor may bring an action directly against the
remains a party to the he dissociates himself sublessee if he does not use and preserve the thing
contract. from the original leased in accordance with the agreement between
contract of lease. the lessor and the lessee or with the nature of the
property. It is not necessary that the sublessor be
As to Right of Action Against Lessor
joined as a defendant. (Art. 1651, NCC)
The sublessee does not The assignee has a
have any direct action direct action against the NOTE: This is true, notwithstanding the fact that the
against the lessor. lessor. sublessee is not a party to the lease contract. (Paras,
2008)

2022 GOLDEN NOTES
Civil Law
Subsidiary Liability of Sublessee to Lessor (1999 4. That the thing is free from any hidden fault
BAR) or defect. (De Leon, 2005)
1. Remedy to collect rents from the In case of eviction of the lessee, and the return of the
sublessee rents paid is required, a reduction shall be made
taking into account the period during which the
The law grants the lessor the right to lessee enjoyed the thing.
demand payment from the sublessee the
rents which the sublessor failed to pay the The lessee has also the right of proportionate
lessor. The demand to pay rents made by reduction of the rents agreed upon where the area
the lessor on the sublessee does not exempt or number of the object of the lease is less than that
the latter from his obligation to pay the stated in the contract. (Art. 1542, NCC)
sublessor the rents which said sublessee
failed to pay the lessor. Lessor’s warranty is Distinct from his Liability
for Damages
Purpose: To prevent a situation where the
lessee collects rents from the sublessee but Liability for the warranty is not equivalent to
does not pay his rents to the lessor. liability in damages, as the latter is an obligation
distinct from the former.
2. Amount of rent recoverable
The lessor’s obligation to warrant the thing leased,
The liability of the sublessee is limited to whether or not he knew of the existence therein of
the amount of rent due from him to the defects that rendered it unsuitable for the use for
sublessor under the terms of the sublease which the lessee intended it, is distinct from his
at the time of the extrajudicial demand by liability for damages, which only attaches when he
the lessor. Future rents cannot be knew about such defects and failed to reveal them
recovered. He is liable to the lessor only for to the lessee or concealed them, in which case fraud
rents the lessee failed to pay the lessor. and bad faith may be presumed on his part. (Yap
Kim Chuan v. Tiaoqui, G.R. No. 10006, 18 Sept. 1915)
NOTE: The liability of the sublessee is
subsidiary.
3. Liability for rents paid in advance
The sublessee continues to be subsidiarily

liable to the lessor for any rent unpaid by
the lessee, although the sublessee may have
made advance rent payments to the lessee.
The rule is to avoid collusion between the
lessee and the sublessee. (Art. 1652, NCC)
Warranty of the lessor
1. That he has a right to lease the thing;

2. That the lessee shall enjoy the legal and
peaceful possession of the thing;
3. That the thing is fit for the use for which it
is intended; and

Lease
OBLIGATIONS OF THE LESSOR

B. RIGHTS AND OBLIGATIONS (1996, 2010 BAR)
OF THE LESSOR
1. Delivery of the property (Art. 1654(1), NCC)
a. The thing leased must be delivered, in such

Rights and obligations arising from lease
conditions as to render it fit for in the use
contract are transmissible to the heirs
intended, in order that the lessee may enjoy
or use the same. (Art. 1654(1), NCC)
1. A lease contract is not essentially personal
Delivery may, of course, be actual or
in character;
constructive. (Art. 1496(1), NCC)
2. The rights and obligations are
transmissible to the heirs; and
b. The thing must be delivered, for without
3. The death of the party does not excuse
delivery, there could be no lease because
nonperformance of contract which
delivery goes to the essence of the contract.
involves a property right, and the rights
Delivery cannot be waived. (De Leon, 2014)
and obligations pass to the successors or
representatives of the deceased.
2. Making of necessary repairs (Art. 1654(2),
NCC)
RIGHTS OF THE LESSOR
a. Includes all the repairs needed, whether

1. GR: The lessor of a business or industrial
the damage be caused by nature, fortuitous
establishment may continue engaging in the
event or lapse of time, but not those
same business or industry to which the lessee
brought about by the fault of the lessee
devotes the thing leased.
himself or by his privies or his servants,
whether the defect was caused prior to or
XPN: Unless there is a stipulation to the
after the delivery of the object. (Rabuya,
contrary. (Art. 1656, NCC)
2017)
NOTE: A contract of lease is no warranty by the
b. Article 1654 of NCC speaks of necessary
lessor to the lessee that the latter will realize
repairs to keep the thing leased suitable for
profits in his business venture. Even if the
the use to which it has been devoted unless
lessee should suffer losses he would still be
there is a stipulation to the contrary. In
bound to fulfill the terms of the contract. (City
default of a special stipulation, the custom
of Naga v. CA, G.R. No. L-5944, 26 Nov. 1954)
of the place shall be observed as to the kind
of repairs on urban property. (Art. 1686,
2. The sublessee is subsidiarily liable to the lessor
NCC) In case, the lessor fails in the
for any rent due from the lessee. However, the
performance of this duty, the lessee may
sublessee shall not be responsible beyond the
suspend the payment of rent (Art. 1658
amount of rent due from him, in accordance
NCC) or avail himself of the other remedies
with the terms of the sublease, at the time of
provided in the law. The lessor is not liable
the extrajudicial demand by the lessor. (Art.
for repairs for damages or deterioration
1652, NCC)
caused by the lessee himself.
NOTE: The word “repairs” implies the
3. If the lessor or lessee should not comply with
putting back of something in the condition
the obligations set forth in Arts. 1654 and
in which it was originally, while an
1657, the aggrieved party may ask for the
“improvement’’ is the adding of something
recission of the contract and indemnification
new thereto; hence, the filling of a vacant
for damages, or only the latter, allowing the
lot is not a repair (Coca-Cola Bottlers
contract to remain in force. (Art. 1659, NCC)

2022 GOLDEN NOTES
Civil Law
Philippines, Inc. v. CA, G.R. No. 100957, 27 Rules if urgent repairs are necessary (Art. 1662,
Jan. 1994) nor is the construction of a NCC)
house. (Parilla v. Pilar, G.R. No. 167680, 30
Nov. 2006) 1. If repairs last for NOT MORE THAN 40 days
3. Duty of the lessee to notify lessor (Art. 1663 Lessee is obligated to tolerate the work,
NCC) although it may be annoying to him and
although during the same time, he may be
a. Peaceful and adequate enjoyment refers to deprived of a part of the premise.
legal, not physical possession. Hence, a
lessor is not, for instance, liable for physical 2. If repairs last for more than 40 DAYS
disturbances in the neighborhood, but is
liable if the lessee is evicted due to non- Lessee can ask for reduction of the rent in
payment of taxes by the lessor. (Paras, proportion to the time (including the first 40
2008) days and the part of the property of which he is
deprived).
b. The lessor’s obligation to maintain the
lessee arises when acts termed “legal NOTE: In either case, rescission may be availed
trespass” disturb, dispute, or place of if the main purpose of the lease is to provide
difficulties in the lessee’s peaceful and a dwelling place and the property becomes
adequate enjoyment of the leased premises uninhabitable.
that in some manner or other cast doubt
upon the right of the lessor to execute the Effects if the Lessor Fails to Make Urgent Repairs
lease. The lessor must answer for such legal
trespass. (Nakpil v. Manila Towers The lessee may:
Development Corporation, G.R. No. 160867, 1. Order repairs at the lessor’s cost; (Art.
20 Sept. 2006) 1663, NCC)
2. Sue for damages; (Art. 1659, NCC)
c. There is mere act of trespass when a third 3. Suspend the payment of the rent; (Art.
person claims no right whatsoever. In 1658, NCC) or
trespass in law, the third person claims a 4. Ask for rescission, in case of substantial
legal right to enjoy the premises. (Rabuya, damage to him. (Art. 1659, NCC)
2017)
If the Contract of Lease is Silent as to Who Will
NOTE: When it is merely trespass in fact, the Pay for Repair Expenses
lessor cannot be faulted for any breach. The
lessee can file a direct action against the a. Major repairs – Shouldered by the lessor;
trespasser such as forcible entry or illegal and
detainer. b. Minor repairs – Shouldered by the lessee.
4. Duty not to Alter Form (Art. 1661, NCC) Remedy of the lessee if the lessor fails to make
major or necessary repairs
The lessor has also the duty not to alter the form
of the thing leased as to impair the use of the said Lessee may ask for:
thing to which it is devoted under the terms of 1. Rescission of contract and indemnification
the lease. for damages; or
2. Indemnification only, while the contract
remains in force. (Art. 1659, NCC)

Lease
Effect of Destruction of thing leased by 2. When lessor fails to maintain the lessee in
Fortuitous Event (1993 BAR) peaceful and adequate enjoyment of the
property leased.
A. Total destruction
Effectivity of the suspension
1. The lease is extinguished if the thing is totally
destroyed; 1. In the case of repairs, from the time he
2. The lessee cannot compel the lessor to made the demand for said repairs, and the
reconstruct the destroyed property; demand went unheeded; or
3. The lessee of the lot and building which has 2. In the case of eviction, from the time the
been totally destroyed by fortuitous event final judgment for eviction becomes
cannot be considered as lessee of the land after effective.
the building had been totally destroyed by the
fortuitous event; (Roces v. Rickards, 45 O.G.
Supp. 97) and
4. While the land has not been affected,
consideration should be taken of the fact that
generally the land was leased only as an
incident to the lease of the building. (Rohde
Shotwell v. Manila Motors Co., Inc., G.R. No. L-
7637, 29 Dec. 1956)
B. Partial Destruction
Lease is not extinguished. The lessee is given the

option to choose between a proportionate
reduction of the rent and rescission of the lease.
Once the choice of the lessee has been
communicated to the lessor, the former cannot
change it. (Art. 1201, NCC)
If reduction of rent is chosen, the same shall be

retroactive to the date when the partial destruction
occurred. In case of rescission, the general rule is
that it will not be granted for slight or trivial causes.
The partial destruction, under the circumstances,
should be important or substantial as to defeat the
purpose of the lessee in entering into the contract of
lease.
NOTE: The choice is on the LESSEE, and not on the

lessor.
When lessee may suspend payment of rent
1. When lessor fails to undertake necessary

repairs; and

2022 GOLDEN NOTES
Civil Law
2. The improvements are suitable to the

C. RIGHTS AND OBLIGATIONS OF THE LESSEE purpose or use for which the lease is
intended; and
3. That the form and substance of the thing
leased are not altered or modified. (Art.
RIGHTS OF LESSEE
1678, NCC)
1. When Lessee May Immediately Terminate
NOTE: These requisites will prevent the lessee from
the Lease (Art. 1660, NCC)
making such valuable improvements that the lessor
may never recover the property leased. It is the
By notice to the lessor in case the dwelling place
lessor who has the option to appropriate the useful
or building is unfit for human habitation and is
improvements and reimburse the lessee therefor. It
dangerous to life or health.
is discretionary with the lessor to retain the useful
improvements by paying one-half of their value. The
Even if at the time the contract was perfected,
lessee cannot compel the lessor to appropriate and
the lessee KNEW of the dangerous condition or
reimburse him for the improvements.
WAIVED the right to rescind.
A lessee who builds on the property leased is not a

Reason: Public safety cannot be stipulated
possessor in good faith, thus, he has no right of
against.
retention until reimbursed for the value of the
improvement.
2. Right of lessee if new owner terminates the
unrecorded lease
The lessor and lessee may stipulate that all
improvements introduced by the lessee shall
The lessee may demand that he be allowed to
pertain to the lessor. However, if the value of the
gather the fruits of the harvest which
improvement is considerably more than the value of
corresponds to the current agricultural year and
the leased premises, merely creating prejudice to
that the vendor indemnify him for damages
the lessee instead of enforcing the contract literally,
suffered. [Art. 1676 (2), NCC]
Art. 1678 of the Civil Code may be applied.
3. Rights of the lessee who introduced
Q: Sps. Yaco are the registered owners of a
improvements (1990, 1996 BAR)
parcel of land with a one-storey building, an old
residential house and an open space between
Introduction of valuable improvement on the
the two buildings. Sps. Yaco and petitioner
leased premises does not give the lessee the
entered into a Contract of Lease, whereby Sps.
right of retention and reimbursement which
Yaco leased the subject property to petitioner
rightfully belongs to the builder in good faith.
for a period of 6 years. Under the lease contract
Otherwise, such a situation would allow the
it is provided that petitioner shall construct, at
lessee to easily “improve” the lessor out of its
its own expense, a second floor on the existing
property. (Rabuya, 2017)
office, which upon termination of the lease will
automatically become the property of the Sps.
The lessor shall pay the lessee one-half of the
Yaco. As claimed by petitioner it incurred
value of the improvements computed at the time
expenses for the construction of the same. Then,
of the termination of the lease if the following
Bermon constructed a new building on the open
conditions are fulfilled:
space in the property to be used for its
advertisement business. Bermon claimed that
1. That the lessee should have made the
the construction was with the knowledge and
useful improvements in good faith;
consent of the Sps. Yaco. It incurred expenses on
the materials and labor. According to Bermon,

Lease
the construction of the building was made with OBLIGATIONS OF THE LESSEE
the understanding that the lease contract will be
extended for another four years. However, the Obligations of the Lessee
lease expired without the same being renewed.
1. Payment of agreed price of lease; (Art.
Thereafter, the lease was converted into a 1657 NCC)
month-to-month basis. Sps. Yaco sent petitioner
a Demand Letter to vacate the premises and to The obligation of the lessee to pay the rent agreed
pay the rent arrears. Bermon Marketing upon arises only when the thing leased has been
claimed that the parties agreed that the lease delivered to the lessee for the purposes stipulated
will be extended to 10 years and that Bermon in the contract.
may construct a building on the open space.
Bermon claimed that it should be reimbursed of 2. Proper use of the thing leased; (Art. 1657
the following amounts, since the same was NCC)
incurred in improving the property, thereby
increasing the value of the land. Sps. Yaco The lessee must exercise the diligence of a good
alleged that they were not liable to reimburse father of a family in the use of the thing leased. He
petitioner for the construction cost because the must devote the thing to the use stipulated, and if
lease provided that the construction of the none was stipulated, to that which may be inferred
second floor will be at Bermon’s own expense from the nature of the thing leased, according to the
without right of reimbursement, the ownership custom of the place.
of the building belonging to Sps. Yaco upon
expiration of the lease. Should Sps. Yaco be held NOTE: The use of the thing for an illegal purpose
liable to pay one-half of the amount of the entitles the lessor to terminate the contract.
improvements to petitioner.
The lessee is liable for any deterioration caused by
A: YES. The payment of one-half of the value of the members of his household, guests and visitors. (Art.
improvements was intended to prevent unjust 1668, NCC)
enrichment on the part of the lessor which now has
to pay one-half of the value of the improvements at 3. Payment of expenses for deed of lease;
the time the lease terminates because the lessee has (Art. 1657 NCC)
already enjoyed the same, whereas the lessor could
enjoy them indefinitely thereafter. Nevertheless, In lease, the law imposes upon the lessee the
under Art. 1306 of the Civil Code, parties are free to obligation to pay the expenses for the deed of lease.
enter into agreements and stipulate on the terms By agreement, the obligation may be assumed by
and conditions of the contract and waive their the lessor.
rights, so long as the same are not contrary to law,
morals, good customs, public order or public policy. 4. To tolerate the urgent repairs upon the
thing leased even if annoying to him, and
Sps. Yaco and petitioner stipulated that any although during the same, he may be
improvements shall be constructed at the expense deprived of a part of the premises; [Art.
of the lessee which shall automatically become the 1662(1), NCC]
exclusive property of the lessor at the end of the
lease without any reimbursement. (Bermon 5. To notify the lessor of every usurpation by
Marketing Communication Corp. v. Sps. Yaco, G.R. No. a third person or persons on the property
224552, 03 Mar. 2021) and of the urgent repairs needed; (Art.
1663, NCC) and
NOTE: If the lessee fails to comply, he
would be liable for damages which the

2022 GOLDEN NOTES
Civil Law
lessor would suffer, and which could have status of the occupants or their right to occupy the
been avoided by lessee’s diligence. building before buying it.
6. To return the property leased upon REMEDIES

termination of the lease in the same
condition as he received it, save what has Accion Directa
been lost or impaired by:
a. Lapse of time A direct action which the lessor may bring against a
b. Ordinary wear and tear; or sublessee who misuses the subleased property or
c. Inevitable cause/fortuitous event. (Art. for unpaid rents otherwise due from the original
1665, NCC) lessee (sublessor).
Responsibility for deterioration or loss of the Alternative Remedies of Aggrieved Party

thing leased
1. Rescission of the contract with damages
GR: The presumption is that the lessee is
responsible for the deterioration or loss of the thing Failure of lessor to place the lessee in
leased unless he proves that it took place without possession of the premises leased is a case of
his fault. Such liability also extends to deterioration lessor’s non-compliance with his obligation.
caused by the members of his household and by (1999, 2001 BAR)
guests and visitors.
Restrictions to Rescission
XPN: When destruction is due to earthquake, flood,
storm or other natural calamity. (Rabuya, 2017) a. Requires judicial action;
b. Can be brought only by the aggrieved party;
Q: Jude owned a building which he had leased and
out to several tenants. Without informing his c. Must be substantial, not slight or minor
tenants, Jude sold the building to Ildefonso. breach.
Thereafter, the latter notified all the tenants
that he is the new owner of the building. 2. Action for damages only, allowing the lease to
Ildefonso ordered the tenants to vacate the remain subsisting.
premises within thirty (30) days from notice
because he had other plans for the building. The Q: Jane leased a truck to Ed for two (2) years.
tenants refused to vacate, insisting that they will After one (1) year from delivery, the truck was
only do so when the term of their lease shall destroyed by a strong typhoon. What is the effect
have expired. Is Ildefonso bound to respect the of the destruction of the truck with respect to
lease contracts between Jude and his tenant? the lease?
Explain your answer. (2009 BAR)
A: It depends. If the thing leased is totally
A: YES. Ildefonso must respect the lease contracts destroyed by a fortuitous event, the lease is
between Jude and his tenants. While it is true that extinguished. If the destruction is partial, the lessee
the said lease contracts were not registered and may choose between: (1) proportional reduction of
annotated on the title to the property, Ildefonso is rent, or (2) rescission of lease. (Art. 1655, NCC)
still not an innocent purchaser for value. He ought NOTE: On the part of the lessor, instead of
to know the existence of the lease because the rescinding the contract, he may directly file an
building was already occupied by the tenants at the action for ejectment against the lessee.
time he bought it. Applying the principle of caveat
emptor, he should have checked and known the If the aggrieved party has chosen the option of
rescission under Art. 1659 of NCC, the court has no

Lease
discretion to grant the fixing of a period in an Non-applicability of presumption when the loss
ordinary obligation under Art. 1191 of NCC. or destruction is due to:
Q: What are the damages recoverable in 1. Earthquake;

ejectment cases? 2. Flood;
3. Storm; and
A: Only the rents or the fair rental value of the 4. Other natural calamities. (Art. 1667, NCC)
premises.
Reason: It is unjust to impose upon the lessee the
The following cannot be successfully claimed: burden of proving due diligence. It is more probable
1. Profits plaintiff could have earned were it that in such cases, he was not negligent.
not for the forcible entry or unlawful
detainer; NOTE: Ordinarily, fire is NOT a natural calamity. But
2. Material injury to the premises; and if the tenant can prove that he had no fault in the
3. Actual, moral, or exemplary damages. case of fire, and that it was impossible for him to
(Baens v. CA, G.R. No. L-57091, 23 Nov. 1983) stop its spread, he will not be liable. (Lizares v.
Hernaez, G.R. No. 14977, 30 Mar. 1920)
Two Kinds of Trespass with Respect to the
Property Leased Deterioration Caused by Others
1. Mere act of Trespass (Disturbance in Fact) Although the deterioration was not caused by the
lessee himself, he is still liable under the law if the
The physical enjoyment is reduced and may take deterioration was made by his household, guests
place in a case of forcible entry. The third person and visitors. (Art. 1668, NCC) His liability is akin to
claims no right whatever. (Paras, 2008) civil liability in quasi-delict. (Art. 2180, NCC)
NOTE: If the leased premises are expropriated and DURATION AND TERMINATION OF LEASE
the tenant is evicted from the premises, the lessor is
not liable for damages. The lessee must look to the When Lease is supposed to End
expropriator for his compensation. (Sayo v. Manila
Railroad Co., G.R. No. 17357, 21 June 1922) 1. When the lease was made for a determinate
time, the lease ends on the day fixed,
2. Trespass in Law (Disturbance in Law) without need of a demand (Art. 1669, NCC);
or
A third person claims a LEGAL right to enjoy the
premises. The lessor is responsible for trespass in 2. If the understanding between the parties as
law. (Paras, 2008) to the term of the lease was vague and
uncertain, it cannot be said that a definite
Lessee is Presumed at Fault in case of Loss or period was agreed upon; hence the proper
Deterioration of the property Article to apply would be Art. 1687 of NCC.
(Guitarte v. Sabaco, et al., G.R. No. L-13688-
This presumption is rebuttable. The burden of proof 91, 28 Mar. 1960)
is on the LESSEE to show that the loss or
deterioration is not due to his own fault, such as NOTE: Under Art. 1687 of NCC, if the period for the
when the deterioration resulted from lapse of time, lease has not been fixed, it is understood to be from
ordinary wear and tear, or from inevitable cause. year to year, if the rent agreed upon is annual; from
(Art. 1665, NCC) month to month, if it is monthly; from week to week,
if the rent is weekly; and from day to day, if the rent
is to be paid daily.

2022 GOLDEN NOTES
Civil Law
Q: May the courts fix a different period for the 3. Rescission due to non-performance of the
lease? obligations of a party;
4. Mutual agreement to terminate the lease
A: YES. Even though a monthly rent is paid, and no contract;
period for the lease has been set, the courts may fix 5. By action of the purchaser or transferee of
a longer term for the lease after the lessee has the property leased in good faith against
occupied the premises for over one year. If the rent the lessee whose lease contract is not duly
is weekly, the courts may likewise determine a recorded;
longer period after the lessee has been in possession 6. In case the dwelling place or any other
for over six months. In case of daily rent, the courts building is unfit for human habitation and
may also fix a longer period after the lessee has is dangerous to life or health; (Art. 1660,
stayed in the place for over one month. (Art. 1687, NCC)
NCC) 7. By resolution of the right of the lessor; or
8. By will of the purchaser or transferee of the
When Demand is Necessary as a Procedural thing. (Rabuya, 2017)
Requirement
Extension or Renewal of lease
For purposes of an action for unlawful detainer on
the ground of the lessee’s failure to pay rents or 1. Authority of Court
violation of the terms of the lease, Rule 70, ROC
requires that demand be made upon the lessee When the parties have stipulated on the period
giving him 5 days (in case of buildings) and 15 days of the lease, upon its expiration, the Court
(in case of land), within which to pay the unpaid cannot extend the period since it has no
rentals and to vacate the premises. authority to do so.
The demand to vacate must be definite and must not 2. Lease not to be deemed extended or renewed
provide an alternative. by implication
The demand required under Rule 70 is only a Where a lease contract expressly stipulates that
procedural requirement and does not, if not the lease shall not be deemed extended or
complied with, change the fact that the lease renewed by implication beyond the contractual
contract has ended upon the termination of the period for any cause or reason whatsoever but
period fixed for its existence. only by negotiations, the mere fact that the
lessee was willing to pay what he claimed to be
When Demand to Vacate is Unnecessary a reasonable rent – which was less than that
demanded by the lessor – did not operate in any
When the action is to terminate the lease, demand is sense to extend the lease.
not necessary. The expiration of the term of the
lease immediately gives rise to a cause of action for 3. Lease extendible for a similar period
unlawful detainer in which case, demand to vacate
is no longer necessary. (Paras, 2008) A stipulation that a lease is “extendible” for a
further similar period is to be understood as
Extinguishment of Lease giving the lessee the right to the additional
period or to quit upon the expiration of the first
1. By the expiration of the period; (Art. 1673, term.
NCC)
2. Total loss or destruction of the thing leased; 4. Lease renewable at the option of both parties
(Art. 1655, NCC)

Lease
A stipulation that the lease of a parcel of land possession of the thing leased within a period of
will be “renewable for another 10 years at the time fixed by law. (Rabuya, 2017)
option of both paerties under such terms,
conditions and rentals reasonable at the time,” GR: Arises if at the end of the contract, the lessee
means that there should be mutual agreement should continue enjoying the thing leased for at
as to the renewal of the lease. least 15 DAYS with the acquiescence of the lessor
5. Option to renew given to lessor XPN: — Unless of course a notice to the contrary
had previously been given by EITHER PARTY.
If the option is given to the lessor, the lessee
cannot renew the lease against the former’s Effects of the Implied New Lease
refusal. The lease is deemed terminated.
1. The period of the new lease is not that
6. Extension exclusively for the benefit of the stated in the original contract, but the time
lessor in Arts. 1682 and 1687 of NCC is month to
month, year to year, etc.; and
The stipulation in a lease contract extending the 2. Other terms of the original contract are
lease term beyond that originally agreed upon, revived. (Paras, 2008)
in order to save the lessor the trouble of
reimbursing the lessee in cash for the expenses Terms which are Revived
incurred on the leased premises was
exclusively for the benefit of the lessor; hence, The original terms of the original contract which are
the latter has the right to terminate the lease revived are only those which are germane to the
upon the expiration of the original period, or at lessee’s right of continued enjoyment of the
any other time thereafter, by tendering to the property leased or related to such possession, such
lessee, or consigning to the court, the as the amount of rental, the date when it must be
outstanding balance of his expenditures. paid, the care of the property, and the responsibility
for repairs. (Dizon v. Magsaysay, G.R. No. L-23399, 31
The lessor should be given the option to either May 1974)
reimburse the balance of the expenditures or
demand that the lessee should account for and NOTE: No such presumption may be indulged in
credit the lessor for the fruits of the properties with respect to special agreements which by their
since the expiration of the lease against the nature are foreign to the right of occupation or
balance due to the lessee, turning over any enjoyment inherent in a contract of lease e.g.,
excess to the lessor. preferential right given to the lessee to purchase the
leased property.
7. Option to renew given to lessee
Requisites for an Implied Renewal of Lease:
Where a lessee is given the option to continue
or renew the contract of lease and is silent upon 1. The term of the original contract of lease
the rentals, the old terms are to be followed in must have already expired;
the renewed lease. 2. The lessee continues enjoying the thing
leased for at least 15 days;
Implied New Lease or Tacita Reconduccion 3. The continuation of the occupation by the
(1990, 1999, 2001 BAR) lessee is with the acquiescence of the
lessor; and
Tacita Reconduccion refers to the right of the lessee 4. The lessor or lessee has not previously
to continue enjoying the material or de facto given a notice to vacate.

2022 GOLDEN NOTES
Civil Law
NOTE: The notice required under Article 1670 is the Judicial Grounds for Ejectment of Lessees (1994,
one given after the expiration of the lease period for 2004 BAR) (E-N-V-I)
the purpose of aborting an implied renewal of lease.
The notice to vacate constitutes an express act on 1. Expiration of period of the lease
the part of the lessor that he no longer consents to
the continued occupation by the lessee of the leased The period of the lease contract may be:
property. (Tagbilaran Integrated Settlers Assoc. v. a. Conventional – when the period is by
CA, G.R. No. 148562, 25 Nov. 2004) agreement of the parties; or
b. Legal – when the period is fixed by law
Instances when implied renewal NOT applicable under Arts. 1682 and 1687 of NCC;
1. Stipulation against implied renewal; GR: Upon the expiration of the period, the lease
2. Invalidity of original lease; contract is terminated. If a determinate time was
3. Acceptance of rentals beyond original term; stipulated, the lease ceases without need of a
4. Acceptance of rentals less than amounts demand. (Art. 1669, NCC)
stipulated; and
5. Non-payment of rentals. XPN: In case of implied new lease. After
termination of the lease, the lessor is free to
Rule if Lessor Objects to Lessee’s Continued dispose of the property in favor of another lessee.
Possession The payment of all rents then due will be
immaterial. As long as the period has expired, the
NOTE: Under Art. 1671 of NCC, there are three (3) lessee can be ejected.
requisites:
2. Non-payment of the rentals agreed upon
1. The contract has expired;
2. The lessee continues enjoying the thing; One of the principal obligations of the lessee is to
and pay the rentals agreed upon. [Art. 1657(1), NCC] It is
3. The lessor has objected to this enjoyment. the cause or consideration for the use and
enjoyment of the property leased. Non-payment of
If the three requisites are present, the lessee shall be the rentals after a demand therefor is a justifiable
considered a possessor in bad faith. ground for the lessor to rescind the contract and
eject the lessee.
If the lessee still makes a construction after he has
become a possessor in bad faith, he may be 3. Violation of any condition
compelled:
Any violation of the terms and conditions of a
1. To forfeit the construction without contract of lease, whether it is essential or
indemnity; accidental in nature, will constitute a violation of the
2. To buy the land regardless of whether or lease contract and will justify the filing of an
not its value is considerably more than the ejectment case against the lessee.
value of the construction; or
3. To demolish the construction at his The theory that a lease could continue for an
expense. indefinite term as long as the lessee pays the rentals
had already been rejected by the SC because the
NOTE: In any of the 3 cases hereinabove referred to, validity or compliance of contracts cannot be left to
he will still be subject to the payment of damages. the will of one of the parties. (Art. 1308, NCC)
(Arts. 449-451, NCC)
Where the contract of lease prohibits the lessee
from introducing improvements and making

Lease
repairs and the lessee did so, he violated this 2. If it is a simulated sale intended merely to
condition. This violation is a basis for ejectment. extinguish the existing lease. In the eyes of
the law, it does not exist. (Art. 1409, NCC)
4. Improper use or enjoyment of the
property leased Effect: The false “vendee” cannot terminate the
lease even if the same is unrecorded.
The lessee is obliged to use the thing leased as a
diligent good father of a family. If due to improper Reason: To discourage the of fictitiously selling the
use of the property, the same is lost, destroyed or premises in order to oust the lessee before the
deteriorated, the lessor may immediately file a suit termination of the lease.
for restitution or ejectment. He need not wait for the
expiration of the period of the lease. (Art. 1673, NCC) Ornamental Expenses (Art. 1678, NCC)
Preliminary Mandatory Injunction to Restore Expenses incurred which cater only to the personal
Possession Pending Appeal (Art. 1674, NCC) comfort, convenience or enjoyment of a person.
The LESSOR is entitled to a writ of preliminary The lessee has no right of reimbursement for
injunction to restore him in his possession in case ornamental expenses. He may remove them
the higher court is satisfied that the lessee’s appeal provided he does not cause any damage to the thing
is frivolous or dilatory (i.e., without merit) or the leased. The lessor, if he so desires, may retain them
lessor’s appeal is prima facie meritorious. after paying their value to the lessee at the time the
lease is extinguished.
Reason: The remedy is intended “to put an end to
the present state of the law which unjustly allows
the lessee to continue in possession during an
appeal.” (Report of the Code Commission)
Use by Lessee of Legal Period
The lessee is entitled to periods agreed upon in the

lease contract (conventional) or those established
in Arts. 1682 and 1687 of NCC (implied new lease).
However, these rights are restricted if there are

grounds or causes for the ejectment of the lessee
under Art. 1673 of NCC. To enjoy peace, the lessee
must be faithful to his obligations as such.
When the lessee is guilty of a cause of ejectment

under Art. 1673 of NCC, he is also deprived of the
right to enjoy the period of grace under Art. 1687 of
NCC.
Fictitious Sale of Leased Property
1. If at the time the supposed buyer demands

the termination of the lease, the deed of
sale is not yet registered in the appropriate
Registry of Property. (Art. 1676 (3), NCC)

2022 GOLDEN NOTES
Partnership
6. Principal – It does not depend for its existence

VII. PARTNERSHIP or validity upon some other contracts;
7. Preparatory – Because it is entered into as a

means to an end, i.e., to engage in business or
specific venture for the realization of profits
A. GENERAL PROVISIONS with the view of dividing them among the
contracting parties; (De Leon, 2019) and
Partnership 8. Profit-oriented. (Art. 1770, NCC)
It is a contract whereby two or more persons bind Typical incidents of partnership

themselves to contribute money, property, or
industry to a common fund, with the intention of 1. The partners share in profits and losses; (Arts.
dividing the profits among themselves. (Art. 1767, 1767, 1797 and 1798, NCC)
NCC) 2. The partnership has a juridical personality
separate and distinct from that of each of the
NOTE: Two or more persons may also form a partners. Such juridical personality shall be
partnership for the exercise of a profession. (Art. automatically acquired despite the failure to
1767, NCC) register in the SEC; (Art. 1768, NCC)
3. Partners have equal rights in the management
Essential Elements of Partnership and conduct of the partnership business; (NCC,
Art. 1803)
1. Agreement to contribute money, property or 4. Every partner is an agent of the partnership
industry to a common fund; and and entitled to bind the other partners by his
2. Intention to divide the profits among the acts, for the purpose of its business. (Art. 1818,
contracting parties. (Jarantilla Jr. v. Jarantilla, NCC) He may also be liable for the entire
G.R. No. 154486, 01 Dec. 2010) partnership obligations;
5. All partners are personally liable for the debts
Characteristics of Partnership of the partnership with their separate property
(Arts. 1816, 1822-24, NCC) except limited
1. Bilateral – It is entered into by two or more partners are not bound beyond the amount of
persons and the rights and obligations arising their investment; (Art. 1843, NCC)
therefrom are always reciprocal; 6. A fiduciary relation exists between the
partners; (Art. 1807, NCC) and
2. Onerous – Each of the parties aspires to 7. On dissolution, the partnership is not
procure for himself a benefit through the terminated, but continues until the winding up
giving of something; of partnership is completed. (Art. 1829, NCC)
3. Nominate – It has a special name or NOTE: These incidents may be modified by

designation in our law; stipulation of the partners subject to the rights of
third persons dealing with the partnership.
4. Consensual – Perfected by mere consent, upon
the express or implied agreement of two or Q: TRUE or FALSE. An oral partnership is valid.
more persons; (2009 BAR)
5. Commutative – The undertaking of each of the A: TRUE. An oral contract of partnership is valid
partners is considered as the equivalent of that even though not in writing. However, if it involves
of the others; contribution of an immovable property or a real

Civil Law
right, an oral contract of partnership is void. In such

a case, the contract of partnership to be valid, must
be in a public instrument (Art. 1771, NCC), and the
inventory of said property signed by the parties
must be attached to said public instrument. (Art.
1773, NCC; Litonjua, Jr. v. Litonjua, Sr., G.R. Nos.
166299-300, 13 Dec. 2005)
Partnership, Co-ownership, and Corporation
PARTNERSHIP CO-OWNERSHIP CORPORATION
As to Basis
Generally created by law and can

By contract or by mere agreement of
exist without a contract. (Albano, By law.
the parties.
2013)
As to Juridical Personality
Has separate and distinct juridical Has separate and distinct

No separate and distinct juridical
personality from that of each juridical personality from
personality.
partner. that of each corporator.
As to Purpose
Common enjoyment of a thing or Depends on the Articles of

Realization of profits.
right. Incorporation (AOI).
As to Duration/Term of Existence
A corporation shall have

perpetual existence unless
10 years maximum (May be its articles of incorporation
No limitation. extended by new agreement). (Art. provide otherwise. (Section
494, NCC) 11 of R.A. No. 11232 or the
Revised Corporation Code of
the Philippines)
As to Number of Incorporators
GR: Minimum of one person

(Section 10 of R.A. No. 11232
Minimum of two persons. Minimum of two persons.
or the Revised Corporation
Code of the Philippines)

2022 GOLDEN NOTES
Partnership
As to Commencement of Juridical Personality
From the date of issuance of

From the moment of execution of the Not applicable; no juridical
the certificate of
contract of partnership. personality.
incorporation.
As to Disposal/Transferability of Interest
Stockholder has a right to
Partner may not dispose of his
Co-owner may freely do so. (NCC, transfer shares without prior
individual interest unless agreed
Art. 495) (Art. 495, NCC) consent of other
upon by all partners.
stockholders.
As to Power to Act with 3rd Persons
In the absence of stipulation to
contrary, a partner may bind
partnership. Each partner is agent of
partnership.
Co-owner cannot represent the
Management is vested with
co- ownership. (NCC, Art. 491-492)
NOTE: Except as provided by Art. the BOD.
(Art. 491-492, NCC)
1825, persons who are not partners
as to each other are not partners as
to third persons. [NCC, Art. 1769(1),
NCC; Albano, 2013]
As to Effect of Death
Death of a partner results in Death of co-owner does not Death of stockholder does
dissolution of partnership. necessarily dissolve co-ownership. not dissolve the corporation.
As to Dissolution
May be dissolved at any time by the

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

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

Civil Law
Partnership v. Joint Venture (2015 BAR)
PARTNERSHIP JOINT VENTURE

As to Coverage
Contemplates the undertaking of a general and Ordinarily limited to a single transaction and not
continuous business of a particular kind intended to pursue a continuous business
As to Firm Name
Required to operate under a firm name. Has no firm name.
As to Transfer of Property
The property used becomes the property of the The property used remains undivided property of
business entity and hence of all the partners. its contributor.
As to Power
A partner acting in pursuance of the firm business,

None of the co-venturers can bind the joint
binds not only himself as a principal, but as their agent
venture or his co-venturers.
as well, also the partnership and the partners.
As to Liabilities
A partnership acquires personality after following the

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

2022 GOLDEN NOTES
Partnership
Joint venture Persons Qualified to be a Partner
It is an association of persons or companies jointly GR: Any person, whether natural or juridical,
undertaking some commercial enterprise. capacitated to contract may enter into a contract of
Generally, all contribute assets and share risks. It partnership. (Ibid.)
requires a community of interest in the
performance of the subject matter, a right to direct XPNs:
and govern the policy in connection therewith, and 1. Persons who are prohibited from giving each
a duty which may be altered by agreement to share other any donation or advantage cannot enter
both in profits and losses. (Aurbach v. Sanitary into a universal partnership; (Art. 1782, NCC;
Wares Manufacturing Corp., G.R. Nos. 75875, 75951 1994 BAR)
and 75975-76, 15 Dec. 1989)
NOTE: A husband and wife, however, may
NOTE: Section 36(h) of R.A. No. 11232 or the enter into a particular partnership or be
Revised Corporation Code of the Philippines members thereof. (De Leon, 2019)
provides for the powers of a corporation “to enter
into a partnership, joint venture, merger, A married woman may enter into a contract of
consolidation or other commercial agreement with partnership even without the consent of her
natural or juridical persons.” husband but the latter may object under
certain conditions. (Ibid.)
Essential Features of Partnership
2. Persons suffering from civil interdiction; and
1. There must be a valid contract;
2. The parties (two or more persons) must have 3. Persons who cannot give consent to a contract:
legal capacity to enter into the contract; a. Unemancipated Minors
3. There must be a mutual contribution of money, b. Insane persons or demented persons
property, or industry to a common fund; c. Deaf-mutes who do not know how to
4. The object must be lawful; and write
5. The primary purpose must be to obtain profits d. Incompetents who are under
and to divide the same among the parties. (De guardianship (Ibid.)
Leon, 2019)
Kinds of partners
Valid contract
1. As to the extent of liability
Partnership is a voluntary relation created by a. Capitalist – contributes either money
agreement of the parties. It excludes from its or property to the common fund; he
concept all other associations which do not have can also contribute an intangible like
their origin in a contract, express or implied. (Ibid.) credit, such as promissory note or
other evidence of obligation, or even a
Legal Capacity of the Parties to Contract goodwill (Rabuya, 2017); and
b. Industrial – contributes only his
Before there can be a valid contract of partnership, industry
it is essential that the contracting parties have the 2. As to the time of entry
necessary legal capacity to enter into the contract. a. Original – one who became a partner
Consequently, any person who cannot give consent at the time of the constitution of the
to a contract cannot be a partner. (Ibid.) partnership
b. Incoming – one who became a partner
as a new member of an existing
partnership.

Civil Law
3. Other kinds NOTE: Even if a partner will associate another

a. Managing – one entrusted with the person in his share in the partnership, the associate
management of the partnership. (Arts. shall not be admitted into the partnership without
1800 & 1801, NCC) the consent of all the partners, even if the partner
b. Liquidating – one who takes charge of having an associate should be a manager. (Art.
the liquidation and winding up of the 1804, NCC) This element of delectus personae,
partnership affairs. (NCC, Art. 1836) however, is true only in the case of a general
c. Retiring – those who cease to be part partner, but not as regards a limited partner.
of the partnership
d. Continuing – one who continues the A partnership may be formed even if the
business of a partnership after it has common fund is comprised entirely of
been dissolved by reason of the borrowed or loaned money
admission of a new partner, or the
retirement, death, or expulsion of one A partnership may be deemed to exist among
or more partners parties who agree to borrow money to pursue a
e. Dormant, Silent, Secret – one whose business and to divide the profits or losses that may
connection to the partnership is arise therefrom, even if it is shown that they have
concealed and who does not take any not contributed any capital of their own to a
active part in it “common fund.” Their contribution may be in the
f. Partner by Estoppel – although not an form of credit or industry, not necessarily cash or
actual partner, he has made himself fixed assets. Being partners, they are all liable for
liable as such by holding himself out as debts incurred by or on behalf of the partnership.
a partner of allowing himself to be so (Lim Tong Lim v. Philippine Fishing Gear Industries,
held out. (Art. 1815, NCC) Inc., G.R. No. 136448, 03 Nov. 1999)
NOTE: A corporation cannot become a member of Consequences of a partnership formed for an

a partnership in the absence of express Unlawful Purpose
authorization by statute or charter. This doctrine is
based on the following considerations: (1) Mutual 1. The contract is void ab initio and the
agency between the partners and, (2) Such partnership never existed in the eyes of the
arrangement would improperly allow corporate law; (Art.1409(1), NCC)
property to become subject to risks not 2. The profits shall be confiscated in favor of the
contemplated by the stockholders when they government; (Art. 1771, NCC)
originally invested in the corporation. (Mendiola v. 3. The instruments or tools and proceeds of the
CA, GR. No. 159333, 31 July 2006) crime shall also be forfeited in favor of the
government; (Art. 45, NCC) and
Principle of Delectus Personae 4. The contributions of the partners shall not be
confiscated unless they fall under No. 3. (Art.
No one can become a member of the partnership 1411, NCC) (De Leon, 2019)
association without the consent of all the partners.
This rule is inherent in every partnership. NOTE: A partnership is dissolved by operation of
law upon the happening of an event which makes it
Reason: This is because of the mutual trust among unlawful for the business of the partnership to be
the partners and that this is a case of subjective carried on, or for the members to carry it on in
novation. There is subjective novation when there partnership. (Art. 1830(3), NCC)
is a change in the parties to a contract. Their consent
thereto is necessary in order to bind them. (Albano,
2013)

2022 GOLDEN NOTES
Partnership
Necessity of Judicial Decree to Dissolve an share of each in the losses shall be in the same
Unlawful Partnership proportion.
Judicial decree is not necessary to dissolve an The definition of partnership under Art. 1767
unlawful partnership; however, it may sometimes refers to “profits” only and is silent as to “losses.”
be advisable that a judicial decree of dissolution be
secured for the convenience and peace of mind of Reason: The object of partnership is primarily the
the parties. (De Leon, 2019) sharing of profits, while the distribution of losses is
but a “consequence of the same.” The right to share
Intention to Divide the Profits in the profits carries with it the duty to contribute
to the losses, of any.
The sharing in profits is merely presumptive and
not conclusive evidence of partnership. There are NOTE: The partnership relation is not the contract
numerous instances of parties who have a common itself, but the result of the contract. The relation is
interest in the profits and losses of an enterprise evidenced by the terms of the contract which may
but who are not partners. Thus, if the division of be oral or written, express or implied from the acts
profits is merely used as a guide to determine the and declarations of the parties, subject to the
compensation due to one of the parties, such is not provisions of Articles 1771-1773 and to the Statute
a partner. (Ibid.) of Frauds. (De Leon, 2019)
Q: To form a lending business, it was verbally FORMATION OF PARTNERSHIP

agreed that Noynoy would act as financier while
Cory and Kris would take charge of solicitation It is created by agreement of the parties
of members and collection of loan payments. (consensual). There is no such thing as a
The parties executed the “Articles of partnership created by law or by operation or
Agreement” where Noynoy would receive 70% implication of law alone. (Ibid.)
of the profits while Cory and Kris would earn
15% each. Later, Noynoy filed a complaint Articles of Partnership
against Cory and Kris for misappropriation of
funds allegedly in their capacities as Noynoy’s While partnership relation may be informally
employees. In their answer, Cory and Kris created and its existence proved by manifestations
asserted that they were partners and not mere of the parties, it is customary to embody the terms
employees of Noynoy. What kind of of the association in a written document known as
relationship existed between the parties? “Articles of Partnership” stating the name, nature or
purpose and location of the firm, and defining,
A: A partnership was formed among the parties. among others, the powers, rights, duties, and
The “Articles of Agreement” stipulated that the liabilities of the partners among themselves, their
signatories shall share in the profits of the business contributions, the manner by which the profits and
in a 70-15-15 manner, with Noynoy getting the losses are to be shared, and the procedure for
lion's share. This stipulation clearly proved the dissolving the partnership. (Ibid.)
establishment of a partnership. (Santos v. Spouses
Reyes, G.R. No. 135813, 25 Oct. 2001) Commencement of Contract of Partnership
Distribution of Losses A partnership begins from the moment of the

execution of the contract, unless it is otherwise
Agreeing upon a system of sharing losses is not stipulated. (Art. 1784, NCC) If there is no contrary
necessary for the obligation is implied in the stipulation as to the date of effectivity of the same,
partnership relation. If only the share of each its registration in the Securities and Exchange
partner in the profits has been agreed upon, the

Civil Law
Commission is not essential to give it juridical Where Capital of the Partnership consists of
personality. (De Leon, 2019) Money or Personal Property amounting to Php
3,000 or more
Formalities needed for the creation of a
partnership The failure to register the contract of partnership
does not invalidate the same as among the
GR: No special form is required for its validity or partners, so long as the contract has the essential
existence. (Art. 1771, NCC). The contract may be requisites, because the main purpose of
made orally or in writing regardless of the value of registration is to give notice to third parties, and it
the contributions. (2009 BAR) can be assumed that the members themselves knew
of the contents of their contract. Non-compliance
NOTE: An agreement to enter in a partnership at a with this directory provision of the law will not
future time, which “by its terms is not performed invalidate the partnership.
within a year from the making thereof” is covered
by the Statute of Frauds. (Art. 1403(2)(a), NCC) Registration is merely for administration and
Such agreement is unenforceable unless the same licensing purposes; hence, it shall not affect the
be in writing or at least evidenced by some note or liability of the partnership and the members
memorandum thereof subscribed by the parties. thereof to third persons. (Art. 1772(2), NCC)
(De Leon, 2019)
A void partnership under Art. 1773, in relation to
XPNs: If property or real rights have been Art. 1771, may still be considered by the courts as
contributed to the partnership: an ordinary contract as regards the parties thereto
from which rights and obligations to each other
1. Personal property may be inferred and enforced. (Torres v. CA, G.R. No.
a. Less than P3,000 – may be oral 134559, 09 Dec. 1999)
b. P 3,000 or more – must be:
i. In a public instrument; and Q: A and B are co-owners of an inherited
ii. Registered with Securities property. They agreed to use the said common
and Exchange Commission properties and the income derived therefrom
(Art. 1772, NCC) as a common fund with the intention to produce
profits for them in proportion to their
2. Real property or real rights – must be: respective shares in the inheritance as
a. In a public instrument (Art. 1771, NCC; determined in a project of partition. What is the
(2009 BAR) effect of such agreement on the existing co-
b. With an inventory of said property ownership?
i. Signed by the parties;
ii. Attached to the public A: The co-ownership is automatically converted
instrument; (Art. 1773, NCC) into a partnership. From the moment of partition,
iii. Registered in the Registry of A and B, as heirs, are entitled already to their
Property of the province, respective definite shares of the estate and the
where the real property is income thereof, for each of them to manage and
found to bind third persons. dispose of as exclusively his own without the
intervention of the other heirs, and, accordingly, he
3. Limited partnership – Must be registered with becomes liable individually for all the taxes in
the SEC, otherwise, the liability of the limited connection therewith.
partners becomes the same as of that of that
general partners. (De Leon, 2019) If, after such partition, an heir allows his shares to
be held in common with his co-heirs under a single
management to be used with the intent of making

2022 GOLDEN NOTES
Partnership
profit thereby in proportion to his share, there can d. As interest on a loan, though the
be no doubt that, even if no document or amount of payment varies with the
instrument were executed for the purpose, for tax profits of the business;
purposes, at least, an unregistered partnership is e. As the consideration for the sale for
formed. (Oña v. CIR, G.R. No. L-19342, 25 May 1972) the sale of a goodwill of a business or
other property by installments or
Future Partnership otherwise. (Art. 1769, NCC)
It is a kind of partnership where the partners may NOTE: In sub-paragraphs a–e, the profits in the
stipulate some other date for the commencement business are not shared as profits of a partner as a
of the partnership. Persons who have entered into partner, but in some other respects or for some
a contract to become partners at some future time other purpose.
or future contingency do not become partners until
or unless the agreed time has arrived, or the Burden of Proving the Existence of a
contingency has happened. Partnership
As long as the agreement for a partnership remains Whoever alleges the existence of a partner or
inchoate or unperformed, the partnership is not partnership by estoppel has the burden of proof.
consummated. (De Leon, 2019) The existence of a partnership must be proved and
will not be presumed. However, when a
Rules to determine Existence of Partnership partnership is shown to exist, the presumption is
that it continues in the absence of evidence to the
1. Except as provided by Art. 1825 of the NCC contrary, and the burden of proof is on the person
(partnership by estoppel), persons who are not asserting its termination. (De Leon, 2019)
partners as to each other are not partners as to
third persons; Classifications of Partnership
2. Co-ownership or co-possession does not of 1. Object

itself establish a partnership, whether such co-
owners or co-possessors do or do not share any a. Universal partnership
profits made by the use of the property;
i. Of all present property (Art. 1778, NCC) –
3. The sharing of gross returns does not of itself The partners contribute all the property
establish a partnership, whether or not the which actually belongs to them to a
persons sharing them have a joint or common common fund, with the intention of
right or interest in any property from which dividing the same among themselves, as
the returns are derived; well as all profits they may acquire
therewith. The following become the
4. The receipt by a person of a share of the profits common fund of all the partners:
of a business is prima facie evidence that he is 1. Property which belonged to each of
a partner in the business, but no such inference the partners at the time of the
shall be drawn if such profits were received in constitution of the partnership
payment: 2. Profits which they may acquire from
a. As a debt by installments or all property contributed
otherwise;
b. As wages of an employee or rent to a ii. Of all profits (Art. 1780, NCC) –
landlord; Comprises all that the partners may
c. As an annuity to a widow or acquire by their industry or work during
representative of a deceased partner; the existence of the partnership as well

Civil Law
as the usufruct of all movable or 4. Legality of existence

immovable property which each of the
partner may possess at the time of the a. De jure partnership – One which has
celebration of the contract of complied with all the requirements for its
partnership. establishment.
b. Particular partnership – It is one which has b. De facto partnership – One which has failed
for its object, determinate things, their use to comply with all the legal requirements
and fruits, or a specific undertaking or the for its establishment. (De Leon, 2019).
exercise of a profession or a vocation. (Art.
1783, NCC) 5. Representation to others
2. Liability of partners a. Ordinary or real partnership – One which

actually exists among the partners and also
a. General partnership – One where all as to third person. (Ibid.)
partners are general partners who are
liable even with respect to their individual b. Ostensible or partnership by estoppel –
properties, after the assets of the When two or more persons attempt to
partnership have been exhausted. (Pineda, create a partnership but fail to comply
2006) with the legal personalities essential for
juridical personality, the law considers
b. Limited partnership – One formed by two them as partners, and the association is a
or more persons having as members one partnership insofar as it is favorable to
or more general partners and one or more third persons, by reason of the equitable
limited partners, the latter not being principle of estoppel. (Atwel v. Concepcion
personally liable for the obligations of the Progressive Assoc., G.R. No. 169370, 14 Apr.
partnership. (Art. 1843, NCC) 2008)
3. Duration 6. Publicity
a. Partnership at will – the partnership has an
indefinite term and it would be dissolved a. Secret partnership – Partnership that is not
only when an act or cause of dissolution known to many but only as to its partners.
happens or arises.
b. Notorious or open partnership – It is known
b. Partnership with a fixed period or not only to the partners, but to the public
Partnership for a Particular Undertaking – as well. (De Leon, 2019)
the partnerships are automatically
dissolved upon the expiration of the 7. Purpose
stipulated term or the achievement of the
particular undertaking stipulated in the a. Commercial or trading – One formed for
contract of partnership. (Art. 1830(1)(a), the transaction of business.
NCC) b. Professional or non-trading – One formed
for the exercise of a profession. (De Leon,
NOTE: When a partnership for a fixed term or 2019)
particular undertaking is continued after it has
terminated without any express agreement,
partnership then become one at will (Art. 1785,
NCC), and the rights and duties of the partners
remain the same as they were at such termination.

2022 GOLDEN NOTES
Partnership
Classes of Universal Partnership Persons Disqualified from Entering into

Universal Partnership
ALL PRESENT
ALL PROFITS 1. Legally married spouses. (Art. 87, Family Code,)
PROPERTY
However, they can enter into particular
What constitutes common property partnership.
Art. 1780, NCC 2. Common law spouses.
3. Parties guilty of adultery or concubinage.
All properties actually
4. Criminals convicted for the same offense in
belonging to the partners
Only usufruct of the consideration of the same. (Art. 739 (2), NCC)
are contributed – they
properties of the 5. A person and a public officer (or his wife,
become common property
partners become ascendant or descendants) by reason of his
(owned by all of the
common property. office. (Art. 739 (3), NCC)
partners and the
partnership).
Contribution of future properties
As to profits as common property
All profits acquired GR: Aside from the As a general rule, future properties cannot be
by the industry of the contributed properties, the contributed. The very essence of the contract of
partners become profits of said property partnership that the properties contributed be
common property become common property. included in the partnership requires the
(whether or not they contribution of things determinate. (De Leon, 2019)
were obtained XPN: Profits from other
through the usufruct sources may become Particular partnership
contributed) (Art. common if there is a
1780, NCC) stipulation to such effect. It is one which has for its object determinate things,
As to properties subsequently acquired their use or fruits, or a specific undertaking, or the
exercise of a profession or vocation. (Art. 1783,
GR: Properties
NCC)
subsequently acquired by
inheritance, legacy or
The fundamental difference between a universal
donation, cannot be
partnership and a particular partnership lies in the
N/A included in the stipulation
scope of their subject matter or object. In the
former, the object is vague and indefinite,
XPN: Only fruits thereof
contemplating a general business with some
can be included in the
degree of continuity, while in the latter, it is limited
stipulation. (NCC, Art. 1779)
and well-defined, being confined to an undertaking
of a single, temporary, or ad hoc nature. (De Leon,
Presumption of Universal Partnership of Profits
2019)
When the Articles of Universal Partnership fail to

Q: J, P and B formed a limited partnership called
specify whether it is one of all present property or
Suter Co., with P as the general partner and J
of profits, it only constitutes a universal partnership
and B as limited partners. J and B contributed
of profits (Art. 1781, NCC), because it imposes lesser
Php 18,000 and Php 20,000 respectively. Later,
obligations on the partners since they preserve the
J and B got married and P sold his share of the
ownership of their separate property. (De Leon,
partnership to the spouses which was recorded
2019)
in the SEC. Has the limited partnership been
dissolved by reason of the marriage between
the limited partners?

Civil Law
A: NO. The partnership is not a universal but a L-25532, 28 Feb. 1969; Heirs of Tang Eng Kee v. CA,
particular one. A universal partnership requires G.R. No. 126881, 03 Oct. 2000)
either that the object of the association must be all
present property of the partners as contributed by GENERAL V. LIMITED PARTNERSHIP
them to a common fund, or all else that the partners
may acquire by their industry or work. Here, the General Partnership
contributions were fixed sums of money and
neither one of them were industrial partners. Thus, It is a partnership where all partners are general
the firm is not a partnership which the spouses are partners who are liable even with respect to their
forbidden to enter into. The subsequent marriage individual properties, after the assets of the
cannot operate to dissolve it because it is not one of partnership have been exhausted. (Paras, 2016)
the causes provided by law. The capital
contributions were owned separately by them General or Real Partner
before their marriage and shall remain to be He is a partner whose liability to third persons
separate under the Spanish Civil Code. Their extends to his separate property; he may be either
individual interest did not become common a capitalist or an industrial partner. (De Leon, 2019)
property after their marriage. (CIR v. Suter, G.R. No.
General v. Limited Partner/Partnership
GENERAL LIMITED
As to Liability
Personally liable for partnership obligations. (Art. Liability extends only to his capital contributions.
1816, NCC) (Arts. 1845, 1848, 1856)
As to Right in Management
GR: No participation in management. His rights are

When manner of management has not been agreed limited to those enumerated in Art. 1851 of NCC.
upon, all general partners have an equal right in the
management of the business. (Arts. 1803, 1810(3), XPN: When he renders himself liable to creditors as
NCC) a general partner if he takes part in the control of
the business. (Art. 1848, NCC)
As to Contribution
Money, property or industry. (Art. 1767, NCC) Cash or property only, not services. (Art. 1845, NCC)
As to If Proper Party to Proceedings By or Against Partnership
Not proper party to proceedings by/against

partnership, unless:
(1) He is also a general partner (Art. 1853, NCC); or
Proper party to proceedings by/against partnership.
(2) Where the object of the proceeding is to enforce
a limited partner’s right or liability to the
partnership. (Art. 1866, NCC)

2022 GOLDEN NOTES
Partnership
As to Assignment of Interest
Interest is not assignable without consent of other

Interest is freely assignable. (Art. 1859, NCC)
partners. (Art. 1813, NCC)
As to Firm Name
It must also operate under a firm name, followed by

the word “Limited.”
GR: The surname of a limited partner shall not

appear in the partnership name.
It must operate under a firm name, which may or may
not include the name of one or more of the partners. XPNs:
(1) It is also the surname of a general partner; or
NOTE: Those, who, not being members of the (2) Prior to the time when the limited partner
partnership, include their names in the firm name, became such, the business had been carried on
shall be subject to the liability of a partner. (Art. 1815, under a name in which his surname appeared.
NCC)
NOTE: A limited partner whose surname appears in
a partnership name is liable as a general partner to
partnership creditors who extend credit to the
partnership without actual knowledge that he is not
a general partner. (Art. 1846, NCC)
As to Prohibition to Engage in Other Business
The capitalist partner cannot engage for their own

account in any operation which is of the kind of
business in which the partnership is engaged, unless
No prohibition against engaging in business. (Art.
there is a stipulation to the contrary. (Art. 1808, NCC)
1866, NCC)
If he is an industrial partner - in any business for

himself. (Art. 1789, NCC)
As to Effect of Death, Insolvency, Retirement, Insanity
Retirement, death, insolvency, insanity of general

Does not have same effect; rights are transferred to
partner dissolves partnership. (Arts. 1860, 1830,
legal representative. (Art. 1861, NCC)
1831, NCC)
As to Creation
Created by the members after substantial

As a rule, it maybe constituted in any form, by
compliance in good faith of the requirements set
contract or conduct of the parties. (Art. 1771, NCC)
forth by law. (Art. 1844, NCC)
As to Composition/Membership
Composed of at least one general partner and one
Composed only of general partners.
limited partner. (Art. 1843, NCC)

Civil Law
PARTNERSHIP WITH A FIXED TERM attendance of bad faith can prevent the dissolution
V. PARTNERSHIP AT WILL of the partnership, but to avoid the liability for
damages to other partners. (De Leon, 2010)
Partnership with a Fixed Term
Q: A, B, and C entered into a partnership to
It is one in which the term of its existence has been operate a restaurant business. When the
agreed upon by the partners either: restaurant had gone past break-even stage and
1. Expressly – There is a definite period. started to garner considerable profits, C died. A
2. Impliedly – A particular enterprise or and B continued the business without
transaction is undertaken. dissolving the partnership. They in fact opened
a branch of the restaurant, incurring
NOTE: The mere expectation that the business obligations in the process. Creditors started
would be successful and that the partners would be demanding for the payment of their
able to recoup their investment is not sufficient to obligations.
create a partnership for a term. a. Who are liable for the settlement of the
partnership’s obligations? Explain.
Fixing the Term of the Partnership Contract b. What are the creditors’ recourse/s?
The partners may fix in their contract any term and Explain. (2010 BAR)
they shall be bound to remain under such a relation
for the duration of the term. (De Leon, 2019) A:
Expiration of the partnership contract a. The two remaining partners, A and B, are
liable. When any partner dies and the business
The expiration of the term fixed, or the is continued without any settlement of
accomplishment of the particular undertaking accounts as between him or his estate, the
specified will cause the automatic dissolution of the surviving partners are held liable for
partnership. (Art. 1830 (1)(a), NCC) continuing the business despite the death of C.
(Arts. 1841, 1785(2) & 1833, NCC)
Partnership at Will b. Creditors can file the appropriate actions, for
instance, an action for the collection of sum of
One in which no fixed term is specified and is not money against the “partnership at will” and if
formed for a particular undertaking or venture there are no sufficient funds, the creditors may
which may be terminated anytime by mutual go after the private properties of A and B. (Art.
agreement of the partners, or by the will of any one 816, NCC) Creditors may also sue the estate of
partner alone; or one for a fixed term or particular C. The estate is not excused from the liabilities
undertaking which is continued by the partners of the partnership even if C is dead already but
after the termination of such term or particular only up to the time that he remained a partner
undertaking without express agreement. (De Leon, (Arts. 1829 & 1835(2) NCC). However, the
2019) liability of C’s individual property shall be
subject first to the payment of his separate
Termination or Dissolution of partnership at debts. (Art. 1835, NCC)
will
PARTNERSHIP BY ESTOPPEL
A partnership at will may be lawfully terminated or
dissolved at any time by the express will of all or It is one who, by words or conduct does any of the
any of the partners. (Art. 1830(1)(b), NCC) following:
1. Directly represents himself to anyone as a
NOTE: The partner who wants the partnership partner in an existing partnership or in a non-
dissolved must do so in good faith, not that the existing partnership.

2022 GOLDEN NOTES
Partnership
2. Indirectly represents himself by consenting to Partnership Tort

another representing him as a partner in an
existing partnership or in a non-existing There is a partnership tort where:
partnership. (Art. 1825, NCC) 1. By any wrongful act or omission of any partner,
acting in the ordinary course of business of the
Elements before a partner can be held liable partnership or with authority of his co-
on the ground of estoppel partners, loss or injury is caused to any person,
not being a partner in the partnership; (Art.
1. Defendant represented himself as partner 1822, NCC)
or is represented by others as such and did 2. One partner, acting within the scope of his
not deny/refute such representation. apparent authority, receives money or
2. Plaintiff relied on such representation. property from a third person, and misapplies it;
3. Statement of defendant is not refuted. (De (Art. 1823(1), NCC) or
Leon, 2019) 3. The partnership, in the course of its business,
receives money or property, and it is
Liabilities in case of estoppel misapplied by any partner while it is in the
custody of the partnership. (Art. 1823(2), NCC)
If all actual partners consented
to the representation, then the NOTE: Partners are solidarily liable with the
liability of the person who partnership for any penalty or damage arising from
When
represented himself to be a a partnership tort. (Art. 1824, NCC)
Partnership
partner or who consented to
is Liable
such representation and the PROFESSIONAL PARTNERSHIP
actual partner is considered a
partnership liability. It is a partnership formed by persons for the sole
When there is no existing purpose of exercising their common profession, no
partnership and all those part of the income of which is derived from
represented as partners engaging in any trade or business.
consented to the
When representation, then the In a professional partnership, it is the individual
Liability is liability of the person who partners who are deemed engaged in the practice of
PRO RATA represented himself to be a profession and not the partnership. Thus, they are
partner, and all who made and responsible for their own acts. (De Leon, 2019)
consented to such
representation, is joint or pro- Prohibition in the formation of a professional
rata. partnership
When there is no existing
partnership and not all but Partnership between lawyers and members of
only some of those other profession or non-professional persons
represented - as partners should not be formed or permitted where any part
When consented to the of the partnership’s employment consists of the
Liability is representation, or none of the practice of law. (Canon 9, CPR)
SEPARATE partnership in an existing
partnership consented to such Prohibition in the firm name of a partnership
representation, then the for the practice of law
liability will be separate. (De
Leon, 2019) In the selection and use of firm name, no false,
misleading, assumed, or trade names should be
used. (Canon 3, CPR)

Civil Law
MANAGEMENT OF THE PARTNERSHIP Rule where there are two or more managers
Modes of appointment of a manager GR: Each may separately

execute all acts of
Without
administration (unlimited
Appointment through specification
Appointment other than power to administer).
the Articles of of their
in the Articles
Partnership respective
XPN: If any of the managers
duties and
Power is irrevocable opposes, decision of the
without
without just or lawful majority prevails.
stipulation
cause. (Art. 1800, requiring
NCC) NOTE: In case of tie – Decision
unanimity of
of the controlling interest
action
NOTE: Vote required (who are also managers) shall
for removal of Power to act is prevail.
manager: revocable anytime, GR: Unanimous consent of all
With
1. For just cause – with or without cause the managing partners shall be
stipulation
Vote of the (should be done by necessary for the validity of
that none of
controlling the controlling the acts and absence or
the
partners interest). (Art. 1920, inability of any managing
managing
(controlling NCC) partner cannot be alleged.
partners
financial
shall act
interest). XPN: Where there is an
without the
2. Without cause or imminent danger of grave or
consent of
for unjust cause irreparable injury to the
the others
– Unanimous partnership.
vote.
Extent of Power Rule when the manner of management has NOT
been agreed upon
1. If he acts in good
faith, he may do all
1. All partners shall be considered agents and
acts of As long as he is a
whatever any one of them may do alone shall
administration manager, he can
bind the partnership, without prejudice to the
(despite perform all acts of
provisions of Art. 1801 of the NCC. This right is
opposition of his administration (if
not dependent on the amount or size of the
partners); others oppose, he can
partner’s capital contribution or services to the
2. If he acts in bad be removed).
business.
faith, he cannot.
(Art. 1800, NCC)
NOTE: If two or more partners have been
entrusted with the management of the
Scope of the Power of a Managing Partner
partnership without specification of their
respective duties, or without a stipulation that
As a rule, a partner appointed as manager has all
one of them shall not act without the consent
the powers of a general agent as well as all the
of all the others, each one may separately
incidental powers necessary to carry out the object
execute all acts of administration, but if any of
of the partnership in the transaction of its business.
them should oppose the acts of the others, the
The exception is when the powers of the manager
decision of the majority shall prevail. In case of
are specifically restricted. (De Leon, 2019)
a tie, the matter shall be decided by the
partners owning the controlling interest. (Art.

2022 GOLDEN NOTES
Partnership
1801 Art. 1801, NCC; 1992 BAR) Rights and Obligations of the Partnership
2. None of the partners may, without the consent 1. Refund the amounts disbursed by partner in
of the others, make any important alteration in behalf of the partnership plus corresponding
the immovable property even if it may be interest from the time the expenses are made,
useful to the partnership. (Arts. 1802-1803, not from the date of demand (e.g., loans and
NCC) advances made by a partner to the partnership
aside from capital contribution);
Rule in case where Unanimity of Action is 2. Answer for obligations the partner may have
Stipulated contracted in good faith in the interest of the
partnership business; and
If refusal of partner is manifestly prejudicial to the 3. Answer for risks in consequence of its
interest of partnership, the court’s intervention management. (Art. 1796, NCC)
may be sought. (Art. 1803(2), NCC)
Compensation
GR: In the absence of an agreement to the contrary,

each member of the partnership assumes the duty
to give his time, attention, and skill to the
management of its affairs, so far, at least, as may be
reasonably necessary to the success of the common
enterprise; and for this service a share of the profits
is his only compensation.
XPNs:
1. A partner engaged by his co-partners to
perform services not required of him in
fulfillment of the duties which the partnership
relation imposes and, in a capacity, other than
that of a partner;
2. A contract for compensation may be implied if
there is extraordinary neglect on the part of
one partner to perform his duties toward the
firm’s business, thereby imposing the entire
burden on the remaining partner;
3. One partner may employ his co-partner to do
work for him outside of and independent of the
co-partnership, and become personally liable
therefor;
4. Where the services rendered are extra-
ordinary; and
5. Where one partner is entrusted with the
management of the partnership business and
devotes his whole time and attention thereto,
at the instance of the other partners who are
attending to their individual business and
giving no time or attention to the business of
the firm. (De Leon, 2019)

Civil Law
Fungible things (Consumable)

B. OBLIGATIONS OF THE PARTNERS
Things brought and appraised

in the inventory
Obligations of partners among themselves
1. Contribution of property; (Art. 1786, NCC) Effects if a partner fails to contribute the
2. Contribution of money and money converted property which he promised to deliver to the
to personal use; (Art. 1788, NCC) partnership
3. Prohibition in engaging in business for himself;
(Art. 1789, NCC) 1. Partner becomes ipso jure a debtor of the
4. Contribute additional capital; (Art. 1791, NCC) partnership even in the absence of any
5. Managing partner who collects debt; (Art. demand. (Art. 1786, NCC)
1792, NCC) 2. Remedy of the other partner is not rescission
6. Partner who receives share of partnership but specific performance with damages and
credit; (Art. 1793, NCC) interest from defaulting partner from the time
7. Damages to partnership; (Art. 1794, NCC) he should have complied with his obligation.
8. Keep the partnership books; (Art. 1805, NCC)
9. Render information; (Art. 1806, NCC) and When the capital or a part hereof which a partner is
10. Accountable as fiduciary. (Art. 1807, NCC) bound to contribute consists of goods, their
appraisal must be made in the manner prescribed
Withdrawal or disposal of money or property in the contract of partnership, and in the absence
by a contributing partner of stipulation, it shall be current prices, the
subsequent changes thereof being for the account
Money or property contributed by a partner cannot of the partnership. (Art. 1787, NCC)
be withdrawn or disposed of by the contributing
partner without the consent or approval of the Rules regarding contribution of money to the
partnership or of the other partners because the partnership
money or property contributed by a partner
becomes the property of the partnership. (De Leon, 1. To contribute on the date fixed the amount the
2019) partner has undertaken to contribute to the
partnership;
Q: Who bears the risk of loss of things 2. To reimburse any amount the partner may
contributed? have taken from the partnership coffers and
converted to his own use;
A: 3. To indemnify the partnership for the damages
caused to it by delay in the contribution or
WHO BEARS
KIND OF PROPERTY / THING conversion of any sum for the partner’s
THE RISK?
personal benefit;
4. To pay the agreed or legal interest, if the
Specific and determinate things partner fails to pay his contribution on time or
which are not fungible where Partners in case he takes any amount from the common
only the use is contributed fund and converts it to his own use. (De Leon,
2019)
Specific and determinate things

the ownership of which is
Partnership
transferred to the partnership

2022 GOLDEN NOTES
Partnership
Rule regarding obligation to contribute to Industrial Partner v. Capitalist Partner

partnership capital
INDUSTRIAL CAPITALIST
Unless there is a stipulation to the contrary, the PARTNER PARTNER
partners shall contribute equal shares to the capital Prohibition
of the partnership. (Art. 1790, NCC) It is not Relative: Cannot
applicable to an industrial partner unless, besides engage in business
Absolute: Cannot
his services, he has contributed capital pursuant to (with same kind of
engage in business for
an agreement. business with the
himself unless the
partnership) for his
partnership expressly
Liability of a capitalist partner to contribute own account, unless
permits him to do so.
additional capital there is a stipulation
(NCC, Art. 1789)
to the contrary. (Art.
GR: A capitalist partner is not bound to contribute 1808, NCC)
to the partnership more than what he agreed to Remedy
contribute. Capitalist partners
Capitalist partner,
may:
XPNs: who violated shall:
1. Exclude him from
1. In case of imminent loss of the business; and 1. Bring to the
the firm; or
2. There is no agreement to the contrary. common fund any
2. Avail themselves
profits accruing to
of the benefits
He is under obligation to contribute an additional him from said
which he may
share to save the venture. If he refuses to transaction; and
have obtained;
contribute, he shall be obliged to sell his interest to 2. Personally bears
Damages, in
the other partners. (De Leon, 2019) all losses. (Art.
either case. (Art.
1808, NCC; 2001
1789, NCC; 2001
Requisites before capitalist partners are BAR)
BAR)
compelled to contribute additional capital
Obligations of Managing Partners Who Collect
1. Imminent loss of the business of the his Personal Receivable from a Person who also
partnership; Owes the Partnership
2. Majority of the capitalist partners are of the
opinion that an additional contribution to the 1. Apply sum collected to 2 credits in proportion
common fund would save the business; to their amounts
3. Capitalist partner refuses deliberately to 2. If he received it for the account of partnership,
contribute (not due to financial inability); and the whole sum shall be applied to partnership
4. There is no agreement to the contrary. (Ibid.) credit (Art. 1792, NCC)
NOTE: The refusal of the partner to contribute his Requisites: At least 2 debts, one where the
additional share reflects his lack of interest in the collecting partner is creditor and the other, where
continuance of the partnership. (Ibid.) It shall be the partnership is the creditor:
obliged to sell his interest to the other partners 1. Both debts are demandable; and
except if there is an agreement to the contrary. (Art. 2. Partner who collects is authorized to manage
1791, NCC) and actually manages the partnership. (Art.
1792, NCC)
It is to be noted that the industrial partner is
exempted from the requirement to contribute an NOTE: The debtor is given the right to prefer
additional share. Having contributed his entire payment of the credit of the partner if it should be
industry, he can do nothing further. (De Leon, 2019) more onerous to him in accordance with his right to

Civil Law
application of payment. (Art. 1252, NCC; De Leon, A: Joe, the capitalist partner, may engage in the
2019) restaurant business because it is not the same kind
of business the partnership is engaged in. On the
Reason for applying payment to partnership other hand, Rudy may not engage in any other
credit business unless their partnership expressly
permits him to do so because as an industrial
The law safeguards the interests of the partnership partner, he has to devote his full time to the
by preventing the possibility of their being business of the partnership. (Art. 1789, NCC)
subordinated by the managing partner to his own
interest to the prejudice of the other partners. (De Rule with regard to the obligation of a partner
Leon, 2019) as to damages suffered by the partnership
through his fault
Obligation of a Partner Who Receives Share of
Partnership Credit GR: Every partner is responsible to the partnership
for damages suffered by it through his fault and he
To bring to the partnership capital what he has cannot compensate them with the profits and
received even though he may have given receipt for benefits which he may have earned for the
his share only. (Art. 1793, NCC) partnership by his industry.
Requisites: XPN: The courts may equitably lessen this

1. A partner has received in whole or in part, his responsibility if through the partner’s
share of the partnership credit; extraordinary efforts in other activities of the
2. Other partners have not collected their shares; partnership, unusual profit has been realized. (Art.
and 1794, NCC)
3. Partnership debtor has become insolvent. (Art.
1793, NCC) Set-off of damages caused by a partner
Liability of a person entered into a contract on GR: The damages caused by a partner to the
behalf of an ostensible corporation partnership cannot be offset by the profits of
benefits which he may have earned for the
The liability for a contract entered into on behalf of partnership by his industry. (Art. 1794, NCC)
an unincorporated association or ostensible
corporation may lie in a person who may not have Reason: The partner has the obligation to secure
directly transacted on its behalf, but reaped benefits for the partnership. Hence, the profits
benefits from that contract. (Lim Tong Lim v. which he may have earned pertain as a matter of
Philippine Fishing Gear Industries Inc., G.R. No. law or right, to the partnership
136448, 03 Nov. 1999) XPN: If unusual profits are realized through the
extraordinary efforts of the partner at fault, the
Rules regarding the prohibition to engage in courts may equitably mitigate or lessen his liability
another business for damages. This rule rests on equity. (Art. 1794,
NCC)
Q: Joe and Rudy formed a partnership to operate
a car repair shop in Quezon City. Joe provided NOTE: Even in this case, the partner at fault is not
the capital while Rudy contributed his labor allowed to compensate such damages with the
and industry. On one side of their shop, Joe profits earned. The law does not specify as to when
opened and operated a coffee shop, while on the profits may be considered “unusual.” The question
other side, Rudy put up a car accessories store. depends upon the circumstances of the particular
May they engage in such separate businesses? case.
Why? (2001 BAR)

2022 GOLDEN NOTES
Partnership
Duty of the partners with respect to keeping the Duty of a partner to act with utmost good faith
partnership books towards co-partners continues even after
dissolution
The partnership books shall be kept, subject to any
agreement between partners, at the principal place The duty of a partner to act with utmost good faith
of business of the partnership. (Art. 1805, NCC) towards his co-partners continues throughout the
entire life of the partnership even after dissolution
Duty to keep partnership book belongs to for whatever reason or whatever means, until the
managing or active partner relationship is terminated, i.e., the winding up of
partnership affairs is completed. (De Leon, 2019)
The duty to keep true and correct books showing
the firm’s accounts, such books being at all times Failure to disclose facts, when there is a duty to
open to inspection of all members of the firm, reveal them, as when parties are bound by
primarily rests on the managing or active partner confidential relations, constitutes fraud. (Art. 1339,
or the particular partner given record-keeping NCC)
duties. (Art. 1805, NCC; De Leon, 2019)
RIGHTS OF PARTNERS
Duty of the partners with respect to
information affecting the partnership 1. Right to reimbursement for amounts advanced
to the partnership and to indemnification for
Partners shall render on demand true and full risks in consequence of management; (Art.
information of all things affecting the partnership 1796, NCC)
to: 2. Right on the distribution of profits and losses;
1. Any partner; or (Art. 1797, NCC)
2. Legal representative of any deceased or any 3. Right to associate another person with him in
partner under legal disability. (Art. 1806, NCC) his share without the consent of the other
partners; (Art. 1804, NCC)
NOTE: Under the same principle of mutual trust
and confidence among partners, there must be no NOTE: Such partnership formed between a
concealment between them in all matters affecting member of a partnership and a third person for
the partnership. The information, to be sure, must a division of the profits coming to him from the
be used only for a partnership purpose. (De Leon, partnership enterprise is termed sub-
2019) partnership. (De Leon, 2019)
Accountability of partners to each other as 4. Right to free access and to inspect and copy at
fiduciary any reasonable hour the partnership books;
(Art. 1805, NCC)
Every partner must account to the partnership for 5. Right to formal account as to partnership
any benefit, and hold as trustee for it any profits affairs:
derived by him without the consent of the other a. If he is wrongfully excluded from the
partners from any transaction connected with the partnership business or possession of
formation, conduct, or liquidation of the its property by his co-partners;
partnership or from any use by him of its property. b. If the right exist under the terms of
(Art. 1807, NCC) any agreement;
c. Duty to account as provided by Art.
1807;
d. Whenever there are circumstances
render it just and reasonable; (Art.
1809, NCC)

Civil Law
6. Right to have the partnership dissolved; (Art. NOTE: For as long as the partnership exists, any of
1830 – 1831, NCC) and the partners may demand an accounting of the
7. Property rights of a partner. (Art. 1810, NCC) partnership's business. Prescription of the said
right starts to run only upon the dissolution of the
Rule as to formal accounting during the partnership when the final accounting is done. The
existence of the partnership right to an account of his interest shall accrue to
any partner, or his legal representative as against
GR: During the existence of the partnership, a the winding up partners or the surviving partners
partner is not entitled to a formal account of or the person or partnership continuing the
partnership affairs. business, at the date of dissolution, in the absence
of any agreement to the contrary. (Emnace v. CA,
XPN: However, in special and unusual situations G.R. No. 126334, 23 Dec. 2001)
enumerated under Art. 1809, the justification for a
formal accounting even before dissolution of the Rules regarding distribution of profits and
partnership cannot be doubted. An example under losses
No. (4) of Art. 1809 is where a partner has been
assigned abroad for a long period of time in a. Distribution of Profits
connection with the partnership business and the i. The partners share in the profits
partnership books during such period being in the according to their agreement.
possession of the other partners. (De Leon, 2019) ii. In the absence of such:
a. Capitalist partner – in proportion
Partners’ inspection rights to his contribution;
b. Industrial partner – what is just
The partners’ inspection rights are not absolute. He and equitable under the
can be restrained from using the information circumstances. (Arts. 1797, NCC)
gathered for other than partnership purpose.
(Ibid.) NOTE: If the industrial partner has contributed
capital other than his services, he shall also receive
“Any reasonable hour” a share in the profits in proportion to his capital.
(Art. 1797, NCC)
The rights of the partners with respect to The share of industrial partner must be satisfied
partnership books can be exercised at “any first before the capitalist partners, as it is very
reasonable hour.” (Art. 1805, NCC) difficult to ascertain the value of the services of a
person. (De Leon, 2019)
NOTE: This phrase has been interpreted to mean
reasonable hours on business days throughout the b. Distribution of Losses
year and not merely during some arbitrary period i. The partners share in the losses
of a few days chosen by the managing partners. (De according to their agreement.
Leon, 2019) ii. In the absence of such, according to
their agreement as to profits.
Action for accounting iii. In the absence of profit agreement, in
proportion to his capital contribution.
An action for accounting, asking that the assets of (Art. 1797, NCC)
the partnership be accounted for, sold and
distributed according to the agreement of the Q: “X” used his savings from his salaries
partners is a personal action which under the Rules amounting to a little more than P2,000 as
of Court, may be commenced and tried where the capital in establishing a restaurant. “Y” gave the
defendant resides or may be found or where the amount of P4,000 to “X” as “financial
plaintiffs reside, at the election of the latter. (Ibid.) assistance” with the understanding that “Y”

2022 GOLDEN NOTES
Partnership
would be entitled to 22% of the annual profits affairs under certain circumstances; (Art. 1809,
derived from the operation of the restaurant. NCC) and
After the lapse of 22 years, “Y” filed a case 5. The right to have the partnership dissolved
demanding his share in the said profits. “X” also under certain conditions. (Arts. 1830-
denied that there was a partnership and raised 1831, NCC; De Leon, 2019)
the issue of prescription as “Y” did not assert his
rights anytime within ten (10) years from the Effects of assignment of partner’s whole
start of the operation of the restaurant. Is “Y” a interest in the partnership
partner of “X” in the business? Why? What is the
nature of the right to demand one’s share in the 1. Rights withheld from the assignee: Such
profits of a partnership? Does this right assignment does not grant the assignee the
prescribe? (1989 BAR) right to:
a. To interfere in the management;
A: YES, because there is an agreement to contribute b. To require any information or account;
to a common fund and intent to divide profits. It is and
founded upon an express trust. It is imprescriptible c. To inspect partnership books. (Art.
unless repudiated. 1813, NCC)
2. Rights of assignee on partner’s interest:
Rule regarding a stipulation excluding a a. To receive in accordance with his
partner in the sharing of profits and losses contract the profits accruing to the
assigning partner;
GR: Such stipulation is void. (Art. 1799, NCC) b. To avail himself of the usual remedies
provided by law in the event of fraud
XPN: Industrial partner is not liable for losses. (Art. in the management;
1797 (2), NCC) However, he is not exempted from c. To receive the assignor’s interest in
liability insofar as third persons are concerned. case of dissolution; and
d. To require an account of partnership
NOTE: Loss is different from liability. affairs, but only in case the
partnership is dissolved, and such
Property rights of a partner account shall cover the period from
the date only of the last account
1. Right in specific partnership property; agreed to by all the partners. (Art.
2. Interest in the partnership (share in the profits 1813, NCC)
and surplus); and
3. Right to participate in the management. (Art. Q: Rosa received money from Jois, with the
1803, NCC) express obligation to act as Jois’ agent in
purchasing local cigarettes, to resell them to
Related rights to the property rights of a several stores, and to give Jois the commission
partner corresponding to the profits received.
However, Rosa misappropriated and converted
1. Right to the partnership and to the said amount due to Jois to her personal use
indemnification for risks in consequence of and benefit. Jois filed a case of estafa against
management; (Art. 1796, NCC) Rosa. Can Rosa deny liability on the ground that
2. The right of access and inspection of a partnership was formed between her and
partnership books; (Art. 1805, NCC) Rosa?
3. The right to true and full information of all
things affecting the partnership; (Art. 1806, A: NO. Even assuming that a contract of
NCC) partnership was indeed entered into by and
4. The right to a formal account of partnership between the parties, when a partner receives any

Civil Law
money or property for a specific purpose (such as c. Knowledge of any other partner who
that obtaining in the instant case) and he later reasonably could and should have
misappropriates the same, he is guilty of estafa. communicated it to the acting partner.
(Liwanag v. CA, G.R. No. 114398, 14 Oct. 1997) (Art. 1821, NCC)
OBLIGATIONS OF 7. Partners and the partnership are solidarily

THE PARTNERSHIP/PARTNERS liable to third persons for the partner's tort or
TO THIRD PERSONS breach of trus.t (NCC, Art. 1822-24)
1. Every partnership shall operate under a firm 8. Liability of incoming partner is limited to:
name. (Art. 1815, NCC) a. His share in the partnership property
for existing obligations
2. All partners shall be liable for contractual b. Extends to his separate property for
obligations of the partnership with their subsequent obligations. (NCC, Art.
property, after all partnership assets have 1826)
been exhausted: 9. Creditors of partnership are preferred in
a. Pro rata partnership property. Private creditors of each
b. Subsidiary (Art. 1816, NCC; 1993, partner may attach the partner's share in
2010 BAR) partnership assets. (NCC, Art. 1827)
XPN: All partners shall be liable solidarily NOTE: On solidary liability, Art. 1816 should be
with the partnership for everything construed together with Art. 1824 in relation to
chargeable to the partnership under Art. Arts. 1822& 1823. While the liability of the
1822 and 1823. (Art. 1824, NCC) partners is merely joint in transactions entered into
by the partnership, a third person who transacted
NOTE: Any stipulation against the liability with said partnership may hold the partners
laid down in Art. 1816 shall be void except solidarily liable for the whole obligation if the case
as among the partners. (Art. 1817, NCC) of the third person falls under Articles 1822 and
1823. (Guy v. Gacott, G.R. No. 206147, 13 Jan. 2016)
3. Partner as an agent of the partnership. (Art.
1818, NCC; 1994 BAR) Q: A, B and C formed a partnership for the
purpose of contracting with the Government in
4. Conveyance of real property belonging to the the construction of one of its bridges. On June
partnership. (Art. 1819, NCC) 30, 1992, after completion of the project, the
bridge was turned over by the partners to the
5. Admission or representation made by any Government. On August 30, 1992, D, a supplier
partner concerning partnership affairs within of materials used in the project sued A for
the scope of his authority is evidence against collection of the indebtedness to him. A moved
the partnership. (Art. 1820, NCC) to dismiss the complaint against him on the
ground that it was the ABC partnership that is
6. Notice to partner of any matter relating to liable for the debt. D replied that ABC
partnership affairs operates as notice to partnership was dissolved upon completion of
partnership except in case of fraud: the project for which purpose the partnership
a. Knowledge of partner acting in the was formed. Will you dismiss the complaint
particular matter acquired while a against B if you were the judge? (1993 BAR)
partner
b. Knowledge of the partner acting in the A: NO. As Judge, I would not dismiss the complaint
particular matter then present to his against A because A is still liable as a general partner
mind for his pro rata share of 1/3. (Art. 1816, NCC)

2022 GOLDEN NOTES
Partnership
Dissolution of a partnership caused by the Remedies available to the Creditors of a Partner

termination of the particular undertaking specified
in the agreement does not extinguish obligations, 1. Separate or individual creditors should first
which must be liquidated during the winding up of secure a judgment on their credit; and
the partnership affairs. (Arts. 1829-1830 (1)(a), 2. Apply to the proper court for a charging an
NCC) order subjecting the interest of the debtor-
partner in the partnership for the payment of
Importance of having a Firm Name the unsatisfied amount of the judgment debt
with interest thereon. (De Leon, 2014) (Art.
A partnership must have a firm name under which 1814, NCC)
it will operate. It is necessary to distinguish the
partnership which has a distinct and separate NOTE: The court may resort to other courses of
juridical personality from the individuals action provided in Art. 1814 of the NCC, (i.e.,
composing the partnership and from other appointment of receiver, sale of the interest, etc.) if
partnerships and entities. (De Leon, 2019) the judgment debt remains unsatisfied,
notwithstanding the issuance of charging order. (De
Liability for the inclusion of name in the firm Leon, 2019)
name
Remedies available to Private Creditors of a
Persons who, not being partners, include their Partner
names in the firm name do not acquire the rights of The creditors of each partner may ask for the
a partner but under Art. 1815, they shall be subject attachment and public sale of the share of the latter
to the liability of a partner (Art. 1815, NCC) insofar in the partnership assets.
as third persons without notice are concerned. (De
Leon, 2019) NOTE: Purchaser at the public sale does not become
a partner. (Ibid.)
Effects of the acts of partners acting as an agent of the partnership
ACTS OF A PARTNER EFFECT
With binding effect except:
1. When the partner so acting has in fact no authority to

Acts for apparently carrying on in the usual way
act for the partnership in the particular matter, and
the business of the partnership
2. The person with whom he is dealing has knowledge of
the fact that he has no such authority. (Art. 1818(1),
NCC)
Do not bind partnership unless authorized by other

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

Civil Law
Acts of strict dominion or ownership:
1. Assigning partnership property in trust for

creditors; GR: One or more but less than all the partners have no
2. Disposing of goodwill of business; authority.
3. Doing an act which would make it impossible
to carry on the ordinary business of XPNs:
partnership; 1. Authorized by the other partners; or
4. Confessing a judgment; 2. Partners have abandoned the business. (Art. 1818(3),
5. Entering into a compromise concerning a NCC)
partnership claim or liability;
6. Submitting partnership claim or liability to
arbitration;
7. Renouncing claim of partnership.
Partnership is not liable to 3rd persons having actual or

Acts in contravention of a restriction on
presumptive knowledge of the restriction. (Art. 1818(4),
authority
NCC)
Effect of conveyance of a real property
TYPE OF CONVEYANCE EFFECT
Conveyance passes title but partnership can recover

unless:
1. Conveyance was done in the usual way of business, and

the partner so acting has the authority to act for the
Title in the partnership’s name; Conveyance
partnership; or
in partnership name
2. The property which has been conveyed by the grantee
or a person claiming through such grantee to a holder
for value without knowledge that the partner, in making
the conveyance, has exceeded his authority. (De Leon,
2014)
Conveyance does not pass title but only equitable interest,

provided:
Title in the partnership’s name; Conveyance

a. Conveyance was done in the usual way of business, or
in partner’s name
b. The partner so acting has the authority to act for the
partnership. (De Leon, 2014)

2022 GOLDEN NOTES
Partnership
Conveyance passes title but the partnership may recover

such property if the partners’ act does not bind the
Title in the name of one (1) or more partnership:
partners, and the record does not disclose
the right of the partnership; Conveyance in 1. The partner so acting has no authority to act for the
name of partner/s in whose name title partnership, and
stands 2. The person with whom he is dealing has knowledge of
the fact unless the purchaser of his assignee, is a
holder for value, without knowledge. (De Leon, 2014)
Conveyance will only pass equitable interest, provided:

Title in name of one (1) or more or all
partners or 3rd person in trust for
1. The act is one within the authority of the partner, and
partnership; Conveyance executed in
2. Conveyance was done in the usual way of the business.
partnership name or in name of partners
(De Leon, 2014)
Title in the names of all the partners; Conveyance will pass all the rights in such property. (De
Conveyance executed by all the partners Leon, 2014)

Civil Law
2. Violating the agreement;

C. DISSOLUTION AND WINDING UP 3. Business becomes unlawful
4. Loss of;
a. Specific thing promised as

Final stages of partnership
contribution is lost or perished before
delivery
1. Dissolution - A change in the relation of
b. specific thing contributed before or
the partners caused by any partner
after delivery, if only the use of such is
ceasing to be associated in carrying on the
contributed
business. (Art. 1828, NCC)
NOTE: The partnership shall not be

Partners cease to carry on the business
dissolved by the loss of the thing when it
together. It represents the demise of a
occurs after the partnership has acquired
partnership. Thus, any time a partner
the ownership thereof. (De Leon, 2019)
leaves the business, the partnership is
dissolved. (De Leon, 2019)
5. Death of any of the partners;
6. Insolvency of any partner or of partnership;
2. Winding up – Actual process of liquidating
7. Civil interdiction of any partner; and
and settling the partnership business or
8. By decree of court under Art. 1831
affairs after dissolution.
A court shall decree a dissolution whenever:

It is the final step after dissolution in the
(Art. 1831, NCC)
termination of the partnership. (De Leon,
a. A partner has been declared insane or
2019)
of unsound mind
b. A partner becomes in any other way
3. Termination - Point in time when all
incapable of performing his part of the
partnership affairs are completely wind-
partnership contract
up and finally settled; signifies the end of
c. A partner has been guilty of such
the partnership life.
conduct as tends to affect prejudicially
the carrying on of the business
It takes place after both dissolution and
d. A partner willfully or persistently
winding up have occurred. (De Leon, 2019)
commits a breach of the partnership
agreement
Causes of dissolution (Art. 1830, NCC)
e. The business of the partnership can
only be carried on at a loss
1. Without violating the agreement between the
f. Other circumstances render a
partners:
dissolution equitable.
a. Termination of the definite term or
specific undertaking
Effects of dissolution (2010 BAR)
b. Express will of any partner in good
faith, when there is no definite term or
1. Partnership is not terminated;
particular undertaking specified
2. Partnership continues for a limited purpose;
c. Express will of all partners who have
3. Transaction of new business is prohibited.
not assigned their interested or
4. Existence of partnership terminated (De Leon,
suffered them to be charged for their
2019)
separate debts, either before or after
the termination of any specified term
As to previous obligations, the dissolution of
or particular undertaking
partnership does not mean that the partners can
d. Expulsion in good faith of any partner

2022 GOLDEN NOTES
Partnership
evade previous obligations entered into. (Realubit completing transactions begun but not then
v. Jaso, G.R. No. 178782, 21 Sept. 2011) finished. (Art. 1832, NCC)
As to new obligations, the dissolution spares the NOTE: The general rule is subject to the
former partners from new obligations entered into qualifications set forth in Articles 1833 and 1834 in
by the partnership without their consent, implied relation to Article 1832:
or express, unless the obligation are essential for 1. In so far as the partners themselves are
the winding up of partnership affairs. (Ibid.) concerned – The authority of any partner to
bind the partnership by a new contract is
NOTE: The dissolution of a partnership must not be immediately terminated when the dissolution
understood in the absolute and strict sense so that is not by the act, insolvency, or death of a
at the termination of the object for which it was partner; (Art. 1832, NCC)
created the partnership is extinguished, pending 2. When the dissolution is by the act, insolvency,
the winding up of some incidents and obligations of or death, the termination of authority depends
the partnership, but in such case, the partnership upon whether or not the partner had
will be reputed as existing until the juridical knowledge or notice of dissolution. (Art. 1833,
relations arising out of the contract are dissolved. NCC; 2010 BAR)
(Ibid.)
Q: Tomas, Rene and Jose entered into a
Dissolution does not automatically result in the partnership under the firm name “Manila
termination of the legal personality of the Lumber.” Subsequently, upon mutual
partnership, nor the relations of the partners agreement, Tomas withdrew from the
among themselves who remain as co-partners until partnership and the partnership was dissolved.
the partnership is terminated. (De Leon, 2019) However, the remaining partners, Rene and
Jose, did not terminate the business of “Manila
A partner cannot be expelled from the Lumber.” Instead of winding up the business of
partnership without agreement thereto. the partnership and liquidating its assets, Rene
and Jose continued the business in the name of
In the absence of an express agreement to that “Manila Lumber” apparently without objection
effect, there exists no right or power of any from Tomas. The withdrawal of Tomas from the
member, or even a majority of the members, to partnership was not published in the
expel all other members of the firm at will. Nor can newspapers. Could Tomas be held liable for any
they at will forfeit the share or interest of a member obligation or indebtedness Rene and Jose might
or members and compel him or them to quit the incur while doing business in the name of
firm, even paying what is due him. “Manila Lumber” after his withdrawal from the
partnership? Explain. (1987 BAR)
The expulsion has the effect of decreasing the
number of the partners, hence, the dissolution. The A: YES. Tomas can be held liable under the doctrine
expulsion must be made in good faith. The partner of estoppel. But as regards the parties among
expelled in bad faith can claim damages. (Ibid.) themselves, only Rene and Jose are liable. Tomas
cannot be held liable since there was no proper
Effect of dissolution on the authority of a notification or publication. In the event that Tomas
partner is made to pay the liability to third person, he has
the right to seek reimbursement from Rene and
GR: The partnership ceases to be a going concern. Jose.
XPN: The partner’s power of representation is Q: The articles of co-partnership provide that in
confined only to acts incident to winding up or case of death of one partner, the partnership
shall not be dissolved but shall be continued by

Civil Law
the deceased partner’s heirs. When H, a GR: A partner continues to bind partnership even
partner, died, his wife, W, took over the after dissolution EXCEPT in the following cases:
management of some of the real properties
with permission of the surviving partner, X, but 1. Transactions to wind up partnership affairs or
her name was not included in the partnership to complete transactions unfinished at
name. She eventually sold these real properties dissolution;
after a few years. X now claims that W did not 2. Transactions which would bind partnership if
have the authority to manage and sell those dissolution had not taken place, provided the
properties as she was not a partner. Is the sale other party/obligee:
valid? a. Had extended credit to partnership
prior to dissolution; and had no
A: YES. The widow was not a mere agent, because knowledge/notice of dissolution; or
she had become a partner upon her husband's b. Did not extend credit to partnership;
death, as expressly provided by the articles of co- had nevertheless known of the
partnership, and by authorizing the widow to partnership prior to dissolution; and
manage partnership property, X recognized her as had no knowledge/ notice of
a general partner with authority to administer and dissolution/fact of dissolution not
alienate partnership property. It is immaterial that advertised in a newspaper of general
W's name was not included in the firm name, since circulation in the place where
no conversion of status is involved, and the articles partnership is regularly carried on.
of co-partnership expressly contemplated the (Art. 1834(1) & (2), NCC)
admission of the partner's heirs into the
partnership. (Goquiolay v. Sycip, G.R. No. L-11840, XPNs: Partner cannot bind the partnership
16 Dec. 1963) anymore after dissolution:
Liability of a partner where the Dissolution is 1. Where dissolution is due to unlawfulness to

Caused by the Act, Death or Insolvency of a carry on the business; or
Partner 2. Where the partner has become insolvent; or
3. Act is not appropriate for winding up or for
GR: Each partner is liable to his co-partners for his completing unfinished transactions; or
share of any liability created by any partner for the 4. Partner is unauthorized to wind up
partnership, as if the partnership had not been partnership affairs, except by transaction with
dissolved. (Art. 1833, NCC) one who:
a. Had extended credit to partnership
XPNs: Partners shall not be liable when: prior to dissolution; and had no
1. The dissolution, being by act of any partner, the knowledge or notice of dissolution; or
partner acting for the partnership had b. Did not extend credit to partnership
knowledge of the dissolution; or prior to dissolution; Had known
2. The dissolution, being by the death or partnership prior to dissolution; and
insolvency of a partner, the partner acting for had no knowledge/notice of
the partnership had knowledge or notice of the dissolution/fact of dissolution not
death or insolvency. (Art. 1833, NCC; 2010 advertised in a newspaper of general
BAR) circulation in the place where
partnership is regularly carried on
Q: After the dissolution of a partnership, can a (Art. 1834(3), NCC); or
partner still bind the partnership? 5. Completely new transactions which would
bind the partnership if dissolution had not
A: taken place with third persons in bad faith.

2022 GOLDEN NOTES
Partnership
Q: Does the dissolution of a partnership for compensation by way of income on their

discharge existing liability of a partner? contribution respectively, in proportion to the
respective amounts of such claims. (Art. 1863, NCC)
A:
GR: Dissolution does not discharge the existing WINDING UP OF THE PARTNERSHIP
liability of a partner. (Art. 1835, NCC)
It is during this time after dissolution that
XPN: Said liability is discharged when there is an partnership business or affairs are being settled.
agreement between: (De Leon, 2019)
1. Partner himself;
2. Person/s continuing the business; and Ways of winding up
3. Partnership creditors. (Art. 1835(2), NCC)
The winding up of the dissolved partnership may
Liability of the estate of a deceased partner be done either:
1. Judicially, under the control and direction of
In accordance with Article 1816, the individual the proper court upon cause shown by any
property of a deceased partner shall be liable for all partner, his legal representative, or his
obligations of the partnership incurred while he assignee; or
was a partner. Note that the individual creditors of 2. Extrajudicially, by the partners themselves
the deceased partner are to be preferred over without intervention of the court. (Ibid.)
partnership creditors with respect to the separate
property of said deceased partner. (Art. 1839(8), Action for liquidation
NCC)
An action for the liquidation of a partnership is a
Order of priority in the distribution of assets personal one; hence, it may be brought in the place
during the dissolution of a limited partnership of residence of either the plaintiff or the defendant.
(Ibid.)
In setting accounts after dissolution, the liabilities
of the partnership shall be entitled to payment in Persons authorized to wind up
the following order:
1. Those to creditors, in the order of priority as 1. Partners designated by the agreement;
provided by law, except those to limited 2. In the absence of such, all partners who have
partners on account of their contributions, and not wrongfully dissolved the partnership; and
to general partners; 3. Legal representative of last surviving partner
2. Those to limited partners in respect to their who is not insolvent. (Ibid.)
share of the profits and other compensation by
way of income on their contributions; NOTE: The court may, in its discretion, after
3. Those to limited partners in respect to the considering all the facts and circumstances of the
capital of their contributions; particular case, appoint a receiver to wind up the
4. Those to general partners other than for partnership affairs where such step is shown to be
capital and profits; to the best interests of all persons concerned.
5. Those to general partners in respect to profits; (Ibid.)
6. Those to general partners in respect to capital.
(Art. 1863, NCC) An insolvent partner does not have the right to
wind up partnership affairs. (Art. 1833, NCC)
NOTE: Subject to any statement in the certificate or
to subsequent agreement, limited partners share in
the partnership assets in respect to their claims for
capital, and in respect to their claims for profits or

Civil Law
Powers of liquidating partner NOTE: The Doctrine of Marshalling of Assets

involves the ranking of assets in a certain order
1. Make new contracts; toward the payment of outstanding debts. (De Leon,
2. Raise money to pay partnership debts; 2019)
3. Incur obligations to complete existing
contracts or preserve partnership assets; and Rights of a partner where dissolution is not in
4. Incur expenses necessary in the conduct of contravention of the agreement
litigation. (De Leon, 2019)
Unless otherwise agreed, the rights of each partner
Order of payment in winding up are as follows:
a. In a general partnership: 1. To have the partnership property applied to

1. Those owing to creditors other than discharge the liabilities of partnership; and
partners 2. To have the surplus, if any, applied, to pay in
2. Those owing to partners other than for cash the net amount owing to the respective
capital or profits partners. (Ibid.)
3. Those owing to partners in respect of
capital Rights of a partner where dissolution is in
4. Those owing to partners in respect to contravention of the agreement
profits. (Art. 1839(2), NCC)
The rights of a partner vary depending upon
b. In a limited partnership: whether he is the innocent or guilty partner.
1. Those to creditors, in the order of priority
as provided by law, except those to limited 1. Rights of partner who has not caused the
partners on account of their contributions, dissolution wrongfully:
and to general partners. a. To have partnership property applied for
2. Those to limited partners in respect to the payment of its liabilities and to receive
their share of the profits and other in cash his share of the surplus;
compensation by way of income on their b. To be indemnified for the damages caused
contributions. by the partner guilty of wrongful
3. Those to limited partners in respect to the dissolution;
capital of their contributions. c. To continue the business in the same name
4. Those to general partners other than for during the agreed term of the partnership,
capital and profits. by themselves or jointly with others; and
5. Those to general partners in respect to d. To possess partnership property should
profits. they decide to continue the business.
6. Those to general partners in respect to
capital. (Art. 1863, NCC) 2. Rights of partner who has wrongfully caused
the dissolution:
“Doctrine of marshalling of assets” a. If the business is not continued by the
other partners, to have the partnership
The Doctrine of Marshalling of Assets provides property applied to discharge its liabilities
that: and to receive in cash his share of the
1. Partnership creditors have preference in surplus less damages caused by his
partnership assets. wrongful dissolution
2. Separate or individual creditors have b. If the business is continued:
preference in separate or individual i. To have the value of his interest in the
properties. partnership at the time of the
3. Anything left from either goes to the other. dissolution, less any damage caused

2022 GOLDEN NOTES
Partnership
by the dissolution to his co-partners, signed by all of the partners. Later, the
ascertained and paid in cash, or withdrawing partners demanded for payment
secured by bond approved by the but were refused. Considering that not all
court; and partners intervened in the distribution of all or
ii. To be released from all existing and part of the partnership assets, should the action
future liabilities of the partnership. prosper?
(Ibid.)
A: NO. A partner’s share cannot be returned
Rights of injured partner where partnership without first dissolving and liquidating the
contract is rescinded partnership, for the return is dependent on the
discharge of creditors, whose claims enjoy
1. Right of a lien on, or retention, the surplus of preference over those of the partner, and it is self-
partnership property after satisfying evident that all members of the partnership are
partnership liabilities for any sum of money interested in its assets and business, and are
paid or contributed by him; entitled to be heard in the matter of the firm’s
2. Right of subrogation in place of partnership liquidation and distribution of its property. The
creditors after payment of partnership liquidation prepared by Magdusa not signed by the
liabilities; and other partners is not binding on them. (Magdusa v.
3. Right of indemnification by the guilty partner Albaran, G.R. No. L-17526, 30 June 1962)
against all debts and liabilities of the
partnership. (Ibid.) Since the capital was contributed to the
partnership, not to partners, it is the partnership
Settlement of accounts between partners that must refund the equity of the retiring partners.
Since it is the partnership, as a separate and
1. Assets of the partnership include: distinct entity that must refund the shares of the
a. Partnership property (including partners, the amount to be refunded is necessarily
goodwill) limited to its total resources. In other words, it can
b. Contributions of the partners only pay out what it has in its coffers, which consists
2. Order of application of the assets: of all its assets. (Villareal v. Ramirez, G.R. No.
a. First, those owing to partnership 144214, 14 July 2003)
creditors
b. Second, those owing to partners other Partner’s lien
than for capital and profits such as
loans given by the partners or It is the right of every partner to have the
advances for business expenses partnership property applied, to discharge
c. Third, those owing for the return of partnership liabilities and surplus assets, if any,
the capital contributed by the distributed in cash to the respective partners, after
partners deducting what may be due to the partnership from
d. Fourth, the share of the profits, if any, them as partners.
due to each partner. (Art. 1839; De
Leon, 2019) Effects when the business of a dissolved
partnership is continued
Q: A partnership was formed with Magdusa as
the manager. During the existence of the 1. Creditors of old partnership are also creditors
partnership, two partners expressed their of the new partnership who continues the
desire to withdraw from the firm. Magdusa business of the old one without liquidation of
determined the value of the partners share the partnership affairs.
which were embodied in the document drawn 2. Creditors have an equitable lien on the
in the handwriting of Magdusa but was not consideration paid to the retiring/deceased

Civil Law
partner by the purchaser when etc. Emnace counters, contending that

retiring/deceased partner sold his interest prescription has set in. Decide.
without final settlement with creditors.
3. Rights of retiring/estate of deceased partner: A: Prescription has not yet set in. Prescription of
a. To have the value of his interest the said right starts to run only upon the
ascertained as of the date of dissolution of the partnership when the final
dissolution; and accounting is done. Contrary to Emnace’s
b. To receive as ordinary creditor the protestations, prescription had not even begun to
value of his share in the dissolved run in the absence of a final accounting. The right to
partnership with interest or profits demand an accounting accrues at the date of
attributable to use of his right, at his dissolution in the absence of any agreement to the
option. (Art. 1841; De Leon, 2019) contrary. When a final accounting is made, it is only
then that prescription begins to run. (Emnace v. CA,
NOTE: The right to demand on accounting of the G.R. No. 126334, 23 Nov. 2001)
value of his interest accrues to any partner or his
legal representative after dissolution in the
absence of an agreement to the contrary. (De Leon,
2019)
Continuation of partnership by a corporation
where a corporation was formed by, and consisted

of members of a partnership whose business and
property was conveyed and transferred to the
corporation for the purpose of continuing its
business, in payment for which corporate capital
stock was issued, such corporation is presumed to
have assumed partnership debts, and is prima facie
liable therefor. The reason for the rule is that the
members of the partnership may be said to have
simply put on a new coat, or taken on a corporate
cloak, and the corporation is a mere continuation of
the partnership. (Laguna Transportation Co., Inc. v.
SSS, G.R. No. L-14606, 28 Apr. 1960)
Persons required to render an account
1. Winding up partner;
2. Surviving partner; and
3. Person or partnership continuing the business.
(Art. 1842, NCC)
Q: Emnace and Tabanao decided to dissolve

their partnership in 1986. Emnace failed to
submit the statement of assets and liabilities of
the partnership, and to render an accounting of
the partnership's finances. Tabanao’s heirs
filed against Emnace an action for accounting,

2022 GOLDEN NOTES
Partnership
FORMATION AND AMENDMENT

D. LIMITED PARTNERSHIP OF LIMITED PARTNERSHIP
Essential requirements for the formation of

limited partnership
It is one formed by two or more persons having as
members one or more general partners and one or
1. Certificate or articles of limited partnership
more limited partners, the latter not being
which states the matters enumerated in Art.
personally liable for partnership debts. (Art. 1843,
1844, must be signed and sworn; and
NCC)
NOTE: Among the contents of the Certificate of

Characteristics of limited partnership
Articles of Partnership should be the name of
the partnership, adding thereto the word
1. It is formed by compliance with the statutory
“limited.”
requirements. (Art. 1844)
2. One or more general partners control the
2. Certificate must be filed for record in the office
business and are personally liable to creditors.
of the SEC. (De Leon, 2019)
(Arts. 1848 & 1850)
3. One or more limited partners contribute to the
NOTE: Strict compliance with legal requirements is
capital and share in the profits but do not
not necessary. It is sufficient that there is
participate in the management of the business
substantial compliance in good faith. If there is no
and are not personally liable for partnership
substantial compliance, the partnership becomes a
obligations beyond their capital contributions.
general partnership as far as third persons are
(Arts. 1845, 1848, & 1856)
concerned, in which the members are liable as
4. The limited partners may ask for the return of
general partners. (Ibid.)
their capital contributions under conditions
prescribed by law. (Arts. 1844(h) & 1857)
Cancellation of certificate or articles of limited
5. Partnership debts are paid out of common fund
partnership
and the individual properties of general
partners. (De Leon, 2019)
1. When the partnership is dissolved
2. When all the limited partners ceased to be such.
Consequences of separate personality of
(Art. 1864, NCC)
limited partnership
Instances when a certificate of a limited

The personality of a limited partnership being
partnership shall be amended
different from that of its members, it must, on
general principle, answer for, and suffer, the
1. It must fall under the following changes and
consequence of its acts as such an entity capable of
conditions:
being the subject of rights and obligations. If the
a. There is a change in the name of the
limited partnership failed to pay its obligations,
partnership or in the amount or character
this partnership must suffer the consequences of
of the contribution of any limited partner;
such a failure, and must be adjudged insolvent.
b. A person is substituted as a limited
(Saludo Jr. v. PNB, G.R. No. 193138, 20 Aug. 2018)
partner;
c. An additional limited partner is admitted;
d. A person is admitted as a general partner;
e. A general partner retires, dies, becomes
insolvent or insane, or is sentenced to civil
interdiction and the business is continued
under Article 1860;

Civil Law
f. There is a change in the character of the Effective date of amendment or cancellation

business of the partnership;
g. There is a false or erroneous statement in As a general rule, a certificate is deemed amended
the certificate; or cancelled when the amended certificate or the
h. There is a change in the time as stated in certified copy of the court order in case of judicial
the certificate for the dissolution of the cancellation or amendment is filed for record in the
partnership or for the return of a SEC. (De Leon, 2019)
contribution;
i. A time is fixed for the dissolution of the Contribution of a limited partner
partnership, or the return of a
contribution, no time having been The contribution of a limited partner may be cash
specified in the certificate; or other property, but not services. (Art. 1845, NCC)
j. The members desire to make a change in
any other statement in the certificate in Otherwise, he shall be considered an industrial and
order that it shall accurately represent the general partner, in which case, he shall not be
agreement among them. (Art. 1864, NCC) exempted from personal liability. (De Leon, 2014)
2. Must be signed and sworn to by all of the NOTE: A partner may be a general partner and a
members including the new members if some limited partner in the same partnership at the same
added; in case of substitution, the assigning time, provided that it shall be stated in the
limited partner must also sign. (Art. 1865(2), certificate provided for in Article 1844. (Art. 1853,
NCC) NCC)
3. Must be recorded in the SEC. (Art. 1865, NCC) Time contribution shall be made
Instances when a general partner needs The contribution of each limited partner must be
consent or ratification of all the limited paid before the formation of the limited
partners partnership in relation to Art. 1822(f) of the NCC,
although with respect to the additional
When he: contributions, they may be paid after the limited
1. Does any act in contravention of the certificate; partnership has been formed. (De Leon, 2019)
2. Does any act which would make it impossible
to carry on the ordinary business of the Firm name
partnership;
3. Confesses judgment against partnership; GR: The surname of a limited partnership shall not
4. Possesses partnership property/ assigns appear in the partnership name.
rights in specific partnership property other
than for partnership purpose; XPNs:
5. Admits person as general partner; 1. Limited partner and general partner have
6. Admits person as limited partner, unless similar surnames; or
authorized in certificate; or 2. Prior to the time when the limited partner
7. Continues business with partnership property became such, the business had been carried on
on death, retirement, civil interdiction, under a name in which his surname appeared.
insanity or insolvency of general partner unless (Art. 1846, NCC)
authorized in the certificate. (Art. 1850, NCC)
NOTE: A limited partner whose surname appears
in a partnership name is liable as a general partner
to partnership creditors who extend credit to the

2022 GOLDEN NOTES
Partnership
partnership without actual knowledge that he is c. Receiving pro rata share of

not a general partner. (Art. 1846, NCC) partnership assets with general
creditors if he is not also a general
Admission of additional limited partners (Art. partner (De Leon, 2019)
1849, NCC)
2. Prohibited
After a limited partnership had been formed, a. Receiving/ Holding partnership
additional limited partners may be admitted, property as collateral security
provided: b. Receiving any payment, conveyance,
1. There is proper amendment to the certificate release from liability if it will prejudice
which must be signed and sworn to by all of the right of 3rd. persons (De Leon, 2019)
partners, including the new limited partners;
and NOTE: The prohibition is not absolute because
2. It is filed with the Securities and Exchange there is no prohibition if the partnership assets are
Commission. (De Leon, 2019) sufficient to discharge partnership liabilities to
persons not claiming as general or limited
RIGHTS AND OBLIGATIONS partners. (De Leon, 2019)
OF A LIMITED PARTNER
Substituted limited partner
Rights of a limited partner (Art. 1851, NCC)
It is a person admitted to all the rights of a limited
The specific rights of the limited partner in the partner who has died or assigned his interest in the
partnership are as follows: partnership. (De Leon, 2019)
1. To require partnership books kept at principal Rights and liabilities of a substituted limited
place of business; partner
2. To inspect or copy books at reasonable hours;
(Art. 1805, NCC) GR: He has all the rights and powers and is subject
3. To demand true and full information of all to all the restrictions and liabilities of his assignor.
things affecting partnership; Art. 1806, NCC)
4. To demand formal account of partnership XPN: Those liabilities which he was ignorant of at
affairs whenever circumstances render it just the time that he became a limited partner and
and reasonable; (Art. 1809, NCC) which could not be ascertained from the certificate.
5. To ask for dissolution and winding up by (Art. 1859(5), NCC)
decree of court; (Arts/ 1831, 1857(4), NCC)
6. To receive share of profits or other Requirements for the admission of a
compensation by way of income; (Art. 1856, substituted limited partner
NCC) and
7. To receive return of contributions provided 1. All the members must consent to the assignee
the partnership assets are in excess of all its becoming a substituted limited partner or the
liabilities. (Art. 1857, NCC) (De Leon, 2019) limited partner, being empowered by the
certificate must give the assignee the right to
Transactions allowed or prohibited in a limited become a limited partner;
partnership 2. The certificate must be amended in accordance
with Art. 1865 of the NCC; and
1. Allowed 3. The certificate as amended must be registered
a. Granting loans to partnership in the SEC. (De Leon, 2019)
b. Transacting business with
partnership

Civil Law
Basis of preference given to limited partners NOTE: Even if a limited partner has contributed
over other limited partners property, he has only the right to demand and
receive cash for his contribution. The exceptions
Priority or preference may be given to some limited are:
partners over other limited partners as to the: 1. When there is stipulation to the contrary
1. Return of their contributions; in the certificate; or
2. Their compensation by way of income; or 2. When all the partners (general and limited
3. Any other matter. partners) consent to the return other than
in the form of cash. (De Leon 2019)
NOTE: In the absence of such statement in the
certificate, even if there is an agreement, all limited Liabilities of a limited partner
partners shall stand on equal footing in respect of
these matters. 1. To the partnership
Since limited partners are not principals in the
Requisites for return of contribution of a transaction of a partnership, their liability as a
limited partner rule, is to the partnership, not to the creditors
of the partnership. The general partners
1. All liabilities of the partnership have been paid cannot however waive any liability of the
or if they have not yet been paid, the assets of limited partners to the prejudice of such
the partnership are sufficient to pay such creditors.
liabilities;
2. The consent of all the members (general and 2. To the partnership creditors and other
limited partners) has been obtained except partners
when the return may be rightfully demanded; a. A limited partner is liable for partnership
and obligations when he contributed services
3. The certificate of limited partnership is instead of only money or property to the
cancelled or amended as to set forth the partnership; (Art. 1845, NCC)
withdrawal or reduction of the contribution. b. When he allows his surname to appear in
(Art. 1857, NCC) (De Leon, 2019) the firm name; (Art. 1846, NCC)
c. When he fails to have a false statement in
When return of contribution is a matter of right the certificate corrected, knowing it to be
false; (Art. 1847, NCC)
When all liabilities of the partnership, except d. When he takes part in the control of the
liabilities to general partners and to limited business; (Art. 1848, NCC)
partners on account of their contributions, have e. When he receives partnership property as
been paid or there remains property of the collateral security, payment, conveyance,
partnership sufficient to pay them and the or release in fraud of partnership
certificate is cancelled or so amended as to set forth creditors; (Art. 1854, NCC)
the withdrawal or reduction: f. When there is failure to substantially
1. On the dissolution of the partnership; comply with the legal requirements
2. Upon the arrival of the date specified in the governing the formation of limited
certificate for the return; or partnerships. (Art. 1844(2), NCC)
3. After the expiration of six (6)-month
notice in writing given by him to the other 3. To separate creditors
partners if no time is fixed in the certificate As in a general partnership, the creditor of a
for the return of the contribution or for the limited partner may, in addition to other
dissolution of the partnership. (De Leon, remedies allowed under existing laws, apply
2019) to the proper court for a charging order
subjecting the interest in the partnership of

2022 GOLDEN NOTES
Partnership
the debtor partner for the payment of his constitute his assignee as substituted limited
obligation. (De Leon, 2019) partner. (De Leon, 2019)
Requisites for Waiver or Compromise of NOTE: The executor or administrator may

Liabilities constitute the assignee as a substituted limited
partner only if the deceased limited partner was
The waiver or compromise shall: empowered to do so in the certificate. (De Leon,
1. Be made with the consent of all partners; and 2019)
2. Not prejudice partnership creditors who
extended credit or whose claims arose before Estate of the deceased limited partner is liable for
the cancellation or amendment of the all his liabilities as a limited partner. (Art. 1861(2),
certificate. (De Leon, 2019) NCC)
When may a limited partner have the In setting accounts after dissolution, the
partnership dissolved liabilities of the partnership shall be entitled to
payment in the following order
1. When his demand for the return of his
contribution is denied although he has a right 1. Those to creditors, in the order of priority as
to such return; or provided by law, except those to limited
2. When his contribution is not paid although he partners on account of their contributions, and
is entitled to its return because the other to general partners
liabilities of the partnership have not been paid 2. Those to limited partners in respect to their
or the partnership property is insufficient for share of the profits and other compensation by
their payment. way of income on their contributions
3. Those to limited partners in respect to the
NOTE: The limited partner must first ask the other capital of their contributions
partners to have the partnership dissolved; if they 4. Those to general partners other than for
refuse, then he can seek the dissolution of the capital and profits
partnership by judicial decree. (De Leon, 2019) 5. Those to general partners in respect to profits
6. Those to general partners in respect to capital.
Effect of retirement, death, civil interdiction, (Art. 1863, NCC)
insanity or insolvency of a partner
NOTE: Subject to any statement in the certificate or
1. General partner – The partnership is dissolved to subsequent agreement, limited partners share in
(Art. 1860, NCC) unless the business is the partnership assets in respect to their claims for
continued by the remaining general partners: capital, and in respect to their claims for profits or
a. Under the right stated in the certificate; for compensation by way of income on their
or contribution respectively, in proportion to the
b. With the consent of all the partners. respective amounts of such claims. (Art. 1863, NCC)
2. Limited partner – The partnership is not
dissolved except all limited partners cease to GR: A limited partner is not a proper party to
be such. proceedings:
1. By a partnership; or
Rights of the executor/administrator on the 2. Against a partnership.
death of the limited partner
XPNs:
1. All the rights of a limited partner for purposes 1. If he is also a general partner.
of settling the affairs of the limited partner 2. Where the object is to enforce a limited
2. To have the same power as the deceased had to partner’s right against or liability to the

Civil Law
partnership. Art. 1866, NCC) Obligations of partners to third persons
SUMMARY OF RIGHTS AND OBLIGATIONS 1. Every partnership shall operate under a firm
OF PARTNERS name. Persons who include their names in
the partnership name even if they are not
GENERAL PARTNER members shall be liable as a partner.
Rights
2. All partners shall be liable for contractual
obligations of the partnership with their
1. Right in specific partnership property. property, after all partnership assets have
2. Interest in the partnership (share in the been exhausted:
profits and surplus).
3. Right to participate in the management. a. Pro rata
4. Right to associate another person with him in b. Subsidiary
his share without the consent of other
partners (sub- partnership). 3. Admission or representation made by any
partner concerning partnership affairs within
5. Right to inspect and copy partnership books
at any reasonable hour. the scope of his authority is evidence against
6. Right to a formal account as to partnership the partnership.
affairs (even during existence of
partnership): 4. Notice to partner of any matter relating to
a. If he is wrongfully excluded from partnership affairs operates as notice to
partnership business or possession partnership except in case of fraud:
of its property by his co-partners.
b. If right exists under the terms of any a. Knowledge of partner acting in the
agreement. particular matter acquired while a
c. As provided in Art. 1807 of the NCC. partner.
d. Whenever the circumstances render b. Knowledge of the partner acting in
it just and reasonable. the particular matter then present to
his mind.
c. Knowledge of any other partner who
Obligations reasonably could and should have
Obligations of partners among themselves communicated it to the acting
partner.
1. Contribution of property.
2. Contribution of money and money converted 5. Partners and the partnership are solidarily
to personal use. liable to third persons for the partner's tort or
3. Prohibition in engaging in business for breach of trust.
himself.
4. Contribute additional capital. 6. Liability of incoming partner is limited to:
5. Managing partner who collects debt.
6. Partner who receives share of partnership a. His share in the partnership
credit. property for existing obligations.
7. Damages to partnership. b. His separate property for
8. Render information. subsequent obligations.
9. Accountable as fiduciary.
Creditors of partnership are preferred in
partnership property & may attach partner's share
in partnership assets.

2022 GOLDEN NOTES
Partnership
Other obligations
To the partnership creditors and other
1. Duty to render on demand true and full
partners
information affecting partnership to any
partner or legal representative of any
1. A limited partner is liable for partnership
deceased partner or of any partner under
obligations when he contributed services
legal disability.
instead of only money or property to the
partnership.
2. Duty to account to the partnership as
2. When he allows his surname to appear in the
fiduciary.
firm name.
LIMITED PARTNER 3. When he fails to have a false statement in the
certificate corrected, knowing it to be false.
Rights 4. When he takes part in the control of the
business
5. When he receives partnership property as
1. To have partnership books kept at principal collateral security, payment, conveyance, or
place of business. release in fraud of partnership creditors.
2. To inspect/copy books at reasonable hours. 6. When there is failure to substantially comply
3. To have on demand true and full information with the legal requirements governing the
of all things affecting partnership. formation of limited partnerships.
4. To have formal account of partnership affairs
whenever circumstances render it just and
reasonable.
5. To ask for dissolution and winding up by To separate creditors
decree of court.
6. To receive share of profits/other As in a general partnership, the creditor of a
compensation by way of income. limited partner may, in addition to other
7. To receive return of contributions, provided remedies allowed under existing laws, apply to
the partnership assets are in excess of all its the proper court for a charging order subjecting
liabilities. the interest in the partnership of the debtor
partner for the payment of his obligation.
Obligations
To the partnership
Since limited partners are not principals in the

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

Agency
Villanueva-Tiansay, 2015)
VIII. AGENCY
7. Generally onerous
8. Representative relation – The agent acts for

Contract of agency (2000, 2003 BAR)
and on behalf of the principal on matters within
the scope of his authority and said acts have the
By the contract of agency, a person binds himself to
same legal effect as if they were personally
render some service or to do something in
executed by the principal. (Rabuya, 2017)
representation or on behalf of another, with the
consent or authority of the latter. (Art. 1868, NCC)
9. Fiduciary and Revocable – For the creation of
legal relationship of representation by the agent
NOTE: The essence of agency is representation. For
on behalf of the principal, the powers of the
a Contract of Agency to exist, it is essential that the
former are essentially derived from the latter.
principal consents that the agent shall act on the
Neither the principal nor the agent can be legally
former’s behalf and the agent consents so as to act.
made to remain in the relationship when they
(Rabuya, 2017)
choose to have it terminated.
One factor which most clearly distinguishes agency

Classifications of Agency
from other legal concepts is control; one person – the
agent – agrees to act under the control or direction of
1. As to manner of creation
another – the principal. Indeed, the very word
a. Express – Agent has been actually
“agency” has come to connote control by the
authorized by the principal, either
principal. (Amor Trading Corp. v. CA, G.R. No. 158585,
orally or in writing. (Art. 1869, NCC)
13 Dec. 2005)
b. Implied – Agency is implied from the
acts of the principal, from his silence or
lack of action, or his failure to repudiate
A. NATURE, FORM, AND KINDS the agency, knowing that another
person is acting on his behalf without
authority, (Art. 1869, NCC) or from the
Characteristics of a contract of agency acts of the agent which carry out the
agency, or from his silence or inaction
1. Bilateral – If it is for compensation, it gives rise according to the circumstances. (Art.
to reciprocal rights and obligations. 1870, NCC)
2. Unilateral – If gratuitous, it creates obligations 2. As to character

for only one of the parties. a. Gratuitous – Agent receives no
compensation for his services. (Art.
3. Nominate – It has its own name. 1875, NCC)
b. Onerous or Compensated – Agent
4. Consensual – It is perfected by mere consent. receives compensation for his services.
(Art. 1875, NCC)
5. Principal – It can stand by itself without need of
another contract.
3. As to extent of business of the principal
a. General – Agency comprises all the
6. Preparatory and Progressive – It is entered
business of the principal. (Art. 1876,
into as a means for other purposes that deal with
NCC)
the public in a particular manner: for the agent
b. Special – Agency comprises one or more
to enter into juridical acts with the public in the
specific transactions. (Art. 1876, NCC)
name of the principal. (Villanueva and

2022 GOLDEN NOTES
Civil Law
4. As to authority conferred 4. The agent acts within the scope of his authority.
a. Couched in general terms – Agency is (Sps. Viloria v. Continental Airlines, Inc., G.R. No.
created in general terms and is deemed 188288, 16 Jan. 2012)
to comprise only acts of administration.
(Art. 1877, NCC) Appointment of an agent
b. Couched in specific terms – Agency
authorizing only the performance of a GR: There are no formal requirements governing the
specific act or acts. (Art. 1876, NCC) appointment of an agent.
5. As to nature and effects XPN: When the law requires a specific form, i.e. when
a. Ostensible or Representative – Agent acts sale of land or any interest therein is through an
in the name and representation of the agent, the authority of the latter must be in writing;
principal. (Art. 1868, NCC) otherwise, the sale shall be void. (Art. 1874, NCC)
b. Simple or Commission – Agent acts in his (2010 BAR)
own name but for the account of the
principal. (De Leon, 2014) Rules on Implied Acceptance of agency
Parties to a contract of agency 1. Between persons who are present – The

acceptance of the agency may also be implied if
1. Principal (Mandante) – One whom the agent the principal delivers his power of attorney to
represents and from whom he derives his the agent and the latter receives it without any
authority; he is the person represented or the objection. (Art. 1871, NCC)
person who consents that another shall act on 2. Between persons who are absent – The
his behalf. acceptance of the agency cannot be implied from
the silence of the agent except:
2. Agent (Mandatario) – One who acts for and a. When the principal transmits his power
represents another; he is the person acting in a of attorney to the agent, who receives it
representative capacity. The agent has without any objection;
derivative authority in carrying out the b. When the principal entrusts to him by
principal’s business. (De Leon, 2019) letter or telegram a power of attorney
with respect to the business in which he
Essential elements of an agency is habitually engaged as an agent and he
did not reply to the letter or telegram.
1. Consent (express or implied) of the parties to (Art. 1872, NCC)
establish the relationship.
NOTE: Acceptance by the agent may also be express
NOTE: A person may express his consent: or implied from his acts which carry out the agency,
a. by contract, (Art. 1868, NCC), orally or in or from his silence or inaction according to the
writing; circumstances. (Art. 1870, NCC)
b. by conduct; (Art. 1869, NCC
c. by ratification; Art. 1910, NCC) or Communication of existence of agency
d. the consent may arise by presumption
or operation of law. (De Leon, 2014) Ways of giving notice of agency:
1. By special information – The person appointed as
2. The object is the execution of a juridical act in agent is considered such with respect to the
relation to third persons; person to whom it was given.
2. By public advertisement – The agent is
3. The agent acts as a representative and not for considered as such with regard to any person.
himself; and (Art. 1873, NCC; De Leon, 2019)

Agency
Nature of the relationship between principal and undertaking. (De Leon, 2019)
agent
Theory of imputed knowledge
It is fiduciary in nature that is based on trust and
confidence. The agent is estopped from asserting or The importance of the duty to give information of
acquiring an interest adverse to that of his principal. material facts becomes readily apparent when it is
(De Leon, 2019) borne in mind that knowledge of the agent is
imputed to the principal even though the agent never
Qualifications of a Principal communicated such knowledge to the principal.
(Ibid.)
1. Natural or juridical person; and
2. Must have capacity to enter into contract in his Exceptions to the theory of imputed knowledge
own right. (Ibid.)
1. The agent’s interests are adverse to those of the
NOTE: If a person is capacitated to act for himself or principal;
his own right, he can act through an agent. 2. The agent’s duty is not to disclose the
information, as where he is informed by way of
Insofar as third persons are concerned, it is enough confidential information; and
that the principal is capacitated. But insofar as his 3. The person claiming the benefit of the rule
obligations to his principal are concerned, the agent colludes with the agent to defraud the principal.
must be able to bind himself. (Ibid.)
Kinds of Principal NOTE: The theory of imputed knowledge ascribes

the knowledge of the agent to the principal, not the
1. Disclosed principal – At the time of the other way around. The knowledge of the principal
transaction contracted by the agent, the other cannot be imputed to his agent. (Sunace Intl. Mgmt.
party knows that the agent is acting for a Services, Inc. v. NLRC, G.R. No. 161757, 25 Jan. 2006)
principal and of the principal’s identity.
Kinds of agents
2. Partially disclosed principal – The other party
knows or has reason to know that the agent is or 1. Universal agent – employed to do all acts which
may be acting for a principal but is unaware of the the principal may personally do, and which he
principal’s identity. can lawfully delegate to another the power of
doing.
3. Undisclosed principal – The party has no notice of
the fact that the agent is acting as such for a 2. General agent – employed to transact all
principal. (De Leon, 2019) business of the principal, or all the business of a
particular kind or in a particular place, or in
Joint principals other words, to do all acts connected with a
particular trade, business or employment.
Two or more persons appoint an agent for a common
transaction or undertaking. (Art. 1915, NCC) 3. Special or particular agent – authorized to act in
one or more specific transactions, or to do one or
Requisites for solidary liability of joint principals more specific acts, or to act upon a particular
occasion. (De Leon, 2019)
1. There are two or more principals;
2. They have all concurred in the appointment of
the same agent; and
3. Agent is appointed for a common transaction or

2022 GOLDEN NOTES
Civil Law
Rule with regard to the execution of the agency required them to take out an insurance policy on
the vehicle. In the promissory note, the Spouses
GR: The agent is bound by his acceptance to carry out Briones constituted iBank as their attorney-in-
the agency, in accordance with the instruction of the fact with full power and authority for the
principal and is liable for damages which, through purpose of filing claims with the insurance
his non-performance, the principal may suffer. (Arts. company as may be necessary to prove the claim
1884 & 1887, NCC) and to collect from the latter the proceeds of
insurance in case of loss or damage to the
XPN: If its execution could manifestly result in loss vehicle. The mortgaged BMW Z4 Roadster was
or damage to the principal. (Art. 1888, NCC) carnapped in Tandang Sora, Quezon City.
Spouses Briones declared the loss to iBank,
Responsibility of two or more agents appointed which instructed them to continue paying the
simultaneously next three (3) monthly installments “as a sign of
good faith.” When the Spouses Briones finished
GR: They are jointly liable. (Art. 1894, NCC) paying the three (3)-month installment, iBank
sent them a letter demanding full payment of the
XPN: Solidarity has been expressly stipulated. Each lost vehicle. The Spouses Briones submitted a
of the agents becomes solidarily liable for: notice of claim with their insurance company,
1. The non-fulfillment of the agency but the latter denied the claim due to the
2. Fault or negligence of his fellow agent (Art. 1895, delayed reporting of the lost vehicle.
NCC)
Thereafter, iBank filed a complaint for the
XPNs to the XPN: default of the Spouses to pay monthly
2. When one of the other agents acts beyond the amortizations. RTC ruled that as the duly
scope of his authority – innocent agent is not constituted attorney-in-fact of the Spouses
liable. Briones, iBank had the obligation to facilitate
3. When the fault or negligence of his fellow agents the filing of the notice of claim and then to
was done beyond the scope of their authority – pursue the release of the insurance proceeds.
innocent agent is not liable. (Art. 1895, NCC) The CA also dismissed the complaint. Did an
agency relationship exist between the parties
Instances when the agent may incur personal which obligated iBank to facilitate the filing of
liability the claim against the insurance company?
1. Agent expressly bound himself; A: YES. All the elements of agency exist in this case,
2. Agent exceeded his authority; namely (1) there is consent, express or implied, of
3. Acts of the agent prevented the performance on the parties to establish the relationship of agency;
the part of the principal; (2) the object is the execution of a juridical act in
4. When a person acted as agent without authority relation to a third person; (3) the agent acts as a
or without a principal; and representative and not for himself; and (4) the agent
5. When a person acted as an agent of an acts within the scope of his authority.
incapacitated principal unless the third person
was aware of the incapacity at the time of the Under the promissory note with chattel mortgage,
making of the contract. (De Leon, 2019) Spouses Briones appointed iBank as their attorney-
in-fact, authorizing it to file a claim with the
Q: Spouses Briones took out a loan of insurance company if the mortgaged vehicle was
₱3,789,216.00 from iBank to purchase a BMW lost or damaged. iBank was also authorized to
Z4 Roadster. The monthly amortization for two collect the insurance proceeds as the beneficiary of
(2) years was ₱78,942.00. They executed a the insurance policy. Article 1370 of the Civil Code
promissory note with chattel mortgage that is categorical that when “the terms of a contract are

Agency
clear and leave no doubt upon the intention of the Rule regarding double agency
contracting parties, the literal meaning of its
stipulations shall control. (Union Bank of the GR: Disapproved by law for being against public
Philippines v. Spouses Briones, G.R. No. 205657, 29, policy and sound morality.
Mar. 2017)
XPN: Where the agent acted with full knowledge and
Presumption of contract of agency consent of the principals.
GR: Agency is not presumed. Acts that a principal may delegate to his agent
The relation between principal and agent must exist GR: What a man may do in person, he may do thru
as a fact. Thus, it is held that where the relation of another.
agency is dependent upon the acts of the parties, the
law makes no presumption of agency, and it is always XPNs:
a fact to be proved, with the burden of proof resting 1. Personal acts; and
upon the person alleging the agency to show, not 2. Criminal acts or acts not allowed by law.
only the fact of its existence, but also its nature and (Ibid.)
extent. (Victorias Milling Co., Inc. v. Consolidated
Sugar Corporation, G.R. No. 117356, 19, June 2000) Q: A granted B the exclusive right to sell his brand
of Maong pants in Isabela, the price for his
XPNs: merchandise payable within 60 days from
1. Operation of law; and delivery, and promising B a commission of 20%
2. To prevent unjust enrichment. (De Leon, on all sales. After the delivery of the merchandise
2010) to B but before he could sell any of them, B’s store
in Isabela was completely burned without his
Agency by necessity fault, together with all of A's pants. Must B pay A
for the lost pants? Why? (1999 BAR)
Agency cannot be created by necessity. What is
created instead is additional authority in an agent A: YES. B must pay A for the lost pants. The contract
appointed and authorized before the emergency between A and B is a sale not an agency to sell
arose. By virtue of the existence of an emergency, the because the price is payable by B upon 60 days from
authority of an agent is correspondingly enlarged in delivery even if B is unable to resell it. If B were an
order to cope with the exigencies or the necessities agent, he is not bound to pay the price if he is unable
of the moment. (De Leon, 2019) to resell it. As a buyer, however, ownership passed to
B upon delivery and, under Art. 1504, the thing
Requisites for the additional authority of agent in perishes for the owner. Hence, B must still pay the
cases of necessity price.
1. Real existence of emergency; Proving the existence of principal-agent

2. Inability of the agent to communicate with the relationship through mere representation
principal;
3. Exercise of additional authority is for the Mere representation of an alleged agent is not
principal’s protection; and sufficient to prove the existence of a principal-agent
4. Adoption of fairly reasonable means, premises relationship. The declarations of the agent alone are
duly considered. (Ibid.) generally insufficient to establish the fact or extent of
agency. It is a settled rule that the persons dealing
with the assumed agent are bound at their peril, if
they would hold the principals liable, to ascertain not
only the fact of agency but also the nature and extent

2022 GOLDEN NOTES
Civil Law
of authority, and in case either is controverted, the Agency v. Judicial Administration

burden of proof is upon them to establish it. (Sps. Yu
v. Pan American World Airways, Inc., G.R. No. 123560,
JUDICIAL
27 Mar. 2000) AGENCY
ADMINISTRATION
Agency v. Guardianship As to the source of authority
Judicial administrator
AGENCY GUARDIANSHIP Agent is appointed
is appointed by the
by the principal
As to who they represent court
Guardian represents As to whom they represent

Agent represents a
an incapacitated Represents not only
capacitated person.
person. Represents the the court but also the
principal heirs and creditors of
As to the source of authority the estate.
Agent derives As to the requirement of bond
authority from the
principal and his Guardian derives Judicial Administrator,
authority may at any authority from the Agent does not file a before entering into
time be abrogated or court. bond. his duties, is required
modified by the to file a bond
principal.
As to control of the Agent/Administrator
As to the appointing authority
The acts of an
Agent is appointed by Agent is controlled
Guardian is appointed administrator are
the principal and can by the principal
by the court, and subject to specific
be removed by the through the
stands in loco parentis. provisions of law and
latter. agreement.
orders from the court.
As to being subject to represented person
Agency v. Lease of Services

Guardian is not subject
Agent is subject to to the
directions of the directions of the ward, AGENCY LEASE OF SERVICES
principal. but must act for the As to representation by the agent or worker
ward’s benefit.
Worker or lessor of
As to liability Agent represents the services does not
principal. represent his
Guardian has no
Agent can make the employer.
power to impose
principal personally
personal liability on
liable. As to termination of relationship
the ward.
Relationship can be
Generally, relationship
terminated at the will
can be terminated only
of either principal or
at the will of both.
agent.

Agency
As to the kind of function he exercises Agency v. Trust
Agent exercises The lessor ordinarily

AGENCY TRUST
discretionary performs only
powers. ministerial functions. As to the capacity
to hold title over the property
Agency v. Partnership Trustee may hold
Agent usually holds no
legal title to the
title at all.
AGENCY PARTNERSHIP property.
As to his actions As to his actions
Agent usually acts in

A partner acts not only Trustee may act in his
the name of the
for his co-partners and own name.
Agent acts in the name principal.
the partnership but
of the principal.
also as principal of As to the termination of the relationship
himself.
Trust usually ends by

As to the control by the principal Agency usually may be
the accomplishment
terminated or revoked
A partner’s power to of the purposes for
any time.
bind his co-partner is which it was formed.
An agent must submit not subject to the co-
to the principal’s right partner’s right to
As to the scope of authority over property
to control. control, unless there is
an agreement to that Agency may not be Trust involves
effect. connected at all with control over
property. property.
As to liability
As to the binding effect of the contracts
The ordinary agent A partner acting as entered into by them
assumes no personal agent for the
liability where he acts partnership binds not Trustee does not
Agent has authority to
within the scope of his only the firm members necessarily or even
make contracts which
authority. but himself as well. possess such
will be binding on his
authority to bind the
principal.
As to sharing of profits trustor.
As to its creation
The alleged owner or
partner takes his Trust may be the
The profits belong to
agreed share of profits, Agency is really a result of a contract; it
all the parties as
not as owner but as an contractual relation. may also be created
common proprietors
agreed measure of by law.
in agreed proportions.
compensation for his
services or the like.

2022 GOLDEN NOTES
Civil Law
Kinds of agency as to the extent of powers above sugar crop loans nor filed a case to collect
conferred or foreclose the mortgage.
An agency may be couched in: Thus Remedios and Roy filed a Petition before
1. General terms – It is one which is created in the RTC to cancel the liens annotated on the
general terms and is deemed to comprise only titles of the mortgated properties on grounds of
acts of administration. (Art. 1877, NCC) prescription and extinction of their loan
2. Specific terms – It is necessary to perform any act obligation.
of strict ownership. (De Leon, 2019)
The CA ruled that when mortgagors Sian
Scope of authority of an agent Agricultural Corporation, Sebastian and Marina
de la Pena and Spouses Jerome Gonzales and
The agent must act within the scope of his authority. Perla Sian-Gonzales as registered owners of Lots
He may do such acts as may be conducive to the 1, 8, 214, 215,213-B and 96, respectively,
accomplishment of the purpose of the agency. (Art. authorized petitioner-appellee and her son Roy
1881, NCC) Sian Liamsiaco to mortgage their properties,
they allowed a burden to be placed therein
However, the limits of the agent’s authority shall not bearing the risk of losing it if the loans were not
be considered exceeded should it have been paid. It is because of this risk that mortgagors
performed in a manner more advantageous to the should be absolute owners, or, that special
principal than that specified by him. (Art. 1882, NCC) authority from the owners of the properties
must be given before their properties can be
Q: Remedios obtained a P142,500.00 sugar crop encumbered through mortgage.
loan from Maybank which was payable within
one year. Through a Special Power of Attorney Since the lifting of this encumbrance is a benefit
(SPA), Remedios executed a Real Estate that would free the owners of the risk of losing
Mortgage (REM) on the following parcels of their properties, it is only a matter of course that
land: (a) Lot 8, covered by Transfer Certificate of the special power to mortgage includes the
Title No. (TCT) T-74488, which is owned by Sian authority to discharge it from the burden. Does
Agricultural Corporation; (b) Lot 1, covered by the authority to encumber one's land title
TCT No. 55619, which is owned by spouses naturally includes the authority to perform acts
Sebastian and Marina de la Pena. Subsequently to disencumber such title?
in 1982, Remedios and her son Roy Sian-
Limsiaco (Roy) obtained another sugar crop A: YES. Article 1882 of the Civil Code expressly
loan for P307,700.00 which was likewise due provides: The limits of the agent's authority shall
after one year. not be considered exceeded should it have been
performed in a manner more advantageous to the
Through another SPA, Roy executed a REM on principal than that specified by him. Given this and
the following parcels of land owned by Spouses considering that respondent was already given
Jerome Gonzales and Perla Sian-Gonzales:(a) special authority to encumber the mortgagors-
Lot 214, covered by TCT No. T-121539; (b) Lot principals' titles with the subject mortgage
215, covered by TCT No. T-121540; (c) Lot213- contracts, then it is indeed implicit that respondent
B, covered by TCT No. T-121541;(d) Lot 96, is also authorized to do all the necessary acts to
covered by TCT No. T-80515. Likewise, in 1984, release the mortgagors-principals from such
Remedios obtained another sugar crop loan for encumbrance. Thus, the filing of the instant case to
P110,000.00 also secured by a REM on Lot 8 cancel the mortgage liens, which were annotated in
owned by Sian Agricultural Corporation the mortgagor-principals' respective titles through
Maybank never demanded payment of the the special authority granted by them to
respondent, should be considered within the limits

Agency
of respondent's authority since disencumbering the Rule as to when the Principal is NOT Bound by
mortagagors-principals' titles of the same mortgage the act of the agent
liens are obviously advantageous to the latter.
Moreover, the registered owners of the mortgaged 1. GR: When the act is without or beyond the
lands (alleged to be the real parties-in-interest) scope of his authority in the principal’s name.
never questioned the authority of respondent all XPNs:
throughout the proceedings nor did they file any a. Where the acts of the principal have
pleading or motion to that effect. In short, the real contributed to deceive a 3rd person in
parties-in-interest effectively ratified the act of good faith;
respondent of filing an action to cancel the b. Where the limitations upon the power
mortgage. (Maybank Ph., Inc. v. Sian-Limsiaco, G.R. created by the principal could not have
No. 196323, 08 Feb. 2021) been known by the 3rd person;
c. Where the principal has placed in the
Instances when the act of an agent is binding to hands of the agent instruments signed
the principal by him in blank; and
d. Where the principal has ratified the acts
1. When the agent acts as such without expressly of the agent.
binding himself or does not exceed the limits of
his authority. (Art. 1897, NCC) 2. GR: When the act is within the scope of the
2. If principal ratifies the act of the agent which agent’s authority but in his own name.
exceeded his authority. (Art. 1898, NCC)
3. Circumstances where the principal himself was, XPN: When the transaction involves things
or ought to have been aware. (Art. 1899, NCC) belonging to the principal. (Art. 1883, NCC)
4. If such act is within the terms of the power of
attorney, as written. (Arts. 1900 & 1902, NCC) NOTE: The limits of the agent’s authority shall not be
5. Principal has ratified, or has signified his considered exceeded should it have been performed
willingness to ratify the agent’s act. (Art. 1901, in a manner more advantageous to the principal than
NCC) that specified by him. (Art. 1882, NCC)
Effects of the Acts of an Agent RIGHTS OF AGENTS
1. With authority Right of agent to retain in pledge object of agency

a. In principal’s name – Valid (Legal Pledge) (2015 BAR)
b. In his own name – Not binding on the
principal; agent and stranger are the The agent may retain in pledge the things which are
only parties, except regarding things the object of the agency until the principal effects the
belonging to the principal or when the reimbursement and pays the indemnity:
principal ratifies the contract or derives 1. If principal fails to reimburse the agent the
benefit therefrom. necessary sums, including interest, which the
2. Without authority latter advanced for the execution of the agency.
a. In principal’s name – Unenforceable but (Art. 1912, NCC)
may be ratified, in which case, may be
validated retroactively from the 2. If principal fails to indemnify the agent for all
beginning. damages which the execution of the agency may
b. In his own name – Valid on the agent, but have caused the latter, without fault or
not on the principal. (De Leon, 2019) negligence on his part. (Art. 1913, NCC)

2022 GOLDEN NOTES
Civil Law
Rule where two persons deal separately with the maintain an action on his own behalf against the
agent and the principal other party for its breach.
If the two contracts are incompatible with each An agent entitled to receive a commission from his
other, the one of prior date shall be preferred. This is principal upon the performance of a contract which
subject however to the rule on double sale under Art. he has made on his principal's account does not, from
1544 of the NCC. (Art. 1916, NCC) this fact alone, have any claim against the other party
for breach of the contract, either in an action on the
NOTE: Rules of preference in double sale contract or otherwise.
1. Personal property – possessor in good faith An agent who is not a promisee cannot maintain an
2. Real property action at law against a purchaser merely because he
a. Registrant in good faith; is entitled to have his compensation or advances paid
b. In the absence of inscription, possessor in out of the purchase price before payment to the
good faith; principal. (Uy v. CA, G.R. No. 120465, 09 Sept. 1999)
c. In the absence of possession, person with the
oldest title in good faith. (Art. 1544, NCC)
If agent acted in good faith, the principal shall be

liable for damages to the third person whose
contract must be rejected. If agent is in bad faith, he
alone shall be liable. (Art. 1917, NCC)
A person acting as an agent cannot escape

criminal liability by virtue of the contract of
agency
The law on agency has no application in criminal

cases. When a person participates in the commission
of a crime, he cannot escape punishment on the
ground that he simply acted as an agent of another
party. (Ong v. CA, G.R. No. 119858, 29 Apr 2003)
An agent cannot maintain an action against

persons with whom they contracted on behalf of
his principal.
Agents are not a party with respect to that contract

between his principal and third persons. As agents,
they only render some service or do something in
representation or on behalf of their principals. The
rendering of such service did not make them parties
to the contracts of sale executed in behalf of the
latter.
The fact that an agent who makes a contract for his

principal will gain or suffer loss by the performance
or non-performance of the contract by the principal
or by the other party thereto does not entitle him to

Agency
principal if he has been authorized to lend

B. OBLIGATIONS OF THE AGENT money at interest; (Art. 1890, NCC)
10. Render an account of his transactions and to

deliver to the principal whatever he may have
Specific obligations of an agent to the principal
received by virtue of the agency, even though it
may not be owing to the principal; (Art. 1891,
1. Carry out the agency;
NCC)
2. Answer for damages which, through his non-

NOTE: Every stipulation exempting the agent
performance, the principal may suffer;
from the obligation to render an account shall be
void. (Art. 1891(2), NCC)
3. Finish the business already begun on the death of
the principal, should delay entail any danger;
11. Distinguish goods by countermarks and
(Art. 1884, NCC)
designate the merchandise respectively
belonging to each principal, in the case of a
NOTE: The agency shall also remain in full force
commission agent who handles goods of the
even after the death of the principal if it has been
same kind and mark, which belong to different
constituted in the common interest of the latter
owners; (Art. 1904, NCC);
and of the agent, or in the interest of a third
person who has accepted the stipulation in his
12. Be responsible in certain cases for the acts of the
favor. (Art. 1930, NCC)
substitute appointed by him; (Art. 1892, NCC)
(1999 BAR)
4. Observe the diligence of a good father of a family
in the custody and preservation of the goods
13. Pay interest on funds he has applied to his own
forwarded to him by the owner in case he
use; (Art. 1896, NCC)
declines an agency, until an agent is appointed;
(Art. 1885, NCC)
14. Inform the principal, where an authorized sale of
credit has been made, of such sale; (Art. 1906,
NOTE: The owner shall as soon as practicable
NCC)
either appoint an agent or take charge of the
goods.
15. Bear the risk of collection and pay the principal
the proceeds of the sale on the same terms
5. Advance the necessary funds should there be a
agreed upon with the purchaser, should he
stipulation to do so except when the principal is
receive also on sale, a guarantee commission;
insolvent; (Art. 1886, NCC)
(Art. 1907, NCC) (2004 BAR)
6. Act in accordance with the instructions of the

16. Indemnify the principal for damages for his
principal and in default thereof, do all that a good
failure to collect the credits of his principal at the
father of a family would do; (Art. 1887, NCC)
time that they become due; (Art. 1908, NCC)
7. Not to carry out the agency if its execution would

17. Be responsible for fraud or negligence. (Art.
manifestly result in loss or damage to the
1909, NCC; De Leon, 2014)
principal; (Art. 1888, NCC)
NOTE: The court shall judge with more or less rigor,

8. Answer for damages if there being a conflict
the fault or negligence of the agent, according to
between his interests and those of the principal,
whether the agency was or was not for
he should prefer his own; (Art. 1889, NCC)
compensation. (Art. 1909, NCC)
9. Not to loan to himself without the consent of the

2022 GOLDEN NOTES
Civil Law
Instructions NOTE: If an act done by an agent is within the

apparent scope of the authority with which he has
Private directions which the principal may give the been clothed, it matters not that it is directly
agent in regard to the manner of performing his contrary to the instructions of the principal. The
duties as such agent but of which a third party is principal will, nevertheless, be liable unless the third
ignorant are said to be secret if the principal person with whom the agent dealt knew that he was
intended them not to be made known to such party. exceeding his authority or violating his instructions.
(De Leon, 2019)
Third persons dealing with an agent do so at their
Obligation of a person who declines an agency peril and are bound to inquire as to the extent of his
authority but they are not required to investigate the
A person who declines an agency is still bound to instructions of the principal. (De Leon, 2019)
observe the diligence of a good father of the family in
the custody and preservation of goods forwarded to Breach of loyalty of the agent
him by the owner. This is based on equity. (Ibid.)
In case of breach of loyalty, the agent is NOT entitled
Authority v. Principal’s instructions to commission. The forfeiture of the commission will
take place regardless of whether the principal suffers
AUTHORITY INSTRUCTIONS any injury by reason of such breach of loyalty. It does
not even matter if the agency is for a gratuitous one,
As to the scope or that the principal obtained better results, or that
Contemplates only a usage and customs allow a receipt of such a bonus.
Sum total of the
private rule of guidance
powers committed to When the obligation to account not applicable
to the agent;
the agent by the
independent and
principal 1. If the agent acted only as a middleman with the
distinct in character
task of merely bringing together the vendor and
As to the relationship to the agent vendees.
Relates to the 2. If the agent informed the principal of the
Refers to the manner or gift/bonus/profit he received from the
subject/ business or
mode of agent’s action purchaser and his principal did not object
transactions with
with respect to matters thereto.
which the agent is
within the scope of 3. Where a right of lien exists in favor of the agent.
empowered to deal or
permitted action (Ibid.)
act
As to third persons Sub-Agent
Limitations of A sub-agent is a person employed or appointed by an

Without significance as
authority are agent as his agent, to assist him in the performance
against those dealing
operative as against of an act for the principal which the agent has been
with the agent with
those who have or are empowered to perform.
neither knowledge nor
charged with
notice of them
knowledge of them Unless prohibited by the principal, the agent may
As to purpose appoint a sub-agent or substitute. However, an agent
may not delegate to a sub-agent where the work
Contemplated to be Not expected to be made
entrusted to him by the principal to carry out
made known to third known to those with
requires special knowledge, skill or competence
persons dealing with whom the agent deals
unless he has been authorized to do so by the
the agent (De Leon, 2014)
principal. (Ibid.)

Agency
Effects of Substitution NOTE: When the transaction involves things

belonging to the principal, his remedy is to sue the
1. When substitution is prohibited– All acts of the agent for damages because of failure to comply
substitute shall be void. (Art. 1892(2), NCC) with the agency.
2. When substitution is authorized Within the scope of the written power of

a. The principal did not designate any attorney but agent has actually exceeded his
particular person – The substitution has authority according to an understanding
the effect of releasing the agent from his between him and the principal
responsibility unless the person
appointed is notoriously incompetent or 1. Insofar as third persons are concerned (they
insolvent. (Art. 1892(2), NCC) are not required to inquire further than the
b. The principal designated the substitute – terms of the written power), agent acted
Results in the absolute exemption of the within scope of his authority;
agent. 2. Principal is estopped.
3. When substitution not authorized, but not With improper motives

prohibited– Valid if the substitution is beneficial
to the principal but if the substitution has Motive is immaterial; as long as within the scope
occasioned damage to the principal, the agent of authority, valid.
shall be primarily responsible for the act of the
With misrepresentations by the agent
substitute. (De Leon, 2019)
1. Authorized – principal still liable
SUMMARY OF RULES: ACTS OF AN AGENT 2. Beyond the scope of the agent’s authority
In behalf of the principal, GR: Principal is not liable.

within the scope of authority
XPN: Principal takes advantage of a contract or
1. Binds principal; receives benefits made under false representation
2. Agent not personally liable. of his agent.
Mismanagement of the business by the agent

Without or beyond scope of authority
1. Principal still responsible for the acts
Contract is unenforceable as against the principal contracted by the agent with respect to 3rd
but binds the agent to the third person. persons;
2. Principal, however, may seek recourse from
Binding on the principal when: the agent.
1. Ratified; or
2. The principal allowed the agent to act as Tort committed by the agent
though he had full powers.
Principal civilly liable so long as the tort is
committed by the agent while performing his
Within the scope of authority
duties in furtherance of the principal’s business.
but in the agent’s name
1. Not binding on the principal; Agent in good faith
2. Principal has no cause of action against the 3 rd but prejudices third parties
parties and vice versa Principal is liable for damages.

2022 GOLDEN NOTES
Civil Law
Third party’s Liabilities to Agent presentation of the power of attorney or the

instructions as regards the agency. (Art. 1902, NCC)
GR: A third party’s liability on agent’s contracts is to
the principal, not to the agent. Q: When may the actual or apparent authority of
the agent bind the principal?
XPNs: A third party subjects himself to liability at the
hands of the agent where the: A: The principal is bound by the acts of the agent on
his behalf, whether or not the third person dealing
1. Agent contracts in his own name for an with the agent believes that the agent has actual
undisclosed principal; authority, so long as the agent has actual authority,
2. Agent possesses a beneficial interest in the express or implied. (De Leon, 2019)
subject matter of the agency;
3. Agent pays money of his principal to a third Doctrine of Apparent Authority
party by mistake under a contract which proves
subsequently to be illegal, the agent being The doctrine provides that even if no actual authority
ignorant of the illegality; and has been conferred on an agent, his or her acts, as
4. Third party commits a tort against the agent. (De long as they are within his or her apparent scope of
Leon, 2019) authority, bind the principal. (Calubad v. Ricarcen
Development Corporation, G.R. No. 202364, 30 Aug.
Scope of the agent’s authority as to third persons 2017)
It includes not only the actual authorization The existence of apparent authority may be
conferred upon the agent by his principal but also ascertained through:
that which is apparent or impliedly delegated to him. 1. The general manner in which the principal holds
(De Leon, 2019) out an agent as having the power to act, with
which it clothes him; or
Q: When is a third person required to inquire into 2. The acquiescence of the principal in the agent’s
the authority of the agent? acts of a particular nature, with actual or
constructive knowledge thereof, within or
A: beyond the scope of his authorities. (Sargasso
1. Where authority is not in writing – Every person Const. & Dev. Corp. v. Philippine Ports Authority,
dealing with an assumed agent is put upon an G.R. No. 170530, 05 July 2010)
inquiry and must discover upon his peril, if he
would hold the principal liable, not only the fact The principal is liable only as to third persons who
of the agency but the nature and extent of the have been led reasonably to believe by the conduct
authority of the agent. (Safic Alcan & CIE v. of the principal that such actual authority exists,
Imperial Vegetable Oil Co., Inc., G.R. No. 126751, although none has been given. (Banate v. Philippine
28 Mar. 2001) If he does not make an inquiry, he Countryside Rural Bank, Inc., G.R. No. 163825, 13 July
is chargeable with knowledge of the agent’s 2010)
authority, and his ignorance of that authority
will not be an excuse.
2. Where authority is in writing –if authority of an
agent is in writing, such person is not required to
inquire further than the terms of the written
power of attorney. (De Leon, 2019)
NOTE: A third person with whom the agent wishes

to contract on behalf of the principal may require the

Agency
Apparent Authority v. Authority by Estoppel Marilyn and Calubad. Should Ricarcen be bound
by the allegedly representative acts of Marilyn?
Apparent Authority Authority by Estoppel
A: YES. Ricarcen should be bound by the acts of
As to the knowledge of the principal of Marilyn, whom it had clothed with apparent
the authority of the agent authority. The doctrine of apparent authority that is
Arises when the based on the principle of estoppel, in accordance
principal, by his with Articles 1431 and 1869 of the New Civil Code,
Though not actually culpable negligence, provides that even if no actual authority has been
granted, the principal permits his agent to conferred on an agent, his or her acts, as long as they
knowingly permits exercise powers not are within his or her apparent scope of authority,
the agent to exercise granted to him, even bind the principal.
or holds him out as though the principal
possessing may have no notice or In the case at bar, it was within Marilyn’s scope of
knowledge of the authority as president to act for and enter into
agent’s conduct contracts in Ricarcen’s behalf. This could be seen
with how the corporate secretary entrusted her
As to the establishment of the authority
with blank yet signed sheets of paper to be used at
Founded on the her discretion, which apparently caused the
Founded in conscious
principal’s negligence in execution of the allegedly falsified secretary
permission of acts
failing properly to certificates. It reasonably appeared that Ricarcen’s
beyond the powers
supervise the affairs of officers knew of the mortgage contracts entered
granted
the agent into by Marilyn in Ricarcen’s behalf as proved by the
checks drawn and issued by Ricarcen as payments
Q: Marilyn R. Soliman (“Marilyn”), allegedly to Calubad for the monthly interest and principal
acting on behalf of Ricarcen Development loans. Calubad, as an innocent third party dealing in
Corporation (“Ricarcen”) of which she was good faith with Marilyn, should not be made to
president, took out a total of P 7,000,000.00 loan suffer because of Ricarcen's negligence in
from Arturo C. Calubad (“Calubad”) at a conducting its own business affairs. If a private
compounded monthly interest rate, which was corporation intentionally or negligently clothes its
secured by a real estate mortgage over officers or agents with apparent power to perform
Ricarcen’s real property in Quezon City. acts for it, the corporation will be estopped to deny
that such apparent authority is real, as to innocent
To prove her authority to execute the three third persons dealing in good faith with such
mortgage contracts on Ricarcen’s behalf, officers or agents. (Calubad v. Ricarcen Dev. Corp.,
Marilyn presented Calubad with a Board G.R. No. 202364, 30 Aug. 2017)
Resolution and Secretary’s Certificates, later
alleged to be falsified. Due to Ricarcen’s failure Q: Performance Forex Corp. is a corporation
to pay its loan, the mortgage was foreclosed, operating as a financial broker/agent between
eventually resulting to the issuance of a market participants in foreign exchange
Certificate of Sale in favour of Calubad as the transactions. Cancio and Pampolina accepted
highest bidder, and thus, the issuance of a the invitation of Performance Forex Corp.’s
certificate of title in his name. agent, Hipol, to open a joint account with
Performance Forex Corp. Hipol was authorized
When Ricarcen discovered these transactions of by Performance Forex Corp. to follow and
Marilyn, it filed before the Regional Trial Court execute the trade orders of Cancio and
(“RTC”) a complaint for Annulment of Real Pampolina.
Estate Mortgage and Extrajudicial Foreclosure
of Mortgage and Sale, with Damages against

2022 GOLDEN NOTES
Civil Law
However, it was later found out that Hipol did Rules regarding estoppel in agency
not execute the orders of Cancio and Pampolina
and instead made unauthorized transactions 1. Estoppel of agent – One professing to act as agent
resulting into the loss of all of their money. for another may be estopped to deny his agency
Hence, Cancio and Pampolina filed a complaint both as against his asserted principal and the
for damages against both Performance Forex third persons interested in the transaction in
Corp. and its agent, Hipol for what happened. Is which he engaged.
Performance Forex Corp. solidarily liable to
Cancio and Pampolina for Hipol’s acts? 2. Estoppel of principal
a. As to agent – One who knows that another is
A: NO. A principal who gives broad and unbridled acting as his agent and fails to repudiate his
authorization to his or her agent cannot later hold acts, or accepts the benefits, will be estopped
third persons who relied on that authorization to deny the agency as against the other.
liable for damages that may arise from the agent's b. As to sub-agent – To estop the principal from
fraudulent acts. Hipol was not employed with denying his liability to a third person, he
Performance Forex Corp. He was categorized as an must have known or be charged with
independent broker for commission. Cancio and knowledge of the fact of the transaction and
Pampolina conferred trading authority to Hipol and the terms of the agreement between the
thus made him their agent. Performance Forex Corp. agent and sub-agent.
was not privy to how Cancio and Pampolina c. As to third persons – One who knows that
instructed Hipol to carry out their orders. another is acting as his agent or permitted
another to appear as his agent, to the injury
Thus, since the acts of Hipol were the direct cause of of third persons who have dealt with the
the injury, there is no reason to hold Performance apparent agent as such in good faith and in
Forex Corp. liable for actual and moral damages. If the exercise of reasonable prudence, is
there was any fault, the fault remains with Hipol and estopped to deny the agency.
him alone. (Cancio v. Performance Foreign Exchange
Corp., G.R. No. 182307, 06 June 2018) 3. Estoppel of third persons – A third person, having
dealt with one as agent may be estopped to deny
AGENCY BY ESTOPPEL the agency as against the principal, agent, or
third persons in interest.
It is when the principal is bound by the acts of his 4. Estoppel of the government – The government is
agent with the apparent authority which he not estopped by the mistake or error on the part
knowingly permits the agent to assume, ot which he of its agents. (Republic v. Bacas, G.R. No. 182913,
holds the agent out to the public as possessing (AFP 20 Nov. 2013)
Retirement and Separation Benefits System
[AFPRSBS], G.R. No. 207586, 16 Aug. 1969) Q: In an expropriation case between RP and
several property owners in Mandaluyong for
Requisites of Agency by Estoppel construction of the EDSA-Shaw Boulevard
Overpass Project, decision was rendered against
1. The principal manifested a representation of the the RP. The RP through the OSG received the
agent’s authority or knowingly allowed the decision on October 7, 2002 but it was only
agent to assume such authority; October 20, 2003 that RP filed a petition for
2. The third person, in good faith, relied upon such certiorari. It resorted to an independent civil
representation; and action because it failed to file within the 15-day
3. Relying upon such representation, such third reglementary period. Is the Republic bound and
person has changed his position to his put in estoppel by the gross negligence/mistake
detriment. (Country Bankers Ins. Corp. v. Keppel of its agent/former counsel?
Cebu Shipyard, G.R. No. 166044, 18 June 2012)

Agency
A: While the Republic or the government is usually this purpose has to be placed in his possession and at
not estopped by the mistake or error on the part of its his disposal. (Jurado, 2019)
officials or agents, the Republic cannot now take
refuge in the rule as it does not afford a blanket or Broker
absolute immunity. The pronouncement in Republic
v. CA (G.R. No. 104678, 20 July 1992) is instructive: the He is a middleman or intermediary who, in behalf of
Solicitor-General may not be excused from its others, and for a commission or fee, negotiates
shortcomings by invoking the doctrine as if it were contracts or transactions relative to real or personal
some magic incantations that could benignly, if property.
arbitrarily, condone and erase its errors.
NOTE: Distinguished from an agent: An agent is
The rule on non-estoppel of the government is not authorized to enter into judicial acts in behalf of the
designed to perpetrate an injustice. In general, the principal but a true broker is merely an intermediary
rules on appeal are created and enforced to ensure between the parties and he has no power to enter
the orderly administration of justice. The judicial into a contract in behalf of any of the parties. (CIR v.
machinery would run aground if late petitions, like Cadwallader Pacific Co., G.R. No. L-20343, 29 Sept.
the present one, are allowed on the flimsy excuse 1976)
that the attending lawyer was grossly lacking in
vigilance. (Leca Realty Corp. v. Republic, G.R. Nos. Rules
155605 & 160179, 27 Sept. 2006)
1. Efficient and procuring cause – a principle in the
Implied Agency v. Agency by Estoppel law on agency whereby the broker, to be entitled
to compensation, must be the efficient agent or
IMPLIED AGENCY AGENCY BY ESTOPPEL procuring cause of the sale;
As to liability between principal and agent 2. Ready-willing-and-able Rule – a principle which

If caused by the “agent,” states that for a broker to be entitled to
Agent is a true agent, commission, he must provide a person who is
he is not considered a
with rights and ready, willing and able both to accept and live up
true agent, hence, he has
duties of an agent. to the terms offered by his principal; (Albano,
no rights as such.
2013)
As to liability to third persons
3. Procuring Cause - Procuring cause is meant to be
1. If caused by the the proximate cause. The term procuring cause,
principal, he is in describing a broker’s activity, refers to a cause
liable, but only if originating a series of events which, without
The principal is the third person break in their continuity, result in
always liable; acted on the accomplishment of prime objective of the
The agent is never misrepresentation; employment of the broker producing a
personally liable. purchaser ready, willing and able to buy real
2. If caused by the agent estate on the owner’s terms. A broker will be
alone, only the agent regarded as the procuring cause of a sale, so as
is liable. to be entitled to commission, if his efforts are the
foundation on which the negotiations resulting
Factor or Commission agent in a sale are begun. The broker must be the
efficient agent or the procuring cause of the sale.
One who is engaged in the business of buying and The means employed by him and his efforts must
selling for a principal of personal property, which for result in the sale. He must find the purchaser,
and the sale must proceed from his efforts acting

2022 GOLDEN NOTES
Civil Law
as broker. (Medrano v. CA, G.R. No. 150678, 18 AGENCY COUCHED IN GENERAL TERMS
Feb. 2005) (1992 BAR)
Factorage It is created in general terms and is deemed to

comprise only acts of administration even if the
It is the compensation of a factor or commission principal should state:
agent.
1. That he withholds no power;
NOTE: A factor or commission agent is one whose 2. That the agent may execute such acts as he may
business is to receive and sell goods for a consider appropriate; or
commission; also called factorage. (De Leon, 2019) 3. That the agency should authorize a general and
unlimited management. (Art. 1877, NCC)
Ordinary commission
Acts of administration
It is the fee or compensation for the sale of goods
which are placed in the agent’s possession and at his Refers to those acts which do not imply the authority
disposal. to alienate for the exercise of which an express
power is necessary. (De Leon, 2019)
Guarantee commission or del credere
commission (2004 BAR) Unless the contrary appears, the authority of an
agent is presumed to include all the necessary and
It is the additional fee or compensation which is usual means to carry out the agency into effect.
given in return for the risk that the agent has to bear
in the collection of credits. NOTE: Payment is an act of administration when it is
made in the ordinary course of management. (Art.
Should the commission agent receive on sale, in 1878, NCC; De Leon, 2019)
addition to the ordinary commission, a guarantee
commission shall: The making of customary gifts for charity, or those
(i) bear the risk of collection; and made to employees in the business managed by the
(ii) pay the principal the proceeds of the agent are considered acts of administration. (Art.
sale on the same terms agreed upon 1878, NCC; De Leon, 2019)
with the purchaser. (Art. 1907, NCC)
AGENCY REQUIRING
The purpose of the guarantee commission is to SPECIAL POWER OF ATTORNEY
compensate the agent for the risks he will have to
bear in the collection of the credit due the principal. Special power of attorney (SPA)
(De, Leon, 2019)
It is an instrument in writing by which one person, as
Del credere agent principal, appoints another as his agent and confers
upon him the authority to perform certain specified
He is the agent who guarantees payment of the acts or kinds of acts on behalf of the principal with a
customer’s account in consideration of the higher primary purpose to evidence agent’s authority to
commission. A del credere agent may sue in his name third parties with whom the agent deals. (De Leon,
for the purchase price in the event of non- 2019)
performance by the buyer. (De Leon, 2019)
NOTE: The requirement of an SPA refers to the
nature of the authorization and not to is form. If the
SPA is not written, then it must be duly established

Agency
by evidence. Gozun v. Mercado, G.R. No. 167812, 19 12. To make gifts, except customary ones for charity
Dec. 2006) or those made to employees in the business
managed by the agent;
Intervention of a notary public in the validity of 13. To compromise, to submit questions to
an SPA arbitration, to renounce the right to appeal from
a judgment, to waive objections to the venue of
GR: A power of attorney is valid although no notary an action or to abandon a prescription already
public intervened in its execution. (Angeles v. PNR, acquired;
G.R. No. 150128, 31 Aug. 2006) 14. Any other act of strict dominion; and
15. To waive an obligation gratuitously. (Art. 1878,
XPN: When SPA is executed in a foreign country, it NCC)
must be certified and authenticated in accordance
with Sec. 24, Rule 132, ROC. (Sps. Alcantara v. Nido, Limitations to an SPA
G.R. No. 165133, 19 Apr. 2010)
1. A special power to sell excludes the power to
NOTE: The failure to have the special power of mortgage;
attorney (executed in a foreign country) 2. A special power to mortgage does not include
authenticated is not merely a technicality – it is a the power to sell; (Art. 1879, NCC) and
question of jurisdiction. Jurisdiction over the person 3. A special power to compromise does not
of the real party-in-interest was never acquired by authorize submission to arbitration. (Art. 1880,
the courts. (Heirs of Medina v. Natividad, G.R. No. NCC)
177505, 27 Nov. 2008)
NOTE: The scope of the agent’s authority is what
An SPA is required: (1992, 2004 BAR) appears in the written terms of the power of
attorney. While third persons are bound to inquire
1. To create or convey real rights over immovable into the extent or scope of the agent’s authority, they
property; are not required to go beyond the terms of the
2. To enter into any contract by which the written power of attorney. Third persons cannot be
ownership of an immovable is transmitted or adversely affected by an understanding between the
acquired either gratuitously or for a valuable principal and his agent as to the limit of the latter’s
consideration; authority. In the same way, third persons need not
3. To loan or borrow money, unless the latter act be concern themselves with instruction given by the
urgent and indispensable for the preservation of principal to his agent outside of the written power of
the things which are under administration; attorney. (Siredy Enterprises, Inc. v. CA, G.R. No.
4. To lease any real property to another person for 129039, 27 Sept. 2002)
more than one year;
5. To make such payments as are not usually Construction of Powers of Attorney
considered as acts of administration;
6. To obligate principal as guarantor or surety; Powers of attorney are generally construed strictly,
7. To bind the principal to render some service and courts will not infer or presume broad powers
without compensation; from deeds which do not sufficiently include
8. To bind the principal in a contract of property or subject under which the agent is to deal.
partnership; However, the rule is not absolute and should not be
9. To ratify obligations contracted before the applied to the extent of destroying the very purpose
agency; of the power. (De Leon, 2019)
10. To accept or repudiate an inheritance;
11. To effect novation which put an end to Q: X was the owner of an unregistered parcel of
obligations already in existence at the time the land in Cabanatuan City. As she was abroad, she
agency was constituted;

2022 GOLDEN NOTES
Civil Law
advised her sister Y via overseas call to sell the withdrawal of the agent, it is on the condition that no
land and sign a contract of sale on her behalf. damage results to the principal, and if the agent
desires to be relieved of the obligation of making
Y thus sold the land to B1 on March 31, 2001 and reparation when he withdraws for a just cause, he
executed a deed of absolute sale on behalf of X. B1 must continue to act so that no injury may be caused
fully paid the purchase price. B2, unaware of the to the principal. (De Leon, 2019)
sale of the land to B1, signified to Y his interest to
buy it but asked Y for her authority from X.
Without informing X that she had sold the land to

B1, Y sought X for a written authority to sell. X e-
mailed Y an authority to sell the land. Y
thereafter sold the land on May 1, 2001 to B2 on
monthly installment basis for two years, the first
installment to be paid at the end of May 2001.
Who between B1 and B2 has a better right over
the land? Explain. (2010 BAR)
A: B-2 has a better title. This not a case of double sale

since the first sale was void. The law provides that
when a sale of a piece of land or any interest therein
is through an agent, the authority of the latter shall
be in writing; otherwise, the sale shall be void. (Art.
1874, NCC)
The property was sold by Y to B1 without any written

authority from the owner X. Hence, the sale to B1 was
void.
AGENCY BY OPERATION OF LAW
Instances where an agency is created by

operation of law
When the agent withdraws from the agency for a

valid reason, he must continue to act until the
principal has had a reasonable opportunity to take
the necessary steps like the appointment of a new
agent to remedy the situation caused by the
withdrawal; (Art. 1929, NCC) and
In case a person declines an agency, he is bound to

observe the diligence of good father of the family in
the custody and preservation of the goods forwarded
to him by the owner until the latter should appoint
an agent. (Art. 1885, NCC)
NOTE: The law reconciles the interests of the agent

with those of the principal, and if it permits the

Agency
Liability for the contracts entered by the agent

C. OBLIGATIONS OF THE PRINCIPAL
GR: The principal must comply with all the
obligations which the agent may have contracted
within the scope of his authority.
Specific obligations of the principal to the agent
XPN: Where the agent exceeded his authority.

1. Comply with all obligations which the agent may
have contracted within the scope of his authority
XPN to the XPN: When the principal ratifies it
(Art. 1910(1), NCC) and in the name of the
expressly or tacitly. (Art. 1910, NCC)
principal;
2. Advance to the agent, should the latter so request,
NOTE: Based on the principle of estoppel, the
the sums necessary for the execution of the
principal becomes solidarily liable with the agent if
agency;
the former allowed the latter to act as though he had
3. Reimburse the agent for all advances made by
full powers even if the agent has exceeded his
him, even if the business or undertaking was not
authority. (Art. 1911, NCC)
successful, provided the agent is free from fault;
(Art. 1912, NCC)
Liability for tort committed by the agent
4. Indemnify the agent for all damages which the
execution of the agency may have caused the
GR: Where the fault or crime committed by the agent
latter without fault or negligence on his part;
is not in the performance of an obligation of the
(Art. 1913, NCC) and
principal, the latter is not bound by the illicit acts of
5. Pay the agent the compensation agreed upon, or
the agent, even if it is done in connection with the
if no compensation was specified, the reasonable
agency. (De Leon, 2019)
value of the agent’s services. (Arts. 1875 & 1306,
NCC)
XPNs:
1. Where the tort was committed by the agent
Liability for the expenses incurred by the agent
because of defective instructions from the
principal or due to lack of necessary vigilance or
GR: Principal is liable for the expenses incurred by
supervision on his part; or
the agents.
2. When the tort consists in the performance of an
act which is within the powers of an agent but
XPNs:
becomes criminal only because of the manner in
1. If the agent acted in contravention of the
which the agent has performed it; the principal
principal’s instructions, unless principal should
is civilly liable to 3rd persons who acted in good
wish to avail himself of the benefits derived from
faith.
the contract;
2. When the expenses were due to the fault of the
Q: CX executed a special power of attorney
agent;
authorizing DY to secure a loan from any bank
3. When the agent incurred them with knowledge
and to mortgage his property covered by the
that an unfavorable result would ensue, if the
owner’s certificate of title. In securing a loan
principal was not aware thereof; or
from bank, DY did not specify that he was acting
4. When it was stipulated that the expenses would
for CX in the transaction with said bank. Is CX
be borne by the agent, or that the latter would be
liable for the bank loan? Why or why not? Justify
allowed only a certain sum. (Art. 1918, NCC)
your answer. (2004 BAR)
A: While as a general rule the principal is not liable for

the contract entered into by his agent in case the
agent acted in his own name without disclosing his

2022 GOLDEN NOTES
Civil Law
principal, such rule does not apply if the contract unauthorized act.
involves a thing belonging to the principal. In such 2. With respect to principal himself – the principal
case, the principal is liable under Article 1883 of the who ratifies thereby assumes responsibility for
Civil Code. The contract is deemed made on his the authorized act as fully as if the agent acted
behalf. (Sy-Juco v. Sy-Juco, G.R. No. L-13471, 12 Jan. under original authority.
1920) 3. With respect to third persons – where a third
person is liable to a principal under an
Ratification unauthorized act of his agent, the third person
shall not be relieved of his liability on the theory
In agency, ratification is the adoption or that the principal ratified that agent’s acts.
confirmation by one person of an act performed on (Ibid.)
his behalf by another without authority. The
substance of ratification is the confirmation after the Retroactive effect of ratification
act, amounting to a substitute for a prior authority.
(Prieto v. CA, G.R. No. 158597, 18 June 2012) GR: Ratification operates upon an unauthorized act
to have retroactive effect.
Conditions for Ratification
XPNs:
1. The principal must have the capacity and power 1. Where to do so would defeat the rights of third
to ratify; parties which have accrued between the time of
2. He must have had knowledge or had reason to the making of the unauthorized contract and the
know of material or essential facts about the time of the ratification;
transaction; 2. Where to do so would render wrongful an
3. He must ratify the acts in its entirety; otherwise rightful act or omission;
4. The act must be capable of ratification; and 3. Where to do so would allow the circumvention
5. The act must be done in behalf of the principal. of a rule of law formulated in the interest of
(De Leon, 2019) public policy; and
4. If the third party has withdrawn from the
Acts that May be Ratified contract. (Ibid.)
1. Valid/Void acts
2. Voidable acts
3. Unrevoked acts – a principal must ratify his
agent’s unauthorized contact before it is revoked
by the other contracting party
4. Criminal acts
5. Tortious acts (Ibid.)
Effects of ratification by principal
The relation of the principal and agent is created

since ratification by a principal is equivalent to prior
authority.
1. With respect to agent - Ratification relieved the

agent from liability to the third party to the
unauthorized transaction, and to his principal
for acting without authority. The principal
thereby assumes responsibility for the

Agency
from the management is unjustifiable; (Art.

D. MODES OF EXTINGUISHMENT 1927, NCC) (2010, 2015 BAR)
4. If it has been constituted in the common interest
of the principal and the agent; Art. 1930, NCC) or
5. If it has been constituted in the interest of a third
Modes of Extinguishing Agency
person who has accepted the stipulation in his
favor i.e., stipulation pour autrui. (Arts. 1930 &
1. By its revocation;
1311, NCC)
2. By the withdrawal of the agent;
3. By the death, civil interdiction, insanity or
XPN to the XPN: When the agent acts to defraud the
insolvency of the principal or of the agent;
principal.
4. By the dissolution of the firm or corporation
which entrusted or accepted the agency;
Q: A lawyer was given an authority by means of a
5. By the accomplishment of the object or purpose
Special Power of Attorney by his client to sell a
of the agency;
parcel of land for the amount of P3 Million. Since
6. By the expiration of the period for which the
the client owed the lawyer P1 Million in
agency was constituted. (Art. 1919, NCC) (1997
attorney's fees in a prior case he handled, the
BAR)
client agreed that if the property is sold, the
lawyer was entitled to get 5% agent's fee plus P1
NOTE: The list is NOT exclusive. Agency may also be
Million as payment for his unpaid attorney's fees.
extinguished by the modes of extinguishment of
obligations in general whenever they are applicable,
The client, however, subsequently found a buyer
like loss of the thing and novation. (De Leon, 2019)
of his own who was willing to buy the property
for a higher amount. Can the client unilaterally
Agency may be terminated:
rescind the authority he gave in favor of his
lawyer? Why or why not? (2015 BAR)
1. by agreement (Nos. 5 and 6);
2. by the subsequent acts of the parties which may
A: NO, the agency in the case presented is one which
be either:
is coupled with an interest. As a rule, agency is
a. by the act of both parties or by mutual
revocable at will except if it was established for the
consent; or
common benefit of the agent and the principal. In this
b. by unilateral act of one of them (Nos. 1
case, the interest of the lawyer is not merely limited
and 2);
to his commission for the sale of the property but
3. by operation of law (Nos. 3 and 4). (Ibid.)
extends to his right to collect his unpaid professional
fees. Hence, it is not revocable at will. (Art. 1927, NCC)
Kinds of revocation
A contract of agency is impliedly revoked when

Revocation may either be express or implied. (Art.
the principal:
1920, NCC) (2014 BAR)
1. Appoints a new agent for the same business

REVOCATION OF AGENCY BY THE PRINCIPAL
or transaction provided there is
incompatibility; (Art. 1923, NCC)
GR: Agency is revocable at will by the principal. (Art.
1920, NCC)
2. Directly manages the business entrusted to
the agent; (Art. 1924, NCC) or
XPNs: An agency is irrevocable:
3. After granting general power of attorney to
1. If a bilateral contract depends upon it.
an agent, grants a special one to another
2. If it is the means of fulfilling an obligation
agent which results in the revocation of the
already contracted.
former as regards the special matter
3. If partner is appointed manager and his removal

2022 GOLDEN NOTES
Civil Law
involved in the latter. (Art. 1926, NCC) conferred. But the principal must act in good faith
and not merely to avoid his obligation to the agent.
NOTE: A special power of attorney is not revoked by
a subsequent general power of attorney given to XPN: The only desire of the principal is for him and
another agent, unless that the latter refers also to the the agent to manage the business together. (Ibid.)
act authorized under the special power. (Tolentino,
1992) Q: Richard sold a large parcel of land in Cebu to
Leo for P100 million payable in annual
Revocation of agency when the agent is installments over a period of ten years, but title
appointed by two or more principals will remain with Richard until the purchase price
is fully paid. To enable Leo to pay the price,
When two or more principals have granted a power Richard gave him a power-of-attorney
of attorney for a common transaction, any one of authorizing him to subdivide the land, sell the
them may revoke the same without the consent of individual lots, and deliver the proceeds to
the others. (Art. 1925, NCC) Richard, to be applied to the purchase price. Five
years later, Richard revoked the power of
Necessity of notice of revocation attorney and took over the sale of the subdivision
lots himself. Is the revocation valid or not? Why?
1. As to the agent– Express notice is not always (2001 BAR)
necessary; sufficient notice if the party to be
notified actually knows, or has reason to know, A: The revocation is not valid. The power of attorney
a fact indicating that his authority has been given to the buyer is irrevocable because it is coupled
terminated or suspended. Revocation without with an interest – the agency is the means of fulfilling
notice to the agent will not render invalid an act the obligation of the buyer to pay the price of the
done in pursuance of the authority. (De Leon, land. (Art. 1927, NCC) In other words, a bilateral
2019) contract, which is a contract to buy and sell the land,
is dependent on the agency.
2. As to third persons– Express notice is
necessary. Q: Eduardo executed a SPA authorizing Zenaida
a. As to former customers – Actual notice to participate in the pre-qualification and
must be given to them because they bidding of a NIA project and to represent him in
always assume the continuance of the all transactions related thereto. It was granted to
agency relationship. (Art. 1873, NCC) them. Zenaida leased Manuel’s heavy equipment
b. As to other persons – Notice by to be used for the NIA project. Manuel interposed
publication is enough. (Art. 1922, NCC) no objection to Zenaida’s actuations. Eduardo
later revoked the SPA alleging that Zenaida acted
NOTE: There is implied revocation of the previous beyond her authority in contracting with Manuel
agency when the principal appoints a new agent for under the SPA. Records show that Eduardo and
the same business or transaction, provided there is Zenaida entered into a partnership in regard to
incompatibility. But the revocation does not become the NIA project. Decide.
effective as between the principal and the agent until
it is in some way communicated to the latter. (De A: Under Art. 1818 of the NCC, every partner is an
Leon, 2019) agent of the partnership for the purpose of its
business and each one may separately execute all
Effect of direct management by principal acts of administration, unless, under Art. 1801, a
specification of their respective duties has been
GR: The agency is revoked for there would no longer agreed upon, or else it is stipulated that any one of
be any basis for the representation previously them shall not act without the consent of all the
others. As such, even granting that Zenaida exceeded

Agency
the authority granted by the SPA, being a partner in Effect of Death of Principal to the contract of
the constituted partnership between her and agency
Eduardo, she can still execute acts of administration
absent any agreement that one cannot act without GR: The agency is terminated by the death of the
the consent of all others. (Mendoza v. Paule, G.R. No. principal even if the agency is for a definite period.
175885, 13 Feb. 2009) (Lopez v. CA, G.R. No. 163959, 01 Aug. 2018; Art. 1919,
NCC)
WITHDRAWAL OR RENUNCIATION
OF THE AGENCY BY THE AGENT XPNs:
1. If it has been constituted in common interest of
When the agent can withdraw from the agency the principal and the agent.
The agent may renounce or withdraw from the 2. If it has been constituted in the interest of a third
agency at any time, by giving due notice to the person who accepted the stipulation in his favor.
principal. (Art. 1928, NCC; De Leon, 2019) (Arts. 1911 and 1930, NCC).
Duties and responsibilities of the withdrawing 3. Anything done by the agent, without the
agent: knowledge of the death of the principal or on any
other cause which extinguishes the agency is
1. If the principal should suffer any damage by valid and shall be fully effective with respect to
reason of the withdrawal by the agent, the latter third persons who may have contracted with him
must indemnify the principal therefor, unless in good faith. (Art. 1931, NCC)
the agent should base his withdrawal upon the
impossibility of continuing the performance of NOTE: The death of the principal extinguishes the
the agency without grave detriment to himself. agency; but in the same way that revocation of the
(Art. 1928, NCC) agency does not prejudice third persons who
have dealt with the agent in good faith without
2. The agent must continue to act until the principal notice of the revocation. (Arts. 1921 and 1922,
has had reasonable opportunity to take the NCC) The death of the principal does not render
necessary steps to meet the situation, even if he the act of an agent unenforceable, where the
should withdraw from the agency. (Art. 1929, latter had no knowledge of such extinguishment
NCC) of the agency. (Hererra v. Luy Kim Guan, G.R. No.
L-17043, 31 Jan. 1961)
Kinds of Withdrawal by the Agent
4. The agent is bound by his acceptance to carry out
1. Without just cause– The law imposes upon the the agency and is liable for the damages which,
agent the duty to give due notice to the principal through his non-performance, the principal may
and to indemnify the principal should the latter suffer. He must also finish the business already
suffer damage by reason of such withdrawal. began on the death of the principal, should delay
(Art. 1928, NCC) entail any danger. (Art. 1884, NCC)
2. With just cause– If the agent withdraws from the Duty of Agent’s Heirs Upon the Death of Agent
agency for a valid reason (Art. 1929. NCC) as
when the withdrawal is based on the If the agent dies, his heirs must notify the principal
impossibility of continuing with the agency thereof, and in the meantime adopt such measures as
without grave detriment to himself (Art. 1928, the circumstances may demand in the interest of the
NCC) or is due to a fortuitous event (Art. 1174, latter. (Art. 1932, NCC)
NCC), the agent cannot be held liable. (De Leon,
2019)

2022 GOLDEN NOTES
Civil Law
Heirs continuing the contract of agency XPNs:

1. If substitution is possible without substantial
GR: Heirs cannot continue the contract of agency. detriment to either party;
The rights and obligations of the agent arising from 2. If the destroyed subject matter was not in fact
the contract are not transmissible to his heirs. essential to the contract. (Ibid.)
Reason: The agency calls for personal services on the Change of circumstance surrounding the
part of the agent since it is founded on a fiduciary transaction
relationship.
GR: The authority of the agent is terminated where
XPNs: there is a basic change in the circumstances
1. Agency by operation of law, or a presumed or surrounding the transaction which was not
tacit agency; and contemplated by the parties and would reasonably
2. Agency is coupled with an interest in the subject lead the agent to believe that the principal would not
matter of the agency (e.g., power of sale in a desire him to act.
mortgage). (De Leon, 2019)
XPNs:
Q: Is the sale of the land by the agent after the 1. If the original circumstances are restored within
death of the principal valid? a reasonable period of time, the agent's
authority may be revived;
A: Art. 1931 provides that an act done by the agent 2. Where the agent has reasonable doubts as to
after the death of the principal is valid and effective whether the principal would desire him to act,
if these two requisites concur: his authority will not be terminated if he acts
1. That the agent acted without the knowledge of reasonably; or
the death of the principal; and 3. Where the principal and agent are in close daily
2. That the third person who contracted with the contact, the agent's authority to act will not
agent himself acted in good faith. terminate upon a change of circumstances if the
agent knows the principal is aware of the change
Good faith here means that the third person was not and does not give him new instructions. (De
aware of the death of the principal at the time that he Leon, 2019)
contracted with said agent. These two requisites must
concur: the absence of one will render the act of the agent
invalid unenforceable. (Rallos v. Felix Go Chan, G.R. No.
L-24332, 31 Jan. 1978)
OTHER MODES OF
EXTINGUISHING AN AGENCY
War
During the existence of a state of war, a contract of

agency is inoperative if the agent or the principal is
an enemy alien. (De Leon, 2019)
Loss or destruction of subject matter
GR: The loss or destruction of the subject matter of

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

Credit Transactions
Object of a contract of loan

IX. CREDIT TRANSACTIONS
1. Commodatum – The object is generally not
consumable; and
2. Mutuum – The object is consumable.
A. LOAN Consumable and Non-consumable things
A thing is consumable when it cannot be used in a

GENERAL PROVISIONS manner appropriate to its nature without being
consumed.
By the contract of loan, one of the parties delivers
to another, either something not consumable so On the other hand, a non-consumable thing is a
that the latter may use the same for a certain time movable thing which can be used in a manner
and return it, in which case the contract is called a appropriate to its nature without it being
commodatum; or money or other consumable consumed. (Pineda, 2006; Art. 418, NCC)
thing, upon the condition that the same amount of
the same kind and quality shall be paid, in which Fungible and non-fungible things
case the contract is simply called a loan or mutuum.
(BAR 1993, 2004, 2005) 1. Fungible thing is one where the parties have
agreed to allow the substitution of the thing
Commodatum is essentially gratuitous. given or delivered with an equivalent thing.
2. Non-fungible thing is one where the parties
Simple loan may be gratuitous or with a stipulation have the intention of having the same identical
to pay interest. thing returned after the intended use. (3
Manresa 58; Pineda, 2006)
In commodatum the bailor retains the ownership of
the thing loaned, while in simple loan, ownership NOTE: As to whether a thing is consumable or not,
passes to the borrower. (Art. 1933, NCC) it depends upon the nature of the thing. As to
whether it is fungible or not, it depends upon the
Kinds of loan intention of the parties. (Ibid.)
1. Commodatum – where the bailor (lender) Fungibles are usually determined by number,
delivers to the bailee (borrower) a non- weight, or measure.
consumable thing so that the latter may use it
for a given time and return the identical thing; Irreplaceability of non-fungible thing
2. Mutuum or Simple Loan – where the lender GR: Non-fungible things are irreplaceable. They
delivers to the borrower money or other must be returned to the lender after the purpose of
consumable thing upon the condition that the the loan had been accomplished.
latter shall pay same amount of the same kind
and quality. (Pineda, 2006) XPN: Non-fungible things may be replaced by
agreement of the parties. In such case, the contract
Commodatum is a loan of use because there is a is barter and not loan.
transfer of the use of the thing borrowed while
mutuum is a loan of consumption because there is a Delivery essential to perfection of loan
transfer of the ownership of the thing, which is
generally received for consumption. Delivery is necessary in view of the purpose of the
contract which is to transfer either the use or

2022 GOLDEN NOTES
Civil Law
ownership of the thing loaned. 5. It may be gratuitous or with stipulation to pay

interest; and
An accepted promise to deliver something by way of 6. It is a unilateral contract. (Rabuya, 2017)
commodatum or simple loan is binding upon the
parties, but the commodatum or simple loan itself Perfection of the contract of mutuum
shall not be perfected until the delivery of the object
of the contract. (Art. 1934, NCC) Real contracts, such as deposit, pledge and
commodatum, are not perfected until the delivery of
Unlawful purpose of the contract of loan the object of the obligation. (Art. 1316, NCC) While
mutuum or simple loan is not mentioned, it has the
If the loan is executed for illegal or immoral or same character as commodatum. Hence, mutuum is
unlawful purpose or use, the contract is void. (De also a real contract which cannot be perfected until
Leon, 2021) the delivery of the object.
The bailor may immediately recover the thing An accepted promise to make a future loan is a
before any illegal act is committed, and provided he consensual contract and therefore, binding upon
is innocent or in good faith. (Arts. 1411 & 1412, NCC) the parties but it is only after delivery, will the real
contract of loan arise.
MUTUUM
Mere issuance of checks does not perfect the
Characteristics of a Contract of Mutuum contract of loan. It is only after the checks have been
encashed that the contact may be deemed perfected.
1. Borrower acquires ownership of the thing (Art
1953, NCC); Consideration in a simple loan
2. If the thing loaned is money, payment must be 1. As to the borrower – The acquisition of money
made in the currency stipulated, and if it is not or any other fungible thing; and
possible to deliver such currency, then in the 2. As to the lender – the right to demand the return
currency which is legal tender in the of the money or any other fungible thing or its
Philippines. (Art. 1249, NCC) equivalent.
NOTE: In case of extraordinary deflation or Object of mutuum

inflation, the basis of payment shall be the value
of the currency at the time of the creation of the Its object is money or fungible and consumable
obligation (Art. 1250, NCC); and things.
3. If fungible thing other than money was loaned, Governing rules on payment of loan
the borrower is obliged to pay the lender
another thing of the same kind, quality and If the object of loan is:
quantity even if it should change in value. (Art. 1. Money – Governed by Arts. 1249 and 1250,
1955(2), NCC) NCC.
Nature of a Contract of Mutuum GR: Payment shall be made in the currency

stipulated.
1. The purpose of the contract is consumption;
2. The subject-matter is either money or XPN: If not, that currency which is legal tender
consumable; in the Philippines.
3. Ownership passes to the borrower;
4. It is a real contract;

Credit Transactions
In case of extraordinary inflation – payment Commodatum v. Mutuum (1996, 2004 BAR)

shall be made at the value of the currency at the
time of the creation of the obligation, unless COMMODATUM MUTUUM
there is an agreement to the contrary. (Art.
1250, NCC) As to Object
Loan of money can be payable in kind if there Non-consumable and Money or consumable
is an agreement between the parties. Non- fungible. thing.
2. Consumable or Fungible thing – Debtor or As to Cause

borrower shall pay another thing of the same
kind, quality and quantity even if it should Gratuitous, otherwise May or may not be
change in value. If cannot be done, the value of it is a lease. gratuitous.
the thing at the time of its perfection (delivery)
shall be the basis of the payment of the loan. As to Purpose
(Art. 1955, NCC)
Use or temporary
Q: Can Estafa be committed by a person who possession of the
refuses to pay his debt or denies its existence? thing loaned.
A: NO, because the debtor in mutuum becomes the GR: Not its fruit
owner of the thing delivered to him. If he consumed because the bailor
or disposed of the thing, the act which is an act of remains the owner.
ownership is not misappropriation. Hence, there is Consumption
no basis for a criminal prosecution. (Flores, Jr. v. XPNs:
Enrile, G.R. No. L-38440, 20 July 1982) Use of the fruits is
stipulated; enjoyment
Destruction of the thing loaned of the fruits is
stipulated; or
The destruction of the thing loaned does not enjoyment of the fruits
extinguish one’s obligation in a simple loan because is incidental to its use.
his obligation is not to return the thing loaned but
to pay a generic thing.
As to Subject Matter
Real or personal
property.
Generally non-
Only personal
consumable things but
property.
may cover
consumables if the
purpose of the contract
is for exhibition.
As to ownership of the thing
Retained by the bailor. Passes to the debtor.

2022 GOLDEN NOTES
Civil Law
As to thing to be returned INTEREST AND

THE SUSPENSION OF USURY LAW
Equal amount of the
Exact thing loaned.
same kind and quality. Interest
Who bears risk of loss It is the compensation to be paid by the borrower

for the use of the money lent to him by the lender. It
Bailor Debtor is paid either as compensation for the use of money
(monetary interest) or as damages (compensatory
When to return
interest). (Andreas vs. BPI, G.R. No. 23836, 09 Sept.
In case of urgent need 1925)
even before the
Only after the Classes of Interest
expiration of term (the
expiration of the term.
contract is in the
meantime suspended). 1. Simple or Monetary – The interest which is
paid for the use or forbearance of the money, at
Contract a certain rate stipulated in writing by the
Contract of parties; (Art. 2209, NCC; Odiamar v. Valencia,
Contract of use G.R. No. 213582, 12 Sept. 2018)
consumption
Mutuum v. Lease 2. Compound– The interest which is imposed

upon accrued interest, that is, the interest due
and unpaid; (Arts. 1959 & 2212, NCC)
MUTUUM LEASE
Object may be any 3. Legal – That interest which the law directs to be
Object is money or any thing, whether paid in the absence of any agreement as to the
consumable (fungible) movable or rate; (Art. 2209, NCC) and
thing. immovable, fungible or
non-fungible. 4. Compensatory – The interest paid by virtue of
damages for delay or failure to pay principal
There is transfer of No transfer of loan on which interest is demanded. (Odiamar
ownership. ownership. v. Valencia, G.R. No. 213582, 12 Sept. 2018)
NOTE: Finance Charges – Are not merely a specie of

Creditor-debtor Lessor-lessee
interest, but these include interest, fees, service
relationship. relationship.
charges, discounts, and such other charges incident
to the extension of credit under R.A. No. 3765, or the
Unilateral Bilateral Truth in Lending Act. Not disclosing the true finance
charges in connection with the extensions of credit
The money or
is a form of deception which the Court cannot
consumable thing
countenance. It is against the policy of the State as
loaned is not returned The debtor returns the
stated in the Truth in Lending Act – to protect its
but the same amount of thing/s leased.
citizens from a lack of awareness of the true cost of
the same kind and
credit to the user by assuring a full disclosure of
quantity shall be paid.
such cost with a view of preventing the uninformed
use of credit to the detriment of the national
economy. (Sec. 2, R.A. No. 3765; UCPB v. Beluso, G.R.
No. 159912, 17 Aug. 2007)

Credit Transactions
Requisites for Recovery of Interest loans or forbearances of money) from the date of
judicial or extrajudicial demand.
1. The payment of interest must be expressly
stipulated; (Jardenil v. Salas, G.R. No. L-47878, 24 The foreclosure proceedings are also void. Since the
July 1942) obligation of making interest payments is illegal and
2. The agreement to pay interest must be in thus non-demandable, the payment of the principal
writing; (Art. 1956, NCC) and loan obligation was likewise not yet demandable.
3. The interest must be lawful. With Zenaida not being in a state of default, the
foreclosure of the subject properties should not
Rules on interest have proceeded. (Bulatao v. Zenaida, G.R. No.
235020, 10 Dec. 2019, J. Caguioa)
GR: No interest shall be due unless it is stipulated in
writing. (Art. 1956, NCC) (2004 BAR) Liability for interest even in the absence of
stipulation (exceptions to Art. 1956)
XPNs:
1. In case of interest on damages or indemnity for 1. Indemnity for damages — The debtor in delay is
damages, it need not be in writing; (Art. 2209, liable to pay legal interest as indemnity for
NCC) or damages even in the absence of stipulation for
2. Interest accruing from unpaid interest. (Art. the payment of interest. (De Leon, 2013) The
2212, NCC) “obligation consisting of the payment of a sum
of money’’ referred to in Article 2209 is not
NOTE: Art. 1956 applies only to interest for the use confined to a loan or forbearance of money. It
of money and not to interest imposed as items of has also been applied by the Supreme Court in
damages. cases involving default in the payment of price
or consideration under a contract of sale and an
Stipulation of a Particular Interest Rate action or damages for injury to persons and loss
of property and an action for damages arising
If a particular rate of interest has been expressly from unpaid insurance claims. (Castelo v. CA,
stipulated by the parties, that interest, not the legal G.R. No. 96372, 22 May 1995) Interest as
rate of interest shall be applied. (Casa Filipina Dev. indemnity for damages is payable only in case
Corp. v. Deputy Executive Secretary, G.R. No. 96494, of default or non- performance of the contract.
28 May 1992) As they are distinct claims, they may be
demanded separately. (Sentinel Insurance Co.
Q: In dire need of money, Zenaida mortgaged a Inc. v. CA, G.R. No. L-52482, 23 Feb. 1990)
parcel of land to Atty. Bulatao to secure a loan
worth P200,000. The real estate mortgage 2. Interest accruing from unpaid interest — Interest
entered by the parties stipulated a 5% per due shall earn interest from the time it is
month interest. Zenaida failed to pay the loan judicially demanded although the obligation
later on and as such Atty. Bulatao foreclosed the may be silent upon this point. (Art. 2212, NCC;
property. Were the stipulated interest rate and see Sec. 5, Usury Law) Both Art. 2212 of the Civil
the ensuing foreclosure sale valid? Code and Sec. 5 of the Usury Law are applicable
only where interest has been stipulated by the
A: NO. The Court has ruled that 5% per month or parties. Art. 1212 contemplates the presence of
60% per annum interest rate is highly iniquitous stipulated or conventional interest which has
and unreasonable; and since the interest rate accrued when demand was judicially made. In
agreed upon is void, the rate of interest should be cases where no interest had been stipulated by
12% per annum (the then prevailing interest rate the parties, no accrued conventional interest
prescribed by the Central Bank of the Philippines for could further earn interest upon judicial
demand. (Isla vs. Estorga, G.R. No. 233974, 02

2022 GOLDEN NOTES
Civil Law
July 2018) When an obligation, not constituting a loan or

forbearance of money, is breached, an interest on
NOTE: Where the court’s judgment which did not the amount of damages awarded may be imposed at
provide for the payment of interest has already the discretion of the court at the rate of 6% per
become final, no interest may be awarded. annum. The Court, therefore, sustains the CA's
(Santuban v. Fule, G.R. No. L-59664, 26 Dec. 1984) ruling that the rate of legal interest imposable on
the liability of the Province of Cebu to WTCI is 6%
Q: Province of Cebu was chosen by former per annum. (WT Construction, Inc. v. The Province of
President Gloria Macapagal-Arroyo to host the Cebu, G.R. No. 208984, 16 Sept. 2015)
12th ASEAN Summit. To cater to the event, it
decided to construct the Cebu International Q: Petitioners Isla obtained a loan in the amount
Convention Center (CICC or the project) which of P100,000.00 from respondent, payable
would serve as venue for the ASEAN Summit. anytime from six (6) months to one (1) year and
Province of Cebu conducted a public bidding for subject to interest at the rate of ten percent
the project and WTCI emerged as the winning (10%) per month, payable on or before the end
bidder for the construction of Phase I. After of each month. When petitioners failed to pay the
completing Phase I, WTCI again won the bidding said loan, respondent sought assistance from the
for Phase II of the project involving the adjacent barangay, and consequently, a Kasulatan ng
works on CICC. As Phase II neared completion, Pautang dated December 8, 2005 was executed.
the Province of Cebu caused WTCI to perform Petitioners, however, failed to comply with its
additional works on the project, WTCI agreed to terms, prompting respondent to send a demand
perform the additional works notwithstanding letter dated November 16, 2006. Once more,
the lack of public bidding. Weeks before the petitioners failed to comply with the demand,
scheduled ASEAN Summit, WTCI completed the causing respondent to file a Petition for Judicial
project, including the additional works and, Foreclosure against them before the RTC.
accordingly, demanded payment therefor. WTCI Petitioners maintained that the stipulated
demanded for payment but the Province of interest of ten percent (10%) per month was
Cebu still refused to pay. Thus, it filed a exorbitant and grossly unconscionable. The RTC
complaint for collection of sum of money before directed petitioners to pay respondent the
the RTC. RTC ruled in favor of WTCI. CA affirmed amounts of P100,000.00 with twelve percent
the RTC's Order but reduced the interest rate to (12%) interest per annum from December 2007
6% per annum. What is the nature of Province of until fully paid and P20,000.00 as attorney's
Cebu’s liability? fees. Is the 12% interest imposed by the Court
valid?
A: The liability of the Province of Cebu to WTCI is
not in the nature of a forbearance of money as it A: YES. Anent monetary interest, the parties are free
does not involve an acquiescence to the temporary to stipulate their preferred rate. However, courts
use of WTCI's money, goods or credits. Rather, this are allowed to equitably temper interest rates that
case involves WTCI's performance of a particular are found to be excessive, iniquitous,
service, i.e., the performance of additional works on unconscionable, and/or exorbitant, such as
CICC, consisting of site development, additional stipulated interest rates of three percent (3%) per
structural, architectural, plumbing, and electrical month or higher. In such instances, it is well to clarify
works thereon. that only the unconscionable interest rate is nullified
and deemed not written in the contract; whereas
Verily, the Court has repeatedly recognized that the parties' agreement on the payment of interest
liabilities arising from construction contracts do not on the principal loan obligation subsists. It is as if
partake of loans or forbearance of money but are in the parties failed to specify the interest rate to be
the nature of contracts of service. imposed on the principal amount, in which case the
legal rate of interest prevailing at the time the

Credit Transactions
agreement was entered into is applied by the Court. Q: The court ordered petitioner Nympha S.
This is because, according to jurisprudence, the legal Odiamar to pay respondent the amount of
rate of interest is the presumptive reasonable P1,010,049.00 representing the remaining
compensation for borrowed money. balance of petitioner's debt to the latter in the
original amount of P1,400,000.00. In said
In this case, petitioners and respondent entered into motion, respondent prays for the imposition of
a loan obligation and clearly stipulated for the legal interest on the monetary award due her.
payment of monetary interest. However, the She likewise insists that petitioner's loan
stipulated interest of ten percent (10%) per month obligation to her is not just P1,400,000.00 but
was found to be unconscionable, and thus, the P2,100,000.00 and, as such, she should be made
courts a quo struck down the same and pegged a to pay the latter amount. Whether a prayer for
new monetary interest of twelve percent (12%) per the imposition of legal interest on the monetary
annum, which was the prevailing legal rate of award due is proper?
interest for loans and forbearances of money at the
time the loan was contracted on December 6, 2004. A: YES. In the absence of an express stipulation as
(Isla vs. Estorga, G.R. No. 233974, 02 July 2018) to the rate of interest that would govern the parties,
the rate of legal interest for loans or forbearance of
NOTE: In expropriation cases, interest is imposed if any money, goods or credits and the rate allowed in
there is delay in the payment of just compensation judgments shall no longer be twelve percent (12%)
to the landowner since the obligation is deemed to per annum but will now be six percent (6%) per
be an effective forbearance on the part of the State. annum effective July 1, 2013. It should be noted,
Such interest shall be pegged at the rate of 12% per nonetheless, that the new rate could only be applied
annum on the unpaid balance of the just prospectively and not retroactively. Consequently,
compensation, reckoned from the time of taking or the twelve percent (12%) per annum legal interest
the time when the landowner was deprived of the shall apply only until June 30, 2013. Come July 1,
use and benefit of his property such as when title 2013 the new rate of six percent (6%) per annum
is transferred to the Republic, or emancipation shall be the prevailing rate of interest when
patents are issued by the government, until full applicable.
payment. (LDB v. Santos, G.R. No. 213863, 27 Jan.
2016) Applying the foregoing parameters to this case,
petitioner's loan obligation to respondent shall be
Payment of Interest when there is No Stipulation subjected to compensatory interest at the legal rate
of twelve percent (12%) per annum from the date of
1. A borrower borrowed money. No interest was judicial demand, i.e., August 20, 2003, until June 30,
stipulated. If by mistake he pays, then this will 2013, and thereafter at the legal rate of six percent
be a question of undue payment or solutio (6%) per annum from July 1, 2013 until finality of
indebiti. We should then apply the rules on the this ruling. Moreover, all monetary awards due to
subject. respondent shall earn legal interest of six percent
2. If a borrower borrows money and orally agrees (6%) per annum from finality of this ruling until
to pay legal interest at 10% per annum, there is fully paid. (Odiamar v. Valencia, G.R. No. 213582, 12
really no obligation to pay since the interest Sept. 2018)
was not agreed upon in writing. If he
nevertheless pays because he considers it his Basis of the Right to Interest
moral obligation to pay said interest, he cannot
recover the interest that he has given The basis of the right to interest is it only arises by
voluntarily. This will now be a natural reason of the contract (stipulation in writing) for the
obligation, and the provisions on said subject use of money or by reason of delay or failure to pay
should apply. (Paras, 2008) principal on which interest is demanded due to a

2022 GOLDEN NOTES
Civil Law
breach of an obligation. (Baretto v. Santa Marina, Thus, collection of interest without any
G.R. No. 11908, 04 Feb. 1918) stipulation therefor in writing is prohibited by
law.
Equitable mortgage
b. YES. The quasi-contract of solutio indebiti
Equitable mortgage is one which, although it lacks harks back to the ancient principle that no
the proper formalities or other requisites of a one shall enrich himself unjustly at the
mortgage required by law, nevertheless reveals the expense of another. The principle of solutio
intention of the parties to burden real property as a indebiti applies where (1) a payment is
security for a debt, and contains nothing impossible made when there exists no binding relation
or contrary to law. between the payor, who has no duty to pay,
and the person who received the payment;
Interest in equitable mortgage and (2) the payment is made through
mistake, and not through liberality or some
There can be no interest to be collected in equitable other cause. The Supreme Court has held
mortgage because the same is not stipulated in that the principle of solutio indebiti applies
writing. (Tan v. Valdehueza, G.R. No. L-38745, 06 Aug. in case of erroneous payment of undue
1975) interest. (Siga-an v. Villanueva, G.R. No.
173227, 20 Jan. 2009)
Recovery of unstipulated interest
Interest on unliquidated claims
A payment for unstipulated interest can be
recovered if paid by mistake, the debtor may GR: Interest may not be adjudged on unliquidated
recover as in the case of solutio indebiti or undue claims or damages.
payment. However, if payment is made voluntarily,
no recovery can be made as in the case of natural XPN: When or until the demand can be established
obligation. (Art. 1960, NCC) with reasonable certainty. (BPI vs. Land Investors
and Developers Corporation, G.R. No. 198237, 08 Oct.
Q: Siga-an granted a loan to Villanueva in the 2018)
amount of P540,000.00. Such agreement was
not reduced to writing. Siga-an demanded Running of interest on unliquidated claims
interest which was paid by Villanueva in cash
and checks. The total amount Villanueva paid Accordingly, where the demand is established with
accumulated to P1,200,000.00. Upon advice of reasonable certainty, the interest shall begin to run
her lawyer, Villanueva demanded for the return from the time the claim is made judicially or
of the excess amount of P660,000.00 which was extrajudicially (Art. 1169, NCC), but when such
ignored by Siga-an. certainty cannot be so reasonably established at the
a. Is the payment of interest valid? time the demand is made, the interest shall begin to
b. Is solutio indebiti applicable? Explain. run only from the date the judgment of the court is
(2012 Bar) made at which time the quantification of damages
A: may be deemed to have been reasonably
a. NO. Payment of monetary interest is ascertained.
allowed only if:
1. There was an express stipulation for The actual base for the computation of legal interest
the payment of interest; and shall, in any case, be on the amount finally adjudged.
2. The agreement for the payment of (BPI vs. Land Investors and Developers Corporation,
interest was reduced in writing. G.R. No. 198237, 08 Oct. 2018)
The concurrence of the two conditions is
required for the payment of monetary interest.

Credit Transactions
Monetary interest and compensatory interest from default (i.e., judicial or extrajudicial
demand) subject to provisions of Art. 1169
Monetary interest must be expressly stipulated in of the Civil Code;
writing and it must be lawful. (Art. 1956, NCC)
c. When an obligation, not constituting a loan
The ruling in Eastern Shipping Lines has now been or forbearance of money, is breached, an
modified by Bangko Sentral ng Pilipinas Monetary interest on the amount of damages
Board Circular No. 799 Series of 2013, providing awarded may be imposed at the discretion
that: of the court at the rate of 6% per annum. No
interest, however, shall be adjudged on
The rate of interest for the loan or forbearance of unliquidated claims or damages except
any money, goods or credits and the rate allowed in when or until the demand can be
judgments, in the absence of an express contract as established with reasonable certainty.
to such rate of interest, shall be six percent (6%) per
annum. (BSP Circular No. 799, 01 July 2013) d. Where the demand is established with
reasonable certainty, the interest shall
Prospective application of BSP Circular No. 799 begin to run from the time the claim is
made judicially or extrajudicially (Art.
It should be noted, nonetheless, that the new rate 1169, NCC); and
could only be applied prospectively and not
retroactively. Consequently, the twelve percent e. When such certainty cannot be so
(12%) per annum legal interest shall apply only reasonably established at the time the
until June 30, 2013. Come July 1, 2013 the new rate demand is made, the interest shall begin to
of six percent (6%) per annum shall be the run only from the date the judgment of the
prevailing rate of interest when applicable. (Nacar court is made at which time the
v. Gallery Frames, G.R. No. 189871, 13 Aug. 2013) quantification of damages may be deemed
to have been reasonably ascertained. The
The new guidelines on the application of Legal actual base for the computation of legal
Interest interest shall, in any case, be on the amount
finally adjudged.
1. When an obligation, regardless of its source
(i.e., law, contracts, quasi-contracts, delicts or When the judgment of the court awarding a sum of
quasi-delicts) is breached, the contravenor can money becomes final and executory, whether the
be held liable for damages and the provisions case falls under under paragraph (a) or (c) above,
under Title XVIII on Damages of the Civil Code the rate shall be 6% per annum from such finality
govern in determining the measure of until its satisfaction, this interim period being
recoverable damages; and deemed to be by then an equivalent to a forbearance
of credit. (Nacar v. Gallery Frames, G.R. No. 189871,
2. For the award of interest in the concept of 13 Aug. 2013)
actual and compensatory damages, the rate of
interest and its accrual is imposed as follows: NOTE: Judgments that have become final and
a. For breach of obligations consisting of loan executory prior to July 1, 2013, shall not be
or forbearance of money, interest due shall disturbed and shall continue to be implemented.
be that stipulated in writing. Interest due (Ibid)
shall itself earn legal interest from the time
it is judicially demanded;
b. In the absence of stipulation, the rate of

interest shall be 6% per annum, computed

2022 GOLDEN NOTES
Civil Law
Authority of BSP Monetary Board to set interest when it is judicially demanded, although the
rates obligation is silent upon this point. (Art. 2212, NCC)
The Supreme Court affirmed the authority of BSP Rule on Compounding of Interest
Monetary Board (BSP-MB) to prescribe the
maximum rate or rates of interest for all loans or GR: Accrued interest (interest due and unpaid) shall
renewals thereof or the forbearance of any money, not earn interest.
goods or credits, including those for loans of low
priority such as consumer loans, as well as such XPNS: When:
loans made by pawnshops, finance companies and 1. There is express stipulation made by the parties
similar credit institutions. (Advocates for Truth in - that the interest due and unpaid shall be added
Lending Inc. v. Monetary Board, G.R. No. 192986, 15 to the principal obligation and the resulting
Jan. 2013) total amount shall earn interest (Art. 1959,
NCC); or
Basis for the Interest Rate for Compensatory 2. Judicial demand has been made upon the
Interest borrower. (Art. 2212, NCC)
1. Central Bank Circular No. 799 – 6% per annum NOTE: Such accrued interest will bear interest at
in cases of: the legal rate (Art. 2212, NCC) unless, a different rate
a. Loans; is stipulated. (Hodges v. Regalado, 69 Phil. 588, 14
b. Forbearance of money, goods and credits; Feb. 1940)
and
c. Judgment involving such loan or Increase in Interest Rates
forbearance
2. Art. 2209 – 6% per annum in cases of: No increase in interest shall be due unless such
a. Other sources (i.e., sale); increase has also been expressly stipulated.
b. Damages arising from injury from person; (Security Bank &Trust Co. v RTC of Makati, G.R. No.
and 113926, October 23, 1996)
c. Loss of property which does not involve a
loan. The unilateral determination and imposition of
3. Interest accruing from unpaid interest increased rates is violative of the principle of
(compound interest) – Interest due shall earn mutuality of contracts ordained in Article 1308 of
interest from the time it is judicially demanded the Civil Code. One-sided impositions do not have
although the obligation is silent upon this point. the force of law between the parties, because such
(Art. 2212, NCC) impositions are not based on the parties’ essential
equality. (NSBCI v. PNB, G.R. No. 148753, 30 July
Forbearance 2004)
Forbearance signifies the contractual obligation of Governing rule on Usurious Transactions

the creditor to forbear during a given period of time
to require the debtor payment of an existing debt CB Circular No. 905 has expressly removed the
then due and payable. Such forbearance of giving interest ceilings prescribed by Usury Law; thus, the
time for the payment of a debt is, in substance, a loan. said law has become legally non-existent.
(Pineda, 2006)
NOTE: It did not repeal or amend the usury law but
Compounding of interest merely suspended its effectivity. (Security Bank &
Trust Company v. RTC of Makati, G.R. No. 113926, 23
There must first be a stipulation of payment of Oct. 1996)
interest and this interest may earn interest only

Credit Transactions
There is certainly nothing in said circular which President are bound by the Credit Agreement
grants lenders carte blanche authority to raise and solidarily liable with ERMA for payment.
interest rates to levels which will either enslave Erma obtained various peso and dollar
their borrowers or lead to a hemorrhaging of their denominated loans from Security Bank
assets. Stipulations authorizing iniquitous or evidenced by promissory notes. Under
unconscionable interests are contrary to morals, if thesepromissory notes, the interest on the
not against the law. (Rey vs. Anson, G.R. No. 211206, principal at varying rates (7.5% per annum for
07 Nov. 2018) dollar obligation and 16.75% or 21% per annum
on peso obligation). In default of payment, ERMA
When Usury Law does not apply requested for restructuring of the agreement
and offered a certain property as collateral.
1. A contract for the lease of property is not a loan; However, Security Bank restructured only
hence, the rental paid is not governed by the partially which ERMA did not accept. Security
Usury Law; (Tolentino v. Gonzales, 50 Phil. 5, G.R. Bank demanded payment against ERMA and the
No. 26085, 12 Aug. 1927) or sureties for the loans inclusive of interest and
penalty charges with additional claim for
2. The increase of the price of a thing sold on credit Interest of 20% per annum on the peso
over its cash sale price is not interest within the obligation and 7.5% per annum on the dollar
purview of the Usury Law, if the sale is made in obligation from November 1, 1994 until fully
good faith and not as a mere pretext to cover a paid and penalty charge of 2% per month of the
usurious loan. (Manila Trading v. Tamaraw, G.R. total outstanding principal and interest due and
No. L-22995, 28 Feb. 1925) unpaid. The RTC ruled in favor of SBC but did not
impose the additional claims.
Such price is the selling price for a sale made on a. Whether ERMA and sureties are liable for
the installment plan. the additional claim?
b. Whether there is novation which would
Courts may simply reduce unreasonable release the sureties from liability?
interests
A:
Interest stipulated by the contracting parties is valid a. NO. The Regional Trial Court denied Security
however if the interest rate agreed upon is Bank's additional claims for interests and
iniquitous and unconscionable, the courts may penalty charges for being iniquitous, and
reduce the same as reason and equity demand. imposed instead a 12% legal interest on the
(Imperial v. Jaucian, G.R No. 149004, April 14, 2004) total outstanding obligation. In making this
ruling, the Regional Trial Court took into
In the case of Medel v. CA (G.R. No. 131622, 27 Nov. account the partial payments made by
1998), the court ruled that while stipulated interest petitioners, their efforts to settle/restructure
of 5.5% per month on a loan is usurious pursuant to their loan obligations and the serious slump in
CBC No. 905, the same must be equitably reduced their export business in 1993. The Regional
for being iniquitous, unconscionable, and Trial Court held that, under those
exorbitant. It is contrary to morals. It was reduced circumstances, it would be "iniquitous, and
to 12% per annum in consonant with justice and fair tantamount to merciless forfeiture of
play. property" if the interests and penalty charges
would be continually imposed.
Q: ERMA obtained credit facility from Security
Bank Co. by virtue of the Credit Agreement they b. NONE. The Regional Trial Court and the Court
executed. They also executed Suretyship of Appeals were in agreement that while there
Agreement whereby Ernesto Marcelo, were ongoing negotiations between Erma and
President, and Sergio Ortiz – Luiz, Jr, Vice- Security Bank for the restructuring of the loan,

2022 GOLDEN NOTES
Civil Law
the same did not materialize. Erma offered to per annum. Finally, Samuel filed an action
restructure its entire outstanding obligation questioning the right of the bank to increase the
and delivered TCT No. M-7021 as collateral, to interest rate up to 48%. The bank raised the
which Security Bank counter-offered a partial defense that the Central Bank of the Philippines
restructuring or only up to P5,000,000. This had already suspended the Usury Law. Will the
counteroffer was not accepted by Erma. There action prosper or not? Why? (2001 BAR)
was no new contract executed between the
parties evidencing the restructured loan. The A: YES. While it is true that the interest ceilings set
nature and extent of respondent Ortiz's liability by the Usury Law are no longer in force, it has been
are set out in clear and unmistakable terms in held that P.D. No. 1684 and CB Circular No. 905
the Continuing Suretyship agreement. Under its merely allow contracting parties to stipulate freely
express terms, respondent Ortiz, as surety, is on any adjustment in the interest rate on a loan or
"bound by all the terms and conditions of the forbearance of money but do not authorize a
credit instruments." His liability is solidary with unilateral increase of the interest rate by one party
the debtor and co-sureties; and the surety without the other's consent. (PNB v. CA, G.R. No.
contract remains in full force and effect until full 107569, 08 Nov. 1994) To say otherwise will violate
payment of Erma's obligations to the Bank. the principle of mutuality of contracts under Article
(ERMA Industries, Inc. v. Bank Corporation, G.R. 1308 of the Civil Code. To be valid, therefore, any
No. 191274, 06 Dec. 2017) change of interest must be mutually agreed upon by
the parties. (Dizon v. Magsaysay, G.R. No. L-23399, 31
Floating Interest May 1974) In the present problem, the debtor not
having given his consent to the increase in interest,
Floating interest is the interest stipulated by banks the increase is void.
which is not fixed and made to depend upon the
prevailing market conditions, considering the Escalation Clauses
fluctuating economic conditions.
A stipulation for floating interest is not valid. A Escalation clauses refer to stipulations allowing an
stipulation for a floating rate of interest in a letter of increase in the interest rate agreed upon by the
credit in which there is no reference rate set either contracting parties. (Juico v. China Banking
by it or by the Central Bank, leaving the Corporation, G.R. No. 187678, 10 Apr. 2013)
determination thereof to the sole will and control of
the lender bank is invalid. While it may be Escalation Clause must have de-escalation
acceptable for practical reasons given the clause
fluctuating economic conditions for banks to
stipulate that interest rates on a loan not be fixed and Escalation clauses refer to stipulations allowing an
instead be made dependent on prevailing market increase in the interest rate agreed upon by the
conditions, there should be a reference rate upon contraction parties. (Ibid.)
which to peg such variable interest rates.
Consolidated Bank and Trust Corp. (Solid Bank) v. An escalation clause can be valid only if it also
CA, G.R. No. 114672, 19 Apr. 2001) includes a de-escalation clause or a stipulation that
the rate of interest agreed upon shall be reduced in
Q: Samuel borrowed P300,000.00 housing loan the event that the maximum rate of interest is
from the bank at 18% per annum interest. reduced by law or by the Monetary Board. (PNB v.
However, the promissory note contained a IAC, G.R. No. 75223, 14 Mar. 1990)
proviso that the bank "reserves the right to
increase interest within the limits allowed by The presence of escalation clause without the
law." By virtue of such proviso, over the corresponding de-escalation clause in the event of a
objections of Samuel, the bank increased the reduction of interest as ordered by law makes the
interest rate periodically until it reached 48% clause one-sided as to make it unreasonable. Any

Credit Transactions
increase in the interest rate pursuant to an

escalation clause must be the result of an agreement B. DEPOSIT
between two parties. Increases unilaterally
imposed by a bank are in violation of the principle
of mutuality of contracts. (PNB v. CA, G.R. No.
Deposit is a contract whereby a person (depositor)
109563, 09 July 1996)
delivers a thing to another (depositary), for the
principal purpose of safekeeping it, with the
obligation of returning it when demanded. (Pineda,
2006)
A contract of deposit is constituted from the

moment a person receives a thing belonging to
another, with the obligation of safely keeping it and
returning the same upon demand. (Art. 1962, NCC)
Its principal purpose is safekeeping and returning

the same.
When Contract of Deposit is Perfected
A deposit, being a real contract, is perfected by

delivery (Art. 1316, NCC), but an agreement to
constitute a deposit is merely consensual and is
therefore binding upon mere consent. (Art. 1963,
NCC)
Characteristics of contract of deposit
1. Real contract – it can only be perfected by the

delivery of the object of the contract. (Art. 1316,
NCC) or an agreement to constitute deposit is
binding but the deposit itself is not perfected
until the delivery of the thing. (Art. 1963, NCC)
NOTE: There is no consensual contract of

deposit; there is only a consensual promise to
deliver which is binding if such is accepted.
2. Object of the contract must be a movable

property. This rule applies only to extra-judicial
deposit. Thus, in cases of judicial deposit, the
subject matter may be a real property; or
3. Purpose is for the safekeeping of the thing

deposited. (Art. 1962, NCC) This must be the
principal purpose and not only secondary;
NOTE: If safekeeping is merely secondary, the
contract is not a deposit but some other
contract.

2022 GOLDEN NOTES
Civil Law
4. Principal – its existence is not dependent on Deposit v. Mutuum, Commodatum, and Lease
another contract.
DEPOSIT MUTUUM
5. Informal – no particular form is required for the
contract. Purpose
Safekeeping/custody Consumption
6. It is gratuitous, unless there is a:
a. Contrary agreement; When to return
b. The depositary is engaged in the business Upon expiration of
of storing goods, like a warehouseman (Art. Upon demand of the
the term granted to
1965, NCC); or depositor.
the borrower.
c. Where the property is saved from
Subject Matter
destruction without knowledge of the
owner, the latter is bound to pay the other Movable (extrajudicial)
Money or other
person just compensation (as in case of or may be immovable
fungible thing.
involuntary deposit). (judicial).
Relationship
NOTE: Deposit shall be considered as a loan if Depositor-depositary Lender-borrower
there is a stipulation for the payment of
Compensation
interest. (Aquino v. Deala, G.R. No. 43304, 21
Oct. 1936) The reason is that interest can only May be gratuitous
Generally gratuitous. No
arise from a contract of loan (mutuum). or with a stipulation
compensation of things
to pay interest.
deposited with each
Q: Is there an instance where there is There can be
other (except by mutual
compensation even though the depositary is not compensation of
agreement).
engaged in business of storing goods or there is credits.
no agreement as to compensation?
DEPOSIT COMMODATUM
A: YES. When during a fire, flood, storm, or other
Principal Purpose
calamity, property is saved from destruction by
another person without the knowledge of the Transfer of use of the
Safekeeping.
owner, the latter is bound to pay the former just thing.
compensation. (Art. 2168, NCC) Nature
7. The depositary cannot use the thing deposited, May be gratuitous or Always gratuitous by
unless: onerous. its essence.
a. Expressly permitted by the depositor; or Object
b. Preservation of the thing requires its use, In extra-judicial Both movable and
but only for said purpose. (Art. 1977, NCC) deposit, only immovable property
movables may be may be objects
objects thereof. thereof.
Demandability
Return of the thing
Depositor can
cannot be demanded
demand the thing at
until the lapse of the
will.
period.

Credit Transactions
DEPOSIT LEASE Purpose

Principal Purpose Security or to ensure
Safekeeping. Use of the thing. the right of a party to
Custody and
property or to recover
When to return safekeeping.
in case of favorable
Upon demand of the Upon termination of judgment.
depositor. the lease contract.
Subject Matter
Kinds of Deposit Movables or
immovables but Movables only
1. Judicial (sequestration) (Arts. 1964 & 2005, generally immovable.
NCC) – It takes place when an attachment or
seizure of the property in litigation is ordered. Cause
2. Extra-judicial (Arts. 1968 & 2004, NCC)
Generally gratuitous
a. Voluntary – The delivery is made by the will
Always onerous but may be
of the depositor or by two or more persons
compensated
each of whom believes himself entitled to
the thing entitled. (Art. 1968, NCC); or When must the thing be returned
b. Necessary – Made in compliance with a legal
obligation, or on the occasion of any Upon order of the court
Upon demand of
calamity, or by travelers in hotels and inns, or when litigation is
depositor.
or by travelers with common carriers. ended.
(Arts. 1996 & 1998, NCC)
In whose behalf it is held
JUDICIAL EXTRA-JUDICIAL Person who has a right

Depositor or third
or in behalf of
Creation person designated.
the winner.
Will of the court; takes
place when an
attachment or seizure Ownership of the thing deposited in a contract
of property in litigation Will of the contracting of deposit
is ordered, thus it is the parties.
court order that gives The depositor need not be the owner of the thing
rise to this kind of deposited because the purpose of the contract is
deposit. safekeeping and not transfer of ownership. (Art.
1984, NCC)
As to Possession of Thing
The sequestrator NOTE: A deposit may also be made by two or more
possesses the thing in persons each of whom believes himself entitled to
virtual representation the thing deposited with a third person, who shall
The depositary holds
of the person who by deliver it in a proper case to the one to whom it
the thing by will of the
the decision of the belongs. (Art. 1968, NCC)
depositor. (Rabuya,
court should turn out
2017)
to be its owner and Rent of Safety Deposit Boxes
proprietor. (Rabuya,
2017) The rent of safety deposit boxes is not an ordinary
Status contract of lease of things but a special kind of
No contract. There is a contract. deposit; it is not strictly governed by the provisions
on deposit. (Pineda, 2006)

2022 GOLDEN NOTES
Civil Law
The case of Sia v. CA (G.R. No. 102970, 13 May 1993) they contracted. (Art. 1397, NCC)
enunciating that a rent of a safety deposit box is a
special kind of deposit, was decided under the 2. If the depositary is incapacitated, he does not
former General Banking Act. However, the Supreme incur the obligation of a depositary. However,
Court has not yet decided a case abandoning the he is liable to:
ruling in Sia v. CA, making it conform with the (1) return the thing deposited while still in his
General Banking Law of 2000. possession; or
(2) pay the depositor the amount by which he
Fixed, savings and current deposits in banks may have benefited himself with the thing or its
price subject to the right of any third person
Fixed, savings and current deposits in banks and who acquired the thing in good faith, in which
other similar institutions are not true deposits but case the depositor may only bring an action
are considered simple loans because they earn against him for its recovery. (Art. 1971, NCC)
interest. (Art. 1980, NCC) Bank deposits are in the
nature of irregular deposit but they are really loans As to Depositor
governed by the law on loans. (De Leon, 2013)
(1997, 1998, 2009 BAR) He can exercise a reinvindicatory action at any time
either against the depositary, if the thing deposited
NOTE: Where safekeeping is still the principal is still in the latter’s possession, or against a third
purpose of the contract, and the use of the thing is person who acquired the thing provided that such
merely secondary. This is called irregular deposit. third person acted in bad faith.
(De Leon, 2021) If the thing can no longer be restored, the depositor
will have the right to demand payment by which the
Nature of Advance Payment in a contract of sale depositary may have enriched himself with the
thing or its price.
A so-called deposit of an advance payment in the
case of a sale is not the deposit contemplated under A guardian is not a depositary of the ward’s
Art. 1962. It is that advance payment upon which property
ownership is transferred to the seller once it is given
subject to the completion of payment by the buyer He is not holding the funds of the ward merely for
under an agreement. (Cruz v. Auditor General, G.R. safekeeping exclusively, but also intended for the
No. L-12233, 30 May 1959) latter’s maintenance and support. Losses, if any,
without the fault of the guardian shall be deducted
PARTIES TO A CONTRACT OF DEPOSIT from the funds of the ward. (Philippine Trust Co. v.
Ballesteros, G.R. No. L-8261, 20 Apr. 1956)
1. Depositary– to whom the thing is deposited;
and Obligations of the Depositor
2. Depositor – the one who deposits the thing.
1. Payment for necessary expenses for
Effects of Incapacity of the Depositary or preservation:
depositor - If the deposit is gratuitous – depositor must
reimburse depositary (Art. 1992, NCC); and
1. If the depositary is capacitated, he is subject to - With compensation – no need for
all the obligations of a depositary whether the reimbursement; expenses are borne by
depositor is capacitated or not (Art. 1970, NCC); depositary. (Pineda, 2006)
and
GR: Depositor must pay losses incurred by
NOTE: Under the law, persons who are capable depositary due to the character of the thing
cannot allege the incapacity of those with whom deposited.

Credit Transactions
XPNs: proportionate interest in the mass. (Art. 1976, NCC)

1) When at the time of deposit, the
depositor was not aware of the DEPOSITARY’S RIGHT OF RETENTION
dangerous character of the thing or was
not expected to know it; Right of the depositary to retain the thing in
2) When the depositor notified the pledge
depositary; or
3) When the depositary was aware of it The depositary has the right to retain the thing in
without advice from the depositor. pledge until full payment of what may be due him by
reason of the deposit. (Art. 1994, NCC) This is an
2. In case of an onerous deposit, to pay the example of pledge created by operation of law. (Art.
compensation agreed upon as consideration for 2121, NCC)
the deposit. (Art. 1993, NCC)
Duty of the depositary’s heir who sold the thing
Diligence required in a contract of deposit deposited in good faith
The diligence required of a depositary is that agreed The *depositor’s heir who in good faith may have
upon by the parties, who may limit or expand the sold the thing he did not know was deposited, shall
degree of diligence required. In the absence of any only be bound to return the price he may have
stipulation, the degree of diligence required is lower received or to assign his right of action against the
if the deposit is gratuitous and higher if the deposit buyer in case the price has not been paid him. (Art.
is with compensation. (Art. 1972, NCC) Ordinarily, 1991, NCC)
the depositary must exercise over the thing
deposited the same diligence he would exercise NOTE: The word “depositor’s” in this part should be
over his property. read as “depositary’s.” (De Leon, 2013) If the heir
acted in bad faith, he is liable for damages. The sale
Loss through force majeure or expropriation or appropriation of the thing deposited constitutes
estafa. (Art. 315(b), RPC)
If the depositary by force majeure or government
order loses the thing and receives money or another The provision applies only when the depositary has
thing in its place, he shall deliver the sum or other died and left heir/s who took possession of the thing
thing to the depositor. (Art. 1990, NCC) in the concept of an owner and sold it in good faith
to a third person.
Manner of deposit
To whom it must be returned
The depositary may change the manner of the
deposit if he may reasonably presume that the 1. The depositor, to his heirs and successors, or to
depositor would consent to the change if the latter the person who may have been designated in
knew of the facts of the situation. However, before the contract (Art. 1972, NCC);
the depositary may make such change, he shall 2. If the depositor was incapacitated at the time of
notify the depositor thereof and wait for his making the deposit, to his guardian or
decision, unless delay would cause danger. (Art. administrator or to the depositor himself should
1974, NCC) he acquire capacity (Art. 1970, NCC);
3. Even if the depositor had capacity at the time of
Right of depositary to commingle making the deposit but he subsequently loses
his capacity during the deposit, the thing must
The depositary may commingle grain or other be returned to his legal representative (Art.
articles of the same kind and quality, in which case 1986, NCC); or
the various depositors shall own or have a 4. Two or more persons each claiming to be

2022 GOLDEN NOTES
Civil Law
entitled to a thing may deposit the same with a without malice on the part of the depositary. (Art.
third person. In such case, the third person 1987, NCC)
assumes the obligation to deliver to the one to When it must be returned
whom it belongs.
GR: The thing deposited should be returned upon
NOTE: The action to compel the depositors to settle demand or at will, whether or not a period has been
their conflicting claims among themselves would be stipulated.
in the nature of an interpleader. (Sec. 1, Rule 62, ROC)
XPNs:
Proving the ownership of the thing deposited 1. The thing is judicially attached while in the
depositary’s possession;
GR: The depositary cannot demand that the 2. The depositary was notified of the opposition of
depositor should prove his ownership of the thing a third person to the return or the removal of
deposited. (Art. 1984, NCC) the thing deposited (Art. 1988, NCC); or
3. In case of gratuitous deposit, if the depositary
XPN: Should he discover that the thing has been has a justifiable reason for not keeping the
stolen and who its true owner is, he must advise the deposit. If the depositor refuses, the depositary
latter of the deposit. may secure its consignation from the court.
(Art. 1989, NCC)
NOTE: If the depositary has reasonable grounds to
believe that the thing has not been lawfully acquired VOLUNTARY DEPOSIT
by the depositor, the former may return the same.
It is a contract or judicial relation wherein a thing is
If the depositary knew the identity of the owner delivered at the will of a person (depositor) to
of the thing deposited another (depositary) for the purpose of safekeeping
by the latter coupled with the obligation of
The depositary may not return the thing to the returning it upon demand. (Pineda, 2006)
owner should he knew of the identity of the latter.
He is not authorized to return the thing A voluntary deposit is that wherein the delivery is
unceremoniously to the alleged owner without the made by the will of the depositor. (Art. 1968, NCC)
knowledge of the depositor. His duty is merely to
advise the owner of the deposit. A deposit may also be made by two or more persons
each of whom believes himself entitled to the thing
If the depositor insists on his ownership as against deposited with a third person, who shall deliver it in
the true owner, the depositary may file an a proper case to the one to whom it belongs. (Art.
interpleader suit against both of them to avoid 1968, NCC)
responsibility. If the identity of the true owner
cannot be ascertained, the depositary may return Form of contract of deposit
the thing to the depositor. (Pineda, 2006)
A contract of deposit may be entered into orally or
Where it must be returned in writing. (Art. 1969, NCC)
GR: The thing deposited must be returned at the NOTE: The above article follows the general rule
place agreed upon. that contracts shall be obligatory in whatever form
they may have been entered into provided all the
XPN: In the absence of stipulation, at the place essential requisites for their validity are present.
where the thing deposited might be, even if it should (Art. 1356, NCC) Thus, except for the delivery of the
not be the same place where the original deposit thing, there are no formalities required for the
was made provided the transfer was accomplished existence of the contract. (De Leon, 2013)

Credit Transactions
Difference between Voluntary and Necessary but a contract of loan or commodatum, as the
deposit case may be.
In voluntary deposit there is a freedom of action XPN: If the principal reason for the contract is
which is implied in the phrase “delivery is made by still safekeeping, it is still deposit.
the will of the depositor,” unlike in the case of a
necessary deposit. In other words, the depositor in 6. When the thing deposited is delivered sealed
a voluntary deposit is free to choose the depositary. and closed:
(Pineda, 2006) a. Return the thing in the same condition;
b. Pay damages if seal be broken through his
Obligations of a depositary in voluntary deposit fault; and
c. Keep the secret of the deposit when seal is
1. To keep the thing safely and return it (Art. 1972, broken with or without his fault. (Art.
NCC); 1981, NCC)
2. Exercise same diligence as he would exercise NOTE: However, the depositary is authorized to
over his own property; open the seal or lock when:
a. There is presumed authority (i.e. the key
GR: Not to deposit the thing with a third person. is delivered);
b. Out of necessity; (Art. 1982, NCC) or
XPNs: c. When the instruction of the depositor as
a. When expressly authorized by stipulation; regards the deposit cannot be executed
and without opening the box or receptacle.
b. When the preservation of the thing (Rabuya, 2015)
requires its use. (Art. 1977, NCC)
7. GR: Pay for any loss or damage that may arise
NOTE: Depositary is liable for the loss if: due to his fault;
a. He deposits the thing to a third person
without authority, even though the loss is XPN: Liability of loss through fortuitous event.
due to fortuitous events; or
b. He deposits the thing to a third person who XPNs to XPN: Even in case of loss through
is manifestly careless or unfit although fortuitous event, still liable if:
there is authority. a. If it is so stipulated;
b. He uses the thing without depositor’s
3. If the thing should earn interest: permission;
a. Collect interest as it falls due; and c. He delays its return; or
b. Take steps to preserve the value and rights d. He allows others to use it even if he himself
corresponding to it. is authorized to use it. (Art. 1979, NCC)
4. Not to commingle things if so stipulated; 8. Return the thing deposited with all its fruits,
accessions, and accessories (Art. 1983, NCC);
5. GR: Not to make use of the thing deposited; and
XPNs: 9. Pay interest on sums converted to personal

3. When preservation of thing deposited use if the deposit consists of money.
requires its use;
4. When authorized by depositor.
NOTE: GR: In such case, it is no longer a deposit

2022 GOLDEN NOTES
Civil Law
Extinguishment of voluntary deposit a. Loss or injury is caused by his employees or

even by strangers; (Art. 2000, NCC) or
a. Loss or destruction of thing deposited; b. Loss is caused by act of thief or robber
b. In gratuitous deposit, upon death of either when there is no use of arms or irresistible
depositor or depositary (Art. 1995, NCC); or force. (Art. 2001, NCC)
c. Other causes.
e.g., return of thing, novation, expiration of the 3. The keepers of hotels or inns are not liable for
term, fulfillment of resolutory condition. loss of thing in case of deposit when:
a. Loss or injury is caused by force majeure;
NECESSARY DEPOSIT (2007 BAR) (Art. 2000, NCC)
b. Loss due to the acts of guests, his family, his
A necessary (involuntary) deposit is one wherein employees, or visitors; (Art. 2002, NCC) and
the deposit is not made by the will of the depositor c. Loss arises from the character of the goods.
but created by force of the law or on occasion of a (Art. 2002, NCC)
calamity.
NOTE: Liability by the hotel or innkeeper
When is deposit considered as necessary commences as soon as there is evident intention on
the part of the travelers to avail himself of the
1. When it is in compliance with a legal obligation; accommodations of the hotel or inn. It does not
2. It takes place on the occasion of any calamity, matter whether compensation has already been
such as fire, storm, flood, pillage, shipwreck, or paid or not, whether the guest has already partaken
other similar events (Art. 1996, NCC); of food and drink or not. (Paras, 2008)
3. Made by passengers with common carriers; or
4. Made by travelers in hotels or inns. (Art. 1998, Posting of Notice of exempt from liability
NCC)
Hotel/Inn-keepers cannot escape or limit liability by
Governing law in cases of necessary deposit stipulation or the posting of notices. Any stipulation
between the hotel keeper and the guest whereby the
1. In compliance with a legal obligation – responsibility of the former (Arts. 1998-2001, NCC)
Governed by the law establishing it, and in case is suppressed or diminished shall be void. (Art.
of deficiency, the rules on voluntary deposit; 2003, NCC) The hotel or inn keepers are still liable
and regardless of the posting of notices exempting
2. On occasion of a calamity – Governed by the themselves from any liability.
provisions concerning voluntary deposit. (Arts.
1968 –1971, NCC) Extent of liability of the hotel keepers in case of
loss
Keepers of Hotels or Inns
1. It covers liability in hotel rooms which comes
1. The keepers of hotels or inns shall be held under the term “baggage” or articles such as
responsible for loss of thing in case of deposit clothing as are ordinarily used by travelers; and
when both are present: 2. It includes lost or damages in hotel’s annexes
a. They have been previously informed by such as vehicles in the hotel’s garage. (Art. 1999,
guest about the effects the latter brought in; NCC)
and
b. The guest has taken precautions prescribed Q: Venus was the owner of Suzuki Grand Vitara
for their safekeeping. which was insured with Pioneer Insurance for
loss and damage. When she arrived and checked
2. They are liable regardless of the degree of care in at Heaven’s Hotel before midnight, its parking
exercised when: attendant, John, got the key to said Vitara. At

Credit Transactions
about one in the morning, Venus was awakened It is auxiliary to a case pending in court. The
in her room by a telephone call from the Hotel purpose is to maintain the status quo during the
Chief Security Officer who informed her that her pendency of the litigation or to insure the right of
Vitara was carnapped while it was parked the parties to the property in case of a favorable
unattended at the parking area of the bank near judgment. (De Leon, 2013)
the hotel. May the insurance company, by right
of subrogation, recover from the hotel the Object of judicial deposit
damages it paid to Venus?
The object of judicial sequestration may be
A: YES. The contract of necessary deposit existed movables or immovable. (Art. 2006, NCC)
between the insured Venus and the hotel. Article
1962, in relation to Article 1998, of the Civil Code Q: When will the properties sequestered cease
defines this contract. Plainly, Venus deposited for to be in custodia legis?
safekeeping her vehicle through the hotel’s
employee. From Venus’ delivery, when she handed A: They cease to be in custodia legis when the
the keys to John, the contract was perfected. Thus, insolvency proceedings of a partnership terminated
there is the obligation of safely keeping it and because the assignee in insolvency has returned the
returning it. Ultimately, the hotel is liable for the remaining assets to the firm, said properties cease
loss of Venus’ vehicle. (Durban Apartments Corp. v. to be in custodia legis. (Ng Cho Cio v. Ng Diong &
Pioneer Insurance Surety Corp., G.R. No. 179419, 12 Hodges, L-14832, 28 Jan. 1961)
Jan. 2011)
Obligation of depositary of sequestered
Right to retain given to hotel-keeper or inn- property
keeper
The depositary of sequestered property is the
The hotel-keeper has a right to retain the things person appointed by the court. (Art. 2007, NCC) He
brought into the hotel by the guest, as a security for has the obligation to take care of the property with
credits on account of lodging, and supplies usually the diligence of a good father of a family (Art. 2008,
furnished to hotel guests. (Art. 2004, NCC) NCC) and he may not be relieved of his
responsibility until the litigation is ended or the
Reason: The right is given to hotel-keepers to court so orders. (Art. 2007, NCC; De Leon, 2013)
compensate them for the liabilities imposed upon
them by law. (De Leon, 2013) Applicable Law
NOTE: This is in the nature of the pledge created by The law on judicial deposit is remedial or
operation of law. The act of obtaining food or procedural in nature. Hence, the Rules of Court are
accommodation in a hotel or inn without paying applicable. The relevant provisions of the Rules of
therefor constitutes estafa. (Art. 135, RPC) Court are Rule 57 (Preliminary Attachment), Rule
59 (Receivership), and Rule 60 (Replevin). Rule 127
A safety deposit box in a hotel is a contract of provides for attachment in criminal cases. (De Leon,
necessary deposit. The existing relationship is one 2013)
of depositor and depositary. (YHT Realty Corp. v. CA,
G.R. No. 126780, 17 Feb. 2005)
JUDICIAL DEPOSIT
Judicial deposit (sequestration) takes place when an

attachment or seizure of property in litigation is
ordered by a court. (Art. 2005, NCC)

2022 GOLDEN NOTES
Civil Law
The CA rendered a Decision holding that the RTC

C. GUARANTY AND SURETYSHIP committed grave abuse of discretion in issuing
the writ absent a clear legal right thereto on the
part of NSSC and Orimaco. Consequently, the
Writ of Preliminary Injunction issued by the RTC
Guaranty
was ordered dissolved. Respondents filed an
application for damages against the injunction
Guaranty is a contract where a person called the
bond issued by CGAC in the amount of
guarantor binds himself to the creditor to fulfill the
P1,000,000.00. Is CGAC liable?
obligation of the principal debtor in case the latter
should fail to do so. (Art 2047, NCC)
A: YES. That CGAC’s financial standing differs from
that of NSSC does not negate the order of execution
Suretyship
pending appeal. As the latter’s surety, CGAC is
considered by law as being the same party as the
Suretyship is a contract where a person binds
debtor in relation to whatever is adjudged touching
himself solidarily with the principal debtor.
the obligation of the latter, and their liabilities are
interwoven as to be inseparable. Verily, in a contract
An undertaking that the debt shall be paid. (Pineda,
of suretyship, one lends his credit by joining in the
2006)
principal debtor’s obligation to render himself
directly and primarily responsible with him, and
Q: The instant petition originated from a
without reference to the solvency of the principal.
Complaint for Breach of Contract with Damages
Thus, execution pending appeal against NSSC means
and Prayer for Preliminary Injunction and
that the same course of action is warranted against
Temporary Restraining Order filed by Nissan
its surety, CGAC. The same reason stands for CGAC’s
Specialist Sales Corporation and its President
other principal, Orimaco, who was determined to
and General Manager, Reynaldo A. Orimaco,
have permanently left the country with his family to
against herein respondents Universal Motors
evade execution of any judgment against him.
Corporation (UMC), Rodrigo T. Janeo, Jr.,
(Centennial Guaranty Corp. v. Universal Motors Corp.,
Gerardo Gelle, Nissan Cagayan de Oro
G.R. No. 189358, 08 Oct. 2014)
Distributors, Inc., Jefferson U. Rolida, and Peter
Yap.
Q: Doctors of New Millennium Holdings, Inc. is a
domestic corporation comprised of about 80
The temporary restraining order (TRO) prayed
doctors. On March 2, 1999, it entered into a
for was eventually issued by the RTC upon the
construction and development agreement
posting by NSSC and Orimaco of a P1,000,000.00
(signed agreement) with Million State
injunction bond issued by their surety, CGAC. The
Development Corporation, a contractor, for the
TRO enjoined respondents from selling, dealing,
construction of a 200-bed capacity hospital in
and marketing all models of motor vehicles and
Cainta, Rizal. According to the terms of the
spare parts of Nissan, and from terminating the
signed agreement, Doctors of New Millennium
dealer agreement between UMC and NSSC and
obliged itself to pay P10,000,000.00 to Million
restrained UMC from supplying and doing
State Development at the time of the signing of
trading transactions with NCOD, which, in turn,
the agreement to commence the construction of
was enjoined from entering and doing business
the hospital. Million State Development was to
on Nissan Products within the dealership
shoulder 95% of the project cost and committed
territory of NSSC as defined in the Dealer
itself to secure P385,000,000.00 within 25
Agreement. The TRO was eventually converted
banking days from Doctors of New Millennium’s
into a writ of preliminary injunction.
initial payment, part of which was to be used for
Respondents filed a petition for certiorari and
the purchase of the lot where the hospital was to
prohibition before the CA and assailed the
be constructed. As part of the conditions prior to
issuance of the aforesaid injunctive writ.

Credit Transactions
the initial payment, Million State Development when there is a material alteration of the contract in
submitted a surety bond of P10,000,000.00 to connection with which the bond is given, such as a
Doctors of New Millennium. The surety bond change which imposes a new obligation on the
was issued by People’s Trans-East Asia promising party, or which takes away some
Insurance Corporation, now known as People’s obligation already imposed, or one which changes
General Insurance Corporation. Doctors of New the legal effect of the original contract and not
Millennium, on the other hand, made the initial merely its form. A surety, however, is not released
payment of P10,000,000.00. by a change in the contract which does not have the
effect of making its obligation more onerous.
Million State Development, however, failed to Respondent was not privy to the terms of the surety
comply with its obligation to secure bond entered into by petitioner and Million State
P385,000,000.00 within 25 banking days from Development. If there were any changes in the
initial payment. Then Doctors of New contract that petitioner should have been aware of,
Millennium sent a demand letter from the time it was Million State Development, as its principal,
remittance was due. When Million State which had the duty to inform them about the
Development reneged on its obligations, changes.
Doctors of New Millennium sent a demand letter
dated June 14, 1999 to People’s General Based on petitioner’s own admissions, the principal
Insurance for the return of its initial payment of contract of the suretyship is the signed agreement.
P10,000,000.00, in accordance with its surety The surety, therefore, is presumed to have
bond. Whether or not the surety bond acquiesced to the terms and conditions embodied in
guaranteeing respondent Doctors of New the principal contract when it issued its surety
Millennium’s initial payment was impliedly bond.
novated by the insertion of a clause in the
principal contract, which waived the conditions Accordingly, petitioner cannot argue that the
for the initial payment’s release? insertion of the clause in the signed agreement
constituted an implied novation of the obligation
A: NO. In this case, the surety bond was executed “to which extinguished its obligations as a surety since
guarantee the repayment of the down payment” and there was nothing to novate: In order that an
“to secure the full and faithful performance” of obligation may be extinguished by another which
Million State Development. According to the terms substitutes the same, it is imperative that it be so
of the bond, People’s General Insurance bound itself declared in unequivocal terms, or that the old and
to be liable in the amount of P10,000,000.00 if new obligation be in every point incompatible with
Million State Development defaults in its each other. Novation of a contract is never
obligations. Petitioner, however, contends that the presumed. In the absence of an express agreement,
inclusion of the clause “or the Project Owner’s novation takes place only when the old and the new
waiver” in Article XIII of the signed agreement made obligations are incompatible on every point
its obligations more onerous and, therefore, the (People’s General Insurance Corporation v. Doctor
surety must be released from its bond. New Millenium Holdings, G.R. No. 172404, 13 Aug.
2014)
A suretyship consists of two different contracts: (1)
the surety contract and (2) the principal contract
which it guarantees. Since the insurer’s liability is
strictly based only on the terms stated in the surety
contract in relation to the principal contract, any
change in the principal contract, which materially
alters the principal’s obligations would, in effect,
constitute an implied novation of the surety
contract. A surety is released from its obligation

2022 GOLDEN NOTES
Civil Law
Guaranty v. Suretyship (1992, 1997, 2010 BAR person cannot be both the primary debtor and the
guarantor of his own debt as this is inconsistent
GUARANTY SURETYSHIP with the very purpose of a guarantee which is for the
Liability depends creditor to proceed against a third person if the
upon an independent debtor defaults in his obligation.
Surety assumes
agreement to pay the
liability as a regular
obligation of the Unilateral Character of Guaranty
party to the contract.
principal if he fails to
do so. The contract of guaranty may be undertaken
Guarantor is Surety is primarily without the knowledge of the principal debtor. It
secondarily liable. liable. exists for the benefit of the creditor and not for the
benefit of the principal who is not a party to the
Guarantor binds Surety undertakes to
contract of guaranty. The creditor has every right to
himself to pay if the pay if principal does
take all possible measures to secure the payment of
principal cannot pay. not pay.
his credit. Hence, it can be constituted without the
Insurer of solvency of knowledge and even against the will of the principal
Insurer of the debt.
debtor. debtor. (Arts. 1236, 1237, & 1250, NCC)
Guarantor can avail of
the benefit of Surety cannot avail of The contract is unilateral because what arises
excussion and the benefit of therefrom are solely obligations on the part of the
division in case excussion and guarantor with relation to the creditor, although its
creditor proceeds division. (Pineda, fulfillment or consummation gives rise to obligation
against him. (Pineda, 2006) on the part of the person guaranteed with respect to
2006) the guarantor. (Rabuya, 2017)
Similarity between guaranty and suretyship NOTE: A guarantor can recover from the debtor
what the former had to pay the creditor, even if the
Both guarantor and surety promise or undertake to guaranty was without the debtor’s consent or
answer for the debt, default, or miscarriage of against his will, but the recovery will only be to the
another person. extent that the debtor had been benefited. (Arts.
1236 & 1237, NCC; De Guzman v. Santos, G.R. No.
Guaranty v. Warranty 45571; 30 June 1939)
GUARANTY WARRANTY Gratuitous Character of Guaranty
An undertaking that the A guaranty is gratuitous unless there is a stipulation

title, quality, or to the contrary. (Art. 2048, NCC)
A contract by which
quantity of the subject Guaranty or surety agreement is regarded valid
a person is bound to
matter of a contract is despite the absence of any direct consideration
another for the
what it is represented received by the guarantor or surety, such
fulfillment of a
to be and relates to consideration need not pass directly to the
promise or
some agreement made guarantor; a consideration moving to the principal
undertaking of a
ordinarily by the party will suffice. (Pineda, 2006)
third person.
who makes the
warranty. Kinds of Guaranty
1. General classification
NOTE: In case of guaranty, the guarantor must be a
a. Personal – A guaranty where an individual
person distinct from the debtor because a person
personally assumes the fulfillment of the
cannot be the personal guarantor of himself. A

Credit Transactions
principal obligation of the debtor; or 4. Natural obligations – When the debtor himself
b. Real – The kind of guaranty where a offers a guaranty for his natural obligation, he
property whether movable, or immovable impliedly recognizes his liability, thereby
is formally committed to answer for the transforming the obligation from a natural into
principal obligation. (Pineda, 2006) a civil one; (Art. 2052, NCC)
5. Conditional obligations – Only in case of
2. As to its origin suspensive condition because upon its
a. Conventional– It is constituted by happening, it gives rise to the principal and
agreement of the parties; hence, gives rise also to the accessory
b. Legal – Imposed by virtue of a obligation. (Art. 2053, NCC)
provision of law; or
c. Judicial– Required by a court to Guaranty for present and future debts
guarantee the eventual right of the
parties in a case. (Art. 2051(1), NCC) There can be a guaranty for:
1. Present debts; and
3. As to consideration 2. Future debts even if the amount is not yet
a. Gratuitous– The guarantor does not known (Art. 2053, NCC).
receive any price or remuneration for
acting as such or Liquidated debt – a debt is liquidated when it is for
b. Onerous– One where the guarantor a price fixed in a contract for the delivery of future
receives valuable consideration for his goods and the seller is now ready to deliver said
guaranty. (Art. 2048, NCC) goods within the period stipulated. (Smith, Bell & Co.
v. National Bank, G.R. No. 16482, 01 Feb. 1992)
4. As to person
a. Single – It is constituted solely to Validity of the Principal Contract
guarantee or secure performance by
the debtor of the principal obligation or A valid principal obligation is necessary in contract
b. Double or sub-guaranty– It is of guaranty since guaranty is an accessory contract,
constituted to secure the fulfillment of it is an indispensable condition for its existence that
the obligation of a guarantor by a sub- there must be a principal obligation. Hence, if the
guarantor. (Art. 2051(2), NCC) principal obligation is void, it is also void.
5. As to scope and extent Absence of Consideration to Guarantor

a. Definite – One where the guaranty is
limited to the principal obligation only, A guaranty or surety agreement is regarded as valid
or to a specific portion thereof; or despite the absence of any direct consideration
b. Indefinite or Simple – One where the received by the guarantor or surety either from the
guaranty included all the accessory principal debtor or from the creditor; a
obligations of the principal, e.g., costs, consideration moving to the principal alone will
including judicial costs. (Art. 2055 (2), suffice. (Garcia Jr., v. CA, G.R. No. 80201, 20 Nov.
NCC) 1990)
Obligations that May be Secured in a Contract of Absence of Direct or Personal Interest of

Guaranty Guarantor
1. Valid obligations; It is never necessary that he should receive any part

2. Voidable obligations, unless it is annulled by of benefit, if such there be, accruing to the principal.
proper action in court; (Art. 1390, NCC (Willex Plastic Industries Corp v. CA, G.R. No. 103066,
3. Unenforceable obligations; (Art. 1403, NCC) 25 Apr. 1996)

2022 GOLDEN NOTES
Civil Law
Statute of Fraud in a Contract of Guaranty Qualifications of a Guarantor
A contract of guaranty must be expressed and in 1. Possesses integrity;

writing (Art. 1403(2), NCC); otherwise, it is 2. Capacity to bind himself; and
unenforceable unless ratified. It need not be in a 3. Has sufficient property to answer for the
public instrument. obligation which he guarantees.
NOTE: The Statute of Frauds does not require that NOTE: The qualifications need only be present at the
the contract of guaranty itself be in writing. What it time of the perfection of the contract. The creditor
requires to be in writing for the contract of guaranty can naturally waive the requirements, for rights in
to be enforceable is the under telling or special general are waivable (Paras, 2008)
promise of guarantor, which must be signed by him.
(Rabuya, 2017) Loss of Qualification of the Guarantor
Acceptance of the creditor in a contract of GR: The qualification of the guarantor is lost
guaranty through conviction of a crime involving dishonesty
or insolvency. In this case, the creditor is given the
GR: The acceptance of the creditor is not essential right to demand substitution of the guarantor.
in contract of guaranty.
XPN: When the guarantor had been selected by the
XPN: When there is a mere offer of a guaranty or a creditor. The supervening loss of required
conditional guaranty wherein the obligation does qualifications will not generally end the guaranty.
not become binding until it is accepted by the (Art. 2057, NCC)
creditor and notice of such acceptance is given to
the guarantor. Married Woman as a Guarantor
Construction of a contract of guaranty or surety GR: A married woman can be a guarantor without
the consent of her husband but binds only her
GR: In case of doubt, a contract of guaranty or surety separate property. (Art. 145, FC & Art. 2049, NCC)
should be strictly construed against the creditor and
liberally in favor of the guarantor or surety; terms XPNs:
cannot be extended beyond the stipulation. 1. If with her husband’s consent, it binds the
community or conjugal partnership property.
XPN: In cases of compensated sureties. (Pineda, 2. Without husband’s consent, in cases provided
2006) for by law, such as when the guaranty has
redounded to the benefit of the family. (Art. 121,
Ratio: A contract of guaranty is unilateral FC)
PARTIES TO A CONTRACT OF GUARANTY Rights of a Third Person (guarantor or surety)

who pays for the debt guaranteed or secured
1. Guarantor; and
2. Creditor. 1. If payment is made without the knowledge or
against the will of the debtor;
Guarantor a. Guarantor can recover only insofar as the
payment has been beneficial to the
The guarantor is the person who is bound to debtor; (Art. 1236(2), NCC) and
another for the fulfillment of a promise or b. Guarantor cannot compel the creditor to
undertaking of a third person. subrogate him in his rights.; (Art. 1237,
NCC)

Credit Transactions
2. If payment is made with the knowledge or BENEFIT OF EXCUSSION

consent of the debtor – The guarantor is
subrogated to all the rights which creditor had Benefit of Excussion
against the debtor.
The benefit of excussion is a right by which the
Extent of Guarantor’s Liability guarantor cannot be compelled to pay the creditor
unless the latter has exhausted all the properties of
1. Where the guaranty is definite – It is limited in the principal debtor and has resorted to all legal
whole or in part to the principal debt to the remedies against such debtor. (Art. 2058, NCC)
exclusion of accessories (11 Manresa 196;
Pineda, 2006); and Requisites of benefit of exhaustion or excussion
2. Where the guaranty is indefinite or simple – It
shall comprise not only the principal obligation 1. The guarantor must set up the right of
but also all its accessories, including the judicial excussion against the creditor upon the latter’s
costs provided that the guarantor shall only be demand for payment from him; and
liable for those costs incurred after he has been 2. He must point out to the creditor the available
judicially required to pay. (Art. 2055(2), NCC) property of the debtor which is not exempted
from execution is found within the Philippine
Effect in case of Death of a Party territory. (Art. 2060, NCC)
1. Guarantor’s death – His heirs will still be liable NOTE: Excussion may only be invoked after legal
to the extent of the value of the inheritance remedies against principal debtor have been
because the obligation is not purely personal expanded. The creditor must first obtain a judgment
and is therefore transmissible. (Estate of against the principal debtor before assuming to run
Hemady v. Luzon Surety & Ins. Co., G.R. No. L- after the alleged guarantor for obviously, the
8437, 28 Nov. 1956) exhaustion of the principal’s property cannot even
begin to take place before judgment has been
NOTE: An action against a guarantor who dies obtained. (Rabuya, 2017)
during pendency of the same, being one for the
recovery of money or debt, should be dismissed, Effect of the creditor’s negligence in exhausting
but may be instituted in the proceeding for the the properties of the debtor
settlement of his estate. (Villegas v. Zapanta, G.R.
No. L-11056, 28 Dec. 1958) He shall suffer the loss to the extent of the value of
the pointed property which was not exhausted by
2. Debtor’s death – his obligation will survive. His the creditor. (Art. 2061, NCC)
estate will be answerable. If the estate has no
sufficient assets, the guarantor shall be liable. Action of the creditor against the debtor
(Pineda, 2006)
GR: In an action of the creditor against the debtor,
Jurisdiction in an action based on a contract of only the principal debtor should be sued alone.
guaranty
XPN: If the benefit of excussion is not available, the
The guarantor shall be subject to the jurisdiction of guarantor can be sued jointly with the debtor.
the court of the place where the obligation is to be The guarantor entitled to be notified of the
complied with. complaint against the debtor. If the guarantor
desires to set up defenses as are granted him by law,
he may have the opportunity to do so. (Art. 2062,
NCC)

2022 GOLDEN NOTES
Civil Law
NOTE: A debtor and a guarantor can be sued indemnified by the latter.

together in one complaint, as permitted by the Rules
of Court on permissive joinder. However, if the The guarantor is entitled to be reimbursed by
creditor obtains favorable judgment, the latter is debtor for:
entitled to the deferment of judgment, before a writ 1. Total amount of the debt paid;
of execution can be implemented against a 2. Legal interest from the time payment was made
guarantor, the creditor must first establish that the known to the debtor (even though it did not
debtor cannot pay. earn interest for the creditor);
3. Expenses incurred after notifying debtor that
The consequences of the guarantor’s appearance or demand to pay was made upon him; and
non- appearance in the case against the debtor: 4. Damages in accordance with law, if they are
1. If he does not appear and judgment is rendered due. (Art. 2066, NCC)
against the debtor, he cannot set up defenses
which he could have set up had he appeared. XPNs:
Moreover, he cannot question the decision 1. Guaranty is constituted without the knowledge
anymore; or against the will of the debtor.
2. If he appears such as by filing an answer in
intervention, he may lose or may win the case. Effect: Guarantor may only recover so much as
If he losses, he is still entitled to the benefit of was beneficial to the debtor. If payment has not
excussion; and benefitted the debtor at all, the guarantor does
3. There is no waiver of his benefit of excussion by not acquire any claim for reimbursement.
his appearance in the case. (Pineda, 2006)
The remedy of the guarantor would be to go
Compromise agreement between the creditor against the creditor for the amount paid, if there
and the principal debtor is still a legal basis for the claim. If the
guarantors suffer, it is due to his own fault.
Compromise is a contract whereby the parties, by
making reciprocal concessions, avoid litigation or 2. Payment by third persons who does not intend
put an end to one already commenced. (Pineda, to be reimbursed; and
2006; Art. 2028, NCC)
Effect: It is deemed a donation and as such
A compromise between the creditor and the requires the consent of debtor.
principal debtor is valid if the compromise is
beneficial to the guarantor; otherwise, it is not 3. If the guarantor has paid without notifying the
binding upon him. debtor and the latter not being aware of the
payment, repeats it, the guarantor has no
In a compromise between the creditor and the remedy whatever against the debtor, but only
guarantor to the principal debtor, if compromise is against the creditor. (Art. 2076, NCC)
beneficial to the principal debtor, it is valid;
otherwise, it is not binding upon him. (Art. 2063, XPNs to XPN:
NCC) a. In case of gratuitous guaranty;
b. If the guarantor was prevented by the
To be binding, it must benefit both the guarantor fortuitous event from advising the debtor of
and the debtor. the payment; and
c. The creditor becomes insolvent, the debtor
Right of Indemnity and Reimbursement of the shall reimburse the guarantor for the
Guarantor who paid the debt amount paid.
GR: The guarantor who pays for a debtor must be

Credit Transactions
Right of subrogation ten years;

6. If there are reasonable grounds to fear that the
The guarantor has the right of subrogation after the principal debtor intends to abscond; or
payment of the debt is made to the creditor. The 7. If the principal debtor is in imminent danger of
guarantor is subrogated to all the rights which the becoming insolvent. (Art. 2071, NCC)
creditor had against the debtor. (Art. 2067(1), NCC)
NOTE: In all these cases, the cause of action of the
If the guarantor pays without notice to the debtor, guarantor is either to obtain release from the
the debtor may interpose against the guarantor guaranty, or to demand a security that shall protect
defenses available to the debtor as against the him from any proceedings by the creditor and from
creditor at the time payment was made. (Pineda, the danger of insolvency of the debtor. (Art. 2071,
2006; Art. 2068, NCC) NCC)
Payment of the guarantor before maturity Purpose of the right of guarantor to proceed
against debtor before payment
GR: The guarantor cannot seek reimbursement
from the debtor until expiration of the period The purpose of this right is to enable the guarantor
stipulated. The guarantor must wait. For being to take measures for the protection of his interest in
subsidiary in character, the guaranty is not view of the probability that he would be called upon
enforceable until the debt has become due. (Art. to pay the debt. (De Leon, 2013)
2069, NCC)
NOTE: The guarantor cannot demand
NOTE: A guarantor cannot exercise the right of reimbursement or indemnity because he has not
subrogation until the principal obligation has been paid the obligation. The proper remedy is to obtain
fully extinguished. (Rabuya, 2017) release from the guaranty or to demand a security.
(Pineda, 2006)
XPN: If the premature payment was ratified by the
debtor, he can now be compelled to reimburse. Remedy of a guarantor of a third person at
(Pineda, 2006) Request of Another
Right of the guarantor to proceed against debtor The remedy of a person who becomes a guarantor
before payment at the request of another for the debt of a third
person who is not present may either:
GR: Guarantor cannot proceed against the principal 1. Sue the requesting party; or
debtor even before having paid the creditor. 2. Sue the principal debtor (Art. 2072, NCC)
XPNs: NOTE: The provision applies when the guarantor

1. When he is sued for payment; has actually paid the debt.
2. In case of insolvency of the principal debtor;
3. When the debtor has bound himself to relieve The Article is based on the principle that no person
him from the guaranty within a specified period, shall be enriched at the expense of another. (Pineda,
and this period has expired; 2006)
4. When the debt has become demandable by
reason of the expiration of the period of Sub-guaranty
payment;
5. After the lapse of ten years, when the principal Double or sub-guaranty is one constituted to
obligation has no fixed period for its maturity, guarantee the obligation of the guarantor.
unless it be of such nature that it cannot be
extinguished except within a period longer than NOTE: In case of insolvency of the guarantor for

2022 GOLDEN NOTES
Civil Law
whom he bound himself, he is responsible to the co- mortgage is constituted. (Marquez vs. Elisan Credit
guarantors in the same terms as the guarantors. Corporation, G.R. No. 194642, 06 Apr. 2015)
(Art. 2075, NCC)
Note: Although a promise expressed in a chattel
Entitlement to Right of Excussion mortgage to include debts that are yet to be
contracted can be binding commitment that can be
A sub-guarantor is entitled to the right of excussion compelled upon, the security itself, however, does
both with respect to the guarantor and to the not come into existence or arise until after a chattel
principal debtor. (Art. 2064, NCC) mortgage agreement covering the newly contracted
debt is executed either by concluding a fresh chattel
Continuing Guaranty mortgage or by amending the old contract
conformably with the form prescribed by the
A continuing guaranty or suretyship is one which Chattel Mortgage Law. (Ibid.)
covers all transactions, including those arising in the
future, which are within the description or XPN to the XPN: In case of stocks in department
contemplation of the contract of guaranty until the stores, drug stores, etc.
expiration or termination thereof. (Fortune Motors
Ph. Corp. v. CA, G.R. No. 112191 07 Feb. 1997) Note: R.A. No. 11057, otherwise known as the
“Personal Property Security Act” (PPSA), which was
A guaranty may be given to secure even future enacted on August 17, 2018, repealed Sections 1 to
debts, the amount of which may not be known at the 16 of Act No. 1508, otherwise known as “The Chattel
time the guaranty is executed. This is the basis for Mortgage Law.”
contracts denominated as continuing guaranty or
suretyship. It is one which covers all transactions, The PPSA is, however, not explicit as to whether a
including those arising in the future, which are “security interest” may secure the after-incurred
within the description or contemplation of the obligations of the debtor/grantor to the secured
contract of guaranty, until the expiration or creditor. Nevertheless, Section 10(c) of said law
termination thereof. (Dino v. CA, G.R. No. 89775, 26 provides that any stipulation limiting the grantor’s
Nov. 1995) right to create a security interest shall be void.
Guaranty of Future Debts Q: PAGRICO submitted a Surety Bond issued by

R&B Surety to secure an increase in its credit
Future debts, even if the amount is not yet known, line with PNB. For consideration of the Surety
may be secured by a guarantee. However, there can Bond, Cochingyan and Villanueva entered into
be no claim against the guarantor until the amount an Indemnity Agreement with R&B Surety and
of the debt is ascertained or fixed and demandable. bound themselves jointly and severally to the
The reason is that a contract of guaranty is terms and conditions of the Surety Bond. When
subsidiary. (De Leon, 2016) PAGRICO defaulted, PNB demanded payment to
R&B Surety; R&B Surety, in turn, demanded
GR: It is not limited to a single transaction but payment to Cochingyan and Villanueva. R&B
contemplates a future course of dealings, covering a sued them. Villanueva argued that the
series of transactions generally for an indefinite complaint was premature because PNB had not
time or until revoked. yet proceeded against R&B Surety to enforce the
latter's liability under the Surety Bond. Is the
XPN: While a Pledge, Real Estate Mortgage, or contention correct?
Antichresis may exceptionally secure after-incurred
obligations so long as these future debts are A: NO. Indemnity Agreements are contracts of
accurately described, a chattel mortgage, however, indemnification not only against actual loss but
can only cover obligations existing at the time the against liability as well. While in a contract of

Credit Transactions
indemnity against loss an indemnitor will not be NOTE: Eviction revives the principal
liable until the person to be indemnified makes obligation, but not the guaranty, for the
payment or sustains loss, in a contract of indemnity creditor here took the risk. (Paras, 2008)
against liability, as in this case, the indemnitor's
liability arises as soon as the liability of the person 4. Release in favor of one of the guarantors,
to be indemnified has arisen without regard to without consent of the others, benefits all to the
whether or not he has suffered actual loss. extent of the share of the guarantor to whom it
has been granted (Art. 2078, NCC);
Accordingly, R & B Surety was entitled to proceed 5. Extension granted to debtor by creditor
against petitioners not only for the partial payments without consent of guarantor (Art. 2079, NCC);
already made but for the full amount owed by or
PAGRICO to the PNB. (Cochingyan, Jr. v. R&B Surety 6. When the guarantors through some act of the
and Ins. Co., G.R. No. L-47369, 30 June 1987) creditor cannot be subrogated to the rights,
mortgages and preferences of the latter. (Art.
EXTINGUISHMENT OF GUARANTY 2080, NCC)
Two Causes for Extinguishment of the guaranty Q: Doctors of New Millennium Holdings, Inc
entered into a construction and development
1. Direct – when the guaranty itself is agreement with Million State Development
extinguished, independently of the principal Corporation for the construction of a 200-bed
obligation; or capacity hospital in Cainta, Rizal. Million State
Development submitted a surety bond to
2. Indirect – when the principal obligation ends, Doctors of New Millennium issued by People’s
the accessory obligation of guaranty naturally Trans-East Asia Insurance Corporation, now
ends. (Shannon v. Phil. Lumber & Trans. Co., G.R. known as People’s General Insurance
No. 41795, 30 Aug. 1935) Corporation. Million State Development,
however, failed to comply with its obligation
Grounds for extinguishing a contract of and so Doctors of New Millennium filed a
guaranty complaint for breach of contract with damages
with prayer for the issuance of preliminary
1. Principal obligation is extinguished; attachment against Million State Development
and People’s General Insurance with the
2. Same causes as all other obligations; Regional Trial Court of Pasig City. Can a surety
a. Payment or performance; bond which guarantees initial payment be
b. Loss of the thing due; impliedly novated by an insertion of a clause in
c. By condonation or remission of the debt; the principal contract waiving the conditions for
d. By confusion or merger of the rights of the the initial payment’s release?
creditor and debtor;
e. By compensation; A: NO. The obligations of the surety to the principal
f. By novation; or under the surety bond are different from the
g. Other causes such as annulment, rescission, obligations of the contractor to the client under the
fulfillment of a resolutory condition and principal contract. The surety guarantees the
prescription. performance of the contractor’s obligations upon
the contractor’s default, its client may demand
3. Release by acceptance of property by the against the surety bond even if there was no privity
creditor; of contract between them and this is the essence of
If the creditor accepts payment in form of a surety agreement. (People's Trans-East Asia
immovable or immovable property, there is a Insurance Corp., v. Doctors of New Millennium
novation on the subject matter. Holdings, Inc., G.R. No. 172404, 13 Aug. 2014)

2022 GOLDEN NOTES
Civil Law
Q: Enriquez filed a replevin case against Asuten LEGAL AND JUDICIAL BONDS
for the recovery of the Toyota Hi-Ace van valued
at P300,000.00. She applied for a bond in the Bond
amount of P600,000.00 with The Mercantile
Insurance Company, Inc. (Mercantile Insurance) A bond, when required by law, is commonly
in Asuten's favor. The Regional Trial Court understood to mean an undertaking that is
(RTC) approved the bond and ordered the sufficiently secured, and not cash or currency.
sheriff to recover the van from Asuten and to (Comm. of Customs v. Alikpula, G.R. No. L- 32542, 26
deliver it to petitioner. While the van was in Nov. 1970)
petitioner's custody, the RTC dismissed the case
without prejudice for failure to prosecute. Thus, Bondsman
it ordered the sheriff to restore the van to
Asuten. When petitioner failed to produce the A bondsman is a surety offered in virtue of a
van, the RTC directed Mercantile Insurance to provision of law or a judicial order. He must have the
pay Asuten the amount of the bond. Is Enriquez qualifications required of a guarantor (Art. 2056,
liable for the replevin bond despite her failure NCC) and in special laws like the Rules of Court.
to return the van, considering that its effectivity (Secs. 12 & 13, Rule 114, ROC; De Leon, 2013)
has lapsed without any renewal?
The necessary qualifications of sureties to a
A: YES. A surety bond remains effective until the property bond shall be as follows:
action or proceeding is finally decided, resolved, or 1. Each of them must be a resident owner of real
terminated. This a rare instance where the writ of estate within the Philippines;
seizure is dissolved due to the dismissal without 2. Where there is only one surety, his real estate
prejudice, but the bond stands because the case has must be worth at least the amount of the
yet to be finally terminated by the Regional Trial undertaking; and
Court. 3. In case there are two or more sureties, they may
justify severally in amounts less than that
Forfeiture of the replevin bond requires first, a expressed in the undertaking, if the entire sum
judgment on the merits in the defendant's favor, and justified is equivalent to the whole amount of
second, an application by the defendant for bail demanded. (Sec. 12, Rule 114, ROC)
damages. Neither circumstance appears in this case.
When petitioner failed to produce the van, equity Nature of bond
demanded that Asuten be awarded only an amount
equal to the value of the van. The RTC would have All bonds including “judicial bonds” are contractual
erred in ordering the forfeiture of the entire bond in in nature. Bonds exist only in consequence of a
Asuten's favor, considering that there was no trial meeting of minds under the conditions essential to
on the merits or an application by Asuten for a contract. (De Leon, 2021)
damages. This judgment could have been reversed
had petitioner appealed the RTC's Order. Judicial bond
Unfortunately, she did not. Respondent was, thus,
constrained to follow the RTC's directive to pay Judicial bonds constitute merely as a special class of
Asuten the full amount of the bond. (Enriquez v. The contracts of guaranty, characterized by the fact that
Mercantile Insurance Co., Inc., G.R. No. 210950, 15 they are given in virtue of a judicial order. (Gerardo
Aug. 2018) v. Plaridel Surety and Ins., Co., G.R. No. L-7807, 31 Oct.
1956)
E.g., A bond to stay execution of an appealed

judgment of a lower court is a judicial bond.

Credit Transactions
Liability of the surety if the creditor was as “Vista Del Mar Executive Houses.” Philtrust
negligent in collecting the debt Bank (“Philtrust”) would finance the cost of
materials and supplies to the extent of P
A surety is still liable even if the creditor was 900,000.00, while the Spouses would shoulder
negligent in collecting from the debtor. The contract the labor cost of P 300,000.00. Paragraph 7 or
of suretyship is not about the obligee seeing to it the “whereas clause” of the said project contract
that the principal pays the debt or fulfills the provided, however, that whether or not the
contract, but that the surety will see that the Spouses could provide the funds for the labor
principal pays or performs. (PNB v. Manila Surety & costs, Dominguez would bind himself to finish
Fidelity Co., Inc., G.R. No. L-20567, 30 July 1965) the project within 150 working days.
Furthermore, a clause for liquidated damages
Violation by the creditor of the terms of the amounting to P 1,000.00 per day was stipulated
surety agreement against Dominguez in case of breach.
A violation by the creditor of the terms of the surety On 24 May 1979, Dominguez secured a
entitles the surety to be released therefrom. performance bond from FGU Insurance
(Associated Ins. & Surety Co. v. Bacolod Murcia Corporation (“FGU”) wherein they both agreed
Milling Co., G.R. No. L-12334, 22 May 1959) to jointly and severally pay Floro Roxas
(“Floro”) and Philtrust the amount of P
When the performance of a bond is rendered 450,000.00 in the event of Dominguez’s non-
impossible performance of his obligation under the
contract.
If the performance of a bond is rendered impossible,
it is the surety’s duty to inform the court of the However, the Spouses borrowed P 73,136.75 of
happening of the event so that it may take action or the project-allocated funds from Dominguez and
decree in the discharge of the surety when the they also failed to make the promised payments
performance of the bond is rendered impossible by for the labor cost; hence, Dominguez refused
an act of God, or the obligee, or the law. (People v. further work on the project. Thus, a complaint
Otiak Omal & Luzon Co., Inc., G.R. No. L-14457, 30 was filed against Spouses and Philtrust before
June 1961) the Court of First Instance of Manila (“CFI”).
a. Should FGU be liable for the full amount of
Remedy if Unable to Give a Bond P 450,000 under the performance bond?
b. Should the liabilities of the Spouses to
A pledgee or mortgage considered sufficient to Dominguez be set off against any liability of
cover his obligation shall be admitted in case a FGU under the performance bond?
person bound to give a legal or judicial bond should c. Should the Spouses be entitled to
not be able to do so. liquidated damages under the contract for
building construction?
NOTE: A judicial bondsman cannot demand the
exhaustion of the property of the principal debtor. A:
This is to ensure that the fulfillment of the obligation a. YES. FGU should be liable for the full amount of
by the guarantor be not delayed or hindered. P 450,000.00 solidarily with Dominguez. A
(Rabuya, 2017) performance bond is a kind of suretyship
agreement that is designed to afford the project
Q: Spouses Floro and Eufema Roxas (“Spouses”) owner security that the contractor will
entered into a Contract of Building Construction faithfully comply with the requirements of the
dated 22 May 1979 with Rosendo P. Dominguez, contract and make good on the damages
Jr. (“Dominguez”), who undertook to be the sustained by the project owner in case of the
building contractor of a housing project known contractor’s failure to so perform. As a surety,

2022 GOLDEN NOTES
Civil Law
FGU’S liability is direct, primary, absolute, and c. YES. The Spouses should be entitled to
solidary with the principal debtor, and is liquidated damages under the contract for
determined strictly in accordance with the building construction. The parties agreed and
actual terms of the performance bond it issued. articulated on the payment of liquidated
The FGU Surety Bond was conditioned upon the damages in case of breach; hence, the deciding
full and faithful performance by Dominguez of factor for the recovery of liquidated damages in
his obligations, wherein FGU guaranteed to this case would be the fact of delay in the
solidarily pay the amount of P 450,000.00 in completion of the works. A clause on liquidated
case of Dominguez’ default. The terms of the damages is normally added to construction
bond were clear; hence, the literal meaning of contracts not only to provide indemnity for
its stipulation should control. damages but also to ensure performance of the
contractor by the threat of greater
If it were true that FGU’s intention was to limit responsibility in the event of breach. Here, it
its liability to the cost overrun or additional cost was clearly provided that liquidated damages
to the Spouses to complete the project up to a would be recoverable for delay in the
maximum cap of P 450,000.00, then it should completion of the project; hence, there should
have included in the Surety Bond specific words be more reason in case of non-completion. To
indicating this intention. Its failure to do so hold otherwise would be to diminish or
must be construed against it, given the fact that disregard the coercive force of this stipulation.
a suretyship agreement is a contract of (FGU Insurance vs Spouses Roxas, G.R. 189526,
adhesion ordinarily prepared by the surety or 09 Aug. 2017)
insurance company; thus, calling for a liberal
construction in favor of the insured and strict Q: Doctors of New Millenium Holdings, Inc.
application against the insurer, which insurer (DNMH) is a domestic corporation and entered
as the drafter, had the opportunity to state into a construction and development agreement
plainly the terms of its obligation. with the Million State Development Corporation
(MSD), a contractor for the construction of a
b. YES. The liabilities of the Spouses to Dominguez 200-bed capacity hospital in Cainta, Rizal.
could be set off against any liability of FGU DNMH obliged to pay 10M to MSD and MSD was
under the performance bond. Under Article to shoulder 95% of the project cost and
1280 of the NCC, a guarantor may set up committed itself to secure 385k within 25
compensation as regards what the creditor may banking days from DNMH’s initial payment.
owe the principal debtor.
Thus, MSD submitted a surety bond of 10M to
While this provision specifically speaks of a DNMH, which was issued by People’s Trans-East
guarantor, it nevertheless applies to a surety as Asia Insurance Corporation, now People’s
well. Contracts of guaranty and surety are General insurance corporation. Upon failure of
closely related in the sense that in both, there is MSD to comply, DNMH opted for payment of the
a promise to answer for the debt or default of surety bond from Philippine General Insurance,
another. The difference lies in that a guarantor which however denied liability on the ground
is the insurer of the solvency of the debtor and that its liability was limited by the contract and
thus binds himself to pay if the principal is that the contract was novated upon execution of
unable to pay, while a surety is the insurer of an additional clause in the agreement. Is the
the debt and he obligates himself to pay if the surety liable in this case?
principal does not pay. Hence, FGU could offset
its liability under the Surety Bond against A: YES. The liabilities of an insurer under the surety
Dominguez’ collectibles from the Spouses. bond are not extinguished when the modifications
in the principal contract do not substantially. The
surety is jointly and severally liable with its

Credit Transactions
principal when the latter defaults from its

obligations under the principal contract. (People’s
Trans-Eat Insurance Corp. v. Doctors of New
Millenium Holdings, G.R. No. 172404, 13 Aug. 2014)

2022 GOLDEN NOTES
Civil Law
REAL ESTATE
PLEDGE CHATTEL MORTGAGE ANTICHRESIS
MORTGAGE
Definition
An accessory contract
whereby a debtor delivers to
the creditor or a third person
Chattel mortgage is a
a movable or personal
contract by virtue of which
property, or document
a personal property is
evidencing incorporeal
recorded in the Chattel It is a contract
rights, to secure the
Mortgage Register as a whereby the debtor
fulfillment of a principal
security for the secures to the
obligation with the condition
performance of an creditor the A contract whereby the
that when the obligation is
obligation. fulfillment of a creditor acquires the
satisfied, the thing delivered
principal obligation, right to receive the
shall be returned to the
Note: The chattel specially subjecting fruits of an immovable
pledgor with all its fruits and
mortgage under Act No. to such security, of the debtor, with the
accessions, if any.
1508 is now superseded immovable property obligation to apply them
by R.A. No. 11057 or the or real rights over to the payment of
Note: The Civil Code
Personal Property immovable interest, if owing, and
provisions governing pledge
Security Act (PPSA) which property, in case the thereafter to the
are now superseded by R.A.
denominates a contract principal obligation principal of his credit.
No. 11057 or the Personal
whereby personal is not paid or
Property Security Act (PPSA)
property is used to secure complied with at the
which denominates a
payment or other time stipulated.
contract whereby personal
performance of an
property is used to secure
obligation as a “security
payment or other
agreement.”
performance of an obligation
as a “security agreement.”
Object of the contract
The object of a security
Movable or personal
agreement under the PPSA
property, or document
is personal property.
evidencing incorporeal
rights.
Note: Under the former
Chattel Mortgage Act, a
Movable properties which
real property may be a
are within the commerce of Immovable property
subject of chattel
men provided it is susceptible or real rights over
mortgage as long as the Fruits of an immovable.
of possession. And immovable
parties to the contract so
incorporeal rights evidenced property.
agree and no innocent
by proper documents may be
third party will be
pledged.
prejudiced thereby.
(Makati Leasing and
Note: The object of a security
Finance Corp. v. Weaver
agreement under the PPSA is
Textile Mills, Inc. G.R. No. L-
personal property.
58469, 17 May 1983)

Credit Transactions
Necessity of delivery
Delivery is not necessary.
Property must be delivered.
Note: Under the PPSA,

Note: Under the PPSA,
delivery of the personal
delivery of the personal
property to and
property to and possession Delivery is not Property is delivered to
possession thereof by the
thereof by the secured necessary. the creditor.
secured creditor is one of
creditor is one of the means
the means whereby a
whereby a security interest
security interest may be
may be perfected. (Sec. 12(b),
perfected. (Sec. 12(b), R.A.
R.A. No. 11057)
No. 11057)
NOTE: The pledgor can sell the thing pledged with 2. Where only a portion of the loan was released;
the consent of the pledgee (Art. 2097, NCC), while or
the mortgagor can sell the property mortgaged even 3. Where there was failure of consideration.
without the consent of the mortgagee. (Art. 2130,
NCC) NOTE: All kinds of obligation may be secured by a
Pledge or Mortgaged as long as they are not void.
Similarities of Pledge and Mortgage (Pineda, 2006)
1. Both are constituted to secure a principal Future advancements or renewals may also be
obligation; they are only accessory contracts; (Arts. secured by Pledge (China Banking Corporation v. CA,
2086 & 2052, NCC) G.R. No. 117604, 26 Mar, 1997)
2. Both pledgor and mortgagor must be the absolute
owner of the property; (Art. 2085(2), NCC) Limited Liability of a Third Person as a pledgor
3. Both pledgor and mortgagor must have the free or mortgagor
disposal of their property or be authorized to do so;
and GR: A third person who pledged and mortgaged his
4. In both, the thing proffered as security may be sold property is not liable for any deficiency.
at public auction, when the principal obligation XPN: If the third party pledgor or mortgagor
becomes due and no payment is made by the expressly agreed to be bound solidarily with the
debtor. (Pineda, 2006) principal debtor. (Pineda, 2006)
Indivisibility of Pledge, Mortgage and Property Acquirable in the Future cannot be

Antichresis mortgaged
GR: A pledge, mortgage or antichresis is indivisible. Where the mortgagor mortgaged a property and
under the contract, he agreed to mortgage
NOTE: The mortgage is indivisible even if the additional properties which he may acquire in the
obligation of the debtor is joint and not solidary. future, there was no valid mortgage as to the latter
Generally, the divisibility of the principal obligation because he was not yet the owner of the properties
is not affected by the indivisibility of the pledge or at the time of the mortgage. (Dilag v. Heirs of
mortgage. (Art. 2089, NCC) Ressurrecion, G.R. No. 48941, 06 May 1946)
XPNs:
1. Where each one of several things guarantees
determinate portion of the credit (Art. 2089,
NCC);

2022 GOLDEN NOTES
Civil Law
Mortgage Constituted to Secure Future PACTUM COMMISSORIUM

Advances (1999, 2001, 2004, 2009 BAR)
Mortgage constituted to secure future advances is Pactum Commissorium is a stipulation whereby the
valid. It is a continuing security and not discharged thing pledged or mortgaged or subject of antichresis
by repayment of the amount named in the shall automatically become the property of the
mortgage, until the full amount of the advances is creditor in the event of non-payment of the debt
paid. However, a chattel mortgage can only cover within the term fixed. Such stipulation is null and
obligations existing at the time the mortgage is void. (Art. 2085, NCC)
constituted and not to obligations subsequent to the
execution of the mortgage. (Lim v. Luter, G.R. No. Elements of Pactum Commissorium
25235, 09 Dec. 1926)
1. There is a pledge, mortgage or antichresis of a
Nature of an Assignment of Rights to Guarantee property by way of security; and
an Obligation of a Debtor 2. There is an express stipulation for the
automatic appropriation by the creditor of the
An assignment of rights to guarantee an obligation property in case of non- payment of the
of a debtor is in effect a mortgage and not an principal obligation. (Pineda, 2006)
absolute conveyance of title which confers
ownership on the assignee. (Manila Banking Corp. v. NOTE: What are prohibited are those stipulations
Teodoro, Jr., G.R. No. 53955, 13 Jan 1989) executed or made simultaneously with the original
contract, and not those subsequently entered into.
ACCOMMODATION MORTGAGE
Pactum Commissorium when allowed
An accommodation mortgagor is a third person who
is not a party to a principal obligation and secures While the law prohibits the creditor from
the latter by mortgaging or pledging his own appropriating to himself the things pledged or
property. (Art. 2085, NCC) mortgaged, and from disposing them, this does not
mean that a stipulation if prohibited whereby the
The liability of an accommodation mortgagor creditor is authorized, in case of nonpayment within
extends up to the loan value of their mortgaged the term fixed by the parties, to sell the thing
property and not to the entire loan itself. Should mortgaged at public auction, or to adjudicate the
there be any deficiency, the creditor has recourse on same to himself in case of failure of said sale, nor is
the principal debtor, not against accommodation there any reason to prevent it; on the contrary, Art.
mortgage. (Rabuya, 2017) 2112 of the NCC expressly authorizes this
procedure in connection with pledge, even if it may
NOTE: Accommodation is also applicable to pledge not have been expressly stipulated. (Aquino, 2021;
since the law provides that “third parties who are El Hogar Filipino v. Paredes, G.R. No. L-19843, 03 Oct.
not parties to the principal obligation may secure 1923)
the latter by pledging or mortgaging their own
property.” (Art. 2085, NCC) It is also applicable to This is not against the law, since what the law
antichresis since Art. 2139 of the New Civil Code prohibits is only the acquisition by the creditor of
states that the last paragraph of Art. 2085 shall be the property mortgaged after non-payment of debt,
applicable to a contract of antichresis. and the above stated article simply authorizes him
to sell it with the aforesaid conditions, which
authorization is inherent in the ownership, and is
not against morals and public order. (Aquino, 2021)

Credit Transactions
Q: ABC loaned to MNO P40,000 for which the acquisition is automatic without need of any further
latter pledged 400 shares of stock in XYZ Inc. It action. In the instant problem another act is
was agreed that if the pledgor failed to pay the required to be performed, namely, the conveyance
loan with 10% yearly interest within four years, of the property as payment (Dacion en pago)
the pledgee is authorized to foreclose on the
shares of stock. As required, MNO delivered
possession of the shares to ABC with the
understanding that the shares would be
returned to MNO upon the payment of the loan.
However, the loan was not paid on time. A month
after 4 years, may the shares of stock pledged be
deemed owned by ABC or not? Reason. (2004
BAR)
A: The shares of stock cannot be deemed owned by

ABC upon default of MNO. They have to be
foreclosed. Under Art. 2088 of the NCC, the creditor
cannot appropriate the things given by way of
pledge. And even if the parties have stipulated that
ABC becomes the owner of the shares in case MNO
defaults on the loan, such stipulation is void for
being a Pactum Commissorium.
Q: X borrowed money from Y and gave a piece of

land as security by way of mortgage. It was
expressly agreed between the parties in the
mortgage contract that upon nonpayment of the
debt on time by X, the mortgaged land would
already belong to Y. If X defaulted in paying,
would Y now become the owner of the
mortgaged land? Why?
A: NO, Y would not become the owner of the land.

The stipulation is in the nature of Pactum
Commissorium which is prohibited by law. The
property should be sold at public auction and the
proceeds thereof applied to the indebtedness. Any
excess shall be given to the mortgagor.
Q: Suppose in the preceding question, the

agreement between X and Y was that if X failed to
pay the mortgage debt on time, the debt shall be
paid with the land mortgaged by X to Y. Would
your answer be the same as in the preceding
question? Explain. (1999 BAR)
A: NO, the answer would not be the same. This is a

valid stipulation and does not constitute pactum
commissorium. In pactum commissorium, the

2022 GOLDEN NOTES
Civil Law
at Domestic Road, Pasay City. MIAA passed a

D. QUASI-CONTRACTS Resolution No. 98-30 increasing the rentals.
DPRC initially refused to pay the increased
rentals which was decreed without prior notice
and hearing. DPRC paid in protest. The Court
Quasi-Contract
promulgated its Decision in the case of MIAA v.
Airspan Corporation, et al, where it nullified
A juridical relation arising from lawful, voluntary,
resolutions issued by MIAA for non-observance
and unilateral acts based on the principle that no
of the notice and hearing requirements for the
one shall be unjustly enriched or benefited at the
fixing rates required by the Administrative
expense of another (Art. 2142, NCC).
Code. DPRC sought the refund of its overpaid
monthly rentals under protest. The RTC ruled in
Distinguished from “Implied Contracts”
favor of DPRC. The CA ruled that some of the
overpaid monthly rentals have prescribed
An implied contract requires consent while a quasi-
because overpaid monthly rentals was in the
contract, being a unilateral contract, does not. The
nature of a quasi-contract of solutio indebiti;
basis of an implied contract is the will of the parties
hence, the claim of refund must be commenced
while the basis of a quasi-contract is law, to the end
within 6 years from date of payment under the
that there be no unjust enrichment (Rabuya, 2017).
Civil Code. Is the CA correct?
Characteristics of a quasi-contract (L-U-V)

A: NO. To establish the application of solutio
indebiti in a given situation, two conditions must
1. It must be Lawful;
concur: (1) a payment is made when there exists no
2. It must be Unilateral; and
binding relation between the payor who has no duty
3. It must be Voluntary. (Pineda, 2000).
to pay, and the person who received the payment,
and (2) the payment is made through mistake, and
Solutio indebiti (SI) v. Accion in rem verso (AIRV)
not through liberality or some other cause. Here,
there exists a binding relation between DPRC and
1. Mistake is an essential element in SI which
MIAA, as both of them are mutually bound to each
is not necessary in AIRV;
other under a Contract of Lease. Thus, the cause of
action of petitioner DPRC is based on the violation
2. An AIRV is merely an auxilliary action,
of a contractual stipulation in the parties' Contract
available only when there is no other
of Lease, and not due to the existence of a quasi-
remedy on contract, quasi-contract, crime
contract. DPRC made the overpayments in monthly
or quasi-delict (Rabuya, 2017).
rentals not due to any mistake, error, or omission as
to any factual matter surrounding the payment of
Contract v. Quasi-Contract
rentals. Nor did DPRC make the overpayments due
to any mistaken construction or application of a
CONTRACT QUASI-CONTRACT doubtful question of law. Instead, DPRC deliberately
There is a meeting of made the payments in accordance with respondent
There is no consent, MIAA's resolutions, albeit under protest. Hence, the
the minds or consent;
but the same is action based on a written contract must be
the parties must have
supplied by fiction of brought within 10 years from the time the right of
deliberately entered
law to prevent action accrues pursuant to Article 1144 of the Civil
into a formal
injustice. Code, and not within 6 years for actions based on
agreement.
quasi-contract. (Domestic Petroleum Retailer Corp. v.
MIAA, G.R. No. 210641, 27 Mar. 2019, J. Caguioa)
Q: DPRC and MIAA entered into a Contract of
Lease whereby the DPRC leased from the MIAA a
parcel of land and the building thereon located

Torts and Damages
separate and distinct from the criminal

X. TORTS AND DAMAGES action, may be brought by the injured party.
Such civil action shall proceed
independently of the criminal prosecution,
and shall require only a preponderance of
evidence. (Art. 33, NCC)
A. TORTS
NOTE: Either of these liabilities may be enforced
against the offender subject to the caveat under Art.
It is a civil wrong wherein a person’s conduct causes 2177 of the NCC that the plaintiff cannot recover
a compensable injury to the person, property, or damages twice for the same act or omission of the
recognized interest of another, in violation of a duty defendant. (Santos v. Pizardo, G.R. No. 151452, 29
imposed by law. (Black’s Law Dictionary, 1990) July 2005)
It may be: Tortious Act
1. A direct invasion of some legal right of the It is a wrongful act. It is the commission or omission
individual; of an act by one, without right, whereby another
2. The infraction of some public duty which special receives some direct or indirect injury, in person,
damage accrues to the individual; or property, or reputation. (De Leon, 2012)
3. The violation of some private obligation by
which like damage accrues to the individual. GR: An action for damages can only be maintained
(Ibid.) by the person directly injured, not by one alleging
the collateral injury.
Tort v. Breach of Contract
XPN: There are instances where injury to one may
Contract duties are created by the promises of the operate as an injury to another, e.g., a lone parent
parties, while tort duties are imposed as rules of cannot sue for the injury suffered by his child but
law. (De Leon, 2012) may maintain an action in his own right for any
damages suffered as a result of the injury.
Civil liabilities that may arise due to an act or
omission of one, causing damage to another Remedies for Torts (C-P-R):
1. Civil liability ex delicto 1. Compensatory – actions for sum of money for

the damage suffered.
NOTE: Every person criminally liable for a felony is 2. Preventive – prayer for injunction, a writ of
also civilly liable. (Art. 100, RPC) preliminary injunction, and a temporary
restraining order, enjoining the defendant from
2. Independent civil liabilities, such as those: continuing the doing of the tortious conduct.
3. Restitution – to return gains that the defendant
a. Not arising from an act or omission wrongfully obtained by tort.
complained of as a felony, e.g., culpa
contractual or obligations arising from law Major Purposes of Tort
under Art. 31 of the NCC (such as breach of
contract or tort), intentional torts under 1. to provide a peaceful means for adjusting the
Arts. 32 and 34 of the NCC, and culpa rights of parties who might otherwise take the
aquiliana under Art. 2176 of the NCC. law into their own hands;
b. In cases of defamation, fraud, and physical 2. deter wrongful conduct;
injuries a civil action for damages, entirely 3. to encourage socially responsible behavior; and

2022 GOLDEN NOTES
Civil Law
4. to restore injured parties to their original CULPA

CULPA CULPA
condition, insofar as the law can do this, by AQUILIANA
CONTRACTUAL CRIMINAL
compensating them for their injury. (Aquino, (QUASI-
(CONTRACT) (DELICT)
2019) DELICT)
Existence of Negligence
1. ELEMENTS
Negligence is
an incident in Negligence is Negligence is
(R-O-W)
the substantive substantive
performance and and
1. A legal Right in favor of a person
of an independent. independent.
2. A correlative legal Obligation on the part of the
obligation.
defendant to respect such right.
3. A Wrong, an act or omission in violation of such Contractual Relations
right with consequent injury. There is
There is no There is no
always a pre-
pre-existing pre-existing
The term quasi-delict was deliberately used by the existing
contractual contractual
Code Commission to designate obligations which do contractual
relation. relation.
not arise from laws, contracts, quasi-contracts, or relation.
criminal offenses. Source of obligation
An act or
The term tort was not used because it is broader in The contract The
omission
coverage as it covers, in common law countries, acts breached or defendant’s
punishable
which are intentional or malicious, which latter acts not fulfilled. negligence.
by law.
in the general plan of the Philippine legal system are
Proof of Negligence
governed by the Penal Code (Pineda, 2009)
Proof of the
Accused shall
2. CULPA AQUILIANA existence of
be presumed
V. CULPA CONTRACTUAL V. CULPA CRIMINAL the contract
The negligence innocent
and of its
of the until the
Kinds of Negligence or Culpa breach or non-
defendant contrary is
fulfillment is
must be proved
1. Culpa Contractual (contractual negligence) - sufficient
proved. beyond
negligence which results from breach of prima facie to
reasonable
contract; warrant
doubt.
recovery.
2. Culpa Aquiliana (civil negligence or tort or Defense available
quasi-delict) - act or omission that causes Defense of Defense of
damage to another, there being no contractual “good father of “good father
relation between the parties (Art. 2176, NCC) a family” in the Defense of of a family” in
and selection and “good father of the selection
supervision of a family” in the and
3. Culpa Criminal (criminal negligence) – that the employees selection and supervision
which results in the commission of crime or is not a proper supervision of of the
delict. complete the employees employees is
defense is a proper and not a proper
though it may complete defense.
mitigate defense.
damages. The
employee’s

Torts and Damages
Respondeat guilt is Criminal intent is

Criminal intent is not
superior or automaticall necessary for criminal
necessary.
command y the liability to exist.
responsibility employer’s Quasi-delict is a Crime is a wrong
or the master civil guilt if wrongful act against a against the State or the
and servant the former is private individual. public interest.
rule. insolvent. The quantum of proof The guilt if the accused
Proof needed is preponderance of must be proved beyond
Guilt beyond evidence. reasonable doubt.
Preponderanc Preponderanc The sanction is either The punishment is
reasonable
e of evidence. e of evidence. reparation or either imprisonment,
doubt.
indemnification of the fine, or both. (Pineda,
Culpa Aquiliana v. Culpa Contractual injury or damage. 2019)
3. VICARIOUS LIABILITY
Culpa Aquiliana Culpa Contractual
The foundation of
OWNERS OR PROPRIETORS OF BUILDINGS,
liability is The liability is founded
STRUCTURES, AND THINGS
independent of a on a contract.
contract.
Duties of owners, proprietors, and possessors of
Negligence is merely
Negligence is direct, properties
incidental to the
substantive, and
performance of the
independent. GR: The owner has no duty to take reasonable care
contractual obligation.
towards a trespasser for his protection from
The defense of “good
concealed danger. The trespasser come on to the
father of a family” is a The defense of “good
premises under his own risk. (Taylor v. Manila
complete and proper father of a family” is not
Railroad Company, G.R. No. L-4977, 22 Mar. 1910)
defense insofar as a complete defense in
parents, guardians, the selection of
XPNs:
employers are employees.
a. Visitors - owners owe a duty of care to
concerned.
visitors. (Cabigao v. University of the East,
There is no
G.R. No. 33554, 15 Mar. 2017)
presumption of There is presumption
negligence. of negligence provided
b. Doctrine of Attractive Nuisance - one who
The party injured that breach of contract
maintains on his premises dangerous
must prove the is proved. (Pineda,
instrumentalities or appliances, likely to
negligence of the 2009)
attract children in play and fails to prevent
defendant.
children from playing therewith, is liable to
a child of tender years who is injured
Culpa Aquiliana v. Crimes
thereby, even if the child is technically a
trespasser in the premises. (Hidalgo
Culpa Aquiliana Crimes
Enterprises, Inc. v. Balandan, G.R. No. L-
There can be quasi- 3422, 13 June 1952)
delict provided there
There must be a law
is fault or negligence
punishing the act. NOTE: The principal reason for the
resulting in damage or
doctrine is that, although its danger is
injury to another.
apparent to those of age, it is so enticing or
alluring to children of tender years as to
include them to approach, get on or use it;

2022 GOLDEN NOTES
Civil Law
and this attractiveness is an implied negligence. (Cuison v. Norton and Harrison Co., G.R.
invitation to such children. (Ibid.) No. L-32774, 14 Oct. 1930)
c. Tolerated Possession - owner is liable if the GR: It is required that the employee must be
plaintiff is inside his property by tolerance performing his assigned task at the time that the
or by implied permission. injury is caused.
d. State of Necessity - A situation of present XPN: However, it is not necessary that the task
danger to legally protected interests, where performed by the employee is his regular job or that
the only remedy is injuring another’s which was expressly given to him by the employer.
legally protected. (Aquino, 2019) It is enough that the task is indispensable to the
business or beneficial to the employer. (Filamer
OWNERS AND MANAGERS OF ESTABLISHMENTS Christian Institute v. IAC, G.R. No. 75112, 07 Aug.
AND ENTERPRISES 1992)
The owners and managers of an establishment or NOTE: It is not required that the employer is
enterprise are likewise responsible for damages engaged in some kind of industry or work. (Castilex
caused by their employees in the service of the Industrial Corporation v. Vasquez, G.R. No. 132266,
branches in which the latter are employed or on the 21 Dec. 1999)
occasion of their functions. (Art. 2180 (4), NCC)
a. MANAGER
Employers shall be liable for the damages caused by
their employees and household helpers acting GR: A mere manager, who does not own the
within the scope of their assigned tasks, even business, is not to be considered as an employer
though the former are not engaged in any business because as a manager, he is just a high-class
or industry. (Art. 2180(5), NCC) (2005 BAR) employee.
Owners and managers XPN: A manager who is not an owner but who
assumes the responsibility of supervision over the
The terms “owners and managers” are used in the employees of the owner may be held liable for the
sense of “employer” and do not include the manager acts of the employees.
of a corporation who himself is just an employee.
(Phil. Rabbit Bus Lines v. Phil. American Forwarders, NOTE: To be liable, the manager must be acting as
Inc., G.R. No. L-25142, 25 Mar. 1975) an employer of with the same authority as the
owner.
To make the employer liable under Art. 2180 of the
NCC, it must be established that the injurious or b. OWNER/EMPLOYER
tortious act was committed at the time the
employee was performing his functions. (Marquez v. To make the employer liable under Art. 2180(5 & 6),
Castillo, G.R. No. 46237, 27 Sep. 1939) it must be established that the injurious or tortuous
act was committed at the time the employee was
NOTE: However, a manager who is not an owner but performing his functions.
who assumes the responsibility of supervision over
the employees of the owner may be held liable for NOTE: If there is deviation from the scope of
the acts of the employees. (Pineda, 2009) employment, the employer is not liable no matter
how short in time is the deviation.
One who hires an independent contractor but
controls the latter’s work is responsible also for his

Torts and Damages
When a criminal case is filed against the offender, Presumption on the negligence of the employer
before the employer’s subsidiary liability is exacted,
there must be proof that: The negligence of the employee is presumed to be
the negligence of the employer because the
1. They are indeed the employer of the convicted employer is supposed to exercise supervision over
employee; the work of the employees. This liability of the
2. The former is engaged in some kind of industry; employer is primary and direct. (Standard Vacuum
3. The crime was committed by the employees in Oil Co. v. Tan, G.R. No. L-13048, 27 Feb. 1960)
the discharge of their duties; and
4. That the execution against the latter has not Once the employee’s fault is established, the
been satisfied due to insolvency. employer can then be made liable based on the
presumption that the employer failed to exercise
NOTE: The determination of these conditions may diligentissimi patris familias (diligence of a good
be done in the same criminal action in which the father of a family) in the selection and supervision
employee’s liability, criminal and civil, has been of its employees. (LRTA v. Navidad, G.R. No. 145804,
pronounced, in a hearing set for that precise 06 Feb. 2003)
purpose, with due notice to the employer, as part of
the proceedings for the execution of the judgment. Owners/Managers Employers
(Calang v. People, G.R. No. 190696, 03 Aug. 2010; (Par 4, Art. 2180, (Par 5, Art. 2180,
Rabuya, 2017) NCC) NCC)
Requires engagement
EMPLOYERS in business on the part
of the employers as the The employers need
An employer includes any person acting directly or law speaks of not be engaged in
indirectly in the interest of an employer in relation “establishment or business or industry.
to an employee and shall include the government enterprise.”
and all its branches, subdivisions and
instrumentalities, all government owned or Covers negligent acts
controlled corporations and institutions, as well as of employees Covers negligent acts
non-profit private institutions, or organizations. committed either in the of employees acting
(Art. 97, Labor Code) service of the branches within the scope of
or in the occasion of their assigned tasks.
Requisites before an Employer may be held their functions.
Liable for the act of its Employees under Art.
2180(4) of the NCC Q: A van and a tricycle figured in an accident
along Sumulong Highway in Antipolo City. The
1. The employee was chosen by the employer van was owned and registered under Imperial's
personally or through another; name, and was driven by Laraga. The tricycle
2. The service is to be rendered in accordance was driven by Mercado.
with orders which the employer has the
authority to give all times; and The Bayaban Spouses, who were on board the
3. That the illicit act of the employee was on the tricycle, sustained injuries requiring therapy
occasion or by reason of the functions entrusted and post-medical treatment. The Bayaban
to him. (Jayme v. Apostol, G.R. No. 163609, 27 Spouses demanded compensation from
Nov. 2008) Imperial, Laraga, and Mercado for the hospital
bills and loss of income that they sustained
while undergoing treatment. When neither
Imperial, Laraga, nor Mercado heeded their

2022 GOLDEN NOTES
Civil Law
demand, the Bayaban Spouses filed a Complaint correctly deemed liable for the damages
for damages. incurred by the Bayaban Spouses when the
tricycle they were riding collided with the van
The RTC ruled in favor of the Bayaban Spouses. driven by petitioner's employee, Laraga.
It found Laraga negligent and the proximate (Imperia v. Heirs of Neil Bayaban, G.R. No.
cause of the accident. On appeal, the CA 197626, 03 Oct. 2018)
maintained Laraga’s liability, ruling that "the
registered owner of a motor vehicle is primarily Remedies of the injured party in pursuing the
and directly responsible for the consequences of civil liability of the employer for the acts of his
its operation, including the negligence of the employees
driver, with respect to the public and all third
persons." 1. If he chooses to file a civil action for damages
1. Does the burden of proof falls upon Imperial based on quasi-delict under Art. 2180 of the
to prove that his employee, Laraga, was not NCC and succeeds in proving the negligence of
acting within the scope of his assigned the employee, the liability of the employer is
tasks? primary, direct and solidary. It is not
2. Should Imperial be vicariously liable for the conditioned on the insolvency of the employee.
damages sustained by the Bayaban Spouses? (Metro Manila Transit Corp. v. CA, G.R. No.
118069, 16 Nov. 1998)
A:
1. NO. The burden of proving the existence of an 2. If he chooses to file a criminal case against the
employer-employee relationship and that the offender and was found guilty beyond
employee was acting within the scope of his or reasonable doubt, the civil liability of the
her assigned tasks rests with the plaintiff under employer is subsidiary. The employer cannot
the Latin maxim "ei incumbit probatio qui dicit, use as a defense the exercise of the diligence of
non qui negat" or "he who asserts, not he who a good father of a family.
denies, must prove." Therefore, it is not
incumbent on the employer to prove that the NOTE: Once there is a conviction for a felony, final
employee was not acting within the scope of his in character, the employer under Art. 103 of the
assigned tasks. Once the plaintiff establishes the RPC, is subsidiary liable, if it be shown that the
requisite facts, the presumption that the commission thereof was in the discharge of the
employer was negligent in the selection and duties of the employee. A previous dismissal of an
supervision of the employee arises, disputable action based on culpa aquiliana could not be a bar to
with evidence that the employer has observed the enforcement of the subsidiary liability required
all the diligence of a good father of a family to by Art. 103 of the RPC. (Jocson, et al. v. Glorioso, G.R.
prevent damage. No. L-22686, 30 Jan. 1968)
2. YES. Specifically, for employers, they are Vicarious Liability of Owners and Managers of
deemed liable or morally responsible for the Establishment v. of Employers
fault or negligence of their employees but only
if the employees are acting within the scope of Q: OJ was employed as a professional driver of
their assigned tasks. An act is deemed an MM Transit bus owned by Mr. BT. In the course
assigned task if it is "done by an employee, in of his work, OJ hit a pedestrian who was
furtherance of the interests of the employer or seriously injured and later died in the hospital
for the account of the employer at the time of because of the accident. The victim’s heirs sued
the infliction of the injury or damage." the driver and the owner of the bus for damages.
Is there a presumption in this case, that Mr. BT,
Considering that petitioner failed to dispute the the owner, had been negligent? If so, is the
presumption of negligence on his part, he was presumption absolute or not? (2004 BAR)

Torts and Damages
A: YES, there is a presumption of negligence on the When the employee is considered to be acting
part of the employer. However, such presumption is within the scope of employment
rebuttable. The liability of the employer shall cease
when they prove that they observed the diligence of An employee who uses his employer’s vehicle in
a good father of a family to prevent damage. (Art. going from his work to a place where he intends to
2180) When the employee causes damage due to his eat or in returning to work from a meal is not
own negligence while performing his own duties, ordinarily acting within the scope of his
there arises the juris tantum presumption that the employment in the absence of evidence of some
employer is negligent, rebuttable only by proof of special business benefit to the employer. (Castilex
observance of the diligence of a good father of a Industrial Corporation v. Vasquez, G.R. No. 132266,
family. (Delsan Transport Lines v. C & A Construction, 21 Dec. 1999)
G.R. No. 156034, 01 Oct. 2003) Likewise, if the driver
is charged and convicted in a criminal case for However, evidence that by using the employer’s
criminal negligence, BT is subsidiarily liable for the vehicle to go to and from meals, an employee is
damages arising from the criminal act. enabled to reduce his time-off and so devote more
time to the performance of his duties, supports the
Q: After working overtime up to midnight, finding that an employee is acting within the scope
Alberto, an executive of an insurance company of his employment while so driving the vehicle.
drove a company vehicle to a favorite Videoke (Ibid.)
bar where he had some drinks and sang some
songs with friends to "unwind." At 2:00 a.m., he Defenses available to an employer
drove home, but in doing so, he bumped a
tricycle, resulting in the death of its driver. May 1. Exercise of due diligence in the selection and
the insurance company be held liable for the supervision of its employees (except in criminal
negligent act of Alberto? Why? (2001 BAR) action); and
A: NO. The insurance company is not liable because NOTE: In the selection of prospective
when the accident occurred, Alberto was not acting employees, employers are required to examine
within the assigned tasks of his employment. them as their qualifications, experience, and
service records. On the other hand, with respect
It is true that under Art. 2180(5), employers are to the supervision of employees, employers
liable for damages caused by their employees who should formulate standard operating
were acting within the scope of their assigned tasks. procedures, monitor their implementation, and
However, the mere fact that Alberto was using a impose disciplinary measures for breaches
service vehicle of the employer at the time of the thereof. To establish these factors in a trial
injurious accident does not necessarily mean that he involving the issue of vicarious liability,
was operating the vehicle within the scope of his employees must submit concrete proof,
employment. In Castilex Industrial Corporation v. including documentary evidence. (Metro Manila
Vasquez (G.R. No. 132266, 21 Dec. 1999), the Transit v. CA, G.R. No. 141089, 01 Aug. 2002)
Supreme Court held that notwithstanding the fact
that the employee did some overtime work for the 2. The act or omission was made outside working
company, the former was, nevertheless, engaged in hours and in violation of company’s rules and
his own affairs or carrying out a personal purpose regulations.
when he went to a restaurant at 2:00 a.m. after
coming out from work. The time of the accident Q: Would the defense of due diligence in the
(2:00 a.m.) was outside normal working hours. selection and supervision of the employee be
available to the employer in both instances?
(1997 BAR)

2022 GOLDEN NOTES
Civil Law
A: NO. The defense of diligence in the selection and A:

supervision of the employee under Article 2180 of 1. YES. Dennis can file an independent civil action
the New Civil Code is available only to those against Carlos and his father for damages based
primarily liable thereunder, but not to those on quasi-delict there being an act or omission
subsidiary liable under Article 103 of the Revised causing damage to another without contractual
Penal Code. (Yumul v. Juliano, G.R. No. 47690, 28 Apr. obligation. Under Sec. 1, Rule 111 of the 2000
1941) Rules on Criminal Procedure, what is deemed
instituted with the criminal action is only the
Employer’s Liability under Art. 2180, NCC v. action to recover civil liability arising from the
Employer’s Liability under Art. 100, RPC act or omission punished by law. An action
based on quasi-delict is no longer deemed
ART. 2180, NCC ART. 100, RPC instituted and may be filed separately. (Sec. 3,
Liability is direct, Rule 111, Rules of Court)
primary, and solidary;
the employer may be Liability is subsidiary. 2. NO, Benjamin cannot raise the defense that the
sued even without vehicle is not registered in his name. His
suing the employee. liability, vicarious in character, is based on Art.
Diligence of a good Diligence of a good 2180 because he is the father of a minor who
father of a family is a father of a family is not caused damage due to negligence. While the
defense. a defense. suit will prosper against the registered owner,
Employer is liable even Petitioner must prove it is the actual owner of the private vehicle who
if he is not engaged in that the employer is is ultimately liable. (Duavit v. CA, G.R. No. L-
business. engaged in business. 29759, 19 May 1989) The purpose of car
Proof of negligence is registration is to reduce difficulty in identifying
Proof beyond the party liable in case of accidents. (Villanueva
by mere
reasonable doubt is v. Domingo, G.R. No. 144274, 14 Sep. 2004)
preponderance of
required.
evidence.
Q: A driver of a bus owned by company Z ran
Q: Arturo sold his Pajero to Benjamin for P1M. over a boy who died instantly. A criminal case
Benjamin took the vehicle but did not register for reckless imprudence resulting in homicide
the sale with the Land Transportation Office. He was filed against the driver. He was convicted
allowed his son Carlos, a minor who did not have and was ordered to pay P2 Million in actual and
a driver's license, to drive the car to buy pan de moral damages to the parents of the boy who
sal in a bakery. On the way, Carlos driving in a was an honor student and had a bright future.
reckless manner sideswiped Dennis, then riding Without even trying to find out if the driver had
a bicycle. As a result, he suffered serious assets or means to pay the award of damages,
physical injuries. Dennis filed a criminal the parents of the boy filed a civil action against
complaint against Carlos for reckless the bus company to make it directly liable for
imprudence resulting in serious physical the damages.
injuries.
1. Will their action prosper?
1. Can Dennis file an independent civil action 2. If the parents of the boy do not wish to file a
against Carlos and his father Benjamin for separate civil action against the bus
damages based on quasi-delict? company, can they still make the bus
2. Assuming Dennis' action is tenable; can company liable if the driver cannot pay the
Benjamin raise the defense that he is not award for damages? If so, what is the nature
liable because the vehicle is not registered of the employer's liability and how may civil
in his name? (2006 BAR) damages be satisfied? (2015 BAR)

Torts and Damages
A: OWNERS OF MOTOR VEHICLES

1. YES, their action will prosper. The liability of
the employer in this case may be based on The applicable law is Art. 2184 of the NCC, which
quasi-delict and is included within the coverage provides that in motor vehicle mishaps, the owner
of independent civil actions. It is not necessary is solidarily liable with his driver, if the former, who
to enforce the civil liability based on culpa was in the vehicle, could have, by the use of due
aquiliana that the driver or employee be proven diligence, prevented the misfortune. It is disputably
to be insolvent since the liability of the presumed that driver was negligent, if he has been
employer for the quasi-delict committed by found guilty of reckless driving or violating traffic
their employees is direct and primary subject to regulations at least twice within the next preceding
the defense of due diligence on their part. (Arts. two months."
2176 &. 2180, NCC)
Under the foregoing provision, if the causative
2. YES, the parents of the boy can enforce the factor was the driver's negligence, the owner of the
subsidiary liability of the employer in the vehicle who was present is likewise held liable if he
criminal case against the driver. The conviction could have prevented the mishap by the exercise of
of the driver is a condition sine qua non for the due diligence. The rule is not new, although
subsidiary liability of the employer to attach. formulated as law for the first time in the NCC.
Proof must be shown that the driver is
insolvent. (Art. 103, RPC) It was expressed Chapman v. Underwood (G.R. No. L-
9010, 28 Mar. 1914) where the Court held:
BANKS
The same rule applies where the owner is
Sec. 2 of the General Banking Law (R.A. No. 8791) present, unless the negligent acts of the driver
declares that the State recognizes the fiduciary are continued for such a length of time as to give
nature of banking that requires high standards of the owner a reasonable opportunity to observe
integrity and performance. them and to direct his driver to desist
therefrom. An owner who sits in his
Banking is a business that is impressed with public automobile, or other vehicle, and permits his
interest. It affects economies and plays a significant driver to continue in a violation of the law by
role in business and commerce. This is why the the performance of negligent acts, after he has
Court has recognized the fiduciary nature of banks’ had a reasonable opportunity to observe them
functions and attached a special standard of and to direct that the driver cease therefrom,
diligence for the exercise of their functions. becomes himself responsible for such acts.
(Philippine National Bank v. Santos, G.R. Nos. 208293
& 208295, 10 Dec. 2014) On the other hand, if the driver, by a sudden act
of negligence, and without the owner having a
Wrongful Acts of Bank’s Employees reasonable opportunity to prevent the act or its
continuance, injures a person or violates the
Petitioner bank was remiss in its duty and criminal law, the owner of the automobile,
obligation to treat private respondent’s account although present therein at the time the act was
with the highest degree of care, considering the committed, is not responsible, either civilly or
fiduciary nature of their relationship. The bank is criminally, therefor. The act complained of must
under obligation to treat the accounts with be continued in the presence of the owner for
meticulous care. It must bear the blame for failing to such a length of time that the owner, by his
discover the mistake of its employee. (Metropolitan acquiescence, makes his driver's act his own.
Bank v. CA, G.R. No. 112576, 26 Oct. 1994)
The basis of the master's liability in civil law is
not respondent superior but rather the relationship

2022 GOLDEN NOTES
Civil Law
of pater familias. The theory is that ultimately the NOTE: The law concerning the liability of a common
negligence of the servant, if known to the master carrier has now suffered a substantial modification
and susceptible of timely correction by him, reflects in view of the innovations introduced by the NCC.
his own negligence if he fails to correct it in order to These innovations are the ones embodied in Arts.
prevent injury or damage. 1733, 1755, and 1756 insofar as the relation
between a common carrier and its passengers is
The test of imputed negligence under Art. 2184 of concerned, which, for ready reference, are quoted
the NCC is, to a great degree, necessarily subjective. hereunder:
Car owners are not held to a uniform and inflexible
standard of diligence as are professional drivers. Art. 1733. Common carriers, from the nature of their
business and for reasons of public policy, are bound
In many cases they refrain from driving their own to observe extraordinary diligence in the vigilance
cars and instead hire other persons to drive for over the goods and for the safety of the passengers
them precisely because they are not trained or transported by them according to all the
endowed with sufficient discernment to know the circumstances of each case.
rules of traffic or to appreciate the relative dangers Such extraordinary diligence in the vigilance over
posed by the different situations that are the goods is further expressed in Arts. 1734, 1735,
continually encountered on the road. What would and 1745, Nos. 5, 6, and 7, while the extraordinary
be a negligent omission under aforesaid Article on diligence for the safety of the passengers is further
the part of a car owner who is in the prime of age set forth in Arts. 1755 and 1756.
and knows how to handle a motor vehicle is not
necessarily so on the part, say, of an old and infirm Art. 1755. A common carrier is bound to carry the
person who is not similarly equipped. passengers safely as far as human care and foresight
The law does not require that a person must possess can provide, using the utmost diligence of very
a certain measure of skill or proficiency either in the cautious persons, with a due regard for all the
mechanics of driving or in the observance of traffic circumstances.
rules before he may own a motor vehicle.
Art. 1756. In case of death of or injuries to
The test of his negligence, within the meaning of Art. passengers, common carriers are presumed to have
2184, is his omission to do that which the evidence been at fault or to have acted negligently, unless
of his own senses tells him he should do in order to they prove that they observed extraordinary
avoid the accident. And as far as perception is diligence as prescribed in Arts. 1733 and 1755.
concerned, absent a minimum level imposed by law, (Isaac v. A.L. Ammen Transportation Co., Inc., G.R. No.
a maneuver that appears to be fraught with danger L-9671, 23 Aug. 1957)
to one passenger may appear to be entirely safe and
commonplace to another. Were the law to require a DOCTORS
uniform standard of perceptiveness, employment of
professional drivers by car owners who, by their General Practitioner: The standard of the care
very inadequacies, have real need of drivers' demanded is ordinary care and diligence in the
services, would be effectively prescribed. (Caedo v. application of his knowledge.
Yu Khe Thai, G.R. No. L-20392, 18 Dec. 1968)
Specialist: legal duty to the patient is generally
COMMON CARRIERS considered to be that of an average specialist and
not of an average physician. (Aquino, 2019)
Common carriers are required to exercise
extraordinary diligence in the vigilance over their
passengers.

Torts and Damages
a. Captain of the Ship Doctrine LAWYERS
The head surgeon is made responsible for An attorney is bound to exercise only a reasonable
everything that goes wrong within the four corners degree of care and skill, having reference to the
of the operating room. (Ibid.) business he undertakes. Prone to err like any other
human being, he is not answerable for every error
The fact that there is a trend in American or mistake, and will be protected as long as he acts
Jurisprudence to do away with the Captain of the honestly and in good faith to the best of his skill and
Ship Doctrine does not mean that this court will ipso knowledge. (Adarne v. Aldaba, A.M. No. 801, 27 June
facto follow said trend. (Ramos v. CA, G.R. 124354, 29 1978)
Dec. 1999)
PARENTS OR HEADS OF THE FAMILY
b. Doctrine of Apparent Authority
Basis of vicarious liability of the parents (2005
When no employment relationship exists but it is BAR); “Principal of Parental Liability”
shown that the hospital holds out to the patient that
the doctor is its agent, it may be vicariously liable This liability is made natural as a logical
under Art. 2176. consequence of the duties and responsibilities of
parents exercising parental authority which
c. Doctrine of Corporate Responsibility includes controlling, disciplining, and instructing
their children. In this jurisdiction the parent’s
A hospital has the duty to see that it meets the liability is vested by law which assumes that when a
standards of responsibilities for the care of patients. minor or unemancipated child living with their
Such duty includes the proper supervision of parent, commits a tortious act, the parents are
members of its medical staff. (Professional Services, presumed negligent in the performance of their
Inc. v. Agana, G.R. No. 126297, 31 Jan. 2007) duty to supervise the children under their custody.
(Tamargo v. CA, G.R. No. 85044, 03 June 1992)
d. Doctrine of Informed Consent
Requisites of vicarious liability of the parents
The doctrine of informed consent within the context (21-C-L)
of physician-patient relationships goes far back into
English common law. From a purely ethical norm, 1. The child is below 21 years of age;
informed consent evolved into a general principle of 2. The child Committed a tortious act to the
law that a physician has a duty to disclose what a damage and prejudice of another person; and
reasonably prudent physician in the medical 3. The child Lives in the company of the parent
community in the exercise of reasonable care would concerned whether single or married. (Pineda,
disclose to his patient as to whatever grave risks of 2009)
injury might be incurred from a proposed course of
treatment, so that a patient, exercising ordinary Minors v. Incapacitated Persons
care for his own welfare, and faced with a choice of
undergoing the proposed treatment, or alternative
Incapacitated
treatment, or none at all, may intelligently exercise Minor
Persons
his judgment by reasonably balancing the probable
risks against the probable benefits. (Li v. Sps. Those who are below
Persons beyond 21
Soliman, G.R. No. 165279, 07 June 2011) 21 years of age.
years of age but are
incapacitated such as
NOTE: R.A. No. 6809,
those who are insane
An Act Lowering the
or imbecile.
Age of Majority from

2022 GOLDEN NOTES
Civil Law
Twenty-One to (b) Under Article 101 of the RPC

Eighteen Years, did not
amend Article 236 of The parents are, and should be, held primarily liable
the Family Code with for the civil liability arising from criminal offenses
regard to age. committed by their minor children under their legal
“Nothing in this code shall be construed to authority or control, or who live in their company,
derogate from the duty or responsibility of unless it is proven that the former acted with the
parents and guardians for children and wards diligence of a good father of a family to prevent such
below 21 years of age mentioned in the second damages. The primary liability is premised on the
and third paragraphs of Art. 2180 of the NCC” provisions of Art. 101 of the Revised Penal Code
(R.A. No. 6809). with respect to damages ex delicto caused by their
children 9 years of age or under, or over 9 but under
15 years of age, who acted without discernment.
Thus, under Art. 221 of the Family Code, there is no
With regard to their children over 9 but under 15
more alternative qualification as to the civil liability
years of age, who acted with discernment, or 15
of parents. The liability of both father and mother is
years of age or over but under 21 years of age, such
now primary and not subsidiary. (Libi v. IAC, G.R. No.
primary liability shall be imposed pursuant to Art.
70890, 18 Sept. 1992) Otherwise stated, their
2180 of the Civil Code. (Ibid.)
responsibility is now simultaneous, and no longer
alternative. (Rabuya, 2017)
NOTE: Parents and other persons exercising
parental authority shall be civilly liable for the
NOTE: A child fifteen (15) years of age or under at
injuries and damages caused by the acts or
the time of the commission of the offense shall be
omissions of their unemancipated children living in
exempt from criminal liability. (Sec. 6, R.A. No. 9344)
their company and under their parental authority
subject to the appropriate defenses provided by
Liability of parents involving either crimes or
law. (Art. 221, FC)
quasi-delicts of their minor children; Primary
NOT Subsidiary
Vicarious liability of other persons exercising
parental authority
Primary and Solidary Liability:
In default of the parents or a judicially appointed

(a) Under Article 2180 of the NCC
guardian, parental authority shall be exercised by
the following persons in the order indicated:
The civil liability of parents for quasi-delicts of their
minor children, as contemplated in Article 2180 of
1. Surviving grandparents;
the NCC, is primary and not subsidiary. In fact, if we
2. Oldest sibling, over 21 years old, unless unfit or
apply Art. 2194 of the NCC, which provides for
unqualified; or
solidary liability of joint tortfeasors, the persons
3. Child’s actual custodian, over 21 years old,
responsible for the act or omission, in this case, the
unless unfit or disqualified. (Art. 216, FC)
minor and the father, and in case of his death or
incapacity, the mother, are solidarily liable.
Adopted Children
Accordingly, such parental liability is primary and
not subsidiary, hence the last paragraph of Art. 2180
Judicially adopted children are considered
provides that “the responsibility treated in this
legitimate children of their adopting parents. (Sec.
article shall cease when the persons herein
17, R.A. No. 8552)
mentioned proved that they observed all the
diligence of a good father of a family to prevent
damages. (Libi v. IAC, G.R. No. 70890, 18 Sept. 1992) Thus, adopters are civilly liable for the
tortious/criminal acts of their minor children who
live with them.

Torts and Damages
NOTE: Parental authority may not be given years of age, the law being applied by analogy.
retroactive effect so as to make the adopting parents (Pineda, 2009)
the indispensable parties in a damage case filed
against their adopted child, for acts committed by STATE, PROVINCES, CITIES,
the latter, when actual custody was yet lodged with AND MUNICIPALITIES
the biological parents. (Tamargo v. CA, G.R. No.
85044, 03 Jun. 1992) Aspects of liability of the State
Reversion of parental authority to biological 1. Public/Governmental – where the State is liable

parents only for the tortious acts of its special agents.
The State has voluntarily assumed liability for
If the adopter dies while the adopted child is still a acts done through special agents. (Pineda, 2009)
minor, parental authority should be deemed to have
reverted in favor of the biological parents. 2. Private/Non-governmental – when the State is
(Bartolome v. SSS, G.R. No. 192531, 12 Nov. 2014) engaged in private business or enterprise, it
becomes liable as an ordinary employer. (NIA v.
Illegitimate Child Fontanilla, G.R. No. 61045, 01 Dec. 1989)
As for an illegitimate child, if he is acknowledged by NOTE: The State is only liable for the negligent acts
the father and lives with the latter, the father shall of its officers, agents and employees when they are
be responsible. However, if he is not recognized by acting as special agents.
the putative father but is under the custody and
supervision of the mother, it is the latter who is the Special Agent
one vicariously liable. (Pineda, 2009)
A special agent is one who receives a definite and
GUARDIANS fixed order or commission, foreign to the exercise of
the duties of his office.
Guardians are liable for damages caused by the
minors or incapacitated persons who are under An employee who on his own responsibility
their authority and live in their company (NCC, Art. performs functions inherent in his office and
2180). If the minor or insane person causing damage naturally pertaining thereto is not a special agent.
has no parents or guardian, the minor or insane (Meritt v. Government of the Philippine Islands, G.R.
person shall be answerable with his own property No. 11154, 21 Mar. 1916)
in an action against him where a guardian ad litem
shall be appointed (Art. 2182, NCC) NOTE: Where the government commissions a
private individual for a special governmental task, it
NOTE: The rules on vicarious liability of parents is acting through a special agent within the meaning
are applicable to vicarious liability of guardians. of the provision. (Largo, 2007)
De facto guardians covered by Art. 2180 of the Liability of Provinces, Cities and Municipalities
NCC
As for local government units, “provinces, cities and
De facto guardians are relatives and neighbors who municipalities shall be liable for damages for the
take upon themselves the duty to care and support death of, or injuries suffered by, any person by
orphaned children without passing through judicial reason of the defective condition of roads, streets,
proceedings. bridges, public buildings, and other public works
under their control or supervision.” (Art. 2189, NCC)
NOTE: They are liable for acts committed by
children while living with them and are below 21

2022 GOLDEN NOTES
Civil Law
In case where there is a “Management and negligence because a teacher who stands in loco
Operating Contract” between a local parentis to his pupils would have made sure that the
government unit and a private corporation children are protected from all harm in his
company.
Sta. Ana Public Market, despite the Management and
Operating Contract between respondent City and Application of vicarious liability under Art. 2180
Asiatic Integrated Corporation remained under the of the NCC not limited to schools of arts and
control of the former. X X X There is no argument trade
that it is the duty of the City of Manila to exercise
reasonable care to keep the public market The application of Article 2180 of the New Civil
reasonably safe for people frequenting the place for Code is not limited to schools of arts and trades.
their marketing needs. X X X To recapitulate, it There is no substantial distinction between the
appears evident that the City of Manila is likewise academic and the nonacademic schools insofar as
liable for damages under Article 2189 of the Civil torts committed by their students are concerned.
Code, respondent City having retained control and The same vigilance is expected from the teacher
supervision over the Sta. Ana Public Market and as over the students under his control and supervision,
tort-feasor under Article 2176 of the Civil Code on whatever the nature of the school where he is
quasi-delicts. (Jimenez v. City of Manila, G.R. No. teaching. There is no reason why different degrees
71049, 29 May 1987) of vigilance should be exercised by the school
authorities on the basis only of the nature of their
NOTE: It is not even necessary for the defective road respective schools. (Amadora v. CA, G.R. No. L-47745,
or street to belong to the province, city or 15 Apr. 1988)
municipality for liability to attach. The article only
requires that either control or supervision is NOTE: Although Art. 2180 is applicable to all
exercised over the defective road or street. (Guilatco schools, the distinction between an academic school
v. City of Dagupan, G.R. No. 61516, 21 Mar. 1989) and an establishment of arts and trades is still
essential to distinguish the liability of the teacher
Lack of knowledge not a defense from that of the head of the establishment.
The LGU cannot be relieved of liability based on its Liability of the teacher as distinguished from the
purported lack of knowledge of the excavation and head of the establishment
the condition of the road when the accident
occurred. Its obligation to maintain the safe GR: Where the school is academic rather than
condition of the road within its territory is a technical or vocational in nature, responsibility for
continuing one which is not suspended while a the tort committed by the student will attach to the
street is being repaired. (Mun. of San Juan v. CA, G.R. teacher in charge of such student.
No. 121920, 09 Aug. 2005)
XPN: In the case of establishments of arts and
TEACHERS AND HEADS OF trades, it is the head thereof, and only he, who shall
ESTABLISHMENTS OF ARTS AND TRADES be held liable as an exception to the general rule.
Teachers or directors of arts and trades are liable In other words, teachers in general shall be liable for
for any damages caused by their pupils or the acts of their students except where the school is
apprentices while they are under their custody. technical in nature, in which case it is the head
In the case of Ylarde v. Aquino (G.R. L-33722, 29 July thereof who shall be answerable. (Ibid.)
1988), the teacher Edgardo Aquino, after bringing
his pupils to an excavation site dug by them, left
them all by themselves, and one of the pupils fell
into the pit. The teacher acted with fault and gross

Torts and Damages
Basis of the teacher’s vicarious liability Age of student immaterial
They are acting in Loco Parentis (in place of Even if the student has already reached the age of
parents). However, teachers are not expected to majority, the liability can be imputed to the teacher-
have the same measure of responsibility as that in-charge. Under Article 2180, age does not matter.
imposed on parent for their influence over the child Unlike the parent who will be liable only if the child
is not equal in degree. The parent can instill more is still a minor, the teacher is held answerable by the
lasting discipline on the child than the teacher and law for the act of the student regardless of the age of
so should be held to a greater accountability than the student liable. (Amadora v. CA, G.R. No. L-47745,
the teacher or the head for the tort committed by the 15 Apr. 1988)
child. (Ibid.)
Limitation to the liability of teachers and heads
Special Parental Authority under the Family of Schools
Code
Teachers and Heads of schools are only liable if the
The school, its administrators and teachers, or the students remain in schools. If they are no longer in
individual, entity or institution engaged in child such premises, their responsibility shall attach no
shall have special parental authority and more. Their parents become responsible for them.
responsibility over the minor child while under (Pineda, 2009)
their supervision, instruction or custody. (Art. 218,
FC) A student is in custody of the school authorities
Authority and responsibility shall apply to all The student is in the custody of the school
authorized activities whether inside or outside the authorities as long as he is under the control and
premises of the school, entity or institution. influence of the school and within its premises,
whether the semester has not ended, or has ended
Those given the authority and responsibility under or has not yet begun. The term “custody” signifies
the preceding Article shall be principally and that the student is within the control and influence
solidarily liable for damages caused by the acts or of the school authorities. The teacher in charge is
omissions of the unemancipated minor. The the one designated by the dean, principal, or other
parents, judicial guardians or the persons exercising administrative superior to exercise supervision
substitute parental authority over said minor shall over the pupils or students in the specific classes or
be subsidiarily liable. (Art. 219, FC) sections to which they are assigned. It is not
necessary that at the time of the injury, the teacher
Rationale of vicarious liability of school heads is physically present, and in a position to prevent it.
and teachers (2005 BAR)
Article 218 of the Family Code v. Article 2180 of
The rationale of school heads and teachers’ liability the New Civil Code
for tortious acts of their pupils and students, so long
as they remain in custody, is that they stand, to a Article 218, FC Article 2180, NCC
certain extent, as to their pupils and students, in loco School, its
Teachers, head of
parentis and are called upon to “exercise reasonable administrators,
establishment in arts
supervision over the conduct of the child.” This is teachers engaged in
and trades are made
expressly provided for in Articles 349, 350 and 352 childcare are made
expressly liable.
of the NCC. (Pineda, 2009) expressly liable.
Liability of school, its Neither such express
administrators, and solidary nor subsidiary
teachers is solidary liability is stated.

2022 GOLDEN NOTES
Civil Law
and parents are made (Saludaga v. FEU, G.R. No. 179337, 30 Apr. 2008)
subsidiary liable. Thus, any quasi-delict committed by the
Students involved Students involved are school’s employee against the student is also
must be a minor. not necessarily minors. actionable under breach of contractual
obligations.
Defenses available
3. Subsidiary liability for felonies committed by
Their responsibility will cease when they prove that their servants, pupils, workmen, apprentices, or
they observed all the diligence of a good father of a employees in the discharge of their duties,
family to prevent damage. (NCC, Art. 2180) As for the under Art. 103 of the RPC.
employer, if he shows to the satisfaction of the court
that in the selection and in the supervision of his 4. RES IPSA LOQUITUR
employees, he has exercised the care and diligence
of a good father of a family, the presumption is Literally, res ipsa loquitur means "the thing speaks
overcome and he is relieved from liability. (Layugan for itself." It is the rule that the fact of the occurrence
v. IAC, G.R. No. L-49542, 12 Sep. 1980) of an injury, taken with the surrounding
circumstances, may permit an inference or raise a
Q: A 15-year-old high school student stabs his presumption of negligence, or make out a plaintiff’s
classmate who is his rival for a girl, while they prima facie case, and present a question of fact for
were going out of the classroom after their last defendant to meet with an explanation.
class. Who may be held liable? (2005 BAR)
However, res ipsa loquitur is not a rule of
A: Under Article 218 of the Family Code, the school, substantive law and, as such, does not create nor
its administrators and teachers, or the individual, constitute an independent or separate ground of
entity or institution engaged in childcare shall have liability. Instead, it is considered as merely
special parental authority and responsibility over evidentiary or in the nature of a procedural rule.
the minor child while under their supervision, (Professional Services Inc. v. Agana, G.R. No. 126297,
instruction, or custody. Authority and responsibility 31 Jan. 2007)
shall apply to all authorized activities whether
inside or outside the premises of the school, entity, NOTE: It is also known as the “Doctrine of
or institution. Common Knowledge.”
Liability of the school Requisites for the application of the doctrine
1. Vicarious liability as an employer under Art. Resort to the doctrine may be allowed only when:
2180 of the NCC; 1. The accident is of such character as to warrant
2. Direct liability: an inference that it would not have happened
a. for quasi-delicts under Art. 2176 of the NCC; except for the defendant’s negligence;
b. as an institution exercising special parental 2. The accident must have been caused by an
authority over minor children under Art. agency or instrumentality within the exclusive
219 of the FC; management or control of the person charged
c. for breach of contract; or with the negligence complained of; and
3. The accident must not have been due to any
NOTE: When a student enrolls, a contract is voluntary action or contribution on the part of
entered into between him and the school. Under the person injured. (Josefa v. Meralco, G.R. No.
this contract, the school is supposed to ensure 182705, 18 July 2014)
that adequate steps are taken to provide an
atmosphere conducive to study and ensure the Thus, it is not applicable when an unexplained
safety of the student while inside its premises. accident may be attributable to one of several

Torts and Damages
causes, for some of which the defendant could not one who has the last reasonable opportunity to
be responsible. (FGU Insurance Corp. v. G. P. avoid the impending harm and fails to do so, is
Sarmiento Trucking Co., G.R. No. 141910, 06 Aug. chargeable with the consequences, without
2002) reference to the prior negligence of the other party.
(Picart v. Smith, G.R. No. L-12219, 15 Mar. 1918)
When doctrine is applicable
The doctrine of last clear chance is a theory adopted
All that the plaintiff must prove is the accident itself; to mitigate the harshness of the contributory
no other proof of negligence is required beyond the negligence of the plaintiff. (Phoenix Construction Inc.
accident itself. It relates to the fact of an injury that v. IAC, G.R. No. L-65295, 10 Mar. 1987)
sets out an inference to the cause thereof or
establishes the plaintiff’s prima facie case. The Requisites:
doctrine rests on inference and not on presumption.
(Perla Compania de Seguros, Inc. v. Sps. Sarangaya, 1. Plaintiff is placed in danger by his own
G.R. No. 147746, 25 Oct. 2005) negligent acts, and he is unable to get out from
such situation by any means;
Three uses and applications of the doctrine 2. Defendant knows that the plaintiff is in danger
and knows or should have known that the
1. In medical negligence cases; plaintiff was unable to extricate himself
2. In cases where the exercise of judicial therefrom; and
discretion is abused; and 3. Defendant had the last clear chance or
3. In practical instances opportunity to avoid the accident through the
exercise of ordinary care but failed to do so, and
Some cases where doctrine was held the accident occurred as a proximate result of
inapplicable such failure. (Pineda, 2009)
1. Where there is direct proof of absence or Instances when doctrine is NOT applicable
presence of negligence;
1. When the injury or accident cannot be avoided
2. Where other causes, including the conduct by the application of all means at hand after the
of the plaintiff and third persons, are not peril has been discovered (Pantranco North
sufficiently eliminated by the evidence; and Expressway v. Baesa, G.R. Nos. 79050-51, 14 Nov.
1989);
3. When an unexplained accident may be 2. If the defendant’s negligence is a concurrent
attributable to one of several causes, for cause and which was still in operation up to the
some of which the defendant could not be time the injury was inflicted;
held responsible. (Aquino, 2019; FGU 3. Where the plaintiff, a passenger, filed an action
Insurance Corp. v. G.R. Sarmiento Trucking against a carrier based on contract (Bustamante
Corp., G.R. No. 141910, 06 Aug. 2002) v. CA, G.R. No. 89880, 06 Feb. 1991);
4. If the actor, though negligent, was not aware of
5. LAST CLEAR CHANCE the danger or risk brought about by the prior
fraud or negligent act;
Doctrine of Discovered Peril or Doctrine of 5. In case of a collapse of a building or structure
Supervening Negligence (De Roy v. CA, G.R. No. 80718, 29 Jan. 1988);
6. Where both parties are negligent (PNR v.
This is also called as the “Humanitarian Brunty, G.R. No. 169891, 02 Nov. 2006); or
Negligence Doctrine.” Where both parties are 7. In case of collision, it applies in a suit between
negligent but the negligent act of one succeeds that the owners and drivers of colliding vehicles and
of the other by an appreciable interval of time, the not where a passenger demands responsibility

2022 GOLDEN NOTES
Civil Law
from the carrier to enforce its contractual 6. DAMNUM ABSQUE INJURIA

obligations. (Tiu v. Arriesgado, G.R. No. 138060,
01 Sept. 2004) Damage without injury – The proper exercise of a
lawful right cannot constitute a legal wrong for
NOTE: There is a different rule in case of collision of which an action will lie, although the act may result
vessels. The doctrine of last clear chance in tort is in damage to another, for no legal right has been
not applicable to collisions of vessels as “if both invaded. One may use any lawful means to
vessels may be blamed for the collision, each one shall accomplish a lawful purpose and though the means
be liable for his own damages, and both shall be adopted may cause damage to another, no cause of
jointly responsible for the losses and damages action arises in the latter’s favor. Any injury or
suffered by their cargoes.” (Art. 827, Code of damage occasioned thereby is damnum absque
Commerce) injuria. The courts can give no redress for hardship
to an individual resulting from action reasonably
Q: Mr. and Mrs. R own a burned-out building, the calculated to achieve a lawful end by lawful means.
firewall of which collapsed and destroyed the (The Orchard Golf & Country Club, Inc., v. Yu, G.R. No.
shop occupied by the family of Mr. and Mrs. S, 191033, 11 Jan. 2016)
which resulted in injuries to said couple and the
death of their daughter. Mr. and Mrs. S had been NOTE: When the conjunction of damage and wrong
warned by Mr. & Mrs. R to vacate the shop in is wanting there is no damnum absque injuria.
view of its proximity to the weakened wall but (Lagon v. CA, G.R. No. 119107, 18 Mar. 2005)
the former failed to do so. Mr. & Mrs. S filed
against Mr, and Mrs. R an action for recovery of The principle does not apply when the exercise of
damages the former suffered as a result of the this right is suspended or extinguished pursuant to
collapse of the firewall. In their defense, Mr. and a court order. (Amonoy v. Gutierrez, G.R. No. 140420,
Mrs. R relied on the doctrine of last clear chance, 15 Feb. 2001)
alleging that Mr. and Mrs. S had the last clear
chance of avoiding the accident, had they Q: Yu Han Yat is the registered owner of a
heeded the former’s warning to vacate the shop, property in Quezon City. Later, he subdivided
and therefore Mr. and Mrs. R’s prior negligence the property into 60 lots duly approved by the
should be disregarded. If you were the judge, Bureau of Lands. TCT Nos. 47294 and 47353
how would you decide the case? (1990 BAR) were then issued in his name. To finance his plan
of developing the subject property, Yu Han Yat
A: I would decide in favor of Mr. & Mrs. S. The applied for loans using some of his TCTs as
proprietor of a building or structure is responsible security. When the mortgage instruments were
for the damages resulting from its total or partial presented for registration, the Registry of Deeds
collapse if it should be due to the lack of necessary of Quezon City refused to record the same on the
repairs. (Art. 2190, NCC) With respect to the defense ground that the Yu Han Yat’s TCTs overlapped
of last clear chance, the same is not tenable as with the boundaries covered by another title,
enunciated by the Supreme Court in De Roy v. CA TCT No. 336663, registered in the name of
(G.R. No. L-80718, 29 Jan. 1988), where it held that Esperanza Nava (Nava). Eventually, the Land
the doctrine of last clear chance is not applicable in Registration Authority ordered the registration
instances covered by Art 2190 of the Civil Code. of the mortgage instruments.
Further, in Phoenix Construction, Inc. v. IAC (G.R. L-
65295, 10 Mar. 1987) the Supreme Court held that In 1992, Yu Han Yat filed a Petition for Quieting
the role of the common law "last clear chance" of Title against the Estate of Nava, Mejia, Bernas
doctrine in relation to Art. 2179 of the Civil Code is and the Register of Deeds of Quezon City. The
merely to mitigate damages within the context of Estate of Nava applied for an injunction to
contributory negligence. restrain Yu Han Yat fom undertaking
development works on the property which the

Torts and Damages
RTC granted. On appeal, the CA ruled in favor of Common Defenses

Yu Han Yat and awarded him damages and
attorney’s fees to compensate him for the duly The vicarious liability shall cease when the
substantiated losses he suffered to protect his defendants prove that they observed all the
interest over the property. Is the CA correct? diligence of a good father of a family to prevent
damage. (Art. 2180, NCC; Cuadra v. Monfort, G.R. No.
A: There is no basis in awarding damages in favor of L-24101, 30 Sept. 1970)
Yu Han Yat. In the absence of malice or bad faith in
the prosecution of the case, the award of damages is Principle of Vicarious Liability or Law on
unavailing. Settled is the rule that the adverse result Imputed Negligence (2001-2006, 2009, 2010
of an action does not per se make the action BAR)
wrongful and subject the actor to damages, for the
law could not have meant to impose a penalty on the The obligation imposed by Art. 2176 of the NCC for
right to litigate. If damages result from a person's quasi-delicts is demandable not only for one's own
exercise of a right, it is damnum absque injuria acts or omissions, but also for those persons for
(Bernas v. Estate of Felipe Yu Han Yat, G.R. Nos. whom one is responsible. (Art. 2180, NCC)
195908 & 195910, 15 Aug. 2018, J. Caguioa)
Liability without Fault different from Damnum

Absque Injuria
Liability without Fault includes:
1. Strict Liability – there is strict liability if one is

made independent of fault, negligence or intent
after establishing certain facts specified by law.
It includes liability for conversion and for
injuries caused by animals, ultra-hazardous
activities and nuisance.
2. Product Liability Law – is the law which governs

the liability of manufacturers and sellers for
damages resulting from defective products.
(Aquino, 2019)
The actual tortfeasor is not exempted from liability
The minor, ward, employee, special agent, pupil,

students, and apprentices who actually committed
the delictual acts are not exempted by the law from
personal responsibility. They may be sued and
made liable alone as when the person responsible
for them or vicarious obligor proves that he
exercised the diligence of a good father of a family
or when the minor or insane person has no parents
or guardians. In the latter instance, they are
answerable with their own property. (Pineda, 2009)

2022 GOLDEN NOTES
Civil Law
the injury and thereby negatives liability. (Aquino,

B. PROXIMATE CAUSE 2019)
When Efficient Intervening Cause is not

applicable
Proximate cause is that cause, which, in natural and
continuous sequence, unbroken by any efficient
There is no efficient intervening cause if the force
intervening cause, produces the injury, and without
created by the negligent act or omission have either:
which the result would not have occurred. (Ramos v.
C.O.L. Realty, G.R. No. 184905, 28 Aug. 2009)
1. Remained active itself; or
2. Created another force which remained active
NOTE: Proximate cause is not necessarily the
until it directly caused the result; or
immediate cause; it’s not necessarily the nearest
3. Created a new active risk of being acted upon by
time, distance, or space. (People v. Elizalde, 59 Off.
the active force that caused the result. (Ibid.)
Gaz. 1241)
Proximate, Intervening, Remote and Concurrent

Application of proximate cause
causes distinguished
The doctrine of proximate cause is applicable only

It is the cause which, in natural
in actions for quasi-delict, not in actions involving
and continuous sequence,
breach of contract.
unbroken by any efficient
PROXIMATE
intervening cause, produces
The doctrine is a device for imputing liability to a CAUSE
the injury, and without which
person where there is no relation between him and
the result would not have
another party. In such a case, the obligation is
occurred.
created by law itself. But, where there is a pre-
One that destroys the causal
existing contractual relation between the parties, it
connection between the
is the parties themselves who create the obligation,
negligent act and injury and
and the function of the law is merely to regulate the
thereby negatives liability.
relation thus created. (Calalas v. CA, G.R. No. 122039, INTERVENING
31 May 2000) CAUSE
NOTE: Foreseeable
Intervening causes cannot be
Principle of concurrent causes
considered sufficient
intervening causes.
Where the concurrent or successive negligent acts
or omissions of two or more persons, although
acting independently, are in combination with the That cause which some
direct and proximate cause of a single injury to a independent force merely took
REMOTE
third person, and it is impossible to determine what advantage of to accomplish
CAUSE
proportion each contributed to the injury, either of something not the natural
them is responsible for the whole injury, even effect thereof.
though his act alone might not have caused the
entire injury. (Sabido v. Custodio, G.R. No. L-21512, Causes brought about by the
31 Aug. 1966) acts and omissions of third
persons which makes the
CONCURRENT
Efficient Intervening Cause (Novus Actus defendant still liable. Here, the
CAUSE
Interviens) proximate cause is not
necessarily the sole cause of
An efficient intervening cause is one which destroys the accident.
the causal connection between the negligent act and

Torts and Damages
reasonably attributed to the non-performance of

C. NEGLIGENCE the obligation. (Art. 2201, NCC)
When is negligence excused
Negligence is the omission of that degree of

GR: Negligence is excused when events that
diligence which is required by the nature of the
transpired were unforeseen or, which though
obligation and corresponding to the circumstances
foreseen, were inevitable. (Art. 1174, NCC)
of the persons, time and place. (Art. 1173, NCC)
XPN:
An actionable negligence may be culpa contractual,
1. In cases specified by law;
culpa aquiliana, or criminal negligence. Thus, an
2. When declared by stipulation; or
action for damages for negligent act of the
3. When the nature of the obligation requires the
defendant may be based on contract, quasi-delict, or
assumption of risk.
delict. The bases for liability are separate and
distinct from each other even if only one act is
Degrees of negligence
involved. (Aquino, 2017)
1. Simple negligence – Failure to give proper

Motive immaterial
attention to a task expected of him or her,
signifying a disregard of a duty resulting from
Motive is not material on negligence cases. The
carelessness or indifference.
defendant may still be held liable even if the act was
meant to be a practical joke. (Aquino, 2019)
2. Gross negligence – Refers to negligence
characterized by the want of even slight care, or
Test of negligence
by acting or omitting to act in a situation where
there is a duty to act, not inadvertently but
The test is would a prudent man, in the position of
wilfully and intentionally, with a conscious
the tortfeasor, foresee harm to the person injured as
indifference to the consequences, insofar as
a reasonable consequence of the course about to be
other persons may be affected. It is the omission
pursued? If so, the law imposes a duty on the actor
of that care that even inattentive and
to take precaution against its mischievous results,
thoughtless men never fail to give to their own
and failure to do so constitutes negligence. (Picart v.
property. (Ombudsman v. De Leon, G.R. No.
Smith, G.R. No. L-12219, 15 Mar. 1918; Romulo
154083, 27 Feb. 2013)
Abrogar and Erlinda Abrogar v. Cosmos Bottling
Company and Intergames Inc., G.R. No. 164749, 15
Circumstances to be considered in determining
Mar. 2017)
whether an act is negligent
NOTE: The determination of negligence is a

1. Person Exposed to the Risk – A higher degree of
question of foresight on the part of the actor. (Phil.
diligence is required if the person involved is a
Hawk Corp. v. Vivian Tan Lee, G.R. No. 166869, 16 Feb.
child.
2010)
2. Emergency – The actor confronted with an

Rule when negligence shows bad faith
emergency is not to be held up to the standard
of conduct normally applied to an individual
When negligence shows bad faith, responsibility
who is in no such situation.
arising from fraud is demandable in all obligations.
(Art. 1171, NCC) Furthermore, in case of fraud, bad
3. Social Value or Utility of Action – Any act
faith, malice or wanton attitude, the obligor shall be
subjecting an innocent person to unnecessary
responsible for all damages which may be
risk is a negligent act if the risk outweighs the

2022 GOLDEN NOTES
Civil Law
advantage accruing to the actor and to the Chemical Bulk Carriers Incorporated, G.R. No.
innocent person himself. 193577, 07 Sep. 2011)
4. Time of the day – May affect the diligence Quantum of proof on negligence
required of the actor (Art. 1173, NCC); e.g., a
driver is required to exercise more prudence The quantum of proof is preponderance of evidence.
when driving at night. (Rule 133(1), Rules of Court)
5. Gravity of the Harm to be Avoided – Even if the Burden of proof

odds that an injury will result are not high,
harm may still be considered foreseeable if the GR: Plaintiff alleging damage due to negligent acts
gravity of harm to be avoided is great. in his complaint has the burden of proving such
negligence.
6. Alternative Cause of Action – If the alternative
presented to the actor is too costly, the harm XPN: When the rules or the law provide for cases
that may result may still be considered when negligence is presumed.
unforeseeable to a reasonable man. More so if
there is no alternative thereto. Disputable presumptions of negligence
7. Place – A man who should occasion to discharge 1. Motor vehicle mishaps – a driver is presumed
a gun on an open and extensive marsh, or in a negligent if he:
forest would be required to use less
circumspection and care, than if he were to do a. Was found guilty of reckless driving or
the same thing in an inhabited town, village or violating traffic regulations at least twice
city. (Kenny, 1928) within the preceding two (Art. 2184, NCC);
or
8. Violation of Rules and Statutes b. Was violating any traffic regulation at the
time of the mishap (Art. 2185, NCC)
a. Statutes
b. Administrative Rules 2. Possession of dangerous weapons or
c. Private Rules of Conduct substances, results in death or injury, except
when the possession or use thereof is
9. Practice and Custom – A practice which is indispensable in his occupation or business.
dangerous to human life cannot ripen into a (Art. 2188, NCC)
custom which will protect anyone who follows
it. (Yamada v. Manila Railroad Co., G.R. No. 3. Common carriers are presumed to have been at
10073, 24 Dec. 1915) fault or acted negligently in cases of death or
injuries to passengers. Unless they prove that
10. Physical Disability they observed extraordinary diligence. (Arts.
1733 & 1755, NCC)
GR: A weak or accident-prone person must
meet the standard of a reasonable man, Intoxication not negligence per se
otherwise he will be considered as negligent.
Mere intoxication is not negligence per se nor
XPN: if the defect amounts to a real disability, establishes want of ordinary care. But it may be one
the standard of conduct is that of a reasonable of the circumstances to be considered to prove
person under like disability, e.g., the standard negligence. (Wright v. Meralco, G.R. No. L-7760, 01
conduct of a blind person becomes that of a Oct. 1914)
reasonable person who is blind. (Francisco v.

Torts and Damages
Doctrine of Comparative Negligence Rule in case of fault or negligence of an obligor
The negligence of both the plaintiff and the 1. Art. 1173, NCC - Provides that the fault or
defendant are compared for the purpose of reaching negligence of the obligor consists in the
an equitable apportionment of their respective omission of that diligence which is required by
liabilities for the damages caused and suffered by the nature of the obligation and corresponds
the plaintiff. (Pineda, 2009) with the circumstances of the persons, of the
time and of the place. When negligence shows
The relative degree of negligence of the parties is bad faith, the provisions of Articles 1171 and
considered in determining whether, and to what 2201, paragraph 2 of the NCC shall apply.
degree, either should be responsible for his
negligence (apportionment of damages). NOTE: Under Art. 1171 of the NCC,
responsibility arising from fraud is demandable
NOTE: Under the modified form, the plaintiff can in all obligations. Any waiver of an action for
recover only if his negligence is less than or equals future fraud is void.
that of the defendant. Expressed in terms of
percentages, a plaintiff who is charged with 80% of 2. Art. 2201, NCC - In contracts and quasi-
the total negligence can recover only 20% of his contracts, the damages for which the obligor
damages. (De Leon, 2012) who acted in good faith is liable shall be those
that are the natural and probable consequences
1. STANDARD OF CARE of the breach of the obligation, and which the
parties have foreseen or could have reasonably
Concept of a Good Father of the family foreseen at the time the obligation was
constituted.
The general standard of test is Bonus Pater Familias
or that of a good father of a family. If the law or NOTE: In case of fraud, bad faith, malice or
contract does not state the diligence which is to be wanton attitude, the obligor shall be
observed in the performance, that which is expected responsible for all damages which may be
of a good father of a family shall be required. (Art. reasonably attributed to the non-performance
1173(2), NCC) of the obligation. (Ibid.)
He is not and is not supposed to be omniscient of the Concept of Good Faith

future; rather, he is one who takes precautions
against any harm when there is something before Good faith refers to the state of the mind which is
him to suggest or warn him of the danger or to manifested by the acts of the individual concerned.
foresee it. (Picart v. Smith, G.R. No. L-12219, 15 Mar. It consists of the intention to abstain from taking an
1918) unconscionable and unscrupulous advantage of
another. (DBP v. CA,, G.R. No. 137916, 08 Dec. 2004)
The law requires a man to possess ordinary capacity
to avoid harming his neighbors unless a clear and Application of standard of diligence to children
manifest incapacity is shown; but it does not
generally hold him liable for unintentional injury GR: The action of a child will not necessarily be
unless, possessing such capacity, he might ought to judged according to the standard of an adult.
have foreseen the danger. (Corliss v. Manila Railroad
Co., G.R. No. L-21291, 28 Mar. 1969) XPN: If the minor is mature enough to understand
and appreciate the nature and consequences of his
actions. In such a case, he shall be considered to
have been negligent.

2022 GOLDEN NOTES
Civil Law
NOTE: A child fifteen (15) years of age or under at NOTE: This rule does not apply solely or
the time of the commission of the offense shall be exclusively to professionals who have undergone
exempt from criminal liability. (Sec. 6, R.A. No. 9344) formal education.
Nevertheless, absence of negligence does not XPN: When the activity, by its very nature,
absolutely excuse the child from liability, as his requires the exercise of a higher degree of
properties, if any, can be held subsidiarily liable. Nor diligence
will such absence of negligence excuse the child’s
parent from vicarious liability. e.g., Banks; Common carriers
“Diligence before the fact” Insane Persons
The conduct that should be examined in negligence

cases is prior conduct or conduct prior to the injury
that resulted or, in proper cases, the aggravation
thereof. The insanity of a person does not excuse him or
his guardian from liability based on quasi-delict
(Arts. 2180 & 2182, NCC). This means that the act
In General
or omission of the person suffering from mental
defect will be judged using the standard test of a
If the law or contract does not state the diligence reasonable man.
which is to be observed in the performance, that
which is expected of a good father of a family shall The bases for holding a permanently insane
be required. (Article 1173(2), NCC) person liable for his torts are as follows:
NOTE: Diligence of a good father of a family - Where one of two innocent persons must suffer a
bonus pater familias - A reasonable man is loss it should be borne by the one who
deemed to have knowledge of the facts that a man occasioned it;
should be expected to know based on ordinary
human experience. (PNR v. IAC, G.R. No. 7054, 22 To induce those interested in the estate of the
Jan. 1993) insane person (if he has one) to restrain and
control him; and
Persons who have Physical Disability The fear that an insanity defense would lead to
false claims of insanity to avoid liability.
(Breunig v. American Family Insurance Co.,
GR: A weak or accident-prone person must come
173 N.W. 2d 619, 3 Feb. 1970)
up to the standard of a reasonable man,
otherwise, he will be considered as negligent.
NOTE: Under the RPC, an insane person is
exempt from criminal liability. However, by
XPN: If the defect amounts to a real disability, the
express provision of law, there may be civil
standard of conduct is that of a reasonable person
liability even when the actor is exempt from
under like disability.
criminal liability. An insane person is still liable
with his property for the consequences of his
Experts and Professionals acts, though they performed unwittingly. (US v.
Baggay, Jr. G.R. No. 6659, 01 Sep. 1911)
GR: They should exhibit the case and skill of one
who is ordinarily skilled in the field he is in.

Torts and Damages
Employers prevent them from playing therefrom, is

liable to a child of tender years who is
Employers are required to exercise that degree of injured thereby, even if the child is a
care as mandated by the Labor Code or other trespasser.
mandatory provisions for proper maintenance of 4. State of Necessity – A situation of present
the workplace or adequate facilities to ensure the danger to legally protected interests, in
safety of the employees. which there is no other remedy than the
injuring of another’s also legally
NOTE: Failure of the employer to comply with protected interest.
mandatory provisions may be considered
negligence per se.
Doctors
Employees
If a General Practitioner – Ordinary care and
diligence in the application of his knowledge and
Employees are bound to exercise due care in the
skill in the practice of his profession.
performance of their functions for the employers.
Liability may be based on negligence committed
If a Specialist – The legal duty to the patient is
while in the performance of the duties of the
generally considered to be that of an average
employee. (Araneta v. De Joya, G.R. No. L-25172,
physician.
24 May 1974)
Lawyers
NOTE: The existence of the contract constitutes
no bar to the commission of torts by one against An attorney is bound to exercise only a
the other and the consequent recovery of reasonable degree of care and skill, having
damages. reference to the business he undertakes to do.
(Adarne v. Aldaba, A.C. No. 801, 27 June 1978)
Owners, Proprietors and
Possessors of Property
UNREASONABLE RISK OF HARM
GR: The owner has no duty to take reasonable
care towards a trespasser for his protection or Elements to be considered to determine if a
even to protect him from concealed danger. person has exposed himself to an unreasonable
great risk:
XPNs:
1. Visitors – Owners of buildings or premises 1. Magnitude of the risk;
owe a duty of care to visitors. 2. Principal object;
3. Collateral object;
2. Tolerated Possession - Owner is still liable if 4. Utility of the risk; and
the plaintiff is inside his property by 5. Necessity of the risk (Aquino, 2019)
tolerance or by implied permission.
However, common carriers may be held In the field of negligence, interests are to be
liable for negligence to persons who stay in balanced only in the sense that the purposes of the
their premises even if they are not actor, the nature of his act and the harm that may
passengers. result from action or inaction are elements to be
considered. Some may not be considered depending
3. Doctrine of Attractive Nuisance- One who on the circumstances.
maintains on his premises dangerous
instrumentalities or appliances of a
character likely to attract children in play,
and who fails to exercise ordinary care to

2022 GOLDEN NOTES
Civil Law
2. PRESUMPTIONS assistants during the time when those

assistants are under the surgeon’s control.
PRESUMPTION OF NEGLIGENCE (Cantre v. Go, G.R. No. 160889, 27 Apr. 2007)
(2000, 2009 BAR)
5. Art. 1756, NCC - In case of death or injuries of
A person is generally presumed to have taken passengers, common carriers are presumed to
ordinary care of his concerns. (Rule 131, Sec. 3, Rules have been at fault or acted negligently, unless
of Court) There are however exceptions when they prove that they observed extraordinary
negligence is presumed: diligence prescribed in Arts. 1733 and 1755 of
the NCC.
1. Art. 2184, NCC - It is disputably presumed that a
driver was negligent, if he had been found guilty Q: Romeo L. Battung, Jr. (Battung) boarded
of reckless driving or violating traffic petitioner's (G.V. Florida Transport, Inc.)
regulations at least twice within the next bus. Battung was seated at the first row behind
preceding two months. the driver and slept during the ride. When the
bus reached the Philippine Carabao Center in
2. Art. 2185, NCC - Unless there is proof to the Muñoz, Nueva Ecija, the bus driver, Duplio,
contrary, it is presumed that a person driving a stopped the bus and alighted to check the tires.
motor vehicle has been negligent if at the time At this point, a man who was seated at the fourth
of the mishap, he was violating any traffic row of the bus stood up, shot Battung at his head,
regulation. and then left with a companion. The bus
conductor, Daraoay, notified Duplio of the
NOTE: Proof of traffic violation is required. A incident and thereafter, brought Romeo to the
causal connection must exist between the hospital, but the latter was pronounced dead on
injury received and the violation of the traffic arrival. Hence, respondents filed a complaint for
regulation. It must be proven that the violation damages in the aggregate amount of
of the traffic regulation was the proximate or P1,826,000.00 based on a breach of contract of
legal cause of the injury or that it substantially carriage against petitioner, Duplio, and Daraoay
contributed thereto. Negligence, consisting in (petitioner, et al.) before the RTC. Respondents
whole or in part, of violation of law, like any contended that as a common carrier, petitioner
other negligence, is without legal consequence and its employees are bound to observe
unless it is a contributing cause of the injury. extraordinary diligence in ensuring the safety of
(Tison v. Pomasin, G.R. No. 173180, 24 Aug. 2011) passengers; and in case of injuries and/or death
on the part of a passenger, they are presumed to
3. Art. 2188, NCC - There is prima facie be at fault and, thus, responsible therefor. RTC
presumption of negligence on the part of the ruled in respondents' favor. CA affirmed the
defendant if the death or injury results from his ruling of the RTC. Can the petitioner be held
possession of dangerous weapons or civilly liable?
substances, such as firearms and poison, except
when possession or use thereof is A: NO. Since Battung's death was caused by a co-
indispensable in his occupation or business. passenger, the applicable provision is Art. 1763 of
NOTE: Proof of possession of dangerous the NCC, which states that "a common carrier is
weapons or substances is required. responsible for injuries suffered by a passenger on
account of the willful acts or negligence of other
4.. Captain of the ship doctrine - A surgeon is passengers or of strangers, if the common carrier's
likened to a captain of the ship, such that it is his employees through the exercise of the diligence of a
duty to control everything going on in the good father of a family could have prevented or
operating room. The surgeon in charge of an stopped the act or omission." Notably, for this
operation is liable for the negligence of his obligation, the law provides a lesser degree of

Torts and Damages
diligence, i.e., diligence of a good father of a family, signage was installed long before the said
in assessing the existence of any culpability on the projects were made. The CA found that VECO’s
common carrier's part. negligence in the transfer and installation of the
posts and wires was the proximate cause of the
In this case, records reveal that when the bus fire. Was VECO negligent?
stopped at San Jose City to let four (4) men ride
petitioner's bus (two [2] of which turned out to be A: YES. VECO is a public utility tasked with
Battung's murderers), the bus driver, Duplio, saw distributing electricity to consumers. It is its duty to
them get on the bus and even took note of what they ensure that its posts are properly and safely
were wearing. Moreover, Duplio made the bus installed. As the holder of a public franchise, it is to
conductor, Daraoay, approach these men and have be presumed that it has the necessary resources and
them pay the corresponding fare, which Daraoay expertise to enable a safe and effective installation
did. During the foregoing, both Duplio and Daraoay of its facilities. By installing its posts and wires
observed nothing which would rouse their haphazardly, without regard to how its wires could
suspicion that the men were armed or were to carry come in contact with a previously installed signage,
out an unlawful activity. With no such indication, VECO failed to act in keeping with the diligence
there was no need for them to conduct a more required of it. Had it not been for the transfer,
stringent search (i.e., bodily search) on the aforesaid VECO's wires would not have touched M. Lhuillier's
men. By all accounts, therefore, it cannot be signage. (Visayan Electric Company, Inc. v. Emilio G.
concluded that petitioner or any of its employees Alfeche, G.R. No. 209910, 29 Nov. 2017)
failed to employ the diligence of a good father of a
family in relation to its responsibility under Art. Q: On October 16, 2001, Keihin-Everett entered
1763 of the NCC. As such, petitioner cannot into a Trucking Service Agreement with
altogether be held civilly liable. Matsushita. These services were subcontracted
by Keihin-Everett to Orient Freight. In April
NOTE: The negligence of the employee gives rise to 2002, Matsushita called Keihin-Everett's Sales
the presumption of negligence on the part of the Manager, Salud Rizada, about a column in the
employer. This is the presumed negligence in the April 19, 2002 issue of the tabloid newspaper
selection and supervision of the employee. (Poblete Tempo. This news narrated the April 17, 2002
v. Fabros, G.R. No. L-29803 14 Sep. 1979) interception by Caloocan City police of a stolen
truck filled with shipment of video monitors and
Negligence is proven by: CCTV systems owned by Matsushita. When
contacted by Keihin-Everett about this news,
1. Direct evidence Orient Freight stated that the tabloid report had
2. Circumstantial evidence blown the incident out of proportion. They
3. Res Ipsa Loquitur claimed that the incident simply involved the
breakdown and towing of the truck. However,
Q: On the night of January 6, 1998, a fire broke when the shipment arrived in Yokohama, Japan
out which burned down the house and store of on May 8, 2002, it was discovered that 10 pallets
respondent Emilio and his son, respondent of the shipment's 218 cartons, worth
Gilbert (the Alfeches), and the adjacent watch US$34,226.14, were missing.
repair shop owned by respondent Manugas. It
was admitted that the cause of the fire was the Keihin-Everett independently investigated the
constant abrasion of VECO' s electric wire with incident. During its investigation, it was found
M. Lhuillier's signboard. The close proximity out that during the incident, Cudas told Aquino
and constant abrasion of the wire and signboard to report engine trouble to Orient Freight and
was due to the transfer of the VECO’s post which Aquino also later on reported that the truck was
was made by reason of the road-widening and missing. When the truck was intercepted by the
the drainage construction of the road. The police, Cudas escaped. When confronted with

2022 GOLDEN NOTES
Civil Law
Keihin-Everett's findings, Orient Freight wrote Extent of recovery of damages

back to admit that its previous report was
erroneous and that pilferage was apparently 1. Recovery completely barred - When the
proven. In a letter, Matsushita terminated its In- plaintiff’s own negligence was the immediate
House Brokerage Service Agreement with and proximate cause of his injury, he cannot
Keihin-Everett. Matsushita cited loss of recover damages. (Art. 2179, NCC)
confidence for terminating the contract, stating
that Keihin-Everett's way of handling the NOTE: Where, in conjunction with the
incident and its nondisclosure of this incident's occurrence, he (plaintiff) contributes only to his
relevant facts "amounted to fraud and signified own injury, he may recover the amount that the
an utter disregard of the rule of law." Keihin- defendant responsible for the event should pay
Everett demanded P2,500,000.00 as indemnity for such injury, less a sum deemed a suitable
for lost income. It argued that Orient Freight's equivalent for his own imprudence. (David
mishandling of the situation caused the Taylor v. The Manila Electric Railroad and Light
termination of Keihin-Everett's contract with Company, G.R. No. L-4977, 22 Mar. 1910)
Matsushita. When Orient Freight refused to pay,
Keihin-Everett filed a complaint for damages. 2. Mitigated damages – If the plaintiff’s negligence
was only contributory, the immediate and
Was Orient Freight negligent for failing to proximate cause of the injury being the
disclose the facts surrounding the hijacking defendants lack of due care, he may recover
incident, which led to the termination of the damages, but the courts shall mitigate the
Trucking Service Agreement between Keihin- damages to be awarded. (Art. 2179, NCC)
Everett and Matsushita?
A: YES. Orient Freight's conduct showed its

negligent handling of the investigation and its
failure to timely disclose the facts of the incident to
Keihin-Everret and Matsushita. Orient Freight was
clearly negligent in failing to investigate properly
the incident and make a factual report to Keihin and
Matsushita. Orient Freight failed to exercise due
diligence in disclosing the true facts of the incident
to plaintiff Keihin and Matsushita. As a result, Keihin
suffered income losses by reason of Matsushita's
cancellation of their contract which primarily was
caused by the negligence of Orient Freight. (Orient
Freight International, Inc. v. Keihin-Everett
Forwarding Company, Inc., G.R. No. 191937, 09 Aug.
2017)
PRESUMPTION OF REGULARITY
Mistakes committed by public officers are not

actionable absent any clear showing of malice or
gross negligence amounting to bad Faith. (Farolan v.
Solmac Marketing Corp., G.R. No. 83589, 13 Mar.
1991)

Torts and Damages
liability arising from negligence under the Penal

D. DAMAGES Code. But the plaintiff cannot recover damages
twice for the same act or omission of the defendant.
(NCC, Art. 2177)
Application of the Prohibition on Double
Recovery Rule
In legal contemplation, the term “damages” is the
sum of money which the law awards or imposes as
Civil liability coexists with criminal responsibility.
a pecuniary compensation, a recompense or
In negligence cases, the offended party, or his heirs,
satisfaction for an injury done or wrong sustained
has the option between an action for enforcement of
as a consequence either of a breach of a contractual
civil liability based on culpa criminal under Art. 100
obligation or a tortious act. (MEA Builders, Inc. v. CA,
of the RPC, and an action for recovery of damages
G.R. No. 121484, 31 Jan. 2005)
based on Art. 2177 of the NCC.
NOTE: A complaint for damages is personal in

The action for enforcement of civil liability based on
nature (personal action).
culpa criminal Sec. 1 of Rule 111 of the ROC deems
simultaneously instituted with the criminal action,
Damages v. Injury
unless expressly waived or reserved for a separate
application by the offended party. Art. 2177 of the
Injury is the illegal invasion of a legal right; damage
NCC, however precludes recovery of damages twice
is the loss, hurt, or harm which results from the
for the same negligent act or omission. (Padua v.
injury; damages are the compensation awarded for
Robles, G.R. No. L-40486, 29 Aug.1975)
the damage suffered. There can be damage without
injury in those instances in which the loss or harm
NOTE: What is barred by law is the double recovery
was not the result of a violation of a legal duty.
of damages, not the remedies.
Example: Damnum absque injuria. (Sps. Custodio v.

2. KINDS OF DAMAGES
CA, G.R. No. 116100, 09 Feb. 1996)
Kinds of damages (M-E-N-T-A-L)

Damages can only be paid with money
1. Moral;
Damages can only be paid with money and not
2. Exemplary or corrective;
“palay” because “palay” is not a legal tender
3. Nominal;
currency in the Philippines. (Vda. Simeon Borlado v.
4. Temperate or moderate;
CA, G.R. No. 114118, 28 Aug. 2001)
5. Actual or compensatory;
6. Liquidated
NOTE: In actions for damages, the courts should
award an amount to the winning party and not its
equivalent in property. (Ibid.)
DOUBLE RECOVERY
Prohibition against Double Recovery (2003,

2006 BAR)
Responsibility for fault or negligence under quasi-

delict is entirely separate and distinct from the civil

2022 GOLDEN NOTES
Civil Law
ACTUAL/
MORAL NOMINAL
COMPENSATORY
According to purpose
Awarded only to enable the
injured party to obtain means,
Vindicating or recognizing the injured
Actual or compensatory diversion or amusement that will
party’s right to a property that has
damages simply make good or alleviate the moral suffering he
been violated or invaded. (Tan v.
replace the loss caused by the has undergone, by reason of
Bantegui, G.R. No. 154027, 24 Oct.
wrong. defendants’ culpable action.
2005)
(Philippine Airlines v. CA, G.R. No. L-
82619, 15 Sept 1993)
According to manner of determination
Claimant must produce
competent proof or the best
evidence obtainable such as No proof of pecuniary loss is
receipts to justify an award necessary. The assessment is left
therefore. Actual or to the discretion of the court in
compensatory damages view of the circumstances of each
cannot be presumed but must case. However, there must be
be proved with reasonable proof that the defendant caused
certainty. (People v. Ereo, G.R. physical suffering, mental anguish,
No. 124706, 22 Feb. 2000) moral shock, etc. (Mahinay v.
Velasquez, G.R. No. 152753, 13 Jan.
GR: Actual damages must be 2004)
substantiated by documentary
evidence, such as receipts to GR: Factual basis must be alleged.
prove expenses incurred as a Aside from the need for the
result of the death of the claimant to satisfactorily prove the
No proof of pecuniary loss is
victim or the physical injuries existence of the factual basis of the
necessary. Proof that a legal right has
sustained by the victim. damages, it is also necessary to
been violated is what is only required.
(Philippine Hawk Corporation prove its causal relation to the
It is awarded in the absence of proof
v. Lee, G.R. No. 166869, 16 Feb. defendant’s act. (People v. Manero,
of actual damages.
2010) G.R. Nos. 86883-85, 29 Jan. 1993)
XPN: Damages for loss of XPN: Criminal cases. Moral

earning capacity may be damages may be awarded to the
awarded despite the absence victim in criminal proceedings in
of documentary evidence such amount as the court deems
when: just without need for pleading or
proof of the basis thereof. (People
1. the deceased is self- v. Paredes, G.R. No. 127569, 30 July
employed and earning 1998)
less than the minimum
wage under current labor The amount of P50,000 is usually
laws, in which case, awarded by the Court in case of the
judicial notice may be occurrence of death.
taken of the fact that in the
deceased's line of work no

Torts and Damages
documentary evidence is
available; or
2. the deceased is employed

as a daily wage worker
earning less than the
minimum wage under
current labor laws. (Ibid.)
Special/Ordinary
Special
Ordinary
NOTE: Special damages are those
which exist because of special
NOTE: Ordinary damages are Special
circumstances and for which a
those generally breach of a
debtor in good faith can be held
typical contract.
liable if he had been previously
informed of such circumstances.

2022 GOLDEN NOTES
Civil Law
EXEMPLARY/
TEMPERATE LIQUIDATED
CORRECTIVE
According to purpose
Exemplary or corrective damages

Temperate damages may be
are intended to serve as a deterrent
recovered when the court finds
Liquidated damages are frequently to serious wrong doings, and as a
that some pecuniary loss has been
agreed upon by the parties, either vindication of undue sufferings and
suffered but its amount cannot,
by way of penalty or in order to wanton invasion of the rights of an
from the nature of the case, be
avoid controversy on the amount of injured party or a punishment for
proved with certainty. (Imperial v.
damages. those guilty of outrageous conduct.
Heirs of Bayaban, G.R. No. 197626,
(People v. Orilla, G.R. Nos. 148939-
03 Oct. 2018)
40, 13 Feb. 2004)
According to manner of determination

necessary.
No proof of pecuniary loss is 1. That the claimant is entitled to

necessary. When the court is moral, temperate or compensatory
convinced that there has been a damages (Art. 2243, NCC; B. F. Metal
pecuniary loss, the judge is v. Lomotan, G.R. No. 170813, 16 Apr.
empowered to calculate moderate 2008); and
necessary. If intended as a penalty
damages rather than let the
in obligations with a penal clause,
complainant suffer without 2. That the crime was committed
proof of actual damages suffered by
redress. (GSIS v. Labung-Deang, G.R. with one or more aggravating
the creditor is not necessary in
No. 135644, 17 Sep. 2001) circumstances (Art. 2230, NCC), or
order that the penalty may be
the quasi-delict was committed
demanded. (Art. 1228, NCC)
Must be reasonable under the with gross negligence (Art. 2231,
circumstances. (Imperial v. Heirs of NCC), or in contracts and quasi-
Bayaban, G.R. No. 197626, 03 Oct. contracts the act must be
2018) accompanied by bad faith or done
in wanton, fraudulent, oppressive
or malevolent manner. (Art. 2232,
NCC)
Special/Ordinary
Special Special Special

Torts and Damages
ACTUAL AND COMPENSATORY DAMAGES the wrong that has been done, to compensate for the
injury inflicted. (Kabisig Real Wealth Dev., Inc. v.
Actual damages are such compensation or damages Young Builders Corp., G.R. No. 212375, 25 Jan. 2017)
for an injury that will put the injured party in the
position in which he had been before he was injured. Q: Petitioner Wyeth Philippines, Inc. (Wyeth) is
They pertain to such injuries or losses that are the project owner of the "Dryer 3 and Wet
actually sustained and susceptible of measurement. Process Superstructure Works.” In 2007, Wyeth
(Filipinas Systems, Inc. v. MRT Development Corp., invited bidders to submit proposals for its
G.R. Nos. 167829-30, 13 Nov. 2007) project. Respondent SKI Construction Group,
Inc. (SKI) submitted its qualified proposal to
NOTE: To recover damages, the amount of loss must undertake the project for P242,800,000.00, and
not only be capable of proof but must actually be was later on awarded the bid. Subsequently, the
proven and pleaded in Court. (1991, 1996, 2004 Project Manager directed the cessation of all
BAR) construction activities until further notice to
give SKI ample time to address internal issues
Art. 2199 of the Civil Code expressly mandates that regarding its workforce. Wyeth wrote a letter to
“except as provided by law or by stipulation, one is Mapfre, claiming on the bonds. Mapfre later
entitled to an adequate compensation only for such confirmed that Wyeth will not be barred from
pecuniary loss suffered by him as he duly proved.” pursuing its claims against the bonds. However,
Mapfre refused to pay the amount under the
It must be proven with a reasonable degree of payments bond. The parties failed to reach a
certainty, premised upon competent proof or the settlement but eventually agreed to resolve the
best evidence obtainable. (Metro Rail Transit Dev’t. dispute through arbitration before the
Corp. v. Gammon Phils., Inc., G.R. No. 200401, 17 Jan. Construction Industry Arbitration Commission
2018) (Commission).
Kinds of Actual or Compensatory Damages After the conduct of hearings, Arbitral Tribunal
held that while Wyeth suffered pecuniary loss,
1. Damnum Emergens/Dano Emergente (actual the evidence it submitted were not clear and
damages) – all the natural and probable convincing as to establish actual damages.
consequence of the act or omission complained Hence, the Tribunal applied Art. 2224 of the NCC
of, classified as one for the loss of what a person and the parties' agreement on liquidated
already possesses. damages as measure for temperate damages. It
2. Lucrum Cessans/Lucro Cesante (compensatory awarded Wyeth temperate damages amounting
damages) – for failure to receive, as benefit, that to P24,280,000.00. Upon appeal, the Court of
which would have pertained to him (expected Appeals held that that while SKI is entitled to the
profits). (Filipinas Synthetic v. De Los Santos, G.R. value of rebars, formworks, and costs of repair,
No. 152033, 16 Mar. 2011) the amount cannot be established with
certainty, thus, the Court of Appeals only
NOTE: Both actual and compensatory damages can awarded SKI temperate damages. It also held
be granted at the same time to the plaintiff as that the Arbitral Tribunal erred in awarding
provided under Art. 2200, NCC. In other words, temperate damages to Wyeth, and instead
there are two components to actual damages. (RCPI awarded actual damages amounting to
v. CA, G.R. No. L-55194, 26 Feb. 1981) P90,717,632.06.
Purpose of the law in awarding actual damages A) Is Wyeth entitled to actual damages?
B) Is SKI entitled to temperate damages?
Actual or compensatory damages proceed from a
sense of natural justice and are designed to repair

2022 GOLDEN NOTES
Civil Law
A: before one can be entitled to damages (PNOC

A) NO. Actual damages under Art. 2199 of the Civil Shipping and Transport Corp. v. CA, G.R. No. 107518,
Code provides that, except as provided by law or by 08 Oct. 1998)
stipulation, one is entitled to an adequate
compensation only for such pecuniary loss suffered XPN: Loss need not be proved in the following cases:
by him as he has duly proved. Such compensation is
referred to as actual or compensatory damages. 1. Liquidated damages have been previously
agreed upon (Art. 2226, NCC);
Thus, actual damages must be proven with a
reasonable degree of certainty, premised upon NOTE: Liquidated damages take the place of
competent proof or the best evidence obtainable actual damages except when additional
like official receipts and invoices, as explained in damages are incurred.
Metro Rail Transit Development Corp. v. Gammon
Philippines. 2. Forfeiture of bonds in favor of the government
for the purpose of promoting public interest or
Actual damages constitute compensation for policy; (Far Eastern Surety and Insurance Co. v.
sustained measurable losses. It is never presumed CA, G.R. No. L-12019, 16 Oct. 1958)
or based on personal knowledge of the court.
3. Loss is presumed; (Manzanares v. Moreta, G.R.
B) YES. Art. 2224 of the Civil Code provides for No. L-12306, 22 Oct. 1918)
temperate damages, as follows: “Art. 2224.
Temperate or moderate damages, which are more 4. When the penalty clause is agreed upon in the
than nominal but less than compensatory damages, contract between the parties; (Art. 1226, NCC)
may be recovered when the court finds that some and
pecuniary loss has been suffered but its amount
cannot, from the nature of the case, be proved with 5. When death is caused within the contemplation
certainty.” of Art. 2206. (Pineda, 2009)
In concluding that respondent SKI's claims for the Civil liability ex delicto v. actual or compensatory
value of rebars, formworks, safety harness damages distinguished
equipment, and costs of the repair were validly
proven, the Arbitral Tribunal thoroughly examined Civil Indemnity Actual or Compensatory
and considered the evidence presented by the Ex Delicto Damages
parties. Thus, its evaluation of the evidence and To be recoverable must
Can be awarded
findings of fact must be upheld. (Wyeth Philippines additionally be established
without need of
Inc. v. CIAC., G.R. No. 220045-48, 22 June 2020) with reasonable degree of
further proof
certainty. (Metro Rail Transit
than the fact of
When victim is unknown Dev’t. Corp. v. Gammon Phils.,
commission of
Inc., G.R. No. 200401, 17 Jan.
the felony.
The fact that the victim remains unknown and no 2018)
heirs have come forward does not warrant the
elimination of civil indemnity. (People v. De Guzman, NOTE: Rule applies to civil and criminal cases.
G.R. No. 92537, 25 Apr. 1994) (People v. Cañares, G.R. No. 188323, 21 Feb. 2011)
Proving the loss GR: Documentary evidence should be presented to

substantiate the claim for damages for loss of
GR: Loss must be proven with a reasonable degree earning capacity.
of certainty, premised upon competent proof or best
evidence obtainable of the actual amount thereof

Torts and Damages
XPN: Damages for loss of earning capacity may be (ACI Philippines, Inc. v. Coquia, G.R. No. 174466, 14
awarded despite the absence of documentary July 2008)
evidence when:
Abrazaldo Doctrine
1. The deceased is self-employed and earning less
than the minimum wage under current labor Temperate damages may be awarded where the
laws, in which case, judicial notice may be taken amount of the actual damages that the heirs are
of the fact that in the deceased's line of work no entitled to cannot be shown. Such temperate
documentary evidence is available; or damages, considering current jurisprudence fixing
the indemnity for death at P50,000, should be one
2. The deceased is employed as a daily wage worker half thereof, which is P25,000. (People v. Abrazaldo,
earning less than the minimum wage under G.R. No. 124392, 07 Feb. 2003)
current labor laws. (Philippine Hawk
Corporation v. Vivian Tan Lee, G.R. No. 166869, Coverage of actual damages
16 Feb. 2010)
Aside from actual pecuniary loss, actual damages
If amount admitted by a party also cover the following:
Even if there are no receipts and yet the amount a. Loss or impairment of earning capacity in cases of
claimed is admitted by a party, it should be granted. temporary or permanent personal injury; or
(People v. Abolidor, G.R. No. 147231, 18 Feb. 2004) b. Injury to the plaintiff’s business standing or
commercial credit. (Art. 2205, NCC)
Docketing fees must be based on allegation of
actual damages Loss or impairment of earning capacity
The amount of damages claimed must be alleged not To be compensated for loss of earning capacity, it is
only in the body of the complaint, petition or answer not necessary that the victim be gainfully employed
but also in the prayer portion thereof. (Siapno v. at the time of the injury or death. Actual damages
Manalo, G.R. No. 132260, 30 Aug. 2005) are awarded not for the loss of earnings but for the
loss of capacity to earn money. (People v. Sanchez,
“Such other relief as this Honorable Court may G.R. Nos. 121039-45, 18 Oct. 2001)
deem reasonable”
Determination of amount of damages
The prayer for “such other relief as this Honorable recoverable
Court may deem reasonable” may include actual
damages although not alleged in the answer, if and Much is left to the discretion of the court
when they are proved. (Heirs of Basilisa Justiva v. considering the moral and material damages
Gustilo, G.R. No. L-16396, 31 Jan. 1963) involved. There can be no exact or uniform rule for
measuring the value of a human life. (Villa Rey
NOTE: It is broad enough to comprehend an Transit, Inc., v. CA, G.R. No. L-25499, 18 Feb. 1970)
application as well for nominal damages and even
exemplary damages. The life expectancy of the deceased or of the
beneficiary, whichever is shorter, is an important
Art. 21 of NCC cannot be used as a basis for factor. Other factors that are usually considered are:
award of actual damages
1. Pecuniary loss to plaintiff or beneficiary;
Art. 21 of the NCC cannot be used as a basis for 2. Loss of support;
award of actual damages when there is a pre- 3. Loss of service;
existing contractual relation between the parties. 4. Loss of society;

2022 GOLDEN NOTES
Civil Law
5. Mental suffering of beneficiaries; and In fixing the amount of that support, the "necessary
6. Medical and funeral expenses. (Ibid.) expenses of his own living" should be deducted from
his earnings. Earning capacity, as an element of
NOTE: The formula that has gained acceptance over damages to one's estate for his death by wrongful
time has limited recovery to net earning capacity. act, is necessarily his net earning capacity or his
The premise is obviously that net earning capacity capacity to acquire money, less the necessary
is the person’s capacity to acquire money, less the expense for his own living. (Villa Rey Transit, Inc. v.
necessary expense for his own living. (Philtranco CA, et al., G.R. No. L-25499, 18 Feb. 1970)
Service Enterprises v. Felix Paras and Inland
Trailways Inc., G.R. No. 161909, 25 Apr. 2012) Medical expenses are in the nature of actual
damages
Computation of Unearned Income
Medical expenses are in the nature of actual
Formula: damages which should be duly proved and the
Net Earning Capacity (x) = Life Expectancy x (Gross award for actual damages cannot be made on the
Annual Income less Living Expenses). (People v. basis of the doctor’s prescription alone. (People v.
Asilan, G.R. No. 188322, 11 Apr. 2012) Enguito, G.R. No. 128812, 28 Feb. 2000)
Legend: Adjustment fees do not constitute actual

damages
Net Earning Capacity = Life Expectancy x (Gross
Annual Income – Living Expenses) Adjustment fees and expense of drivers in the
Life Expectancy = 2/3 x (80 – Age of the Deceased) recovery of cargo lost at sea done voluntarily,
Living Expenses = 50% of gross annual income though unsuccessfully, does not constitute actual
damages. (Schmitz Transport & Brokerage Corp. v.
Basis of Life Expectancy Transport Venture, Inc., G.R. No. 150255, 22 Apr.
2005)
Life expectancy should not be based on the
retirement age of government employees, which is Injury to business standing and commercial
pegged at 65. In calculating the life expectancy of an credit of plaintiff
individual for the purpose of determining loss of
earning capacity under Art. 2206 (1), NCC, it is Compensatory damages may be awarded in the
assumed that the deceased would have earned concept of temperate damages for injury to business
income even after retirement from a particular job. reputation or business standing, loss of goodwill,
(Smith Bell Dodwell Shipping Agency Corp. v. Borja, and loss of customers who shifted their patronage
G.R. No. 143008, 10 June 2002) to competitors. (Art. 2205, NCC; Coca – Cola Bottlers
Philippines Inc. v. Sps. Bernardo, G.R. No. 190667, 07
Heirs cannot claim as damages the full amount Nov. 2016)
of earnings of the deceased
ATTORNEY’S FEES AND
Said damages consist, not of the full amount of his EXPENSES OF LITIGATION
earnings, but of the support they received or would
have received from him had he not died in Two concepts of Attorney’s fees
consequence of the negligence of the bus’s agent.
Stated otherwise, the amount recoverable is not loss 1. Ordinary – reasonable compensation paid to a
of the entire earning, but rather the loss of that lawyer by this client for the legal services he has
portion of the earnings which the beneficiary would rendered to the latter.
have received. In other words, only net earnings, not
gross earning, are to be considered.

Torts and Damages
2. Extraordinary – awarded by the court to the 7. Clearly Unfounded civil action or proceeding
successful litigant to be paid by the losing party against plaintiff;
as indemnity for damages. (Aquino v. Casabar, 8. When Double judicial costs are awarded;
G.R. No. 191470, 26 Jan. 2015) 9. When Exemplary damages are awarded;
10. Defendant acted in gross & evident bad faith in
They are actual damages due to the plaintiff. Refusing to satisfy plaintiff's just & demandable
claim; and
Payable not only to the lawyer but to the client, 11. When defendant's act or omission Compelled
unless they have agreed that the award shall plaintiff to litigate with third persons or incur
pertain to the lawyer as additional expenses to protect his interest.
compensation or as part thereof. (Benedicto v.
Villaflores, G.R. No. 185020, 06 Oct. 2010) NOTE: It was held that, in respect of attorney’s fees,
where a claim therefore arises out of the filing of the
NOTE: In all cases, the attorney’s fees and complaint, they too should be considered as in the
expenses of litigation must be reasonable. (Art. nature of a compulsory counterclaim. They should
2208, NCC) be pleaded or prayed for in the answer to the
complaint in order to be recoverable, otherwise,
ORDINARY EXTRAORDINARY they would be barred. (Tiu Po v. Bautista, G.R. No. L-
Nature 55514, 17 Mar. 1981)
The reasonable An indemnity for

Furthermore, moral damages and attorney’s fees
compensation paid to a damages ordered by
cannot be consolidated for they are different in
lawyer for the legal the court to be paid by
nature and each must be separately determined.
services rendered to a the losing to the
(Philippine Veterans Bank v. NLRC, G.R. No. 130439,
client who has engaged prevailing party in
26 Oct. 1999) Attorney’s fees are recoverable only in
him. litigation.
the concept of actual not moral damages. (Mirasol v.
Basis Hon. dela Cruz, G.R. No. L-32552, 31 July 1978)
The fact of
In cases authorized by
employment of the Attorney’s fees are not available when the
law.
lawyer by the client. defendant employer is not guilty of bad faith.
To whom payable (Dalusong v. Eagle Clark Shipping Philippines, Inc.,
G.R. No. 204233, 03 Sept. 2014)
Lawyer Client
Q: Philippine Transmarine Carriers, Inc. for and

Recovery of attorney’s fees as actual damages
on behalf of its foreign principal, respondent
(1991, 1994, 2002 BAR)
Marine Shipmanagement Ltd. hired petitioner
as a Chief Cook while carrying provisions,
GR: Attorney’s fees cannot be recovered as actual
suddenly felt a severe pain on his waist,
damages.
abdomen, and down to his left scrotum. As the
pain persisted for a number of days, he was
XPNs: (S-W-I-S-S–M-U-D-E-R-C)
airlifted to a hospital in Belgium where he was
1. Stipulation between parties;
diagnosed with "infection with the need to rule
2. Recovery of Wages of household helpers,
out Epididymitis and Prostatitis" and advised to
laborers and skilled workers;
undergo repatriation. Upon arrival in the
3. Actions for Indemnity under workmen's
Philippines, petitioner claimed that he
compensation and employer liability laws;
immediately reported to PTCI and asked for
4. Legal Support actions;
referral for further treatment but was ignored.
5. Separate civil action to recover civil liability
Thus, he filed a complaint for, inter alia,
arising from crime;
permanent and total disability benefits against
6. Malicious prosecution;

2022 GOLDEN NOTES
Civil Law
PTCI, Marine, and respondent Captain Marlon L. Damage to or loss of real property – value at the
Malanao as the crewing manager (respondents). time of destruction, or market value, plus, in proper
Was it proper for the CA to delete the award of cases, damages for the loss of use during the period
attorney’s fees? before replacement, value of use of premises, in case
of mere deprivation of possession.
A: NO. The instances when these may be awarded
are enumerated in Art. 2208 of the Civil Code and is 2. Personal injury
payable not to the lawyer but to the client, unless
the client and his lawyer have agreed that the award Medical Expenses - plaintiff is entitled to the amount
shall accrue to the lawyer as additional or part of of medical expenses for the injury suffered as a
compensation. result of the defendant’s tortuous act.
In this case, suffice it to say that the CA erred in
deleting the award of attorney's fees, considering NOTE: A person is entitled to the physical integrity
that petitioner was found to be entitled to of his or her body; if that integrity is violated or
permanent and total disability benefits and was diminished, actual injury is suffered for which actual
forced to litigate to protect his valid claim. Thus, the or compensatory damages are due and assessable.
reinstatement of such award is in order. (Gatchalian v. Delim G.R. No. L-56487, 21 Oct. 1991)
(Horlador, v. Philippine Transmarine Carriers, Inc.,
Marine Shipmanagement, G.R. No. 236576, 05 Sept. Rape - For simple rape or qualified rape, where the
2018). penalty imposed is death but reduced to reclusion
perpetua because of R.A. 9346, the civil indemnity is
EXTENT OR SCOPE OF ACTUAL DAMAGES IN P100,000.00. (People v. Jugueta, G.R. No. 202124, 05
CONTRACTS AND QUASI-CONTRACTS April 2016)
Amount of Actual Damages NOTE: Civil indemnity is mandatory upon the

finding of the fact of rape; it is distinct from and
The amount of actual damages should be that which should not be denominated as moral damages
would put the plaintiff in the same position as he which are based on different jural foundations and
would have been if he had not sustained the wrong assessed by the court in the exercise of sound
for which he is claiming compensation or discretion. (People v. Tabayan, G.R. No. 190620, 18
reparation: June 2014)
1. Property 3. Death – P100,000.00 by way of civil indemnity ex

delicto. (People v. Jugueta, G.R. No. 202124, 05
Damage to or loss of personal property - the plaintiff Apr. 2016)
is entitled to their value at the time of the
destruction, that is, normally, the sum of money 4. Physical Injuries – Civil indemnity of P50,000.00
which he would have to pay in the market for for the victims who suffered mortal/fatal
identical or essentially similar goods, plus in a wounds and could have died if not for a timely
proper case, damages for the loss of the use during medical intervention, and a civil indemnity of
the period before replacement. (Marikina Auto Line P25,000.00 for the victims who suffered non-
v. People G.R. No. 152040, 31 Mar. 2006) mortal/non-fatal injuries. (Ibid.)
Damage to or loss of profit-earning chattels - what Q: MV Lorcon Luzon, a commercial vessel owned
has to be assessed is the value of the chattel to its by Lorenzo Shipping, hit and rammed National
owner as a going concern at the time and place of Power Corporation’s Power Barge 104. NPC
the loss. (PNOC Shipping v. CA, G.R. No. 107518, 08 submitted pieces of evidence to the court as
Mar. 1998) basis for actual damages it has suffered.
However, Lorenzo Shipping pointed out that

Torts and Damages
these pieces of evidence fall short of the 2. For Quasi-contracts:

standard required for proving pecuniary loss,
which shall be the basis for awarding actual a. In cases where exemplary damages are to
damages. The CA awarded temperate damages be awarded such as in Art. 2232 of the NCC;
to NPC in lieu of actual damages as the amount or
of damages was not proven by NPC. Is Lorenzo b. Defendant has done his best to lessen the
Shipping liable for actual damages? plaintiff’s injury or loss.
A: NO. Art. 2199 of the NCC spells out the basic 3. For Quasi-delicts:
requirement that compensation by way of actual
damages is awarded only to the extent that a. That the loss would have resulted in any
pecuniary loss is proven. NPC failed to establish the event because of the negligence or
precise amount of pecuniary loss it suffered. omission of another, and where such
Nevertheless, it remains that Power Barge 104 negligence or omission is the immediate
sustained damage — which may be reckoned and proximate cause of the damage or
financially — as a result of the MV Lorcon Luzon's injury; or
ramming into it. National Power Corporation b. Defendant has done his best to lessen the
suffered pecuniary loss, albeit its precise extent or plaintiff’s injury or loss. (Pineda, 2009)
amount had not been established. Accordingly, the
Court of Appeals' conclusion that National Power 4. For Crimes:
Corporation is entitled to temperate damages
should be sustained. (Lorenzo Shipping Corp. v. NPC, The damages to be adjudicated may be respectively
G.R. No. 181683, 07 Oct. 2015) increased or lessened according to the aggravating
or mitigating circumstances. (Art. 2204, NCC)
Mitigation of Actual Damages
IN CRIMES AND QUASI-DELICTS
Actual damages can be mitigated in the following
cases: The amount of damages for death caused by a crime
or quasi-delict shall be at least P75,000.00 even
1. For Contracts: though there may have been mitigating
circumstances. (People v. Tabarnero, G.R. No.
a. Violation of terms of the contract by the 168169, 24 Feb. 2010)
plaintiff himself;
b. Enjoyment of benefit under the contract by In addition to the amount to be awarded, Art. 2206
the plaintiff himself; of the NCC provides that the defendant shall also be
c. Defendant acted upon advice of counsel in liable for the following:
cases where the exemplary damages are to
be awarded such as under Arts. 2230, 2231 1. Loss of the earning capacity of the deceased,
and 2232; or and the indemnity shall be paid to the heirs of
d. Defendant has done his best to lessen the the latter; such indemnity shall in every case be
plaintiff’s injury or loss. assessed and awarded by the court, unless the
deceased on account of permanent physical
NOTE: Award of compensatory damages for breach disability not caused by the defendant, had no
of contract may be executed pending appeal, but not earning capacity at the time of his death;
the moral and exemplary damages which must
await the final determination of the main cases. 2. If the deceased was obliged to give support
(Radio Communication of the Philippines, Inc. v. according to the provisions of Art. 291 of the
Lantin, G.R. No. L-59311, 31 Jan. 1985) NCC, the recipient who is not an heir called to
the decedent's inheritance by the law of testate

2022 GOLDEN NOTES
Civil Law
or intestate succession, may demand support omission, of which defendant, or some person for
from the person causing the death, for a period whose-acts he must respond, was guilty; and (3) the
not exceeding five years, the exact duration to connection of cause and effect between such
be fixed by the court; or negligence and the damages. Caballes was grossly
negligent in allowing Aparra to drive the truck
NOTE: The article only mentioned heirs. despite being an inexperienced driver. Aparra's
Consequently, it cannot speak of devisees and inexperience caused the accident that led to the
legatees who are receiving support from the deaths of Rodolfo and Monalisa. It is undisputed that
deceased. the deaths of Vivian's husband and daughter caused
damage to her. Clearly, the requisites for a quasi-
3. The spouse, legitimate and illegitimate delict are present in this case.
descendants and ascendants of the deceased
may demand moral damages for mental anguish B) YES. Art. 2206 provides that the amount of
by reason of the death of the deceased. (1992, damages for death caused by a crime or quasi-delict
1993, 2007 BAR) shall be at least three thousand pesos [P3,000.00],
even though there may have been mitigating
NOTE: In case of death caused by quasi-delict, the circumstances. In addition, the defendant shall be
brother of the deceased is not entitled to the award liable, among others, for the loss of the earning
of moral damages based on Art. 2206 of the NCC. capacity of the deceased, and the indemnity shall be
(Sulpicio Lines Inc. v. Curso, G.R. No. 157009, 17 Mar. paid to the heirs of the latter; such indemnity shall
2010) in every case be assessed and awarded by the court,
unless the deceased on account of permanent
Q: Rodolfo, Monalisa, Johanna and Abellana physical disability not caused by the defendant, had
arrived at the municipal wharf of Jetafe, Bohol. no earning capacity at the time of his death. The
They boarded a cargo truck which would indemnity for the deceased's lost earning capacity is
transfer them from the wharf to Poblacion, meant to compensate the heirs for the income they
Jetafe. While passengers were getting on the would have received had the deceased continued to
truck, Simolde called Caballes, the official truck live. (Abellana v. Aparra, Jr., G.R. No. 188493, 13 Dec.
driver. Caballes approached Simolde but left the 2017)
engine running. While Simolde and Caballes
were talking, Aparra, chief diesel mechanic, MORAL DAMAGES
started driving the truck. Upon seeing the truck
move, Caballes rushed to the truck and sat It includes physical suffering, mental anguish, fright,
beside Aparra. However, instead of taking serious anxiety, besmirched reputation, wounded
control of the vehicle, Caballes allowed Aparra feelings, moral shock, social humiliation, and similar
to drive. Shortly thereafter, Aparra lost control injury. (Art. 2217, NCC)
of the truck and they fell off the wharf.
Consequently, Rodolfo and Monalisa died while Although incapable of pecuniary computation,
Johanna and Abellana were injured. Vivian, the moral damages, nevertheless, must somehow be
widow of Rodolfo and the mother of Johanna, proportional to and in approximation of the
filed a complaint. suffering inflicted. Such damages, to be recoverable,
must be the proximate result of a wrongful act or
A) Whether or not quasi-delict was committed? omission, the factual basis for which is satisfactorily
B) Whether or not loss of earning capacity established by the aggrieved party. (Expertravel &
should be awarded to Vivian, wife of Rodolfo? Tours, Inc. v. CA, G.R. No. 152392, 26 May 2005)
A: It is awarded to enable the injured party to obtain

A) YES. The requisites for quasi-delict are: (1) means, diversions or amusement that will serve to
damages to the plaintiff; (2) negligence, by act or alleviate the moral suffering he has undergone by

Torts and Damages
reason of the defendant’s culpable action. NOTE: Moral damages apply both to natural and
(Prudenciado v. Alliance Transport System, Inc., G.R. juridical persons. Moral damages are generally not
No. L-33836, March 16, 1987) awarded in favor of a juridical person, unless it
enjoys a good reputation that was debased by the
NOTE: A case of simple negligence does not justify offending party resulting in social humiliation.
an award of moral damages. Such is proper only in (ABS-CBN v. CA, G.R. No. 128690, 21 Jan. 1999)
cases of gross negligence amounting to bad faith.
(Villanueva v. Salvador, G.R. No. 139436, 25 Jan. GR: A judicial person is generally not entitled to
2006) moral damages because, unlike a natural person, it
cannot experience physical suffering or such
Q: Rosalie Sy Ayson discovered that the Fil- sentiments as wounded feelings, serious anxiety,
Estate and Fairways illegally entered into her metal anguish or moral shock.
property when it constructed its golf course.
Despite receipt of a notice to vacate said XPN: A corporation may have a good reputation
property, the latter still continued to encroach which, if besmirched, may also be a ground for the
the subject land. On the other hand, Fil-Estate award of moral damages. (Mambulao Lumber Co. v.
and Fairways contend that it was in good faith in PNB, G.R. No. L-22973, January 30, 1968)
constructing the golf course. It contended that a
certain Villanueva, the former owner of the NOTE: Art. 2219 (7) of the NCC expressly authorizes
subject land, gave assurances that Ayson will the recovery of moral damages in cases of libel,
agree to a land swap which will be mutually slander or any other form of defamation. [It] does
beneficial for the parties. Ayson thereafter filed not qualify whether the plaintiff is a natural or
a complaint for damages. juridical person. Therefore, a juridical person such
as a corporation can validly complain for libel or any
Assuming that the case will prosper, what kind other form of defamation and claim for moral
of damages is she entitled to? damages. (Filipinas Broadcasting Network Inc. v.
AMEC-BCCM, G.R. No. 141994, 17 Jan. 2005)
A: Ayson is entitled to recover moral and exemplary
damages. Moral damages are designed to Q: BNL Management owned six (6)
compensate and alleviate the physical suffering, condominium units at the Imperial Bayfront
mental anguish, fright, serious anxiety, besmirched Tower Condominium. BNL Management,
reputation, wounded feelings, moral shock, social through its president Romeo David (David),
humiliation, and similar harm unjustly caused to a wrote a letter and brought raised their concerns.
person. Exemplary damages may be imposed by It stated therein that if problems remain
way of example or correction for public good if the unresolved, it will withhold all future payments
guilty party acted in a wanton, fraudulent, reckless, of association dues until the issue are resolved
oppressive or malevolent manner. satisfactorily. Sevilla sent a letter to BNL
Management containing a breakdown of its
Here, Ayson can recover moral damages as she was arrears in the payment of association dues.
made to suffer sleepless nights and mental anguish
because her right as the owner of the subject lot was BNL Management received the Second Notice of
violated by Fil-Estate in constructing its golf course Billing informing it of its pending arrears
in the latter's property. She is also entitled to representing unpaid association dues. The
exemplary damages since despite the notice to Second Notice also contained a warning that
vacate, the latter still proceeded to construct its golf after a third notice had been sent, the
course. (Ayson v. Fil-Estate Properties, Inc., G.R. No. Association would terminate utility services.
223254, 01 Dec. 2016) BNL Management received the Third Notice of
Billing, still, did not pay the arrears. Because of
this, the Association's Board of Directors, who

2022 GOLDEN NOTES
Civil Law
are the respondents herein, resolved to been presented before the Labor Arbiter, it was
disconnect the electricity and water services in not disputed that Mabunay was under the care
the six (6) units owned by BNL Management. of Dr. Cruz from the time he was medically
This prompted BNL Management to file a repatriated.
Complaint against Uy, et al. for damages.
Is Mabuhay entitled to moral and exemplary
Is BML Management entitled to moral damages? damages when Sharp Sea withheld the company
physician’s medical report showing that he was
A: NO. Petitioner BNL Management, being a diagnosed of Grade 8 disability?
corporation, is not entitled to moral damages. There
is no standing doctrine that corporations are, as a A: YES. Mabunay is entitled to moral and exemplary
matter of right, entitled to moral damages. The damages because Sharp Sea was found to be in bad
existing rule is that moral damages are not awarded faith. Bad faith is not simply bad judgment or
to a corporation since it is incapable of feelings or negligence. "It imports a dishonest purpose or some
mental anguish. Exceptions, if any, only apply pro moral obliquity and conscious doing of wrong. It
hac vice. There is no showing here that an exception means a breach of a known duty through some
should apply pro hac vice in favor of petitioner BNL motive or interest or ill-will that partakes of the
Management. (BNL Management Corporation v. Uy, nature of fraud."
G.R. No. 210297, 03 Apr. 2019)
SC ruled that by not timely releasing Dr. Cruz's
Q: Mabunay who is a seafarer was hired by interim disability grading, petitioners revealed their
Sharpe Sea. One day after boarding the ship, intention to leave respondent in the dark regarding
Mabunay slipped and hit his back on the his future as a seafarer and forced him to seek
purifier, while he was cleaning the second floor diagnosis from private physicians. Petitioners' bad
of the engine room. Mabunay then informed 2nd faith was further exacerbated when they tried to
Engineer Castro who advised him to continue invalidate the findings of respondent's private
with his assigned duties. Despite the persistent physicians, for his supposed failure to move for the
pain in his back and numbness in his legs, appointment of a third-party physician as required
Mabunay continued working for 3 days, until by the POEA-SEC, despite their own deliberate
Chief Engineer Manuel De Leon allowed him to concealment of their physician's interim diagnosis
have a medical checkup when the ship docked in from respondent and the labor tribunals. (Sharpe
Nanjing, China. He was diagnosed with chest and Sea v. Mabunay Jr., G.R. 206113, 06 Nov. 2017)
spinal bone damage and was declared unfit to
work. He was then repatriated to Manila. Act or omission must be with bad faith
Mabunay reported to Sharpe Sea office and was
told to report to its company designated Moral damages are recoverable only if the party
physician. Mabunay underwent surgery and was from whom it is claimed has acted fraudulently or in
discharged from the hospital. bad faith or in wanton disregard of his contractual
obligations. (Yamauchi v. Suñiga, G.R. No. 199513, 18
Mabunay filed a complaint against Sharpe Sea Apr. 2018)
for the payment of medical expenses, total
disability benefits, damages, and attorney’s fees. Bad faith imports a dishonest purpose or some
LA ruled in favor of Mabunay. NLRC affirmed moral obliquity and conscious doing of a wrong, a
LA’s ruling. In its MR, Sharp Sea attached the breach of known duty through some motive or
medical report showing the findings of the interest or ill will that partakes of the nature of
company designated physician. The medical fraud; it is a question of intention, which can be
report showed that Mabunay is diagnosed of inferred from one’s conduct and/or
Grade 8 disability. The NLRC pointed out that contemporaneous statements. (Peralta v. Raval, G.R.
while Dr. Cruz's medical report might not have No. 188467, 29 Mar. 2017)

Torts and Damages
NOTE: Unless there is a clear showing of malice or would be a fair amount of moral damages, since
bad faith or gross negligence, a public officer is not each case must be governed by its own peculiar
liable for moral and exemplary damages for acts circumstances. (PNB v. CA, G.R. No. 116181, 06 Jan.
done in the performance of duties. (Rebadulla v. 1997)
Republic, G.R. No. 222159, 31 Jan. 2018)
When victim bearing a child
Elements required for recovery (1991, 2002,
2003 BAR) (I-P-A-D) An award for the death of a person does not cover
the case of an unborn foetus that is not endowed
1. An Injury clearly sustained by the claimant; with personality. The damages recoverable by the
2. A culpable Act or omission factually parents of an unborn child are limited to moral
established; damages for the illegal arrest of the normal
3. The act or omission must be the Proximate development of the foetus on account of distress
result of the physical suffering, mental anguish, and anguish attendant to its loss. (Geluz v. CA, G.R.
fright, serious anxiety, besmirched reputation, No. L-16439, 20 July 1961)
wounded feelings, moral shock, social
humiliation and similar injury; and wrongful act Recovery of Moral Damages
or omission of the defendant as the proximate
cause of the injury sustained by the claimant; GR: To recover moral damages, the plaintiff must
and allege and prove:
NOTE: The person claiming moral damages 1. The factual basis for moral damages; and
must prove the existence of bad faith by clear 2. The causal relation to the defendant’s act
and convincing evidence for the law always
presumes good faith; it is not enough that one XPN: Moral damages may be awarded to the victim
merely suffered sleepless nights, mental in criminal proceedings without the need for
anguish, serious anxiety as the result of the pleading of proof or the basis thereof.
actuations of the other party. (Ong Bun v. Bank NOTE: Moral damages are mandatory without need
of the Phil. Islands, G.R. No. 212362, 14 Mar. of allegation and proof other than the death of the
2018) victim, owing to the fact of the commission of
murder or homicide. (Espineli v. People, G.R. No.
4. The award of Damages predicated on any of the 179535, 09 June 2014)
cases stated in Art. 2219. (Amado v. Salvador,
G.R. No. 171401, 13 Dec. 2007) Award of moral damages to a corporation
Court given discretion to determine moral GR: Juridical person is generally not entitled to
damages moral damages because, unlike a natural person, it
cannot experience physical suffering or such
Trial courts are given discretion to determine moral sentiments as wounded feelings, serious anxiety,
damages and the Court of Appeals can only modify mental anguish or moral shock. (Filipinas
or change the amount awarded when they are Broadcasting Network v. Ago Medical and
palpably and scandalously excessive “so as to Educational Center-Bicol, G.R. No. 141994, 17 Jan.
indicate that it was the result of passion, prejudice 2005)
or corruption on the part of the trial court.”
(Yuchengco v. Manila Chronicle Publishing Corp., G.R. XPN: A corporation may have a good reputation
No. 184315, 25 Nov. 2009) which, if besmirched, may also be a ground for the
award of moral damages. (Ibid.)
Moral damages are not punitive in nature. There is
no hard and fast rule in the determination of what

2022 GOLDEN NOTES
Civil Law
Moral damages recoverable under culpa award of moral damages. (People v. Delen, G.R. No.
contractual 194446, 21 Apr. 2014)
GR: Moral damages are not recoverable in actions NOTE: The term “physical injury” as used in Art.
for damages predicated on a breach of contract. 2219(1) of the NCC, includes death, and no proof of
pecuniary loss is necessary in order that such
XPNS: Moral damages may be awarded in culpa damages may be adjudicated. (People v. Tambis, G. R
contractual, involving common carriers in the No. 124452, 28 July 1999)
following instances:
Tortious acts referred to in chapter of human
a. Where the passenger died by reason of relations of the NCC
negligence of the carrier (Art. 1764, NCC); or
b. Where it is proved that the carrier is guilty of The plaintiff may recover moral damages in the
fraud or bad faith, even if the death does not following instances:
result. (Fores v. Mirand, G.R. No. L-12163, 04
Mar. 1959; Pineda, 2010) 1. Willful acts contrary to morals, good customs or
public policy;
NOTE: Even if the negligence of the bank is not 2. Disrespect to the dignity, personality, privacy
attended with malice and bad faith, moral damages and peace of mind of neighbors and other
may be granted. (Cavite Development Bank v. Lim, persons;
G.R. No. 131679, 01 Feb. 2000) 3. Refusal or neglect of a public servant to perform
his official duty without just cause;
Moral damages may be recovered in the 4. Unfair competition in enterprise or in labor;
following and analogous cases (1996, 2002, 5. Civil action for damages against accused
2004, 2006, 2009 BAR) acquitted on reasonable doubt;
6. Violation of civil rights;
1. A criminal offense resulting in physical injuries; 7. Civil action for damages against city or
2. Quasi-delicts causing physical injuries; municipal police force; and
3. Seduction, abduction, rape, or other lascivious 8. When the trial court finds no reasonable ground
acts; to believe that a crime has been committed after
4. Adultery or concubinage; a preliminary investigation or when the
5. Illegal or arbitrary detention or arrest; prosecutor refuses or fails to institute criminal
6. Illegal search; proceedings.
7. Libel, slander or any other form of defamation;
8. Malicious prosecution; Moral damages may be awarded in appropriate
9. Acts mentioned in Art. 309; and cases referred to in the chapter on human relations
10. Actions referred to in Arts. 21, 26, 27, 28, 29, 30, of the Civil Code (Arts. 19 to 36), without need of
32, 34, and 35 (Art. 2219, NCC). proof that the wrongful act complained of had
caused any physical injury upon the complainant.
NOTE: Art. 2219 of the NCC provides for criminal (Patricio v. Leviste, G.R. No. L-51832, 26 Apr. 1989)
offenses resulting from physical injuries and quasi-
delicts causing physical injuries. Cases where moral damages is mandatory
without need of any proof
Parents of the victim seduced, abducted, raped, or
abused, may also recover moral damages. (Art. 1. Rape cases;
2219, NCC) The prevailing jurisprudence is that the
award of moral damages should be granted jointly NOTE: Moral damages are automatically
to both the victim and her parents. Stated granted in a rape case without need of further
differently, the parents are not entitled to a separate proof other than the fact of its commission. For

Torts and Damages
it is assumed that a rape victim has actually deliberately. Thus, as the grant of moral damages
suffered moral injuries entitling her to such an was not proper, it follows that the grant of
award. (People v. Iroy, G.R. No. 187743, 03 Mar. exemplary damages cannot stand since the Civil
2010) Code provides that exemplary damages are imposed
in addition to moral, temperate, liquidated or
2. Murder cases; and compensatory damages. (Buenaventura v. CA, G.R.
No. 127358, 31 Mar. 2005)
NOTE: Same rule applies in cases of frustrated
murder. Q: An article written by Raffy Tulfo, and was
published in Abante Tonite, reported that a
3. Homicide certain Michael C. Guy (Guy), who was being
investigated for tax fraud, went to former
In robbery and other common crimes, the grant Department of Finance Secretary Juanita
of moral damages is not automatic, unlike in Amatong (Secretary Amatong)'s house to ask for
rape cases. (People v. Taño, G.R. No. 133872, 05 help. Claiming that the article had tainted his
May 2000) reputation, Guy filed a Complaint-Affidavit
against Tulfo and the following representatives
Civil indemnity different from moral damages in of Abante Tonite's publisher.
rape
The RTC convicted Tulfo and Macasaet, et al. of
In rape cases, civil indemnity is different from moral the crime of libel and ordered them to pay Guy:
damages. It is distinct from and should not be (1) ₱5,000,000.00 as actual damages, and (2)
denominated as moral damages which are based on ₱5,000,000.00 as moral damages. The CA
different jural foundations and assessed by the affirmed the RTC’s decision, however, modified
court in the exercise of sound discretion. (People v. it – awarding exemplary damages in the amount
Caldona, G.R. No. 126019, 01 Mar. 2001) of ₱500,000.00 and reduced moral damages to
₱500,000.00. Later on, in its Amended Decision,
NOTE: In criminal proceedings for rape, plaintiff the CA deleted the exemplary damages, as well
need not prove the factual basis for moral damages as the actual damages awarded by the RTC.
as well as the causal relation to the defendant’s act.
A) Is Guy entitled to actual damages?
Amount of award in qualified rape B) Is Guy entitled to exemplary damages
C) Is the reduction of moral damages proper?
For qualified rape, where the penalty imposed is
death but reduced to reclusion perpetua because of A:
R.A. 9346, the amount of damages to be awarded are A) NO. This Court has, time and again, emphasized
as follows: that actual damages cannot be presumed and
courts, in making an award, must point out specific
1. Civil indemnity – P100,000.00; facts which could afford a basis for measuring
2. Moral damages – P100,000.00; and whatever compensatory or actual damages are
3. Exemplary damages – P100,000.00. (People v. borne. An award of actual damages is "dependent
Jugueta, G.R. No. 202124, 05 Apr. 2016) upon competent proof of the damages suffered and
the actual amount thereof. The award must be
Psychological incapacity and moral damages based on the evidence presented, not on the
personal knowledge of the court; and certainly not
By declaring petitioner as psychologically on flimsy, remote, speculative and unsubstantial
incapacitated, the possibility of awarding moral proof."
damages was negated, which should have been
proved by specific evidence that it was done

2022 GOLDEN NOTES
Civil Law
B) YES. Contrary to the Court of Appeals' Cases where nominal damages are awarded
pronouncement, exemplary damages may be
awarded even in the absence of aggravating The court ‘'may award nominal damages in every
circumstances. It may be awarded "where the obligation arising from any source enumerated in
circumstances of the case show the highly Art. 1157, or in every case where any property right
reprehensible or outrageous conduct of the has been invaded. (Art. 2222, NCC)
offender."
The adjudication of nominal damages shall preclude
C) YES. Art. 2219 of the NCC specifically states that further contest upon the right involved and all
moral damages may be recovered in cases of libel, accessory questions, as between the parties to the
slander, or defamation. The amount of moral suit, or their respective heirs and assigns. (Art. 2223,
damages that courts may award depends upon the NCC)
set of circumstances for each case. There is no fixed
standard to determine the amount of moral NOTE: Nominal damages cannot co-exist with
damages to be given. Courts are given the discretion compensatory damages. Nominal damages are
to fix the amount to be awarded in favor of the adjudged in order that a right of the plaintiff, which
injured party, so long as there is sufficient basis for has been violated or invaded by the defendant, may
awarding such amount. (Guy v. Tulfo, G.R. No. be vindicated or recognized, and not for the purpose
213023, 10 Apr. 2019) of indemnifying the plaintiff for any loss suffered by
him. (LRTA v. Navidad, G.R. No. 145804, 06 Feb. 2003)
NOMINAL DAMAGES
Nominal and temperate damages cannot be
Nominal damages are adjudged in order that a right awarded concurrently. The two awards are
of the plaintiff, which has been violated or invaded incompatible. Nominal damages are given in order
by the defendant, may be vindicated or recognized, that a right of plaintiff which has been violated or
and not for the purpose of indemnifying the plaintiff invaded by the defendant, may be vindicated or
for any loss suffered by him. (Art. 2221, NCC) (1991, recognized. On the other hand, temperate damages
1994, 2005 BAR) may be awarded when the court finds that some
pecuniary loss has been suffered but its amount
Nature of Nominal Damages cannot be proved with reasonable certainty.
(Rabuya, 2017)
Nominal damages are small sums fixed by the court
without regard to the extent of the harm done to the Q: On 15 March 2002, the annual meeting of the
injured party. They are damages in name only and stockholders of Philadelphia School, Inc. (“PSI”)
are allowed simply in recognition of a technical was held, wherein a new board of directors was
injury based on a violation of a legal right. (Robes- elected, a transfer of certain shares was
Francisco Realty v. CFI, G.R. No. L-41093, 30 Oct. approved, and a 300% stock dividend was
1978) distributed. During the meeting, King was asked
to leave the board room because allegedly, he
Elements of Nominal Damages was not a PSI stockholder, while Lim was
allowed to vote only for one share during the
1. Plaintiff has a right; elections despite the proxies he held for other
2. Such right is violated; and stockholders who were his brothers.
3. The purpose of awarding damages is to
vindicate or recognize the right violated. Prior to the meeting, the SEC and the RTC had
previously ordered that the 1997 General
Information Sheet (“GIS”) of which Lim and King
were listed as stockholders be used as basis for
the 2000 and 2001 elections of PSI Board of

Torts and Damages
Directors. Thus, on 26 March 2002, Lim and King the required notice, the amount was fixed at
filed a petition before the RTC of Quezon City, P50,000.00. (Celebes Japan Foods Corporation v.
seeking to annul the proceedings and acts Yermo, G.R. No. G.R. No. 175855, 02 Oct. 2009)
resolved on the 15 March 2002 meeting. Should
King and Lim be awarded indemnity for TEMPERATE OR MODERATE DAMAGES
damages?
Temperate damages are those damages, which are
A: YES. King and Lim should be entitled to an award more than nominal but less than compensatory, and
of damages because they were unjustifiably and may be recovered when the court finds that some
obstinately refused recognition of their pecuniary loss has been suffered but its amount
shareholdings in PSI as well as participation in the cannot be proved with certainty. (Art. 2224, NCC)
annual stockholders’ meeting. The right to vote is
inherent in and incidental to the ownership of a Nature of Temperate Damages
capital stock, and the deprivation of which is a
violation of property right that entitles the injured The allowance of temperate damages when actual
party to an award of damages. Arts. 2217 and 2220 damages were not adequately proven is ultimately a
of the NCC allow recovery of moral damages in case rule drawn from equity, the principle affording
of willful injury to property. The acts of the other relief to those definitely injured who are unable to
stockholders who refused to recognize the rights of prove how definite the injury. (Equitable PCI Bank v.
the plaintiffs caused mental anguish, serious anxiety Tan, G.R. No. 165339, 23 Aug. 2010)
and social humiliation to the latter. Furthermore,
under Art. 2224 of the NCC, temperate or moderate Temperate damages may be awarded in the
damages, which are more than nominal but less following cases:
than compensatory damages, may be recovered 1. In lieu of actual damages; or
even though not specifically prayed for in the 2. In lieu of loss of earning capacity.
complaint, when the court finds that some
pecuniary loss has been suffered but its amount Rationale behind the temperate or moderate
cannot, from the nature of the case, be provided damages (1994 BAR)
with certainty. Similarly, the award of attorney’s
fees and litigation expenses was proper because The rationale behind temperate damages is
plaintiffs were compelled to litigate to protect or precisely that from the nature of the case, definite
vindicate their stockholders’ rights against the proof of pecuniary loss cannot be offered. When the
unlawful acts of the other stockholders. (Lydia Lao court is convinced that there has been such loss, the
v. Yao Bio Lim, et al, G.R. 201306, 09 Aug. 2017). judge is empowered to calculate moderate damages,
rather than let the complainant suffer without
Award of nominal damages in labor termination redress from the defendant’s wrongful act. (GSIS v.
cases Sps. Labung-Deang, G.R. No. 135644, 17 Sept. 2001)
Where an employee was terminated for a caused, Elements of Temperate Damages

but the employer failed to comply with the notice 1. Some pecuniary loss;
requirement, the employee is entitled to the 2. Loss is incapable of pecuniary estimation; and
payment of nominal damages. (Agabon v. National 3. The damages awarded are reasonable.
Labor Relations Commission, G.R. No. 158693, 17 Nov.
2004) The nominal damages awarded to the Q: Nanito Evangelista filed a complaint for
employees for a dismissal based on just cause under damages against Andolong over the latter's
Art. 282 of the Labor Code without notice failure to give the former's share in the net
requirement was P30,000.00; while, where the profits derived from their business. However,
dismissal of the employees was based on authorized this was evidenced solely by the documentary
cause under Art. 283 of the Labor Code, but without exhibits which disclosed the gross monthly

2022 GOLDEN NOTES
Civil Law
revenue and not the actual profit earned. During investigation on the incident. Ultimately, the
the course of the proceedings, Andolong was trial court and the Court of Appeals found him
declared in default. Consequently, it was no guilty beyond reasonable doubt of simple arson,
longer possible for Evangelista to prove the and was ordered to pay temperate damages of
actual profit earned since such documents were P50,000.00 to Alfred. Is the award of temperate
in possession of Andolong. Can Evangelista damages proper?
recover damages if the net profits can no longer
be ascertained? A: YES. Under Art. 2224 of the Civil Code, temperate
damages may be awarded when there is a finding
A: YES. Evangelista can recover damages although that "some pecuniary loss has been suffered but its
the exact amount of the net profits remained amount [cannot], from the nature of the case, be
unproven. This comes in the form of temperate or proved with certainty." The amount of temperate
moderate damages. Temperate damages may be damages to be awarded in each case is discretionary
recovered when the court finds that some pecuniary upon the courts as long as it is "reasonable under
loss has been suffered but its amount cannot, from the circumstances."
the nature of the case, be provided with certainty.
Consequently, in computing the amount of Private complainant clearly suffered some
temperate or moderate damages, it is usually left to pecuniary loss as a result of the burning of his nipa
the discretion of the courts, but the amount must be hut. However, private complainant failed to
reasonable, bearing in mind that temperate substantiate the actual damages that he suffered.
damages should be more than nominal but less than Nevertheless, he is entitled to be indemnified for his
compensatory. (Evangelista v. Sps. Andolong, G.R. No. loss. The award of temperate damages amounting to
221770, 16 Nov. 2016) ₱50,000.00 is proper and reasonable under the
circumstances. (Tabones v. People, G.R. No. 204544,
Q: Alfredo and his family were sound asleep in 03 July 2017)
their home when he was roused from sleep by
the sound of stones hitting his house. Alfredo LIQUIDATED DAMAGES
went to the living room and peered through the
jalousie window. The terrace light allowed him Liquidated damages are fixed damages previously
to recognize his neighbor and co-worker, agreed by the parties to the contract and payable to
Bacerra. Bacerra threw stones at Alfredo's the innocent party in case of breach by the other.
house while saying, "Vulva of your mother." Just (Pineda, 2009)
as he was about to leave, Bacerra exclaimed,
"[V]ulva of your mother, Old Fred, I'll burn you Liquidated damages are those that the parties agree
now." Bacerra then left. Troubled by Bacerra's to be paid in case of a breach. Under Philippine laws,
threat, Alfredo waited for him to return. Alfredo they are in the nature of penalties. They are attached
sat down beside the window. At around 4:00 to the obligation in order to ensure performance. As
a.m., he heard dogs barking outside. Alfredo a precondition to such award, however, there must
looked out the window and saw Bacerra walking be proof of the fact of delay in the performance of
towards their nipa hut, which was located the obligation. (Suatengco v. Reyes, G.R. No. 162729,
around 10 meters from their house. 17 Dec. 2008)
Bacerra paced in front of the nipa hut and shook Nature of Liquidated Damages
it. Moments later, Alfredo saw the nipa hut
burning. Alfredo sought help from his neighbors A stipulation on liquidated damages is a penalty
to smother the fire. Edgar contacted the clause where the obligor assumes a greater liability
authorities for assistance, but it was too late. in case of breach of an obligation. The obligor is
The nipa hut and its contents were completely bound to pay the stipulated amount without need
destroyed. The local authorities conducted an for proof on the existence and on the measure of

Torts and Damages
damages caused by the breach. (Titan v. Uni-Field, When principal obligation is void
G.R. No. 153874, 01 Mar. 2007)
The nullity of the principal obligation carries with it
NOTE: Attorney’s fee is in the concept of actual that of the penal clause. (Art. 1230, NCC)
damages except that when it is stipulated and
therefore in the form of liquidated damages no Rule governing in case of breach of contract
proof of pecuniary loss is required. (Art. 2216, NCC)
(Santiago v. Dimayuga, G.R. No. L-17883, 30 Dec. When the breach of contract committed by the
1961) defendant is not the one contemplated by the
parties in agreeing upon the liquidated damages, the
Liquidated Damages v. Penalties law shall determine the measure of damages, and
not the stipulation. (Art. 2228, NCC)
Liquidated
Penalties
Damages EXEMPLARY OR CORRECTIVE DAMAGES
Purpose
Exemplary damages or corrective damages are
It is a sum inserted in a
It is a sum imposed, by way of example or correction for the
contract as a punishment for
inserted in a public good, in addition to the moral, temperate,
default, or by way of security
contract as a liquidated or compensatory damages. (Art. 2229,
for actual damages which may
measure of NCC) (2003, 2005, 2009 BAR)
be sustained because of the
compensation
non- performance of the
for its breach. NOTE: They are also known as “punitive” or
contract.
“vindictive” damages.
Nature
Its essence is a An agreement to pay a Nature of exemplary damages
genuine stipulated sum on breach of
covenanted pre- contract irrespective of the Exemplary damages are mere accessories to other
estimate of damage sustained. (De Leon, forms of damages except nominal damages. They
damages. 2012) are mere additions which may or may not be
Legal Results granted at all depending upon the necessity of
setting an example for public good as a form of
There is no difference between a penalty and
deterrent to the repetition of the same act by
liquidated damages, as far as legal results are
anyone. (Pineda, 2009)
concerned. (Lambert v. Fox, G.R. No. L-7991, 29
Jan. 1914; Filinvest Land, Inc. v. CA, et. al., G.R. No.
Rationale behind exemplary damages
138980, 20 Sept. 2005)
The rationale behind exemplary damages is to

NOTE: Whether as a penalty or indemnity, it is
provide an example or correction for the public
necessary that there be a contract the violation of
good and not to enrich the victim. (Rana v. Wong,
which give rise to the liquidate damages stipulated
G.R. No. 192861, 30 June 2014)
upon. (Pineda, 2009)
Cases where exemplary damages may be

Liquidated damages may be equitably reduced
imposed as accessory damages
when
GR: Exemplary damages cannot be recovered as a

1. Iniquitous or unconscionable (Art. 2227, NCC);
matter of right. (Art. 2233, NCC)
or
2. Partial or irregular performance
XPN: They can be imposed in the following cases:

2022 GOLDEN NOTES
Civil Law
1. Criminal offense – when the crime was NOTE: In quasi-contracts, award of exemplary
committed with one or more aggravating damages is discretionary. (Ong Bun v. Bank of the
circumstances (Art. 2230, NCC); Phil. Islands, G.R. No. 212362, 14 Mar. 2018)
2. Quasi-delicts – when the defendant acted with
gross negligence (Art. 2231, NCC); and Q: Meralco was contracted to supply electricity
3. Contracts and Quasi-contracts – when to Marvex Industrial Corporation (Marvex)
defendant acted in wanton, fraudulent, reckless, under an Agreement for Sale of Electric Energy.
oppressive, or malevolent manner. (Art. 2232, It installed metering devices at Marvex's
NCC) premises. Marvex was billed according to the
monthly electric consumption recorded in its
Requirements for an award of exemplary meter. Meralco service inspectors inspected
damages Marvex's electric metering facilities and found
that the main meter terminal and cover seals
1. The claimant’s right to exemplary damages has had been tampered with. During a second
been established; inspection, Meralco found that the metering
2. Their determination depends upon the amount devices were tampered with again.
of compensatory damages that may be awarded Subsequently, Meralco assessed Marvex a
to the claimant; and differential billing. Meralco sent demand letters
3. The act must be accompanied by bad faith or and disconnected Marvex's electric service
done in wanton, fraudulent, oppressive or when it did not pay. Nordec, the new owner of
malevolent manner. (Mendoza v. Sps. Gomez, Marvex, sued Meralco for damages with prayer
G.R. No. 160110, 18 June 2014) for preliminary mandatory injunction. It alleged
that Meralco's service inspectors conducted the
Award in Crime, Quasi-Delict, Contracts and inspections without its consent or approval.
Quasi-contracts
Following the inspections, Meralco's inspectors
Award in gave an unnamed Nordec employee a Power
Award in
Award in Contracts and Field Order that did not mention the alleged
Quasi-
Crime Quasi- defects in the metering devices. Nordec further
Delict
Contracts claimed that the parties exchanged letters on
May be the alleged unregistered electric bill, and that it
May be
awarded if the requested a recomputation, which Meralco
granted if
defendant is denied in its letter. However, Meralco asked
the
found to have Nordec to show the basis for its recomputation
defendant
An aggravating acted in a request, to which Nordec complied in its letter.
acted with
circumstance, wanton, Meralco required Nordec to pay P371,919.58 for
gross
whether fraudulent, the unregistered electricity bill. Nordec then
negligence.
ordinary or reckless, informed Meralco of the pending resolution of
(BPI
qualifying. oppressive, or the recomputation. Nordec claimed that Meralco
Investment
(People v. malevolent then disconnected its service without prior
Corp. v. D.G.
Dadulla, G. R. manner. notice, resulting to loss of income and
Carreon
No. 172321, 09 (Pilipinas cancellation of other business opportunities.
Commercial
Feb. 2011) Makro, Inc. v.
Corp., G.R.
Coco Charcoal Is Nordec Philippines is entitled to actual,
No. 126524,
Phils., Inc., G.R. temperate, moral or exemplary damages,
29 Nov.
No. 196419, 04 attorney's fees, and legal interest?
2001)
Oct. 2017)
A: NO. Art. 2234 of the Civil Code requires proof of
entitlement to moral, temperate or compensatory

Torts and Damages
damages before exemplary damages may be P30,000.00. (Manila Electric Company, v. Nordec
awarded. Exemplary damages, which cannot be Philippines And/Or Marvex Industrial Corp., G.R.
recovered as a matter of right, may not be awarded 196020, 18 Apr. 2018)
if no moral, temperate, or compensatory damages
have been granted. Since exemplary damages 3. IN CASE OF DEATH
cannot be awarded, the award of attorney's fees
should likewise be deleted. Damages that can be recovered in case of death
(M-E-A-I3)
Moral damages are also not proper, in line with
Manila Electric Company v. T.E.A.M. Electronics 1. Moral damages
Corporation: “As a rule, a corporation is not entitled 2. Exemplary damages
to moral damages because, not being a natural 3. Attorney's fees and expenses for litigation
person, it cannot experience physical suffering or 4. Indemnity for death
sentiments like wounded feelings, serious anxiety, 5. Indemnity for loss of earning capacity
mental anguish and moral shock. 6. Interest in proper cases
Here, the records are bereft of evidence that would Rules when crimes and quasi-delict have caused
show that Nordec's name or reputation suffered due death
to the disconnection of its electric supply. Moreover,
contrary to Nordec's claim, it cannot be awarded The amount of damages for death caused by a crime
temperate or moderate damages under Art. 2224 of or quasi-delict shall be at least P75,000.00, even
the Civil Code. When the court finds that a party fails though there may have been mitigating
to prove the fact of pecuniary loss, and not just the circumstances. In addition:
amount of this loss, then Art. 2224 does not apply.
1. The defendant shall be liable for the loss of the
Here, the Court of Appeals found that Meralco's earning capacity of the deceased, and the
disconnection had a "domino effect" on Nordec's indemnity shall be paid to the heirs of the latter;
business, but that Nordec did not offer actual proof such indemnity shall in every case be assessed
of its losses. Nordec even admitted in its petition for and awarded by the court, unless the deceased
review that there was an "oversight" on its part in on account of permanent physical disability not
"adducing proof of the accurate amount of damages caused by the defendant, had no earning
it sustained" due to Meralco's acts. No pecuniary capacity at the time of his death;
loss has been established in this case, apart from the
claim in Nordec's complaint that the "serious 2. If the deceased was obliged to give support
anxiety" of the disconnection had caused Nordec's according to the provisions of Art. 291 of the
president to cancel business appointments, NCC, the recipient who is not an heir called to
purchase orders, and fail to fulfill contractual the decedent's inheritance by the law of testate
obligations, among others. or intestate succession, may demand support
In this instance, nominal damages may be awarded. from the person causing the death, for a period
Nominal damages are awarded to vindicate the not exceeding five years, the exact duration to
violation of a right suffered by a party, in an amount be fixed by the court; and
considered by the courts reasonable under the
circumstances. Meralco's negligence in not 3. The spouse, legitimate and illegitimate
providing Nordec sufficient notice of disconnection descendants and ascendants of the deceased
of its electric supply, especially when there was an may demand moral damages for mental anguish
ongoing dispute between them concerning the by reason of the death of the deceased. (Art.
recomputation of the electricity bill to be paid, 2206, NCC)
violated Nordec's rights. Because of this, Nordec is
entitled to nominal damages in the amount of

2022 GOLDEN NOTES
Civil Law
NOTE: Under Art. 2206 of the NCC, the amount of Reduction of damages in quasi-delict cases
damages for death caused by a crime or quasi-delict
is P3,000.00. At present, however, civil indemnity In quasi-delict, the contributory negligence of the
for death has been increased to P75,000.00 The plaintiff shall reduce the damages he may recover.
same amount is awarded as moral damages and (Art. 2214, NCC)
exemplary damages, regardless of the number of
qualifying aggravating circumstances present. Reduction of damages in contracts, quasi-
(People v. Roa, G.R. No. 225599, 22 Mar. 2017) contracts and quasi-delicts
The plaintiff is entitled to the amount that he spent The court can equitably mitigate the damages in
during the wake and funeral of the deceased. contracts, quasi-contracts and quasi-delicts in the
However, it has been ruled that expenses after the following instances other than in Art. 2214:
burial are not compensable.
1. That the plaintiff himself has contravened the
GRADUATION OF DAMAGES terms of the contract;
2. That the plaintiff has derived some benefit as a
Rules in graduation of damages in torts cases result of the contract;
3. In cases where exemplary damages are to be
Generally, the degree of care required is graduated awarded, that the defendant acted upon the
according to the danger a person or property advice of counsel;
attendant upon the activity which the actor pursues 4. That the loss would have resulted in any event;
or the instrumentality he uses. The greater the and
danger the greater the degree of care required. 5. That since the filing of the action, the defendant
(Keppel Cebu Shipyard v. Pioneer Insurance, G.R. Nos. has done his best to lessen the plaintiff’s loss or
180880-81, 25 Sept. 2009). injury. (Art. 2215, NCC)
However, foreseeability is not the same as Liquidated damages, whether intended as an

probability. Even if there is lesser degree of indemnity or a penalty, shall be equitably reduced if
probability that damage will result, the damage may they are iniquitous or unconscionable. (Art. 2227,
still be considered foreseeable. NCC)
NOTE: The test, with respect to foreseeability, is not NOTE: There may be a compromise upon the civil
the balance of probabilities, but the existence, in the liability arising from an offense; but such
situation in hand, of some real likelihood of some compromise shall not extinguish the public action
damage and the likelihood is of such appreciable for the imposition of the legal penalty. (Art. 2034,
weight and moment to induce, or which reasonably NCC)
should induce, action to avoid it on the part of a
person or a reasonably prudent mind. MISCELLANEOUS RULES
Rules in graduation of damages in crimes The injured party is obligated to undertake

measures that will alleviate and not aggravate his
In crimes, the damages to be adjudicated may be condition after the infliction of the injury or
respectively increased or lessened according to the nuisance.
aggravating or mitigating circumstances. (Art. 2204,
NCC) The party suffering loss or injury must exercise the
diligence of a good father of the family to minimize
the damages resulting from the act or omission. (Art.
2203, NCC)

Torts and Damages
Co-existence of damages
Damages Damages that Damages

that cannot must co-exist that must
co-exist (Mo-Te-L-Co) stand alone
Exemplary
Nominal Damages must
Damages co-exist with
cannot co- Moral, Nominal
exist with Temperate, Damages
Exemplary Liquidated or
Damages Compensatory
Damages

2022 GOLDEN NOTES
Property
Requisites for a thing to be considered as

PART II property (U-S-A)
1. Utility – It can serve as a means to satisfy human

needs;
2. Substantivity/Individuality – It has a separate
I. PROPERTY and autonomous existence and not simply a
part of a whole; and
3. Appropriability - Susceptibility to
CHARACTERISTICS ownership/possession, even if not yet actually
appropriated. (De Leon, 2006)
All things which are or may be the object of
appropriation are considered as either immovable or Properties NOT susceptible of appropriation
real property, or movable or personal property. (Art.
414, NCC) 1. Common things (res communes) (e.g., electricity,
oxygen, distilled water)
GR: Those properties belonging to everyone. While
in particular no one owns common property, still in XPN: Those that may be appropriated under
another sense, res communes are really owned by certain conditions in a limited way.
everybody in that their use and enjoyment are given
to all of mankind (e.g., air, wind, sunlight). (Paras, 2. Not yet been appropriated (res nullius) (e.g.,
2008) wild animals, hidden treasures) or because it
has been lost or abandoned by the owner;
It is an object or a right which is appropriated or
susceptible of appropriation by man, with capacity 3. Not susceptible due to physical impossibility
to satisfy human wants and needs. (Pineda, 2009) (e.g., sun, moon, and other heavenly bodies);
and
NOTE: Property does not only cover material things
because it mentions of rights which could either be 4. Not susceptible due to legal impossibility (e.g.,
classified as real or personal right. (Art. 415(10), human body while the person is alive) (De Leon,
NCC; Paras, 2008) 2006)
Distinctions between Things and Property The human body is NOT a property
1. The term thing is broader in scope than It is neither real nor personal property, whether
property. All kinds of property are things but alive or dead. It is not even property at all, in that it
not all things are property; generally cannot be appropriated.
2. Things refer to all objects that exist including While a human being is alive, he cannot, as such, be
those which could not be appropriated by man. the object of a contract, for he is considered outside
Property refers to objects already possessed by the commerce of man. He may donate part of his
man or are in their possession; and blood, may even sell part of his hair, but he cannot
sell his body. (Paras, 2008)
3. Things involve only corporeal objects. Property
may refer to intangible matters. (Pineda, 2009) Under the R.A. No. 7170 or the Organ Donation Act
of 1991, donation of all or a part of a human body
Q: Are the rights under the Bill of Rights may only occur after a person’s death (i.e., the
considered as property? irreversible cessation of circulatory and respiratory
A: NO. They are not susceptible of appropriation. functions or the irreversible cessation of all

Civil law
functions of the entire brain, including the brain Classification of Things

system). (Sec. 2(j), R.A. No. 7170, as amended)
1. Res nullius – belonging to no one; those objects
which have not yet been appropriated, or have
A. CLASSIFICATION OF PROPERTY been abandoned by the owner with the
intention of no longer owning them.
2. Res communes – belonging to everyone; things

1. As to nature/mobility
which are used and enjoyed by all of mankind.
a. Immovable or real property; and
(e.g., sunlight, starlight, and wind).
b. Movable or personal property.
3. Res alicujus – belonging to someone; objects,

2. As to ownership
whether tangible or intangible, which are
a. Public dominion; and
privately owned, either in a collective or
b. Private ownership.
individual capacity. (Ibid.)
3. As to alienability
CLASSIFICATION OF PROPERTY BY MOBILITY
a. Alienable or within the commerce of men;
and
REAL OR IMMOVABLE PROPERTY
b. Inalienable or outside the commerce of
(1995, 1997, 2007 BAR)
men.
Real properties are categorized by: (N-I-D-A)

4. As to individuality
a. Specific property; and
1. Nature – Those which by their essence and
b. Generic property.
nature are immovable or cannot be moved from
one place to another;
5. As to susceptibility to touch
a. Tangible; and
2. Incorporation – Those which are attached to an
b. Intangible.
immovable in a fixed manner and considered as
an integral part thereof, irrespective of its
6. As to susceptibility to substitution
ownership;
a. Fungible; and
b. Non-fungible.
3. Destination – Things placed in buildings or on
lands by the owner of the immovable or his
7. As to accession dependence or importance
agent in such a manner that it reveals the
a. Principal; and
intention to attach them permanently thereto;
b. Accessory
and
8. As to existence
4. Analogy – Classified by express provision of law
a. Existing or present property (res
or those which are not actually tangible
existentes); and
properties but are rights and interests over
b. Future property (res futurae)
existing immovable properties. (Paras, 2008)
9. As to consumability
a. Consumable; and
IMMOVABLE
b. Non-consumable
BY NATURE AND INCORPORATION
10. As to divisibility
Land, buildings, roads and constructions of all kinds
a. Divisible; and
adhered to the soil. (Art. 415(1), NCC)
b. Indivisible. (Paras, 2008)

2022 GOLDEN NOTES
Property
Land A building can be the subject of a chattel

mortgage
By its very nature is immovable property. In
whatever transaction land is involved, it is always When the parties have so expressly designated,
immovable. especially when it is considered that the property
given as a security is a house of mixed materials
A truck full of soil taken from the land (like garden which by its very nature is considered as personal
soil) becomes a personal property because it is no property. (Luna v. Encarnacion, G.R. No. L-4637, 30
longer adhered to the land. However, the moment it June 1952)
is used to cover a land for ornamentation or
gardening, it becomes immovable again. (Pineda, Requisites for a building to be the subject of a
2009) chattel mortgage
Building 1. Parties mutually agreed to consider the house a

personal property; and
GR: A building is always immovable whether built 2. That no innocent third party is prejudiced.
in one’s own land or rented.
NOTE: Under the Doctrine of Estoppel, parties to a
XPN: When a building is merely superimposed on contract who agreed to treat as personal property
the soil or is sold for immediate demolition, in which that which by nature would be real property are
case it may be considered as movable or personal prohibited from assuming inconsistent positions
property (e.g., Barong-barongs are not permanent and repudiating an obligation voluntarily assumed.
structures but mere superimpositions on land). (Pineda, 2009)
(Paras, 2008)
Insofar as execution proceedings are considered,
Effect of demolition of a house the house or building is considered real property.
Once a house is demolished, its character as an A building subjected to a chattel mortgage cannot be
immovable ceases because a house is classified as sold extrajudicially. For purposes of sale at public
an immovable property by reason of its adherence auction on execution sales, the building or house
to the soil on which it is built. (Bicerra v. Teneza, G.R. shall be treated as real property. The requirements
No. L-16218, 29 Nov. 1962) of the Rules of Court on foreclosure of real estate
mortgages must therefore be followed. (Ibid.)
Mortgage of a building erected on a land
belonging to another Trees and Plants
A building, by itself, may be mortgaged apart from Trees, plants and growing fruits, while they are
the land on which it was built even if a mortgage of attached to the land or form an integral part of an
land necessarily includes, in the absence of immovable. (Art. 415(2), NCC)
stipulation of the improvements thereon, buildings. 1. A real property; or
Such a mortgage would still be a real estate a. By nature - If they are spontaneous
mortgage for the building would still be considered products of the soil; or
immovable property even if dealt with separately b. By incorporation - If they have been
and apart from the land. (Yee v. Strong Machinery planted through cultivation or labor.
Co., G.R. No. 11658, 15 Feb. 1918)
2. A personal property.
The moment trees are detached or uprooted from
the land it is considered as personal property.

Civil law
NOTE: In case of uprooted timber, they are still not IMMOVABLE BY INCORPORATION
considered as personal property because timber is AND BY DESTINATION
an integral part of the timber land. (Paras, 2008)
Statues, reliefs, paintings or other objects for use
Growing fruits or ornamentation, placed in buildings or on lands
by the owner of the immovable in such a manner
GR: Growing fruits are considered as real property that it reveals the intention to attach them
so long as they are still attached to the soil. Once permanently to the tenements. (Art. 415(4), NCC)
removed from the soil, they become personal
properties. “Placed by the owner”
XPN: Growing fruits may be exceptionally treated as This means that the objects must be placed by the
personal property pursuant to the provisions of Art. owner of the immovable and not necessarily the
416(2) of the NCC. (Rabuya, 2008) owner of the object. (Paras, 2008)
E.g., Requisites
1. For the purposes of sale of the whole or part of
the crops; 1. Placed in buildings or on lands by the owner of
2. For purposes of attachment and execution; and the immovable or by his agent; and
3. For applying the provisions of the Chattel 2. Placed there in a manner that it reveals the
Mortgage Law. (Ibid.) intention to attach them permanently to the
tenements.
IMMOVABLE BY INCORPORATION
Art. 415(3) v. Art. 415(4) (Paras, 2008)
Everything attached to an immovable in a fixed
manner, in such a way that it cannot be separated Art. 415(3) Art. 415(4)
therefrom without breaking the material or
Cannot be separated Can be separated
deterioration of the object. (Art. 415(3), NCC)
from the immovable from the immovable
without breaking or without breaking or
An incorporated thing is considered as real
deterioration. deterioration.
property when in cases of separation, the injury,
breakage, or deterioration is substantial. (Paras, Must be placed by
2008) the owner of the
Need not be placed
immovable, or by his
by the owner.
Res vinta agent whether
express or implied.
These are immovables by incorporation, which
when separated from the immovable, regain their Real property by
Real property by
condition as movable. (Pineda, 2009) incorporation and
incorporation.
destination.
Steel towers are personal properties
Requisites for machinery to be considered real
They are not buildings adhered to the soil (Art.
property (C-O-T-E)
415(1), NCC); they are not attached to an immovable
in a fixed manner; they can be separated without
1. The industry or work must be Carried on in a
substantial damage or deterioration, and they are
building or on a piece of land;
not machineries intended for works on the land.
(Board of Assessment Appeals v. Meralco, G.R. No. L-
2. The machinery must:
15334, 31 Jan. 1964)
a. Be placed by the Owner of the tenement

2022 GOLDEN NOTES
Property
or his agent; Equipment of a transportation business

b. Tend directly to meet the needs of the classified as personal property
said industry or work; and
A transportation business is not carried on in a
3. Be Essential and principal to the industry or building or on a specified land. Hence, equipment
work, and not merely incidental thereto. (Paras, destined only to repair or service a transportation
2008) business may not be deemed real property, but
personal property.
Machinery, receptacles, instruments or
implements intended by the owner of the Machines must be essential and principal elements
tenement for an industry or works which may be in the industry and must directly meet the needs of
carried on in a building or on a piece of land & said industry. It does not include movables which
which tend directly to meet the needs of the said are merely incidentals, without which the business
industry or works. (Art. 415(5), NCC) can still continue or carry on their functions.
Machinery placed by a tenant or by a Cash registers, typewriters, etc. usually found and
usufructuary is NOT real property. used in hotels and restaurants are merely
incidentals not considered immobilized by
Since it is placed by a person having only a destination because these businesses can carry on
temporary right, it does not become immobilized. their functions without this equipment. (Mindanao
(Valdez v. Central Altagracia, 225 U.S. 58, 1912) Bus Co. v. City Assessor and Treasurer, G.R. No. L-
17870, 29 Sept. 1962)
Where a tenant places the machinery under the
express provision of lease that it shall become a part Machineries bolted or cemented on real
of the land belonging to the owner upon the property mortgaged
termination of the lease without compensation to
the lessee, the tenant acts as an agent of the owner It is not considered an immovable property. The fact
and the immobilization of the machineries arises that machineries were bolted or cemented on real
from the act of the owner in giving by contract a property mortgaged does not make them ipso facto
permanent destination to the machinery. (Ibid.) immovable under Art. 415(3) and (5) as the parties’
intent has to be looked into. (Rabuya, 2008)
Equipment and living quarters of the crew
permanently attached are immovable When immovable property by nature may be
properties treated as a chattel
It is intended to meet the needs of the industry Even if the properties appear to be immovable by
being undertaken by MPC. The equipment partakes nature, nothing detracts the parties from treating
of the nature of the immovable upon which it has them as chattels to secure an obligation under the
been placed. principle of estoppel. (Tsai v. CA, G.R. No. 120098, 02
Oct. 2001)
The living quarters, if attached to the immovable
platform with permanence, becomes an immovable Effect of temporary separation of movables
as well. Permanence means they cannot be from the immovables to which they are attached
separated without destroying the platform or the
quarters. If the attachment is not permanent, or not There are two views:
merely superimposed on the platform, then the 1. They continue to be regarded as immovables;
living quarters are movable properties. (2007 and
BAR) 2. Fact of separation determines the condition of
the objects thus recovering their condition as

Civil law
movables. (De Leon, 2006) pigeon houses, the bees in the beehives, the fish in
the fishponds are included and considered part of
Machines though essential and principal the immovable property. (Pineda, 2009)
elements of the industry are personal
properties when provided in the lease Cages are not included
agreement
It will be considered as personal property since they
The Court’s holding that the machines should be can be moved from one place to another. (Paras,
deemed personal property pursuant to the Lease 2008)
Agreement is good only insofar as the contracting
parties are concerned. Hence, while the parties are Fertilizers
bound by the Lease Agreement, third persons acting
in good faith are not affected by its stipulation Fertilizer actually used on a piece of land. (Art.
characterizing the subject machinery as personal. 415(7), NCC)
(Serg’s Products, Inc. v. PCI Leasing and Finance, Inc.,
G.R. No. 137705, 22 Aug. 2000) Fertilizers in sacks are not included
Animal houses, pigeon-houses, beehives, fishponds Fertilizers which are still in the sacks, although
or breeding places of similar nature, in case their there is intention to place them or use them on land,
owner has placed them or preserves them with the are movable. Only fertilizers actually used on a piece
intention to have them permanently attached to the of land are deemed immovable since it is already
land, and forming a permanent part of it; the placed in the land and can never be separated from
animals in these places are included. (Art. 415(6), it without scraping the soil or destroying it. (Pineda,
NCC) 2009)
Animal houses, pigeon houses, etc. Mines, Quarries, and Slag Dumps
These are immovables by destination or by Mines, quarries and slag dumps, while the matter
incorporation. The Code requires that they be thereof forms part of the bed, and waters either
placed by the owner of the land in order to acquire running or stagnant. (Art. 415(8), NCC)
the nature of real property. However, they are still
considered as real property even if not placed by the By their nature, mines quarries and slag dumps are
owner if such structures are adhered to the soil in a immovable property.
permanent manner. (Rabuya, 2008; Davao Saw Mill
Co., Inc., v. Castillo, G.R. No. L-40411, 07 Aug. 1935) Mines - These are mineral lands where excavations
are done to extract minerals such as gold, ores etc.
Beehives, fishponds or breeding places of
similar nature are real property; animals Quarries - These are lands where stones are
contained therein, included chipped of or where sand is being extracted.
When purposely constructed or attached to the Slag dumps - They consist of waste and dirt taken
ground or on another immovable (like a tree- wall), from a mine and mounted on the surface of the
fishponds and other similar breeding places, like ground under excavation
cemented container where breeding of fishes or
crustaceans is done, are considered immovable Running or Stagnant Waters – These waters refer
property if the owner of the land or tenement to waters still running through the soil or ground in
intended them to be permanent mines and quarries. (Pineda, 2009)
The animals in the animal houses, the pigeons in the

2022 GOLDEN NOTES
Property
Docks and floating structures analogy. While no tangible, they have the
characteristics of real property (e.g., Contract over a
Docks and structure which, though floating, are construction of a bridge). (Pineda, 2009)
intended by their nature and object to remain at a
fixed place on a river, lake or coast. (Art. 415(9), PERSONAL OR MOVABLE PROPERTY
NCC) (1995 BAR)
When power barges are classified as real The following things are deemed to be personal
properties property:
(1) Those movables susceptible of
Power barges are categorized as immovable appropriation which are not included in the
property by destination, being in the nature of preceding article;
machinery and other implements intended by the (2) Real property which by any special
owner for an industry or work which may be carried provision of law is considered as personality;
on in a building or on a piece of land and which tend (3) Forces of nature which are bought under
directly to meet the needs of said industry or work. control by science; and
(Fels Energy, Inc. v. Province of Batangas, G.R. No. (4) In general, all things which can be
168557, 19 Feb. 2007) transported from place to place without
impairment of the real property to which they
Floating platform is an immovable property are fixed. (Art. 416, NCC)
The platform is an immovable property by Art. 417. The following are also considered as
destination. It was intended by the owner to remain personal property:
at a fixed place on a river or coast. Art. 415 (9) of the (1) Obligations and actions which have for
NCC considers as real property “docks and their object movables or demandable sums;
structures which, though floating are intended by and
their nature and object to remain at a fixed place on (2) Shares of stock of agricultural,
a river, lake, or coasts.” (Ibid.) commercial and industrial entities, although
they may have real estate (Art. 417, NCC)
Vessels are considered personal property under the
civil law and common law and occasionally referred Movable properties (S3-O-F-T)
to as peculiar kind of personal property. It is
essential that a record of documents affecting the 1. Movables Susceptible of appropriation which
title to a vessel be entered in the record of the are not included in Art. 415, NCC;
Collector of Customs at the port of entry. (Art. 585, 2. Real property which by any Special provision of
Code of Commerce) law considers as personality (e.g., Growing
crops under the Chattel Mortgage Law);
IMMOVABLE BY ANALOGY 3. Forces of nature which are brought under the
control of science (e.g., Electricity generated by
Contracts for public works and servitudes and electric powers, solar light for batteries power);
other real rights over immovable property. (Art. 4. In general, all things which can be Transported
415(10), NCC) from place to place without impairment of the
real property to which they are fixed; (Art. 416,
These properties refer to contracts for public works, NCC)
servitudes and real rights over immovable property 5. Obligations and actions which have for their
(like usufruct). They are inseparable from their object movables or demandable sums; and
sources which are immovable, Hence, for 6. Shares of stock of agricultural, commercial and
convenience, they are considered immovable not by industrial entities, although they have real
their nature, destination or incorporation but by estate. (Art. 417, NCC)

Civil law
Special kind of personal property 3. Test of Mobility – If the property is capable of

being carried from place to place without
The author, composer, painter, sculptor, inventor injuring the real property to which it may in the
have rights over their works. These rights are meantime be attached. (De Leon, 2006)
personal property. (Pineda, 2009)
CLASSIFICATION OF PROPERTY BY NATURE
Interest in business is a personal property
Movable property is either consumable or non-
With regard to the nature of the property consumable. To the first class belong those
mortgaged which is one-half interest in the movables which cannot be used in a manner
business, such interest is a personal property appropriate to their nature without their being
capable of appropriation and not included in the consumed; to the second class belong all others.
enumeration of real properties in Art. 335 of the (Art. 418, NCC)
NCC and may be the subject of mortgage.
(Strochecker v. Ramirez, G.R. No. 18700, 26 Sept. Properties classified according to Consumability
1922)
1. Consumable property – That which cannot be
The business of providing telecommunication is used according to its nature without being
a personal property consumed or being eaten or used up (e.g.,
cigarette, glass of wine); and
The business of providing telecommunication or
telephone service is likewise personal property 2. Non-consumable property – That which can be
which can be the object of theft under Art. 308 of the used according to its nature without being
RPC. consumed or being eaten or used up (e.g.,
eyeglasses, book). (Rabuya, 2008)
Indeed, while it may be conceded that international
long-distance calls, the matter alleged to be stolen Properties classified according to Susceptibility
in the instant case, take the form of electrical to Substitution
energy, it cannot be said that such international
long-distance calls were personal properties 1. Fungible property –if it can be substituted by
belonging to PLDT since the latter could not have another thing of the same kind, quantity and
acquired ownership over such calls. PLDT merely quality; and
encodes, augments, enhances, decodes and
transmits said calls using its complex 2. Non-fungible property – if not replaceable in
communications infrastructure and facilities. such equivalents. (Paras, 2008)
(Laurel v. Abrogar, G.R. No. 155076, 13 Jan. 2009)
NOTE: It is fungible if, by the intention of the parties,
Tests to determine whether a property is a it can be replaced by another of the same kind;
movable property (M-E-S) otherwise, it is a non-fungible. (Rabuya, 2008)
1. Test of Exclusion – Everything not included in CLASSIFICATION OF PROPERTY

Art. 415 of NCC (e.g., ships or vessels or interest BY OWNERSHIP
in a business);
Property is either of public dominion or of private
2. By reason of a Special law – Immovable by ownership. (Art. 419, NCC)
nature but movable for the purpose of the
special law (e.g., Growing crops for purposes of 1. In relation to the State
the Chattel Mortgage Law); and a. Public Dominion; and
b. Patrimonial. (Arts. 420 & 421, NCC)

2022 GOLDEN NOTES
Property
2. In relation to political subdivisions/local use – may be used only by duly authorized

government unit persons; and
a. Public use; and 3. For the Development of the national wealth –
b. Patrimonial. (Arts. 423 & 424, NCC) like our natural resources. (Art. 420, NCC)
3. In relation to private persons Characteristics of properties of Public Dominion

a. Owned individually; and (U-L-E-P-R-O-B)
b. Owned collectively. (Art. 425, NCC)
1. In general, they can be Used by everybody;
NOTE: Sacred and religious objects are considered 2. Cannot be Levied upon by execution or
outside the commerce of man. They are neither attachment;
public nor private party. (Barlin v. Ramirez, G.R. No. 3. May Either be real or personal property;
L-2832, 24 Nov. 1906) 4. Cannot be acquired by Prescription;
5. Cannot be Registered under Land Registration
PUBLIC DOMINION Law and be the subject of Torrens Title;
6. Outside the commerce of man – cannot be
It means ownership by the public in general, in that alienated or leased or be subject of any
not even the State or subdivisions thereof may make contract; and
them the object of commerce as long as they remain 7. Cannot be Burdened by voluntary easement.
properties for public use. (Paras, 2008)
All other property of the State, which is not of the
Properties classified as public dominion cannot be character stated in the preceding article, is a
alienated but are not totally outside the commerce patrimonial property. (Art. 421, NCC)
of man as the Constitution allows the State to enter
into co-production, joint ventures or production- Patrimonial Property
sharing agreements with private individuals or
corporations for their exploration, development This is a property pertaining to the State which is
and utilization. (Rabuya, 2008) not intended for public use, public service, or for the
development of the national wealth. It is intended
NOTE: In order to be classified as property of public rather for the attainment of the economic ends of
dominion, an intention to devote it to public use or the State, that is, for its subsistence.
to public service is sufficient and it is not necessary
that it must actually be used as such. (Ibid.) NOTE: The patrimonial property of the State or any
of its subdivisions may be acquired by private
The following things are property of public individuals or juridical persons through
dominion: prescription. It can be the object of an ordinary
(1) Those intended for public use, such as roads, contract. (Cebu Oxygen & Acetylene Co., Inc. v.
canals, rivers, torrents, ports and bridges Bercilles, G.R. No. L40474, 29 Aug. 1975)
constructed by the State, banks, shores,
roadsteads, and others of similar character; Conversion from property of public dominion to
(2) Those which belong to the State, without patrimonial property, how effected.
being for public use, and are intended for some
public service or for the development of the Property of public dominion, when no longer
national wealth. (Art. 420, NCC) intended for public use or for public service, shall
form part of the patrimonial property of the State.
Kinds of property of Public Dominion (U-S-D) (Art. 422, NCC)
1. For Public Use – may be used by anybody; When no longer intended or operated for public use
2. Intended for Public Service and not for public or public service, a property of public dominion shall

Civil law
form part of the State’s patrimonial property as of Charging of fees does not remove property as
the date the Government, through the Executive or public dominion
Legislative Departments, has formally declared that
it is no longer needed for said purposes. (Ignacio v. The charging of fees to the public does not
Director of Land, G.R. No. L-12958, 30 May 1960) determine the character of the property whether it
is of public dominion or not. The airport lands and
The property of provinces, cities, and buildings are devoted to public use because they are
municipalities is divided into property for public used by the public for international and domestic
use and patrimonial property. (Art. 423, NCC) travel and transportation. The terminal fees MIAA
charges to passengers, as well as the landing fees
Property for public use, in the provinces, cities, and MIAA charges to airlines, constitute the bulk of the
municipalities, consist of the provincial roads, city income that maintains the operations of MIAA.
streets, municipal streets, the squares, fountains, (Manila International Airport Authority v. CA, G.R.
public waters, promenades, and public works for No. 155650, 20 July 2006)
public service paid by said provinces, cities, or
municipalities. PRIVATE OWNERSHIP
All other property possessed by any of them is Property of private ownership, besides the
patrimonial and shall be governed by this Code, patrimonial property of the State, provinces, cities,
without prejudice to the provisions of special laws. and municipalities, consists of all property
(Art. 424, NCC) belonging to private persons, either individually or
collectively. (Art. 425, NCC)
Properties for public service and properties for
the development of national wealth Patrimonial property of the State
1. Public service – It depends on who pays for the It is the property intended for the attainment of the
service. If paid for by the political subdivision, economic ends of the State, that is, for subsistence.
public; if for profit, patrimonial; and It is owned by the State in its private or proprietary
2. National wealth – It is still property for public capacity. It is the property not devoted to public use,
use under the Regalian Doctrine. (Rabuya, 2008) public service, or the development of the national
wealth.
Property of municipal corporations
An executive or legislative act is necessary to
1. Provincial roads; reclassify property into patrimonial. The
2. City streets; conversion cannot be inferred from non-use.
3. Municipal streets;
4. Squares; NOTE: It may be disposed of by the State in the same
5. Fountains; manner that private individuals dispose of their
6. Public waters; own property subject, however, to administrative
7. Promenades; and laws and regulations.
8. Public works for public service paid for by said
provinces, cities, or municipalities. (Art. 424, The fact that the Roppongi site has not been used for
NCC) a long time for actual embassy service does not
automatically convert it to patrimonial property. An
NOTE: All other property possessed by any of them abandonment of the intention to use the Roppongi
are patrimonial. (Rabuya, 2008) property for public service and to make it
patrimonial property must be definite.
Abandonment cannot be inferred from the non- use
alone. (Laurel v. Garcia, G.R. No. 92013, 25 July 1990)

2022 GOLDEN NOTES
Property
Any such conversion happens only if the property is possession and, occupation of agricultural lands of
withdrawn from public use. Accordingly, the the public domain, under a bona fide claim of
withdrawal of the property in question from public acquisition or ownership, since June 12, 1945”.
use by the City of Cebu and its subsequent sale to the
petitioner is valid. (Cebu Oxygen and Acetylene Co. v. Sec. 48(b) of the C.A. 141 therefore requires that
Bercilles, G.R. No. L40474, 29 Aug. 1975) two (2) requisites be satisfied before claims of title
to public domain lands may be confirmed: first, that
Sewage system of a city is a patrimonial the land subject of the claim is agricultural land; and
property second, open, continuous, notorious, and exclusive
possession of the land since June 12, 1945. That the
It is property of the city, purchased with private Iligan property was alienable and disposable,
funds and not devoted to public use (it is for profit). agricultural land, has been admitted. What is
It is therefore patrimonial under the Civil Code. Nor claimed instead is that petitioners' possession is
can the system be considered “public works for debunked by how the Iligan property was
public service” under Art. 424 of the NCC because supposedly part of a military reservation area which
such classification is qualified by ejusdem generis; it was subsequently reserved for Iligan City's slum
must be of the same character as the preceding improvement and resettlement program, and the
items. (City of Cebu v. NAWASA, G.R. No. 12892, 20 relocation of families who were dislocated by the
Apr. 1960) National Steel Corporation's five-year expansion
program. (Heirs of Spouses Delfin v. NHA, G.R. No.
Q: The Delfin spouses claimed that they were the 193618, 28 Nov. 2016)
owners of a 28,800 square meter parcel of land
in Iligan City. They had been declaring the Iligan Private ownership of land prohibited to aliens
property in their names for tax purposes since (Krivenko Doctrine)
1952, and had been planting it with mangoes,
coconuts, corn, seasonal crops, and vegetables. GR: Aliens have no right to acquire any public or
They alleged that NHA took possession of a private agricultural, commercial or residential
10,798 square meter portion of the property. lands in the Philippines.
Despite their repeated demands for
compensation, the National Housing Authority The same rule is applicable to a foreign corporation
(NHA) failed to pay the value of the property. even if it is a religious and non-stock corporation. A
The NHA alleged that the Delfin spouses' foreign-owned corporation cannot be the
property was part of a military reservation area. transferee of a land in the Philippines even
It reserved the area in which property is temporarily. (Pineda, 2009)
situated for Iligan City's slum improvement and
resettlement program as cited in Proclamation XPN: Aliens may only acquire such lands by
No. 2143, and the relocation of families who hereditary succession. (Krivenko v. Registry of
were dislocated by the National Steel Deeds, G.R. No. L-630, 15 Nov. 1947)
Corporation's five-year expansion program.
Effect of a subsequent sale by the disqualified
Does the Delfin spouses. have the right to claim alien vendee to a qualified Filipino citizen
the just compensation?
If land is invalidly transferred to an alien who
A: YES. Sec. 48 of C.A 141 (Public Land Act) enabled subsequently becomes a citizen or transfers it to a
the confirmation of claims and issuance of titles in citizen, the flaw in the original transaction is
favor of citizens occupying or claiming to own lands considered cured and the title of the transferee is
of the public domain or an interest therein. Sec. 48 rendered valid.
(b) specifically pertained to those who "have been
in open, continuous, exclusive, and notorious Thus, the subsequent transfer of the property to

Civil law
qualified Filipinos may no longer be impugned on

the basis of invalidity of the initial transfer. The B. OWNERSHIP
objective of the constitutional provision to keep our
lands in Filipino hands has been achieved. (Lee v.
Republic, G.R. No. 12819, 03 Oct. 2001)
NOTE: The constitutional proscription on alien

Ownership may be exercised over things or rights.
ownership of lands of the public or private domain
(Art. 427, NCC)
was intended to protect lands from falling in the
hands of non-Filipinos. (Ibid.)
Ownership is the juridical relation of a person over a
thing by virtue of which said person has the
Regalian Doctrine: All lands not otherwise
exclusive power or authority to receive all the
appearing to be clearly within private ownership
benefits and advantages arising from said thing,
are presumed to be owned by the state. (Pineda,
save those restricted by law or the recognized rights
2009)
of others. (Pineda, 2009)
Reversion - An action where the ultimate relief

Kinds of Ownership (F-N-S-C)
sought is to revert the land back to the government
under the Regalian Doctrine. (Ibid.)
1. Full ownership – Includes all the rights of an
owner;
“Muebles” Or “Furniture” when used alone;
NOTE: Naked ownership + Usufruct
effects
2. Naked ownership – Ownership where the rights

If used alone in a contract or agreement, it will not
to the use and to the fruits have been denied;
include things found therein like money, credits,
NOTE: Full ownership – Usufruct
commercial securities, stocks and bonds, jewelry,
scientific or artistic collection, books medals, arms,
3. Sole ownership – Ownership is vested in only
clothing, horses or carriages and their accessories,
one person; and
grains, liquids which do not have as their principal
purpose the furnishing or the ornamenting of the
4. Co-ownership– Ownership is vested in two or
building where the “muebles” or “furniture” is
more persons. There is Unity of the property,
found.
and plurality of the subjects. (Paras, 2008)
XPN: When the law or the individual declaration

Q: Respondents inherited the subject property
clearly provides that the aforesaid things are
from Emiliana Bacalso, by virtue of Decree No.
included. (Art. 426, NCC; Pineda, 2009)
98992. Sometime later, they found the heirs of
Alejandra Delfin to be occupying the said
property, to which they even constructed houses
there. The heirs argued they have better right for
it was inherited to them after it was bought by
the predecessor from Emiliana Bacalso; also,
they are the ones paying the subject property’s
realty taxes. Do the respondents have the better
right to the ownership and possession of the
subject property?
A: YES. Respondents have the better right to the

ownership and possession of the subject property.
The basis is the LRA certification, daybook entry, and

2022 GOLDEN NOTES
Property
Decree No. 98992 that was issued to Emiliana with, the subject property was sold at a public
Bacalso. The Decree bars all claims and rights which auction, where Jose emerged as the highest
arose as may have existed prior to the decree of bidder. A Certificate of Sale was thus issued in
registration. (Heirs of Delfin v. Rabadon, G.R. No. his favor. The period of redemption expired
165014, 31 July 2013) without the subject property being redeemed;
hence, a Final Bill of Sale was issued and
ATTRIBUTES OF OWNERSHIP registered in Jose's name. Thereafter, the latter
executed an Affidavit of Consolidation of
1. Right to enjoy (jus utendi) (Art. 428, NCC); Ownership. This notwithstanding, Nicolasa
2. Right to the fruits (jus fruendi); persisted in her occupancy of the subject
3. Right to abuse (jus abutendi); property and refused to deliver possession to
4. Right to dispose (jus dispodendi); (Ibid.) Jose.
5. Right to recover (jus vindicandi); (Ibid.)
6. Right to accessories (jus accessiones); Is the Writ of Possession and Notice to Vacate
7. Right to possess (jus possidendi); issued by the RTC is valid?
8. Right to exclude (Art. 429, NCC); and
9. Right to enclose (Art. 430, NCC). A: YES. It is well-settled that the purchaser in an
extrajudicial foreclosure of real property becomes
The owner has the right to enjoy and dispose of a the absolute owner of the property if no redemption
thing, without other limitations than those is made within one (1) year from the registration of
established by law. the certificate of sale by those entitled to redeem. As
absolute owner, he is entitled to all the rights of
The owner has also a right of action against the ownership over a property recognized in Art. 428 of
holder and possessor of the thing in order to the NCC not least of which is possession, or jus
recover it. (Art. 428, NCC) possidendi.
The owner or lawful possessor of a thing has the It should be clarified that the purpose of a petition
right to exclude any person from the enjoyment for the issuance of a writ of possession under Act
and disposal thereof. For this purpose, he may use 3135, as amended by Act 4118, is to expeditiously
such force as may be reasonably necessary to repel accord the mortgagee who has already shown a
or prevent an actual or threatened unlawful prima facie right of ownership over the subject
physical invasion or usurpation of his property. property (based on his consolidated title over the
(Art. 429, NCC) same) his incidental right to possess the foreclosed
property. To reiterate, "possession being an
Lease merely follows the property as a lien or essential right of the owner with which he is able to
encumbrance exercise the other attendant rights of ownership,
after consolidation of title, the purchaser in a
Q: On April 15, 1991, Nicolasa authorized her foreclosure sale may demand possession as a
daughter, Carmelita, Artemio's sister, to matter of right."
mortgage the subject property to Jose, the
predecessor-in-interest of Jose, Jose Jr., and Thus, it is only upon a credible showing by a third-
Virginia in order to secure a loan in the amount party claimant of his independent right over the
of P112,000.00. As Nicolasa failed to settle her foreclosed property that the law's prima facie
loan obligation when it fell due, Jose, led an deference to the mortgagee's consolidated title
application for extra-judicial foreclosure of should not prevail. Verily, a mere claim of
mortgage before the Regional Trial Court of ownership would not suffice.
Olongapo City, Branch 72 (RTC), docketed as As jurisprudence prescribes, the demonstration by
Case No. 07-0-91. After the requirements of the third party-claimant should be made within the
posting, notices, and publication were complied context of an adversarial hearing, where the basic

Civil law
principles of Evidence and Civil Procedure ought to the acquisition of private lands by aliens;
be followed, such as: (1) it is the claimant who has
the burden of proving his claim; (2) the claim must 7. Acts in State of necessity – The law permits
be established through a preponderance of injury or destruction of things owned by
evidence; and (3) evidence not presented or another provided this is necessary to avert
formally offered cannot be admitted against the a greater danger (with right to indemnity v.
opposing party. In this case, none of these principles principle of unjust enrichment); and
were followed for the CA considered evidence that
were not only submitted in a totally different case 8. True Owner must resort to judicial process –
against an entirely different party but are also When thing is in possession of another; law
innately inadequate to — at least — prima facie creates a disputable presumption of
show the source of the third party claimant's ownership to those in actual possession.
independent title, all to the detriment of the (2008 BAR)
mortgagee who had already consolidated his title to
the contested property. (Heirs of Peñaflor v. Dela PRINCIPLE OF SELF-HELP
Cruz, G.R. No. 197797, 08 Aug. 2017)
This principle authorizes an owner or lawful
LIMITATIONS ON THE RIGHT OF OWNERSHIP possessor of a property to use reasonable force to
prevent or repel an actual or threatened unlawful
2
Those imposed by the: (S-L-O-G-S-O-C ) (Rabuya, physical invasion or usurpation of property. (Art.
2008) 429, NCC) There must be no delay in the pursuit,
otherwise, his recourse will be to go to the court for
1. State in the exercise of: the recovery of property.
a. Power of taxation;
b. Police power; and The owner of lawful possessor of a thing has the
c. Power of eminent domain right to exclude any person from the enjoyment
and disposal thereof. For this purpose, he may use
2. Law; such force as may be reasonably necessary to repel
a. Legal easements (i.e., easements of or prevent an actual or threatened unlawful
waters and of right of way); and physical invasion of usurpation of his property.
b. The requirement of legitime in (Art. 429, NCC)
succession
Requisites of the Principle of Self-Help
3. Owner himself; (R-O-A-D)
a. Voluntary easement;
b. Mortgage; 1. Reasonable force used;
c. Pledge; or 2. Such force is used by the Owner or lawful
d. Lease possessor;
3. There is no Delay; and
4. Grantor of the property on the grantee, 4. Actual or threatened physical invasion or
through: usurpation of the property. (De Leon, 2006)
a. Contract;
b. Donation; or Counterpart of Self-help in Criminal Law
c. Will;
5. Those arising from Conflicts of private rights The loose counterpart of the Principle of Self-help
– Those which take place in accession under the criminal law is self-defense provided for
continua; in Art. 11(1) of the RPC: Justifying circumstances. —
The following do not incur any criminal liability:
6. Constitution – On the prohibition against

2022 GOLDEN NOTES
Property
(1) Anyone who acts in defense of his person or Property owner can use his property in any manner
rights, provided that the following he desires provided he does not injure the rights of
circumstances concur: others (sic utere tuo ut alienum non laedas). (Pineda,
2009)
First. Unlawful aggression;
Second. Reasonable necessity of the means Every owner may enclose or fence his land or
employed to prevent or repel it; and tenements by means of walls, ditches, live or dead
Third. Lack of sufficient provocation on the hedges, or by any other means without detriment
part of the person defending himself. to servitudes constituted thereon. (Art. 430, NCC)
Right of Self-Help exercised by third person DOCTRINE OF STATE OF NECESSITY
A third person who is not a possessor may repel The owner of a thing has no right to prohibit the
unlawful possession on the property owned by interference of another with the same, if the
another. In such an event, he is acting as a interference is necessary to avert an imminent
negotorium gestor. The owner must indemnify him danger and the threatened damage, compared to
for injuries sustained. (Pineda, 2009) the damage arising to the owner from the
interference, is much greater. The owner may
Test of Reasonableness demand from the person benefited indemnity for
the damage to him. (Art. 432, NCC)
The reasonableness of the defensive acts resorted to
by a possessor is determined not by what he This principle authorized the destruction of
imagined to exist but by the objective situation. property which is lesser in value to avert the danger
(Pineda, 2009) He will be liable for damages, if he poised to another property of greater value.
uses force more than what is necessary in repelling
the aggression. Requisites of Doctrine of State of Necessity
German Management's drastic action of bulldozing 1. Interference necessary to avert an imminent

and destroying the crops of private respondents on danger and the threatened damage to the actor
the basis of the doctrine of self- help was unavailing or a third person; and
because the doctrine of self- help can only be 2. Damage to another is much greater than the
exercised at the time of actual or threatened damage to the property.
dispossession which is absent in the case at bar. 3. That the evil sought to be avoided actually
(German Management Services Inc. v. CA, G.R. No. exists;
76216, 14 Sept. 1989) 4. The injury feared be greater than that done to
avoid it; and
NOTE: The intruder must not have succeeded in its 5. There be no other practical and less harmful
entry, for otherwise, he must resort to court action; means of preventing it. (Art. 11(4), RPC)
self-help cannot apply. One cannot put the law into
his own hands. Art. 429, NCC must be read in Disputable Presumption of Ownership
relation to Art. 536, NCC.
There is disputable presumption of ownership
“Sic utere tuo ut alienum non laedas” when a person is in actual possession of the
property under the claim of ownership. (Pineda,
The owner of a thing cannot make use thereof in 2009; Art. 433, NCC)
such manner as to injure the rights of a third person.
(Art. 431, NCC)

Civil law
Resort of the owner rebutting the presumption 5. The utilization of the property for public
use must be in such a way as to oust the
Under Art. 433 of the NCC, the remedy is judicial owner and deprive him of all beneficial
process to recover the property of the person. enjoyment of the property. (NPC v. CA, G.R.
No. 113194, 11 Mar. 1996)
Requisites to prove claim of ownership
Q: Alfredo Hababag, Sr. (Alfredo) was the owner
1. Proper identification of the property; and of several parcels of agricultural land situated in
2. Title must be clear, strong, and credible. the Municipality of Gubat, Sorsogon. The
(Pineda, 2009) aforesaid landholdings were voluntarily offered
for sale (VOS) to the government under R.A. No.
Requisites For Action to Recover Property 6657, otherwise known as the Comprehensive
Agrarian Reform Law of 1988. The Land Bank of
1. To clearly identify the land he is claiming in the Philippines (LBP) initially valued the subject
accordance with the title or titles on which lands at P1,237,850.00, but Alfredo rejected the
he bases his right of ownership; and valuation. After summary administrative
proceedings for the determination of the
2. To prove that he has a better title than the amount of just compensation, the Office of the
defendant. (Pineda, 2009; Art. 434, NCC) Provincial Agrarian Reform Adjudicator
(PARAD) of the Department of Agrarian Reform
Eminent Domain (DAR) Adjudication Board (DARAB) fixed the
value of the subject lands at P1,292,553.20.
This is the superior right of the State to acquire
private property whether registered or not for Dissatisfied, Alfredo filed a Complaint for the
public use upon payment of just compensation. determination of the amount of just
compensation before the RTC. RTC rendered a
It is one of the limitations on the right of ownership Decision fixing the amount of just compensation
in the pursuit of public interest. (Pineda, 2009) of the subject lands at P5,653,940.00. The RTC
applied the Income Productivity Approach. CA
No person shall be deprived of his property except set aside the RTC's valuation for failure to give
by competent authority and for public use and due consideration to the factors enumerated in
always upon payment of just compensation. Sec. 17 of R.A. 6657 and the formula under DAR
AO 6-92, as amended by DAR AO 11-94.
Should this requirement be not first complied Moreover, contrary to the limitation imposed by
with, the courts shall protect and, in a proper case, DAR AO 6-92 (i.e., that the computed value using
restore the owner in his possession. (Art. 435, NCC) the applicable formula shall not exceed the
landowner's offer to sell) the CA found that the
Elements of “taking” of property for purposes of amount as recomputed by the RTC was way
Eminent Domain beyond the landowner's offer of P1,750,000.00
as stated in the Claims Valuation and Processing
1. The expropriator must enter a private Form. Is the CA correct in setting aside the
property; computation of RTC?
2. The entrance into private property must be
for more than a momentary period; A: YES. Just compensation is defined as the full and
3. The entry into the property should be fair equivalent of the property taken from its owner
under warrant or color of legal authority; by the expropriator. It has been repeatedly stressed
4. The property must be devoted to a public by this Court that the measure is not the taker's gain
use or otherwise informally appropriated but the owner's loss. The word "just" is used to
or injuriously affected; and intensify the meaning of the word "compensation"

2022 GOLDEN NOTES
Property
to convey the idea that the equivalent to be cumulative cost of the non-fruit-bearing trees; and
rendered for the property to be taken shall be real, (c) market value of the cogonal land have been duly
substantial, full [and] ample. considered. The Court observes that the holistic
data gathered therefrom adequately consider the
In this relation, the RTC, sitting as a Special Agrarian factors set forth in Sec. 17 of R.A. No. 6657, as well
Court, has been conferred with the original and as the DAR formula. As such, the CA's computation,
exclusive power to determine just compensation for which was derived from the same, must be
parcels of land acquired by the State pursuant to the sustained. Lest it be misunderstood, the
agrarian reform program. To guide the RTC in this ascertainment of just compensation on the basis of
function, Sec. 17 of R.A. No. 6657 enumerates the the landholdings' nature, location, and market
factors which must be taken into consideration to value, as well as the volume and value of the
accurately determine the amount of just produce is valid and accords with Sec. 17 of R.A. No.
compensation to be awarded in a particular case. 6657 7 and the DAR formula, as in this case.
They are: (a) the acquisition cost of the land; (b) the
current value of like properties; (c) the nature and On the contrary, the Court finds the RTC's valuation
actual use of the property, and the income to be improper, as it contradicts the definition of
therefrom; (d) the owner's sworn valuation; (e) the "market value" as crafted by established
tax declarations; (f) the assessment made by jurisprudence on expropriation. (Land Bank of the
government assessors; (g) the social and economic Philippines v. Hababag, G.R. No. 171352, September
benefits contributed by the farmers and the 16, 2015, 16 Sept. 2015)
farmworkers, and by the government to the
property; and (h) the nonpayment of taxes or loans Q: The Republic of the Philippines filed before
secured from any government financing institution the RTC a complaint against an unknown owner
on the said land, if any. Corollarily, pursuant to its for the expropriation of a lot located in
rule-making power under Sec. 49 of the same law, Barangay Ugong, Valenzuela City for the
the DAR translated these factors into a basic construction of the C-5 Northern Link Road
formula, which courts have often referred to and Project, otherwise known as North Luzon
applied, as the CA did in this case. It, however, bears Expressway (NLEX) Segment 8.1, traversing
stressing that courts are not constrained to adopt from Mindanao Avenue in Quezon City to the
the said formula in every case since the NLEX in Valenzuela City. Petitioner applied for a
determination of the amount of just compensation writ of possession over the subject lot on May 5,
essentially partakes the nature of a judicial function. 2008, which was granted, and was required to
In this accord, courts may either adopt the DAR deposit with the court the amount of
formula or proceed with its own application for as P550,000.00 (i.e., at P2,750.00/sq. m.) as
long as the factors listed in Sec. 17 of R.A. No. 6657 provisional deposit. However, respondent
have been duly considered. Macabagdal was substituted as party- defendant
upon sufficient showing that the subject lot is
In keeping with these considerations, the Court registered in her name under the Transfer
finds the CA's valuation - which made use of the DAR Certificate Title of the lot. Respondent did not
formula - as reflective of the factors set forth in Sec. oppose the expropriation and received the
17 of R.A. No. 6657. Records disclose that the CA's provisional deposit.
computation, as adopted from the LBP's own
computation, is based on: (a) actual production The RTC appointed a board of commissioners to
data; (b) the appropriate industry selling prices of determine the just compensation for the subject
the products from the Philippine Coconut Authority lot, which thereafter submitted report dated
and the Bureau of Agricultural Statistics of May 23, 2014, recommending a fair market
Sorsogon; and (c) the actual uses of the property. value of P9,000.00/sq. m. as the just
Likewise, the (a) income from the coconut fruit- compensation for the subject lot, taking into
bearing trees, as well as the unirrigated riceland, (b) consideration its location, neighborhood and

Civil law
land classification, utilities, amenities, physical the pendency of the proceedings, NPC filed a
characteristics, occupancy and usage, highest motion to discontinue the proceedings since the
and best usage, current market value offerings, delay in the possession of the properties would
as well as previously decided expropriation adversely affect the project. NPC also claims that
cases of the same RTC involving properties the properties were no longer needed as it was
similarly situated in the same barangay. The set to acquire an alternative site.
Court of Appeals affirmed this decision and
imposed interest the rate of 12% per annum May NPC be allowed to discontinue the
from the time of the filing of the complaint until expropriation proceedings?
June 30, 2013, and thereafter, at 6% per annum
until full payment. Is the 12% per annum A: YES. No expropriation proceeding can continue if
interest on the unpaid balance be computed the property to be expropriated will not be for
from the time of the taking of the subject until public use. In Metropolitan Water District v. De Los
full payment valid? Angeles, the Court held that the fundamental basis
then of all actions brought for the expropriation of
A: NO. The value of the landholdings should be lands, under the power of eminent domain, is public
equivalent to the principal sum of the just use. That being true, the very moment that it
compensation due, and interest is due and should be appears at any stage of the proceedings that the
paid to compensate for the unpaid balance of this expropriation is not for a public use, the action must
principal sum after taking has been completed. necessarily fail and should be dismissed, for the
From the date of the taking of the subject lot on May reason that the action cannot be maintained at all
5, 2008 when the RTC issued a writ of possession in except when the expropriation is for some public
favor of petitioner, until the just compensation use. Considering that the NPC is no longer using
therefor was finally fixed at P9,000.00/sq. m., respondents' properties for the purpose of building
petitioner had only paid a provisional deposit in the the Substation Project, it may be allowed to
amount of P550,000.00 (i.e., at P2,750.00/sq. m.). discontinue with the expropriation proceedings,
Thus, this left an unpaid balance of the "principal subject to the approval of the court. (NPC v. Posada,
sum of the just compensation," warranting the G.R. No. 191945, 11 Mar. 2015)
imposition of interest. It is settled that the delay in
the payment of just compensation amounts to an Extent of ownership of parcel of land
effective forbearance of money, entitling the
landowner to interest on the difference in the The owner of a parcel of land is the owner of its
amount between the final amount as adjudged by surface and of everything under it, and he can
the court and the initial payment made by the construct thereon any works or make any
government. It bears to clarify that legal interest plantations and excavations which he may deem
shall run not from the date of the filing of the proper, without detriment to servitudes and subject
complaint but from the date of the issuance of the to special laws and ordinances. He cannot complain
Writ of Possession on May 5, 2008, since it is from of the reasonable requirements of aerial navigation.
this date that the fact of the deprivation of property (Art. 437, NCC)
can be established. As such, it is only proper that
accrual of legal interest should begin from this date. Ad Coleum
(Republic v. Macabagdal, G.R. No. 227215, 10 Jan.
2018) The owner of a land has rights not only to its surface
but also to everything underneath and the airspace
Q: National Power Corporation (NPC) instituted above it up to a reasonable height.
expropriation proceedings for the acquisition of Presumably, the landowner’s right extends to such
a right of way easement and for the construction height or depth where it is possible for them to
of the Substation Island Grid Project over the obtain some benefit or enjoyment, and it is
parcels of land owned by respondents. During extinguished beyond such limit as there would be

2022 GOLDEN NOTES
Property
no more interest protected by law. (Napocor v. market value should not have been more than
Ibrahim, G.R. No. 168732, 02 June 2007) P85.00 per oil palm tree. The sudden increase of
realty tax assessment level from P42.00 for each
2. RULES ON ACCESSION oil palm tree in 1993 to P207.00 was
confiscatory. The LBAA adopted Filipinas' claim
that the basis for assessment should only be 98
The right pertaining to the owner of a thing over
trees. Although one (1) hectare of land can
everything which is produced thereby, or which is
accommodate 124 oil palm trees, the
incorporated or attached thereto, either naturally
mountainous terrain of the plantation should be
or artificially. (Art. 440, NCC)
considered. Because of the terrain, not every
meter of land can be fully planted with trees.
Right of Accession
The LBAA found that roads of any kind, as well
as all their improvements, should not be taxed
It is that right of ownership of which an owner of a
since these roads were intermittently used by
thing has over the products of said thing (accession
the public.
discreta), as well as to all things inseparably
attached or incorporated thereto whether naturally
Should the roads the respondent constructed
or artificially (accession continua). (Pineda, 2009)
within the leased area be assessed with real
property taxes?
Accession is NOT a mode of acquiring ownership
A: NO. The roads that respondent constructed

It is not one of the modes enumerated under Art.
within the leased area should not be assessed with
712 of the NCC (different modes of acquiring
real property taxes. The roads that respondent
ownership). It is, therefore, safe to conclude that
constructed became permanent improvements on
accession is not a mode of acquiring ownership.
the land owned by the NGPI-NGEI by right of
Reason: Accession presupposes a previously
accession under the Civil Code, to wit:
existing ownership by the owner over the principal.
Fundamentally, accession is a right implicitly
Despite the land being leased by respondent when
included in ownership, without which it will have no
the roads were constructed, the ownership of the
basis or existence. (Paras, 2008)
improvement still belongs to NGPI-NGEI. As
provided under Arts. 440 and 445 of the NCC, the
NOTE: In general, the right to accession is automatic
land is owned by the cooperatives at the time
(ipso jure), requiring no prior act on the part of the
respondent built the roads. Hence, whatever is””
owner or principal.
incorporated in the land, either naturally or
artificially, belongs to the NGPI-NGEI as the
Q: Filipinas Palm Oil Plantation Inc. is a private
landowner. (Provincial Assessor of Agusan Del Sur v.
organization engaged in palm oil plantation
Filipinas Palm Oil Plantation, Inc., G.R. No.183416, 05
with a total land area of more than 7,000
Oct. 2016)
hectares of National Development Company
(NDC) lands in Agusan del Sur. Harvested fruits
ACCESSION DISCRETA
from oil palm trees are converted into oil
through Filipinas' milling plant in the middle of
The right of accession with respect to what is
the plantation area. Within the plantation, there
produced by the property. To the owner belongs the:
are also three (3) plantation roads and a
number of residential homes constructed by
1. Natural fruits - The spontaneous products of
Filipinas for its employees.
the soil, and the young and other products of
animals;
The LBAA found that the P207.00 market value
declared in the assessment by the Provincial
2. Industrial fruits - Are those produced by lands
Assessor was unreasonable. It found that the

Civil law
of any kind through cultivation or labor; Pratus Sequitor Ventrem – Offspring Follows the
Mother
3. Civil fruits - The rents of buildings, the price of
leases of lands and other property and the This legal maxim means that the offspring follows
amount of perpetual or life annuities or other the dam (mother). The legal presumption, in the
similar income. (Arts. 441-442, NCC) absence of proof to the contrary, is that the calf, as
well as its mother, belongs to the owner of the latter,
Obligation of the owner who receives the fruit by the right of accretion. (US v. Caballero, G.R. No.
from a third person 8608, 26 Sept. 1913) Thus, when the ownership over
the offspring of the animal when the male and
He who receives the fruits has the obligation to pay female belongs to different owners, the owner of the
the expenses made by a third person in their female was considered also the owner of the young,
production, gathering and preservation. (Art. 443, unless there is a contrary custom or speculation.
NCC) (2009 BAR)
When Fruits are Deemed to Exist
Meaning of third person
1. Civil fruits accrue daily and are considered
One who is NOT the owner, builder, planter or personal property and may be pro-rated; and
sower. (Pineda, 2009) 2. Natural and industrial fruits, while still growing,
Only such as are manifest or born are considered are considered as real property; ordinarily, they
as natural or industrial fruits. cannot be pro-rated. (De Leon, 2006; 3 Manresa
190)
With respect to animals, it is sufficient that they
are in the womb of the mother, although unborn. Ownership of Fruits
(Art. 444, NCC)
GR: Fruits belong to the owner. (Art. 441, NCC)
Existence of the fruit
XPNs: If the thing is: (P-U-L-P-A)
It depends on the type of fruit: 1. In possession of a Possessor in good faith (Art.
546, NCC) (1992, 1996, 2000 BAR) before the
1. Annual (must be planted every year/must repossession is legally interrupted;
plant after harvest; rice, wheat, corn) – deemed 2. Subject to a Usufruct; (Art. 566, NCC)
manifest the moment their seedlings appear; 3. Lease of rural land;
and 4. Pledged (Arts. 1680 & 2102(7), NCC) - pledge is
entitled to the fruits but has the obligation to
2. Perennial (only planted once and bear fruit for compensate or set-off what he receives with
several seasons; mango and coconut trees) – those which are owing to him; or
deemed to exist only when they actually appear. 5. In possession of an Antichretic creditor. (Art.
(Paras, 2008) 2132, NCC)
Animal young ACCESSION CONTINUA
They are considered existing even if still in the It is the right pertaining to the owner of a thing over
maternal womb. They should be considered existing everything incorporated or attached thereto either
only at the commencement of the maximum naturally or artificially, by external forces.
ordinary period for gestation. (Ibid.)
1. Immovable Property
a. Accession Industrial (Arts. 445-455, NCC)

2022 GOLDEN NOTES
Property
i. Building; seeds indiscriminately or evenly through hand

ii. Planting; and or mechanical device.
iii. Sowing.
Maxims in connection with Accession Industrial
b. Accession Natural
i. Alluvium; (Art. 457, NCC) 1. The accessory follows the principal;
ii. Avulsion; (Art. 459, NCC) 2. The accessory follows the nature of that to
iii. Change of course of rivers; (Arts. 461-462, which it relates; and
NCC); and 3. What is built upon the land goes with it; or the
iv. Formation of islands. (Arts. 464- 465, NCC) land is the principal, and whatever is built on it
becomes the accessory. (Paras, 2008)
2. Movable Property
a. Adjunction or Conjunction; Rule on Ownership regarding Accession
b. Mixture; and Industrial
c. Specification. (Paras, 2008)
GR: The owner of the land is the owner of whatever
Basic principles in Accession Continua (B-A-D-O- is built, planted or sown on that land, including the
N-G-E) improvements or repairs made thereon.
1. He who is in Bad faith is liable for damages. XPNs:

2. Accessory follows the principal; 1. When the doer is in good faith, the rule is
3. Union or incorporation must generally be modified; or
effected in such a manner that to separate the 2. Improvements on the land of one of the spouses
principal from the accessory would result in at the expense of the conjugal partnership will
substantial Damage to either or diminish its belong to the partnership or to the spouse who
value; owns the land depending on which of the two
4. To the Owner of the thing belongs the extension properties has a higher value. (Art. 120, F.C.)
or increases to such thing;
5. Bad faith of one party Neutralizes the bad faith NOTE: If the doer is in bad faith, he is entitled only
of the other so that they shall be considered in to necessary expenses for the preservation of the
good faith; land.
6. He who is in Good faith may be held responsible
but not penalized; and The owner of the land who makes thereon,
7. No one shall unjustly Enrich himself at the personally or through another, plantings,
expense of another. (Paras, 2008) constructions or works with the materials of
another, shall pay their value; and, if he acted in bad
ACCESSION INDUSTRIAL faith, he shall also be obliged to the reparation of
damages. The owner of the materials shall have the
Three kinds of Industrial Endeavors (B-P-S) right to remove them only in case he can do so
without injury to the work constructed, or without
1. Building – Erecting a structure or construction the plantings, constructions or works being
of any kind, with roof for residential, office, destroyed. However, if the landowner acted in bad
social, commercial or other purposes; faith, the owner of the materials may remove them
in any event, with a right to be indemnified for
2. Planting – Setting into the soil or land seeds or damages. (Art. 447, NCC)
seedlings of trees such as mangoes, coconuts,
etc.; and Good Faith and Bad Faith distinguished.
3. Sowing - Scattering or spreading of germinated Good Faith - A person who is not aware that there

Civil law
exists in his title or mode of acquisition any flaw land; it does not apply where one’s interest in the
which invalidates it. land is merely that of a holder such as a mere lessee
under a rental contract, an agent, or a usufructuary.
Bad Faith - A person who is aware that there exists (Ibid.)
in his title or mode of acquisition any flaw which
invalidates it.
RIGHTS OF BUILDER/PLANTER/SOWER
IN GOOD FAITH
When both parties are in bad faith
As to presumption of good faith
If both parties are in bad faith, the bad faith of one
He who alleges bad faith on the part of the
cancels the bad faith of the other. Hence, both are
builder, etc. has the burden of proof. (Art. 527,
considered in good faith. (Paras, 2008)
NCC; De Leon, 2006)
NOTE: Good faith is always presumed; and upon As to necessary expenses
him who alleges bad faith on the part of the
possessor rests the burden of proof. (Art. 527, NCC) The builder, etc. may retain the thing until he has
been reimbursed by the owner of the land. (Art.
a. RIGHTS OF BUILDER/PLANTER/ 546, NCC)
SOWER IN GOOD FAITH As to useful improvements
The owner of the land on which anything has been

If it can be removed without damage to the
built, sown or planted in good faith, shall have the
principal thing, may remove them. (Art. 546, NCC)
right to appropriate as his own the works, sowing or
planting, after payment of the indemnity provided
for in articles 546 and 548, or to oblige the one who As to expenses of pure luxury/mere pleasure
built or planted to pay the price of the land, and the
one who sowed, the proper rent. However, the Shall not be refunded but he may remove the
builder or planter cannot be obliged to buy the land ornaments with which he has embellished the
if its value is considerably more than that of the principal thing if it suffers no injury thereby, and
building or trees. In such case, he shall pay if his successor in the possession does not prefer
reasonable rent, if the owner of the land does not to refund the amount expended. (Art. 547, NCC)
choose to appropriate the building or trees after As to the materials not owned
proper indemnity. The parties shall agree upon the
Owner of land is subsidiarily liable for the value
terms of the lease and in case of disagreement, the
if the builder, etc. made use of them has no
court shall fix the terms thereof. (Art. 448, NCC)
property with which to pay.
Good faith under Art. 448 of the NCC consists in the

If builder, etc. pays the owner of the materials,
honest belief of the builder, sower, or planter, that
demand from landowner the value of the
the land he is building, sowing, or planting on, is his
materials and labor. (Art. 455, NCC)
or that by some title he has a right to build, etc.
thereon, and his ignorance of any defect or flaw in
Instance where bad faith is offset by act of owner
his title.
Q: Respondents alleged that they are owners of

It implies honesty of intention, and freedom from
a lot covered by a TCT and a tax declaration,
knowledge of circumstances which ought to put the
both in the name of respondent Marco, who
builder, etc. upon inquiry. (De Leon, 2006)
allegedly purchased the same in October of
1978. As the parties were close relatives,
NOTE: Art. 448, NCC applies only where one builds,
respondents allegedly allowed petitioners to
etc. on land in the belief that he is the owner of the
possess the lot, subject to the condition that they

2022 GOLDEN NOTES
Property
would vacate the same upon demand. land, the rights of one and the other shall be the same
Respondents then sent petitioners a letter as though both had acted in good faith.
requiring the latter to vacate the property
within 30 days from receipt of the letter. It is understood that there is bad faith on the part of
Petitioners, however, refused to comply. Hence, the landowner whenever the act was done with his
a complaint against the latter was filed. On the knowledge and without opposition on his part.
other hand, petitioners claimed that in 1979, the
subject property was purchased by the late Pursuant to the aforementioned article, the rights
Loren, the mother of petitioner Camille and and obligations of the parties shall be the same as
respondent Marco. Marco, however, allegedly though both acted in good faith. Therefore, Art.448
succeeded in registering the property solely in in relation to Arts. 546 and 548 of the NCC applies.
his name. Hence, an implied trust was allegedly (Sps. Belvis v. Sps. Erola, G.R. No. 239727, 24 July
created over the one-half (½) undivided 2019, J. Caguioa)
hereditary share of petitioner Camille. For over
34 years, petitioners alleged that they possessed
and cultivated the lot in the concept of an owner,
believing in good faith that they were co-owners
of the subject lot. In the course of their
possession, petitioners allegedly introduced
various improvements thereon by planting
bamboos, nipa palms and coconut trees, and by
constructing fishponds. Are petitioners builders
in good faith under Art. 448 of the NCC?
A: YES. While petitioners cannot be deemed to be

builders in good faith, it being undisputed that the
land in question is titled land in the name of
respondents, the CA and the lower courts
overlooked the fact that petitioners constructed
improvements on the subject lot with the
knowledge and consent of respondents. In
exceptional cases, the Court has applied Art. 448 to
instances where a builder, planter, or sower
introduces improvements on titled land if with the
knowledge and consent of the owner.
While respondents may have merely tolerated

petitioners' possession, respondents never denied
having knowledge of the fact that petitioners
possessed, cultivated and constructed various
permanent improvements on the subject lot for
over 34 years. As such, the Court finds that
respondents likewise acted in bad faith under Art.
453 of the NCC, which provides:
Art. 453. If there was bad faith, not only on the part of
the person who built, planted or sowed on the land of
another, but also on the part of the owner of such

Civil law
Requisites of Co-ownership (P-U-S)

C. CO-OWNERSHIP
1. Plurality of owners;
2. Unity of object, which is an undivided thing or
right; and
In default of contacts, or of special provisions, co-
3. Each co-owner’s right must be limited only to
ownership shall be governed by the provisions of
his ideal Share of the physical whole. (De Leon,
this Title. (Art. 484, NCC)
2006)
There is co-ownership whenever the ownership of

NOTE: By the very nature of co-ownership, a co-
an undivided thing or right belongs to different
owner cannot point to any specific portion of the
persons. (Art. 484, NCC) It is the right of common
property owned in common as his own because his
dominion which two or more persons have in a
share remains intangible and ideal. (Sps. Avila et al
spiritual (or ideal) part of the thing which is not
v. Sps. Barabat, GR. No. 141993, 17 May 2006)
physically divided.
Rules to govern in Co-ownership

Characteristics of Co-ownership in general (P-E-
M-O-P-C)
1. Contracts;
2. Special provision of law; and
1. Plurality of subjects or owners;
3. Articles 484 to 501, Title III of the NCC (Pineda,
2. There is no Mutual representation by the co-
2009)
owners;
3. It exists for the common Enjoyment of the co-
Co-ownership v. Joint Tenancy (Pineda, 2009;
owners;
Paras, 2008)
4. There is a single Object which is not materially
divided;
5. It has no distinct legal Personality; and CO-OWNERSHIP
JOINT OWNERSHIP
6. It is governed, first of all, by the Contract of the (Tenancy in
(Joint Tenancy)
parties; otherwise, by special legal provisions, common)
and in default of such provisions, by the
provisions of Title III of the NCC on co- As to the extent of ownership
ownership. (De Leon, 2006)
Each co-owner is the
Each joint owner
Legal effect of Co-ownership owner of his own ideal
owns the whole thing.
share.
Co-ownership creates rights in favor of each one of
As to disposition
the co-owners with respect to the property owned
in common. Joint owner may not
Each co-owner may
dispose of his own
dispose of his
The rights of a co-owner can be viewed in two share without the
undivided share
senses: consent of all the rest,
without the other co-
1. His right over the thing owned in common is because he really has
owners’ consent.
limited by the other co- owner’s concomitant no ideal share.
rights; or As to transfer of shares in case of death
2. His right over his ideal share or his undivided Upon the death of a
Upon the death of a
interest over the same property; the individual joint owner, his share
co-owner, his ideal
co-owner has absolute control and ownership goes to the other joint
share goes to his heirs.
over his ideal share. owners by accretion.

2022 GOLDEN NOTES
Property
As to minority or legal disability sharing agreements).
In case of a minor who For collective

is a co-owner, this The legal disability of For profit
enjoyment
does not benefit the one joint owner
others for the purpose benefits the others.
of prescription. No public instrument
May be made in any
is needed even if the
form except when real
Prescription object of the co-
property is
ownership is an
Prescription will contributed
Prescription will not immovable
continue to run
run among them.
among co-owners.
Alienation of property co-owned
Co-ownership v. Partnership (Pineda, 2009)
When a co-owner sells the whole property as his,
the sale will affect only his own share but not those
ORDINARY
CO-OWNERSHIP of the other co-owners’ who did not consent to the
PARTNERSHIP
sale.
No legal personality Has legal personality
A sale of the entire property by one co-owner
Can be created without the consent of the other co-owners is not
Can be created only by null and void but affects only his undivided share
without the
contract, express and the transferee gets only what would correspond
formalities of a
or implied to his grantor in the partition of the thing owned in
contract
common. (Paulmitan v. CA, G.R. No. 51584, 25 Nov.
By contract or by will By contract only 1992)
Agreement to exist for Q: Is there such a thing as perpetual co-

No term limit is set by
more than ten (10) ownership?
law.
years is void.
A: NO. Any of the co-owners may demand partition
No mutual There is mutual
any time. No co-owner ought to be compelled to stay
representation. representation.
in a co-ownership indefinitely. He may insist the
partition of the property any time. Such action to
Not dissolved by the demand for partition does not prescribe. (Patricio v.
Dissolved by death or
death/incapacity of a Dario, G.R. No. 170829, 20 Nov. 2006)
incapacity of a partner
co- owner
A co-owner has a right to freely sell or dispose his
A co-owner can undivided share of interest but has no right to sell a
dispose of his share A partner cannot be divided or definite part of a real estate owned in
without the consent of substituted without common. (Lopez v. Illustre, G.R. No. 2426, 24 Jan.
the others, hence, in a the consent of the 1906; Torres v. Lapinid, G.R. No. 187987, 26 Nov.
way a co-owner is others. 2014)
substituted.
In a property co-owned by the compulsory heirs,
Profits of a co-owner Profits may be any act tantamount to partition such as identifying
depend on his stipulated upon; (e.g., their shares and constructing their respective
proportionate share. profit-

Civil law
houses automatically terminates co-ownership. partition of the property for a certain period of
(Avila v. Sps. Arabat, G.R. No. 141993, 17 Mar. 2006) time;
Duration of the Co-ownership (2000, 2002, 2008 5. Contract; or

BAR)
6. By Chance or fortuitous event – e.g., Hidden
An agreement to keep the thing undivided for a treasure. (Paras, 2008)
certain period of time, not exceeding ten (10) years,
shall be valid. This term may be extended by a new NOTE: One who is merely related by affinity to the
agreement. decedent does not become a co-owner of the latter’s
property.
A donor or testator may prohibit partition for a
period which shall not exceed twenty (20) years (in Q: Hilaria Bagayas, an adoptive child, filed a
relation to Art. 1083, NCC). complaint against her siblings who excluded her
from inheriting from the estate of their parents.
Neither shall there be any partition when it is She asked to include her as a registered owner
prohibited by law. (Art. 494, NCC) to the extent of one-third of the lands covered
therein; citing Sec. 108 of P.D. 1529 or the
Share of the co-owners in the benefits and Property Registration Decree. In an earlier
charges arising from the co-ownership complaint, she asked for the annulment of a
Deed of Absolute Sale in favor of her brothers
The share of the co-owners in the benefits and wherein the RTC found otherwise. They found
charges arising from the co-ownership shall be that the lands were transferred to the brothers
proportional to their respective interests and any by the father’s execution of the deed of sale
stipulation in a contract to the contrary shall be before he died. Is the dismissal of the earlier
void. (Art. 485(1), NCC) Consequently, in order to complaint on the ground that it is in the nature
determine the share of the co-owners in the benefits of a collateral attack on the certificates of title
and charges, we must first determine their constitutes a bar to a subsequent petition under
respective interests in the co-ownership. Sec. 108 of P.D. 1529?
Interests are presumed equal, unless the contrary is A: NO. Sec. 108 of P.D. 1529 is used only for
proved. (Art. 485(2), NCC) contemplating corrections or insertions of mistakes
which are only clerical but certainly not
Sources of Co-ownership (L-O-S-T-C²) controversial issues. Although Hilaria Bagayas was
able to prove that she is a legally adoptive child, the
1. Law – e.g., Easement of party walls (Art. 658, action is not proper as her petition was of an
NCC); co-ownership between a man and a annulment of sale and partition. She must first
woman capacitated to marry each other (Art. prove that she is a co-owner of the estate and
147, FC); between a man and a woman not conveyance of her lawful shares. However, she
capacitated to marry each other; (Art. 148, FC) failed to do so. As regards to her citing of Sec. 108 of
P.D. 1529, it was improper as her intent for using it
2. Occupancy – e.g., When two persons gather is as a mode of directly attacking the certificates of
forest products or catch a wild animal; title issued to the Bagayas brothers. It was ruled
that it was not a direct attack, therefore cannot be
3. Succession – e.g., Heirs of undivided property used. The complaint is not covered by the intention
before partition; of the decree. (Bagayas v. Bagas, G.R. Nos. 187308 &
187517, 18 Sept. 2013)
4. Testamentary (or mortis causa) / Donation
inter vivos – e.g., Where the donor prohibits

2022 GOLDEN NOTES
Property
RIGHT OF CO-OWNERS prejudicial to the minority; (Art. 492(3), NCC)
Each co-owner may use the thing owned in 7. To Exercise legal redemption;
common, provided he does so in accordance with
the purpose for which it is intended and in such a 8. To ask for Partition (Art. 494, NCC);
way as not to injure the interest of the co-
ownership or prevent the other co-owners from 9. Right to Exempt himself from obligation of
using it according to their rights. The purpose of paying necessary expenses and taxes by
the co-ownership may be changed by agreement, renouncing his share in the pro-indiviso
express or implied. (Art. 486, NCC) interest; but cannot be made if prejudicial to co-
ownership; (Art. 488, NCC)
General rights of each co-owner as to the thing
owned in common 10. Right to make Repairs for preservation of things
(U-S-E-C-O-P-E-P-E-R-F-A-P-A-P) can be made at will of one co-owner; receive
reimbursement therefrom; notice of necessity
1. To Use the thing according to the purpose of such repairs must be given to co- owners, if
intended provided that: practicable (Art. 489, NCC);
a. It is without prejudice to the interest of the
co-ownership; and 11. Right to full ownership of his part and Fruits;
b. Without preventing the use of other co- (Art. 493, NCC)
owners. (Art. 486, NCC)
12. Right to Alienate, assign or mortgage own part;
NOTE: The purpose of the co-ownership may be except personal rights like right to use and
changed by an agreement, express or implied. habitation; (Ibid.)
2. To Share in the benefits in proportion to his 13. Right of Pre-emption;

interest, provided the charges are borne in the
same proportion (Art. 485, NCC); 14. Right to be Adjudicated thing (subject to right of
others to be indemnified); and
NOTE: A contrary stipulation is void. Hence,
benefits cannot be stipulated upon by the co- 15. Right to share in Proceeds of sale of thing if
owners. thing is indivisible and they cannot agree that it
be allotted to one of them. (Art. 498, NCC)
3. Each co-owner may bring an action for
Ejectment (Art. 487, NCC) Duties/Liabilities of Co-Owners
(C-U-N-A-M-A-P2)
NOTE: Action for ejectment covers; forcible
entry, unlawful detainer, accion publiciana, 1. Share in Charges proportional to respective
quieting of title, accion reivindicatoria, and interest; stipulation to contrary is void;
replevin.
2. Pay Necessary expenses and taxes – May be
4. To Compel other co-owners to contribute to exercised by only one co-owner;
expenses for preservation of the thing (Art. 488, 3. Pay Useful and luxurious expenses – If
NCC) and to the taxes; determined by majority;
5. To Oppose to any act of alteration; (Art. 491, 4. Duty to obtain consent of All if thing is to be
NCC) even if beneficial to the co-owners; altered even if beneficial; resort to court if non-
consent is manifestly prejudicial;
6. To Protect against acts of majority which are

Civil law
5. Duty to obtain consent of Majority with regards of all co-owners of the property. (Resuena v. CA, G.R.
to administration and better enjoyment of the No. 128338, 28 Mar. 2005)
thing; controlling interest; court intervention if
prejudicial – Appointment of administrator; Consent of the co-owners is not required to
bring an action for ejectment
6. No Prescription to run in favor of a co-owner as
long as he recognizes co-ownership; The law does not require that consent of all the co-
owners must be first secured before one of them can
Requisites for acquisition through prescription: bring an action for ejectment. If the case does not
a. He has repudiated through prosper:
unequivocal acts;
b. Such act of repudiation is made GR: The other co-owners are NOT bound by the
known to other co-owners; and judgment.
c. Evidence must be clear and
convincing. XPN: If they were also served with summons, even
as unwilling plaintiffs.
7. Co-owners cannot ask for Physical division if it
would render thing unserviceable; but can A suit for ejectment CANNOT be brought by one co-
terminate co-ownership; and owner against another co-owner, since the latter
also has a right of possession; the only effect of the
8. After partition, duty to render mutual action will be to obtain recognition of the co-
Accounting of benefits and reimbursements for ownership.
expenses.
RIGHT TO PROPERTY OWNED IN COMMON
Rights of a co-owner to third parties v. FULL OWNERSHIP OVER IDEAL SHARE
1. GR: Assignees or creditors of the co-owners 1. Right to property owned in common

may take part in the division of the thing owned
in common and object to it being effected NOTE: Each co-owner is granted the right to use
without their concurrence, but they cannot the property owned in common for the purpose
impugn any partition already executed; and for which it is intended.
XPN: If there has been fraud or it was made Two restrictions in the enjoyment of this right:
notwithstanding their formal opposition a. The co- ownership shall not be injured;
presented to prevent it, without prejudice to and
the right of the debtor or assignor to maintain b. The exercise of such right shall not
its validity. (Art. 497, NCC) prevent the other co-owners from using
the property according to their own
2. Non-intervenors – Retain rights of mortgage rights. (Rabuya, 2008; Aguilar v. CA, G.R.
and servitude and other real rights and personal No. 76351, 29 Oct. 1993)
rights belonging to them before partition was
made. 2. Full ownership over his/her ideal share
Any of the co-owners may bring an action in NOTE: A co-owner has full ownership of his share
ejectment (undivided interest) and the fruits and benefits
arising therefrom. Being the full owner thereof, he
One of the co-owner’s action for ejectment against a may alienate, assign, or mortgage it. He can also
defendant is deemed to be instituted for the benefit substitute another person in the enjoyment of his
share, except only when personal rights are

2022 GOLDEN NOTES
Property
involved. (Art. 493, NCC) properties of conjugal in nature, thus making

the children of Vda. Rosario co- owners?
Q: Melecio heirs inherited a residential lot,
ancestral house and two other structures A: NO. The SC ruled that Vda. Rosario is the sole
erected thereon, the administration and owner of the parcel of lands. Conjugal partnership
management of which were left to the care of terminates upon the death of one spouse. Vda.
Erna who was then residing in their ancestral Rosario was already a widow when she sold the
home. The Melecio heirs purportedly executed a subjected lands to Bobby Tan. Therefore, at the time
notarized Special Power of Attorney (SPA) of the sale, Vda. Rosario, a widow, can now dispose
authorizing Erna to apply for a loan with RBCI the properties on her own volition. (Tan v. Andrade,
and mortgage the subject properties. Erna G.R. No. 171904, 07 Aug. 2013)
defaulted in the loan payment causing RBCI to
extrajudicially foreclose the mortgaged Q: Sps. Roque Magsano and Susana Capelo (Sps.
properties. Melecio heirs demanded RBCI to Magsano), the parents of Norma, et. al., executed
release the subject properties from the coverage in favor of PSLB a Real Estate Mortgage over
of Erna's loan obligation to the extent of their their parcel of land as security for their loan.
shares and refused to vacate the premises. RBCI Sps. Magsano defaulted in their obligation,
applied for and was issued a writ of possession. causing the extra-judicial foreclose of the
The Melecio heirs filed a complaint in court mortgaged property in which PSLB emerged as
alleging that the SPA submitted by Erna was the highest bidder. It subsequently sold the
spurious and their signatures appearing subject land to Sps. Manuel. Thereafter, Sps.
thereon were falsified. Is the mortgage of the Magsano refused to vacate the premises despite
entire property valid? PSLB’s demands; hence, the latter applied for
and was granted a writ of possession and
A: NO. Erna did not validly mortgage the entire demolition. Norma et. al. sought to annul the
property. While Erna, as herself, a co-owner, by Real Estate Mortgage. They averred that Roque
virtue of Art. 493 of the NCC, had the right to Magsano passed away prior to the execution of
mortgage or even sell her undivided interest in the the Real Estate Mortgage; hence, the mortgage
said properties, she, could not, however, dispose of was void, and could not have conferred any right
or mortgage the subject properties in their entirety to PSLB which it could pass to Sps. Manuel. PSLB
without the consent of the other co-owners. The and the heirs of Sps. Manuel denied knowledge
settled rule is that persons constituting a mortgage of the death of Roque, and averred that
must be legally authorized for the purpose. In the petitioners have no cause of action to seek the
present case, while Erna appears to be a co-owner annulment of the Real Estate Mortgage since
of the mortgaged properties, she made it appear they were not parties thereto.
that she was duly authorized to sell the entire
properties by virtue of the notarized SPA. (Rural 1. Is the Real Estate Mortgage void?
Bank of Cabadbaran, Inc. v. Melecio-Yap, G.R. No. 2. Are Sps. Manuel purchasers in good faith?
178451, 30 July 2014)
A:
Q: Vda. Rosario is the registered owner of four 1. NO. The validity of the mortgage in favor of
(4) parcels of land, which she mortgaged to and PSLD should be limited only to the Susana’s
foreclosed. Upon the expiration of the portion. At the time the mortgage was
redemption period, she asked the assistance of constituted, Roque was already deceased.
Bobby Tan. Thereafter, she sold the lands to Upon Roque’s death, the conjugal partnership
him. The children of Vda. Rosario said they are between him and Susana was dissolved. Thus,
co-owners as they are inheritors of their an implied co-ownership arose among Susana
deceased father, whose approval was needed to and the other heirs of Roque with respect to his
dispose the subject properties. Are the subject share in the assets of the conjugal partnership

Civil law
pending liquidation. ACTS OF ALTERATION
While she herself as co-owner had the right to Alteration (2008 BAR)
mortgage or even sell her undivided interest in
the subject property, she could not mortgage It is a change which is more or less permanent,
or otherwise dispose of the same in its entirety which changes the use of the thing, and which
without the consent of the other co-owners. prejudices the condition of the thing or its
enjoyment by the others. (Paras, 2008)
2. NO. While the rule is that every person dealing
with registered land may safely rely on the Alteration includes the act by virtue of which a co-
correctness of the certificate of title issued owner changes the thing from the state in which the
therefor and the law will in no way oblige him others believe it should remain. It is not limited to
to go beyond the certificate to determine the material changes. (Rabuya, 2008; 3 Manresa 447)
condition of the property, where the land sold
is in the possession of a person other than the Acts of Administration v. Acts of Alteration
vendor, as in this case, the purchaser must go
beyond the certificate of title and make
ACTS OF ACTS OF
inquiries concerning the actual possessor.
ADMINISTRATION ALTERATION
(Norma C. Magsano, v. Pangasinan Savings &
Loan Bank, G.R. No. 215038, 17 Oct. 2016) Acts, by virtue of
which, a co-owner, in
Co-owner’s right to use the property owned in opposition to the
common expressed or tacit
Refers to the agreement of all the
Each co-owner may use the thing owned in enjoyment, co- owners, and in
common, provided he does so in accordance with exploitation, violation of their will,
the purpose for which it is intended and in such a alteration of the thing changes the thing
way as not to injure the interest of the co- which do not affect its from the state in
ownership or prevent the other co-owners from substance, form, or which the others
using it according to their rights. (Art. 486, NCC) purpose. believe it would
remain, or
NOTE: If one co-owner alone occupies the entire withdraws it from
house without opposition from the other co- the use to which they
owners, and there is no lease agreement, the other believe it is intended.
co-owners cannot demand the payment of rent.
Transitory in
(Rabuya, 2008; De Guia v. CA, G.R. No. 120864, 08 Oct. Permanent. (Rabuya,
character. (Rabuya,
2003) 2008)
2008)
Rules on determination of the purpose of the

Affects or relates to
property Does not affect the
the substance or
substance or form.
essence of the thing.
1. Purpose stipulated in the agreement, express or
implied; In relation to the right
2. In default thereof, its purpose ordinarily of a co-owner, they
adapted based on its nature; or require the consent of Require the consent
3. In default thereof, the use for which it was the majority who of all co-owners. (Art.
formerly intended. represents the 491, NCC)
controlling interest.
(Art. 492, NCC)

2022 GOLDEN NOTES
Property
Can be exercised by NOTE: The transaction affects only his ideal

Must be exercised by
the co-owners share and not that of the other co-owners.
the co-owners
through other
themselves.
persons. 5. Right to Substitute another person in its
enjoyment, except when personal rights are
Effect of alteration without the express or involved.
implied consent of co-owners
NOTE: Personal rights or jus in personam is the
The co-owner who makes the alteration shall: power belonging to one person to demand from
1. Lose what he has spent; another, as a definite passive subject-debtor,
2. Be obliged to demolish the improvements the fulfillment of a prestation to give, to do, or
done; and not to do. (Paras, 2008)
3. Pay for the loss and damages the community
property or other co-owners may have Right to demand partition
suffered. (Paras, 2008)
GR: Every co-owner has the right to demand
NOTE: Estoppel will operate against the co-owners partition. (Art. 494, NCC) (2000, 2002, 2008 BAR)
who were aware of the execution of the acts of
alteration, but did not object thereto. They are XPNs: (E-A-S-I-P-A-U-L)
deemed to have given their implied consent. 1. When partition would render the thing
(Pineda, 2009; 3 Manresa 469-470) Unserviceable;
Conversion 2. When the thing is essentially Indivisible;
It is the act of using or disposing of another’s 3. When partition is prohibited by Law by reason
property without lawful authority to do so in a of their origin or juridical nature - e.g., party
manner different from that with which a property walls and fences;
is held by the trustees to whom the owner had
entrusted the same. It is not necessary that the use 4. When the co-owners Agree to keep the
for which the property is given be directly to the property undivided for a period of time but not
advantage of the person misappropriating or more than ten (10) years;
converting the property of another.
5. When partition is Prohibited by the transferor
RIGHT TO PARTITION (donor/testator) but not more than 20 years
(Art. 1083, NCC);
Rights of co-owners as to the ideal share of each
(F-A-R-T-S) 6. When a co-owner possessed the property as an
Exclusive owner for a period sufficient to
1. Each has Full ownership of his part and of his acquire it through prescription (acquisitive
share of the fruits and benefits; prescription);
2. Right to Alienate, dispose, or encumber; NOTE: Ten (10) years ordinary prescription,
3. Right to Renounce part of his interest to 30 years extraordinary partition.
reimburse necessary expenses incurred by
another co-owner; 7. When co-owners may agree that it be Allotted
to one of them reimbursing the others; and
4. Right to enter into Transaction affecting his
ideal share; and 8. If they cannot agree, they may Sell the thing
and distribute the proceeds.

Civil law
NOTE: An action to demand partition is Prescription

imprescriptible or cannot be barred by laches,
absent a clear repudiation of the co-ownership by a Q: May prescription run against a co-owner?
co-owner clearly communicated to the other co- (2000, 2002, 2008 BAR)
owners. (De Leon, 2006)
A:
Q: X, Y, Z are siblings who inherited a 1O- storey GR: NO. As long as the co-owner expressly or
building from their parents. They agreed in impliedly recognizes the co-ownership,
writing to maintain it as a co-owned property prescription cannot run in favor of or against him.
for leasing out and to divide the net profits
among themselves equally for a period of 20 Reason: Possession of a co-owner is like that of a
years. On the 9th year, X wanted to get out of the trustee and shall not be regarded as adverse to the
co-ownership so he could get his 1/3 share in other co-owners but in fact is beneficial to all of
the property. Y and Z refused, saying X is bound them. Acts considered adverse to strangers may
by their agreement to keep the co- ownership not be considered adverse insofar as co-owners are
for 20 years. Are Y and Z correct? Explain. (2015 concerned. (Salvador v. CA, G.R. No. 109910, 05 Apr.
Bar) 1995)
A: Y and Z ARE PARTLY CORRECT. If the co- XPNs: Co-owner's possession may be deemed
owners agree to keep the thing undivided, such adverse to the cestui que trust or the other co-
agreement shall govern provided the period shall owners provided the following elements must
not exceed ten (10) years. In this case, the concur:
agreement to keep the thing undivided shall be 1. That he has performed unequivocal acts of
valid at the most for ten (10) years. (Art. 494, NCC) repudiation amounting to an ouster of the
cestui que trust or the other co-owners;
When partition is not allowed (C-I-P-U-N) 2. That such positive acts of repudiation have
been made known to the cestui que trust or the
1. When Indivision within ten (10) years is other co-owners; and
stipulated by the co-owners; 3. That the evidence thereon must be clear and
convincing. (Salvador v. CA, G.R. No. 109910, 05
2. When co-ownership is imposed as a Condition Apr. 1995)
in a donation or in a last will and testament;
NOTE: Prescription begins to run from the time of
repudiation. (De Leon, 2006)
3. When from the Nature of the property in
common, it cannot just be divided (without
Examples of Acts of Repudiation
following the requisites of the law) such as
conjugal property and party walls;
Filing of an action to:
4. When partition will render the property
1. Quiet title; or
Unserviceable for the use and purpose for
2. Recovery of ownership. (De Leon, 2006)
which it is intended; and
XPN to XPN: Constructive trusts can prescribe.
5. When the issue of ownership had not been
Express trust cannot prescribe as long as the
definitely resolved, it is Premature to effect a
relationship between trustor and trustee is
partition of the properties. (Pineda, 2009)
recognized. (Paras, 2008)
Q: The two lots owned by Alipio were inherited

by his nine (9) children, including Maria, upon
his death. Pastor, Maria’s husband, filed a

2022 GOLDEN NOTES
Property
complaint for quieting of title and annulment of Impugning partition already implemented
documents against the Sps. Yabo, alleging that
he owned a total of eight (8) shares of the GR: A partition already executed or implemented
subject lots, having purchased the shares of CANNOT be impugned.
seven (7) of Alipio's children and inherited the
share of his wife, Maria, and that he occupied, XPNs:
cultivated, and possessed continuously, openly, 1. In case of fraud, regardless of notification and
peacefully, and exclusively the parcels of land. opposition; or
He prayed that he be declared the absolute 2. In case partition was made over their objection
owner of 8/9 of the lots. His co-heirs then even in absence of fraud. (Art. 497, NCC)
instituted an action to partition the lots. Did
Pastor acquire by prescription the shares of his Remedies available to co-owners where the co-
other co-heirs or co-owners? owned property cannot be physically divided
without rendering it useless or unserviceable
A: NO. The only act which may be deemed as (Art. 498, NCC)
repudiation by Pastor of the co-ownership over the
lots is his filing of an action to quiet title. The period 1. Agree on the allotment of the entire property
of prescription started to run only from this to one of them who in turn will indemnify the
repudiation. However, this was tolled when his co- others for their respective interests; or
heirs, instituted an action for partition of the lots.
Hence, the adverse possession by Pastor being for 2. Sell the property and distribute the proceeds to
only about six (6) months would not vest in him the co-owners. (Pineda, 2009)
exclusive ownership of his wife's estate, and absent
acquisitive prescription of ownership, laches, and Rights of third persons that are NOT affected by
prescription of the action for partition will not lie partition (Mo-R-Se-P)
in favor of Pastor. (Salvador v. CA, G.R. No. 109910,
05 Apr. 1995) 1. Rights of
a. Mortgage;
Notice of the Proposed Partition to Creditors b. Servitude; and
and/or Assignees c. Any other Real rights existing before
partition.
The law does not require that a notification be 2. Personal rights pertaining to third persons
given but: against the co-ownership. (Art. 499, NCC)
1. If notice is given – it is their duty to appear to
concur /oppose, otherwise creditor’s claims Illustration: A, B and C were co-owners of parcel
are deemed waived; and of land mortgaged to M. If A, B, and C should
2. If no notice is given – creditors and/or physically partition the property, the mortgage in
assignees may still question the partition made M’s favor still covers all the three lots, which,
on ground of fraud or for being prejudicial to together, formerly constituted one single parcel. If
existing rights. A alone had contracted an unsecured obligation, he
would of course be the only one responsible.
NOTE: Third persons who have rights attached to (Paras, 2008)
the community property before its partition, shall
retain such rights even after the partition of the Rights of third persons in case of partition (Art.
property. The protection granted by law applies to 499, NCC)
both real and personal rights. (Pineda, 2009)
1. The partition of a thing owned in common shall
not prejudice third persons, who shall retain
the rights of mortgage, servitude or any other

Civil law
real rights belonging to them before the Acts requiring the majority consent of the co-
division was made; and owners
2. Personal rights pertaining to them against the 1. Management;

co-ownership shall also remain in force, 2. Enjoyment; and
notwithstanding the partition. 3. Improvement or embellishment.
RIGHT TO CONTRIBUTION FOR EXPENSES Remedy of the minority who opposes the
decision of the majority in co-ownership
Expenses which the co-owners can be
compelled to contribute Minority may appeal to the court against the
majority’s decision if the same is seriously
Only necessary expenses. Useful expenses and prejudicial.
those for pure luxury are not included.
There is no majority unless the resolution is
Necessary Expenses, Useful Expenses, and approved by the co-owners who represent the
Expenses of Pure Luxury defined controlling interest in the object of the co-
ownership. (Art. 492(2), NCC)
1. Necessary Expenses – Made for the
preservation of the thing, or those without Q: May a co-owner opt not to contribute to the
which the thing would deteriorate or be lost, or expenses for the preservation of the property?
those that augment the income of the things
upon which are expended, or those incurred A:
for cultivation, production, upkeep, etc. GR: YES, by renouncing his undivided interest
(Mendoza v. De Guzman, G.R. No. L-28721, 05 equal to the amount of contribution.
Oct. 1928)
XPN: If the waiver or renunciation is prejudicial to
2. Useful Expenses – Incurred to give greater the co-ownership, otherwise he cannot exempt
utility or productivity to the property. These himself from the contribution. (Art. 488, NCC)
expenses increase the value of the thing and
result in improvements. (Rabuya, 2008) NOTE: The value of the property at the time of the
renunciation will be the basis of the portion to be
3. Ornamental Expenses – Adds value to the thing renounced.
only for certain persons in view of their
particular whims, neither essential for Failure or refusal of a co-owner to contribute
preservation nor useful to everybody in pro rata to his share in expenses NOT
general. (Paras, 2008) tantamount to renunciation
Acts of Preservation (Art.489, NCC) There must be an express renunciation, otherwise

he is required to reimburse the others for the
Acts of preservation may be made in the property expenses they incurred. (De Leon, 2006)
of the co-owners at the will of one of the co-owners,
but he must, if practicable, first notify the others of Effect of Renunciation
the necessity of such repairs.
Since renunciation is intended as payment for
expenses already made, it is in nature of dacion en
pago - there is a change in the object of the
obligation (i.e., from sum of money to interest in the
co-ownership). Consequently, the consent of the

2022 GOLDEN NOTES
Property
other co-owner who made the advances is owned in common. The property being conjugal,
necessary. (Tolentino, 2013) Villaner's interest in it is the undivided one-half
portion. When his wife died, her rights to the other
Renunciation CANNOT be made without the half was vested to her heirs including Villaner and
consent of any unpaid creditor. This is because it is their eight (8) legitimate children. (Acabal v.
in effect a novation by substitution. It will prejudice Acabal, G.R. No. 148376, 31 Mar. 2005)
the rights of the unpaid creditor.
Status of the sale by a co-owner
RIGHT OF REDEMPTION
OF CO-OWNER’S SHARE A sale of the entire property by one co-owner
without the consent of the other co-owners is valid.
The shares of all or any other co-owner if sold to a However, it will only affect the interest or share in
third person may be redeemed by a co-owner. the undivided property of the co-owner who sold
If two or more co-owners want to redeem, they the same. The remedy is an action for partition
may do so in proportion to the shares they under Rule 69 of the ROC, the division of the
respectively have. (Art. 1620, NCC) common property. (Acabal v. Acabal, G.R. No.
148376, 31 Mar. 2005)
Effect of redemption by a co-owner
Extinguishment of Co-ownership (C-A-L-S-T-E-
Redemption of the whole property by a co-owner P)
does not vest in him sole ownership over said
property. Redemption within the period 1. Consolidation or merger of the rights in one co-
prescribed by law will inure to the benefit of all co- owner;
owners. Hence, it will not put an end to existing co- 2. Acquisitive prescription in favor of a third
ownership. (Mariano v. CA, GR. No. 101522, 28 May person or a co-owner who repudiates;
1993) 3. Loss or destruction of thing co-owned;
4. Sale of thing co-owned;
Right of Legal Redemption cannot be exercised 5. Termination of period agreed upon;
when there is no co-ownership 6. Expropriation; or
7. Judicial or extra-judicial Partition. (De Leon,
Once the property is subdivided and distributed 2006)
among the co-owners, the community ceases to
exist and there is no more reason to sustain any EFFECTS OF PARTITION
right of legal redemption. The exercise of this right
presupposes the existence of a co-ownership at the 1. It confers upon the co-owner exclusive title
time the conveyance is made by a co-owner and over the property adjudicated to him (Art.
when it is demanded by the other co-owners. (Vda. 1091, NCC); and
de Ape v. CA, G.R. No. 133638, 15 Apr. 2005)
2. Possession of the co-owner over the property
A co-owner cannot alienate the shares of his adjudicated to him shall be deemed exclusive
other co-owners for the period during which the co-possession
lasted. (Art. 543, NCC) In other words, it is
While a co-owner has the right to freely sell and deemed continuous.
dispose of his undivided interest, nevertheless, as a
co-owner, he cannot alienate the shares of his other Rule in case the co-owners cannot agree in the
co-owners. The disposition made by Villaner partition
affects only his share pro indiviso, and the
transferee gets only what corresponds to his 1. If realty is involved, an action for partition
grantor's share in the partition of the property (Rule 69, ROC) against the co- owners may be

Civil law
filed; and
D. POSSESSION
2. In case of personalty and actual partition could
not be made, it may be sold under the
discretion of the court and the proceeds be
It refers to the holding of a thing or the enjoyment
divided among the owners after deducting the
of a right. (Art. 523, NCC) (2007 BAR)
necessary expenses.
Requisites of Possession (P-A-V-E)
Acts of Co-ownership (A2- P-I-E)
1. Existence of the thing or right;

1. Ejectment – any of the co-owners may file such
2. Possession in fact or holding or control of a
action;
thing or right;
2. Administration – majority of the co- owners
3. Animus possidendi or the deliberate intention
shall decide;
to possess; and
3. Improvements – majority of the co-owners
4. Possession is by Virtue of one’s own right,
shall take part;
either as an owner or as a holder. (Pineda,
4. Alteration – all of the co-owners must agree;
2009)
and
5. Preservation – any of the co-owners can do so.
Right to Possession v. Right of Possession
(Pineda, 2009)
Obligations of co-owners upon partition (W-A-
R-D)
Right to Possession Right of Possession
1. Mutual Accounting for benefits received, fruits
and other benefits (in relation to Art. 1087 of
NCC); Jus possidendi Jus possessionis
2. Mutual Reimbursements for expenses;
3. Indemnity for Damages caused by reason of An incident or
negligence/fraud; and An independent right,
attribute of
4. Reciprocal Warranty for defects of title and separate from
ownership over a
quality of the portion assigned to the co-owner. ownership
thing
(Arts. 500 & 501, NCC)
e.g., The lessee of a

Partition is effected either by (1998 BAR):
property, who is not
e.g., The owner of a
the owner thereof, is
1. By agreement between the parties; or house is entitled to
entitled to possess it
2. By judicial proceedings. (Art. 496, NCC) possess it.
for the period of the
lease.
Object of Possession
GR: All things and rights susceptible of being

appropriated. (Art. 530, NCC)
XPNs:
1. Res communes;
2. Property of Public Dominion;
3. Easement; and

2022 GOLDEN NOTES
Property
4. Prohibited by law. Such possessor is presumed to possess just

title. (Art. 540, NCC)
Degrees of Possession b. In the concept of a holder – possessor holds
it merely to keep or enjoy it, the ownership
1. Possession with no right or title (Grammatical pertaining to another (e.g., usufructuary
Degree) – Possessor knows that his possession with respect to the thing itself). (Art. 525,
is wrongful; (e.g., Possession by a thief) NCC)
2. With Juridical title (Juridical Possession) – Title NOTE: None of these holders may assert a
is not one of ownership. Possession peaceably claim of ownership for himself over the thing
acquired and will not ripen into full ownership but they may be considered as possessors in
as long as there is no repudiation of the concept the concept of an owner, or under a claim of
under which property is held; (e.g., Possession ownership, with respect to the right they
of a tenant, depositary) respectively exercise over the thing. There can
be possession in concept of both owner and
3. With just title sufficient to transfer ownership, holder or in either.
but not from the true owner (Real Possessory
Right) – ripens to full ownership by the lapse of 3. According to the condition of the mind (2008
time. (e.g., Possession of a buyer of a car BAR)
purchased from one who pretends to be the a. Possession in good faith – possessor is not
owner); and aware that there is in his title or mode of
acquisition a defect that invalidates it. (Art.
4. With a title in fee simple (Dominium 526, NCC); and
Possession) – Arises from ownership; highest
degree of possession; perfect possession. b. Possession In bad faith – possessor is aware
(Paras, 2008) of the invalidating defect in his own title.
(Art. 526, NCC)
1. KINDS OF POSSESSION
NOTE: Only personal knowledge of the flaw in
1. According to the name used as to its existence one’s title or mode of acquisition can make him
a. In one’s own name – possessor claims the possessor in bad faith. It is not transmissible
thing for himself. (Art. 524, NCC) even to an heir. Possession in good faith ceases
b. In the name of another – held by the from the moment defects in his title are made
possessor for another; agent, subject to known to the possessor. (Rabuya, 2008;
authority and ratification; if not Escritor, Jr. v. IAC, G.R. No. 7183, 12 Nov. 1987)
authorized, negotiorum gestio. (Art. 524,
NCC) 4. According to extent of possession
i. Voluntary – by virtue of an a. Actual possession – occupancy in fact of the
agreement (e.g., possession of an whole or at least substantially the whole
agent). property; and
ii. Legal – by virtue of law (e.g.,
possession in behalf of b. Constructive possession – occupancy of
incapacitated). part, in the name of the whole, under such
circumstances that the law extends the
2. According to the concept of possession occupancy to the possession of the whole.
a. In the concept of an owner (en concepto de (De Leon, 2006)
dueno) – possessor, by his actions, is
believed by others as the owner, whether
he is in good or bad faith. (Art. 525, NCC)

Civil law
Q: What is the Doctrine of Constructive not entitled to possession. (Heirs of Roman Soriano
Possession? v. CA, G.R. No. 128177, 15 Aug. 2001)
A: The possession of a part is a possession of the Tax declarations are not conclusive evidence of
whole. To be considered in possession, one need ownership
not have actual or physical occupation of every
square inch of the property at all times. (Habagat Although tax declarations or realty tax payment of
Grill v. DMC-Urban Property Developer, Inc., G.R. No. property are not conclusive evidence of ownership,
155110, 31 Mar. 2005) nevertheless, they are good indicia of possession in
the concept of owner for no one in his right mind
Requisites of Constructive Possession (A-C-A- would be paying taxes for a property that is not in
R) his actual or at least constructive possession. They
constitute at least proof that the holder has a claim
1. Possessor was in Actual possession of a portion of title over the property. The voluntary
or part of the property; declaration of a piece of property for taxation
2. Claim of ownership of the whole area; purposes manifests not only one’s sincere and
3. Remainder of the area must not be in the honest desire to obtain title to the property and
Adverse possession of another person; and announces his adverse claim against the State and
4. Area claimed must be Reasonable. (Rabuya, all other interested parties, but also the intention
2008) to contribute needed revenues to the Government.
Such an act strengthens one’s bona fide claim of
Possession v. Occupation (2007 BAR) acquisition of ownership. (Ganila v. CA, G.R. No.
150755, 28 June 2005)
POSSESSION OCCUPATION
Real right of possession v. personal right to
Apply to properties Applies only to possess (Paras, 2008)
whether with or property without an
without an owner. owner
REAL RIGHT
PERSONAL RIGHT
Possession does not Occupation confers (RIGHT OF
(RIGHT TO POSSESS;
confer ownership. ownership. POSSESSION;
POSSIDENDI)
POSSESSIONIS)
There can be There can be no
possession without occupation without Creation
ownership. ownership. Created by title alone.
It is not directly created
Created by both title over a thing but is
Person declared as the owner of a certain
and mode directly exercised through
property may still not be entitled to its
over a thing. another against whom
possession
the action is to be
brought.
Possession and ownership are distinct legal
concepts. Ownership confers certain rights to the Object
owner among which are the right to enjoy the thing Incorporeal or
owned and the right to exclude other persons from Generally corporeal intangible.
possession thereof. On the other hand, possession or tangible. Object covers all the
is defined as the holding of a thing or the enjoyment Object is specific present and future
of a right. Literally, to possess means to actually property or thing. property of the debtor.
and physically occupy a thing with or without a (Art. 2236, NCC)
right. Thus, a person may be declared an owner but

2022 GOLDEN NOTES
Property
Subjects possessor who is the owner of the property

continues his possession no longer under a
title of ownership but under a title less than
a. One definite ownership, (i.e., lessee, depositary, etc.)
active subject
(e.g., owner); b. Traditio brevi manu – when the possessor
and who is possessing the thing by a title other
b. One indefinite than ownership, continues to possess it
passive subject a. An active subject under a new title, now of ownership.
which is the (creditor); and (Pineda, 2009)
whole world. b. A definite passive
subject (debtor) 2. By subjection of the thing/right to our will
Right of pursuit is which does not require actual physical detention
therefore available. or seizure; and
Real right follows its
object in the hands of This includes:
any possessor. a. Traditio longa manu – delivery by consent
or mere pointing.
Enforceability b. Traditio symbolica – delivery of a mere
symbol (e.g., key) placing the thing under
Enforceable only against the control of the transferee. (Ibid.)
the original debtor or his
Enforceable against
transferee charged with 3. By constructive possession or proper acts and
the whole world.
notice of the personal legal formalities established by law such as
rights. succession, donation, execution of public
instruments. (Art. 531, NCC)
Limit
Q: Respondents inherited the subject property
Limited by
from Emiliana Bacalso, by virtue of Decree No.
usefulness, value, or
No such limitation 98992. Sometime later, they found the heirs of
productivity of the
Alejandra Delfin to be occupying the said
thing.
property, to which they even constructed
Extinguishment houses there. The heirs argued they have better
right for it was inherited to them after it was
Not so extinguished.
bought by the predecessor from Emiliana
Extinguished by loss Claim for damages may
Bacalso; also, they are the ones paying the
or destruction of the still be pursued-in case
subject property’s realty taxes. Do the
thing. of loss or destruction of
respondents have better right to the ownership
the thing.
and possession of the subject property?
2. ACQUISITION OF POSSESSION A: YES. The basis is the LRA certification, daybook

entry and Decree No. 98992 that was issued to
Modes of Acquiring Possession Emiliana Bacalso. The Decree bars all claims and
rights which arose as may have existed prior to the
1. By material occupation (detention) of a thing or decree of registration. (Heirs of Alejandra Delfin v.
the exercise of a right (quasi-possession); Rabadon, G.R. No. 165014, 31 July 2013)
(Rabuya, 2008)
This includes:
a. Constitutum possessorium – when the

Civil law
Q: Sps. Gregorio and Rosario Centeno and its Certificate of Sale at Public Auction was
previously owned the subject lots, which they registered with the Register of Deeds of Iloilo City
mortgaged in favor of Rural Bank of Sta. in 1971. It cannot therefore be disputed that Gerry
Barbara, Inc. as security for a P1,753.65 loan. is a mere successor-in- interest of Sps. Centeno.
Sps. Centeno, however, defaulted on the loan, Consequently, he cannot be deemed as a third
prompting the bank to cause the extrajudicial party who is holding the property adversely to the
foreclosure of the mortgage. Consequently, the judgment obligor under legal contemplation.
subject lots were sold to the bank, being the (Rural Bank of Sta. Barbara, Inc. v. Centeno, G.R. No.
highest bidder at the auction sale. Sps. Centeno 200667, 11 Mar. 2013)
failed to redeem the subject lots within the one-
year redemption period pursuant to Sec. 6 of Essential elements of acquiring possession
Act No. 3135. Yet, they still continued with the
possession and cultivation of the aforesaid 1. Corpus – Refers to the existence of the thing
properties. and its holding; and
2. Animus – Refers to the intent to possess the
Gerry Centeno, son of Sps. Centeno, later on thing. (Pineda, 2009)
purchased the said lots from his parents.
Accordingly, Rosario paid the capital gains Actual Possession distinguished from
taxes on the sale transaction and tax Constructive Possession
declarations were eventually issued in the
name of Gerry. Actual possession consists in the manifestation of
acts of dominion over property of such a nature as
On March 19, 1998, Rural Bank of Sta. Barbara, a party would naturally exercise over his own;
Inc. filed a petition for the issuance of a writ of Constructive possession may be had through
possession before the trial court, claiming succession, donation, execution of public
entitlement to the said writ by virtue of the instruments, or the possession by a sheriff by
Final Deed of Sale covering the subject lots. virtue of a court order. (Remington Industrial Sales
Gerry opposed the petition, arguing that he Corp v. CYMCAPI, G.R. No. 171858, 22 Jan. 2007)
purchased and has, in fact, been in actual, open
and exclusive possession of the same Acquisition of possession according to person
properties for at least 15 years. Is the Rural of possessor (Art. 532, NCC)
Bank of Sta. Barbara, Inc. is entitled to a writ of
possession over the subject lots? 1. Personal – The possession acquired by the
same person who is to enjoy it, either the
A: YES. It is well-established that after owner or a mere holder.
consolidation of title in the purchasers’ name for
failure of the mortgagor to redeem the property, Requisites:
the purchasers right to possession ripens into the a. Capacity to possess;
absolute right of a confirmed owner. At that point, b. Intent to possess; and
the issuance of a writ of possession, upon proper c. Object must be capable of being possessed.
application and proof of title, to a purchaser in an
extrajudicial foreclosure sale becomes merely a 2. Through an authorized person – Acquisition of
ministerial function, unless it appears that the possession through a legal representative as
property is in possession of a third party claiming provided by law or by appointing an agent.
a right adverse to that of the mortgagor.
Requisites:
Gerry Centeno acquired the subject lots from his a. Capacity to possess of the representative
parents, Sps. Centeno, on March 14, 1988 after they or agent;
were purchased by Rural Bank of Sta. Barbara, Inc. b. Authority to possess (for another) of the

2022 GOLDEN NOTES
Property
representative or agent; ‘‘suffer.” In such a case, the possession of the father

c. Intent to possess for principal; and in good faith is added to the possession of the son
d. Principal has intent and capacity to in good faith, and we cannot say that the effects of
possess. possession in good faith shall commence only from
the decedent’s death. (Paras, 2008)
3. Through a person without authority (but only
if subsequently ratified) – Acquisition of Acquisition of minors or incapacitated persons
possession through a person who is not
clothed with authority by the supposed Minors or incapacitated persons may acquire the
“principal”. possession of things; but they need the assistance
of their legal representatives for them to be able to
Requisites: exercise the rights arising from the possession.
a. Intent to possess (for another) of the (Art. 535, NCC)
“principal”;
b. Capacity of the “principal” to possess; and NOTE: Minors and incapacitated persons may
c. Ratification by “principal”. acquire property or rights by prescription, either
personally or through their parents, guardians, or
NOTE: The ratification does not suppress the legal representatives. (Art. 1107, NCC)
consequences of negotiorum gestio. (Art. 2144,
NCC) The principal is deemed to have acquired Nature of minors or incapacitated persons’
possession from the time the gestor had voluntarily possession
took the management of the affairs of the former.
(Pineda, 2009) If the stranger (gestor) had Possession is allowed only in those matters where
possessed it in his own name, it is he who had they have capacity to act (as in the case of physical
possession, and not the so-called “principal”. seizure of res nullius or donation of personal
(Paras, 2008) property simultaneously delivered to them) and
NOT possession where juridical acts are imperative
Acquisition of Possession through Succession like the possession of land the ownership of which
he desires to test in court, for in such a case, and in
One who succeeds by hereditary title shall not similar ones, the intervention of the legal
suffer the consequences of the wrongful possession representatives or guardians is needed. (Paras,
of the decedent, if it is not shown that he was aware 2008)
of the flaws affecting it; but the effects of
possession in good faith shall not benefit him Acts which do not give rise to possession (F-
except from the date of death of the decedent. (Art. A-T-V)
534, NCC)
1. Through Force or intimidation as long as there is
Effects a possessor who objects thereto (Art. 536, NCC);
(2006 BAR)
If the father or decedent was in bad faith, it does 2. Through Acts executed clandestinely and
not necessarily mean that the son was also in bad without the knowledge of the possessor which
faith. The son is presumed to be in good faith. means that:
(Arriola v. De la Serna, G.R. No. L-5397, 17 Dec. 1909) a. Acts are not public; and
However, since the father was in bad faith, the b. Unknown to the owner or
consequences of the good faith of the son should be possessor.
counted only from the date of the decedent’s death.
3. Acts merely Tolerated by the owner or the
NOTE: If the father had been in good faith, the lawful possessor; and
article is not applicable, for the son would not 4. Acts executed by Violence. (Art. 537, NCC)

Civil law
Through force or intimidation as long as there repercussions. (Santiago v. Cruz, G.R. No. 6276. 21
is a possessor who objects thereto (Art. 536, Mar. 1911) (Paras, 2008)
NCC)
Possession by Force or Violence
NOTE: Impliedly, if at first there was objection but
later on such objection ceases, the possession The force may be:
begun by force or intimidation may be acquired. 1. Actual or merely threatened;
(Paras, 2008) 2. Done by possessor himself or by his agent;
3. Done against the owner or against any other
Through acts executed clandestinely and possessor or against the owner’s
without the knowledge of the possessor (Art. representative, such as a capataz; or
537, NCC) 4. Done to oust possessor; or if occupied during
the latter’s absence, done to prevent his getting
NOTE: Clandestine possession by itself is hidden or back the premises. (Paras, 2008)
disguised possession and may be with or without
the owner’s knowledge. (Paras, 2008) Rule when two or more persons claim
possession over the same property
POSSESSION BASED ON TOLERANCE
GR: Possession as a fact cannot be recognized at the
Acts merely tolerated by the owner or the same time in two different personalities.
lawful possessor.
XPN:
“Tolerance” is permission, as distinguished from 1. Co-possessors (since here, there is no conflict
abandonment. If an owner abandons, as when of interest, both of them acting as co-owners, as
within the proper period for prescription, he brings in the case of property owned or possessed in
no action, the possession of another will ripen into common); or
ownership. As a matter of fact, silence or inaction is
negligence, not tolerance. But where a person 2. Possession in different concepts or different
occupies another’s land with the latter’s degrees (e.g., both owner and tenant are
permission (or tolerance), the occupier, no matter possessors as a fact at the same time; the first,
how long he may remain, can never acquire in the concept of owner; the second, in the
ownership, because he never had possession. concept of holder; other examples: principal
Whether there was permission, or there has been and agent; depositor and depositary; owner
an abandonment, is a question of fact. Of course, it and administrator). (Paras, 2008)
is possible that although there was permission at
first, the permission was subsequently withdrawn, Rules to follow in case there is a dispute of
and abandonment has resulted. But this must be possession of two or more persons
proved by clear and convincing evidence. (Paras,
2008) 1. Present/actual possessor shall be preferred;
2. If there are two possessors, the one longer in
How to recover possession possession;
3. If the dates of possession are the same, the one
First, he should request the usurper to give up the with a title; or
thing and if the latter refuses, the former should 4. If both claimants have titles, the competent
invoke the aid of the proper and competent court court will determine the rightful possessor,
(that which has jurisdiction over the subject matter and in the meantime, the thing shall be placed
and the parties). (Repide v. Astuar, G.R. No. 505, 08 in judicial deposit. (Art. 538, NCC)
Apr. 1902) Otherwise, the owner can be made the
defendant in a forcible entry case with all its

2022 GOLDEN NOTES
Property
Only the possession acquired and enjoyed in the Effect of cessation of possession in good faith
concept of owner can serve as a title for acquiring
dominion. (Art. 540, NCC) Possessor is now considered as a possessor in bad
faith and he may be required to pay rent or vacate
NOTE: Art. 538 of the NCC applies to preference of the property. In both cases, he is required to pay
possession (whether real or personal property is damages to the lawful owner or possessor of the
involved). It also applies whether the possession property.
was longer or shorter than one year. Art. 1544 of
the NCC applies to preference of ownership in case Q: A Deed of Sale was executed between Jose
of double sale or a double donation. (Art. 744, NCC; (seller) and Rosario (buyer). However, later on,
Paras, 2008) Jose could not continue the sale because he sold
the lot to Emma with whom he executed a
3. EFFECTS OF POSSESSION formal deed of sale. Informed that the sale in
favor of Emma was not registered, Rosario
One is a possessor is in good faith when he is not registered her adverse claim. Later, Emma
aware that there exists in his title or mode of registered her deed of sale and a TCT was
acquisition any flaw which invalidates it. (Art. 526, issued to her but with Rosario’s adverse claim.
NCC) (2008 BAR) Emma then took possession of the lot.
Requisites in order to be considered a a. Who has a better right to the land?

possessor in good faith (F-U-T) b. Is Emma entitled to the improvements she
introduced in the lot?
1. The possessor has a Title or mode of
acquisition; A:
2. Flaw or defect in said title or mode which a. ROSARIO has a better right. Rosario’s prior
invalidates it; and purchase of the land was made in good faith; she
3. The possessor is Unaware of the flaw or defect was the only buyer at that time. Her good faith did
or believes that the thing belongs to him. not cease after Jose told him of the second sale to
(Rabuya, 2008) Emma. In order to protect her right, Rosario
registered her adverse claim. Said recording is
XPN: If aware, in bad faith. deemed to be in good faith and emphasized
Emma’s bad faith. (Carbonell v. CA G.R. No. L-29972,
Cessation of possession in good faith 26 Jan. 1976)
Possession in good faith ceases from the moment b. NO. The possessor in bad faith has neither the
defects in his title are made known to the possessor right of retention of useful improvements nor the
by: right to demand refund for useful expenses. (Art.
1. extraneous evidence; or 546 & 547; Carbonell v. CA G.R. No. L-29972, 26 Jan.
2. suit for recovery by the true owner. (Rabuya, 1976)
2008; Ortiz v. Kayanan, G.R. No. L-32974, 30 July
1979) Mistake upon a doubtful or difficult question of
law
This interruption of good faith may take place:
1. At the date of summons; or Mistake upon a doubtful or difficult question of law
2. That of the answer if the date of summons does may be the basis of good faith provided that such
not appear. (Rabuya, 2008; Tacas v. Tobon, G.R. ignorance is not gross and therefore inexcusable.
No. 30240, 23 Aug. 1929) (Art. 526, NCC) Ignorance of the law may be based
on an error of fact. (2008 BAR)

Civil law
RIGHTS OF A POSSESSOR Legal means for restoration of possession
Right to be respected in possession A. Reasons for requiring legal means:
Every possessor has a right to be respected in his 1. To prevent spoliation or a disregard of

possession; and should he be disturbed therein he public order;
shall be protected in or restored to said possession 2. To prevent deprivation of property
by the means established by the laws and the ROC. without due process of law; and
3. To prevent a person from taking the law
A possessor deprived of his possession through into his own hand.
forcible entry may within ten (10) days from the
filing of the complaint present a motion to secure B. Thus:
from the competent court, in the action for forcible
entry, a Writ of Preliminary Mandatory Injunction 1. The owner should go to court, and not eject
to restore him in his possession. The court shall the unlawful possessor by force;
decide the motion within thirty (30) days from the
filing thereof. (Art. 539, NCC) 2. A tenant illegally forced out by the owner-
landlord may institute an action for forcible
Rights of a Possessor entry even if he had not been paying rent
regularly;
1. To be respected in his possession;
2. To be protected in said possession by legal 3. The proper actions are forcible entry or
means; unlawful detainer (summary action or
3. To secure in an action for forcible entry the accion interdictal, accion publiciana, accion
proper writ to restore him in his possession; reivindicatoria, replevin, injunction, to
and prevent further acts of dispossession).
4. To secure from a competent court in an action However, injunction is generally not the
for forcible entry the Writ of Preliminary proper remedy to recover possession,
Mandatory Injunction to restore him in his particularly when there are conflicting
possession. (Art. 539, NCC) claims of ownership. An accion
reivindicatoria would be better. A final
Possession contemplated by law is legal judgment in an unlawful detainer case may
possession; a thief cannot exercise possession. be executed even if there is still pending an
Such possession is exercised by every possessor accion reivindicatoria, for the two actions
whether in good faith or bad faith. can co-exist. A mere trespasser, even if
ejected, has no right to institute an action of
Every possessor is protected under Art. 539 of the forcible entry; and (Paras, 2008)
NCC, whether in the concept of owner or in the
concept of holder. 4. Writ of Preliminary Mandatory Injunction.
NOTE: An adverse possession of property by
another is not an encumbrance in law and does not WRIT OF PRELIMINARY MANDATORY
contradict the condition that the property be free INJUNCTION
from encumbrance. Likewise, the adverse
possession is not a lien for a lien signifies a security As a rule, injunction cannot substitute for the other
for a claim. (Ozaeta v. Palanca, L-17455, 31 Aug. actions to recover possession. This is because in
1964) the meantime, the possessor has in his favor, the
presumption of rightful possession, at least, until
the case is finally decided. The exception, of course,
is a very clear case of usurpation. Similarly, a
receiver should not ordinarily be appointed to

2022 GOLDEN NOTES
Property
deprive a party who is in possession of the the plaintiffs in accion publiciana is to recover
property in litigation of such possession. (Paras, possession only, not ownership. Lot A was the
2008) subject of a cadastral case. The OCT was issued
to Sacluti and Obial who sold the same to
Requisites for the issuance of the Writ of Artemio. From the date of sale, until Artemio’s
Preliminary Injunction: death, he was in continuous possession of the
land.
1. In forcible entry cases (in the original court) —
file within ten (10) days from the time the b. NO. The remedy of accion publiciana
complaint for forcible entry is filed (not from prescribes after the lapse of ten (10) years. The
the time the dispossession took place) (Art. action was filed with the RTC in 1991. Sps.
538, NCC); and Padilla dispossessed the heirs of Velasco of the
property in 1987. At the time of the filing of the
2. In ejectment (unlawful detainer cases) in the complaint, only four years had elapsed from
CFI (RTC) or appellate court (Court of Appeals) the time of dispossession. (Sps. Padilla v.
— file within ten (10) days from the time the Velasco, G.R. No. 169956, 19 Jan. 2009)
appeal is perfected (that is, from the time the
attorneys are notified by the Court of the Acquisitive Prescription
perfection of the appeal), only if:
Only the possession acquired and enjoyed in the
a. The lessee’s appeal is frivolous or concept of owner can serve as a title for acquiring
dilatory; or dominion. (Art. 540, NCC)
b. The lessor’s appeal is prima facie
meritorious. (Art. 1674, NCC) Possession in the concept of an owner
Q: During his lifetime, Velasco acquired Lot A 1. If a person possesses en concepto de dueño —
from Sps. Sacluti and Obial evidenced by a deed he may eventually become the owner by
of sale. In 1987, Sps. Padilla entered the said prescription; and
property as trustees by virtue of a deed of sale
executed by the Rural Bank. The Padillas 2. Thus, a possessor merely in the concept of
averred that the Sps. Solomon owned the holder cannot acquire property by acquisitive
property which was identified as Lot B. prescription. This is because here the
However, it was proved during trial that the possession, far from being adverse, recognizes
land occupied by Sps. Padilla was Lot A in the right of ownership in others. One cannot
name of Velasco, whereas the land sold by the recognize the right of another and at the same
bank to the Sps. Padilla was Lot B. The heirs of time claim adverse possession which can ripen
Velasco demanded that Sps. Padilla vacate the to ownership through acquisitive prescription.
property, but they refused. Thus, the heirs filed For prescription to set in, the possession must
a complaint for accion publiciana. be adverse, public and to the exclusion of all.
(Paras, 2008)
a. Who has the better right of possession?
b. Has the action already prescribed? Possession in the concept of a holder
(C-A3-T-D-L)
A:
a. The Heirs of Velasco have the better right. 1. Lessees or those merely permitted to occupy;
Accion publiciana, the recovery of the right to 2. Trustees (including parents over the
possess, is an action filed in the RTC to properties of their unemancipated minor
determine the better right to possession of children or insane children; (Art. 1109, NCC)
realty independent of the title. The objective of and husband and wife over each other’s

Civil law
properties, as long as the marriage lasts, and 4. Presumption of Just title; (Art. 541, NCC)
even if there be a separation of property which 5. Non-interruption of possession of property
had been agreed upon in a marriage settlement unjustly Lost but legally recovered; (Art. 561,
or by judicial decree; (Art. 1109, NCC) NCC)
3. Antichretic creditors; 6. Possession of Present possessor who was also
4. Agents; the possessor at previous time; (Art. 1138(2),
5. Attorneys (regarding their client’s properties); NCC)
6. Depositaries; and 7. Possession of Movables with real property
7. Co-owners (unless the co-ownership is clearly (Art. 542, NCC); and
repudiated by unequivocal acts communicated 8. Exclusive possession of common property (Art.
to the other co-owners). 543, NCC).
Presumption that possessor has a just title Presumption of possession of movables found
in an immovable
A possessor in the concept of owner has in his favor
the legal presumption that he possesses with a just The possession of real property presumes that of
title and he cannot be obliged to show or prove it. the movables therein, as long as it is not shown or
(Art. 541, NCC) proved that they should be excluded. (Art. 542,
NCC) (2008 BAR)
Requirements under Art. 541, NCC to raise the
disputable presumption of ownership (of a Applicability of the Article:
thing or a right) 1. Whether the possessor be in good faith or bad
faith;
1. One must be in possession (actual or 2. Whether the possession be in one’s own name
constructive); and or in another; and
2. The possession must be in the concept of 3. Whether the possession be in concepto de
owner (not mere holder). dueno or in the concept of holder. Thus, the
lessee of a building is presumed to be the
NOTE: A tenant cannot avail himself of the possessor of the movables found therein, for he
presumption of just title because he is not a who needs them is supposed to have been the
possessor in the concept of owner. (Paras, 2008) one who introduced the movables into the
building. (Paras, 2008)
Art. 541 can apply to both real and personal
property. Thus, if a person possesses the key to a NOTE: By “real property’’ and “movables’’, the law
car over which he claims ownership, he can be means only real or personal things, not rights.
presumed to be the owner. But such presumption (Ibid.)
may be overcome by documentary evidence
concerning the car’s ownership. (Paras, 2008) Exclusive possession by a previous co-owner
Presumptions in favor of a possessor Each one of the participants of a thing possessed in

(P-H-L-E-G-M-C-J) (Paras, 2008) common shall be deemed to have exclusively
possessed the part which may be allotted to him
1. Good faith; (Art. 527, NCC) upon the division thereof, for the entire period
2. Continuity of character of possession whether during which the co-possession lasted.
in good faith or bad faith; (Art. 529, NCC) Interruption in the possession of the whole or a
3. Non-interruption of possession of the Heir part of a thing possessed in common shall be to the
from the moment of the death of the decedent prejudice of all the possessors. However, in case of
in case the inheritance is accepted; (Art. 533, civil interruption, the ROC shall apply. (Art. 543,
NCC) NCC)

2022 GOLDEN NOTES
Property
Example of interruption in possession of the NCC)

whole thing (Art. 543, NCC)
RIGHTS OF POSSESSOR TO FRUITS
A, B, and C have been co-possessors of a piece of
land since 2002. If in 2006, A, B, and C lose Possessor in good faith is entitled to the fruits
possession over the whole land, it can be said that received before the possession is legally
the three of them were in possession for only four interrupted.
(4) years.
Natural and industrial fruits are considered
Example of interruption in possession of part of received from the time they are gathered or
the thing (Art. 543, NCC) severed. Civil fruits are deemed to accrue daily and
belong to the possessor in good faith in that
A and B have been co-possessors of a piece of land proportion. (Art. 544, NCC)
since 2002 through a mutual agent X. In 2006, X lost
possession of one-fifth of the land. A and B’s Right of a possessor in good faith to fruits
possession over the remaining four-fifth (4/5) already received (Paras, 2008)
continues, the interruption being limited only to
one-fifth (1/5). First Paragraph: “A possessor in good faith is
entitled to the fruits received before the possession
NOTE: If A and B had co-possessed the land in is legally interrupted.’’
equal shares, the co-possession of the remaining
four-fifths will also be in equal shares. If A and B a. Reason for the law: Justice demands that the
had co-possessed in the proportion of 3 to 1, their fruits be retained by the possessor who
shares in the remaining four-fifths would also be in thought that he was really the owner of the
the proportion of 3 to 1. In other words, there is a property, and who, because of such thought
proportionate losing in the area possessed. (Paras, had regulated his daily life, income, and
2008) expenses by virtue of such fruits. Moreover, the
possessor should be rewarded for having
Rules to apply for Civil Interruption contributed to the industrial wealth, unlike the
owner, who by his presumed negligence, had
The ROC applies (Art. 543, NCC): virtually discarded his property.
1. Civil interruption is produced by judicial b. Fruits refer to natural, industrial, and civil
summons to the possessor (Art. 1123, NCC); fruits, not to other things. (If no actual fruits
and are produced, reasonable rents— civil fruits—
2. Judicial summons shall be deemed not to have must be given)
been issued, and shall not give rise to
interruption: c. Legal interruption happens when a complaint
is filed against him and he receives the proper
a. If it should be void for lack of legal judicial summons. (Art. 1123, NCC) All fruits
solemnities; accrued and received since said date must be
b. If the plaintiff should desist from the turned over to the winner, that is, either the
complaint or should allow the owner or the lawful possessor adjudged as
proceedings to lapse; or such by the court. Before legal interruption, the
fruits received are his own. After the receipt of
c. If the possessor should be absolved from the judicial summons, the right to get the fruits
the complaint. In all these cases, the not yet gathered ceases.
period of the interruption shall be
counted FOR the prescription. (Art. 1124, d. The reason why fruits should be returned from

Civil law
the time of legal interruption is that it is interruption) should belong to the possessor in
ordinarily only from said date that the good faith.
possessor should be considered in bad faith.
Therefore, should there be proof that bad faith RIGHTS TO PENDING FRUITS
had not set in even before legal interruption,
fruits should be returned from that date of If at the time the good faith ceases, there should be
conversion are not entitled to the fruits. As a any natural or industrial fruits, the possessor shall
matter of fact, the law provides that “the have a right to a part of the expenses of cultivation,
possessor in bad faith shall reimburse the and to a part of the net harvest, both in proportion
fruits received and those which the legitimate to the time of the possession. The charges shall be
possessor (or owner) could have received”. divided on the same basis by the two possessors.
(Art. 549, NCC) This is true whether the
possession in bad faith was legally interrupted The owner of the thing may, should he so desires,
or not. It is understood of course that he is give the possessor in good faith the right to finish
entitled to the fruits received before the the cultivation and gathering of the growing fruits,
conversion into bad faith, for then, he would as an indemnity for his part of the expenses of
still be in good faith. cultivation and the net proceeds; the possessor in
good faith who for any reason whatever should
When natural and industrial fruits are refuse to accept this concession, shall lose the right
considered received (Paras, 2008) to be indemnified in any other manner. (Art. 545,
NCC)
Second Paragraph: “Natural and industrial fruits
are considered received from the time they are NOTE: This article applies to pending fruits,
gathered or severed.” natural or industrial. (Paras, 2008)
a. If at the time of legal interruption, the crops are Q: What if there are natural or industrial fruits
still growing, the rule on pending crops, not at the time good faith ceases?
that on gathered crops, should apply. (Art. 545,
NCC); and A: The possessor shall have the right to a part of the
expenses of cultivation, and to a part in the net
b. If at the time of legal interruption, the crops harvest both in proportion to the time of
have already been gathered, but are sold only possession. (Art. 545, NCC) (2000, 2008 Bar)
after such interruption, the sale is immaterial,
for the law requires only a gathering or Q: A possessed in good faith a parcel of land. At
severance, so Art. 544 applies. the time he received judicial summons to
answer a complaint filed by B, the crops still
When civil fruits are deemed to accrue (Paras, growing had been there for two months.
2008) Harvest was made only after four (4) more
months (for his crop needed a total of six (6)
Third Paragraph: “Civil fruits are deemed to months from planting to harvesting). How
accrue daily and belong to the possessor in good should said crops be divided between A and B?
faith in that proportion.’’
A: In the proportion of 2 to 4 (or 1 to 2), 2 for A and
a. If civil fruits (like rents) are accrued daily, Art. 4 for B. This is what the law means when it says that
545 does not apply; and the net harvest shall be divided in proportion to the
b. Actual receipt of the rents is immaterial; hence, time of possession. (Paras, 2008)
even if received only, for example, on the 30th
of a month, all rents accrued before the 21st of
the month (date for example of legal

2022 GOLDEN NOTES
Property
Sharing of expenses and charges (Paras, 2008) right to indemnity.
1. The expenses for cultivation shall also be Crops not yet manifest (Paras, 2008)
divided pro rata (2 to 4). The law says “the
possessor shall have a right to a part of the Art. 545 applies to pending crops. Suppose the
expenses for cultivation in proportion to the crops have already been planted but are not yet
time of possession (This may in certain cases manifest at the time there is a transfer of
be unfair because although he may have spent possession, should the article also apply? It is
more than the owner, still he will be entitled to submitted that the answer is YES, by the
a reimbursement of less since his possession is application of the general rules stated in Art. 443,
shorter. The better rule would be for the NCC.
expenses to be borne in proportion to what
each receives from the harvest). (Art. 443, NCC) RIGHT TO BE REIMBURSED
Otherwise, unjust enrichment would result.
Necessary and Useful Expenses
2. The charges (those incurred because of the
land and the fruits, like taxes, or interest on Necessary expenses shall be refunded to every
mortgages are what are referred to as charges, possessor; but only the possessor in good faith may
and not those incurred on or in them, such as retain the thing until he has been reimbursed
improvements) are also to be divided in therefor. Useful expenses shall be refunded only to
proportion to the time of possession. (Art. 545 the possessor in good faith with the same right of
(2), NCC) retention, the person who has defeated him in the
possession having the option of refunding the
Options of the owner in case there are pending amount of the expenses or of paying the increase in
fruits at the time good faith ceases (Paras, 2008) value which the thing may have acquired by reason
thereof. (Art. 546, NCC)
1. To pay the possessor in good faith indemnity
for his cultivation expenses and charges and Necessary Expenses (1992, 1996, 2000 BAR)
his share in the net harvest; or
2. To allow the possessor in good faith to finish Necessary expenses are expenses incurred to
the cultivation and gathering of the growing preserve the property, without which, said
crops, as an indemnity for his part of the property will physically deteriorate or be lost.
expenses of cultivation and the net proceeds. These expenses are not improvements but are
incurred merely to protect the thing from
NOTE: If the possessor refuses, for any reason, to becoming useless.
finish the cultivation and gathering, he forfeits the
right to be indemnified in any other manner. (Art. Sample of Necessary Expenses (Paras, 2008)
545(3), NCC)
1. Those incurred for cultivation, production, and
Art. 545 applies only to a possessor in good faith upkeep; or
for a possessor in bad faith has no right whatsoever 2. Those made for necessary repairs of a house.
to fruits already gathered nor to fruits still pending,
except that in the former case (gathered fruits), he Ordinary repairs are understood such as are
gets back the necessary expenses for production, required by the wear and tear due to the natural
gathering, and preservation of fruits. (Art. 443, use of the thing and are indispensable for its
NCC) In the case of pending fruits, the Principle of preservation. (Art. 592, NCC) They do not increase
Accession applies, and the law clearly states that he the thing’s value; rather, they merely prevent the
who plants or sows in bad faith on the land of things from becoming useless.
another, loses whatever is planted or sown without

Civil law
Urgent repairs (reparacion urgentisima) are also possession will be a bar to a subsequent suit
necessary expenses. brought solely for the recovery of such expenses.
The purpose is clearly to avoid the multiplicity of
The following are NOT necessary expenses suits.
1. Those incurred for the filling up with soil of a Right of removal of necessary expenses
vacant or deep lot. This is not a repair since the
term “repair” implies the putting back into the There is no right of removal of necessary expenses
condition in which it was originally, and not an whether in good faith or bad faith. Necessary
improvement in the condition thereof by expenses affect the existence or substance of the
adding something new thereto. The expenses property itself.
are indeed in the nature of useful
improvements; NOTE: Improvements are so incorporated to the
principal thing that their separation must
2. A house constructed on land possessed by a necessarily reduce the value of the thing not
stranger (not the owner), because the house curable by ordinary repairs.
cannot be said to preserve the land (the house
is useful); Useful Expenses
3. Land taxes are, for the purposes of the Article, Those which increase the value or productivity of
not necessary expenses, for they are needed, the property. (Ibid.)
not for preservation of the land itself; but for
its continued possession. Failure to pay Examples of Useful Expenses
said taxes results not in destruction, but
forfeiture, therefore they should be merely 1. Those incurred for an irrigation system;
considered charges. Consequently, Art. 545 of 2. Those incurred for the erection of a chapel,
the NCC regarding pro rating of charges should because aside from its possibility of conversion
apply; and into such materialistic things as a warehouse
or a residence, the chapel satisfied spiritual
4. Unnecessary improvements on a parcel of land and religious aspirations and the attainment of
purchased at a sheriff’s auction sale, made just man’s higher destinies. “To uphold the
to prevent redemption from taking place. opposite view would be to reduce life to a mere
(Ibid.) conglomeration of desires and lust, when, as a
matter of fact, life is also a beautiful aggregate
Rights of a possessor (in the concept of owner) of noble impulses and lofty ideals”;
as to the necessary expenses (Paras, 2008)
3. Those incurred for the making of artificial
1. If in good faith — entitled to: fishponds;
a. Refund; or and 4. Those incurred for the construction of
b. Retain premises until paid. additional rooms in a house, for use as kitchen,
bathroom, stable, etc; or
2. If in bad faith — entitled only to a refund (No
Right of Retention, as penalty) 5. Those incurred for clearing up land formerly
thickly covered with trees and shrubbery.
NOTE: If the owner sues the possessor for the (Ibid.)
recovery of the property, the possessor in good
faith (who is thus entitled to a refund) must file a
counterclaim for the refund of necessary and useful
expenses, otherwise the judgment in the case for

2022 GOLDEN NOTES
Property
Rights of a possessor (in the concept of owner) Removal of useful improvements introduced by
as to the useful expenses (Paras, 2008) the possessor
A. If in good faith Only a possessor in good faith is allowed to remove

the useful improvements he introduced provided
1. Right to Reimbursement (of either the that the useful improvements can be removed
amount spent or the increase in value — without damage to the principal thing. (Art. 547,
“plus value” — at the owner’s option) NCC)
(Art. 546, NCC)
2. Right of Retention (until paid) (Art. 546, “Damage’’ here means a substantial one that
NCC) reduces the value of the property, thus a slight
3. Right of Removal (provided no injury curable by an ordinary repair does not
substantial damage or injury is caused to defeat the right of removal, but the repairs should
the principal, reducing its value) — be chargeable to the possessor, for it is he who
UNLESS the winner (owner or lawful benefits by the removal and the object removed.
possessor) exercises the option in (1) (Paras, 2008)
(Art. 547, NCC)
NOTE: This right of removal is subordinate to the
NOTE: The possessor in good faith is entitled owner’s right to keep the improvements himself by
to both the fruits and expenses (necessary or paying the expenses incurred or the concomitant
useful), hence they do not compensate each increase in the value of the property caused by the
other. improvements. (Pineda, 2009; Javier v. Concepcion,
Jr., G.R. No. L-36566, 07 Nov. 1979)
B. If in bad faith
Expenses for Pure Luxury
The possessor in bad faith is not entitled to any
right regarding the useful expenses. However, Expenses for pure luxury or mere pleasure shall
in Angeles v. Guevara, L-15697, 31 Oct. 1960, the not be refunded to the possessor in good faith; but
Supreme Court, through Justice Gutierrez he may remove the ornaments with which he has
David, made the statement that although a embellished the principal thing if it suffers no
possessor in bad faith is not entitled to injury thereby, and if his successor in the
reimbursements for expenses incurred, he possession does not prefer to refund the amount
may nevertheless remove the objects (repairs expended. (Art. 548, NCC)
on buildings) provided the things suffer no
injury thereby, and that the lawful possessor Examples of ornamental expenses
does not prefer to retain them by paying the
value they may have at the time he enters into a. Hand paintings on the wall of a house;
possession. Evidently, here, the Court was b. A garage made of platinum; and
thinking not of useful improvement, but of c. Water fountains in gardens. (Paras, 2008)
expenses for pure luxury or mere pleasure.
(Art. 549, NCC) Rights of a possessor (in the concept of owner)
as to luxurious or ornamental expenses
Effect of voluntary surrender of property
1. If in good faith:
GR: The voluntary surrender of property is a
waiver of the possessor’s right of retention but his In general, no right of refund or retention but
right to be refunded may still be enforced. can remove if no substantial injury is caused.
However, owner has option to allow:
XPN: If he also waived the same. a. Possessor to remove; or

Civil law
b. Retain for himself (the owner) the 545, NCC)

ornament by refunding the amount spent.
(Art. 548, NCC) 2. If in bad faith:
2. In bad faith: a. Gathered fruits — must return value of

fruits already received as well as value of
In general, no right of refund or retention but fruits which the owner or legitimate
can remove if no substantial injury is caused. possessor (not the possessor in bad faith)
However, owner has option to allow: could have received with due care or
a. Possessor to remove; or diligence, minus necessary expenses for
b. Retain for himself (the owner) the cultivation, gathering, and harvesting, to
ornament by refunding the value it has at prevent the owner from being unjustly
the time owner enters into possession. (Art. enriched. (Arts. 549 and 443, NCC)
549, NCC; Paras, 2008) b. Pending or ungathered fruits — no rights at
all, not even to expenses for cultivation
Possessor in Bad Faith because by accession, all should belong to
the owner, without indemnity. (Art. 449,
The possessor in bad faith shall reimburse the NCC; Paras, 2008)
fruits received and those which the legitimate
possessor could have received and shall have a NOTE: The costs of litigation over the property
right only to the expenses mentioned in Art. 546 shall be borne by every possessor. (Art. 550, NCC)
(1) and Art. 443, of the NCC. The expenses incurred “Every possessor’’ refers to one in good faith or bad
in improvements for pure luxury or mere pleasure faith, in the concept of owner or in the concept of
shall not be refunded to the possessor in bad faith; holder, in one’s own name or in that of another, and
but he may remove the objects for which such not to the owner or the person adjudged by the
expenses have been incurred, provided that the court to be lawfully entitled to possess.
thing suffers no injury thereby, and that the lawful
possessor does not prefer to retain them by paying Improvements caused by nature or time
the value they may have at the time he enters into
possession. (Art. 549, NCC) Neither the possessor in good faith nor in bad faith
is entitled to:
Q: Who is a possessor in bad faith?
1. Improvements caused by nature (e.g.,
A: A possessor in bad faith is one who is aware that alluvium, etc.); and
there exists in his title or mode of acquisition any 2. Improvements caused by time (e.g., like the
flaw which invalidates it. Only personal knowledge improved flavor of wine). (Paras, 2008)
of the flaw in one’s title or mode of acquisition can
make him a possessor in bad faith. Liability for Loss or Deterioration
Right of the possessor (in the concept of owner) A possessor in good faith shall not be liable for the
as to fruits deterioration or loss of the thing possessed, except
in cases in which it is proved that he has acted with
1. If in good faith: fraudulent intent or negligence, after the judicial
summons.
a. Gathered or severed or harvested fruits are A possessor in bad faith shall be liable for
his own (Art. 544, NCC); deterioration or loss in every case, even if caused
b. Pending or ungathered fruits — (pro- by a fortuitous event. (Art. 552, NCC)
rating between possessor and owner of
expenses, net harvest, and charges) (Art.

2022 GOLDEN NOTES
Property
Rules Applicable As to expenses

a. Necessary expenses
A. Possessor in good faith —
1. Before receipt of judicial summons —
not liable; or Right of reimbursement
Right of
2. After judicial summons only. (Paras, 2008;
reimbursement and
i. Loss or deterioration through fortuitous Director of Lands v.
retention. (Paras,
event — not liable; and Abagat, G.R. No. 30515, 27
2008)
ii. Through fraudulent intent or Mar. 1929)
negligence — liable.
b. Useful expenses
B. Possessor in bad faith — Right of
Whether before or after judicial summons, and reimbursement,
whether due to fortuitous event or not, such retention and
None.
possessor is liable. (Paras, 2008) limited right of
removal. (Art. 546,
Summary of rights of a possessor NCC)
c. Ornamental Expenses
GOOD FAITH BAD FAITH
Shall not be
As to fruits received refunded but he has Shall not be refunded but
a limited right of he has a limited right of
removal, i.e., he may removal, i.e., he may
Shall reimburse the fruits remove if the remove if the principal
received and those which principal thing thing suffers no injury
the legitimate possessor suffers no injury thereby, and if the lawful
Entitled to the fruits could have received and thereby, and if the possessor does not prefer
received before the shall have the a right only lawful possessor to retain them by paying
possession is legally to necessary expenses does not prefer to its value at the time he
interrupted (Art. (Art. 546, par. 1, NCC) and refund the amount enters into possession.
544, NCC) expenses in the expended. (Paras, (Ibid.)
production, gathering 2008)
and preservation of such
fruits. (Art. 443, NCC) As to liability in case of deterioration or loss
GR: No liability
As to pending fruits
XPN: If due to his Always liable.
Liable with fraudulent act or
legitimate possessor negligence, or after
for expenses of service of summons.
cultivation and shall
share in the net Possessor in good faith has the right of
None. retention until he has been fully reimbursed
harvest in
proportion to the
time of their A possessor in good faith has the right of retention
Possession. (Art. of the property until he has been fully reimbursed
545, NCC) for all the necessary and useful expenses made by
him on the property. Its object is to guarantee the
reimbursement for the expenses, such as those for

Civil law
the preservation of the property, or for the An accion publiciana or reivindicatoria is still
enhancement of its utility or productivity. It possible unless prescription, either ordinary or
permits the actual possessor to remain in extraordinary, has set in. (Paras, 2008)
possession while he has not been reimbursed by
the person who defeated him in the possession for NOTE: Acts merely tolerated, and those executed
those necessary expenses and useful clandestinely and without the knowledge of the
improvements made by him on the thing possessor of a thing, or by violence, do not affect
possessed. (Ortiz v. Kayanan, G.R. No. L-32974, 30 possession. (Art. 537, NCC) (2001, 2009 Bar)
July 1979)
Abandonment
Presumption of possession during the
intervening period Abandonment involves a voluntary renunciation of
all rights over a thing. There must be an intention
A present possessor who shows his possession at to lose the thing. (Pineda, 2009)
some previous time is presumed to have held
possession also during the intermediate period, in Requisites (O-C-P-A)
the absence of proof to the contrary. (Art. 554, NCC)
1. The abandoner must have been a possessor in
LOSS/ TERMINATION OF POSSESSION the concept of Owner (either an owner or mere
possessor may respectively abandon either
Possession is lost through: (P-R-A-D-A) ownership or possession);
2. The abandoner must have the Capacity to
1. Possession of another; (Art. 555 in relation to renounce or to alienate (for abandonment is
Art. 537, NCC) the repudiation of property right);
2. Recovery of the thing by the legitimate owner; 3. There must be Physical relinquishment of the
3. Abandonment; (Art. 555, NCC) thing or object; and
4. Destruction or total loss of the thing – a thing is 4. There must be no spes recuperandi
lost when it perishes or goes out of commerce, (expectation to recover) and no more Animus
or disappears in such a way that its existence is revertendi (intention to return or get back).
unknown, or it cannot be recovered (Art. 1189; (Paras, 2008)
Art. 555, NCC); or
5. Assignment – complete transmission of the Additional Doctrines (Paras, 2008)
thing/right to another by any lawful manner.
(Art. 555, NCC) 1. A property owner cannot be held to have
abandoned the same until at least he has some
Possession of another knowledge of the loss of its possession or the
thing;
Possession of another subject to the provision of
Art. 537, NCC (possession by tolerance o, if a 2. There is no real intention to abandon property
person is not in possession for more than one (1) when as in the case of a shipwreck or a fire,
year but less than ten (10) years, he loses things are thrown into the sea or upon the
possession de facto. He can no longer bring an highway;
action of forcible entry or unlawful detainer, since
the prescriptive period is one (1) year for such 3. An owner may abandon possession merely,
actions. But he may still institute an accion leaving ownership in force, but a mere
publiciana to recover possession de jure, possessor cannot abandon ownership since he
possession as a legal right or the real right of never had the same;
possession. (Art. 555, NCC; Paras, 2008)
4. If an owner has not lost possession because

2022 GOLDEN NOTES
Property
there has been no abandonment, it surely are lost, and no action will allow recovery. (Paras,
cannot be acquired by another through 2008)
acquisitive prescription. Thus, the mere fact
that land is covered by the sea completely Q: Does Art. 555, NCC refer to both real and
during high tide for failure in the meantime of personal property?
the owner to dam the water off, does not
indicate an abandonment of the land in favor A: YES. The law does not distinguish, except in the
of public dominion. Moreover, abandonment case of paragraph 4 where it is evident that the
can hardly refer to land much less to reference to possession of more than one (1) year
registered land; concerns only real property – the rule as to
movable property being explicitly stated in Art.
5. There is no abandonment if an owner merely 556 of the NCC.
tolerated (permitted) another’s possession,
nor if the latter was done by stealth or effected Loss or Unlawful Depravation of Movable
through force and intimidation. (Arts. 537 and
558, NCC); A thing is lost when it perishes, or goes out of
commerce, or disappears in such a way that its
6. There is no abandonment of movables even if existence is unknown, or it cannot be recovered.
there is temporary ignorance of their (Art. 1189, NCC)
whereabouts, so long as they remain under
the control of the possessor (that is, so long as When possession of movables is lost or not lost
another has not obtained control of them).
(Art. 556, NCC); If the possessor has no idea at all about the
whereabouts of the movable, possession is lost, but
7. In true abandonment, both possession de facto not when he more or less knows its general
and de jure are lost; and location, though he may not know its precise or
definite location. In the former, he has lost juridical
8. Abandonment which converts the thing into control; in the latter, the object remains within his
res nullius (ownership of which may ordinarily patrimony and not in the patrimony of another.
be obtained by occupation), does not apply to (Paras, 2008)
land (Art. 714, NCC) much less does
abandonment apply to registered land. (Sec. Loss of immovables with respect to third
46, Act 496) person
Assignment The possession of immovables and of real rights is

not deemed lost or transferred for purposes of
Refers to a total transfer of ownership of property prescription to the prejudice of third persons,
by the owner to another person either gratuitously except in accordance with the provisions of the
or onerously. Mortgage Law and the Land Registration Laws.
(Art. 557, NCC)
While in assignment, at no time did the thing not
have a possessor (for possession merely changed NOTE: Art. 557 of the NCC refers to possession of
hands or control), in abandonment, there was a real property, and other real rights over real
time, no matter how short, when the object did not property such as easement and usufruct
have any possessor at all. Moreover, while
assignment may in some cases be by onerous title, Acts of mere holder
abandonment is always gratuitous, otherwise it
becomes a virtual assignment. Moreover, in GR: Acts relating to possession of a mere holder do
assignment, both possession de facto and de jure not bind or prejudice the possessor in the concept

Civil law
of owner unless said acts were previously Duty of a finder of a lost movable
authorized or subsequently ratified by the latter.
(De Leon, 2006) Whoever finds a lost movable, which is not a
treasure, must return it to its previous possessor. If
XPNS: the latter is unknown, the finder shall immediately
1. Unless he gave said holder express authority to deposit it with the mayor of the city or municipality
do such acts; or where the finding has taken place. The mayor in
2. Ratifies them subsequently. (Art. 558, NCC) turn must publicly announce the finding of the
property for two (2) consecutive weeks. (Art.
FINDER OF LOST MOVABLE 719(1-2), NCC)
Rule regarding the right of a possessor who Authorized public auction of lost movable
acquires a movable claimed by another
If the movable cannot be kept without
If the possessor is in: deterioration, or without expenses which
1. Bad faith – He has no right; or considerably diminish its value, it shall be sold at
2. Good faith – He has presumed ownership. It is public auction eight (8) days after the publication.
equivalent to title. (Art. 719(3), NCC)
Requisites: Awarding of the lost movable to the finder

a. Owner has voluntarily parted with the
possession of the thing; If the owner or previous possessor did not appear
b. Subsequent possessor is in the concept of an after six (6) months from the publication, the thing
owner; and found or its value or proceeds if there was a sale,
c. Possession in good faith. (Pineda, 2009) shall be awarded to the finder. The finder, however,
shall pay for the expenses incurred for the
Possession of movable property acquired in publication. (Art. 719(4), NCC)
good faith
Duty of the owner who appeared
GR: Doctrine of Irrevindicability – The
possession of movable property acquired in good 1. Give a reward to the finder equivalent to one-
faith is equivalent to title and the true owner tenth (1/10) of the sum or of the price of the
cannot recover such movable. (Art. 559(1), NCC) thing found; (Art. 720, NCC)
2. Reimburse to the finder for the latter’s
NOTE: This is merely presumptive as it can be expenses incurred for the preservation of the
defeated by the true owner. (Ibid.) thing; (Art. 546, NCC) and expenses spent for
the location of the owner; and
XPNs: 3. Reimburse the expenses for publication if there
1. When the owner has lost a movable; or was a public auction sale. (Pineda, 2009)
2. Has been unlawfully deprived of a movable.
(Art. 559(2), NCC) Summary of Recovery or Non-Recovery
Principle
In which case the possessor cannot retain the thing
as against the owner, who may recover it without A. Owner may recover without reimbursement:
paying any indemnity
1. From possessor in bad faith; or
XPN to the XPNs: Where the movable is acquired 2. From possessor in good faith (if owner had
in good faith at a public sale, the owner must lost the property or been unlawfully
reimburse to recover. (Ibid.) deprived of it) (the acquisition being from a

2022 GOLDEN NOTES
Property
private person). (Art. 559, NCC) lost it or has been illegally deprived of it. This proof
is an indispensable requisite a condition sine qua
B. Owner may recover but should reimburse: non in order that the owner of the chattel may
contest the apparent title of its possessor. Without
If possessor acquired the object in good faith at adequate proof of such loss or illegal deprivation,
a public sale or auction. (Art. 559, NCC) Because the present holder cannot be put on his defense,
the publicity attendant to a public sale should even if as possessor he has no actual proprietary
have been sufficient warning for the owner to title to the movable property in question. (Paras,
come forward and claim the property. 2008)
C. Owner CANNOT recover, even if he offers to Rule when possessor has already become the
reimburse (whether or not the owner had lost or owner
been unlawfully deprived):
Art. 559 of the NCC in fact assumes that the
1. If possessor had acquired it in good faith by possessor is not the owner, for it is obvious that
purchase from a merchant’s store, or in where the possessor has come to acquire
fairs, or markets in accordance with the indefeasible title, let us say adverse possession for
Code of Commerce and special laws; (Art. the necessary period, no proof of loss, or illegal
1505, NCC and Arts. 85 and 86, Code of deprivation could avail the former owner of the
Commerce) chattel. He would no longer be entitled to recover
2. If owner “is by his conduct precluded from it under any condition. (Paras, 2008)
denying the seller’s authority to sell.”
(estopped); (Art. 1505, NCC) and Estafa is considered as unlawful deprivation
3. If possessor had obtained the goods
because he was an innocent purchaser for Q: Using a falsified manager's check, Justine, as
value and holder of a negotiable document the buyer, was able to take delivery of a
of title to the goods. (Art. 1518, NCC) (Paras, secondhand car which she had just bought from
2008) United Car Sales Inc. The sale was registered
with the Land Transportation Office (LTO). A
Q: Suppose a recently stolen property is found week later, the seller learned that the check
in possession of A, is A presumed to be the had been dishonored, but by that time, Justine
thief? was nowhere to be seen. It turned out that
Justine had sold the car to Jerico, the present
A: YES. It is a disputable presumption “that a possessor who knew nothing about the falsified
person found in possession of a thing taken in the check. In a suit by United Car Sales, Inc. against
doing of a recent wrongful act is the taker and doer Jerico for recovery of the car, plaintiff alleges it
of the whole act.’’ (Rule 131, Sec. 3(j), ROC) It is true had been unlawfully deprived of its property
that one who possesses a movable, acquired in through fraud and should, consequently, be
good faith, has what is called an equivalent of title, allowed to recover it without having to
but this is destroyed when it is proved that said reimburse the defendant for the price the latter
movable belongs to somebody else who has lost it, had paid. Should the suit prosper? (1998 BAR)
or has been unlawfully deprived of its possession.
(Art. 559, NCC) (Paras, 2008) A: YES. The criminal act of estafa should be deemed
to come within the meaning of unlawful
Q: In order to contest the title of the possessor deprivation under Art. 559, NCC as without it,
in good faith, what should the true owner do? United Car Sales would not have parted with the
possession of its car. Thus, it was allowed to
A: The true owner should present sufficient proof recover the property without having to reimburse
of the identity of the object and that he had either the defendant.

Civil law
Possession of wild animals

E. USUFRUCT
Wild animals are possessed only while they are
under one’s control; domesticated or tamed
animals are considered domestic or tame, if they
Usufruct is the right of a person called
retain the habit of returning to the premises of the
usufructuary, to enjoy the property of another
possessor. (Art. 560, NCC)
called the owner, with the obligation of returning it
at the designated time and preserving its form and
Lawful recovery of possession that had been
substance, unless the title constituting it or the law
unjustly lost
provides otherwise. (Pineda, 2009)
One who recovers, according to law, possession

NOTE: A usufruct can be constituted in favor of a
unjustly lost, shall be deemed for all purposes
town, corporation or association, but it cannot be
which may redound to his benefit, to have enjoyed
for more than 50 years. (Art. 605, NCC)
it without interruption. (Art. 561, NCC)
1. IN GENERAL
Requisites
Characteristics of Usufruct (E-N-A) (Paras, 2008)

1. Possession was lost unlawfully or unjustly;
2. Possessor lawfully recovers possession; and
1. Essential – Those without which it cannot be
3. Uninterrupted possession is beneficial to him.
termed as usufruct:
(Pineda, 2009)
a. Real right (whether registered in the
registry of property or not);
b. Constituted on property
i. Real;
ii. Personal;
iii. Consumable;
iv. Non-consumable;
v. Tangible; or
vi. Intangible.
c. Temporary duration; and

d. Purpose is to enjoy the benefits and
derive all advantages from the object as a
consequence of normal use or
exploitation.
2. Natural – That which ordinarily is present, but

a contrary stipulation can eliminate it because
it is not essential:
a. The obligation of conserving or
preserving the form and substance
(value) of the thing; and
b. It is transmissible.
3. Accidental – Those which may be present or

absent depending upon the stipulation of
parties:
a. Whether it be pure or a conditional

2022 GOLDEN NOTES
Property
usufruct; either by act inter vivos (e.g., donation) or

b. The number of years it will exist; and by act mortis causa (e.g., in a last will and
c. Whether it is in favor of one person or testament); and
several, etc.
c. Mixed/ Prescriptive– Created by both law
Obligation to preserve the form and substance and act of the person (e.g., acquired by
of the thing in usufruct prescription: I possessed in good faith a
parcel of land which really belonged to
GR: The usufructuary is bound to preserve the another. Still in good faith, I gave in my
form and substance of the thing in usufruct. This is will to X, the naked ownership of land and
to prevent extraordinary exploitation, prevent to Y, the usufruct. In due time, Y may
abuse of property and prevent impairment. (De acquire the ownership of the usufruct by
Leon, 2006; Paras, 2008) acquisitive prescription).
XPN: The law or the will of the parties may allow 2. As to the number of beneficiaries:
the modification of the substance of the thing. (De a. Simple – If only one (1) usufructuary
Leon, 2006) enjoys the usufruct; or
b. Multiple – If several usufructuaries
Q: Chayong owned a parcel of land which she enjoy the usufruct;
mortgaged to Michael. Upon the OCT was an i. Simultaneous – at the same time
annotation of usufructuary rights in favor of ii. Successive – one after the other
Cheddy. Is Michael obliged to investigate
Chayong’s title? NOTE: In case usufructuary is created by
donation, apply Art. 756, NCC. If the usufruct is
A: NO. The annotation is not sufficient cause to testamentary, apply Rules on Fideicommissary
require Michael to investigate Chayong’s title Substitution under Art. 863 and 869, NCC.
because the latter’s ownership over the property
remains unimpaired despite such encumbrance. 3. As to the extent of object:
Only the jus utendi and jus fruendi over the a. Total – constituted on the whole thing
property are transferred to the usufructuary. The b. Partial – constituted only on a part.
owner of the property maintains the jus disponendi
or the power to alienate, encumber, transform, and 4. As to the subject matter:
even destroy the same. (Hemedes v. CA, G.R. Nos. a. Over things; or
107132 & 108472, 08 Oct. 1999) i. Normal (or perfect or regular) –
involves non-consumable things
KINDS OF USUFRUCT (Paras, 2008) where the form and substance are
preserved; or
1. As to origin:
a. Legal – Created by law such as usufruct of ii. Abnormal (or imperfect or irregular)
the parents over the property of their – involves consumable things – that
unemancipated children; which involves things which would
be useless to the usufructuary unless
NOTE: The right of the parents over the they are consumed or expanded.
fruits and income of the child’s property
shall be limited primarily to the child’s b. Over rights – involves intangible
support and secondarily to the collective property; rights must not be personal or
daily needs of the family. (Art. 226. FC) intransmissible in character so present
or future support cannot be an object of
b. Voluntary – Created by will of the parties usufruct.

Civil law
5. As to the effectivity or extinguishment: Creator of Right

a. Pure – no term or condition;
May not be the owner,
b. With a term – there is a period which may
as in the case of a sub-
be either suspensive or resolutory; or Owner or his agent.
lessor or a
i. Ex die – from a certain day
usufructuary.
ii. In diem – up to a certain day
iii. Ex die in diem – from a certain day up Origin
to a certain day.
By contract, by way of
c. Conditional – subject to a condition which exception by law (as in
may be either suspensive or resolutory. the case of an implied
new lease under Art.
GR: No form is required in constituting a usufruct. 1670, NCC), or when a
By law, contract, will of
Even an oral usufruct may be constituted. builder has built in
testator or by
good faith on the land
prescription.
XPNs: of another a building,
1. Usufruct over real property must be registered when the land is
to bind third person; considerably worth
2. Statute of Frauds apply in case Real Property is more in value than the
involved. If personal property, Statute of building.
Frauds will apply where the value is P500.00
or higher and in case the agreement is not to be Extent of Enjoyment
performed in one (1) year; or
3. A usufruct by donation or by will must comply All fruits, uses and Only those particular
with formalities of a donation or will benefits. or specific use.
Rules governing Usufruct

Cause
1. The agreement of the parties or the title giving A passive owner who
the usufruct. allows the An active owner who
2. In case of deficiency, the provisions of the Civil usufructuary to enjoy makes the lessee enjoy
Code. (Art. 565, NCC) the object of usufruct
Repairs and Taxes
Usufruct v. Lease (Paras, 2008)
Usufructuary pays for
USUFRUCT LEASE ordinary repairs and Lessee cannot
pays for annual constitute a usufruct
Nature of the Right charges and taxes on on the property leased.
the fruits.
Real right only if, as in Limitation on the use of property

the case of a lease over
real property, the lease Usufructuary may
Always a real right. is registered, or is for The lessee cannot
lease the property to
more than one (1) year, constitute a usufruct
another but cannot
otherwise it is a on the property leased.
alienate the thing itself.
personal right.

2022 GOLDEN NOTES
Property
2. RIGHTS AND OBLIGATIONS 7. To Set-off the improvements he may have

OF THE USUFRUCTUARY made on the property against any damage to
the same. (Art. 580, NCC)
RIGHTS OF THE USUFRUCTUARY
Rule as to certain rights (rent, pension,
Rights of the usufructuary as to the thing and its benefits, etc.)
fruits (R-I-R-I-C-R-E-S)
Whenever a usufruct is constituted on the right to
1. To Receive the fruits of the property in receive a rent or periodical pension, whether in
usufruct and half of the hidden treasure he money or in fruits, or in the interest on bonds or
accidentally finds on the property; (Arts. 566 securities payable to bearer, each payment due
and 438, NCC) shall be considered as the proceeds of fruits of such
right. Whenever it consists in the enjoyment of
NOTE: The usufructuary is entitled to the benefits accruing from a participation in any
natural, industrial, and civil fruits that will industrial or commercial enterprise, the date of the
accrue during the existence of the usufruct. distribution of which is not fixed, such benefits
(Paras, 2008) shall have the same character. In either case they
shall be distributed as civil fruits, and shall be
2. To enjoy any Increase which the thing in applied in the manner prescribed in the preceding
usufruct may acquire through accession; (Art. article. (Paras, 2008)
571, NCC)
The things referred to in Art. 570, NCC are
3. To Retain the thing until he is reimbursed for considered civil fruits and shall be deemed to
advances for extraordinary expenses and taxes accrue proportionately to the naked owner and
on the capital; (Art. 612, NCC) usufructuary, for the time the usufruct lasts.
To make such Improvements or expenses on Rules if the finder of a hidden treasure is a

the property he may deem proper and to usufructuary
remove the improvements provided no
damage is caused to the property; (Art. 579, If the finder is a usufructuary and he discovers it by
NCC) chance, the usufructuary shall be entitled to one
half of the value thereof. The other half belongs to
4. To Collect reimbursements from the owner for the naked owner.
indispensable extraordinary repairs, taxes on
the capital he advanced, and damages caused If the finder is a third person and he found hidden
to him; (Art. 597, NCC) treasure by chance in the property under usufruct,
the usufructuary shall be considered a stranger.
5. To Remove improvements made by him if the The finder gets half and the other half shall belong
same will not injure the property; (Art. 579, to the naked owner. (Paras, 2008)
NCC)
6. To personally Enjoy the thing or lease it to

another (Arts. 572-577, NCC) generally for the
same or shorter period as the usufruct; and
NOTE: As to the thing itself, the usufructuary

may lease the thing to another, even without
the consent of the owner. (Paras, 2008)

Civil law
Rights of a usufructuary on pending natural and a. jus fruendi (including fruits of accessions); and
industrial fruits (Art. 567, NCC) b. jus utendi (so he can make use for example of
an easement)
RIGHTS OF THE USUFRUCTUARY
When the expenses of cultivation and
Fruits growing production exceeds the proceeds of the growing
at the beginning of the Usufruct fruits
a. Belong to the usufructuary; and If the expenses exceed the proceeds of the growing
fruits, the owner has no obligation to reimburse the
b. Not bound to refund to the owner the difference. (Art. 567, NCC)
expenses of cultivation and production but
without prejudice to the right of third Limitations to Usufructuary Rights
persons;
The usufructuary cannot:
But without prejudice to the right of third 1. Sell, pledge or mortgage the property itself
persons. Thus, if the fruits had been planted by a because he is not the owner;
possessor in good faith, the pending crop 2. Sell future crops (growing crops at the
expenses and charges shall be pro-rated between termination of the usufruct belong to the
said possessor and the usufructuary owner); and
3. Lease the thing for a period longer than the
Fruits growing term of the usufruct without the consent of
at the termination of the Usufruct owner. (Pineda, 2009)
Belong to the owner but he is bound to reimburse XPN: In lease of rural lands, it may exceed the
the usufructuary of the ordinary cultivation lifetime of the usufruct and shall subsist during the
expenses (Art. 545, NCC) out of the fruits agricultural year. (Art. 572, NCC)
received. (Art. 443, NCC) The right of innocent
third parties should not be prejudiced. Q: Can a usufruct be constituted on an
encumbered or mortgaged land?
NOTE: Civil fruits accrue daily (Art. 544, NCC); stock A: YES. The mortgage remains inactive until the
dividends and cash dividends are considered civil debt is not paid, and the mortgage is not for the
fruits (Orozco v. Araneta, L-3691, 21 Nov. 1951). purpose of limiting the use of the fruits.
Increases in the thing held in usufruct (Paras, Right of usufructuary to make useful or
2008) luxurious improvements
Aside from the right to the fruits, the usufructuary 1. The usufructuary may construct and make
has the right to the enjoyment (use, not ownership) improvements on the property as he may deem
of: proper;
a. Accessions (whether artificial or natural);
b. Servitudes and easements; and XPN: If there is an express prohibition to that
c. All benefits inherent in the property (e.g., the effect.
right to hunt and fish therein, the right to
construct rainwater receptacles, etc.) 2. Limitation: the usufructuary cannot alter its
form and substance;
Reason: The usufructuary, as a rule, is entitled to
the entire: 3. Removal: usufructuary may generally remove

2022 GOLDEN NOTES
Property
provided no injury is made on the principal 2. Recover property/real right, to bring the
even against the will of the naked owner. If he action and to oblige the owner thereof to give
has chosen not to remove he cannot be him the proper authority and the necessary
compelled to remove them; and proof to bring the action (Art. 578, NCC); and
4. Indemnity: no right to be indemnified if the 3. In a usufruct of part of a Common property, to

improvements cannot be removed. He may exercise all the rights pertaining to the co-
however set-off the value of the improvements owner with respect to the administration and
against the amount of damage he had caused to collection of fruits or interests. (Art.582, NCC)
the property. (Pineda, 2009)
Lease, alienation and encumbrance of the
NOTE: If the right of the usufructuary to remove property subject to usufruct
improvements is not registered in the registration
proceedings of the land in usufruct, an innocent 1. Rights with reference to the thing itself (in
purchaser for value of the property is not bound to addition to the usufruct) - The usufructuary, not
respect the right. (Ibid.) being the owner of the thing subject to usufruct,
cannot alienate, pledge or mortgage the thing
Offsetting of damages and improvements itself. However, the usufructuary may lease the
introduced by the usufructuary thing to another (This can be done even without
the owner’s consent; moreover, ordinarily the
Requisites before set-off can be made lease must not extend to a period longer than
that of the usufruct, unless the owner consents.
1. Damage must have been caused by the Thus, the lease ends at the time the usufruct
usufructuary; ends, except in the case of rural leases).
2. Improvements must have augmented the value
of the property; and NOTE: If the lessee should damage the property,
3. Notice of intention to set-off. (Pineda, 2009) the usufructuary shall answer to the owner. (Art.
590, NCC) The relation between the owner and
If the damages exceed the value of the the usufructuary, does not end just because a
improvements, the usufructuary is liable for the lease has been made. The usufructuary,
difference as indemnity. however, can demand reimbursement from the
lessee, because of the latter’s breach of the
If the improvements exceed the amount of damages, contract of lease. If the usufructuary cannot pay
the usufructuary may remove the portion of the the damage to the naked owner, his bond shall
improvements representing the excess in value if it be liable. This is precisely one reason for the
can be done without injury; otherwise, the excess in requirement of a bond. (Art. 583, NCC)
value accrues to the owner. (Paras, 2008)
2. Rights with reference to the usufructuary right
Q: Why do improvements accrue to the owner? itsef - The usufructuary may alienate (sell,
donate, bequeath, or devise) the usufructuary
A: Because there is no indemnity for improvements. right (except a legal usufruct, i.e., the usufruct
which parents have over the properties of their
Rights of the usufructuary as to the usufruct unemancipated children, because said usufruct
itself (A-R-C) (De Leon, 2006) is to be used for certain obligations towards
children); or a usufruct granted a usufructuary
1. To Alienate, pledge or mortgage the right of in consideration of his person; or a usufruct
usufruct, even by gratuitous title; (Art. 572, acquired through a caucion juratoria, for here,
NCC) the need of the usufructuary himself is the
reason for the enjoyment. (Art. 587, NCC)

Civil law
The usufructuary may pledge or mortgage the a:

usufructuary right (because he OWNS said right)
but he cannot pledge or mortgage the thing itself 1. Consumable;
because he does not own the thing (Art. 2085(2), 2. Property intended for sale; or
NCC). Neither can he sell or in any way alienate 3. Property which has been appraised when
the thing itself, or future crops, for crops pending delivered. (Art. 574, NCC)
at the termination of the usufruct belong to the
naked owner. (Arts. 567 and 572, NCC and Art. NOTE: If it has not yet been appraised or if it is not
106, Mortgage Law) a consumable, return the same quality (mutuum).
Q: 120 hectares of land from the NHA property Abnormal usufruct on consumable things
were reserved for the site of the National
Government Center. Seven (7) hectares from This is another instance of abnormal usufruct and
which were withdrawn from the operation. is sometimes referred to as a “quasi-usufruct”
These revoked lands were reserved (MSBF) because the form and substance is not really
However, MSBF occupied approximately 16 preserved. Thus, this is really a simple loan. It has
hectares and leased a portion thereof to Bulacan been included however in the title on usufructs
Garden Corporation (BGC). BGC occupies 4,590 because in what are called universal usufructs,
sqm. Implementing such revocation, NHA both non-consumable and consumable properties
ordered BGC to vacate its occupied area. BGC are included. While we seldom find usufructs on
then filed a complaint for injunction. Has BGC consumable properties alone, it is a fact that they
any right over the leased premises? indeed exist. Thus, the Supreme Court has held that
even money may be the object of a usufruct. (Paras,
A: A usufructuary may lease the object held in 2008)
usufruct. The owner of the property must respect
the lease entered into by the usufructuary so long as Rules for ‘quasi-usufruct’
the usufruct exists. MSBF was given a usufruct over
only a 7-hectare area. NHA cannot evict BGC if the 1. The usufructuary (debtor-borrower) can use
4,590 square meter portion MSBF leased to BGC is them (as if he is the owner, with complete right
within the 7-hectare area held in usufruct by MSBF. of pledge or alienation)
However, the NHA has the right to evict BGC if BGC
occupied a portion outside of the 7-hectare area 2. BUT at the end of the usufruct, he must:
covered by MSBF's usufructuary rights. (NHA v. CA, 1. Pay the appraised value (if appraised
G.R. No. 148830, 13 Apr. 2005) when first delivered); or
2. If there was no appraisal, return same
Transfer of the usufruct kind, quality, and quantity or pay the price
current at the termination of the usufruct
The transferee can enjoy the rights transferred to (therefore not at the original price or
him by the usufructuary until the expiration of the value) (Ibid.)
usufruct. Transfer of usufructuary rights,
gratuitous or onerous, is co-terminus with the term Usufruct on fruit-bearing trees and shrubs
of usufruct.
The usufructuary of fruit-bearing trees and shrubs
Exercise of acts of ownership by a usufructuary may make use of the dead trunks, and even of those
cut off or uprooted by accident, under the
GR: A usufructuary cannot exercise acts of obligation to replace them with new plants. (Art.
ownership such as alienation or conveyance. 575, NCC)
XPNs: When what is to be alienated or conveyed is NOTE: This is a special usufruct. (Paras, 2008)

2022 GOLDEN NOTES
Property
Rights 2. In the cutting or felling of trees, he must—

a. Follow the owner’s habit or practices;
The usufructuary can use (even for firewood, b. In default thereof, follow the customs of
though he is not the naked owner) the following: the place (as to manner, amount and
a. Dead trunks; and season) (Art. 577, NCC); and
b. Those cut off or uprooted by accident. — All without prejudice to the owner, for
while he can use, he cannot abuse
However, he must replace them with new plants
(for indeed, he was not the naked owner). (Ibid.) NOTE: The rule above is applicable if the
woodland:
Other special usufructs i. Is a copse (thicket of small trees); or
ii. Consists of timber for building.
1. Of periodical pension, income, dividends; (Art.
570, NCC) c. If there be no customs, the only time the
2. Of woodland; (Art. 577, NCC) usufructuary can cut down trees will be for
3. Of right of action to recover real property, real repair or improvement, but here the
right, or movable property; (Art. 578, NCC) owner must first be informed (the owner,
4. Of part of property owned in common; thus, does not need to consent)
(Art. 582, NCC)
5. Of the entire patrimony of a person; (Art. 598, 3. Cannot alienate the trees (for the trees are not
NCC) considered fruits) unless he is permitted,
6. On a mortgaged immovable; (Art. 600, NCC) expressly or impliedly by the owner as when
and the purpose of the usufruct was really to sell
7. On a flock or herd of livestock. (Art. 591, NCC) the timber, or unless he needs the money to do
some repairs but in the last case, the owner
Special usufruct over a woodland must be informed
This is not a common or frequent usufruct because: Rights of usufructuary to recover the property
1. Natural resources (including forest or timber held in usufruct
lands) belong to the State (Regalian Doctrine
under Art. XII (3), 1987 Constitution); and To bring the action, the usufructuary can demand
from the owner:
2. A license is generally essential if one desires to
gather forest products (Sec. 47, Revised 1. Authority to bring the action (usually a special
Administrative Code) power of attorney); and
2. Proof needed for a recovery.
Obligations of the usufructuary over a
woodland (Paras, 2008) The action may be instituted in the usufructuary’s
name, for being the owner of the usufruct, he is
In the enjoyment of the usufruct, the usufructuary: properly deemed a real party in interest. (Rule 3(2),
1. Must bear in mind that he is not the owner, and ROC)
therefore, in the exercise of the diligence in
caring for the property (required under Art. a. If the purpose is the recovery of the property
589, NCC, he must see to it that the woodland or right, he is still required under Art. 578, NCC
is preserved, either by development or by to obtain the naked owner’s authority.
replanting, thus he cannot consume all, b. If the purpose is to object to or prevent
otherwise nothing would be left for the disturbance over the property (once the
owner); property is given him), no special authority
from the naked owner is needed.

Civil law
Usufructuary of a part of common property OBLIATIONS OF THE USUFRUCTUARY
The usufructuary of a part of a thing held in Obligations of the Usufructuary

common shall exercise all the rights pertaining to
the owner thereof with respect to the 1. Before the usufruct (such as the making of
administration and the collection of fruits or inventory);
interest. Should the co-ownership cease by reason 2. During the usufruct (such as taking due care of
of the division of the thing held in common, the property); and
usufruct of the part allotted to the co-owner shall 3. After the usufruct/ at the termination (such as
belong to the usufructuary. (Art. 582, NCC) the duty to return and indemnify in the proper
cases) (De Leon, 2006)
A co-owner may give the usufruct of his share to
another, even without the consent of the others, BEFORE THE USUFRUCT (ART. 583, NCC)
unless personal considerations are present. (Art.
493, NCC) a. Make an inventory; and
b. Give security
The usufructuary in such a case takes the owner’s
place as to: This article speaks of two obligations – inventory
a. Administration (management); and and security. They are not necessary however
b. Collection of fruits or interest (Art. 582, before the right to the usufruct begins; they are
NCC) but not as to alienation, disposition, merely necessary before physical possession and
or creation of any real right over the enjoyment of the property can be had, thus if the
property, since these are strict acts of usufructuary fails to give security, the usufruct still
ownership, unless of course he is begins but the naked owner will have the rights
authorized by the naked owner. (Paras, granted him under Art. 586, NCC unless exempted.
2008) (Paras, 2008)
Rights of usufructuary at the expiration of the NOTE: The purpose of giving security is to insure
usufruct fulfillment by the usufruct of the obligation
imposed upon him.
1. To collect reimbursement from the owner:
a. For indispensable extraordinary repairs After the security has been given by the
made by the usufructuary; (Art. 593, NCC) usufructuary, he shall have a right to all the
b. For taxes on the capital advanced by the proceeds and benefits from the day on which, in
usufructuary; (Art. 597, NCC) accordance with the title constituting the usufruct,
c. For damages caused by the naked owner; he should have commenced to receive them
d. For payment of increase in value of the (retroactive effect of security). (Art. 588, NCC)
immovable by reason of repairs provided
the owner is notified of the urgency of Requirements for the inventory
such repairs but the latter failed to make
said repairs despite the notification, and 1. The naked owner or representative must be
the repair is necessary for the previously notified;
preservation of the property. (Art. 594,
NCC) NOTE: The purpose is to enable him to correct
errors in the inventory if he desires. His
2. To retain the thing until reimbursement is absence is a waiver for corrections. If there is
made. (Art. 612, NCC) non-notification, the inventory can go on but
the naked owner may later on point out
discrepancies and omissions in the inventory.

2022 GOLDEN NOTES
Property
2. Conditions of immovables must be described; 2. On the rights of the usufructuary:

and a. Cannot possess the property until he
gives security;
3. Movables must be appraised.
b. Cannot administer property;
NOTE: As a rule, no form is required, except
when there are real properties. Expenses are to c. Cannot collect credits that have matured
be borne by the usufructuary. (Paras, 2008) nor invest them; and
XPN: if the court or naked owner
When inventory is not required consents;
1. Waived by the naked owner; (Paras, 2008) d. May alienate his right to usufruct. (Paras,
2. No one will be injured by the lack of inventory; 2008)
(Art. 585, NCC)
3. When the donor has reserved to himself the Exemption of usufructuary from the obligation
usufruct of the property donated; or to give security
4. Agreement of both parties (Paras, 2008).
Usufructuary may be exempt from the obligation to
Effects of failure to post a bond or security give security when:
1. The owner shall have the following options 1. No one will be injured by the lack of the bond;
(Art. 586, NCC): (Art. 585, NCC)
a. Receivership of realty; 2. The donor (or parent) reserved the usufruct of
b. Sale of movables; the property donated; (Art. 584, NCC)
c. Deposit of securities; 3. When there is waiver by the naked owner;
d. Investment of money; or 4. When there is parental usufruct (Art. 225,
e. Retention of the property as Family Code); and
administrator. 5. The usufruct is subject to caucion juratoria
where:
2. The net product shall be delivered to the a. The usufructuary takes an oath to take
usufructuary; and care of the things and restore them to its
3. The usufructuary cannot collect credit due or previous state before the usufruct is
make investments of the capital without the constituted; and
consent of the owner or of the court until the b. The property subject to such cannot be
bond is given. alienated or encumbered or leased.
Effects of failure to give security Caucion juratoria – “by virtue of a promise under
oath”
1. On the rights of the naked owner:
a. May deliver the property to the The usufructuary, being unable to file the required
usufructuary; bond or security, may file a verified petition in the
b. May choose retention of the property as proper court asking for the delivery of the house
administrator; and and furniture necessary for himself and his family
c. May demand receivership or so that he and his family be allowed to live in a house
administration of the real property, sale included in the usufruct and retain it until the
of movable, conversion or deposit of termination of the usufruct without any bond or
credit instruments or investment of cash security.
or profits.

Civil law
The same rule shall be observed with respect to NOTE: If the naked owner demanded the repair
implements, tools and other movable property and the usufructuary still fails to do so, the owner
necessary for an industry or vocation in which he is may make them personally or through another, at
engaged. (Art. 587, NCC) the expense of the usufructuary. (Art. 592, NCC)
Requisites before the caucion juratoria is Extraordinary repairs (Art. 593, NCC)
allowed
It includes:
1. Proper court petition; 1. Those required by the wear and tear due to the
2. Necessity for delivery of furniture, implements natural use of the thing but not indispensable for
or house included in the usufruct; its preservation;
3. Approval of the court; and
4. Sworn promise. (Paras, 2008) Liabilities:
a. The naked owner should be held liable,
DURING THE USUFRUCT whether or not he is notified by the
usufructuary; and
a. Take care of property; (Art. 589, NCC)
b. Replace the young of animals that die or are b. The law does not require the naked owner
lost or become prey when the usufruct is to make them; what is important is that he
constituted on a flock or herd of livestock; will bear the expenses made by the
(Art. 591, NCC) usufructuary. (Paras, 2008)
c. Make ordinary repairs; (Art. 592, NCC)
d. Notify the owner of urgent extraordinary 2. Those caused by exceptional circumstances and
repairs; (Art. 593, NCC) are indispensable for its preservation; and
e. Permit works & improvements by the
naked owner not prejudicial to the Liabilities:
usufruct; (Art. 595, NCC) a. The naked owner shall be held liable; and
f. Pay annual taxes and charges on the fruits; b. The usufructuary is allowed to make them
(Art. 596, NCC) with the right to get the increase in value
g. Pay interest on taxes on capital paid by the and the right of retention at the termination
naked owner; (Art. 597, NCC) of usufruct, provided there was notification
h. Pay debts when usufruct is constituted on by the usufructuary and failure to repair by
the whole patrimony; (Art. 598, NCC) the naked owner. (Ibid.)
i. Secure the naked owner’s/court's approval
to collect credits in certain cases; (Art. 599, 3. Those caused by exceptional circumstances but
NCC) are not needed for its preservation.
j. Notify the owner of any prejudicial act
committed by third persons; (Art. 601, NCC) Liabilities:
and a. The naked owner is liable; and
k. Pay for court expenses and costs. (Art. 602, b. The usufructuary cannot compel the naked
NCC) owner to make such repairs and he is not
allowed to make them even if the naked
Usufructuary’s liability for ordinary repairs owner has failed to make them. (Ibid.)
The usufructuary is obliged to make the ordinary NOTE: Extraordinary repairs shall be at the expense
repairs needed by the thing given in usufruct. It of the owner. The usufructuary is obliged to notify
includes such as are required by the wear and tear the owner when the need for such repairs is urgent.
due to the natural use of the thing and are (Art. 593, NCC)
indispensable for its preservation. (Art. 592, NCC)

2022 GOLDEN NOTES
Property
Right of retention of the usufructuary RIGHTS OF THE OWNER
Upon the termination of the usufruct, the thing in Rights of a naked owner and the limitations
usufruct shall be delivered to the owner, without imposed upon him
prejudice to the right of retention pertaining to the
usufructuary or his heirs for taxes and 1. Alienation - can alienate the thing in usufruct;
extraordinary expenses which should be 2. Alteration - cannot alter the form and
reimbursed. (Art. 612, NCC) substance;
3. Enjoyment - cannot do anything prejudicial to
Charges or taxes which the usufructuary must the usufructuary; and
pay 4. Construction and Improvement - Can
construct any works and make any
1. The annual charges (in the fruits); and improvement provided it does not diminish
2. The annual taxes on the fruits. the value or the usufruct or prejudice the
rights of the usufructuary.
Taxes imposed directly on the capital
Alienation by naked owner
These shall be at the expense of the owner provided
they are not annual. (Paras, 2008) Since the jus disponendi and the title (dominium
directum) reside with the naked owner, he retains
Rules: the right to alienate the property but:
1. If paid by the naked owner, he can demand
legal interest on the sum paid; or 1. He cannot alter its form or substance; or
2. If advanced by the usufructuary, he shall 2. Do anything prejudicial to the usufructuary (as
recover the amount thereof at the termination when he should illegally lease the property to
of the usufruct. (Art. 597(2), NCC) another, since this right ordinarily pertains to
the usufructuary). (Paras, 2008)
AFTER THE USUFRUCT/
AT THE TERMINATION Improper use of the thing by the usufructuary
a. Return the thing in usufruct to the naked The owner may demand the delivery of and
owner unless there is a right of retention; (Art. administration of the thing with responsibility to
612, NCC) deliver net fruits to usufructuary.
b. Pay legal interest for the time that the usufruct
lasts; and Q: On January 1, 1980, Minerva, the owner of a
c. Indemnify the naked owner for any losses due building granted Petronila a usufruct over the
to his negligence or of his transferees. (Art. 573, property until 01 June 1998 when Manuel, a
NCC) son of Petronila, would have reached his 30th
birthday. Manuel, however, died on 1 June 1990
NOTE: The usufructuary may be liable for the when he was only 26 years old.
damages suffered by the naked owner on account of
fraud committed by him or through his negligence. Minerva notified Petronila that the usufruct
had been extinguished by the death of Manuel
XPN: the usufructuary is not liable for deterioration and demanded that the latter vacate the
due to: premises and deliver the same to the former.
1. Wear and tear; or Petronila refused to vacate the place on the
2. Fortuitous event. (Ibid.) ground that the usufruct in her favor would
expire only on 01 June 1998 when Manuel
th
would have reached his 30 birthday and that

Civil law
th
the death of Manuel before his 30 birthday did the usufructuary does not terminate the
not extinguish the usufruct. Whose contention usufruct.
should be accepted? (1997 BAR)
XPN: unless it constitutes renunciation.
A: PETRONILA’S CONTENTION should be (Pineda, 2009)
accepted. A usufruct granted for the time that may
elapse before a third person reaches a certain age 2. Total Loss of the thing;
shall subsist for the number of years specified even
if the third person should die unless there is an NOTE: If the loss is only partial, the usufruct
express stipulation in the contract that states continues with the remaining part. (Art. 604,
otherwise. (Art. 606, NCC) There is no express NCC)
stipulation that the consideration for the usufruct
is the existence of Petronila’s son. Thus, the general 3. Death of the usufructuary;
rule and not the exception should apply in this case.
GR: Death of the usufructuary generally ends
When buyer must respect the usufruct the usufruct since a usufruct is constituted
essentially as a lifetime benefit for the
A purchaser of the property must respect the usufructuary or in consideration of his person.
usufruct in case it is registered or known to him
(Art. 709, NCC), otherwise, he can oust the XPNs:
usufructuary, who can then look to the naked a. In the case of multiple usufructs, it ends
owner for damages. (Art. 581, NCC) on the death of the last survivor; (Art. 611,
NCC)
Effect of the death of the naked owner on the
usufruct b. In case there is a period fixed based on the
number of years that would elapse before
It does not terminate the usufruct. The naked a person would reach a certain age, unless
owner’s rights are transmitted to his heirs. the period was expressly granted only in
consideration of the existence of such
Obligations of the Owner person, in which case it ends at the death
of said person; (Art. 606, NCC) or
1. To make reimbursement for advances of the
usufructuary (Art. 597, NCC); c. In case the contrary intention clearly
2. To cancel the security, upon discharge of the appears.
usufructuary’s obligations (Art. 612, NCC); and
3. To respect leases of rural lands by the 4. Termination of right of the person constituting
usufructuary for the balance of the agricultural the usufruct;
year. (Art. 572, NCC)
5. Expiration of the period or fulfilment of the
3. EXTINGUISHMENT resolutory condition;
NOTE: If the usufructuary is a juridical person,
Usufruct is extinguished by: (P-L-D-T-E-R-M) the term should not exceed 50 years. (Art. 605,
(Art. 603, NCC) NCC)
1. Acquisitive Prescription; 6. Renunciation by the usufructuary; and
NOTE: The use by a third person and not the NOTE: It partakes the nature of a condonation
non-use by the usufructuary. Mere non-use of or donation. It can be made expressly or
impliedly as long as done clearly. If done

2022 GOLDEN NOTES
Property
expressly, it must conform with forms of a. The usufruct on the building ends, but the
donation. Renunciation of usufructuary’s usufruct on the land continues
rights is NOT an assignment of right. It is really (usufructuary is still entitled to the use of
abandonment by the usufructuary of his right the land and remaining materials of the
and does not require the consent of the naked building); and
owner but it is subject to the rights of creditors. b. If the naked owner wants to rebuild but
There can be a partial waiver except if it is a the usufructuary refuses, the latter
universal usufruct. (De Leon, 2006) prevails but the use of the land is still his
for the remainder of the period. (Paras,
7. Merger of the usufruct and ownership in the 2008)
same person who becomes the absolute owner
thereof. (Art. 1275, NCC) 2. The usufruct is on the building alone (but the
building is destroyed before the termination of
Other causes of termination of usufruct the period):
a. Annulment of the act or title constituting
the usufruct; a. The usufruct on the building ends, but the
b. Rescission; usufructuary can still make use of
c. Expropriation; whatever materials of the building
d. Mutual withdrawal; remain; and
e. Legal causes for terminating legal b. The usufructuary is entitled to the use of
usufruct; or the land but the naked owner enjoys
f. Abandonment or dissolution of juridical preferential right to its use. (Ibid.)
entity (e.g., corporation) granted with
usufruct before the lapse of the period. NOTE: While the usufruct on a building does not
(Pineda, 2009; Paras, 2008) expressly include the land on which it is
constructed, the land should be deemed included,
Usufruct cannot be constituted in favor of a because there can be no building without land. (De
town, corporation or association for more than Leon, 2006)
50 years
Payment of insurance on a building held in
Any usufruct constituted in favor of a corporation usufruct (Art. 608, NCC; Paras, 2008)
or association cannot be constituted for more than
fifty years. (Art. 605, NCC) A usufruct is meant only 1. If the naked owner and usufructuary share in the
as a lifetime grant. Unlike a natural person, a premiums and the property is destroyed:
corporation or association's lifetime may be a. If the owner constructs a new building, the
extended indefinitely. The usufruct would then be usufruct continues on the new building:
perpetual. This is especially invidious in cases i. If the cost of the new building is less
where the usufruct given to a corporation or than the insurance indemnity, the
association covers public land. (NHA v. CA, G.R. No. usufructuary should get legal
148830, 13 Apr. 2005) interests on the difference; or
ii. If the cost is more than the insurance
Usufruct on a building and/or land concerned indemnity, the usufructuary enjoys
the new building completely with no
Rules: obligation to give interest on the
1. If the usufruct is both on the building and the additional cost of the naked owner.
land but the building is destroyed in any
manner whatsoever before the expiration of b. If the naked owner does not construct a new
the period of usufruct: building or rebuild, the naked owner gets the
insurance indemnity but he should pay the

Civil law
interest thereon to the usufructuary. (Paras, period.

2008)
NOTE: If the owner chooses the latter
2. If the naked owner alone pays the insurance alternative, he shall give security for the
indemnity and the usufructuary refused to share: payment of interest. (Art. 609, NCC)
a. The naked owner gets the whole indemnity
(with no obligation to give the interest 2. If both the naked owner and the usufructuary
thereon to the usufructuary); were separately given indemnity, each owns
b. If the usufruct was on the building and the the indemnity given to him, the usufruct being
land, the usufruct continues on the land and totally extinguished; or
the material; or
c. If the usufruct was on the building alone, the 3. If the usufructuary alone was given the
naked owner may rebuild, with or without indemnity, he must give it to the naked owner
the approval of the usufructuary, but he must and compel the latter to return either the
pay interest on the value of the land and the interest or to replace the property. He may
old materials that may have been used. (Art. deduct the interest himself if the naked owner
607, NCC) fails to object.
3. If the naked owner alone paid for the insurance Effect of bad use of the property held in usufruct
but there is failure or omission on the part of the
usufructuary to share: GR: Usufruct is not extinguished by bad use of the
The effect is the same as if there was a sharing, thing in usufruct which does not cause considerable
but the usufructuary must reimburse the owner injury to the naked owner.
of the usufructuary’s share in the insurance
premium. XPN: If the abuse should cause considerable injury
to the owner, the latter may demand delivery to and
4. If the usufructuary alone pays the insurance administration by him, but he will be obliged to pay
premium: net proceeds to the usufructuary. (Art. 610, NCC)
a. The insurance indemnity goes to the (Paras, 2008)
usufructuary alone, with no obligation to
share it with, nor to give legal interest Rules in case of multiple usufructs
thereon to, the naked owner; but
b. The usufruct continues on the land for the 1. If constituted simultaneously, all the
remaining period (unless usufruct has been usufructuaries must be alive at the time of the
constituted on the building alone). constitution. The death of the last survivor
extinguishes the usufruct; (Art. 611, NCC)
Rule in case of expropriation of the property
(Art. 609, NCC; Paras, 2008) 2. If constituted successively by virtue of a
donation, all the donee-usufructuaries must be
In case the property held in usufruct is expropriated living at the time of the constitution- donation
for public use: of the usufruct; (Art. 756, NCC) and
1. If the naked owner alone was given the 3. If constituted successively by virtue of a last
indemnity, he has the option to: will, there should only be two (2) successive
a. Replace it with another thing of the same usufructuaries, and both must have been alive
value and of similar condition; or at the time of testator’s death. (Paras, 2008)
b. Pay legal interest to usufructuary on the
amount of indemnity for the whole period
of the usufruct, not just the unexpired

2022 GOLDEN NOTES
Property
Characteristics of Easement (N-I-C-E-L-I-A-R)

F. EASEMENTS
1. A right limited by the Needs of the dominant
owner or estate, without possession;
It is an encumbrance imposed upon an immovable

2. Inseparable from the estate to which it is
for the benefit of:
attached – cannot be alienated independently
of the estate; (Art. 617, NCC) (2001, 2010
1. Another immovable belonging to a different
BAR)
owner; or
2. For the benefit of a community or one (1) or
3. Cannot consist in the doing of an act unless the
more persons to whom the encumbered estate
act is accessory in relation to a real easement;
does not belong by virtue of which the owner
is obliged to abstain from doing or to permit a
4. Involves two (2) neighboring Estates: the
certain thing to be done on his estate. (Arts. 613
dominant estate to which the right belongs and
& 614, NCC)
the servient estate upon which an obligation
rests;
Where the easement may be established on any of
several tenements surrounding the dominant
5. A Limitation on the servient owner’s rights of
estate, the one where the way is shortest and will
ownership;
cause the least damage should be chosen. However,
if these two circumstances do not concur in a single
6. Indivisible – not affected by the division of the
tenement, the way which will cause the least
estate between two or more persons; (Art. 618,
damage should be used, even if it will not be the
NCC)
shortest.
7. It is enjoyed over Another immovable never

There can be no easement over another easement
on one’s own property; and
for the reason that an easement may be constituted
only on a corporeal immovable property. An
8. A Real right but will affect third persons only
easement, although it is real right over an
when registered. (De Leon, 2006)
immovable, is not a corporeal right. (1995 BAR)
Essential qualities of easements

Easement v. Servitude (De Leon, 2006)
1. Incorporeal;
EASEMENT SERVITUDE 2. Imposed upon corporeal property;
3. Confers no right to a participation in the profits
Used in civil law
An English law term arising from it;
countries
4. Imposed for the benefit of corporeal property;
5. Has two distinct tenements: dominant and
Real or personal servient estate; and
Real easement
easement 6. Cause must be perpetual.
Burden imposed upon

The right enjoyed
another

Civil law
Easement v. Usufruct Q: Can there be a usufruct over an easement?
EASEMENT USUFRUCT A: NO. There can be no usufruct over an easement.

While a usufruct may be created over a right, such
Where it is constituted
right must have an existence of its own
independent of the property. A servitude cannot be
On real property Real or personal
the object of a usufruct because it has no existence
independent of the property to which it attaches.
Use granted
Limited to a Q: Is there such thing as judicial easement?
particular or specific Includes all uses and
use of the servient fruits A: NO. When the court says that an easement exists,
estate it is not creating one. For, even an injunction cannot
As to right of possession be used to create one as there is no such thing as a
judicial easement. The court merely declares the
Involves a right of existence of an easement created by the parties. (La
No possessory right Vista Association v. CA, G.R. No. 95252, 05 Sept. 1997)
possession in an
over an immovable
immovable or movable
Parties to an Easement
As to effect of death
1. Dominant estate – refers to the immovable for
Not extinguished by which the easement was established; and
Extinguished by death of 2. Servient estate – the estate which provides the
death of dominant
usufructuary service or benefit. (Pineda, 2009)
owner
Nature of right 1. MODES OF ACQUIRING EASEMENTS
Real right whether or Real right whether or not Modes of acquiring easement (P-R-A-F-T)
not registered registered
1. By Title (Art. 620, NCC) – the following
As to transmissibility easements may be acquired only by title:
Transmissible Transmissible a. Continuous non-apparent easements;

b. Discontinuous apparent easements; and
How it may be constituted
c. Discontinuous non-apparent easements.
Cannot be constituted (Art. 622, NCC) (2005 BAR)
May be constituted
on an easement but it
in favor, or, NOTE: Title means:
may be constituted on
burdening, a piece of • It does not necessarily mean document.
the land burdened by an
land held in usufruct • It means a juridical act or law sufficient to
easement
create the encumbrance
• E.g., law, donation, testamentary
Q: Can there be an easement over a usufruct?
succession, contract
a. Intestate succession does not create
A: NO. There can be no easement over a usufruct.
an easement, for no act is involved.
Since an easement may be constituted only on a
Hence, instead of creating an
corporeal immovable property, no easement may
easement, it transmits merely an
be constituted on a usufruct which is not a
easement already existing
corporeal right.

2022 GOLDEN NOTES
Property
b. Prescription is a mode of acquisition, because there are visible signs or their existence but
and is generally and ordinarily a title, because of the making of the notarial prohibition
but is not considered as such under which makes it apparent. (De Leon, 2006)
Art. 620, NCC which expressly
makes it distinct from title. NOTE: In negative easement there is a need of a
formal act. (Art. 621, NCC)
2. By Prescription of ten (10) years; (2009 BAR)
Doctrine of Apparent Sign
NOTE: Prescription runs irrespective of good
faith or bad faith of the possessor and whether Easements are inseparable from the estate to which
or not he has just title. The only requirement is they actively or passively pertain. The existence of
adverse possession. Only continuous and apparent sign under Art. 624, NCC is equivalent to a
apparent easements can be acquired by title. It is as if there is an implied contract between
prescription; (Art. 620, NCC) the two new owners that the easement should be
constituted, since no one objected to the continued
3. By deed of Recognition, in the absence of proof existence of the windows.
of prescription;
NOTE: It is understood that there is an exterior sign
4. By Final judgment, if owner denies existence of contrary to the easement of party wall whenever:
easement or refuses to execute deed of
recognition; (Rabuya, 2008) or 1. There is a window or opening in the dividing
wall of buildings;
NOTE: If the owner of the servient estate 2. Whenever the dividing wall is, on one side,
refuses to execute the deed of recognition, the straight and plumb on all its facement, and on
court may, in its judgment, declare the the other, it has similar conditions on the
existence of the easement. upper part, but the lower part slants or
projects outward;
5. By Apparent sign established by the owner of 3. Entire wall is built within the boundaries of
the two adjoining estates. one of the estates;
4. The dividing wall bears the burden of the
XPN: unless at the time the ownership of the binding beams, floors and roof frame of one of
two estates is divided: the buildings, but not those of the others;
a. There are contrary stipulations; or 5. Whenever the dividing wall between
b. The sign is removed before the courtyards, gardens, and tenements is
execution of the deed. (Art. 624, NCC) constructed in such a way that the coping
sheds the water upon only one of the estates;
Prescriptive Period 6. Whenever the dividing wall, being built of
masonry, has stepping stones, which at certain
1. Positive easement – The 10-year period is intervals project from the surface on one side
counted from the day when the owner of the only, but not on the other; and
dominant estate begins to exercise it; and 7. The lands enclosed by fences or live hedges
adjoin others which are not enclosed.
2. Negative easement – from the day a notarial
prohibition is made on the servient estate. (Art. In all these cases, ownership is deemed to belong
621, NCC) exclusively to the owner of the property which has
Negative easement cannot be acquired by in its favor the presumption based on any of these
prescription since they are non-apparent. However, signs. (Art. 660, NCC)
for purposes of prescription, there are negative
easement that can be considered “apparent” not

Civil law
Q: Sps. Fernandez once owned five (5) properties were eventually transferred to the PNB,
contiguous parcels of land in Dagupan City. Two the bank did not raise any qualms or stipulated
(2) of their properties were located in front of against the easement of right of way or the
their three (3) other properties. These front annotations. Thus, when the front properties were
properties provided the other properties sole sold, Sps. Delfin’s titles bore the same annotations
access to the national highway. They annotated as those of petitioners. To clarify, the easement of
on the transfer certificates of title of the front right of way was not constituted when petitioners
properties an easement of right of way in favor annotated it on their titles. However, when the front
of the back properties an easement of road of properties were transferred to the PNB, the
right of way. The Sps. Fernandez later obtained apparent signs of the easement — the path and the
a loan from the PNB and mortgaged the front annotations — served as a title over the easement.
properties. When they failed to pay their loan, (Sps. Fernandez v. Sps. Delfin, G.R. No. 227917, 17
the bank foreclosed and eventually acquired the Mar. 2021)
front properties. Later on, the Sps. Delfin
purchased the front properties from the Acknowledgement of an easement in one who
PNB. They were issued TCT, which bore the owns property
same annotations as those in the Sps.
Fernandez. However, they refused to recognize An acknowledgement of the easement is an
the annotated right of way, enclosing the admission that the property belongs to another.
properties to prevent the Sps. Fernandez from (BOMEDCO v. Heirs of Valdez, G.R. No. 124669, 31 July
accessing the national highway through the 2003)
front properties. Thus, Sps. Fernandez filed
before the RTC a Complaint for specific 2. RIGHTS AND OBLIGATIONS
performance, right of way, and damages, OF THE OWNERS OF THE
arguing that they were entitled to use the right DOMINANT AND THE SERVIENT ESTATES
of way to access the national highway. Sps.
Delfin countered that they acted within their The owner of the dominant estate may make, at his
rights as the properties' owners. They claimed own expense, on the servient state any works
that despite the annotations, the right of way necessary for the use and preservation of the
was invalid as it was constituted by the Sps. servitude, but without altering it or rendering it
Fernandez for their own sake. They alleged that more burdensome.
the easement had already been extinguished
when the PNB acquired the properties after For this purpose, he shall notify the owner of the
foreclosure. servient estate, and shall choose the most
convenient time and manner so as to cause the
Is there a valid easement of right of way least inconvenience to the owner of the servient
constituted on the front properties formerly estate. (Art. 627, NCC)
owned by Sps. Fernandez, and now owned by
Sps. Delfin? NOTE: The necessity of the works for the use and
preservation of the easement is the basis and the
A: YES. Art. 624 of the NCC applies in this case. The determining factor for the extent of such works.
front properties and the back properties were all The works must be executed in the manner least
previously owned by Sps. Fernandez, who created inconvenient to the servient owner, who cannot
an apparent sign of an easement on the front recover indemnity for the inevitable damages or
properties when: (1) they used a portion of the front inconveniences which may be caused thereby.
properties to give the back properties access to the
national highway; and (2) they had it annotated on But if the work is done badly, the dominant owner
the front properties' titles as an easement of right of will be liable for damages that may be suffered by
way in favor of the back properties. When the front the servient owner. (Tolentino, 1992)

2022 GOLDEN NOTES
Property
Rights of the Dominant Owner (M-A-R-E) Servient Owner
1. Make on the servient estate all works The owner of the immovable whose property is
necessary for the use and preservation of the subject to easement for the benefit of the dominant
servitude; (Art. 627, NCC) owner. (Pineda. 2009)
2. Ask for mandatory injunction to prevent Rights of the Servient Owner (R-M-C)
impairment of his right; (Resolme v. Lazo, G.R.
No. L-8654, 30 Mar. 1914) 1. Retain the ownership of the portion of the
estate on which easement is imposed;
3. Renounce the easement if he desires to be 2. Make use of the easement unless there is an
exempt from contributing necessary expenses; agreement to the contrary (Art. 628(2), NCC);
(Art. 628, NCC) and and
3. Change the place or manner of the use of the
4. Exercise all rights necessary for the use of the easement, provided it be equally convenient.
easement. (Art. 625, NCC) (Art. 629(2), NCC)
Obligations of the Dominant Owner (C-A-N-E-C- Obligations or limitations imposed on the

O) Servient Owner (I-C)
1. He cannot Exercise the easement in any other 1. GR: He cannot impair the use of the servitude;
manner than that previously established; (Art. and
626, NCC) XPNS:
1) When the easement has become very
2. He cannot Alter the easement or render it more inconvenient to the said servient owner;
burdensome; (Art. 627(1), NCC) or
3. He shall Notify the servient owner of works 2) If it prevents him from making any
necessary for the use and preservation of the important works, repairs, or
servitude; (Art. 627(2), NCC) improvements thereon. (Art. 629(1), NCC)
4. He must Choose the most convenient time and 2. He must Contribute to the necessary expenses
manner of making the necessary works as to in case he uses the easement, unless otherwise
cause the least inconvenience to the servient agreed upon. (Art. 628(2), NCC)
owner;
CLASSIFICATIONS OF EASEMENT
5. If there are several dominant estates, he must (De Leon, 2006)
Contribute to the necessary expenses in
proportion to the benefits derived from the 1. As to recipient of the benefit
works; (Art. 628(1), NCC; and a. Real (or predial) – The easement is in
favor of another immovable (Art. 613,
6. He may make, at his Own expense, on the NCC); and
servient estate, any works necessary for the
use of servitude, provided it will not alter or NOTE: It requires two distinct
make it more burdensome. (Art.627(1), NCC) immovables belonging to different
owners to which it relates. (Pineda, 2009)
b. Personal – The easement is in favor of a

community, or of one or more persons to
whom the encumbered estate does not

Civil law
(e.g., easement of right of way for passage 5. As to source

of livestock). (Art. 614, NCC) a. Legal – Those created by law for public
use or private interests; (Arts. 619, 637-
NOTE: In personal servitude. the person 687, NCC)
in whose favor the easement is b. Voluntary - constituted by will or
constituted need not to be the owner of agreement of the parties or by testator;
any estate and does not require a (Art. 619, NCC) and
dominant estate because the person in
whose favor the easement is constituted NOTE: Like any other contract, a
need not to be the property owner. voluntary easement (of right of way)
could be extinguished only by mutual
2. As to the manner of exercise agreement or by renunciation of the
a. Continuous – Their use may or may not be owner of the dominant estate. (La Vista
incessant, without the intervention of any Association v. CA, G.R. No. 95252, 05 Sept.
act of man. (e.g., easement of drainage); 1997)
(Art. 615, NCC) and
c. Mixed – Created partly by agreement and
NOTE: For acquisitive prescription, the partly by law.
easement of aqueduct and easement of
light and view are considered continuous. 6. As to the duty of the servient owner:
a. Positive – Imposes upon the owner of the
b. Discontinuous – Used at intervals and servient estate the obligation of allowing
depend upon the acts of man. (e.g., something to be done or doing it himself;
easement of right of way). (Ibid.) (e.g., right of way – imposes the duty to
allow the use of said way); and
3. As to whether their existence is indicated
a. Apparent – Made known and continually b. Negative – Prohibits the owner of the
kept in view by external signs that reveal servient estate from doing something
the use and enjoyment of the same; (Art. which he could lawfully do if the easement
615, NCC) and did not exist. (e.g., easement of light and
view – where the owner is prohibited from
NOTE: By way of exception, the easement obstructing the passage of light). (Art. 616,
of aqueduct is always apparent, whether NCC)
or not it can be seen. (Art. 646, NCC)
3. MODES OF EXTINGUISHMENT
b. Non-apparent – They show no external
indication of their existence. (Art. 615, Easements are extinguished (M-E-N-C-R2)
NCC) (2001, 2010 BAR)
4. As to the right given 1. By Merger in the same person of the ownership

a. Right to partially use the servient estate; of the dominant and servient estates;
b. Right to get specific materials or objects 2. By Non-user for ten (10) years; with respect to
from the servient estate; discontinuous easements, this period shall be
c. Right to participate in ownership; and computed from the day on which they ceased
d. Right to impede or prevent the to be used; and, with respect to continuous
neighboring estate from performing a easements from the day on which an act
specific act of ownership. (Paras, 2008) contrary to the same took place;
3. When either or both of the estates fall into such

2022 GOLDEN NOTES
Property
condition that the easement Cannot be used; because the basis of this cause of extinguishment is
but it shall revive if the subsequent condition a presumptive renunciation. (Rabuya, 2008)
of the estates or either of them should again
permit its use, unless when the use becomes NOTE: Reckoning point:
possible, sufficient time for prescription has 1. Discontinuous – counted from the day they
elapsed, in accordance with the provisions of ceased to be used; and
the preceding number; 2. Continuous – counted from the day an act
adverse to the exercise takes place. (Art.
4. By the Expiration of the term or the fulfillment 631(2), NCC)
of the condition, if the easement is temporary
or conditional; Non-user presupposes that the easement has been
used before but it was abandoned for ten (10) years.
5. By the Renunciation of the owner of the Thus, it cannot apply to easements which have not
dominant estate; and been used. (Pineda, 2009)
6. By the Redemption agreed upon between the Impossibility of use

owners of the dominant and servient estates.
(Art. 631, NCC) The impossibility of use only suspends the servitude
until such time when it can be used again. (Rabuya,
NOTE: The grounds under Article 631, NCC are not 2008)
exclusive.
Expiration
In addition to the foregoing causes enumerated in
Article 631 of the NCC, the following may be added: E.g., An easement was agreed upon to last till the
1. Annulment or rescission of title constituting owner of the dominant easement becomes a lawyer.
easement; When the condition is fulfilled, the easement ceases.
2. Termination of the right of the grantor; (Paras, 2008)
3. Abandonment of the servient estate; and Renunciation
4. Eminent domain. (4 Manresa 590)
Renunciation must be express, definite, clear,
Merger specific (otherwise it might be confused with non-
user). This is particularly true for discontinuous
It is not necessary, however, that the merger takes easements. (Ibid.) Renunciation of a real right must
place to the full extent of the property, it being be reflected in a public instrument. (Pineda, 2009)
sufficient that the merger takes place with regard to
that part affected by the servitude or that part for Redemption
the benefit of which the servitude was established.
(Rabuya, 2006) This is voluntary redemption, existing because of an
express stipulation. The stipulation may provide
Where the merger is temporary or under resolutory conditions under which the easement would be
condition, there is at most a suspension, but not an extinguished. (Paras, 2008)
extinguishment of the servitude. (De Leon, 2006; 4
Manresa 657-658) 4. LEGAL v. VOLUNTARY EASEMENTS
Non-user LEGAL EASEMENTS
Non-use must be due to voluntary abstention by the Legal easements are those imposed by law having
dominant owner, and not to fortuitous event, for their object either public use or the interest of
private persons. (Art. 634, NCC) They shall be

Civil law
governed by the special laws and regulations 2. Personal servitudes:

relating thereto, and in the absence thereof, by the a. For anyone capacitated to accept.
Civil Code.
Q: How are voluntary easements created and
Kinds of Legal Easements what are the governing rules for such?
1. Public legal easement is for public or A:

communal use, primarily governed by special 1. If created by title (contract, will, etc.), the title
laws and regulations, and Arts. 634 to 687 of governs; and
the NCC; and 2. If acquired by prescription, it is governed by
2. Private legal easement is for the interest of the manner or form of possession.
private persons or for private use, primarily
governed by: NOTE: In both cases, the Civil Code will only apply
a. Agreement of the parties provided they suppletorily.
are neither prohibited by law nor
prejudicial to third persons; When consent is necessary
b. In default, general or local laws and
ordinances for the general welfare; or The owner of a property in usufruct may create
c. In default of a and b, Title VII, Arts. 613- easements thereon without the consent of the
687 of the NCC. (De Leon, 2006) usufructuary provided the rights of the latter are
not impaired. (Art. 689, NCC)
VOLUNTARY EASEMENT
NOTE: Consent of both the naked owner and the
An easement is voluntary when it is established by beneficial owner is necessary for the creation of
the will of the owners. (Art. 619, NCC) perpetual voluntary easement. (Art. 690, NCC)
Persons who may constitute voluntary Expenses for work required for use and
easement preservation of the easement
Voluntary easements may be constituted by the If the owner of the servient estate has bound
owner possessing capacity to encumber property. himself to pay for the cost of the work needed for
If there are various owners, all must consent; but the use and preservation of the easement, and
consent once given is not revocable. wants to free himself from such obligations, he may
simply renounce or abandon his property in favor
NOTE: Third persons are not bound by a voluntary of the owner of the dominant state.
easement unless the same is duly recorded with the
proper authorities. Q: Mr. Bong owns several properties in Pasig
City. He decided to build a condominium named
Q: For whose favor are voluntary easements Flores de Manila in one of his lots. To fund the
established? project, he obtained a loan from the National
Bank (NB) secured by a real estate mortgage
A: over the adjoining property which he also
1. Praedial servitudes: owned.
a. For the owner of the dominant estate (Art.
613, NCC); and During construction, he built three pumps on
b. For any other person having any juridical the mortgaged property to supply water to the
relation with the dominant estate, if the condominium. After one year, the project was
owner ratifies it. completed, and the condominium was turned
over to the buyers. However, Mr. Bong failed to

2022 GOLDEN NOTES
Property
pay his loan obligation to NB. Thus, NB 3. Easement of Party wall;

foreclosed the mortgaged property where the
pumps were installed. During the sale on public
auction of the mortgaged property, Mr. Simon
won in the bidding. When Mr. Simon attempted
to take possession of the property, the
condominium owners, who in the meantime
constituted themselves into Flores de Manila
Inc. (FMI), claimed that they have earlier filed a
case for the declaration of the existence of an
easement before the Regional Trial Court (RTC)
of Pasig City and prayed that the easement be
annotated in the title of the property foreclosed 4. Easement of Light and view;
by NB. FMI further claimed that when Mr. Bong
installed the pumps in his adjoining property, a
voluntary easement was constituted in favor of
FMI. Will the action prosper? (2014 BAR)
A: NO. The essence of a mortgage is that it

immediately subjects the property upon which it is
imposed, and whoever the possessor may be, to the
fulfillment of the obligation for whose security it
was constituted. There was no voluntary easement
in this case because at the time the water pumps
were constructed, the subject lot and the
condominium belong to the same person. No one
can have an easement over his own property. Even
of the assumption that an easement was created in
favor of FMI that alone will not defeat the right of 5. Drainage of Building;
the mortgagee to enforce the security if the debtor
defaults. (Bogo- Medellin v. CA, G.R. No. 124699, 31
July 2003)
5. KINDS OF LEGAL EASEMENT
Kinds of Legal Easements (W-I-N-D-P-L-W-S)
1. Easement relating to Waters;
6. Intermediate distances and works for certain

2. Easement relating to right of Way;
construction and plantings;

Civil law
7. Easement against Nuisance; and NOTE: Art. 637 has already been superseded by Art.
50 of P.D. 1067 otherwise known as the Water Code
of the Philippines.
Q: Spouses Ermino are residents of Alco Homes,

a subdivision located beside Golden Village
Subdivision (Golden Village) in Barangay
Carmen, Cagayan de Oro City. On days prior to
August 12, 1995 and September 10, 1995, there
was continuous heavy rain which caused a large
volume of water to fall from the hilltop
subdivision to the subdivisions below. The
8. Easement relating to lateral and Subjacent volume of water directly hit Spouses Ermino's
support. house and damaged their fence, furniture,
appliances and car. Spouses Ermino filed a
Lateral Support complaint for damages against E.B. Villarosa, the
developer of Hilltop City Subdivision, and
GVHAI. Spouses Ermino blamed E.B. Villarosa
for negligently failing to observe Department of
Environment and Natural Resources rules and
regulations and to provide retaining walls and
other flood control devices which could have
prevented the softening of the earth and
consequent inundation. They likewise claimed
Subjacent Support
that GVHAI committed a wrongful act in
constructing the concrete fence which diverted
the flow of water to Alco Homes, hence, making
it equally liable to Spouses Ermino.
On the other hand, E.B. Villarosa argued that the

location of the house of Spouses Ermino is
located at the lower portion of the Dagong Creek
and is indeed flooded every time there is a heavy
downpour, and that the damage was further
aggravated by GVHAI's construction of the
a. RELATING TO WATERS concrete fence. It contended, however, that the
damage was due to a fortuitous event.
Different easements relating to waters (B-R-E- Meanwhile, GVHAI averred that the
W-C-A-N) construction of the concrete fence was in the
exercise of its proprietary rights and that it was
A. NATURAL DRAINAGE (ART. 637, NCC) done in order to prevent outsiders from using
the steel grille from entering the subdivision. It
Scope of easement of natural drainage likewise asserted that they "should not be made
inutile and lame-duck recipients of whatever
Lower estates are obliged to receive the waters waters and/or garbage" that come from Alco
which naturally and without the intervention of Homes. GVHAI attributed sole liability on E.B.
man descend from higher estates, as well as the Villarosa for having denuded Hilltop City
stones or earth which they carry with them. (Art. Subdivision and for its failure to provide
637, NCC) (2002 BAR)

2022 GOLDEN NOTES
Property
precautionary measures. Is GVHAI responsible Duties of Servient Estate

for the damage to spouses Ermino’s properties?
The owner cannot construct works that would
A: Yes. Based on the ocular inspection conducted by impede the easement (Art. 637, NCC) but he may
the RTC of the Hilltop City Subdivision, the area was regulate or control the descent of water.
bulldozed and the hills were flattened. There were
no retaining walls constructed to prevent the water Duties of Dominant Estate
from flowing down and the soil was soft. This
flattening of the area due to bulldozing changed the 1. He cannot construct works which will increase
course of water, which ultimately led to the passing the burden, but he may construct works
of said water to the house of Spouses Ermino. preventing erosion; and
Thus, the bulldozing and construction works done 2. They must compensate the owners of the
by E.B. Villarosa, not to mention the denudation of servient estates if the waters are result of an
the vegetation at the Hilltop City Subdivision, made overflow from irrigation dams, or the result of
Alco Homes and Golden Village's obligation, as artificial descent done by man and damages
lower estates, more burdensome than what the law caused by reason thereof. (Paras, 2008)
contemplated. Lower estates are only obliged to
receive water naturally flowing from higher Prescription of easement of natural drainage
estates and such should be free from any human
intervention. In the instant case, what flowed from The easement of natural drainage prescribes by
Hilltop City Subdivision was not water that non-use for ten (10) years. (Paras, 2008)
naturally flowed from a higher estate. The
bulldozing and flattening of the hills led to the Indemnity in easement of natural drainage
softening of the soil that could then be easily carried
by the current of water whenever it rained. Thus, Art. 637 of the NCC, which provides for the
Alco Homes and Golden Village are not anymore easement of natural drainage, does not speak of any
obligated to receive such waters and earth coming indemnity. It follows that no indemnity is required
from Hilltop City Subdivision. as long as the conditions laid down in the article are
complied with. (Paras, 2008)
Therefore, it is ineluctably clear that E.B. Villarosa is
responsible for the damage suffered by Spouses B. DRAINAGE OF BUILDINGS (ART. 674, NCC)
Ermino. E.B. Villarosa should have provided for the
necessary measures such as retaining walls and The owner of a building shall construct its roof or
drainage so that the large volume of water covering in such manner that the rainwater shall fall
emanating from it would not unduly cause on his own land or on a street or public place, and
inconvenience, if not injury, to the lower estates. not on the land of his neighbor, even though the
E.B. Villarosa's negligence is the proximate cause of adjacent land may belong to two or more persons,
the injury. Had it only exercised prudence, one of whom is the owner of the roof. Even if it
reasonable care and caution in the construction of should fall on his own land, the owner shall be
Hilltop City Subdivision, then Spouses Ermino obliged to collect the water in such a way as not to
would not have experienced the injury that they cause damage to the adjacent land or tenement.
suffered. (Sps. Ermino v. Golden Village Homeowners (Art. 674, NCC)
Association, Inc., G.R. No. 180808, 15 Aug. 2018, J.
Caguioa) The easement is created when the owner receives
the water upon his own roof or gives it another
outlet so as not to cause any nuisance or damage to
the dominant estate. (Art. 675, NCC)

Civil law
If the collection of water through the house itself is E. EASEMENT FOR DRAWING WATER OR FOR
impossible, the establishment of an easement of WATERING ANIMALS
drainage may be demanded giving an outlet to the (ARTS. 640-641, NCC)
water at the point of the contiguous lands or
tenements where its egress may be easiest and This is a combined easement for drawing of water
establishing a conduit for the drainage to cause the and right of way.
least damage to the servient estate, after payment of
the property indemnity. (Art. 676, NCC) Requisites for easement for watering cattle
C. EASEMENT ON RIPARIAN BANKS FOR 1. It must be imposed for reasons of public use;
NAVIGATION, FLOATAGE, FISHING, SALVAGE, 2. It must be in favor of a town or village; and
AND TOW PATH (ART. 638, NCC) 3. Indemnity must be paid. (Art. 640, NCC)
Easement on Riparian Property NOTE: The right to make the water flow through or
under intervening or lower estates.
The banks of rivers and streams and the shores of
the seas and lakes throughout their entire length Requisites for drawing water or for watering of
and within a zone of three meters in urban areas, 20 animals
meters in agricultural areas, and 40 meters in forest
areas along their margins are subject to the 1. Owner of the dominant estate has the capacity
easement of public use in the interest of recreation, to dispose of the water;
navigation, floatage, fishing and salvage. 2. The water is sufficient for the use intended;
3. Proposed right of way is the most convenient
No person shall be allowed to stay in this zone and the least onerous to third persons; and
bigger than what is necessary for recreation, 4. Pay indemnity to the owner of the servient
navigation, floatage, fishing or salvage or to build estate. (Art. 643, NCC)
structures of any kind. (Art. 51, P.D. 1067)
NOTE: The absence of any one of these
D. EASEMENT OF A DAM requirements will prevent the imposition of the
(ARTS. 639 & 647, NCC) easement of aqueduct on the intervening estates.
(Pineda, 2009)
A person may establish the easement of abutment
or of a dam provided that: Easement of right of way does not necessarily
1. The purpose is to divert or take water from a include easement of aqueduct
river or brook, or to use any other continuous
or discontinuous stream; If A was granted a right of way by B which he (A)
uses in entering and exiting from his tenement, A
2. It is necessary to build a dam; has no presumed right to dig trenches and lay
3. The person to construct it is not the owner of pipelines for conducting water to his tenement. (San
the banks or lots which must support it; and Rafael Ranch Co. v. Rogers, Co., 154 C 76, 21 July 1908)
4. Payment of proper indemnity is made. F. EASEMENT OF AQUEDUCT

(ARTS. 642- 646, NCC)
He must seek the permission of the owner and in
case of latter’s refusal, he must secure authority The easement of aqueduct, for legal purposes, is
from the proper administrative agency. considered continuous and apparent even though
the flow of water may not be continuous, or its use
depends upon the needs of the dominant estate or

2022 GOLDEN NOTES
Property
upon a schedule of alternate days or hours. (Art. 646, it, or from building over the aqueduct in such
NCC) manner as not to cause the owner of the dominant
estate any damage or render necessary repairs and
NOTE: Easement of aqueduct is not acquirable by cleanings impossible. (Art. 645, NCC)
prescription after ten (10) years because although it
is continuous and apparent in character, under the G. EASEMENT FOR THE CONSTRUCTION
Water Code of the Philippines (P.D. 1067), all waters OF A STOP LOCK OR SLUICE GATE
belong to the State; therefore, they cannot be the (NCC, ART. 647)
subject of acquisitive prescription. (Jurado, 2011)
To make these structures in the bed of a stream
It is an easement which gives right to make water from which they needed water for irrigation or
flow through intervening estates in order that one improvement of the dominant estate will be drawn,
may make use of said water. However, unlike the it is required that the dominant owner pays the
easement for drawing water or for watering riparian owners where the structures will be
animals, the existence of the latter does not constructed for the damages caused to the latter and
necessarily include the easement of aqueduct. to other irrigators who may sustain damages also.
Requisites for easement of aqueduct Q: The original developer of Happy Glen Loop
(HGL) loaned from T. P. Marcelo Realty
1. Indemnity must be paid to the owners of Corporation. HGL failed to settle its debts so he
intervening estates and to the owners of lower assigned all his rights to Marcelo over several
estates upon which waters may filter or parcels of land in the subdivision. Marcelo
descend; represented to lot buyers that a water facility is
available in the subdivision. Marcelo sold the lot
NOTE: The amount usually depends on to Liwag who subsequently died. The wife of
duration and inconvenience caused. Liwag demanded the removal of the overhead
water tank over the parcel of land contending
2. If for private interests, the easement cannot be that its existence is merely tolerated. HGL
imposed on existing buildings, courtyards, Homeowners Association refused the demand
annexes, out- houses, orchards or gardens but contending that they have used continuously the
can be on other things, like road, provided no facility for more than 30 years. Is there an
injury is caused to said properties; and established easement for water facility in the
lot?
3. There must be a proof:
a. That the owner of the dominant estate can A: YES. The water facility is an encumbrance on the
dispose of the water; lot of the subdivision for the benefit of the
b. That the water is sufficient for the use community. It is continuous and apparent, because
which it is intended; it is used incessantly without human intervention,
c. That the proposed course is the most and because it is continually kept in view by the
convenient and least onerous to third overhead water tank, which reveals its use to the
persons and the servient estate; and public. The easement of water facility has been
voluntarily established either by Marcelo, the
d. That a proper administrative permission subdivision owner and the original developer of the
has been obtained. (Paras, 2008) subdivision. For more than 30 years, the facility was
continuously used as the residents’ sole source of
Right of the owner of the servient estate to fence water. (Liwag v. Happy Glen Loop Homeowners
Association, Inc., G.R. No. 189755, 04 July 2012)
The easement of aqueduct does not prevent the
owner of the servient estate from closing or fencing

Civil law
b. RIGHT OF WAY (1996, 2005, 2010 BAR) 3. There must be no adequate Outlet to a public
highway; (Art. 649, (1), NCC)
Easement of right of way is the right granted to a 4. The right of way must be absolutely Necessary
person or class of persons to pass over the land of not mere convenience;
another by using a particular pathway therein, to 5. The isolation must not be Due to the claimant’s
reach the former’s estates, which have no adequate own act; (Art. 649, NCC) and
outlet to a public highway subject, however, to 6. There must be payment of proper Indemnity.
payment of indemnity to the owner of the land
burdened by the right. (Pineda, 2009) Least prejudicial to the servient estate (1996,
It may refer either to the easement itself, or simply, 2000, 2005, 2010 BAR)
to the strip of land over which passage can be done.
(Paras, 2008) “Least prejudicial” in determining the right of way
means it is the shortest way and the one which will
Q: May the easement of right of way be acquired cause the least damage to the property to the
by prescription? servient estate in favor of the dominant estate.
A: Easement of right of way cannot be acquired by Q: Lots A and B are owned by Demit while Lot C
prescription because it is discontinuous or is owned by Dayum. Lot C has an existing right
intermittent. (Ronquillo v. Roco, G.R. No. L- 10619, of way. After inspection of the area, it has been
28 Feb. 1958) found out that a fence and portion of the
residential house owned by Demit have
encroached a part of Dayum’s right of way.
Q: What kind of servitude in favor of the Dayum demanded that Demit pay for the area
government is a private owner required to encroached or demolish the wall fence and
recognize? portion of the house which have been
encroaching. Demit contends that as owner of
A: The only servitude which he is required to Lots A and B, he is equally entitled to the road
recognize in favor of the government are: of right of way and proposed to buy the portion.
1. The easement of a public highway; Is the contention of Demit correct?
2. Private way established by law; or
3. Any government canal or lateral that has been A: NO. As the owner of the servient estate, Dayum
pre-existing at the time of the registration of retained ownership of the road right of way even
the land. assuming that said encumbrance was for the
benefit of lots of Demit. The latter could not claim
NOTE: If the easement is not pre-existing and is to own even a portion of the road right of way
sought to be imposed only after the land has been because Art. 630 of the NCC expressly provides that
registered under the Land Registration Act, proper "[t]he owner of the servient estate retains
expropriation proceedings should be had, and just ownership of the portion on which the easement is
compensation paid to the registered owner. established, and may use the same in such manner
(Eslaban v. Vda. De Onorio, G.R. No. 146062, 28 June as not to affect the exercise of the easement." (Sps.
2001) Mercader v. Sps. Bardilas, G.R. No. 163157, 27 June
2016)
Requisites for easement on right of way
(P-O-O-N-D) (1996, 2005, 2010 BAR) Q: What if the property is not the shortest way
but will cause the least damage to the servient
1. The easement must be established at the point estate?
least Prejudicial to the servient estate; (Art.
649, NCC) A: The way which will cause the least damage
2. Claimant must be an Owner of enclosed; should be used even if it will not be the shortest.

2022 GOLDEN NOTES
Property
The easement of right of way shall be established Adequate outlet

at the point least prejudicial to the servient estate
and where the distance from the dominant estate The convenience of the dominant estate has never
to a public highway is the shortest. In case of been the gauge for the grant of compulsory right of
conflict, the criterion of least prejudice prevails way. To be sure, the true standard for the grant of
over the criterion of shortest distance. the legal right is "adequacy." Hence, when there is
already an existing adequate outlet from the
Mere inconvenience is not a justification for a dominant estate to a public highway, as in this case,
right of way even when the said outlet, for one reason or
another, be inconvenient, the need to open up
Thus, it was held that where the petitioner could another servitude is entirely unjustified. (Dichoso v.
have access to Sucat Road (Paranaque) through the Marcos, G.R. No. 180282, 11 Apr. 2011)
Lombos Subdivision from which he acquired his lot
and not from Gatchalian Realty Inc., he cannot Q: The coconut farm of Federico is surrounded
claim any right of way from the latter. (Ramos v. by the lands of Romulo. Federico seeks a right
Gatchalian Realty, Inc., G.R. 75905, 12 Oct. 1987) of way through a portion of the land of Romulo
to bring his coconut products to the market. He
Legal easement not dependent upon consent has chosen a point where he will pass through a
housing project of Romulo. The latter wants
The existence of a legal easement does not depend him to pass another way which is 1 km longer.
upon the consent of the servient owner or owners. Who should prevail? (2000 BAR)
Easements established by law in the interest of A: Romulo will prevail. Under Art. 650, NCC, the
private persons or for private use shall be easement of right of way shall be established at the
governed by the provisions of this Title, without point least prejudicial to the servient estate and
prejudice to the provisions of general or local laws where the distance from the dominant estate to a
and ordinances for the general welfare. public highway is the shortest. In case of conflict,
the criterion of least prejudice prevails over the
These easements may be modified by agreement of criterion of shortest distance. Since the route
the interested parties, whenever the law does not chosen by Federico will prejudice the housing
prohibit it or no injury is suffered by a third person. project of Romulo, Romulo has the right to demand
(Art. 636, NCC) that Federico pass another way even though it will
be longer.
Claimant must be an owner of enclosed
immovable or with real right Q: David owns a subdivision which does not
have access to the highway. When he applied
Easement is a real right which may be availed for a license to establish the subdivision, he
against every person who may happen, for the time represented that he will purchase a rice field
being, to have any interest in the thing, or, as located between his land and the highway, and
adverse possessor, to exercise a right of dominion develop it into an access road. However, when
over it. the license was granted, he did not buy the rice
field, which remained unutilized. Instead, he
Since easement is constituted on the corporeal chose to connect his subdivision with the
immovable property of another person, an neighboring subdivision of Nestor, which has
acknowledgment of the easement by the servient access to the highway. When Nestor and David
estate is an admission that the property belongs to failed to arrive at an agreement as to
another. (Rabuya, 2008) compensation, Nestor built a wall across the
road connecting with David’s subdivision. Is
David entitled to an easement of right of way

Civil law
through the subdivision of Nestor which he 653 (2), NCC)

claims to be the most adequate and practical
outlet to the highway? NOTE: If it is the land donated that is surrounded by
the estate of the donor or grantor, although the
A: NO. The isolation of his subdivision was due to latter is obliged to grant a right of way, he can
his own act or omission because he did not develop demand the required indemnity. (Art. 652, NCC)
an access road to the rice fields which he was
supposed to purchase according to his own Granting of right of way without indemnity
representation when he applied for a license to
establish the subdivision. (Floro v. Llenado, G.R. No. When the vendor sells a parcel of land and this land
75723, 02 June 1995) is surrounded by other estates of said vendor and
is without access to a public highway, the vendor is
When adequate outlet to a public highway is obliged to grant a right of way without demanding
available through water an indemnity.
If the outlet to a highway is through water, like a This rule equally applies to an exchange of
river, lake or sea, and the same is not dangerous to property, or partition of property in co- ownership.
cross nor do they pose grave inconvenience, the The exchanger, or the co-owner shall have the
right of way should not be granted. (Paras, 2008) same obligation as the vendor. (Pineda, 2009)
If the waterway is dangerous and to construct a Measurement for the Easement of Right of Way
bridge over it is too expensive, it is as if there is no
available outlet to the highway. In which case, right The width of the easement shall be that which is
of way is grantable. sufficient for the needs of the dominant estate. (Art.
651, NCC)
Determination of proper indemnity to the
servient estate Q: Can a dominant owner demand a driveway
for his automobile?
If the passage is:
1. Continuous and permanent – The indemnity A: YES, due to necessity of motor vehicles in the
consists of the value of the land occupied present age.
plus the amount of damages caused to the
servient estate; and Liability for repairs and taxes
2. Temporary – Indemnity consists in the 1. As to repairs, the dominant owner is liable for
payment of the damage caused. (De Leon, 2006) necessary repairs; and
2. As to proportionate share of the taxes, it shall
When Indemnity NOT required be reimbursed by said owner to the proprietor
of the servient estate. This applies only to
1. When a piece of land acquired by sale, permanent easements. (Art. 654, NCC)
exchange or partition is surrounded by other
estates of the vendor, exchanger or co-owner. Special causes of extinguishment of right of way
In such case he shall be obliged to grant a right
of way without indemnity (Art. 652, NCC); or 1. The opening of a public road giving access to
isolated estate; or
2. When a piece of land acquired by donation
surround the estate of the donor or grantor. In 2. When the dominant estate is joined to another
such case, the donee or grantee shall be obliged estate (such as when the dominant owner
to grant a right of way without indemnity. (Art. bought an adjacent estate) which is abutting a

2022 GOLDEN NOTES
Property
public road, the access being adequate and Q: A commercial and residential building project
convenient. (Art. 655, NCC) located at EDSA corner Fordham Street in Wack
Wack Village, Mandaluyong City, was proposed
Both cases must substantially meet the needs of the by AMALI. AMALI notified WWRAI (a registered
dominant estate. Otherwise, the easement may not homeowners' association of Wack Wack Village)
be extinguished. of its intention to use Fordham Street as an
access road and staging area of the project. As
NOTE: Said extinguishment is NOT automatic. AMALI received no response from WWRAI, the
There must be a demand for extinguishment former temporarily enclosed the job site and set
coupled with tender of indemnity by the servient up a field office along Fordham Street. WWRAI
owner. (Paras, 2008) claimed, however, that AMALI already
converted part of the said street as barrack site
Q: Emma bought a parcel of land from and staging area. All subsequent attempts of
Equitable-PCI Bank, which acquired the same WWRAI to remove the said field office proved
from Felisa, the original owner. Thereafter, futile. AMALI then filed a petition before the
Emma discovered that Felisa had granted a RTC, wherein it seeks the temporary use of
right of way over the land in favor of the land of Fordham Street belonging to WWRAI as an
Georgina, which had no outlet to a public access road to AMALI's construction site of its
highway, but the easement was not annotated AMA Tower project pursuant to Art. 656 of the
when the servient estate was registered under NCC, and to establish a permanent easement of
the Torrens system. Emma then filed a right of way in its favor over a portion of
complaint for cancellation of the right of way, Fordham Street pursuant to Art. 649 of the NCC.
on the ground that it had been extinguished by
such failure to annotate. How would you decide The RTC granted the writ of preliminary
the controversy? (2001 BAR) mandatory injunction "directing WWRAI to
allow AMALI to use Fordham Street through a
A: The complaint for cancellation of easement of temporary easement of right of way." The CA
right of way must fail. The failure to annotate the granted WWRAI's application for a temporary
easement upon the title of the servient estate is not restraining order, and, accordingly, AMALI was
among the grounds for extinguishing an easement commanded to cease and desist from further
under Art. 631 of the NCC. Under Art. 617 of the committing the act complained of, which is the
NCC easements are inseparable from the estate to construction of the commercial and residential
which they actively or passively belong. Once it condominium project located along EDSA
attaches, it can only be extinguished under Art. corner Fordham Street in Wack Wack Village. Is
631, and they exist even if they are not stated or AMALI entitled to a temporary easement of right
annotated as an encumbrance on the Torrens title of way?
of the servient estate.
A: NO. Art. 656 of the NCC provides that it can be
Temporary easement of right of way granted only after the payment of the proper
indemnity by AMALI, the owner of the dominant
If it be indispensable for the construction, repair, estate; and only if AMALI has established that the
improvement, alteration, or beautification of a easement is indispensable for the construction of its
building, to carry materials through the estate of AMA Tower Project. Art. 656 of the NCC requires
another, or to raise thereon scaffolding or other proof of indispensability and receipt of payment of
objects necessary for the work, the owner of such the proper indemnity for the damage caused by the
estate shall be obliged to permit the act, after owner of the dominant estate before the owner of
receiving payment of the proper indemnity for the the servient estate can be compelled to grant a
damage caused him. (Art. 656, NCC) temporary easement of right of way. AMALI
presented no witnesses to establish these

Civil law
prerequisites. The temporary easement of right of light is necessarily included, as well as the
way under Art. 656, similar to the permanent easement of altius non tollendi not to build higher
easement of right of way pursuant to its Arts. 649 for the purpose of obstruction. (Ibid.)
and 650, can only be granted after proof of
compliance with the prerequisites set forth in the When easement of light and view is positive and
articles duly adduced during a full-blown trial (AMA when negative
Land, Inc. v. Wack Wack Residents' Association, Inc.,
G.R. No. 202342, 19 July 2017, J. Caguioa) 1. Positive — If the window is through a party wall.
(Art. 668(1), NCC) Therefore, the period of
Easement of right of way for the passage of prescription commences from the time the window
livestock or sevidumbres pecurias is opened.
Governed by the ordinances and regulations NOTE: The mere opening of the window does not
relating thereto and, in their absence, by the usages create the easement; it is only when after a
and customs of the place. sufficient lapse of time the window still remains
open, that the easement of light and view is created.
Maximum width: (Art. 668(1), NCC) Moreover, even if the window is
1. Animal path – 75 meters; on one’s own wall, still the easement would be
2. Animal trail – 37 meters and 50 centimeters; positive if the window is on a balcony or projection
and extending over into the adjoining land. (Paras,
3. Cattle – 10 meters (unless to the old Civil Code, 2008)
vested rights has been acquired to a greater
width). (Paras, 2008; Art. 657, NCC) 2. Negative — If the window is through one’s own
wall, that is, through a wall of the dominant estate.
c. LIGHT AND VIEW (Art. 668(2), NCC) Therefore, the time for the
period of prescription should begin from the time
No part-owner may, without the consent of the of notarial prohibition upon the adjoining owner.
others, open through the party wall any window or (Cid v. Javier, G.R. No. L-14116, 30 June 1960)
aperture of any kind. (Art. 667, NCC)
XPN: Even if the window is on the wall of the
A window or opening in the dividing wall of dominant estate, still easement of light and view
buildings is an exterior sign which rebuts the would be positive if the window is on the balcony
presumption that the wall is a party wall ; one part- or extension extending over the land of the servient
owner may not, therefore, make any window or estate.
opening of any kind through a party wall without
the consent of others. (De Leon, 2006) Thus, the period of prescription for the acquisition
shall be counted from the time of:
1. Easement of light — “Jus luminum” The opening
is for the purpose of admitting light and not for 1. Opening of the window, if through a party wall;
viewing as in the case of small windows, not more or
than 30 cm. square, at the height of the ceiling joist, 2. The formal prohibition upon the proprietor of
the purpose of which is to admit light, and a little the adjoining land, if window is through a wall
air, but not view. (Paras, 2008) on the dominant estate. (Art. 668, NCC)
2. Easement of view — “Servidumbre prospectus” Openings to admit light and air but NOT view
The opening is for the purpose of viewing as in the
case of full or regular windows overlooking the When the distances in Art. 670 are not observed,
adjoining estate. Incidentally, although the the owner of a wall which is not a party wall can
principal purpose here is view, the easement of make an opening for the purpose of admitting light

2022 GOLDEN NOTES
Property
and air, but not for view. (Art. 669, NCC) Restrictions as to easement of views
Restrictions for making an opening for light 1. Direct Views - The distance of two (2) meters
and air between the wall and the boundary must be
observed; and
1. The size must not exceed 30-centimeter
square; 2. Oblique Views - (Walls perpendicular or at an
2. The opening must be at the height of the ceiling angle to the boundary line) must not be 60 cm
joists or immediately under the ceiling; to the nearest edge of the window. (Art. 670,
3. There must be an iron grating imbedded in the NCC)
wall; and
4. There must be a wire screen. (Art. 669, NCC) Any stipulation to the contrary is void. (Art. 673,
NCC) And the owner who opened them may be
If the wall becomes a party wall – A part owner can ordered by the court to close them. Prescription
order the closure of the opening because no part may still be acquired as a negative easement after
owner may make an opening through a party wall ten years from the time of notarial prohibition.
without the consent of the others; it can also
obstruct the opening unless an easement. The distance referred to in Art. 670 of the NCC shall
be measured in cases of direct views from the outer
The openings allowed by Art. 669 of the NCC are for line of the wall when the openings do not project,
the purpose of admitting light; hence they can be from the outer line of the latter when they do, and
made only in the walls of buildings. in cases of oblique view from the dividing line
between the two properties. (Art. 671, NCC)
NOTE: Art. 669 refers to restricted windows.
Where buildings are separated by a public way
Direct and oblique views or alley (Art. 672, NCC)
Arts. 670 and 671 deal with regular, full windows. The distance provided in Art. 670, NCC is not
compulsory where there is a public way or alley
Direct view is the gaining of direct sight from an provided that it is not less than three meters wide,
opening in a wall parallel to the boundary line the minimum width is necessary for the sake of
without having to extend out or turn one’s head to privacy and safety.
see the adjoining tenement. (Pineda, 2009)
NOTE: When windows are opened at a distance NOTE: The width of the alley is subject to special
less than that prescribed by Art. 670 of the NCC regulations and ordinances. (De Leon, 2006)
from the boundary lines, they constitute unlawful
openings (Rabuya, 2006), however, it is not A private alley opened to the use of the general
necessary always that the wall sustaining the public falls within the provision of Art. 672 of the
opening and the dividing line be exactly and NCC.
geometrically parallel. (Pineda, 2009)
Where easement of direct view had been
Oblique view is the gaining of sight of the other acquired (Art. 673, NCC)
tenement from an opening made at an angle with
the boundary line, such that to be able to see the Whenever the easement of direct view has been
adjoining tenement, there is necessity for putting acquired by any such title, there is created a true
out or turning one’s head either to the left of right. easement. The owner of the servient estate cannot
(Ibid.) build thereon at less than a distance of three (3)
meters from the boundary line.

Civil law
NOTE: The title used in Art. 673, NCC refers to any aforesaid should be removed before the execution
modes of acquiring easements: of the deed.
1. Contract;
2. Will; Art. 624 applies since, prior to the purchase of the
3. Donation; or subject property by the Sps. Garcia in 1998, the
4. Prescription. subject property and its adjoining lot (i.e., Lot 1,
were both owned by singular owners, the Sps.
The distance may be increased or decreased by Santos). On the subject property, a one-storey
stipulation of the parties provided that in case of house laden with several windows and openings
decrease, the minimum distance of two (2) meters was built and the windows and openings remained
or sixty (60) centimeters prescribed in Art. 670 of open. Then in October 1998, the subject property,
the NCC must be observed, otherwise it is void. The together with the one-storey structure, was
said distances involve considerations of public alienated in favor of the Sps. Garcia, while the Sps.
policy and the general welfare; hence, they should Santos retained the adjoining Lot 1. (Sps. Garcia v.
not be rendered ineffective by stipulation. Santos, G.R. No. 228334, 17 June 2017, J. Caguioa)
Q: A Complaint for easements of light, air and

view, was filed by the Sps. Garcia against the Sps.
Santos. Petitioners alleged that they are the
registered owners of Lot 2, which has been
occupied by them for 11 years, has a one-storey
residential house erected thereon and was
purchased by them from the Sps. Santos in
October 1998. At the time of the purchase of the
subject property from the Sps. Santos, the one-
storey house was already constructed. Also, at
the time of the acquisition of the subject
property, the adjoining lot, Lot 1, which is owned
by the Sps. Santos, was an idle land without any
improvements. Lot 1 remained empty until the
Sps. Santos started the construction of a two-
storey residential house therein on January 24,
2009. The building constructed on Lot 1 is taller
than the Sps. Garcia's one-storey residential
house. As such, the Sps. Santos' building
allegedly obstructed the Sps. Garcia's right to
light, air, and view. Are Sps. Garcia entitled to
the easements of light, air and view?
A: YES. According to Art. 624 of the NCC, 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, unless, at
the time the ownership of the two estates is divided:
(1) the contrary should be provided in the title of
conveyance of either of them, or (2) the sign

2022 GOLDEN NOTES
Property
Nuisance v. Negligence (Pineda, 2009)

G. NUISANCE
NEGLIGENCE NUISANCE
As to their Concepts
A nuisance is any act, omission, establishment,
business, condition of property, or anything else Liability attaches
which: Liability is based on
regardless of the degree
1. Injures or endangers the health or safety of lack of proper care or
of care or skill exercised
others; diligence.
to avoid the injury.
2. Annoys or offends the senses;
3. Shocks, defies or disregards decency or Condition of the act
morality;
4. Obstructs or interferes with the free passage of There is a continuing
any public highway or street, or any body of harm being suffered by
Act complained of is
water; or the aggrieved party by
already done which
the maintenance of the
caused the injury to
5. Hinders or impairs the use of property. (Art. act or thing which
plaintiff.
694, NCC) (2005, 2006 BAR) constitutes the
nuisance.
Nuisance v. Trespass (De Leon, 2006) Abatement
NUISANCE TRESPASS Abatement is not Abatement without

available as a remedy. judicial proceedings is
Use of one’s own property
The remedy is action allowed to suppress the
which causes injury to
for damages. nuisance.
another the property, right or Direct
interest of another, and infringement of
generally results from the another’s right
NOTE: Nuisance is wrongful in itself due to the
commission of an act beyond or property.
injury caused, regardless of the presence or
the limits of the property
absence of care, while negligence creates liability
affected.
due to want of proper care resulting to another’s
injury. (Ibid.)
Injury is direct
Injury is consequential.
and immediate.
Kinds of Nuisance
NOTE: An encroachment upon the space of 1. As to the number of persons affected (2005
another’s land, but not upon the land itself is BAR)
considered a nuisance, and not trespass. (Ibid.) a. Public (or common) – One that affects a
community or neighborhood or any
considerable number of persons although
the extent of the annoyance, danger or
damage upon individuals may be
unequal; (Suarez, 2011) and
b. Private – one which affects an individual

or few persons only. (Rabuya, 2008)
c. Mixed - both public and private in its

effects, public because it injures many

Civil law
persons or all the community, and private playing therewith or resorting thereto, is
in that it also produces special injuries to liable to a child of tender years who is
private rights. (Ibid.) injured thereby, even if the child is
technically a trespasser in the premises.
2. Other classifications (P3-T-C-I-A) (Rabuya, 2006)
a. Nuisance Per se – That kind of nuisance Nuisance per se v. Nuisance per accidens (De
which is always a nuisance. By its nature, Leon, 2006)
it is always a nuisance all the time under
any circumstances regardless of location PER SE PER ACCIDENS
or surroundings It is an act, occupation, or
structure which unquestionably is a As a matter of
As a matter of fact.
nuisance at all times and under any law.
circumstances, regardless of its location
or surroundings; (Pineda, 2009) Depends upon its location
Need only be
and surroundings, the
b. Nuisance Per accidens – That kind of proved in any
manner of its conduct or
nuisance by reason of location, locality.
other circumstances.
surrounding or in a manner it is
conducted or managed. (Ibid.) It is an act,
May be abated only with
occupation, or structure that may become May be
reasonable notice to the
a nuisance by reason of circumstances, summarily
person alleged to be
location, or surroundings; (De Leon, 2006) abated under the
maintaining or doing such
law of necessity.
nuisance.
NOTE: The above classification is no longer useful,
since there are very few nuisances per se. (Paras,
2008) NOTE: The abatement of a nuisance without
judicial proceedings is possible only if it is a
c. Temporary – That kind which if properly nuisance per se. A gas station is not a nuisance per
attended does not constitute a nuisance; se or one affecting the immediate safety of persons
or property. Hence, it cannot be closed down or
d. Permanent – That kind which by nature of transferred summarily to another location.
structure creates a permanent (Parayno v. Jovellanos, G.R. No. 148408, 14 July
inconvenience; 2006)
e. Continuing – That kind which by its Q: Boracay West Cove, applied for a zoning
nature will continue to exist indefinitely compliance covering the construction of a
unless abated;E three-storey hotel over a parcel of land in
Malay. The Zoning Administrator denied the
f. Intermittent – That kind which recurs off application on the ground that the proposed
and on and may be discontinued anytime; construction site was within the “no build
and zone”. The Office of the Mayor issued E.O. 10,
ordering the closure and demolition of Boracay
g. Attractive Nuisance – One who maintains West Cove’s hotel. Boracay West Cove
on his premises countered that the hotel cannot summarily be
dangerous instrumentalities or abated because it is not a nuisance per se. Is the
appliances of a character likely to attract hotel classified as a nuisance per se?
children in play, and who fails to exercise A: NO. The litmus test in determining if it’s a
ordinary care to prevent children from nuisance is the property’s nature and conditions.

2022 GOLDEN NOTES
Property
The hotel cannot be considered as a nuisance per se NOTE: The Doctrine of Attractive Nuisance does
since this type of nuisance is generally defined as not generally apply to bodies of water, artificial as
an act, occupation, or structure, which is a nuisance well as natural, in the absence of some unusual
at all times and under any circumstances, condition or artificial feature other than the mere
regardless of location or surrounding. Here, it is water and its location. (Ibid.)
merely the hotel’s particular incident – its location–
and not its inherent qualities that rendered it a PUBLIC NUISANCE AND PRIVATE NUISANCE
nuisance. Otherwise stated, had it not been
constructed in the no build zone, Boracay West Remedies against public nuisances
Cove could have secured the necessary permits
without issue. (Aquino v. Mun. of Malay Aklan, G.R. 1. Prosecution under the RPC or any local
No. 211356, 29 Sept. 2014) ordinance;
2. Civil action; or
ATTRACTIVE NUISANCE 3. Abatement, summarily and without judicial
proceeding. (Art. 699, NCC)
One who maintains on his premises dangerous
instrumentalities or appliances of a character likely NOTE: A private person may file for a civil action
to attract children in play, and who fails to exercise against a public nuisance if the latter is injurious to
ordinary care to prevent children from playing him. Thus, insofar as he is concerned, the nuisance
therewith or resorting thereto, is liable to a child of becomes a private nuisance which affects him in a
tender years who is injured thereby, even if the special way, different from that sustained by the
child is technically a trespasser in the premises. public in general.
(Jarco Marketing Corp. v. CA, G.R. No. 129792, 21
Dec. 1999) Remedies against private nuisances
Basis for liability 1. Civil action; or

2. Abatement, summarily and without judicial
The attractiveness is an invitation to children. proceedings. (Art. 705, NCC)
Safeguards to prevent danger must therefore be set
up. (Paras, 2008) NOTE: Any person injured by a private nuisance
may abate it by removing, or if necessary, by
Elements of Attractive Nuisance destroying the thing which constitutes the
nuisance, without committing a breach of the peace
1. It must be attractive; and or doing unnecessary injury.
2. Dangerous to children of tender years.
However, it is indispensable that the procedure for
Q: Is a swimming pool an attractive nuisance? extrajudicial abatement of a public nuisance by a
private person be followed. (Art. 706, NCC) Every
A: GR: A swimming pool or water tank is not an successive owner or possessor of property who
attractive nuisance, for while it is attractive, it is fails or refuses to abate a nuisance in that property
merely an imitation of the work of nature. Hence, if started by a former owner or possessor is liable
small children are drowned in an attractive water therefor in the same manner as the one who
tank of another, the owner is not liable even if there created it. (Art. 696, NCC)
be no guards in the premises. (Hidalgo Enterprises
v. Balandan, G.R. No. L-3422, 13 June 1952)
XPN: Swimming pool with dangerous slide

characteristics

Civil law
Extrajudicial Abatement (2002 BAR), a residential structure and garage extension by

Requisites (B-A-R-V-I-D) petitioners on a parcel of land. Upon
investigation, the City Engineer's Office found
1. The nuisance must be especially Injurious out that the construction had no building
to the person affected; permit. Consequently, the City Mayor issued
Demolition Order No. 5 (D.O. 5). Aggrieved,
2. No Breach of peace or unnecessary injury petitioners moved for a reconsideration of D.O.
must be committed; 5, but was denied by the City Mayor. Thus, they
were prompted to file a complaint for
3. Demand must first be made upon the injunction and prohibition with the RTC.
owner or possessor of the property to Should D.O. 5 be enjoined?
abate the nuisance;
A: YES. The following shall be subject for summary
4. Demand is Rejected; eviction: (1) New squatter families whose
structures were built after the effectivity of R.A. No.
5. Abatement is Approved by the district 7279; and (2) Squatter families identified by the
health officer and executed with the LGU in cooperation with the Presidential
assistance of the local police; and Commission of the Urban Poor (PCUP), Philippine
National Police (PNP) and accredited Urban Poor
6. Value of the destruction does not exceed Organization (UPO) as professional squatters or
P3,000.00 (Rabuya. 2008) members of squatting syndicates as defined in the
Act.
NOTE: Abatement is the exercise of police power
which includes the right to destroy property In this case, petitioners cannot be considered as
regarded as a public health or safety, and there is new squatters, since, although their structures
no obligation to give compensation. (De Leon, were built after March 28, 1992, they or their
2006) predecessors-in-interest had occupied and were
claimants of the subject property long before the
An extrajudicial abatement can only be applied for said date. Neither have they been identified by the
if what is abated is a nuisance per se and not LGU as professional squatters nor members of a
nuisance per accidens. (Rabuya, 2008) squatting syndicate. Thus, since petitioners do not
fall under the coverage of the said IRR, the issuance
Liability for damages in case of extrajudicial of D.O. 5 had no legal basis at the onset. (Vergara v.
abatement of nuisance City Mayor of Baguio, G.R. No. 206423, 01 July 2015)
The private person or a public official

extrajudicially abating a nuisance is liable for
damages to the owner of the thing abated if he
causes unnecessary injury or if an alleged nuisance
is later declared by courts to be not a real nuisance.
(Art. 707, NCC)
NOTE: The right to question the existence of a

nuisance does not prescribe; it is imprescriptible.
Q: Respondent Ernesto Lardizabal (Ernesto)

filed a complaint for demolition, before the City
Engineer's Office of Baguio City (City Engineer's
Office), questioning the ongoing construction of

2022 GOLDEN NOTES
Property
Classification of modes of acquiring ownership

H. MODES OF ACQUIRING OWNERSHIP
1. Original – those which do not arise or
depend upon any pre-existing right or title
of another person:
Mode v. Title
a. Occupation; (Art. 713, NCC)

MODE TITLE b. Intellectual Creation; (Art. 721,
As to their Concepts NCC) and
c. Acquisitive Prescription. (Art.
Serves merely to give 1106, NCC).
Directly and
the occasion for its
immediately produces
acquisition or 2. Derivative – those which arise or depend
a real right.
existence. upon a pre-existing or preceding right or
title of another person:
Cause Means
a. Law (e.g., hidden treasure (Art.
Proximate cause Remote cause 438, NCC), improvements on the
land of another (Art. 445, NCC),
Essence of the right alluvium. (Art. 457, NCC),
Means whereby that abandoned riverbeds (Art. 461,
which is to be created
essence is transmitted. NCC), falling fruits into the
or transmitted.
tenement of another; (Art. 681,
NCC))
Mode – it is a way or process of acquiring or
b. Donation; (Art. 725, NCC)
transferring ownership. The process may either be
c. Succession mortis causa; (Art. 774,
original or derivative.
NCC); and
d. “Tradition (delivery) as a
Title – is a jural act or deed which is not sufficient
consequence of certain contracts”
by itself to transfer ownership. (Pineda, 2009)
like sale, agency, partnership,
mutuum, assignment barter. Pure
Modes of acquiring ownership (O-L-D-T-I-P-S)
tradition does not transfer
(2007 BAR)
ownership such as in deposit or
commodatum. (Pineda, 2009)
1. Occupation; (Art. 713, NCC)
2. Law;
3. Donation; (Art. 725, NCC) 1. OCCUPATION
4. Tradition; (Arts. 1962, 1935, NCC)
5. Intellectual creation; (Art. 721, NCC) Occupation is the acquisition of ownership by
6. Acquisitive Prescription; (Art. 1106, NCC) seizing corporeal thing that have no owner, made
and with the intention of acquiring them, and
7. Succession. (Art. 774, NCC) accomplished according to legal rules. (Paras,
2008) (1997, 2007 BAR)
NOTE: Registration of a property does is not a
mode of acquiring ownership. It merely confirms Only movables can be the object of occupation for
the existence of one’s ownership over a property purposes of acquiring ownership. Immovables are
with notice to the whole world. (Bautista v. Dy Bun not included. (Sta. Maria, 2021)
Chin, CA-L-6983-R)

Civil law
Requisites of Occupation Things susceptible of occupation
1. There must be seizure of a thing; 1. Things that are without an owner – (res
2. Which must be a corporeal personal nullius); abandoned;
property;
3. Which must be susceptible of a. NOTE: Stolen property cannot be
appropriation by nature; subject of occupation.
4. The thing must be without an owner;
5. There must be an intention to acquire 2. Animals that are the object of hunting and
ownership; and fishing; (Art. 713, NCC)
6. The requisites or claid down by law must
be complied with. (De Leon, 2006) 3. Hidden treasures – Only if the there is no
known owner thereof. This is possible only
Occupation v. Possession (De Leon, 2006) if the treasure is found in places or things
without owners; (Art 718, NCC);
OCCUPATION POSSESSION
4. Abandoned movables – A thing is
As regards Acquisition of Ownership abandoned when:
Merely raises the a. The expectation to recover is gone
presumption of (spes recuperandi); and
Mode of acquiring
ownership when b. The intent to return or have it
ownership.
exercised in the returned is given up (spes
concept of owner. rivertandi). (Paras, 2008)
As to Property Involved
5. Swarm of bees that has escaped from its
Involves only corporeal owner, under certain conditions; (Art. 716,
Any kind of property
personal property NCC)
As regards Ownership of Thing by Another

NOTE: Whoever catches a swarm of bees
Requires that the object The property may be shall own them. Being the owner already,
be without an owner owned by somebody. if the swarm flies to another property, the
owner of the bees can pursue them. If the
As regards the Intent to Acquire owner of the bees does not make the
pursuit within two (2) days, the possessor
May be had in the of the land may retain the bees. (Sta. Maria,
There must be an intent
concept of a mere 2021)
to acquire ownership
holder
6. Domesticated animals that have escaped
As regards Possession
from their owners, under certain
May not take place conditions; (Art. 716, NCC)
May exist without
without some form of
occupation
possession 7. Transfer of pigeons to another breeding
place without fraud or artifice; (Art. 717,
As to Period NCC); and
Short duration Generally, longer 8. Transfer of fish to another breeding place
without fraud or artifice. (Art. 717, NCC)
As to Leading to Another Mode of Acquisition
Cannot lead to another May lead to another

mode of acquisition mode- prescription

2022 GOLDEN NOTES
Property
Acquisition of ownership over a wild animal by (Paras, 2008)

occupation
Prescription v. Occupation (Ibid.)
Wild animals are considered res nullius when not
yet captured. After its capture, animals that PRESCRIPTION OCCUPATION
escaped become res nullius again. (Pineda, 2009)
As to Mode
Straying domesticated animals Derivative mode –
Original mode – no
somebody else was the
Domesticated animals, if they got strayed and were previous owner
owner
caught by another, the owner may still claim them
from the captor within 20 days reckoned from the As to Period
date of occupation by the latter. Failure to do so,
Longer period of
they shall belong to the captor who kept them. (Art. Shorter period.
possession is required
716, NCC)
Domesticated as distinguish from Domestic 2. DONATION

Animals
Donation is an act of pure liberality whereby a

Domesticated or tamed animals are those which
person disposes gratuitously of a thing or right in
were formerly wild but which have been subdued
favor of another who accepts it. (Art. 725, NCC)
and retained the habit of returning to the premises
of the possessor or owner. Domestic or tame
Requisites of Donation (A-C-I-D)
animals are those which are born or reared under
the control and care of man. (Rabuya, 2008)
1. Donor must have Capacity to make the
donation;
Q: When can land be the object of occupation?
2. He must have donative Intent (animus
donandi);
A: IT DEPENDS.
3. There must be Delivery in certain cases;
and
1. If without an owner, it pertains to the State
4. Donee must Accept or consent to the
(Regalian Doctrine);
donation during the lifetime of the donor
2. If abandoned and the property is private, it
and of the donee in case of donation inter
can be the object of occupation; or
vivos (Art. 746, NCC); whereas in case of
3. If the land does not belong to anyone, it is
donation mortis causa, acceptance is made
presumed to be public.
after donor’s death because they partake
of a will. (Art. 728, NCC) (De Leon, 2006)
Ownership of land cannot be acquired by
occupation
Essential features or elements of a true
donation
When the land is without owner, it pertains to the
State. The State need not acquire abandoned lands
1. Consent, subject matter, cause (as in other
by occupation because once the requisites of
contracts);
abandonment had been fulfilled; automatically, the
2. The necessary form (including delivery in
reversion operates. (Pineda, 2009)
some cases);
3. Consent or acceptance by donee during
Abandoned land (one with an owner before)
donor’s lifetime;
becomes patrimonial land of the State susceptible
4. Irrevocability (except for legal causes);
of acquisition through acquisitive prescription.

Civil law
5. Intent to benefit the donee (animus of donation. Art. 756, NCC)

donandi); and
6. Resultant decrease in the assets or Limitation on the amount that can be donated
patrimony of the donor. (Paras, 2008)
1. If the donor has forced heirs, he cannot give
a. NATURE or receive by donation more than what he
can give or receive by will; or
Extent to which donor may donate property
2. If the donor has no forced heirs, donation
It may comprehend all the present property of the may include all present property provided
donor, or part thereof, provided he reserves, in full he reserves in full ownership or in usufruct:
ownership or in usufruct, sufficient means for the
support of himself, and of all relatives who, at the a. The amount necessary to support
time of the acceptance of the donation, are by law him and those relatives entitled to
entitled to be supported by the donor. (Art. 750, support from him; and
NCC) b. Property sufficient to pay the
donor’s debt contracted prior to
Future properties as subject of donation (2003 the donation.
BAR)
NOTE: The limitation applies only to simple,
Future properties cannot be subject of donations. remunerative, and modal donations but not to
Donations cannot comprehend future properties. onerous ones, which are governed by the law on
contracts. (De Leon, 2006)
NOTE: Future property means anything which the
donor cannot dispose of at the time of the donation. RESERVATIONS AND REVERSIONS
(Art. 751, NCC) (2009 BAR)
Effect if the donor violates the requirement for
XPN: In donation propter nuptias, however, the reservation under Art. 750, NCC
Family Code allows a donation of future property
between future spouses. A donation where the donor did not reserve
property or assets for himself in full ownership or
Donation of future inheritance or the inchoate in usufruct sufficient for his support and all
right to inherit relatives legally dependent upon him is not void. It
is merely reducible to the extent that the support
Future inheritance or the inchoate right to inherit to himself and his relatives is impaired or
cannot be donated because it is future property. prejudiced. (Pineda, 2009)
Q: May a property, the acquisition of which is Reversion in donation

subject to suspensive condition, be donated?
It is a condition established in the deed of donation
A: YES, because once the condition is fulfilled, it which has for its effect the restoration or return of
retroacts to the day the contract is constituted. the property donated to the donor or his estate or
(Art. 1187(1), NCC) in favor of other persons who must be living at the
time of the donation for any cause or
Donation of ownership and usufruct circumstances. (Art. 757, NCC)
Ownership and usufruct of a property may be NOTE: If the reversion is in favor of other persons
donated to different persons separately. However, who are not all living at the time of the donation,
all the donees are required to be living at the time the reversion stipulated shall be void, but the

2022 GOLDEN NOTES
Property
donation shall remain valid. (Ibid.) inferior to the

donation given.
KINDS OF DONATION
Onerous
1. According to motive or cause:
a. Simple; Imposes upon the
b. Remuneratory (first kind); donee a reciprocal
c. Remuneratory (second kind): obligation; Burdens,
Same as that of
Conditional or Modal donations; or charges or services
contracts.
d. Onerous donations. are equal or greater in
value to that of the
2. As to perfection or extinguishment: donation.
a. Pure;
b. With a condition; or
Kinds of donation according to perfection or
c. With a term.
extinguishment
3. According to effectivity:
1. Pure donation – It is one which is not subject
a. Inter vivos; (Art. 729, NCC);
to any condition;
b. Mortis causa; (Art. 728, NCC); or
2. Conditional – It is one wherein the donor
c. Propter nuptias. (Paras, 2008)
imposes on the donee a condition
dependent on the happening of a future
Kinds of donation according to motive or cause
event or past event unknown to the parties;
(Arts. 730 and 731, NCC) and
PURPOSE FORM 3. With a term – It is one wherein the donor
Simple (2007 BAR) imposes on the donee a condition
dependent upon the happening of a future
Same to that of forms in
Pure liberality and certain event. (Art. 730, NCC)
donations.
Remuneratory (First kind) (2007 BAR) Effect of illegal or impossible conditions
To reward past Like in testamentary dispositions (Art. 873, NCC),

merits, services only the illegal or impossible conditions are
rendered by the donee disregarded. The donation itself remains valid (as
Same to that of forms in
to the donor provided a simple donation). (Art. 727, NCC)
donations.
the same do not
constitute a DONATION INTER VIVOS
demandable debt.
It is a donation which takes effect during the
Remuneratory (Second kind) lifetime of the donor.
1. Consideration for
future services; Limitations imposed by law in making
or 1. Onerous – Same donations inter vivos
2. Donor imposes form of that of
certain contracts. 1. Donor must reserve sufficient means for his
conditions, 2. Gratuitous – Same support and for his relatives who are
limitations or form of that of entitled to be supported by him; (Art. 750,
charges upon donations. NCC)
the donee, 2. Donation cannot comprehend future
whose value is property except donations between future

Civil law
husband and wife; (Art. 84, FC); and Donation mortis causa must comply with the
3. No person may give by way of donation formalities prescribed by law for the validity of
more than he may give by will. wills
Some inter vivos donations Donation mortis causa must comply with the
formalities prescribed by law for the validity of
The following donations have been held to be inter wills, otherwise, the donation is void and would
vivos: produce no effect. That the requirements of
attestation and acknowledgment are embodied in
1. A donation where the causes of revocation two separate provisions of the Civil Code (Arts. 805
have been specified; and 806, respectively) indicate that the law
2. A donation where the donor reserved for contemplates two distinct acts that serve different
himself a lifetime usufruct of the property, purposes. An acknowledgment is made by one
for if he were still the owner, there would executing a deed, declaring before a competent
be no need of said reservation; officer or court that the deed or act is his own. On
3. A donation where the donor warrants the the other hand, the attestation of a will refers to the
title to the thing which he is donating — act of the instrumental witnesses themselves who
there would be no need of warranty if he is certify to the execution of the instrument before
not transferring the title; them and to the manner of its execution. (Echavez
4. Where the donor immediately transferred v. DCDC, G.R. No. 192916, 11 Oct. 2010)
the ownership, possession and
administration of the property to the donee, Some mortis causa donations
but stipulated that the right of the donee to
harvest and alienate the fruits would begin The following have been held to be mortis causa:
only after the donor’s death. (But if what
had been transferred in the meantime was 1. Where the donor has reserved (expressly or
only the administration of the property, the impliedly) the option to revoke the donation
donation is mortis causa); at any time before death, even without the
5. Where the donor stated that while he is consent of the donee;
alive, he would not dispose of the property 2. Where the donation will be void if the
or take away the land “because I am transferee dies ahead of the transferor.
reserving it to him (the donee) upon my 3. If before the donor’s death, it is revocable at
death.” (The Court held this to be inter vivos his will;
because in effect, he had already renounced 4. If the donor retains full or naked ownership
the right to dispose of his property); and and control over the property while he is still
6. A donation where the donees “should not alive;
yet get the possession until our demise,” the 5. If what was in the meantime transferred to
administration remaining with the donor the done was merely the administration of
spouses, or either one surviving. (Paras, the property; and
2008) 6. If title will pass only after donor’s death.
(Paras, 2008)
DONATION MORTIS CAUSA
These are donations which are to take effect upon

the death of the donor.
NOTE: It partakes of the nature of testamentary

provisions and governed by the Rules on
Succession. (Art. 728, NCC)

2022 GOLDEN NOTES
Property
Donation inter vivos v. Donation mortis causa Test in determining whether the donation is
(Ibid.) mortis causa or inter vivos
INTER VIVOS MORTIS CAUSA What is controlling is the nature of the act and its
effectivity. If the act is one of disposition, and
As to When it Takes Effect
effective independently of the donor’s death, it is a
During the lifetime donation inter vivos. If it is one of deposition, but its
of the donor, effectivity is dependent upon the death of the
Upon donor’s death donor, it is a mortis causa donation. (Pineda, 2009)
independently of his
death
NOTE: The title given to a deed of donation is NOT
As to Cause or Consideration a determinative factor which makes the donation
In contemplation of inter vivos or mortis causa. What is controlling is
donor’s death without the provision stated in the deed and must be read
Donor’s pure in its entirety.
intention to dispose of
generosity
the thing in case of
survival If there is doubt on the nature of the donation, the
doubt should be resolved in favor of donation inter
On Predecease vivos, rather than mortis causa to avoid uncertainty
Valid if donor as to the ownership of the property subject of the
Void if donor survives
survives the done deed of donation.
On Revocability
ONEROUS DONATIONS
Generally
Always revocable at any
irrevocable except Onerous donation is a donation given for which the
time and for any reason
for grounds donor received a valuable consideration which is
before the donor’s death
provided for by law the equivalent of the property so donated. (Ibid.)
Samples of Onerous Donations
On Formalities
Where the condition is to take care of the donor’s
Must comply with Must comply with the family in the future (Carlos v. Ramil, G.R. No. 6736,
the formalities of formalities of a will. 05 Sept. 1911); or where the donee must take care
donations of the donor’s funeral expenses. Thus, even if real
On When Acceptance is Made property is involved, it is not essential to have a
public instrument. (Manalo v. De Mesa, G.R. No. L-
Acceptance during 9449, 12 Feb. 1915)
After donor’s death
donor’s lifetime
Kinds of Onerous Donations
On When Property is Conveyed to the Donee
1. Totally onerous – When the burden is

Property completely Property retained by the
equal to or greater than the value of the
conveyed to the donor while he is still
property donated; and
done alive
2. Partially onerous – When the burden is less
On Tax Payable than the value of the donation. (Pineda,
Donor’s tax Estate tax 2009)

Civil law
Laws that apply to Onerous Donations When the donation and the acceptance are in
the same instrument
1. Totally onerous – Rules on Contracts.
2. Partially onerous If the donation and the acceptance are in the same
a. Portion exceeding the value of the burden instrument, containing the signatures of both
– simple donations; and donor and donee, it is understood that there is
b. Portion equivalent to the burden – Law on already knowledge of the acceptance, hence, the
Contracts. (Ibid.) donation is already perfected. (Ibid.)
Rules of Contract govern the onerous portion of Donations made to incapacitated persons
donation; Rules of Donation only apply to the
excess, if any. Since the donation imposed on the Donations made to incapacitated persons shall be
donee the burden of redeeming the property for void, though simulated under the guise of another
value, the donation was onerous. As an endowment contract or through a person who is interposed.
for a valuable consideration, it partakes of the (Art. 743, NCC)
nature of an ordinary contract; hence, the Rules of
Contract will govern, and Art. 765 of the NCC finds Persons who must accept the donation made in
no application with respect to the onerous portion favor of a minor
of the donation. Insofar as the value of the land
exceeds the redemption price paid for by the If the donation is pure and simple and does not
donee, a donation exists, and the legal provisions require written acceptance, the minors can accept
on donation apply. (Calanasan v. Sps. Dolorito, G.R. the donation by themselves.
No. 171937, 15 Nov. 2013)
If the donation needs written acceptance, it may be
HOW MADE AND ACCEPTED accepted by their guardian or legal
representatives. Art. 741, NCC)
Persons who must accept the donation
PERFECTION OF DONATION
The donee must accept the donation personally, or
through an authorized person with a special power Donation is perfected from the moment the donor
for the purpose, or with a general and sufficient knows of the acceptance by the donee. (Art. 734,
power, otherwise, the donation shall be void. (Art. NCC)
745, NCC) (2010 BAR)
The donation is perfected, not from the time of
Reason for the need for an acceptance acceptance, but from the time of knowledge by the
donor that the donee has accepted (the knowledge
Because the donee may not want to accept the may of course be actual or constructive). If there is
donor’s liberality or if donation is onerous, he may no acceptance, the donation will be null and void.
not agree with the burden imposed. (Paras, 2008)
Rule prior to knowledge of acceptance FORMALITIES OF DONATION
Prior to learning of the acceptance, there is no 1. As regards movable property (1998, 2000,
perfected donation yet (no donation at all), hence, 2007 BAR)
the donor may give the property to somebody else, a. With simultaneous delivery of property
for he has not really parted with the disposition of donated:
the property. (Paras, 2008) i. For P5,000.00 or less – May be
oral/written
ii. For more than P5,000.00 – Written

2022 GOLDEN NOTES
Property
in public or private document The term “person” who could make donations
refers to natural and artificial persons with legal
b. Without simultaneous delivery: personalities. With respect to artificial persons,
i. The donation and acceptance must they must be authorized by their Articles to donate.
be written in a public or private (Pineda, 2009)
instrument (Statute of Frauds),
regardless of value. Otherwise, NOTE: “Making of donation” shall be construed to
donation is unenforceable. mean perfection of the donation, otherwise if
“making” means “giving,” Art. 737 of the NCC would
2. As regards immovable property (1993, 2000, in some cases be inconsistent with Art. 734 of the
2010 BAR) NCC which states that “the donation is perfected
a. Must be in a public instrument specifying from the moment the donor knows of the
i. The property donated; and acceptance by the donee.” To avoid a contradiction,
ii. The burdens assumed by the done. the rule may be stated thus: “at the time the
donation is perfected, both the donor and the
b. Acceptance may be made: donee must be capacitated.”
i. In the same instrument; or
ii. In another public instrument, Status of a donation made by an incapacitated
notified to the donor in authentic person
form, and noted in both deeds.
Otherwise, donation is void. (De Following the laws in contracts (which are of
Leon, 2006) suppletory application to simple donations) said
donations should be merely considered voidable.
Q: The Roman Catholic Church accepted a The same answer should be given in case there was
donation of a real property located in Lipa City. vitiated consent (as in the case of fraud or
A deed of donation was executed, signed by the intimidation). (Paras, 2008)
donor, Don Mariano, and the donee, the Church,
as represented by Fr. Damian. Before the deed Q: May an emancipated minor by himself make
could be notarized, Don Mariano died. Is the donation mortis causa?
donation valid? (2014 BAR)
A: YES, because at the age of 17, a person of sound
A: The donation is VOID. The donation of an mind can already make a valid will.
immovable property must be in a public
instrument for it to be valid. In this case, the donor Donation by a guardian or trustee
died even before the notarization of the deed of
donation. Hence, it does not satisfy the Guardians and trustees may of course donate their
requirement of being in a public instrument for the own properties, unless otherwise disqualified by
donation to be valid. the law, but not the property entrusted to them, for
the simple reason that they are not the owners
b. PERSONS WHO MAY thereof. (Ibid.)
GIVE OR RECEIVE A DONATION
Status of a donation of ward’s property by a
DONOR guardian
Any person who has capacity to contract and It is believed that such a donation, if made in the
capacity to dispose of his property may make a guardian’s name, is null and void. On the other
donation. (Art. 735, NCC) His capacity shall be hand, if made by the guardian in the name of, and
determined as of the time of the making of with the consent of the ward, it would be valid
donation. (Art. 737, NCC) provided judicial permission is obtained. This is

Civil law
particularly true if the donation benefits, in some husband being credited to his capital, and that of
way, the ward. (Ibid.) the wife being considered part of her paraphernal
property. (Ibid.)
NOTE: When the donation is clearly in the interest
of the beneficiaries, it would be contrary to the c. EFFECTS AND LIMITATIONS OF DONATION
spirit and intent of the law to say it cannot be done.
(De Leon, 2006; Araneta v. Perez, G.R. No. L-18872, Rights and actions the donee acquires
15 July, 1966)
The donee is subrogated to the rights and actions
DONEE which in case of eviction would pertain to the
donor. (Art. 754, NCC)
All those who are not specially disqualified by law.
Liability of donors for eviction of hidden
Q: May an unborn child be a donee or a donor? defects
A: An unborn child may be a donee but not a donor. 1. If the donation is simple or remunerative,
As a donee, donations made to conceived and donor is not liable for eviction or hidden
unborn children may be accepted by those persons defects because the donation is gratuitous,
who would legally represent them if they were unless the donor acted in bad faith; (Ibid.)
already born. (Art. 742, NCC) and
NOTE: If the conceived child did not become a 2. If the donation is onerous, the donor is
person, the donation is null and void. An unborn liable on his warranty against eviction and
child cannot be a donor because it is essential for a hidden defects but only to the extent of the
person to be able to make a donation, he must have burden. (Arts. 754 and 726, NCC)
full civil capacity a donor to a have full civil
capacity. Rules regarding the liability of the donee to pay
the debts of donor
When a person is “specially disqualified’’ to
accept a donation 1. Where donor imposes obligation upon the
donee, (Art. 758, NCC) the donee is liable:
“Specially disqualified’’ does not refer to those
incapacitated to contract like minors or those of a. To pay only debts previously contracted;
unsound mind, but to people such as those and
mentioned in Art. 739 of the NCC and husbands and b. For debts subsequently contracted only
wives with respect to immoderate donations from when there is an agreement to that effect.
each other (donations of spouses inter se). (Paras,
2008) NOTE: But he is not liable for debts in
excess of the value of donation received,
Natural and juridical persons may be donees unless the contrary is intended.
Since the law does not distinguish, both natural and 2. Where there is no stipulation regarding the
juridical persons may become donees. An payment of debts (Art. 759, NCC):
unregistered partnership may become a donee a. Donee is generally not liable to pay
because it is a juridical or artificial person despite donor’s debts;
its non-registration. But the conjugal partnership b. Donee is responsible only if donation
itself, not being natural or juridical, cannot be a has been made in fraud of creditors; and
donee. Instead, the donation should be given by the
stranger to the husband and wife, the share of the NOTE: The presumption that the

2022 GOLDEN NOTES
Property
donations was made in fraud of Remedy in case of donations executed in fraud

creditors arises when the donor has not of creditors
left sufficient assets to pay his debts, at
the time of donation. The creditors may rescind the donation to the
extent of their credits. The action is known as
c. The donee shall not be liable beyond the accion pauliana. (Art. 1381, NCC)
value of donation received. (Paras,
2008) NOTE: The law establishes a presumption when the
donation is apparently in fraud of creditors, namely
Double Donations failure to reserve sufficient property (at time of
donation) to pay previous debts. (Paras, 2008)
There is double donation when the same thing has
been donated to two or more persons. The rule on Donations prohibited by law (1990, 2000 BAR)
double sale under Art. 1544 of the NCC shall be (L-A-W-S-C-R-A-P-O-P)
applicable.
1. By persons guilty of Adultery or
Rule: “First in time, stronger in right” concubinage at the time of donation;
1. Movable property — preference in ownership is 2. The action for declaration of nullity may be
given to the person who first possessed it in brought by the spouse of the donor or
good faith. (Art. 1544 (1), NCC). donee; and the guilt of the donor and donee
2. Immovable property — Preference in may be proved by preponderance of
ownership is given evidence;
a. to the first who registered his right in good
faith in the Registry of Property. 3. Those made between persons found guilty
b. if there was no registration, to the person of the same Criminal offense, in
who first possessed in good faith. consideration thereof; (Art. 739, NCC)
c. if there was no possession, to the person who
presents the oldest title, provided that the NOTE: The phrase “found guilty of same
title had been acquired in good faith. offense” does NOT refer only to
(Paras, 2008) concubinage and adultery.
in case of an Excessive, Inofficious donation 4. Those made to a public Officer or his wife,
descendants and ascendants, by reason of
1. A donor may not donate more than what he his office;
can give by will. If he donates more than what
he cannot give by will, the donation will 5. Relative incapacity to succeed;
become excessive and to insist on it, the
legitime of the compulsory heirs will be 6. By individuals, associations or
impaired. Legitime is reserved for the corporations not permitted by Law to make
compulsory heirs and the same cannot be donations Art. 1027, NCC);
impaired or disposed of by the testator; and
2. The donee cannot receive by way of donation 7. By a Ward to the guardian before the
more than what he may receive by will. If the approval of accounts; (Art. 1027, NCC)
donee can receive by donation (devise or
legacy) more than what the testator is allowed 8. By Spouses to each other during the
by law to give, the donation is inofficious and marriage or to persons of whom the other
it may be suppressed totally or reduced as to spouse is a presumptive heir; (Art. 87, FC)
its excess.

Civil law
9. To Relatives of such priest, etc. within the the crime or act has been
fourth degree, or to the church to which committed against the donee
such priest belongs; himself, his wife or children under
his authority; or
10. To an Attesting witness to the execution of c. If he unduly refuses him support
donation, if there is any, or to the spouse, when the donee is legally or
parents or children or anyone claiming morally bound to give support to
under them; the donor.
11. To the Priest who heard the confession of NOTE: The list of grounds for
the donor during the latter’s last illness, or revocation by reason of
the minister of the gospel who extended ingratitude under Art. 765, NCC is
spiritual aid to him during the same exclusive.
period); or
Grounds for Reduction of Donation
12. To a Physician, surgeon, nurse, health
officer or druggist who took care of the The same grounds for revocation under Art. 760 of
donor during his/her last illness. (Art. the NCC The donation shall be reduced insofar as it
1027, NCC) exceeds the portion that may be freely disposed of
by will, considering the whole estate of the donor
d. REVOCATION AND REDUCTION at the time of the birth, appearance, or adoption of
a child. (Art. 761, NCC)
Grounds for Revocation of Donation
Revocation of perfected donations
1. Under Art. 760, NCC
a. Birth of a donor’s child or children Once a donation is perfected, it cannot be revoked
(legitimate, legitimated, or without the consent of the donee except on
illegitimate) after the donation, grounds provided by law. (Arts. 760, 764 & 765,
even though born after his death; NCC)
b. Appearance of a donor’s child who
is missing and thought to be dead Revocation or reduction is NOT automatic.
by the donor; or
c. Subsequent adoption by the donor The emergence of the circumstances enumerated
of a minor child. in Art. 760 of the NCC does not automatically
revoke or reduce the donation. The revocation or
2. Under Art. 764, NCC – When the donee fails reduction is authorized only if the amount or value
to comply with any of the conditions which of the property donated exceeds the disposable
the donor imposed upon the donee. free portion.
3. Under Art. 765, NCC – By reason of Q: For purposes of prescription of action, what
ingratitude is the rule in case of concurrence of two or more
a. If the donee should commit some grounds for revocation or reduction?
offense against the person, the
honor or the property of the donor, A: If two or more causes are present, the earliest
or of his wife or children under his among them shall be the starting point in the
parental authority; reckoning of the period of prescription of the
b. If the donee imputes to the donor action. (Pineda, 2009)
any criminal offense, or any act
involving moral turpitude, even
though he should prove it, unless

2022 GOLDEN NOTES
Property
Execution of a donation subject to a condition Obligations of the donee upon the revocation or
reduction of donation
A donor may execute a donation subject to a
condition, the non-fulfilment of which authorizes 1. Return the thing or the object of the
the donor to go to court to seek its revocation (not donation;
reduction). 2. If the property had already been alienated
and could not be recovered anymore, its
Revocation of donation in a conditional value shall be paid to the donor. The value
donation shall be the price of the property
estimated at the time of the perfection of
A donor cannot revoke a conditional donation the donation; and
unilaterally, that is, without going to court, even if 3. If the property had been mortgaged, the
the donee had breached any of the obligations donor may pay the mortgage obligations,
imposed in the donation. A judicial action is subject to reimbursement by the donee.
essential if the donee refuses to return the (Art. 762, NCC)
property, or pay its value to the donor, or to latter’s
heirs or assigns. However, the action must be filed Obligation of the donee to return the fruits
within the prescriptive period fixed by law,
otherwise, it will be barred. (De Luna v. Abrigo, GR 1. If due to non-compliance with any condition
No. L-57455, 18 Jan. 1990) imposed on the donation – Fruits acquired
after non-compliance shall be returned;
The breach of the condition in the donation causes and
the automatic revocation. All the donor has to do is 2. If due to causes stated under Art. 760, NCC
to formally inform the donee of the revocation. ingratitude, or inofficious donations – fruits
Judicial intervention only becomes necessary if the acquired from the time the complaint is
donee questions the propriety of the revocation. filed shall be returned. (Art. 768, NCC)
Even then, judicial intervention is required to
merely confirm and not order the revocation. Period of prescription of action for revocation
Hence, there can be no 10-year prescriptive period or reduction of donation (Pineda, 2009)
to file an action to speak of. When the donee does
not contest the revocation, no court action is
PRESCRIPTIVE
necessary. (Province of Camarines Sur v. Bodega RECKONING PERIOD
PERIOD
Glassware, G.R. No. 194199, 22 Mar. 2017)
Birth of Child
Q: Can the creditors of the deceased file an
From the birth of the first
action for reduction of inofficious donation? Four (4) years
child.
A: NO. Only compulsory heirs or their heirs and Legitimation

successors in interest may sue for reduction of From birth of the
inofficious donations. The remedy of the creditor is legitimated child, not
Four (4) years
to sue, during the lifetime of the donor, for the from the date of
annulment of inofficious donation made in fraud of marriage of the parents.
creditors; (Art. 1387, NCC) or they can go against Recognition of an Illegitimate Child
the estate of the deceased and not against the
donees. From the date the
recognition of the child
Four (4) years by any means
enumerated in Art. 712
of the FC.

Civil law
Adoption notary public who notarized the Deed of

Donation had an expired notarial commission
From the date of filing of when the Deed of Donation was executed by
the original petition for Jose. Can Maria be made to reconvey the
Four (4) years adoption, provided a property? What can she put up as a defense?
decree of adoption is (2015 BAR)
issued thereafter.
A: NO. Maria cannot be compelled to reconvey the
Appearance of a Child Believed to be Dead
property. The Deed of Donation was void because
From the date an it was not considered a public document. However,
information was a void donation can trigger acquisitive
received as to the prescription. (Solis v. CA, G.R. Nos. 46753-54, 25 Aug.
Four (4) years 1989) The void donation has a quality of titulo
existence or survival of
the child believed to be colorado enough for acquisitive prescription
dead especially since 12 years had lapsed from the deed
of donation.
Non-compliance with Any Condition Imposed
Maria can set up the defense that the action has
From the non-
prescribed. An action for revocation of the
Four (4) years compliance with the
donation on the ground that it impaired the
condition (Art. 764, NCC)
legitime of a compulsory heir may only be filed
Act of Ingratitude within ten (10) years from the time the cause of
action accrues which is at the time of the death of
From the time the donor Jose. The facts are not clear as to when Jose died,
had learned of the but on the assumption that he died ten years prior
donee’s act of to the filing of the action, the same has clearly
One (1) year
ingratitude, it was prescribed.
possible for him to file an
action. (Art. 769, NCC) Ingratitude
Q: What if the donor dies within the four-year Q: Are there any other grounds for revocation
prescriptive period? of donation by reason of ingratitude other than
those enumerated under Art. 765 of the NCC?
A: The right of action to revoke or reduce is
transmitted to his heirs. (Pineda, 2009) A: NONE. The grounds under Art. 765 are
exclusive.
Q: Jose, single, donated a house and lot to his
only niece, Maria, who was of legal age and who NOTE: The rationale behind the article is that a
accepted the donation. The donation and person who has been favored with kindness and
Maria's acceptance thereof were evidenced by generosity has the moral obligation to be and
a Deed of Donation. Maria then lived in the remain grateful to the benefactor. It is a matter of
house and lot donated to her, religiously paying tradition that generosity must not be reciprocated
real estate taxes thereon. Twelve years later, with ungratefulness.
when Jose had already passed away, a woman
claiming to be an illegitimate daughter of Jose Q: Suppose the husband of the donee had
filed a complaint against Maria. Claiming rights maligned the donor, is there a ground for
as an heir, the woman prayed that Maria be revocation by reason of ingratitude?
ordered to reconvey the house and lot to Jose's
estate. In her complaint she alleged that the A: NONE. The act must be imputable to the donee

2022 GOLDEN NOTES
Property
himself and not to another. (Pineda, 2009) b. PRESCRIPTION OF OWNERSHIP

AND OTHER REAL RIGHTS
Mortgages and alienations effected before the
notation of the action for revocation Two concepts of Prescription
If there are mortgages and alienations effected 1. Acquisitive prescription/ Adverse

before the notation of the complaint for revocation Possession - It is the acquisition of ownership
in the Registry of Property, such alienations and and other real rights through possession of a
mortgages shall remain valid and must be thing in the manner and under the conditions
respected. (Art. 766, NCC) provided for by law:
NOTE: Alienations and mortgages after the a. Ordinary acquisitive prescription -

registration of the pendency of the complaint shall requires possession of things in good faith
be void. and with just title for the time fixed by law
which is 10 (10) years; and
Remedy of the donor
b. Extraordinary acquisitive prescription -
If the property is already transferred in the name the acquisition of ownership and other
of the buyer or mortgagee, the remedy of the donor real rights without the need of title or of
is to recover the value of the property determined good faith or any other condition and
as of the time of the donation. (Art. 766, NCC) would prescribe in 30 years. (De Leon,
2011)
Waiver of actions to revoke donations
Requisites of prescription as a mode of
The donor CANNOT make a renunciation of actions acquiring ownership
to revoke in advance. Such waiver is void. (Art.
772(2), NCC) However, the donor may renounce an 1. Capacity to acquire by prescription;
action to revoke if the act of ingratitude had already 2. A thing capable of acquisition by
been done. prescription;
3. Possession of the thing under certain
3. PRESCRIPTION conditions; and
4. Lapse of time provided by law.
a. GENERAL PROVISIONS
Mere possession with a juridical title, such as by a
usufructuary, a trustee, a lessee, an agent, or a
Definition
pledge, not being in the concept of an owner, cannot
ripen into ownership by acquisitive prescription
It is a means of acquiring ownership and other real
unless the juridical relation is just expressly
rights or losing rights or actions to enforce such
repudiated as such repudiation has been
rights through the lapse of time. Thus, prescription
communicated to the other party. (Esguerra v.
applies to ownership and other real rights as well as
Manantan, G.R. No. 158328, 23 Feb. 2007)
to rights and actions of any kind whatsoever. (De
Leon, 2006)
NOTE: The first two requisites apply to both
ordinary and extraordinary prescription, but the
NOTE: The applicability of prescription is a
last two requisites vary for each kind.
question of fact. It is evidentiary and must be
established by clear and convincing evidence.
2. Extinctive prescription or limitation of
actions – It involves loss of property rights or
actions through the possession by another of a

Civil law
thing for the period provided by law or failure

to bring the necessary action to enforce one’s
right with in the period fixed by law. Rights and
actions are lost by the lapse of time. (Arts. 1106
and 1139, NCC)
NOTE: It is also referred to as prescription of

actions, statute of limitations, and statute of repose.
(De Leon, 2006)

2022 GOLDEN NOTES
Property
TIME OF FILING OF TRANSMISSIBILITY OF

EXTENT OF REDUCTION RIGHTS TO THE FRUITS
THE ACTION ACTION
1. Failure of the donor to reserve sufficient means for support (Art. 750, NCC)
Any time by the donor

Not transmissible. NOTE: Donation reduced to Donee is entitled to the
or by relatives entitled
the duty to give and right extent necessary to fruits as owner of the
to support during the
to receive support are provide support. Art. 750, property donated. (Art.
donor’s lifetime. (Art.
personal. (Art. 195, FC) NCC 441, NCC)
750, NCC)
2. Inofficiousness for being in excess of what the donor can give by will (Art. 750, 771, NCC)
Donation effective during

Transmissible to donor’s
Within five (5) years the donor’s lifetime
heirs as donation shall be
after the donor’s subject to reduction only Donee appropriates fruits.
reduced as regards the
death. (Arts. 771 and upon his death with (Art. 441, NCC)
excess at donor’s death.
1149, NCC) regard to the excess. (Art.
(Art. 771, NCC)
771, NCC)
3. Birth, appearance or adoption of a child (Art. 760, NCC)
[Same as in no.1
Revocation] Donee appropriates
Within four (4) years fruits not affected by
from birth of first child, [Same as in no. 1 [Same as in no. 1 reduction. (NCC, Art. 441)
legitimation Revocation] Reduction] When donation is
(recognition), To children & Donation reduced to revoked for any of the
adoption, judicial descendants of donor extent necessary to cause mentioned in Art.
declaration of filiation upon his death. (Art. provide support. (Art. 760, the donee shall not
or receipt of info of 763(2), NCC) 750), NCC return the fruits except
existence of the child from the filing of the
believed to be dead. complaint. (Art. 768, NCC)
(Art. 763, NCC)
4. Fraud against creditors (Art. 759, NC)
Within four (4) years

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

Civil law
Acquisitive Prescription v. Extinctive Prescription (De Leon, 2006)
ACQUISITIVE PRESCRIPTION EXTINCTIVE PRESCRIPTION

As to Applicability
Applicable to all kinds of rights, whether real or

Applicable to ownership and other real rights.
personal.
As to Legal Effect
Expressly vests the property and raises a new title Produces extinction of rights or bars a right of action.
in the occupant. The relationship between the Results in the loss of a real or personal right or bars the
occupant and the land in terms of possession is cause of action to enforce said right. One does not look
capable of producing legal consequences. It is the to the act of the possessor but to the neglect of the
possessor who is the actor. owner.
As to requisite
Inaction by the owner or neglect of one with a right to

Possession of a claimant who is not the owner.
bring his action.
As a defense
Can be proven under the general issue without it Should be affirmatively pleaded and proved to bar the
being affirmatively pleaded. action or claim of the adverse party.

2022 GOLDEN NOTES
Property
Prescription v. Laches
PRESCRIPTION LACHES
As to Concept
The failure or neglect, for an unreasonable and

unexplained length of time, to do that which by
exercising due diligence could or should have been
One acquires ownership and other real rights through done earlier; it is negligence or omission to assert a
the lapse of time in the manner and under the action right within a reasonable time, warranting a
laid down by law. (Art. 1106, NCC) presumption that the party entitled to assert it either
has abandoned it or declined to assert it. (De Leon,
2006) It applies even to imprescriptible actions e.g.,
an action to annul a void contract may be barred by
laches.
As to creation
Prescription is purely statutory in origin and is

founded on ground of public policy. Time limit is A creation of equity which, as such, is applied not
imposed for a party to enforce his claim so that title really to penalize neglect or sleeping upon one's
to property and other rights will be stabilized. It right, but rather to avoid recognizing a right when
protects the person who is diligent and vigilant in to do so would result in a clearly inequitable
asserting his right, and conversely punishes the situation. (Chavez v. Bonto-Perez, G.R. No. 109808,
person who sleeps on his right. (Fernandez v. Cuerva, 01 Mar. 1995)
G.R. No. L-21114, 28 Nov. 1967)
As a defense
GR: Evidentiary in nature and requires full blown

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

Failure to plead constitutes as a waiver of defense
and cannot be raised for the first time on trial or
appeal.

Civil law
Who may acquire by prescription (P-S-M) Things not subject to prescription
1. Persons who are capable of acquiring 1. Public domain;

property by other legal modes; 2. Intransmissible rights;
2. State; and 3. Movables possessed through a crime; and
3. Minors – through guardians of personally. 4. Registered land.
(Art. 1107, NCC)
Rights not extinguished by prescription
Persons against whom prescription may run
1. Demand right of way;
1. Minors and other incapacitated persons 2. Abate public /private nuisance;
who have parents, guardians or other legal 3. To declare a contract void;
representatives; 4. Recover property subject to expressed
trust;
2. Absentees who have administrators, either 5. Probate of a will; and
appointed by them before their 6. Quiet title.
disappearance, or appointed by the courts;
ACQUISITIVE PRESCRIPTION
3. Persons living abroad, who have managers (ORDINARY/EXTRAORDINARY)
or administrators;
4. Juridical persons, except the State and its Basis of Acquisitive Prescription
subdivisions; (Art. 1108, NCC) and
It is based on the assertion of a usurper of an
5. Prescription, acquisitive and extinctive, adverse right for such a long period of time,
runs in favor of, or against a married uncontested by the true owner of the right, as to
woman. (Art. 1110, NCC) This presupposes give rise to the presumption that the latter has
a situation where the parties involved are given up such right in favor of the former.
a married woman and another person not (Tolentino, 1992)
her husband.
Q: What are the basic requirements of
Persons who are disqualified from administering prescription as a mode of acquiring ownership?
their property have a right to claim damages from
their legal representatives whose negligence has A:
been the cause of prescription. 1. Actual possession of a property, which is
susceptible of prescription;
Things subject to prescription 2. Possession must be in the concept of an
owner and not that of a mere holder; (Art.
All things within the commerce of men: 1118, NCC)
a. Private property; and 3. Possession must be public or open; (Art.
b. Patrimonial property of the State. (Art. 1118, NCC)
1113, NCC) 4. Possession must be peaceful; (Art. 1118,
NCC)
NOTE: Patrimonial property of the State is the 5. Possession must be continuous and not
property it owns but which is not devoted to public interrupted; (Art. 1118, NCC)
use, public service, or the development of national 6. Possession must be adverse, that is,
wealth. It is wealth owned by the state in its exclusive and not merely tolerated; and
private, as distinguished from its public, capacity. 7. Possession must satisfy the full period
(Paras, 2008) required by law. (Pineda, 2009)

2022 GOLDEN NOTES
Property
Ordinary Prescription True title
It requires possession of things in good faith and One which actually exists and is not just a
with just title for the time fixed by law (Art. 1127- pretended one.
1130, NCC)
Note: An absolutely simulated or fictitious title is
Requisites of Ordinary Prescription (C-L-A-S-G) void and cannot be a basis for ordinary
1. Capacity of the possessor to acquire by prescription. (Pineda, 2009)
prescription (Art. 1107, NCC);
2. Susceptibility of object to prescription Valid title
(Art. 1113, NCC);
3. Adverse possession of the character A title which by itself is sufficient to transfer
prescribed by law (Arts. 1118 and 1119, ownership without the necessity of letting the
NCC) prescriptive period elapse. (Paras, 2008)
4. Lapse of time required by law (1139, NCC);
and Extraordinary Prescription
5. Good faith of possessor or proof of just
title. (Art. 1127, NCC) Prescription where the possessor is in bad faith. It
does not require good faith or just title but
Good faith possession for a period longer than ordinary
acquisitive prescription. (Pineda, 2009)
Q: When is a possessor in good faith?
Requisites of Extraordinary Prescription (C-L-
A: If he is not aware of the existence of any flaw or A-S)
defect in his title or mode of acquisition which
invalidates it (Art. 526 in relation to Art. 1128, NCC) 1. Capacity of the possessor to acquire by
and has reasonable belief that the person from prescription (Art. 1107, NCC);
whom he received the thing was the owner thereof, 2. Susceptibility of object to prescription
and could transmit his ownership (Art. 1127, NCC) (Art. 1113, NCC);
3. Adverse possession of the character
Q: When must good faith exist? prescribed by law (Arts. 1118 and 1119,
NCC)
A: It must exist not only from the beginning but 4. Lapse of time required by law (1139, NCC);
throughout the entire period of possession fixed by and
law. (Pineda, 2009)
Q: What are the periods as regards prescription
Just title as a mode of acquisition of ownership?
It means that the possessor obtained the A:

possession of the property through one of the 1. Movables
modes recognized by law for acquiring ownership, a. Four (4) years ‐ If in good faith (Art.
but the transferor or grantor was not the owner of 1132, NCC); and
the property or he has no power to transmit the b. Eight (8) years ‐ If in bad faith. (Art.
right. (Art. 1129, NCC) 1140, NCC)
NOTE: Just title is never presumed, it must be

proved. (Art. 1131, NCC) The title for prescription 2. Immovables
must be true and valid. (Art. 1130, NCC) a. Ten (10) years ‐ If in good faith (Art.
1134, NCC); and

Civil law
b. 30 years ‐ If in bad faith. (Art. 1141, co‐owned property does not prescribe, a co‐owner
NCC) may acquire ownership thereof by prescription,
where there exists a clear repudiation of the co‐
Q: How does ownership of personal property ownership, and the co‐owners are apprised of the
prescribe? claim of adverse and exclusive ownership. In this
case, the respondents never possessed the lot,
A: Through uninterrupted possession for eight (8) much less asserted their claim thereto until 1999
years, without need of any other condition. (Art. when they filed the complaint for partition. In
1132, NCC) contrast, Flores took possession of the lot after
Emilio’s death and exercised acts of dominion
Q: How about ownership and other real rights thereon‐ tilling and cultivating the land,
over immovables? introducing improvements, and enjoying the
produce thereof. The statutory period of
A: They prescribe through uninterrupted adverse prescription commenced in 1960 when Flores,
possession for 30 years, without need of title or of who had neither title nor good faith, secured a tax
good faith. (Art. 1137, NCC) declaration in his name and may, therefore, be said
to have adversely claimed ownership of the lot. On
Q: What are the rules for the computation of said date, respondents were also deemed to have
time necessary for prescription? become aware of the adverse claim. Flores’s
possession thus ripened into ownership through
A: acquisitive prescription after the lapse of 30 years.
1. The present possessor may complete the (Heirs of Restar v. Heirs of Cichon, G.R. No. 161720,
period necessary for prescription by 22 Nov. 2005)
tacking his possession to that of his
grantor or predecessor-in-interest; Q: Sixto, owner of a parcel of land, died. He was
2. It is presumed that the present possessor survived by his wife and three children. The
who was also the possessor at a previous subject land was donated by his wife to Silverio,
time, has continued to be in possession who immediately entered into possession of
during the intervening time, unless there the land, built a fence around it, constructed a
is proof to the contrary; and residential house, declared it for tax purposes
3. The first day shall be excluded and the last and paid the taxes thereon, and resided there
day included. (Art 1138, NCC) until his death. After 45 years from the time of
donation, Soledad, one of Sixto’s children, filed
Q: Emilio died, leaving eight (8) children. In a complaint for recovery of ownership, and
1960, His eldest child, Flores, took possession possession against Silverio. Who is the rightful
of and cultivated the land, caused the owner of the land?
cancellation of the tax declaration in Emilio’s
name covering a parcel of land and caused the A: Silverio became the rightful owner of the land by
issuance of another in his own name. The co‐ extraordinary acquisitive prescription. In
heirs of Flores discovered the cancellation. extraordinary prescription ownership and other
Upon Flores’ death, the heirs of his sisters real rights over immovable property are acquired
together with his surviving sisters filed a through uninterrupted adverse possession thereof
complaint in 1999 against the heirs of Flores for for 30 years without need of title or of good faith.
partition of the lot and declaration of nullity of When Soledad filed the case, Silverio was in
the documents. Did the heirs of Flores acquire possession of the land for 45 years counted from
ownership over the lot by extraordinary the time of the donation. This is more than the
acquisitive prescription? required 30 years of uninterrupted adverse
possession without just title and good faith. Such
A: YES. While the action to demand partition of a possession was public, adverse and in the concept

2022 GOLDEN NOTES
Property
of an owner. He declared the land for taxation received before the possession was legally
purposes and religiously paid the realty taxes interrupted by the service of summons. (Art. 544,
thereon. Together with his actual possession of the NCC) After Anthony was served with summons, he
land, these tax declarations constitute strong became a possessor in bad faith and a builder,
evidence of ownership of the land occupied by him. planter, sower in bad faith. He can also be made to
(Calicdan v. Cendeña, G.R. No. 155080, 5 Feb. 2004) account for the fruits but he may deduct expenses
for the production gathering and preservation of
Q: Anthony bought a piece of untitled the fruits. (Art. 443, NCC)
agricultural land from Bert. Bert, in turn,
acquired the property by forging Carlo’s Q: If there are standing crops on the property
signature in a deed of sale over the property. when Carlo recovers possession, can Carlo
Carlo had been in possession of the property for appropriate them? (2008 BAR)
eight (8) years, declared it for tax purposes, and
religiously paid all taxes due on the property. A: YES. The value of the standing crops must be
Anthony is not aware of the defect in Bert’s title prorated depending upon the period of possession
but has been in actual physical possession of and the period of growing and producing the fruits.
the property from the time he bought it from Anthony is entitled to a part of the net harvest and
Bert, who had never been in possession. a part of the expenses of cultivation in proportion
Anthony has since then been in possession of to his period of possession. However, Carlo may
the property for one year. allow Anthony to gather these growing fruits as an
indemnity for the expenses of cultivation. If
Can Anthony acquire ownership of the property Anthony refuses to accept this concession, he shall
by acquisitive prescription? lose the right to indemnity under Art. 443, NCC.
(Art. 545(3), NCC)
A: NO. Anthony could acquire ownership of the
property by ordinary acquisitive prescription EXTINCTIVE PRESCRIPTION
which requires just title and good faith (Art. 1117,
NCC). There was just title because a deed of sale It based on the probability, born of experience, that
was issued in his favor even though it was forged, the alleged right which accrued in the past never
which fact he was not aware of. Moreover, he needs existed or has already been extinguished; or if it
to possess the land in good faith and in the concept exists, the inconvenience caused by the lapse of
of owner for a total of ten (10) years to acquire time should be borne by the party negligent in the
ownership. However, since Anthony possessed the assertion of his right. (Tolentino, 1992)
land for only one (1) year, he has not completed the
ten‐year period. Even if Anthony lacks the 8‐year Requisites
period of possession by Carlo who in the deed of 1. Capacity to acquire by prescription;
sale is supposed to be his grantor or predecessor- 2. A thing capable of acquisition by
in-interest (Art. 1138(1), NCC), the period is still prescription;
short of ten (10) years. 3. Possession of the thing under certain
conditions; and
If Carlo is able to legally recover his property, 4. Lapse of time provided by law.
can he require Anthony to account for all the
fruits he has harvested from the property while
in possession?
A: NO. Since Anthony is a possessor in good faith,

Anthony cannot be made to account for the fruits
he gathered before he was served with summons. A
possessor in good faith is entitled to the fruits

Civil law
INSTANCES WHEN Property of Public Dominion

PRESCRIPTION IS NOT ALLOWED
Right of reversion or reconveyance to the State
NO PRESCRIPTION APPLICABLE of the public properties registered and which
are not capable of private appropriation or
By Offender
private acquisition does not prescribe.
When it is possessed through a crime such as NOTE: In contrast, where private property is
robbery, theft, or estafa. taken by the Government for public use without
first acquiring title thereto either through
NOTE: The person who cannot invoke the right of expropriation or negotiated sale, the owner’s
prescription is the offender or person who action to recover the land or the value thereof
committed the crime or offense, not a subsequent does not prescribe. (De Leon, 2006)
transferee who did not participate in the crime or
offense, unless the latter knew the criminal
nature of the acquisition of the property by the Prescription and laches cannot apply to registered
transferor. (Art. 1133, NCC; Pineda, 2009) land covered by the “Torrens system" because
"under the Property Registration Decree, no title to
registered land in derogation to that of the
Registered Lands
registered owner shall be acquired by prescription
or adverse possession.” (Jakosalem v. Barangan,
1. An action to recover a registered land by the G.R. No. 175025, 15 Feb. 2012)
owner; and
2. Right to petition for the issuance for the c. PRESCRIPTION OF ACTIONS
issuance of a Writ of Possession filed by the
applicant for registered land. PRESCRIPTIVE PERIOD
Action to Recover Movables
NOTE: Similarly, an action to recover possession
of a registered land never prescribes. Eight (8) years (good faith) or four (4) years (bad
faith) from the time the possession is lost. (Art.
1140, NCC; Pineda, 2009)
Action to Demand a Right of Way
to Abate a Nuisance Action to Recover Immovables
Imprescriptible 30 years (Recover ownership). (Art. 1141, NCC)

Ten (10) years (Recover real right of possession).
Action to Quiet Title
(Art. 555(4), NCC); Pineda, 2009)
if Plaintiff in Possession
Mortgage Action
Imprescriptible
Void Contracts Ten (10) years from default of mortgagor. (Art.

1142, NCC)
Applies to both action and defense.
Action based on Written Contract
NOTE: However, an action to annul avoidable
contract prescribes after four (4) years. Ten (10) years
Action to Demand Partition

NOTE: If contract is oral or quasi, prescriptive
As long as the co‐ownership is recognized period is six (6) years (Art. 1145, NCC)
expressly or impliedly. (Art. 494, NCC)

2022 GOLDEN NOTES
Property
Action based on Obligation Created by Law Movables – The period of ordinary period is four
(4) years, while that of extraordinary prescription
Ten (10) years from the time the right of action is eight (8) years. Since the period of extraordinary
accrues prescription is two (2) times longer than the
ordinary prescription, the number of years in
Action based on Judgment ordinary period will be multiplied by two (2) to get
the period for extraordinary prescription.
Ten (10) years from the day judgment became
final and executory. (Art. 1144, NCC) E.g., If after two (2) years of possession in good
faith of a movable property, the possession was
Action based on Injury to Rights of Plaintiff
converted in bad faith. The two (2) years would be
Four (4) years equivalent to four (4) years possession in bad faith.
Action based on Quasi-Delicts Immovable – The period for ordinary prescription

in good faith is ten (10) years and 30 years for
Four (4) years (Art. 1146, NCC) extraordinary or in bad faith. Since the
extraordinary prescription is three (3) times
Action based on Forcible Entry and Detainer
longer than the ordinary prescription it shall be
One (1) year multiplied by three (3).
Defamation E.g., If after six (6) years of possession in good faith

of a real property, the possession was converted in
One (1) year (Art. 1147, NCC) bad faith, the six (6) years of possession in good
faith would be equivalent to 18 years possession in
All Other Actions Not Specified bad faith.
Five (5) years (Art .1149, NCC) Q: Sometime in 1974, Simeon Piedad filed a case
for annulment of an absolute deed of sale
INTERRUPTION OF PRESCRIPTIVE PERIOD against Candelaria and Mariano Bobilles. The
case was docketed as Civil Case No. 435-T. The
Q: What are the grounds for interruption of trial court ruled in Piedad's favor and declared
prescriptive period? the deed of sale as null and void for being a
forgery. On appeal, the Court of Appeals
A: dismissed the appeal and affirmed the trial
1. When they are filed before the court; court ruling. The Court of Appeals Decision
2. When there is a written extrajudicial became final and executory on November 1,
demand by the creditors; or 1998. Judge Gaviola, upon motion, then issued
3. When there is any written an order for the issuance of a writ of demolition
acknowledgment of the debt by the debtor. on October 22, 2001.
(Art. 1155, NCC)
However, the writ of demolition was never
Prescription where possession in good faith is served on respondents due to their dilatory
converted into possession in bad faith. (De tactics and the gross ignorance of the law and
Leon, 2006) undue delay caused by Judges Estrera and
Villarin. The case only began to gain traction on
If the possession in good faith is later converted July 12, 2010, when petitioners filed their
into bad faith, the prescriptive period shall be motion for the revival of judgment. But by this
computed in the following manner: time, almost 12 years had passed since the Court
of Appeals September 15, 1998 Decision became

Civil law
final and executory. This led Branch 29, RTC,

Toledo City, where the case was transferred I. QUIETING OF TITLE
from Branch 9, RTC, Cebu City, to deny the
motion in its Order dated May 15, 2012 for being
the wrong remedy.
It is a proceeding in equity, the purpose of which is
the declaration of the invalidity of a claim on a title
Whether or not the prescription had already set
or the invalidity of an interest in property adverse
in requiring the Piedad’s to file an action for
to that of the plaintiff, and thereafter to free the
revival of judgment?
plaintiff and all those claiming under him from any
hostile claim thereon. (Pineda, 2009)
A: YES. Prescription had already set in. However, a
mere motion will suffice for reasons of equity. In one
Quieting of title is a common law remedy for the
jurisprudence, the Supreme Court provides that if
removal of any cloud upon, doubt, or uncertainty
manifest wrong or injustice would result with the
affecting title to real property. Whenever there is a
strict adherence to the statute of limitations or
cloud on title to real property or any interest in real
doctrine of laches, it would be better for courts to
property by reason of any instrument, record, claim,
rule under the principle of equity. This Court, in a
encumbrance, or proceeding that is apparently valid
long line of cases, has allowed for the execution of a
or effective, but is, in truth and in fact, invalid,
final and executory judgment even if prescription
ineffective, voidable, or unenforceable, and may be
has already set in, if the delay was caused by the
prejudicial to said title, an action may be brought to
judgment obligor for his or her benefit or advantage.
remove such cloud or to quiet the title. In such
(Heirs of Simeon Piedad v. Bobilles, G.R. No. 208614,
action, the competent court is tasked to determine
27 Nov. 2017)
the respective rights of the complainant and the
other claimants, not only to place things in their
proper places, and make the claimant, who has no
rights to said immovable, respect and not disturb
the one so entitled, but also for the benefit of both,
so that whoever has the right will see every cloud of
doubt over the property dissipated, and he can
thereafter fearlessly introduce any desired
improvements, as well as use, and even abuse the
property. (Phil-Ville Dev. and Housing Corp. v.
Bonifacio, G.R. No. 167391, 08 June 2011)
Nature of the Action to Quiet Title
Significantly, suits to quiet title are characterized as

proceedings quasi in rem. Technically, they are
neither in rem nor in personam. In an action quasi in
rem, an individual is named as defendant. However,
unlike suits in rem, a quasi in rem judgment is
conclusive only between the parties. A proceeding
quasi in rem is one brought against persons seeking
to subject the property of such persons to the
discharge of the claims assailed. (Portic v. Cristobal,
G.R. No. 156171, 22 Apr. 2005)

2022 GOLDEN NOTES
Property
Classifications of Actions Legal or equitable title to, or interest in, the real
property subject matter of the action must be
1. Remedial action – one to remove cloud on established by the plaintiffs as a prerequisite for
title; and their action to quiet title to prosper.
2. Preventive action – one to prevent the
casting of a (threatened) cloud on the title. Here, petitioners did not have a legal title to the
(De Leon, 2006) subject property. The tax declarations under the
names of their predecessor-in-interests,
Scope of the Action to Quiet Title documentation alluding to mortgages, and the
testimonial evidence they have presented did not
Only real properties can be subject of an action for convincingly establish their equitable title over the
quieting of title. (Pineda, 2009) subject property. Tax declarations and receipts are
not conclusive evidence of ownership or of the right
Requisites for an Action to Quiet Title (L-C-D) to possess land when not supported by other
evidence. Mere allegation of open, continuous, and
1. The plaintiff or complainant has a Legal or exclusive possession of the property in dispute
an equitable title to or interest in the real without substantiation does not meet the
property subject of the action; requirements of the law. Hence, based on the
foregoing, petitioners failed at the outset to
2. There is a Cloud on title to real property or establish the first requirement of having legal or
any interest therein; and equitable title over the property in dispute. Their
3. The Deed, claim, encumbrance or cause of action for quieting of title simply cannot
proceeding claimed to be casting cloud on prosper. In view of their lack of title, legal or
his title must be shown to be in fact invalid equitable, there is no cloud to be prevented or
or inoperative despite its prima facie removed and there is no case of quieting of title to
appearance of validity or legal efficacy. speak of. (Viloria v. Heirs of Gaetos, G.R. No. 206240,
(Rabuya, 2008) 12 May 2021)
Q: The petitioners claimed ownership over a Reasons for quieting of title

10,000-square meter lot located in Taboc, San
Juan, La Union, having inherited the subject 1. Prevent future litigation on the ownership
property from their predecessor-in-interest of the property;
who had openly, publicly, continuously, and 2. Protect true title and possession;
peacefully possessed the same without 3. To protect the real interest of both parties;
interruption for more than 30 years in the and
concept of an owner. They also alleged that the 4. To determine and make known the precise
heirs of respondents surreptitiously and state of title for the guidance of all. (Paras,
without their knowledge and consent caused the 2008)
subject property to be surveyed for the purpose
of claiming ownership. The court held that the Persons who may file an action to quiet title
petitioners failed to prove that they have either
legal or beneficial title to institute the action to 1. Registered owner;
quiet title against defendants appellees. Is the 2. A person who has an equitable right or
court correct? interest in the property; or
3. The State.
A: YES. In order that an action for quieting of title
may prosper, it is essential that the plaintiff must Q: Lim filed in the RTC in Cebu City a petition for
have legal or equitable title to, or interest in, the the reconstitution of the owner's duplicate copy
property which is the subject-matter of the action. of OCT No. RO-9969-(O-20449), alleging that

Civil law
said OCT had been lost during World War II by years. (Art. 1137, NCC)
his mother, Luisa, who acquired title to it by
virtue of a deed of sale, albeit unregistered. Whenever there is a cloud on title to real property
Because of the Oños' opposition, and upon order or any interest therein, by reason of any
of the RTC, Lim converted the petition for instrument, record, claim, encumbrance or
reconstitution into a complaint for quieting of proceeding which is apparently valid or effective
title. The Oños now contend that this action for but is in truth and in fact invalid, ineffective,
quieting of title should be disallowed because it voidable, or unenforceable, and may be prejudicial
constituted a collateral attack on OCT No. RO- to said title, an action may be brought to remove
9969-(O-20449). Is their contention correct? such cloud or to quiet the title.
A: NO. The attack is direct when the objective is to An action may also be brought to prevent a cloud
annul or set aside such judgment or enjoin its from being cast upon title to real property or any
enforcement. On the other hand, the attack is interest therein. (Art. 476, NCC)
indirect or collateral when, in an action to obtain a
different relief, an attack on the judgment is Requisites for existence of a Cloud (T-A-P) (Art.
nevertheless made as an incident thereof. The 476, NCC)
averments readily show that the action was neither
a direct nor a collateral attack for Lim was asserting 1. There is an Apparently valid or effective
only that the existing title registered in the name of instrument;
the petitioners' predecessors had become
inoperative due to the conveyance in favor of Lim's NOTE: They must appear valid or effective –
mother, and resultantly should be cancelled. (Oño v. and extraneous evidence is needed to prove
Lim, G.R. No. 154270, 09 Mar. 2010) their invalidity or ineffectivity.
Rules in Actions for Quieting of Title 2. But such instrument is in Truth:

a. Invalid;
1. These put an end to vexatious litigation in b. Ineffective;
respect to property involved; plaintiff c. Voidable;
asserts his own estate & generally declares d. Unenforceable;
that defendant’s claim is without e. Has been extinguished or terminated; or
foundation; f. Has been barred by extinctive
2. Remedial in nature; (Art. 476(1), NCC) prescription.
3. Not suits in rem nor personam but suits
against a particular person or persons in 3. Such instrument may be Prejudicial to the title.
respect to the res (quasi in rem);
4. May not be brought for the purpose of Purpose of an Action to Remove Cloud on Title
settling a boundary disputes;
5. Applicable to real property or any interest It is intended to procure the cancellation, or
therein; delivery of, release of an instrument, encumbrance,
6. An action to quiet title brought by the or claim constituting a claim on plaintiff’s title, and
person in possession of the property is which may be used to injure or vex him in the
imprescriptible; (Pineda, 2009) and enjoyment of his title. (Pineda, 2009)
7. If he is not in possession, he must invoke his
remedy within the prescriptive period as
follows;
a. Ordinary prescription - ten (10)
years (Art. 1134, NCC); or
b. Extraordinary prescription - 30

2022 GOLDEN NOTES
Property
Action to Quiet Title v. Action to Remove Cloud which is yet to be effectively revoked. Such rightful
on Title (Pineda, 2009) claim does not constitute a cloud on the supposed
title of Edgardo over the same property removable
by an action to quiet title. (Dolar v. Brgy. Lublub, G.R.
ACTION TO QUIET ACTION TO REMOVE
No. 152663, 18 Nov. 2005)
TITLE CLOUD ON TITLE
As to purpose Indispensable requirement for action to quiet

To procure the title
cancellation; delivery;
release of an For an action to quiet title or remove cloud on a title
instrument, to stand, the plaintiff must have legal or equitable
To put an end to title to or interest in the subject real property. This
encumbrance or claim,
vexatious litigation in requirement is indispensable, the absence of which
which constitutes a
respect to the is fatal to the action. (Pineda, 2009)
claim in plaintiff’s title,
property involved.
and which may be used
to injure or to vex him Legal title covers a situation when the owner is
in his enjoyment of his registered as the owner of the property. Equitable
title. title covers a situation when the person has the
beneficial ownership of the property. (Ibid.)
As to nature of the action
Preventive in nature, to The plaintiff must have legal or equitable title to,
Remedial in nature,
remove a cloud which or interest in the real property which is the subject
involving a present
may be used for future matter of the action. He need not be in possession
adverse claim.
actions. of said property. (Art. 477, NCC)
As to nature of claims
Prescriptive periods for bringing an action to
Plaintiff asserts own quiet title
Plaintiff declares his
claim and declares
own claim and title and 1. Plaintiff in possession – Imprescriptible; or
that the claim of the
at the same time 2. Plaintiff not in possession –
defendant is
indicates the source and a. Ten (10) years (ordinary) (Art. 1134,
unfounded and calls
nature of defendant’s NCC); or
on the defendant to
claim b. 30 years (extra-ordinary). (Art. 1137,
justify his claim on the
pointing its defect and NCC)
property that same
prays for the declaration
may be determined by
of its validity.
the court.
Filed against whom
Against people who Against defendant who

have claims; claims asserts claims based on
are more general in an invalid instrument
nature (but not apparent).
Action to quiet title cannot be availed until the

donation has been first revoked
The barangay traces its claim of ownership over the

disputed property to a valid contract of donation

Civil law
premises by virtue of a subsisting lease contract;

J. ACTIONS TO RECOVER PROPERTY second, such possession eventually became illegal,
either due to the latter's violation of the provisions
of the said lease contract or the termination thereof;
third, the defendant-lessee remained in possession
Legal Remedies to Recover Possession of One’s
of the leased premises, thus, effectively depriving
Property
the plaintiff-lessor enjoyment thereof; and fourth,
there must be a demand both to pay or to comply
1. Personal Property – Replevin
and vacate and that the suit is brought within one
2. Real Property
(1) year from the last demand.
a. Accion Interdictal;
i. Forcible entry; or
In this case, all requisites have been indubitably
ii. Unlawful detainer.
complied with, considering that at the time the suit
b. Accion Publiciana; or
was instituted on June 21, 2011: (a) there was a
c. Accion Reinvindicatoria.
subsisting lease contract between petitioner and
respondent; (b) , respondent was not updated in its
Q: On June 26, 2003, petitioner Teodorico A.
monthly rental payments, as there is no evidence of
Zaragoza (petitioner) bought a 3,058-square
such payment for the months of April, May, and even
meter (sq. m.) parcel of land. His father leased a
June 2011, thus said omission constitutes a
1,000-sq. m. portion of Lot 937-A (subject land)
violation of the lease contract on the part of
to respondent Iloilo Santos Truckers, Inc.
respondent; (c) respondent was still in possession
(respondent). This notwithstanding, petitioner
of the subject land; and (d) the case was filed within
allowed the lease to subsist and respondent had
one (1) year from petitioner's letter dated May 24,
been diligent in paying its monthly rent
2011 demanding that respondent pay monthly
amounting to P10,000.00 per month. Petitioner
rentals and at the same time, vacate the subject land.
claimed that when his father died, respondent
(Zaragoza v. Iloilo Santos Truckers, Inc., G.R. No.
stopped paying rent.
224022, 28 June 2017)
On the other hand, respondent maintained that

RECOVERY OF POSSESSION OF
it was willing to pay rent, but was uncertain as
MOVABLE PROPERTY
to whom payment should be made. Respondent
made a consignation on the RTC br. 24 for the
Replevin
amount of P521,396.89 equivalent for the rent
of February 2007 to March 2011.
It is the remedy when the complaint prays for the
recovery of the possession of personal property.
Petitioner averred that the amount was
(Rule 60, ROC)
insufficient to cover the unpaid rentals plus
interests from February 2007 to May 2011.
NOTE: A property validly deposited in custodia legis
Petitioner clarified that his earlier demand to
cannot be subject of a replevin suit. (Calub v. CA, G.R.
pay was for the period of February 2007 to May
No. 115634, 27 Apr. 2000)
2011. Thus, petitioner posited that respondent
had continuously failed and refused to comply
with the terms and conditions of the lease
contract concerning the payment of monthly
rental. May petitioner eject respondent from the
subject land?
A: YES. For an unlawful detainer suit to prosper, the

plaintiff-lessor must show that: first, initially, the
defendant-lessee legally possessed the leased

2022 GOLDEN NOTES
Property
RECOVERY OF POSSESSION OF
As to necessity of proof of prior physical
IMMOVABLE PROPERTY
possession
1. ACCION INTERDICTAL
Plaintiff need not
It is a summary action to recover physical or have been in prior
material possession only and it must be brought physical possession.
within one (1) year from the time the cause of action
arises. It may be: Plaintiff must prove
NOTE: The fact that
1. Forcible Entry; or that he was in prior
petitioners are in
2. Unlawful detainer. (De Leon, 2006) physical possession of
possession of the lot
the premises until he
does not
Distinction between Forcible entry and was deprived thereof
automatically entitle
Unlawful Detainer (Rabuya, 2008) by the defendant.
them to remain in
possession. (Ganilla
Forcible Entry Unlawful Detainer v. CA, G.R. No. 150755,
As to when possession became unlawful 28 June 2005)
Possession is As to when one-year period is counted from

inceptively lawful but
becomes illegal from One-year period is
the time defendant One-year period is
counted from the
unlawfully withholds generally counted from
date of last demand
Possession of the possessions after the the date of actual entry
or last letter of
defendant is unlawful expiration or of the land.
demand.
from the beginning as termination of his
he acquired possession right thereto.
by (F-I-S-T-S) Q: The petitioners discovered sometime in 2006
1. Force; NOTE: The question that respondent clandestinely encroached the
2. Intimidation; of possession is subject property by constructing a nipa house
3. Strategy; primordial, while the and fencing the perimeter of the encroached
4. Threat; or issue of ownership is area. Due to financial constraints, petitioners
5. Stealth. generally unessential did not immediately file an action in court and
in unlawful detainer. allowed respondent to remain in possession of
(Rosa Rica Sales said portion, even against their will. Sometime
Center v. Sps. Ong, G.R. in June 2013, petitioners learned that
132197, 16 Aug. respondents, through strategy and stealth,
2005) occupied the remaining area of the subject
property. The CA dismissed the complaint for
As to necessity of demand ejectment filed by petitioners. Is the dismissal
Demand is proper?
jurisdictional if the
No previous demand ground is non- A: NO. In a forcible entry case, the one-year
for the defendant to payment of rentals or prescriptive period is generally reckoned from the
vacate is necessary. failure to comply date of actual entry on the land. However, if forcible
with the lease entry is done through stealth, the period is counted
contract. from the time the plaintiff discovered the entry. In
this case, the one-year period for filing a forcible
entry case from the date of discovery of entry

Civil law
prescribed in 2007. Hence, with respect to this one- the allegations in Dizon's Complaint. Talaue's
hectare portion, they should have filed an accion testimony is thus clearly inadmissible for being
publiciana or recovery of possession. As to the violative on the rule on hearsay. It must be
illegal entry of the remaining area of the subject emphasized, however, that in civil cases, the burden
property, the forcible entry case was filed well of proof is on the plaintiff to establish his or her case
within the one-year prescriptive period. The stealth by a preponderance of evidence. The plaintiff must
was discovered in June 2013 and petitioners filed rely on the strength of his or her own evidence and
the complaint in February 2014. However, not on the weakness of that of his or her
considering that the property subject matter of this opponent. Since Dizon claims to have the better
case pertain to only one parcel of land covered by right to possess the subject property pursuant to
one certificate of title and the intruders are the law, hers was the burden to establish all
same, the Court gives due course to the filing of the jurisdictional facts required by law. (Sarmiento v.
instant forcible entry case for the whole area of the Dizon, G.R. No. 235424, 03 Feb. 2021)
subject property. (Barcelo v. Riparip, G.R. No.
250159, 26 Apr. 2021) 2. ACCION PUBLICIANA
Q: Dizon filed an unlawful detainer case based It refers to an ejectment suit filed within ten (10)
based on Ang’s alleged tolerance against years after the expiration of one (1) year from
Sarmiento. However, the sole evidence accrual of cause of action or from the unlawful
presented by Dizon to prove the fact of tolerance withholding of possession of the realty. (Gabriel Jr. v.
is the testimony of her attorney-in-fact Talaue. Crisologo, G.R. No. 204626, 09 June 2014)
In Talaue's Counter-Affidavit therein, he
acknowledged that he did not have personal It is an action for recovery of the right to possess and
knowledge of the purported arrangement is a plenary action in an ordinary civil proceeding to
between Ang and Sarmiento and that his determine the better right of possession of realty
testimony was only based on Dizon's allegations independent of the title or ownership of the
in the Complaint. Will the unlawful detainer property.
prosper?
If at the time of the filing of the complaint more than
A: NO. To sustain an action for unlawful detainer, one year had elapsed since defendant had turned
the plaintiff bears the burden of alleging and plaintiff out of possession or defendant’s
proving, by preponderance of evidence, the possession had become illegal, the action will be, not
following jurisdictional facts: (1) initially, one of the forcible entry or illegal detainer, but an
possession of property by the defendant was by accion publiciana. (Rabuya, 2008)
contract with or by tolerance of the plaintiff; (2)
eventually, such possession became illegal upon 3. ACCION REINVINDICATORIA
notice by plaintiff to defendant of the termination of
the latter's right of possession; (3) thereafter, the It is an action whereby plaintiff alleges ownership
defendant remained in possession of the property over a parcel of land and seeks recovery of its full
and deprived the plaintiff of the enjoyment thereof; possession. (Ibid.)
and (4) within one year from the last demand on NOTE: Where the facts averred in the complaint
defendant to vacate the property, the plaintiff reveals that the action is neither one of forcible
instituted the complaint for ejectment. entry nor unlawful detainer but essentially involves
Talaue's testimony with respect to Ang and a boundary dispute, the same must be resolved in an
Sarmiento's purported arrangement and the accion reinvindicatoria. (Sarmiento v. CA, G.R. No.
circumstances which purportedly gave rise to the 116192, 16 Nov. 1995)
former's tolerance of the latter's occupation clearly
constitutes hearsay considering that it was based
not on Talaue's personal knowledge, but rather, on

2022 GOLDEN NOTES
Property
Requisites of Accion Reivindicatoria property then Sps. Javier agreed and even said
that they would pay P100,000.00 to buy them
1. Identity of property; and more time within which to pay the purchase
2. Plaintiff’s title to the property. (Rabuya, price. but they only delivered P 78,000.00 but
2008) they consistently paid rent until February 2004.
Then Racelis wrote to inform them that her
Q: A contract of lease executed by Alava (lessor) family had decided to terminate the lease
and Anita Lao (lessee) was not registered with agreement and to offer the property to other
the Register of Deeds. Aside from Anita, Rudy interested buyers. In the same letter, Racelis
Lao also leased a portion of the same property demanded that they vacate the property by May
where he put up his business. At that time, Rudy 30, 2004. The Sps. Javier refused to vacate due
knew that Anita and her husband were the to the ongoing operation of their tutorial
owners of the said building. He also knew that business. They insisted that the sum of
she had leased that portion of the property, and P78,000.00 was advanced rent and proposed
that Jaime Lao, their son, managed and that this amount be applied to their outstanding
maintained the building, as well as the business liability until they vacate the premises. Can Sps.
thereon. Rudy eventually purchased the entire Javier suspend their payment?
property from Alava. Rudy then filed a
complaint for unlawful detainer against Jaime A: NO. In this case, the disconnection of electrical
alleging that the latter had occupied a portion of service over the leased premises on May 14,
his property without any lease agreement and 2004 was not just an act of physical disturbance but
without paying any rentals and prayed that an one that is meant to remove respondents from the
order be rendered directing Jaime to vacate the leased premises and disturb their legal possession
premises. Should the complaint be dismissed? as lessees. Ordinarily, this would have entitled
respondents to invoke the right accorded by Art.
A: YES. The records in this case show that the 1658 of the NCC. However, this rule will not apply in
respondent has been in possession of the property the present case because the lease had already
in question, not by mere tolerance or generosity of expired when petitioner requested for the
Rudy, but as the manager of his mother, who temporary disconnection of electrical service.
conducted her business in the building which stood Petitioner demanded respondents to vacate the
on a portion of the property leased from Alava. premises by May 30, 2004. Instead of surrendering
Jaime’s possession was on behalf of his mother, and the premises to petitioner, respondents unlawfully
not in his own right. (Lao v. Lao, G.R. No. 149599, 16 withheld possession of the property. Respondents
May 2005) continued to stay in the premises until they moved
to their new residence on September 26, 2004. At
Q: In August 2001, the Sps. Javier offered to that point, petitioner was no longer obligated to
purchase the Marikina property. However, they maintain respondents in the "peaceful and adequate
could not afford to pay the price of enjoyment of the lease for the entire duration of the
P3,500,000.00. They offered instead to lease the contract”. (Racelis v. Sps. Javier, G.R. No. 189609, 21
property while they raise enough money. Jan. 2018)
Racelis hesitated at first, but she eventually
agreed. The parties agreed on a month-to- Effect of non-registration of the contract of lease
month lease and rent of P10,000.00 per month. Although the lease contract was not filed with the
This was increased to P11,000.00. when Sps. Register of Deeds, nevertheless, the buyer of the
Javier used the property as their residence and property was bound by the terms and conditions of
site of their tutorial school. said contract. The lease, in effect became a part of
the contract of sale. He had no cause of action for
Sometime in 2002, Racelis inquired whether unlawful detainer against the lessee because of the
they are still interested to purchase the subsisting contract of lease; hence, he could not file

Civil law
the complaint against her. (Lao v. Lao, G.R. No. b. Tax receipts and tax declarations.
149599, 16 May 2005)
NOTE: Tax receipts and tax declaration
Q: Sps. Magtanggol managed and operated a are only prima facie evidence of
gasoline station on a 1,000 sq.m. lot which they ownership; it is rebuttable.
leased from Francisco Bigla-awa. The contract c. Long and actual possession;
was for a period of three (3) years. When the d. Titles granted by Spanish Government
contract expired, Francisco asked the spouses to e. Occupation of a building for a long time
peacefully vacate the premises. The spouses without paying rentals; and
ignored the demand and continued with the f. Testimony adverse of adverse and
operation of the gasoline station. exclusive possession of ownership.
(Paras, 2008)
One month after, Francisco, with the aid of a
group of armed men, caused the closure of the NOTE: Plaintiff’s title must be founded on positive
gasoline station by constructing fences around right or title and not merely on the lack or
it. Was the act of Francisco and his men lawful? inefficiency of the defendant’s title. In other words,
Why? (2014 BAR) he shall not be permitted to rely upon the defects of
the defendant’s title. (Art. 434, NCC)
A: NO. Even if the lessee’s right to occupy the
premises has expired, the lessor cannot physically Q: In 1998, Intramuros leased certain real
oust the lessee from the leased premises if the latter properties of the national government which it
refuses to vacate. The lessor must go through the administered to Offshore Construction. Three
proper channels by filing an appropriate case for properties were subjects of the Contracts of
unlawful detainer or recovery of possession. Every Lease: Baluarte De San Andres, Baluarte De San
possessor has a right to be respected in his Francisco De Dilao and Revellin De Recoletos.
possession (Art. 539, NCC) and in no case can All three properties were leased for five (5)
possession be acquired through force or years from September 1,1998 to August
intimidation as long as there is a possessor who 31,2003.
objects thereto (Art. 536, NCC). The act of Francisco
is an abuse of rights because even if he has the right Offshore Construction occupied and introduced
to recover possession of his property, he must act improvements in the leased premises. However,
with justice and give the lessees their day in court Intramuros and the DOT halted the projects due
and observe honesty and good faith. to Offshore Construction’s non-conformity with
PD 1616, which required 16th to 19th centuries
Requisites for recovery of property Philippine-Spanish Architecture in the area.
During the lease period, Offshore Construction
1. Clearly identify the land he is claiming in failed to pay its utility bills and rental fees,
accordance with the title/s on which he despite several demand letters. Intramuros
bases his right of ownership; and tolerated the continuing occupation, hoping that
Offshore Construction would pay its arrears. To
NOTE: Burden of proof lies on the party who settle its arrears, Offshore Construction
asserts the affirmative of an issue. The proposed to pay the DOT’s monthly operational
description should be so definite that an officer expenses and the parties executed a
of the court might go to the locality where the Memorandum of Agreement covering the period
land is situated and definitely locate it. of August 15, 2004, to August 25, 2005. But
Offshore Construction failed to pay its arrears
2. Prove that he has a better title than the amounting to P13,448,867.45. Is Intramuros
defendant through: entitled to possession to the said leased
a. A Torrens certificate (best proof); properties to Offshore Construction?

2022 GOLDEN NOTES
Property
A: YES. Intramuros’ tolerance of respondent's the defendant does not have to prove.
occupation and use of the leased premises after the (Paras, 2008)
end of the lease contracts does not give the latter a
permanent and indefeasible right of possession in
its favor. When a demand to vacate has been made,
as what petitioner had done, respondent’s
possession became illegal and it should have left the
leased premises.
More than once has this Court adjudged that a

person who occupies the land of another at the
latter's tolerance or permission without any
contract between them is necessarily bound by an
implied promise that he will vacate upon demand,
failing which a summary action for ejectment is the
proper remedy against him. The situation is not
much different from that of a tenant whose lease
expires but who continues in occupancy by
tolerance of the owner, in which case there is
deemed to be an unlawful deprivation or
withholding of possession as of the date of the
demand to vacate. In other words, one whose stay is
merely tolerated becomes a deforciant illegally
occupying the land or property the moment he is
required to leave. (Intramuros Administration v.
Offshore Const. Dev. Co., G.R. No. 196795, 07 Mar.
2018)
Reasons why the plaintiff is NOT allowed to rely

on the weakness of defendant’s title
1. Possibility that neither the plaintiff nor the

defendant is the true owner of the
property. In which case, the defendant who
is in possession will be preferred; (Paras,
2008)
2. One in possession is presumed to be the

owner and he cannot be obliged to show or
prove a better title; (Art. 541, NCC)
3. Possessor in the concept of an owner is

presumed to be in good faith and he cannot
be expected to be carrying every now and
then his proofs of ownership over the
property; (Art. 527, NCC); and
4. He who relies on the existence of a fact,

should prove that fact. If he cannot prove,

Credit Transactions
The implementation of this Act shall be

II. CREDIT TRANSACTIONS conditioned upon the Registry being established
and operational.
KINDS OF AGREEMENT
A. PERSONAL PROPERTY SECURITY ACT 1. Commodity Contract –

(R.A. NO. 11057)
A commodity futures contract, an option on a
commodity futures contract, a commodity option, or
NOTE: The provisions of the Personal Property another contract if the contract or option is:
Security Act (PPSA) superseded the rules
governing foreclosure of chattel mortgage under the - Traded on or subject to the rules of board
Chattel Mortgage Law (Act 1508) of trade, that has been designated as a
contract market for such a contract; or
This Act was enacted to promote economic activity - Traded on a foreign commodity board of
by increasing access to least cost credit by trade, exchange or market, and is carried on
establishing a unified and modern legal framework the books of a commodity intermediary for
for securing obligations with personal property. a commodity customer; (Sec. 3, PPSA)
(Sec. 2, PPSA)
2. Control agreement –
This Act shall apply to all transactions of any form
that secures an obligation with movable collateral, CONTROL AGREEMENT
except interests in aircrafts and in ships. (Sec. 4,
Ibid.) With respect to Securities
An agreement in writing among the:
Interpretation
a. issuer or the intermediary;
If there is conflict between a provision of this Act b. the grantor and the secured creditor
and a provision of any other law, this Act shall
govern unless the other law specially cites are according to which the issuer or the intermediary
amends the conflicting provisions of this law. agrees to follow instructions from the secured
creditor with respect to the security, without
This act repeals, among others, Sections 1 to 16 of further consent from the grantor.
Act No. 1508, otherwise known as "The Chattel
With respect to Rights to Deposit Account
Mortgage Law"; and Articles 2085-2123, 2127,
2140-2141, 2241, 2243, and 2246-2247 of Republic
Act No. 386, otherwise known as the "Civil Code of An agreement in writing among the:
the Philippines."
a. deposit-taking institution,
b. the grantor and
c. the secured creditor,
according to which the deposit-taking institution

agrees to follow instructions from the secured
creditor with respect to the payment of funds
credited to the deposit account without further
consent from the grantor.

2022 GOLDEN NOTES
Civil Law
With respect to Commodity Contract CREATION OF SECURITY INTEREST

Means and agreement in writing among:
A security interest shall be created by a security
agreement. (Sec. 5, Ibid.)
1. the grantor,
2. secured creditor, and
Security Agreement
3. intermediary,
A security agreement must be contained in a written

according to which the commodity intermediary
contract signed by the parties. It may consist of one
will apply any value distributed on account of the
or more writings that, taken together, establish the
commodity contract as directed by the secured
intent of the parties to create a security interest.
creditor, without further consent by the
(Sec. 6, Ibid.)
commodity customer or grantor. (Sec. 3(b), Ibid.)
Description of Collateral
3. Security interest - a property right in collateral
that secures payment or other performance of an
Description of collateral is required in the security
obligation regardless of whether the parties have
agreement. A description of collateral shall be
denominated it as a security interest, and regardless
considered sufficient, whether it is specific or
of the type of asset, the status of the grantor or
general, if it reasonably identifies the collateral.
secured creditor or the nature of the secured
obligation; including the right of a buyer of accounts
NOTE: A security agreement may provide for the
receivable and a lessor under an operating lease for
creation of security interest in a future property, but
not less than one (1) year. (Sec. 3(j), Ibid.)
the security interest in that property is created only
when the grantor acquires rights in it or the power
PARTIES UNDER THE PPSA
to encumber it. (Sec. 5, Ibid.)
1. Grantor
Continuance of Security Interest
a. The person who grants a security interest

A security interest shall continue in collateral
in collateral to secure its own obligation or
notwithstanding sale, lease, license, exchange, or
that of another person;
other disposition of the collateral, except as
b. A buyer or other transferee of a collateral
otherwise provided in Sec. 21 of the PPSA or agreed
that acquires its right subject to security
upon by the parties. (Sec. 9, Ibid.)
interest;
c. A transferor in an outright transfer of an
Any party who obtains in the ordinary course of
accounts receivable; or
business, any movable property containing a
d. A lessee of goods. (Sec. 3(c), PPSA)
security interest shall take the same free of such
security interest provided he was in good faith. No
2. Secured creditor
such good faith shall exist if the security interest in
the movable property was registered prior to his
A person that has a security interest.
obtaining the property. (Sec. 21, Ibid.)
NOTE: For the purposes of registration and

PERFECTION OF INTEREST
priority only, it includes:
1. A security interest shall be perfected when it

1. A buyer of account receivable and
has been created and the secured creditor has
2. A lessor of goods under an operating lease
taken one of the actions in accordance with Sec.
for not less than one (1) year. (Sec. 3(i),
12.
Ibid.)

Credit Transactions
2. On perfection, a security interest becomes Perfection of Security Interest in any Tangible

effective against third parties. Assets, Investment and Deposit Account
Means of Perfection Tangible Asset
A security interest may be perfected by: Any tangible movable asset. Except in Rules 3.07,
3.08, 4.09, and 6.05, this term includes money,
a. Registration of a notice with the Registry; negotiable instruments, negotiable documents and
b. Possession of the collateral by the secured certificated non-intermediated securities but only if
creditor; and the mere possession of such instruments results in
c. Control of investment property and deposit the ownership of the underlying rights or property
account. embodied by them, in accordance with the law
governing such instruments.
A security interest in any tangible asset may be
perfected by registration or possession. A security Intangible Asset
interest in investment property and deposit account
may be perfected by registration or control. (Sec. 12, Any movable property other than a tangible asset
PPSA) including, but not limited to, investment property,
deposit accounts, commodity contracts and
receivables.
Intermediated Securities
Securities credited to a securities account and rights

in securities resulting from the credit of securities
to a securities account.
Deposit Account
Deposits in deposit-taking institutions
CREATION OF CONTROL
CONTROL
REGISTRATION POSSESSION SECURITY THROUGH
AGREEMENT
AGREEMENT NOTATION
Tangible Assets (As a general rule)
Yes Yes No No No
Intangible Assets (As a general rule)
Yes No Yes No No
Intermediated Securities
Yes No Yes No No
Deposit Accounts
Yes No Yes Yes No
Non-intermediated Electronic Securities
Yes No Yes No Yes
Intermediated Electronic Securities
Yes No Yes No No

2022 GOLDEN NOTES
Civil Law
Perfection by Control Change in Means of Perfection
1. A security interest in a deposit account or A security interest shall remain perfected despite a
investment property may be perfected by change in the means for achieving perfection.:
control through: Provided, that there was no time when the security
a) The creation of the security interest in interest was not perfected. (Sec. 15, Ibid.)
favor of the deposit-taking institution or
the intermediary; Assignment of Security Interest
b) The conclusion of a control agreement; or
c) For an investment property that is an If a secured creditor assigns a perfected security
electronic security not held with an interest, an amendment notice may be registered to
intermediary, the notation of the security reflect the assignment. (Sec. 16, Ibid.)
interest in the books maintained by or on
behalf of the issuer for the purpose of REGISTRATION OF NOTICE
recording the name of the holder of the
securities. Registry
2. Nothing in this Act shall require a deposit- The centralized and nationwide electronic registry
taking institution or an intermediary to enter established in the Land Registration Authority
into a control agreement, even if the grantor so (LRA) where notice of a security interest and a lien
requests. A deposit-taking institution or an in personal property may be registered. (Sec. 3(h),
intermediary that has entered into such an PPSA)
agreement shall not be required to confirm the
existence of the agreement to another person This Act requires that the notice should be sufficient
unless requested to do so by the grantor. (Sec. at the time of registration. It provides that:
13, Ibid.)
1. An initial notice of security interest shall not be
Perfection in Proceeds rejected:
a. If it identifies the grantor by an
a. Upon disposition of collateral, a security identification number, as further
interest shall extend to proceeds of the prescribed in the regulations;
collateral without further act and be b. If it identifies the secured creditor or an
continuously perfected, if the proceeds are in agent of the secured creditor by name;
the form of money, accounts receivable, c. If it provides an address for the grantor
negotiable instruments or deposit accounts. and secured creditor or its agent;
d. If it describes the collateral; and
b. Upon disposition of the collateral, if the e. If the prescribed fee has been tendered,
proceeds are in a form different from money, or an arrangement has been made for
accounts receivable, negotiable instruments or payment of fees by other means.
deposit accounts, the security interest in such
proceeds must be perfected by one of the 2. If the Registry rejects to register a notice, it shall
means applicable to the relevant type of promptly communicate the fact of and reason
collateral within fifteen (15) days after the for its rejection to the person who submitted
grantor receives such proceeds; otherwise, the the notice.
security interest in such proceeds shall not be
effective against third parties. (Sec. 14, Ibid.) 3. Each grantor must authorize the registration of
an initial notice by signing a security agreement
or otherwise om writing.

Credit Transactions
4. A notice may be registered before a security A termination notice terminates effectiveness of the
agreement is concluded. Once a security notice as to each authorizing secured creditor. (Sec.
agreement is concluded, the date of registration 34, Ibid.)
of the notice shall be reckoned from the date the
notice was registered. Compulsory Amendment or Termination by
Court Order
5. A notice of lien may be registered by lien holder
without the consent of the person against The court may, on application by the grantor, issue
whom the lien is sought to be enforced. an order that the notice be terminated or amended
in accordance with the demand, which order shall
6. Description of the collateral in a notice shall be be conclusive and binding on the LRA: Provided,
entered in English. (Sec. 28, Ibid.) That the secured creditor who disagrees with the
order may appeal the order.
NOTE: The registration of a single notice may relate
to security interests created by the grantor under The court may take any order it deems proper for
one (1) or more than one security agreement. (Sec. the purpose of giving effect to the order made under
29, Ibid.) the first paragraph.
The LRA shall amend or terminate a notice in
Effectiveness of Notice accordance with a court order as soon as reasonably
practicable after receiving the order. (Sec. 42, Ibid.)
A notice shall be effective at the time it is
discoverable on the records of the Registry and for Security interest shall be perfected when it has been
the duration of the term indicated in the notice created and the secured creditor has taken one of
unless a continuation notice is registered before the the actions mentioned above. On perfection, a
term lapses. security interest becomes effective against third
parties. (Sec. 11, Ibid.)
Substantial compliance of the requirements would
still give effectiveness to the notice unless it is RIGHTS OF THE GRANTOR
seriously misleading. (Sec. 30, Ibid.)
The rights of the grantor are the following:
Amending of Notice
a. Right to disclosure of information from secured
A notice may be amended by the registration of an creditor; (Sec. 37, PPSA)
amendment notice that: b. Right to demand amendment or termination of
notice; (Sec. 39, Ibid.)
1. Identifies the initial notice by its registration c. Right to notification to dispose from the
number; and secured creditor; and
2. Provides the new information. (Sec. 32, Ibid.) d. Right of Redemption. (Sec. 45, Ibid.)
Termination of Effectiveness of a Notice Right to Disclosure of Information from Secured

Creditor
The effectiveness of a notice may be terminated by
registering a termination notice that: The secured creditor must provide to the grantor at
its request:
a. Identifies the initial notice by its registration
number; and 1. The current amount of the unpaid secured
b. Identifies each secured creditor who is obligation; and
authorizes the registration of the termination 2. A list of assets currently subject to a security
notice. interest. (Sec. 37(a), Ibid.)

2022 GOLDEN NOTES
Civil Law
Right to Demand Amendment or Termination of speedily in value or is of type customarily sold on a

Notice recognized market. (Sec. 51, Ibid.)
A grantor may give a written demand to a secured Right of Redemption

creditor to amend or terminate the effectiveness of
the notice if: A grantor is entitled to redeem the collateral by
paying or otherwise performing the secured
1. All the obligations under the security obligation in full, including the reasonable cost of
agreement to which the registration relates enforcement.
have been performed and there is no
commitment to make future advances; The right of redemption may be exercised, unless:
2. The secured creditor has agreed to release part
of the collateral described in the notice;: a. The person entitled to redeem has not, after the
3. The collateral described in the notice includes default, waived in writing the right to redeem;
an item or kind of property that is not a b. The collateral is sold or otherwise disposed of
collateral under a security agreement between acquires or collected by the secured creditor or
the secured creditor and the grantor; until the conclusion of an agreement by the
4. No security agreement exists between the secured creditor for that purpose; and
parties; or c. The secured creditors have retained the
5. The security interest is extinguished in collateral.
accordance with this Act. (Sec. 39, Ibid.)
NOTE: Any person who is entitled to receive a
Upon receipt of the demand submitted in notification of disposition in accordance with this
accordance with the above, the secured creditor Chapter 6 is entitled to exercise the right of
must register, within fifteen (15) working days, an redemption. (Sec. 45, Ibid.)
amendment or termination notice terminating the
registration in a case within subsections (a), (d) or RIGHTS OF THE SECURED CREDITOR
(e); or amending the registration to release some
property that is no longer collateral under a security These are the following:
agreement between the secured creditor and the
grantor in a case within subsection (c). (Sec. 40, a. Right to require payment for a fee for a request
Ibid.) of disclosure of information from the grantor;
(Sec. 37, PPSA)
If the secured creditor fails to comply with the b. Right to take over enforcement; (Sec. 46, Ibid.)
demand within fifteen (15) working days after its c. Right to expedite Repossession of the
receipt, the grantor may ask the proper court to Collateral; (Sec. 47, Ibid.)
issue an order terminating or amending the notice d. Right to recover in special cases; (Sec. 48, Ibid.)
as appropriate. (Sec. 41, Ibid.) e. Right to Dispose of Collateral; (Sec. 49, Ibid.) and
f. Right to retain collateral.
Right to Notification to dispose collateral from
the secured creditor
Right to require payment for a fee for a request
of disclosure of information from the grantor
Not later than ten (10) days before disposition of the
collateral, the secured creditor shall notify the
The secured creditor may require payment of a fee
grantor of the said action. However, the grantor may
for each request made by the grantor, but the
waive the right such right. Provided, the
grantor is entitled to a reply without charge once
requirement to send a notification shall not apply if
every six (6) months. (Sec. 37(b), Ibid.)
the collateral is perishable or threatens to decline

Credit Transactions
However, secured creditor shall not charge any fee a. The reasonable expenses of taking,
for compliance with a demand received under Sec. holding, preparing for disposition,
39. (Sec. 43, Ibid.) and disposing of the collateral,
including reasonable attorney’s
ENFORCEMENT OF SECURITY INTEREST fee and legal expenses incurred by
SECURED CREDITOR’S RIGHT the secured creditor;
Steps in Enforcement of Security Interests b. The satisfaction of the obligation

secured by the security interest of
1. The debtor incurs in default. the enforcing secured creditor;
and
2. The secured creditor effects repossession
of the collateral. c. The satisfaction of obligations
secured by any subordinate
3. The repossession may be done without security interest or lien in the
judicial process if: (a) so stipulated in the collateral if a written demand and
security agreement AND (b) the possession proof of the interest are received
can be taken without a breach of the peace. before distribution of the proceeds
is completed.
4. If the collateral is a fixture, the secured
creditor, if it has priority over all owners 8. The secured creditor shall account to the
and mortgagees, may remove the fixture grantor for any surplus, and, unless
from the real property to which it is affixed otherwise agreed, the debtor is liable for
without judicial process. The secured any deficiency.
creditor shall exercise due care in removing
the fixture. Right of Redemption
5. If, upon default, the secured creditor GR: Any person entitled to receive a notification of
cannot take possession of the collateral disposition is entitled to redeem the collateral by
without breach of the peace, he must apply paying or otherwise performing the secured
with the courts for an order granting him obligation in full (including the reasonable cost of
possession of the collateral. The secured enforcement.
creditor must prove that a default has
occurred under the security agreement and XPNs:
that the secured creditor has a right to take 1. After default, the person entitled to redeem has
possession of the collateral. not waived in writing the right to redeem;
6. The secured creditor must give notice of 2. The collateral is sold or otherwise disposed of,
the intended disposition not later than ten acquired or collected by the secured creditor or
(10) days before the disposition. The until the conclusion of an agreement by the
requirement to send a notification under secured creditor for that purpose; and
this section shall not apply if the collateral
is perishable or threaten to decline 3. The secured creditor has retained the
speedily in value or is of a type customarily collateral. (Sec. 45, PPSA)
sold on a recognized market.
7. The proceeds of disposition shall be

applied in the following order:

2022 GOLDEN NOTES
Civil Law
Right of Higher-Ranking Secured Creditor to grantor.

Take Over Enforcement
NOTE: If the collateral is a fixture, any real
A secured creditor whose security-interest has estate mortgagee, a copy of the application,
priority over that of the enforcing secured creditor including all supporting documents and
or lien holder (even if another secured creditor or a evidence for the order granting the secured
lien holder has commenced enforcement) shall be creditor possession of the collateral.
entitled to take over the enforcement process.
3. The secured creditor is entitled to an order
The right of higher-ranking secured creditor to take granting possession of the collateral upon the
over enforcement may be invoked at any time court finding that a default has occurred under
before the collateral is sold or otherwise disposed of the security agreement and that the secured
or retained by the secured creditor or until the creditor has a right to take possession of the
conclusion of an agreement by the secured creditor collateral.
for that purpose. This right shall include the right to
enforce the rights by any method available to a The court may direct the grantor to take such
secured creditor under this Act. (Sec. 46, Ibid.) action as the court deems necessary and
appropriate so that the secured creditor may
Expedited Repossession of the Collateral take possession of the collateral, provided, that
breach of the peace shall include entering the
The secured creditor may take possession of the private residence of the grantor without
collateral without judicial process if the security permission, resorting to physical violence or
agreement so stipulates, provided, that possession intimidation, or being accompanied by a law
can be taken without a breach of the peace. enforcement officer when taking possession or
confronting the grantor. (Sec. 47, Ibid.)
If the collateral is a fixture, the secured creditor,
who has priority over all owners and mortgagees, Recovery in Special Cases
may remove the fixture from the real property to
which it is affixed without judicial process. The Upon default, the secured creditor may without
secured creditor shall exercise due care in removing judicial process:
the fixture. (Sec. 47, Ibid.)
1. Instruct the account debtor to make payment to
If, upon default, the secured creditor cannot take the secured creditor and apply such payment to
possession of collateral without breach of the peace, the satisfaction of the obligation secured by the
the secured creditor may proceed as follows: security interest after deducting the secured
creditor’s reasonable collection expenses;
1. The secured creditor shall be entitled to an 2. On request of the account debtor, the secured
expedited hearing upon application for an creditor shall provide evidence of its security
order granting the secured creditor possession interest to the account debtor when it delivers
of the collateral. the instruction to the account debtor;
NOTE: Such application shall include a 3. In a negotiable document that is perfected by

statement by the secured creditor, under oath, possession, proceed as to the negotiable
verifying the existence of the security document or goods covered by the negotiable
agreement attached to the application and document;
identifying at least one event of default by the
debtor under the security agreement. 4. In a deposit account maintained by the secured
creditor, apply the balance of the deposit
2. The secured creditor shall provide the debtor, account to the obligation secured by the deposit

Credit Transactions
account; and NOTE: The grantor may waive the right to be

notified.
5. In other cases of security interest in a deposit
account perfected by control, instruct the 2. Any other secured creditor or lien holder who,
deposit-taking institution to pay the balance of five (5) days before the date notification is sent
the deposit account to the secured creditor’s to the grantor, held a security interest or lien in
account. (Sec. 48, PPSA) the collateral that was perfected by
registration; and
Right to Dispose of Collateral
3. Any other person from whom the secured
1. After default, a secured creditor may sell or creditor received notification of a claim of an
otherwise dispose of the collateral, publicly or interest in the collateral if the notification was
privately, in its present condition or following received before the secured creditor gave
any commercially reasonable preparation or notification of the proposed disposition to the
processing. grantor.
2. The secured creditor may buy the collateral at A notification of disposition is sufficient if it
any public disposition, or at a private identifies the grantor and the secured creditor;
disposition but only if the collateral is of a kind describes the collateral; states the method of
that is customarily sold on a recognized market intended disposition; and states the time and place
or the subject of widely distributed standard of a public disposition or the time after which other
price quotations. (Sec. 49, Ibid.) disposition is to be made.
Commercial Reasonableness The requirement to send a notification shall not

apply if the collateral is perishable or threatens to
In disposing of collateral, the secured creditor shall decline speedily in value or is of a type customarily
act in a commercially reasonable manner. sold on a recognized market. (Sec. 51, PPSA)
A disposition is commercially reasonable if the Application of Proceeds

secured creditor disposes of the collateral in
conformity with commercial practices among The proceeds of disposition shall be applied in the
dealers in that type of property. (Sec. 50, Ibid.) following order:
NOTE: A disposition is not commercially 1. The reasonable expenses of taking, holding,

unreasonable merely because a better price could preparing for disposition, and disposing of the
have been obtained by disposition at a different collateral, including reasonable attorneys’ fees
time or by a different method from the time and and legal expenses incurred by the secured
method selected by the secured creditor. creditor;
If a method of disposition of collateral has been 2. The satisfaction of the obligation secured by
approved in any legal proceeding, it is conclusively the security interest of the enforcing secured
commercially reasonable. (Ibid.) creditor; and
Notification of Disposition 3. The satisfaction of obligations secured by any

subordinate security interest or hen in the
Not later than ten (10) days before disposition of collateral if a written demand and proof of the
the collateral, the secured creditor shall notify: interest are received before distribution of the
proceeds is completed.
1. The grantor;

2022 GOLDEN NOTES
Civil Law
The secured creditor shall account to the grantor for a. A proposal for the acquisition of the
any surplus, and, unless otherwise agreed, the collateral in full satisfaction of the secured
debtor is liable for any deficiency. (Sec. 52, Ibid.) obligation, unless the secured creditor
receives an objection in writing from any
Rights of Buyers and Other Third Parties person entitled to receive such a proposal
within twenty (20) days after the proposal
1. If a secured creditor sells the collateral (in is sent to that person; or
accordance with the discussion above) the
buyer shall acquire the grantor’s right in the b. A proposal for the acquisition of the
asset free of the rights of any secured creditor collateral in partial satisfaction of the
or lien holder. secured obligation, only if the secured
creditor receives the affirmative consent
2. If a secured creditor leases or licenses the of each addressee of the proposal in
collateral (in accordance with the discussion writing within twenty (20) days after the
above) the lessee or licensee shall be entitled to proposal is sent to that person. (Sec. 54,
the benefit of the lease or license during its Ibid.)
term.
TRANSITIONAL PROVISIONS
3. If a secured creditor sells, leases or licenses the
collateral not in compliance with this Chapter, Prior Interest
the buyer, lessee or licensee of the collateral
shall acquire the rights or benefits described in A security interest created or provided for by an
subsections (a) and (b) of this section: agreement or other transaction that was made or
Provided, That it had no knowledge of a entered into before the effectivity of this Act and
violation of this Chapter that materially that has not been terminated before the effectivity
prejudiced the rights of the grantor or another of this Act, but excludes a security interest that is
person. (Sec. 53, Ibid.) renewed or extended by a security agreement or
other transaction made entered into on or after the
Retention of Collateral by Secured Creditor effectivity of this Act. (Sec. 55(c), PPSA)
1. After default, the secured creditor may propose Existing Secured Creditor
to the debtor and grantor to take all or part of
the collateral in total or partial satisfaction of A secured creditor with a prior security interest.
the secured obligation, and shall send a (Ibid.) The creation of prior interest shall be
proposal to: determined by prior law. It remains effective
between the parties notwithstanding its creation
a. The debtor and the grantor; did not comply with the creation requirement of this
Act. Sec. 57 provides modes of perfecting prior
b. Any other secured creditor or lien holder interest.
who, five (5) days before the proposal is
sent to the debtor and the grantor,
perfected its security interest or lien by
registration; and
2. Any other person with an interest in the

collateral who has given a written notification
to the secured creditor before the proposal is
sent to the debtor and the grantor. The secured
creditor may retain the collateral in the case of:

Credit Transactions
PLEDGE V. CHATTEL MORTGAGE V. the date of the

SECURITY AGREEMENT UNDER THE PPSA pledge are in a
public
instrument.
SECURITY
CHATTEL Security for Future Obligations
PLEDGE AGREEMENT
MORTGAGE
UNDER PPSA A pledge may A chattel Security
stand as mortgage Agreement
Subject Matter
security for cannot secure may secure
Movables All forms of future future future
susceptible of tangible or advancements obligations obligations
possession intangible
Future Property as Collateral
including Personal asset or
incorporeal Property personal
Not allowed
rights property
given the need Not allowed Allowed
evidenced by except ships
for Delivery
documents and aircrafts
Ownership over the Subject Matter Prohibition against Pactum Commissorium
The grantor Does not apply

must have / Secured
Mortgagor Applies except
Pledgor must legal right Creditor is
must be the under Arts Applies
be the owner over the asset allowed to
owner 2112, 2118
given as retain the
security. collateral
Extent of Security Manner of Disposition of the Security
Security Public sale –

Extends to Mortgage Public sale private sale Public or
interest
interests and only extends only by agreement private sale
extends to
earnings of to the of the parties
proceeds,
things pledges property
commingled
in the absence described in Right to Recover Deficiency
assets,
of contrary the
replacements,
stipulation instrument The creditor
products The creditor
None even if may recover
may recover
Form of Validity the contrary is unless
Exception:
stipulated otherwise
Recto Law
No need for Security must agreed
Perfected by
delivery but be in writing.
delivery; Right to the Surplus
registration Registration is
registration
is required required for
not required None unless it
for validity perfection. Mortgagor is The grantor is
is otherwise
entitled entitled
Binding Effect on 3rd persons stipulated
Binding if the Right of Redemption

Registration
description of Binding if
also binds There is right
the thing perfected. None None
third persons. of redemption
pledged and

2022 GOLDEN NOTES
Civil Law
Laws that govern Contract of Real Mortgage

B. REAL ESTATE MORTGAGE
1. New Civil Code;
2. Mortgage Law;
3. Property Registration Decree (P.D. 1529);
Real estate mortgage (REM) is a contract whereby
4. Sec. 194, as amended by Act No. 3344, Revised
the debtor secures to the creditor the fulfillment of
Administrative Code; (Phil. Bank of Commerce v.
the principal obligation, specially subjecting to such
De Vera, G.R. No. L-18816, 29 Dec. 1962) and
security immovable property or real rights over
5. R.A. No. 4882 – law governing aliens who
immovable property in case the principal obligation
become mortgagees.
is not fulfilled at the time stipulated. (12 Manresa
467)
Kinds of Real Mortgages
Characteristics of Real mortgage

1. Voluntary or Conventional mortgage– It is
constituted voluntarily by the contracting
1. It is a real right;
parties or by the will of the owner of the
property on which it was created;
2. It is an accessory contract;
2. Legal mortgage– It is required by law to be

NOTE: If the principal obligation is void,
executed in favor of certain persons; (Arts.
the mortgage is also void. (Reyes v.
2125(2), 2082 and 2083, NCC) and
Gonzales, 45 O.G. No. 2, p. 831) But if a
mortgage is void because it was not made
3. Equitable mortgage – Although lacking the
by the owner of the property, the principal
formalities of a mortgage, shows the intention
contract of loan may still be valid. (PNB v.
of the parties to make the property a security
Rocha, G.R. No. L-332260, 29 Dec. 1930)
for debt.
3. Unilateral; it creates only an obligation on the

Consideration in mortgage
part of the creditor who must free the property
from encumbrance once the obligation is
Its consideration is the same as of the principal
fulfilled.
contract from which it receives its life, and without
which it cannot exist as an independent contract.
4. It is indivisible;
(China Banking Corp. v. Lichauco, G.R. No. L-22001,
04 Nov. 1924)
5. It is inseparable;
Requisites for a valid constitution of a Real

NOTE: The mortgage adheres to the
Mortgage (1991, 1994, 1996, 1999, 2001 BAR)
property, regardless of who its owner may
subsequently be. (McCullough v. Veloso, G.R.
The following requisites are essential to the
No. L-21455, 05 Apr. 1924)
contract of a real estate mortgage:
6. It is real property;
1. That it be constituted to secure the fulfillment
of a principal obligation;
7. It is subsidiary;
2. That the mortgagor be the absolute owner of
the thing mortgaged;
NOTE: Once the obligation has been paid or
3. That the person constituting the mortgage have
satisfied, the property must be released from
the free disposal of their property, and in the
the encumbrance imposed. The mortgage is
absence thereof, that they be legally authorized
answerable only if the principal obligation is
for the purpose;
not paid.

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4. It must appear in a public instrument; (Art. proceedings pursuant to the Repayment

2125, NCC) and Agreement and the subject REMs.
5. Recording in the Registry of Property is
necessary to bind third persons. Do the REMs entered into by PDIC and EPCIB
contain all the elements of a valid mortgage
NOTE: A recorded Real Estate Mortgage is a right in contract?
rem, a lien on the property whoever its owner
maybe. (Rabuya, 2017) A: YES. In this case, the terms of the subject REMs
are clear and leave no doubt on the true intentions
Registration operates as a notice of the mortgage to of the parties. They were executed to secure all
others, but neither adds to its validity nor converts amounts payable by PDIC to EPCIB under the
an invalid mortgage into a valid one between the Repayment Agreement upon maturity. Under the
parties. The person in whose favor the law Repayment Agreement, PDIC expressly undertook
establishes a mortgage has the right to demand the to execute and deliver a REM as security for its
execution and the recording of the document in existing loan obligations to EPCIB. This can be
which the mortgage is formalized. (Art. 2152(2), gleaned in the provisions of the Agreement.
NCC)
Verily, the execution of the Repayment Agreement
Q: PDIC applied for and was granted a credit line was entered into for the purpose of accommodating
by EPCIB, composed of a secured credit line and the request for a restructuring of payment by PDIC.
a clean credit line. After the clean credit line was Restructuring, as applied to a debt, implies a
fully utilized, PDIC requested EPCIB to release postponement of the maturity, modification of the
funds from the secured credit line. However, essential terms of the debt (e.g., conversion of debt
after evaluating PDIC's account and given the into bonds or into equity, or a change in or
then market and economic condition, EPCIB amendment of collateral security) in order to make
decided to defer the granting of additional the account of the debtor current. With the
credit accommodation. The amounts previously execution of the Repayment Agreement wherein
drawn by PDIC had become past due and EPCIB PDIC undertook to execute a REM to secure all
had intended to take legal action against PDIC to amounts payable to EPCIB, any distinctions in the
enforce its rights. PDIC, however, requested loan facilities pursuant to the Letter of Approval
EPCIB to defer legal action and allow it to make dated August 8, 1996 previously granted by EPCIB
payments on the obligations under such terms have necessarily been superseded. Accordingly,
and conditions acceptable to EPCIB. Thus, PDIC considering that PDIC requested for the release of
and EPCIB agreed to enter into a Repayment the mother title, it is but reasonable that EPCIB
Agreement, where PDIC acknowledged that it is would ask for a substitute property in its stead.
indebted to EPCIB, and that the said obligations Certainly, EPCIB had a legitimate reason for refusing
have become past due. to return TCT No. 230861 and cancel the mortgage
annotated thereon before the execution by PDIC of
In accordance with the terms and conditions of the new subject REMs. Thus, while it may be said
the Repayment Agreement, PDIC executed REMs that EPCIB's refusal to release the mother title had
over 29 condominium units of the condominium compelled PDIC to execute the subject REMs and
project and a parcel of land. When PDIC mortgage the 29 units of the condominium project
defaulted in its loan obligations under the and the Bulacan property, the same cannot be
Repayment Agreement, EPCIB sent a letter to equated with undue influence that could have
PDIC demanding payment. In response to the vitiated PDIC's consent. (Philippine Dev. and Ind.
demand letter, PDIC offered to settle its loan Corp. v. CA, G.R. No. 231545, 28 Apr. 2021)
obligations by way of dacion en pago. However,
the parties failed to agree on the terms therefor. Q: Vicente was the owner of a real property in
Hence, EPCIB proceeded to initiate foreclosure Davao City. He executed an SPA in favor of his

2022 GOLDEN NOTES
Civil Law
sister, Nanette. She entered into contract of loan Real Estate Mortgage v. Contract of Sale with
with BAP and used Vincente’s property as Right of Repurchase
collateral. However, she failed to pay the
obligation to BAP when it fell due. Demand
REAL ESTATE SALE WITH RIGHT
letters were sent but to no avail. BAP instituted
MORTGAGE OF REPURCHASE
an Extra-Judicial Foreclosure of Vincente’s
property. Vicente and Nanette filed a complaint Nature of Contract
for declaration of nullity of real estate mortgage
against BAP. In the complaint, Nanette alleges Principal and
Accessory contract
that she signed blank loan forms, she did not independent contract.
receive the proceeds of the loan, and another
sister, named Eleonor, was included in the loan Divisibility of Contract
documents when only Nanette is empowered by
Vincente to enter contract of loan. Thus, they Redemption can be
contend that since there is absence of Indivisible partial. (Arts. 1612-
consideration, the loan contract is void which 1613, NCC)
means its accessory contract, real mortgage, is Subject Matter
void as well. RTC ruled in favor of BAP and
dismissed the complaint finding that Vicente Real and personal
Only to real property.
and Nanette indeed applied for loan and property.
received the proceeds through the account
Transfer of Ownership
under the name of Holy Infant Medical
Clinic/Nanette Luntao/Eleanor Luntao. Also, it There is transfer of
relied heavily on the letter of Jesus Luntao in There is no transfer of
title and possession of
court showing an admission of the existence of title and possession of
the property, although
the loan. CA denied the appeal. Whether the the property.
conditional.
contract of loan entered by Nanette is void thus
nullifies the contract of real mortgage being an Entitlement to Fruits
accessory contract.
Creditor has no right to
The vendee a retro is
A: NO. As an accessory contract, a mortgage the fruits of the
entitled to the fruits
contract's validity depends on the loan contract's property during the
even during the period
validity. Thus, the contract of loan between pendency of the
of redemption.
petitioners and private respondent must be valid. mortgage.
The real mortgage contract remains valid because
the main contract of loan is found to be valid when Appropriation of Property
it was proven during trial that Vicente and Nanette
received the proceeds of the loan and further
If the debtor fails to pay As soon as there is a
supported by the letter of Jesus Luntao of the
his debt, the creditor consolidation of title in
existence of the loan. Despite having the
cannot appropriate the the vendee a retro, he
opportunity to prove that the admission of Jesus is
property mortgaged may dispose of it as an
false, petitioners failed to present rebuttal evidence.
nor dispose of it. absolute owner.
They also failed to present evidence to support their
allegation that Eleanor received the loan proceeds
or that Eleanor's non-payment of her alleged
Rights of Mortgagor
personal loan with BAP caused the foreclosure of
the mortgage. What petitioners presented were
To alienate the mortgaged property but the
mere denials. (Luntao vs. BAP, G.R. No. 204412, 20
mortgage shall remain attached to the property.
Sept. 2017)
(Art. 2130, NCC)

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Q: Bucton alleged that Concepcion borrowed the Registration of Mortgage

title to her house and lot on the pretext that she
was going to show it to an interested buyer. Registration of mortgage is a matter of right. By
However, Concepcion, instead, obtained a loan executing the mortgage, the mortgagor is
in the amount of P30,000.00 from Rural Bank of understood to have given his consent to its
El Salvador (Rural Bank) that as security for the registration, and he cannot be permitted to revoke
loan, Concepcion mortgaged Bucton’s house and it unilaterally. Registration operates as a notice of
lot to Rural Bank in her personal capacity, using the mortgage to others, but neither adds to its
a forged SPA. validity nor converts an invalid mortgage into a
valid one between the parties. (Gonzales v. Basa, G.R.
Would Bucton be bound by such real estate No. L-48695, 30 Sept. 1942)
mortgage if the Rural Bank later on forecloses
the property, after Concepcion defaults in Mortgage as a Real and Inseparable Right
payment?
Mortgage is a real and inseparable right. The
A: NO. The mere fact that the agent was authorized mortgage directly and immediately subjects the
to mortgage the property is not sufficient to bind the property upon which it is imposed, whoever the
principal, unless the deed was executed and signed possessor may be, to the fulfillment of the obligation
by the agent for and on behalf of his principal. The for whose security it was constituted. (Art. 2126,
authorized agent failed to indicate in the mortgage NCC)
that she was acting for and on behalf of her
principal. The real estate mortgage, explicitly shows Effect of registration as to better right of third
on its face, that it was signed by Concepcion in her parties
own name and in her own personal capacity. Thus,
Bucton cannot be bound by the acts of Concepcion. A registered mortgage right over property
(Bucton v. Rural Bank of El Salvador, G.R. No. 179625, previously sold is inferior to the buyer’s
24 Feb. 2014) unregistered right.
Rights of a Mortgagee Reason: If the original owner had sold the thing,
then he no longer had ownership and free disposal
To claim from a third person in possession of the of it so as to be able to mortgage it. (State Investment
mortgaged property the payment of the part of the House, Inc. v. CA, G.R. No. 115548, 05 Mar. 1996)
credit secured by the property which said third
person possesses. (Art. 2129, NCC) Prohibition against Encumbrance of Mortgaged
Land, without mortgagors’ consent
Prior demand must have been made on the debtor
and the latter failed to pay. (BPI. v. Concepcion E. In this case, rights over the property, which came
Hijos, Inc., G.R. No. 27701, 21 July 1928) into existence after the execution of the deed,
cannot be annotated as an adverse claim on the title
Right to Possession of the land over the mortgagee’s opposition. (Rivera
v. Peña, G.R. No. L-11781, 24 Mar. 1961)
The mortgagee has no right or claim to the
possession of the property. Such possession is only Subsequent Registration of an Adverse Claim
a security for the payment of the sum borrowed. The
debtor merely subjects the property to a lien but the A prior registration of a lien creates a preference.
ownership thereof is not parted. (De Leon, 2013) Hence, the subsequent annotation of an adverse
claim cannot defeat the rights of the mortgagee or
the purchaser at the auction sale whose rights are
derived from a prior mortgage validly registered.

2022 GOLDEN NOTES
Civil Law
Q: Laguna West Multi-Purpose Cooperative is a (Cathay Metal Corp. v. Laguna West Multi-Purpose
cooperative recognized under Republic Act No. Coop., Inc., G.R. No. 172204, 02 July 2014)
6657 or the Comprehensive Agrarian Reform
Law. It allegedly entered into a joint venture Extent of Mortgage
agreement with farmer-beneficiaries through
Certificates of Land Ownership Award (CLOA) in GR: Mortgage extends to the following:
Silang, Cavite. While respondent was
negotiating with the farmer-beneficiaries, 1. Natural accessions;
petitioner Cathay Metal Corporation entered 2. Improvements;
into Irrevocable Exclusive Right to Buy (IERB) 3. Growing fruits;
contracts with the same farmer-beneficiaries. 4. Rents or income not yet received when the
obligation becomes due; and
In 1996, respondent caused the annotation of its 5. Amount of indemnity granted or owing to
adverse claim on the farmer-beneficiaries’ the proprietor from:
certificates of title. Petitioner and the farmer- a. Insurance proceeds; or
beneficiaries executed contracts of sale of the b. Expropriation price. (Art. 2127, NCC)
properties. Transfer certificates of title were
also issued in the name of petitioner in the same Reason: Ownership of such accessions and
year. The annotations in the original titles were accessories and improvements subsequently
copied to petitioner’s titles. Respondent’s Vice- introduced also belongs to the mortgagor who is the
President, Orlando dela Peña, sent two letters to owner of the principal. (Castro, Jr. v. CA, G.R. No.
petitioner, informing it of respondent’s claim to 97401, 06 Dec. 1995)
the properties. Petitioner did not respond. On
September 15, 2000, petitioner filed a XPNS:
consolidated petition for cancellation of adverse 1. Express stipulation excluding them; or
claims on its transfer certificates of title with the 2. Evidence sufficiently overthrowing the
Regional Trial Court of Tagaytay City. Does the presumption that the mortgagor owns the
respondent had a claim over the property under mortgaged property.
the Joint Venture Agreement? Effects of Mortgage
A: NO. The purpose of annotations of adverse claims 1. It creates a real right; and
on title is to apprise the whole world of the 2. It creates merely an encumbrance.
controversy involving a property. These
annotations protect the adverse claimant's rights Mortgagee in Good Faith
before or during the pendency of a case involving a
property. It notifies third persons that rights that A mortgagee has a right to rely in good faith on the
may be acquired with respect to a property are certificate of title of the mortgagor of the property
subject to the results of the case involving it. Sec. 70 given as security and in the absence of any sign that
of P.D. 1529 or the Property Registration Decree might arouse suspicion, has no obligation to
governs adverse claims. It describes an adverse undertake further investigation. Hence, even if the
claim as a statement in writing setting forth a mortgagor is not the rightful owner of, or does not
subsequent right or interest claimed involving the have a valid title to, the mortgaged property, the
property, adverse to the registered owner. A claim mortgagee in good faith is nonetheless entitled to
based on a future right does not ripen into an protection.” (De Leon, 2013)
adverse claim as defined in Sec. 70 of P.D. 1529. A
right still subject to negotiations cannot be enforced The doctrine does not apply to a situation where the
against a title holder or against one that has a title is still in the name of the rightful owner and the
legitimate title to the property based on possession, mortgagor is a different person pretending to be the
ownership, lien or any valid deed of transfer. owner. In such a case, the mortgagee is not an

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innocent mortgagee for value and the registered & Insurance, Inc., G.R. No. 176246, 13 Feb. 2009)
owner will generally not lose his title. (Ereña v.
Querrer-Kauffman, G.R. No. 165853, 22 June 2006) A mortgage with a dragnet clause is an “offer”
by the mortgagor to the bank to provide the
Alienation or Assignment of Mortgage Credit security of the mortgage for advances of and
when they were made.
The mortgage credit may be alienated or assigned
to a third person, in whole or in part, with the XPN: it can be said that the “offer” by the
formalities required by law. (Art. 2128, NCC) mortgagor to the bank to provide the security
of the mortgage for advances of and when they
NOTE: Even if the alienation is not registered, it were made.
would still be valid as between the parties. (Lopez v.
Alvarez, G.R. No. L-3438, 12 Oct. 1907) NOTE: It is a clause which operates as a
convenience and accommodation to the
There is no need to obtain the consent of the borrowers as it makes available additional
debtor/mortgagor. funds without their having to execute
additional security documents, thereby saving
Stipulations on Mortgage Contract time, travel, loan closing costs, costs of extra-
legal services, recording fees. etc.
1. Including after-acquired properties
Statement of the amount in a mortgage contract
Status: Valid in a Dragnet Clause
Purpose: To maintain, to the extent of the The amount stated in the contract is not controlling
allowed by the circumstances, the original in case of mortgage securing future advancements.
value of the property given as a security. Such The amount named in the contract does not limit the
stipulation is common where the properties amount for which the mortgage stand as a security,
given as collateral are perishable or subject of if, from the four corners of the instrument the intent
inevitable wear and tear. to secure future and other indebtedness can be
gathered. (Pineda, 2006)
2. Blanket or Dragnet Clause
Q: Petitioner obtained a loan of P20K from
Status: Valid defendant Rural Bank of Kawit. The loan
was secured by a REM over a parcel of land.
A dragnet clause is a mortgage provision which The mortgage contract states that the
is specifically phrased to subsume all debts of mortgage will cover the payment of the loan
past or future origin. It is a valid and legal of P20K and such other loans or other
undertaking, and the amounts specified as advances already obtained or to be
consideration in the contracts do not limit the obtained by the mortgagors from the bank.
amount for which the pledge or mortgage The loan of P20k was fully paid. Thereafter
stands as security, if from the four corners of they again obtained a loan of P18K, secured
the instrument, the intent to secure future and by the same mortgage. The spouses
other indebtedness can be gathered. A pledge defaulted. The bank extra-judicially
or mortgage given to secure future foreclosed the mortgage. Was the
advancements is a continuing security and is foreclosure sale valid?
not discharged by the repayment of the amount
named in the mortgage until the full amount of A: YES. It has long been settled that those
all advancements shall have been paid. mortgages given to secure future
(Premiere Development Bank v. Central Surety advancements are valid and legal contracts;

2022 GOLDEN NOTES
Civil Law
that the amounts named as consideration in NOTE: Such stipulation nonetheless

said contract do not limit the amount for which contravenes public policy, being an undue
the mortgage may stand as security, if from the impediment or interference on the transmission
four corners of the instrument the intent to of property.
secure future and other indebtedness can be
gathered. A mortgage given to secure 5. Grant of first refusal
advancement is a continuing security and is
not discharged by repayment of the amount Status: Valid.
named in the mortgage, until the full amount of
the advancements is paid. (Mojica v. CA, G.R. No. The consideration for the loan-mortgage may
94247, 11 Sept. 1991) be said to include the consideration for the right
of first refusal. The mortgagor has the right to
3. Forbidding of alienation or assignment of sell the mortgaged property without securing
mortgage credit the consent of the mortgagee, but has the
obligation under a right of refusal provision to
Status: Void. (Art. 2130, NCC) notify the mortgagee of his intention to sell the
property, and give him the priority over other
Reason: Such prohibition would be contrary to buyers.
the public good inasmuch as the transmission of
property should not be unduly impeded. NOTE: A sale made in violation of the
mortgagee’s contractual right of first refusal is
NOTE: In case of alienation, the transferee is rescissible.
bound to respect the encumbrance because
being a real right, the property remains to the The buyer is presumed to have been notified
fulfillment of the obligation for whose guaranty thereof by the registration of the mortgage deed
it was constituted. containing such stipulation, which equates to a
notice to the whole world.
Assignment of credit, right or action shall be in a
public instrument in order to affect third 6. Acceleration Clause
persons
Status: Valid. (LDB v. Conquilla, G.R. No. 163338,
An assignment of a credit, right or action shall 21 Sept. 2005)
produce no effect as against third persons, unless
it appears in a public instrument, or the A stipulation stating that on the occasion of the
instrument is recorded in the Registry of mortgagor’s default, the whole sum remaining
Property in case the assignment involves real unpaid automatically becomes due and payable.
property. (Art. 1625, NCC)
7. Stipulation of Upset Price or TIPO
4. Stipulation requiring mortgagee’s consent
before alienation Status: Void. (Property should be sold to the
highest bidder)
Status: Void for violating Art. 2130 of the NCC.
While such provision does not absolutely Upset Price or TIPO is the minimum price at
prohibit the mortgagor from selling his which the property shall be sold at a public
mortgaged property, what it does not outrightly auction.
prohibit, it nevertheless achieves. The
mortgagee can simply withhold its consent and A stipulation in the mortgage of real property
thereby, preventing the mortgagor from selling providing an Upset Price or TIPO, to become
the property. (De Leon, 2013) operative in the event of a foreclosure sale at

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public auction, is null and void for property must sell the mortgaged property. (Act 3135)
be sold to the highest bidder.
Judicial foreclosure v. Extrajudicial foreclosure
Possession by third person of the Property (1999 BAR)
Mortgaged
JUDICIAL EXTRAJUDICIAL
The creditor may claim from the third person in
FORECLOSURE FORECLOSURE
possession of the mortgaged property, the payment
of the part of the credit secured by the property Court Intervention
which the third party possesses, in terms and with
the formalities which the law establishes. (Art. 2129, With court Without court
NCC) intervention. intervention.
Right of Appeal
FORECLOSURE OF REAL ESTATE MORTGAGE
Decisions are not
Foreclosure Decisions are appealable;
appealable. immediately
Foreclosure is a remedy available to the mortgagee executory.
by which he subjects the mortgaged property to the
satisfaction of the obligation. It is a proceeding to Cutting Off Rights
terminate the rights of the mortgagor of the Order of the court cuts Foreclosure does not
property. off all rights of the cut off the rights of all
parties impleaded. parties involved.
Causes of Action of Mortgage-Creditor
Right of Redemption
Mortgage-creditor has a single cause of action GR: No right of
against the mortgage-debtor, which is to recover the redemption.
debt, but he has the option to either: There is a right of
XPN: If mortgagee is a redemption.
1. File a personal action for collection of sum of bank, quasi-bank, or
money; or trust entity.
2. Institute a real action to foreclose on the
Equity of Redemption
mortgaged property.
There is equity of No equity of
NOTE: If he elects to foreclose, he waives the action redemption. redemption.
for the collection of the unpaid debt, except only for
the recovery of whatever deficiency may remain in JUDICIAL FORECLOSURE
the outstanding obligation of the debtor-mortgagor
after deducting the old price in the public auction Nature of Judicial Foreclosure
sale. The remedies are alternative, not cumulative,
(Bank of America, NT and SA v. American Realty Corp. A judicial foreclosure is an action quasi in rem. It is
G.R. No. 133876, 29 Dec. 1999) each remedy is based on a personal claim against a specific
complete by itself. property of the defendant. (Ocampo v. Domalanta,
G.R. No. L-21011, 30 Aug. 1967)
Kinds of Foreclosure
Steps in Judicial Foreclosure
1. Judicial– Governed by Rule 68, Rules of Court;
and 1. Judicial action brought to the proper court
2. Extrajudicial– The mortgagee is given a SPA to having jurisdiction;

2022 GOLDEN NOTES
Civil Law
2. Order by the court for mortgagor to pay 7. Execution of sheriff’s certificate.

mortgage debt if the court finds the complaint
to be well-founded, within a period of not less NOTE: In the absence of a certificate of sale, no
than 90 days nor more than 120 days from the title is passed by the foreclosure proceedings to
entry of judgment; the vendee.
3. Sale to the highest bidder at a public auction if Action for Foreclosure of Mortgage Survive the
the mortgagor fails to pay at the time directed Death of Mortgagor
in the court order;
An action for foreclosure of mortgage survives the
4. Confirmation of the sale, which operates to death of mortgagor because the claim is not a pure
divest the rights of all parties to the action and money claim but an action to enforce a mortgage
vest their rights to the purchaser; lien. Being so, the judgment rendered therein may
be enforced by a writ of execution. The action may
Requirements: be prosecuted by the interested person against the
a. Motion for confirmation is filed; and executor or administrator independently of the
b. Notice of hearing of motion testate or intestate proceedings of the settlement of
the mortgagor’s estate “for the reason that such
5. Execution of judgment in the manner provided claims cannot in any just sense be considered claims
by law on mortgages, the parties not being against the estate, but the right to subject specific
authorized to change the procedure prescribed; property to the claim arises from the contract of the
(Piano v. Cayanong, G.R. No. L-18603, 28 Feb. debtor whereby he has during life set aside certain
1963) property for its payment, and such property does
not, except in so far as its value may exceed the debt,
NOTE: The proper remedy to seek reversal of belong to the estate.” (Matute v. Canlas, G.R. No. L-
a judgment in an action for foreclosure is an 12709, 28 Feb. 1962)
appeal from the judgment itself or from the
order confirming the sale of the foreclosed real Remedies of the Mortgagee in case of Death of
estate. (Sps. Agbada v. Inter-Urban Developers, the Debtor
Inc., G.R. No. 144029, 19 Sept. 2002)
1. To waive the mortgage and claim the entire
6. Application of the proceeds of the sale; and debt from the estate of the mortgagor as an
ordinary claim;
a. Costs of sale; 2. To foreclose the mortgage judicially and prove
any deficiency as an ordinary claim; or
b. Amount due the mortgagee; 3. To rely on the mortgage exclusively, foreclosing
the same at any time before it is barred by
c. Claims of junior encumbrancers or persons prescription, without right to file claim for any
holding subsequent mortgages in the order deficiency. (Maglaque v. Planters Development
of priority; and Bank, G.R. No. 109472, 18 May 1999)
d. The balance, if any, shall be paid to the Necessity for confirmation of court in
mortgagor, or his duly authorized agent, or foreclosure sale (Judicial Foreclosure)
the person entitled to it.
A foreclosure sale (in judicial foreclosure) is not
NOTE: If the mortgagee retains the balance, complete until it is confirmed and before such
the mortgagor has a cause of action to confirmation, the court retains control of the
recover such surplus. proceedings by exercising sound discretion in
regard to it either granting or withholding

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confirmation as the rights and interests of the Steps in Extrajudicial Foreclosure of Real Estate
parties and the ends of justice may require. (Rural Mortgage (A.M. No. 99-10-05-0, 15 Jan. 2000,
Bank of Oroquieta v. CA, G.R. No. L-53466, 10 Nov. further amended on 07 Aug. 2001)
1980)
1. Filing of an application before the Executive
There can be no redemption of the property after Judge through the Clerk of Court;
confirmation. Such confirmation retroacts to the
date of the auction sale. After the confirmation, the In extrajudicial foreclosure of real mortgages
previous owners lose any right they may have had in different locations covering a single
over the property, which rights in turn vested on the indebtedness, only one filing fee
Purchaser of the property. (Lonzame v. Amores, G.R. corresponding to such debt shall be collected.
No. L-53620, 31 Jan. 1985)
2. Clerk of court will examine whether the
Right to Recover Deficiency following requirements of the law have been
complied with:
GR: Mortgagee has the right to recover deficiency by
way of mere motion. a. Posting of notice in not less than 20 days in
at least three public places of the
XPN: When the mortgage was executed by a third municipality or city where the property is
person to secure the obligation of a debtor, such situated. Notices are given to secure
third person not having assumed personal liability bidders and to prevent a sacrifice of the
for the payment of the debt, the extent of recovery property. (Sps. Suico v. PNB, G.R. No.
in the judgment foreclosure shall be limited to the 170215, 28 Aug. 2007)
purchase price at the foreclosure sale. The remedy
of the mortgagee in such case is to proceed against b. Publication (if property is worth more than
the debtor in an ordinary action for sum of money P400.00) once a week for at least three
to recover the balance of debt due. (Rabuya, 2017) consecutive weeks in a newspaper of
general circulation in the city or
EXTRAJUDICIAL FORECLOSURE municipality. The notice shall be published
in a newspaper of general circulation
An extrajudicial foreclosure may only be effected if pursuant to Sec. 1, P.D. 1079.
in the mortgage contract covering a real estate, a
clause is incorporated therein giving the mortgagee 3. The application shall be raffled among different
the power, upon default of the debtor, to foreclose sheriffs;
the mortgage by an extrajudicial sale of the
mortgage property. (Sec. 1, Act 3135, as amended by 4. An auction sale may be had even with just one
Act 4148) (1) participating bidder. The name/s of the
bidder/s shall be reported by the Sheriff or the
Authority to Sell Notary Public, who conducted the sale to the
Clerk of Court before the issuance of the
The authority to sell may be done in a separate certificate of sale (As amended by the 30 Jan.
document but annexed to the contract of mortgage. 2001 Resolution A.M. No. 99-10-05-0(5); Sps.
The authority is not extinguished by the death of the Certeza v. Phil. Savings Bank, G.R. No. 190078, 05
mortgagor or mortgagee as it is an essential and Mar. 2010)
inseparable part of a bilateral agreement. (Perez v.
PNB, G.R. No. L-21813, 30 July 1966) The indivisibility of a real estate mortgage is not
violated by conducting two separate
proceedings on mortgaged properties located
in different cities or municipalities as long as

2022 GOLDEN NOTES
Civil Law
each parcel of land is answerable for the entire 16279 was cancelled and, in its place, TCT No.
debt. (Sps. Yu v. PCIB, G.R. No. 147902, 17 Mar. 151178 was issued. However, TCT No. 151178
2006) contained annotations from the former TCT No.
S-16279, specifically, the mortgage lien of the
No sale can be legally made outside the province Philippine National Bank and a tax lien for
in which the property sold is situated, such sale unpaid taxes incurred by Marinduque Mining
shall be made in said place or in the municipal and Industrial Corporation. DBP delivered to
building of the municipality in which the Clarges the owner's duplicate copy of TCT No.
property or part thereof is situated. (Sec. 2, Act 151178 with the mortgage and tax liens still
3135) annotated on it. Clarges demanded a clean title
from the DBP, but the bank failed to deliver a
5. The clerk of court shall issue a certificate of clean title. Thus, Clarges Realty Corporation
payment indicating the amount of filed before the RTC of Makati City a
indebtedness, the filing fees collected, the Complaint for Specific Performance and
mortgages sought to be foreclosed, the Damages.
description of the real estates and their
respective locations; Clarges had already rested its case when the
DBP moved for leave of court to file a third-party
6. The certificate of sale must be approved by the complaint. The DBP sought to implead the Asset
Executive Judge; and Privatization Trust as a third-party defendant
and maintained that the Asset Privatization
7. After the redemption has expired, the clerk of Trust had assumed the "direct and personal"
court shall archive the records. obligation to pay for Marinduque Mining and
Industrial Corporation's tax liability and to have
NOTE: The law covers only real estate mortgages. It the partially reduced tax lien cancelled. Clarges
is intended merely to regulate the extrajudicial sale opposed the Motion for Leave. Consequently, the
of the property mortgaged if and when the trial court denied the Motion for Leave. Should
mortgagee is given a special power or express the Motion for Leave to File Third-Party
authority to do so in the deed itself or in a document Complaint be denied?
annexed thereto. (Luna v. Encarnacion, G.R. No. L-
4637, 30 June 1952) A: YES. A lien, until discharged, follows the
property. Hence, when petitioner acquired the
The authority to sell, is not extinguished by the death property, the bank also acquired the liabilities
of either mortgagor or mortgagee. It is an essential attached to it, among them being the tax liability to
and inseparable part of a bilateral agreement. (Perez the Bureau of Internal Revenue. That the unpaid
v. PNB, G.R. No. L-21813, 30 July 1996) taxes were incurred by the defunct Marinduque
Industrial and Mining Corporation is immaterial. In
Q: The Development Bank of the Philippines acquiring the property, petitioner assumed the
(DBP) and Clarges Realty Corporation (Clarges) obligation to pay for the unpaid taxes. With
executed a Deed of Absolute Sale for the petitioner capable of having the tax lien cancelled, it
property. The parties agreed that all expenses to cannot insist on the admission of its third-party
be incurred in connection with the transfer of complaint against the Asset Privatization Trust. The
title to Clarges would be borne by the DBP. admission of a third-party complaint requires leave
Moreover, the DBP bound itself under Clause 6 of court; the discretion is with the trial court. If leave
of the Deed of Absolute Sale to deliver a title to is denied, the proper remedy is to file a complaint to
the property "free from any and all liens and be docketed as a separate case. There was no grave
encumbrances on or before December 15, abuse of discretion in denying leave to admit the
1987." The DBP succeeded in having the third-party complaint against the Asset
property registered under its name. TCT No. S- Privatization Trust. As the Court of Appeals

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observed, the trial court would have wasted time Requisites for a newspaper to be deemed of
and effort had it admitted the third-party complaint. General Circulation
Respondent, the original plaintiff, had already
rested its case when the Motion for Leave was filed. 1. It must be published for the dissemination of
The original case would have dragged on with the local news and general information;
addition of a new party at a late stage of the trial. 2. It must have a bona fide subscription list of
(Development Bank of the Philippines v. Clarges paying subscribers;
Realty Corp., G.R. No. 170060, 17 Aug. 2016) 3. It must be published at regular intervals;
4. It must be available to the public in general and
Notes on Posting and Publication under Act not just to a select few chosen by the publisher,
3135: otherwise, the precise objective of publication
of notice of sale will not be realized; and
1. Nature 5. It must not be devoted to the interests or
published for the entertainment of a particular
They are imbued with public considerations profession, trade, calling, race or religion.
and any waiver thereon would be inconsistent (Metropolitan Bank and Trust Company, Inc. v.
with the intent and letter of the law. Eugenio Peñafiel, G.R. No. 173976, 27 Feb. 2009)
Failure to comply with the statutory Q: MBTC granted a loan to spouses Peñafiel, who
requirements as to publication of notice of mortgaged their two parcels of land in
auction sale constitutes a jurisdictional defect Mandaluyong. The spouses defaulted in the
which invalidates the sale. Lack of republication payment. MBTC instituted an extrajudicial
foreclosure proceeding under Act 3135. The
NOTE: The failure to post notice is not per se a Notice of Sale was published in Maharlika
ground for invalidating a foreclosure sale Pilipinas, which has no business permit in
provided that the notice thereof is duly Mandaluyong and its list of subscribers shows
published in a newspaper of general circulation. that there were no subscribers from
(Development Bank of the Philippines v. Aguirre, Mandaluyong. Did MBTC comply with the
G.R. No. 144877, 07 Sept. 2007) publication requirement under Section 3, Act
3135?
2. No requirement of personal notice
A: NO. Maharlika Pilipinas is not a newspaper of
Sec 3 of Act 3135 does not require personal general circulation in Mandaluyong where the
notice or any particular notice on the mortgagor property is located. To be a newspaper of general
much less on his successors-in-interest where circulation, it is enough that it is published for the
there is no contractual stipulation therefor. dissemination of local news and general
information, that it has a bona fide subscription list
NOTE: Unless the parties stipulate, personal of paying subscribers, and that it is published at
notice to the mortgagor in extrajudicial regular intervals. The newspaper must be available
proceedings is not necessary because Sec. 3 of to the public in general, and not just to a select few
Act 3135 only requires the posting of notice of chosen by the publisher. Otherwise, the precise
the sale in three public places and the objective of publishing the notice of sale in the
publication of that notice in a newspaper of newspaper will not be realized. (Ibid.)
general circulation. (Ramirez v. The Manila
Banking Corp., G.R. No. 198800, 11 Dec. 2013) 1. No certificate of posting is required
GR: A certificate of posting is not required,

much less considered indispensable for the
validity of a foreclosure sale under Act 3135.

2022 GOLDEN NOTES
Civil Law
XPN: Such certificate is significant only when it RECOVERY OF DEFICIENCY

becomes necessary to prove compliance with
the required notice of posting. Judicial foreclosure
The fact alone that there is no certificate of The mortgagee is specifically given the right to claim
posting attached to the sheriffs sheriff’s for the deficiency. (Sec. 6, Rule 68, ROC)
records is not sufficient to prove lack of
posting. (Rabuya, 2017) Extrajudicial Foreclosure
2. Burden of proving non-compliance with the The plain result of adopting extrajudicial
publication and posting requirements foreclosure under Act No. 3135 is that the creditor
waives his right to recover any deficiency. (Heirs of
Foreclosure proceedings have in their favor the Sps. Flaviano v. Manila Banking Corporation, G.R. No.
presumption of regularity. (Union Bank of the 171206, 23 Sept. 2013)
Philippines v. CA, G.R. No. 164910, 30 Sept. 2005)
While Act 3135 governing extrajudicial foreclosures
Enjoining the implementation of Writ of of mortgage does not give a mortgagee the right to
Possession recover deficiency after the public auction sale,
neither does it expressly nor impliedly prohibit
As a rule, any question regarding the validity of the such recovery.
mortgage or its foreclosure cannot be a legal ground
for refusing the issuance of a writ of possession. NOTE: In both judicial and extrajudicial foreclosure,
Regardless of whether or not there is a pending suit when a third person is the mortgagor, he is not liable
for annulment of the mortgage or the foreclosure for any deficiency in the absence of a contrary
itself, the purchaser is entitled to a writ of stipulation.
possession, without prejudice to the outcome of the
case. Hence, an injunction to prohibit the issuance Action for Recovery of Deficiency
of writ of possession is entirely out of place.
Prohibition does not lie to enjoin the A mortgagee may recover any deficiency in the
implementation of a writ of possession. Once the mortgage account, which is not realized in a
writ of possession has been issued, the trial court foreclosure sale. An independent civil action may
has no alternative but to enforce the writ without for the recovery be filed even during the period of
delay. (Sps. Ong v. CA, G.R. No. 121494, 08 June 2000) redemption. (Tarnate v. CA, G.R. No. 100635, 13 Feb.
1995)
Effect of inadequacy of price in foreclosure sale If the deficiency is embodied in a judgment, it is
referred to as deficiency judgment.
GR: When there is a right to redeem, inadequacy of
price is immaterial because the judgment debtor NOTE: The action prescribes ten (10) years from
may reacquire the property easier at a low price or the time the right of action accrues. (Art. 1142(2),
sell his right to redeem. (PNB v. CA, G.R. No. 121739, NCC)
14 June 1999)
REDEMPTION OF MORTGAGE
XPN: When the price is so inadequate as to shock
the conscience of the court taking into Redemption is a transaction by which the
consideration the peculiarly circumstances mortgagor reacquires or buys back the property
attendant thereto. (UCPB v. CA, G.R. No. 155912, 17 which may have passed under the mortgage or
Aug. 2007) divests the property of the lien which the mortgage
may have created. (Pineda, 2006)
Persons entitled to exercise Right of

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Redemption Notice and hearing of a motion for confirmation

of sale are essential to the validity of the order
1. Mortgagor or one in privity of title with the of confirmation. An order of confirmation
mortgagor; which is void due to lack of notice and hearing,
2. Successors-in-interest under Sec. 29, Rule 39, may be set aside anytime, and the mortgagor
ROC. may still redeem the mortgaged property.
Kinds of Redemption 2. Right of redemption – Right of the mortgagor

to redeem the mortgaged property within one
1. Equity of redemption – Right of mortgagor to year from the date of registration of the
redeem the mortgaged property after his certificate of sale. It applies in case of
default in the performance of the conditions of extrajudicial foreclosure.
the mortgage but before the sale of the
mortgaged property or confirmation of the sale Where applicable: Extrajudicial foreclosure
by the court. The mortgagor pays the secured
debt within the period specified. To extinguish Period to exercise: Within one (1) year from
the mortgage and retain ownership of the the date of registration of the certificate of sale.
property, the mortgagor must pay the secured (Sec. 6, ROC, Act 3135; Sec. 28, Rule 39, ROC)
debt within the 90-day period after judgement
becomes final, or even after foreclosure sale, The right of redemption, as long as within the
but prior to its confirmation. period prescribed, may be exercised regardless
of whether or not the mortgagee has
Where applicable: Judicial foreclosure of real subsequently conveyed the property to some
estate mortgage other party. (Sta. Ignacia Rural Bank v. CA, G.R.
No. 97872, 01 Mar. 1994)
XPN: There is no right of redemption from a
judicial foreclosure sale after the confirmation NOTE: Notwithstanding Act 3135, juridical
of the sale, except those granted by banks and persons whose property is being sold pursuant
financial institution as provided by the General to an extrajudicial foreclosure, shall have the
Banking Act. (GSIS v. CFI of Iloilo, G.R. No. 45322, right to redeem the property in accordance with
05 July 1989) Sec. 47 of the General Banking Act until, but not
after, the registration of the certificate of sale
If the mortgagee is a bank, the mortgagor may with the applicable Register of Deeds which in
exercise a right of redemption and this rule no case shall be more than three (3) months
applies even if the foreclosure is judicial in after foreclosure, from the date of the
accordance with Rule 68 of the ROC. foreclosure sale, but not after the registration of
the certificate of foreclosure sale, whichever is
Period to exercise: Within 90-120 days from earlier. Owners of property that has been sold
the date of the service of the order of in a foreclosure sale prior to the effectivity of
foreclosure or even thereafter but before the this General Banking Act shall retain their
order of confirmation of the sale. redemption rights until their expiration. (Sec.
47, R.A. No. 8791)
NOTE: The subsequent sale by the purchaser to
a third person of the mortgaged property does Q: X and Y, judgment creditors of A, obtained the
not prevent the court from granting the transfer of the title of the mortgaged property in
mortgagor a period within which to redeem the their names. Earlier, A executed a mortgage over
property by paying the judgment debt and the the same property in favor of FGU Insurance.
expenses of the sale and costs. The latter mortgage was registered. When A
defaulted, FGU foreclosed the property. A

2022 GOLDEN NOTES
Civil Law
certificate of sale was thereafter issued in FGU’s expiration of the one-year period. (Heirs of
favor, which was confirmed by the RTC. Quisumbing v. PNB, G.R. No. 178242, 20 Jan. 2009)
However, before the new TCT could be issued, X
and Y filed their respective motion for Summary of Redemption Period
intervention and to set aside the judgment
alleging that they are the new owners of the 1. Extrajudicial (Act 3135)
property and the failure of FGU to implead X and
Y in the action for foreclosure deprived the a. Natural Person - one (1) year from
latter of due process. Is the contention of X and registration of the certificate of sale with
Y correct? the Registry of Deeds.
A: NO. Subordinate lien holders acquire only a lien NOTE: The statutory period of redemption
upon the equity of redemption vested in the is only directory and can be extended by
mortgagor, and their rights are strictly subordinate agreement of the parties provided:
to the superior lien of the mortgagee. Such equity of
redemption does not constitute a bar to the i. The agreement to extend is voluntary;
registration of the property in the name of the and
mortgagee. Registration may be granted in the ii. The debtor commits to pay the
name of the mortgagee but subject to the redemption price on a fixed date.
subordinate lien holders’ equity of redemption, (Gojudo v. Traders Royal Bank, G.R. No.
which should be exercised within ninety (90) days 151098, 21 Mar. 2006)
from the date the decision becomes final. This b. Juridical Person – same rule as natural
registration is merely a necessary consequence of person.
the execution of the final deed of sale in the c. Juridical Person (mortgagor) and Bank
foreclosure proceedings. (Looyuko v. CA, G.R. No. (mortgagee) – three (3) months after
102696, 12 July 2001) foreclosure or before registration of
certificate of foreclosure whichever is
Requisites for valid Right of Redemption earlier. (Sec. 47, R.A. No. 8791)
1. Must be made within twelve (12) months from NOTE: By an amendment by the General Banking
the time of the registration of the sale in the Law of 2000, juridical mortgagors like partnerships
Office of the Registry of Property; and corporations are barred from the right of
2. Payment of the purchase price of the property redemption of mortgaged property sold pursuant to
plus 1% interest per month together with the an extrajudicial foreclosure, after the registration of
taxes thereon, if any, paid by the purchaser with the certificate of foreclosure with the applicable
the same rate of interest computed from the Register of Deeds.
date of registration of the sale; For purposes of reckoning the one-year redemption
3. Written notice of the redemption must be period in case of individual mortgagors, or the
served on the officer who made the sale and a three-month reckoning period for juridical
duplicate filed with the proper Register of persons/mortgagors the same shall be reckoned
Deeds; (Sps. Yap v. Sps. Dy, G.R. No. 171868, 27 from the date of confirmation of the auction sale
June 2011) and which is the date when the certificate of title is
4. Tender of payment within the prescribed period issued. (BIR RMC No. 15-2008, 15 Aug. 2008)
to make the redemption for future enforcement.
(Sec. 26, Act 3135; Sec. 8, Rule 39, ROC) 2. Judicial– within the period of 90-120 days from
the date of the service of the order of
NOTE: The filing of a court action to enforce foreclosure or even thereafter but before the
redemption, being equivalent to a formal offer to order of the confirmation of the sale. (Sec. 2&3,
redeem, would have the effect of “freezing” the Rule 28, ROC)

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NOTE: Allowing redemption after the lapse of the 3. Redemption price in this case is reduced by the
statutory period, when the buyer at the foreclosure income received from the property.
sale does not object but even consents to the
redemption, will uphold the policy of the law which Rentals received by the Purchaser
is to aid rather than defeat the right of redemption.
(Ramirez v. CA, G.R. No. 98147, 05 Mar. 1993) The purchaser or redemptioner shall not be entitled
to receive the rents, earnings and income of the
Payment of Redemption property sold on execution or the value of the use
and occupation thereof while the property is in the
To whom: The purchaser or redemptioner or for him possession of the tenant. It shall belong to the
to the officer who made the sale. (Sec. 29, Rule 39, judgment obligor until the expiration of the period
ROC) of redemption. (Pineda, 2006; Sec. 32, Rule 39, ROC)
Medium of Payment: In cash or in check Rights of persons with Subordinate Interest
NOTE: In accepting a check, he undoubtedly places 1. Mortgagor’s equity of redemption before

himself in a position where he can be held liable to foreclosure – a second mortgagee acquires only
the purchaser at a public auction if any damage has the equity of redemption vested in the
been suffered by the latter as a result of the medium mortgagor and his rights are strictly
by which payment was made. (Co v. PNB, G.R. No. L- subordinate to the superior lien of the first
51767, 29 June 1982) mortgagee; (Sun Life Assurance Co. of Canada v.
Diez, G.R. No. L-29027, 25 Oct. 1928)
Amount of Redemption Price
2. Mortgagor’s right of redemption after
1. When mortgagee is not a bank (Act. 3135 in foreclosure – his remedy is limited to the right
relation to Sec. 28, Rule 39, ROC) to redeem by paying off the debt secured by the
first mortgage; (Tizon v. Valdez, G.R. No. L-
a. Purchase price of the property; 24797, 16 Mar. 1926)
b. 1% interest per month on the purchase
price from the date of registration of the 3. The second mortgagee is entitled, under the
certificate up to the time of redemption; mortgage constituted in his favor to the
c. Necessary expenses incurred by the payment of his credit the excess of the proceeds
purchase for the improvements made by of the auction sale, after covering the
him to preserve the property during the mortgagor’s obligations to the first mortgagee;
period of redemption; and,
d. Taxes paid and amount of purchaser’s 4. To be made defendant in an action for
prior lien, if any, with the same rate of foreclosure of the mortgage; and
interest computed from the date of
registration of sale, up to the time of NOTE: The effect of the failure of the
redemption. mortgagee to implead a subordinate lien-
holder or subsequent purchase or both is to
2. When mortgagee is a bank (General Banking render the foreclosure ineffective against
Law, 2000): them.
a. Amount fixed by the court or amount due 5. To question the legality of the foreclosure
under the mortgage deed; proceedings or the effect of the alleged lack of
b. Interest; notice to them of such foreclosure. (G. Puyat &
c. Cost and expenses. Sons v. PNC, G.R. No. L-16843, 30 Apr. 1962)

2022 GOLDEN NOTES
Civil Law
Right to Possession of Third Persons as Property or despite non-registration, the

Purchasers mortgagee has prior knowledge of the existence
and duration of the lease (Ibasco v. Caguioa, G.R.
The purchaser in an extra-judicial foreclosure sale No. L62619, 19 Aug. 1986);
is entitled to the possession of the property and can
demand that he be placed in possession of the same 2. Where the mortgagor refuses to surrender the
either during (with bond) or after the expiration property sold. The remedy is to file an ordinary
(without bond) of the redemption period therefor. action for the recovery of possession in order
(Sps. Marquez v Sps. Alindog, G.R. No. 184045, 22 Jan. that the mortgagor may be given opportunity to
2014) be heard; and
A writ of possession is an order whereby a sheriff is 3. When third party is in actual possession
commanded to place in possession of real or adverse to the judgment debtor. (Sec. 36, Rule
personal property, the person entitled thereto such 39, ROC; Sec. 6, Act 3135)
as when the property is extrajudicially foreclosed.
Period of Redemption is NOT a Prescriptive
NOTE: The right of the applicant or subsequent Period
purchaser for the issuance of a writ of possession
never prescribes. (Ching v. Family Savings Bank, G.R. The period of redemption is not a prescriptive
No. 167835, 15 Nov. 2010) period, but a condition precedent provided by law
to restrict the right of the person exercising
1. Before expiration of redemption period – redemption.
possession can be availed of as long as an ex
parte motion under oath is filed and a bond in If a person exercising the right of redemption has
accordance with Sec. 7 of Act 3135 is posted. offered to redeem the property within the period
(Philippine Bank of Communications v. Yeung, fixed, he is considered to have complied with the
G.R. No. 179691, 04 Dec. 2013) condition precedent prescribed by law and may
thereafter bring an action to enforce redemption.
2. After lapse of redemption period – purchaser is On the other hand, if the period is allowed to lapse
not obliged to bring a separate suit for before the right of redemption is exercised, then the
possession. He must invoke the aid of the courts action to enforce redemption will not prosper, even
and ask a writ of possession. (Javelosa v. CA, G.R. if the action is brought within the ordinary
No. 124292, 10 Dec. 1996) prescriptive period.
No bond is required of the purchaser after the Effect of Failure to Redeem

redemption period if the property is not redeemed.
Suspension of the implementation of the writ of Act 3135 provides that if the mortgagor or
possession is not allowed after the redemption successors-in-interest fail to redeem within the
period. redemption period, the title over the property
consolidates in the purchaser.
NOTE: After consolidation of title in the purchaser’s
name for failure of the mortgagor to redeem the The consolidation confirms the purchaser as the
property, the purchaser’s right to possession ripens owner entitled to the possession of the property.
into absolute right of a confirmed owner. The mortgagor, by failing to redeem loses all interest
in the property. (UCPB v. Lumbo, GR. No. 162757, 11
When Writ of Possession NOT available Dec. 2013)
1. Where mortgaged property under lease Q: D obtained a loan from C secured by a REM
previously registered in the Registry of over a parcel of land. When D defaulted, C

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extrajudicially foreclosed the property. C was the remittance of collected/received

declared the highest bidder in the auction. On rentals/fruits from the properties, of LCD to DBP
October 29, 1993, C caused the registration of start?
the certificate of sale. On November 9, 1994 D
filed a complaint for annulment of the A: In foreclosure proceedings, the buyer becomes
extrajudicial foreclosure and auction sale. Can D the absolute owner of the property purchased if it is
redeem the property beyond the one-year not redeemed during the prescribed period of
redemption period? redemption, which is one year from the date of
registration of the sale. The Sheriff’s certificate of
A: NO. D lost any right or interest over the subject sale was annotated in the certificate of titles on April
property primarily because of his failure to redeem 30, 1976. DBP became the absolute owner of the
the same in the manner and within the period properties on May 1, 1977.
prescribed by law. His belated attempt to question
the legality and validity of the foreclosure Thus, the period to be considered in determining
proceedings and public auction must accordingly the amount of collection should start from May 1,
fail. (Sps. Landrito v. CA, G.R. No. 133079, 09 Aug. 1997 up to the time when the possession of the
2005) properties are actually and completely surrendered
to DBP. (La Campana Dev. Corp. v. DBP, G.R. No.
A mortgagor, whose property has been 146157, 13 Feb. 2009)
extrajudicially foreclosed and sold, can validly
execute a mortgage contract over the same property Options in case of Death of Debtor
in favor of a third party during the period of
redemption. The purchaser at the foreclosure sale A secured creditor holding a real estate mortgage
merely acquires an inchoate right to the property has three distinct, independent, and mutually
which could ripen into ownership only upon the exclusive remedies that can be alternatively
lapse of the redemption period without his credit pursued in case the mortgagor dies:
having been discharged, it is illogical to hold that
during that same period of twelve months the 1. To waive the mortgage and claim the entire
mortgagor was "divested" of his ownership, since debt from the estate of the mortgagor as an
the absurd result would be that the land will ordinary claim;
consequently be without an owner although it 2. To foreclose the mortgage judicially and prove
remains registered in the name of the mortgagor. any deficiency as an ordinary claim; and
Such mortgage does not involve a transfer, cession 3. To rely on the mortgage exclusively, foreclosing
or conveyance of the property but only constitutes the same at any time before it is barred by
a lien thereon. (Medida v. CA, G.R. No. 98334, 08 May prescription without a right to file a claim for
1992) any bank deficiency. (Perez v. PNB, G.R. No. L-
21813, 30 July 1996)
Q: DBP guaranteed LCD’s loan. When LCD
defaulted, DBP paid it and sought Petition for Annulment of Foreclosure
reimbursement. LCD failed to reimburse DBP, Proceedings
hence DBP extrajudicially foreclosed the REM,
where it was the highest bidder. The Sheriff’s This petition contests the presumed right of
certificate of sale was annotated in the ownership of the buyer in a foreclosure sale and
certificate of titles on April 30, 1976. La puts in issue such presumed right of ownership,
Campana failed to redeem the properties. The while an ex parte petition for issuance of a writ of
court, among others, ordered LCD to pay such possession is a non-litigious proceeding.
sums of money unlawfully collected or received
by way of rentals and/or fruits from the subject Filing of a petition for nullification of foreclosure
properties to DBP. When should the period for proceedings with motion for consolidation is not

2022 GOLDEN NOTES
Civil Law
allowed as it will render nugatory the presumed

right of ownership, as well as the right of possession
of a buyer in a foreclosure sale.

Land Titles and Deeds
Purpose of registration
III. LAND TITLES AND DEEDS
The following are the purpose of Registration under
Torrens System:
1. To quiet title to land;

A. TORRENS SYSTEM; GENERAL PRINCIPLES 2. To establish and certify to the ownership of
an absolute and indefeasible title to realty,
and to simply its transfer;
In this system, title by registration takes the place of 3. To guarantee the integrity of land titles, and
"title by deeds" of the system under the "general" to protect their indefeasibility once the
law. A sale of land is effected by a registered claim of ownership is established and
transfer, upon which a certificate of title is issued. recognized;
The certificate is guaranteed by statute, and, with 4. To put a stop forever to any question of the
certain exceptions, constitutes indefeasible title to legality of the title;
the land mentioned therein. (Agcaoili, 2011) 5. To minimize conflicting claims and stabilize
land ownership;
The system generally means those systems of 6. To relieve the land of burden of known, as
registration of transactions with interest in land well as unknown claims; and
whose declared object, under governmental 7. To decree land titles that shall be final,
authority, to establish and certify to the ownership irrevocable, and indisputable. (Agcaoili,
of an absolute and indefeasible title to realty, and 2017)
simplify the transfer. (Ibid.)
NOTE: The government has adopted the Torrens
Under the old system the same sale would be system due to its being the most effective measure
effected by a conveyance, depending for its validity, to guarantee the integrity of land titles and to
apart from intrinsic flaws, on the correctness of a protect their indefeasibility once the claim of
long series of prior deeds, wills, etc. The object of the ownership is established and recognized. (Casimiro
Torrens system, then, is to do away with the delay, Development Corporation v. Mateo, G.R. No. 175485,
uncertainty, and expense of the old conveyancing 27 July 2011)
system. (Alba v. Dela Cruz G.R. No. 5246, 16 Sept.
1920) Advantages of Torrens System
NOTE: Registration is not a mode of acquiring 1. It has substituted security for insecurity;
ownership but is merely a procedure to establish 2. It has reduced the cost of conveyances from
evidence of title over realty. It does not give the pounds to shillings, and the time occupied
holder any better title than what he actually has. from months to days
(Solid State Multi-Products Corp. v. Development 3. It has exchanged brevity and clearness for
Bank of the Philippines, G.R. No. 83383, 06 May 1991) obscurity and verbiage;
4. It has so simplified ordinary dealings that
However, a certificate of title cannot be used to he who has mastered the ‘three R’s’ can
protect a usurper from the true owner or be used as transact his own conveyancing
a shield for fraud. Registration merely creates a 5. It affords protection against fraud;
prima facie presumption of the validity of the 6. It has restored to their just value many
registration and must give way to evidence to the estates, held under good holding titles, but
contrary. (Vagilidad v. Vagilidad, G.R. No. 161136, 16 depreciated in consequence of some blur or
Nov. 2006) technical defect, and has barred the
reoccurrence of any similar faults.
(Agcaoili, 2018)

2022 GOLDEN NOTES
Civil Law
Nature land registration proceedings under the notice and hearing. Petitioners further argue
Torrens System that CA unwittingly sanctioned a collateral
attack on their TCTs when the CA ruled that all
The Torrens system is judicial in character and not lands applied for by Sps. Go belonged to the
merely administrative. Judicial proceedings for the public domain. Accordingly, to petitioners, the
registration of lands throughout the Philippines CA Decision has raised a cloud over their
shall be in rem and shall be based on the generally Torrens titles. Did the CA err in its ruling?
accepted principles underlying the Torrens system.
(Sec. 2, P.D. 1529) A: NO. Sec. 25 of P.D. No. 1529 provides that "if the
opposition or the adverse claim of any person
Registration being a proceeding in rem requires covers only a portion of the lot and said portion is
constructive seizure of the res (land) as against all not properly delimited on the plan attached to the
persons inluding the State, through publication, application, conflicting claims of ownership or
posting, and service of notice. (Agcaoili, 2018) possession, or overlapping of boundaries, the court
may require the parties to submit a subdivision plan
Accordingly, all other interested persons are duly approved by the Director of Lands." It is
notified of the proceedings by publication of the discretionary on the part of the land registration
notice of initial hearing. They also and have the right court to require the parties to submit a subdivision
to appear in opposition to such application. plan duly approved by the appropriate government
A decree of registration that has become final shall agency. Regardless of how the said court exercises
be deemed conclusive not only on the questions its discretion, the burden remains with the
actually contested and determined but also upon all oppositor or adverse claimant to convince by
matters that might be litigated or decided in the preponderance of evidence the land registration
land registration proceedings. court that there is an overlapping of boundaries. In
this case, petitioners failed.
Q: In the application for registration of title filed
by Sps. Franco over three (3) parcels of land The arguments of petitioners that CA allowed a
situated at Almanza, Las Piñas City. Republic of collateral attack on their Torrens titles, created a
the Philippines, through the OSG filed a Notice of cloud thereon and deprived them thereof without
Appearance authorizing the City Prosecutor of due process are sheer speculations. The RTC as well
Las Piñas to appear in its behalf. Oppositors- as the CA did not make any categorical ruling on the
appellants Phil-Estate Management, Inc., validity of petitioners' Torrens titles. Nor did they
Peaksun Enterprises and Export Corporation, declare that the areas covered by petitioners'
Megatop Realty Development, Inc., Arturo Dy Torrens titles are inalienable lands of the public
and Elena Dy Jao entered their Opposition. domain. (Fil-Estate Management, Inc. v. Republic,
G.R. No. 192393, 27 Mar. 2019, J. Caguioa)
Despite the opposition, the application for title
was granted by the court a quo. CA held that Constructive notice upon registration
spouses Franco failed to prove (1) that the land
applied for is alienable public land; and (2) they Every conveyance, mortgage, lease, lien,
openly, continuously, exclusively and attachment, order, judgment, instrument or entry
notoriously possessed and occupied the same affecting registered land shall, if registered, filed or
since June 12, 1945 or earlier. CA noted that the entered in the office of the Register of Deeds for the
tax declarations presented by them show that province or city where the land to which it relates
the earliest payment was made only in lies, be constructive notice to all persons from the
1991. Petitioners claim that the CA ruling which time of such registering, filing or entering. (Sec. 52,
categorized the lands applied for by Sps. Go as P.D. 1529)
public lands, effectively took away portions of
the property covered by their titles without due

Judicial and quasi-judicial bodies covering land 1529. The Quesadas are the owners of a parcel
registration under the Torrens system of land situated in Quezon City under TCT No.
27090. TCT No. 27090 as originally registered in
1. Courts; the name of the Quesadas' predecessors-in-
interest and it was donated to them sometime in
GR: RTCs have plenary jurisdiction over land 1997. The original copy of TCT No. 27090, on file
registration cases. Regional Trial Courts have with the Register of Deeds of Quezon City, was
exclusive jurisdiction over land registration destroyed as it was gutted by fire.
cases and all petitions after original registration
of title, with the power to hear and determine all The said original TCT, which has not been
questions arising upon such applications or reconstructed, may be reconstituted on the
petitions. (Sec. 2, P.D. 1529) basis of the owner's copy thereof. However, the
said owner's copy of the TCT is presently in the
NOTE: The court can now hear and decide possession of PMO. PMO got hold of the said
not only non-controversial cases but even owner's copy of the TCT because it was
contentious issues which before were delivered in 1983 to Golden Country Farms, a
beyond its competence. (Lopez v. Querubin, defunct private corporation, to secure the
G.R. No. 155405, 18 Mar. 2015) performance by the Quesadas' predecessors-in-
interest of their obligation in a Growership
XPN: MeTCs, MTCCs, MTCs and MCTCs have Agreement.
delegated jurisdiction to hear and determine
cadastral or land registration cases in the Several demands were made to PMO to
following instances: surrender the said title but the same were not
favorably acted upon by the said office. The
a. Where the lot sought to be registered is not Quesadas were constrained to file the instant
the subject of controversy or opposition; or petition to surrender the withheld duplicate
b. Where the lot is contested but the value certificates pursuant to Sec. 107 of P.D. No. 1529.
thereof does not exceed P100,000.00,
(Republic v. Bantigue, G.R. No. 162322, 14 1. Does the RTC, as a land registration court,
Mar. 2012) such value to be ascertained by have jurisdiction to hear and decide
the affidavit of the claimant or by the contentious and substantial issues over the
agreement of the respective claimants, if original petition for surrender of withheld
there be more than one, or from the duplicate certificate of title?
corresponding tax declaration of the real
property. (Sec. 34, B.P. Blg. 129, as amended A: YES. Sec. 107 contemplates ONLY two situations
by Sec. 4, R.A. No. 7691) when a petition for surrender of withheld duplicate
certificate of title may be availed of. These are:
NOTE: Appeal is taken to the Court of Appeals.
1. where it is necessary to issue a new
2. Department of Environment and Natural certificate of title pursuant to
Resources (DENR); any involuntary instrument which divests
3. Department of Justice (DOJ) through the the title of the registered owner against his
Land Registration Authority (LRA) and its consent, and
Register of Deeds;
4. Department of Land Reform (DLR); and 2. where a voluntary instrument cannot be
5. Department of Agriculture (DA) registered by reason of the refusal or
failure of the holder to surrender the
Q: The Quesadas filed a Petition to Surrender owner's duplicate certificate of title.
TCT No. 27090 pursuant to Sec. 107 of P.D. No.

2022 GOLDEN NOTES
Civil Law
Inasmuch as the original petition before the RTC property was not yet clearly and particularly
seeks the surrender of the owner's duplicate copy of identified. DARAB denied the appeal for lack of
TCT No. 27090 in the possession of PMO so that jurisdiction. It held that since the action filed by
a voluntary instrument—a Deed of Donation—can the DAR with the PARO was for the preliminary
be registered but the registration cannot be made determination of just compensation, Ella’s
by reason of the refusal of PMO, the holder, to remedy from an adverse decision therefrom was
surrender the same, a cause of action under Sec. 107 to file an original action for judicial
of P.D. No. 1529 has been sufficiently alleged in the determination of just compensation with an RTC
original petition. sitting as a Special Agrarian Court. Is the DARAB
correct?
Sec. 2 of P.D. 1529 confers a broad jurisdiction upon
the RTC "with power to hear and determine all A: YES. There is nothing contradictory between the
questions arising upon such [petition]." RTCs now provision of Sec. 50 granting the DAR primary
have the power to hear and determine all questions, jurisdiction to determine and adjudicate "agrarian
even contentious and substantial ones, arising from reform matters" and exclusive original jurisdiction
applications for original registration of titles to over "all matters involving the implementation of
lands and petitions filed after such registration. The agrarian reform," which includes the determination
matter of whether the RTC resolves an issue in the of questions of just compensation, and the provision
exercise of its general jurisdiction or of its limited of Sec. 57 granting RTCs "original and exclusive
jurisdiction as a special court is only a matter of jurisdiction" over (1) all petitions for the
procedure and has nothing to do with the question determination of just compensation to landowner,
of jurisdiction. Indeed, the land registration court and (2) prosecutions of criminal offenses under R.A.
can now hear and decide controversial and No. 6657. The first refers to administrative
contentious cases and those involving substantial proceedings, while the second refers to judicial
issues. (Privatization and Management Office v. proceedings. Under R.A. No. 6657, Land Bank of the
Quesada, G.R. No. 224507, 20 Sept. 2017, J. Caguioa) Philippines is charged with the preliminary
determination of the value of lands placed under
Q: The DAR placed portions of two lots owned by land reform program and the compensation to be
Ella under the coverage of the CARP and R.A. No. paid for their taking. Within 30 days from receipt of
6657. Land Bank of the Philippines notice, the landowner shall inform the DAR of his
subsequently valued said portions accordingly. acceptance or rejection of the offer.
DAR offered to pay the LBP-assessed amounts to
petitioner, but the latter rejected the same. After In the event the landowner rejects the offer, a
Ella failed to reply to DAR's Notice of Land summary administrative proceeding is held by the
Valuation and Acquisition within the prescribed provincial (PARAD), the regional (RARAD) or the
period, the DAR instituted before the Provincial central (DARAB) adjudicator, as the case may be,
Agrarian Reform Adjudication Board (PARAD) depending on the value of the land, for the purpose
two summary administrative proceedings for of determining the compensation for the land. The
the determination of just compensation. The landowner, the Land Bank, and other interested
PARAD found the LBP's basis for its assessment parties are then required to submit evidence as to
of just compensation for the subject lots proper. the just compensation for the land. The DAR
adjudicator decides the case within 30 days after it
Aggrieved, Ella appealed before the DARAB. is submitted for decision. If the landowner finds the
Petitioner mainly alleged that the PARO erred price unsatisfactory, he may bring the matter
(1) since the subject property should not have directly to the appropriate Regional Trial Court.
been placed under the CARP coverage, and (2) (Marasigan, Jr. v. Provincial Agrarian Reform Officer,
grave abuse of discretion was committed when G.R. No. 222882, 02 Dec. 2020, J. Caguioa)
the two summary proceedings were heard and
decided despite the fact that the subject

rendered its judgment granting aforesaid

B. REGALIAN DOCTRINE application. The Director of Lands appealed said
Decision to the CA on the basis that the trial
court erred in not dismissing the application for
registration because of applicants' failure to
All lands of whatever classification and other
overthrow the presumption that the land
natural resources not otherwise appearing to be
applied for is public land belonging to the State.
clearly within private ownership are presumed to
CA dismissed for lack of merit the appeal
belong to the State which is the source of any
interposed by the Director of Lands. Supreme
asserted right to ownership of land. (Republic v. Sin,
Court rendered its judgment and granted the
G.R. No. 157485, 26 Mar. 2014)
petition of the Director of Lands and reaffirmed
the decision of the RTC. Six years after, sisters
Jura regalia means that the State is the original
Maria and Lourdes filed for the second time an
proprietor of all lands and the general source of all
application for registration of title covering the
private titles. All claims of private title to land, save
same parcel of land and presented a
those acquired from native title, must be traced
Certification issued by CENRO of Odiongan,
from some grant, whether express or implied, from
Romblon.
the State. Absent a clear showing that the land had
been into private ownership through the State’s
Should the Court grant their petition for
imprimatur, such land is presumed to belong to
registration over the parcel of land?
State. (Republic v. Santos, G.R. No. 180027, 18 July
2012)
A: NO. There are two documents that must be
presented to prove that the land subject of the
The capacity of the State to own or acquire property
application for registration is alienable and
is the State’s power of dominium. (Agcaoili, 2018)
disposable:
1. A copy of the original classification
NOTE: To prove that the subject property is
approved by the DENR Secretary and
alienable and disposable land of the public domain,
certified as a true copy by the legal
applicant must:
custodian of the official records, and
1. Present a Community Environment and Natural
2. A certificate of land classification status
Resources Office Certificate (CENRO);
issued by the CENRO or the Provincial
2. Prove that the DENR Secretary had approved
Environment and Natural Resources Office
the land classification and released the land of
(PENRO) based on the land classification
the public domain as alienable and disposable;
approved by the DENR Secretary.
and
3. That the land subject of the application for
A CENRO or PENRO certification is not enough to
registration falls within the approved area per
prove the alienable and disposable nature of the
verification through survey by the PENRO or
property sought to be registered because
CENRO. In addition, the applicant for land
the only way to prove the classification of the land
registration must present a copy of the original
is through the original classification approved by
classification approved by the DENR Secretary
the DENR Secretary or the President himself. Given
and certified as a true copy by the legal
that the proof which Maria and Lourdes presented
custodian of the official records. (Republic v.
in this case to prove the alienable and disposable
Malijan-Javier, G.R. No. 214367, 04 Apr. 2018)
character of the Subject Land proceed mainly from
a Certification dated issued by the CENRO of
Q: Sisters Maria and Lourdes Sicat applied for
Odiongan, Romblon, which is insufficient, their
registration over a parcel of land with the RTC of
second attempt to register the Subject Land under
Romblon. Republic of the Philippines through
the Torrens system must suffer the same fate as
the Director of Lands opposed the application
for registration. Land Registration Court

2022 GOLDEN NOTES
Civil Law
their first. (Buyco v. Republic, G.R. No. 197733, 29 relies does not even state upon whose authority the
Aug. 2018, J. Caguioa) alleged reclassification had been made, placing the
annotation's validity, veracity and worth in serious
Q: In 1971, the Bureau of Lands issued Free doubt. Ultimately, the Republic failed to prove that
Patent No. 516197 in favor of Meynardo, the Roxas were classified as forest land when they
covering two lots (Roxas properties). On the were decreed in Meynardo's favor in
basis of said patent, the ROD issued Original 1971. (Republic v. Heirs of Meynardo Cabrera, G.R.
Certificate of Title covering both lots in No. 218418, 08 Nov. 2017, J. Caguioa)
Meynardo's name. Thereafter, the Roxas
Properties was transferred to other purchasers. Exception to the Regalian Doctrine
DENR Final Report showed that Free Patent No.
516197 was declared null and void for having NOTE: The Regalian Doctrine does not negate
been issued over land forming part of the public native title to lands held in private ownership since
domain (forest lands). time immemorial. (Cruz v. Secretary of Environment
and Natural Resources, G.R. No. 135385, 06 Dec.
Republic filed against the Respondents a 2000)
complaint for the annulment and/or
cancellation of Free Patent No. 516197, OCT No. When as far back as testimony or memory goes, the
RP-132 (P-9193), and TCT No. 16580. The land has been held by individuals under a claim of
Complaint also prayed for the reversion of the private ownership, it will be presumed to have been
Roxas Properties in the State's favor. Is a held in the same way before the Spanish conquest,
positive act of the government necessary to and never to have been public land. (Cariño v.
evince the reclassification of land from alienable Insular Government, 212 U.S. 449, 23 Feb. 1909)
and disposable to forest?
Q: On March 1980, Cornelio filed an application
A: YES. The classification and reclassification of for land registration of a parcel of agricultural
public lands into alienable or disposable, mineral or land. During the trial, Cornelio claimed that he
forest land is the exclusive prerogative of the and his predecessors-in-interest had been in
Executive Department, and is exercised by the latter open, continuous, uninterrupted, public and
through the President, or such other persons vested adverse possession and occupation of the land
with authority to exercise the same on his behalf. for more than 30 years. He likewise introduced
Since the power to classify and reclassify land are a certification, dated February 1981 citing a
executive in nature, such acts, effected without presidential declaration that on June 1980, the
executive authority, are void, and essentially ultra subject matter of the application was declared
vires. alienable and disposable agricultural land. If
you are the judge, will you grant the application
Further, owing to the nature of reversion for land registration of Cornelio? (2014 BAR)
proceedings (as opposed to land registration
proceedings), the State bears the burden to prove A: NO, I will not grant the application. To be entitled
that the land previously decreed or adjudicated in to register the parcel of land, the applicant must
favor of the defendant constitutes land which show that the land being applied for is an alienable
cannot be owned by private individuals. land. At the time of the filing of the application, the
land has not yet been declared alienable by the
The alleged reclassification of the Roxas Properties state. (Republic v. CA, G.R. No. 144057, 17 Jan. 2005)
is bereft of basis, as it was done by Engineer Mendez
on his sole account, without any prior directive from Q: Can Cornelio acquire said agricultural land
the President, or a duly authorized officer from the through acquisitive prescription, whether
Executive Department. In fact, the annotation ordinary or extraordinary? (2014 BAR)
appearing on LC Map 209 upon which the Republic

A: Cornelio may acquire the land by acquisitive Sec. 3 of R.A. No. 11231 provides that “Agricultural
prescription only after it was declared part of public lands alienated or disposed in favor of
alienable land by the state by possession for the qualified public land applicants under Section 44 of
required number of years through ordinary Commonwealth Act No. 141, as amended, shall not
prescription, which requires ten years of possession be subject to restrictions imposed under Sections
in good faith with just title; or extraordinary 118, 119 and 121 thereof regarding acquisitions,
prescription by possession for thirty years without encumbrances, conveyances, transfers, or
need of any other condition. (Art. 1134, NCC) dispositions. Agricultural free patent shall now be
considered as title in fee simple and shall not be
Q: By virtue of Free Patent No. III-12 17306 subject to any restriction on encumbrance or
dated May 20, 1987, OCT No. P-22-C was issued alienation.”
and registered on May 25, 1987, in the name of
Epifania San Pedro. It covers Lot No. 3070, Cad- Clearly, the State's complaint for reversion is based
333 situated in San Juan, Balagtas, Bulacan with solely on Sec. 118 of C.A. 141. Since the restriction
an area of 12,108 square meters. After the death on the conveyance, transfer or disposition of the
of Epifania San Pedro, Pelagio Francisco, Sr. patented land subject of this case within five years
executed an Affidavit of Self Adjudication from and after the issuance of the patent pursuant
declaring that he was the sole surviving heir of to Sec. 118 of C.A. 141 has been removed and the
the patentee. title of the patentee Epifania San Pedro is, under R.A.
No. 11231, now considered as title in fee simple,
As a consequence, OCT No. P-22-C was cancelled which is not subject to any restriction on alienation
and Pelagio Francisco was issued TCT No. T- or encumbrance, the Government no longer has any
7836 on October 25, 1990. Thereafter, Pelagio legal basis to seek the reversion or reconveyance of
Francisco sold the subject property to defendant the subject land. (Republic v. Tanduay Lumber, Inc.,
Tanduay Lumber. Thus, TCT No. T-7836 was G.R. No. 223822, 16 Oct. 2019, J. Caguioa).
cancelled and TCT No. P-8582 was issued in the
name of Tanduay Lumber. A certain Arturo and Q: In his lifetime, Jose Carlos owned a 3,975
Teresita Mendoza wrote the OSG a petition to square meter parcel of land situated in Ususan,
request the OSG to cause the cancellation of Taguig City. Upon his death in 1948, Jose's
Patent No. P-22-C issued to Epifania San Pedro, daughter — Maria Carlos — inherited said
and all subsisting derivative titles. They alleged property and later declared the same in her
that the patentee sold the lot covered by said name for taxation purposes and paid the realty
patent within 5 years from the issuance of the taxes due thereon. In 1968, Maria Carlos caused
patent, in violation of the provisions of C.A. No. the survey of the lot under a conversion plan
141. A Complaint for Cancellation of which was approved by the Bureau of Lands. In
Title/Reversion was filed by the Republic of the 1996, Maria Carlos sold subject lot to Ususan
Philippines. RTC dismissed the Complaint for Development Corporation (now DMCI Project
Cancellation of Title and Reversion on the Developers, Inc.). Wanting to have said land
grounds of equitable estoppels and laches. Is the titled in its name, applicant-appellee filed this
complaint already barred? instant application for registration and
confirmation of title before the RTC asserting
A: The passage of R.A. No. 11231 or the "Agricultural that the subject realty formed part of the
Free Patent Reform Act" has rendered this issue alienable and disposable land of the public. It
moot and academic. Pursuant to David v. averred that, along with its predecessors-in-
Macapagal-Arroyo, a moot and academic case is one interest, it has been in open, exclusive,
that ceases to present a justiciable controversy by continuous and notorious possession and
virtue of supervening events so that a declaration occupation of said realty in the concept of an
thereon would have no practical use or value. owner as early as June 12, 1945. To prove such
claim, Maria Carlos' daughter, Teresita Victoria

2022 GOLDEN NOTES
Civil Law
testified that her deceased mother used to own possessed in the concept of owner, and utilized a
and occupy said lot openly, peacefully, defined territory devolved to them, by operation of
exclusively and continuously since she acquired customary law or inherited from their ancestors, in
it from her father, which realty she devoted to accordance with their customs and traditions. (Sec.
planting rice and other crops as well as to her 3(p), R.A. No. 8371)
piggery and poultry business. In addition, the
former adjacent owner Pilar Guillermo testified Q: Socorro Orcullo was a grantee of a Free Patent
that everybody in their community confirmed for a parcel of land in Cebu. Subsequently, the
and recognized Jose and Maria Carlos' subject lot was sold to SAAD Agro-Industries,
successive ownership and possession of the Inc. by one of Orcullo’s heirs. Yet, the Solicitor
subject realty. Hence, [applicant-]appellee General filed a complaint for the annulment of
contended that its total length of possession of the title and reversion of the said lot on the
such land, tacked with that of its predecessors- ground that the issuance of the free patent and
in-interest, add up to over sixty (60) years title was irregular and erroneous, following the
already. Is petitioner entitled to the registration discovery that the lot is allegedly part of the
of the property? timberland and forest reserve. Decide on the
case.
A: No. In the present case, petitioner does not claim
that the subject lot is of private ownership. On the A: In instances where a parcel of land considered to
contrary, petitioner claims that it is a land of public be inalienable land of the public domain is found
dominion that has been classified as alienable and under private ownership, the Government is
disposable. Consequently, the burden to prove its allowed by law to file an action for reversion in
alienable and disposable classification rests with which the ultimate relief sought is to revert the land
petitioner. Unfortunately, petitioner was unable to to the government pursuant to the Regalian
do so. The failure of petitioner to prove the alienable doctrine. Nevertheless, in applying the Regalian
and disposable status of the subject lot renders the Doctrine, the paramount considerations of fairness
review of the finding of the CA that it has not and due process must be observed in every claim of
substantiated its claim that it and its predecessors- right by the Government against one of its citizens.
in-interest have possessed the subject lot in the Respondent Orcullo in this case failed to show that
character and for the duration required under the subject lot is part of timberland or forest reserve
Section 14 (1) of PD 1529 superfluous. (Ususan it adverted to. (Saad Agro-Industries, Inc. v. Republic,
Development Corp. v. Republic, G.R. No. 209462 G.R. No. 152570, 27 Sept. 2006)
(Resolution), 15 July 2020, J. Caguioa)
Native title
Refers to pre-conquest rights to lands and domains

which, as far back as memory reaches, have been
held under a claim of private ownership by
Indigenous Cultural Communities/Indigenous
People (ICCs/IPs), have never been public lands and
are thus indisputably presumed to have been held
that way since before the Spanish Conquest. (Sec.
3(1), R.A. No. 8371)
Time immemorial possession for native title
Refers to a period when as far back as memory can

go, certain ICCs/IPs are known to have occupied,

a. WHO MAY APPLY

C. ORIGINAL REGISTRATION
1. Those who by themselves or through their
predecessors-in-interest have been in Open,
Continuous, Exclusive, and Notorious
Laws that govern land registration
Possession and Occupation of alienable and
disposable lands of the public domain under a
1. Property Registration Decree (P.D. 1529, as
bona fide claim of ownership since June 12,
amended);
1945, or earlier. (O-C-E-N-P-O)
NOTE: P.D. 1529 amended and superseded
C.A. 496, otherwise known as the then Land
NOTE: Possession is:
Registration Act.
2. Cadastral Act (Act. 2259, as amended);
Open – when it is patent, visible, apparent,
3. Public Land Act (C.A. 141, as amended);
notorious and not clandestine;
4. Emancipation Decree (P.D. 27, as amended);
5. Comprehensive Agrarian Reform Law of
Continuous – when uninterrupted, unbroken
1988 (R.A. No. 6657); and
and not intermittent or occasional;
6. Indigenous Peoples Rights Act (R.A. No.
8371).
Exclusive – when the adverse possessor can
show exclusive dominion over the land and an
1. ORDINARY REGISTRATION appropriation of it to his own use and benefit;
and
A proceeding filed in the MTC where there is no
controversy or opposition, or contested lots where Notorious – when it is so conspicuous that it is
the value of which does not exceed P100,000.00 generally known and talked of by the public or
(Sec. 4, R.A. No. 7691) or in the RTC (as a land the people in the neighborhood. (Bienvenido v.
registration court) when the value exceeds Gabriel, G.R. No. 175763, 11 Apr. 2012)
P100,000 to determine title or ownership of land on
the basis of an application for registration or 2. Those who have acquired ownership over
answer/opposition by a claimant in a cadastral private lands by prescription under the
registration. provisions of existing laws;
Kinds of original registration NOTE: Rule on Prescription under the Civil

Code:
1. Judicial/Voluntary/Ordinary – filing a. Ordinary prescription – 10 years in good
with the proper court an application by the faith and with just title; and
private individual himself; and b. Extraordinary prescription – 30 years
2. Administrative/Involuntary/Cadastral Only when such land has become patrimonial

– compulsory registration initiated by the can the prescriptive period for the acquisition
government, to adjudicate ownership of of the property begin to run. (Malabanan v.
land and involuntary on the part of the Republic, G.R. No. 179987, 03 Sept. 2013)
claimants, but they are compelled to
substantiate their claim or interest through 3. Those who have acquired ownership of private
an answer. lands or abandoned river beds by right of
accession or accretion under the existing laws;
and

2022 GOLDEN NOTES
Civil Law
Ownership of Abandoned River Beds by Is the Ortigas not allowed to sell the unutilized
right of Accession portion of the property to the government in
accordance with Section 50 of Presidential
GR: River beds which are abandoned Decree No. 1529?
through the natural change in the course of
waters ipso facto belong to the owners A: NO, Ortigas is still allowed to sell the unutilized
whose lands are occupied by the new portion of the property. Section 50 of Presidential
course in proportion to the area lost. Decree No. 1529 does not apply in a case that is the
proper subject of an expropriation proceeding.
XPN: The owners of the adjoining lands Respondent Ortigas may sell its property to the
shall have the right to acquire the same by government. It must be compensated because its
paying the value thereof, otherwise, the property was taken and utilized for public road
alluvial property may be subject to purposes. Section 50 contemplates roads and
acquisition through prescription by third streets in a subdivided property, not public
persons. (Art. 461, NCC; City Mayor of thoroughfares built on a private property that was
Parañaque City v. Ebio, G.R. No. 178411, 23 taken from an owner for public purpose. A public
June 2010) thoroughfare is not a subdivision road or street.
More importantly, when there is taking of private
Ownership by right of Accretion along property for some public purpose, the owner of the
River Banks property taken is entitled to be compensated.
(Republic v. Ortigas and Company Limited
The owners of land adjoining the banks of Partnership, G.R. No.. 171496, 03 Mar. 2014).
rivers belong the accretion which they
gradually receive from the effects of the Object of Registration
current of the waters. (Art. 457, NCC)
Only real property or real rights may be the object
A riparian owner does not acquire the of registration under the existing land registration
additions to his land caused by special laws.
works designed to bring about accretion.
Q: Rosario filed her application for land
4. Those who have acquired ownership of land by registration of a rice land that she had inherited,
any other manner provided for by law. owning and possessing it openly, publicly,
uninterruptedly, adversely against the whole
5. Where the land is owned in common, all the co- world, and in the concept of owner since then.
owners shall file the application jointly. (Sec. 14, This was opposed by the Republic opposed
P.D. 1529) claiming that Rosario failed to occupy and
possess the land for at least 30 years
Q: Ortigas and Company Limited Partnership is immediately preceding the filing of the
the owner of a parcel of land in Pasig City, whose application; and that the land applied for, being
title was then inscribed with an encumbrance a portion of a river control system, that could
that it was for road widening and subject to not be subject of appropriation or land
Section 50 of Presidential Decree No. 1529 or registration. Is the land subject of application
the Property Registration Decree. After the C-5 susceptible of private acquisition?
Ortigas Avenue flyover was completed, Ortigas
filed a petition for authority to sell to the A: NO. The land of the public domain, to be the
government the unutilized portion, which was subject of appropriation, must be declared alienable
granted by the RTC. The Republic contends that and disposable either by the President or the
Ortigas can only donate the property to the Secretary of the DENR. Unless public land is shown
government in accordance with Section 50. to have been reclassified or alienated to a private

person by the State, it remains part of the Cavite. The parcels of land were allegedly
inalienable public domain. Indeed, occupation acquired from Narciso Ambrad, Alberto
thereof in the concept of owner, no matter how long, Tibayan, and Restituto Tibayan on March 13,
cannot ripen into ownership and be registered as a 1997. It was also alleged that their
title. (Republic v. De Joson, G.R. No. 163767, 10 Mar. predecessors-in-interest had been in possession
2014) of the properties since June 12, 1945. Can the
AFP-RSBS acquire the land through acquisitive
Q: Mario applied for registration of his land. He prescription?
claims that he bought the land from Eduardo
who also claims that his great grandfather A: YES. The period of possession prior to the
owned the land. Mario submitted a CENRO from declaration that land is alienable and disposable
DENR stating that the land is alienable and agricultural land is included in the computation of
disposable in 1982. However, the Republic possession for purposes of acquiring registration
appealed claiming that Mario did not adhere to rights over a property if the land has already been
the requirements of time required by the law declared as such at the time of the application for
and he failed to proof that the land is an registration. Petitioner’s right to the original
alienable and disposable land. The Court ruled registration of title over the property is, therefore,
in favor of the Republic stating that the dependent on the existence of:
possession of the land before it is declared a) a declaration that the land is alienable and
alienable and disposable cannot be included in disposable at the time of the application for
the computation of possession of the land, thus, registration, and
Mario did not adhere to the period required by b) open and continuous possession in the
law. Can Mario register his land? concept of an owner through itself or
through its predecessors-in-interest since
A: NO. Mario failed to present sufficient evidence to June 12, 1945 or earlier.
establish that they and their predecessors-in-
interest had been in possession of the land since In this case, there is no dispute that the properties
June 12, 1945. Without satisfying the requisite were already declared alienable and disposable
character and period of possession—possession land on March 15, 1982. Hence, the property was
and occupation that is open, continuous, exclusive, already alienable and disposable at the time of
and notorious since June 12, 1945, or earlier—the petitioner’s application for registration on July 10,
land cannot be considered ipso jure converted to 1997. Further, the open, continuous, exclusive,
private property even upon the subsequent notorious possession of the petitioner was proven
declaration of it as alienable and disposable. by testimonies and pieces of evidence. (AFP
Prescription never began to run against the State, Retirement and Separation Benefits System v.
such that the land has remained ineligible for Republic, G.R. No. 180086, 02 July 2014)
registration under Sec. 14(1) of the Property
Registration Decree. Likewise, the land continues to Persons qualified for registration in case the
be ineligible for land registration under Sec. 14(2) land is subject to:
of the Property Registration Decree unless Congress
enacts a law or the President issues a proclamation 1. Pacto de retro sale
declaring the land as no longer intended for public
service or for the development of the national GR: Vendor a retro may apply for registration.
wealth. (Malabanan v. Republic, G.R. No. 179987, 03
Sept. 2013) XPN: Vendee a retro should the period for
redemption expire during pendency of registration
Q: The AFP-RSBS filed an application for proceedings and ownership to property is
original registration of parcels of land consolidated in vendee a retro.
consisting of 48, 151 square meters in Silang,

2022 GOLDEN NOTES
Civil Law
2. Trust and for the period prescribed by law as to entitle

him to registration in his name, then the
GR: Trustee may apply for registration. proscription against corporation acquiring
alienable lands of the public domain except through
XPN: Unless prohibited by the instrument creating lease does not apply for the land was no longer
the trust. public land but private property. (Republic v. Iglesia
ni Cristo. G.R. No. 180067, 30 June 2009)
NOTE: Trusteeship or trust is a fiduciary
relationship with respect to property which Q: Noynoy, Erap, Manny and Gibo are co-owners
involves the existence of equitable duties imposed of a parcel of land. May Manny seek registration
upon the holder of the title to the property to deal in his name of the land in its entirety?
with it for the benefit of another.
A: NO. Since a co-owner cannot be considered a true
3. Reserva troncal owner of a specific portion until division or
partition is effected, he cannot file an application for
Reservista has the right to apply for registration but registration of the whole area without joining the
the reservable character of the property will be co-owners as applicants.
annotated in the title.
Q: In 1998, Iglesia ni Cristo filed its application
NOTE: In reserva troncal, the ascendant who for Registration of Title before the MCTC which
inherits from his descendant any property which the Republic opposed. The cadastral court held
the latter may have acquired by gratuitous title from that the essential elements for judicial
another ascendant, or a brother or sister, is obliged confirmation of an imperfect title over the
to reserve such property as he may have acquired subject lot have been complied with. The CA also
by operation of law for the benefit of relatives who held that the INC has been in continuous, open,
are within the third degree and who belong to the and peaceful possession and occupation of the
line from which said property came. lot for more than 40 years. Is the INC entitled to
registrable right over the subject lot?
Eligibility of Private Corporations to hold
alienable lands of the public domain A: YES. In Naguit, the Court held a less stringent
requirement in the application of Sec. 14(1) of P.D.
Private corporations may not hold alienable lands of 1529 that the reckoning period for possession is the
the public domain. The word “persons” refer to actual possession of property and it is sufficient that
natural persons who are citizens of the Philippines. the property sought to be registered is already
Juridical or artificial persons are excluded. Sec. 3, alienable and disposable at the time the application
Art. XII of the 1987 Constitution prohibits private for registration of title is filed.
corporations or associations from holding alienable
lands of the public domain except by lease. The possession of INC has been established not only
from 1952 and 1959 when it purchased the
GR: Private corporations or associations may not respective halves of the subject lot but is also tacked
hold alienable lands of public domain except by on to the possession of its predecessors-in-
lease, for a period not exceeding 25 years, interest. These possessions and occupation—from
renewable for not more than 25 years, and not to Sabuco, including those of his parents, to INC; and
exceed 1,000 hectares in area. (Sec. 3, Art. XII, 1987 from Sabuco to Badanguio to INC—had been in the
Constitution) concept of owners: open, continuous, exclusive, and
notorious possession and occupation under a bona
XPN: Where at the time the corporation acquired fide claim of acquisition of property. These had not
land, its predecessor-in-interest had been in been disturbed as attested to by respondent’s
possession and occupation thereof in the manner

witnesses. (Republic v. Iglesia ni Cristo, G.R. No. June 12, 1945, they still cannot register the land for
180067, 30 June 2009) failing to establish that the land is alienable and
disposable. (Republic v. Javier, GR No. 214367, 04
Q: Laureana and Iden's application for Apr. 2018)
registration of land title over a parcel situated in
Barangay Tranca, Talisay, Batangas filed in June Q: The applicants sought the registration of their
2009 before the Municipal Circuit Trial Court of titles over the subdivided portions of a land. The
Talisay-Laurel, Batangas. The land, regarded as applicants provided ample evidence to their
Lot No. 1591, Cad. 729, Talisay Cadastre, had an favor. However, the Solicitor General opposed
area of 9,629 square meters. The application of the application using a pro forma opposition.
Laureana and Iden was docketed as Land Does the Solicitor General have to produce
Registration Case No. 09-001 (LRA Record No. N- evidence that that the land is a public domain
79691). On September 10, 2009, Republic of the despite the theory that all lands belong to the
Philippines (Republic) filed an Opposition to the State?
application based on the following grounds: (1)
Neither the applicants nor their predecessors- A: YES. When the State has no effective opposition,
in-interest have been in open, continuous, except for a pro forma opposition, to controvert an
exclusive and notorious possession and applicant's convincing evidence of possession and
occupation of the land in question in the concept occupation, presumptions are tilted to this
of an owner since June 12, 1945 or earlier; (2) applicant's favor. (Republic v. Sps. Noval, G.R. No.
The tax declarations relied upon by appellees do 170316, 18 Sept. 2017)
not constitute competent and sufficient
evidence of a bona fide acquisition of the land by Adverse possession of land
the appellees; and (3) The parcel of land applied
for is a land of public domain and, as such, not Possession of land is adverse when it is open and
subject to private appropriation. And the notorious. It is open when it is patent, visible, and
Republic further avers that a CENRO apparent and it is notorious when it is so
Certification is not sufficient to prove the land's conspicuous that it is generally known and talked of
classification as alienable and disposable. The by public or the people in the neighborhood.
MTC and CA ruled in granting the Application for
registration. Whether or not Laureana is Q: An Emancipation Patent OCT was issued in
entitled for the registration of the land in her Remy’s favor. However, Madarieta filed a
name? complaint for annulment and cancellation of the
OCT against Remy before the DARAB, alleging
A: NO. In this case, although respondents were able that the Department of Agrarian Reform
to present a CENRO certification, a DENR-CENRO mistakenly included her husband’s lot as part of
report with the testimony of the DENR officer who Luspo’s property where Remy’s house was
made the report, and the survey plan showing that constructed. What is the nature of Remy’s
the property is already considered alienable and possession of the subject land?
disposable, these pieces of evidence are still not
sufficient to prove that the land sought to be A: Remy possessed the subject land in the concept
registered is alienable and disposable. Absent the of an owner. No objection was interposed against his
DENR Secretary's issuance declaring the land possession of the subject land and Remy did not
alienable and disposable, the land remains part of employ fraud in the issuance of the emancipation
the public domain. Thus, even if respondents have patent and title. In fact, Madarieta faulted the DAR,
shown, through their testimonial evidence, that not him. (Rementizo v. Heirs of Vda. De Madarieta,
they and their predecessors-in-interest have been G.R. No. 170318, 15 Jan. 2009)
in open, continuous, exclusive, and notorious
possession and occupation of the property since

2022 GOLDEN NOTES
Civil Law
NOTE: Jurisdiction over cases for cancellation of

Extended under the
registered emancipation patents Available both by P.D.
aegis of the P.D. 1529
1529 and the Civil
and the Public Land
With the enactment of R.A. No. 9700 (An Act Code.
Act (PLA).
Strengthening the Comprehensive Agrarian Reform
Program), the exclusive and original jurisdiction
over cases for cancellation of registered Under Sec. 48(b) of the
The 30-year period
emancipation patents now belongs to the PLA, as amended by
involves extraordinary
Department of Agrarian Reform Secretary. R.A. No. 1472, the 30-
prescription under the
In line with this, the Department of Agrarian Reform year period is in
Civil Code, particularly
has issued Administrative Order No. 07- 14, which relation to possession
Art. 1113 in relation to
outlines in Article III the procedure for the without regard to the
Art. 1137.
cancellation of registered emancipation patents, Civil Code.
certificates of land ownership awards, and other
agrarian titles. The petition for cancellation shall be
filed before the Office of the Provincial Agrarian b. DECREE OF REGISTRATION
Reform Adjudicator, which would then undertake
the case build-up before forwarding it to the It is issued by LRA after finality of judgment, and
Department of Agrarian Reform Secretary for contains technical description of the land. It is
decision. subject only to an appeal. It is conclusive evidence
of the ownership of the land referred to therein and
Thus, under Administrative Order No. 07-14, the becomes indefeasible and incontrovertible after one
Complaint for cancellation of original certificates of year from the issuance of the decree.
title and emancipation patents filed by respondents
should be referred to the Office of the Provincial Decree of Confirmation and Registration v.
Agrarian Reform Adjudicator for case buildup. Decree of Registration
Then, the case shall be decided by the Department
of Agrarian Reform Secretary. (Secretary of the
Department of Agrarian Reform, v. Heirs of Abucay, DECREE OF
DECREE OF
G.R. No. 186432, 12 Mar. 2019) CONFIRMATION AND
REGISTRATION OF
REGISTRATION OF
TITLE
Sec. 14(1) v. Sec. 14(2) of P.D. 1529 TITLE
In Malabanan v. Republic, (G.R. No. 179987, 03 Sept. Issued pursuant to the Issued pursuant to the
2013), the Court clarified the difference between Public Land Act, where Property Registration
Sec. 14(1) and Sec. 14(2) of P.D. 1529. the presumption is that Decree, where there
the land applied for already exists a title
SEC. 14(1) SEC. 14(2) pertains to the State, and which is confirmed by
the occupants and the court. (Limcoma
Registration of possessors only claim an Multi-Purpose
Registration of title on
property on the basis of interest in the same by Cooperative v.
the basis of possession.
prescription. virtue of their imperfect Republic, G.R. No.
title or continuous, open, 167652, 10 July 2007)
Deals with possession Involves prescription and notorious
and occupation in the as a mode of acquiring possession.
concept of an owner. ownership.

Doctrine of Non-Collateral Attack of a Decree or Q: Mr. and Mrs. Roman and Mr. and Mrs. Cruz
Title filed an application for registration of a parcel of
land which after due proceedings was granted
A decree of registration or a registered title cannot by the RTC acting as a land registration court.
be impugned, enlarged, altered, modified, or However, before the decree of registration could
diminished either in collateral or direct proceeding, be issued, the spouses Roman and the spouses
after the lapse of one year from the date of its entry. Cruz sold the lot to Juan. In the notarized deed of
sale, the sellers expressly undertook to submit
XPN: Fake or non-existent titles. the deed of sale to the land registration court so
that the title to the property would be directly
NOTE: An oppositor cannot simply invoke the issued in Juan's name.
nullity of the title as a defense as it partakes the
nature of a collateral attack. The opponent claiming a. Is such stipulation valid?
that the applicant’s OCT is fake must file a b. Distinguish a direct attack from a
counterclaim, and that such counterclaim partakes collateral attack on a title.
the nature of a direct attack. c. If the title in (a) is issued in the names of
the original sellers, would a motion filed
Reason: Fake titles do not enjoy indefeasibility. by Juan in the same case to correct or
Well-settled is the rule that the indefeasibility of a amend the title in order to reflect his
title does not attach to titles secured by fraud and name as owner considered be collateral
misrepresentation. However, every certificate of attack? (2015 BAR)
title is presumed to have been validly issued. If an
opponent claims that it is fake, he has the burden of A:
proving it. a. YES, because when one who is not the owner of
the property sells or alienates it and later the
Effect: It was as if no title was ever issued in this seller or grantor acquires title, such title passes
case to the petitioner and therefore this is hardly the by operation of law to the buyer or grantee.
occasion to talk of collateral attack against a title. (Art. 1434, NCC)
(Heirs of Leoncio C. Oliveros v. San Miguel Corp., G.R.
No. 173531, 01 Feb. 2012) b. A direct attack on a title is one where the action
filed is precisely for the purpose of pointing out
Q: In a case for recovery of possession based on the defects in the title with a prayer that it be
ownership, is a third-party complaint to nullify declared void. A collateral attack is one where
the title of the third-party defendant considered the action is not instituted for the purpose of
a direct attack on the title? attacking the title, but the nullity of the title is
raised as a defense in a different action.
A: YES. If the object of the third-party complaint is c. NO, because Juan is not attacking the title but
to nullify the title of the third-party defendant, the merely invoking his right as transferee. Hence,
third-party complaint constitutes a direct-attack on it does not involve a collateral attack on the
the title because the same is in the nature of an title.
original complaint for cancellation of title.
Q: The Cascayan Heirs alleged that by virtue of a
Q: If an attack is made thru a counterclaim, free patent application, they were co-owners of
should it be disregarded for being a collateral a parcel of land denominated as Lot No. 20028.
attack? The Cascayan Heirs affirmed that the Spouses
Gumallaoi bought Lot No. 20029, an adjacent lot.
A: NO. A counterclaim is also considered an original The Spouses Gumallaoi built a residential house
complaint, and as such, the attack on the title is on Lot No. 20029 which the Cascayan Heirs
direct and not collateral. alleged encroached on Lot No. 20028 after

2022 GOLDEN NOTES
Civil Law
renovations and improvements. The Spouses subject lots. The Regional Director granted the
Gumallaoi ignored the notifications that they petition and declared Padillo a qualified
had encroached into Lot No. 20028. On May 31, beneficiary. A Writ of Execution was
2001, the Spouses Gumallaoi applied for a subsequently issued. Thus, Padillo filed a
Building Permit. Due to renovations on their Petition for Cancellation of Diopenes’ and
residential house, they further encroached on Villanueva’s Certificates of Land Ownership
Lot No. 20028. Thus, the Cascayan Heirs prayed Award before the Provincial Adjudicator. The
that the Spouses Gumallaoi be directed to vacate Department of Agrarian Reform Adjudication
Lot No. 20028 and to restore it to their Board ordered the cancellation of the TCT and
possession. They likewise prayed that the CLOA. It ruled that the Regional Director had
municipal engineer of Bangui issue the jurisdiction to order Padillo's inclusion as
necessary demolition permit as well as cause farmer-beneficiary. On appeal, the CA annulled
the demolition of the portion of the house that the Decision on the ground of indefeasibility of
encroached on Lot No. 20028. Finally, they title.
prayed to be paid damages.
Is the cancellation of the registered Certificates
In response, and by way of counterclaim, the of Land Ownership Award (CLOA) or Transfer
Spouses Gumallaoi maintained that they were Certificates of Title (TCT) four (4) years after
the true owners of both Lot Nos. 20029 and their issuance proper?
20028. They claimed that the Cascayan Heirs
secured a free patent to Lot No. 20028 through A: NO, under Sec. 48 of P.D. 1529, a registered
manipulation. They asserted that the certificate of land ownership award may be altered,
supporting affidavits for the Cascayan Heirs' modified, or canceled only through an action for
free patent application were obtained through annulment of the certificate itself. The petition
fraud and deception. incidentally questioned the validity of the TCT
issued in Diopenes’ and Villanueva’s favor in an
Were the Spouses Gumallaoi the legal owners of action seeking a different relief—purportedly for
Lot No. 20028? petitioner to be included as farmer-beneficiary in
the subject lots. This is a collateral attack on the title,
A: YES. In this case, Spouses Gumallaoi presented and as such, prohibited by law. Similar to a
sufficient evidence to show that the Heirs of certificate of title issued in registration proceedings,
Cascayan obtained their title through fraud and the registration of a CLOA places the subject land
misrepresentation. Moreover, the evidence did not under the operation of the Torrens system. Once
sufficiently prove the heirs' claims of possession or under the Torrens system, a CLOA becomes
ownership over Lot No. 20028. The only basis for indefeasible and incontrovertible upon the
their claim of possession was tax declarations. expiration of one year from the date of registration
with the Office of the Registry of Deeds. It may only
The spouses, on the other hand, sufficiently be attacked through a direct proceeding before the
identified Lot No. 20028 and proved their title court.
thereto. Hence, considering the foregoing, it is
proper to say that Spouses Gumallaoi are the lawful Moreover, Regional Director has no jurisdiction in a
owners of the subject property. (Heirs Of Cayetano Petition for Inclusion as farmer-beneficiary over
Cascayan v. Sps. Gumallaoi, G.R. No. 211947, 03 July lots covered by the Certificates of Title or registered
2017) Certificates of Land Ownership Award. Thus, all
subsequent proceedings are void for lack of
Q: Years after the issuance of TCT or CLOA to jurisdiction. Under B.P. Blg. 129, or the Judiciary
Diopenes and Villanueva, Padillo filed before Reorganization Act of 1980, an action for annulment
the Agrarian Reform Regional Office a Petition of a registered certificate of land ownership award,
for Inclusion a Farmer-Beneficiary over the like the annulment of a certificate of title, involves

title to or possession of real property or any interest forth in or preserved against the certificate of title.
therein. This falls under the exclusive original (PCSO v. New Dagupan Metro Gas Corporation, et al.;
jurisdiction of either the Regional Trial Court or the G.R. No. 173171, 11 July 2012)
Municipal Trial Court, depending on the assessed
value. (Padillo v. Villanueva, G.R. No. 209661, 03 Oct. NOTE: An innocent purchaser for value includes a
2018) lessee, mortgagee, or other encumbrances for value.
c. REVIEW OF DECREE OF REGISTRATION; Purchaser in good faith and for value is the same as
INNOCENT PURCHASER FOR VALUE a purchaser for value.
Available remedies to question the validity of Determination of Good Faith

judgment in a registration case
Good faith, or the lack of it, is in its last analysis a
1. New trial or reconsideration; (Rule 37, ROC) question of intention; but, in ascertaining the
2. Appeal to the CA or SC in the manner as intention by which one is actuated on a given
ordinary actions; (Sec. 33, P.D. 1529) occasion, we are necessarily controlled by the
3. Relief of judgment; (Rule 38, ROC) evidence as to the conduct and outward acts by
4. Annulment of judgment; (Rule 37, Ibid.) which alone the inward motive may, with safety, be
5. Claim under Assurance Fund; (Sec. 95, P.D. determined. So it is that “the honesty of intention,”
1529) “the honest lawful intent,” which constitutes good
6. Review of Decree of Registration; (Sec. 32, faith, implies freedom from knowledge and
Ibid.) circumstances which ought to put a person on
7. Reversion; (Sec. 101, C.A. 141) inquiry,” and so it is that proof of such knowledge
8. Action for reconveyance; that overcomes the presumption of good faith in
9. Cancellation of title; which the courts always indulge in the absence of
10. Quieting of Title; proof to the contrary.
11. Criminal prosecution under the Revised
Penal Code. Good faith is satisfied with the concurrence of
the following conditions:
PURCHASER IN GOOD FAITH AND FOR VALUE
1. The seller is the registered owner of the
An innocent purchaser for value is one who buys the land;
property of another without notice that some other 2. He is in possession thereof; and
person has a right to or interest in it, and who pays 3. At the time of the sale, the buyer was not
a full and fair price at the time of the purchase or aware of any claim or interest of some
before receiving any notice of another person’s other person in the property, or of any
claim. defect or restriction in the title of the seller
or in his capacity to convey title to the
While good faith is presumed, bad faith must be property. (Agcaoili, 2018)
established by competent proof by the party
alleging the same. Sans such proof, the purchasers Purchaser in Good Faith
of property are deemed to be purchasers in good
faith, and their interest in the subject property must It has been held that a purchaser in good faith is one
not be disturbed. (Agcaoili, 2018) who buys the property of another without notice
that some other person has a right to or interest on
A purchaser of a registered property can rely on the such property and pays a full and fair price for the
guarantee afforded by pertinent laws on same at the time of such purchase or before he has
registration that he can take and hold it free from notice of the claim or interest of some other person
any and all prior liens and claims except those set in the property.

2022 GOLDEN NOTES
Civil Law
Q: Sindophil anchors its right to the Tramo the concept of an innocent purchaser for value does
property on Transfer Certificate of Title, which not apply.
was purportedly issued by the Register of Deeds
of Pasay City. The Republic alleged that the NOTE: Good faith and bad faith is immaterial in case
Tramo property was initially registered under of unregistered land. One who purchases an
the name of Teodoro. Despite the issuance of unregistered land does so at his peril. (Caldito v.
certificates of title over the Tramo property, the Obado, G.R. No. 181596, 30 Jan. 2017)
Republic claimed that the TCT in the name of
Teodoro was "spurious or of doubtful Q: Nestor applied for and was granted a Free
authenticity." Sindophil countered that the Patent over a parcel of agricultural land in
Republic was estopped from questioning the General Santos City. He presented the Free
transfers considering that it had allowed the Patent to the Register of Deeds, and he was
series of transfers and even accepted the issued a corresponding Original Certificate of
"tremendous amounts paid" as capital gains tax. Title (OCT) No. 375. Subsequently, Nestor sold
Is Sindophil a purchaser in good faith? the land to Eddie. The deed of sale was
submitted to the Register of Deeds and on the
A: NO, Sandophil is not a purchaser in good faith. basis thereof, OCT No. 375 was cancelled and
The presumption of good faith and that a holder of a Transfer Certificate of Title (TCT) No. 4576 was
title is an innocent purchaser for value may be issued in the name of Eddie. In 1986, the
overcome by contrary evidence. These annotations Director of Lands filed a complaint for
show that the Tramo property is controversial and annulment of OCT No. 375 and TCT No. 4576 on
has been the subject of several adverse claims, the ground that Nestor obtained the Free Patent
belying Sindophil's contention that it acquired the through fraud. Eddie filed a motion to dismiss on
property in good faith. With Sindophil failing to the ground that he was an innocent purchaser
prove that it was a buyer in good faith, it cannot for value and in good faith and as such, he has
recover damages. (Sindophil Inc. v. Republic, G.R. No. acquired a title to the property which is valid,
204594, 07 Nov. 2018) unassailable and indefeasible. Decide the
motion. (2000 BAR)
A Forged Deed may be the root of a Valid Title
A: Nestor’s motion to dismiss the complaint for
GR: A forged or fraudulent deed is a nullity and annulment of OCT No. 375 and TCT No. 4576 should
conveys no title. be denied for the following reasons:
XPN: If the certificate of title has already been 1. Eddie cannot claim protection as an innocent
transferred from the name of the true owner to the purchaser for value nor can he interpose the
name of the forger or the name indicated by the defense of indefeasibility of his title, because
forger, and while it remained that way, the land was his TCT is rooted on a void title. Under Sec. 91,
subsequently sold to an innocent purchaser. (Muoz C.A. 141, as amended, otherwise known as the
v. Yabut, G.R. No. 142676, 06 June 2011) Public Land Act, statements of material facts in
the applications for public land must be under
Q: If the land subject of the dispute was not oath. Sec. 91 of the same act provides that such
brought under the operation of the Torrens statements shall be considered as essential
system, will the concept of an innocent conditions and parts of the concession, title, or
purchaser for value apply? permit issued, any false statement therein, or
omission of facts shall ipso facto produce the
A: NO. If the land in question was not brought under cancellation of the concession. The patent
the operation of Torrens system because the issued to Nestor in this case is void ab initio
original certificate of title is null and void ab initio, not only because it was obtained by fraud but
also because it covers 30 hectares which is far

beyond the maximum of 24 hectares provided was presented by Sps. Ilano who claimed that
by the free patent law. the property was sold to them and showed
Mahilum a notarized Agreement and a Deed of
2. The government can seek annulment of the Absolute Sale containing Mahilum’s forged
original and transfer certificates of title and signature. However, the spouses did not register
the reversion of the land to the State. Eddie's the title in their names. Mahilum then sought the
defense is untenable. The protection afforded annulment of the Agreement and the Deed of
by the Torrens System to an innocent Absolute Sale. Spouses Ilano prayed for the
purchaser for value can be availed of only if dismissal of the complaint arguing that Mahilum
the land has been titled thru judicial failed to allege that they were purchasers in bad
proceedings where the issue of fraud becomes faith and in the absence of such an allegation,
academic after the lapse of one year from the the presumption that respondents are
issuance of the decree of registration. In public purchasers in good faith prevails. Can the
land grants, the action of the government to Spouses Ilano claim that they are purchasers in
annul a title fraudulently obtained does not good faith?
prescribe such action and will not be barred
by the transfer of the title to an innocent A: NO. Since the title of the property remained with
purchaser for value. Mahilum, there is no new title to annul. Indeed, if the
agreement and deed of sale are forgeries, then they
Q: Heirs of Kusop, filed for application of sales are a nullity and convey no title. The underlying
patents for Lot X, a lot reserved for recreation principle is that no one can give what one does not
and health purposes under Proclamation No. have. Moreover, in order for the holder of a
168. The DENR approved such application and certificate for value issued by virtue of the
conveyed 16 titles to Kusop, who subsequently registration of a voluntary instrument may be
transferred it to AFP-RSBS. Republic filed a considered a holder in good faith for value, the
complaint for reversion, and annulment of AFP- instrument registered should not be forged. When
RSBS’ titles since the Lot X is classified as the instrument presented is forged, even if
inalienable and non-disposable public land. Is accompanied by the owner’s duplicate certificate of
the Republic correct? title, the registered owner does not thereby lose his
title, and neither does the assignee in the forged
A: YES. Certificates of title issued covering deed acquire any right or title to the property.
inalienable and non-disposable public land, even in (Mahilum v. Sps. Ilano, G.R. No. 197923, 22 June 2015)
the hands of an alleged innocent purchaser for
value, should be cancelled. The Heirs of Kusop didn’t Q: Spouses Rufloe acquired a parcel of land
acquire any right to Lot X. The sales patents over Lot located at Muntinlupa. However, in 1978 Delos
X are null and void, for at the time the sales patents Reyes forged the signatures of the spouses in
were applied for and granted, the land had lost its Deed of Sale to make it appear that the disputed
alienable and disposable character. (Republic v. AFP property was sold to her by the former. On the
Retirement and Separation Benefits System, G.R. No. basis of the said deed of sale, Delos Reyes
180463, 13 Jan. 2013) succeeded in obtaining title in her name. Hence,
the Rufloes filed a complaint for damages
Q: Mahilum entrusted the owner’s duplicate against Delos Reyes alleging that the Deed of
copy of her land to Perez, real estate broker, Sale was falsified as their signatures appearing
who claimed that she can assist the latter in thereon was forged.
obtaining a loan, with the title serving as
collateral. Mahilum demanded the return of the During the pendency of the case, Delos Reyes
title but Perez failed to produce the same sold the subject property to the Burgos siblings
alleging that it was lost. Thereafter Mahilum was who then sold the same to their aunt, Leonarda
informed by the RD that the title was not lost but Burgos. However, the sale in favor of Leonarda

2022 GOLDEN NOTES
Civil Law
was not registered. Thus, no title was issued in of their possession. (Rufloe v. Burgos G.R. No.
her name. The subject property remained in the 143573, 30 Jan. 2009)
name of the Burgos siblings who also continued
paying the real estate taxes thereon. Q: Cipriano, one of Pablo’s heirs, executed an
a. Are the sales of the subject property by extrajudicial settlement of a sole heir and
Delos Reyes to the Burgos siblings and confirmation of sales, declaring himself as the
the subsequent sale to Leonarda valid only heir and confirmed the sales made in favor
and binding? of the spouses Rodolfo. Consequently, a
b. Are the respondents considered as certificate of title was issued in the name of the
innocent purchasers in good faith and spouses, who then sold the property to
for value despite the forged deed of sale Guaranteed Homes. Pablo’s other descendants
of their transferor Delos Reyes? seek reconveyance of the property sold to the
spouses alleging that the extrajudicial
A: settlement was forged. Who is the rightful
a. The forged deed of sale was null and void and owner of the property?
conveyed no title. It is a well-settled principle
that no one can give what one does not have, A: Guaranteed Homes is the rightful owner, even
nemo dat quod non habet. One can sell only assuming that the extrajudicial settlement was a
what one owns or is authorized to sell, and the forgery. Generally, a forged or fraudulent deed is a
buyer can acquire no more right than what the nullity and conveys no title. There are, however,
seller can transfer legally. Due to the forged instances when such a fraudulent document may
deed of sale, Delos Reyes acquired no right over become the root of a valid title. One such instance is
the subject property which she could convey to where the certificate of title was already transferred
the Burgos siblings. All the transactions from the name of the true owner to the forger, and
subsequent to the falsified sale between the while it remained that way, the land was
spouses Rufloe and Delos Reyes are likewise subsequently sold to an innocent purchaser. For
void, including the sale made by the Burgos then, the vendee had the right to rely upon what
siblings to their aunt, Leonarda. appeared in the certificate.
b. The evidence shows that the Rufloe caused a Also, the extrajudicial settlement was recorded in
notice of adverse claim to be annotated on the the Register of Deeds. Registration in the public
title of Delos Reyes as early as November 5, registry is notice to the whole world. (Guaranteed
1979. The annotation of an adverse claim is a Homes, Inc. v. Heirs of Valdez, G.R. No. 171531, 30 Jan.
measure designed to protect the interest of a 2009)
person over a piece of real property, and serves
as a notice and warning to third parties dealing Q: Spouses X and Y mortgaged a piece of
with said property that someone is claiming an registered land to A, delivering as well the OCT
interest on the same or may have a better right to the latter, but they continued to possess and
than the registered owner thereof. Despite the cultivate the land, giving 1/2 of each harvest to
notice of adverse claim, the Burgos siblings still A in partial payment of their loan to the latter. A
purchased the property in question. Equally however, without the knowledge of X and Y,
significant is the fact that Delos Reyes was not forged a deed of sale of the aforesaid land in
in possession of the subject property when she favor of himself, got a TCT in his name, and then
sold the same to the Burgos siblings. Leonarda sold the land to B.
cannot be categorized as a purchaser in good B bought the land relying on A's title, and
faith. Since it was the Rufloes who continued to thereafter got a TCT in his name. It was only then
have actual possession of the property, that the spouses X and Y learned that their land
Leonarda should have investigated the nature had been titled in B's name. May said spouses

file an action for reconveyance of the land in The Civil Code clearly provides that “the action or
question against B? Reason. (1999 BAR) defense for the declaration of the inexistence of a
contract does not prescribe.” (Zacarias v. Sps.
A: The action of X and Y against B for reconveyance Alfredo, G.R. No. 190901, 12 Nov. 2014)
of the land will not prosper because B has acquired
a clean title to the property being an innocent Q: Gatmaytan purchased a parcel of land from
purchaser for value. Garcia covered by a TCT. Armed with the
A forged deed is an absolute nullity and conveys no original owner's duplicate copy of the TCT,
title. The fact that the forged deed was registered Gatmaytan attempted to register the
and a certificate of title was issued in his name, did corresponding DOAS with the RD. He was
not operate to vest upon A ownership over the successful in having the DOAS annotated, but he
property of X and Y. The registration of the forged was not able to transfer the Torrens title in his
deed will not cure the infirmity. However, once the name due to the lack of a DAR clearance.
title to the land is registered in the name of the forger
and title to the land thereafter falls into the hands of 19 years later, when Gatmaytan resumed
an innocent purchaser for value, the latter acquires a processing the transfer of the title to his name,
clean title thereto. A buyer of a registered land is not he discovered that the lot had been consolidated
required to explore beyond what the record in the by MLI pursuant to a purchase from Garcia. He
registry indicates on its face in quest for any hidden thus filed a complaint with the RTC for the
defect or inchoate right which may subsequently alternative causes of action of nullity of the sale
defeat his right thereto. This is the "mirror principle" to MLI or quieting of title. RTC dismissed the
of the Torrens system which makes it possible for a complaint on the ground of prescription stating
forged deed to be the root of a good title. that the complaint is an action for reconveyance
based on implied constructive trust, which
Q: The Revilla spouses faced financial prescribes in 10 years. Was the dismissal
difficulties in raising funds for Alfredo Revilla’s correct?
travel to Saudi Arabia, so Paz Castillo-Revilla
borrowed money from Amada Cotoner-Zacarias A: NO. Petitioners' action should be characterized
(Amada). By way of security, the parties verbally primarily as one for reconveyance based on a void
agreed that Amada would take physical contract, and thus, imprescriptible. The above
possession of the property, cultivate it, then use allegations show that the recovery of ownership is
the earnings from the cultivation to pay the loan predicated on the nullification of the underlying
and realty taxes. Upon full payment of the loan, mode of transfer of title of the disputed lot — the
Amada would return the property to the Revilla issuance of the Torrens titles to MLI being merely
spouses. Unknown to the Revilla spouses, the result of the DOAS sought to be nullified.
Amada presented a fictitious document entitled
"Kasulatan ng Bilihanng Lupa" before the In any case, even if the Complaint were to be treated
Provincial Assessor. This document was as an action for reconveyance based solely on an
executed on with the Revilla spouses as sellers implied constructive trust, it should still be allowed
and Amada as buyer of the property. Amada to proceed, having been timely filed. In all cases of
then sold the property. Was there a valid registration procured by fraud, the owner may
transfer? pursue all his legal and equitable remedies against
the parties to such fraud and that registration
A: NO. Well-settled is the rule that "conveyances by procured by the presentation of a forged deed or
virtue of a forged signature are void ab initio as the other instrument shall be null and void.
absence of the essential requisites of consent and
cause or consideration in these cases rendered the A Torrens title issued without prior presentation
contract inexistent. Doctrines of equity such as and cancellation of the existing owner's duplicate
laches apply only in the absence of statutory law. title does not bind the property to which it pertains.

2022 GOLDEN NOTES
Civil Law
The title so issued does not produce the effects of a The complaint alleged that Reynaldo Andres
Torrens title contemplated under P.D. No. 1529, was in collusion with his mother, Lydia Andres,
including the effects of constructive notice. in executing a falsified document denominated
(Gatmaytan v. Misibis Land, Inc., G.R. No. 222166, 10 as "Self-Adjudication of Sole Heir."
June 2020, J. Caguioa) PNB denied the material allegations in the
complaint. It argued that it conducted an
Reliance on a title which appears valid on its investigation on the property. The title
face presented to PNB by Reynaldo Andres and his
wife was clear and free from adverse claims. Is
Q: The Spouses Victor and Filomena Andres own PNB an innocent mortgagee for value and in
a 4,634-square-meter parcel of land. After good faith?
Victor’s death, Filomena, and six of their
children — Onofre, Roman, Juana, Guillermo, A: YES. A bank that accepts a mortgage based upon
Felisa, and Maxima — agreed in an extrajudicial a title which appears valid on its face and after
partition with sale to adjudicate one half of the exercising the requisite care, prudence, and
land to each of them pro indiviso. This diligence appropriate to the public interest
document also provides that, they all sold, character of its business can be deemed a
transferred, and conveyed to Roman Andres mortgagee in good faith. The subsequent
their respective rights and participation to the consolidation of title in its name after a valid
one-half portion of the property. This was foreclosure shall be respected notwithstanding
annotated on the title. Consequently, a new title later proof showing that the title was based upon a
was issued in the name of Roman Andres and his void transaction.
wife, Lydia Andres, under TCT No. NT-
57731. Spouses Roman and Lydia Andres The standard operating practice for banks when
mortgaged the property to PNB for acting on a loan application is “to conduct an ocular
3,000.00. PNB alleged that the Nueva Ecija inspection of the property offered for mortgage and
Regional Trial Court cancelled the guardianship to verify the genuineness of the title to determine
issued in favor of the Security Bank and Trust the real owner(s) thereof.” PNB complied with the
Company and transferred ownership of the standard operating practice of banks, which met the
properties of the deceased, Spouses Roman and requisite level of diligence, when it sent Gerardo
Lydia Andres, to their only living heir, Reynaldo Pestano to conduct an ocular inspection of the
Andres. property and verify the status of its ownership and
title. Consequently, PNB is a mortgagee in good
TCT No. NT-57731 was consequently cancelled, faith. The title resulting from the foreclosure sale,
and title was transferred to the Spouses therefore, is to be protected. The bank is an innocent
Reynaldo Andres and Janette de Leon on purchaser for value. (Onofre Andres v PNB, G.R. No.
December 27, 1994. On September 4, 1995, the 173548, 15 Oct. 2014)
Spouses Reynaldo Andres and Janette de Leon
used this title and mortgaged the property to Q: Gregorio, Enrique, Simplicio and Severino
PNB for a 1.2 million loan. This was without the Lopez inherited a 2734-square-meter property
consent of Onofre Andres. in Bustos, Bulacan originally owned by their
grandmother Gregoria Lopez, over which a tax
Onofre Andres, claiming ownership over the declaration was issued under the name, “Heirs
property, filed a complaint for cancellation of of Lopez.” On 29 November 1990, Enrique Lopez
title, reconveyance of property and damages, executed an affidavit of self-adjudication
with prayer for the issuance of a preliminary declaring himself to be the sole heir of Gregoria,
injunction against his nephew Reynaldo Andres and sold the property to Marietta Yabut
and Reynaldo’s wife, Janette de Leon, PNB, Lydia (“Yabut”). In 1993, Yabut obtained a loan from
Andres, and the Register of Deeds of Nueva Ecija. Development Bank of the Philippines (“DBP”)

and mortgaged the property to DBP as security. does not apply when the land is not yet registered
At the time of the loan, the property was covered with the Registry of Deeds.
by Tax Declaration No. 18727 under Yabut’s
name, but subsequently on 26 July 1993, an Similarly, DBP could not be held to be a mortgagee
original certificate of title was issued in Yabut’s in good faith because at the time of the mortgage,
favour and the mortgage was annotated the mortgagor Yabut had yet to register the
thereon. property under her name. The rule on “innocent
purchasers or mortagees for value” is applied more
Petitioners filed a complaint with the Regional strictly when the purchaser or mortgagee is a bank
Trial Court (“RTC”) for the annulment of as banks are expected to exercise higher degree of
Enrique’s affidavit of self-adjudication, the deed diligence in their dealings, including those involving
of sale in favour of Yabut, and the deed of real lands. DBP failed to exercise the degree of diligence
estate mortgage in favour DBP, with a prayer for required of banks when it accepted the unregistered
the re-conveyance of their ¾ share in the property as security for Yabut’s loan despite
property. Meanwhile, foreclosure proceedings circumstances that should have aroused its
were instituted by DBP upon Yabut’s default, suspicion. (Heirs of Gregorio Lopez v. Development
and there, DBP became the highest bidder, Bank of the Philippines, G.R. No. 193551, 19 Nov.
eventually resulting in the title of the property 2014)
being consolidated in its favour.
NOTE: The maxim prior est tempore, potior est jure
Did Yabut and eventually, DBP acquire valid title (he who is first in time is preferred in right) is
to the property under the doctrine of innocent followed in land registration. When a mortgagee
purchaser or mortgagee for value? relies upon what appears on the face of a Torrens
title and lends money in all good faith based on the
A: NO. Under Art. 493 of the NCC, Enrique had no title in the name of the mortgagor, his or her right or
right to sell the undivided portions belonging to his lien upon the land mortgaged must be respected
siblings or their respective heirs, and the sale to and protected. (Mahinay v. Hon. Gako, Jr., G.R. No.
Yabut should be void with respect to the shares of 165338, 28 Nov. 2011)
the other heirs who did not consent thereto.
Q: Golden Dragon is the developer of Wack-
While as a rule, an ordinary buyer may rely on the Wack Twin Towers Condominium, located in
certificate of title issued in the name of the seller, Mandaluyong City. On May 9, 1995, respondent
and need not look beyond what appears on the face Rapanot paid Golden Dragon the amount of
of the title, the ordinary buyer will not be P453,329.64 as reservation fee for a 41.1050-
considered an innocent purchaser for value if there square meter unit in said condominium. Later,
is anything on the certificate of title that arouses petitioner Bank extended a loan to Golden
suspicion, and the buyer failed to inquire or take Dragon amounting to P50,000,000.00 to be
steps to ensure that there is no cloud on the title, utilized by the latter as additional working
right or ownership of the property being sold. capital. To secure the loan, Golden Dragon
executed a Mortgage Agreement in favor of the
Yabut could not be an innocent purchaser for value, Bank, which had the effect of constituting a real
because there was no certificate of title to rely on estate mortgage over several condominium
when she purchased the property from Enrique, at units owned and registered under Golden
which time the only available document presented Dragon's name. Among the units subject of the
her was a tax declaration under “Heirs of Lopez.” Mortgage Agreement was Unit 2308-B2. On May
The defense of having purchased the property in 21, 1996, Rapanot and Golden Dragon entered
good faith may be availed of only where registered into a Contract to Sell covering Unit 2308-B2. On
land is involved and the buyer had relied in good April 23, 1997, Rapanot completed payment of
faith on the clear title of the registered owner. It the full purchase price of said unit and Golden

2022 GOLDEN NOTES
Civil Law
Dragon executed a Deed of Absolute Sale in if Unit 2308-B2 already had a buyer, given that the
favor of Rapanot. Thereafter, Rapanot made nature of the latter's business inherently involves
several verbal demands for the delivery of Unit the sale of condominium units on a commercial
2308-B2. Hence, Golden Dragon sent a letter to scale. (Prudential Bank v. Rapanot, G.R. No. 191636,
the Bank requesting for a substitution of 16 Jan. 2017, J. Caguioa)
collateral for the purpose of replacing Unit
2308-B2 with another unit with the same area.
However, the Bank denied Golden Dragon's
request due to the latter's unpaid
accounts. Because of this, Golden Dragon failed
to comply with Rapanot's verbal demands. Is the
Mortgage Agreement between the Bank and
Golden Dragon valid as against Rapanot? May it
be enforced against the latter?
A: No, the mortgage agreement is null and void as

against Rapanot. First of all, under Presidential
Decree No. 957 (PD 957), no mortgage on any
condominium unit may be constituted by a
developer without prior written approval of the
National Housing Authority, now HLURB. PD
957 further requires developers to notify buyers of
the loan value of their corresponding mortgaged
properties before the proceeds of the
secured loan are released. Thus, the Mortgage
Agreement cannot have the effect of curtailing
Rapanot's right as buyer of Unit 2308-B2, precisely
because of the Bank's failure to comply with PD 957.
Moreover, contrary to the Bank's assertions, it

cannot be considered a mortgagee in good faith. The
Bank failed to ascertain whether Golden Dragon
secured HLURB's prior written approval as
required by PD 957 before it accepted Golden
Dragon's properties as collateral. It also failed to
ascertain whether any of the properties offered as
collateral already had corresponding buyers at the
time the Mortgage Agreement was executed. The
Bank cannot harp on the fact that the Mortgage
Agreement was executed before the Contract to Sell
and Deed of Absolute Sale between Rapanot and
Golden Dragon were executed, such that no amount
of verification could have revealed Rapanot's right
over Unit 2308-B2. The Court particularly notes
that Rapanot made his initial payment for Unit
2308-B2 as early as May 9, 1995, four (4) months
prior to the execution of the Mortgage Agreement.
Surely, the Bank could have easily verified such fact
if it had simply requested Golden Dragon to confirm

Types of certificates of title

D. CERTIFICATE OF TITLE
1. Original Certificate of Title (OCT) – The first
title issued in the name of the registered owner
by the Register of Deeds covering a parcel of
It is the transcript of the decree of registration made
land which had been registered under the
by the Register of Deeds in the registry. It
Torrens system by virtue of a judicial or
accumulates in one document a precise and correct
administrative proceeding. It consists of one
statement of the exact status of the fee simple title
original copy filed in the Register of Deeds, and
which an owner possesses.
the owner’s duplicate certificate delivered to
the owner; and
Registration is the operative act which gives validity
to the transfer or creates a lien upon the land. A
NOTE: The original certificate of title shall be a
certificate of title serves as evidence of an
true copy of the decree of registration (Sec. 39,
indefeasible and incontrovertible title to the
P.D. 1529).
property in favor of the person whose name appears
therein. (Sps. Vilbar v. Opinion, G.R. No. 176043, 15
2. Transfer Certificate of Title (TCT) – The title
Jan. 2014). The titleholder is entitled to all the
issued by the Register of Deeds in favor of a
attributes of ownership of the property, including
transferee to whom the ownership of a
possession (Endaya v. Villaos, G.R. No. 202426, 27
registered land has been transferred by any
Jan. 2016)
legal mode of conveyance.
Every registered owner receiving a certificate of
Who has right to possess owner’s duplicate
title in pursuance of a decree of registration, and
certificate
every subsequent purchaser of registered land
taking a certificate of title for value and in good faith,
The owner’s duplicate certificate shall be issued by
shall hold the same free from all encumbrances
the Register of Deeds in the name of the person in
except those noted in said certificate and any of the
whose favor the land was decreed, and further
encumbrances which may be subsisting as provided
disposes that said duplicate shall be delivered to the
for under the law (Sec. 44, P.D. 1529)
registered owner. (Sec. 41, Act 496, as amended by
P.D. 1529)
NOTE: A certificate of title is different from a title.
Title constitutes a just cause of exclusive possession
Differences between title over land, land title,
or the foundation of ownership of property. A
certificate of title and deed
certificate of title is merely evidence of ownership
and not the title to the land itself. (Castillo v. Escutin,
G.R. No. 171056, 13 Mar. 2009) TITLE LAND TITLE
Evidentiary value of certificate of title A juridical act or deed The evidence of the
which is not sufficient owner’s right or extent
A certificate of title is conclusive evidence with by itself to transfer of interest, by which he
respect to the ownership of the land described ownership but can maintain control,
therein, and other matters which can be litigated provides only for a and as a rule, assert
and decided in land registration proceedings juridical justification to right to exclusive
(Sampaco v. Lantud, G.R. No. 163551, 18 July 2011) effect the acquisition or possession and
transfer ownership. enjoyment of property.

2022 GOLDEN NOTES
Civil Law
Q: St. Jude’s Enterprise, Inc. is the registered

CERTIFICATE OF owner of a parcel of land. It subdivided the said
DEED
TITLE land which was later on found to have expanded
with an increase of 1,421 sqm. St. Jude sold the
The transcript of the The instrument in lots to several individuals. Thus, the Solicitor
decree of registration writing, by which any General filed an action seeking the annulment
made by the Register of real estate or interest and cancellation of the TCT issued in the name
Deeds in the registry. It therein is created, of St. Jude. Is the government estopped from
accumulates in one alienated, mortgaged questioning the approved subdivision plan
document a precise and or assigned, or by which expanded the areas covered by the TCTs
correct statement of the which title to any real in question?
exact status of the fee estate may be affected
simple title which an in law or equity. A: YES, estoppel against the public is less
owner possesses. favored. They should not be invoked except in rare
and unusual circumstances, nor if it would operate
Ownership as distinguished from title to defeat the effective operation of a policy adopted
to protect the public. They must be applied with
circumspection and only in those special cases
OWNERSHIP TITLE
where the interests of justice clearly require it. In
the case at bar, St. Jude failed to correct and recover
An independent right of
the alleged increase in the land area for nearly 20
exclusive enjoyment
years. Its prolonged inaction strongly militates
and control of the thing
The cause for against its cause, as it is tantamount to laches.
for the purpose of
acquisition of
deriving therefrom all
ownership Verily, all persons dealing with registered land may
advantages required by
safely rely on the correctness of the certificate of
the reasonable needs of
e.g., sale = title; title issued therefor, and the law or the courts do not
the owner and the
delivery = mode of oblige them to go behind the certificate in order to
promotion of the
acquisition of investigate again the true condition of the property.
general welfare but
ownership. (Republic v. CA, G.R. No. 116111, 21 Jan. 1999)
subject to the
restrictions imposed by
law and the rights of Modes of acquiring title over land
others. (Art. 427, NCC)
1. By possession of land since time
immemorial;
NOTE: Registration under the Torrens system, not 2. By possession of alienable and disposable
being a mode of acquiring ownership, does not public land; and
create or vest title. The Torrens certificate of title is
merely evidence of ownership or title in the NOTE: Under the Public Land Act (C.A. 141),
particular property described therein. In that sense, citizens of the Philippines, who by themselves
the issuance of the certificate of title to a particular or through their predecessors-in-interest
person does not preclude the possibility that have been in open, continuous, exclusive and
persons not named in the certificate may be co- notorious possession and occupation of
owners of the real property therein described with alienable and disposable agricultural land of
the person named therein, or that the registered the public domain under a bona fide claim of
owner may be holding the property in trust for ownership since June 12, 1945, or earlier,
another person. (Casimiro Development Corporation (except when prevented by war or force
v. Mateo, G.R. No. 175485, 27 July 2011) majeure), shall be conclusively presumed to
have performed all the conditions essential to

a government grant and shall be entitled to a ameliorate the sad plight of the tenant-
certificate of title. farmers; (Gonzales v. CA, G.R. No. 110335, 18
June 2001)
3. By sale, donation, and other modes of
acquiring ownership. Lands acquired by beneficiaries may not be
sold, transferred or conveyed except
Modes of acquiring ownership over land through hereditary succession, or to the
government, or the LBP, or to other
1. Occupation; qualified beneficiaries for a period of ten
2. Law; (10) years; (Sec. 27. R.A. No. 6657)
3. Donation;
4. Tradition; 3. Reclamation – filling of submerged land by
5. Intellectual creation; deliberate act and reclaiming title thereto;
6. Prescription; and (Noblejas, 2007)
7. Succession.
4. Adverse possession / acquisitive
NOTE: Registration of a piece of land under the prescription – if the person has been in
Torrens System does not create or vest title, open, continuous, exclusive, and notorious
because it is not a mode of acquiring ownership. possession for a period prescribed by law;
Thus, notwithstanding the indefeasibility of the a. Ordinary Prescription – possession in
Torrens title, the registered owner may still be good faith and with just title for 10
compelled to reconvey the registered property to its years; (Art. 1134, NCC)
true owners. (Heirs of Tanyag v. Gabriel, et. al., G.R. b. Extraordinary Prescription –
No. 175763, 11 Apr. 2012) uninterrupted adverse possession for
30 years without need of title or good
Possession v. Occupation faith; (Art. 1137, NCC)
POSSESSION OCCUPATION 5. Private grant or voluntary transfer – the

transfer of title to land by the owner
Applies to a property Applies only to a himself or his duly authorized
with or without an property without an representative to another by mutual
owner. owner. consent is recognized by law; (Noblejas,
2007)
By itself does not confer Confers ownership by
ownership. itself. 6. Accretion – To the owners of lands
adjoining the banks of rivers belong the
There can be no
There can be possession accretion which they gradually receive
occupation without
without ownership. from the effects of the current of the
ownership.
waters; (Art. 457, NCC)
Acquisition of land titles 7. Involuntary alienation – may be acquired

against the express will of the owner.
1. Public grant – by administrative process, Transfers may not require the consent of
the government transfers land to a private the owner of the land. Some examples are
individual by the issuance of sales patent or exercise of power of eminent domain or
special patent; (C.A. 141) escheat proceedings;
2. Emancipation patent or grant – Under
P.D. 27, tenant-farmers are deemed owners
of the land they till. The purpose is to

2022 GOLDEN NOTES
Civil Law
8. Descent or devise; Disputed Lot, they do not prove that such work
a. Acquired by descent – heir succeeds was in the nature of personal cultivation, or that
the deceased owner in intestacy or by San Pedro family agreed to merely share in the
reasons of certain relationship which harvest arising therefrom. Thus, CA held that
entitles him to succeed by operation of working on another's landholding, without
law; more, "does not raise a presumption of the
b. Succeeds by devise – acquires land existence of agricultural tenancy.” Did the CA err
from one who may not be a relative, if in holding that Soriano failed to establish his
he is named by the latter in his last will status as a de jure tenant of the Disputed Lot?
and testament to succeed as such.
A: YES. The CARL of 1988 was enacted to facilitate
Q: Soriano filed before the Office of the PARAD a "a more equitable distribution and ownership of
petition for maintenance of possession, with land, with due regard to the rights of landowners to
prayer for issuance of status quo order and/or just compensation and to the ecological needs of the
injunction against San Pedro family and nation." CARL implements the CARP of the Republic.
respondents Sofronio Sariente and CARP covers not only alienable and disposable
Metropolitan Bank and Trust Company, Inc. lands of the public domain, but also those lands
Soriano averred that Rolando, Sr., with the owned by the government in its private capacity and
consent of the rest of the San Pedro family, lands owned by private individuals, provided they
instituted him as tenant farmer of the Disputed are devoted to or suitable for agriculture.
Lot, and that he had been tilling it since then.
Soriano further alleged that he had been The fact that the Disputed Lot is agricultural in
remitting a portion of the proceeds of the nature is clearly established by the evidence on
harvest to San Pedro, Sr. as part of the tenurial record. The Tax Declaration presented by San Pedro
arrangement. Soriano alleged that the San Pedro family to show that the Disputed Lot had already
family later mortgaged the Disputed Lot in favor been re-classified for residential use was shown to
of Metrobank without his consent, in order to have been forged. One of the modes by which DAR
secure an P8,000,000.00 loan. San Pedro family implements the distribution of agricultural lands
defaulted, leading to the foreclosure of the under the CARP is through the issuance of a CLOA.
mortgage and the consolidation of title in The issuance of CLOA No. T-2165 in Soriano's favor
Metrobank's name. thus confirms his right to retain possession over the
portion of the Disputed Lot identified thereunder,
Subsequently, San Pedro family directed such possession being an attribute of ownership
Soriano to vacate the Disputed Lot. Rolando, Sr. granted in his favor. Until duly cancelled in
denied that Soriano had been instituted as accordance with the prescribed procedure, CLOAs
tenant farmer and claimed that he was merely issued by the DAR shall remain valid and subsisting
employed as bulldozer and street roller and enjoy the same respect accorded to those issued
operator. Rolando, Sr. assailed the PARAD's through other modes of acquisition of title. (Dalit v.
jurisdiction, claiming that the Disputed Lot had Balagtas Sr., G.R. No. 202799, 27 Mar. 2019, J.
already been classified as residential property, Caguioa)
as stated in tax declaration issued in favor of San
Pedro family. Torrens Title
PARAD issued a Decision declaring Soriano as A certificate of ownership issued under the Torrens
lawful tenant. CA held that the system of registration by the government, through
Pagpapatunay and Sinumpaang Salaysay the Register of Deeds (RD) naming and declaring the
presented by Soriano do not suffice to establish owner in fee simple of the real property described
a tenancy relationship, for while these therein, free from all liens and encumbrances,
documents confirm that he worked on the

except as may be expressly noted there or otherwise the certificate cannot be changed, altered, modified,
reserved by law. enlarged, or diminished in a collateral proceeding.
(Wee v. Mardo, G.R. No. 202414, 04 June 2014)
Q: Filomena allegedly bought a parcel of
unregistered land from Hipolito. When she had Q: In 1929, an OCT covering the lot in
the property titled and declared for tax controversy was issued in the name of Maria
purposes, she sold it. The Mapili’s question the Ramos, Heirs of Maligaso’s aunt. In 1965, Maria
transfer, saying that Filomena falsely stated in sold it to the Spouses Encinas which led to the
her Affidavit that Hipolito sold it to her in 1949, issuance of a TCT in favor of the latter.
since by that time, he is already dead. Filomena
maintains that she is the lawful owner of the 30 years from the time they purchased the lot,
land by virtue of the issuance of the Torrens Spouses Encinas issued two demand letters to
certificate and tax declarations in her name. Is the Heirs of Maligaso asking them to vacate the
Filomena the lawful owner of such property? contested area but they refused to leave. Hence,
the Spouses Encinas filed a complaint for
A: NO. A Torrens certificate does not create or vest unlawful detainer against them. According to
title, but is merely an evidence of an indefeasible the Heirs, however, their occupation remained
and incontrovertible title to the property in favor of undisturbed for more than 30 years and the
the person whose name appears therein. Land Spouses’ failure to detail and specify the Heirs’
registration under the Torrens system was never supposedly tolerated possession suggest that
intended to be a means of acquiring ownership. they are aware of their claim over the subject
area. Decide with reason.
Neither does the existence of tax declarations create
or vest title. It is not a conclusive evidence of A: The validity of Spouses’ certificate of title cannot
ownership, but a proof that the holder has a claim of be attacked by the Heirs in this case for ejectment.
title over the property. (Larena v. Mapili, G.R. No. Under Sec. 48 of P.D. 1529, a certificate of title shall
146341, 07 Aug. 2003) not be subject to collateral attack. It cannot be
altered, modified or cancelled, except in a direct
NOTE: A Torrens title is not a conclusive evidence proceeding for that purpose in accordance with law.
of ownership when the land or a portion covered Whether or not petitioner has the right to claim
thereof was illegally or erroneously included ownership over the property is beyond the power of
thereto. The certificate of title cannot be used to the trial court to determine in an action for unlawful
protect a usurper from the true owner. (Sps. detainer.
Valenzuela v. Sps. Mano, G.R. No. 172611, 09 July
2010) As ruled in Sps. Ragudo v. Fabella Estate Tenants
Association, Inc., laches does not operate to deprive
Torrens title NOT subject to Prescription. the registered owner of a parcel of land of his right
to recover possession thereof. (Heirs of Jose
No title to registered land in derogation to that of Maligaso, Sr. v. Sps. Encinas, G.R. No. 182716, 20 June
the registered owner shall be acquired by 2012)
prescription or adverse possession. (Sec. 47, P.D.
1529) Probative value of a Torrens title
Torrens title NOT subject to Collateral Attack. A Torrens title may be received as evidence in all
courts of the Philippines and shall be conclusive as
Torrens title can be attacked only for fraud, within to all matters contained therein, principally as to the
one year after the date of the issuance of the decree identity of the land owner, except so far as provided
of registration. Such attack must be direct, and not in the Land Registration Act (LRA).
by a collateral proceeding. The title represented by

2022 GOLDEN NOTES
Civil Law
A Torrens certificate is an evidence of indefeasible Ruben alleged that he has better right to possess
title of property in favor of the person whose name the property having acquired the same from his
appears therein–such holder is entitled to the father through a Deed of Quitclaim in 1971.
possession of the property until his title is nullified. Spouses Agustin however contends that they are
(Heirs of Mariano v. City of Naga, G.R. No. 197743, 12 the rightful owners as evidenced by a Deed of
Mar. 2018) Absolute Sale in their favor. Decide who
between the parties has the right to possession
Q: Hadji Serad filed an action to quiet title with of the disputed properties.
damages with the RTC. Accordingly, Datu Kiram
with several armed men, forcibly and unlawfully A: Ruben has the right to possession. A title
entered his property and destroyed the nursery issued under the Torrens system is entitled to all
buildings, cabbage seedlings and other the attributes of property ownership, which
improvements. Datu Kiram however denied the necessarily includes possession. Ruben is correct
material allegations of Hadji Serad, asserting that as a Torrens title holder over the subject
that he and his predecessors-in-interest are the properties, he is the rightful owner and is entitled to
ones who had been in open, public, continuous, possession thereof. In this case, the Quitclaim
and exclusive possession of the property in executed by the elder Corpuz in favor of Ruben was
dispute. He also alleged that he inherited the executed made ahead of the Deed of Sale of Spouses
land in 1952 from his father and had been in Agustin. Thus, the sale of the subject properties by
adverse possession and ownership of the Ruben’s father to Spouses cannot be considered as a
subject lot, cultivating and planting trees and prior interest at the time Ruben came to know of the
plants. He also declared the land for taxation transaction. (Corpuz v. Sps. Agustin, G.R. No. 183822,
purposes and paid real estate taxes. Who is the 18 Jan. 2012)
rightful owner of the subject property?
Q: OCT P-61499 which covered a parcel of land
A: Hadji Serad is the rightful owner. was issued in Gerald’s favor. Gerald’s father,
The Torrens title is conclusive evidence with Julio, representing Gerald who was then still a
respect to the ownership of the land described minor, filed before the RTC an action for
therein, and other matters which can be litigated recovery of ownership, possession with
and decided in land registration proceedings. Tax damages with prayer for preliminary
declarations and tax receipts cannot prevail over a mandatory injunction and TRO against Joshua.
certificate of title which is an incontrovertible proof
of ownership. An original certificate of title issued Joshua, in his Answer with Motion to Dismiss,
by the Register of Deeds under an administrative interposed the special and affirmative defenses
proceeding is as indefeasible as a certificate of title of his actual possession and cultivation of the
issued under judicial proceedings. Thus, Hadji subject parcel of land in an open, adverse and
Serad’s Torrens title is a valid evidence of his continuous manner. He likewise asked for the
ownership of the land in dispute. (Datu Kiram reconveyance of the property, considering that
Sampaco v. Hadji Serad Mingca Lantud, G.R. No. Gerald and his father fraudulently had the
163551, 18 July 2011) subject property titled in Gerald's name.
Gerald's counsel repeatedly failed to attend the
Q: Ruben filed a complaint against Spouses scheduled hearings, and as a consequence, the
Agustin alleging that he is the registered owner heirs of Joshua were eventually allowed to
of two parcels of land. Accordingly, his father present their evidence after Gerald was deemed
bought it from Elias and then allowed spouses to have waived his right to cross-examine the
Agustin to occupy the subject properties. witness of the heirs of Joshua. The RTC ruled in
Despite demand to vacate, the Agustins refused favor of the heirs of Joshua. Gerald then filed
to leave the premises. with the CA a petition for annulment of
judgment on the ground of extrinsic fraud and

lack of jurisdiction. The CA initially dismissed done in an accion publiciana. (Heirs of Cullado v.
the petition but reinstated the same upon Gutierrez, G.R. No. 212938, 30 July 2019, J. Caguioa)
Dominic's motion for reconsideration. Is the CA
correct? Rules regarding the Indefeasibility and
Incontrovertibility of Torrens Title
A: YES. In an accion publiciana, the defense of
ownership will not trigger a collateral attack on the 1. The certificate of title serves as evidence of
plaintiffs Torrens or certificate of title because the an indefeasible title to the property in favor
resolution of the issue of ownership is done only to of the person whose name appears therein;
determine the issue of possession. In the present 2. After the expiration of the one-year period
case, the Answer of Joshua raised, as "special and from the issuance of the decree of
affirmative defenses" to Gerald's accion publiciana, registration upon which it is based, it
the issue of fraud in obtaining Gerald's certificate of becomes incontrovertible; and
title on the ground that "neither he nor his father 3. Decree of registration and the certificate of
had been in actual possession and cultivation of the title issued pursuant thereto may be
subject parcel of land" and that Gerald was not attacked on the ground of actual fraud
qualified as he was then a minor. within one year from the date of its entry
and such an attack must be direct and not
There is no dispute that Gerald was awarded a by a collateral proceeding. The validity of
patent on May 10, 1995 and Original Certificate of the certificate of title in this regard can be
Title No. (OCT) P-61499 was issued in his name threshed out only in an action expressly
pursuant to the said patent on May 17, 1995. filed for the purpose (Melquiades v. IAC, G.R.
Joshua's Answer questioned the OCT issued in No. L-68291, 06 Mar. 1991)
Gerald's name. At that time, Gerald's OCT had
already become incontrovertible upon the lapse of NOTE: The defense of indefeasibility of a Torrens
the one-year period to question it by reason of title does not extend to a transferee who takes it
actual fraud as provided in Section 32 of P.D. No. with notice of a flaw in the title of his transferor. To
1529. be effective, the inscription in the registry must
have been made in good faith. A holder in bad faith
Gerald has a better right of possession because his of a certificate of title is not entitled to the
right is based on ownership recognized by OCT P- protection of the law, for the law cannot be used as
61499 registered and titled under his name. The a shield for fraud. (Rufloe v. Burgos, G.R. No. 143573,
age-old rule that the person who has a Torrens title 30 Jan. 2009)
over the land is entitled to possession thereof
squarely applies in his favor. The principle that the earlier title prevails over a
subsequent one applies only when there are two
Thus, RTC was clearly without jurisdiction in ruling apparently valid titles over a single property.
that Joshua had become the owner of the land in Without a title, one cannot invoke the principle of
controversy "through the medium of acquisitive indefeasibility of Torrens titles nor can he assert
prescription" having been in possession by himself priority or presumptive conclusiveness. (Oliveros v.
and with his wife for 36 years and that Gerald must San Miguel Corp., G.R. No. 173531, 01 Feb. 2012)
reconvey the land in favor of the heirs of Joshua.
While the RTC could have resolved the issue of Q: There is no specific provision in the Public
ownership provisionally to determine the "better Land Law (C.A. 141, as amended) or the Land
right of possession," which is allowed in an accion Registration Act (Act 496), now P.D. 1529, fixing
publiciana, it was without any power or jurisdiction the one-year period within which the public land
to order the reconveyance of the land in dispute patent is open to review on the ground of actual
because that can be done only upon a definitive fraud as in Sec. 38 of the Land Registration Act,
ruling on the said issue - something that cannot be now Sec. 32 of P.D. 1529, and clothing a public

2022 GOLDEN NOTES
Civil Law
land patent certificate of title with quest for any hidden defect or inchoate right that
indefeasibility. What is the effect of such may defeat his right thereto. (Chua v. Soriano, G.R.
absence? No. 150066, 13 Apr. 2007)
A: NONE. The rule on indefeasibility of certificates XPN: When the party has actual knowledge of facts
of title was applied by the Court in Public Land and circumstances that would impel a reasonably
Patents because such application is in consonance cautious man to make such inquiry or when the
with the spirit and intent of homestead laws. purchaser has knowledge of a defect or the lack of
title in his vendor or of sufficient facts to induce a
The pertinent pronouncements in cases clearly reasonably prudent man to inquire into the status of
reveal that Sec. 38 of the Land Registration Act, now the title of the property in litigation (Amoguis v.
Sec. 32 of P.D. 1529 was applied by implication to Ballado, G.R. No. 189626, 20 Aug. 2018)
the patent issued by the Director of Lands duly
approved by the Secretary of Natural Resources, Application of mirror doctrine
under the signature of the President of the
Philippines in accordance with law. GR: Mirror Doctrine applies when title over a land
is registered under the Torrens system.
The date of issuance of the patent, therefore,
corresponds to the date of the issuance of the decree XPN: Mirror Doctrine cannot be invoked where:
in ordinary registration cases because the decree
finally awards the land applied for registration to 1. The purchaser or mortgagee is a
the party entitled to it, and the patent issued by the bank/financing institution; (Homebankers
Director of Lands equally and finally grants, awards, Saving & Trust Co. v. CA, G.R. No. 128354, 26
and conveys the land applied for to the applicant. Apr. 2005)
2. The owner still holds a valid and existing
NOTE: A certificate of title issued under an certificate of title covering the same
administrative proceeding pursuant to a homestead property, because the law protects the
patent is as indefeasible as a certificate of title lawful holder of a registered title over the
issued under a judicial registration proceeding, transfer of a vendor bereft of any
provided the land covered by said certificate is a transmissible right; (Tomas v. Tomas, G.R.
disposable public land within the contemplation of No. L-36897, 25 June 1980)
the Public Land Law (Republic v. Roxas, G.R. No. 3. The purchaser is in bad faith; (Egao v. CA,
157988, 11 Dec. 2013). G.R. No. 79787, 29 June 1989)
4. The purchaser purchases land with a
Mirror Doctrine certificate of title containing a notice of lis
pendens;
GR: If a land is registered and is covered by a 5. There are sufficiently strong indications to
certificate of title, any person may rely on the impel closer inquiry into the location,
correctness of the certificate of title, and he or she is boundaries and condition of the lot;
not obliged to go beyond the four (4) corners of the (Francisco v. CA, G.R. No. L-30162, 31Aug.
certificate to determine the condition of the 198)
property (Amoguis v. Ballado, G.R. No. 189626, 20 6. The purchaser had full knowledge of flaws
Aug. 2018) and defects in the title; (Bernales v. IAC, G.R.
Nos. 71490-91, 28 June 1988) or
Where there is nothing on the certificate of title to 7. A person buys land not from the registered
indicate any cloud or vice in the ownership of the owner but from whose rights to the land has
property, or any encumbrance thereon, the been merely annotated on the certificate of
purchaser is not required to explore further than title. (Quiñiano v. CA, G.R. No. L-23024, 31
what the Torrens title upon its face indicates in May 1971)

Q: Cipriana Delgado was the registered owner of

the lot in controversy. She and her husband sold E. SUBSEQUENT REGISTRATION
the property to Cecilia where it was agreed that
the latter shall make partial payments from time
to time and pay the balance when the Spouses
It is where incidental matters after original
are ready to execute the deed of sale and
registration may be brought before the land
transfer title to her. After paying the total
registration court by way of motion or petition filed
amount and being ready to pay the balance,
by the registered owner or a party in interest.
Cecilia demanded the execution of the deed
which was refused. Cecilia learned of the sale of
Necessity and Effects of Registration
the property to the Dys and its subsequent
mortgage to petitioner Philippine Banking
Q: After registering his land, what conveyances
Corporation (Philbank). Thus, a complaint for
may the registered owner do?
annulment of the Certificate of title and for
specific performance and/or reconveyance with
A: An owner of registered land may convey,
damages was filed against Spouses Delgado, the
mortgage, lease, charge or otherwise deal with the
Dys and Philbank. However, Philbank contends
same in accordance with existing laws. He may use
that it is a mortgagee in good faith. Is the bank’s
such forms of deeds, mortgages, leases or other
contention correct?
voluntary instruments as are sufficient in law. (Sec.
51, P.D. 1529)
A: NO. Primarily, it bears noting that the doctrine of
“mortgagee in good faith” is based on the rule that
GR: Such deed, mortgage, lease, or other voluntary
all persons dealing with property covered by a
instrument shall operate only as a contract between
Torrens Certificate of Title are not required to go
the parties and as evidence of authority to the
beyond what appears on the face of the title. In the
Register of Deeds to make registration. It is the act
case of banks and other financial institutions,
of registration which shall operate to convey or
however, greater care and due diligence are
affect the land insofar as third persons are
required since they are imbued with public interest,
concerned, and in all cases, the registration shall be
failing which renders the mortgagee in bad faith.
made in the office of the Register of Deeds for the
Thus, before approving a loan application, it is a
province or city where the land lies.
standard operating practice for these institutions to
conduct an ocular inspection of the property offered
The act of registration creates a constructive notice
for mortgage and to verify the genuineness of the
to the whole world of such voluntary or involuntary
title to determine the real owner(s) thereof. The
instrument or court writ or process. (Sec. 52, Ibid.)
apparent purpose of an ocular inspection is to
protect the “true owner” of the property as well as
XPN: A will purporting to convey or affect
innocent third parties with a right, interest or claim
registered land shall take effect as a conveyance or
thereon from a usurper who may have acquired a
bind the land, not merely as a contract or evidence
fraudulent certificate of title thereto. (Philippine
of authority of the RD to make registration. (Sec. 51,
Banking Corporation v. Dy, et al., G.R. No. 183774, 14
Ibid.)
Nov. 2012)
1. VOLUNTARY DEALINGS
Mortgages and Leases
GR: The mortgagor should be the absolute owner of

the property to be mortgaged; otherwise, the
mortgage is considered null and void.

2022 GOLDEN NOTES
Civil Law
XPN: Doctrine of mortgagee in good faith. All Donation and TCT No. N-217728, as well as the
persons dealing with property covered by a Torrens cancellation and annulment of the Deed of Real
Certificate of Title, as buyers or mortgagees, are not Estate Mortgage, with prayer for preliminary
required to go beyond what appears on the face of injunction before the RTC of Quezon City.
the title. This is the same rule that underlies the
principle of innocent purchasers for value. RTC denied the prayer for injunction, hence, the
extrajudicial sale pushed through as scheduled.
The prevailing jurisprudence is that a mortgagee Calubad and Keh emerged as the highest
has a right to rely in good faith on the certificate of bidders. Consequently, a Certificate of Sale
title of the mortgagor to the property given as dated November 3, 2002 was issued. The title to
security and in the absence of any sign that might the property was consolidated and TCT No. N-
arouse suspicion, has no obligation to undertake 257432 was issued in favor of Calubad and Keh.
further investigation. Hence, even if the mortgagor
is not the rightful owner of, or does not have a valid Danilo argues that while Calubad and Keh may
title to, the mortgaged property, the mortgagee in be mortgagees in good faith, they are not
good faith is, nonetheless, entitled to protection. purchasers in good faith as they were aware of
(Duque-Rosario v. Banco Filipino Savings and Sonia's adverse claim when they purchased the
Mortgage Bank, G.R. No. 140528, 07 Dec. 2011) property during the public auction on October
24, 2002. As such, they have no right over the
NOTE: The subsequent nullification of the disputed property. Calubad and Keh contend
mortgagor’s title will not nullify the mortgage. that that any subsequent adverse claim will not
(Gonzales v. IAC, G.R. No. L-69622, 29 Jan. 1988) prejudice the mortgagee's right as a purchaser
in the foreclosure sale. Are Calubad and Keh's
Q: Corona is the registered owner of a lot title as purchasers in the foreclosure sale are
covered by TCT No. RT-122097 (126876). Her valid?
children are petitioners Danilo and Sonia,
respondent Damian, and the Jimenez siblings A: YES. There is a situation where, despite the fact
(Vilma, Federico, and Chona Jimenez). Corona that the mortgagor is not the owner of the
died on January 16, 2002. During the settlement mortgaged property, his title being fraudulent, the
of the estate, Jimenez siblings discovered a Deed mortgage contract and any foreclosure sale arising
of Donation allegedly executed by Corona in therefrom are given effect by reason of public
favor of Damian on August 31, 2000 over the 532 policy.” The doctrine applies when the following
sq.m. property. By virtue of the Deed, TCT No. requisites concur, namely:
RT-122097 was cancelled and TCT No. N- a. the mortgagor is not the rightful owner of,
217728 was issued in the name of Damian on or does not have valid title to, the property;
September 7, 2000. b. the mortgagor succeeded in obtaining a
Torrens title over the property;
On May 21, 2001, Damian mortgaged the c. the mortgagor succeeded in mortgaging the
property to Calubad and Keh in consideration of property to another person;
a P7,000,000.00-loan. On the same day, the d. the mortgagee relied on what appears on
mortgage was annotated on TCT No. N-217728. the title and there exists no facts and
Jimenez siblings learned about the mortgage, circumstances that would compel a
but only Sonia registered her Affidavit of reasonably cautious man to inquire into the
Adverse Claim, which was annotated at the back status of the property; and
of TCT No. N-217728 on July 12, 2002. On e. the mortgage contract was registered.
October 12, 2002, Sonia was informed that the
property was scheduled for auction on October All these requisites were satisfied in this case, viz.:
24, 2002. This prompted the Jimenez siblings to (a) Damian was found to have no valid title to the
file a complaint for the annulment of the Deed of property as his title was derived from a forged Deed

of Donation; (b) he was able to obtain TCT No. N- Effects of Registration of voluntary dealings
217728; (c) he succeeded in mortgaging the
property to Calubad and Keh; (d) Calubad and Keh 1. Creates a lien that attaches to the property
found nothing on TCT No. N-217728 that would in favor of the mortgagee; and
have notified them of Damian's invalid title. In fact, 2. Constitutes constructive notice of his
Calubad and Keh even went beyond the title and interest in the property to the whole world.
conducted an ocular inspection, whereby they
confirmed that Damian was in possession and Rule on Carry-Over of Encumbrances
occupation of the property; and (e) the mortgage
contract was registered. Thus, the courts a quo did Mortgage lien is a right in rem which follows the
not err in ruling that Calubad and Keh were property. If, at the time of any transfer, subsisting
mortgagees in good faith. encumbrances or annotations appear in the
registration book, they shall be carried over and
Jurisprudence dictates that a subsequent lien or stated in the new certificate or certificates; except
encumbrance annotated at the back of a certificate so far as they may be simultaneously released or
of title of a foreclosed property will not affect the discharged. (Sec. 59, P.D. 1529)
rights of a purchaser in a foreclosure sale because
such sale retroacts to the date of the registration of It is inseparable from the property mortgaged as it
the mortgage, making the sale prior in time to the is a right in rem — a lien on the property whoever
lien or encumbrance. The foreclosure sale retroacts its owner may be. It subsists notwithstanding a
to the date of registration of the mortgage because change in ownership; in short, the personality of the
it is incidental to the fulfilment of the mortgagor's owner is disregarded. (Ligon v. CA, GR No. 107751,
obligation in the mortgage contract upon his 01 June 1995)
default. In turn, the purchaser in a foreclosure sale
essentially derives his right from the previously Q: If the property that was the subject of
registered mortgage. To rule otherwise would be to mortgage was subsequently foreclosed, must a
render nugatory the purpose of the mortgage as new certificate of title be automatically issued in
security. favor of the purchaser?
Furthermore, the nullity of the mortgagor's A: The answer must be qualified.

certificate of title does not automatically carry with
it the nullity of a registered mortgage if the 1. No right of redemption – The certificate
mortgagee acted in good faith. Once the mortgagor of title of the mortgagor shall be canceled,
defaulted in the fulfillment of his obligation, the and a new certificate issued in the name of
mortgagee in good faith can still cause the the purchaser; and
foreclosure of the mortgage. In such case, the 2. There is right of redemption – The
purchaser in the foreclosure sale acquires the right certificate of title of the mortgagor shall
of the mortgagee in good faith, making the sale prior NOT be cancelled, but the certificate of
in time as against any subsequent lien or sale and the order confirming the sale
encumbrance. Accordingly, Sonia's adverse claim, shall be registered by a brief
which was annotated after the registered mortgage memorandum thereof made by the
in favor of Calubad and Keh, cannot prevail over Register of Deeds upon the certificate of
Calubad and Keh's rights as mortgagees in good title.
faith and purchasers in the foreclosure sale. Being
mortgagees in good faith, they have a superior lien In the event the property is redeemed, the
over that of Sonia, and their right to foreclose is certificate or deed of redemption shall be filed with
reserved. (Jimenez v. Jimenez, Jr., G.R. No. 228011, 10 the Register of Deeds, and a brief memorandum
Feb. 2021) thereof shall be made by the Register of Deeds on
the certificate of title of the mortgagor.

2022 GOLDEN NOTES
Civil Law
If the property is not redeemed, the final deed of Distinctions between Voluntary and Involuntary
sale executed by the sheriff in favor of the purchaser Dealings
at a foreclosure sale shall be registered with the
Register of Deeds; whereupon the title of the VOLUNTARY INVOLUNTARY
mortgagor shall be canceled, and a new certificate DEALINGS DEALINGS
issued in the name of the purchaser. (Sec. 63, P.D. As to Registration
1529) Requires registration
to create a constructive
Q: Does non-registration of property after Does not require notice to the whole
judicial foreclosure and sale have the effect of registration. world of such
invalidating the foreclosure proceedings, such instrument or court
that ownership reverts to the original owner? writ.
As to Kinds
A: NO. The effect of the failure to obtain the judicial
confirmation was only to prevent the title to the 1. Attachment
1. Sale
property from being transferred. For sure, such 2. Mandamus
2. Real property
failure did not give rise to any right in favor of the 3. Sale on execution
mortgage
mortgagor or the respondents as his successors-in- of judgment or
3. Lease
interest to take back the property already validly sales for taxes
4. Pacto de retro sale
sold through public auction. Nor did such failure 4. Adverse claims
5. Extra-judicial
invalidate the foreclosure proceedings. To maintain 5. Notice of lis
settlement
otherwise would render nugatory the judicial pendens
6. Free patent /
foreclosure and foreclosure sale, thus unduly 6. Expropriation
homestead
disturbing judicial stability. After all, under the 7. Forfeiture
7. Powers of
applicable rule earlier cited, the judicial 8. Auction sale on
attorney
confirmation operated only “to divest the rights of foreclosure of
8. Trusts
all the parties to the action and to vest their rights mortgage
in the purchaser, subject to such rights of As to Entry
redemption as may be allowed by law.” (Robles v. Entry in the day book is An entry thereof in the
Yapcinco et al., G.R. No. 169569, 22 Oct. 2014) insufficient. There is a day book is sufficient
need to present title to notice to all persons.
2. INVOLUNTARY DEALINGS record the deed in (Garcia v. CA, G.R. Nos.
registry and to make L-48971 & 49011, 22
Necessity of Registration of involuntary dealings memorandum on title. Jan. 1980)
Involuntary dealings, unlike the voluntary dealings, Involuntary dealings that must be registered
requires the registration. It is the act of registration
which creates a constructive notice to the whole 1. Attachment; (Sec. 69, P.D. 1529)
world of such instrument or court writ or process 2. Adverse claim; (Sec. 70, P.D. 1529)
and is the operative act that conveys ownership or 3. Sale on execution or levy for taxes or for
affects the land insofar as third persons are any assessment; (Sec. 74, P.D. 1529) and
concerned. (Saberon v. Ventanilla, Jr. G.R. No. 4. Notice of lis pendens. (Sec. 76, P.D. 1529)
192669, 21 Apr. 2014)
Writ of Attachment
Attachment is the legal process of seizing another’s

property in accordance with a writ or judicial order
for the purpose of securing satisfaction of a
judgment yet to be rendered. It is used primarily to

seize the debtor’s property in order to secure the a. His alleged right or interest;
debt or claim of the creditor in the event that a b. How and under whom such alleged
judgment is rendered (Agcaoili, 2018) right of interest is acquired;
c. Description of the land in which the
Effect of the Non-Recording of a Writ of right or interest is claimed; and
Attachment d. Certificate of title number.
2. Such statement must be signed and sworn
An attachment levied on real state not duly to before a notary public or other officer
recorded in the Registry of Property is not an authorized to administer oath; and
encumbrance on the attached property, nor can 3. Claimant shall state his residence or place
such attachment unrecorded in the registry, serve to which all notices may be served upon
as a ground for decreeing the annulment of the sale him. (Agcaoili, 2018)
of the property at the request of another creditor.
(Siari Valley Estates, Inc. v. Lucasan, G.R. No. L-13281, Registration of adverse claim
31 Aug. 1960)
By filing a sworn statement with the Register of
a. ADVERSE CLAIM Deeds of the province where the property is located,
setting forth the basis of the claimed right together
It is a notice to third persons that any transaction with other data pertinent thereto. The duty of the
regarding the disputed land is subject to the Register of Deeds to record the same on the title is
outcome of the dispute. (Arrazola v. Bernas, G.R. No. ministerial. (Paz Ty Sin Sei v. Jose Lee Dy Piao, G.R.
L-29740, 10 Nov. 1978) No. L-11271, 28 May 1958)
Purpose of Annotating the adverse claim NOTE: Entry of the adverse claim filed on the day
book is sufficient without the same being annotated
The purpose of annotating the adverse claim on the at the back of the corresponding certificate of title.
title of the disputed land is to apprise third persons (Director of Lands v. Reyes, G.R. No. L-27594, 28 Nov.
that there is a controversy over the ownership of the 1975)
land and to preserve and protect the right of the
adverse claimant during the pendency of the Effect of the registration of an adverse claim
controversy. It is a notice to third persons that any
transaction regarding the disputed land is subject to It renders the adverse claim effective and any
the outcome of the dispute. (Ibid.) transaction regarding the disputed land shall be
subject to the outcome of the dispute.
Instances when a claim of interest is adverse Effect of non-registration of an adverse claim
1. Claimant’s right or interest in registered The effect of non-registration or invalid registration

land is adverse to the registered owner; of an adverse claim renders it ineffective for the
2. Such right or interest arose subsequent to purpose of protecting the claimant’s right or
the date of original registration; or interest on the disputed land, and could not thus
3. No other provision is made in the decree for prejudice any right that may have arisen thereafter
the registration of such right or claim. (Sec. in favor of third parties.
110, Act 496)
Limitations to the registration of an adverse
Formal requisites of an adverse claim for claim
purposes of registration
1. No second adverse claim based on the same
1. Adverse claimant must state the following ground may be registered by the same
in writing: claimant; (Sec. 70, P.D. 1529) and

2022 GOLDEN NOTES
Civil Law
2. A mere money claim cannot be registered Sale on execution or for taxes or for any
as an adverse claim. (Sanchez v. CA, G.R. No. assessment
L-40177, 12 Feb. 1976)
Whenever registered land is solved on execution, or
Q: May an adverse claim exist concurrently with taken or sold for taxes or for any assessment or to
a subsequent annotation of a notice of lis enforce a lien of any character, or for any costs and
pendens? charges incident to such liens, any execution or copy
of execution, any officer's return, or any deed,
A: YES, an adverse claim may exist concurrently demand, certificate, or affidavit, or other instrument
with a subsequent annotation of a notice of lis made in the course of the proceedings to enforce
pendens. When an adverse claim exists concurrently such liens and required by law to be recorded, shall
with a notice of lis pendens, the notice of adverse be filed with the Register of Deeds of the province
claim may be validly cancelled after the registration or city where the land lies and registered in the
of such notice, since the notice of lis pendens also registration book, and a memorandum made upon
serves the purpose of the adverse claim. the proper certificate of title in each case as lien or
encumbrance. (Sec. 74, P.D. 1529)
Lifespan of a registered adverse claim
b. NOTICE OF LIS PENDENS
The adverse claim shall be effective for a period of
30 days from the date of registration and it may be Lis pendens literally means a pending suit. The
cancelled. doctrine of lis pendens refers to the jurisdiction,
power or control which a court acquires over
Effect of the expiration of the period of property involved in a suit, pending the continuance
effectivity of an adverse claim of the action, and until final judgment. (Sps. Po Lam
v. CA, G.R. No. 116220, 06 Dec. 2000)
The expiration does not ipso facto terminate the
claim. The cancellation of the adverse claim is still It merely creates a contingency and not a lien. It
necessary to render it ineffective; otherwise, the does not produce any right or interest which may be
inscription will remain annotated and shall exercised over the property of another. It only
continue as a lien to the property. protects the applicant’s rights which will be
determined during trial.
Q: May the RD cancel an adverse claim?
NOTE: It is not a lien or encumbrance under our
A: NO. The RD cannot, on its own, automatically civil law. It is mere cautionary notice to prospective
cancel the adverse claim. buyers of certain property that said property is
under litigation. The annotation of a notice of lis
NOTE: Before the lapse of 30-day period, the pendens at the back of the original copy of the
claimant may file a sworn petition withdrawing his certificate of title on file with the Register of Deeds
adverse claim, or a petition for cancellation of is sufficient to constitute constructive notice to
adverse claim may be filed in the proper Regional purchasers or other persons subsequently dealing
Trial Court. with the same property. One who deals with
property subject of a notice of lis pendens cannot
Q: What must an interested party do if he seeks invoke the right of a purchaser in good faith neither
the cancellation of a registered adverse claim? can he acquire better rights that those of his
predecessors-in-interest. (Tanchoco v. Aquino, G.R.
A: The interested party must file with the proper No. 30670, 17 Jan. 1990)
court a petition for cancellation of adverse claim,
and a hearing must also first be conducted.

Purposes of a notice of lis pendens judgment or decree that the court will
promulgate subsequently.
1. Protect the rights of the party causing the
registration of the lis pendens; and However, the filing of a notice of lis pendens does not
2. Advise third persons who purchase or create a right or lien that previously did not exist.
contract on the subject property that they Without a notice of lis pendens, a third party who
do so at their peril and subject to the result acquires the property after relying only on the
of the pending litigation. (Agcaoili, 2006) certificate of title is a purchaser in good faith. (Lopez
v. Enriquez, GR No. 146262, 21 Jan. 2005)
NOTE: A notice of lis pendens may involve actions
that deal not only with title or possession of a Notice of lis pendens negates good faith
property, but also with the use or occupation of a
property. The litigation must directly involve a One who deals with property subject of a notice of
specific property which is necessarily affected by lis pendens cannot invoke the right of a purchaser in
the judgment. (Agcaoili, 2018) good faith—neither can he acquire better rights
than those of his predecessor-in-interest.
Q: When may a notice of lis pendens be made and
when may it not be resorted to? Q: When may a notice of lis pendens be
cancelled?
A: (Ibid.)
A: A notice of lis pendens may be cancelled in the
following cases before final judgment upon order of
NOTICE OF LIS PENDENS
the court:
1. When it is shown that the notice is for the
When applicable When inapplicable
purpose of molesting the adverse party;
1. Recover possession 1. Preliminary 2. Where the evidence so far presented by the
of real estate; attachments; plaintiff does not bear out the main
2. Quieting of title; 2. Levy or execution; allegations of the complaint;
Remove clouds 3. Proceedings on 3. When it is shown that it is not necessary to
upon title; probate or wills; protect the right of the party who caused
3. For partition; or 4. Administration of the registration thereof;
4. Any other the real estate of 4. Where the continuances of the trial are
proceeding of any deceased person; unnecessarily delaying the determination
kind in court or of the case to the prejudice of the
directly affecting 5. Proceedings for defendant;
title to the land or its the recovery of 5. Upon verified petition of the party who
use or occupation or money caused the registration thereof; or
the building judgments. 6. It is deemed cancelled after final judgment
thereon. in favor of defendant, or other disposition
of the action, such as to terminate all rights
of the plaintiff to the property involved.
Effects of the Annotation of notice of lis pendens (Sec. 77, P.D. 1529; Valderama v. Arguelles,
G.R. No. 223660, 02 Apr. 2018)
1. It keeps the subject matter of litigation
within the power of the court until the Q: When is a notice of lis pendens deemed
entry of the final judgment to prevent the cancelled?
defeat of the final judgment by successive
alienation; and A: Under Sec. 77 of P.D. 1529, a notice of lis
2. It binds a purchaser, bona fide or not, of the pendens shall be deemed cancelled only upon the
land subject of the litigation to the

2022 GOLDEN NOTES
Civil Law
registration of a certificate of the clerk of court in

which the action or proceeding was pending stating F. NON-REGISTRABLE PROPERTIES
the manner of disposal thereof if there was a final
judgment in favor of the defendant or the action was
disposed of terminating finally all rights of the
Non-registrable lands
plaintiff over the property in litigation. (Cunanan v.
Jumping Jap Trading Corp. G.R. No. 173834, 24 Apr.
These are properties of public dominion which,
2009)
under existing legislation, are not the subject of
private ownership and are reserved for public
NOTICE OF LIS purposes.
ADVERSE CLAIM
PENDENS
All lands of the public domain, waters, minerals,
As to definition
coal, petroleum, and other mineral oils, all forces of
potential energy, fisheries, forests or timber,
Literally means wildlife, flora and fauna, and other natural
pending suit. It resources are owned by the State. (Sec. 2, Art. XII,
operates as a notice to 1987 Constitution)
the whole world that a
particular real NOTE: The properties of public dominion are not
Notice to third persons property is in susceptible to acquisitive prescription and only
that any transaction litigation. The properties of the State that are no longer earmarked
regarding the disputed inscription serves as a for public use, otherwise known as patrimonial, may
land is subject to the warning that one who be acquired by prescription. In Heirs of Malabanan
outcome of the dispute. acquires interest over v. Republic, the Supreme Court, in observance of the
litigated property does foregoing, clarified the import of Sec. 14(2) and
so at his own risk, or made the following declarations:
that he gambles on the
result of the litigation 1. The prescriptive period for purposes of
over the property. acquiring an imperfect title over a property of
the State shall commence to run from the date
As to purpose an official declaration is issued that such
property is no longer intended for public
service or the development of national wealth;
Its purpose is to and
Its purpose is to protect the rights of the
apprise third persons party causing the 2. Prescription will not run as against the State
that there is a registration of the lis even if the property has been previously
controversy over the pendens and to advise classified as alienable and disposable as it is
ownership of the land third persons who that official declaration that converts the
and to preserve and purchase or contract property to patrimonial. (Republic v. Metro
protect the right of the on the subject property Index Realty and Development Corp., G.R. No.
adverse claimant that they do so at their 198585, 02 July 2012)
during the pendency of peril and subject to the
the controversy. result of the pending Reason behind their non-registrability
litigation.
Property of the public domain is beyond the
commerce of man and not susceptible of private
appropriation and acquisitive prescription.
Occupation thereof in the concept of owner no

matter how long cannot ripen into ownership and What is the effect of the act of Gov. Gen Forbes in
be registered as a title. (Valiao v. Republic, G.R. No. reserving the land for provincial park purposes?
170757, 28 Nov. 2011)
A: As part of the reservation for provincial park
Non-Registrable Lands purposes, they form part of the forest zone. It is
elementary in the law governing natural resources
1. Property of public domain or those that forest land cannot be owned by private
intended for public use, public service or persons. It is not registrable and possession thereof,
development of the national wealth; (Art. no matter how lengthy, cannot convert it into
420, NCC) private property, unless such lands are reclassified
2. Forest or timber lands; and considered disposable and alienable. (Sps.
3. Water sheds; Palomo, et. al. v. CA, et. al., G.R. No. 95608, 21 Jan.
4. Mangrove swamps; 1997)
5. Mineral lands;
6. National parks and plazas; Q: Does land classified as forest loses its
classification because it has been stripped of it
NOTE: Where the certificate of title covers forest cover?
a portion of land within the area reserved
for park purposes, the title should be A: NO. A forested area classified as forest land of the
annuled with respect to that portion. public domain does not lose such classification
(Palomo v. CA, G.R. No. 95608. 21 Jan. 1997) simply because loggers or settlers may have
stripped it of its forest cover. Parcels of land
7. Military or naval reservations; classified as forest land may actually be covered
8. Foreshore lands; with grass or planted with crops
9. Reclaimed lands; by kaingin cultivators or other farmers. Forest lands
10. Submerged areas; do not have to be on mountains or in out-of-the-way
11. River banks; places. The classification of land is descriptive of its
12. Lakes, rivers, creeks and lagoons; legal nature or status and does not have to be
descriptive of what the land actually looks like.
NOTE: Areas beyond a lake’s natural bed, (Heirs of Jose Amunategui v. Director of Forestry, G.R.
or the ground covered by the waters at No. L-27873, 09 Nov. 1983)
their highest ordinary depth during the dry
season, may be registered. (Republic v. CA, Forest lands
G.R. No. L-43105, 31 Aug. 1984)
It is defined as “a large tract of land covered with a
A dried-up creek is property of public natural growth of trees and underbrush; a large
dominion. (Fernando v. Acuña, G.R. No. wood.” If the land forms part of the public forest,
161030, 14 Sept. 2011) possession thereof, however long, cannot convert it
into private property as it is within the exclusive
13. Reservations for public and semi-public jurisdiction of the Bureau of Forest Development
purposes; and beyond the power and jurisdiction of the
14. Protected areas; registration court. (Agcaoili, 2018; Director of Lands
15. Resources within ancestral domains; and v. Abanzado, G.R. No. L-21814, 15 July 1975)
16. Others of similar character. Unless the land is released as A and D, the rules on
confirmation of title do not apply. (Heirs of Jose
Q: In 1913, Gov. Gen. Forbes reserved a parcel of Amunategui v. Director of Forestry, G.R. No. L-27873,
land for provincial park purposes. Sometime 09 Nov. 1983)
thereafter, the court ordered said land to be
registered in Ignacio & Carmen Palomo’s name.

2022 GOLDEN NOTES
Civil Law
Foreshore land Mineral lands
A strip of land that lies between the high and low Mineral land means any land where mineral
water marks and is alternately wet and dry resources are found. Mineral resources, on the
according to the flow of tide. It is that part of the other hand, mean any concentration of
land adjacent to the sea, which is alternately mineral/rocks with potential economic value. (Sec.
covered by the ordinary flow of tides. (Republic v. 3, R.A. No. 7942)
CA, G.R. No. 126316, 25 June 2004)
NOTE: Mineral resources are owned by the State
Foreshore lands are inalienable unless reclaimed by and the exploration, development, and processing
the government and classified as agricultural lands thereof shall be under its full control and
of the public domain. (Chavez v. Public Estates supervision. The State may directly undertake such
Authority, G.R. No. 133250, 11 Nov. 2003) activities or it may enter into mineral agreements
with contractors. (Sec. 4, R.A. No. 7942)
NOTE: Seashore, foreshore land, and/or portions of
the territorial waters and beaches, cannot be NOTE: Possession of mineral land, no matter how
registered. Even alluvial formation along the long, does not confer possessory rights. Thus, a
seashore is part of the public domain and, therefore, certificate of title is void when it covers property of
not open to acquisition by adverse possession by public domain classified as mineral lands. Any title
private persons unless subsequently declared as no issued over non-disposable lots, even in the hands
longer needed for public use. (Aranas De Buyser v. of alleged innocent purchaser for value, shall be
Director of Lands, G.R. no. l-22763, 18 Mar. 1983) cancelled. (Lepanto Consolidated Mining Co. v.
Dumyung, G.R. No. L-31666, 20 Apr. 1979)
Mangrove swamps
NOTE: Ownership of land does not extend to
These are mud flats, alternately washed and mineral underneath. The Regalian doctrine reserves
exposed by the tide, in which grows various kindred to the State all minerals that may be found in public
plants which will not live except when watered by and even private land devoted to “agricultural,
the sea, extending their roots deep into the mud and industrial, commercial, residential, or (for) any
casting their seeds, which also germinate there. purposes other than mining.” (Republic v. CA, G.R.
These constitute the mangrove flats of the tropics, No. 45859, 28 Sept. 1938)
which exist naturally, but which are also, to some
extent, cultivated by man for the sake of the Q: Can land be partly mineral and partly
combustible wood of the mangrove and like trees as agricultural?
well as for the useful nipa palm propagated thereon.
(Director of Forestry v. Villareal, G.R. No. 32266, 27 A: NO. The rights over the land are indivisible and
Feb. 1989) that the land itself cannot be half agricultural and
half mineral. The classification of land must be
Q: Are mangrove swamps disposable? categorical; the land must be either completely
mineral or completely agricultural. (Republic v. CA,
A: NO. Mangrove swamps or manglares are forestall G.R. No. L-43938, 15 Apr. 1988)
and not alienable agricultural land.
Watershed
Mangrove swamps form part of the public forests
and, therefore, not subject to disposition until and It is a land area drained by a stream or fixed body of
unless they are first released as forest land and water and its tributaries having a common outlet for
classified as alienable agricultural land. (Ibid.) surface runoff. (Sec. 3(m), P.D. No. 705)

Watershed reservation
G. DEALINGS WITH UNREGISTERED LAND
It is a forest land reservation established to protect
or improve the conditions of the water yield thereof
or reduce sedimentation. (Sec. 3(l), P.D. 705)
No deed, conveyance, mortgage, lease, or other
voluntary instrument affecting land not registered
Q: Public Reclamation Authority (formerly
under the Torrens system shall be valid, except as
Philippine Estate Authority or PEA) reclaimed
between the parties thereto, unless such instrument
several portions of the foreshore and offshore
shall have been recorded in the manner herein
areas of Manila Bay. In 2003, the Parañaque City
prescribed in the office of the Register of Deeds for
Treasurer issued Warrants of Levy on PRA’s
the province or city where the land lies (Sec. 113,
reclaimed property. PRA filed a petition for
P.D. 1529)
prohibition with prayer for TRO but was denied
by the RTC on the ground that PRA was not
NOTE: Where registered land has been the subject
exempt from payment of real property taxes as
of a transaction and this was recorded under Act No.
it was organized as a stock corporation. Is PRA
3344, such recording does not bind third persons
exempted from the payment of real property tax
since registration thereunder refers to properties
for its reclamation project?
not registered under the Land Registration Act, and,
hence, not effective for purposes of Art. 1544 of the
A: YES. The subject lands are reclaimed lands,
Civil Code on double sales. Registration of
specifically portions of the foreshore and offshore
instruments, in order to affect and bind the land,
areas of Manila Bay. As such, these lands remain
must be done in the proper registry (Soriano v.
public lands and form part of the public domain. It
Magali, G.R. No. L-15133, 31 July 1953)
is clear from Sec. 234 of the LGC that real property
owned by the Republic of the Philippines is exempt
Purpose of registration
from real property tax unless the beneficial use
thereof has been granted to a taxable person. In the
A transaction affecting unregistered lands covered
case of Chavez v. Public Estates Authority and AMARI
by an unrecorded contract may be valid and binding
Coastal Development Corporation, the Court held
on the parties themselves, but not on third parties.
that the fact that alienable lands of the public
In the case of third parties, it is necessary for the
domain were transferred to the PEA (now PRA) and
contract to be registered. (Dadizon v. CA, G.R. No.
issued land patents or certificates of title in PEA’s
159116, 30 Sept. 2009)
name did not automatically make such lands
private. Supreme Court also held therein that
Section 113 contemplates instruments created
reclaimed lands retained their inherent potential as
by agreement of the parties
areas for public use or public service. (Republic v.
City of Parañaque; G.R. No. 191109, 18 July 2012)
The opening paragraph of Section 113 cannot be
interpreted to include conveyances made by
ministerial officers, such as sheriff’s deeds. It
contemplates only such instruments as may be
created by agreement of the parties. (Agcaoli, 2018)
Recording shall be without prejudice to a third

party with ‘Better Right’
Sec. 113(b) states that any recording made

thereunder shall be without prejudice to a third
party with a ‘better right’. Thus, a mortgage of
unregistered property which is recorded under Act

2022 GOLDEN NOTES
Civil Law
No. 3344 is valid as against everybody except a third certification that he has recorded the same. (Sec.
person having a better right. (Mota v. Concepcion, 113, P.D. 1529)
G.R. No. 34581, 31 Mar. 1932)
NOTE: Under Sec. 113(d), a tax sale, attachment and

levy, notice of lis pendens, adverse claim and other
instruments in the nature of involuntary dealing
with respect to unregistered lands, if made in the
form sufficient in law, may be recorded.
Recording by Register of Deeds is Ministerial
The Register of Deeds does not exercise a judicial or

quasi-judicial power in the registration of sheriff’s
deeds or certificates of sale. His duty with respect to
the notation or recording of these instruments, so
far at least as relates to unregistered property, is
ministerial only’ and the registration of such
instrument adds nothing to their intrinsic effect.
Registration in such cases is required merely as a
means of notification of the purchaser’s rights to the
public. If the Register of Deeds refuses to register
the instrument, he shall advise the party in interest
in writing of the grounds for his refusal, and the
latter may elevate the matter to the Administrator,
Land Registration Authority, en consulta pursuant
to Section 117 of the Property Registration Decree.
(Hermanos v. Register of Deeds, G.R. No. 274349, 10
Sept. 1927).
How recording is effected
Register of Deeds shall keep a Primary Entry Book

and a Registration Book. The Primary Entry Book
shall contain, among other particulars, the entry
number, the names of the parties, the nature of the
document, the date, hour and minute it was
presented and received. The recording of the deed
and other instruments relating to unregistered
lands shall be effected by any of annotation on the
space provided therefor in the Registration Book,
after the same shall have been entered in the
Primary Entry Book.
After recording, the Register of Deeds shall endorse

on the original of the instrument the file number
and the date as well as the hour and minute when
the instrument was received, returning to the
registrant the duplicate of the instrument with a

Register of Deed, G.R. No. 224678, 03 July 2018; 2019

H. ASSURANCE FUND BAR)
Who must file
1. ACTION FOR COMPENSATION

It is a condition sine qua non that he be the
FROM ASSURANCE FUND
registered owner, and, as to holders of a TCT, that
they be innocent purchasers in good faith and for
A person may bring an action in any court of
value. Moreover, there must be a showing that there
competent jurisdiction for the recovery of damages
is no negligence on the part of the party sustaining
to be paid out of the Assurance Fund if:
the loss or damage or deprivation of any land or
interest therein. (La Urbana v. Bernardo, G.R. No.
Requisites for recovery:
41915, 08 Jan. 1936)
1. Said person sustains loss or damage, or is
deprived of any estate or interest in land;
When may the action be properly brought
2. On account of the bringing of land under
the operation of the Torrens system arising
An action against the Assurance Fund on the ground
after original registration;
of “fraudulent registration under the Torrens
3. Through fraud, error, omission, mistake,
system after the land’s original registration” may be
misdescription in any certificate of title or
brought only after the claimant’s property is
in any entry or memorandum in the
registered in the name of an innocent purchaser for
registration book;
value. This is because it is only after the registration
4. Without negligence on his part; and
of the innocent purchaser for value’s title (and not the
5. Is barred or precluded from bringing an
usurper’s title which constitutes a breach of trust)
action for the recovery of such land or
can it be said that the claimant effectively “sustains
estate or interest therein. (Sec. 95, P.D.
loss or damage, or is deprived of land or any estate or
1529)
interest therein in consequence of the bringing of the
land under the operation of the Torrens system.” The
NOTE: Any action for compensation against the
registration of the innocent purchaser for value’s
Assurance Fund by reason of any loss, damage or
title is therefore a condition sine qua non in order to
deprivation of land or any interest therein shall be
properly claim against the Assurance Fund. (Sps.
instituted within a period of six (6) years from the
Esperanza, et al., v. Register of Deed, G.R. No. 224678,
time the right to bring such action first occurred.
03 July 2018)
(Sec. 102, P.D. 1529)
Against whom
Purpose
1. The Register of Deeds of the province or city

Act 496 provides for an Assurance Fund to pay for
where the land lies and the National
the loss or damage sustained by any person who,
Treasurer – If the action is brought for the
without negligence on his part, is wrongfully
recovery of loss or damage or for
deprived of any land or interest therein on account
deprivation of land or of any estate or
of the bringing of the same under the Act or
interest therein arising through fraud,
registration of any other persons as owner of the
negligence, omission, mistake or
land. (Agcaoili, 2015)
misfeasance of the court personnel, the
Register of Deeds or other employees of the
The Assurance Fund is a long-standing feature of
registry in the performance of their duties.
our property registration system which is intended
2. The action shall be brought against the
to relieve innocent persons from the harshness of
Register of Deeds, the National Treasurer
the doctrine that a certificate is conclusive evidence
and such other persons – If the action is
of an indefeasible title to land. (Sps. Esperanza v.

2022 GOLDEN NOTES
Civil Law
brought for the recovery of loss or damage NOTE: An action for compensation against the
or for deprivation of land or of any estate or Assurance Fund is separate and distinct remedy,
interest therein arising through fraud, apart from review of decree of registration or
negligence, omission, mistake or reconveyance of title, which can be availed of when
misfeasance of persons other than the there is an unjust deprivation of property. This is
court personnel, the Register of Deeds or evidence from the various provisions of Chapter VII
other employees of the Registry. (Sec. 96, of P.D. 1529 which provide for specific parameters
P.D. 1529) that govern the action. (Sps. Esperanza v. Register of
Deed, G.R. No. 224678, 03 July 2018)
Limitation on the Amount to be recovered
Q: Alfredo V. de Ocampo (de Ocampo) filed an
The plaintiff cannot recover as compensation more application before the Court of First Instance of
than the fair market value of the land at the time he Negros Occidental to register two parcels of
suffered the loss, damage, or deprivation thereof. prime sugar land, Lot No. 2509 of the cadastral
(Sec. 97, P.D. 1529) survey of Escalante and Lot No. 817 of the
cadastral survey of Sagay. The registration was
2. LIMITATION OF ACTION contested by the Republic of the Philippines'
Bureau of Education (the Republic). According
GR: Any action for compensation against the to the Republic, the lots de Ocampo sought to
Assurance Fund shall be instituted within a period register were bequeathed to the Bureau of
of six (6) years from the time the right to bring such Education by the late Esteban Jalandoni. Due to
action first occurred. the donation, the Bureau of Education owned
the lots as evidenced by Transfer Certificate of
XPN: The proper action may be instituted by the Title (TCT) No. 6014.
person entitled to bring such or anyone claiming
from, by or under him at any time within two (2) While registration proceedings were pending,
years after his or her disability (being a minor, de Ocampo entered into an agreement with
insane, imprisoned, or otherwise under legal Oscar Anglo, Sr. (Anglo, Sr.). Their agreement,
disability) has been removed, notwithstanding the denominated as a Deed of Conditional Sale,
expiration of the original period of six years first included an undertaking that de Ocampo would
above provided (Sec. 102, P.D. 1529). cede, transfer, and convey Lot No. 2509 and part
of Lot No. 817 under certain conditions. Anglo,
Amendment or Cancellation of title Sr. and Anglo Agricultural Corporation filed a
Complaint for Recovery of Damages from the
In the event the Assurance Fund is held liable on Assurance Fund against the Register of Deeds of
account of the unlawful or erroneous issuance of a Negros Occidental and the National Treasurer of
certificate of title, the Register of Deeds, upon the Republic of the Philippines before the
authority of the LRA Administrator, shall file the Regional Trial Court of Bacolod City, Negros
necessary action to amend or cancel the title or Occidental. According to their Complaint, Anglo,
perform any other act as may be directed by the Sr. acquired the lots in good faith and for value
court. Such action may pre-empt any action against without any negligence on his part.
the Assurance Fund. (Agcaoili, 2015)
Considering that de Ocampo passed away and
Prescriptive period left no property to his heirs before the finality of
the Court of Appeals' Decision, the only available
The action must be brought within 6 years from the remedy for Anglo, Sr. and Anglo Agricultural
time the right to bring the action first occured. (Sec. Corporation was to recover the value of the lots
102, P.D. 1529) from the Assurance Fund as provided for under
Act No. 496 and P.D. 1529. Are the respondents

Oscar Anglo, Sr. and Anglo Agricultural

Corporation entitled to an award of damages
from the Assurance Fund under Sec. 95 of P.D.
1529?
A: NO. We rule that respondent Anglo, Sr. in the sale

transaction on January 6, 1966 acted in good faith.
However, he no longer had an interest over the lots
after he had transferred these to respondent Anglo
Agricultural Corporation in exchange for shares of
stock. Hence, he no longer has a claim from the
Assurance Fund. On the other hand, respondent
Anglo Agricultural Corporation cannot be
considered a transferee in good faith, considering it
was aware of the title's notices of lis pendens.
Hence, it also has no right to claim damages from the
Assurance Fund.
The Torrens system is not infallible. It is possible

that through fraud or error, a person who is not the
owner acquires a certificate of title over property.
The law thus created an Assurance Fund to address
this possibility. Under P.D. 1529, for every
certificate of title issued to a registered owner of the
property, building, or other improvements, the
registered owner contributes "one-fourth of one
percent of the assessed value of the real estate on
the basis of the last assessment for taxation
purposes, as contribution to the Assurance Fund." If
the property has not yet been assessed for taxation
purposes, the contribution will be based on the
value determined by two disinterested persons.
These collections are pooled together under the
custody of the National Treasurer. This court
further explained that "the Assurance Fund is
intended to relieve innocent persons from the
harshness of the doctrine that a certificate is
conclusive evidence of an indefeasible title to land."
An individual who relied on the validity of a

certificate of title should not be prejudiced by fraud
committed during the original registration, nor
should he or she be prejudiced by the error,
omission, mistake, or misdescription in the
certificate of title caused by court personnel or the
Register of Deeds, his or her deputy, or other
employees of the Registry. (Register Of Deeds of
Negros Occidental v. Anglo, Sr., G.R. No. 171804, 05
Aug. 2015)

2022 GOLDEN NOTES
Civil Law
register under the Torrens system. (Republic v. De

I. CADASTRAL SYSTEM OF REGISTRATION Guzman, G.R. No. 137887, 28 Feb. 2000)
(ACT 2259, AS AMENDED)
Under C.A. 141, the Director of Lands, primarily, and
the DENR Secretary, ultimately, have the authority
to dispose of and manage public lands. While the
It is a proceeding in rem, initiated by the filing of a
DENR’s jurisdiction over public lands does not
petition for registration by the government, not by
negate the authority of the courts to resolve
the persons claiming ownership of the land subject
questions of possession, the DENR’s decision would
thereof, and the latter are, on the pain of losing their
prevail with regard to the rights of public land
claim thereto, in effect compelled to go to court to
claimants. Thus, regular courts have no jurisdiction
make known their claim or interest therein, and to
to inquire into the validity of the award of the public
substantiate such claim or interest.
land. (Sps. Tabino v. Tabino, G.R. No. 196219, 30 July
2014)
Purpose of cadastral registration
Period of Filing
The principal aim is to settle as much as possible all
disputes over land and to remove all clouds over
Extended up to December 31, 2020. (Sec. 2, R.A. No.
land titles, as far as practicable, in a community.
9176)
(Agcaoili, 2006)
Procedure
Here, the government does not seek the registration
of land in its name. The objective of the proceeding
1. Determination of the President that public
is the adjudication of title to the lands or lots
interest requires title to unregistered lands
involved in said proceeding. Furthermore, it is to
be settled and adjudicated. The president
serve public interest by requiring that the titles to
may direct and order the Director of Lands
the lands be settled and adjudicated. (Sec. 1, Act. No.
to cause to be made a cadastral survey of
2259)
the lands involved; (Sec. 35(a), P.D. 1529)
Extent of authority of cadastral courts

2. Notice by the Director of Lands to persons
claiming any interest in the lands as well as
The cadastral court is not limited to merely
to the general public of the day on which
adjudication of ownership in favor of one or more
such survey will begin. It shall be published
claimants. If there are no successful claimants, the
once in the Official Gazette, and a copy of
property is declared public land. (Republic v. Vera,
the notice shall be posted in a conspicuous
G.R. No. L-35778, 27 Jan. 1983)
place on the bulletin board of the municipal
building of the municipality in which the
Cadastral courts do not have the power to
lands or any portion thereof is situated;
determine and adjudicate title to a lot already
(Sec. 35(b), P.D. 1529)
covered by homestead patent to a person other than
a patentee. (Manalo v. Lukban, G.R. No. 22424, 08
NOTE: A copy of the notice shall also be
Sept. 1924)
sent to the mayor of such municipality,
barangay captain, Sangguniang
Cadastral courts possess no authority to award
Panlalawigan and Sangguniang Bayan
damages.
concerned.
NOTE: A parcel of forest land is within the exclusive

3. Cadastral survey;
jurisdiction of the Bureau of Forestry and beyond
the power and jurisdiction of the cadastral court to
4. Filing of Petition (Sec. 36, P.D. 1529)

5. Publication, mailing, posting; (SMC). The Director of Lands, instituted with the
then CFI of Zamboanga del Sur a Cadastral Case
Publication of notice of initial hearing of the pursuant to the government's initiative to place
petition to be published twice, in successive all lands under the Cadastral System. The
issues of the Official Gazette, in English Padayhags claim that Sps. Federico and Lourdes
language. (Sec. 7, Act No. 2259) Padayhag are the original owners of the Lumbia
Lots. As for the Sta. Lucia Lots, Padayhags claim
6. Filing of Answer; (Sec. 37, P.D. 1529 that since 1927 they occupied 300 sq.m. of the
lots. However, when a cadastral survey was
The answer shall contain: made, they were not able to object as they were
a. Age of claimant; not informed of such survey. On the other hand,
b. Cadastral number of the lot or lots SMC argued that it bought Lot. No. 2102 from
claimed; Mangacop Ampato evidenced by Deeds of
c. Name of the barrio and municipality in Conveyance of Real Estate and Absolute Sale.
which the lots are situated;
d. Names and addresses of the owners of RTC, sitting as Land Registration Court,
the adjoining lots so far as known to the rendered a Decision in favor of SMC. CA
claimant; dismissed SMC’s appeal and ruled that there
e. If the claimant is in possession of the being no indication at all from the records that
lots claimed and can show no express notice of the Order for Initial Hearing was
grant of the land by the government to published in the Official Gazette and in a
him or to his predecessors-in-interest, newspaper of general circulation, the decision
the answer shall state the length of rendered by the RTC of Pagadian City is void ab
time he has held such possession and initio for having been rendered without
the manner in which it has been jurisdiction. Is the CA correct?
acquired, and shall also state the length
of time, as far as known, during which A: NO. Given that the initial hearing based on the
the predecessors, if any, held published notice was scheduled on January 16,
possession; 1967, the applicable laws were Act 496 and Act
f. If the claimant is not in possession or 2259 which required only the notice of initial
occupation of the land, the answer shall hearing to be published twice, in successive issues of
fully set forth the interest claimed by the Official Gazette.
him and the time and manner of his
acquisition; Given that the Cadastral Case does not only cover
g. If the lots have been assessed for the six lots but around 1,409 lots, the copies of the
taxation, their last assessed value; and issues of the Official Gazette where the Notice of the
h. The encumbrances, if any, affecting the Order for Initial Hearing was published could have
lots and the names of adverse been included in the records of the cadastral
claimants, as far as known. proceedings of the other lots included therein. Thus,
it was imprudent for the CA to rule that the Decision
7. Hearing of the case; (Sec. 38, P.D. 1529) rendered by the RTC is void ab initio for having been
rendered without jurisdiction.
8. Decision; (Sec. 38, P.D. 1529)
9. Issuance of the decree and certificate of Anent the publication requirement in reconstitution
title. (Sec. 38, P.D. 1529) proceedings under Sec. 13 of R.A. No. 26, mere
submission of the subject Official Gazette issues
Q: Out of six (6) parcels of land, these lots are would evidence only the first element —
claimed by two (2) parties: the Heirs of Lourdes publication in two consecutive issues of the Official
Padayhag, and Southern Mindanao Colleges Gazette, and what must be proved is not the content

2022 GOLDEN NOTES
Civil Law
of the Order published in the Official Gazette but the

fact of two-time publication in successive issues at J. REGISTRATION THROUGH ADMINISTRATIVE
least 30 days before the hearing date. PROCEEDINGS
(C.A. 141, AS AMENDED)
The Court has consistently accepted the probative
value of certifications of the Director of the National
Printing Office in reconstitution cases. The Official
Brief Background of C.A. 141 or the Public Land
Gazette is an official publication of the government
Act
and consequently, the Court can take judicial notice
of its contents.
1. It is to govern the disposition of lands of the
public domain.
In this case, no certification from the Director of the
2. It prescribed rules and regulations for the
National Printing Office was presented. The
homesteading, selling, and leasing of
certification alone without the copy of the Notice of
portions of the public domain of the
Initial Hearing may not suffice. There is a need to
Philippine Islands.
verify the contents of the said Notice to ensure that
3. It prescribed the terms and conditions to
the subject properties and parties/claimants are
enable persons to perfect their titles to
covered thereby. The Notice of Initial Hearing was
public lands in the Islands.
not only for subject properties and
4. It worked on the assumption that the title
parties/claimants, but for 1,409 lots and numerous
to public lands in the Philippines remained
claimants. If the Notice of Initial Hearing pertained
in the government and government’s title
to a specific registered property, as in the case of the
to public land came from the Treaty of Paris
reconstitution of a title, then a certification of
and other relative treaties. (Agcaoli, 2011)
publication from the Director of the National
Printing Office in this wise would suffice. (Padayhag
Persons qualified for registration
v. Director of Lands, G.R. Nos. 202872 & 206062, 22
Nov. 2017, J. Caguioa)
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 agricultural
lands of the public domain, under a bona fide claim
of acquisition or ownership, since June 12, 1945,
except when prevented by war or force majeure.
Requisites:
1. The applicant must be a Filipino citizen;

2. He must have, by himself or through his
predecessors in-interest, possessed and
occupied an alienable and disposable
agricultural portion of the public domain;
3. Such possession and occupation must have
been open, continuous, exclusive,
notorious and in the concept of owner,
since June, 12, 1945, except when
prevented by war or force majeure; and
4. The application must be filed with the
proper court. (Agcaoili, 2006)

Public land Property of public

dominion, when no longer
The term is uniformly used to describe so much of needed for public use, or
the national domain under the legislative power of for public service, shall
the Congress as has not been subjected to private form part of the
right or devoted to public use. (Montano v. Insular patrimonial property of
Government, G.R. No. 3714, 26 Jan. 1909) the State.
Public lands v. Government lands

NOTE: Only lands of public domain subsequently
classified or declared as no longer intended for
GOVERNMENT public use, or removed from the sphere of public
PUBLIC LANDS
LANDS dominion are considered controverted into
patrimonial lands which may be alienated or
Includes not only the The government disposed of through any of the modes of acquisition.
government lands, but owns real estate, (Andres v. Sta. Lucia Realty & Development, Inc., G.R.
also other lands of the which is part of the No. 201405, 24 Aug. 2015)
government already “public lands,” and
reserved or devoted to other real estate, Means by which public lands may be disposed of
public use or subject to which is not a part
private right. thereof. 1. For homestead settlement;
2. By sale;
Equivalent to public 3. By lease; and
domain and does not, by 4. By confirmation of imperfect or incomplete
any means, include all titles:
lands of government a. By judicial legalization; or
ownership, but only so b. By administrative legalization (free
much of said lands as are patent). (Sec. 11, C.A. 141)
thrown open to private
appropriation and A person is deemed to possess an imperfect title
settlement by homestead over property when:
and other like general
laws. (Montano v. Insular The applicant for confirmation of imperfect title has
Government, G.R. No. L- shown possession and occupation that is: (O-C-E-N-
3714, 26 Jan, 1909) P-O)
Patrimonial property v. Public land 1. Open;

2. Continuous;
PATRIMONIAL 3. Exclusive;
PUBLIC LAND 4. Notorious Possession; and
PROPERTY
5. Occupation of the land since June 12, 1945
All other property of the or earlier. (Republic v. Sogod Development
State which is not of the Corp., G.R. No. 175760, 17 Feb. 2016).
character of public
Property for public
dominion or not intended Factors to consider:
use of provinces and
for public use, public
towns.
service, or for the 1. Open – When it is patent, visible apparent
development of national notorious and not clandestine;
wealth.

2022 GOLDEN NOTES
Civil Law
2. Continuous – When uninterrupted, burden of proof placed on applicants for land

unbroken and not intermittent or registration.
occasional;
Canlas comes before this court, arguing that she
3. Exclusive – When the adverse possessor has duly overcome the burden of proof by
can show exclusive dominion over the land showing open, continuous, exclusive, adverse,
and an appropriation of it to his own use and notorious possession and occupation of the
and benefits; and property. Is Canlas in open, continuous,
exclusive, and notorious possession and
4. Notorious Possession in the concept of occupation of the land described in plan Psu-04-
an owner – When it is so conspicuous that 006561?
it is generally known and talked of by the
public or the people in the neighborhood. A: YES. To qualify as open, continuous, exclusive,
(Heirs of Marcelina Azardon-Crisologo v. and notorious possession and occupation, the
Raon, G.R. No. 171068, 05 Sept. 2007) possession must be of the following character:
Possession and occupation Possession is open when it is patent, visible,

apparent, notorious and not clandestine. It is
Q: Luzviminda A. Canlas applied for the original continuous when uninterrupted, unbroken and not
registration of title, under Presidential Decree intermittent or occasional; exclusive when the
No. 1529, of the 9,751-square-meter parcel of adverse possessor can show exclusive dominion
land located in Rizal and technically described over the land and an appropriation of it to his own
as Cadastral Lot No. 11566, Psu-04-006561. use and benefit; and notorious when it is so
There was no opposition to Canlas’ application. conspicuous that it is generally known and talked of
Respondent Republic of the Philippines by the public or the people in the neighborhood.
(Republic) did not submit its comment or
opposition despite the opportunity given by the This court puts more premium on the findings of the
trial court. The case was then submitted for trial court that petitioner has sufficiently shown
decision. acts of dominion before 1945 and throughout the
years. It is settled that the trial court’s appreciation
The Regional Trial Court granted Canlas’ of the evidence presented is entitled to great respect
application. According to the trial court, Canlas since it is in a better position to evaluate the
complied with the procedural requirements and testimonies of witnesses.
substantiated her application. She sufficiently
proved that, through her predecessors-in- Petitioner has sufficiently shown that she, through
interest, she has been in “open, continuous, her predecessors-in-interest, have been in open,
exclusive and notorious possession of an continuous, exclusive, and notorious possession
alienable and disposable parcel of land of the and occupation of the 9,751-square-meter parcel of
public domain under a bona fide claim of land located in Barrio Macamot, Municipality of
ownership for more than 30 years. Binangonan, Province of Rizal, since June 12, 1945
or earlier. Documentary evidence to prove
The Republic of the Philippines, however, filed a possession was presented and substantiated by the
notice of appeal. Acting on the Republic’s appeal, witnesses’ testimonies. There were sufficient pieces
the Court of Appeals reversed and set aside the of evidence to show that petitioner and her
decision of the trial court. The Court of Appeals predecessors-in-interest exercised specific acts of
held that Canlas was not able to prove open, ownership such as: farming activities; allowing the
continuous, exclusive, and notorious possession excavation of land for “pulang lupa” to make clay
and occupation of the property. According to the pots; paying realty taxes; declaring the property for
Court of Appeals, Canlas failed to discharge the tax purposes; employing a caretaker; causing

corrections in entries in public documents with Q: Manuel was born on 12 March 1940 in a
regard to the land; and demanding unlawful 1,000-square meter property where he grew up
occupants to vacate the premises. (Canlas v. helping his father, Michael, cultivate the land.
Republic, G.R. No. 200894, 10 Nov. 2014) Michael has lived on the property since the land
was opened for settlement at about the time of
Effect of possession of an Imperfect Title the Commonwealth government in 1935, but for
some reason never secured any title to the
When the conditions set by law are complied with, property other than a tax declaration in his
the possessor of the land, by operation of law, name. He has held the property through the
acquires a right to government grant, without the years in the concept of an owner and his stay
necessity of a certificate of the title being issued. was uncontested by others. He has also
conscientiously and continuously paid the
Q: RP opposed the application for registration realty taxes on the land.
filed by Manna Properties under Sec. 48(b), C.A.
141 arguing that, as a private corporation, it is Michael died in 2000 and Manuel-as Michael’s
disqualified from holding alienable lands of the only son and heir-now wants to secure and
public domain, except by lease, citing Sec. 3, Art. register title to the land in his own name. He
XII, 1987 Constitution. On the other hand, consults you for legal advice as he wants to
Manna Properties claims that the land in perfect his title to the land and secure its
question has been in the open and exclusive registration in his name.
possession of its predecessors-in-interest since
the 1940s, thus, the land was already private a. What are the laws that you need to
land when Manna Properties acquired it from its consider in advising Manuel on how he
predecessors-in-interest. Decide. can perfect his title and register the land
in his name? Explain the relevance of
A: Lands that fall under Sec. 48, C.A. 141 are these laws to your projected course of
effectively segregated from the public domain by action.
virtue of acquisitive prescription. Open, exclusive b. What do you have to prove to secure
and undisputed possession of alienable public land Manuel's objectives and what
for the period prescribed by C.A. 141 ipso jure documentation are necessary? (2013
converts such land into private land. Judicial BAR)
confirmation in such cases is only a formality that
merely confirms the earlier conversion of the land A:
into private land, the conversion having occurred in a. For purposes of confirmation of imperfect
law from the moment the required period of title, I will consider the provisions of C.A. 141
possession became complete. as well as the Property Registration Decree or
P.D. No. 1529. C.A. 141 provides two
Under C.A. 141, the reckoning point is June 12, requisites for judicial confirmation of
1945. If the predecessors-in-interest of Manna imperfect title namely: (1) open and
Properties have been in possession of the land in continuous, exclusive and notorious
question since this date, or earlier, Manna possession and occupation of the land by
Properties may rightfully apply for confirmation of himself or through his predecessor in interest
title to the land. Manna Properties, a private under bona fide claim of ownership since June
corporation, may apply for judicial confirmation of 12, 1945; and (2) the classification of the land
the land without need of a separate confirmation as alienable and disposable land of the public
proceeding for its predecessors-in-interest first. domain. (Secretary of DENR v. Yap, G.R. No.
(Republic v. Manna Properties Inc., G.R. No. 146527, 167707, 08 Oct. 2008)
31 Jan. 2005)
The Property Registration Decree provides

2022 GOLDEN NOTES
Civil Law
that those who by themselves or their acquisition since June 12, 1945 or prior
predecessors-in-interest have been in open, thereto or since time immemorial;
continuous, exclusive and notorious 2. Filipino citizens who by themselves or their
possession and occupation of alienable and predecessors-in-interest have been, prior
disposable lands of the public domain under a to the effectivity of P.D. 1073 on January 25,
bona fide claim of ownership since June 12, 1977, in open, continuous, exclusive and
1945 or earlier. Since Manuel’s father notorious possession and occupation of
Michael had been in open, continuous, agricultural lands of the public domain
exclusive and notorious possession of the land under a bona fide claim of acquisition or
since 1935, and that the land was declared ownership for at least 30 years, or at least
alienable in the same year, his possession has since January 24, 1947;
ripened into ownership which entitles him or 3. Private domestic corporations or
his successor Manuel to file an application for associations which had acquired lands
judicial confirmation of imperfect title. from Filipino citizens who had possessed
the same in the manner and for the length
b. I have to prove that the land was already of time indicated in paragraphs 1 & 2
declared alienable at the time that Manuel or above; or
his father Michael took possession of the land 4. Natural-born citizens of the Philippines
and that their possession was open, who have lost their citizenship and who has
continuous, exclusive and notorious which the legal capacity to enter into a contract
started prior to or on June 12, 1945 as under Philippine laws may be a transferee
required by C.A. 141. To prove the first of private land up to a maximum area of
requisite, the original classification of the land 5,000 sq.m., in case of urban land, or three
as approved by the DENR Secretary (Republic hectares in case of rural land to be used by
v. T.A.N. Properties, Inc., G.R. No. 154953, 26 him for business or other purposes. For
June 2008) or in lieu thereof, a Certification by residence purposes, the maximum area is
the DENR Regional office attesting to the 1,000 sq. m. in case of urban lands or one
alienable and disposable character of the land hectare in case of rural lands. (Sec. 14, P.D.
must have to be submitted. (Republic v. 1529)
Serrano G.R. No. 183063, 24 Feb. 2010) I also
have to file together with the application for NOTE: Aliens are disqualified from acquiring public
registration all original muniments of title or and private lands. (Krivenko v. Register of Deeds, G.R.
copies thereof and a survey plan of the land No. L-630, 15 Nov. 1947)
approved by the Bureau of Lands in
accordance with Sec. 17 of P.D. 1529. Manuel NOTE: Extended period for filing of applications for
may also submit the tax declarations and tax administrative legalization (free patent) and
payment receipts which have been ruled to be judicial confirmation of imperfect and incomplete
good indications of possession in the concept titles to alienable and disposable lands of the public
of owner. (Republic v. Candy Maker, Inc., G.R. domain. – Sec. 1, R.A. No. 9176 provides in part that,
No. 163766, 22 June 2006) “The time to be fixed in the entire archipelago for
the filing of applications shall not extend beyond
Persons qualified for judicial confirmation December 31, 2020. Provided that the period shall
apply only when the area applied for does not
1. Filipino citizens who by themselves or exceed 12 hectares.” (Sec. 1, R.A. No. 9176, amending
through their predecessors-in-interest Sec. 45, Chapter VII, C.A. 141)
have been in open, continuous, exclusive
and notorious possession and occupation Q: Henry is the winning bidder in an auction sale
of alienable and disposable lands of public pursuant to C.A. 141 involving a parcel of land in
domain under a bona fide claim of Baguio City. Nearly 4 years later, Miguel sought

the cancellation of the Award before the Bureau A: NO. The land was only classified as alienable or
of Lands contending that he has been in actual, disposable on May 27, 1972. Prior to said date,
continuous, open and adverse possession of the when the subject parcels of land were classified as
same since 1947, and that they have already inalienable or not disposable, the same could not be
built their houses thereon and the auction sale the subject of confirmation of imperfect title. There
over the subject property void. can be no imperfect title to be confirmed over lands
not yet classified as disposable or alienable. In the
DENR and Office of the President found that the absence of such classification, the land remains
auction sale of the subject property violated Sec. unclassified public land until released and opened
24 of C.A. 141 and was therefore void, for its to disposition. Indeed, it has been held that the rules
failure to comply with the statutorily required on the confirmation of imperfect title do not apply
notice. It found that contrary to the requisite unless and until the land classified as forest land is
publication of the notice of sale in the Official released in an official proclamation to that effect so
Gazette for six consecutive weeks, the notice of that it may form part of the disposable agricultural
the said auction sale was only published twice. lands of the public domain. (Bracewell v. CA, G.R. No.
Did the DENR and OP err in finding that the 107427, 25 Jan. 2000)
auction sale over the subject property void?
Q: In an application for judicial confirmation of
A: NO. According to Sec. 24 of C.A. 141, “the Director imperfect title filed by Naguit, the OSG argues
of Lands shall announce the sale thereof by that the property must first be alienable. Since
publishing the proper notice once a week for six the subject land was declared alienable only on
consecutive weeks in the Official Gazette, and in two 1980, Naguit could not have maintained a bona
newspapers one published in Manila and the other fide claim of ownership since June 12, 1945, as
published in the municipality or in the province required by Sec. 14 of the Property Registration
where the lands are located, or in a neighboring Decree, since prior to 1980, the land was not
province, and the same notice shall be posted on the alienable or disposable. Is it necessary under
bulletin board of the Bureau of Lands in Manila, and Sec. 14(1) of the Property Registration Decree
in the most conspicuous place in the provincial (now Sec. 48(b) of the Public Land Act) that the
building and the municipal building of the province subject land be first classified as alienable and
and municipality, respectively, where the land is disposable before the applicant’s possession
located”. under a bona fide claim of ownership could
start?
As a consequence, the failure to publish the notice of
the auction sale as statutorily required constitutes a A: NO. Sec. 14(1) merely requires the property
jurisdictional defect which invalidates the auction sought to be registered as already alienable and
sale of the subject property, as well as the Award in disposable at the time the application for
favor of Henry. (Heirs of Leung v. Heirs of Madio, G.R. registration of title is filed. If the State, at the time
No. 224991, 23 June 2021, J. Caguioa) the application is made, has not yet deemed it
proper to release the property for alienation or
Q: Bracewell asserts that he has a right of title to disposition, the presumption is that the government
a parcel of land having been, by himself and is still reserving the right to utilize the property;
through his predecessors-in-interest, in hence, the need to preserve its ownership in the
occupation under a bona fide claim of ownership State irrespective of the length of adverse
since 1908. Thus, he filed an application for possession even if in good faith. However, if the
registration in 1963 but the land has been property has already been classified as alienable
classified as alienable or disposable only on May and disposable, as it is in this case, then there is
27, 1972. May his application for confirmation already an intention on the part of the State to
of imperfect title be granted? abdicate its exclusive prerogative over the property.

2022 GOLDEN NOTES
Civil Law
(Republic v. CA and Naguit, G.R. No. 144057, 17 Jan. 2. If, however, it is the duplicate of the OCT or
2005) TCT – Replacement of lost duplicate
certificate of title.
NOTE: This case is distinguishable from Bracewell v.
CA, where the claimant had been in possession of
the land since 1908 and had filed his application in
1963, or nine years before the property was
declared alienable and disposable in 1972. Hence,
registration was denied. The Bracewell ruling will
not apply in this case because here, the application
was made years AFTER the property had been
certified as alienable and disposable.
A different rule obtains for forest lands, such as

those which form part of a reservation for provincial
park purposes, the possession of which cannot
ripen into ownership. It is elementary in the law
governing natural resources that forest land cannot
be owned by private persons.
As held in Palomo v. CA, forest land is not registrable

and possession thereof, no matter how lengthy,
cannot convert it into private property, unless such
lands are reclassified and considered disposable
and alienable. In the case at bar, the property in
question was undisputedly classified as disposable
and alienable; hence, the ruling in Palomo is
inapplicable. (Palomo v. CA, G.R. No. 95608, 21 Jan.
1997)
NOTE: The law does not require that the land

subject of registration should have been alienable
and disposable during the entire period of
possession, or since June 12, 1945. It is sufficient
that the land is already declared as alienable and
disposable land at the time the application for
registration is filed so as to entitle the possessor to
registration. (Malabanan v. Republic, G.R. No.
179987, 29 Apr. 2009) It must be stressed, however,
that the applicant for land registration must have
been in possession of the land sought to be
registered since June 12, 1945 or earlier.
Remedies in case a person lost his certificate of

title
1. If what is lost is the OCT or TCT –

Reconstitution of certificate of title.

However, it cannot be issued in a petition for

K. RECONSTITUTION OF TITLES reconstitution of an allegedly lost or destroyed
certificate of title. Reconstitution does not confirm
or adjudicate ownership over the property covered
by the reconstituted title as in original land
Reconstitution of certificate of title
registration proceedings where, in the latter, a writ
of possession may be issued to place the applicant-
The restoration of the instrument which is
owner in possession (Serra v. CA, G.R. No. L-34080,
supposed to have been lost or destroyed in its
22 Mar. 1991)
original form and condition, under the custody of
Register of Deeds.
Q: PBCOM filed a petition for issuance of an
owner's duplicate copy of its TCT No. 21320 in
The process involves diligent circumspect
view of a lost one. The RTC dismissed the
evaluation of the authenticity and relevance of all
petition for insufficiency of evidence. Later,
the evidence presented for fear of the chilling
PBCOM filed another petition for issuance of an
consequences of mistakenly issuing a reconstituted
owner's duplicate copy, armed with additional
title when in fact the original is not truly lost or
evidence. The RTC dismissed the second
destroyed. (Dela Paz v. Republic, G.R. No. 195726, 20
petition on the ground of res judicata, ruling
Nov. 2017)
that the dismissal for insufficiency of evidence is
a ruling on the merits. Is the RTC correct?
Purpose of reconstitution of title
A: NO. A registered owner who fails to prove the

To have the same reproduced, after proper
loss or destruction of his/her owner's duplicate
proceedings, in the same form they were when the
certificate of title may not be barred from refiling a
loss or destruction occurred. (Noblejas, 2007)
new petition to replace the same. (Philippine Bank of
Communications v. The Register of Deeds for the
The reconstitution or reconstruction of a certificate
Province of Benguet, G.R. No. 222958, 11 Mar. 2020, J.
of title literally denotes restoration of the
Caguioa)
instrument which is supposed to have been lost or
destroyed in its original form and condition.
Requisites for the issuance of an order for
reconstitution
A reconstitution of title does not pass upon the
ownership of land covered by the lost or destroyed
1. That the certificate of title had been lost or
title but merely determines whether a re-issuance
destroyed;
of such title is proper (Republic v. Fule, G.R. No.
2. That the documents presented by
239273, 02 Mar. 2020). Restitution is proper only
petitioner are sufficient and proper to
when it is satisfactorily shown that the title sought
warrant reconstitution of the lost or
to be reconstituted is lost or no longer available.
destroyed certificate of title;
3. That the petitioner is the registered owner
Q: May a writ of possession be issued in a
of the property or had an interest therein;
petition for reconstitution?
4. That the certificate of title was in force at
the time it was lost or destroyed; and
A: NO. In a land registration case, a writ of
5. That the description, area and boundaries
possession may be issued only pursuant to a decree
of the property are substantially the same
of registration in an original land registration
as those contained in the lost or destroyed
proceedings “not only against the person who has
certificate of title. (Republic v. Catarroja,
been defeated in a registration case but also against
G.R. No. 171774, 12 Feb. 2010)
anyone adversely occupying the land or any portion
thereof during the proceedings up to the issuance of
the decree.”

2022 GOLDEN NOTES
Civil Law
Jurisdictional requirements in petitions for c. Petitioner must have the duplicate copy
reconstitution of title of the certificate of title.
Notice thereof shall be: NOTE: The law provides for retroactive application
1. Published twice in successive issues of the thereof to cases 15 years immediately preceding
Official Gazette; 1989. (Agcaoili, 2006)
2. Posted on the main entrance of the
provincial building and of the municipal SOURCES WHERE A CERTIFICATE OF TITLE MAY
building of the municipality or city, where BE RECONSTITUTED
the land is situated; and
3. Sent by registered mail to every person JUDICIAL RECONSTITUTION
named in said notice. (Sec. 9, R.A. No. 26)
Section 2 of R.A. No. 26 governs reconstitution of

NOTE: The above requirements are mandatory and
original certificates of title (OCT) while Section 3
jurisdictional.
governs petitions for reconstitution of transfer
certificates of title (TCT).
NOTE: Where the owner’s duplicate certificate of
title is not in fact lost or destroyed, a petition for the
For OCT (in the following order):
issuance of a new owner’s duplicate certificate is
unwarranted, as in fact the court has no jurisdiction
1. Owner’s duplicate of the certificate of title;
over the petition, and any owner’s duplicate issued
2. Co-owner’s, mortgagee’s or lessee’s
pursuant to said petition is null and void. (New
duplicate of said certificate;
Durawood Co. v. CA, GR No. 111732, 20 Feb. 1996)
3. Certified copy of such certificate,
previously issued by the Register of Deeds;
Kinds of reconstitution of title
4. Authenticated copy of the decree of
registration or patent, as the case may be,
1. Judicial – Partakes the nature of a land
which was the basis of the certificate of
registration proceeding in rem. The
title;
registered owners, assigns, or any person
5. Deed or mortgage, lease or encumbrance
having an interest in the property may file a
containing description of property covered
petition for that purpose with RTC where
by the certificate of title and on file with the
property is located. RD is not the proper
Registry of Deeds, or an authenticated copy
party to file the petition.
thereof; or
6. Any other document which, in the
2. Administrative – May be availed of only in
judgment of the court, is sufficient and
case of:
proper basis for reconstitution. (Sec. 2, R.A.
a. Substantial loss or destruction of the
No. 26)
original land titles due to fire, flood, or
other force majeure as determined by
For TCT (in the following order):
the Administrator of the Land
Registration Authority.
1. Owner’s duplicate of the certificate of title;
b. The number of certificates of title lost or
2. Co-owner’s, mortgagee’s or lessee’s
damaged should be at least 10% of the
duplicate of said certificate;
total number in the possession of the
3. Certified copy of such certificate,
Office of the Register of Deeds.
previously issued by the Register of Deeds;
In no case shall the number of
4. Deed of transfer of other document, on file
certificates of title lost or damaged be
in the registry of deeds, or an authenticated
less than 500.
copy thereof, showing that its original had
been registered, and pursuant to which the

lost or destroyed transfer of certificate was interest. None of the documents presented in this
issued; case fit such description. (Republic v. Catarroja, et
5. A document, on file with the Register of al., G.R. No. 171774, 12 Feb. 2010)
deeds, by which the property, the
description of which is given in said Where reconstituted title is a nullity, the order
document, is mortgaged, leased or for reconstitution may be attacked at any time.
encumbered, or an authenticated copy of
said document showing that its original had A reconstitution of Torrens title, whether judicial or
been registered; and administrative, cannot proceed once it is shown that
6. Any other document which, in the another Torrens title has already been issued to
judgment of the court, is sufficient and another person over the same property. The
proper basis for reconstitution. (Sec. 3, R.A. reconstituting body or court has no jurisdiction to
No. 26) issue another Torrens title over the same property
to the petitioner. The existence of a prior title ipso
ADMINISTRATIVE RECONSTITUTION facto nullifies the reconstitution proceedings. The
proper recourse is to assail directly in a proceeding
before the regional trial court the validity of the
1. Owner’s duplicate of the certificate of title
Torrens title already issued to the other person.
(DCT); and
(Justice Carpio’s separate concurring opinion,
2. Co-owner’s, mortgagee’s or lessee’s DCT
Manotok v. Barque, GR. No. 162335, 18 Dec. 2008)
(Sec. 12 in relation to Secs. 2 and 3, R.A. No.
26)
NOTE: Petition for reconstitution can be barred by
laches.
Q: Catarroja et al. filed a petition for
reconstitution of title covering two lots in Cavite
Persons entitled to a DCT:
which they inherited from their parents.
1. Registered owner; and
Allegedly, the LRA issued a certification
2. Each co-owner.
confirming that the land registration court
issued a Decree covering the lots. A copy of the
Requirements for Replacement of Lost DCT
decree however was no longer available in the
record. It was also claimed that the owner’s
1. Due notice under oath shall be sent by the
duplicate copy of the title had been lost while
owner or by someone in his behalf to the
with their parents. If you were the judge, will
Register of Deeds of the province or city
you grant the petition for reconstitution of title?
where the land lies as soon as the loss or
theft is discovered; (Sec. 109, P.D. 1529);
A: In Republic v. IAC, applied the principle
2. Petition for replacement should be filed
of ejusdem generis in interpreting Sec. 2(f) of R.A.
with the RTC of the province or city where
No. 26. “Any other document” refers to reliable
the land lies; (Sec. 109, P.D. 1529)
documents of the kind described in the preceding
enumerations. This Court is not convinced that the
3. Notice to Solicitor General by petitioner is
following documents (Microfilm printouts of Official
not imposed by law but it is the Register of
Gazette., a certification by the LRA and from the
Deeds who should request for
Register of Deeds, a Report of the LRA and an
representation by the Solicitor General;
Affidavit of Loss) of the Catarrojas fall in the same
and
class as those enumerated in paragraphs (a) to
(e). None of them proves that a certificate of title
4. A proceeding where the certificate of title
had in fact been issued in the name of their
was not in fact lost or destroyed is null and
parents. Accordingly, the documents must come
void for lack of jurisdiction and the newly
from official sources which recognize the ownership
issued duplicate is null and void.
of the owner and his predecessors-in-

2022 GOLDEN NOTES
Practical Exercises
IV. PRACTICAL EXERCISES
A. DEMAND AND AUTHORIZATION LETTERS
DEMAND LETTER (UNPAID RENT)
DATE
NAME OF LESSOR
Address of Lessor
MR./MRS./MS. (NAME OF LESSOR):
LETTER OF DEMAND
RE: UNPAID RENT
My client, (NAME OF CLIENT), the landlord of (DESCRIPTION OF PROPERTY), endorsed to me the matter of
your overdue accountability in the amount of (AMOUNT IN WORDS) (₱______________), representing your unpaid
rentals.
Despite my client’s several demands, you refused to settle the account up to present.
In view thereof, you are hereby given TEN (10) DAYS from receipt hereof to pay the foregoing amount of
(AMOUNT IN WORDS) (₱______________), plus _____% interest starting (DUE DATE OF PAYMENT), and _____%
collection fee; otherwise, I shall be constrained to file the necessary legal action against you to collect the
foregoing amount, plus _____% attorney’s fees thereon as well as litigation expenses.
If you have any inquiry, please contact me at (CONTACT DETAILS).
Sincerely,
________________________________________
ATTY. (NAME OF COUNSEL)
Counsel for (Name of Client)

Civil Law
AUTHORIZATION LETTER
NAME OF SENDER
Address of Sender
DATE
NAME OF RECEIVER
Address of Receiver
DEAR MR./MRS./MS. (NAME OF RECEIVER):
AUTHORIZATION LETTER
I, (NAME OF SENDER), hereby authorize my (RELATIONSHIP), (NAME OF REPRESENTATIVE), to act on my

behalf in all matters dealing with (SUBJECT MATTER), to file and receive (DOCUMENTS/COPIES/PAYMENTS),
including signing of all documents relating to these matters. Any and all acts of (NAME OF REPRESENTATIVE)
shall have the same effect as acts of my own.
This letter of authorization will be in effect from (STARTING DATE) to (END DATE). If you have any questions,
feel free to contact me on (CONTACT DETAILS OF SENDER) for any further clarification needed.
Sincerely,
_________________________________________
NAME OF SENDER
Title of Sender
Date of Signature

2022 GOLDEN NOTES
Practical Exercises
B. SIMPLE CONTRACTS
DEED OF ABSOLUTE SALE
KNOW ALL MEN BY THESE PRESENTS:
This DEED OF ABSOLUTE SALE is made, executed and entered into by:
(NAME OF SELLER), of legal age, single/married to (NAME OF SPOUSE, IF ANY), Filipino, and with
residence and postal address at (ADDRESS OF SELLER), hereinafter referred to as the SELLER;
-AND-
(NAME OF BUYER), of legal age, single/married to (NAME OF SPOUSE, IF ANY), Filipino and with
residence and postal address at (ADDRESS OF BUYER), hereinafter referred to as the BUYER.
WITNESSETH;
WHEREAS, the SELLER is the registered owner of a parcel of land with improvements located at
(Address of property to be sold) and covered by Transfer Certificate of Title No. (TCT Number) containing a
total area of (Land Area of Property in Words) (000) SQUARE METERS, more or less, and more particularly
described as follows:
TRANSFER CERTIFICATE OF TITLE NO. XXXX

(Registry of Deeds for the City of _____, Philippines)
(Technical Description of the Property on the Title) Example: A PARCEL OF LAND

(Lot 20 Blk 54 of consolidation subdivision plan (LRC) Pcs-13265, being a portion of the
consolidation of Lots 4751-A and 4751-B (LRC) Psd-50533, Lot 3, Psd-100703, Lot 1, Psd-
150980, LRC Rec. Nos. Nos. N-27024, 51768, 89632, N-11782, N-13466, and 21071 situated in
the Bo. of San Donisio, Mun of Paranaque, Prov of Rizal, Is. of Luzon. Bounded on NE., point 4 to
1 by Road Lot 22, on.to the point of beginning; containing an area of (280) square meters more
or less.

Civil Law
WHEREAS, the BUYER has offered to buy and the SELLER has agreed to sell the above-mentioned
property for the amount of (AMOUNT IN WORDS) (₱ ______________) Philippine Currency;
NOW THEREFORE, for and in consideration of the sum of (AMOUNT IN WORDS) (₱ ______________)
Philippine Currency, hand paid by the vendee to the vendor, the SELLER HEREBY SELLS, TRANSFERS, and
CONVEYS by way of Absolute Sale unto the said BUYER, his heirs and assigns, the certain parcel of land together
with all the improvements found thereon, free from all liens and encumbrances of whatever nature including
real estate taxes as of the date of this sale.
____________________________ _____________________________
(NAME OF SELLER) (NAME OF BUYER)
Seller Buyer
WITH MARITAL CONSENT:
______________________________________ _____________________________________
NAME OF SELLER’S SPOUSE NAME OF BUYER’S SPOUSE

Seller's Spouse Buyer's Spouse
SIGNED IN THE PRESENCE OF:
_______________________ ______________________
WITNESS NO. 1 WITNESS NO. 2
ACKNOWLEDGMENT
REPUBLIC OF THE PHILIPPINES )

CITY/MUNICIPALITY OF ) S.S.
BEFORE ME, a Notary Public for and in the (Province/City/Municipality) of _____________, personally
appeared the following persons, with their respective competent evidence of identity as follows:
NAME COMPETENT EVIDENCE OF IDENTITY VALIDITY
1. (NAME OF SELLER) _____________ ________________________ _____________

2. (NAME OF BUYER) _____________ ________________________ _____________

2022 GOLDEN NOTES
Practical Exercises
Known to me and to me known to be the same persons who executed the foregoing instrument and
acknowledged to me that the same is their free act and voluntary deed.
This instrument, consisting of (__) pages, including the page on which this acknowledgment is written, has
been signed on the left margin of each and every page thereof by the concerned parties and their witnesses, and
sealed with my notarial seal.
WITNESS MY HAND AND SEAL on this ___day of __________________20__ at_______________.
NAME OF NOTARY PUBLIC
Notary Public
Doc. No. ______;

Page No. ______;
Book No. ______;
Series of ______.

Civil Law
LEASE CONTRACT
CONTRACT OF LEASE
KNOW ALL MEN BY THESE PRESENTS:
This CONTRACT OF LEASE is made and executed at the City of _____, this day of _______________, 20____, by
and between:
(NAME OF LESSOR), of legal age, single/married to (NAME OF SPOUSE, IF ANY), Filipino, and with
residence and postal address at (Address), hereinafter referred to as the LESSOR.
-and-
(NAME OF LESSEE), of legal age, single/married to (NAME OF SPOUSE, IF ANY), Filipino and with
residence and postal address at (ADDRESS), hereinafter referred to as the LESSEE.
WITNESSETH;
WHEREAS, the LESSOR is the owner of THE LEASED PREMISES, a residential property situated at
(Address of property to be leased);
WHEREAS, the LESSOR agrees to lease-out the property to the LESSEE and the LESSEE is willing to lease
the same;
NOW THEREFORE, for and in consideration of the foregoing premises, the LESSOR leases unto the LESSEE
and the LESSEE hereby accepts from the LESSOR the LEASED PREMISES, subject to the following:
TERMS AND CONDITIONS
5. PURPOSES. That premises hereby leased shall be used exclusively by the LESSEE for residential
purposes only and shall not be diverted to other uses. It is hereby expressly agreed that if at any time,
the premises are used for other purposes, the LESSOR shall have the right to rescind this contract
without prejudice to its other rights under the law.
6. TERM. This term of lease is for ONE (1) YEAR., from (Date) to (Date) inclusive. Upon its expiration, this
lease may be renewed under such terms and conditions as may be mutually agreed upon by both parties,
written notice of intention to renew the lease shall be served to the LESSOR not later than seven (7) days
prior to the expiry date of the period herein agreed upon.

2022 GOLDEN NOTES
Practical Exercises
7. RENTAL RATE. The monthly rental rate for the leased premises shall be in (AMOUNT IN WORDS)
(P______________), Philippine Currency, exclusive of VAT. All rental payments shall be payable to the
LESSOR.
The said rental shall become due (without need of any demand) and payable on the 5th day of each
calendar month to the LESSOR.
8. DEPOSIT. That the LESSEE shall deposit to the LESSOR upon signing of this contract and prior to move-
in an amount equivalent to the rent for THREE (3) MONTHS or the sum of (AMOUNT IN WORDS)
(P______________), Philippine Currency, wherein the two (2) months deposit shall be applied as rent for
the 11th and 12th months and the remaining one (1) month deposit shall answer partially for damages
and any other obligations, for utilities, such as water, electricity, cable TV, internet, telephone,
association dues, or any other obligation resulting from violation(s) of any of the provision(s) of this
contract.
9. DEFAULT PAYMENT. In case of default by the LESSEE in the payment of the rent, such as when the
checks are dishonored, the LESSOR, at its option, may terminate this contract and eject the LESSEE. The
LESSOR has the right to padlock the premises when the LESSEE is in default of payment for ONE (1)
MONTH and may forfeit whatever rental deposit or advances have been given by the LESSEE.
10. SUB-LEASE.: The LESSEE shall not directly or indirectly sublet, allow, or permit the LEASED PREMISES
to be occupied in whole or in part by any person, firm, or corporation, neither shall the LESSEE assign
its rights hereunder to any other persons or entities and no right of interest thereto or therein shall be
conferred on or vested in anyone by the LESSEE without the LESSOR'S written approval.
11. PUBLIC UTILITIES. The LESSEE shall pay for its telephone, electric, cable TV, water, internet,
association dues, and utilities during the duration of the lease.
12. FORCE MAJEURE. If the whole or any part of the leased premises shall be destroyed or damaged by
fire, flood, lightning, typhoon, earthquake, storm, riot, or any other unforeseen events of acts of God, as
to render the LEASED PREMISES during the term substantially unfit for use and occupation of the
LESSEE, then this lease contract may be terminated without compensation by the LESSOR or by the
LESSEE by notice in writing to the other.
13. LESSOR'S RIGHT OF ENTRY. The LESSOR or its authorized agent shall, after giving due notice to the
LESSEE, have the right to enter the premises in the presence of the LESSEE or its representative at any
reasonable hour to examine the same or make repairs therein or for the operation and maintenance of
the building or to exhibit the LEASED PREMISES to prospective LESSEE, or for any other lawful purposes
which it may deem necessary.
14. EXPIRATION OF LEASE. At the expiration of the term of this lease or cancellation thereof, as herein
provided, the LESSEE will promptly deliver to the LESSOR the leased premises with all corresponding
keys and in as good and tenantable condition as the same is now, ordinary wear and tear expected,
devoid of all occupants, movable furniture, articles, and effects of any kind. Non-compliance with the
terms of this clause by the LESSEE will give the LESSOR the right, at the latter's option, to refuse to accept
the delivery of the premises and compel the LESSEE to pay rent therefrom at the same rate plus twenty-
five (25) % thereof as penalty until the LESSEE shall have complied with the terms hereof. The same
penalty shall be imposed in case the LESSEE fails to leave the premises after the expiration of this
Contract of Lease or termination for any reason whatsoever.

Civil Law
15. JUDICIAL RELIEF. Should any one of the parties herein be compelled to seek judicial relief against the
other, the losing party shall pay an amount of ONE HUNDRED PERCENT (100%) of the amount claimed
in the complaint as attorney's fees which shall in no case be less than FIFTY THOUSAND PESOS
(₱50,000.00) in addition to other cost and damages which the said party may be entitled to under the
law.
16. VENUE. Any legal action or proceeding brought to enforce the terms of this Contract can only and be
exclusively filed in the proper courts in the City of _____________.
17. This CONTRACT OF LEASE shall be valid and binding between the parties, their successors-in-interest,
and assigns.
IN WITNESS WHEREOF, parties herein affixed their signatures this ________ day of
____(Month)___(Year)______ at _________ City, Philippines.
_____________________________ ______________________________
(NAME OF LESSOR) (NAME OF LESSEE)
Lessor Lessee
SIGNED IN THE PRESENCE OF:
_______________________ ______________________
WITNESS NO. 1 WITNESS NO. 2
ACKNOWLEDGMENT
REPUBLIC OF THE PHILIPPINES )

CITY/MUNICIPALITY OF ________ ) S.S.
BEFORE ME, a Notary Public for and in the (Province/City/Municipality) of _____________, personally
appeared the following persons, with their respective competent evidence of identity as follows:
NAME COMPETENT EVIDENCE OF IDENTITY VALIDITY
1. (NAME OF SELLER) _____________ ________________________ _____________

2. (NAME OF BUYER) _____________ ________________________ _____________

2022 GOLDEN NOTES
Practical Exercises
Known to me and to me known to be the same persons who executed the foregoing instrument and
acknowledged to me that the same are their free act and voluntary deed.
This instrument, consisting of (__) pages, including the page on which this acknowledgment is written, has
been signed on the left margin of each and every page thereof by the concerned parties and their witnesses, and
sealed with my notarial seal.
WITNESS MY HAND AND SEAL on this ___day of____(Month)___(Year)______ at_______________.
NAME OF NOTARY PUBLIC
Notary Public
Doc. No. ______;

Page No. ______;
Book No. ______;
Series of ______.

Civil Law
C. COMPLAINT
REPUBLIC OF THE PHILIPPINES
REGIONAL TRIAL COURT
National Capital Judicial Region
Branch ____
City of ___________
JUAN DELA CRUZ,

Plaintiff,
Civil Case No. __________________

-versus-
For: Sum of Money
MARIA DELA CRUZ,

Defendant.
x-----------------------
-x
COMPLAINT (Title)
Plaintiff, by undersigned counsel and to this Honorable Court, respectfully states;
1. The plaintiff Juan Dela Cruz is of legal age, single and a resident of 12 M.F. Jhocson St., Sampaloc, Manila,
and defendant Maria Dela Cruz is of legal age, single and a resident of 25 Centro St., Sampaloc, Manila.
2. On 03 May 2022, defendant obtained a loan from the plaintiff in the amount of ONE HUNDRED
THOUSAND PESOS (P100,000.00) for which he executed and delivered to plaintiff a promissory note.
A copy of the promissory note dated _____________ is hereto attached as Annex “A”, and made part an
integral of this complaint.
3. Plaintiff exerted earnest efforts to collect from defendant through repeated demands to pay, both verbal
and written, but to no avail.
4. As a result of defendant’s deliberate refusal to pay, a final demand was sent to defendant on
____(date)_____. Unfortunately, as of the date of the filing of this complaint, defendant intentionally
disregarded and refused to pay its outstanding obligation to the plaintiff. Attached as Annex “B” is a
copy of the final demand dated ____(date)_____.

2022 GOLDEN NOTES
Practical Exercises
5. Due to the unwarranted failure and blatant refusal of the defendant to pay its valid and outstanding
obligation, plaintiff was compelled to engage the services of counsel.
PRAYER
WHEREFORE, it is respectfully prayed that judgment be rendered in favor of plaintiff and against
defendant for the sum of ONE HUNDRED FIFTY IHOUSAND PESOS (P150,000.00) with interest at the rate of
six per centum (6%) per annum on the aforesaid notes, until paid; interest at the legal rate on the interest due
from the time of the filing of the complaint and attorney's fees plus costs.
Plaintiff further prays for such other reliefs as may be just and equitable in the premises.
City of Manila, April 10, 2022. (Venue and Date)
(Sgd.) ATTY. LIZA SOBRANGANO

Counsel for the Plaintiff
Roll No, 12345
IBP No. 123456/mm.dd.yyyy/ Manila City
PTR No. 1234567/mm.dd.yyyy/ Manila City
MCLE Compliance No. VI-0012345/valid until 20 March 2023
Unit 1, Building X, Mendiola, Manila City
Mobile No.: 0917 123 9876
Email Address: lizasobrangano.law@lawoffice.com
VERIFICATION AND CERTIFICATION OF NON-FORUM SHOPPING
I, JUAN DELA CRUZ, of legal age, Filipino, and with residence address at 12 M.F. Jhocson St., Sampaloc,
Manila, hereby depose and state that:
1. I am the plaintiff in the above-entitled case;
2. I caused the preparation and filing of the foregoing complaint, read, and understood the contents thereof,
and hereby attests that the same are true and correct based on my personal knowledge and from
authentic records in my possession;
3. The Complaint is not filed to harass, cause unnecessary delay, or needlessly increase the cost of
litigation;
4. The factual allegations therein have evidentiary support, or, if specifically so identified, will likewise
have evidentiary support after a reasonable opportunity for discovery;

Civil Law
5. I have not commenced any other action or proceeding involving the same issues in the Supreme Court,
Court of Appeals, or any other tribunal or agency, and that to the best of my knowledge, no such action
is pending in said Court, tribunal, or agency; and
6. If I should learn thereafter of the pendency of any such action, I undertake to report that fact within five
(5) calendar days therefrom to this Honorable Court.
IN WITNESS WHEREOF, I have signed this instrument on _________(date)________.
JUAN DELA CRUZ

Affiant
SUBSCRIBED AND SWORN to before me this _______ day of ___(month)___ (year)___, affiant exhibited to
me his Competent Evidence of Identity by way of Driver’s License No. 123456789 issued at Manila City on ________,
with expiry date of _________.
Witness my hand and seal this _______ day of ___(month)___ (year)___.
Doc. No. ______;

Page No. ______;
Book No. ______;
Series of 2022.
AFFIDAVIT OF SERVICE

2022 GOLDEN NOTES

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FACULTY OF CIVIL LAW (1734)

2022 GOLDEN NOTES

Address: Academics Committee

Tel. No: (02) 8731-4027

Released in the Philippines, 2022.

ACADEMIC YEAR 2021-2022

SARAH ANGELA D. EVA CHAIRPERSON

ATTY. AL CONRAD B. ESPALDON

ACADEMICS COMMITTEE 2022

CIVIL LAW COMMITTEE 2022

CEDRIC EMMANUEL S. VILLARAN

MARIA ALEXA LOUISE U. DAÑO

JAMIE ANNE G. JORGE ASST. HEAD, SUCCESSION

ASST. HEAD, OBLIGATIONS AND CONTRACTS and

ATTY. KENNETH JAMES CARLO C. HIZON

FACULTY OF CIVIL LAW

ATTY. ARTHUR B. CAPILI

ATTY. ELGIN MICHAEL C. PEREZ

JUDGE PHILIP A. AGUINALDO

LENY G. GADIANA, R.G.C.

OUR DEEPEST APPRECIATION TO OUR

THE RISK OF USE OF THIS BAR

A. Effect and Application of Laws ............................................................................................................................................................. 1

II. PERSONS AND FAMILY RELATIONS

A. General provisions................................................................................................................................................................................ 163

IV. OBLIGATIONS AND CONTRACTS

A. Obligations ............................................................................................................................................................................................... 235

A. Nature and Form ...................................................................................................................................................................................358

A. General Provisions ................................................................................................................................................................................428

A. General Provisions ................................................................................................................................................................................451

A. Nature, Form and Kinds .....................................................................................................................................................................492

IX. CREDIT TRANSACTIONS

A. Torts ............................................................................................................................................................................................................ 558

A. Personal Property Securities (R.A. No. 11057)........................................................................................................................ 742

III. LAND TITLES AND DEEDS

A. Torrens System; General Principles ............................................................................................................................................. 772

IV. PRACTICAL EXERCISES

A. Demand and Authorization Letters .............................................................................................................................................. 831

declares that it shall be effective

3. If the law provides for immediate

A. EFFECT AND APPLICATION OF LAWS 4. If the law is voluminous– Reckoning shall

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Newspaper of general circulation Judge Villanueva then directly went to Court to

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3. In order that fraud may make a contract

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Retroactive law Q: Belen Mejares was adjudged guilty of the

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specifically stipulates that its provisions shall have Permissive law

Prohibitory law The voluntary abandonment or surrender, by a

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Judicial decisions applying or interpreting the law, Duty to Render Judgment

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Guidelines in the Rendition of Decisions under (Pineda, 2010) and

Necessity of proving customs Computation of period

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Illustration: One calendar month from December

2. Month – 30 days, unless designated by their

4. Nighttime – from sunset to sunrise;