2012 Ateneo Civil Law Summer Reviewer

CIVIL LAW
BAR REVIEWER
FACULTY ADVISER
ACADEMICS HEAD
SUBJECT HEADS
ATTY. BENJAMIN LERMA

PIERRE MARTIN REYES
FRANCESCO BENZON
ANBOCHI
HANNAH STEPHANIE ANG
ATENEO CENTRAL BAR OPERATIONS 2012

ACADEMICS COMMITTEE
Academics Head: Pierre Martin Reyes;
Understudy: Clariesse Jami Mari Chan
REVIEW COMMITTEE
Head: Yla Gloria Marie Paras;
Understudy: Ken Koga;
Members: Catherine Dela Rosa, Eric Lavadia, Iris Lucido,
Pearl Charisse Baustista; Mina Reyes
CIVIL LAW COMMITTEE
Heads: Francesco Benzon Anbochi, Hannah Stephanie
Ang;
Understudy: Alessandra Vilches, Ken Patrick Habana;
Volunteers: Rizza Anne Sy, John Benedict Ty, Rose
Angelique Dizon, Geoanne Christi Battad, Paolo de
Guzman, Roberto Miguel Ramiro;
CIVIL LAW
Table of Contents
PRELIMINARY TITLE
5
1. Effect and Effectivity of Law
2. Human Relations
PERSONS
8
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=====
A. General Provisions
B. Natural Persons
C. Juridical Persons
D. Domicile
E. Marriage
F. Legal Separation
G. Rights and Obligations Between Husband and
Wife
H. Property Relations Between Husband and Wife
I. The Family
J.
Family Home
K. Paternity and Filiation
L. Adoption
M. Support
N. Parental Authority
O. Funerals
P. Surname
Q. Absence
R. Civil Register
PRESCRIPTION
78
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PROPERTY
37
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A. Classification of Property (Arts. 414-418, CC)
B. Ownership (Arts. 427-439, CC)
C. Accessions
D. Quieting Title
E. Co-ownership
F. Condominium Act (RA 4726)
G. Possession
H. Usufruct
I. Easements
J. Modes Of Acquring Ownership
K. Occupation
L. Intellectual Creation
M. Donation
N. Other Modes of Acquiring Ownership
O. Nuisance
CONTRACTS
109
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A. Definition
B. No Prescription Applicable
C. Prescription or limitation of actions
D. Interruption
OBLIGATIONS
82
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A. Definition
B. Elements of an Obligation
C. Different Kinds of Prestations
D. Classification of Obligations
E. Sources of obligations (Arts. 1156-1157)
F. Nature and Effect of Obligations
G. Kinds of Civil Obligations
H. Joint and Solidary Obligation
I. Extinguishment of Obligations
A. Essential Requisites (Art. 1261)

B. Kinds of Contracts
C. Formality (Arts. 1356, 1357, 1358)
D. Defective Contracts
E. Effect of contracts (Art. 1311)
SALES 123
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A. Introduction
B. Parties to a Contract of Sale
C. Subject Matter
D. Obligations of the Seller to Transfer Ownership
E. Price
F. Formation of Contract of Sale
Page 3 of 383
G.
Transfer of Ownership
H. Risk of Loss
I. Documents of Title
J. Remedies of an Unpaid Seller
K. Performance of Contract
L. Warranties
M. Breach of Contract
N. Extinguishment of the Sale
O. The Subdivision and Condominium Buyers'
Protective Decree
P. The Condominium Act
SUCCESSION
155
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B. Testamentary Succession
C. Legal or Intestate Succession
D. Provisions Common to Testate and Intestate
Succession
E. Partition and distribution of estate
LEASE
199
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A. Lease of Things
B. Lease of Work or Services
C. Lease of Rural and Urban Lands
D. Contract for Piece of Work
E. Rights and Obligations of Lessor and Lessee
PARTNERSHIP
205
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A. Contract Of Partnership
B. Rights and Obligations of Partnership
C. Rights and Obligations of Partners Among
Themselves
D. Obligations of Partnership/Partnership to Third
Persons
E. Dissolution
F. Limited Partnership
AGENCY
221
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A. Definition of Agency
B. Powers
C. Express V. Implied Agency
D. Agency By Estoppel
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E. General vs. Special Agency

F. Agency Couched in General Terms
G. Agency Requiring Special Power of Attorney
H. Agency by Operation of Law
I. Rights and Obligations of Principal
J. Modes of Extinguishment
CREDIT
TRANSACTIONS
235
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===
A. Loan
B. DEPOSIT
C. Guaranty and Suretyship
D. Pledge
E. Real Mortgage
F. Antichresis
G. Chattel Mortgage
H. Quasi-contracts
I. Concurrence and Preference of Credits
J. Insolvency Law
LAND TITLES AND DEEDS
283
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A. Torrens System
B. Regalian Doctrine
C. Citizen Requirements
D. Non-Registrable Properties
E. Original Registration
F. Subsequent Registration
G. Dealings With Unregistered Land
TORTS AND DAMAGES
323
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Book I--Torts
A. Principles
B. Classification of Torts
C. The Tortfeasor
D. Act of Omission and Its Modalities
E. Proximate Cause
F. Legal Injury
G. Intentional Torts
H. Negligence
I. Special Liability in Particular Activities
J. Strict Liability
Book II--Damages
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A.
General Considerations
B. Actual and Compensatory Damages
C. Moral Damages
D. Nominal Damages
E. Temperate or Moderate Damages
F. Liquidated Damages
G. Exemplary or Corrective Damages
H. Damages in Case of Death
I. Graduation of Damages
J. Miscellaneous Rules
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Page 6 of 383
CIVIL LAW
When Laws Take Effect (art.2)
================================
TOPICS UNDER THE SYLLABUS

A. PRELIMINARY TITLE
1. Effect and Effectivity of Law
a. When laws become effective
b. Mandatory effect of laws
c. Irretroactivity of laws
d. Waiver of rights
e. Repeal of laws
f. Judicial decisions
g. Presumption and Applicability
of Custom
h. Computation of Time
i. Governing laws
j. Rules on Prohibitive laws
2. Human Relations
a. Application
b. Duty to act with justice,
observe honesty and good faith
c. Actions for breach of promise
to marry
d. Unjust enrichment at the
expense of others
e. Rights to personal dignity and
privacy
f. Liability of Public Officers
=========================
================
CIVIL LAW branch of law that regulates
relations of assistance, authority and obedience
among family members as well as members of a
society for the protection of private interests
NEW CIVIL CODE: took effect on August 30,
1950
==============================
===================

A. PRELIMINARY TITLE
1. Effect and Effectivity of Laws
=========================
=================
1. EFFECT AND EFFECTIVITY OF LAWS
a) When the Laws Become Effective
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General Rule - 15 days after completion of

publication in OG or newspaper of general
circulation
Exception - The law can provide for its own date
of effectivity
b) Mandatory Effect of Laws
Publication is MANDATORY for all

statutes, including PDs and Eos
AOs and Regulations must also be
published if their purpose is to enforce or
implement existing law
An immediate effectivity clause does not
preclude the requirement of publication
Publication must be in full (otherwise,
it is not deemed published at all) since its
PURPOSE is to inform the public of its
contents
Non-publication of the law would offend
due process (persons not aware of laws
would be prejudiced)
Effect of Publication: The people are
deemed to have conclusively been
notified of the law even if they have not
read them.
Compliance with the Law (art.3):

Ignorance of the law excuses no one from
compliance therewith (Ignorantia juris neminem
excusat)
NOTE: Applies only to mandatory and prohibitory
laws (Consunji v. CA, [G.R. 137873 April 20,
2001])
c) Irretroactivity of Laws (art. 4)

General rule: laws are not retroactive
Exceptions: (PIERCER)
1. Penal laws when favorable to the accused
who is not a habitual delinquent or
recidivist
2. Interpretative statutes
3. When the law itself expressly provides
Exception to the exception:
a. Ex post facto law
b. When retroactivity impairs the
obligations of contracts
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4.
5.
6.
7.
Remedial statutes
Curative statutes
Emergency laws
Laws creating new substantive rights
Customs which are contrary to law, public order

or public policy shall not be countenanced. A
custom must be proved as a fact according to the
rules of evidence.
Mandatory and Prohibitory laws (art. 5):

General Rule - Acts executed against the
provisions of mandatory or prohibitory laws shall
be void.
Exception - If the law expressly provides for the
validity of acts committed in violation of a
mandatory or prohibitory provision of a statute.
Exceptions - When waiver is

1. Contrary to law, public order, public
policy, morals, good customs (e.g. waiver of
future inheritance, political rights, future support)
2. Prejudicial to a third person with a right
recognized by law
e) Repeal of Laws (art. 7)

Express repeal - repeal of repealing law will
not revive the old law (unless expressly
provided)
Implied repeal - the provisions of the
subsequent law are incompatible with those
of the previous law
Requisites:
1. Both laws cover the same subject
matter
2. The latter law is repugnant to the
earlier law
Penal Laws
Judgment of the Courts (Arts. 8-9)

Decisions of the SC form part of the law
All judges or courts have the duty to
render judgment even in the absence of a
law
&
Applicability
of
Custom (Arts.
10-12)
Construction and interpretation of laws come only
after it has been demonstrated that application is
impossible or inadequate without them.
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Matters/Perso
ns Bound
All those who
live or
sojourn in
Philippine
territory
Status
Laws
(relating to
family rights
and duties,
status, legal
capacity)
Property
Laws
Citizens of
the
Philippines,
including
those living
abroad
Laws on
Forms and
Solemnitie
s
Forms and
solemnities
of contracts,
wills, public
instruments
f) Judicial Decisions
g) Presumption
Governing Laws (Arts. 14-17)
LAW
General Rule- Rights may be waived
2.
Legal Periods (Art. 13, as amended by Sec.

31, EO 292)
Year = 12 months; Month = 30 days, unless
referring to a specific calendar month; Day = 24
hours; Night = sunset to sunrise
i)
d) Waiver of Rights (art.6)
1.
h) Computation of Time
j)
Real and
personal
property
Principle/
Doctrine
Principle of
Territoriality:
follow laws of the
place where
crime was
committed
Principle of
Nationality:
follow ones own
national laws
Lex rei sitae:

follow laws of the
place where
property is
situated
Lex loci
celebrationis:
follow laws of the
country in which
they are
executed
Rules on Prohibitive Laws (art. 17)
General Rule - Prohibitive laws concerning

persons, their acts or property and laws which
have for their object public order, public policy or
good customs are not rendered ineffective by
laws, judgments promulgated or conventions
agreed upon in foreign country.
Exception: Art. 26 (2) of Family Code
2. HUMAN RELATIONS
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a) Application
PRINCIPLE OF ABUSE OF RIGHTS (ART. 19) When ones right is exercised for the purpose of
prejudicing or injuring another
Requisites/ Elements:
1. There is a legal right or duty
2. Which is exercised in bad faith
3. For the sole intent of prejudicing or injuring
another
Standards to observe in the exercise of
ones rights:
1. Act with justice
2. Give everyone his due
3. Observe honesty and good faith
b) Duty to Act with Justice, Observe

Honesty and Good Faith
ACTS CONTRA BONUS MORES (ART.21)When persons wilfully cause loss or injury to
another
Elements:
1. There is an act which is legal
2.
But which is contrary to morals, good
customs, public order, or public policy
3. Done with intent to injure
Note:
Similarities: In Arts. 19-21, at the core

is bad faith or malice; and the
aggrieved party must be indemnified.
Difference: Under Arts. 19 & 21, the
act must be done intentionally. Art.
20, however, does not distinguish (the
act may be done either willfully or
negligently, as long as the act is be
contrary to law).
c) Actions for Breach of Promise to

Marry
General Rule: Breach of promise to marry is not
actionable.
Exception: When one party has already made
real efforts to prepare and spend for the wedding.
Such act is unjustifiably contrary to good customs
for which the defendant must be held answerable
for damages in accordance with Art. 21 of the
NCC. (Wassmer v. Velez 12 SCRA 649 (1964))
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d) Unjust Enrichment at the Expense of

Others
ACCION IN REM VERSO (Art. 22) action for
recovery of what has been paid without just
cause.
Requisites:
1. Defendant has been enriched
2. Plaintiff suffered a loss
3. Unjust Enrichment of defendant is without
just or legal ground
4. Plaintiff has no other action based on
contract, quasi-contract, crime, or quasi-delict
Distinguished from solutio indebiti: Mistake is

an essential element in solutio indebiti but not
in accion in rem verso.
DUTY TO INDEMNIFY ONE FOR DAMAGE TO
HIS PROPERTY (Art. 23): when defendant was
benefitted even if not due to fault or negligence
DUTY OF COURTS TO PROTECT A PARTY IN A
CONTRACT (Art. 24): When such party is at a
disadvantage on account of his: (MIgIMenTO)
Moral dependence
Ignorance
Indigence
Mental weakness
Tender age
Other handicap
THOUGHTLESS EXTRAVAGANCE (Art. 25)
May be prevented if the ff requisites are present:
1. During an acute public want or emergency
2. Person seeking to stop it is the govt or a
private charitable institution
e) Rights to
Privacy
Personal
Dignity
and
Protection of Human Dignity (Art. 26)

Every
person
shall
respect
the dignity,
personality, privacy and peace of mind of others
The following acts produce a cause of action for
damages,
prevention
and
other
relief:
(PryMIVex)
1. Prying into the privacy of anothers residence
2.
Meddling with or disturbing the private life or

family relations of another
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3.
Intr
4.
iguing to cause another to be alienated from

friends
Vexing or humiliating another on account of
his religious beliefs, lowly station in life, place
of birth, physical defect, or other personal
condition
f) Liability of Public Officers
Relief Against Public Officials (Art. 27)

When one suffers material or moral loss because
a public officer fails without cause to perform his
duty, the officer is not protected by his office and
is personally liable.
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I.
PERSONS
==============================
===================

1. Juridical Capacity v Capacity to
Act
2. Restrictions and Modifications on
Capacity to
Act
B. Natural Persons
1. When Personality Begins and
Ends
2. Rules on Survivorship (Art.43, CC
v Rule 131 Sec
jj)
C. Juridical Persons
1. Who are Juridical Persons
2. When Personality Begins and
Ends
3. Rights of Juridical Persons
D. Domicile
=========================
=================
A. GENERAL PROVISIONS
1. Juridical Capacity v. Capacity to Act

(Art. 37)
JURIDICAL CAPACITY
Fitness to be the
subject of legal
relations
Passive
Inherent
Lost only through death
Can exist without
capacity to act
Cannot be limited or
restricted
CAPACITY TO ACT
Power to do act with
legal effects
Active
Merely acquired
Lost through death and
other causes
Cannot exist without
juridical capacity
Can be restricted,
modified, or limited
Full Civil Rights: union of both juridical capacity

and capacity to act
2. Restrictions
(Art. 38)
on
Capacity
to
(MInD - ICIP)
Do not exempt the incapacitated person from
certain obligations
1. Minortiy
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Act
2. Insanity
3. State of being Deaf-mute
4. Imbecility
5. Civil Interdiction
6. Prodigality state of squandering money or
property with a morbid desire to prejudice the
heirs of a person (Martinez v. Martinez, 1 Phil.
182)
Circumstances that Modify or Limit Capacity

to Act (art. 39)
Age
Penalty
Absence
Insanity
Prodigality
Insolvency
Imbecility
Family Relations
Trusteeship
Deaf-muteness
Alienage
CIVIL PERSONALITY the aptitude of being the
subject, active or passive, of rights and
obligations
B. NATURAL PERSONS
NATURAL PERSONS
Natural Persons
A human being, has
physical existence
Product of
procreation
V. JURIDICAL PERSONS
Juridical Persons
Exists only in
contemplation of law
Product of legal
fiction
1. When Personality Begins and Ends

Civil Personality, Natural Persons (Arts. 4043)
General
Rule
Determined
extinguished by death
by
birth,
Exception The conceived child shall be

considered born for all purposes favorable to it,
provided it be born later under the following
conditions:
1. It is alive at the time it is completely
delivered from the mothers womb
2. BUT if it had an inter-uterine life of less
than 7 months, only if it lives for at
least 24 hours after its complete
delivery from the maternal womb
2. Rules on Survivorship
Doubts as to Order of Death: As between two
or more persons called to succeed each other, if
there is doubt as to which of them died first,
whoever alleges the death of prior to the other
Page 11 of 383
shall prove the same. In the absence of proof, it

is presumed that they died at the same time and
there shall be no transmission of rights from one
to the other.
This rule applies only to cases involving
succession
C. JURIDICAL PERSONS
1. Who are Juridical Persons
Civil Personality, Juridical Persons (Arts. 4447)
1. The state and its political subdivisions
2. Other corporations, institutions, and
entities for public interest or purpose,
created by law
3. Corporations,
partnerships,
and
associations for private interest or
purpose
2. When Personality Begins and Ends
Creation: (1) and (2) are created by the laws
creating or recognizing them,
private corporations are governed
by the Corp. Code (B.P. 68) and
partnership and associations are
governed by the provisions of the
New Civil Code on partnerships
Extinguished: by termination of existence
3. Rights of Juridical Persons

1.
2.
3.
Acquire and possess property of all kinds

Incur obligations
Bring civil or criminal actions
CITIZENSHIP
In the Philippine jurisdiction, what is followed
is the concept of jus sanguinis (citizenship by
blood) as opposed to jus soli (citizenship by
place of birth)
D. DOMICILE
DOMICILE ( Arts. 50-51)
For natural persons, it is the
place of habitual residence
For juridical persons, it is where
their
legal
representation
is
established or where they exercise
their principal functions (when the
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law creating them does not fix the

domicile)
A minor follows the domicile of his parents
Domicile of origin can only be lost when a
change of domicile occurs.
Requirements for the acquisition of new
domicile:
1. Bodily presence in a new locality
2. Intention to remain therein (animus
manendi)
3. Intention to abandon the old domicile
(animus non revertendi)
The husband and the wife shall fix the family
domicile. In case of disagreement, the court
shall decide
Kinds of Domicile
1. Domicile of origin received by a person at
birth
2. Domicile of choice the place freely chosen by
a person sui juris
3. Constructive domicile assigned to a child by
law at the time of his birth
================================

E. Marriage (Arts. 1-54, Family
Code)
1. Concept
2. Essential and Formal
Requirements
3. Non-Essential Requirements
4. Marriages Celebrated Outside
the Philippines
a. Validity and Exceptions
b. Foreign Divorce
5. Void Marriages
a. Void ab initio under Art. 35
b. Void under Art. 36
c. Void for Being Incestuous
under Art. 37
d. Void for Reason of Public
Policy under Art. 38
e. Imprescriptibility of action or
defense for declaration of
nullity of marriage. (Art. 39)
Page 12 of 383
f. Subsequent Marriage Without

Judicial Declaration of Nullity of
Previous Void Marriage (Art. 40)
6. Annullable Marriages
7. Procedure and Effects of
Termination of Marriage
==============================
==================
E. MARRIAGE
1. CONCEPT
Marriage is
1. A special contract
2. of permanent union
3. Between a man and a woman
4. Entered into in accordance with law
5. For the establishment of conjugal and
family life
2. ESENTIAL AND FORMAL REQUIREMENTS

1. Legal capacity of contracting parties
a. Must be between a man and woman
b. Must be at least 18 years old
2. Consent freely given, IN the PRESENCE of
the solemnizing officer
Formal Requisites of Marriage: (ALC)
1. Authority of solemnizing officer
2. Valid marriage license (except in cases where
a marriage license is not required)
valid only for 120 days from issue in any part
of the Philippines
3. Marriage ceremony where the contracting
parties appear before the solemnizing officer,
with their personal declaration that they take
each other as husband and wife in the
presence of not less than two witnesses of
legal age
Effects:
1. Absence of essential or formal requisites
void ab initio
Exceptions:
a. If solemnized by unauthorized person, the
marriage will still be valid if either or both
contracting parties believed in good faith that
the solemnizing officer had legal authority
(Article 35(2))
Those exempt from the license requirement.
If either of the contracting parties are
1. at a point of death (articulo
mortis),
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2. or the residence of either party is
located that there is no means of

transportation to enable such
party to appear personally before
the civil registrar,
3. cohabitation for 5 years,
then
the
marriage
may
be
solemnized without the necessity of
a marriage license. (Article 27 and
28)
2. Defect in any of the essential requisites
voidable
3. Irregularity in any of the formal
requisites does not affect the validity of the
marriage but will make the party responsible
civilly, criminally, or administratively liable
Authorized Solemnizing Officers: (JPCCCM)
1. Incumbent member of the judiciary within
the courts jurisdiction
2. Duly authorized priest, rabbi, imam or the
minister of any church or religious sect
3. Ship captain or airplane chief only in
articulo mortis between passengers or
crew members while the ship is at sea or
the plane is in flight and also during
stopover at ports of call
4. Military commander of a unit to which a
chaplain is assigned only in articulo
mortis between persons within the zone of
military operations whether members of
the armed forces or civilians and only in
the absence of the chaplain
5. Consul-general, consul or vice-consul only
when contracting parties are both Filipinos
abroad
6. Mayor (Local Government Code of 1991)
The vice mayor, in case the mayor is
temporarily incapacitated to discharge his
duties
Marriages
Exempt
from
License
Requirements:
1. Marriage in articulo mortis (one of the
parties is at the point of death)
2. If the residence of either party is so located
that there is no means of transportation
to enable such party to appear personally
before the civil registrar
3. Marriage
solemnized
outside
the
Philippines where no marriage license is
required by the country where it was
solemnized
Page 13 of 383
4.
Marriage
among
Muslims
or
among
members of ethnic cultural communities
in accordance with their customs
5. Marriage between persons who have lived
together as husband and wife for at least
five years and without any legal impediment
to marry each other
Requisites:
a. Man and woman must have been
living together as husband and wife
for at least five years before
marriage
b. The parties must have no legal
impediment to marry each other
c. The fact of absence of legal
impediment between the parties
must be present at the time of
marriage
d. The parties must execute an
affidavit stating that they have lived
together for at least five years (and
are without legal impediment to marry
each other)
e. The
solemnizing
officer
must
execute a sworn statement that he
had ascertained the qualifications of
the parties and that he had found no
legal impediment to their marriage
No legal impediment during the entire

period:
This 5-year period should be a period of
cohabitation characterized by exclusivity
meaning no third party was involved at any
time that is, unbroken. (Nial vs. Bayadog,
328 SCRA 122 (2000))
AUTHORIZED VENUES FOR MARRIAGE:
General Rule: Must be solemnized publicly, and
not elsewhere, in the:
1.
Chambers
of
the
judge or in open court
2.
Church, chapel or
Office of consul-general, consul or viceconsul
Exceptions:
1.
Marriage at the point of death (articulo
mortis)
2.
Marriage in remote places
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3.
Marriage at a house or place designated by
the parties in a sworn statement upon
their written request to the solemnizing
officer
OTHER REQUIREMENTS:
Either or Both
Requires
Parties
18 years old and Parental consent
above but below 21
Marriage counseling
21 years old and Parental advice
above but below 25
Marriage counseling
Lack
of
consent
Lack
of
advice or
counselling
EFFECTS
parental Marriage is VOIDABLE
parental
marriage
NO EFFECT on th
validity of marriage
However, this will
suspend the issuance
of the marriage
license for 3 months
from the completion of
publication
If they get married
during the 3-month
period without a
license, the
marriage shall be
VOID
If they are able to
obtain a license
during the 3-month
period, the
marriage will still
be valid but civil
and criminal
liability may
attach.
3. NON-ESSENTIAL REQUIREMENTS
Marriage Certificate
While a marriage certificate is considered the
primary evidence of a marital union, it is not
regarded as the sole and exclusive evidence of
marriage. Jurisprudence teaches that the fact of
marriage may be proven by relevant evidence
other than the marriage certificate. Hence, even
a persons birth certificate may be recognized as
Page 14 of 383
competent evidence of the marriage between his

parents. (Anonuevo vs. Int. Estate of
Jalandoni, [GR 178221, December 1, 2010])
4. MARRIAGES SOLEMNIZED ABROAD

a) Validity and Exceptions
General Rule: Marriages solemnized outside the
Philippines in accordance with the laws of the
foreign country shall be valid here (lex loci
celebrationis). Basis: Principle of comity
However, if solemnized inside the Philippine
Consulate abroad, Philippinelaws must be
observed
Exceptions:
1. Where either or both parties are below
18 years old
2. Bigamous or polygamous marriage
(except Art. 41 on presumptive death of
spouse)
3. Mistake in identity
4. Marriages void under Art. 53
contracted following the annulment or
declaration of nullity of a previous
marriage but before partition
5. Psychological incapacity
6. Incestuous marriages
7. Marriage void for reasons of public
policy
were Filipino citizens but, later on, one of

them becomes naturalized as a foreign citizen
and obtains a divorce decree. The Filipino
spouse should be allowed to remarry as if the
other party was a foreigner at the time of the
solemnization of the marriage. Republic v.
Orbecido III, 472 SCRA 114 (2005)
For the second paragraph of Article 26 to
apply, a spouse who obtained the divorce
must not be a Filipino at the time of the
divorce. Otherwise, the divorce is not
recognized in the Philippines. Republic v.
Iyoy, G.R. No. 15277, September 21,
2005
Additionally, an action based on
the second paragraph of Article 26 of the
Family Code is not limited to the recognition
of the foreign divorce decree. If the court
finds that the decree capacitated the alien
spouse to remarry, the courts can declare
that the Filipino spouse is likewise capacitated
to contract another marriage. No court in this
jurisdiction, however, can make a similar
declaration for the alien spouse (other than
that already established by the decree),
whose status and legal capacity are generally
governed by his national law. Corpuz vs.
Sto. Tomas, G.R. No. 186571, August
11, 2010
5. VOID MARRIAGES
a) Void ab initio under Art. 35
b) Foreign Divorce
Divorce by Foreigner-Spouse:
If a Filipino is married to a foreigner and the
latter subsequently obtains a valid divorce
abroad capacitating him/her to remarry, the
Filipino spouse shall likewise have the
capacity to remarry under the Philippine law.
(Art. 26, par. 2)
Requisites:
a.) There is a valid marriage that had been
celebrated between Filipino citizen and a
foreigner
b.) A valid divorce is obtained abroad by the
alien spouse capacitating him or her to
remarry
The traditional rule applies when parties at the
time of celebration are a Filipino and an alien
BUT
This includes cases involving parties who, at
the time of the celebration of the marriage,
CIVIL LAW REVIEWER
1. Contracted by any party below 18 years

old
2. Solemnized by unauthorized solemnizing
officer (Except if either or both parties
believed in good faith that the officer had
authority)
3. Solemnized without marriage license
(Except when license not required)
A petition to declare the marriage void

due to absence of marriage license, filed
after the court denied a petition to
declare the marriage void due to
psychological incapacity, is barred by
RES JUDICATA. There is only one cause
of action which is the nullity of marriage.
Petitioner is estopped from asserting that
the first marriage had no marriage license
because he impliedly admitted the same
when he did not question the absence of a
Page 15 of 383
marriage license in the first case. Mallion

v. Alcantara, G.R. No. 141528,
October 31, 2006
Psychological Incapacity must be judged

on a case to case basis. It should refer to
no less than a mental (not physical)
incapacity. It must be characterized by a.
gravity b. juridical antecedence c.
incurability.
Carating-Siaynco
v.
Siaynco, 441 SCRA 422 (2004)
Mere showing of irreconcilable differences

and conflicting personalities does NOT
constitute
psychological
incapacity.
Carating-Siaynco v. Siaynco, 441
SCRA 422 (2004)
Mere sexual infidelity or perversion and

abandonment do not by themselves
constitute psychological incapacity within
the contemplation of the Family Code.
Neither could emotional immaturity and
irresponsibility
be
equated
with
psychological incapacity. Dedel v. CA
421 SCRA 461 (2004)
It must be shown that these acts are

manifestations of a disordered personality
which
make
respondent
completely
unable
to
discharge
the essential
obligations of a marital state. Root cause
must be traceable prior to the marriage
ceremony. Dedel v. CA 421 SCRA 461
(2004)
One of the essential marital obligations is

"To procreate children based on the
universal principle that procreation of
children through sexual cooperation is the
basic end of marriage." Constant nonfulfillment of this obligation will finally
destroy the integrity or wholeness of the
marriage. The senseless and protracted
refusal of one of the parties to fulfill this
marital obligation is equivalent to
psychological incapacity. Chi Ming Tsoi
v. CA, G.R. No. 119190, January 16,
1997
Psychological incapacity is not equated

with insanity or total mental inability to
function in all aspects of human lifeit is
a ground restricted to psychological
incapacity to comply with marital
obligations. Perez-Ferraris v. Ferraris
GR No. 162368 (2006)
4. Bigamous or polygamous marriages

Exception: Art. 41 Marriage contracted
by a person whose spouse has been
absent for 4 years (ordinary absence) or 2
years (extraordinary absence), where
such person has a well founded belief that
his/her absent spouse is already dead,
and after the absent spouse is judicially
declared presumptively dead, and at the
time of the marriage ceremony is in good
faith together with the subsequent spouse
5. Mistake in identity
The contemplated mistake here refers
to the actual physical identity of the
other party, and not merely mistake in
the name, character, age, or other
attributes of the person.
6. Subsequent marriage void under Art. 53
- A person whose marriage has been
annulled may remarry as long as after
the marriage is annulled, the properties
of the spouses must be partitioned and
distributed
and
the
presumptive
legitimes of the children be distributed.
Furthermore,
the
judgment
of
annulment or absolute nullity, the
partition and distribution, and the
delivery of the presumptive legitimes
must be recorded in the appropriate
civil registry and registries of property.
Failure to comply with these requisites
will make the subsequent marriage
void ab initio. Further, failure to record
in the proper registries will mean that
such will not affect third persons (Arts.
52-53)
NOTE: The enumeration of void marriages under
Art. 35 is not exclusive.
b) Void under Art. 36
Where any of the parties, who at the time of the
celebration of the marriage, was psychologically
incapacitated to comply with the essential marital
obligations, even if incapacity becomes manifest
only after solemnization.
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Page 16 of 383
A finding of psychological incapacity on

the part of one spouse shows noncognizance of ones essential marital
obligation, and therefore negates bad
faith. As a consequence moral and
exemplary damages cannot be awarded
against him/her because bad faith is an
essential element in awarding moral and
exemplary damages. Award of moral
damages should be predicated, not on the
mere act of entering into the marriage,
but on specific evidence that is was done
deliberately and with malice by a party
who had known of his or her disability and
yet
willfully
concealed
the
same.
Buenaventura v. CA, GR No. 127358,
March 31, 2005
The Court emphasizes that the burden falls

upon petitioner, not just to prove that private
respondent suffers from a psychological
disorder, but also that such psychological
disorder renders her "truly incognitive of the
basic marital covenants that concomitantly
must be assumed and discharged by the parties
to the marriage." Psychological incapacity must
be more than just a "difficulty," a "refusal," or a
"neglect" in the performance of some marital
obligations. An unsatisfactory marriage is not a
null and void marriage. Baccay vs. Baccay,
GR No. 117318, December 1, 2010
JURISPRUDENTIAL GUIDELINES (BRE-IGO-IC)
(Republic v. CA & Molina 268 SCRA 198 (1997))
1. Burden of proof to show the nullity of
marriage is upon the plaintiff
2. The root cause of the psychological
incapacity must be:
a. Medically or clinically identified
b. Alleged in the complaint
c. Sufficiently proven by experts
d. Clearly explained in the decision
3. The incapacity must be proven to be
existing at the time of the celebration of the
marriage
4. Such incapacity must be shown to be
medically or clinically permanent or
incurable
5. Such illness must be grave enough to bring
about the disability of the party to assume
the essential obligations of marriage
6. Essential marital obligations must be those
embraced by Art. 68-71, as well as Art. 220,
221, and 225 of the Family Code.
CIVIL LAW REVIEWER
7. Interpretations given by the National

Appellate Matrimonial Tribunal of the
Catholic Church in the Philippines, while not
controlling or decisive, should be given
great respect by our courts
8. The trial court must order the prosecuting
attorney or fiscal and the Solicitor General
to appear as counsel for the state
The foregoing guidelines do not require that a

physician examine the person to be declared
psychologically
incapacitated.
What
is
important is that the totality of evidence can
adequately establish the partys psychological
condition. Republic v. CA & Molina, 268
SCRA 198 (1997)
In determining if one of the contracting

parties is psychologically incapable, the
courts should interpret the provision on a
case-to-case basis. Courts should be guided
by experience, the findings of experts and
researchers in psychological disciplines, and
by decisions of church tribunals. Te v. Te,
G.R. No. 161793, February 13, 2009
c) Void for Being Incestuous under Art.
37
Whether relationship is legitimate or illegitimate:

1. Between ascendants and descendants of
any degree
2. Between brothers and sisters, whether full
or half blood
d) Void for Reason of Public Policy
under Art. 38
1. Between collateral blood relatives up to
the 4th civil degree
There is no prohibition regarding
marriages
between
collateral
blood relatives by half-blood
2. Between step-parents and step-children
3. Between parents-in-law and children-inlaw
4. Between adopting parent and adopted
child
5. Between surviving spouse of the adopter
and the adopted
6. Between surviving spouse of the adopted
and the adopter
7. Between adopted and legitimate child of
adopter
8. Between adopted children of same
adopter
Page 17 of 383
9. Between parties where one, with the

intention to marry the other, killed that
other persons spouse or his/her own
spouse
No prior criminal conviction by the
court for the killing is required by the
law since mere preponderance of
evidence is required to prove the
killing.
Article 38 is an exclusive list.
Under the new Family Code, the following can
now marry each other:
a.
Brother-in-law
and sister-in-law
b.
Stepbrother
and stepsister
c.
Guardian
and
ward
d.
Adopted
and
illegitimate child of the adopter
e.
Parties
who
have been convicted of adultery or
concubinage
NOTE: R.A. 6995 (Mail Order Bride Act) declares
as unlawful the practice of matching Filipino
women for marriage to foreign nationals on a
mail-order basis and other similar practices
including the advertisement, publication, printing
or distribution of brochures, fliers, and other
propaganda materials in furtherance thereof.
e) Imprescriptibility of action or
defense for declaration of nullity of
marriage. (Art. 39)
A marriage that is invalid from the beginning is
non-existent, and in effect, cannot be dissolved.
The judicial decree to declare its nullity is a mere
confirmation of the voidness of the marriage,
hence this petition is imprescriptible.
f)
Subsequent
Marriage
Without
Judicial Declaration of Nullity of
Previous Void Marriage (Art. 40)
-For the purposes of remarriage, the only

legally acceptable basis for declaring a
previous marriage an absolute nullity is a
final judgment declaring such previous
marriage void, whereas, for purposes other
than
remarriage,
other
evidence
is
acceptable
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-In a case for concubinage, the accused

need not present a final judgment declaring
his marriage void for he can adduce
evidence in the criminal case of nullity of
his marriage other than proof of final
judgment declaring his marriage void.
Hence, the pendency of the civil action for
nullity of marriage does not pose a
prejudicial question in a criminal case for
concubinage.
However, a judicial declaration of nullity is
not needed where no marriage ceremony
at all was performed by a duly authorized
solemnizing officer as where the parties
merely signed a marriage contract on
their own. The mere signing of a marriage
contract bears no semblance to a valid
marriage and thus needs no judicial
declaration of nullity. Lucio Morigo v.
People, G.R. No. 145226, February 6,
2004
Second marriage is still bigamous even if the
first marriage is judicially declared void
after contracting the second marriage,
only if the first marriage ostensibly
transpired as there was a marriage
ceremony. However, if the first marriage
was void due to the fact that no marriage
ceremony was solemnized at all, then the
second marriage is not bigamous. Morigo
v. People, 422 SCRA 376 (2004)
NOTE: Even if a marriage is void, it must be
declared void first by final judgment before
the parties to such void marriage can
remarry. The parties cannot decide for
themselves the invalidity of their marriage.
EXCEPTION: When the purpose is other than
remarriage, a collateral attack of the marriage is
allowed.
PRESUMPTION OF DEATH FOR REMARRIAGE
(Art. 41)
General Rule: Marriage contracted by any
person during the subsistence of a previous
marriage is VOID
Exception: If before the celebration of the
subsequent marriage:
a.The previous spouse had been absent for
4 consecutive years (ordinary absence)
or 2 years (extraordinary absence) and
Page 18 of 383
b.The remaining spouse has a well-founded

belief that the absent spouse is already
dead
c.Judicial declaration of presumptive death
- In this case, the subsequent marriage
is valid but it shall be automatically
terminated by the recording of the
affidavit of reappearance of the
absent spouse.
- Without filing of the affidavit of
reappearance, there will exist two
valid marriages (valid bigamous
marriage)
Exception to the Exception: If both spouses of
the subsequent marriage acted in bad faith, such
marriage is void ab initio (Art. 44)
Effect of Reappearance
The subsequent bigamous marriage under
Art. 41 remains valid despite reappearance of
the absentee spouse
UNLESS, the reappearance made in a sworn

statement is recorded in the civil registry in
the place where the parties to the subsequent
marriage resides. In such case, the
subsequent
marriage
is
automatically
terminated.
HOWEVER, if there was a previous judgment
annulling or declaring the first marriage a
nullity, the subsequent bigamous marriage
remains valid.
NOTE: Summary proceedings under the Family

Code are final and executory pursuant to Article
247. Hence, summary proceeding for the
declaration of presumptive death of an absent
spouse under Article 41 of the Family Code is nonappealable. Republic v. Tango, G.R. No.
161062, July 31, 2009
Effects of Termination of Subsequent
Marriage: (LDDRI)
1. Children of the subsequent marriage
conceived prior to its termination shall be
considered legitimate
2. The absolute community or conjugal
partnership shall be dissolved and
liquidated
If either spouse acted in bad faith,

his/her share in the net profits shall be
forfeited:
a. In favor of the common children
CIVIL LAW REVIEWER
b. If none, in favor of the children of

the guilty spouse by previous
marriage
c. In default of children, in favor of the
innocent spouse
3. Donations by reason of the marriage
remain valid except if the donee
contracted the marriage in bad faith
4. The innocent spouse may revoke the
designation of the spouse in bad faith as
the beneficiary in any insurance policy,
even if designation is stipulated as
irrevocable, and
5. The
spouse
who
contracted
the
subsequent marriage in bad faith shall be
disqualified to inherit from the innocent
spouse by testate or intestate succession
NOTE: The above effects apply to voidable
bigamous marriages. Except for (1), the
above effects also apply to marriages
which are annulled or declared void ab
initio under Art. 40.
6. ANNULLABLE MARRIAGES
Grounds for Annulment (art. 45): (PUFFIS)
1. Lack of parental consent
2. Either party is of unsound mind
3. Fraudulent means of obtaining consent of
either party
Circumstances
constituting
fraud:
(Art. 46)
a. Non-disclosure of conviction by
final judgment of crime involving
moral turpitude
b. Concealment of pregnancy by
another man
c. Concealment
of
sexually
transmissible disease, regardless
of nature, existing at the time of
marriage
d. Concealment of drug addiction,
habitual
alcoholism,
homosexuality and lesbianism
4. Force, intimidation or undue influence
5. Physical incapability of either party to
consummate the marriage with the other,
and such incapacity continues and
appears to be incurable
Requisites of Annulment due to
Impotence:
a. Impotence exists at the time of the
celebration of marriage
b. Permanent
Page 19 of 383
c. Incurable
d. Unknown to the other spouse
e. The other spouse must not also be
impotent
Doctrine of Triennial Cohabitation:
Presumption that the husband is
impotent should the wife still remain a
virgin after 3 years of living together
with her husband.
6. Affliction
of
Sexually
Transmissible
Disease found to be serious and which
appears incurable
Elements:
a. Existing at the time of marriage
b. Sexually transmissible disease
c. Serious
d. Appears incurable
ARTICLE 45
The STD is a ground
for annulment
The STD does not
have to be concealed
The STD must be

serious and incurable
The STD does not have

to
be
serious
and
appears incurable
ARTICLE 46
The STD is a type of
fraud which in turn is a
ground for annulment
The
STD
must
be
concealed
CIVIL LAW REVIEWER
Page 20 of 383
GROUNDS FOR ANNULMENT

Lack of parental consent (PC)
Insanity
of
(INSANITY)
one
party
EFFECTS OF TERMINATION OF MARRIAGE

WHO CAN FILE
PRESCRIPTIVE PERIOD
a. Underage
(18-21)
party
a. Within 5 years after

turning 21
b. Parent or guardian
b. Before child reaches 21
Sane spouse
2 views:
Sempio-Diy:
RATIFICATION
Free cohabitation after reaching 21
Free cohabitation after insane spouse

regains sanity
Before death of other party

Dean Del Castillo:
Within 5 years from the time
the right or action accrues
Guardian of insane
spouse
Anytime before the death

of either party
Insane spouse
During the lucid interval or

after regaining sanity also
before death of other party
Fraud
Injured Party
Within 5 years after

discovery of Fraud
Vitiated consent
Injured Party
Within 5 years from time

force, intimidations or undue
influence disappeared or
ceased
Incapability to Consummate/
Sexually transmissible disease
(CONSUMMATE/STD)
Injured Party
Within 5 years after the

marriage ceremony
CIVIL LAW REVIEWER
Free
cohabitation
even
with
full
knowledge of facts constituting the
fraud
Free cohabitation after the cause (force,
intimidation,
undue
influence)
disappeared or ceased
*intimidation can be on the person or the
property of the injured party and his/her
immediate family
No ratification since defect is permanent.
Page 21 of 383
BASIS
Status of
children
Property
Relations
Donations
Propter
Nuptias
Insurance
Successio
n
EFFECTS OF VOIDABLE BIGAMOUS MARRIAGE, DECLARATION OF NULLITY, AND ANNULMENT

VOIDABLE BIGAMOUS MARRIAGE (ART. 41)
DECLARATION OF
ANNULMENT
NULLITY
Children of subsequent marriage conceived before its termination Illegitimate except
Children conceived or born before
legitimate
Art. 36 and Art. 53
annulment decree
legitimate
ACP/CPG shall be liquidated. The share in the net profits of Same
Same
community property of the spouse who contracted the marriage
in bad faith, shall be forfeited in favor of common children or if
there are none, children of the guilty spouse by previous
marriage or in default, the innocent spouse (common children
-> children of guilty spouse by previous marriage -> innocent
spouse)
Shall remain VALID except
Same
Same
If donee contracted the marriage in bad faith, donations
propter nuptias made to the donee are revoked by
operation of law.
If both spouses acted in bad faith, donations propter
nuptias made by one in favor of the other are revoked by
operation of law.
If one spouse acted in bad faith, innocent spouse may revoke Same
Same
his designation as beneficiary in the insurance policy even if
such designation be stipulated as irrevocable
If one spouse contracted the marriage in bad faith, he shall be Same
Same
disqualified to inherit from the innocent spouse both testate and
intestate
CIVIL LAW REVIEWER
Page 22 of 383
DISTINCTION BETWEEN VOID AND VOIDABLE MARRIAGES

VOID
VOIDABLE
Inexistent from the time of performance
Valid until annulled
Cannot be ratified
Can be ratified either by free cohabitation or prescription
BASIS
As to nature
As to susceptibility to
ratification
As to effect on property
As to effect on children
As to how marriage may

be impugned
a.
b.
a.
b.
c.
No community property, only co-ownership (Art

147/148)
Children are illegitimate
Exceptions:
In case of psychological incapacity (Art 36)
Children born of subsequent marriage (Art 53)
May be attacked directly or collaterally but for
purpose of remarriage, there must be judicial
declaration of nullity.
Can still be impugned even after death of
parties
Action for nullity does not prescribe
CIVIL LAW REVIEWER
Absolute community exists unless another system is agreed

upon in marriage settlement (Default: ACP)
Children are legitimate if conceived before decree of
annulment
a. Cannot be attacked collaterally, only directly,
i.e. there must be a decree of annulment
b. Can no longer be impugned after death of one
of the parties
c. Action prescribes
Page 23 of 383
7.
PROCEDURE
AND
EFFECTS
TERMINATION OF MARRAIGE
A.M. No. 02-11-10-SC

PROPOSED RULE ON DECLARATION OF
ABSOLUTE NULLITY OF VOID MARRIAGES
AND ANNULMENT OF VOIDABLE
MARRIAGES
SCOPE:
Petitions for declaration of absolute nullity
of void marriages and annulment of
voidable marriages under the Family Code
The Rules of Court shall apply suppletorily
PETITION FOR DECLARATION OF ABSOLUTE
NULLITY:
Who may file: solely the husband or wife
What to allege: If based on psychological
incapacity, complete facts showing either one is
incapacitated from complying with marital
obligations at the time of the celebration of the
marriage including physical manifestations, if
any
Actions or defenses shall NOT prescribe
PETITION FOR ANNULMENT OF VOIDABLE

MARRIAGES
Who may file:
GROUND
PARTY TO
PRESCRIPTIV
FILE THE
E PERIOD
SUIT
1. No Parental a. Parent or
a. Anytime
Consent
Guardian
before charge
having Legal
reaches 21
Charge of no- yrs. old
consent
party
2. Insanity
b.NoConsent
Party
a. Sane
spouse
without
knowledge of
insanity
b. Relative,
guardian or
person having
b. Within 5
years after
reaching 21
a. Anytime
before death
of either party
b. Anytime
before death
of either party
CIVIL LAW REVIEWER
legal charge
of insane
OF
3. Fraud
c. Insane
spouse
Injured Party
4. Vitiated
Consent
Injured Party
5.
Incapability to
Consummate/
Sexually
Transmitted
Disease
Injured Party
c. During lucid
interval or
after
regaining
sanity
Within 5 years
from
discovery of
fraud
Within 5 years
from time of
force,
intimidation or
undue
influence
disappeared
or ceased
Within 5 years
after the
marriage
ceremony
A. Venue: Family Court of the province or city

where the petitioner or the respondent has
been residing for at least 6 months prior to the
date of filing (or non-resident respondent:
where he may be found in the Philippines) AT
THE ELECTION OF THE PETITIONER.
B. Petition shall allege:
1. Complete facts constituting the cause of
action
2. Names and ages of the common children of
the parties and specify the regime governing
their property relations, and the properties
involved
3. Verified and accompanied by a certification
against forum shopping, which must be
signed personally by the petitioner
Petition may not be signed solely by

counsel or through an attorney-in-fact
If petitioner is in a foreign country, the
verification/certification
shall
be
authenticated by the duly authorized
officer of the Philippine embassy or
legation, consul general, consul, viceconsul, or consular agent in said country
4. Filed in 6 copies, a copy to be served to the

OSG and the Office of the City or Provincial
Prosecutor, w/in 5 days from the date of its
Page 24 of 383
filing and submit to the court proof of such

service w/in the same period
Failure to comply with requirements

may be a ground for immediate
dismissal of the petition.
C. Service of Summons
Governed by the Rule 14 of the Rules of
Court and the following:
1. Respondent cannot be located at his
given address or his whereabouts are
unknown and cannot be ascertained by
diligent inquiry:
(a) Service of summons by publication once
a week for 2 consecutive weeks in a
newspaper of general circulation in the
Philippines and in such places as the
court may order
(b) Served at respondents last known
address by registered mail or any other
means the court may deem sufficient
2. Summons to be published shall be
contained in a court order with the
following data:
(a) title of the case
(b) docket number
(c) nature of the petition
(d) principal grounds of the petition and the
reliefs prayed for
(e) a directive for the respondent to answer
w/in 30 days from the last issue of the
publication
D. Motion to Dismiss: not allowed, except
for lack of jurisdiction over the subject matter
or over the parties (however, any ground that
might warrant a dismissal may be raised as an
affirmative defense in an answer)
E. Answer
Verified by the respondent himself & filed
w/in 15 days from service of summons or
w/in 30 days from the last issue of
publication in case of service of
summons by publication
Failure to answer shall NOT make him in
default
Court will order the public prosecutor to
investigate if there is collusion if no
answer is filed or when answer does not
tender an issue
CIVIL LAW REVIEWER
F. Investigation Report of the Public

Prosecutor
To be made w/in 1 month after the
receipt of the court order
Shall state whether the parties are in
collusion and basis for such finding,
serve copies to parties & counsels
(a) there is collusion parties shall file
their respective comments w/in 10
days from receipt of a copy
(b) no collusion set the case for pretrial
Public prosecutor shall represent the
State
Investigation is a condition sine qua non
for further proceedings in cases where
the respondent does not answer. This is
true even if during the hearing the fiscal
participated and cross-examined the
witnesses. Corpus vs. Ochoterena,
435 SCRA 446 (2004)
G. Court may require a social worker to conduct
a case study and submit report at least 3 days
before the pre-trial
H. Pre-trial is MANDATORY.
Notice
1. Notice of pre-trial shall be served to
the parties, their counsels and the
public prosecutor, containing: date
of pre-trial conference and order
directing the parties to file pre-trial
brief, ensuring its receipt by the
adverse party at least 3 days before
the date of pre-trial
2. Notice of pre-trial shall still be sent
to respondent even if he did not file
an answer
Personal Appearance
1. Parties should appear personally at
the pre-trial
2. Failure of petitioner to appear at the
pre-trial personally w/o the valid
cause, case dismissed
3. Failure to file the pre-trial brief or to
comply with its required contents,
case dismissed
4. If respondent filed his answer but
fails to appear at the pre-trial, the
court shall proceed but public
prosecutor required to investigate
reason for non-appearance (if due to
collusion)
Page 25 of 383
Pre-trial conference
Court may refer issues to mediator,
but should this fail or is not availed of,
proceed with pre-trial conference
Pre-trial order
1. Parties are not allowed to raise
issues or present witnesses and
evidence other than those stated in
the pre-trial order
2. Parties have 5 days from receipt of
pre-trial order to make corrections or
modifications
3. Public prosecutor shall appear for
the State to prevent collusion
J. Prohibited Compromise
(a) Civil status of persons
(b) Validity of marriage or legal separation
(c) Any ground for legal separation
(d) Future support
(e) Jurisdiction of courts
(f) Future legitimes
K. Decision
Copies will be served on the parties,
including
the
SolGen
and
public
prosecutor
Final after expiration of 15 days from
notice to the parties
Should be registered in the Civil Registry
where the marriage was celebrated and in
the Civil Registry of the place where the
Family Court is located
L. Appeal
Not
allowed
if
no
motion
for
reconsideration or new trial is made w/in
15 days from notice of judgment
M. Death
Party dies before entry of judgment:
case closed and terminated w/o
prejudice to the settlement of the estate
in proper proceedings in the regular
courts
Party dies after the entry of judgment:

binding upon the parties and their successorsin-interest in the settlement of the estate in the
regular courts.
N. Date of Effectivity: March 15, 2003
============================
====================
F. LEGAL SEPARATION
1. Grounds
2. Procedure
3. Defenses
4. Liquidation
5. Effects of Legal Separation
Pendente Lite
6. Reconciliation Effects
========================
==================
1. GROUNDS
(PRC-FAL-BILA)
1. Repeated physical violence or grossly
abusive conduct directed against petitioner,
a common child or a child of the petitioner
2. Physical violence or moral pressure to
compel the petitioner to change religious or
political affiliation
3. Attempt of respondent to corrupt or induce
the petitioner, a common child, or a child of
the petitioner, to engage in prostitution, or
connivance
in
such
corruption
or
inducement
4. Final judgment sentencing respondent to
imprisonment of more than 6 years (even if
pardoned)
5. Drug addiction or habitual alcoholism
6. Lesbianism or homosexuality
7. Subsequent bigamous marriage
8. Sexual infidelity or perversion
9. Attempt by respondent against the life of
the petitioner
10. Abandonment for more than 1 year without
justifiable cause
Grounds to Deny Legal
Separation/Defenses to Legal Separation:
(C4-D-GRP)
1. Condonation
failure of the husband to look for his
adulterous wife is not condonation to
wifes adultery
2. Consent
3. Connivance
4. Collusion
5. Mutual guilt
6. Prescription action for legal separation
must be filed within five years from the time
of the occurrence of the cause of action
CIVIL LAW REVIEWER
Page 26 of 383
7.
Death of either party during the pendency of

the case Lapuz-Sy v. Eufemio, 43 SCRA
177 (1972)
8. Reconciliation of the spouses during the
pendency of the case
Effects of Separation:
1. Spouses are entitled to live separately
2. Marriage bond is not severed
3. Dissolution of property regime
4. Forfeiture of the share of the guilty spouse
in the net profits of the ACP/CPG
5. Custody of minor children to innocent
spouse (subject to Art. 213: parental
authority shall be exercised by parent
designated by the court)
The imposed custodial regime under the
second paragraph of Article 213 is limited in
duration, lasting only until the childs
seventh year. From the eighth year until the
childs emancipation, the law gives the
separated parents freedom, subject to the
usual contractual limitations, to agree on
custody regimes they see fit to adopt.
(Dacasin vs. Dacasin, GR168785, February
5, 2010)
6. Guilty spouse is disqualified from intestate
succession and provisions made by
innocent spouse in his favor in a will shall
be revoked by operation of law
7. Innocent spouse may revoke the donation
made by him in favor of the offending
spouse.
However, alienations, liens and
encumbrances registered in good faith
before the recording of the complaint for
revocation in the registries of property shall
be respected.
8. Innocent spouse may revoke designation of
guilty spouse as beneficiary in the
insurance policy even if such designation be
stipulated as irrevocable
2. PROCEDURE FOR LEGAL SEPARATION
A.M. No. 02-11-11-SC
PROPOSED RULE ON LEGAL SEPARATION
The Rules of Court shall apply suppletorily
Who may file: solely the husband or wife

When to file: within 5 years
occurrence of any of the grounds
CIVIL LAW REVIEWER
from
the
rocedure is almost the same as in the Rule

on Declaration of Absolute Nullity &
Annulment (see above)
Creditors are furnished copies of the
petition
Pre-trial set not earlier than 6 months from
filing of the petition for possibility of
reconciliation (COOLING OFF PERIOD)
Exception: There is no cooling-off period if the

ground alleged are those under R.A. 9262
(Violence Against Women & Children). The
court shall proceed in the main case and other
incidents of the case as soon as possible. R.A.
9262, Sec. 19.
The abandonment contemplated is one

without justifiable cause for more than
one year. As it was established that
Lucita left William due to his abusive
conduct, such does not constitute
abandonment contemplated by the said
provision. Ong Eng Kiam vs. Ong,
G.R. No. 153206, October 23, 2006
============================
====================

G. RIGHTS AND OBLIGATIONS
BETWEEN HUSBAND AND WIFE
========================
==================
Obligations of Husband and Wife (L2H2ds)

1. Live together
2. Observe mutual love, respect and fidelity
3. Render mutual help and support
4. Management of the household
5. Fix the family domicile
6. Joint responsibility for the support of the
family
Profession
General Rule - Either spouse may exercise any
legitimate profession/business without the
consent of the other
Exception - The other spouse may object on
valid, serious and moral grounds. In
case of disagreement, the court
shall decide whether
a. The objection is proper AND
b. Benefit has accrued to the family
before and after the objection.
Page 27 of 383

If benefit accrued to
the family before the objection, the
resulting obligation shall be enforced
against the separate property of the spouse
who has not obtained consent
If benefit accrued to the family after the
objection has been made, the resulting
obligation shall be enforced against the
community property
============================
====================

H. PROPERTY RELATIONS BETWEEN
HUSBAND AND WIFE
1. How Governed
2. Marriage Settlements
3. Donations by Reason of
Marriage
4. Property Relations of Union
with Marriage
a.System of Absolute Marriage
b. Conjugal Partnership of Gains
5. Separation of Properties During
Marriage
6. Regime of Separation of
Property
========================
==================
1. WHAT GOVERNS PROPERTY
RELATIONS BETWEEN SPOUSES
1. Marriage settlement future spouses may
agree upon the regime of ACP, CPG,
complete separation of property, or any
other regime
2. Family Code if there is no marriage
settlement or when the regime agreed upon
therein is void, the system of ACP shall
govern
3. Local customs
2. MARRIAGE SETTLEMENT
CIVIL LAW REVIEWER
Requisites of a Valid Marriage Settlement:

(WSB-TC-CR)
1. In writing
2. Signed by the parties
3. Executed before the celebration of marriage
4. To fix the terms and conditions of their
property relations
5. If parental consent is needed for the
marriage, the parent/guardian must be
made a party to the agreement
6. If the party executing the settlement is
under civil interdiction or any other
disability, the guardian appointed by the
court must be made a party to the
settlement
7. Registration (to bind 3rd persons)
General Rule: Property Relations are governed
by Philippine laws
Exceptions:
1. When both are aliens, even if married in the
Phils.
2. As to extrinsic validity of contracts
3. Contrary stipulation
3. DONATIONS BY REASON OF
MARRIAGE (Donations Propter
Nuptias)
Before Marriage
General Rule: Future spouses cannot donate
to each other more than 1/5 of their present
property (excess shall be considered void)
Requisites:
1. Made before celebration of marriage
2. In celebration of marriage
3. In favor of one or both future spouses
Exception: If they are governed by ACP
During Marriage
General Rule: Donations made by spouses to
each other during the marriage are VOID
REASON:
1. To protect unsecured creditors from
being defrauded
2. To prevent stronger spouse from
imposing upon the weaker one the
transfer of the latters property to the
former
3. To prevent indirect modification of the
marriage settlement
Exceptions:
1. Moderate gifts on the occasion of any
family rejoicing
2. Donation mortis causa
Page 28 of 383
Applies to common law spouses (Art. 87)

Grounds to Revoke Donation Propter
Nuptias: (CARNIVL)
1. Marriage is not celebrated
2. Marriage is judicially declared void ab initio
3. Marriage without the needed parental
consent
4. Marriage is annulled and donee is in bad
faith
5. If it is with a resolutory condition and the
condition is complied with
6. In legal separation and donee is the guilty
spouse
7. Donee commits acts of ingratitude such as:
a. Commits an offense against the person,
honor or property of the donor, his wife, or
his children under his parental authority
b. Imputes to the donor any criminal offense
or any act involving moral turpitude,
unless the crime was committed against
the donee himself, his wife, or his children
under his authority
c. Unduly refuses to support the donor when
he is legally or morally bound to give such
support
DONATION PROPTER NUPTIAS v.
ORDINARY DONATION
DONATIONS
ORDINARY
BASIS
PROPTER
DONATIONS
NUPTIAS
Governed by the
rules on ordinary
donations except Governed by
Formaliti
if future
rules on
es
property, it must donations (Arts.
conform with
725-773 NCC)
formalities of
wills
No limit except
May be donated
that donor shall
Present
but up to 1/5 of
leave property
Property
donor's present
enough for his
property
support
May be included
Future
provided
Cannot be
Property
donation is
included
mortis causa
Grounds
for
Art. 86 of Family
Arts. 760, 764,
revocatio
Code
765 NCC
n
CIVIL LAW REVIEWER
Prescriptive Periods for Filing Action for

Revocation of Donation Propter Nuptias
(Based on Sta. Maria)
If marriage is not
5 years (Art. 1149
celebrated
NCC) from the time
marriage is not
(Except: donations in
solemnized on the
marriage settlements
fixed date
automatically void if
marriage not
celebrated)
If marriage is judicially
declared void, it
depends:
(a) If subsequent
marriage is void
pursuant to Art. 40 in
relation to Arts. 52 and
53, because
contracted by a
spouse before prior
void marriage is
judicially declared void
(b) Judicially declared
void on grounds other
than Art. 40 in relation
to Arts. 52 and 53
When marriage takes
place without the
required parental
consent
If resolutory condition
is complied with
When marriage is
annulled and donee in
bad faith
If donee commits an
act of ingratitude
In cases of legal
separation
By operation of law if
donee-spouse
contracted subsequent
void marriage in bad
faith
5 years from finality of

judicial declaration of
nullity (if action to
recover property)
5 years
5 years from
happening of condition
5 years from finality of
decree
1 year from donors
knowledge of that fact
5 years from the time
the decree of
separation has become
final
4. PROPERTY RELATIONS
a.
System of Absolute Community
(acp)
The property regime of spouses in the absence
of a marriage settlement or when the regime
agreed upon is void.
Page 29 of 383
4.
E
NOTE: Shall commence at the precise moment
that the marriage is celebrated. Any stipulation,
express or implied, for the commencement of
the regime at any other time shall be VOID.
No waiver of rights allowed during the marriage
except in case of judicial separation of property.
The waiver must be in a public instrument.
Property acquired during the marriage, whether
acquisition appears to have been made in the
name of one or both spouses, is PRESUMED to
belong to the community.
General Rule: The community property
consists of all the property owned by the
spouses at the time of the celebration of the
marriage or acquired thereafter.
Exceptions/Exclusions from Community
Property:
1.
Property acquired
before the marriage by either spouse who
has legitimate descendants by a former
marriage and its fruits and income
2.
Property
for
personal and exclusive use, except jewelry
3.
Property acquired
during the marriage by gratuitous title,
except when the donor, testator, or grantor
expressly provides otherwise
Encumbrance
or
disposition
of
the
community property without the consent of
the other spouse is totally void. Benefit to
the family must always be proven.
Homeowners Savings & Loan Bank vs.
Dailo, G.R. No. 153802, March 11, 2005
Charges Upon and Obligations of the ACP:

1. Debts and obligations contracted during the
marriage:
a.) By either spouse without the consent
of the other to the extent that it
benefited the family
b.) By designated administrator-spouse
c.) By both spouses
d.) By one with the consent of the other
2. Taxes,
liens,
charges
and
expenses
including major or minor repairs, upon
community property
3. Support of spouses, their common children
and legitimate children of either spouse
CIVIL LAW REVIEWER
5.
6.
7.
8.
9.
xpenses of litigation between spouses

unless the suit is found to be groundless
Ante-nuptial debts which redounded to the
benefit of the family
Taxes and expenses for mere preservation
made during the marriage upon the
separate property of either spouse used by
the family
Expenses for professional or vocational
course
Other ante-nuptial debts, support of
illegitimate child, and liabilities for crime or
quasi-delicts in absence of separate
property
Donated or promised to common legitimate
children for profession, vocational course or
self improvement
If the community property is insufficient to

cover all these liabilities (except those falling
under (8) spouses shall be solidarily liable for
the unpaid balance with their separate
properties
Dissolution of the ACP:
1. Upon death of either spouse
2. Decree of legal separation
3. Marriage is annulled or nullified
4. Judicial separation of property during the
marriage (Arts. 134-138)
Liquidation of the ACP:
1. Inventory of all properties
a. Inventory of community property
b. Inventory of separate property of the wife
c. Inventory of separate property of the
husband
2. Debts and obligations of ACP are paid
3. Remainder of the separate properties of the
spouses are returned to the owner
4. Net remainder of the ACP is divided equally
between husband and wife
5. Presumptive legitimes of children are
delivered
6. Adjudication of conjugal dwelling and
custody of common children
b. System of Conjugal Property of
Gains (cpg)
The spouses contribute the following to a
common fund:
1. Proceeds, products, fruits and income of
separate properties of spouses
Page 30 of 383
7.
T
2. Everything acquired by spouses through
their efforts
3. Everything acquired by spouses through
chance
Shall commence at the precise moment that
the marriage is celebrated. Any stipulation,
express or implied, for the commencement
of the regime at any other time shall be
VOID.
No waiver of rights allowed during the

marriage except in case of judicial
separation of property. The waiver must be
in a public instrument.
Property acquired during the marriage,

whether acquisition appears to have been
made in the name of one or both spouses,
is PRESUMED to be conjugal.
The presumption is not rebutted by the

mere fact that the certificate of title of the
property or the tax declaration is in the
name of one of the spouses. Villanueva v.
CA,427 SCRA 439 (2004)
It is not even necessary to prove that the

properties were acquired with funds of the
partnership. The presumption shall subsist
in the absence of clear, satisfactory and
convincing evidence to overcome the same.
Chine v. CA, 423 SCRA 371 (2004)
Exclusive Property in CPG:

1.
That brought into the marriage as
his/her own
2.
That acquired during the marriage
gratuitously
3.
That acquired by redemption, barter or
exchange with exclusive property
4.
That purchased with exclusive money
What Constitutes CPG:
1. Fruits of conjugal property due or received
during the marriage and net fruits of
separate property
2. Those acquired through occupation
3. Livestock in excess of what was brought to
the marriage
4. Those acquired during the marriage with
conjugal funds
5. Share in hidden treasure
6. Those obtained from labor, industry, work or
profession of either or both spouse
CIVIL LAW REVIEWER
hose acquired by chance

Rules in Cases of Improvement of
Exclusive Property:
GENERAL
RULE:
The
ownership
of
improvements made on the separate property
of the spouses at the expense of the
partnership or through efforts of both spouses
shall pertain to the partnership.
1. Accession if the cost of the improvement
and any resulting increase in value are equal
or less than the value of the entire property
at the time of the improvement, the entire
property remains the exclusive property of
the owner-spouse (subject to reimbursement
of improvement cost)
2. Reverse Accession if the cost of the
improvement and any resulting increase in
value are more than the value of the entire
property at the time of the improvement, the
property becomes conjugal (subject to
reimbursement of the value of the property
of the owner-spouse)
Charges upon CPG:
-Same as that under ACP, except that under
taxes and expenses for preservation of
separate property of either spouse during the
marriage -> property need not be used by the
family
NOTE:
If
the
conjugal
partnership
is
insufficient, the spouses shall be solidarily liable
for the unpaid balance with their separate
properties.
Dissolution of CPG: Same as under ACP
Liquidation of the CPG:
1. Inventory of all property
2. Amounts advanced by CP as payment for
personal debts and obligations of either
spouse are credited
3. Reimbursement for use of exclusive funds
4. Debts and obligations of the CP are paid
5. Remains of exclusive properties are returned
6. Indemnify loss of deterioration of movables
belonging to either spouse used for the
7. Net remainder of conjugal property is divided
equally
8. Delivery of childrens presumptive legitimes
Page 31 of 383
9.
Adjudication of conjugal dwelling and custody

of children
Prior to the liquidation of the

conjugal partnership, the interest of
each spouse in the conjugal assets is
inchoate, a mere expectancy, which
constitutes neither a legal nor an
equitable estate, and does not ripen into
title
until
after
liquidation
and
settlement. The right of the husband or
wife to one-half of the conjugal assets
does not vest until the dissolution and
liquidation of the conjugal partnership or
after dissolution of the marriage and
there are net assets left which can be
divided between the spouses or their
respective
heirs.
Abalos
v.
Macatangay, 439 SCRA 649 (2004)
NOTES:
Property bought on installments paid partly
from exclusive funds of the spouses and
partly from conjugal funds:
a.
If
full
ownership is vested before the marriage
it shall belong to the buyer-spouse
b.
If
full
ownership was vested during the
marriage it shall belong to the
conjugal partnership
(In any case, the amount advanced by the
partnership or by either/both spouses shall
be reimbursed by the owner upon
liquidation)
If the community or conjugal properties are

insufficient, the separate properties shall be
solidarily and subsidiarily liable for the
obligations
The conjugal partnership property shall

likewise be liable for the payment of the
personal debts of either spouse insofar as
they have redounded to the benefit of the
family.
Administration and Enjoyment of the
ACP/CPG
General Rule: It shall belong to both spouses
jointly
Exceptions:
1. In cases of disagreement, husbands
decision shall prevail
Wife has recourse to the courts within
5 years
CIVIL LAW REVIEWER
2. In case one spouse is incapacitated or

unable
to
participate
in
the
administration of the common properties,
other spouse may assume sole powers
These powers do not include:
a. disposition and
b. encumbrance
- Both spouses must approve any
disposition
or
encumbrance.
Any
encumbrance or disposition is void if
without the written consent of the other
spouse or the court approval. However,
the transaction shall be construed as a
continuing offer on the part of the
consenting spouse, which may be
perfected as a binding contract upon
acceptance by the spouse or court
approval.
Rules on Games of Chance: (ACP/CPG)
LOSS: Borne by the loser spouse and shall
not be charged to the community
property
WINNINGS: Form part of the community
property
Distinction between ACP and CPG
ACP
CPG
All the properties
Each spouse retains
owned by the
his/her property
spouses at the time
before the marriage
of marriage become
and only the fruits
community property
and income of such
properties become
part of the conjugal
properties during the
marriage
Upon dissolution and
Upon dissolution of
liquidation of the
the partnership, the
community property,
separate property of
the net remainder is
the spouses are
divided equally
returned and only the
between the spouses. net profits of the
partnership are
divided equally
between the spouses
of their heirs
c.
Separation of Property
Separation of property between the spouses

during the marriage shall not take place
except by judicial order.
Page 32 of 383
1.
O
Judicial separation of property may either be
voluntary or for sufficient cause.
SUFFICIENT CAUSE
FOR SEPARATION
OF PROPERTY
1. Petitioners
spouse sentenced to
penalty with civil
interdiction
2. Petitioners
spouse declared an
absentee
3. Loss of parental
authority of
petitioners spouse
declared by court
4. Abandonment or
failure to comply
with marital
obligations
5. Spouse abused
power of
administration
granted
6. At the time of
petition, spouses
have been separated
in fact for at least
one year and
reconciliation is
highly improbable
GROUNDS FOR
REVIVAL OF
FORMER
PROPERTY REGIME
2. Civil interdiction
terminates
2. Absent spouse reappears
3. Parental authority
judicially restored
4. When spouse who

has left conjugal
home without degree
of legal separation
resumes common life
with the other
5. Court authorizes
the resumption of
administration, being
satisfied that there
will be no abuse
6. Spouses reconcile
and resume common
life
7. When after
voluntary dissolution
of the ACP or CPG
has been judicially
decreed, spouses
agree to revive
former regime (no
subsequent
voluntary separation
may be granted)
GROUNDS FOR TRANSFER OF
ADMINISTRATION OF EXCLUSIVE
PROPERTY OF EITHER SPOUSE: (GACA)
CIVIL LAW REVIEWER
ne spouse becomes guardian of the other

2. One spouse judicially declared absent
3. One spouse sentenced to penalty with civil
interdiction
4. One spouse becomes a fugitive from justice
or is hiding as an accused in a criminal case
PROPERTY REGIME OF UNIONS WITHOUT
MARRIAGE
BASIS
ARTICLE 147
ARTICLE 148
1. Man and
woman
2. Living
1. Man and woman
together as
2. Living together
husband and
as husband and
wife
wife
3. With capacity
3. NOT
to marry
capacitated to
(without legal
marry (Art.35(1)
impediment)
under 18 years
At least 18
old)
years old
4. Adulterous
Not Art. 37
Applicabil
relationship
ity
(incestuous
(e.g.
void
concubinage)
marriage)
5. Bigamous/polyg
amous marriage
Not Art. 38
(Art.35(4))
(void
6. Incestuous
marriage by
marriages under
reason of
Art.37
public policy)
7. Void marriages
Not
by reason of
bigamous
public policy
4. Other void
under Art.38
marriages /
live-in
Exclusively owned;
married party
Salaries
Owned in equal
and
property of CPG of
shares
wages
legitimate
marriage
Propertie
s
Remains
acquired
exclusive
Remains exclusive
through
provided there
exclusive
is proof
funds
Propertie
Presumed to be
Only the
s
obtained in
properties
acquired
equal shares
acquired by both
while
since it is
parties through
living
presumed to
their actual joint
together
have been
contribution of
acquired
money, property,
Page 33 of 383
through joint
efforts
If one party did
not participate
in acquisition,
presumed to
have
contributed
through care
and
maintenance of
family and
household
or industry shall
be owned by them
in common in
proportion to their
respective
contributions.
Properties owned
in common shall
be presumed to be
equal; however,
proof may be
shown to show
that their
contribution and
respective shares
are not equal.
The registration of a property in the name

of the paramour who had no income
whatsoever at the time of the donation by
anothers husband is tantamount to a
donation which is void under Article 87 of
the Family Code. The paramour then holds
the property under a constructive trust
under Article 1456 in favor of the conjugal
partnership of the husband with the
legitimate spouse. Joaquino v. Reyes, 434
SCRA 260 (2004)
Under Article 148, there must be proof of
actual joint contribution by both the live-in
partners before the property becomes coowned by them in proportion to their
contribution. Otherwise, there are no
presumptions of co-ownership and equal
sharing. Villanueva v. CA, 427 SCRA 439
(2004)
No co-ownership exists between parties to
an adulterous relationship. In such a
relationship, it is necessary for each of the
partners to prove his or her actual
contribution to the acquisition of property in
order to be able to lay claim to any portion
of it. Presumptions of co-ownership and
equal contribution do not apply. Rivera v.
Heirs of Villanueva, G.R. No. 141501,
July 21, 2006
===========================
===================
TOPICS UNDER SYLLABUS:

I. The Family (Arts 149-151, FC)
CIVIL LAW REVIEWER
===========================
===================
FAMILY - basic social institution which public
policy cherishes and protects
Hence, no suit between members of the
family shall prosper unless earnest efforts
towards a compromise have been made but
failed.
Allegation
of
earnest
efforts
is
JURISDICTIONAL, if it is absent, the court can
dismiss the case. BUT this rule is
inapplicable to the following cases: (CLVFJF)
1. Civil status of persons
2. Any ground for legal separation
3. Validity of marriage or legal separation
4. Future support
5. Jurisdiction of courts
6. Future legitime
FAMILY RELATIONS INCLUDE:
1. Between husband and wife
2. Between parents and children
3. Among other ascendants and descendants
4. Among brothers and sisters, full or half
blood
============================
====================
TOPICS UNDER SYLLABUS

J.
FAMILY HOME
============================
====================
FAMILY HOME It is deemed constituted from

the time it is occupied as a family residence
BENEFICIARIES OF A FAMILY HOME
1. Husband and wife, or unmarried head of the
family
2. Parents
(may
include
parent-in-laws),
ascendants,
brothers
and
sisters
(legitimate/illegitimate) living in the family
home and dependent on head of family for
support
1. MANNER OF CONSTITUTION
GUIDELINES:
1. FH is deemed constituted from time of
actual occupation as a family residence
2. FH must be owned by person constituting it
Page 34 of 383
3.
3.
H
FH must be permanent
4. Rule applies to valid, voidable and even to
common-law marriages under Arts. 147 and
148
5. FH continues despite death of one or more
spouses or unmarried head of family for 10
years or as long as there is a minor
beneficiary (Art. 159)
6. Only one FH can be constituted
2. QUALIFIED PROPERTY
Actual value of the family home shall not
exceed P300,000 in URBAN areas and P200,000
in RURAL areas (Art.157)
3. EXEMPTION FROM EXECUTION
General Rule: (Art. 153) The family home
(FH) is exempted from:
1. Execution
2. Forced Sale
3. Attachment
Exceptions: (Art. 155)
1. Non-payment of taxes
2. Debts incurred prior to constitution of home
3. Debts secured by mortgages on the
premises
4. Debts due laborers, mechanics, architects,
builders, materialmen, and others who have
rendered service or furnished materials for
the construction of the building
NOTE: The exemption is limited to the value
allowed by the Family Code
4. SALE
Sale, Alienation, Donation, Assignment, Or
Encumbrance Of The Family Home
1. The person who constituted the same must
give his/her written consent
2. The spouse of the person who constituted
the family home must also give his/her
written consent
3. A majority of the beneficiaries of legal age
must also give their written consent
4. In case of conflict, the court shall decide
Requisites For Creditor To Avail Of The
Right To Execute: (Art. 160)
1. He must be a judgment creditor
2. His claim is not among those excepted
under Art. 155
CIVIL LAW REVIEWER
e has reasonable grounds to believe that

the family home is worth more than the
maximum amount fixed in Art. 157
PROCEDURE:
1. Creditor to file a motion in the court
proceeding where he obtained a favorable
for a writ of execution against FH.
2. Hearing on the motion where the creditor
must prove that the actual value of the FH
exceeds the maximum amount fixed by the
Family Code, either at the time of its
constitution or as a result of improvements
introduced thereafter its constitution.
3. If creditor proves that actual value exceeds
the maximum amount the, court will order
its sale in execution.
4. If FH is sold for more than the value
allowed, the proceeds shall be applied as
follows:
a. First, the obligations enumerated in Art.
155 must be paid (listed above)
b. Then the judgment in favor of the
creditor will be paid, plus all the costs of
execution
c. The excess, if any, shall be delivered to
the judgment debtor
============================
==================

K. Paternity and Filiation (Arts. 163182, FC)
1. Kinds of Filiation
2. Children by Nature
a. Legitimate Children
b. Illegitimate Children
c. Legitimated Children
3. Actions regarding filiation
a. To claim filiation
i. Proof of filiation
ii. Admissibility of Scientific
Testing
b. To impugn filiation
4. Rights of
Legitimate/Legitimated/Illegitimat
e Children
========================
==================
Page 35 of 383
probative value. Concepcion v. CA, [G.R.

No. 123450, Aug. 31, 2005]
G. PATERNITY AND FILIATION

1.Kinds of Filiation
2 Children by Nature
============================
====================
1.KINDS OF FILIATION
2.CHILDREN BY NATURE
a. Legitimate Children
LEGITIMATE CHILDREN -are those conceived
OR born during a valid marriage.
INCLUSIONS: Those children who are:
1. Conceived
as
a
result
of
artificial
insemination
2. Born of a voidable marriage before decree
of annulment
3. Conceived or born before judgment of
annulment or absolute nullity under Art. 36
(psychological incapacity) becomes final &
executory
4. Conceived or born of a subsequent
marriage under Art. 53 (failure to record the
judgment, partition and distribution of
properties, and delivery of childrens
presumptive legitime)
5. Of mothers who may have declared against
their legitimacy or was sentenced as an
adulteress (Art.167)
6. Legally adopted
7. Legitimated, conceived and born outside of
wedlock of parents without impediment at
the
time
of
conception
and
who
subsequently married
A child born inside a valid marriage is

legitimate. Hence a child born inside a
bigamous marriage, which is void, is
considered a child under the first marriage,
which has not been nullified or annulled.
Concepcion v. CA, [G.R. No. 123450,
Aug. 31, 2005]
An agreement by parties as to the status of
a child is void. Only the law determines
legitimacy or illegitimacy. Thus, the child, in
eyes of the law, is legitimate under the first
marriage notwithstanding the admission in
pleadings
by the wife and his second
husband that the child is their legitimate
son. Similarly, any declaration of the
mother that her child is illegitimate has no
CIVIL LAW REVIEWER
b. Illegitimate Children
ILLEGITIMATE
CHILDREN
-are
those
conceived AND born outside a valid marriage.
Exceptions: Those children who are:
1. Born of marriages which are void ab initio
such as bigamous and incestuous marriages
and void marriages by reason of public
policy
2. Born of voidable marriages born after the
decree of annulment
c. Legitimated Children
REQUISITES FOR LEGITIMATION:
1. The child was conceived and born outside of
wedlock
2. The parents, at the time of childs
conception, were not disqualified by any
impediment to marry each other
3. There is a valid marriage subsequent to the
childs birth
Legitimation takes place by the subsequent

marriage of the childs parents
Effect of legitimation:
-Confers on the child the rights of legitimate
children
-Retroacts to the time of the childs birth
Legitimation may be impugned only by
those who are prejudiced in their rights
within 5 years from the time the cause of
action accrues (death of parents of
legitimated child)
3. ACTIONS REGARDING FILIATION

a. To claim filiation
i. Proof of filiation
PROOF OF FILIATION
General Rule: (Art. 172, Par. 1) Filiation of
legitimate or illegitimate children is established
by any of the following:
1. The record of birth appearing in the civil
register or a final judgment
Must be prepared by the father. A certificate

of live birth purportedly identifying the
Page 36 of 383
putative father is not competent evidence

of paternity when there is no showing that
the putative father had a hand in the
preparation of said certificate. The local civil
registrar has no authority to record the
paternity of an illegitimate child on the
information of a third person. Cabatania v.
CA, [441 SCRA 96 (2004)]
Record of Birth merely prima facie
evidence. In Benitez-Badua v. CA, it is wellsettled that a record of birth is merely a
prima facie evidence of the facts contained
therein. It is not conclusive evidence of the
truthfulness of the statements made there
by the interested parties.
2. An admission of legitimate or illegitimate
filiation in a public document or a private
handwritten instrument and signed by the
parent concerned
Exception: (Art. 172, Par. 2) In the absence

of these evidences, the legitimate filiation may
be proved by:
1. Open and continuous possession of the
status of a legitimate (or illegitimate) child
Definition. Continuous does not mean that

the concession of status shall continue
forever but only that it shall not be of an
intermittent character while it continues.
The possession of such status means that
the father has treated the child as his own,
directly
and
not
through
others,
spontaneously and without concealment
though without publicity. Mendoza v. CA,
[G.R. No. 86302, Sept. 21, 1991]
How to prove. There must be evidence of

the manifestation of the permanent
intention of the supposed father to consider
the child as his, by continuous and clear
manifestations of parental affection and
care, which cannot be attributed to pure
charity. Such acts must be of such a nature
that they reveal not only the conviction of
paternity, but also the apparent desire to
have and treat the child as such in all
relations in society and in life, not
accidentally, but continuously. Jison v. CA,
[G.R. No. 124853, February 24, 1998]
The due recognition of an illegitimate child

in a record of birth, a will, a statement
before a court of record, or in any authentic
writing is, in itself, a consummated act of
acknowledgement of the child, and no
further court action is required. In fact, any
authentic writing is treated not just a
ground for compulsory recognition; it is in
itself a voluntary recognition that does not
require a separate action for judicial
approval. Eceta v. Eceta, [428 SCRA 204
(2004)]
NOTE: For illegitimate children: when the

action is based on the par. 2 of Art. 172, the
action may be brought ONLY during the lifetime
of the alleged parent
ii. Admissibility of Scientific Evidence

REQUISITES FOR CHILDREN BY ARTIFICIAL
INSEMINATION TO BE CONSIDERED
LEGITIMATE: (Art. 164)
1. The artificial insemination must made on
the wife;
2. The sperm of the husband, or of a donor, or
both the husband and a donor must be
used;
3. The artificial insemination has been
authorized or ratified by both spouses on a
written instrument executed and signed by
them before the birth of the child; AND
4. The written instrument is recorded in civil
registry together with the birth certificate of
the child
b. To impugn filiation
WHO MAY IMPUGN THE LEGITIMACY OF A
CHILD:
General Rule: Only the husband can impugn
the legitimacy of a child
Exceptions: The heirs of the husband may
impugn the childs filiation in the following
cases:
a. If the husband dies before the expiration of
period for filing the action
b. If the husband dies after filing without
desisting
c. If the child was born after the death of the
husband
2. Any other evidence allowed by the Rules of

Court and special laws
CIVIL LAW REVIEWER
Page 37 of 383
GROUNDS TO IMPUGN THE LEGITIMACY OF

THE CHILD: (EXCLUSIVE LIST) (PBA)
1. It was physically impossible for the husband
to have sexual intercourse with his wife
within the first 120 days of the 300 days
which immediately preceded the birth of the
child because of:
a. Physical incapacity of the husband to
have sexual intercourse with his wife
b. Fact that the husband and wife were
living separately in such a way that
sexual intercourse was not possible, or
c. Serious illness of the husband which
absolutely prevented intercourse
2. If its 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
3. In case of children conceived through
artificial insemination, when the written
authorization or ratification of either parent
was obtained through mistake, fraud,
violence, intimidation, or undue influence
PERIODS FOR FILING OF ACTION TO
IMPUGN LEGITIMACY:
1. If the husband (or his heirs, in proper cases)
resides in the SAME city or municipality:
within 1 year from knowledge of the birth
OR its recording in the civil register
2. If the husband (or his heirs) does NOT
RESIDE in the city or municipality where the
childs birth took place or was recorded BUT
his residence is IN THE PHILS.: within 2
years
3. If the childs birth took place or was
recorded in the PHILS. while the husband
has his residence ABROAD, or vice-versa:
within 3 years
NOTE:
The period shall be counted from the
knowledge of the childs birth or its
recording in the civil register.
HOWEVER, if the childs birth was
concealed from or was unknown to the
husband or his heirs, the period shall be
counted from the discovery or knowledge of
the birth of the child or of the act of
registration of said birth, whichever is earlier.
Legitimacy CANNOT be collaterally attacked

or impugned. It can be impugned only in a
CIVIL LAW REVIEWER
direct suit precisely filed for the purpose of

assailing the legitimacy of the child.
RULE ON STATUS OF A CHILD BORN
WITHIN 300 DAYS AFTER TERMINATION OF
FORMER MARRIAGE (Art. 168):
Rules in the absence of proof to the contrary:
1. If the child was born before 180 days after
celebration of 2nd marriage provided born
within 300 days after the termination of the
1st marriage: considered to have been
conceived during the first marriage.
2. If the child was born after 180 days
following the celebration of the 2nd marriage
whether born within 300 days after
termination of 1st marriage or afterwards:
considered to have been conceived during
the second marriage.
ACTION TO CLAIM LEGITIMACY:
1. The child can bring the action during his
lifetime
2. If the child dies after reaching majority
without filing an action, his heirs can no
longer file the action after death
3. If the child dies during minority or in the
state of insanity, his heirs can file the action
for him within 5 years from the childs death
4. If the child dies after commencing the
action, the action will survive and his heirs
will substitute for him
5. If the child is a minor, incapacitated or
insane, his guardian can bring the action in
his behalf
4. RIGHTS OF
LEGITIMATE/LEGITIMATED/ILLEGITIMATE
CHILDREN
RIGHTS OF LEGITIMATE AND ILLEGITIMATE
CHILDREN
LEGITIMAT
BASIS
ILLEGITIMATE
E
Use of mothers
surname
NOTE: R.A. 9255
Use of
amended Art. 176
father and
Surname
of FC as of March
mothers
19, 2004 can
surname
use fathers
surname
Page 38 of 383
Legitime
Support
Action for
claim for
legitimacy
or
illegitimacy
Transmissi
ble to heirs
under
Art.173?
Right to
inherit ab
intesto
Entitled to
legitime and
other
successional
rights
granted to
them by the
NCC
Entitled to
receive
support
from
parents,
ascendants,
and in
proper
cases,
brothers and
sisters
under Art.
174
Entitled only to
of legitime of
legitimate child
3. Fathers
admission
in
private
handwritten document (R.A. 9255, Sec. 1,
effective March 19, 2004)
NOTE: The father under R.A. 9255, Sec. 1
has the right to file an action to prove nonfiliation during his lifetime.
===========================
==================
Receive support
according to the
provision of the FC
His/her
whole
lifetime
regardless
of type of
proof
provided
under Art.
172
His/her whole
lifetime
regardless of
type of proof
provided under
Art.172 par. 1
ONLY lifetime of
alleged parent
for Art. 172 par.
2
Yes
No
Yes
No right to inherit
ab intesto from
legitimate children
and relative of
father and mother
under Art. 992
NCC
NOTE:
Use the surname of the mother if the
requisites of R.A. 9255 are not complied
with
Use the surname of the father if the childs
filiation has been expressly recognized by
the father, either through:
1. Record of birth in civil register
2. Fathers admission in public document
CIVIL LAW REVIEWER

L. ADOPTION (Arts 183-193, FC)
Inter-country Adoption Law
Domestic Adoption Law
1. Construction
2. Qualifications and
Disqualifications of Adopter
3. Qualifications and
Disqualifications of Adopted
4. Rights Granted by Adoption
5. Rules on Succession
6. Rescission of Adoption
========================
==================
R.A. 8043: INTER-COUNTRY ADOPTION
ACT OF 1995
1. CONSTRUCTION
INTER-COUNTRY ADOPTION -is the sociolegal process of adopting a Filipino child by a
foreigner or a Filipino citizen permanently
residing abroad where the petition is filed, the
supervised trial custody is undertaken, and the
decree of adoption is issued outside the
Philippines.
2.
QUALIFICATIONS
DISQUALIFICATIONS OF ADOPTER
AND
An alien or a Filipino citizen permanently

residing abroad may file an application for intercountry adoption of a Filipino child if:
1. At least 27 years of age and at least 16
years older than the child to be adopted, at
the time of application unless the adopter is
the parent by nature of the child to be
adopted or the spouse of such parent
2. If married, his/her spouse must jointly file
for the adoption
Page 39 of 383
3.
Has the capacity to act and assume all rights

and responsibilities of parental authority
under his national laws, and has undergone
the appropriate counseling from an
accredited counselor in his/her country
4. Has not been convicted of a crime involving
moral turpitude
5. Eligible to adopt under his/her national law
6. In a position to provide the proper care and
support and to give the necessary moral
values and example to all his children,
including the child to be adopted
7. Agrees to uphold the basic rights of the
child as embodied under Philippine laws,
the U.N. Convention on the Rights of the
Child, and to abide by the rules and
regulations issued to implement the
provisions of this Act
8. Comes from a country with whom the
Philippines has diplomatic relations and
whose government maintains a similarly
authorized and accredited agency and that
adoption is allowed under his/her national
laws
9. Possesses all the qualifications and none of
the disqualifications provided herein and in
other applicable Philippine laws
3.
QUALIFICATIONS
DISQUALIFICATIONS OF ADOPTED
AND
WHO MAY BE ADOPTED: Only a legally free

child may be the subject of inter-country
adoption
LEGALLY-FREE CHILD - is a child who has
been voluntarily or involuntarily committed to
the Department, in accordance with the Child
and Youth Welfare Code
No child shall be matched to a foreign

adoptive family unless it is satisfactorily
shown that the child cannot be adopted
locally
Qualified children: Section 25, Article 8 of
the Rules and Regulations provide: any child
who has been voluntarily or involuntarily
committed
to
the
Department
as
dependent,
abandoned,
or
neglected
pursuant to the provisions of the Child and
Youth Welfare Code may be the subject of
Inter-Country Adoption
R.A. 8552: DOMESTIC ADOPTION ACT
CIVIL LAW REVIEWER
1. CONSTRUCTION
2.
QUALIFICATIONS
DISQUALIFICATIONS OF ADOPTER
AND
WHO MAY ADOPT:

1. FILIPINO CITIZEN
a. Of legal age
b. In possession of full civil capacity
and legal rights
c. Of good moral character
d. Has not been convicted of any crime
involving moral turpitude
e. Emotionally
and
psychologically
capable of caring for children,
f. At least 16 years older than the
person to be adopted, unless:
i. The adopter is the natural parent
of the child to be adopted, or
ii. The adopter is the spouse of the
legitimate parent of the person
to be adopted
g. In a position to support and care for
his
legitimate
and
illegitimate
children, in keeping with the means
of the family
2. ALIEN
a. Possessing the same qualifications
as above stated for Filipino nationals
b. His/her country has diplomatic
relations with the Philippines
c. He/she has been living in the
Philippines for at least 3 continuous
years prior to the filing of the
application
for
adoption
and
maintains such residence until the
adoption decree is entered, EXCEPT
in the case of:
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 child of his/her Filipino
spouse; or
iii.
One who is married to a Filipino
citizen and seeks to adopt jointly
with his/her spouse a relative
within
the
4th
degree
of
consanguinity or affinity of the
Filipino spouse; or
3.
GUARDIAN - with respect to the ward
after the termination of the guardianship
and clearance of his/her financial
accountabilities
Page 40 of 383
RULE ON ADOPTION BY SPOUSES

General Rule: Husband and wife shall jointly
adopt
Exceptions:
1. One spouse seeks to adopt the legitimate
son/daughter of the other; or
2. One spouse seeks to adopt his/her own
illegitimate son/daughter
3. The spouses are legally separated from
each other.
3.
QUALIFICATIONS
DISQUALIFICATIONS OF ADOPTED
AND
WHO MAY BE ADOPTED:

1. Any person below 18 years of age who has
been administratively or judicially declared
available for adoption;
2. Legitimate son/daughter of one spouse by
the other spouse;
3. Illegitimate son/daughter by a qualified
adopter to improve his/her status to that of
legitimacy;
4. Person of legal age if, prior to the adoption,
said
person
has
been
consistently
considered and treated by the adopter as
his/her own child since minority;
5. Child whose adoption has been previously
rescinded; or
6. Child whose biological or adoptive parents
have died provided that no proceedings
shall be initiated within 6 months from the
time of death of said parents.
WRITTEN CONSENT NECESSARY FOR
ADOPTION:
(A-BLISS-A)
1. Adoptee, if 10 years of age or over;
2. Biological parents of the child, if known, or
the
legal
guardian,
or
the
proper
government instrumentality which has legal
custody of the child
3. Legitimate children of the adopter, 10 years
old or over
4. Illegitimate children of the adopter, 10
years old or over and living with him
5. Spouse of the adopted, if married
6. Spouse of the adopter, if married
7. Adopted children of the adopter, 10 years
old or over
EFFECTIVITY OF DECREE OF ADOPTION
A decree of adoption is effective as of the
date the original petition was filed. This also
CIVIL LAW REVIEWER
applies in case the petitioner dies before

the issuance of the decree of adoption
Where the petition for adoption was granted
after the child killed a girl, no retroactive
effect may be given to the decree of
adoption so as to impose a liability upon the
adopting parents accruing at a time when
the adopting parents had no actual or
physically custody over the adopted child.
Retroactive effect may perhaps be given
where such is essential to permit the
accrual of some benefit or advantage in
favor of the adopted child. To hold that
parental authority had been retroactively
lodged in the adopting parents so as to
burden them with liability for a tortuous act
that they could not have foreseen nor
prevented
would
be
unfair
and
unconscionable. Tamargo v. CA, [G.R. No.
85044, June 3, 1992]
4. RIGHTS GRANTED BY ADOPTION

EFFECTS OF ADOPTION:
1. Severance of all legal ties between the
biological parents and the adoptee and the
same shall then be vested on the adopters
EXCEPT in cases where the biological parent
is the spouse of the adopter
2. Deemed a legitimate child of the adopter
3. Acquired reciprocal rights and obligations
arising from parent-child relationship
4. Right to use surname of the adopter
5. RULES ON SUCCESSION
In legal and intestate succession, the adopters
and the adoptee shall have reciprocal rights of
succession without distinction from legitimate
filiation. However, if the adoptee and his/her
biological parents had left a will, the law on
testamentary succession shall govern.
6. RECISSION OF ADOPTION
GROUNDS FOR RECISSION OF ADOPTION:
(MASA)
1. Repeated physical and verbal maltreatment
by the adopters despite having undergone
counseling
2. Attempt on the life of the adoptee
3. Sexual assault or violence
4. Abandonment and failure to comply with
parental obligations.
Page 41 of 383
1.
S
Adoption, being in the best interest of the child,

shall not be subject to rescission by the
adopter
Only the adoptee is given the right to
rescind the decree of adoption
However, the adopters may disinherit the
adoptee for causes provided in Art. 919 NCC
EFFECTS OF THE RESCISSION OF THE
ADOPTION:
1. The parental authority of the adoptee's
biological parents, if known, OR the legal
custody of the DSWD shall be restored if the
adoptee is still a minor or incapacitated.
2. The reciprocal rights and obligations of the
adopters and the adoptee to each other
shall be extinguished.
3. The court shall order the Civil Registrar to
cancel the amended certificate of birth of
the adoptee and restore his/her original
birth certificate.
4. Succession rights shall revert to its status
prior to adoption, but only as of the date of
judgment of judicial rescission. Vested
rights acquired prior to judicial rescission
shall be respected.
============================
====================

M. SUPPORT (Arts 194-208)
1. What constitutes support
2. Persons Obliged to Support each
other
a. Spouses
b. Ascendants and Descendants
c. Parents and Legitimate and
Illegitimate
Children/Descendants
d. Legitimate/Illegitimate
Brothers and Sisters
2. Contractual Support
3. Basis of Support
4. Options of Giver
========================
==================
1. WHAT CONSTITUTES SUPPORT
SUPPORT consists of everything indispensable
for:
CIVIL LAW REVIEWER
ustenance
Dwelling
Clothing
Medical attendance
Education includes schooling (formal
education)
or
training
(non-formal
education) for some profession, trade or
vocation, even beyond the age of majority
6. Transportation includes expenses going to
and from school, or to and from place of
work (art. 194)
2.
3.
4.
5.
Makes no distinction between natural

support (basic necessities) and civil support
(those beyond the basics)
NOTE: Amount of support shall be in proportion

to the means of the giver and to the need of
the recipient
2. PERSONS OBLIGED TO SUPPORT EACH

OTHER
Persons Obliged To Support Each Other To
The Whole Extent: (Art. 195)
a. Spouses
b. Ascendants
and
Descendants
c. Parents
and
Legitimate/Illegitimate
Children/Descendants
d. Legitimate/Illegitimate
Brothers and Sisters
RULES REGARDING SUPPORT TO

ILLEGITIMATE BROTHERS AND SISTERS
(WHETHER FULL OR HALF BLOOD):
1. If the one asking for support is below
majority age, he is entitled to support from
his illegitimate brother or sister to the full
extent, without any condition
2. If the one asking for support is already of
majority age, he is entitled to support only if
his need for support is not due to a cause
imputable to his fault or negligence (Art.
196)
PROPERTIES THAT ARE LIABLE FOR THE
SUPPORT OF THE RELATIVES (SOURCES
OF MUTUAL SUPPORT)
Spouses
Absolute community
of conjugal
Page 42 of 383
partnership
Common children of
the spouses
Children of a spouse
by another marriage
Illegitimate children
of either spouse
Legitimate
ascendants, other
legitimate and
illegitimate
descendants, and
legitimate and
illegitimate brothers
and sisters
Absolute community
or conjugal property
Absolute community
or conjugal property
Under ACP, separate
property of parentspouse. But if
insufficient, absolute
community liable but
considered as
advances on the
share of the parent to
be paid during
liquidation
Under CPG, separate
property of parentspouse. But if
insufficient, conjugal
partnership liable if
financially capable,
but support paid shall
be deducted from
share of spouse
during liquidation
Separate property of
the obligor-spouse
if the same is not
sufficient or there is
none, the absolute
community or
conjugal property
shall be liable if
financially capable,
which support shall be
deducted from the
share of the spouse
upon liquidation of the
ACP or CPG
2. CONTRACTUAL SUPPORT
3. BASIS OF SUPPORT
LEGACY OF SUPPORT
Based on law
can be between
strangers
Not exempt from
attachment and
execution because it is
not a legal obligation
CONTRACTUAL
SUPPORT
Based on contract, so it
CIVIL LAW REVIEWER
Exempt from execution

and attachment
If contained in a will,
apply the rules of
contractual support
because there is no
more obligation of
support to speak of
since the giver is
already dead
Exception: If the giver

contracts with a person
whom he is obliged by
law to support, in which
case only the excess of
what is obliged (based
on need) can be
attached or subject to
execution
Follow rules of
contracts which says
that obligation must be
fulfilled (support must
be given) no matter
what happens (even if
you lose your job). BUT
if the change in
circumstances are
manifestly beyond that
contemplation of the
parties, support may be
adjusted accordingly
Judgment of support is always provisional

in character. Res Judicata does not apply.
Lam v. Chua, [426 SCRA 29 (2004])
4. OPTIONS OF GIVER
Options Of The Person Giving Support:
1. To give a fixed monthly allowance; or
2. To receive and maintain the recipient in the
giver's home or family dwelling (Art. 204)
Exception to # 2: Existence of legal or moral
obstacle
ORDER OF LIABILITY IF 2 OR MORE ARE
OBLIGED TO SUPPORT:
1. Spouse
2. Descendants in nearest degree
3. Ascendants in nearest degree
4. Brothers and sisters (Art. 199)
When the obligation to give support falls

upon two or more persons, the payment of
Page 43 of 383
the same shall be divided between them in

proportion to the resources of each.
However, in case of urgent need and by
special circumstances, the judge may order
only one of them to furnish the support
provisionally, without prejudice to his right
to claim from the other obligors the share
due from them.
When two or more recipients at the same
time claim support from one and the same
person legally obliged to give it, and the
obligor does not have sufficient means to
satisfy all claims:
-The order established in the preceding
article shall be followed:
a. Spouse
b. Descendants in nearest degree
c. Ascendants in nearest degree
d. Brothers and sisters (Art. 200)
If the concurrent obligees should be the
spouse and a child subject to parental
authority, the child shall be preferred
SOURCES OF SUPPORT
DURING
PENDING
AFTER
THE
LITIGATION
LITIGATION
MARRIAGE
SPOUSES
From the
community
property assets
except if Art.
203 applies, i.e.
if the claimant
spouse is the
guilty spouse,
No obligation to
he/she will not
support except if
be entitled to
there is legal
support.
From the
separation, in
communit
which case the
If the spouses
y property
court may
are under CPG,
require the guilty
support is
spouse to give
considered an
support
advance of such
spouses' share;
the rule does
not apply if the
spouses are
under ACP,
based on Art
153
CIVIL LAW REVIEWER
CHILDREN
From the
communit
y property
From the
community
property
From the
separate
property of the
spouses
============================
=================

N. Parental Authority
1. Contempt
2. Over Person
3. Over Property
4. Substitute and Special Parental
Authority
5. Suspension/Termination of
Parental Authority
6. Liability of Parents for Acts of
Children
========================
==================
1. CONTEMPT
PARENTAL AUTHORITY (PATRIA POTESTAS)
-is the mass of rights and obligations which
parents have in relation to the person and
property
of
their
children
until
their
emancipation, and even after, under certain
circumstances.
Characteristics Of Parental Authority:
1. It is a natural right and duty of the parents
(Art. 209)
2. It cannot be renounced, transferred or
waived, except in cases authorized by law
(Art. 210)
3. It is jointly exercised by the father and the
mother (Art. 211)
4. It is purely personal and cannot be
exercised through agents
5. It is temporary
2. OVER PERSON
RULES AS TO THE EXERCISE OF PARENTAL
AUTHORITY:
1. The father and the mother shall jointly
exercise parental authority over the persons
of their common children. In case of
disagreement, the father's decision shall
Page 44 of 383
2.
I
prevail, unless there is a judicial order to
the contrary (Art. 211)
2. If the child is illegitimate, parental authority
is with the mother.
WHO EXERCISES PARENTAL AUTHORITY
Absence
of either
Parent present
parent
Death of
either
Surviving parent
parent
Remarriag
e of
Surviving parent, unless the court
surviving
appoints a guardian
parent
Parent designated by the court,
taking into account all relevant
considerations, especially the
choice of the child over 7 years
old, unless the parent chosen is
unfit
GR: A child under 7 years of age
shall not be separated from the
mother UNLESS the court
Separation
finds compelling reasons to
of parents
order otherwise (TENDER
(Art. 213)
YEARS DOCTRINE)
Paramount consideration in
matters of custody of a child is the
welfare and well-being of the child
Tonog v. Court of Appeals,
[G.R. No. 122906, February 7,
2002]
In case of death, absence or unsuitability of

both parents, the surviving grandparent
shall exercise substitute parental authority
(Art. 214)
No descendant shall be compelled, in
criminal cases, to testify against his parents
or grandparents, except when such
testimony is indispensable in a crime
against the defendant or by one parent
against the other. (Art 215)
3. OVER PROPERTY
Effect Of Parental Authority Upon The
Property Of The Child:
1. The father and mother shall jointly exercise
legal guardianship over the property of the
minor
common
child
without
court
appointment
CIVIL LAW REVIEWER
n case of disagreement, the fathers

decision shall prevail, unless there is judicial
order to the contrary
3. If the market value of the property or the
annual income of the child exceeds
P50,000, the parent is required to furnish a
bond of not less than 10% of the value of
the childs property or income
4. SUBSTITUTE AND SPECIAL PARENTAL

AUTHORITY
Order Of Substitute Parental Authority:
1. The surviving grandparent
2. The oldest brother or sister, over 21 years
old, unless unfit or disqualified
3. The child's actual custodian, over 21 years
old, unless unfit or disqualified (Art. 216)
In case of foundlings, abandoned children,

neglected children, or abused children,
summary judicial proceedings shall be
instituted so that they may be entrusted to:
a. Heads of childrens homes
b. Orphanages, or
c. Similar institutions duly accredited by
the proper government agency (Art.
217)
Person Exercising Special Parental

Authority:
1. School
2. Administrators and teachers
3. Individual, entity, or institution engaged in
child care
Liability Of Those Exercising Special
Parental Authority Over The Child:
1. They are principally and solidarily liable for
damages caused by the acts or omissions of
the child while under their supervision,
instruction or custody. HOWEVER, this
liability is subject to the defense that the
person
exercising
parental
authority
exercised proper diligence.
2. The parents and judicial guardians of the
minor or those exercising substitute
parental authority over the minor are
subsidiarily liable for said acts and
omissions of the minor.
Page 45 of 383
DISTINCTION BETWEEN SUBSTITUTE AND

SPECIAL PARENTAL AUTHORITY
SUBSTITUTE
SPECIAL PARENTAL
PARENTAL
AUTHORITY
AUTHORITY
It is exercised
concurrently with the
parental authority of
It is exercised in
the parents. The
case of death,
parents temporarily
absence, or
relinquish parental
unsuitability of
authority over the child
parents.
to the person with
special parental
authority.
5. SUSPENSION/TERMINATION OF
PARENTAL AUTHORITY
Grounds For Suspension Of Parental
Authority: (CHOBA)
1. Conviction of parent for crime with civil
interdiction
2. Treats child with excessive harshness and
cruelty
3. Gives corrupting orders, counsel or example
4. Compels child to beg
5. Subjects to or allows him to be subjected to
acts of lasciviousness
The suspension or deprivation may be

revoked and the parental authority revived
in a case filed for the purpose or in the
same proceeding if the court finds that the
cause therefore has ceased and will not be
repeated
Grounds For The Permanent Termination

Of Parental Authority :
1. Death of parents
2. Death of child
3. Emancipation of child
4. Parents exercising parental authority has
subjected the child or allowed him to be
subjected to sexual abuse
Lesbianism is not compelling reason to
deprive the mother of a child below seven
years of age. To deprive the wife of custody,
the husband must clearly establish that her
moral lapses have had an adverse effect on
the welfare of the child or have distracted
the offending spouse from exercising proper
parental care. Writ of habeas corpus has no
CIVIL LAW REVIEWER
leg to stand on to deprive the mother of a

child below seven years of age, unless there
are compelling reasons to do so. Gualberto
v. Gualberto, G.R. No. 154994, June 28,
2005
Cases Where Parental Authority May Be
Revived:
1. Adoption of child
2. Appointment of general guardian
3. Judicial declaration of abandonment
4. Final judgment divesting parental authority
5. Judicial declaration of absence or incapacity
or person exercising parental authority
6. LIABILITY OF PARENTS FOR ACTS OF

CHILDREN
Liability Of Parents For Torts Committed
By Their Minor Children:
Parents and other persons exercising
parental authority shall be civilly liable for
the injuries and damages caused by the
acts or omissions of their minors PROVIDED
the children are living in their company and
under their parental authority
This is subject to the appropriate defenses
provided by law
NOTE:
Parental authority and responsibility are
inalienable and may not be transferred and
renounced except in cases authorized by
law
Parents may exercise parental authority
over their childs property
===================
==============
TOPIC UNDER SYLLABUS
N. Funerals (Arts. 305-310,CC)
O. Surname (Arts 364-380, CC)
P. Absence (Arts. 381-396,CC)
Q. Civil Register (Arts. 407-413,CC)
===================
==============
N. FUNERAL
General Guidelines:
Page 46 of 383
1.
Duty and right to make arrangement in funerals

in accordance with Art. 199 FC:
a. Spouse
b. Descendants in nearest degree
c. Ascendants in nearest degree
d. Brothers and sisters
2. The funeral shall be in keeping with the
social position of the deceased
3. The funeral shall be in accordance with the
expressed wishes of the deceased
a. In the absence of expressed wishes, his
religious beliefs or affiliation shall
determine
b. In case of doubt, the persons in Art. 199
of FC shall decide
4. Any person who disrespects the dead or
allows the same shall be liable for damages
O. SURNAME
USE OF SURNAME
CHILD CONCERNED
Legitimate child
Legitimated child
Adopted child
Illegitimate child
Conceived prior to
the annulment of the
marriage
Conceived after the
annulment of the
marriage
SURNAME TO BE
USED
Fathers surname
Fathers surname
Adopters surname
1. Mothers surname;
or
2. Fathers name if
they were
recognized by their
father in the record
of birth or in an
authentic writing
Fathers surname
Mothers surname
Since a legitimate child can ask for a

change of name, an adopted child can do
the same.
The interest of justice and of the child

permits an illegitimate child to change his
name adopting the surname of his parents
other spouse. Calderon vs. Republic, [19
SCRA 721]
CIVIL LAW REVIEWER
WIFE
Valid
marriag
e
Husband
is living
(Art.
370)
Husband
is dead
(Art.
373)
Wife is
the guilty
party
SURNAME TO BE USED
a. First name and
maiden name + her
husbands surname
b. First name + her
husbands surname
c. Her husbands full
name, but prefixing a
word indicating that
she is his wife, such
as Mrs
d. Retain the use of her
maiden name (use of
husbands surname is
not a duty but merely
an option of the wife)
She can use the surname
of the husband as if he
were still living
She shall resume using
her maiden name
1. Resume using her

maiden name; or
2. Continue employing
her husbands surname
Wife is
UNLESS:
the
a. Court decrees
innocent
otherwise, or
party
b. She or the former
husband is
married again to
another person
Continue using the name
and surname she was
Legally separated
employing prior to the
(Art.372)
legal separation Laperal
v. Republic,[6 SCRA
357 (1962)]
IDENTITY OF NAMES AND SURNAMES
Between
Younger person is obliged to
persons (Art.
use such additional name OR
374)
surname as will avoid
confusion
Marriag
e is
annulle
d
(Art.37
1)
Page 47 of 383
Between
ascendants
and
descendants
(Art.
375)
1. Son may use the word

Junior
2. Grandsons and other male
descendants, shall either :
a. Add a middle name
b. Add the mothers
surname
c. Add the Roman
numerals II, III, and so
on
P. ABSENCE
Persons Who May Be Appointed By Way Of
Court Order As The Representative Of An
Absentee In Case Of Provisional Absence
Or As An Administrator
1. If no legal separation, the spouse present
2. If no spouse or if the spouse present is a
minor, any competent person
The
spouse
who
is
appointed
as
administratrix of the absentee spouses
property cannot alienate or encumber the
same, or that of the conjugal partnership,
without judicial authority.
When Administration Shall Cease
1. Absentee appears personally or by means
of an agent;
2. Death of the absentee is proved and his
estate or intestate heirs appear;
3. A third person appears, showing by a proper
document that he has acquired the
absentee's property by purchase or other
title
The property shall be at the disposal of
those who may have a right thereto
CIVIL LAW REVIEWER
Page 48 of 383
STAGES
Provisional Absence
- A person disappears from
his domicile, whereabouts
are unknown and
a.
He did not
leave any agent; or
b.He left an agent but
agent's power has
expired
Judicial Declaration of
Absence
-Necessary for interested
persons to be able to
protect the interest of the
absentee
WHEN TO FILE
No statutory period
Without administrator
- After 2 years having
elapsed without any
news
about
the
absentee or since the
last news
With administrator
- After 5 years from time
of
disappearance
Presumption of death
WHO MAY FILE?
ORDINARY ABSENCE
4 years person presumed dead for purposes

of remarriage of the spouse present
7 years presumed dead for all purposes

a. Interested party
EXCEPT
for those of succession
b. Relative
10 years person presumed dead for purposes

c. Friend
of opening succession
EXCEPT if he disappeared after the age of 75, an
absence of 5 years is sufficient
EXTRAORDINARY ABSENCE
a.
1.
If a person rode an airplane or sea vessel lost in
b.
the course of voyage, from the time of loss of the
heirs
airplane or sea vessel
c.
2.
If a person joined the armed forces who has
heirs
taken
part in war, from the time he is considered
d.
missing
in action
may have over the
3.
Danger of death under other circumstances,
property of the absentee
from time of disappearance
some right subordinated
Spouse
to the condition of the

absentee's death 4 years for all purposes including those of opening
succession
2 years for purposes of remarriage
CIVIL LAW REVIEWER
Page 49 of 383
Q. CIVIL REGISTER
5.
MATTERS RECORDED/ENTERED IN THE CIVIL

REGISTER:
1. Acts, events and judicial decrees concerning
the civil status of persons
2. Birth
3. Marriage
4. Death
5. Legal separation
6. Annulment of marriage
7. Judgments declaring marriage void from the
beginning
8. Legitimation
9. Adoption
10. Acknowledgement of natural children
11. Naturalization
12. Loss of citizenship
13. Recovery of citizenship
14. Civil interdiction
15. Judicial determination
16. Voluntary emancipation of a minor
17. Change of name
General Rule: Entries in the civil register may be

changed or altered only upon a judicial order.
Exception:
Clerical or typographical errors or
change in the name or nickname can be changed
administratively through verified petition with the
local office of the civil registrar.
Who may file petition: Any person having direct
and personal interest in any act, event, order or
decree concerning the civil status of persons or
change of name
PROCEDURAL
REQUIREMENTS
FOR
A
PETITION FOR CHANGE OF NAME:
1. 3 years residency in the province where change
is sought prior to the filing
2. Must not be filed within 30 days prior to an
election
3. Petition must be verified
PROPER AND REASONABLE CAUSES THAT MAY
WARRANT THE GRANT OF A PETITION FOR
CHANGE OF FIRST NAME/NICKNAME:
1. Petitioners true and official name is ridiculous;
2. Petitioners true and official name is tainted
with dishonor
3. Petitioners true and official name is extremely
difficult to write or pronounce
4. New first name or nickname has been
habitually and continuously used by the
petitioner and he has been publicly known by
the first names and nicknames in the
community
When the change is necessary to avoid

confusion (Sec. 4, R.A. 9048)
R.A. 9048 does not sanction a change of first
name on the ground of sex reassignment.
Rather than avoiding confusion, changing the
first name to make it compatible with the sex
he transformed himself into through surgery
may only create grave complications in the civil
registry and the public interest. Silverio vs.
Republic, G.R. No. 174689, Oct. 22, 2007
6. When the request for change is a consequence

of a change of status, such as when a natural
child is acknowledged or legitimated
USURPATION OF NAME - implies some injury to
the interests of the owner of the name. It consists
in the possibility of confusion of identity between
the owner and the usurper.
ELEMENTS OF USURPATION OF NAME:
1. An actual use of another's name by the
defendant
2. Use is unauthorized
3. Use of another's name is to designate
personality or to identify a person
REMEDIES AVAILABLE TO THE PERSON
WHOSE NAME HAS BEEN USURPED:
1. Civil (insofar as private persons are concerned)
a. Injunction
b. Damages (actual and moral)
2. Criminal (when public affairs are prejudiced)
WHEN USE OF ANOTHER'S NAME IS NOT
ACTIONABLE:
Used as stage, screen, or pen name, provided:
1. Use of name is in good faith; and
2. By using the name of another, no injury is
caused to that person's right
3. When use is motivated by modesty, a desire to
avoid unnecessary trouble, or other reason not
prohibited by law or morals
The law does not allow dropping of middle

name from registered name unless there are
justifiable reasons to do so. Mere convenience
is not justifiable. Middle names serve to identify
the maternal lineage filiation of a person as
well as further distinguish him from others who
may have the same given name and surname
as he has.
An illegitimate child whose filiation is not

recognized by the father bears only a given
name and his mothers surname, and does not
have a middle name, unless legitimated or
subsequently acknowledged by the father in a
public document or private handwritten
instrument. In Re: Petition for Change of

Name of Wang,[G.R. No. 159966, March
30, 2005]
2. Change of first
name or nickname
CHANGE OF ENTRIES IN CIVIL REGISTRY

WITHOUT JUDICIAL
WITH JUDICIAL
AUTHORITY
AUTHORITY
Matters which may
Change of surname
be made by the
can only be done
concerned city or
through a court
municipal registrar or proceeding
consul general (R.A.
EXCEPT when the
9048):
request for change is
1. Clerical or
a consequence of a
typographical error
change of status,
such as when a
NOT nationality,
natural child is
age, civil status
acknowledged or
needs court order
legitimated
If the correction is clerical: summary

proceeding
If the rectification affects the civil status,
citizenship
or
nationality
of
a
party
(substantial): adversarial proceeding
Change of sex is not a mere clerical or
typographical error. There is no special aw in
the Philippines governing sex reassignment and
its effects. Silverio vs. Republic, [G.R. No.
174689, Oct. 22, 2007]
NOTE: The new law, R.A. 9048, applies only to

clerical and typographical errors in entries of name
and does not modify the rules mentioned above
II. PROPERTY
=====================
==============
A. Classification of Property (Arts. 414418, CC)
1. Immovable Property
2. Movable Property
3. According to Ownership
a. Public Dominion
b. Private Ownership
=====================
==============
4.
5.
6.
7.
PROPERTY: An object or a right which is

appropriated or susceptible of appropriation by
man, with capacity to satisfy human wants and
needs.
A. CLASSIFICATION OF PROPERTY
Requisites of Property: (USA)
1. Utility for the satisfaction of some
human wants
endows property with value susceptible of
pecuniary estimation (e.g. food, shelter,
clothing, recreation)
2. Substantivity or individuality
quality of having existence apart from
any other thing (e.g. blood, when
separated from the body)
3. Appropriability
susceptibility of being possessed by men
not susceptible of appropriation:
I. Common things (res communes)
Exception: those that may be
appropriated
under
certain
conditions in a limited way (e.g.
Electricity, oxygen)
II.
Due to physical impossibility (e.g.
Sun)
III. Due to legal impossibility (e.g.
Human body)
IV. Due to no ownership (e.g. wild
animals) or abandonment by the
owner.
Classification of Property
1. Mobility and Non-mobility
A. Movable or personal property
B. Immovable or real property
2. Ownership
A. Public
B. Private
3. Alienability
8.
9.
A. Within the commerce of man (or which

may be the objects of contracts or
judicial transactions)
B. Outside the commerce of man
Existence
A. Present property (res existents)
B. Future property (res futurae)
NOTE: Both present and future
property may be the subject of sale but
generally not the subject of donation.
Materiality or Immateriality
A. Tangible or corporeal
B. Intangible or incorporeal
Dependence or Importance
A. Principal
B. Accessory
Capability of Substitution
A. Fungible capable of substitution by
other things of the same quality and
quantity
B. Non-Fungible incapable of such
substitution, hence, the identical thing
must be given or returned
Nature or Definiteness
A. Generic one referring to a group or
class
B. Specific one referring to a single,
unique object
Whether in the Custody of the Court or
Free
A. In custodia legis in the custody of
the court
B. free property
1. IMMOVABLE PROPERTY
Juridical
Classification
of
Immovable
Properties: (NIDA)
1. By nature cannot be moved from place
to place because of their nature (Art. 415
par 1 & 8 NCC)
A. land, buildings, roads and constructions
of all kinds adhered to soil
a
structure
which
is
merely
superimposed on the soil may be
considered movable.
B. mines, quarries, and slag dumps, while
the matter thereof forms parts of the
bed, and waters either running or
stagnant
Once a house is demolished, its character

as an immovable ceases. Bicerra v.
Teneza, [6 SCRA 649 (1962)]
A mortgage of land necessarily includes, in

the
absence
of stipulation
of the
improvements thereon, buildings. Still a
building by itself may be mortgaged apart
from the land on which it has been built.

Such would be a real estate mortgage for
the building would still be considered
immovable property. Leung Yee v. Strong
Machinery, [37 Phil. 644 (1981)]
Requisites: (OP)
I. Placed by the owner of the or
his agent
II. Intent
to
attach
them
permanently to the land
A valid real estate mortgage can be

constituted on the building erected on the
land belonging to another. Prudential
Bank v. Panis, [153 SCRA 390 (1987)]
The contracting parties may validly

stipulate that a real property be considered
as personal. After agreeing, they are
consequently estopped from claiming
otherwise. However, third persons acting in
good faith are not affected by its stipulation
characterizing the subject machinery as
personal.
Sergs
Products
v.
PCI
Leasing, [328 SCRA 299 (2000)]
3. By destination movable placed on

immovable for the utility it gives to the
activity carried thereon (Art. 415 par
4,5,6,7,9)
A. Machinery, receptacles, instruments or
implements intended by owner of the
tenement or his agent for an industry or
works which may be carried on in a
building & which tend directly to meet
the needs of such works/industry
attachment or incorporation to the
immovable is not essential
Requisites: (COE)
I. industry or works must be
carried on inside the building or
on the land
II. placed by the owner of the
building or property or his agent
III. machines must be essential and
principal elements in carrying
out the industry
does
not
include
incidentals
(movables
without
which
the
businesses can still continue or
carry on their functions)
2. By incorporation essentially movables

but attached to an immovable in a fixed
manner to be an integral part of it (Art.
415 par 2,3,4,6)
A. Trees, plants & growing fruits while
adhered to soil, immovable
once cut or uprooted, they cease to
be immovables
Except: Uprooted Timber
B. Everything attached to an immovable in
a fixed manner that it cannot be
separated
without
breaking
the
material or deterioration of the object
intent to attach permanently is
essential
On temporary separation: 2 points
of view:
I. May still be considered as
immovable If there is intent to
put them back.
II. Movable because the material
fact of incorporation is what
determines its condition
C. Statues, reliefs, painting or other
objects for use or ornamentation
Requisites: (OP)
I. Placed by the owner of the
immovable or his agent
II. Intent
to
attach
them
permanently to the tenements
D. Animal
houses,
pigeon
houses,
beehives, fish ponds, or breeding places
of similar nature including the animals
in these places
Equipment destined only to repair or

service a transportation business may not
be deemed real property. Mindanao Bus
v. City Assessor, [6 SCRA 197 (1962)]
B. fertilizers actually used on a piece of

land
C. docks & floating structures intended
by their nature and object to remain at
a fixed place on a river, lake or coast.
4. By analogy/by law contracts for public
works, servitude & other real rights over
immovable property (Art. 415 par 10)
2. MOVABLE PROPERTY
Movable Property: (SIFTOS)
1. Susceptible of appropriation that are not
included in enumeration in immovables.
Example
interest in the business is personal
property. Involuntary Insolvency of
Strochechker v. Ramirez,[44 Phil
933 (1922)]
2. Immovable that are designated as movable
by special provision of law. Examples
Growing
crops
are
considered
immovable under Art. 415(2) but
3.
4.
5.
6.
personal property by Chattel Mortgage

Law. Sibal v. Valdez, 50 Phil 512
(1927)
House built on leased land may be
treated insofar as the parties are
concerned as personal property and be
the object of a chattel mortgage.
Navarro v. Reyes,[9 SCRA 63
(1963)]
Forces of nature brought under control by
science. Examples
Electricity, gas, rays, heat, light,
oxygen, atomic energy, water power
etc.
Electricity, the same as gas, is an
article bought and sold like other
personal property and is capable of
appropriation by another. United
States v. Carlos,[21 Phil. 364
(1946)]
Things which can be transported w/o
impairment of real property where they are
fixed
Obligations which have for their object
movables or demandable sums (credits)
obligations and actions must be legally
demandable
demandable sums must be liquidated
Shares of stocks of agricultural, commercial
& industrial entities although they may
have real estate
Classification Of Movables:
1. According to nature
a. Consumable cannot be utilized w/o
being consumed
b. Non-consumable
2. According
to
intention
of
the
parties/purpose (whether it can be
substituted by other things of same kind,
quality and quantity)
a. Fungible (res fungibles) only the
equivalent is returned
b. Non-fungible (res nec fungibles)
identical thing is returned, do not admit
of substitution
Test To Determine Whether Property Is Real
Or Personal
1. Whether the property can be transported or
carried from place to place (Rule of
Description)
2. Whether such change of location can be
made without injuring the immovable to
which the object may be attached (Rule of
Description)
3. Whether the object does not fall within any
of the cases enumerated in Art. 415 (Rule
of Exclusion)
ACCORDING TO OWNERSHIP
a. Public Dominion
3.
Public Dominion outside the commerce of men.

KINDS: (USD)
A. intended for public use can be
used by the public or everybody
B. intended for specific public service
of state,
provinces,
cities
&
municipalities can be used only by
duly authorized persons, such as
government buildings and vehicles
C. for the development of national
wealth
Characteristics:
A. Outside the commerce of men
cannot be alienated or leased or be
the subject of any contract
B. Cannot be acquired by private
individual or even municipalities
through prescription
C. Not subject to attachment &
execution
D. Cannot be burdened by voluntary
easement
E. Cannot be registered under the
Land Registration Law and be the
subject of a Torrens Title
F. In general, can be used by
everybody
NOTE: Fishponds are considered as part of public
dominion and cannot be acquired by private
persons unless it is converted into patrimonial
property. However, fishponds may be leased by the
government.
Properties which the government owns for
fundamental
purposes
for
rendering
government services are properties of public
dominion. They are held by the local
governments for public service, but at the
same time, they can be removed by the State
from the LGUs without having to pay just
compensation because the LGUs are merely
acting as agents. (City of Zamboanga Del
Norte v. Province of Zamboanga Del
Norte)
b. Private Ownership
KINDS:
Patrimonial property - the property of the State
owned by it in its private or proprietary capacity,
the property is not intended for public use, or for
some public service, or for the development of the
national wealth.
G.
- Exist for attaining economic ends of

state
- Property of public dominion when no
longer intended for public use/service
declared patrimonial (Article 422
NCC)
- Subject to prescription
- May be an object of ordinary contract
- Example: property acquired in
execution and tax sales, incomes or
rents of the State
H. Property for LGUs
- Property for public use
roads, streets, squares, fountains,
public waters, promenades and public
works for public service paid for by the
LGUs
- all other properties possessed by LGUs
without prejudice to special laws are
considered patrimonial
NOTE: Patrimonial properties of LGUs cannot
be removed by the State without paying just
compensation.
I. Property of Private Ownership - all
properties belonging to private persons and
those belonging to the State and any of its
political subdivisions which are patrimonial
in nature
Conversion Of Property Of Public Dominion
To Patrimonial Property
1. Property of the National Government
formal declaration by the executive or
legislative department that the property
is no longer needed for public use or for
public service
2. Property of political subdivisions
must be authorized by law
NOTE: Sacred and religious objects are outside the
commerce of man. They are neither public nor
private party.
Political subdivisions cannot register as their own
any part of the public domain, UNLESS:
1. grant has been made
2. possession has been enjoyed during the period
necessary to establish a presumption of
ownership
Aliens have no right to acquire any public or
private agricultural, commercial, or residential
lands except by hereditary succession.
Private individual has superior right over the
property against the state.
The right of the public to use the city

streets may not be bargained away
through contract. Rule: Local government
cannot withdraw a public street from public

use, unless it has been granted such authority
by law. Dacanay v. Asistio Jr.,[208 SCRA
404 (1992)]
The power to vacate or withdraw a street or

alley from public use is discretionary and such
will not be interfered with by the courts. The
Charter of Cebu City gives such power to the
City Council. Such withdrawn portion thus
becomes patrimonial property which can be the
object of an ordinary contract. Cebu Oxygen
v. Bercilles, [66 SCRA 481 (1975)]
A property continues to be part of the

public domain until there is a formal
declaration on the part of the government
to withdraw it from being such. An
abandonment of the intention to use the
property for public service and to make it
patrimonial property must be definite. It cannot
be inferred from the non-use alone. Laurel v.
Garcia, [187 SCRA 797 (1990)]
==============================
======================

B. Ownership (Arts. 427-439, CC)
1. Rights of Ownership/Limitations
2.
Doctrines
of
Incomplete
Privilege/Self Help
3. Presumption of Ownership
4. Rule of Hidden Treasure
==========================
==================
OWNERSHIP -is the independent right of a person

to the exclusive enjoyment and control of a thing
including its disposition and recovery subject only
to the restrictions or limitations established by law
and the rights of others.
TITLE -is that which constitutes a just cause of
exclusive possession or which is the foundation of
ownership of property.
Kinds Of Ownership:
1. FULL OWNERSHIP (dominium or jus in re
propia) includes all the rights of the owner
2. NAKED OWNERSHIP (nuda proprietas)
where the right to the use and the fruits
has been denied
Naked ownership + usufruct = Full
ownership
3. SOLE OWNERSHIP ownership is vested
only in one person
4. CO-OWNERSHIP/TENANCY IN COMMON
ownership is vested in two or more
owners; unity of the property, plurality of
the subjects
1. RIGHTS OF OWNERSHIP/LIMITATIONS
Seven Rights Of Ownership:
1. JUS ABUTENDI right to consume,
transform or abuse by its use
2. JUS ACCESIONES right to fruits and
accessories
3. JUS DISPONENDI right to dispose,
including the right not to dispose, or to
alienate
4. JUS FRUENDI right to fruits
5. JUS POSSIDENDI right to possess
does not necessarily include the right to
use (e.g. contract of deposit)
6. JUS UTENDI right to use and enjoy
Includes the right to transform and
exclude any person from the enjoyment
and disposal thereof
Limitation: use in such a manner as not
to injure the rights of a third person
7. JUS VINDICANDI right to vindicate or
recover
Limitations on the Right of Ownership:
(CLOGS)
1. those arising from conflicts of private
rights (e.g. those which take place in
accession continua)
2. those imposed by law (e.g. Legal
easement)
3. those imposed by the owner himself (e.g.
Voluntary easement, pledge, lease)
4. those imposed by the grantor of the
property on the grantee
A. by contract (e.g. donation)
B. by last will
5. those imposed in general by the State
A. police power
B. power of taxation
C. power of eminent domain
Right of Ownership not absolute
The welfare of the people is the
supreme law of the land. Salus populi
suprema est lex.
Use your property so as not to impair
the rights of other. Sic utere tuo ut
alienum non laedas.
ACTIONS FOR POSSESSION:

MOVABLES Replevin/ Manual Delivery (return of a movable)
both principal and provisional remedy
Plaintiff shall state in the affidavit that he is the owner of the property claimed,
particularly describing it or that he is entitled to possession, and that it is wrongfully
detained by the other.
PERIOD: 4 or 8 years from the time the possession thereof is lost, in accordance with Art.
1132
machinery and equipment used for an industry and indispensable for the carrying on of
such industry, cannot be the subject of replevin, because they are considered real
properties.
property validly deposited in custodia legis cannot be the subject of a replevin suit
ACTION
Accion
Interdic
tal
GROUND
Forcible
entry
(detenci
on)
GROUND:
deprivation
of
possession through:
force, intimidation,
strategy, threat, or
stealth (FISTS)
De
facto
or physical
possession
Unlawfu
l
detainer
(desahui
co)
Lessor/person having
legal
right
over
property deprived of
such
when
the
lessee/person
withholding property
refuses to surrender
possession
of
property
after
expiration
of
lease/right to hold
property
Better
right
of
possession
Physical
possession
Recovery
of
dominion of property
based on ownership
OWNERSH
IP
Accion Publiciana
Accion
Reinvindicatoria
I.
IMMOVABLES
ISSUE
CAUSE
Possession
DE FACTO
PERIOD
COURT
Within 1 year
from
(1)
unlawful
deprivation, or
from
(2)
discovery,
in
case of stealth
or strategy
Within 1 year
from unlawful
deprivation:
date of last
demand or last
letter
of
demand
MTC
Within a period
of 10 years,
otherwise the
real right of
possession
is
lost
30 years
Depends
on
ASSESSE
D VALUE
MTC
Depends
on
ASSESSE
D VALUE
Injunction
- Generally not available as a remedy.
- When injunction is allowed:
A. Actions for forcible entry
B. Ejectment
- possessor admittedly the owner or in possession in concept of owner
- possessor clearly not entitled to property
- extraordinary cases where urgency, expediency and necessity so required
II. Writ of possession
- When proper:
PROCEEDIN
GS
Summary
proceeding
Summary
proceeding
Civil
A. Land registration cases

B. Foreclosure, judicial or extra-judicial, of mortgage provided that the mortgagor has
possession and no third party has intervened
C. Execution sales
D. Eminent domain proceedings
E. Ejectment
2.
DOCTRINE OF STATE OF NECESSITY
STATE OF NECESSITYis the principle which
authorizes the destruction of a property which is
lesser in value to avert the danger poised to
another property the value of which is much
greater.
REQUISITES OF STATE NECESSITY:
1. Interference necessary to avert an imminent
danger
2. Damage to another much greater than damage
to property
COMPARATIVE DANGE Danger must be
greater than damage to property. Consider
the economic and sentimental value of the
property.
MEASURE OF RATIONAL NECESSITY
the law does not require a person acting in
a state of necessity to be free from
negligence or mistake. He must be given
the benefit of reasonable doubt as to
whether he employed rational means to
avert the threatened injury.
The owner of the sacrificial property is
obliged to tolerate the act of destruction
but subject to his reimbursement by all
those who benefited.
In case of conflict between the exercise of
the right of self-help and a proper and licit
state of necessity, the latter prevails
because there is no unlawful aggression
when a person or group of persons acts
pursuant to the right given in a state of
necessity.
3. PRESUMPTION OF OWNERSHIP
a) Requisites to Raise the Disputable
Presumption of Ownership:
1. Actual possession of the property
2. Possession is under the claim of ownership
a. Possessor of property has the presumption
of title in his favor
b. Judicial process contemplated for recovery
of
property:
ejectment
suit
or
reinvindicatory action
c. The person claiming better right must
prove:
a. That he has better title to the
property
b. Identity of the property
d. One must depend on strength of his title
and not the weakness of the defense
e. Action is founded on positive rights
f.
Evidence
evidence.
required:
preponderance
of
b) Eminent Domain
EMINENT DOMAINis the superior right of the
State to acquire private property whether
registered or not for public use upon payment of
just compensation. It is one of the limitations of
the right of ownership.
a. Absolute necessity for expropriation is not
required.
It is enough that reasonable
necessity for public use is intended.
b. Just compensation is equivalent to the value of
the land. (Market value plus consequential
damages minus the consequential benefits)
c. The market value should be determined at the
time of the filing of the complaint or at the
time of taking of the property, whichever
transpires first.
d. The ownership over the property taken is
transferred only when the just compensation
with proper interest had been made
Elements for Taking in Eminent Domain:
(CPJD)
1. Taking done by Competent authority
a. Executive branch
b. Municipal corporations, other government
entities, and public service corporations.
2. For Public use
a. That only a few actually benefit does not
diminish its public use
3. Owner paid Just compensation
a. Value at the time of the taking
4. Due process of law observed
Computation for Just Compensation under
Agrarian Reform
LBP v. Cruz, [G.R. No. 175175, Sept. 29,
2008]
How will the computation of just computation
applied? Section 17 of R.A. No. 6657: In
determining just compensation, the cost of
acquisition of the land, the current value of like
properties, its nature, actual use and income, the
sworn valuation by the owner, the tax declarations,
and the assessment made by government
assessors, shall be considered. The social and
economic benefits contributed by the farmers and
the farmworkers and by government to the
property as well as the non-payment of taxes or
loans secured from any government financing
institution on the said land shall be considered as
additional factors to determine its valuation.
Formula by the DAR in using Section 17

of RA 6657 (DAR A.O. No. 5, series of
1998):
LV = Land Value
CNI = Capitalized Net Income
CS = Comparable Sales
MV = Market Value per declaration
LV = (CNI x 0.6) + (CS x 0.3) + (MV x
0.1)
Procedure of Expropriation under Agrarian
Reform:
LBP is an agency created primarily to provide
financial support in all phases of agrarian reform
pursuant to Section 74 of Republic Act (RA) No.
3844 and Section 64 of RA No. 6657. Once an
expropriation proceeding for the acquisition of
private agricultural lands is commenced by the
DAR, the indispensable role of LBP begins. No
judicial determination of just compensation allowed
without LBPs participation. Tabuena v. LBP, [G.R.
No. 180557, Sept. 26, 2008].
Abandonment of Property Expropriated:
MCIAA v. Tudtud, [G.R. No. 174012, Nov. 14,
2008]
When a private land is expropriated for public use
and subsequently, the public use was abandoned,
it returns to its owner unless there is a statutory
provision that prohibits it.
MCIAA has the obligation to return to X the land. X
has the obligation to return:
1. What he received as just compensation with
interest computed from default.
2. Necessary expenses incurred by MCIAA in
sustaining lot and monetary value for services
in managing insofar as X was benefitted
services in managing insofar as X was
benefitted
Following Article 1187 of the Civil Code, the MCIAA
may keep whatever income or fruits it may have
obtained from Lot No. 988, and X need not account
for the interests that the amounts they received as
just compensation may have earned in the
meantime.
Respondents, as creditors, do not have to settle as
part of the process of restitution the appreciation in
value of Lot 988 which is a natural consequence of
nature and time. x x x,"
c) Police Power
POLICE POWER is another limitation of the right

of ownership wherein property may be interfered
with, even destroyed, if so demanded by the
welfare of the community.
The owner of the
property is not entitled to compensation
Requisites of Police Power: (PRO)
1. Public interest
2. Reasonably
necessary
means
for
the
accomplishment of a purpose
3. It is not unduly Oppressive upon individuals
a. No taking of property involved
b. No financial compensation
SURFACE RIGHTS OF A LANDOWNER right to
surface & everything under it only as far as
necessary for his practical interest (Benefit or
Enjoyment)
1. Rights subject to:
a. Existing servitudes or easements
b. Special laws
c. Local ordinances
d. Reasonable
requirements
of
aerial
navigation
e. Rights of third persons
4. HIDDEN TREASURE
Concept of Treasure: (HUM)
1. Hidden and unknown
2. Unknown owner
3. Consists of Money, jewels, or other precious
objects. (not raw materials)
Right to Hidden Treasure:
1. Finder is the same as owner of the property
treasure totally belongs to him.
2. Finder is third person and he discovered it by
chance finder is entitled to one half of the
value of the treasure.
3. Finder is an intruder he is not entitled to
anything
4. Finder was given express permission by the
owner subject to the contract of service and
principle of unjust enrichment
BASIS
ACCION
REPLEVIN
Definitio
n
Where to
file
Issue
involved
Action
Prescripti
on
Others
Action or provisional remedy

where the complainant prays
for the recovery of the
possession of the personal
property
* NOT APPLICABLE TO
(a) Movables distrained or
taken for a tax assessment or
fine pursuant to law
(b) Those under a writ of
execution or preliminary
attachment
(c) Those under custodia legis
MTC or RTC depending on the
amount of money involved
Recovery of possession of
personal property
In Personam
Steps:
i. Complaint is filed at
commencement or at
any time before
answer of other party
ii. Complaint should
allege OWTA (owner,
wrongfully taken,
taken against law)
iii. Pay bond double the
amount of property
CIVIL LAW REVIEWER
FORCIBLE ENTRY
Summary action to
recover material or
physical possession of
real property when a
person originally in
possession was deprived
thereof by (FISTS)
Force,
Intimidation, Strategy,
Threat, or
Stealth
UNLAWFUL
DETAINER
Action brought when
possession by a
landlord, vendor or
vendee or other
person of any land or
building is being
unlawfully withheld
after the termination
or expiration of the
right to hold
possession, by virtue
of a contract, express
or implied
ACCION
PUBLICIANA
It is the
preliminary
action to recover
a better right to
possess
MTC
MTC
RTC
Material or physical
possession of real
property
Possession de facto
Material or physical
possession of real
property
Possession de facto
Quasi in Rem
1 year from
dispossession
FIT from dispossession
SS from discovery
Quasi in Rem
1 year from the time
the possession
became unlawful
last date of demand
or letter of demand
If theres a fixed
period 1 year from
the expiration of the
lease
If the reason is nonpayment of rent or
non-fulfillment of
the conditions of
the lease 1 year
from demand to
May be brought
against the owner in
some cases such as
lease
Complaint must
state FISTS or else it
would just be an
accion publiciana
which should be filed
with the RTC
REINVINDICATORIA
Action to recover
ownership of real
property
RTC
Better right of
possession of
real property.
Possession de
jure
Quasi in Rem
10 years
Ownership of real
property
2 kinds:
a) Possession not
through FISTS
- can be filed
Immediately
Accion
reinvindicatoria
can be filed
simultaneously
with FE
Judgment of
ownership usually
includes the right
of possession
b) 1 year period
for
FE or UD has
Elapsed
Page 39 of 383
Quasi in Rem
10 or 30 years
depending on
whether its ordinary
or extraordinary
prescription
iv.
Sheriff takes property
v. Doors broken if
necessary
Defendants remedy:
1. File a bond double the
amount, and
2. Give copy to plaintiff
Strangers remedy File a 3rd
party claim
CIVIL LAW REVIEWER
vacate
Complaint filed 5
days after
demand
(buildings) or 15
days (land
Refers to any kind
of land
It should be
alleged that the
right to possess
had been
terminated and
that the
continued
possession was
unlawful
Not the remedy if
what is sought is
specific
performance
Demand
Necessary - if there
is a breach
Not necessary if the
fixed period just
expires
Page 40 of 383
Should
remember
Article 434. In an
action to recover
ownership, the
property must be
identified, and the
plaintiff must rely
on the strength of
his title and not
on the weakness
of the defendants
claim
================================
2.

C. Accessions
1. Accession Discreta
a. Natural Fruits
b. Industrial Fruits
c.
Civil Fruits
2. Accession Continua
a.1 Accession Industrial
i. Builder/ Planter/ Sower
(BPS) in Good Faith
ii. BPS in Bad Faith
iii. No Claim of Ownership
a.2 Accession Natural
a.3 For Personal Property
i. Adjucntion/ Conjunction
ii. Mixture
iii. Specification
Usufruct
3. Lease of rural lands
4. Pledge
5. Antichresis
================================
PRINCIPLES:
1. Accessory follows the principal.
2. The incorporation or union must be intimate
that removal or separation cannot be
effected without substantial injury to either or
both.
3. Good faith exonerates a person from punitive
liability but bad faith may give rise to dire
consequences.
4. Bad faith of one party neutralizes the bad
faith of the other.
5. No one should enrich himself at the expense
of another.
C. ACCESSION
ACCESSION is the right of the owner of a
thing, real or personal, to become the owner of
everything which is produced thereby, or which is
incorporated or attached thereto, either naturally
or artificially.
NOTE: It is NOT one of the modes of acquiring
ownership enumerated in Article 712.
2 KINDS OF ACCESSION:
1. ACCESSION DISCRETA the extension of
the right of ownership of a person to the
products of a thing which belongs to such
person. It takes place with respect to:
a. NATURAL
FRUITS
spontaneous
products of the soil and the young of
animals.
b. INDUSTRIAL FRUITS those produced
by lands of any kind through cultivation
or labor.
c. CIVIL FRUITS rents of buildings, the
price of lease of lands and other property
and the amount of perpetual or life
annuities or other similar income.
GENERAL RULE: All fruits belong to the owner
of a thing.
EXCEPTIONS: (PULPA)
1. Possession in good faith by another
CIVIL LAW REVIEWER

383
2. ACCESSION CONTINUA the extension of

the right of ownership of a person to that
which is incorporated or attached to a thing
which belongs to such person. It may take
place:
a. With respect to real property

b.
a)
b)
accession industrial
accession natural
With respect to personal property

i. adjunction or conjunction
ii. commixtion or confusion
iii. specification
a.1 Accession Industrial
OBLIGATIONS:
i. Gathered Fruits
PLANTER
OWNER
Planter
in Good
Faith
(GF)
Keeps fruits
Planter
in Bad
Faith
(BF)
Reimbursed
for
expenses
for
production,
gathering,
and
preservation
(necessary
expenses)
No need to
reimburse the
planter of expenses
since he retains the
fruits
Gets fruits, pay
planter necessary
expenses
Page 41 of
ii. Standing Crops

Planter
in GF
Planter
in BF
PLANTER
Reimbursed
for expenses
for
production,
gathering,
and
preservation
Loses
everything.
No right to
reimburseme
nt
OWNER
Owns
fruits
provided he pays
planter expenses
for
production,
gathering,
and
preservation.
(forced
coownership)
Owns fruits
iii. Re: Offsprng of Animals. When the

male and female animals belong to
different owners, under the Partidas, the
owner of the female was considered also
the owner of the young, unless there is a
contrary custom or speculation. The legal
presumption, in the absence of proof to
the contrary, is that the calf, as well as its
mother belong to the owner of the latter,
by the right of accretion. US v.
Caballero, [25 Phil 356] This is also in
accord with the maxim pratus sequitor
ventrem (the offspring follows the dam
or mother).
Right of Accession with Respect to

Immovables
Two
disputable
presumptions
as
improvements on land:
1.
Works made by the owner
2.
Works made at the owners expense
OM =
BF
LO = BF
(as if
both in
GF)
LO = BF
OM =
GF
Exception:
OM exercises
the right of
removal
Becomes the
owner of the
materials but
he must pay:
1. Value
2. Damages
removal
- provided no
injury to the work
constructed or
destruction of the
plantings, etc. will
be caused
1. Entitled to the
ABSOLUTE right of
removal and
damages (whether
or not substantial
injury is caused)
2. Entitled to
reimbursement and
damages (in case
he chooses not to
remove)
PLANTING V. SOWING
1. PLANTING pertains to a perennial fact.
Something that will grow and produce fruits
year after year without having to be
replanted.
2. SOWING pertains to an annual crop.
Something that will grow and produce fruits
and then you plant again before it will
produce fruits again.
ESSENCE OF DISTINGUISHMENT
In planting: planter may be required to buy
the land.
In sowing: sower may be required to pay
rents.
to
WHERE LAND AND MATERIALS BELONG TO

DIFFERENT OWNERS
Land Owner
Owner of
(LO)
Materials (OM)
OM =
Becomes the
1. Entitled to
GF
owner of the
reimbursement
LO =
materials but
- provided he does
GF;
he must pay for not remove them
their value.
2. Entitled to
Or
CIVIL LAW REVIEWER

383
Page 42 of
WHERE A PERSON BUILDS (IN GOOD OR IN

BAD FAITH) ON
THE LAND OF ANOTHER
LAND OWNER (LO)

LO = GF
Builder= GF;
Or
LO = BF
Builder = BF
(as if both in
GF)
LO = GF
Builder= BF
1. Appropriate
improvements as his own
after paying for indemnity
2. Compel the builder to buy
the land where the
building has been built
Exception:
Value of land > Value of improvements
rent to be paid
If builder fails to pay the rent:
- no right of retention
- LO entitled to removal of
improvement
OPTIONS:
1. Appropriate the improvements
- must pay for:
- a. necessary expenses for the
preservation of the land
- b. damages
- no need to pay for its value or other
expenses
2. right to demolish or removal +
damages
- at the builders expense
3. compel the builder or planter to pay
the price of the land, and the sower the
proper rent + damages
- whether or not the value of the land
is considerably more than the value of
the house
General Rule: LO has no right of removal or

demolition.
Exception: Option of right of removal is
compulsory on the part of the LO when builder fails
to pay.
REMEDIES:
1.
Demolish what has been built,
sown, or planted
2.
Consider price of land as an
ordinary money debt of the builder
CIVIL LAW REVIEWER

383
BUILDER
OPTIONS:
1. Right to indemnification
a. Necessary expenses, w/ right of retention
until reimbursed
b. Useful expenses, w/ right of retention
2. Right of removal - if the thing suffers no
injury, and if his successor in the possession
does not prefer to refund the amount
expended.
1. Loses what is built, planted, or sown without

right to indemnity
2. Liability for damages
3. Entitled to reimbursement for the necessary
expenses of preservation of land
may enforce payment thru an

ordinary action for the recovery of a
money debt (levy and execution)
EXCEPTIONS to the Rule on Builders, etc.

(HSBC)
1. Builder, etc. does not claim ownership over
the land but possesses it as mere Holder,
agent, usufructuary or tenant; he knows
that the land is not his.
Page 43 of
EXCEPTION TO THE EXCEPTION: Tenant whose

lease is about to expire, but still sows, not knowing
that the crops will no longer belong to him
2. A person constructs a building on his own
land, and then Sells the land but not the
building to another
a. no question of good faith or bad
faith on the part of the builder
b. can be compelled to remove the
building
c. new owner will not be required to
pay any indemnity for the building
RULES
WHEN
INVOLVED:
For Art. 448 of the NCC to apply, the

construction must be of a permanent
character, attached to the soil with an idea
of perpetuity. It is of a transitory character
or is transferable, there is no accession,
and the builder must remove the
construction.
Alviola
v.
CA,
[G.R.
117642, April 12, 1998]
A promised to donate a property to B. B

constructed his house thereon before the
donation. If the property was not donated to
him, can B be considered a possessor in good
faith? Mere promise to donate the property to
B cannot convert him into a builder in good
faith. At the time the improvement was built,
such promise was not yet fulfilled, but a mere
expectancy of ownership that may or may
not be realized. If at all, B is a mere
possessor by tolerance. A person whose
occupation of a realty is by tolerance of its
owners are not possessors in good faith.
Hence, he is not entitled to the value of the
improvements built thereon. Verona PadaKilario v. CA, [G.R. No. 134329, January
19, 2000]
CIVIL LAW REVIEWER

383
ARE
Rights of LO and Builder same as set

forth in the table
Rights of OM
a. Bad faith
i. Loses all rights to be indemnified
ii.
Can
be liable
for consequential
damages (as when the materials are of
an inferior quality)
b. Good faith
i. Entitled to reimbursement
ii.In case of insolvency on the part of the
builder LO is subsidiarily liable, if he
makes use of the materials.
RULE: OM bad faith, Builder bad faith, LO

good faith
1.
RULES WHEN LANDOWNER SELLS LAND

TO A 3RD PERSON WHO IS IN BAD FAITH
1. Builder must go against him.
2. BUT when the 3rd person paid the landowner:
a. Builder may still file a case against him
b. 3rd person may file a 3rd party complaint
against landowner
PARTIES
Parties:
1. Land owner (LO)
2. Builder, planter, sower (builder)
3. Owner of materials (OM)
3. Builder is a Belligerent occupant

4. Builder, etc. is a Co-owner
a. even if later on, during the partition,
the portion of land used is awarded
to another co-owner;
THREE
2.
Between OM and Builder, good faith must

govern. Builder must reimburse OM,
but in case Builder cannot pay, LO will not
be subsidiarily liable because as to him,
OM is in bad faith. If the builder pays, he
cannot ask reimbursement from LO
because as to LO, builder is in bad faith
LO Can ask damages from BOTH; has the
choice to:
a. Appropriate what has been built as his
own
i. Without payment of any indemnity
for useful or necessary expenses for
the building
ii. With indemnity for the necessary
expenses for the preservation of the
land
b. Demand the demolition at builders
expense
c. Compel builder to pay the price of the
land
i. Whether the land is considerably
more valuable than the building or
not.
A lessee cannot be a builder in good faith.
He is estopped to deny his landlords title,
or to assert a better title not only in
himself, but also in some third person while
Page 44 of
he remains in possession of the leased

premises
and
until
he
surrenders
possession to the landlord. Munar v. CA,
[230 SCRA 372]; Frederico Geminiano,
et al. v. CA, et al., [G.R. No. 120303,
July 24, 1996]
Estoppel applies even if the lessor had no

title at the time. The relation of lessor and
lessee was created and may be asserted
not only by the original lessor, but also by
those who succeed to his title. As lessees,
they knew that their occupation of the
premises would continue only for the life of
the lease. They cannot be considered as
possessors nor builders in good faith.
Racaza v. Susan Realty, Inc., [18 SCRA
1172]; Vda. De Bacaling v. Laguna, [54
SCRA 243]; Santos v. CA, [221 SCRA
42]
Even if the lessor promised to sell, it would

not make the lessee possessor or builder in
good faith so as to be covered by the
provisions of Art. 448 of the NCC, if he
improves the land. The latter cannot raise
the mere expectancy of ownership of the
land because the alleged promise to sell
was not fulfilled nor its existence even
proven. (Jurado)
The owner of the land on which a building

has been built in good faith by another has
the option to buy the building or sell his
land to the builder, he cannot refuse to
exercise either option. Sarmiento v.
Agana, [129 SCRA 122 (1984)]
Owner of the land on which improvement

was built by another in good faith is entitled
to removal of improvement only after
landowner chose to sell the land and the
builder refused to pay for the same. Where
the lands value is greater than the
improvement,
the
landowner
cannot
compel the builder to buy the land. A
forced lease is then created and the court
shall fix the terms thereof in case the
parties disagree thereon. Depra v.
Dumlao, [136 SCRA 475 (1985)]
The right to choose between

the improvement or selling
which the improvement of
planter or sower stands, is
CIVIL LAW REVIEWER

383
owner of the land (not the court) Balatan

v. CA, [304 SCRA 34 (1999)]
Improvements made prior to the annotation

of the notice of lis pendens are deemed to
have been made in good faith. After such
annotation, P can no longer invoke the
rights of a builder in good faith. Should E
opt to appropriate the improvements made
by P, it should only be made to pay for
those improvements at the time good faith
existed to be pegged at its current market
value. Carrascoso v. CA, [G.R. No.
123672, December 14, 2005]
appropriating
the land on
the builder,
given to the
Page 45 of
ACCESSION
Accession
Discreta
Natural
Fruits
Spontaneous
products of the
soil,
Young and other
products of
animals
Industrial
Fruits
Accession
Continua
Real
Civil
Fruits
rents of buildings
price of leases of
land &
other property
amount of
perpetual or life
annuities or
other similar
income
Accession
Industrial
Building
Planting
Sowing
Accession
Natural
Alluvium
Avulsion
Change of course
of rivers
Formation of
islands
Personal
Adjunction/ Specification
Conjunction
(ISTEP)
Inclusion or
engraftment
Soldadura or
soldering
Tejido or weaving
Escritura or writing
Pintura or Painting
Mixed
commixtion
confusion
Accession Natural
i. Alluvium
ALLUVION - the accretion which the banks of
rivers gradually receive from the effects of the
current of the waters and which belong to the
owners of lands adjoining the said banks.
ACCRETION - act or process by which a riparian
land gradually and imperceptively receives
addition made by the water to which the land is
contiguous.
ESSENTIAL ELEMENTS:
1. Deposit or accumulation of soil or sediment
must be gradual and imperceptible.
2. Accretion results from the effects or action of
the current of the waters of the river.
3. The land where accretion takes place must be
adjacent to the bank of a river.
Registration under the Torrens System

does not protect the riparian owner
against the diminution of the area of his
registered land through gradual changes
in the course of an adjoining stream.
Viajar v. CA, [168 SCRA 405 (1988)]
Failure to register the acquired alluvial

deposit by accretion for 50 years
subjected said accretion to acquisition
through prescription by third persons.
Reynante v. CA, [207 SCRA 794
(1992)]
The rules on alluvion do not apply to

man-made or artificial accretions to lands
that adjoin canals or esteros or artificial
drainage system. Ronquillo v. CA, [195
SCRA 433 (1991)]
Law of Waters: ART. 4. Lands added to

the shores by accretions and alluvium
deposits caused by the action of the sea,
form part of the public domain. When
they are no longer washed by the waters
of the sea, and are not necessary for the
purposes of public utility, or for the
establishment of special industries, or for
the coastguard service, the Government
shall declare them to be the property of
the owners of the estates adjacent
thereto and as an increment thereof.
Lanzar v. Dir. Of Lands, [78 SCRA
152]
ii. Avulsion
AVULSION - accretion which takes place when

the current of a river, creek, or torrent
segregates from an estate on its bank a known
portion and transfers it to another estate, in
which case, the owner of the estate to which the
segregated portion belonged, retain the
ownership thereof.
ALLUVIUM vs. AVULSION
ALLUVIUM
AVULSION
Deposit
of soil
is Deposit of soil is sudden
gradual
and or abrupt.
imperceptible.
Soil
cannot
be Soil is identifiable and
identified.
verifiable.
Deposit of soil belongs Deposit of soil belongs to
to the owner of the the owner from whose
property to which it is property it was detached.
attached.
ESSENTIAL ELEMENTS:
1. Segregation and transfer must be caused by
the Current of a river, creek or torrent.
2. Segregation and transfer must be Sudden or
abrupt.
3. The portion of land transported must be
Known or identifiable.
NOTE: The owner should remove the transferred
portion within two years; otherwise, it
becomes permanently attached.
Uprooted Trees
1. Trees uprooted and carried away by the
current of the waters
a. Owners do not claim them w/in
6mos Belong to the owner of the
land upon which they may be cast
b. Owners claim them owners pay
the expenses incurred in gathering
them or putting them in a safe
place
iii. Change of Riverbed
Requisites:
1. There must be a natural change in the course
of the waters of the river.
2. The change must be abrupt or sudden.
Right of owner of land occupied by new
river course:
1. Right to old bed ipso facto in proportion to
area lost
2. Owner of adjoining land to old bed: right to
acquire the same by paying its value Value
not to exceed the value of area occupied by
new bed
New River Banks

1. New river banks created public dominion
2. New river bed may itself be abandoned, due
to natural or artificial causes authorized by
law.
a. owners will get back this previous
property if the course of the river reverts
back to its original place
iv. Formation of Islands
ISLAND BELONGS TO THE STATE:
1. On seas within the jurisdiction
Philippines
2. on lakes
3. on navigable or floatable rivers
of
the
Islands formed in Non-navigable or Nonfloatable Rivers:

1. Island to the owners of the margins or
banks of the river nearest to each of them.
2. If in the MIDDLE of the river divided
longitudinally in halves
a.3 For Personal Property
i. Adjunction/ Conjunction
ADJUNCTION OR CONJUNCTION Is a process
whereby two movable things owned by different
persons are joined together without bad faith, in
such a way that they form a single object.
Requisites:
1.
The two things
belong to different owners.
2.
They form a
single object.
3.
They
are
inseparable; that their separation would
impair their nature or result in substantial
injury to either component.
CLASSES OF ADJUNCTION: (ISTEP)
1. Inclusion (engraftment)
i.e. setting a precious stone on a golden
ring
2. Soldadura (soldering)
i.e. joining a piece of metal to another
metal
a.
Feruminatio same metal
b.
Plumbatura different metals
3. Tejido (weaving)
4. Escritura (writing)
5. Pintura (painting)
a. Owner of the principal:
a. By law becomes the owner of the
resulting object
b. Indemnifies the owner of the

accessories for the values thereof.
Test To Determine Principal:
1. Rule of importance and purpose
2. Greater value - If they are of unequal value
3. Greater volume - If they are of equal value
4. Greater merits
When Separation Allowed:
1. Separation without injury
2. Separation with injury accessory is much
more precious than the principal; the owner
of the former may demand its separation
even though the principal may suffer injury.
3. Owner of principal in bad faith
OP
GF
OA
GF
=
=
Or
OP =
BF
OA =
GF
OP
=GF
OA
BF
OP
BF
OA
GF
=
=
RULES AS TO OWNERSHIP
OWNER OF
OWNER OF
PRINCIPAL
ACCESSORY (OA)
(OP)
Acquires the
May demand
accessory
reparation:
- indemnifies
a. If no injury will be
the former
caused
owner for its
b. If value of
value
accessory is greater
than principal even if damages
will be caused to
principal (expenses
is to the one who
caused the
conjunction)
1. Owns the
1. Loses the thing
accessory
incorporated
2. Right to
2. Indemnify the
damages
OP for the damages
OP may have
suffered
1. Pay OA
Right to choose
value of
between
accessory or
1. OP paying him
2. Principal
its value or
and accessory 2. That the thing
be separated
belonging to him be
PLUS
separated even
Liability for
though it be
damages
necessary to
destroy the
principal thing
ii. Mixture
MIXTURE takes place when two or more things
belonging to different owners are mixed or
combined to such extent that the components
lose their identity.
KINDS:
1. COMMIXTION mixture of solid things
2. CONFUSION mixture of liquid things
RULES:
1. Mixture by the will of the owners
a. Rights governed by stipulations
b. Without stipulation: each acquires a right
or interest in proportion to the value of
his material
2. Mixture caused by an owner in GF or by
chance
a. Each share shall still be in proportion to
the value of their thing
3. Mixture caused by owner in BF
a. The actor forfeits his thing
b. Liable for damages
iii. Specification
SPECIFICATION imparting of a new form to
the material belonging to another; or the making
of the material of another into a thing of a
different kind.
RULES:
1. When the maker (considered principal) is
in GF
a. May
appropriate
but
must
indemnify the owner of the
material
b. May not appropriate when
material transformed > new thing.
The OM may:
i. Appropriate the new thing
subject to the payment of
the value of the work, or
ii. Demand indemnity for the
material with damages
b. When the maker is in BF
a. OM can appropriate the work
without paying for the labor or
industry
b. OM can demand indemnity plus
damages
c. OM cannot appropriate if the value of the
work is considerably more than the value
of the material due to artistic or scientific
importance
COMPARISON OF THE 3 TYPES OF
ACCESSION OF MOVABLES
ADJUNCTION
MIXTURE
SPECIFICATION
Involves at
Involves at
Involves at least 2
least 2 things
least 2
things
things
As a rule,
As a rule,
As a rule,
accessory
coaccessory follows
follows
ownership
principal
principal
The things
joined retain
their nature
results
May either
retain or
lose
respective
natures
The new object

retains or
preserves the
nature of the
original object
================================
D. Quieting Title
================================
QUIETING OF TITLE is a remedy or
proceeding which has for its purpose an
adjudication that a claim of title to realty or an
interest thereon, adverse to the plaintiff, is
invalid or inoperative, or otherwise defective and
hence, the plaintiff and those claiming under him
may forever be free of any hostile claim.
Reasons:
1. Prevent litigation
2.
3.
Protect true title & possession

Real interest of both parties which requires
that precise state of title be known
ACTION TO QUIET TITLE

1. Puts an end to vexatious litigation in respect
to property involved; plaintiff asserts his own
estate & generally declares that defendants
claim is w/o foundation
2. Remedial
3. QUASI IN REM - suits against a particular
person or persons in respect to the res May
not be brought for the purpose of settling a
boundary disputes
4. Applicable to real property or any interest
therein. The law, however, does not exclude
personal property from actions to quiet title.
5. An action to quiet title brought by the person
in
possession
of
the
property
is
IMPRESCRIPTIBLE.
6. If he is not in possession, he must invoke his
remedy within the prescriptive period.
Classifications:
1. Remedial action to remove cloud on title
2. Preventive action to prevent the casting of a
(threatened ) cloud on the title.
Requisites: (TICR)
1.
Plaintiff must have a legal or equitable Title or
interest in the real property
2.
Cloud in such title
3.
Such cloud must be due to some Instrument,
record,
claim,
encumbrance
or
proceeding which is:
a) apparently valid
b) but is in truth invalid, ineffective, voidable
or unenforceable
c) prejudicial to the plaintiffs title
4.
Plaintiff must Return to the defendant all
benefits received from the latter or reimburse
him for expenses that may have redounded
to his benefit
NO APPLICATION TO:
1. Questions
involving
interpretation
of
documents
2. Mere written or oral assertions of claims,
EXCEPT
a. If made in a legal proceeding
b. If it is being asserted that the instrument
of entry in plaintiffs favor is not what it
purports to be
3. Boundary disputes
4. Deeds by strangers to the title UNLESS
purporting to convey the property of the
plaintiff
5. Instruments invalid on their face
6. Where the validity of the instrument involves
pure questions of law
ACTION TO REMOVE CLOUD
1. Intended to procure cancellation, delivery,
release of an instrument, encumbrance, or
claim constituting a on plaintiffs title which
may be used to injure or vex him in the
enjoyment of his title
2. Preventive
CLOUDis a semblance of title, either legal or
equitable, or a claim or a right in real property,
appearing in some legal form but which is, in
fact, invalid or which would be inequitable to
enforce.
Existence of Cloud: (AIP)
1. Instrument
or
record
or
claim
or
encumbrance or proceeding
which is
Apparently valid or effective
2. BUT is, in truth and in fact, Invalid,
ineffective, voidable, or unenforceable, or
extinguished (or terminated) or barred by
extinctive prescription
3. May be Prejudicial to the title
DISTINCTIONS BETWEEN ACTION FOR
QUIETING OF TITLE AND ACTION FOR
REMOVAL OF CLOUD
BASIS
ACTION TO
ACTION TO
QUIET TITLE
REMOVE CLOUD
Purpose
To end
vexatious
litigation in
respect to the
property
concerned
Nature
Plaintiff asserts
own claim and
declares
that
the claim of the
defendant
is
unfounded and
calls
on
the
defendant
to
justify his claim
on the property
that the same
may
be
determined by
the court
Procure
cancellation,
release of an
instrument,
encumbrance or
claim in the
plaintiffs titlewhich affects the
title or enjoyment
of the property
Plaintiff
declares
his own claim and
title, and at the
same
time
indicates
the
source and nature
of the defendants
claim, pointing its
defects and prays
for the declaration
of its invalidity
Except: In one case, a piece of land was owned

by as a husband and wife, and it was offered for
bail. They executed a mortgage in the land in
favor of the Court. Later on, the land was
foreclosed and the State was the sole bidder.
Deed of Sale was issued in favor of the State. The
owner of the land could not redeem it. But the
State did not change the title to be under its
name. Many years after that, the heirs of the
couple brought an action to quiet title. The
Supreme Court denied the claim. The Court
failure of the State to have it registered does not
mean that the title is invalid. The Court also held
that the right for action to quiet title is
imprescriptible so long as the plaintiff is in
possession of the property.
Ruinous Buildings and Trees in Danger of
Falling
Liability for damages:
1. Collapse engineer, architect or contractor
2. Collapse resulting from total or partial
damage; no repair made owner; state may
compel him to demolish or make necessary
work to prevent if from falling
3. If no action done by government at expense
of owner
To constitute an Act of God:

Requisites:
1. The cause of the breach of obligation
must be independent of the will of the
debtor
2. The event must be either unforeseeable

or unavoidable
3. The event must be such as to render it
impossible for the debtor to fulfill his
obligation in a normal manner
4. The debtor must be free form any
participation in, or aggravation of the
injury to the creditor. Nakpil v. CA, [144
SCRA 595 (1986)]
================================
E. Co-ownership
1. Elements
2. How Created
3. Rights of Co-owners
a. Ownership over Whole
Property
b. Sale/ Alienation
i. Of Individual Interest
ii. Of Entire Property
iii. Redemption by Other Coowners
iv. Prescription
c. Benefits/ Fruits/ Interest/
Income
d. Use/ Possession
e. Management/ Administration
4. Partition
a. Demandable Anytime
b. Prohibition for Indivision
5. Obligations of Co-owners
6. Termination
3.
3.
Succession
4. Fortuitous event/chance (i.e., commixtion)
5. Occupancy (i.e.,2 persons catch a wild
animal)
6. Donation
Kinds of Co-ownership:
1. Ordinary right of partition exists
2. Compulsory no right partition exists (party
wall)
3. Legal created by law
4. Contractual created by contract
5. Universal over universal things (co-heirs)
6. Singular or Particular over particular or
specific thing
7. Incidental exists independently of the will of
the parties
DISTINGUISHED FROM PARTNERSHIP

BASIS
Legal
personality
Created by
contract or
other things
Purpose
Collective
enjoyment of a
thing
Agreement for
it to exist for
10 years
valid (If more
than 10 years,
the excess is
void)
Term
E. CO-OWNERSHIP
CO-OWNERSHIP is a form of ownership which
exists whenever an undivided thing or right
belongs to different persons.
2. HOW CREATED
1. Law
2. Contracts
OWNE
RSHIP
No legal
personality
Source
================================
1. ELEMENTS
1.
Plurality of subjects many owners
2.
Object of ownership must be undivided
3.
Recognition of ideal shares; no one is an
owner of a specific portion of the property
until it is partitioned.
CO-
Representatio
n
Effect of death
Substitution
NOTE: 20
years is the
maximum if
imposed by
the testator or
donee of the
common
property
As a rule, no
mutual
representation
Not dissolved
by death or
incapacity of a
co-owner
Can dispose of
PARTNERSHI
P
Has legal or
juridical
personality
Created by
contract only
(express or
implied)
Profit
No term limit
set by law
As a rule,
there is
mutual
representatio
n
Dissolved by
the death or
incapacity of
a partner
Cannot
his share
without
consent of
others
Profits
Must always
depend on
proportionate
shares
substitute
another as
partner in his
place without
consent of
others
May be
stipulated
upon
DISTINGUISHED FROM JOINT TENANCY

BASIS
Shares
Disposal
of shares
Effect of
death
Effect of
disability
COOWNERSHIP
Involves a
physical whole.
But there is an
ideal (abstract)
division; each
co-owner being
the owner of
his ideal share
Each co-owner
may dispose of
his ideal or
undivided
share (without
boundaries)
without the
others consent
share goes to
his own heirs
If a co-owner is
a minor, this
does not
benefit the
others for the
purpose of
prescription,
and
prescription
therefore runs
against them
JOINT
TENANCY
Involves a
physical whole.
But there is no
ideal (abstract)
division; each and
all of them own
the whole thing
Each co-owner
may not dispose
of his own share
without the
consent of all the
rest, because he
really has no ideal
share
share goes by
accretion to the
other jointtenants by virtue
of their
survivorship or jus
accrecendi
If one joint-tenant
is under legal
disability (like
minority), this
benefits the other
against whom
prescription will
not run
3. RIGHTS OF CO-OWNERS
a. Ownership over Whole Property
b. Sale/ Alienation
i.
Of Individual Interest
o
Right to alienate, assign or

mortgage own part; except
personal rights like right to use
and habitation
ii.
iii.
Of Entire Property
Redemption
owners
by
Other
Co-
Right of redemption
i. Right to be adjudicated thing (subject
to right of others to be indemnified)
ii. Right to share in proceeds of sale of
thing if thing is indivisible and they
cannot agree that it be allotted to one
of them
NOTE:
To be exercised w/in 30days from
written notice of sale of undivided
share of another co-owner to a
stranger
Redemption of the whole property
by a co-owner does not vest in
him sole ownership over said
property. Redemption within the
period prescribed by law by a coowner will inure to the benefit of
all co-owners. Hence, it will not
put an end to existing coownership. Mariano v. CA, [222
SCRA 736 (1993)]
iv.
Prescription
General Rule - A co-owner cannot acquire the

whole property as against the other coowners by acquisitive prescription.
Exception - When there is valid repudiation
prescription shall start from such repudiation
Exception to the Exception - In constructive
trusts, prescription does not run
i.
A co-owner cannot sell the property

without the other co-owners consent,
otherwise, the selling co-owners share
shall be the only one valid. Paulmitan v.
CA, [215 SCRA 866 (1992)]
ii.
While the husband is the recognized

administrator of the conjugal property
under the Civil Code, there are instances
when the wife may assume administrative
powers or ask for the separation of
property. Where the husband is absent
and incapable of administering the
conjugal property, the wife must be
expressly authorized by the husband or
seek judicial authority to assume powers
of administration. Thus, any transaction
entered by the wife without the court or
the husbands authority is unenforceable.

Being an unenforceable contract, the 2nd
Contract is susceptible to ratification. The
husband continued remitting payments
for the satisfaction of the obligation under
the questioned contract. These acts
constitute ratification of the contract.
Fabrigas v. San Francisco, [G.R. No.
152346, Nov. 25, 2005]
c.
Benefits/ Fruits/ Interest/ Income

Right to benefits proportional to
respective interest
i. Stipulation to contrary is void
Right to full ownership of his part and
fruits
o
o
d.
Use/ Possession
Right to use thing co-owned
i. For purpose for which it is
intended
ii. Without prejudice to interest
of ownership
iii. Without preventing other coowners from making use
thereof
e.
Management/ Administration
o
o
o
o
o
o
Right to change purpose of coownership by agreement

Right to bring action in ejectment in
behalf of other co-owner
Right to compel co-owners to
contribute to necessary expenses for
preservation of thing and taxes
Right to exempt himself from
obligation of paying necessary
expenses and taxes by renouncing
his share in the pro indiviso interest;
but cant be made if prejudicial to
co-ownership
Right
to
make
repairs
for
preservation of things; can be made
at will of one co-owner; receive
reimbursement therefrom; notice of
necessity of such repairs must be
given to co-owners, if practicable
Right to ask for partition anytime
Right of pre-emption
4. PARTITION
a. Demandable Anytime
General Rule: No co-owner shall be obliged to
remain in the co-ownership. Each co-owner may
at any time demand the partition of the thing
owned in common, insofar as his share is

concerned.
b. Prohibition for Indivision

Exception - A co-owner may not successfully
demand a partition:
1.
If by agreement (for a period not
exceeding 10 years, renewable) partition is
prohibited
2.
When partition is prohibited by a
donor or testator (for a period not exceeding
20 years) from whom the property came
3.
When partition is prohibited by law
4.
When a physical partition would
render the property unserviceable, but in this
case, the property may be allotted to one of
the co-owners, who shall indemnify the
others, or it will be sold, and the proceeds
distributed
5.
When the legal nature of the
common property does not allow partition
REQUISITES OF REPUDIATION:
1. Unequivocal acts of repudiation of the coownership amounting to an ouster of the
other co-owners
2. Positive acts of repudiation have been made
Known
3. Evidence is clear and conclusive
4. Open,
continuous,
exclusive,
notorious
possession
5. OBLIGATIONS OF CO-OWNERS
1. Share in charges proportional to respective
interest; stipulation to contrary is void
2. Pay necessary expenses and taxes may be
exercised by only one co-owner
3. Pay useful and luxurious expenses if
determined by majority
4. Duty to obtain consent of all if thing is to be
altered even if beneficial; resort to court if
non-consent is manifestly prejudicial
5. Duty to obtain consent of majority with
regards
to
administration
and
better
enjoyment of the thing; majority means
majority in the interest not in the number of
co-owners; court intervention if prejudicial
appointment of administrator
6. No prescription to run in favor co-owner as
long as he recognizes the co-ownership;
requisites for acquisition through prescription
i. He
has
repudiated
through
unequivocal acts
ii. Such act of repudiation is made
known to other co-owners
iii. Evidence
must
be
clear
and
convincing
7. Co-owners cannot ask for physical division if
it would render thing unserviceable; but can
terminate co-ownership
8. After partition, duty to render mutual
accounting of benefits and reimbursements
for expenses
9. Under Art. 493 of the NCC, each co-owner
has full ownership of his part and of the fruits
and benefits pertaining thereto, and he may
alienate, assign or mortgage the portion
which may be allotted to him upon the
termination of the co-ownership. It appears
that while there is a single certificate of title,
the three lots are distinguishable from each
other.
RIGHTS OF 3RD PARTIES
1. Creditors of assignees may take part in
division and object if being effected
without their concurrence, but cannot
impugn unless there is fraud or made
notwithstanding their formal opposition
2. Non-intervenors retain rights of
mortgage and servitude and other real
rights and personal rights belonging to
them before partition was made
General Rule: Common areas shall remain

undivided, and there shall be no judicial partition
thereof
Exceptions
1. When the project has not been rebuilt or
repaired substantially to its state prior to its
damage or destruction 3 years after damage or
destruction which rendered a material part
thereof unfit for use;
2. When damage or destruction has rendered
or more of the units untenable and that the
condominium owners holding more than 30%
interest in the common areas are opposed to
restoration of the projects;
3. When the project has been in existence for
more than 50 years, and the condominium
owners holding in aggregate more than 50%
interest in the common areas are opposed to
restoration, remodeling or modernizing;
4. When a project or a material part thereof has
been condemned or expropriated and the project
is no longer viable or that the condominium
owners holding in aggregate more than 70%
interest in the common areas are opposed to the
continuation of the condominium regime.
5. When conditions for partition by sale set forth
in the declaration of restrictions duly registered
have been met.
================================
F. Condominium Act (RA 4726)
================================
CONDOMINIUM an interest in real property
consisting of a separate interest in a unit in a
residential, commercial or industrial building and
an undivided interest in common, directly or
indirectly, in the land on which it is located and in
other common areas of the building.
a. Any transfer or conveyance of a unit or an
apartment office or store or other space
therein shall include the transfer and
conveyance of the undivided interest in
the common areas or in a proper case,
the membership or shareholdings in the
condominium: provided however, that
where the common areas in the
condominium project are held by the
owners of separate units as co-owners
thereof, no condominium unit therein
shall be conveyed or transferred to
persons other than Filipino citizens or
corporations at least 60% of the capital
stock of which belong to Filipino citizens,
except in cases of hereditary succession.
================================

G. Possession
1. Elements
2. Kinds
3. RequirementsTo Ripen into
Ownership
4. Acquisitive Prescription
5. Rights of Legal Processor
a. Peaceful & Uninterrupted
Possession
i. Co-possession
ii. Actions in Case of
Deprivation of Possession
b. Fruits
i. Civil Fruits
ii. Natural/ Industrial Fruits
iii. Pending Fruits
c. Indemnity for Expenses/
Improvements
i. Necessary
ii. Useful
iii. Luxurious
iv. Possession by Lessee
6. Prescription of Just Title

a. When Applicable
b. Meaning of Just Title
7. Possession of Movables
a. When Lost
b. Unlawful Deprivation
8. Loss of Possession
================================
POSSESSION is the holding of a thing or
enjoyment of a right
1.
a.
ELEMENTS
Occupancy
actual or constructive (corpus)
b.
Intent
to
possess (animus possidendi)
c.
Must be by
virtue of ones own right
Extent of Possession:
1. Physical/actual occupancy in fact of the
whole or at least substantially the whole
2. Constructive occupancy in part in the name
of the whole under such circumstances that
the law extends the occupancy to the
possession of the whole
Subject of possession: things or rights which
are susceptible of being appropriated
Exceptions:
1. Res communes
2. Property of public dominion
3. Discontinuous servitudes
4. Non-apparent servitudes
DEGREES OF POSSESSION:
1. Holding w/o title and in violation of right
of owner (grammatical degree)
Ex. possession of a thief
2. Possession with juridical title but not that
of owner (juridical possession)
Ex. that of a lessee, pledge,
depositary
3. Possession with just title but not from true
owner (possessory right)
Ex. A in good faith buys a car
from B who delivers the same to A
but B merely pretended to be the
owner
4. Possession with just title from true owner
ACQUISITION OF POSSESSION FROM THE
VIEWPOINT OF WHO POSSESSES:
1. Personal
Requisites:
a. Intent to possess
b. Capacity to possess
c. Object must be capable of being
possessed
2. Thru authorized person (agent or legal
representative)
Requisites:
a. Intent to possess for principal (not for
agent)
b. Authority or capacity to possess (for
another)
c. Principal has intent and capacity to
possess
3. Thru Unauthorized person (but only if
subsequently ratified)
Requisites:
a. Intent to possess for another (the
principal)
b. Capacity of principal to possess
c. Ratification by principal
2. REQUIREMENTSTO RIPEN INTO
OWNERSHIP
Classes of Possession:
1. In concept of owner owner himself or
adverse possessor
Effects:
A. May be converted into ownership
through acquisitive prescription
B. Bring actions necessary to protect
possession
C. Ask for inscription of possession
D. Demand fruits and damages from
one unlawfully detaining property
2. In concept of holder usufruct, lessee,
bailee in commodatum
3. In oneself personal acquisition
A. must have capacity to acquire
possession
B. intent to possess
C. possibility to acquire possession
4. In name of another agent; subject to
authority
and
ratification
if
not
authorized; negotiorum gestio
A. Voluntary as when an agent
possesses for the principal
B. Necessary as when a mother
possesses for a child still in the
maternal womb
C. Unauthorized this will become
the principals possession only
after there has been a ratification
without prejudice to the effects of
negotiorum gestio
Possession and ownership are distinct

legal concepts.
Ownership confers
certain rights to the owner, among which
are the right to enjoy the thing owned
and the right to exclude other persons

from possession thereof. On the other
hand, possession is defined as the
holding of a thing or the enjoyment of a
right.
Literally, to possess means to
actually and physically occupy a thing
with or without a right. Thus, a person
may be declared an owner but he may
not be entitled to possession. Heirs of
Roman Soriano v. CA, [363 SCRA 86
(2001)]
4. ACQUISITIVE PRESCRIPTION
POSSESSOR IN GOOD FAITH is one who is not
aware that there exist a flaw in the title or mode
w/c invalidates it.
POSSESSOR IN BAD FAITH is one who is aware
of defect.
Notes on Good Faith/Bad Faith
Mistake upon a doubtful/difficult question
of law may be the basis of good faith
Good faith is always presumed. Burden of
proof lies on the one alleging bad faith
Possession is presumed to be enjoyed in
the same character in which it is
acquired, until contrary is proven.
Ways of Acquiring Possession
1. Material occupation or exercise of a
right
a. TRADICION BREVI MANU when one
already in possession of a thing by a title
other than ownership continues to
possess the same under a new title, that
of ownership
b. TRADICION
CONSTITUTUM
POSSESSORIUM when the owner
continues in possession of the property
alienated not as owner but in some other
capacity.
b. By the subjection of the thing or right to
our will
a. TRADICION LONGA MANU effected by
mere consent or agreement of the parties
b. TRADICION SIMBOLICA effected by
delivering an object (such as key)
symbolizing the placing of one thing
under the control of the vendee
c.
By proper acts and legal formalities

established for acquiring such right of
possession
POSSESSION THROUGH SUCCESSION
1. Possession of hereditary property:

a. If ACCEPTED deemed transmitted w/o
interruption from moment of death
b. If NOT ACCEPTED deemed never to
have possessed the same
2. Except from date of death of decedent.
EFFECTS OF BAD FAITH OF DECEDENT ON
HEIR
1. Heir shall not suffer the consequences of the
wrongful possession of the decedent (bad
faith is personal)
EXCEPTION: when he becomes aware
of the flaws affecting the decedents title
2. Interruption of good faith may take place at
the date of summons or that of the answer if
the date of summons does not appear.
HOWEVER, there is a contrary view espousing
that summons is insufficient to make the
possessor in bad faith.
3. Effects of possession in good faith counted
only from the date of the decedents death
MINORS/INCAPACITATED:
1. May acquire MATERIAL possession but not
right to possession;
2. May only acquire them through guardian or
legal representatives
ACQUISITION: cannot be acquired through force
or intimidation when a possessor objects thereto
resort to courts
The execution of a deed of sale is merely a

prima facie presumption of delivery of
possession of a piece of real property, which
is destroyed when the delivery is not effected
because of a legal impediment. Said
construction or symbolic delivery, being
merely presumptive, may be negated by the
failure of the vendee to take actual
possession of the land sold. Copuyoc v. De
Sola, [G.R. No. 151322, October 26,
2006]
5. RIGHTS OF LEGAL POSSESSOR

a. Peaceful & Uninterrupted
Possession
o
Right to be respected in his

possession; if disturbed protected
by means established by law;
spoliation
Possession acquired and enjoyed in
concept of owner can serve as title for
acquisitive prescription
o
o
Possession has to be in concept of

owner,
public,
peaceful
and
uninterrupted
Title short of ownership
Legal presumption of just title (prima
facie) for person in concept of owner
Possession of real property presumes
that movables are included
i. Co-possession
Co-possessors deemed to have exclusively
possessed part which may be allotted to him;
interruption in whole or in part shall be to the
prejudice of all
ii. Actions in Case of

Deprivation of Possession
b. Fruits
For possessors in good faith:
1. Entitled to fruits received before possession
is legally interrupted (natural and industrial
gathered or severed; civil accrue daily )
2. Entitled to part of net harvest and part of
expenses of cultivation if there are natural or
industrial fruits ( proportionate to time of
possession )
a. Owner has option to require possessor to
finish cultivation and gathering of fruits
and give net proceeds as indemnity for
his part of expenses;
b. If possessor in good faith refuses barred
from indemnification in other manner
c. Indemnity for Expenses/ Improvements

For possessors in good faith:
1. Right to be reimbursed for useful expenses
with right of retention; owner has option of
paying expenses or paying the increase in
value of property which thing acquired by
reason of useful expenses
2. May remove improvements if can be done
w/o damage to principal thing- unless owner
exercises option of paying; possessor in bad
faith not entitled.
Regardless of good faith/bad faith:
1. Right to be indemnified for necessary
expenses;
2. Possessor in good faith has right of retention
over thing unless necessary expenses paid by
owner
3.
Not entitled to payment for luxurious
expense but may remove them provided
principal is not injured provided owner does
not refund the amount expended
4.
Im
provements caused by nature or time to inure
to the benefit of person who has succeeded
in recovering possession
5. Wild animals possessed while in ones
control; domesticated possessed if they
retain habit of returning back home
6. One who recovers, according to law,
possession unjustly lost is deemed to have
enjoyed it w/o interruption
Liabilities/ Duties Of Possessors
1. Return of fruits if in bad faith fruits
legitimate possessor could have received
2. Bear cost of litigation
3. Possessor in good faith not liable for loss
or deterioration or loss except when fraud
and negligence intervened
4. Possessor in bad faith liable for loss or
deterioration even if caused by fortuitous
event
5. Person who recovers possession not
obliged to pay for improvements which
have ceased to exist at the time of
occupation
General Rule Re: possession as a fact:
Possession as a fact cannot be recognized at the
same time in two different personalities
Exceptions:
1. Co-possessor there is no conflict of interest,
both of them acting as co-owners, as in the
case of property owned or possessed in
common
2. Possession of different concepts or different
degrees
SUMMARY OF RULES ON NECESSARY/

USEFUL/ LUXURIOUS POSSESSION &
POSSESSION BY LESSEE
BASIS
IF IN GOOD
FAITH
IF IN BAD
FAITH
Necessary
Expenses
Useful
expenses
Luxurious
or
Ornamenta
l Expenses
1. Right to
reimbursemen
t
2. Right of
retention
1. Right to
reimbursemen
t of either the
amount spent
or the increase
in value
plus value
at owners
option (art.
546)
2. Right of
retention until
paid
3. Right of
removal
(provided no
substantial
damage or
injury is
caused to the
principal,
reducing its
value)
UNLESS the
winner (owner
or lawful
possessor)
exercises the
option in (1)
In general, no
right to refund
or retention
but can
remove if no
substantial
injury is
caused.
However,
owner has
OPTION to
allow:
a. Possessor
to remove
b. Or retain
for himself
(the owner)
the ornament
by refunding
the amount
spent (art.
548)
Right to
reimbursement
- no right of
retention
Taxes and
Charges
1. On capital
charged to
owner
1. On capital
charged to
owner
2. On fruits
charged to
possessor
2. On fruits
charged to
owner
3. Charges
No right to
reimbursement
In general, no
right of refund or
retention but
can remove if no
substantial
injury is caused.
However, owner
has OPTION to
allow:
1. Possessor to
remove
2. Or retain for
himself (the
owner) the
ornament by
refunding the
value it has at
the time owner
enters into
possession (art.
549)
Regarding
gathered or
severed
fruits
Regarding
pending or
ungathered
fruits
To possessor
Cultivation
expenses of
gathered fruits
not
reimbursed to
possessor
pro-rating
between
possessor and
owner of
expenses, net
harvest, and
charges
Possessor must
return value of
fruits already
received as well
as value of fruits
which the owner
or legitimate
possessor (not
the possessor in
BF)
could have
received with
due care or
diligence, MINUS
necessary
expenses for
cultivation,
gathering, and
harvesting, to
prevent the to
Reimbursed
possessor
To owner
Improveme
nts no
longer
existing
Liability for
accidental
loss or
deterioratio
n
Improveme
nts due to
time or
nature
Production
expenses of
pending fruits
indemnity
pro rata to
possessor:
(owners
option) money
allowing full
cultivation and
gathering of all
fruits; if
possessor
refused, he
shall lose all
the right to be
indemnified in
any other
manner.
No
reimbursemen
t
No indemnity
Only if acting
w/ fraudulent
intent or
negligence,
after summons
To owner or
lawful
possessor
Liable in every
case
No
reimbursement
To owner or
lawful possessor
Rules in case of conflict or dispute

regarding possession
1. Present possessor shall be preferred
2. If both are present, the one longer in
possession
3. If both began to possess at the same time,
the one who present (or has) title
4. If both present a title, the Court will
determine. (Meantime, the thing shall be
judicially deposited.)
A NOTICE OF LIS PENDENS is proper in the
following cases: (PORC-Q)
1. Action to recover possession of real estate
2. Action to quiet title thereto
3. Action to remove clouds thereon
4. Action for partition
5. Any other proceedings of any kind in Court
directly affecting the title to the land or the use
or occupation thereof of the buildings thereon
6. PRESCRIPTION OF JUST TITLE

7. POSSESSION OF MOVABLES
Requisites:
1.
G
ood faith
2. Owner voluntarily parted with the possession
of the thing
3. In the concept of owner
a. Possession in good faith - Equivalent
to title
b. One who has lost or has been
unlawfully deprived of it may recover
the thing from whomever possesses
it, ordinarily, w/o reimbursement.
c. Owner must prove:
i. Ownership of the thing
ii. Loss or unlawful deprivation or
bad faith of the possessor
NOTE: Owner acts negligently or voluntarily
parts w/ the thing owned cannot recover from
possessor
SUMMARY OF RECOVERY OR NONRECOVERY PRINCIPLE
Owner
may
1.
from possessor in bad
recover without faith
reimbursement2.
from possessor in good
faith (if owner had lost the
property
or
been
unlawfully deprived of it)
the acquisition being from
a private person [art. 559]
Owner
may
if possessor acquired
recover
but the object in good faith at
should
a public sale or auction;
REIMBURSE the owner to pay the price
possessor
paid.
Owner cannot
1.
if
possessor
had
recover, even if acquired it in good faith by
he
offers
to purchase
from
a
reimburse
merchants store, or in
(whether or not fairs,
or
markets
in
the owner had accordance with the Code
lost or been of Commerce and special
unlawfully
laws
deprived)
2.
if owner is by his
conduct precluded from
denying
the
sellers
authority to sell
3.
if seller has voidable
title which has not been
avoided at the time of sale
to the buyer in good faith
for value and without
notice of the sellers defect
in title
4.
if recovery is no longer
possible
because
of
prescription
5.
if sale is sanctioned by
statutory
or
judicial
authority
6.
if
possessor
had
obtained
the
goods
because
he
was
an
innocent
purchaser
for
value and holder of a
negotiable document of
title to the goods
ANIMALS
WILD ANIMALS possessor is the one who has
control over them
DOMESTICATED AND TAMED ANIMALS the
possessor does not lose possession as long as
habitually they return to the possessors
premises
NOTE: For ownership, the owner must claim them
within 20 days from their occupation by another
person
Loss Of Possession: (PALA)
1. Abandonment of the thing renunciation
of right; intent to lose the thing
2. Assignment made to another by onerous
or gratuitous title
3. Destruction or total loss of the thing or
thing went out of commerce
4. Possession of another if new possession
lasted longer that 1 year (possession as
a fact); real right of possession not lost
except after 10 years
8. LOSS OF POSSESSION
Acts Not Affecting Possession: (not deemed
abandonment
of
rights);
possession
not
interrupted
1. Acts merely tolerated
2. Clandestine and unknown acts
3. Acts of violence
Possession Not Lost When:
2. Even for time being he may not know their
whereabouts, possession of movable is not
deemed lost
3. When agent encumbered property without
express authority except when ratified
4. Possession may still be recovered:
a.
Unlawfully deprived or lost
b.
Acquired at public sale in good
faith with reimbursement
c.
Provision of law enabling the
apparent owner to dispose as if he is
owner
d.
Sale under order of the court
e.
Purchases made at merchant
stores, fairs or markets
f.
Negotiable document of title
Possession Equivalent To Title:

1.
Possession is in good faith
2.
Owner has voluntarily parted with the
possession of the thing - Possessor is in concept
of an owner
================================

H. USUFRUCT
1. Nature/Elements
2. Application to Personal and Real
Properties
3. How constituted
4. Rights of the Usufructuary
a. Fruits
b. Possession and enjoyments
c. Lease of property
d. Sale/Alienation of Usufructuary
rights
5. Obligations of the Usufructuary
a. Before the Usufruct
commences
b. During the Usufruct
i. Alteration of form and
substance
ii. Exercise of diligence
iii. Repairs
iv. Charges and Taxes
v. Insurance
6. Termination of Usufruct
================================
USUFRUCT is the right to enjoy the property of
another with the obligation of preserving its form
and substance, unless the title constituting it or
the law otherwise provides
Quasi-usufruct is the usufruct pertaining to
immovables.
1. NATURE/ELEMENTS
Characteristics or Elements
1. Essential those without which it cannot be
termed usufruct
a.
A
real
right
(whether
registered in the Registry of Property or
not)
b.
Of a temporary nature or
duration
c.
Purpose: 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.
Obligation of conserving or
preserving the form and substance
(value) of the thing
3.
Accidental those which may be present
or absent depending upon the stipulation of
the parties
a.
Whether it be a pure or a
conditional usufruct
b.
The number of years it will
exist
c.
Whether it is in favor of one
person or several, etc
Creator
Origin
Can be created
only by the
owner, or by a
duly authorized
agent, acting
in behalf of the
owner
May be created
by law,
contract, last
will, or
prescription
DISTINGUISHED FROM EASEMENT

BASIS
Object
Extent
Coverag
e
Effect of
death
USUFRUCT
May be real or
personal
property. Can
also be on rights,
but not personal
rights
What can be
enjoyed here are
all uses and
fruits of the
property
Cannot be
constituted on an
easement; but it
may be
constituted on
the land
burdened by an
easement
Usually
extinguished by
death of
usufructuary
EASEMENT
Involves only
real property
Cause
Limited to a
particular use
May be
constituted in
favor or, or
burdening, a
piece of land
held in usufruct
Not
extinguished by
the death of the
owner of the
dominant estate
DISTINGUISHED FROM LEASE

USUFRUCT
LEASE
Covers all fruits Generally covers
and uses as a
only a particular or
rule
specific use
Nature
Always a real
A real right only if,
right
as in the case of a
lease over real
property, the lease
is registered, or is
for more than 1
year, otherwise, it
is only a personal
BASIS
Extent
Repairs
Taxes
As to
other
things
The owner is
more or less
passive, and
he allows the
usufructuary to
enjoy the thing
given in
usufruct
The
usufructuary
has the duty to
make the
ordinary
repairs
The
usufructuary
pays for the
annual charges
and taxes on
the fruits
A usufructuary
may lease the
property itself
to another
right
The lessor may or
may not be the
owner as when
there is a sub-lease
or when the lessor
is only a
usufructuary
May be created as
a rule only by
contract; and by
way of exception
by law (as in the
case of an implied
new lease, or when
a builder has built
in good faith on
the land of another
a building, when
the land is
considerably worth
more in value than
the building
The owner or
lessor is more or
less active, and he
makes the lessee
enjoy the thing
being leased
The lessee
generally has no
duty to pay for
repairs
The lessee
generally pays no
taxes
The lessee cannot

constitute a
usufruct on the
property leased
KINDS:
1. As to Origin
a. Legal created by law such as usufruct of
parents over the properties of their
children
b. Voluntary or conventional
i.
Created by will of the parties inter
vivos
ii.
Created mortis causa
c. Mixed partly created by law and partly
by will
d. Prescriptive is one acquired by a third

person through continuous use of the
usufruct for the period required by law
2. As to quantity or extent
a. As to fruits
i.
Total
ii.
Partial
b. As to extent
i.
Universal if over the entire
patrimony
ii.
Particular/Singular - if only individual
things are included
3. As to the number of persons enjoying
the right
a. Simple if only one usufructuary enjoys
the right
b. Multiple if several usufructuaries enjoy
the right
i.
Simultaneous at the same time
ii.
Successive one after the other
BUT, in this case, if the usufruct is created by
donation, all the donees must be alive, or at least
already conceived, at the time of the perfection
of the donation.
4. As to the quality or kind of objects
involved
a. Usufruct over rights rights must not be
personal or intransmissible in character,
so present or future support cannot be an
object of usufruct
b. Usufruct over things
i.
Normal (or perfect or regular) this
involves
non-consumable
things
where the form and substance are
preserved
ii.
Abnormal (or imperfect or irregular)
involves consumable things
5. As to terms or conditions
a. Pure no term or condition
b. With a term or period
i.
Ex die from a certaign day
ii.
In diem up to a certain day
iii.
Ex die in diem from a certain day up
to a certain day
c. With a condition
i.
Suspensive
ii.
Resolutory
2. APPLICATION TO PERSONAL AND REAL
PROPERTIES
Some rules regarding Usufruct:
1. Usufruct can be constituted even if the object
is subject to Mortgage
2.
Us
ufruct CANNOT be constituted on an object
subject to Pledge
3. Usufruct can be constituted on an object
subjected previously to a Lease.
4. Usufructuary can lease out the property to
other parties
5. Usufructuary can construct improvements
over property subject to usufruct
3. HOW CONSTITUTED
How to constitute Usufruct
1. Legal Usufruct but is not evident in todays
laws
2. Act Inter Vivos
3. By Prescription
4. RIGHTS OF USUFRUCTUARY
a. Fruits
b. Possession and enjoyments
Right to civil, natural & industrial fruits of
property (jus fruendi and jus utendi)
a.
Civil Fruits accrue daily
I.
Belong to the usufructuary in
proportion in proportion to the time the
usufruct may last
II.
Both stock dividends and cash
dividends are considered civil fruits
b.
Industrial and Natural Fruits
I.
Fruits pending at the beginning of
the usufruct
Belong to the usufructuary
No necessity of refunding the

owner for expenses incurred, (for the
owner gave the usufruct evidently
without
any
thought
of
being
reimbursed for the pending fruits, or
because the value of said fruits must
have already
been taken into
consideration in fixing the terms and
conditions of the usufruct, if for
instance, the usufruct came about
because of contract)
BUT without prejudice to the right

of 3rd persons. (Thus, if the fruits had
been planted by a possessor in good
faith, the pending crop expenses and
charges shall be pro-rated between
said possessor and the usufructuary)
II.
Fruits pending at the termination
of usufruct
Belong to the owner
BUT the owner must reimburse the

usufructuary for ordinary cultivation
expenses and for seeds and similar
expenses, from the proceeds of the
fruits. (Hence, the excess of expenses
over the proceeds

reimbursed)
need
not
be
c. Lease of Property
Right to lease the property
7.
Ri
ght of usufructuary of woodland
ordinary cutting as owner does habitually or
custom of place; cannot cut down trees
unless it is for the restoration of improvement
of things in usufruct must notify owner first
General Rule: The lease expires at the end of

the usufruct or earlier
Exception: In the case of leases of rural lands
which continues for the remainder of the
agricultural year;.
8. Right to leave dead, uprooted trees at

the disposal of owner with right to demand
that owner should clear and remove them if
caused by calamity or extraordinary event
impossible to replace them
If the usufruct should expire before the

termination of the lease, he or his heirs and
successors shall receive only the proportionate
share of the rent that must be paid by the
lessees. (Art 568) If the naked owner allows the
lease to continue even after the expiration of the
usufruct, he will be entitled to the rentals
pertaining to such extension.
9. Right to oblige owner to give authority

and furnish him proofs if usufruct is
extended to recover real property or real
right
d. Sale/Alienation
rights
of
Usufructuary
Right to transfer usufructuary rights

gratuitous or onerous; but is co-terminus with
term of usufruct; but cannot do acts of ownership
such as alienation or conveyance except when
property is:
a.
Consumable
b.
Intended for sale
c.
Appraised
when
delivered;
if
not
appraised and consumable return same
quality (mutuum)
OTHER RIGHTS OF THE USUFRUCTUARY:
1. Right to hidden treasure as stranger
2. Right not exempt from execution and
can be sold at public auction by owner
3. Naked owner still have rights but w/o
prejudice to usufructuary; may still
exercise act of ownership bring action to
preserve ownership
4. Right to necessary expenses
cultivation at end of usufruct
from
5. Right to enjoy accessions and servitudes

in its favor and all benefits inherent
therein
6. Right to make use of dead trunks of
fruit bearing trees and shrubs or those
uprooted/cut by accident but obliged to
plant anew
10. Right to introduce useful and luxurious

expenses but with no obligation of
reimbursement on part of owner; may
remove improvement if can be done without
damage
11. Right to set-off improvements against
damages he made against the property
12. Right to administer when property is coowned; if co-ownership cease usufruct of
part allotted to co-owner belongs to
usufructuary not affected
13. Right to demand the increase in value of
property if owner did not spend for
extraordinary repairs; when urgent and
necessary for preservation of thing
5. OBLIGATIONS OF THE USUFRUCTUARY
Pay expenses to 3rd persons for
cultivation and production at beginning
of usufruct; those who have right to fruits
should reimburse expenses incurred
Generally, usufructuary has no liability
when due to wear and tear, thing
deteriorates, obliged to return in that
state; except when there is fraud or
negligence, then he shall be liable
a. Before the Usufruct commences
Before entering into Usufructuary:
a.
Notice of inventory of property
(appraisal of movables and description)
b.
Posting of security
i.
Not applicable to parents who are
usufructuary of children except when 2nd
marriage contracted
ii.
Caucion Juratoria promise under
oath to deliver:
iii.
A. Furniture necessary for the use of the

usufructuary
B. House included in the usufruct
C. Implements, tools and other movable
property necessary for an industry or
vocation for which he is engaged
Excused allowed by owner, not
required by law or no one will be injured
Failure to give security, owner may demand

that:
A. Immovables be placed under administration
B. Negotiable instruments can be converted into
registered certificates or deposited in bank
C. Capital and proceeds of sale of movables be
invested in safe securities
D. Interest on proceeds or property under
administration belong to usufructuary
E. Owner may retain property as administrator
w/ obligation to deliver fruits to usufructuary
until he gives sufficient security
F. Effect of security is retroactive to day he is
entitled to fruits
b. During the Usufruct
i.
Alteration of form and substance
ii. Exercise of diligence

Obligation to exercise diligence:
1. Take care of property as a good father of
family
2. Liable for negligence and fault of person who
substitute him
iii. Repairs
Obligation to make ordinary repairs wear
and tear due to natural use of thing and are
indispensable for preservation; owner may make
them at expense of usufructuary during
existence of usufruct
iv. Charges and Taxes
Obligation to charges and taxes:
A. Obliged to make expenses due to his fault;
cannot escape by renouncing usufruct
B. Pay
legal
interest
from
extraordinary
expenses made by owner
C. Payment of expenses, charges and taxes
affecting fruits
D. Payment of interest on amount paid by owner
charges on capital
E. Expenses, cost and liabilities in suits brought
with regard to usufructuary borne by
usufructuary
v. Insurance
OTHER
OBLIGATIONS
OF
THE
USUFRUCTUARY
1.
Obliged to notify owner of act of 3 rd
person prejudicial to rights of ownership
he is liable if he does not do so for damages
as if it was caused through his own fault
2.
If usufruct is constituted on animals

duty bound to replace dead animals that
die from natural causes or became prey;
if all of them perish w/o fault but due to
contagious disease / uncommon event
deliver remains saved; if perish in part due to
accident continue on remaining portion; if
on sterile animals as if fungible replace
same kind & quality
RIGHTS OF THE NAKED OWNER

1. Alienate thing
2. Cannot alter form or substance
3. Cannot
do
anything
prejudicial
to
usufructuary
4. Construct any works and make any
improvement provided it does not diminish
value or usufruct or prejudice right of
usufructuary
OBLIGATIONS OF THE NAKED OWNER
1. Extraordinary expenses; usufructuary obliged
to inform owner when urgent and there is the
need to make them
2. Expenses after renunciation of usufruct
3. Taxes and expenses imposed directly on
capital
4. If property is mortgaged, usufructuary has no
obligation to pay mortgage; if attached,
owner to be liable for whatever is lost by
usufructuary
5. If property is expropriated for public use
owner obliged to either replace it or pay legal
interest to usufructuary of net proceeds of
the same
6. TERMINATION OF USUFRUCT
Extinguishment of Usufruct: (PLDTERM)
1. Prescription use by 3rd person
2. Termination of right of person constituting
usufruct
3. Total loss of thing
4. Death of usufructuary unless contrary
intention appears
5. Expiration of period of usufruct
6. Renunciation of usufructuary express
7. Merger of usufruct and ownership
Loss in part remaining part shall

continue to be held in usufruct

Usufruct cannot be constituted in favor of a town,
corporation or association for more than 50
years
Usufruct
constituted
on
immovable whereby a building is erected
and building is destroyed right to make use
of land and materials
If owner wishes to construct a new

building pay usufructuary the value of
interest of land and materials
Both share in insurance if both

pay premium; if owner only then proceeds
will go to owner only
Effect of bad use of the thing

owner may demand the delivery of and
administration of the thing with responsibility
to deliver net fruits to usufructuary at
termination of usufruct
Thing to be delivered to owner

with right of retention for taxes and
extraordinary expenses w/c should be
reimbursed, security of mortgage shall be
cancelled
================================

I. EASEMENTS
1. Kinds of Easements
2. Rights and Obligations
3. Modes of Extinguishment
4. Legal Easements
a. Public
b. Private
i. Waters
ii. Right of Way
iii. Party Wall
iv. Light and View
v. Drainage of Building
vi. Intermediate Distances
vii. Against Nuisance
viii. Lateral and Subjacent
Support
================================
EASEMENT is an encumbrance imposed upon an
immovable for the benefit of another immovable
belonging to a different owner. The immovable
in favor of which the easement is established is
called the dominant estate; that which is
subject thereto, the servient estate.
1.
KINDS
a) According to purpose of easement or
the nature of limitation
a. Positive one which imposes upon the
servient estate the obligation of allowing
something to be done or of doing it
himself
b. Negative that which prohibits the
owner of the servient estate from doing
something which he could lawfully do if
the easement did not exist
b) According to party given the benefit
a. Real (or predial) for the benefit of
another belonging to a different owner
(e.g. easement of water where lower
estates are obliged to allow water
naturally descending from upper estates
to flow into them)
b. Personal for the benefit of one or more
persons or community (e.g. easement of
right of way for passage of livestock)
c) According to the manner they are
exercised
i. Continuous their use is incessant or may
be incessant
a. for legal purposes for acquisitive
prescription,
the
easement
of
aqueduct is considered continuous;
easement of light and view is also
continuous
ii. Discontinuous used at intervals and
depend upon
the acts of man
Ex. right of way because it can only
be used if a man passes
d) According to whether or not their
existence is indicated
i. Apparent make known and continually
kept in view
by external signs that reveal the use and
enjoyment of
the same
Ex. right of way when there is an
alley or a permanent path
ii. Non-apparent they show no external
indication of
their existence
Ex. easement of not building to more
than certain height
DOCTRINE OF APPARENT SIGN - Easements
are inseparable from the estate to which they
actively or passively pertain. The existence of
the apparent sign under Art. 624 is equivalent to
a
title. It is as if there is an implied contract
between the two new owners that the easement
should be constituted, since no one objected to
the continued existence of the windows. Amor v.
Florentino, 74 Phil 404 (1951)
e) According to right given
i. Right to partially use the servient
estate
Ex. right of way
ii. Right to get specific materials or
objects from the servient estate
iii. Right to participate in ownership
Ex. easement of party wall
iv. Right to impede or prevent the
neighboring estate from performing a
specific act of ownership
f)
According to source or origin and

establishment of easement
a. Voluntary constituted by will or
agreement of the parties or by a testator
b. Mixed created partly by agreement and
partly by law
c. Legal constituted by law for public use
or for private interest
How established:
1. By law (Legal)
2. By the will of the owners (Voluntary)
3. Through prescription (only for continuous and
apparent easements)
Resultantly, when the court says that an

easement exists, it is not creating one. For,
even an injunction cannot be used to create
one as there is no such thing as a judicial
easement. The court merely declares the
existence of an easement created by the
parties. La Vista Association v. CA, 278
SCRA 498 (1997)
Essential qualities of easements:

1. Incorporeal
2. Imposed upon corporeal property
3. Confer no right to a participation in the
profits arising from it
4. Imposed for the benefit of corporeal property
5.
Has 2 distinct tenements dominant and

servient estate
6. Cause must be perpetual
2. RIGHTS AND OBLIGATIONS
a) Rights Of Dominant Owner
1. Exercise all rights necessary for the use of
the easement
2.
M
ake any works necessary for the use and
preservation of the servitude; subject to the
following conditions:
A. The works shall be at his expense, are
necessary for the use and preservation of
the servitude;
B. They do not alter or render the servitude
more burdensome;
C. The dominant owner, before making the
works, must notify the servient owner;
and
D. They shall be done at the most
convenient time and manner so as to
cause the least inconvenience to the
servient owner
3. Renounce the easement if he desires to
exempt
himself
from
contribution
to
necessary expenses
4. Ask for mandatory injunction to prevent
impairment of his use of the easement
b) Obligations Of The Dominant Owner
1. Notify the servient owner of works necessary
for the use and preservation of the servitude
2. Contribute to the necessary expenses if there
are several dominant estates in proportion to
the benefits derived from the works
3. Cannot alter or impose added burden on the
easement
4. Choose the most convenient time and
manner in making the necessary works as to
cause the least inconvenience to the servient
owner
c) Rights Of The Servient Owner
1. Retain ownership of the portion on which the
easement is established, and may use it in
such a manner as not to affect the exercise of
the easement
2. Change the place or manner of the use of the
easement, provided it be equally convenient
3. Use the property subject of the easement,
unless there is an agreement to the contrary
d) Obligations Of The Servient Owner
1. Contribute to the necessary expenses in case
he uses the easement, unless there is an
agreement to the contrary
2. Not to impair the use of the easement
3. MODES OF EXTINGUISHMENT
How extinguished:
1. Merger in the same person of the ownership
of the dominant and servient estates;
2. Non-user for 10 years
a. If discontinuous easements period
computed from the day it was ceased to
be used
3.
4.
5.
6.
b. If continuous period from the day on

which an act contrary to the same took
place
Expiration of the term or fulfillment of the
condition (if temporary or conditional)
Renunciation of the owner of the dominant
estate
Redemption agreed upon between owners of
the dominant and servient estates
When either or both estates fall into a
condition that the easement cannot be used;
revived if subsequent condition should again
permit its use, unless sufficient time for
prescription has elapsed
4.LEGAL EASEMENTS
LEGAL EASEMENTS are those imposed by law
having for their object either public use or the
interest of private persons.
They shall be
governed by the special laws and regulations
relating thereto, and in the absence thereof, by
the Civil Code.
Kinds Of Legal Easements:
1. Public for public or communal use
2.
Private for the interest of private

persons/private use, including those relating
to: (WRPL-DIAL)
a.
Waters
b.
Right of Way
c.
Party Wall
d.
Light and View
e.
Drainage of Building
f.
Intermediate Distances
g.
Against Nuisance
h.
Lateral and Subjacent Support
a) Easement Relating To Waters
Lower estates are obliged to receive the
waters which naturally and without the
intervention of man descend from the higher
estates, as well as stones or earth which they
carry with them
Cannot construct works which will impede
the easement; neither can the owner of the
higher estate make works which will increase
the burden
Banks of rivers and streams, although of
private ownership, are subject throughout
their entire length and within a zone of 3
meters along their margins, to the easement
of public use in the general interest of
navigation, floatage, fishing and salvage
Estates adjoining the banks of navigable
and floatable rivers are, subject to the
easement of towpath, for the exclusive
service of river navigation and floatage
Co
mpulsory easements for drawing of water
and for watering animals can be imposed for
reasons of public use in favor of a town or
village, after payment of the proper
indemnity
Use of any water by anyone can be
disposed by having the water flow through
the intervening estates but is obliged to do
the following:
1. Prove that he can dispose of the water
and that it is sufficient for the use
intended
2. Show that the proposed right of way is
the most convenient and least onerous to
3rd persons
3. Indemnify the owner of the servient
estate
Easement of aqueduct is continuous and
apparent even though the flow of water may
not be continuous
b) Easement Of Right Of Way

Right granted to a person or class of persons
to pass over the land of another by using a
particular pathway therein, to reach the
formers estates, which have no adequate
outlet to a public highway, subject, however
to payment of indemnity to the owner of the
servient estate
Requisites: (LIPO NA)
1. Claimant must be an owner of enclosed
immovable or one w/ real right
2. No adequate outlet to public highway
3. Right of way is absolutely necessary
4. Least prejudicial
5. Isolation not due to claimants own act
6. Proper indemnity
a. Not compulsory if the isolation of the
immovable is due to the proprietors own
acts
b. Right of Way is granted without indemnity
if land was acquired by and is surrounded
by the other estates of the vendor,
exchanger or co-owner through:
i. Sale
ii. Exchange
iii. Partition
Burden of proof of proving the requisites

on the owner of the dominant estate
EXTINGUISHMENT: Legal or compulsory

right of way
When the dominant estate is joined to

another estate (such as when the dominant
owner bought an adjacent estate) which is
abutting a public road, the access being

adequate and convenient
When a new road is opened giving access
to the isolated estate
In both cases: must substantially meet
the needs of the dominant estate. Otherwise,
the easement may not be extinguished.
Extinguishment NOT ipso facto
If extinguished, must return the amount

received as indemnity to the dominant owner
without any interest.
Interest shall be
deemed in payment for the rent.
The only servitude w/c a private owner is

required to recognize in favor of the
government is the easement of a public
highway, way, private way established by
law, or any government canal or lateral that
has been pre-existing at the time of the
registration of the land. If the easement is
NOT PRE-EXISTING and is sought to be
imposed only AFTER the land has been
registered under the Land Registration Act,
proper expropriation proceedings should be
had, and just compensation paid to the
registered owner. Eslaban v. Vda. De
Onorio, G.R. No. 146062 (2001)
Easement of right of way is DISCONTINUOUS.
It may be exercised only if a person passes or
sets foot on somebody elses land. An
easement of right of way of railroad tracks is
discontinuous because the right is exercised
only if and when a train operation by a
person passes over anothers property.
Bomedco v. Valdez, G.R. No. 124669
(2003)
c) Easement Of A Party Wall

A wall erected on the line between two
adjoining properties belonging to different
persons, for the use of both estates.
Presumed, unless there is a title, or exterior
sign, or proof to the contrary:
1. In dividing walls of adjoining buildings up
to the point of common elevation
2. In dividing walls of gardens or yards
situated in cities, towns, or in rural
communities
3. In fences, walls and live hedges dividing
rural lands
Exterior signs rebutting presumption:
1. There is a window or opening in the dividing
wall of buildings
3.
4.
5.
6.
7.
2.
Di
viding wall is on one side straight and plumb
on all its facement, and on the other, it has
similar conditions on the upper part but the
lower part slants or projects outward
Entire wall is built within the boundaries of
one of the estates
The dividing wall bears the burden of the
binding beams, floors and roof frame of one
of the buildings, but not those of the others
The dividing wall between courtyards,
gardens and tenements is constructed in
such a way that the coping sheds the water
upon only one of the estates
The dividing wall, being built by masonry, has
stepping stones, which at certain intervals
project from the surface of one side only, but
not on the other
The lands enclosed by fences or live hedges
adjoin others which are not enclosed
In all these cases, the ownership is deemed to

belong exclusively to the owner of the property
which has in its favor the presumption based on
any of these signs.
d) Easement Of Light And View

Period of prescription for the acquisition shall
be counted:
1. From the time of opening of the window,
if through a party wall
2. From the time of the formal prohibition
upon the proprietor of the adjoining land,
if window is through a wall on the
dominant estate
4. VOLUNTARY EASEMENTS are those which

may be established by the owner of a tenement
of piece of land as he may deem suitable, and in
the manner and form which he may deem best,
provided that he does not contravene the laws,
public policy or public order.
================================
J. Modes of Acquiring Ownership
1. Mode v. Title
2. Original/Derivative Modes
K. Occupation
L. Intellectual Creation
M. Donation
1. Essential Elements
2. Kinds
3. Conditional Donations
a. Effect of Impossible/Illegal
Conditions
4. Inter Vivos/Mortis Causa

Donations
5. Form
a. Onerous Donations
6. Capacity
a. Of Donor
b. Of Donee
7. Revocation
a. Birth, Survival or Adoption
b. Ingratitude
c. Non-fulfillment of Condition
d. Innoficiousness
N. OTHER MODES OF ACQUIRING
OWNERSHIP
1. Law
2. Prescription
O. NUISANCE
================================
MODES
OF
ACQUIRING
(OLDTIPS)
1. Occupation
2. Law
3. Donation
4. Tradition
5. Intellectual Creation
6. Prescription
7. Succession
OWNERSHIP:
1. MODE V. TITLE
Difference between Mode and Title
MODE is the process of acquiring or transferring
ownership
TITLE is the juridical act, right or condition which
gives the juridical justification for a mode or
means to their acquisition but which in itself is
insufficient to produce them
Mode
Directly
and
immediately
produces a real right
The cause
Proximate cause
Essence of the right
which
is
to
be
created
or
transmitted
Title
Serves
merely
to
give the occasion for
its
acquisition
or
existence
The means
Remote cause
Means whereby that
essence
is
transmitted
2. ORIGINAL/DERIVATIVE MODES
Original Mode independent of any preexisting or preceding title or right of another
Derivative Mode
owner
there was a preceding
Modes Of Extinguising Ownership:

1.
Absolute all persons are affected
a.
Physical loss or destruction
b.
Legal loss or destruction (when it
goes out of the commerce of man)
2.
Relative only for certain persons for
others may acquire their ownership
a.
Law
b.
Succession
c.
Tradition as a consequence of
certain contracts
d.
Donation
e.
Abandonment
f.
Destruction of the prior title or
right
(like
expropriation,
rescission,
annulment, fulfillment of a resolutory
condition)
g.
Prescription
OCCUPATION is the acquisition of
seizing corporeal things
owner, made with the
acquiring them, and
according to legal rules
ownership by
w/c have no
intention of
accomplished
Requisites:
1. Seizure or apprehension
The holding of the material is not

required as long as there is right of
disposition
2. Property must be corporeal personal property
3. Property must be susceptible of appropriation
a.
Abandoned
property res derelicata, a thing is
considered abandoned when:
i.
The
spes recuperandi (expectation to
recover) is gone
ii.
The
animo revertendi (intention to return
or to have it returned) has been given
up by the owner
b.
Unowned
property res nullius
4. Without an owner
5. Intent to appropriate
6. Compliance with the requisites or conditions
of the law
Abandonment requires (1) a clear and
absolute intention to renounce a right or a
claim or to abandon a right or property; and
(2) an external act by which that intention is
expressed or carried into effect. The intention
to abandon implies a departure, with the
avowed intent of never returning, resuming
or claiming the right and the interest that
have been abandoned. Castellano v.

Francisco, [G.R. No. 155640, May 7,
2008]
d. If finder retains the thing found he may

be charged with theft
e. If owner is unknown, give to mayor;
mayor shall announce finding of the
movable for 2 weeks in a way he deems
best
f. If owner does not appear 6 months after
publication, thing found shall be awarded
to the finder
g. If owner appears, he is obliged to pay the
finder 1/10 of value of property as price
h. If movable is perishable or cannot be kept
w/o deterioration or w/o expenses it shall
be sold at public auction 8 days after the
publication
Things Susceptible to Occupation

1. Things w/c has no owner res nullius;
abandoned
2. Stolen property cannot be subject of
occupation
3. Animals that are the object of hunting and
fishing
NOTE: Hunting and fishing are regulated by
special laws: Act 2590; Fisheries Act 4003 as
amended by CA 116, CA 147 and RA 659; Act
1499 as amended by Act 1685; PD 534;
Municipal ordinances.
Kinds Of Animals
a. Wild considered res nullius when not yet
captured; when captured and escaped
becomes res nullius again
b. Domesticated animals originally wild but
have been captured and tamed; now belong
to their capturer; has habit of returning to
premises of owner; becomes res nullius if
they lose that habit of returning and regain
their original state of freedom
c. Domestic/tamed
animals
born
and
ordinarily raised under the care of people;
become res nullius when abandoned by
owner
Hidden treasure (only when found on

things not belonging to anyone)
Abandoned movables
Animals
1. Swarm of bees
owner shall have right to pursue
them to anothers land (owner to identify
latter for damages, if any)
land owner shall occupy/retain the
bees if after 2 days, owner did not pursue
the bees
2. Domesticated animals
may be redeemed within 20 days
from occupation of another person; if no
redemption is made, they shall pertain to
the one who caught them
3. Pigeons and fish
when they go to another breeding
place, they shall be owned by the new
owner provided they are not enticed
Movables:
1. Treasure found on anothers property
2. Movable found w/c is not treasure:
c. Must be returned to owner
Ownership of a piece of land cannot be

acquired by occupation
Because when a land is without an owner, it
pertains to the State
Land that does not belong to anyone is
presumed to be public land
But when a property is private and it is
abandoned it can be object of occupation
J. INTELLECTUAL CREATION
By Article 722 and Decree Intellectual

Property (P.D. 49), the author, composer,
artist, or scientist can be considered as the
owner of the creation or product even if it has
not been copyrighted or patented. (Jurado)
Letters and other private communications in
writing are owned by the person to whom
they are addressed and delivered, but they
cannot be published or disseminated without
the consent of the writer or his heirs EXCEPT
when the court so authorize if the public good
or the interest of justice so requires.
K. DONATION
DONATION is an act of liberality whereby a
person disposes gratuitously of a thing or right in
favor of another, who accepts it
1. ESSENTIAL ELEMENTS
Characteristics
1. Unilateral obligation imposed on the donor
2. Consensual perfected at time donor knows
of acceptance
Requisites: (CIDA)
1. The donor must have capacity to make the
donation of a thing or right
2.
Donative intent (animus donandi) or intent to
make the donation out of liberality to benefit
the donee
3. Delivery, whether actual or constructive of
the thing or right donated
4. donee must accept or consent to donation
The donation is perfected once the
acceptance of the donation was made known
to the donor. Accordingly, ownership will only
revert to the donor if the resolutory condition
is not fulfilled. Quijada v. CA, 299 SCRA
695 (1998)
Requirements of a Donation:
1. Subject matter anything of value;
present and not future property, must
not impair legitime
2. Cause anything to support a
consideration,
generosity,
charity,
goodwill, past service, debt
3. Capacity to donate, dispose and accept
donation
4. Form depends on value of donation
2. KINDS
a) As to Effectivity
1. Inter vivos takes effect during the
lifetime of the donor
2. Mortis Causa takes effect upon the
death of the donor
3. Propter Nuptias made by reason of
marriage and before its celebration, in
consideration of the same and in favor of
one or both of the future spouses.
DONATION INTER
VIVOS
Disposition and
acceptance to take
effect during lifetime
of donor and donee
Already pertains to
the donee unless
there is a contrary
intent
Formalities required follow law on
donations and certain
kinds of donations and
law on obligations and
contracts (suppletory)
Irrevocable at the
instance of the donor;
may be revoked only
by reasons provided
by law
Revoked only for
DONATION MORTIS
CAUSA
Disposition happens
upon the death of
donor
Even if there is a term
of effectivity and
effectivity is upon the
death of the donor, still
entitled to fruits
Formalities required follow law on
succession to be valid,
and donation must be
in the form of a will
Revocable ad mutuum
(exclusive will of
donor)
reasons provided for

by law (except
onerous donations)
b) As to Consideration
1. Simple the cause of which is the pure
liberality of the donor in consideration of
the donees merits
2. Remuneratory or compensatory it is
given out of gratitude on account of the
services rendered by the donee to the
donor, provided they do not constitute a
demandable debt.
3. Modal imposes upon the donee a
burden less than the value of the gift
4. Onerous the value of which is
considered
the
equivalent
of
the
consideration for which it is given and
thus governed by the rules of obligations
and contracts
c) As to Effectivity of Extinguishment
1. Pure not subject to any condition
(uncertain event) or period
2. Conditional subject to suspensive or
resolutory condition
3. With a Term subject to a period,
suspensive or resolutory
3. CONDITIONAL DONATIONS
a. Effect
of
Conditions
Conditional subject
Impossible/Illegal
to
suspensive
or
4. INTER VIVOS/MORTIS CAUSA DONATIONS

Inter vivos takes effect during the lifetime of
the donor
Mortis Causa takes effect upon the death of
the donor
5. FORM
a. Onerous Donations
ONEROUS the value of which is considered the
equivalent of the consideration for which it is
given and thus governed by the rules of
obligations and contracts
6. CAPACITY
a. Of Donor
Who may give donations
All persons who may contract and dispose of
their property donors capacity shall be
determined as of the time of the making of the

donation
b. Of Donee
Who may accept donations
1. Natural and juridical persons not especially
disqualified by law
2. Minors and other incapacitated
A. By themselves
I. If pure and simple donation
II. If it does not require written
acceptance
B. By guardian, legal representatives if
needs written acceptance
I. Natural guardian not more than
50,000
II. Court appointed more than 50,000
4. Conceived and unborn child, represented by
person who would have been guardian if
already born
Who are disqualified to donate
1. Guardians and trustees with respect to
property entrusted to them
2. Husband and wife
3. Between
paramours/persons
guilty
of
adultery or concubinage at the time of
donation
4. Between parties guilty of same criminal
offense
5. Made to public officers, wife, descendant,
ascendant, by reason of his office
The prohibition against donations between
spouses must likewise apply to donations
between persons living together in illicit
relations. Joaquino v. Reyes, [G.R. No.
154645, July 13, 2003]
Other persons disqualified to receive
donations
1. Priest who heard confession of donor during
his last illness
2. Relatives of priest within 4th degree, church,
order or community where priest belongs
3. Physician, nurse, etc. who took care of donor
during his last illness
4. Individuals, corporations and associations not
permitted
Acceptance
a.
Acceptance must be made personally or
thru agent
b.
Donation may be made orally or in
writing:
Movable:
5,000 and below may be oral or written,
if oral it must be with simultaneous
c.
delivery of thing/document & acceptance

need not be in writing
above 5,000 - must be written and
accepted also in writing
Immovable
must be in a public
instrument and acceptance must also be
in a public instrument (in same
instrument or in other instrument);
otherwise it is void
Must be made during the lifetime of the
donor and donee
In case of doubt with regard to nature of

donation: inter vivos
Badges of mortis causa:
2. Title remains with donor (full or naked
ownership) and conveyed only upon
death
3. Donor can revoke ad mutuum
4. Transfer is void if transferor survives
transferee
A donation mortis causa must comply with
the formalities of a last will and testament
otherwise, it would be void and would
produce no effect. If the donation is made in
such a way that the full and naked ownership
will pass to the donee upon the death of the
donor, then it is at that time when the
donation will take effect and it is the donation
mortis causa which should be embodied in
the last will and testament. Maglasang v.
Cabatingan, [G.R. No. 131953, June 2,
2002]
SOME RULES ON DETERMINATION WHETHER
MORTIS CAUSA OR INTER VIVOS:
1. A donation made in consideration of love and
affection of the donor and the donee but further
stipulates that It became effective upon the
death of the donor provided that in the event the
donee should die before the donor, the present
donation
shall
be
deemed
automatically
rescinded and of no force and effect. mortis
causa since the right of disposition is not
transferred to donee while donor is still alive.
Sicad v. CA
5. A donation made stipulating that it will take
effect after the death of the donor but further
stipulates that (1) the donor will not dispose
nor take it away from the donee and that (2)
the donor is parting with the beneficial
ownership while he lived inter vivos
Donation Of The Same Thing To 2 Or More
Different Persons
Rules on double sale will apply
CLASSIFICATION OF DONATION INTER VIVOS

1. From the viewpoint of motive, purpose,
or cause
PURE/
SIMPLE
Consider
a-tion
Merits of
donee
Law
to
apply/
forms
Law on
donations
Form of
accepta
nce
Required
Reservat
ion
w/regar
d to
personal
support
and
legitime
Applicabl
e
Warrant
y
against
eviction
and
hidden
defects
In bad
faith only
Revocati
on
Applicabl
e
REMUNERA
TORY
COND
ITION
AL
Valuable
considera
-tion is
imposed
but value
is less
than
value of
thing
donated
ONEROU
S
Liberality
or merits
of donee
or
burden/
charge of
past
services
provided
they do
not
constitute
demanda
ble debt
Law on
donations
Valuable
considera
-tion
given
Extent of
burden
Required
Required
Applicabl
e
Applicabl
e
Law on
obligation
s
imposed
>
ObliCon
excess>
donation
Required
Not
Applicabl
e
In bad
faith only
In bad
faith only
Applies
Applicabl
e
Applicabl
e
Applicabl
e
Inter vivos takes effect

before the death
In praesenti to be
delivered in future (also considered inter
vivos)
Mortis causa
3. From the viewpoint of occasion
Ordinary donation
Donation propter nuptias

4. From the viewpoint of object donated
Corporeal property
A. Donation of real property
B. Donation of personal property
Incorporeal property donation of
inalienable rights
What may be given
All or part of donors present property
provided he reserves sufficient means for the
support of the ff:
a. Himself
b. Relatives who by law are entitled to his
support
c. Legitimes shall not be impaired
when w/o reservation or if inofficious, may be
reduced on petition of persons affected
Exception:
conditional
donation
and
donation mortis causa
Exception To The Exception:
future
property (cannot be disposed of at the time
of donation)
A donation would not be legally feasible if the

donor has neither ownership nor real rights
that he can transmit to the donee. Hemedes
v. CA, [G.R. No. 107132, October 8,
2008]
DOUBLE DONATIONS:
Rule: Priority in time, priority in right
1. If movable one who first takes possession in
good faith
2. If immovable one who recorded in registry
of property in good faith
No inscription, one who first took
possession in good faith
In absence thereof, one who presents
oldest title
7. REVOCATION
2. From the viewpoint of the taking effect
Grounds For Revocation

1. Birth, Adoption, Reappearance of a child
Period of 4 years from the time of birth,
adoption or reappearance to revoke the
donation
Transmissible to the heirs of the donor if

the donor dies within the 4 year period, in
which case the remaining period shall
apply to the donors heirs
Reduction shall be based on the
inofficiousness of the donation
2. Non-fulfillment of the conditions
3. Ingratitude
Cannot be passed to the donors heir
Period of 1 year from knowledge of the
act of ingratitude, and it was possible for
him to bring the action
Grounds For Reduction
1.
Failure of the donor to reserve sufficient
means for support of himself or dependent
relatives
2.
Failure of donor to reserve sufficient
property to pay off existing debts
3.
Inofficiousness, that is, the donation
exceeds that which the donor can give by will
4.
Birth, appearance or adoption of a child
AUTOMATIC REVOCATION
In
contracts
providing
for
automatic
revocation, judicial intervention is necessary
not for purposes of obtaining a judicial
declaration rescinding a contract already
deemed rescinded by virtue of an agreement
providing for rescission even without judicial
intervention, but in order to determine
whether or not the rescission was proper the
stipulation of the parties providing for
automatic revocation of the deed of donation,
without prior judicial action for that purpose,
is valid subject to the determination of the
propriety of the rescission sought. Where
such propriety is sustained, the decision of
the court will be merely declaratory of the
revocation, but it is not in itself the
revocatory act. Zamboanga Barter Traders
v. Plagata, [G.R. No. 148433]
Revocation Of Donations
Affects the whole donation
Applies only to donation inter vivos
Not applicable to onerous donations
Donor can revoke donation if the donee

fails to comply with the conditions imposed
by the donor. Prescription: 4 years from the
non-compliance with condition.
X donated a parcel of land to the University

on the condition that the latter will establish
a medical college named after X. After 50
years, Xs heirs filed annulment for failure to
abide by the condition. Can this be revoked?
General rule is that if the period is not fixed

in the contract, the court can fix the period.
However, it has been 50 years, more than
enough time to comply. The Court refused to
fix a period and ruled that the donation can
be revoked for failure to comply with
condition. Central Philippine University v.
CA, 246 SCRA 511
Action for
revocation by reason of
ingratitude
1. Donee commits offense against person,
honor, property of donor, spouse, children
under his parental authority
2. Donee imputes to donor any criminal
offense or any act involving moral
turpitude even if he should prove it unless
act/crime has been committed against
donee himself, spouse or children under
his parental authority
3. Donee unduly refuses to give support to
donor when legally or morally bound to
give support to donor
BIRTH OF
CHILD
Ipso jure
revocation, no
need for
action, court
decision is
merely
declaratory
Extent:
portion which
may impair
legitime of
heirs
Property must
be returned
Alienation/mor
tgages done
prior to
recording in
Register of
Deeds:
If already sold
or cannot be
returned the
value must be
returned
If mortgaged
donor may
redeem the
mortgage with
right to
NONFULFILLMEN
T OF
CONDITION
Needs court
action
Extent: whole
portion but
court may
rule partial
revocation
only
Property in
excess
Alienations/m
ortgages
imposed are
void unless
registered
with Register
of Deeds
INGRTITAUD
E
Needs court
action
Extent: Whole
portion
returned
Property to be
returned
Prior ones are
void; demand
value of
property
when
alienated and
cannot be
recovered or
redeemed
from 3rd
persons
recover from
donee
Fruits to be
returned at
filing of action
for revocation
Prescription of
action is 4
years from
birth, etc.
Action cannot
be renounced
Right of action
transmitted to
heirs
Action extends
to donees
heirs
Fruits to be
returned at
filing of
complainant
Prescription is
4 years from
nonfulfillment
Action cannot
be renounced
in advance
Right of action
at instance of
donor but
may be
transmitted to
heirs
Action does
not extend to
donees heirs
6. Effect of declaration as inofficious: the

donation is annulled only as to the
portion diminishing the legitime
Prescription is
1 year from
knowledge of
fact and it
was possible
for him to
bring action
Heirs cannot
file action
Exception to rule on intransmissibility of

action with regard to revocation due to
ingratitude:
1. Personal to the donor; general rule is heir
cannot institute if donor did not institute
2. Heirs can only file in the following cases:
a. Donor has instituted proceedings but dies
before bringing civil action for revocation
b. Donor already instituted civil action but
died, heirs can substitute
c. Donee killed donor or his ingratitude
caused the death of the donor
d. Donor died w/o having known the
ingratitude done
e. Criminal action filed but abated by death
3. Can only make heirs of donee liable if
complaint was already filed when donee died
Inofficious donations:
1. Shall be reduced with regard to the
excess
2. Action to reduce shall be filed by heirs
who have right to legitime at time of
donation
3. Donees/creditors of deceased donor
cannot ask for reduction of donation
4. If there are 2 or more donation: recent
ones shall be suppressed
5. If 2 or more donation at same time
treated equally and reduction is pro rata
but donor may impose preference which
must be expressly stated in donation
Cause
of
action
arising
from
the
inofficiousness of donation arises only upon
death of the donor, as the value of the
donation will be contrasted with the net value
of the estate of the donor decedent. Eloy
Imperial v. CA,[ G.R. No. 112483 (1999)]
Checklist For Donation:

1. Whether onerous or gratuitous if onerous,
governed by law on contracts
2. If gratuitous, whether mortis causa or inter
vivos if mortis causa, governed by law on
succession
3. If inter vivos, whether perfected or not (made
known to the donor). If no perfection,
donation is void.
4. If perfected, check for the capacity of the
donor to give and the donee to receive. If no
capacity, donation is void.
5. Compliance with Art 748 (movable) and 749
(immovable) of NCC.
Non-compliance,
donation is void.
ILLEGAL AND IMPOSSIBLE CONDITIONS
In Simple/Remunatory donations shall be
considered as not imposed (Art 727)
In Onerous/Contract annuls obligation;
obligation and conditions are void (Art 1183)
N. Other Modes of Acquiring

Ownership
1. LAW
Refers to those instances where the law,
independently of the other modes of acquiring
ownership, automatically and directly vests the
ownership of the thing in a certain individual
once the prescribed requisites or conditions are
present or complied with (Jurado).
2. PRESCRIPTION
PRESCRIPTION is a mode by which one acquires
ownership and other real rights thru lapse of
time; also a means by which one loses
ownership, rights and actions; retroactive from
the moment period began to run; founded on
grounds of public policy; regarded as a statute of
repose
Kinds:
1.
Acquisitive
General Requisites:
A. Capacity to acquire by prescription
B. Thing
capable
of
acquisition
prescription
by
2.
C. Possession of thing under certain

conditions
D. Lapse of time provided by law
Extinctive also called as limitation of actions
Morales v CFI, 97 SCRA 872, 1980
Who may acquire by prescription

1. Person who is capable of acquiring property
by other legal modes
2. State
3. Minors through guardians or personally
Against whom prescription may run
1.
Minors and incapacitated person who
have guardians
2.
Absentees who have administrators
3.
Persons living abroad who have
administrators
4.
Juridical persons except the state with
regard to property not patrimonial in
character
5.
Between husband and wife
6.
Between parents and children (during
minority/insanity)
7.
Between guardian and ward (during
guardianship)
8.
Between co-heirs/co-owners
9.
Between owner of property and
person in possession of property in concept
of holder
Prescription does NOT run

1.
Between husband and wife, even
though there be a separation of property
agreed upon in the marriage settlements or
by judicial decree
2.
Between parents and children, during
the minority or insanity of the latter
3.
Between guardian and ward during
the continuance of the guardianship
Things subject to prescription: all things
within the commerce of men
1.
Private property
2.
Patrimonial property of the State
Things not subject to prescription
1. Public domain
2. Intransmissible rights
3. Movables possessed through a crime
4. Registered land
Renunciation of Prescription
Persons with capacity to alienate may

renounce prescription already obtained but
not the right to prescribe in the future
May be express or tacit
Prescription is deemed to have been

tacitly renounced; renunciation results from
the acts w/c imply abandonment of right
acquired
Creditors and persons interested in

making prescription effective may avail it
themselves notwithstanding express or tacit
renunciation
PRESCRIPTION OF OWNERSHIP AND OTHER
REAL RIGHTS
Kinds of Acquisitive prescription
1. Ordinary
a. Possession in good faith
b. Just title
c. Within time fixed by law
i. 4 years for movables
ii. 8 years for immovables
d. In concept of an owner
e. Public, peaceful, uninterrupted
2. Extra-ordinary
a. Just title is proved
b. Within time fixed by law
i.
10 years for movables
ii. 30 years for immovables
1. In concept of an owner
2. Public, peaceful, uninterrupted
GOOD FAITH
Re
asonable belief that person who transferred
the thing is the owner and could validly
transmit ownership
Must exist throughout the entire period
required for prescription
JUST TITLE (TRUE and VALID) must be

proved and never presumed; only Titulo Colorado
is required
Titulo Colorado such title where there was a
mode
of
transferring
ownership
but
something is wrong because the grantor is
not the owner
Titulo putativo - a person believes he has
obtained title but he has not because there
was no mode of acquiring ownership, as
when one is in possession of a thing in the
mistaken belief that it had been bequeathed
to him. Doliendo v Biarnesa, 7 Phil. 232,
1906
Title must be one which would have been
sufficient to transfer ownership if grantor had
been the owner
Through one of the modes of transferring
ownership but there is vice/defect in capacity
of grantor to transmit ownership
IN CONCEPT OF OWNER
Possession not by mere tolerance of owner
but adverse to that of the owner
Claim that he owns the property
PUBLIC, PEACEFUL & UNINTERRUPTED
Must be known to the owner of the

thing
Acquired and maintained w/o violence
Uninterrupted (no act of deprivation

by others) in the enjoyment of property
INTERRUPTION
1. Natural
A. Through any cause, possession ceases for
more than 1 year
B. If 1 year of less as if no interruption
2. Civil
A. Produced by judicial summons; EXCEPT:
i. Void for lack of legal solemnities
ii. Plaintiff desists from complaint/allows
proceedings to lapse
iii. Possessor is absolved from complaint
Express or tacit renunciation
Possession in wartime
RULES IN COMPUTATION OF PERIOD
Present possessor may tack his possession to
that of his grantor or predecessor in interest

Present possessor presumed to be in continuous
possession even with intervening time unless
contrary is proved
First day excluded, last day included
TACKING PERIOD
There must be privity between previous and
present possessor
Possible when there is succession of rights
If character of possession different:
predecessor in bad faith possessor in
good
faith
use
extraordinary
prescription
PRESCRIPTION OF ACTIONS
PRESCRIPTIV
ACTION
E PERIOD
30 yrs
1. action over immovables from time possession is lost
10 yrs
1.
m
ortgage action
2. action upon written contract
3. action
upon
obligation
created by law
4. action upon a judgment
8 yrs
1. action to recover movables from time possession is lost
6 yrs
1. action upon an oral contract
2. action upon a quasi-contract
4 yrs
1. upon injury to rights of
plaintiff
2. upon a quasi-delict
1 yr
1. forcible entry and unlawful
detainer
2. defamation
5 yrs
1. others where periods are not
fixed by law
Rights not extinguished by prescription:
1. Demand right of way
2. Abate public/private nuisance
3. Declare contract void
4. Recover property subject to expressed trust
5. Probate of a will
6. Quiet title
O. NUISANCE
NUISANCE is any act, omission, establishment,
business, condition of property, or anything else
which:
1. Injures or endangers the health or safety of
others
2. Annoys or offends the senses
3. Shocks, defies or disregards decency or
morality
4.
O
bstructs or interferes with the free passage of
any public highway or street, or any body of
water
5. Hinders or impairs the use of property
Lapse of time cannot legalize any nuisance,

whether public or private
Kinds of Nuisances According To Number of

Persons Affected:
1. Public (or common) nuisance affects a
community or neighborhood or considerable
number of persons
2. Private nuisance affects a an individual or
few persons only
Other Classification:
1. Nuisance Per Se always a nuisance
because of its nature regardless of location or
surroundings
2. Nuisance Per Accidens nuisance by
reason of location, surrounding or in the
manner it is conducted or managed.
DOCTRINE OF ATTRACTIVE NUISANCE:
1. REASON for the doctrine: one who maintains
on his premises dangerous instrumentalities
or appliances of a character likely to attract
children in play, and who fails to exercise
ordinary care to prevent children from
playing therewith or resorting thereto, is
liable to a child of tender years who is injured
thereby, even if the child is technically a
trespasser in the premises. The principal
reason for the doctrine is that the condition
or appliance in question although its danger
is apparent to those of age, is so enticing or
alluring to children of tender years as to
induce them to approach, get on or use it,
and this attractiveness is an implied
invitation
to
such
children.
Hidalgo
Enterprises, Inc. v. Balandan, 91 Phil.
488 (1952)
2. Application to bodies of water generally not
applicable to bodies of water, artificial as well
as natural in the absence of some unusual
condition or artificial feature other than the
mere water and its location.
Remedies against a public nuisance:
1. Prosecution under the Penal Code or any local
ordinance
2. Civil action
3. Extra-judicial abatement
All remedies may be simultaneously pursued
to remove a nuisance
Requirements
for
abatement
of
a
public/private nuisance by a private person:
1. Demand has been made
2. Demand has been rejected
3. Abatement be approved by the district health
officer and executed with the assistance of
the local police
4. Value of the destruction does not exceed
P3000
5. If public nuisance, it must be specially
injurious to him
A private person or a public official extrajudicially abating a nuisance shall be liable
for damages:
1. If he causes unnecessary injury
2. If an alleged nuisance is later declared by the
courts to be not a real nuisance
Remedies against a private nuisance:
1.
Civil action
2.
Abatement, without judicial proceedings
NOTE:
1. No legalization of nuisance, whether private
or public, by prescription
2. Even if nuisance no longer exists, the
aggrieved person may still pursue a civil
action for damages for the injuries suffered
during the existence of nuisance
3. Subsequent owner of the property, having full
knowledge of the existence of the nuisance,
did not remove the nuisance is solidarily
liable for the injuries and damages caused
4. Owner of nuisance property is not entitled to
compensation
5. Civil action against a public nuisance shall be
commenced by the mayor of the locality
6.
A private person may commence a civil
action to eliminate a public nuisance only if
he suffered a particular harm or injury which
is different from the harm or damage suffered
by the general public by reason thereof
OBLIGATIONS
================================
1. Definition
2. Elements of an Obligation
3. Different Kinds of Prestation
4. Classification of Obligations
5. Sources of Obligations
A. Art. 1157
B. Natural obligations
C. Extra-contractual obligations
=========================================

1. Definition
=========================================
1. DEFINITION
OBLIGATION:
1. A juridical necessity to give, to do or not to
do. (Art. 1156)
2. It is a legal bond whereby constraint is laid
upon a person or group of persons to act or
forbear on behalf of another person or group of
persons.1
=========================================

2. Elements of an Obligation
=========================================
2. ELEMENTS OF AN OBLIGATION
ELEMENTS OF AN OBLIGATION: ARTS. 1156
1162 (PAVO)
A. PASSIVE SUBJECT (obligor/debtor): one who
has the duty of giving, doing or not doing;
person bound to the fulfillment
B. ACTIVE SUBJECT (obligee/creditor): one in
whose favor the obligation is constituted; person
entitled to demand
C. VINCULUM JURIS/ LEGAL TIE: the efficient
cause or the juridical tie between two subjects
1 William F. Elliot, Commentaries on the Law of Contracts,
by reason of which the debtor is bound in favor

of the creditor to perform the obligation. It can
be established by various sources of obligations
(law, contract, quasi-contracts, delicts, and
quasi-delicts) and may arise either from bilateral
or unilateral acts of persons.
D. OBJECT/ SUBJECT MATTER: the prestation
or conduct which has to be observed by the
debtor/obligor. It is not a thing but a particular
conduct of the debtor.
REQUISITES OF A VALID PRESTATION:
a. Licit
b. Possible
c. Determinate/ Determinable
d. Must have pecuniary value
Ang Yu Asuncion vs Court of Appeals [G.R.
No. 109125, December 2, 1994].
The obligation is constituted upon the
concurrence of the essential elements thereof,
viz.: (a) The vinculum juris or the juridical tie
which is the efficient cause established by the
various sources of obligations (law, contracts,
quasi-contracts, delicts and quasi-delicts); (b)
the object which is the prestation or conduct,
required to be observed (to give, to do, or not to
do); and (c) subject-persons who, viewed from
the demandability of the obligation, are the
active (obligee) and the passive (obligor)
subjects.
NOTE: The form in which the obligation is

manifested is sometimes added as a fifth
element. This element, however, cannot be
considered as essential as there is no particular
form required to make obligations binding,
except in rare cases.
=========================================

3. Different Kinds of Prestation
=========================================
3. DIFFERENT KINDS OF OBLIGATION

a) To give
b) To do
c) Not to do consists in abstaining from some
act, includes not to give, both being negative
obligations
Volume 1, 1913 edition, Indianapolis, The Bobbs-Merrill

Company, page 6, citing Anson Cont. 5, 23.
CIVIL LAW REVIEWER
Page 85 of 383
=========================================

4. Classification of Obligations
=========================================
4. CLASSIFICATION OF OBLIGATIONS
A. Viewpoint of Sanction
a. Civil Obligations give a right of action
to compel their performance
b. Natural Obligations not based on
positive law but on equity and natural
law, do not grant a right of action to
enforce their performance, but after
voluntary fulfillment by the obligor, they
authorize retention of what has been
delivered or rendered by reason thereof.
c. Moral Obligations those that cannot
be enforced by action but which are
binding on the party who makes it in
conscience and natural law.
B. Viewpoint of Performance
a. Positive Obligation to give; to do.
b. Negative Obligation not to do.
C. Viewpoint of Subject Matter
a. Personal Obligation
b. Real Obligation
I. Determinate or Specific
II. Generic
III. Limited Generic
D. Viewpoint of Person Obliged
a. Unilateral only one party is bound
b. Bilateral both parties are bound
Distinguish a Civil Obligation from Natural
Obligation
CIVIL OBLIGATION
NATURAL
OBLIGATION
Art. 1156
Arts. 1423- 1430
Based on positive
law
Based on equity and

natural justice
Enforceable by court
action
Cannot be compeled
by cour action but
depends exclusively
upon the good
CIVIL LAW REVIEWER
conscience of the
debtor
=========================================

5. Sources of Obligations
=========================================
5. SOURCES OF OBLIGATION
A. ARTICLE 1157. OBLIGATIONS ARISE
FROM
(1) Law;
(2) Contracts;
(3) Quasi-contracts;
(4) Acts or omissions punished by law; and
(5) Quasi-delicts
NOTE: The list is exclusive (Sagrado Orden v.
Nacoco, [G.R. No. L-37756, June 30, 1952]).
However, some writers expressly recognize that
a UNILATERAL PROMISE can give rise to
obligations (Tolentino, Volume IV, p. 62).
A.1. LAW (OBLIGATION EX LEGE)
The law cannot exist as a source of
obligations, unless the acts to which its
principles may be applied exist.
Once the acts or facts exist, the
obligations arising therefrom by virtue of
the express provisions of the law are
entirely independent of the agreement of
the parties. And such obligations and
their correlative rights are governed by
the law by which they are created.
It must be expressly or impliedly set
forth and cannot be presumed.
A.2.
CONTRACTS
(OBLIGATION
EX
CONTRACTU)
A juridical conventions manifested in
legal form, by virtue of which one or
more persons bind themselves in favor
another, or others, or reciprocally, to the
fulfillment of a prestation to give, to do,
or not to do. (Sanchez Roman)
Obligations arising from contracts have
the force of law between the
contracting parties and should be
complied with in good faith. (Art. 1159)
Page 86 of 383
The terms of the contracts determine the

respective obligations of the parties.
If the terms of the contract are clear and
leave no doubt upon the contracting
parties intention, such terms should be
applied in their literal meaning.
Neither party may unilaterally evade his
obligation in the contract, unless the
contract authorizes it or the other party
assents.
Parties may freely enter into any
stipulations provided they are not
contrary to law, morals, good customs,
public order or public policy.
A.3. QUASI-CONTRACTS (Obligation Ex

Quasi-Contractu)
Juridical relations resulting from lawful,
voluntary and unilateral acts, 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.
Distinguished from other Sources
(LUV)
a. The act giving rise to a quasi-contract
must be LAWFUL distinguishing it from
delict;
b. The
act
must
be
VOLUNTARY
distinguishing it from a quasi-delict
which is based on fault or negligence;
c. The
act
must
be
UNILATERAL
distinguishing it from contract which is
based on agreement. (Tolentino, Volume
IV, p. 68)
KINDS OF QUASI-CONTRACT
a. Negotiorum Gestio: is the voluntary
management of the property or affairs of
another without the knowledge or consent of
the latter. (Art. 2144)
b. Solutio indebiti: is the juridical relation,
which is created when something is received
when there is no right to demand it and it
was unduly delivered through mistake. (Art.
2145) The requisites are:
c. There is no right to receive the thing
delivered;
d. The thing was delivered through mistake.
e. Other cases (Art. 2164-2175)
CIVIL LAW REVIEWER
A.4. DELICTS (OBLIGATION EX MALEFICIO

OR EX DELICTO)
Article 100 of the Revised Penal Code
Every person criminally liable for a felony is
also civilly liable.
The civil liability springs out and is
dependent upon the facts which, if true,
would constitute a crime.
Such civil liability is a necessary

consequence of criminal responsibility, and
is to be declared and generally enforced in
the criminal proceeding except where the
injured party reserves his right to avail
himself of it in a distinct civil action or in
cases where an independent civil action is
allowed by law.
GOVERNING RULES:
1. Articles 100-113 of the RPC and other penal
laws subject to Art 2177 Civil Code (quasidelict);
2. Chapter 2, Preliminary title, on Human
Relations ( Civil Code )
3. Title 18 of Book IV of the Civil Code on
damages
SCOPE OF CIVIL LIABILITY
1. Restitution
2. Reparation for damage caused
3. Indemnity for Consequential damages
EFFECT OF ACQUITTAL IN CRIMINAL CASE
GENERAL RULE: The acquittal of the accused
in the criminal case does not prejudice the civil
action, in which the offended party may still be
able to recover damages by a preponderance of
evidence.
EXCEPTION: Where the judgment of acquittal
contained a declaration that no negligence can
be attributed to the accused and that the fact
from which the civil action might arise did not
exist
CRIMES WITHOUT CIVIL LIABILITY
1. Contempt
2. Insults to persons in authority
3. Gambling
4. Violations of traffic regulations (De
Leon, 2003 ed.,p. 23)
EXTINGUISHMENT OF LIABILITY: The civil
liability for crimes is extinguished by the same
causes provided by the Civil Code for the
extinguishment of other obligations.
Page 87 of 383
A.5. QUASI-DELICT/TORTS (OBLIGATION EX

QUASI-DELICTO/ EX QUASI MALEFICIO)
It is an act or omission arising from fault
or negligence which causes damage to
another, there being no pre-existing
contractual relations between the parties
ELEMENTS:
1. That there exists a wrongful act or
omission imputable to the defendant by
reason of his fault or negligence;
2. That there exists a damage or injury,
which must be proved by the person
claiming recovery;
3. That there must be a direct causal
connection or a relation of cause and
effect between the fault or negligence
and the damage or injury; or that the
fault or negligence be the cause of the
damage or injury.
DISTINCT FROM A CRIME: An injured party or
his heirs has the choice of either:
(a) An action to enforce civil liability arising from
crime under Article 100 of the RPC, or
(b) An action from quasi-delict under Articles
2176-2194 of the Civil Code.
NEGLIGENCE: Failure to observe for the
protection of the interests of another person,
that degree of care, precaution and vigilance
which the circumstances justly demand,
whereby such other person suffers injury. US v.
Barrias, [23 Phil. 434, (1912)]
ELEMENTS OF NEGLIGENCE: (DFI)

a.
A duty on the part of the defendant
to protect the plaintiff from the
injury of which the latter complains;
b.
A failure to perform that duty; and
c.
An injury to the plaintiff through
such failure.
TEST of NEGLIGENCE: Would a prudent
man, in the position of the person to whom
negligence is attributed, foresee harm to the
person injured as a reasonable consequence
of the course about to be pursued? Picart
v. Smith, [37 Phil. 809]
B. NATURAL OBLIGATIONS (Arts. 1423

1430)
NATURAL OBLIGATIONS
1.
They are real obligations to which the
law denies an action, but which the debtor
may perform voluntarily.
CIVIL LAW REVIEWER
2.
It
is patrimonial, and presupposes a prestation.
3.
The binding tie of these obligations is in
the conscience of man, for under the law, they
do not have the necessary efficacy to give rise
to an action.
EXAMPLES OF NATURAL OBLIGATIONS
ENUMERATED UNDER THE CIVIL CODE:
1.
Performance after the civil obligation has
prescribed
2.
Reimbursement of a third person for a
debt that has prescribed
3.
Restitution by minor after annulment of
contract
4.
Delivery by minor of money or fungible
thing in fulfillment of obligation
5.
Performance after action to enforce civil
obligation has failed
6.
Payment by heir of debt exceeding value
of property inherited
7.
Payment of legacy after will have been
declared void.
C. EXTRA-CONTRACTUAL OBLIGATIONS
C.1. ESTOPPEL (Arts. 1431 1439)

ESTOPPEL - a condition or state by virtue of
which an admission or representation is
rendered conclusive upon the person making it
and cannot be denied or disproved as against
the person relying thereon.
KINDS:
1. Estoppel in pais (by conduct)
a. Estoppel by silence
b. Estoppel by acceptance of benefits
2. Technical Estoppel
a. Estoppel by deed
b. Estoppel by record
c. Estoppel by judgment
d. Estoppel by laches
C.2. LACHES OR STALE DEMANDS
LACHES Failure or neglect, for an
unreasonable and unexplained length of time to
do that which, by exercising due diligence, could
or should have been done earlier; it is
negligence or omission to assert a right within
reasonable time warranting a presumption that
the party entitled to assert it either has
abandoned it or declined to assert it
Page 88 of 383
ELEMENTS (CDLI)
1. Conduct on part of the defendant, or of one
under whom he claims, giving rise to the
situation of which complaint is made and for
which the complaint seeks a remedy
2. Delay in asserting the complainants
rights, the complainant having knowledge or
notice, of the defendants conduct and having
been afforded the opportunity to institute a suit
3. Lack of knowledge or notice on the part
of the defendant that the complainant would
assert the right on which he bases his suit
4. Injury to the defendant in the event relief
is accorded to the complainant, or the suit in not
held to be barred.
Distinguish Laches from Prescription
LACHES
Concerned
delay
with
PRESCRIPTION
effect
of
Concerned
with
fact of delay
Question of inequity of
permitting the claim to be
enforced
Question
or
matter of time
Not statutory
Statutory
Applies in equity
Applies at law
Not based on a fixed time
Based on a fixed
time
END OF DISCUSSION ON TOPIC

================================
B. NATURE AND EFFECT OF

OBLIGATIONS
================================
OBLIGATIONS
1. Obligation to give
A. A determinate or specific thing
B. An indeterminate or generic
thing
CIVIL LAW REVIEWER
2. Obligation to do or not to do
3. Breaches of obligations
A. Complete failure to perform
B. Default or Delay (Art. 1169)
B.1. Mora solvendi
B.2. Mora accipiendi
B.3. Compesatio morae
C. Fraud
C.1. Waiver of future fraud is void
(Art. 1171)
D. Negligence
D.1. Ordinary Diligence
D.2 Exceptions
E. Contravention of the tenor of
obligation
F. Fortuitous Event
4. Remedies of Obligations
A. Specific Performance
A.1. Substituted performance by a
third person on obligation to deliver
generic thing and in obligation to do,
unless a purely personal act
B. Rescission (resolution in
reciprocal obligations)
C. Damages, in any event
D. Subsidiary remedies of creditors
(Art. 1177)
D.1. Accion subrogatoria
D.2. Accion pauliana
D.3. Accion directa (Arts. 1652,
1608, 1729, 1893)
========================================

OBLIGATIONS
1. Obligation to give
=========================================
Personal Obligations: obligations to do or not
to do; where the subject matter is an act to be
done or not to be done
a. Positive obligation to do
b. Negative obligation not to do
Page 89 of 383
Real Obligations: obligations to give; where

the subject matter is a thing which the obligor
must deliver to the obligee
a. Determinate or specific object is
particularly designated or physically
segregated from all other things of the
same class
b. Generic object is designated by its class
or genus
c. Limited Generic generic objects
confined to a particular class
a. Ex: An obligation to deliver one
of my horses (Tolentino, Volume
IV, p. 91; De Leon, 2003 ed., p. 7)
1. OBLIGATION TO GIVE
A. DUTIES OF OBLIGOR IN AN OBLIGATION
TO GIVE A DETERMINATE THING (Arts.
1163, 1164, 1166.)
To preserve or take care of the thing due with
the diligence of a good father of a family
EXCEPTION: if the law requires or the parties
stipulate another standard of care
B. DUTIES OF OBLIGOR IN AN OBLIGATION
TO GIVE A GENERIC THING (Arts. 1246 AND
1170)
To deliver the thing of the quality intended
by the parties, taking into consideration the
purpose of the obligation, intent of the parties,
and other circumstances;
To be liable for damages in case of fraud,
negligence, or delay, in the performance of his
obligation, or contravention of the tenor thereof.
1. To deliver the fruits of the thing: Right to
the fruits of the thing from the time the
obligation to deliver it arises;
2. To deliver its accessions and accessories
(Art. 1166)
a. Accessions additions to or improvements
upon a thing.
Ex: air conditioner in a car.
b. Accessories things joined to, or included
with the principal thing for its better use,
embellishment or completion. Ex: key of a
house; frame of a picture (De Leon, 2003
ed., pp. 37-38)
3. To deliver the thing itself (Specific
Performance)
CIVIL LAW REVIEWER
4. To pay damages in case of breach of the

obligation by reason of delay, fraud, negligence
or contravention of the tenor of the obligation.
RIGHTS OF THE CREDITOR TO THE FRUITS
1. Before Delivery personal right
2. After Delivery real right
RIGHTS OF THE CREDITOR IN REAL
OBLIGATION TO GIVE (Art. 1165)
1. GENERIC REAL OBLIGATION (Obligation to
deliver a generic thing):
a. To ask for performance of the obligation
b. To ask that obligation be complied with at
the expense of the obligor
c. To recover damages in case of breach of
obligation
NOTE: A generic real obligation can be
performed by a third person since the object is
expressed only according to its family or genus.
2. DETERMINATE OR SPECIFIC REAL
OBLIGATION (Obligation to deliver a
determinate thing):
a.To demand specific performance or
fulfillment (if it is still possible) of the
obligation with a right to indemnity for
damages
b.
To demand rescission of the obligation
with right to recover damages
c.To demand payment of damages when it
is the only feasible remedy
d.
If the obligor delays, or has promised
to deliver the same thing to two or more
persons who do not have the same interest,
he shall be responsible for any fortuitous
event until he has effected delivery.
NOTE: In an obligation to deliver a determinate
thing, the very thing itself must be delivered and
consequently, only the debtor can comply with
the obligation.
WHEN OBLIGATION TO DELIVER THE THING
AND FRUIT ARISES
1. If the source of the obligation is law, quasicontract, delict, quasi-delict, it arises from
the time designated by the law creating or
regulating them;
2. If the source is contract, it arises from the
time of the perfection of the contract (i.e.
meeting of the minds between the parties),
unless
Page 90 of 383
a.the parties made a stipulation to the

contrary,
b. the obligation is subject to a suspensive
condition or period; arises upon fulfillment
of the condition or arrival of the period
c.in a contract to sell, the obligation arises
from the perfection of the contract even if
the obligation is subject to a suspensive
condition or a suspensive period where the
price has been paid
=========================================

OBLIGATIONS
2. Obligation to do or not to do
=========================================
2. OBLIGATION TO DO OR NOT TO DO
RIGHTS OF A CREDITOR IN PERSONAL
OBLIGATION (TO DO OR NOT TO DO)
A. POSITIVE PERSONAL OBLIGATIONS:
1. Performance at debtors cause: The
obligee is entitled to have the thing done in a
proper manner, by himself or by a third person,
at the expense of the debtor.
2. To demand what has been poorly done be
undone
3. To recover damages because of breach of the
obligation
B. NEGATIVE PERSONAL OBLIGATION
1. To have it undone at the expense of the
obligor; and
2. To ask for damages
DISTINGUISH PERSONAL RIGHT FROM
REAL RIGHT
PERSONAL
REAL
Jus ad rem, a right

enforceable only
against a definite
person or group of
persons
Jus in re, a right

enforceable against
the whole world
Right pertaining to a
person to demand
from another, as a
definite passive
subject, the
Right pertaining to a
person over a
specific thing,
without a definite
passive subject
CIVIL LAW REVIEWER
fulfillment of the
prestation to give,
to do or not to do.
against whom the

right may be
personally enforced
========================================

OBLIGATIONS
3. Breaches of obligations
========================================
3. BREACHES OF OBLIGATIONS (Arts. 1170
1174)
A. Voluntary debtor in the performance of the
obligation is guilty of:
1.
Delay (Mora)
2.
Fraud (Dolo)
3.
Negligence (Culpa)
4.
Contravention of the tenor of the
obligation
NOTE: debtor is liable for damages
B. Involuntary debtor is unable to comply
with his obligation due to fortuitous event/s
NOTE: debtor is not liable for damages
A.1. DEFAULT OR DELAY
GENERAL RULE: Those obliged to deliver or to
do something incur in delay from the time the
obligee judicially or extrajudicially demands
from them the fulfillment of their obligation.
(Art. 1169)
EXCEPTION: Demand by the creditor shall not
be necessary in order that delay may exist:
(1) When the obligation or the law expressly so
declares;
(2) When from the nature and the circumstances
of the obligation it appears that the designation
of the time when the thing is to be delivered or
the service is to be rendered was a controlling
motive for the establishment of the contract; or
(3) When the demand would be useless, as
when the obligor has rendered it beyond his
power to perform.
In reciprocal obligations, neither party incurs in
delay if the other does not comply or is not
ready to comply in a proper manner with what is
incumbent upon him. From the moment one of
Page 91 of 383
the parties fulfills his obligation, delay by the

other begins.
NOTE: Art. 1169 is applicable only when the
obligation is to do something other than the
payment of money. In case of obligation for
payment of sum of money, the interest replaces
the damages.
KINDS OF DELAY:
1. Mora solvendi delay or default committed by
debtor
2. Mora accipiendi delay or default committed
by creditor
3. Compensatio Morae default of both parties
in reciprocal obligations
GENERAL RULE: An action or suit can be filed
at anytime after the non-compliance of the other
party. However, damages or interest shall only
start to run after judicial or extra-judicial
demand.
a
dishonest purpose or some moral obliquity and
conscious doing of wrong. Bad faith is thus
synonymous with fraud and involves a design to
mislead or deceive another, not prompted by an
honest mistake as to ones rights or duties, but
by some interested or sinister motive.
TYPES OF FRAUD:
1. Causal Fraud (Dolo Causante): fraud
employed in the execution of the contract
2. Incidental Fraud (Dolo Incidente): fraud
in performance of obligation already existing
because of a contract
FRAUD IN THE
PERFORMANCE/
DOLO INCIDENTE
(ART. 1170)
CAUSAL FRAUD/
DOLO CAUSANTE
(ART. 1338)
Present during the

performance of a
pre-existing obligation
Present during the

perfection
of
a
contract
Purpose is to evade
the
normal
fulfillment
of the
obligation
Purpose is to secure
the
consent
of
another to enter into
the contract
Results in the breach

of an obligation
Results in vitiation of
consent;
voidable
contract
A.2. FRAUD (Dolo)

It is the deliberate or intentional evasion of the
normal fulfillment of an obligation. (8 Manresa
72)
Gives rise to a right in

favor of the creditor to
recover damages
Gives rise to a right of

an innocent party to
annul the contract
It is the fraud in the performance or fulfillment

of
an
obligation
already
existing,
as
distinguished from the fraud referred to in
Article 1338 which is the cause of nullity of
contracts and which exists before and at the
moment of creating the obligation.
NOTE: Future fraud cannot be waived. However,

the law does not prohibit renunciation of the
action for damages on the ground of past fraud.
EXCEPTION: In ejectment and consignment

cases, the extra-judicial demand should first be
made prior to the filing of a civil suit.
DEMAND IS NOT NECESSARY WHEN:
1. Law or obligation expressly declares so
2. Time is of the essence
3. Demand would be useless
NOTE: In reciprocal obligations, a party does not
incur in delay for failure of the other party to
assume and perform the obligation imposed
upon him/her.
Samson vs Court of Appeals [G.R. No.

108245, November 25, 1994].
Bad faith is essentially a state of mind
affirmatively operating with furtive design or
with some motive of ill-will. It does not simply
connote bad judgment or negligence. It imports
CIVIL LAW REVIEWER
REMEDIES OF DEFRAUDED PARTY

a. Specific performance (Art 1233)
b. Resolve contract (Art 1191)
c. Damages, in either case
A.3. NEGLIGENCE (Culpa)
Any voluntary act or omission, there
being no malice which prevents the
normal fulfillment of an obligation
Page 92 of 383
Consists in the omission of that diligence

which is required by the nature of the
obligation and corresponds with the
circumstances of the persons, of the
time and of the place (Art. 1173)
KINDS OF NEGLIGENCE
a. Quasi-Delict (Culpa aquiliana/culpa
extra contractual) source of obligation;
wrong or negligence committed independent
of contract and without criminal intent
b. Contractual Negligence (Culpa
Contractual) wrong or negligence in the
performance of a obligation/contract
c.
Criminal Negligence (Culpa
Criminal) wrong or negligence in the
commission of a crime
INSTANCES WHERE THE LAW REQUIRES A
HIGHER STANDARD OF CARE:
C.1. Banks as a business affected with public
interest, and because of the nature of its
functions, the bank is under obligation to treat
the accounts of its depositors with
meticulous care, always having in mind the
fiduciary nature of their relationship. (Simex v.
CA, 183 SCRA 360)
EXCEPTION: Extraordinary diligence does not
cover transactions outside bank deposits, ie:
commercial transactions (Reyes v. CA, 363
SCRA 51)
C.2. Common Carriers from the nature of their
business and for reasons of public policy,
common carriers are bound to observe
extraordinary diligence in the vigilance over the
goods and for the safety of the passengers
transported by them, according to all the
circumstances of each case (Art. 1733)
Diligence of a good father of a family:
ordinary care or that diligence which an average
or reasonably prudent person would exercise
over his own property.)
NOTE:
Rule on Standard of Care

That which the law requires; or
That stipulated by the parties; or
In the absence of the two, diligence of a
good father of a family
CIVIL LAW REVIEWER
DISTINGUISH FRAUD FROM NEGLIGENCE
FRAUD
NEGLIGENCE
There is deliberate
intention to cause
damage.
There is no
deliberate intention
to cause damage.
Liability cannot be
mitigated.
Liability may be
mitigated.
Presumed from the

breach of a
contractual obligation
Must be clearly
proved
Waiver for future

fraud is void.
Waiver for future

negligence may be
allowed in certain
cases
DISTINGUISH NEGLIGENCE FROM CRIME

NEGLIGENCE
CRIME
WHAT IT
PUNISHABLE
Any act with

fault or
negligence
Acts
punishable by
law
CONDITION
OF THE
MIND
LIABILITY
FOR
DAMAGES
Criminal intent
unnecessary
Necessary
Damages may
be awarded to
injured party
NATURE OF
THE RIGHT
VIOLATED
AMOUNT OF
EVIDENCE
Violation of
private rights
Some crimes
do not give
rise to civil
liability
Public rights
Preponderance
of evidence
Proof beyond
reasonable
doubt
COMPROMIS
E
Can be
compromised
as any other
civil liability
Presumption of
negligence
Criminal
liability can
never be
compromised
Presumption
of innocence
PRESUMPTIO
N
KINDS OF NEGLIGENCE, DISTINGUISHED

CULPA AQUILIANA
CULPA CONTRACTUAL
Page 93 of 383
Negligence
substantive
independent
is
and
Negligence merely an
incident of performance
of an obligation
impossible
condition
existence
There may or may not

be
a
pre-existing
There is a pre-existing
contractual relation
Source
of
obligation
is
negligence itself
the
the
Source of the obligation

is the breach of the
Condition
IMPOSSIBLE BUT
Obligation
DIVISIBLE
Negligence must be
proved
Proof of existing of the

contract and its breach
is prima facie sufficient
to warrant recovery
Diligence
in
the
selection
and
supervision of the
employees
is
a
defense
Diligence
selection
supervision
employees
available as a
in
the
and
of
the
is
not
defense
EFFECTS OF CONTRIBUTORY NEGLIGENCE

OF THE OBLIGEE
GENERAL RULE: Reduces or mitigates the
damages which he can recover
EXCEPTION: If the negligent act or omission of
the creditor is the proximate cause of the event,
which led to the damage or injury complained
of, he cannot recover.
EFFECTS OF
CONDITIONS
IMPOSSIBLE
CONDITION
AND
ILLEGAL
EFFECT ON
OBLIGATIO
N
EFFECT
ON
CONDITION
VOID
VOID
NOT to Do an
Illegal Thing
VALID
VALID
NOT to do an
impossible thing
VALID
DISREGARD
CONDITION
Condition is preexisting and NOT

dependent
on
the fulfillment of
VALID
VOID
TO
impossible
illegal
DO
OR
CIVIL LAW REVIEWER
for
ONLY
THE
AFFECTED
OBLIGATION IS VOID.
A.4. CONTRAVENTION OF THE TENOR OF

THE OBLIGATION
B. FORTUITOUS EVENT (Force Majeure)
GENERAL RULE: No one should be held to
account for fortuitous cases, which are those
situations that could not be foreseen, or which
though foreseen, were inevitable.
EXCEPTION: There concurs a corresponding
fraud, negligence, delay or violation or
contravention in any manner of the tenor of the
obligation.
ELEMENTS OF A FORTUITOUS EVENT:
1. The cause of breach is independent of the
debtors will.
2. The event must be unforeseeable or
unavoidable
3. The events render performance impossible
4. The debtor must be free from any
participation, or aggravation of the injury.
NOTE: In the case of Republic v. Luzon
Stevedoring [G.R. No. L-21749, September
29, 1967], the Court held that the person
obliged to perform an obligation shall not be
excused from a fortuitous event when the nature
of the obligation requires the assumption of risk.
In other words, it is not enough that the event
should not be foreseen or anticipated, but it
must be one that is impossible to foresee or to
avoid.
========================================

OBLIGATIONS
4. Remedies of obligations
========================================
Page 94 of 383
GENERAL RULE: The law protects the creditors.

The creditors are given by law all possible
remedies to enforce such obligations.
A. SPECIFIC PERFORMANCE
To demand specific performance or fulfillment
of the obligation with a right to indemnity for
damages
B. RESCISSION
It means to abrogate the contract from the

beginning and to restore the parties to their
relative positions as if no contract has been
made.
It is to declare the contract void at its

inception and to put an end to it as though it
never was.2
It is predicated on the breach of faith by any

party that violates the reciprocity between
them.
NOTE: In the case of Adorable v. Court of
Appeals [G.R. No. 119466, November 25,
1999], the Court held that unless a debtor
acted in fraud of his creditor, the creditor has no
right to rescind a sale made by the debtor to
someone on the mere ground that such sale will
prejudice the creditors rights in collecting later
on from the debtor. The creditors right against
the debtor is only a personal right to receive
payment for the loan; it is not a real right over
the lot subject of the deed of sale transferring
the debtors property.3
C. DAMAGES
To demand payment of damages when it is a
feasible remedy
D. SUSIDIARY REMEDIES OF CREDITORS
1. Accion Subrogatoria action which the
creditor may exercise in the place of his
negligent debtor in order to preserve or recover
for the patrimony of the debtor the product of
such action, and then obtain therefrom the
satisfaction of his own credit
2. Accion Pauliana action to revoke or
rescind acts which the debtor may have done to
defraud his creditor.
3. Accion Directa - (Arts. 1652, 1608, 1729,

1893)

OBLIGATIONS
================================
C. KINDS OF CIVIL
OBLIGATIONS
================================

C. KINDS OF CIVIL OBLIGATIONS
1. Pure Obligations (Arts. 1179-1180)
2. Conditional Obligations (Art. 1181)
A. Suspensive Condition
B. Resolutory Condition
C. Potestative; casual or mixed
C.1. Obligations subject to
potestative suspensive conditions
are void (Art. 1182)
D. Effect of the happening of
suspensive condition or resolutory
condition (Art. 1187)
D.1. Extent of retroactivity
E. Effect of improvement, loss or
deterioration of specific thing
before the happening of a
suspensive condition in obligation
to do or not to do (Art. 1189)
F. Effect when a resolutory
condition in obligation to do or not
to do happens and there is
improvement, loss or deterioration
of the specific thing (Art. 1190, par.
3)
3. Obligation with a period or a term
(Art.1193)
A. Presumption that period is for
the benefit of both debtor and
creditor (Art. 1196)
2 SPOUSES VELARDE V. COURT OF APPEALS, [G.R. NO. 108346,

JULY 11,2001].
3 MELENCIO S. STA. MARIA, JR., OBLIGATIONS AND CONTRACTS:
TEXT AND CASES 101 (2 ND ED. 2003).
CIVIL LAW REVIEWER
Page 95 of 383
B. Effect if suspensive period is for

the benefit of both debtor and
creditor
C. Effect if given to debtor alone
C.1. Instances when debtor losses
benefit of period (Art. 1198)
D. Resolutory period
E. Definite or indefinite period
E.1. Instances when courts may fix
the period (Art. 1197)
E.2. Creditor must ask court to set
the period before he can demand
payment
4. Alternative or facultative (Art.
1199)
A. Difference between alternative
and facultative obligations
B. Effect of loss of specific things or
impossibility of performance of
alternative, through fault of
debtor/creditor or through
fortuitous events
=========================================

C. KINDS OF CIVIL OBLIGATION
1. Pure Obligations
=========================================
1. PURE OBLIGATIONS
It is an unqualified obligation which is
demandable immediately. It is an obligation
whose performance does not depend upon a
future and uncertain event, or past event
unknown to the parties. (Art. 1179)
=========================================

2. Conditional Obligations
=========================================
2. CONDITIONAL OBLIGATIONS
It is exactly the reverse of a pure obligation. The
performance in conditional obligations depends
upon a future or uncertain event or upon a past
event unknown to parties.
CIVIL LAW REVIEWER
A. RESOLUTORY CONDITION
Demandable at once
Once the condition is established or
acknowledged,
the
right
to
demand
performance
immediately
exists
and
therefore the obligation concomitant to the
right can be demanded at once.
It is also known as condition subsequent
It extinguishes obligations
NOTE: In case of a contract with a reciprocal

obligation, the obligation of one is a resolutory
condition of the obligation of the other, the nonfulfillment of which entitles the other party to
rescind the contract.
B. SUSPENSIVE CONDITION
Not demandable at once

It gives rise to the performance of an
obligation (ex. Contract to Sell)
It is also known as condition precedent
It gives birth to obligations
C. POTESTATIVE CONDITION
The fulfillment of the condition entirely depends
upon the sole will of the debtor.
GENERAL RULE: All potestative conditions are
void.
EXCEPTION: Potestative resolutory conditions
are not void. If the potestative condition is
imposed not on the birth (suspensive) of the
obligation but on its fulfillment (resolutory), only
the condition is avoided, leaving unaffected the
obligation itself.
D.
EFFECT
OF
SUSPENSIVE
RESOLUTORY CONDITIONS
AND
Art. 1187:
When the obligation imposes reciprocal
prestations, the fruits and interests during
the pendency of the condition shall be
deemed
to
have
been
mutually
compensated.
If the obligation is unilateral, the debtor or
obligor shall appropriate the fruits and
interests received, unless from the nature
and circumstances of the obligation it should
be inferred that the intention of the person
constituting the same is different.
Page 96 of 383

3. Obligations with a Period or Term
D.1. Extent of Retroactivity

In resolutory conditions, retroactivity is
irrelevant.
=========================================
In suspensive conditions, the effect of a

conditional obligation to give retroacts to
the day of the constitution of the obligation
(Art 1187)
3. OBLIGATIONS
TERM
E.
IMPROVEMENT,
DETERIORATION
LOSS,
AND
Constructive fulfillment - The condition shall

be deemed fulfilled when the obligor (debtor)
voluntarily prevents its fulfillment (Art. 1186)
NOTE: LOSS happens when the thing
perishes, goes out of commerce, or it disappears
in such a way that its existence is unknown or it
cannot be recovered. (Art. 1189)
E.1. Before the happening of a suspensive
condition in an obligation to do or not to
do (Art. 1189)
If the thing is lost without the fault of debtor,
the obligation shall be extinguished.
If the thing is lost with the fault of debtor, he
shall be obliged to pay damages.
If the thing deteriorates without the fault of
debtor, the impairment is to be borne by
creditor
If the thing deteriorates with the fault of
debtor, the creditor may choose between
rescission of the obligation and its
fulfillment, with indemnity for damages in
either case
If the thing improves by its nature or by
time, the benefit shall inure to the benefit of
the creditor.
If the thing improves at the expense of
debtor, he shall have no other right than
that granted to the usufructuary.
E.2. When a resolutory condition in an
obligation to do or not to do happens (Art.
1190, par. 3)
In obligations to do and not to do, the court
shall
determine
the
effect
of
the
extinguishment of the obligation
=========================================
WITH
PERIOD
OR
WITH A PERIOD An obligation whose

demandability or extinguishment depends
on a future and certain event; subject to the
expiration of a term of period (Arts 1193,
1196)]
PERIOD Interval of time, which, exerting
an influence on an obligation as a
consequence of a juridical act, either
suspends its demandability or produces its
extinguishment
REQUISITES:
1. Future
2. Certain
3. Legally and physically possible
WHEN STIPULATION SAYS PAYABLE WHEN

ABLE
When the obligor binds himself to pay when
his means permit him to do so, the
obligation shall be deemed to be one with a
period.
Remedy:
1.
Agreement among parties
2.
Court shall fix period of payment when
parties unable to agree
KINDS OF OBLIGATIONS WITH A PERIOD:
1. According to effect:
a. Resolutory (in diem) demandable at
once but terminates upon arrival of the
day certain
Day certain that which must
necessarily come, although it may not be
known when
b. Suspensive (ex die) obligation
becomes demandable on the day
stipulated
2. According to source
a. Legal - when it is provided by laws
b. Conventional or Voluntary - when it is
agreed to by the parties
c. Judicial - when it is fixed by the court
3. According to definiteness:
CIVIL LAW REVIEWER
Page 97 of 383
4.
a.Definite - when it is fixed or it is known

when it will come
b. Indefinite - when it is not fixed or it is
not known when it will come
TERM VS. CONDITION, DISTINGUISHED

TERM
CONDITION
Interval
of
time
which is future and
certain
Fact or event which is

future or uncertain or a
past event unknown to
the parties
Time
w/c
must
necessarily
come
although it may not
be known when
Future and uncertain

fact or event which may
or may not happen
Exerts an influence
upon the time of
demandability
or
extinguishment of an
obligation
Exerts
an
influence
upon the very existence
of the obligation itself
Does not have any

retroactive
effect
unless there is an
agreement to the
contrary
Has retroactive effect
When
it
is
left
exclusively to the will
of the debtor, the
existence
of
the
obligation is affected
When
it
is
left
exclusively to the will of
the
debtor,
the
obligation is void
WHEN COURTS MAY FIX PERIOD:

1. If the obligation does not fix a period, but
from its nature and circumstances it can be
inferred that a period was intended by the
parties
2. If the duration of the period depends
upon the will of the debtor
3. In case of reciprocal obligations, when there
is a just cause for fixing a period
CIVIL LAW REVIEWER
If
the debtor binds himself when his means
permit him to do so
PERIOD, FOR WHOSE BENEFIT
GENERAL RULE: When a period is designated
for the performance or fulfillment of an
obligation, it is presumed to have been
established for the benefit of both parties.
EXCEPTION: When it appears from the tenor of
the obligation or other circumstances that the
period has been established in favor of one or
the other.
PERIOD FOR THE BENEFIT OF THE
CREDITOR
Creditor may demand the fulfillment of the
obligation at any time but the debtor cannot
compel him to accept before the expiration
of the period
PERIOD FOR THE BENEFIT OF THE DEBTOR
Debtor may oppose any premature demand
of the creditor but he may renounce the
benefit of the period by performing his
obligation in advance (Manresa)
WHEN DEBTOR LOSES RIGHT TO PERIOD
(Art 1198)
1. Insolvency of debtor, unless security
provided
2. Did not deliver security promised
3. Impaired security through his own acts or
through fortuitous event unless he gives new
securities equally satisfactory
4. Violates undertaking in consideration of
extension of period
5. Attempts to abscond
=========================================

4. Alternative or Facultative
Obligation
=========================================
4. ALTERNATIVE OR FACULTATIVE
OBLIGATION
(ARTS. 1199 1206)
FACULTATIVE - only one prestation has been
agreed upon but another may be given in
substitution
Page 98 of 383
EFFECT OF LOSS OR DETERIORA0TION

THRU NEGLIGENCE, DELAY OR FRAUD OF
OBLIGOR:
Of thing intended as substitute - no liability
Of the substitute after substitution is made
with liability
ALTERNATIVE bound by different prestations
but only one is due
RIGHT
OF
CHOICE
IN
ALTERNATIVE
OBLIGATIONS
GENERAL RULE: the right of choice belongs to
debtor
EXCEPTION:
1. Expressly granted to creditor
2. Expressly granted to third person
LIMITATIONS ON THE RIGHT OF CHOICE OF
THE DEBTOR
The debtor shall not have the right to choose the
prestations, which are:
a. Impossible
b. Unlawful
c. Those which could not have been the
object of the obligation
WHEN CONVERTED TO SIMPLE OBLIGATION:
1. When the person who has a right of choice
has communicated his choice
2. Only one is practicable
EFFECT OF LOSS OF OBJECTS OF
ALTERNATIVE OBLIGATIONS
1.
If the right of choice belongs to the
debtor
If through a fortuitous event all were lost,
debtor cannot be held liable for damages
If 1 or more but not all of the things are
lost or one or some but not all of the
prestations cannot be performed due to
fortuitous event or fault of the debtor,
creditor cannot hold the debtor liable for
damages because the debtor can still
comply with his obligation
If all things, except one, were lost, the
debtor must comply by performing that
which remain
If all were lost by fault of the debtor the
later is liable for the value of the last
thing
or
service
which
became
impossible
CIVIL LAW REVIEWER
2.
If
right of choice belongs to the creditor
If 1 of the things is lost through a
fortuitous event, the debtor shall
perform the obligation by delivering that
which the creditor should choose from
among the remainder or that which
remains if only 1 subsists
If the loss of 1 of the things occurs
through the fault of the debtor, the
creditor may claim any of those
subsisting or the price of that which,
through the fault of the former, has
disappeared with a right to damages
If all the things are lost through the fault
of the debtor, the choice by the creditor
shall fall upon the price of any 1 of them,
also with indemnity for damages.
REQUISITES FOR MAKING THE CHOICE:
1. Made properly so that creditor or his agent
will actually know
2. Made with full knowledge that a selection is
indeed being made
3. Made voluntarily and freely
4. Made in due time before or upon maturity
5. Made to all proper persons
6. Made w/o conditions unless agreed by the
creditor
7. May be waived, expressly or impliedly
DISTINGUISH ALTERNATIVE FROM
FACULTATIVE
ALTERNATIVE
FACULTATIVE
Various things are due

but
the
giving
principally of one is
sufficient
Only one thing is due

but a substitute may
be given to render
payment/fulfillment
easy
If one of prestations is
illegal, others may be
valid but obligation
remains
If
principal
obligations is void
and there is no
necessity of giving
the substitute; nullity
of P carries with it
nullity of S
Page 99 of 383
If it is impossible to
give all except one,
the last one must still
be given
If it is impossible to
give the principal,
the substitute does
not have to be given;
if it is impossible to
give the substitute,
the principal must
still be given
Right to choose may

be given either to
debtor or creditor
The right of choice is

given only to the
debtor

================================
D. JOINT AND SOLIDARY

OBLIGATION
================================
D. JOINT AND SOLIDARY OBLIGATION

1. Joint (Divisible) Obligation
A. Concurrence of two or more
creditors and/or two or more debtors
A.1. Joint obligation is presumed,
unless otherwise indicated by the
law or nature of obligation (Art.
1207)
A.2. Obligation presumed to be
divided into as many equal shares
as there are creditors or debtors
A.3. Each credit is distinct from one
another, therefore a joint debtor
cannot be required to pay for the
share of another with debtor,
although he may pay if he wants to
(Art. 1209)
A.4. Insolvency of a joint debtor,
others not liable for his share (Art.
1209)
CIVIL LAW REVIEWER

383
2. Joint (Indivisible) Obligation

A. Obligation cannot be performed in
parts but debtors are bound jointly
B. In case of failure of one joint
debtor to perform his part (share),
there is default but only the guilty
shall be liable for damages
3. Solidary Obligation
A. Mutual agency among solidary
debtors (Arts. 1214-1215)
B. Mutual guaranty among solidary
debtors (Arts. 1216, 1217, 1222)
C. Each one of solidary creditors may
do whatever may be useful to the
others, but not anything prejudicial
to them (Art. 1212)
C.1. Effect of any novation,
compensation, confusion or
remission of debt executed by a
solidary creditor
4. Divisible and Indivisible (Art.
1225)
5. Obligations with a Penal Clause
(Arts. 1226, 1228-1230)
=========================================

OBLIGATIONS
1. Joint (Divisible) Obligation
=========================================
1. JOINT (DIVISIBLE) OBLIGATION

JOINT
OBLIGATION
(Obligacion
Mancumunada) The whole obligation is to be
paid or fulfilled proportionately by different
debtors or demanded proportionately by the
different obligees
GENERAL RULE: The presumption of the law is
that an obligation is always joint.
Page 100 of
EXCEPTIONS TO THE PRESUMPTION

1. When expressly stated that there is
solidarity
2. When the law requires solidarity
3. When the nature of the obligation requires
solidarity
4. When a charge or condition is imposed upon
heirs or legatees and the testament
expressly makes the charge or condition in
solidum (Manresa)
5. When a solidary responsibility is imputed by
a final judgment upon several defendants
(Gutierrez v. Gutierrez)
EFFECTS OF JOINT LIABILITY
1. Demand on one produces delay only with
respect to the debt
2. Interruption in payment by one does not
benefit or prejudice the other
3. Vices of one debtor to creditor has no effect
on the others
4. Insolvency of one debtor does not affect
other debtors
JOINT DIVISIBLE OBLIGATIONS
1. Each creditor can demand for the payment
of his proportionate share of the credit, while
each debtor can be held liable only for the
payment of his proportionate share of the
debt
2. A joint creditor cannot act in representation
of the other creditors while a joint debtor
cannot be compelled to answer for the acts
or liability of the other debtors
NOTE: Unless there is no specification as to
their proportionate share in the credit or in the
debt, the creditors and debtors in a joint
obligation shall be entitled or shall make
payment in equal proportion.
=========================================

OBLIGATIONS
2. Joint (Indivisible) Obligation
=========================================
2. JOINT (INDIVISIBLE) OBLIGATION

1. If there are 2 or more debtors, the fulfillment
of or compliance with the obligation requires
the concurrence of all the debtors, although
each for his own share. The obligation can
CIVIL LAW REVIEWER

383
be enforced only by proceeding against all of

the debtors.
2. If there are 2 or more creditors, the
concurrence or collective act of all the
creditors, although each for his own share, is
also necessary for the enforcement of the
obligation
EFFECT OF BREACH
If one of the joint debtors fails to comply with his
undertaking, the obligation can no longer be
fulfilled or performed. Consequently, it is
converted into one of indemnity for damages.
Innocent joint debtor shall not contribute to the
indemnity beyond their corresponding share of
the obligation.
INDIVISIBILITY
DISTINGUISHED
and
SOLIDARITY,
INDIVISIBILITY
SOLIDARITY
Refers
to
the
prestation
which
constitutes
the
object
of
the
obligation
Refers to the legal tie

and consequently to
the subjects or parties
of the obligation
Plurality of subjects
is not required
Plurality of subjects is
indispensable
In case of breach,
obligation
is
converted into 1 of
indemnity
for
damages
because
of
breach,
indivisibility of the
obligation
is
terminated
When there is liability

on the part of the
debtors because of the
breach, the solidarity
among
the
debtors
remains
PASSIVE SOLIDARITY
SURETYSHIP
Stands for some other person

May be reimbursed after payment
liable for his and co- only the
debtor's share
principal's share
Primary
Secondary
Extension of time,
Released
not released
Page 101 of
=========================================

OBLIGATIONS
3. Solidary Obligation
=========================================
3. SOLIDARY OBLIGATION
SOLIDARY
OBLIGATION
(Obligacion
Solidaria) must be expressed in stipulation or
provided by law or by nature of obligation
1. Active on the part of creditor or oblige
EFFECTS:
Death of 1 solidary creditor transmits share
to heirs (but collectively)
Each creditor represents the other in the act
of recovery of payment
Credit is divided equally between creditors
as among themselves
Debtor may pay any of the solidary creditors
2. Passive on the part of debtors or obligors
EFFECTS:
Each debtor may be requested to pay whole
obligation with right to recover from codebtors
Interruption of prescription to one creditor
affects all
Interest from delay on 1 debtor is borne by
all
3. Mixed on the part of the obligors and
obligees, or the part of the debtors and the
creditors
4. Conventional agreed upon by the parties
5. Legal imposed by law
Instances
where
law
imposes
solidary obligation:
a. Obligations arising from tort
b. Obligations arising from quasi-contracts
c. Legal provisions regarding obligation of
devisees and legatees
d. Liability of principals, accomplices, and
accessories of a felony
e. Bailees in commodatum
EFFECTS:
CIVIL LAW REVIEWER

383
a. Payment made before debt is due, no

interest can be charged, otherwise
interest can be charged
b. Insolvency of one others are liable for
share pro-rata
c. If different terms and conditions collect
only what is due, later on collect from
any
d. No reimbursement if payment is made
after prescription or became illegal
e. Remission made after payment is made
co-debtor still entitled to reimbursement
f. Effect of insolvency or death of co-debtor
still liable for whole amount
g. Fault of any debtor everyone is
responsible price, damage and interest
h. Complete/ personal defense total or
partial ( up to amount of share only ) if
not personal to him
EFFECT OF LOSS OR IMPOSSIBILITY OF THE
PRESTATION:
1. If without fault no liability
2. If with fault there is liability (also for
damage and interest)
3. Loss due to fortuitous event after default
there is liability (because of default)
NOTE: The law clearly provides that the creditor
who may have executed any acts mentioned in
Art. 1215 (Novation, Compensation, Merger or
Confusion), as well as he or she who collects the
debts, shall be liable to the others for the share
in the obligation corresponding to them.
=========================================

OBLIGATIONS
4. Divisible and Indivisible Obligation
=========================================
4. DIVISIBLE AND INDIVISIBLE OBLIGATION
DIVISIBLE - obligation that is capable of partial
performance
Execution of certain no of days work
Expressed by metrical units
Nature of obligation susceptible of
partial fulfillment
Page 102 of
INDIVISIBLE - one not capable of partial

performance
To give definite things
Not susceptible of partial performance
Provided by law
Intention of parties
NOTES:
Divisibility or indivisibility of the obligation
refers to the performance of the prestation
and not to the thing which is the object
thereof
Intention of parties should be taken into
account to determine whether obligation is
divisible or not
=========================================
obligation
Debtor may not
choose between
principal and penalty
Debtor may choose

among the
prestations
PENAL CLAUSE DISTINGUISHED FROM

FACULTATIVE OBLIGATION
PENAL CLAUSE
FACULTATIVE
OBLIGATION
Penalty of payment
Power to choose
in lieu of the
prestation is absolute
principal must be
expressly granted
Creditor may
Creditor may not
demand both if
demand both principal
expressly granted
and penalty

OBLIGATIONS
5. Obligations with a Penal Clause
=========================================
5. OBLIGATIONS WITH A PENAL CLAUSE

WITH A PENAL CLAUSE One to which an
accessory undertaking is attached for the
purpose of insuring its performance by virtue of
which the obligor is bound to pay a stipulated
indemnity or perform a stipulated prestation in
case of breach.
CONDITION
PENAL CLAUSE
CONDITION
Constitutes an
Not an obligation
obligation
Demandable in default
Never demandable
Obligation exists
No obligation until
condition happens
Depends on the nonPrincipal itself is
performance of the
dependent on an
principal obligation
uncertain event
PENAL CLAUSE DISTIGUISHED FROM

ALTERNATIVE OBLIGATIONS
PENAL CLAUSE
ALTERNATIVE
OBLIGATIONS
Only 1 prestation
Several prestations
Impossibility of
Impossibility of 1
principal extinguishes prestation does not
penalty
extinguish the
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383

GUARANTEE
PENAL CLAUSE
GUARANTEE
Insure performance of principal obligation
Accessory and subsidiary obligations
Obligation to pay the
Object of the
penalty is different from principal and the
the principal obligation
guarantee is the
same
Principal and penalty
No
can be assumed by the
same person
Penalty is extinguished
Guarantee subsists
by the nullity of the
even if the principal
principal
obligation is
voidable,
unenforceable or a
natural one, same
applies if penal
clause is assumed
by a guarantee
PURPOSE OF PENALTY:
1. Funcion coercitiva o de garantia to
insure the performance of the obligation
2. Funcion liquidatoria to liquidate the
amount of damages to be awarded to the
Page 103 of
injured party in case of breach of the

principal obligation (compensatory), and
3. Funcion estrictamente penal in certain
exceptional cases, to punish the obligor in
case of breach of the principal obligation
(punitive).
CHARACTERISTICS OF PENAL CLAUSES:
1. Subsidiary - As a general rule, only penalty
can be demanded, principal cannot be
demanded, except: Penalty is joint or
cumulative
2. Exclusive - takes place of damage, damage
can only be demanded in the ff. cases:
a.
Stipulation granting right
b.
Refusal to pay penalty
c.
With dolo ( not of creditor )
PENALTY AS SUSTITUTE FOR DAMAGES
GENERAL RULE: the penalty fixed by the
parties is or substitute for damages in case of
breach
EXCEPTIONS:
1. When there is a stipulation to the contrary
2. When the debtor is sued for refusal to pay
the agreed penalty; and
3. When debtor is guilty of fraud
DOUBLE FUNCTIONS OF PENALTY
1.
to provide for liquidated damages
2.
to strengthen the coercive force of
the obligation by the threat of greater
responsibility in the event of breach
KINDS OF PENALTIES:
1.
Legal constituted by law
2.
Conventional constituted by
agreement of the parties
3.
Compensatory established
for the purpose of indemnifying the damages
suffered by the obligee or creditor in case of
breach of the obligation
4.
Punitive established for the
purpose of punishing the obligor or debtor in
case of breach of the obligation
5.
Subsidiary or alternative- in
case of non-performance only the penalty is
demandable
6.
Joint or cumulative both the
principal undertaking and the penalty may
be demanded
CAUSES FOR REDUCTION OF PENALTY:
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383
1.
P
2.
artial/irregular performance
Penalty provided is iniquitous/
unconscionable

D. JOINT AND SOLIDARY OBLIGATION
================================
E. EXTINGUISHMENT OF
OBLIGATIONS
================================
OBLIGATIONS
1. Payment (Arts. 1236-1238)
A. Dation in payment (Art. 1245)
B. Form of payment (Art. 1249)
C. Extraordinary inflation or
deflation (Art. 1250)
D. Application of payment (Arts.
1252-1254)
E. Tender of payment and
consignation (Arts. 1256-1261)
2. Loss of determinate thing due or
impossibility or difficulty of
performance (Arts. 1262, 12661267)
3. Condonation or remission of debt
A. Express condonations and
required formality thereof (Art.
1270)
B. Implied (Arts. 1271, 1272,
1274)
4. Confusion or Merger of Rights
(Arts. 1275, 1272)
5. Compensation
A. Kinds (Arts. 1278, 1279)
Page 104 of
A.1. Legal compensation (Arts.

1286-1290)
A.2. Agreement (Art. 1282)
A.3. Voluntary (Art. 1282)
A.4. Judicial (Art. 1283)
A.5. Facultative
B. Obligations not compensable
(Arts. 1287-1288)
6. Novation (Arts. 1291-1288)
=========================================

OBLIGATIONS
1. Payment
=========================================
Principal Modes: (PAL-CoCoCo-No)
1. Payment or performance
2. Loss of the thing due
3. Condonation or remission of debt
4. Confusion or merger of rights
5. Compensation
6. Novation
Other Modes:
7. Annulment
8. Rescission
9. Fulfillment of resolutory condition
10. Prescription
Not Stated in the Civil Code:
11. Death of a Party in Personal Obligations
12. Mutual Desistance
13. Compromise
14. Impossibility of Fulfillment
15. Happening of Fortuitous Event
16. Arrival of Resolutory Period
17. Will of One of the Parties Due to
Indeterminate Duration or Nature of the
Prestation/
Unilateral
Withdrawal
in
Partnerships
18. Change of Civil Status
19. Rebus Sic Stantibus (Art. 1267)
20. Want of Interest in Some Circumstances
21. Abandonment in Special Cases
22. Insolvency Judicially Declared and Debtor is
Discharged
1. PAYMENT OR PERFORMANCE
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383
Delivery of money and performance, in any

other manner of the obligation
REQUISITES
FOR
PAYMENT/PERFORMANCE
1. With respect to prestation itself
a. Identity
b. Integrity or completeness
c. Indivisibility
VALID
2. With respect to parties - must be made by

proper party to proper party
a. Payor
1. Payor - the one performing, he can be the
debtor himself or his heirs or assigns or his
agent, or anyone interested in the fulfillment of
the obligation; can be anyone as long as it is
with the creditor's consent
2. 3RD person pays/performs - only the
creditor's consent; if performance is done also
with debtor's consent - he takes the place of the
debtor. There is subrogation except if the 3rd
person intended it to be a donation
3. 3rd person pays/performs with consent of
creditor but not with debtor's consent, the
repayment is only to the extent that the
payment has been beneficial to debtor
b. Payee
i. Payee - creditor or obligee or successor
in interest of transferee, or agent
ii. 3rd person - if any of the ff. concur:
a.It must have redounded to the
obligee's
b.
benefit and only to the extent of
such benefit
c.It falls under art 1241, par 1,2,3 - the
benefit is total so, performance is total
iii. Anyone in possession of the credit - but
will apply only if debt has not been
previously garnished
PRINCIPLE OF INTEGRITY (Art. 1233)
GENERAL RULE: A debt shall not be
understood to have been paid unless a thing or
service of which the obligation consists has been
completely delivered or rendered, as the case
maybe.
EXCEPTIONS:
1. When the obligation has been substantially
performed in good faith (Art. 1234);
2. When the obligee accepts performance
despite its incompleteness or irregularity and
without expressing any protest or correction.
(Art. 1235)
Page 105 of
1.
PERSONS FROM WHOM THE CREDITOR

MUST ACCEPT PAYMENT
1. Debtor himself or his legal representative
2. Any person who has interest in the
obligation (i.e., guarantor)
3. A 3rd person who has no interest in the
obligation, when there is a stipulation to the
contrary
P
ayment by debtor must be made in good faith
2. Creditor must be in possession of the
credit and not merely the evidence of
indebtedness
PAYMENT MADE BY 3Rd PERSON

If payment was made without the knowledge
or against the will: the recovery is only up to
the extent or the amount of the debt at the
time of the payment; the defense may only
be availed of by the obligor
If payment was with knowledge: the rights of
reimbursements
and
subrogation
are
acquired by the 3rd person
WHERE PAYMENT SHOULD BE MADE

1. In the place designated in the obligation
2. If there is no express stipulation and the
undertaking is to deliver a specific thing at the
place where the thing might be at the moment
the obligation was constituted
3. In other case in the place of the domicile of
the debtor
Time of payment - time stipulated
Effect of payment extinguish obligation
Except: order to retain debt
TO WHOM PAYMENY MUST BE MADE

1. The person in whose favor the obligation has
been constituted
2. His successor-in-interest
3. Any person authorized by law or by the
obligee at the time when payment is due to
receive it (not during the time when the
obligation is constituted)
PAYMENT TO AN INCAPACITATED PERSON,
VALID IF:
1.
Incapacitated person kept the thing
delivered, or
2.
Insofar as the payment has been
beneficial to him
PAYMENT TO 3RD PERSON
GENERAL RULE: Payment is not valid, even
though made in good faith
EXCEPTIONS:
1. Payment which redounded to the benefit of
the obligee
Instances when the presumption that the
payment redounded to the benefit of the
obligee:
1.
After payment, 3rd person acquires the
creditors rights (subrogation)
2.
Creditor ratifies payment to 3rd person
3.
By creditors conduct, debtor has been
led to make the payment (estoppel)
2. Payment to the possessor of the credit, when
made in good faith
REQUISITES:
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383
NOTE: With respect to time and place of

payment - must be according to the obligation
SUBSTANTIAL PERFORMANCE
A debt shall not be understood to have been
paid unless the thing or service in which the
obligation consists has been completely
delivered or rendered, as the case may be.
If the obligation has been substantially
performed in good faith, the obligor may recover
as though there had been a strict and complete
fulfillment, less damages suffered by the
obligee.
When the obligee accepts the performance,
knowing its incompleteness or irregularity, and
without expressing any protest or objection, the
obligation is deemed fully complied with
Attempt in Good Faith to perform without
willful or intentional departure
Deviation is slight
Omission/Defect is technical or unimportant
Must not be so material that intention of
parties is not attained
EFFECT OF SUBSTANTIAL PERFORMANCE IN
GOOD FAITH
Obligor may recover as though there has
been strict and complete fulfillment, less
damages suffered by the oblige
Right to rescind cannot be used for slight
breach
SPECIAL RULES/FORMS OF PAYMENT
1.
Application of Payments
Page 106 of
2.
Dation in Payment/ Dacion en Pago/
Adjudication/
Dacion
in
Solutum/
Adjudicacion en Pago/ Payment in Kind/
Dation en Paiement
3.
Payment by Cession/Cession en Pago
4.
Tender of Payment and Consignation
A. APPLICATION OF PAYMENTS the
designation of the debt which payment shall
be made, out of 2 or more debts owing the
same creditor: stipulation or application of
party given benefit of period OK; to be
valid: must be debtors choice or w/ consent
of debtor
REQUISITES FOR THE APPLICATION OF
PAYMENT:
a. There must be only one debtor and
only one creditor
b. Two or more debts of the same kind
c. All debts must be due
EXCEPTION: there may be application of
payment even if all debts are not yet due
if:
i. Parties so stipulate
ii. When application of payment is
made by the party for whose benefit
the term has been constituted
iii. Payment is not enough to extinguish
all debts
d. Amount paid by the debtor is insufficient
to cover the total amount of all debts.
HOW APPLICATION IS MADE:
a.
Debtor makes the designation
b. If not, creditor makes it by so stating in
the receipt that he issues unless
there is cause for invalidating the
contract
c.
If neither the debtor nor creditor has
made the application or if the
application
is
not
valid,
then
application, is made by operation of
law
WHO MAKES APPLICATION OF DEBTS
GENERAL RULE: Debtor
EXCEPTION: Creditor
a. Debtor without protest accepts receipt in
which creditor specified expressly and
unmistakably the obligation to which such
payment was to be applied debtor in this
case renounced the right of choice
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383
b. When monthly statements were made by

the bank specifying the application and the
debtor signed said statements approving the
status of her account as thus sent to her
monthly by the bank
c. In case no application is made:
Apply payment to the most onerous
If debts are of the same nature and
burden, application shall be made to
all proportionately
B. DACION EN PAGO: mode of extinguishing
an obligation whereby the debtor alienates
in favor of the creditor property for the
satisfaction of monetary debt; extinguish up
to amount of property unless w/ contrary
stipulation; A special form of payment
because 1 element of payment is missing:
IDENTITY
REQUISITES FOR A VALID DACION EN PAGO:
a. There must be the performance of the
prestation in lieu of payment (animo
solvendi) which may consist in the delivery
of a corporeal thing or a real right or a credit
against the third person
b. There must be some difference between the
prestation due and that which is given in
substitution (aliud pro alio)
c. There must be an agreement between the
creditor and debtor that the obligation is
immediately extinguished by reason of the
performance of a prestation different from
that due
CONDITIONS FOR A VALID DACION:
a. If creditor consents, because a sale
presupposes the consent of both parties
b. If dacion will not prejudice the other
creditors
c. If debtor is not judicially declared
insolvent
NOTE: DACION is governed by the law on sales
DACION EN PAGO DISTINGUISHED FROM
PACTUM COMMISORIUM
DACION EN PAGO
PACTUM
COMMISORIUM
There
is
an Generally, only one
intervening
single
contract
agreement
where
the
parties
subsequent
and agree that in the event
independent from debtor fails to pay, the
Page 107 of
the
original
contract is entered
into by the parties
to
have
the
property
collaterizes in the
original agreement
as payment of the
debt
Valid
mortgaged or pledged
property
shall
automatically
be
appropriated or owned
by the creditor
Void

PLEDGE
DACION EN PAGO
PLEDGE
Delivery
and Delivery
but
no
transfer
of transfer of ownership
ownership
Presumed since less
transmission of rights
SALE
DACION EN PAGO
SALE
Preexisting credit
None
Obligation extinguished Obligation rises
Less freedom in
Greater freedom
determining the price
Total or partial
Payment of price
extinguishment
generally totally
extinguishes
if done by mistake,
... recovery of the
recovery of the thing
price paid
ASSIGNMENT
DACION EN PAGO
ASSIGNMENT
Substitute forms of performance
1 creditor
Several creditors
Debtor not partially
Debtor partially
insolvent
insolvent
C.
CESSION or ASSIGNMENT (IN FAVOR
OF CREDITORS) the process by which debtor
transfer all the properties not subject to
execution in favor of creditors is that the latter
may sell them and thus, apply the proceeds to
their credits; extinguish up to amount of net
proceeds ( unless w/ contrary stipulation)
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383
KINDS OF ASSIGNMENT:
a. Legal governed by the insolvency law
b. Voluntary agreement of creditors
REQUISITES OF VOLUNTARY ASSIGNMENT:
a. More than one debt
b. More than one creditor
c. Complete or partial insolvency of debtor
d. Abandonment of all debtors property not
exempt from execution
e. Acceptance or consent on the part of the
creditors
EFFECTS OF ASSIGNMENT:
a. Creditors do not become the owner; they
are merely assignees with authority to
sell
b. Debtor is released up to the amount of
the net proceeds of the sale, unless
there is a stipulation to the contrary
c. Creditors will collect credits in the order
of preference agreed upon, or in default
of agreement, in the order ordinarily
established by law
DATION IN PAYMENT DISTINGUISHED FROM
CESSION IN PAYMENT
DATION IN PAYMENT
CESSION IN
PAYMENT
One creditor
Plurality of creditors
Not
necessarily
in
state
of
financial
difficulty
Debtor
must
b
partially or relatively
insolvent
Thing
delivered
considered
equivalent
performance
is
as
of
Universality
of
property of debtor is
what is ceded
Payment extinguishes
obligation
to
the
extent of the value of
the thing delivered as
agreed upon, proved
or implied from the
conduct of the creditor
Merely
releases
debtor
for
net
proceeds of things
ceded of, assigned,
unless there is a
contrary intention
D. TENDER AND CONSIGNATION
Page 108 of
TENDER -the act of offering the creditor what is

due him together with a demand that the
creditor accept the same (When creditor refuses
w/o just cause to accept payment, he becomes
in mora accepiendi and debtor is released from
responsibility if he consigns the thing or sum
due)
CONSIGNATION the act of depositing the
thing due with the court or judicial authorities
whenever the creditor cannot accept or refuses
to accept payment; generally requires prior
tender of payment
REQUISITES OF VALID CONSIGNATION:
a. Existence of valid debt
b. Consignation was made because of some
legal cause - previous valid tender was
unjustly
refused
or
circumstances
making previous tender exempt
c. Prior Notice of Consignation had been
given to the person interested in
performance of obligation (1st notice)
d. Actual deposit/Consignation with proper
judicial authorities
e. Subsequent notice of Consignation (2nd
notice)
EFFECTS:
EXTINGUISHMENT
OF
OBLIGATION
a. Debtor may ask judge to order
cancellation of obligation
b. Running of interest is suspended
c. Before creditor accepts or before judge
declares consignation has been properly
made, obligation remains (debtor bears
risk of loss at the meantime, after
acceptance by creditor or after judge
declares that consignation has been
properly made risk of loss is shifted to
creditor)
CONSIGNATION W/O PRIOR TENDER
allowed in:
a. Creditor absent or unknown/ does not
appear at the place of payment
b. Incapacitated to receive payment at the
time it is due
c. Refuses to issue receipt w/o just cause
d. 2 or more creditor claiming the same
right to collect
e. Title of obligation has been lost
CIVIL LAW REVIEWER

383
TENDER OF PAYMENT DISTINGUISHED

FROM CONSIGNATION
TENDER OF
CONSIGNATION
PAYMENT
antecedent act; principal
act;
preparatory
produces the effects
of payment
extrajudicial
judicial
=========================================

OBLIGATIONS
2. Loss of determinate thing due or
impossibility or difficulty of
performance
=========================================
2. LOSS OF DETERMINATE THING OR
IMPOSSIBILITY OR DIFFICULTY OF
PERFORMANCE
LOSS OF THE THING DUE: partial or total/
includes impossibility of performance
WHEN
a.
b.
c.
IS THERE A LOSS
When the object perishes (physically)
When it goes out of commerce
When it disappears in such a way that:
its existence is unknown or it cannot be
recovered
WHEN
IS
THERE
IMPOSSIBILITY
OF
PERFORMANCE:
a. Physical impossibility
b. Legal impossibility
i.
Directly caused as when prohibited
by law
ii.
Indirectly caused as when debtor is
required to enter a military draft
EFFECT OF LOSS IN OBLIGATION
DELIVER A SPECIFIC THING
TO
GENERAL RULE: Loss shall extinguish the

obligation
EXCEPTIONS:
a. If by law the obligor is liable even for
fortuitous event
Page 109 of
b. If by stipulation the obligor is liable even

for fortuitous event
c. If the nature of the obligation requires the
assumption of the risk
d. If the loss of the thing occurs after the
obligor incurred in delay
e. If the loss of the thing occurs after the
obligor incurred delay
f. If the obligor promised to deliver the same
thing to two or more persons who do not
have the same interest
g. IF the obligation is generic, unless the
object is a particular class or group with
specific or determinate qualities
OBLIGATION TO DELIVER A GENERIC THING
GENERAL RULE: Not extinguished
EXCEPTIONS:
a. If the generic thing is delimited
b. If the generic thing has already been
segregated
c. Monetary obligation
EFFECT
OF
IMPOSSIBILITY
PERFROMANCE IN OBLIGATION TO DO
OF
GENERAL RULE: Debtor is released when

prestation becomes legally or physically
impossible without fault on part of debtor
EFFECT OF PARTIAL LOSS
a. When loss is significant may be
enough to extinguish obligation
b. When loss insignificant not enough to
extinguish obligation
NOTE:
Judicial determination of extent is
necessary
Doctrine of Unforeseen Events: The
court is authorized to release the obligor,
in whole or in part, when the service has
become so difficult as to be manifestly
beyond the contemplation of the parties.
Doctrine of Subjective Impossibility:
The obligation undoubtedly becomes
impossible if there is no physical or legal
loss but the object obligation belongs to
another person; the obligor must
indemnify the obligee for the damages
suffered by the latter.
Presumption: Loss due to debtors fault

(disputable)
Exception: natural calamity, earthquake, flood,
storm
REBUS SIC STANTIBUS: agreement is valid
only if the same conditions prevailing at time of
contracting continue to exist at the time of
performance; Obligor may be released in whole
or in part based on this ground
REQUISITES:
A. The event or change could not have been
foreseen at the time of the execution of the
contract
B. The performance is extremely difficult, but
not impossible (because if it is impossible, it is
extinguished by impossibility)
C. The event was not due to the act of any of the
parties
D. The contract is for a future prestation
==========================================

OBLIGATIONS
3. Condonation or Remission of Debt
=========================================
3. CONDONATION OR REMISSION OF DEBT
CONDONATION/REMISSION OF THE DEBT
gratuitous abandonment of debt; right to
claim; donation; rules of donation applies;
express or implied
REQUISITES:
a. There must be an agreement
b. There must be a subject matter (object
of the remission, otherwise there would
be nothing to condone)
c. Cause of consideration must be liberality
(Essentially gratuitous, an act of
liberality )
d. Parties must be capacitated and must
consent; requires acceptance by obligor;
implied in mortis causa and expressed
inter vivos
WHEN THING IS LOST IN THE POSSESSION

OF THE DEBTOR
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383
Page 110 of
e. Formalities of a donation are required in

the case of an express remission
f. Revocable subject to rule on inofficious
donation
(
excessive,
legitime is
impaired ) and ingratitude and condition
not followed
g. Obligation remitted must have been
demandable at the time of remission
h. Waivers or remission are not to be
presumed generally
FORMS
EXTENT
a. Express
formalities of
donation
a. Total
b. Implied
conduct
is
sufficient
b. Partial
KINDS
a.
Principal
accessory
also
condoned
b.
Accessory
principal
still
outstanding
c.
Accessory
obligation of pledge
condoned;
presumption
only,
rebuttable
REQUISITES OF IMPLIED CONDONATION

1. Voluntary delivery presumption; when
evidence of indebtedness is w/ debtor
presumed voluntarily delivery by creditor;
rebuttable
2. Effect of delivery of evidence of
indebtedness is conclusion that debt is
condoned already conclusion; voluntary
delivery of private document
a.
If in hands of joint debtor only his share
is condoned
b.
If in hands of solidary debtor - whole
debt is condoned
c.
Tacit
voluntary
destruction
of
instrument by creditor; made to prescribe w/o
demanding
==========================================
OBLIGATIONS
4. Confusion or Merger
4. CONFUSION OR MERGER
CONFUSION OR MERGER: character of
debtor and creditor is merged in same person
with respect to same obligation
REQUISITES:
a. It must take place between principal
debtor and principal creditor only
b. Merger must be clear and definite
c. The obligation involved must be same and
identical one obligation only
d. Revocable, if reason for confusion
ceases, the obligation is revived
=========================================

OBLIGATIONS
5. Compensation
=========================================
5. COMPENSATION
COMPENSATION: Set off; it is a mode of
extinguishment to the concurrent amount the
obligation of persons who are in their own right
reciprocally debtors or creditors
REQUISITES:
a. Both parties must be mutually creditors
and debtors - in their own right and as
principals
b. Both debts must consist in sum of money
or if consumable , of the same kind or
quality
c. Both debts are due
d. Both
debts
are
liquidated
and
demandable (determined)
e. Neither debt must be retained in a
controversy commenced by 3rd person
and communicated w/ debtor (neither
debt is garnished)
1. Kinds OF COMPENSATION
a. Legal by operation of law; as long as 5
requisites concur- even if unknown to
parties and if payable in diff places;
indemnity for expense of exchanges;
even if not equal debts only up to
concurring amount
=========================================
CIVIL LAW REVIEWER

383
Page 111 of
b. Conventional agreement of parties is

enough, forget other requirement as long
as both consented
c. Facultative one party has choice of
claiming/opposing one who has benefit
of period may choose to compensate:
i.
Not all requisites are present
ii.
Depositum;
commodatum;
criminal offense; claim for future
support; taxes
d. Judicial set off; upon order of the
court; needs pleading and proof; all
requirements
must
concur
except
liquidation
e. Total when 2 debts are of the same
amount
f. Partial when 2 debts are not of the
same amount
EFFECT OF ASSIGNMENT OF CREDIT TO 3 RD
PERSON;
CAN
THERE
STILL
BE
COMPENSATION
a. If made after compensation took place
no
effect;
compensation
already
perfected
b. If made before compensation took place
depends
i. With consent of debtor debtor is
estopped unless he reserves his right
and gave notice to assignee
ii. With knowledge but w/o consent of
debtor compensation may be set
up as to debts maturing prior to
assignment
iii. W/o knowledge compensation may
be set-up on all debts prior to his
knowledge
COMPENSATION DISTINGUISHED FROM

CONFUSION
COMPENSATION
CONFUSION
2 persons; each is a
only 1 person who is
debtor and creditor of
creditor and debtor
each other
of himself
2 obligations
indirect payment
one obligation
impossibility of
payment

PAYMENT
COMPENSATION
PAYMENT
CIVIL LAW REVIEWER

383
capacity not
necessary
may be partial
performance
Simpler
more guarantee and
less risk
may take place by
operation of law
capacity to dispose and

capacity to receive
required
must be complete
performance
involves action or
delivery of the amount
paid

COUNTERCLAIM
COMPENSATION
COUNTERCLAIM
takes place by operation
must be pleaded
of law and extinguishes
to be effectual
reciprocally 2 claims as
soon as they exist
simultaneously to the
concurrent amounts
2. Obligations Not Compensable
When one of the debts arises from a
depositum or from the obligations of a
depositary or of a baliee in
commodatum. (Art. 1287)
Against a creditor who has a claim for

support due by gratuitous title, without
prejudice to Article 301 par. 2 (Article
1287)
If one of the debts consists in civil

liability arising from a penal offense. (Art.
1288)
=========================================

OBLIGATIONS
5. Novation
=========================================
5. NOVATION
NOVATION: Extinguishment of obligation by
creating/ substituting a new one in its place
Page 112 of

Changing object or principal conditions
Substituting person of debtor
Subrogating 3rd person in right of creditor

REQUISITES:
a.Valid obligation
b. Intent to extinguish old obligation
expressed
or
implied:
completely/substantially incompatible old
and new obligation on every point
c.Capacity and consent of parties to the new
obligation
d. Valid new obligation
EFFECTS OF NOVATION:
a. Extinguishment
of
principal
carries
accessory, except:
i. Stipulation to contrary
ii. Stipulation
pour
autrui
unless
beneficiary consents
iii. Modificatory novation only; obliged
to w/c is less onerous
iv. Old obligation is void
b. Old obligation subsists if new obligation is
void or voidable but annulled already
(except: intention of parties)
c. If old obligation has condition
i. If Resolutory and it occurred old
obligation already extinguished; no
new obligation since nothing to
novate
ii. If Suspensive and it never occurred
as if no obligation; also nothing to
novate
d. If old obligation has condition, must be
compatible with the new obligation; if new is
w/o condition deemed attached to new
e. If new obligation has condition
i. If resolutory: valid
ii. If
suspensive
and
did
not
materialize: old obligation is enforced
KINDS OF NOVATION:
1. REAL/OBJECTIVE
change
object,
cause/consideration or principal condition
2. PERSONAL/SUBJECTIVE
i. Substituting person
(passive)
of
debtor
EXPROMISION:
initiative
is
from 3rd person or new debtor;
new debtor and creditor to
consent; old debtor released
CIVIL LAW REVIEWER

383
from obligation; subject to full

reimbursement and subrogation
if made w/ consent of old
debtor; if w/o consent or against
will
,
only
beneficial
reimbursement; if new debtor is
insolvent, not responsible since
w/o his consent
DELEGACION: initiative of old
debtor; all parties to consent;
full reimbursement; if insolvent
new debtor not responsible old
debtor
because
obligation
extinguished by valid novation
unless:
insolvency
already
existing and of public knowledge
or know to him at time of
delegacion
1. Delegante old debtor
2. Delegatario - creditor
3. Delegado new debtor
EXPROMISION DISTINGUISHED FROM

DELEGACION
EXPROMISIO
DELEGACION
N
Intention: old debtor be released from the
obligation
Consent of creditor may be express or tacit
but not presumed by acceptance of
payment from third person
Donation cannot be presumed
consent of
consent of debtor
creditor and
(initiates), creditor and
third person
third person; need not be
given simultaneously
governed by
same applies in the
the rules of
absence of an agreement
payment by
by old and new debtors
third persons
if w/o
subrogation
knowledge of
debtor,
beneficial
reimbursement
, no
subrogation
new debtor's
same unless new debtor is
insolvency
known to the public as
does not make
insolvent or old debtor
Page 113 of
old debtor
liable
knows of such insolvency

at the time of delegacion
creditor may not recover
from old debtor if he
knows of such insolvency
of the new debtor
delegante (old)
delegado (new)
delegatario (creditor)
quite rare
3rd person has no

obligation to pay
if insolvent
ii. Subrogating 3 person to rights of creditor

( active )
1. Conventional - agreement and consent of all
parties; clearly established
2. Legal - takes place by operation of law; no
need for consent; not presumed
except as provided for in law:
rd
PRESUMED WHEN
Creditor pays another preferred creditor
even w/o debtors knowledge
3rd person not interested in obligation pays

w/ approval of debtor
Person interested in fulfillment of obligation

pays debt even w/o knowledge of debtor
DIFFERENCE
FROM
PAYMENT
PERSON vs CHANGE OF DEBTOR
DIFFERENCE
FROM PAYMENT
BY 3RD PERSON
BY
3 rd
CHANGE OF DEBTOR
debtor
is
not
necessarily
released
from
debt
debtor is released
can be done w/o

consent
of
creditor
needs consent of creditor

express or implied
one obligation
two obligations; one is

extinguished and new one
created
CIVIL LAW REVIEWER

383
CONVENTIONAL
DISTINGUISHED
RIGHTS
new debtor is obliged to

pay
FROM
SUBROGATION
ASSIGNMENT OF
CONVENTIONA
L
SUBROGATION
ASSIGNMENT OF RIGHTS
Governed
by
Arts. 1300-1304
Governed by Arts. 1624 to

1627
debtors consent
is required
debtors
required
extinguishes the
obligation
and
gives rise to a
new one
transmission of right of the

creditor to third person
without
modifying
or
extinguishing the obligation
defects and vices

in
the
old
obligation
are
cured
defects and vices in the old

obligation and not cured
takes effect upon

moment
of
novation
or
subrogation
as far as the debtor is

concerned,
takes
effect
upon notification
consent
is
not
================================
Page 114 of
CONTRACTS
================================
1. Essential Requisites (Art. 1261)
(2) Pactum de non alienando (Art.

2130)
(3) Pactum leonine (Art. 1799)
7. Effect of contracts (Art. 1311)
=========================================

1. Essential Requisites
2. Kinds of Contracts
A. Consensual
B. Real
C. Formal or solemn
C.1. Donations (Arts. 748-749)
C.2. Partnership where real
property contributed (Arts. 1771,
1773)
C.3. Antichresis (Art. 2134)
C.4. Agency to sell real property
or an interest therein (Art. 1874)
C.5. Stipulation to charge interest
(Art. 1956)
C.6. Stipulation limiting common
carriers duty of extraordinary
diligence to ordinary diligence
(Art. 1744)
C.7. Chattel mortgage
C.8. Sale of large cattle
=========================================
3. Formality (Arts. 1356, 1357, 1358)

4. Reformation of Contracts
5. Interpretation of Contracts
6. Defective Contracts
A. Rescissible contracts (Art. 1381)
A.1. Difference with rescission
(resolution) under Art. 1191
B. Voidable contracts (Arts. 13281344, 1390-1402)
C. Unenforceable contracts (Arts.
1403-1408, 1317)
D. Void contracts (Arts. 1409, 1346)
(1) Pactum commissorium (Arts.
2088, 2130, 1390)
COLLECTIVE CONTRACTS - will of majority

binds
a
minority
to
an
agreement
notwithstanding the opposition of the latter
CIVIL LAW REVIEWER

383
1. ESSENTIAL REQUISITES
ESSENTIAL ELEMENTS:
1. Consent
2. Subject Matter
3. Consideration
A. CONSENT
CONSENT meeting of minds between parties
on subject matter and cause of contract;
concurrence of offer and acceptance
REQUIREMENTS:
1. Must be manifested by the concurrence of
the offer and payment;
2. Parties are legally capacitate to enter into
contracts
3. Consent
must
be
intelligent,
free,
spontaneous, and real
AUTO CONTRACTS - made by a person acting
in anothers name in one capacity
CONTRACTS OF ADHESION - one party has

already a prepared form of a contract,
containing the stipulations he desires, and he
simply asks the other party to agree to them if
he wants to enter into the contract
NOTE: We follow the theory of cognition and not
the theory of manifestation.
Under our Civil Law, the offer and acceptance
concur only when the offeror comes to know,
and not when the offeree merely manifests his
acceptance.
Page 115 of
OFFER a proposal made by one party to

another to enter into a contract; must be certain
or definite, complete and intentional
ELEMENTS OF VALID OFFER / ELEMENTS OF
VALID ACCEPTANCE
1. Definite--unequivocal
2. Complete--unconditional
3. Intentional
WHEN OFFER BECOMES INEFFECTIVE:
1. Death,
civil
interdiction,
insanity
or
insolvency of either party before acceptance
is conveyed
2. Express or implied revocation of the offer by
the offeree
3. Qualified or conditional acceptance of the
offer, which becomes a counter-offer
4. Subject matter becomes illegal or impossible
before acceptance is communicated
ACCEPTANCE - manifestation by the offeree of
his assent to the terms of the offer; must be
absolute
the other
necessary.
and
acceptance
of
both
is
Offer inter praesentes must be

accepted IMMEDIATELY. If the parties
intended that there should be an express
acceptance,
the
contract
will
be
perfected only upon knowledge by the
offeror of the express acceptance by the
offeree of the offer. An acceptance which
is not made in the manner prescribe by
the offeror is NOT EFFECTIVE, BUT A
COUNTER-OFFER which the offeror may
accept or reject. Malbarosa v. CA,
[G.R. No. 125761, April 30, 2003]
RULE ON ADVERTISEMENTS AS OFFERS

Business advertisements Not a definite
offer, but mere invitation to make an offer,
unless it appears otherwise
constitutes
Advertisement for Bidders only invitation to

make proposals and advertiser is not bound to
accept the highest or lowest bidder, unless
appears otherwise
PERIOD FOR ACCEPTANCE

1. Stated fixed period in the offer
2. No stated fixed period
a. Offer is made to a person present
acceptance must be made immediately
b. Offer is made to a person absent
acceptance may be made within such
time that, under normal circumstances,
an answer can be received from him
NOTE: Acceptance may be revoked before it
comes to the knowledge of the offeror.
(withdrawal of offer)
THE 4 THEORIES IN ACCEPTANCE OF OFFER

BY TELEGRAM OR LETTER
1. Manifestation perfected from the moment
the acceptance is declared or made
2. Expedition perfected from the moment the
offeree transmits the notification of acceptance
3. Reception perfected from the moment the
offeror receives the letter
4. Cognition perfected from the moment the
acceptance comes to the knowledge of the
offeror
NOTE: A qualified
counter-offer
acceptance
AMPLIFIED ACCEPTANCE
Under
certain
circumstances,
a
mere
amplification on the offer must be understood as
an acceptance of the original offer, plus a new
offer, which is contained in the amplification.
RULE ON COMPLEX OFFERS
1. Offers are interrelated contract is
perfected if all the offers are accepted
2. Offers are not interrelated single
acceptance of each offer results in a
perfected contract unless the offeror has
made it clear that one is dependent upon
CIVIL LAW REVIEWER

383
NOTE: Contracts under the Civil Code generally

adhere to the Cognition Theory while
transactions under the Code of Commerce use
the Manifestation Theory.
When the offeror refuses to open the letter or
telegram he is held to have a constructive notice
of the contents thereof and will be bound by the
acceptance of the offeree. (Jurado citing Castan)
OPTION: option may be withdrawn anytime
before acceptance is communicated but not
when supported by a consideration other than
purchase price: option money
Page 116 of
EFFECTS OF OPTION:
NOT
supported
by
independent
consideration the offeror can withdraw
the
privilege
at
any
time
by
communicating the withdrawal before
acceptance
Supported by independent consideration
the offeror cannot withdraw his offer
PERSONS WHO CANNOT GIVE CONSENT TO
A CONTRACT:
1. Minors
2. Insane or demented persons, unless the
contract was entered into during a lucid
interval
3. Illiterates/ deaf-mutes who do not know
how to write
4. Intoxicated and under hypnotic spell
5. Art 1331 - person under mistake; mistake
may deprive intelligence
6. Art 1338 - person induced by fraud (dolo
causante)
NOTE: Dolus bonus (usual exaggerations in
trade) are not in themselves fraudulent
RULE ON CONTRACTS ENTERED INTO BY
MINORS
GENERAL RULE: VOIDABLE
EXCEPTIONS:
a. Upon reaching age of majority they
ratify the same
b. They were entered unto by a guardian
and the court having jurisdiction had
approved the same
c. They were contracts for necessities
such as food, but here the persons who
are bound to give them support should
pay therefor
d. Minor is estopped and cannot be
absolved from the contract they
entered
into
for
having
misrepresented his age and misled
the other party through his active
misrepresentation.
Mercado
vs.
Espiritu, [37 Phil 215] HOWEVER,
minors can set up the defense of
minority to resist the claim when there
is only passive misrepresentation, as
they did not disclose their minority
because they had no juridical duty to
disclose their inability. (Braganza vs.
De Villa Abrille, [105 Phil 456]
CIVIL LAW REVIEWER

383
DISQUALIFIED TO ENTER INTO CONTRACTS:

(contracts entered into are void)
1.
Those under civil interdiction
2.
Hospitalized lepers
3.
Prodigals
4.
Deaf and dumb who are unable to read
and write
5.
Those who by reason of age, disease,
weak mind and other similar causes, cannot
without outside aid, take care of themselves and
manage their property, becoming an easy prey
for deceit and exploitation (Rule 92, Sec.2, Rules
of Court)
INCAPACITY
DISTINGUISHED
DISQUALIFICATION
FROM
INCAPACITY
DISQUALIFICATION
Restrains
the
exercise of the right
to contract
Restrains the very right

itself
May still enter into

contract
through
parent, guardian or
legal representative
Absolutely disqualified
Based
subjective
circumstance
certain person
Based
upon
public
policy and morality
Contracts
into
are
voidable
upon
of
entered
merely
Contracts entered into

are void
CAUSES WHICH VITIATE FREEDOM

1.
Violence
REQUISITES
a. Irresistible physical force
b. Such force is the determining cause for
giving consent
2.
Intimidation
REQUISITES:
b.
Determining cause for the contract
c.
Threatened act is unjust and unlawful
d.
Real and serious
Page 117 of
e.
3.
Produces a well grounded fear that the

person making it will carry it over
Reluctant consent a contract is valid
even though one of the parties entered
into it against his wishes and desires or
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. Martinez vs. Hongkong and
Shanghai Bank, [15 Phil 252]
Mistake
Not only wrong conception of the thing
but also the lack of knowledge with
respect to it (Manresa)
Two General Kinds of Mistake:

a.Mistake of Fact when one or both of
the contracting parties believe that a fact
exist when in reality it does not, or that such
fact does not exist when in reality it does
b.
Mistake of Law
General Rule: Mistake does not vitiate
consent
Exception: Mutual error as to the effect of
an agreement when the real purpose of the
parties is frustrated
4.
Fraud
When, through insidious words or
machinations of 1 of the contracting
parties, the other is induced to enter into
a contract which, without them, he would
not have agreed to.
KINDS:
o Causal Fraud (Dolo Causante)- Fraud in
the PERFECTION of the contract
Deception of serious character, without
which the other party would not have
entered into
It is the cause which induces the party to
enter into a contract
Renders the contract voidable. Insidious
words or machinations are employed
Not employed by both or by third person
Ground for annulment
CIVIL LAW REVIEWER

383
o
I
ncidental Fraud (Dolo Incidente)- Fraud in
the PERFORMANCE of an obligation
Deception which are not serious and
without which the other party would still
have entered into the contract
It is not the cause which induced the
party to enter into a contract
Renders the party liable for damages
5.
Undue influence
When
a
person
takes
improper
advantage of his power over the will of
another, depriving the latter of a
reasonable freedom of choice
SIMULATED CONTRACTS
1.
Absolute no intention to be bound at
all, fictitious only void from beginning
2.
Relative there is intention to be
bound but concealed; concealed contract
binds:
c. No prejudice to 3rd persons
d. Not contrary to law, morals, etc.
B. OBJECT
REQUISITES:
1. Within the commerce of man either
existing or in potency
2. Licit or not contrary to law, good customs
3. Possible
4. Determinate as to its kind or determinable
w/o need to enter into a new contract
5. Transmissible
THINGS WHICH CANNOT BE THE OBJECT OF
CONTRACT:
1. Things which are outside the commerce of
men
2. Intransmissible rights
3. Future inheritance, except in cases expressly
authorized by law
Page 118 of
4.
EFFECT
proximate reason of a
contract
reasons
ABSENCE
OF CAUSA
Void - produce no legal effect
Objective and juridical

reason of contract
Psychological or purely
personal reason
ILLEGALITY
OF CAUSA
Void - produce no legal effect
Cause us always same

for each contracting
party
The motive differs for

each contracting party
FALSITY
CAUSA
OF
Voidable party must prove

that cause is untruthful;
presumption of validity but
rebuttable
Legality or illegality of
cause
affects
the
existence or validity of
the contract
Legality or illegality of
motive does not affect
the
existence
or
validity of contract
CAUSA NOT
STATED
IN
CONTRACT
Presumed to Exist - burden of

proof is on the person
assailing its existence
INADEQUAC
Y OF CAUSA
Does not Invalidate Contract

per se
Exceptions:
WANT OF
CAUSE
*
*
*
*
Fraud
Mistake
Undue influence
Cases specified by law
- contracts entered when

ward suffers lesion of more
than 25%
Services which are contrary to law, morals, good
customs, public order or public policy
5. Impossible things or services
6. Objects
which
are
not
possible
of
determination as to their kind
C. CAUSE (CAUSA)
CAUSA- Immediate, direct and most proximate
reason why parties enter into contract
REQUISITES:
1. It must exist
2. It must be true
3. It must be licit
MOTIVE:
Purely private reason; illegality does not
invalidate
contract
except
when
it
predetermines purpose of contract; when
merged into one
CAUSE DISTINGUISHED FROM MOTIVE
CAUSE
Direct
and
MOTIVE
most
Indirect
CIVIL LAW REVIEWER

383
or
remote
CAUSA IN SOME CONTRACTS:

1. Onerous contracts the prestation of
promise of a thing or service by the other
2. Remuneratory contracts the service or
benefit remunerated
3. Pure Beneficence mere liberality of the
donor or benefactor
4. Accessory identical with cause of principal
contract, the loan which it derived its life
and existence (ex: mortgage or pledge)
Want of Cause - There is a total lack or
absence of cause
Illegal Cause The cause is contrary to law,
morals, good customs, public order and public
policy
False Cause The cause is stated but it is not
true
Moral Obligation as Cause
Where the moral obligation arises wholly
from ethical considerations, unconnected with
any civil obligations, it cannot constitute a
sufficient cause or consideration to support an
onerous contract. Fisher vs. Robb [69 Phil
101]
Where such moral obligation is based upon a
previous civil obligation which has already been
barred by the statute of limitations at the time
when the contract is entered into, it constitutes
a sufficient cause or consideration to support a
contract Villaroel vs. Estrada 71 Phil 14]
A contract is a meeting of minds between two
persons whereby one binds himself, with respect
Page 119 of
to the other, to give something or to render

some service
CONTRACT
OBLIGATION
DISTINGUISHED
FROM
C.
CONTRACT
OBLIGATION
One of the sources of

obligations
Legal tie or relation

itself
There must be an
obligation
There need not be a

contract
CONTRACT
AGREEMENT
B. EXCEPTION TO RELATIVITY:
1. Accion Pauliana
2. Accion directa
3. Stipulation pour autrui
DISTINGUISHED
CONTRACT
FROM
AGREEMENT
Agreements
enforceable through
legal proceedings
Cannot be enforced
by action in courts of
justice
Should have all the

requisites of a contract
Need not have all

the requisites
There must be an
agreement
There need not be a

contract
A. PRINCIPAL CHARACTERISTICS:
1. Autonomy of wills parties may
stipulate anything as long as not illegal,
immoral, etc.
2. Mutuality performance or validity
binds both parties; not left to will of one of
parties
3. Obligatory Force and Consensuality
parties are bound from perfection of
contract; contracts are perfected by mere
consent and from that moment the parties
are bound not only to the fulfillment of what
has been expressly stipulated but also to all
consequences which, according to their
nature may be in keeping with good faith,
usage and law.
4. Fulfill
what
has
been
expressly
stipulated
5. All consequences w/c may be in keeping
with good faith, usage and law
6. Relativity binding only between the
parties, their assigns, heirs; strangers cannot
demand enforcement
CIVIL LAW REVIEWER

383
REQUISITES OF STIPULATION POUR

AUTRUI
1.
Parties
must
have
clearly
and
deliberately conferred a favor upon a 3rd person
2.
The stipulation in favor of a 3rd person
should be a part of, not the whole contract
3.
That the favorable stipulation should not
be conditioned or compensated by any kind of
obligation whatsoever
4.
Neither of the contracting parties bears
the legal representation or authorization of 3rd
party
5.
The third person communicates his
acceptance before revocation by the original
parties
6.
Art 1312; Art 1314
In contracts creating real rights, third persons
who come into possession of the object of the
contract are bound thereby, subject to the
provisions of the Mortgage Law and the Land
Registration Laws
D.
1.
2.
3.
REQUISITES:
Existence of a valid contract
Knowledge of the contract by a 3rd person
Interference by the 3rd person
E. TEST OF BENFICIAL SITUATION

The fairest to determine whether the
interest of 3rd person in a contract is a
stipulation pour autrui or merely an
incidental interest is to rely upon the
intention of the parties as disclosed by
their
contract.
Determine
whether
contracting parties desired to tender him
such interest Uy Tam vs. Leonard, [30
Phil 471]
=========================================

2. Kinds of Contracts
=========================================
2. KINDS OF CONTRACTS
1.
As to perfection or formation
Page 120 of
a. Consensual perfected by agreement

of parties
perfected by delivery (e.g.
commodatum, pledge, deposit)
c. Formal/solemn
perfected
by
conformity
to
essential
formalities
(donation )
As to cause
a. Onerous with valuable consideration
b. Gratuitous founded on liberality
c. Remunerative prestation is given for
service previously rendered not as
obligation
As to importance or dependence of one
upon another
a. Principal contract may stand alone
b. Accessory depends on another
contract for its existence; may not exist
on its own
c. Preparatory not an end by itself; a
means through which future contracts
may be made
As to parties obliged
a. Unilateral only one of the parties has
an obligations
b. Bilateral both parties are required to
render reciprocal prestations
As to form
a. Common or informal require no
particular form
b.
Special or formal require some
particular
Form
As to their purpose
a. Transfer of ownership
b. Conveyance of use
c. Rendition of service
As to their subject matter
a. Things
b. Services
As to the risk involved
a. Commutative example lease
b. Aleatory example insurance
As to name or designation
a. Nominate those which have their own
distinctive
individuality
and
are
regulated by special provisions of law
b. Innominate
those
which
lack
individuality and are not regulated by
special provisions of law
II. Do ut des I give that you may give
III. Do ut facias I give that you may do
IV. Facio ut des I do that you may give
V. Facio ut facias I do that you may do
b. Real
2.
3.
4.
5.
6.
7.
8.
9.
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NOTE: According to some authorities, do ut des

is no longer an innominate contract. It has
already been given a name of its own, i.e. barter
or exchange. (Art. 1638)
STAGES IN A CONTRACT:
1.
2.
3.
Preparation - negotiation
Perfection/birth
Consummation performance
FORMAL CONTRACTS
1. Donation
The donation of a movable may be made

orally or in writing (Article 748)
An
oral
donation
requires
the
simultaneous delivery of the thing or of
the document representing the right
donated. (Article 748)
If the value of the personal property

donated exceeds five thousand pesos,
the donation and the acceptance shall be
made in writing. Otherwise, the donation
shall be void. (Article 748)
In order that the donation of an

immovable may be valid, it must be
made in a public document, specifying
therein the property donated and the
value of the charges which the donee
must satisfy. (Article 749)
The acceptance may be made in the

same deed of donation or in a separate
public document, but it shall not take
effect unless it is done during the
lifetime of the donor. (Article 749)
If the acceptance is made in a separate

instrument, the donor shall be notified
thereof in an authentic form, and this
step shall be noted in both instruments.
(Article 749)
2. Partnership
A partnership may be constituted in any

form, except where immovable property
or real rights are contributed thereto, in
which case a public instrument shall be
necessary. (Article 1771)
A contract of partnership is void,
whenever
immovable
property
is
contributed thereto, if an inventory of
said property is not made, signed by the
parties, and attached to the public
instrument. (Article 1773)
Page 121 of
3.
Antichresis
The amount of the principal and of the
interest shall be specified in writing;
otherwise, the contract of antichresis
shall be void
=========================================
4. Agency to Sell Real Property
3. FORM OF CONTRACTS
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. (Article
1874)
5. Interest
No interest shall be due unless it has

been expressly stipulated in writing
(Article 1876)
6. Ordinary Diligence
A stipulation between the common

carrier and the shipper or owner limiting
the liability of the former for the loss,
destruction, or deterioration of the goods
to a degree less than extraordinary
diligence shall be valid, provided it be:
o
In writing, signed by the shipper

or owner;
Supported
by
a
valuable
consideration other than the
service rendered by the common
carrier; and
Reasonable, just and not contrary

to public policy. (Article 1744)
7. Chattel Mortgage
By a chattel mortgage, personal property

is recorded in the Chattel Mortgage
Register
as
a
security
for
the
performance of an obligation. If the
movable, instead of being recorded, is
delivered to the creditor or a third
person, the contract is a pledge and not
a chattel mortgage.
8. Sale of Large Cattle
The form of sale of large cattle shall be

governed by special laws. (Article 1581)
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3. Formality
=========================================
FORM: in some kind of contracts only as

contracts are generally consensual; form is a
manner in which a contract is executed or
manifested
1. Informal may be entered into whatever
form as long as there is consent, object and
cause
2. Formal required by law to be in certain
specified form such as: donation of real
property, stipulation to pay interest, transfer
of large cattle, sale of land thru agent,
contract
of
antichresis,
contract
of
partnership,
registration
of
chattel
mortgage, donation of personal prop in
excess of 5,000
3. Real creation of real rights over
immovable prop must be written
WHEN
1. For
2. For
3. For
FORM IS IMPORTANT:
validity (formal/solemn contracts)
enforceability (statute of frauds)
convenience
GENERAL RULE: contract is valid and

binding in whatever form provided that 3
essential requisites concur
EXCEPTIONS
a. Law requires contract to be in some
form for validity - donation and
acceptance of real property
b. Law requires contract to be in some
form to be enforceable - Statute of
Frauds; contract is valid but right to
enforce cannot be exercised; need
ratification to be enforceable
c. Law requires contract to be in some
form for convenience - contract is valid
and enforceable, needed only to bind
3rd parties
Ex: public documents needed for the ff:
i. Contracts w/c object is creation,
transmission or reformation of real
rights over immovables
Page 122 of
ii. Cession, repudiation, renunciation

of hereditary rights/CPG
iii. Power to administer property for
another
iv. Cession
of
action
of
rights
proceeding from an act appearing
in a public inst.
v. All other docs where amount
involved is in excess of 500 (must
be written even private docs )
NOTE: RA 8792 (E-COMMERCE ACT) formal
requirements to make contracts effective as
against third persons and to establish the
existence of a contract are deemed complied
with provided that the electronic document is
unaltered and can be authenticated as to be
useable for future reference.
=========================================

4. Reformation of Instruments
=========================================
4. REFORMATION OF INSTRUMENTS
REFORMATION OF CONTRACTS: remedy to
conform to real intention of parties due to
mistake, fraud, inequitable conduct, accident
CAUSES/GROUNDS:
1. Mutual: instrument includes something w/c
should not be there or omit what should be
there
a. Mutual
b. Mistake of fact
c. Clear and convincing proof
d. Causes failure of instrument to express
true intention
2. Unilateral
a. One party was mistaken
b. Other either acted fraudulently or
inequitably or knew but concealed
c. Party in good faith may ask for
reformation
3. Mistake by 3rd persons due to ignorance,
lack of skill, negligence, bad faith of drafter,
clerk or typist
4. Others specified by law to avoid
frustration of true intent
Requisites:
a.There is a written instrument
b.
There is meeting of minds
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c.True intention not expressed in instrument

d.
Clear and convincing proof
e.Facts put in issue in pleadings
NOTE:
Prescribes in 10 years from date of execution
of instrument
When one of the parties has brought an
action to enforce the instrument, no subsequent
reformation can be asked. (principle of estoppel)
Reformation is based on justice and equity
When there is no meeting of the minds, the
proper remedy is annulment and not reformation
WHEN REFORMATION NOT AVAILABLE:
1. Simple donation inter vivos
2. Wills
3. When real agreement is void
4. Estoppel when party has brought suit to
enforce it
=========================================

5. Interpretation of Contracts
=========================================
5. INTERPRETATION OF CONTRACTS
GENERAL RULE: If the terms of the contract
are clear and leave no doubt upon the intention
of the contracting parties, the literal meaning of
its stipulations shall control. (Art. 1370)
EXCEPTION: It is alleged and proved that the
intention of the parties is otherwise.
Sec. 13 Rule 130 of the Rules of Court:
When an instrument consists partly of written
words and partly of a printed form, and the two
are inconsistent, the former controls the latter.
NOTE:
1. If the law is clear, there is no room for
interpretation
2. In case of ambiguity, the most important
guideline is intention of the parties.
3. Ambiguity is construed against the one who
caused it because he had control (e.g. contract
of adhesion). However, this rule does not apply
to all contracts of adhesion (e.g. if contract is
negotiated)
4. In order to judge the intention of the
contracting parties, their contemporaneous and
subsequent acts shall be principally considered.
(Art. 1371)
Page 123 of
5. Words which may have different significations

shall be understood in that which is most in
keeping with the nature and object of the
contract. (Art. 1375)
6. The interpretation of obscure words or
stipulations in a contract shall not favor the
party who caused the obscurity. (Art. 1377)
7. If the court cannot resolve the ambiguity
based on the elements of the contract:
a. If a gratuitous contract, the least
transmission of rights and interests shall
prevail
b. If an onerous contract, doubt shall be
settled in favor of the greatest
reciprocity of interest
8. The principles of interpretation stated in Rule
123 of the Rules of Court shall likewise be
observed in the construction of contracts
In the case of Felipe v. Heirs of Maximo
Aldon [G.R. No. L-60174, February 16,
1983], the Court stated that the description
that a contract is invalid is no longer precise,
since the Civil Code uses specific names in
designating defective contract (e.g. rescissible,
voidable, unenforceable, and void or inexistent
contracts)
=========================================

6. Defective Contracts
=========================================
6. DEFECTIVE CONTRACTS
KINDS OF DEFECTIVE CONTRACTS:
A. RESCISSIBLE CONTRACTS
RESCISSIBLE CONTRACTS - Those which have
caused a particular economic damage either to
one of the parties or to a 3rd person and which
may be set aside even if valid. It may be set
aside in whole or in part, to the extent of the
damage caused
REQUISITES:
(a) Contract must be rescissible
Under Art 1381: Contracts entered into by
persons exercising fiduciary capacity:
1. Entered into by guardian whenever ward
suffers damage by more than 1/4 of value of
object
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383
2.
A
greed upon in representation of absentees, if
absentee suffers lesion by more than of
value of property
3. Contracts where rescission is based on fraud
committed on creditor (accion pauliana)
4. Objects of litigation; contract entered into by
defendant w/o knowledge or approval of
litigants or judicial authority
5. Provided for by law Arts 1526, 1534, 1539,
1542, 1556, 1560, 1567 and 1659
Art. 1526 Unpaid seller of goods,
notwithstanding that the ownership
in the goods may have passed to the
buyer, subject to other provisions on
Sales
Art. 1534 Unpaid seller having the
right of lien or having stopped the
goods in transit, where he expressly
reserved his right to do so in case
the buyer should make default, or
the buyer has been in default in
the payment of the price for an
unreasonable time
Art. 1539 In the sale of real estate
at a rate of a certain price for a unit
of measure or number, at the will of
the vendee, when the inferior value
of the thing sold exceeds onetenth of the price agreed upon, or if
the vendee would not have bought
the immovable had he known of
its smaller area or inferior quality
Art. 1542 In the sale of real estate,
made for a lump sum, where the
boundaries are mentioned and the
area
or
number
within
the
boundaries exceed that specified in
the contract, when the vendee does
not accede to the failure to
deliver what has been stipulated
Art. 1556 Should the vendee lose,
by reason of eviction, a part of the
thing sold of such importance, in
relation to the whole, that he would
not have bought it without said part
Art. 1560 Vendee may ask for
recession if the immovable sold
should be encumbered with any
non-apparent
burden
or
servitude, not mentioned in the
Page 124 of
agreement, of such a nature that it

must be presumed that the vendee
would not have acquired it had he
been aware thereof
Art. 1567 In cases of breach of
warranty against hidden defects of
or encumbrances upon the thing sold
Art. 1658 If the lessor or lessee
should not comply with their
obligations, the aggrieved party
may ask for rescission
ART 1191 COMPARED TO ART 1381

RESCISSION IN
ART 1191
RESCISSION
PROPER IN ART
1381
It is a principal
action retaliatory in
character
it is a
remedy
subsidiary
Only ground is nonperformance

of
ones obligation or
what is incumbent
upon him
There are 5 grounds

to
rescind.
Nonperformance by the
other is not important
Applies
only
to
reciprocal obligation
Applies
to
both
unilateral
and
reciprocal obligations
Only a party to the

contract
may
demand fulfillment
or
seek
the
rescission of the
contract
Even a third person

who is prejudiced by
the
contract
may
demand the rescission
of the contract.
Court may fix a

period
or
grant
extension of time
for the fulfillment of
the obligation
Court cannot grant

extension of time for
fulfillment
of
the
obligation
Its purpose is to
cancel the contract
Its purpose is to seek

reparation
for
the
damage
or
injury
caused, thus allowing
partial rescission of
the contract
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Under Art. 1382 - Payments made in a state of

insolvency
1. Plaintiff has no other means to obtain
reparation.
2. Plaintiff must be able to return whatever he
may be obliged to return due to rescission
3. The things must not have been passed to 3rd
parties who did not act in bad faith
4. It must be made within the prescribed period
(of 4 years)
REQUISITES before a contract entered into
in fraud of creditors may be rescinded:
1. There must be credit existing prior to the
celebration of the contract.
2. There must be fraud, or at least, the intent
to commit fraud to the prejudice of the
creditor seeking rescission
3. The creditor cannot in any legal manner
collect his credit (subsidiary character of
rescission)
4. The object of the contract must not be
legally in the possession of a 3rd person who
did not act in bad faith.
OBLIGATION CREATED BY THE RESCISSION
OF THE CONTRACT: Mutual Restitution
a. Things w/c are the objects of the contract
and their fruits
b. Price with interest
MUTUAL RESTITUTION NOT APPLICABLE
WHEN
a. creditor did not receive anything from
contract
b. thing already in possession of party in
good faith; subject to indemnity only; if
there are 2 or more alienations liability
of 1st infractor
BADGES OF FRAUD
a. consideration of the conveyance is
inadequate or fictitious
b. transfer was made by a debtor after a
suit has been begun and while it is
pending against him
c. sale upon credit by an insolvent debtor
d. evidence of indebtedness or complete
insolvency
e. transfer of all his property by a debtor
when he is financially embarrassed or
insolvent
Page 125 of
f.
g.
transfer made between father and son

where there is present any of the above
circumstances
failure of the vendee to take exclusive
possession of the property
B. VOIDABLE CONTRACTS
VOIDABLE CONTRACTS -intrinsic defect; valid
until annulled; defect is due to vice of consent or
legal incapacity
CHARACTERISTICS:
a. Effective until set aside
b. May be assailed or attacked only in an
action for that purpose
c. Can be confirmed (NOTE: confirmation is
the proper term for curing the defect of a
voidable contract)
d. Can be assailed only by the party whose
consent was defective or his heirs or assigns
WHAT CONTRACTS ARE VOIDABLE:
a. Minors
b. Insane unless acted in lucid interval
c. Deaf mute who cant read or write
d. Persons
specially
disqualified:
interdiction
e. In state of drunkenness
f. In state of hypnotic spell
civil
MISTAKE
False belief of something which is contrary to
the real intention of the parties
REQUISITES:
a. Refers to the subject of the thing which is
the object of the contract
b. Refers to the nature of the contract
c. Refers to the principal conditions in an
agreement
d. Error as to person - when it is the principal
consideration of the contract
e. Error as to legal effect - when mistake is
mutual and frustrates the real purpose of
parties
spouse, ascendants
coercion)
or
descendants
(moral
UNDUE INFLUENCE
Person takes improper advantage of his power
over will of another depriving latter of
reasonable freedom of choice
The doctrine on reluctant consent provides
that a contract is still valid even if one of the
parties entered it against his wishes or 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. Martinez vs. HSBC, [12 Phil 252]
FRAUD
Thru insidious words or machinations of
contracting parties, other is induced to enter
into contract w/o w/c he will not enter (dolo
causante)
KINDS OF FRAUD IN THE PERFORMANCE OF
OBLIGATION OR CONTRACTS
a. Causal Fraud (dolo causante) deception
of serious character without which the other
party would not have entered into; contract is
VOIDABLE (Art. 1338)
b. Incidental Fraud (dolo incidente)
deception which are not serious and without
which the other party would still have entered
into the contract; holds the guilty party liable for
DAMAGES (Art. 1344)
c. Tolerated Fraud includes minimizing the
defects of the thing, exaggeration of its god
qualities and giving it qualities it does not have;
LAWFUL misrepresentation
NOTE:
Expression of an opinion not fraud unless
made by expert and other party relied on the
formers special knowledge
VIOLENCE
Serious or irresistible force is employed to wrest
consent
Fraud by third person does not vitiate

consent; only action for damages except if there
is collusion between one party and the third
person, or resulted to substantial mistake,
mutual between parties.
INTIMIDATION
One party is compelled by a reasonable and
well-grounded fear of an imminent and grave
danger upon person and property of himself,
CAUSES OF EXTINCTION OF ACTION TO

ANNUL
a.PRESCRIPTION - Period to bring an action
for Annulment
CIVIL LAW REVIEWER

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Page 126 of
i. Intimidation, violence, undue influence - 4

years from time defect of consent ceases
ii.Mistake, fraud 4 years from time of
discovery
iii.
Incapacity
From time guardianship ceases
Discovery of fraud must be reckoned to have

taken place from the time the document was
registered in the office of the register of
deeds. Registration constitutes constructive
notice to the whole world. Carantes v. CA,
[76 SCRA 514]
b. RATIFICATION
REQUISITES:
i. Knowledge
of
reason
rendering
contract voidable
ii. Such reason must have ceased, except
in case of ratification effected by the
guardian to contracts entered into by
an incapacitated,
iii. The injured party must have executed
an act which expressly or impliedly
conveys an intention to waive his right
c. LOSS OF THE THING which is the object of
the contract through fraud or fault of the
person who is entitled to annul the contract
NOTE: Object is lost through a fortuitous event,
the contract can still be annulled, but the person
obliged to return the same can be held liable
only for the value of the thing at the time of the
loss, but without interest thereon.
Ratification cleanses the contract of its defects
from the moment it was constituted.
C. UNENFORCEABLE CONTRACT
UNENFORCEABLE CONTRACT valid but cannot
compel its execution unless ratified; extrinsic
defect; produce legal effects only after ratified
KINDS:
a. Unauthorized
or
No
sufficient
authority entered into in the name of
another when:
i. No authority conferred
ii. In excess of authority conferred (ultra
vires)
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b. Curable by Ratification - Both parties

incapable of giving consent -2 minor or 2
insane persons
c. Curable by Acknowledgment - Failure
to comply with Statute of Frauds
STATUTE OF FRAUDS:
Agreement to be performed within a year
after making contract
Special promise to answer for debt, default
or miscarriage of another
Agreement made in consideration of promise
to marry
Agreement for sale of goods, chattels or
things in action at price not less than 500;
exception: auction when recorded sale in
sales book
Agreement for lease of property for more
than one year and sale of real property
regardless of price
Representation as to credit of another
TWO WAYS OF CURING UNENFORCEABLE
CONTRACTS:
a. Failure of defendant to object in time,
to the presentation of parole evidence in
court, the defect of unenforceability is cured
b. Acceptance of benefits under the
contract. If there is performance in either
part and there is acceptance of performance,
it takes it out of unenforceable contracts;
also estoppel sets in by accepting
performance, the defect is waived
NOTES:
The contracts/agreements under the Statute
of Frauds require that the same be
evidenced by some note or memorandum or
writing, subscribed by the party charged or
by his agent, otherwise, the said contracts
shall be unenforceable.
The Statute of Frauds applies only to
executory contracts, not to those that are
partially or completely fulfilled.
D. VOID OR INEXISTENT
VOID OR INEXISTENT of no legal effect
CHARACTERISTICS:
a. It produces no effect whatsoever
either against or in favor of anyone
Page 127 of
b. There is no action for annulment

necessary as such is ipso jure. A
judicial declaration to that effect is
merely a declaration
c. It cannot be confirmed, ratified or
cured
d. If performed, restoration is in order,
except if pari delicto will apply
e. The right to set up the defense of
nullity cannot be waived
f. Imprescriptible
g. Anyone may invoke the nullity of the
contract whenever its juridical effects
are asserted against him
KINDS OF VOID CONTRACT:
a. Those lacking in essential elements:
no consent, no object, no cause
(inexistent ones) essential formalities
are not complied with ( ex: donation
propter nuptias should conform to
formalities of a donation to be valid )
i. Those w/c are absolutely simulated
or fictitious no cause
ii. Those which cause or object did not
exist at the time of the transaction
no cause/object
iii. Those whose object is outside the
commerce of man no object
iv. Those
w/c
contemplate
an
impossible service no object
v. Those w/c intention of parties
relative to principal object of the
contract cannot be ascertained
b. Prohibited by law
c. Those
expressly
prohibited
or
declared void by law - Contracts w/c
violate any legal provision, whether it
amounts to a crime or not
d. Illegal/Illicit ones Those whose
cause, object or purpose is contrary to
law, morals, good customs, public order
or public policy ; Ex: Contract to sell
marijuana
OTHER VOID CONTRACTS:
1.
PACTUM
COMMISSORIUM (Arts. 2088, 2130, 1390)
ELEMENTS:
1. There should be a property mortgaged by way
of security for the payment of the principal
obligation.
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2. There should be a stipulation for automatic

appropriation by the creditor of the thing
mortgaged in case of non-payment of the
principal obligation within the stipulated period.
2.
PACTUM DE NON ALIENANDO (Art.
2130)
A stipulation forbidding the owner from

alienating the immovable mortgaged shall
be void.
It is a clause in a mortgage giving the

mortgagee the right to foreclose by
executory process directed solely against the
mortgagor, and giving him or her the right to
seize and sell the mortgaged property,
regardless of any subsequent alienations.
3.
PACTUM LEONINA (Art. 1799)
A stipulation which excludes one or more

partners from any share in profit or loss is void.
KINDS OF ILLEGAL CONTRACTS

PARI DELICTO DOCTRINE
Both parties are guilty, no action against each
other; those who come in equity must come with
clean hands; applies only to illegal contracts and
not to inexistent contracts; does not apply when
a superior public policy intervene
EXCEPTION TO PARI DELICTO RULE - If
purpose has not yet been accomplished and if
damage has not been caused to any 3rd person
OTHER EXCEPTIONS:
a. Payment of Usurious interest
b. payment of money or delivery of
property for an illegal purpose, where
the party who paid or delivered
repudiates the contract before the
purpose has been accomplished, or
before any damage has been caused to a
3rd person
c. payment of money or delivery of
property made by an incapacitated
person
d. agreement or contract which is not
illegal per se and the prohibition is
designed for the protection of the
plaintiff
Page 128 of
e. payment of any amount in excess of the

maximum price of any article or
commodity fixed by law or regulation by
competent authority
f. contract whereby a laborer undertakes to
work longer than the maximum number
of hours fixed by law
g. One who lost in gambling because of
fraudulent schemes practiced on him is
allowed to recover his losses (Art. 313
RPC) even if gambling is prohibited.
REQUISITES OF ILLEGAL CONTRACTS:
a.
Contract is for an illegal purpose
b.
Contract must be repudiated by any of
the
parties
before
purpose
is
accomplished or damage is caused to 3rd
parties
c.
Court believes that public interest will
be
served
by
allowing
recovery
(discretionary upon the court) based on
remorse; illegality is accomplished when
parties entered into contract; before it
takes effect party w/c is remorseful
prevents it
WHERE LAWS ARE ISSUED TO PROTECT
CERTAIN
SECTORS:
CONSUMER
PROTECTION, LABOR, AND USURY LAW
a. Consumer protection if price of
commodity is determined by statute,
any person paying an amount in excess
of the maximum price allowed may
recover such excess
b. Labor if law sets the minimum wage
for laborers, any laborer who agreed to
receive less may still be entitled to
recover the deficiency; if law set max
working hours and laborer who
undertakes to work longer may
demand additional compensation
c. Interest paid in excess of the interest
allowed by the usury law may be
recovered by debtor with interest from
date of payment
EFFECTS OF ILLEGAL CONTRACTS
a. If one party is incapacitated, courts may
allow recovery of money, property
delivered by incapacitated person in the
interest of justice; pari delicto cannot
apply because an incapacitated person
CIVIL LAW REVIEWER

383
does not know what he is entering into;

unable to understand the consequences
of his own action
b. If agreement is not illegal per se but
merely prohibited and prohibition is
designated for the protection of the
plaintiff may recover what he has paid
or delivered by virtue of public policy
MUTUAL RESTITUTION IN VOID CONTRACTS
GENERAL RULE: parties should return to each
other what they have given by virtue of the void
contract in case
Where nullity arose from defect in essential
elements
a. return object of contract
and fruits
b. return price plus interest
EXCEPTION: No recovery can be had in cases
where nullity of contract arose from illegality of
contract where parties are in pari delicto;
except when incapacitated not obliged to
return what he gave but may recover what he
has given other party is less guilty or not guilty
=========================================

7. Effect of Contracts
=========================================
7. EFFECT OF CONTRACTS
Contracts take effect only between the parties,
their assigns and heirs, except in case where the
rights and obligations arising from the contract
are not transmissible by their nature, or by
stipulation or by provision of law. The heir is not
liable beyond the value of the property he
received from the decedent. (Article 1311)
If a contract should contain some stipulation in
favor of a third person, he may demand its
fulfillment provided he communicated his
acceptance to the obligor before its revocation.
A mere incidental benefit or interest of a person
is not sufficient. The contracting parties must
have clearly and deliberately conferred a favor
upon a third person. (Article 1311)
Page 129 of
SALES
A. INTRODUCTION
================================
A. Introduction
1. Definition of sales (Arts. 1458,
1470)
2. Essential requisites of a contract
of sale (Art. 1505)
3. Stages of contract of sale
4. Obligations created (Art. 1165)
5. Characteristics of a contract of
sale
6. Sale is title and not mode
7. Sale distinguished from other
contracts
8. Contract of sale/contract to sell
=========================================

A. INTRODUCTION
1. Definition of Sales
=========================================
1. DEFINITION OF SALES (Arts. 1458 &

1470)
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A. INTRODUCTION
3. Stages of Contract of Sale
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3. STAGES IN LIFE OF CONTRACT OF SALE

1.
2.
3.
Negotiation
Perfection
Consummation
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A. INTRODUCTION
4. Obligations created
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4. OBLIGATIONS CREATED
2 sets of real obligations to give
Obligation of the Seller:
a. to transfer ownership and
b. to deliver possession
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A. INTRODUCTION
5. Characteristics of Contract of Sale
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5. CHARACTERISTICS OF CONTRACT OF
SALE:
CONTRACT OF SALE One of the contracting

parties obligates himself to transfer the
ownership of and to deliver a determinate
thing, and the other to pay therefore a price
certain in money or its equivalent. A contract
of sale may be absolute or conditional.
1.
2.
3.
4.
5.
6.
7.
8.
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A. INTRODUCTION
2. Elements of a Contract of Sale
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2. ELEMENTS OF A CONTRACT OF SALE

1. Consent
2. Determinate subject matter
Nominate
Principal
Consensual
Bilateral
Reciprocal
Onerous
Commutatitve
Title and not a mode

A. INTRODUCTION
6. Sale is Title and not Mode
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6. SALE IS TITLE AND NOT MODE

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A. INTRODUCTION
3. Price certain in money or its equivalent
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Lease
Use of thing is for a
specified period only
with an obligation to
return
Consideration is rent
Lessor need not be
owner
Sale
Obligation to
absolutely transfer
ownership of thing
Consideration is price
Seller needs to be
owner of thing to
transfer ownership
If consideration consists partly in money

and partly by thing
look at manifest intention;
If intention is not clear: If intention is not
value of thing is
clear: value of thing
more than amount of
is equal or less than
money barter
amount of money
sale
7. Sale distinguished from other

contracts
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Contract for delivery

of an article which
the vendor in the
ordinary course of
business
manufactures or
procures for general
market (whether on
hand or not)
Essence is service
Essence is object
Real obligation
Personal obligation
Tests under Jurisprudence:
GR: IF YES, Contract for piece of work, IF
NO, SALE
DATION IN PAYMENT DISTINGUISHED FROM

SALE
Dation in Payment
Sale
Pre-existing credit
No pre-existing
credit
Obligations are
Obligations are
extinguished
created
Debtors consideration:
Consideration of
extinguishment of the
seller: price
debt
Consideration of
Creditors consideration:
buyer: acquisition
acquisition of the object
of the object
offered in lieu of the
original credit
Less freedom in
Greater freedom
determining the price
in determining
the price
Payment is received by
Buyer still has to
the debtor before the
pay the price
contract is perfected
1. Timing test - Under art 1467: whether the

thing transferred only existed upon special
order
AGENCY TO SELL DISTINGUISHED FROM

SALE
Agency to Sell
Sale
CONTRACT FOR PIECE OF WORK

DISTINGUISHED FROM SALE
Contract for piece of
work
Goods are to be
manufactured specially
for a customer and
upon special order and
not for the general
market
Sale
2. Habituality test - if manufacturer engages

in activity with the need to employ
extraordinary skills and equipment (Celestino v
CIR)
3. Nature of the object test - Each products
nature of execution differs from the others;
products are not ordinary products of
Manufacturer (EEI v CIR)
BARTER DISTINGUISHED FROM SALE

Barter
Sale
Consideration: giving
Consideration: giving
of a thing
of money as payment
Governed by law on sales: species of the genus
sales
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Agent not obliged to

pay for price, merely
obliged to deliver price
received from buyer.
Preparatory contract
Principal remains owner
even if object delivered
to agent
Agent assumes no
risk/liability as long as
within the authority
given
May be revoked
unilaterally because
fiduciary and even if
revoked w/o ground
Agent not allowed to
Buyer pays for price

of object
Principal contract
Buyer becomes
owner of thing; in
agency
Seller warrants
Not unilaterally
revocable
Seller receives profit
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profit
Personal Contract;
Rescission is not
available
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Real Contract
DONATION DISTINGUISED FROM SALE

Donation
Sale
Gratuitous or
Onerous
onerous
Formal contract
Consensual contract
NOTE: Lease with option to buy: really a
contract of sale but designated as lease in name
only; it is a sale by installments
B. PARTIES TO A CONTRACT
OF SALE
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B. Parties to a Contract of Sale
1. Capacity of parties (Arts. 14891492)
2. Absolute incapacity (Arts. 1327,
1397, 1399)
3. Relative incapacity: married
persons
4. Special disqualifications (Arts.
1491-1492)
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A. INTRODUCTION
8. Contract of Sale/Contract to Sell
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8. Contract of Sale/Contract to Sell

Contract of Sale
Absolute
Real obligation
obligation to give
Title passes to the
buyer upon delivery
Non-payment of the
price is a negative
Remedies available:
Specific
Performance
Rescission
Damages
Contract to Sell
Conditional
Personal obligation
obligation to do
Ownership is reserved
in the seller and will
pass to the buyer only
upon full payment of
the price
Full payment is a
positive suspensive
condition, the failure
of which is not a
breach but prevents
the obligation of the
vendor to convey title
to arise
Remedies available:
Resolution
Damages

A. INTRODUCTION
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B. PARTIES TO A CONTRACT OF SALE
1. Capacity of Parties
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GENERAL RULE - All persons who are
authorized in this Code to obligate themselves
may enter into a contract of sale
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2. Absolute Incapacity
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2. ABSOLUTE INCAPACITY
MINORS, INSANE AND DEMENTED
PERSONS, AND DEAF-MUTES
Contracts are voidable, subject to

annulment or ratification
Also includes:
-
State of drunkenness
Hypnotic spell
NECESSARIES: Those sold and delivered

to a minor or other person without
Page 132 of
capacity to act, he must pay a

reasonable price therefore
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3. Relative Incapacity
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3. RELATIVE INCAPACITY
A. SPOUSES - A spouse may, without the
consent of the other spouse, enter into sales
transactions in the regular pursuit of their
profession, vocation, or trade. These contracts
are void.
GENERAL RULE: The husband and the wife
cannot sell property to each other.
EXCEPTION:
When a separation of property was agreed
upon in the marriage settlement
When there has been a judicial separation

of property under Art. 191
NOTE: Prohibition likewise applies to commonlaw spouses

B. OTHERS - TRUST RELATIONSHIPS
I. Art. 1491 - Two groups of parties prohibited
from acquiring by purchase certain properties:
property involved in litigation (reason is that the

transfer or assignment of the property takes
effect only after the finality of a favorable
judgment
II. Legal Status of Contract
1. Void (case law) guardian/ executor/public
officers / officers of the court
2. Voidable (civil code) agent; VALID if with
consent
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4. Special Disqualifications
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4. SPECIAL DISQUALIFICATIONS

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C. SUBJECT MATTER OF SALE

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a. Guardian/Agent/Executors and Administrators

Direct or indirect
C. Subject Matter
1. Requisites of a valid subject
matter (Arts. 1459-1465)
2. Particular kinds
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May be ratified since only private wrong is

involved
b. Public Officers & Employees/Officers of Court

i. Cannot be ratified since public wrong is
involved
ii.
Requisites for the prohibition to
apply to attorneys:
1. Existence of attorney client
relationship;
2. Property is the subject matter in
litigation;
3. While in litigation (from filing of
complaint to final judgment)

1. Requisites of a valid subject
matter
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NOTE: Exception to the prohibition against

attorneys: contingent fee arrangement where
the amount of legal fees is based on a value of
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1. REQUISITES OF A VALID SUBJECT

MATTER
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Requisites:
1. Things
A. Possible - existing, future, and
contingent
i.
Whether
the
subject
matter is of a type and nature that
exists or could be made to exist to
allow the seller reasonable certainty
of being able to comply with his
obligations
ii.
Minimum requirement of
potential existence: taking into
consideration the state of science
and technology at the time of
perfection of the contract
B. Licit
B.1. Not outside the commerce of man
B.2. If illicit, contract is void
B.3. Prohibited:
i. Animals with contagious
diseases
ii. Sale of future inheritance
a)
Thing is capable of
being made determinate
b)
Without
the
necessity of a new or further contract
between the parties.
NOT
2. Rights Must be transmissible, except:

a. Future inheritance
b. Service
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Sale of a mere hope or

expectancy that the thing
will come to existence;
sale of the hope itself
Sale is effective even if
the thing does not come
into existence, unless it is
a vain hope (Art 1461
Sale of a vain hope or
expectancy is void)
The uncertainty is with
regard to the existence of
the thing
Object is a present thing

which is the hope or
expectancy
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ii. Determinable: always generic
CAN
Sale is
subject to the
condition;
that the thing
will exist; if it
does not,
there is no
contract
Uncertainty
is with regard
to the
quantity and
quality of the
thing and not
the existence
of the thing
Object is a
future thing
Emptio spei

2. Particular Kinds
C. Determinate or determinable
i. Determinate: particularly designated or
physically segregated from all others of
the same class; always specific
NOTE:
Subject
matter
DETERMINED BY a 3rd PARTY.
Emptio rei
speratae
Sale of an
expected
thing
be
2. PARTICULAR KINDS
GOODS THAT MAY BE THE OBJECTS OF SALE
1. Existing goods goods owned or
possessed by the seller at the time of
perfection
2. Future
goods
goods
to
be
manufactured, raised or acquired by the
seller after the perfection of the contract
NOTES:
Quantity of subject matter is not essential for
perfection; must determine nature and
quality of subject matter
Generic things may be the object of sale, but
the obligation to deliver the subject matter
can only be complied with when the subject
matter has been made determinate (either
by physical segregation or particular
designation)
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D. OBLIGATIONS OF THE
SELLER TO TRANSFER
OWNERSHIP
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D. Obligations of the Seller to
Transfer Ownership
1. Sale by a person not the owner
at time of delivery (Arts. 1462, 1505,
1459); Exceptions
2. Sale by a person having a
voidable title (Arts. 1506, 559)
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D. OBLIGATIONS OF THE SELLER TO
TRANSFER OWNERSHIP
1. Sale by a person not the owner at
the time of delivery
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1. OBLIGATION OF THE SELLER TO

TRANSFER OWNERSHIP
GENERAL RULE: Seller need not be the owner
of the subject matter at the time of perfection:
sufficient that he is the owner at the time of
delivery.
EXCEPTION: Foreclosure sale (mortgager must
be absolute owner)
RULES ON LEGAL EFFECTS OF SALE BY A
NON-OWNER
GENERAL RULE: Sale by non-owner, buyer
acquires no better title than seller had.
EXCEPTIONS:
1. Owner by his conduct is precluded from
denying sellers authority (ESTOPPEL)
2. Contrary is provided for in recording laws (PD
1529)
3. Sale is made under statutory power of sale or
under order of a court of competent jurisdiction
4. Sale is made in a merchants store in
accordance with code of commerce and special
laws.
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But subject to ANTI-FENCING LAW

TITLE AS TO MOVABLE PROPERTIES
GENERAL RULE: Possession is equivalent to
title
REQUISITES: Possession of movable and Good
Faith
EXCEPTIONS:
1. Owner lost movable owner can recover
without reimbursing price
2. Owner is unlawfully deprived owner can
recover w/o reimbursing price
EXCEPTIONS TO THE EXCEPTIONS:
1. Movable is bought at public sale owner can
only recover after reimbursing price
2. Acquired in good faith and for value from
auction
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TRANSFER OWNERSHIP
1. Sale by a person having a voidable
title
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TRANSFER OWNERSHIP
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E. PRICE
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E. Price
1. Meaning of price (Arts. 14691474)
2. Requisites for a valid price
3. How price is determined
4. Inadequacy of price (Arts. 1355,
1470)
5. When no price agreed (Art. 1474)
6. Manner of payment must be
agreed upon
7. Earnest money vs. Option money
(Art. 1482)
Page 135 of
e. But never by one party to the

contract (unless the price is accepted
by the other party)
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E. PRICE
1. Meaning of Price
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1. MEANING OF PRICE
PRICE 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 vendee and agreed to by him.
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E. PRICE
2. Requisites for a Valid Price
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Note: When the 3rd party is unwilling to set the

price, the parties may not ask the court to fix
the price because the condition imposed on the
contract has not happened yet and thus, no
enforceable contract has arisen.
EFFECT WHERE PRICE IS SIMULATED
The act may be shown to have been in
reality a donation, or some other act or
contract
If not and neither party had any intention

whatsoever that the amount will be paid
(absolutely simulated): the sale is void
2. REQUISITES FOR A VALID PRICE:

A. Real
When at the perfection of the contract of sale,
there is every intention on the buyer to pay the
price, and every expectation on the part of the
seller to receive such price as the value of the
subject matter he obligates himself to deliver.
(Test of intention)
B. In money or its equivalent
Consideration for a valid contract of sale can be
the price and other valuable consideration; at
the very least, a true contract of sale must have
price as part of its consideration (Test of value
consideration)
C. Certain or ascertainable
i. Certain: expressed and agreed in
terms of specific pesos and/or
centavos
ii. Ascertainable:
a. Set by third persons
b. Set by the courts in cases where
the third person fixes the price in bad
faith or by mistake
c.
Set by reference to a definite day,

particular exchange or market
d. Set by reference to another thing

certain
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If there is a real price but what is stated

in the contract is not the one intended to
be paid (only relatively simulated): the
contract of sale is valid but subject to
reformation (false price)
EFFECT OF NON-PAYMENT OF PRICE
NOTE: Non-payment of price does not cancel
sale, as the sale is still considered perfected. But
it is a cause for either:
1. Specific performance or
2. Rescission.
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E. PRICE
3. How price is determined
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3. HOW PRICE IS DETERMINED
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E. PRICE
4. Inadequacy of price
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4. INADEQUACY OF PRICE
Page 136 of
EFFECT OF GROSS INADEQUACY OF PRICE

NOTE: Mere inadequacy of the price does not
affect the validity of the sale, except
EARNEST MONEY
1. Money given as part of purchase price
2. Acceptance is the proof that contract of
sale exists
(1) When there is fraud, mistake, or undue

influence indicative of a defect in consent is
present,
3. Nothing in law prevents parties from

treating earnest money differently
(2)When it shows that the parties really intended

a donation or some other act or contract.
4. Old concept: subject to forfeiture when

BUYER backs out
(3)Judicial sale, where the inadequacy is

shocking to the conscience of man and there is
showing that in event of resale, a better price
can be obtained.
5. New concept: cannot be forfeited part

of purchase price; must be restored
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E. PRICE
5. When no price agreed
6. Qualification: if old concept is stipulated

VALID
7. Presumption of perfection of contract of
sale and such earnest money as part of
purchase price is disputable
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5. WHEN NO PRICE AGREED

Note: If there was a failure of the contract to
set a price but the BUYER has already
APPROPRIATED IT, then the buyer must pay a
reasonable price (Article 1474)
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E. PRICE
6. Manner of payment must be
agreed upon
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OPTION MONEY DISTINGUISHED FROM

EARNEST MONEY
OPTION MONEY
EARNEST MONEY
Money given as distinct
consideration for an
option contract
Part of the purchase

price
Applies to a sale not

perfected
Given only when

there is already a
sale
Not required to buy
When given, buyer

is bound to pay the
balance
6. MANNER OF PAYMENT MUST BE

AGREED UPON
Manner of payment must be agreed upon
Marnelego v. Banco Filipino Savings and
Mortgage Bank, [G.R. No. 161524, January
27, 2006
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E. PRICE
7. Earnest money vs. Option money

E. PRICE
================================
F. FORMATION OF CONTRACT
OF SALE
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7. EARNEST VS. OPTION MONEY
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F. Formation of Contract of Sale

1. Preparatory (Art. 1479)
Page 137 of
1.1. Offer (Art. 1475)

1.2. Option contract (Arts. 1479,
1324)
1.3. Right of first refusal
1.4. Mutual promise to buy and
sell (Art. 1479)
2. Perfection (Arts. 1475, 1319,
1325, 1326)
3. Formalities of the contract (Art.
1403 (d)&(e))
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F. FORMATION OF CONTRACT OF
SALE
1. Preparatory
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1. PREPARATORY
4. Offer floated
without
period/without
condition
5. Offer is
floated and
there
is counter-offer
6. Offer is
floated
7. Offer
accepted
absolutely
Continues to be valid
depending upon
circumstances of time,
place and person
Original offer is destroyed,
there is a new offer; can
not go back to original offer
No authority of offeror to
modify offer
Proceed to perfected stage
OPTION CONTRACT - a contract granting an

exclusive right in one person, for which he has
paid a separate consideration, to buy a certain
object within an agreed period
3 STAGES IN LIFE OF A CONTRACT OF SALE

A. Policitacion/Negotiation Stage - offer is
floated, acceptance is floated but they do not
meet; the time when parties indicate their
interest but no concurrence of offer and
acceptance.
B. Perfection - concurrence of all requisites;
meeting of the minds.
C. Consummation - parties perform their
respective undertakings
NOTE: There is no presumption of

consideration, it needs to be proven
A. PREPARATORY
b. Nominate
I.
RULES:
Characteristics of Option Contract

a. Not the contract of sale by itself, separate
and distinct
c.
1. Offer is
floated
Prior to acceptance, may

be withdrawn at will by
offeror
2. Offer floated
with a period
Without acceptance,
extinguished when period
has ended and maybe
withdrawn at will by offeror;
right to withdraw must not
be arbitrary otherwise,
liable to damage under Art
19, 20, 21 of Civil Code
3. Offer floated
w/ condition
OPTION- an unaccepted or unexercised

contractual offer
Extinguished by
happening/non-happening
of condition
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Principal - but can be attached to other

principal contracts
d. Onerous
e. Commutative
f.
Unilateral versus contract of sale which is

bilateral
g. Preparatory
Consideration in an option contract may be

anything of value, unlike in sale where it must
be price certain in money. (San Miguel
Philippines v. Cojuangco)
Page 138 of
a
How EXERCISED: Notice of acceptance should be
communicated
to
offeror
without
actual
payment as long as there is delivery of payment
in consummation stage
ELEMENTS OF VALID OPTION CONTRACT
a. Consent meeting of the minds
b. Subject matter an option right, or accepted
unilateral offer to buy, or accepted unilateral
offer to sell:
i. a determinate object
ii. for a price certain (including manner of
payment)
c. Prestation a consideration separate from
purchase price for option given
SITUATIONS IN AN OPTION CONTRACT:
i. Option contract is valid

ii. Offeror cannot withdraw offer until
after expiry period
iii. Subject to rescission, damages but
not to specific performance because
this is not an obligation to give
Without separate consideration
i. OLD RULE - offer is still valid, but
option contract is void and not
subject to rescission, damages
ii. NEW RULE: Right of first refusal
recognized as a valid offer
RIGHT OF FIRST REFUSAL:
1. Creates a promise to enter into a
contract of sale and it has no separate
consideration, not subject to specific
performance because there is no
contractual relationship here and it is
not an obligation to give (not a real
contract)
2. New doctrine: May
specific performance.
be
subject
to
The right of first refusal is only subject to

specific performance insofar as it is attached to
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Effect of new doctrine: turned the world of

policitacion upside down because while valid
option contract is not subject to specific
performance, right of first refusal which does not
even have a separate consideration may be
subject to specific performance
Recognizes recovery of damage based on abuse
of rights doctrine
OPTION CONTRACT DISTINGUISHED FROM
RIGHT OF FIRST REFUSAL
Option Contract
Right of First
Refusal
a. With separate consideration
b.
valid written principal contract (e.g. lease). RFR

becomes one of the considerations in the
contract. If RFR is violated, and property sold to
another buyer in bad faith, the sale to the 3 rd
party buyer is rescissible. The price for the 3rd
party buyer is to be the basis for the price of the
sale back to the one with the RFR. Equatorial
Devt v. Mayfair Theater, [370 SCRA 56]
Principal
contract;
stands on its own
Needs separate
consideration
Subject matter and
price must be valid
Not conditional
Not
subject
to
specific performance
Accessory; can not

stand on its own
Does
not
need
separate consideration
There must be subject
matter but price not
important
Conditional
Subject
to
specific
performance
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SALE
2. Perfection of Sales
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2. PERFECTION OF SALES
GENERAL RULE: A contract of sale is perfected
at the moment there is a meeting of the minds
upon the thing which is the object of the
contract and upon the price; consensual
contract
EXCEPTION: When the sale is subject to a
suspensive condition
Page 139 of
REQUIREMENTS:
1. When parties are face to face when

there is absolute acceptance of an offer
that is certain
2. When
thru
correspondence
or
telegram when the offeror receives or
had knowledge of the acceptance
3. When the sale is subject to a
suspensive condition from the
moment the condition is fulfilled
NOTES: Qualified acceptance: mere counteroffer which needs to be absolutely accepted to
give rise to perfected contract of sale
Business ads are mere invitations to make an
offer except when it appears to be otherwise
Rules governing auction sales:
1. Sales of separate lots by auction are separate
contracts of sale
2. Sale is perfected by the fall of the hammer
3. Seller has the right to bid at the auction
provided such right was reserved and notice was
given to that effect
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SALE
3. Formalities of the Contract
=========================================
3. FORMALITIES OF THE CONTRACT

Form not important in validity of sale
A. Sale being consensual, may be oral or
written, perfected by mere consent as to
price and subject matter
B. If particular form is required under the
statute of frauds:
-
valid and binding between parties

but not binding to 3rd persons
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Reason:
purposes
of
convenience only and not for validity
and enforceability; cause of action is
granted to sue and compel other
party to execute the document
When form is important for validity;

exception by specific provision of law;
1. Power to sell a piece of land granted to
an agent otherwise VOID
2. Sale of large cattle; must also be
registered with Municipal treasurer
otherwise VOID
3. Sale of land by non-Christian if not
approved by Governor VOID
When form is important for enforceability
[STATUTE OF FRAUDS Article 1403 (2)]
a. Performed 1 Year: A sale agreement
which by its terms is not to be
performed within a year from the
making thereof;
b. 500 and Above: An agreement for the
sale of goods, chattels or things in
action, at a price not less than P500.00;
and
c.
Sale Land: A sale of real property or of

an interest therein.
EXCEPTIONS TO COVERAGE OF STATUTE IN

SALES CONTRACTS:
1. WRITTEN: When there is a note or
memorandum in writing and subscribed
to by party or his agent (contains
essential terms of the contract)
2. PARTIAL EXECUTION: When there has
been
partial
performance/execution
(seller delivers with intent to transfer
title/receives price)
3. FAILURE TO OBJECT: When there has
been failure to object to presentation of
evidence (oral)
Page 140 of
4. E-COMMERCE: When sales are effected

through electronic commerce
While a sale of land appearing in a private deed
is binding between the parties, it cannot be
considered binding on third persons if not
embodied in a public instrument and recorded in
the Registry of Deeds. Secuya v. Vda. De
Selma, [G.R. No. 136021, February 22,
2000]

E. FORMATION OF CONTRACT OF
SALE
G. TRANSFER OF OWNERSHIP
1. Manner of Transfer
=========================================
1. MANNER OF TRANSFER
NOTE: Stage where parties both comply with
their obligation.
OBLIGATIONS OF THE SELLER
1. Preserve subject matter (proper diligence of a
good father of a family unless law or parties
stipulate another standard)
2. Deliver transfer ownership and deliver
object
3. Deliver fruits and accessories
4. Warrant subject matter against eviction and
hidden defects
A. Delivery of the Thing - Transfer ownership
(tradicion) covers twin obligations of the seller
which are:
1. To transfer the ownership; and
2. To deliver a determinate thing
================================
================================
G. Transfer of Ownership
1. Manner of Transfer (Arts. 1477,
1496-1501)
2. When delivery does not transfer
title
3. Kinds of delivery
4. Double sales (Art. 1544)
5. Property Registration Decree
5.1. Requisites for registration of
deed of sale in good faith
5.2. Accompanied by vendors
duplicate certificate of title,
payment of capital gains tax, and
documentary tax registration fees
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B. Delivery of the thing together with the

payment of the price, marks the consummation
of the contract of sale. PNB v. Ling, [69 Phil
611, October 5, 1927]
The act of delivery must be coupled with the
intention of delivering the thing and putting the
buyer under control. Norkis Distributor v. CA,
[195 SCRA 694, February 7, 1991]
=========================================

2. When Delivery does not transfer
Title
=========================================
2. WHEN DELIVERY DOES NOT TRANSFER

TITLE
=========================================

3. Different Kinds of Delivery
=========================================
3. DIFFERENT KINDS OF DELIVERY

Different Kinds of Delivery:
Page 141 of
1. Actual or real - when thing sold is placed in

the control and possession of the buyer
2. Legal or Constructive- can take several forms
and may be any manner signifying an
agreement that the possession is transferred
from the vendor to the vendee.
C. Different forms of Constructive Delivery Constructive delivery has same legal effect as
actual or physical delivery
over the thing sold that, at the moment of sale,

its material delivery could have been made.
Addison v. Felix, [38 Phil. 404]
A. WHEN
EXECUTION
OF
PUBLIC
INSTRUMENT DOES NOT PRODUCE THE
EFFECTS OF DELIVERY
Gives rise only to a prima facie presumption of

delivery which is destroyed when actual delivery
is not effected because of a legal impediment.
Ten Forty Realty v. Cruz
1.
When there is stipulation to contrary,

execution does not produce effect of
delivery
2.
When at the time of execution of

instrument, subject matter was not
subject to control of the seller
3.
Subject matter should be within control

of seller; he should have capacity to
deliver at the time of execution of public
instrument when he wants to effect
actual delivery
4.
Such capacity should subsist for a

reasonable time after execution of
instrument (reasonable time depends on
circumstances of persons, places and
things)
1. Traditio Longa Manu

Delivery of thing by mere agreement; when
SELLER points to the property without need of
actually delivering
2. Traditio Brevi Manu
Before contract of sale, the would be buyer was
already in possession of the would be subject
matter of sale (ex: as lessee)
3. Symbolic delivery
As to movables ex: delivery of the keys to a
car
4. Constitutum possessarium
When at the time of the perfection of the
contract of sale, seller had possession of the
subject matter in the concept of owner and
pursuant to the contract, seller continues to hold
physical possession no longer in the concept of
an owner but as a lessee or any other form of
possession other than in the concept of owner.
5. Quasi-tradition
Delivery of rights, credits or incorporeal
property, made by:
Placing titles of ownership in the hands of
the buyer
Allowing buyer to make use of rights
6. Tradition by operation of law
The execution of a public instrument is
equivalent to delivery. But to be effective, it is
necessary that the vendor have such control
CIVIL LAW REVIEWER

383
The presumption of delivery when the sale is

made through a public instrument can be
rebutted by clear and convincing evidence.
Presumptive delivery through a public
instrument can be negated by the failure of
the vendee to take actual possession of the
land or the continued enjoyment of
possession by the vendor. Santos v.
Santos, [366 SCRA 395]
B. Delivery of
Accessories
Fruits
and
Accessions/
Right to fruits and accessions/accessories accrue

from time sale is perfected but no real right over
it until it is delivered
C. Delivery Through Carrier
GENERAL RULE: Where the seller is authorized
or required to send the goods to the buyer,
delivery to the carrier is delivery to the buyer.
Page 142 of
I.
II.
EXCEPTIONS: a contrary intention appears or

implied reservation of ownership under pars.
1,2, 3 of Art. 1503
GENERAL RULE: The ownership of the thing

sold shall be transferred to the buyer upon the
actual or constructive delivery thereof.
FAST FREE ALONG SIDE - When goods

delivered alongside the ship, there is already
delivery to the buyer (twin effects deemed
fulfilled)
EXCEPTION: When the contrary is stipulated

such in the cases of:
1. Contract to sell
2.
Sale on acceptance/approval
ownership only passes to the buyer
when:
FOB - FREE ON BOARD - Shipment when

goods are delivered at ship at point of
shipment; delivery to carrier by placing
goods on vessel is delivery to buyer
Destination when goods reach the port
even if not disembarked yet from the vessel,
there is delivery to the buyer
III.
When buyer pays for services of carrier

delivery to carrier is delivery to buyer;
carrier is agent of the buyer.
When buyer pays seller the price from

moment the vessel is at port of
destination, there is already delivery to
buyer.
See Arts. 1522, 1539, 1540, 1541, 1542,

1543.
D.
TIME AND PLACE OF

DELIVERY
a. Follow stipulation in contact, or
b. Follow usage in trade, or
c. Sellers place of business or his
residence
d. Specific goods place where the
thing is
The buyer does not signify his

rejection but retains the goods
NOTE: Who Bears Expenses of Delivery? Seller

F.
SALE
DESCRIPTION/SAMPLE
BY
1. Sample goods must correspond with

sample shown
2. Description goods must correspond
with description or sample
3. Effect if there is no compliance:
RESCISSION may be availed of by the
buyer
G.
OBLIGATIONS OF BUYER
1. Pay the price

o
Buyer is obligated to pay price

according to terms agreed upon
regarding time, place and amount
If payment of interest is stipulated

must pay; if amount of interest not
mentioned apply legal rate
e. At reasonable hour
E. EFFECTS OF DELIVERY
CIVIL LAW REVIEWER

383
The buyer signifies approval to

the seller, or
3. Sale on return ownership passes to

the buyer but he may re-vest ownership
to the seller by returning the goods
within time fixed. If no time is fixed,
within reasonable time.
CIF COST, INSURANCE, FREIGHT
Page 143 of
2.
When buyer defaults constitutes

breach:
subject
to
specific
performance/rescission
and
damages; interest to be paid also
from default
GENERAL RULE: FIRST IN TIME, PRIORITY IN

RIGHT
When does it apply: when not all requisites
embodied in Art. 1544 concur.
I.
REQUISITES FOR
EXIST: (VOCS)
a. Where to accept: at time and place
3. Two or more buyers at odds over the

rightful ownership of the subject
matter
must
each
represent
conflicting interests; and
i. He intimates to seller that he has

accepted
ii. When delivered and does any act
inconsistent with ownership of seller
Sale of Goods on installment

1. Goods must be delivered in full,
except when stipulated

2. When not examined by buyer not
accepted until examined or at least

had reasonable time to examine
Acceptance of goods in general, absent

contrary express stipulation, does not
discharge seller from liability in case of
breach of warranties (unless no notice or
failure to give it within reasonable time)
4. When buyer has a right to refuse goods,

no need to return; shall be considered
as depositary; unless there is stipulation
to the contrary
=========================================

4. Double Sale
=========================================
4. DOUBLE SALE
CIVIL LAW REVIEWER

383
TO
2. Two or more sales transactions must

pertain to the same object or subject
matter;
stipulated in the contract; if none

specified at the time and place of
delivery goods; there is acceptance
when:
3.
SALES
1. Two or more sales transactions must

constitute valid sales;
Accept delivery of thing sold
iii. Retains without intimating to seller

that he has rejected
DOUBLE
4. Two or more buyers must each have

bought from the very same seller.
If not all the elements are present for

Art. 1544 to apply, the priniciple of prior
tempore, potior jure or simply he who is
first in time is preferred in right should
apply. Undisputably, he is a purchaser in
good faith because at the time he
bought the real property, there was still
no sale to as a second vendee.
Consolidated Rural Bank v. CA, [Jan.
17, 2005]
II. RULES ACCORDING TO 1544:

1. MOVABLE
First to posses in good faith
2. IMMOVABLE
1. First to register in good faith
2. No inscription, first to possess in good
faith
3. No inscription and no possession in
good faith Person who presents
oldest title in good faith
4. Good Faith - one who buys property
without notice that another person
has a right or interest in such
Page 144 of
property; one who has paid price

before notice that another has claim
or interest
III. LIS PENDENS notice that subject matter is
in litigation
IV. ADVERSE CLAIM notice that somebody is
claiming better right
V. POSSESSION - Both actual or constructive
VI. REGISTRATION: any entry made in the
books of the registry, including both
registration in its ordinary and strict
sense, and cancellation, annotation, and
even marginal notes. It is the entry made
in the registry which records solemnly and
permanently the right of ownership and
other real rights.
Registered under Torrens system 1544
applies
Not registered under the
system 1544 still applies
Torrens
If 2nd sale is a judicial sale (by way of levy on

execution), buyer merely steps into the
shoes of the judgment debtor. Outside of
such situation must apply to conflicting
sales over the same unregistered parcel of
land. If sale 1 occurs when land is not yet
registered and sale 2 is done when land is
already registered apply FIRST IN TIME,
PRIORITY IN RIGHT.
Good faith must concur with registration. To
be entitled to priority, the second purchaser
must not only establish prior recording of his
deed, but must have acted in good faith.
Gabriel v. Mabanta, [GR 142403, March
26, 2003]
CONDITION
1. Effect of Non-Fulfillment of Condition
The other party may
a. refuse to proceed with the contract
CIVIL LAW REVIEWER

383
b. proceed with the contract, waiving the

performance of the condition
If the condition is in the nature of a promise that
it should happen, the non-performance of such
condition may be treated by the other party as
breach of warranty.
2. Effect if buyer has already sold the
goods
GENERAL RULE: The unpaid sellers right to
lien or stoppage in transitu remains even if
buyer has sold the goods
EXCEPTION:
When the
thereto, or
seller
has
given
consent
When the buyer is a purchaser in good

faith for value of a negotiable document
of title.
=========================================

4. Property Registration Decree
=========================================
4. PROPERTY REGISTRATION DECREE

================================
H. RISK OF LOSS
================================
H. Risk of Loss
1. General Rule (Arts. 1263, 1189)
2. When loss occurred before
perfection
3. When loss occurred at time of
perfection (Arts. 1493 and 1494)
4. When loss occurred after
perfection but before delivery
Page 145 of
5. When ownership is transferred

(Art. 1504)
=========================================

H. RISK OF LOSS
Paras: BUYER
Tolentino: SELLER
Deterioration and fruits - Buyer

bears loss;
=========================================
4. AFTER DELIVERY
1. GENERAL RULE
Legal consequences from point of perfection

are the same in both legal systems: upon
perfection of an unconditional contract of
sale involving specific or determinate subject
matter, the risk of loss deterioration and the
benefits of fruits and improvements, were fro
the account of the buyer.
If Subject matter is GENERIC, Simply replace
item.
Res perit domino

Delivery extinguishes ownership visa-vis the seller and creates a new
one in favor of the buyer

H. RISK OF LOSS
================================
I. DOCUMENTS OF TITLE
================================
WHO
BEARS
RISK
DETERIORATION/ FRUITS:
OF
LOSS/
1. BEFORE PERFECTION
Res perit domino
Owner is seller so seller bears risk of

loss
2. AT PERFECTION
Res perit domino
Contract is merely inefficacious

because loss of the subject matter
does not affect the validity of the
sale
Seller cannot anymore comply with

obligation so buyer cannot anymore
be compelled.
I. Documents of Title
1. Definition (Art. 1636)
2. Purpose of documents of title
3. Negotiable documents of title
4. Non-negotiable documents of
title
5. Warranties of seller of
documents of title (Art. 1516)
6. Rules on levy/garnishment of
goods (Arts. 1514, 1519, 1520)
=========================================

1. Definition
=========================================
3. AFTER PERFECTION
DELIVERY
BUT
Loss confused state
CIVIL LAW REVIEWER

383
BEFORE
1. DEFINITION
DOCUMENTS OF TITLE
1. Not creation of law but by merchants to allow
them to deal with merchandise without having
to physically carry them around
2. Pertains to specific type of movables only:
GOODS
Page 146 of
a. Documents of
functions:
title
serve
two
(2)
i.
Evidence of existence and possession

of goods described therein
ii.
Medium by which seller is able to

transfer possession of goods
3. A document of title which states that the

goods referred to therein will be delivered to the
bearer, or to the order of any person named in
such document
4. Negotiable by delivery or indorsement
=========================================

2. Purpose of documents of title
=========================================
2. PURPOSE OF DOCUMENTS
=========================================

3. Negotiable documents of title
=========================================
4. NON-NEGOTIABLE
TITLE
DOCUMENTS
OF
Effects of Unauthorized Negotiation

The validity of the negotiation of a negotiable
document is not impaired by the fact that
negotiation was done in breach of duty or that
the owner of the document was deprived of the
same by loss, theft, accident, fraud, mistake if
the person to whom the document is delivered
is in good faith and without notice of the said
irregularities.
Important Considerations
1. Negotiation gives better
assignment
right
than
2. Assignee takes document with defects of

the assignor
3. Obligation of bailee bailee
immediately bound to the document
is
=========================================
=========================================

5. Warranties of seller of documents
of title
3. NEGOTIABLE DOCUMENTS OF TITLE
=========================================
1.
Deliver to bearer
(negotiation by mere delivery)
2.
Deliver to specific
person or his order (negotiation by
endorsement + delivery)
Even if face of instrument says NONNEGOTIABLE, it is still NEGOTIABLE;

limiting
words
does
not
destroy
negotiability.
If order instrument and no endorsement
was made equivalent to assignment
=========================================

4. Non-negotiable documents of title
Warranties on Negotiation
1. The document is genuine
2. He has legal
transfer it
right
to
negotiate
or
3. He has knowledge of no fact which would

impair the validity or worth of the
document
4. He has right to transfer title to goods and
goods are merchantable/fit
=========================================

6. Rules on Levy or Garnishment of
Goods
=========================================
CIVIL LAW REVIEWER

383
Page 147 of
6. Rules of Levy/Garnishment of Goods

Covered by Documents of Title
d. Law on estoppel further bolsters it:

title passes by operation of law to
grantee when person who is not
owner of the goods sold delivers it
and later on acquires title thereto
NON NEGOTIABLE:
o
Notification is operative act to transfer

title/possession of goods in favor
assignee
e. Since valid, action to annul

improper;
there
is
already
perfected contract
Before notification can still be

garnished
is
a
2. CONSUMMATION STAGE
a. Contract of sale is valid because it

has passed perfected stage, despite
seller not being the owner or seller
having no authority to sell
NEGOTIABLE:
o
Cannot be levied or garnished when

documents are already with purchaser in
good faith, unless:
Document is first surrendered
Document is pounded by court
Negotiation is enjoined
NEGOTIATION
b. What is void is the transfer of title/

ownership did not pass
c. Effect: buyer acquired no better right
than transferor
d. Legal effect: CAVEAT
BUYER BEWARE
ASSIGNMENT
Transferor/holder
acquires title to
goods
Acquires title to
goods against
transferor
Bailee has direct

obligation to holder
as if directly dealt
with him
Acquires right to
notify bailee so
that he acquires
obligation of bailee
to hold goods for
him
A. SALE BY NON-OWNER OR BY ONE

HAVINGVOIDABLE TITLE
1. PERFECTION STAGE
a. Sale by owner VALID
b. Sale by non-owner VALID;
c. Reason why both sales are valid:
ownership is necessary only at time
when transfer title to goods; at
perfection stage, no obligation on
part of seller to transfer ownership
CIVIL LAW REVIEWER

383
EMPTOR
e. Sale of co-owner of whole property or

definite portion
GENERAL RULE:
Co-owner sells whole property prior to
partition sale of property itself is void but
valid as to his spiritual share
Co-owner sells definite portion to partition

sale is void as to other co-owner but valid as
to his spiritual share if the buyer would have
still bought such spiritual share had he
known that the definite portion sold would
not be acquired by him.
EXCEPTIONS TO THE RULE ON THE EFFECT

OF SALE OF A DEFINITE PORTION BY A COOWNER
1. Subject matter is indivisible in nature or by
intent;
2. Sale of a particular portion of a property is
with consent of other co-owners;
3. Co-owner sells 1 of 2 commonly-owned lands
and does not turn over of the proceeds, other
co-owner, by law and equity, has exclusive claim
over remaining land.
Page 148 of
B. SALE BY SELLER WITH VOIDABLE TITLE

IN GOOD FAITH and WITHOUT NOTICE OF
THE DEFECT
1. PERFECTION STAGE
a. Valid sale buyer acquires title of goods
2. CONSUMMATION STAGE
o
Valid sale if title has not yet been
avoided, buyer buys goods under following
condition:
in good faith
for value
without notice of sellers defect

of title

================================
J. REMEDIES OF UNPAID
SELLER
================================
SPECIAL REMEDIES
REQUISITES:
1. Subject matter goods
2. Seller is unpaid not completely paid or
received negotiable instrument under a
condition and condition has been breached by
reason of dishonor
3. Physical possession is with seller
=========================================

J. REMEDIES OF UNPAID SELLER
2. Remedies of unpaid seller
=========================================
2. REMEDIES OF UNPAID SELLER

The following are the special remedies of unpaid
seller:
1. Possessory lien
2. Stoppage in transitu
3. Special right of re-sale
4. Special right to rescind
NOTE: Hierarchical Application - only when
unpaid seller has exercised possessory lien or
stoppage in transitu can the seller proceed with
his other special rights of resale or to rescind.
Possessory Lien
J. Remedies of an Unpaid Seller

1. Definition of unpaid seller (Art.
1525)
2. Remedies of unpaid seller
1. Seller not bound to deliver if buyer has

not paid
him the price
=========================================
3. Exercisable
only
circumstances:

1. Definition of unpaid seller
2. Right to retain; cannot be availed when

seller does not have custody
goods sold without stipulation as to

credit
b.
goods sold on credit but term of

credit has expired
c.
buyer becomes insolvent
d.
When part of goods delivered, may

still
exercise
right
on
goods
undelivered
1. DEFINITION OF UNPAID SELLER
EXCEPTION:
DOCTRINE OF SELF HELP
CIVIL LAW REVIEWER

383
following
a.
=========================================
GENERAL RULE: Any man may not take law in

his own hands, must seek remedy through
courts.
in
Page 149 of
3. Notice by seller to buyer is not

required; notice to carrier is essential
Instances when possessory lien lost:

1. seller delivers goods to carrier for
transmission
to
buyer
without
reserving ownership in goods or right
to possess them
2. buyer or his agent lawfully
possession of goods
obtains
3. Waiver
4. loses lien when he parts with goods
(still has stoppage in transitu)
5. notice by seller to buyer not essential
Stoppage In Transitu
Goods are in transit
Requisites when goods are in transit
1. From
the
time
goods
are
delivered to carrier for purpose of
transmission to buyer
2. Goods rejected by buyer and
carrier continues to possess them
When goods no longer in transit
III. Special Right to Resell the Goods

1. Goods are perishable
2. stipulated the right of resale in case buyer
defaults in payment
3. Buyer in default for unreasonable time
4. Notice by seller to buyer not essential
Why special? There are things which seller
cannot do in ordinary sale:
A. ownership is with buyer but seller
can
sell goods
B. title accorded to buyer is destroyed
even without court intervention
Special Right to Rescind
1. Expressly stipulated
2. Buyer is in default for unreasonable time
3. Notice needed to be given by seller to buyer
1. Reached point of destination

2. Before reaching destination, buyer obtains
delivery of the goods
3. Goods are supposed to have been delivered to
buyer but carrier refused
4. Shown by seller that buyer is insolvent (failure
to pay when debts become due)
How is right exercised
1. Obtain actual possession of goods
2. Give notice of claim to carrier / bailee
in possession thereof
CIVIL LAW REVIEWER

383
Why special ownership of goods already with

buyer but seller may still rescind; ownership is
destroyed even without court intervention but in
ordinary sale, need to go to court to destroy
transfer of ownership
Remedies of Buyer
When Seller fails to deliver, buyer may seek
SPECIFIC PERFORMANCE WITHOUT GIVING
SELLER OPTION TO RETAIN GOODS ON PAYMENT
OF DAMAGES

================================
Page 150 of
K. PERFORMANCE OF
CONTRACT
to sell the buyer has the

following options:
================================
i. Accept per contract and reject
the rest
ii. Accept the whole pay price
K. Performance of Contract
1. Delivery of thing sold
(1) Sale of movables (Arts. 1522,
1537, 1480)
(2) Sale of immovables (Arts.
1539, 1543)
(3) Inspections and Acceptance
2. Payment of price
stipulated
iii. Eject whole if subject matter is
indivisible
d. When the seller delivers to
the buyer the goods he

contracted to sell, MIXED with
goods
of
a
different
description not included in
the contract, buyer has 2
options:
=========================================

K. PERFORMANCE OF CONTRACT
1. Delivery of thing sold
i.
=========================================
1. DELIVERY OF THING SOLD
ii. Reject
goods
indivisible
A. MOVABLES
a. Delivery of thing plus accessories
and accessions in the condition in
which they were upon the perfection
of the contract including the fruits
b. When the seller delivers to the buyer
a quantity of goods LESS than he
contracted to sell, buyer has the
option to reject or accept it.
a.When accepts with knowledge
that seller is not going to perform
contract in full, he must pay at
price stipulated
Accept good w/c are in

accordance with contract and
reject the rest
entirely
if
Obligations of a Vendor (Art. 1537)

1. To deliver the subject matter
2. To deliver the fruits and accessories
Those which pertains to the vendee

from the day on the perfection of
contract
3. To preserve the subject matter
In the condition in which they were

upon the perfection of the contract.
b.
When
accepts
and
consumes before knowledge that
buyer will not perform contract in
full, liable only for fair value of
goods delivered
Article 1480. Any injury to or benefit from the

thing sold, after the contract has been
perfected, from the moment of the perfection of
the contract to the time of delivery, shall be
governed by articles 1163 to 1165, and 1262.
When seller delivers to the

buyer a quantity of goods
LARGER than he contracted
This rule shall apply to the sale of fungible

things, made independently and for a single
price, or without consideration of their weight,
number, or measure.
c.
CIVIL LAW REVIEWER

383
Page 151 of
Should fungible things be sold for a price fixed

according to weight, number, or measure, the
risk shall not be imputed to the vendee until
they have been weighed, counted, or measured
and delivered, unless the latter has incurred in
delay.
C. INSPECTIONS AND ACCEPTANCE

Accept delivery of thing sold
Where to accept: at time and

place stipulated in the contract; if
none specified at the time and
place of delivery goods;
There is acceptance when: He

intimates to seller that he has
accepted
When delivered and does any

act inconsistent with ownership
of seller
Retains without intimating to

seller that he has rejected
B. IMMOVABLES
o Sold per unit or number
i.
If the sale should be made with

statement of its area, rate at
certain price, deliver all that may
have been stated in the contract
if impossible, remedies of buyer:
ii. If Less in area:
Rescission
Proportional reduction of price:
LACK IN AREA SHLD NOT BE LESS
THAN 1/10 OF AREA AGREED
UPON
iii. If Greater in area:
Accept per stipulation and
reject the rest
=========================================

2. Payment of price
=========================================
Accept whole area pay

at contract rate
Not applicable to judicial

sales
2. PAYMENT OF PRICE
Buyer is obligated to pay price according to
terms agreed upon regarding time, place and
amount
iv. Sold for lump sum
When price
indicated
per
unit
not
If area delivered is either

greater or lesser price will
not be adjusted accordingly
The actions arising from above in delivery of

immovables shall prescribe in six months,
counted from the day of delivery.
CIVIL LAW REVIEWER

383
If payment of interest is stipulated must pay; if

amount of interest not mentioned apply legal
rate
When buyer defaults constitutes breach:

subject to specific performance/rescission and
damages; interest to be paid also from default

================================
L. WARRANTIES
================================
Page 152 of

L. Warranties
1. Express warranties
2. Implied warranties (Art. 1547)
3. Effects of warranties
4. Effects of waivers
5. Buyers options in case of breach
of warranty (Art. 1599)
=========================================

L. WARRANTIES
1. Express warranties
=========================================
1. EXPRESS WARRANTIES
I. Condition
3. Buyer purchases
relying thereon
the
4. When breached,
damages
seller
subject
is
matter
liable
for
=========================================

L. WARRANTIES
2. Implied warranties
=========================================
2. Implied Warranties
Deemed included in all contracts of sale whether
parties are actually aware or not, whether they
were intended or not; by operation of law
1. Warranty that seller has a right to sell
1. When a contract contains a condition, the

non happening of which would not constitute
a breach but extinguishes the obligation
Refers to consummation stage since

in consummation stage, it is where
ownership is transferred by tradition
2. However, if party to the sales contract has

promised that the condition should happen
or be performed, the non-performance of
which may be treated by parties as breach
Not applicable to sheriff, auctioneer,

mortgagee, pledge
2. Warranty against eviction

II. Warranties
A statement or representation made by the
seller contemporaneously and as a 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 insure that
certain facts are or shall be as he then
represents
Express Warranties
REQUISITES:
1. It must be an affirmation of fact or any
promise by seller relating to the subject
matter of sale
2. Natural tendency of affirmation or
promise is to induce buyer to purchase
subject matter
CIVIL LAW REVIEWER

383
a. Implied, unless contrary

appears in contract
provision
b. When ownership is transferred, buyer

shall enjoy the legal and peaceful
possession of the thing
c.
Requisites of breach of warranty against

eviction:
Buyer is evicted in whole or in part

from the subject matter of sale
There is a final judgment
Basis of eviction is a right prior to

sale or an act imputable to vendor
Seller has been summoned in the

suit for eviction at the instance of
buyer; or made 3rd party defendant
Page 153 of
through 3rd party complaint brought

by buyer
Vendors liability shall consists of (Total
Eviction) (VICED)
1. Value of the thing at the time of eviction;
2. Income or fruits if he has been ordered to
deliver the to the party who won the suit
3. Cost of the suit
4. Expenses of the contract; and
5. Damages and interests if the sale was in bad
faith
REQUISITES:
a. Immovable sold is encumbered with non
apparent
burden
or
servitude
not
mentioned in the agreement
b. Nature of nonapparent servitude or
burden is such that it must be presumed
that the buyer would not have acquired it
had he been aware thereof
c. When breach of warranty exist: buyer may
ask for rescission of indemnity
d. Warranty not applicable when non
apparent burden or servitude is recorded
in the Registry of Property unless there is
express warranty that the thing is free
from all burdens and encumbrances
Partial Eviction
1. To enforce vendors liability for eviction
(VICED);
2.
To demand rescission of contract.
4. Warranty against hidden defects
a. No appeal needed nor a need for buyer

to resist eviction for right to accrue; it is
enough
that
the
aforementioned
requisites are complied with
b. Warranty cannot be enforced
aforementioned requisites concur
until
c. Applies to judicial sale; judgment debtor

responsible for eviction unless otherwise
decreed in judgment
d. Vendor not liable for eviction if adverse
possession had been commenced before
sale but prescriptive period is completed
after transfer
e. Rights of buyer when deprived of only
part of the subject matter but would not
have bought such part if not in relation
for the whole:
1. Rescission
2. Mutual restitution
3. Warranty against encumbrances (non-
SELLER does not warrant

defect; caveat emptor
Except when hidden
patent
1. subject matter may be movable or

immovable
2. nature of hidden defect is such that it
should render the subject matter
unfit for the use of which it was
intended or should
diminish its
fitness
3. had the buyer been aware, he would
not have acquired it or would have
given a lower price
a. When defect is visible or even if not
visible but buyer is an expert by reason
of his trade or profession, seller is not
liable
b. Obligation of seller for breach depends
on whether he has knowledge of such
defect or not
apparent)
CIVIL LAW REVIEWER

383
Page 154 of
c. Seller is aware seller should return

price and refund expenses of contract
with damages
d. Seller is not aware - seller should return
price and interest and refund expenses
(no damages)
contract and they are found to be

unfit therefor
Prescription of action: 40 days from

date of
delivery to buyer
If sale is rescinded, animals to be

returned in same condition when
they were acquired; buyer shall
answer for injury / loss due to his
fault
Buyer
may
elect
between
withdrawing
from
sale
and
demanding proportionate reduction
of price with damages in either case
e. Buyer may elect between withdrawing

from
contract
or
demanding
proportionate reduction of price with
damages in either case
f.
Applicable to judicial sale except that

judgment debtor not liable for damages
g. Action to prescribe 6 months

delivery of subject matter
5.
from
Defects on animals
a. Even in the case of professional
inspection but hidden defect is of such
nature that expert knowledge is not
sufficient to discover it - defect shall be
considered as REDHIBITORY
b. If vet fails to discover through ignorance
or bad faith, he is liable for damages
c. Sale of animals on teams (2 or more)
When only one is defective, only one

is prohibited and not the others
Exception: when it appears buyer
would not have purchased the team
without the defective one
Apply to sale of other things
d. Animals at fair or public auction
Sale of unfit animals
A. Warranty as to fitness and quality;

requisites:
1. Buyer makes known to seller the
particular purpose for which goods are
acquired and it appears that the buyer
relied on the sellers skill or judgment
2. Goods are bought by description from
seller who deals in goods of that
description
3. in case of sale of specified article under its
patent or trade name, no warranty unless
there is a stipulation to the contrary
4. measure of damage: difference between
value of goods at time of delivery and
value they would have had if they had
answered to the warranty
No warranty against hidden defects
e. Sale of animals with contagious disease

is void
f.
Specific Implied Warranties in the Sale of

Goods
Void if use / service for which they are

acquired has been stated in the
SALE OF GOODS BY SAMPLE

If seller is a dealer in goods of that kind, there is
an implied warranty that the goods shall be free
from defect rendering them unmerchantable
which would not be apparent on reasonable
examination of the sample
=========================================
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Page 155 of

L. WARRANTIES
3. Effects of warranties
=========================================
3. EFFECTS OF WARRANTIES
=========================================
Buyers Option
Warranty
in
Case
of
Breach
of
1. Accept goods and set up breach

warranty by way of recoupment
diminution or extinction of the price.
of
in
2. Accept goods and maintain action against

seller for damages

L. WARRANTIES
4. Effects of waivers
3. Refuse to accept goods and maintain

action against seller for damages
=========================================
4. Rescind contract of sale and refuse to

receive goods/return them when already
received.
4. EFFECTS OF WAIVER
Waiver in Warranty against eviction Parties may increase or diminish implied
warranty against eviction; but effect depends on
good faith or bad faith on the part of the seller.
o
Seller in bad faith and there is waiver

against eviction null and void
Buyer without knowledge of a particular

risk, made general renunciation of
warranty not waiver but merely limits
liability of seller in case of eviction (pay
value of subject matter at time of eviction)
Buyer with knowledge of risk of eviction

assumed its consequences and made a
waiver vendor not liable (applicable only
to waiver of warranty against eviction)
1. Waiver to a specific case of eviction wipes out warranty as to that specific
risk but not as to eviction caused by
other reasons.
Waiver against Hidden Defects

i. If there has been a stipulation exempting
seller from hidden defects
ii. If seller not aware of hidden defects
loss of the thing due to such defect will
not make seller liable
iii. If seller aware waiver is in bad faith,
thus seller still liable
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When rescission by buyer not allowed:

1. If the buyer accepted the goods knowing
the breach of warranty WITHOUT protest
2. If he fails to notify the seller within a
reasonable time of his election to rescind
3. If he fails to return or offer to return the
goods in substantially as good condition
as they were in at the time of the
transfer of ownership to him

L. WARRANTIES
================================
M. BREACH OF CONTRACT
================================
M. Breach of Contract
1. Remedies of the seller (Arts.
1636, 1594)
(1) Sale of movables
2. Recto Law: sale of movables on
installment (Arts. 1484-1486)
3. Sale of immovables
(1) PD 957, sec. 23, 24
(2)Maceda Law: sale of
immovables on Installment
4. Remedies of the Buyer
(1) Sale of movable
Page 156 of
Coverage: sale and financing transaction and

contracts of lease with option to purchase
(2) Sale of immovables

=========================================

1. Remedies of the seller
GENERAL RULE: If already chose specific

performance, can no longer choose other
remedies
=========================================
EXCEPTION: After choosing, it has become

impossible, rescission may be pursued
1. REMEDIES OF THE SELLER
Remedies of Unpaid Seller (Art. 1484)

1. Exact fulfillment should the buyer fail to pay.
2. Cancel the sale if buyer fails to pay 2 or
more installments.
3. Foreclose on chattel mortgage if buyer fails
to pay 2 or more installments
=========================================

2. Recto Law: Sale of Movables on
Installment
=========================================
2. RECTO LAW: SALE OF MOVABLES ON

INSTALLMENT
Incidents:
1. If buyer chooses foreclosure, no further
action against buyer to recover any
unpaid balance of the price
2. When is the law applicable? Sale on
movables by installment
o
Sale
on
installment:
payment by several partial payments
in small amount
Rationale of the law: Buyer is lulled into

thinking that he could afford because of small
amounts per installment and at the same time
remedy abuse of commercial houses
Nature of
cumulative
remedies:
alternative
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383
and
not
The fact that the seller did not foreclose

the chattel mortgage constituted on the
movable purchased on credit, but opted
specific performance, with a plea for a
writ of replevin, does not amount to a
foreclosure of the chattel mortgage to be
covered by Art. 1484. Tajanglangit v.
Southern Motors, [101 Phil. 606]
Rescission
1. When chosen, there is correlative obligation
to restitute
2. But stipulations that installments paid are
forfeited are valid if not unconscionable
3. Deemed chosen when:
Notice of rescission is sent
-
Takes possession of subject matter of sale
Files action for rescission
Barring effect on recovery of balance
Foreclosure
i. Barring effect on recovery of balance
ii. Extent of barring effect: purchase price
iii. Exception: mortgagor refuses to deliver
property to effect foreclosure, recover also
expenses incurred in attorneys fees, etc.
(Perverse Buyer-Mortgagor)
=========================================

3. Sale of Immovables
=========================================
3. SALE OF IMMOVABLES
Remedies of Seller
Page 157 of
o
B
Anticipatory breach
uyer paid at least 2 years installment
1. Seller has reasonable grounds to fear loss of

immovable sold and its price, sue for
RESCISSION
1. Pay without interest the balance

within grace period of 1 month for
every year of installment payment
2. Nonpayment of price, sue for RESCISSION
2. Grace to be exercised once every 5

years
IMMOVABLES (BY INSTALLMENT)
3. When no payment - cancelled; buyer

entitled to
50% of what he has
paid + if after 5 years of
installments, 5% for every year but
not to exceed 90% of total payments
made
Art 1592 Applies only to contract of sale

MACEDA LAW
1. applies to COS and CTS and Financing
2. Coverage: REAL ESTATE defined space
vs. CONDO not defined space (w/
common areas)
4. Cancellation to be effected 30 days

from notice and upon payment of
cash surrender value
1. Excluded:
o
a. Industrial
b. Commercial
c.
Sale to tenants under agrarian

laws
=========================
================
3. Remedies of the Buyer
=========================================
4. REMEDIES OF THE BUYER
In case of subdivision or condo projects,
suspend payment.
If real estate developer fails to comply
with obligation according to approved
plan:
-
RESCIND
SUSPEND PAYMENT
COMPLIES
UNTIL
SELLER
Buyer
paid
installment
less
than
years
1. 1st Grace period is 60 days from date

installment became due
2. 2nd grace period of 30 days from
notice of cancellation/demand for
rescission
buyer can still pay within the 30
day period
with interest
No payment after 30 day period,
can cancel.
Purpose of law - Protect buyers in

installments against oppressive conditions
Notice needed
oppressive
waiver
thereof
Applies to contracts even before law

was enacted
Stipulation to contrary is void
Rights Granted to Buyers:
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if
Page 158 of
================================
Other rights:
o
N. EXTINGUISHMENT OF SALE
Sell rights to another

o
================================
Reinstate contract by updating

during grace period and before
actual cancellation
REMEDY OF RESCISSION IN CONTRACTS

COVERING IMMOVABLES (Articles 1191 &
1592)
N. Extinguishment of Sale
1. Causes (Arts. 1600, 1231)
2. Conventional redemption (Art.
1601)
3. Equitable mortgage (Arts. 16021604)
4. Distinguish from option to buy
(Art. 1602)
5. Period of redemption (Art. 1606)
6. Exercise of the right to redeem
(Art. 1616)
7. Legal redemption (Art. 1619)
8. Age redemption (Art. 1619)
GENERAL RULE: Judicial
=========================================
Deed of Sale to be done by notarial

act
To pay in advance any installment or

the full balance of price anytime
without interest
Have full payment

certificate of title
annotated
in
EXCEPTION: Extra judicial Rescission allowed

but SUBJECT to COURT Confirmation.
a. allowed if stipulated; burden to sue
shifts to party who does not like
rescission
b. court still has final say as to propriety
of rescission
c.
Forfeiture of amounts valid being in

nature of penal clause

1. Causes
=========================================
1. CAUSES
I.
GROUNDS
(same
grounds
whereby
obligations in general are extinguished)
1. Payment or performance
2.
Loss of the subject matter
3.
Condonation or remission
Contract of
Applicable
is
4.
Confusion or merger of rights of creditor

and debtor
Contract to Sell Rescission not

Applicable
5.
Compensation
6.
Novation
Nonpayment of purchase price

would automatically cancel even
without further action for rescission
7.
Annulment
8.
Rescission
9.
Fulfillment of a resolutory condition
Sale
Rescission
Exception: If subject matter is residential lots,

law on rescission applies when there is
substantial breach. Maceda law applies.
10. Prescription

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=========================
================
2. Conventional Redemption
=========================================
2. CONVENTIONAL REDEMPTION
Only extinguishes obligations pertaining
to contract of sale, not extinguish
contract itself; only applies to contract of
sale
b. Seller remains in possession as lessee or

otherwise
c.
Upon or after expiration of right to

repurchase,
another
instrument
extending the period of redemption or
granting new period is executed
e. Seller binds himself to pay taxes on

thing sold
Other legitimate payments,

expenses
e. And fulfills other stipulations which may

have been agreed upon
a. Price of sale with right to repurchase is

unusually inadequate
d. Buyer retains for himself a part of the

purchase price
b. Expenses of contract,
d. The necessary and useful

made on the thing sold
Cachola v. CA,
1.A contract with right to repurchase is

deemed to be an equitable mortgage if
the following requisites concur (IPERTI):
The right which the vendor reserves to

himself to reacquire the property sold
provided he returns to the vendee:
a. The price of the sale,
c.
impossible contrary to law.

[208 SCRA 496]
The right is exercised only be seller in

whom right is recognized in the contract
or by any person to whom right was
transferred; must be in the same
contract
f.
Real intention of parties is to secure the

payment of a debt or performance of
other obligation
NOTE: In case of doubt in determining

whether it is an equitable mortgage or a sale a
retro, the sale shall be construed as an equitable
mortgage.
2.What to Look for in Determining Nature of
Contract
a. Language of the contract
=========================
================
b. Conduct of parties to reveal real intent
3. Equitable Mortgage
=========================================
4.Rationale behind provision on Equitable

Mortgage:
3. EQUITABLE MORTGAGE
a. Circumvention of usury law
One which lacks the proper formalities, form of

words, or other requisites prescribed by law for a
mortgage, but shows the intention of the parties
to make the property subject of the contract as
security for a debt and contains nothing
b. Circumvention of prohibition against

pactum commissorium creditor cannot
appropriate the things given by way of
pledge or mortgage; remedy here is
foreclosure. The real intention of parties
is that the pretended purchase price is
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383
3.Remedy available to
reformation of contract
vendor:
ask
Page 160 of
for
money loaned and to secure payment of

the loan, sale with pacto de retro is
drawn up
=========================
================
4. Distinguish from option to buy
=========================================
4. DISTINGUISH FROM OPTION TO BUY

OPTION TO PURCHASE - Right to repurchase
the thing sold granted to the vendor in a
separate instrument from the deed of sale
=========================
================
5. Period of Redemption
=========================================
5. PERIOD OF REDEMPTION
a. No period agreed upon 4 years from date
of contract
b. Period agreed upon should not exceed 10
years; if it exceeded, valid only for the first
10 years.
c.
When period to redeem has expired and

there has been a previous suit on the
nature of the contract seller still has 30
days from final judgment on the basis that
contract was a sale with pacto de retro:
d. Rationale:
no
redemption
due
to
erroneous belief that it is equitable
mortgage which can be extinguished by
paying the loan.
e. This refers to cases involving a transaction
where one of the parties contests or denies
that the true agreement is one of sale with
the right to repurchase; not to cases where
the transaction is conclusively a pacto de
retro sale.
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f.
Example: Where a buyer a retro honestly

believed that he entered merely into an
equitable mortgage, not a pacto de retro
transaction, and because of such belief he
had not redeemed within the proper
period.
NOTE: When period has expired and seller

allowed the period of redemption to expire
seller is at fault for not having exercised his
rights so should not be granted a new period
Tender of payment is SUFFICIENT to compel
redemption, but is not in itself a payment that
relieves the vendor from his liability to pay the
redemption price. Paez v. Magno, G.R. No. :792, April 27, 1949
=========================
================
6. Exercise of the Right to Redeem
=========================================
EFFECT WHEN THERE IS NO REDEMPTION
MADE
i.
Jurisprudence before the NCC: buyer a

retro
automatically
acquires
full
ownership
ii.
Under present art 1607: there must be

judicial order before ownership of real
property is consolidated in the buyer a
retro
HOW IS REDEMPTION EFFECTED

Seller a retro must first pay the following:
o
The price of the thing sold
Expenses of the contract and other

legitimate payments made by reason of
the sale
Necessary and useful expenses made on

the thing sold
Valid tender of payment is sufficient
Page 161 of
Mere sending of notice without valid

tender is insufficient
Failure to pay useful and unnecessary

expenses entitles vendee to retain land
unless actual reimbursement is made
IN CASE OF MULTI-PARTIES
1. When an undivided thing is sold because
co-owners cannot agree that it be
allotted to one of them vendee a retro
may compel the vendor to redeem the
whole thing
2. When an undivided thing is sold by coowners / co-heirs, vendors a retro may
only exercise his right over his respective
share; vendee a retro may demand that
they must come to an agreement first
and may not be compelled to consent to
a partial redemption
3. When rights of co-owners over an
undivided thing is sold as regards to
their own share vendee retro cannot
compel one to redeem the whole
property
4. Should one of the co-heirs/co-owners
succeed in redeeming the property
such vendor a retro shall be considered
as trustee with respect to the share of
the other co-owners/co-heirs.
FRUITS
What controls is the stipulation between parties
as regards the fruits;
If none:
a. At time of execution of the sale a retro
there are visible or growing fruits there
shall be no pro-rating at time of
redemption if no indemnity was paid by
the vendee a retro
b. At time of execution sale a retro there be
no fruits but there are fruits at time of
redemption pro-rated between vendor
a retro and vendee a retro giving the
vendee a retro a part corresponding to
the time he possessed the land.
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PRE-EMPTION
1. Arises before sale
2.
No
rescission
because no sale exists
yet
3.
The
action
is
directed
against
prospective seller
REDEMPTION
Arises after sale
There can be rescission
of the original sale
Action
is
directed
against buyer
=========================
================
7. Legal Redemption
=========================================
7. LEGAL REDEMPTION
LEGAL REDEMPTION
Only applies to contracts of sale.
The right to be subrogated upon the same
terms and conditions stipulated in the
contract, in the place of one who acquires
the thing by (1) purchase OR (2) by dation in
payment OR (3) by other transaction
whereby ownership is transmitted by
onerous title.
Types of Legal Redemption:
a. Among co-heirs
i.
Any of the heirs sell his hereditary

rights to stranger before partition
ii.
Any of the co-heirs may be subrogated

to the rights of the purchaser by
redeeming
said
hereditary
right:
reimburse buyer of the price of the
sale
iii. Co-heirs has 1 month from receipt of

notice in writing
b. Among co-owners
Page 162 of
i. any or all of co-owners sells their

shares to 3rd person
paid therefor
interest
ii. any co-owner may exercise right of

redemption by paying reasonable price
of property to the buyer
iii. if 2 or more co-owners desire to
exercise right of redemption, they may
only do so in proportion to the share
they respectively have in thing owned
in common
plus
judicial
costs,
ii. debtor may exercise right within 30

days from the date assignee demands
payment from him
Other Instances When Right of Legal
Redemption is Granted
a. Redemption of homesteads
b. Public Land Act
c.
Among adjoining owners

i. Rural land
Where piece of rural land has an area not

exceeding 1 hectare, adjoining owner
has right to redeem unless grantee does
not own a rural land
If two or more adjacent lot owners desire

to exercise right to redeem, owner of
adjoining lot with smaller area shall be
preferred
If two or more adjacent lit owners desire

to exercise right to redeem and both
have same lot area, one who first
requested shall be granted
ii. Urban land
o
when piece of land is small and

cannot be used for any practical
purpose and bought merely for
speculation, owner of adjoining land
can redeem
2 or more owners of adjoining lot
desire to exercise right to redeem,
owner whose intended use is best
justified shall be preferred.
d.
Sale of credit in litigation
i. when a credit or other incorporeal right
in litigation is sold, debtor shall have a
right to extinguish it by reimbursing
the assignee for the price the latter
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c.
Land acquired under free patent

homestead subject to repurchase by
wife, legal heirs within 5 years from date
of conveyance granted by law, need not
be stipulated
1. Redemption in tax sales

i. in case of tax delinquency/failure to
pay tax assessments, property is
foreclosed
ii. delinquent payer has 1 year from date
of sale to redeem by paying to the
revenue District Officer the amount of
tax delinquencies, and interest or
purchase price.
2. Redemption by judgment debtor - 1 year
from date of registration of certificate of
sale to redeem by paying purchaser at
public auction with interest
3. Redemption in extrajudicial foreclosure 1 year from date of sale and registration
4. Redemption in judicial foreclosure of
mortgage - no right to redeem is granted
to debtor mortgagor except when
mortgagee is bank of a banking
institution 90 days after finality of
judgment
5. When Period of Redemption Begins to
Run - Right of legal pre-emption of
redemption shall be exercised within 30
days from notice by the seller
Page 163 of
6. How exercised - tender of payment is not

necessary; offer to redeem is enough.
i.
ii.
consideration of a price certain in money or

its equivalent
There is no prescribed form for an

offer to redeem to be properly
effected. Hence, it can either be
through a formal tender with
consignation of the redemption price
within the prescribed period. What is
paramount is the availment of the
fixed and definite period within which
to exercise the right of legal
redemption.
Deeds of sale are not to be recorded
in
Register
of
Deeds
unless
accompanied by affidavit of seller
that he has given notice to all
possible redemptioners
NOTE: Written notice under Art. 1623 is

mandatory for the right of redemption to
commence (PSC vs. Sps. Valencia, [August
19, 2003].
1. Transfers the right to collect the full

value of the credit, even if he paid a
price less than such value
2. Transfers all the accessory rights (e.g.
guaranty, mortgage, pledge, preference)
3. Debtor can set up against the assignee
all the defenses he could have set up
against the assignor
II.
III.
EXCEPTION: When actual knowledge is

acquired by co-heirs living in same land with
purchaser, or co-owner was middleman in sale
to 3rd party.
Art. 1623 does not prescribe any
distinctive method for notifying the
redemptioner. Etcuban v. CA, [148
SCRA 507]
Sale of credits and other incorporeal

things
EFFECTS OF ASSIGNMENT
4. Compensation unless assignor was

notified by debtor that he reserved his
right to the compensation
5. Debtor has knowledge but no consent may still set up compensation of debts
previous to assignment but not the
subsequent ones.
9. ASSIGNMENT (See Arts . 1624 1634)
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383
2.
3. Debtor has consented to assignment

cannot set up
=========================================
ASSIGNMENT: The owner of a credit

transfers to another his rights and actions in
Technical term but basically a sale
2. Assignment
of
rights
made
w/o
knowledge of debtor debtor may set up
against assignee the compensation w/c
would pertain to him against assignor of
all credits prior to assignment and of
later ones until he had knowledge of the
assignment
=========================
================
8. Age Redemption
I.
1.
1. Lack of knowledge or consent of debtor

not essential for validity but has legal
effects
(meeting
of
minds
in
assignment contemplates that between
assignor of the credit and his assignee)
GENERAL
RULE:
Actual
knowledge
notwithstanding, written notice is still
required
WHAT MAKES ASSIGNMENT

DIFFERENT FROM SPECIES SALE?
IV.
TRANSFER OF OWNERSHIP
Page 164 of
1. By tradition and not by perfection
be answerable for his character

as an heir
2. By execution of public instrument

because intangibles cannot be physically
transferred
3. Without necessity of delivering
document evidencing the credit.
the
4. This rule does not apply to negotiable

documents and documents of title which
are governed by special laws.
V.
d. One who sells whole of certain

rights for a lump sum, shall be
answerable for legitimacy of the
whole in general but not for each
of the various parts
VII.
EFFECT OF PAYMENT OF DEBTOR

AFTER ASSIGNMENT OF CREDIT
BREACH OF WARRANTY: LIABILITIES

OF THE ASSIGNOR OF CREDIT FOR
VIOLATION OF HIS WARRANTIES
1. Assignor in good faith
Liability is limited to price received,
expenses of the contract and other
legitimate payments made by reason of
the assessment
2. Assignor in bad faith
1. Before Notice of the Assignment

Payment to the original creditor is
valid and debtor shall be released
from his obligation
Liable ALSO for (expenses of contract

and other legitimate payments plus
useful
and
necessary
expenses)
damages
2. After Notice
a. Payment to the original creditor is
not valid as against the assignee
VIII.
b. He may be made to pay again by the

assignee
ASSIGNMENT
OF
CREDIT
OR
INCORPOREAL RIGHT IN LITIGATION REQUISITES:
1. There must be a sale or assignment of credit

VI.
WARRANTIES OF THE ASSIGNOR OF

CREDIT
1. NO warranty against hidden defect - N/A
because intangibles has no physical
existence
2. There must be a pending litigation

3. The debtor must pay the assignee:
a. Price paid by him AND
b. Judicial costs incurred by him AND
2. He warrants the existence and legality of

credit - there is warranty except when
expressly sold as a doubtful account
a. NO warranty as to the solvency of
debtor unless it is expressly
stipulated
OR
unless
the
insolvency was already existing
and of public knowledge at the
time of the assignment
b. Warranty shall last for 1 year only
c.
One who assigns inheritance

right w/o enumerating rights shall
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383
c. Interest on the price from the date of

payment
4. The right must be exercised by the debtor
within 30 days from the date the assignee
demands (judicially or extra-judicially) payment
from him
NOTE:
Presumption: buyers purpose is speculation

and; law would rather benefit the debtor of
Page 165 of
such credits rather than the one who merely

speculates for profit.
IX.
When credit or incorporeal right in litigation

is assigned or sold, debtor has a right to
extinguish it by reimbursing the assignee for
the price the buyer
paid plus interest
Right to redeem by debtor not
available in the following instances
(not considered speculative
1. Assignment of credit / incorporeal right to

co-heir or co-owner; the law does not favor
co-ownership
2. Assignment to creditor in payment for his
credit
Presumption is that the assignment is
above suspicion; assignment is in the

form of dacion en pago, thus perfectly
legal
3. Assignment to possessor of tenement or
piece of land which is subject to the right in
litigation assigned
Purpose is to presumably preserve the
O. THE SUBDIVISION AND

CONDOMINIUM BUYERS PROTECTIVE
DECREE
=========================================
P.D. 957: LAW ON SALE OF SUBDIVISION AND

CONDOMINIUM
REMEDIES FOR FAILURE OF THE

DEVELOPER TO DEVELOP THE SUBDIVISION
OR CONDOMINIUM ACCORDING TO THE
APPROVED PLAN AND TO COMPLY WITH
SUCH WITHIN THE TIME LIMIT.
The buyer may desist from further payment

any installments. Also, there would be no
forfeiture of past payments in favor of the
developer after due notice has been given.
The buyer may demand reimbursement of

the total amount paid including amortization
interests but excluding delinquency interests,
with interest thereon at the legal rate. (Sec. 23,
P.D. 957)
Otherwise: RA 6552 (Maceda Law) will apply.
REQUISITES OF SEC 3 OF RA 6552:
tenement

================================

CONDOMINIUM BUYERS
PROTECTIVE DECREE
================================
Failure to pay installments was due to

reasons, other than failure of the developer to
develop the subdivision or condominium
according to the approved plan and to comply
with such within the time limit, and,
Only covers residential lots including

condominium units, excluding, sales to tenants.
The buyer has paid at least two years of

installments

The Subdivision and Condominium
Buyers Protective Decree (P.D. 957)
=========================
================
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RIGHTS OF THE BUYER UNDER RA 6552

WITH AT LEAST TWO (2) YEARS OF
INSTALLMENT:
To pay, without additional interest, the

unpaid installments due within the total grace
period earned by him. Said grace period is fixed
at the rate of one month grace period for every
Page 166 of
one year of installments payments made. Thus,

here the buyer has at least two months grace for
he should have paid at least two years of
installments to avail of the rights under this
section.
This rights can only be exercised only
once in every five (5) years of the life of
the contract and its extensions, if any.
To be refunded of the cash surrender value

of this payments equal to 50% of his total
payments if the contract is cancelled. But if he
has paid five years or more, he is entitled to an
increase of 5% every year and so on but the
cash surrender value shall not exceed 90% of his
total payments. McLaughlin v CA, [G.R. No.
L-57552, Oct 10, 1986]
THE ACTUAL CANCELLATION OF THE

CONTRACT REFERRED TO ABOVE SHALL
TAKE PLACE ONLY:
1. After 30 days from receipt by the buyer of the
notice of cancellation or demand for rescission,
AND
2. Upon full payment to the buyer of the cash
surrender value
the buyer of the notice of cancellation or

demand for rescission of the contract by
a notarial act.
Here the buyer is not entitled to any refund

CONDOMINIUM BUYERS PROTECTIVE
DECREE
================================
P. THE CONDOMINIUM ACT

================================
The Condominium Act (R.A. 4726)

=========================
================
=========================================
R.A. 4726: THE CONDOMINIUM ACT

Restrictions and Additional requirements
transfer of condominiums:
It shall include the transfer or conveyance of

the undivided interests in the common areas
or membership or shareholdings in the
condominium corporation.
Membership
in
a
condominium
corporation, regardless whether stock or
non-stock,
shall
not
be
transferable
separately from the condominium unit of
which it is an appurtenance.
No condominium owners copy of the

certificate of title shall, subsequent to the
original conveyance, be registered unless
accompanied by a certificate of the
management body of the project that such
conveyance is in accordance with the
provisions of the declaration of restrictions of
such project.
In the computation of the total number of

installment payments the following are included:
1. downpayment and
2. deposit or option money
RIGHTS OF THE BUYER UNDER RA 6552
WITH LESS THAN 2 YEARS OF
INSTALLMENTS:
If he has paid less than two (2) years of

installments, he still has the right to pay
within a grace period of not less than
sixty (60) days from the date the
installment became due.
If the buyer fails to pay the installment

due at the expiration of the grace period,
i.e. 60 days, the seller may cancel the
contract after 30 days from receipt by
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on
Page 167 of
================================
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Page 168 of
H. SUCCESSION
of the inheritance either by will or

by operation on law (Art. 782)
=================================
I. General Provisions (Arts. 774-780)
A. Definition/what is transmitted
(Arts. 774, 776, 781)
B. When succession occurs (Art.
777)
C. Kinds of successors: heirs,
devisees, legatees (Art. 782)
=================================
I. GENERAL PROVISIONS
SUCCESSION mode of acquisition by virtue of
which the property, rights and obligations to the
extent of the value of the inheritance, of a
person are transmitted through his death to
another or others either by his will or by
operation of law. (Art. 774)
KINDS OF HEIRS
1. Compulsory those who 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
2. Voluntary or Testamentary those who
are instituted by the testator in his will, to
succeed to the portion of the inheritance of
which the testator can freely dispose
3. Legal or Intestate 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
ii.
KINDS OF SUCCESSION (Balane)

1. Compulsorysuccession to the legitime
(this prevails over all kinds)
Devisees or Legatees persons to

whom gifts of real or personal
property are respectively given by
virtue of a will (Art. 782)
NOTE: The distinction between heirs and

devisees/legatees are important in these cases:
2. Testamentarysuccession by will
a. Preterition
3. Intestatesuccession in default of a will
b. Imperfect disinheritance
4. Mixednot a distinct kind really, but a

combination of any two or all of the first
three
c.
ELEMENTS OF SUCCESSION
I.
Subjective Element
A. Decedent person whose property is
transmitted through succession (Art.
775)
B. Successors
i.
Heirs those who are called to

the whole or to an aliquot portion
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383
After-acquired properties
d. Acceptance
or
non-repudiation
successional rights
of
II. Causal Element (Art. 777)

Death of the Person However, a
person may be presumed dead for the
purpose of opening his succession (see
rules on presumptive death). In this
case, succession is only of provisional
character because there is always the
chance that the absentee may be alive.
III. Objective Element (Art. 776)
Page 169 of
Inheritance is the subject matter of

Succession it includes:
i.
Property and transmissible rights

and obligations
RIGHTS EXTINGUISHED
(NOT TRANSMISSIBLE)
BY
DEATH
2. Usufruct
from
personal
4. Personal easements
5. Partnership rights
6. Agency
7. Life Annuity
ii. Existing at the time of his death
iii. AND those which have accrued
thereto
since
the
opening
of
succession (Art. 781)
After-Acquired Property (Art. 793)
GENERAL RULE: Property acquired during
period between the execution of the will and
death of the testator is NOT included among
property disposed of with REGARD
LEGACIES and DEVISEES, not to heirs.
EXCEPTION:
When a contrary
expressly appears in the will
the
the
the
to
intention
Succession distinguished from Inheritance

Succession
Inheritance
Refers to the legal

mode
by
which
inheritance
is
transmitted to the
persons entitled to
Refers
to
the
universality
or
entirety
of
the
property, rights and
obligations
of
a
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person who died.
=================================
II. Testamentary Succession
A. Wills
1. Support
3. Those arising
consideration
it.
(1) In General
(a) Definition and
characteristics (Arts. 783-787)
(2) Testamentary capacity and
intent (Arts. 796-803)
(a) Age requirement (Art. 797)
(b) Soundness of mind (Arts.
798-801)
(3) Form
(a) Rules governing the formal
validity of wills (Arts. 17, 815817, 819)
(b) Common requirements (Art.
804)
(c) Notarial wills
(d) Holographic wills
(e) Joint wills (Arts. 818-819)
(4) Codicils (Arts. 825-826)
(a) Definition and formal
requirements
(5) Incorporate by reference (Art.
827)
(6) Revocation (Arts. 828-834)
(a) Kinds (Art. 830)
(7) Allowance and disallowance of
wills (Arts. 838-839)
(a) Probate requirement (Art.
838)
(b) Grounds for denying
probate (Art. 839)
=================================
Page 170 of
II. TESTAMENTARY SUCCESSION
iii.
Determination
of
whether or not the testamentary
disposition is to be operative
A. WILLS
CONCEPT OF A WILL (Art. 783)
b.
Acts which may be entrusted to third

persons (Article 787);
1. It is an act;
2. Whereby a person is permitted;
i.
Distribution of specific
property or sums of money that he
may leave in general to specified
classes or causes; and
ii.
Designation
of
the
persons,
institutions
or
establishments
to
which
such
property or sums are to be given or
applied.
3. With the formalities prescribed by law;

4. To control to a certain degree;
5. he disposition of his estate;
6. To take effect after his death.
KINDS OF WILLS:
1. Notarial an ordinary or attested will
2. Holographic a handwritten will
3. FREE AND VOLUNTARY ACT any vice

affecting testamentary freedom can cause
the disallowance of the will
COMMON REQUISITES BETWEEN THE TWO

WILLS:
1. Must be in writing and
4. FORMAL AND SOLEMN ACT the formalities

are essential for validity
2. In a language or dialect known to the

testator
CHARACTERISTICS OF A WILL:
1. UNILATERAL does not need the approval
of any other person (implied in Art. 783)
2. STRICTLY PERSONAL ACT (Art. 784-785)
a.
Acts which may not be left to the

discretion of third persons (Arts. 785 and
787):
i.
ii.
Duration or efficacy of
the designation of heirs, devisees or
legatees;
Determination of the
portions which they are to take,
when referred to by name; and
5. ACT MORTIS CAUSA (Art. 783) takes effect

only after the death of the testator
6. AMBULATORY AND REVOCABLE during the
testators lifetime
7. INDIVIDUAL ACT two or more persons
cannot make a single joint will, either for
their reciprocal benefit or for another person.
However, separate or individually executed
wills,
although
containing
reciprocal
provisions (mutual wills) are not prohibited,
subject to the rules on disposicion
captatoria.
8. Executed with ANIMUS TESTANDI
9. Executed with TESTAMENTARY CAPACITY
10. DISPOSITIVE OF PROPERTY
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Page 171 of
11. STATUTORY
INTERPRETATION OF WILLS (Art. 788-794)

Underlying Principle: Testacy is always preferred
to intestacy, because the former is the express
will of the decedent whereas the latter is only
his implied will.
disposed of. EXCEPT: When a contrary

intention expressly appears on the will.
NOTE: This rule applies only to legacies and

devisees and not to institution of heirs
NOTE: The validity of a will as to its form
depends upon the observance of the law at the
TIME it was MADE (Art. 795)
1. Animus Testandi - The testators intent

(animus testandi), as well as giving effect to
such intent is primordial.
TESTAMENTARY CAPACITYthe ability as well

as the power to make a will (must be present at
the TIME of EXECUTION):
EXCEPT: when the intention of the

testator is contrary to law, morals or public
policy.
1. All persons who are not expressly prohibited

by law (Art. 796)
2. In case of doubt, the interpretation by which

the disposition is to be operative or will
sustain and uphold the will in all its parts
shall be adopted, provided that it can be
done consistently with the established rules
of law.
2. 18 years old and above (Art. 797)

3. Of sound mind, at the time of its execution
(Art. 798); A testator is considered of sound
mind if he knows at the time of making of
the will the following:
a. Nature of the estate to be disposed of
3. Ambiguities in Wills Intrinsic or extrinsic

evidence may be used to ascertain the
testatorial intent of the testator.
EXCEPT: The oral declarations of the
testator as to his intentions must be
excluded because such testimony would be
hearsay.
KINDS OF AMBIGUITIES (Art. 789)
I.
II.
Latent or Intrinsic Ambiguities

those which do not appear on the face of
the will and is discovered only by
extrinsic evidence
Patent or Extrinsic Ambiguities
those which appear on the face of the
will itself
4. After Acquired Property - Property

acquired during the period between the
execution of the will and the death of the
testator is NOT included among the property
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b. Proper objects of his bounty

c.
Character of the testamentary act (Art.

799)
LEGAL
PRESUMPTION
IN
FAVOR
SOUNDNESS OF MIND (Art. 800):
OF
General Rule: The law presumes that every

person is of sound mind, in the absence of proof
to the contrary.
Exceptions:
1. When the testator, one month or less
before the execution of the will, was
PUBLICLY KNOWN to be INSANE (Art. 800);
2. When the testator executed the will after
being placed under guardianship Torres
and Lopez de Bueno vs. Lopez, [48
Phil. 772] or ordered committed, in either
case, for insanity (under Rules 93 and 101,
Page 172 of
respectively of the Rules of Court), and

before said order has been lifted.
Supervening capacity or incapacity does

not invalidate an effective will, nor is the will
of an incapable validated by supervening
capacity (Art. 801).
FORMS OF WILL
COMMON FORMALITIES:
1. Every will must be in WRITING; and
2. Executed in a LANGUAGE or DIALECT
KNOWN to the TESTATOR (Art. 804)
SPECIAL FORMALITIES:
I.
NOTARIAL WILL a valid notarial will:

(Art. 805)
C. Each and every page, except the last, must

be signed by the testator or by the person
requested by him to write his name, and by
the instrumental witnesses of the will, on the
left margin.
Signatures on the left margin on each and
every page NOT REQUIRED:
i.
In the last page, when the will

consists of two or more pages;
ii.
When the will consists of only one

page;
iii.
When the will consists of two pages,

the
first
consists
of
all
the
testamentary disposition and is
signed at the bottom by the testator
and the witnesses and the second
contains only the attestation clause
duly signed at the bottom by the
witnesses.
A. Subscribed at the end by the testator

himself or by the testators name written
by some other person in his presence,
and by his express direction
Physical end- where the writing
stops
Logical end- where the last
testamentary disposition ends
B. Attested & subscribed by three or more
credible witnesses in the presence of the
testator and of one another
Mandatory Part: The signing on

every page in the witnesses
presence
NOTE: Test of presence is not
whether they actually saw each other
sign, but whether they might have
seen each other sign had they
chosen to do so considering their
mental and physical condition and
position with relation to each other at
the moment of inscription of each
signature.
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383
Directory Part: The place of the

signature, i.e. the left margin; the
signature can be affixed anywhere on
the page.
NOTE: A statute requiring a will to be signed is

satisfied if the signature is made by the
testator's mark.
A thumbmark is sufficient
signature. Payad v. Tolentino, [62 Phil 846]
But a mere sign of the cross cannot be accepted
as it does not have the trustworthiness of a
thumbmark Garcia v. Lacuesta, [90 Phil 489]
D. Each and every page of the will must be
numbered correlatively in letters placed
on the upper part of each page.
Mandatory Part: Pagination

means of a conventional system.
Directory Part: The pagination in

letters on the upper part of each
page
by
E. It must contain an attestation clause,

stating the following:
Page 173 of
a. The number of pages used upon

which the will is written
b. The fact that the testator signed
the will and every page, or
caused some other person to
write his name, under his express
direction, in the presence of the
instrumental witnesses
c.
All the instrumental witnesses

witnessed and signed the will and
all its pages in the presence of
the testator and of one another
F.
It must be acknowledged before a notary

public by the testator and the witnesses
(Art. 806)
The notary public cannot be counted as

one of the attesting witnesses. Cruz v.
Villasor, [54 SCRA 31]
ATTESTATION v. SUBSCRIPTION
Attestation An act of witnessing execution of
will by testator in order to see and take note
mentally those things are done which the
statute requires for the execution of a will and
that the signature of the testator exists as a fact
Subscription manual act of instrumental
witnesses in affixing their signature to the
instrument
ATTESTATION
SUBSCRIPTION
1. act of the senses
1. act of the hand
2. mental act
2. mechanical act
3. Purpose is to render
available proof during
the probate that such
will had been executed
in accordance with the
formalities prescribed
by law
3. Purpose is for
identification
CIVIL LAW REVIEWER

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Page 174 of
4.
Found after the
attestation clause at
the end or last page of
the will
4. Found at the left

side margin of every
page of the will
The attestation clause need not be written in

a language or dialect known to the testator
nor to the witnesses since it does not form
part of the testamentary disposition
The attestation clause need only be signed

by the witnesses and not by the testator as
it is a declaration made by the witnesses.
ADDITIONAL REQUISITES FOR VALIDITY

a. If the Testator be Deaf or Deaf-Mute:
forgery
fraud
undue and improper

and influence
ii.
Otherwise, he shall designate two

persons to read it and communicate to
him, in some practicable manner, its
contents (Art 807)
i.
Once by
witnesses
one
of
the
subscribing
ii.
Once by the notary public before whom

the will is acknowledged (Art 808)
NOTE:
Articles
807
and
808
are
mandatory, failure to comply with either
would result in nullity and denial of probate.
1. In the absence of
bad faith
Testator must personally read the will,

if able to do so;
b. If the Testator be Blind: The will shall be

read to the testator twice
RULE ON SUBSTANTIAL COMPLIANCE (ART.

809)
i.
The inadvertent failure of one witness to

affix his signature to one page of the original
will due to the simultaneous lifting of two
pages in the course of signing is not per se
sufficient to justify denial of probate when
the duplicate will shows such signatures.
Icasiano v. Icasiano, [11 SCRA 422]
II.
HOLOGRAPHIC WILL a holographic

will is valid if it is:
pressure
2. Defects and imperfections

o
in the form of attestation or in

the language used therein
3. Shall not render the will invalid

4. If it is proved that the will was in fact
executed and attested in substantial
compliance with all the requirements of
Article 805.
Defects and imperfections can be

supplied by an examination of the will
itself. Caneda v. CA [222 SCRA 781]
CIVIL LAW REVIEWER

383
A.
Entirely written, dated, and signed by

the hand of the testator himself
B.
Dispositions of the testator written

below his signature must be dated and
signed by him in order to validate the
testamentary dispositions. (Art 812)
EXCEPT: In case of dispositions
appearing in a holographic will which
are signed without being dated, where
the last disposition has a signature
and a date, such date validates the
Page 175 of
dispositions preceding it, whatever be

the time of prior dispositions
PROBATE OF HOLOGRAPHIC WILL

A.
A holographic will is subject

to no other form, and may be made in
or out of the Philippines, and need not
be witnessed. (Art 810)
EXCEPTION: If the will is contested,

at least three of such witnesses shall be
required (merely directory). In the
absence of such competent witness
and if the court deems it necessary,
expert testimony may be resorted to.
ELEMENTS OF A CODICIL (ART. 825)
1. It is a supplementary or addition to a will
B.
Who knows the handwriting

signature of the testator
C.
Must explicitly declare that the will

and the signature are in the handwriting
of the testator. (Art 811)
2. Made after the execution of the will

3. Annexed to be taken as a part thereof
4. By which any disposition in the original will
may be explained, added to or altered
REQUISITES
FOR
INCORPORATION
REFERENCE (Art. 827)
BY
1. the document or paper referred to in the will

must be in existence at the time of the
execution of the will
2. the will must clearly describe and identify
the same, stating among other things the
number of pages thereof
3. it must be identified by clear and
satisfactory proof as the document or paper
referred to therein
4. it must be signed by the testator and the
witnesses on each and every page, except
in case of voluminous books of account or
inventories
NOTE: The text of Art, 827 suggests that

holographic wills cannot incorporate documents
by reference.
Paragraph 4 requires the
signatures of the testator and witnesses on
every page of the incorporated document. It
seems, therefore, that only attested wills can
incorporate documents by reference, since only
these are witnessed (unless the testator has his
holographic will superfluously witnessed)
CIVIL LAW REVIEWER

383
There must be at least one witness.
and
NOTE: This article applies only to post mortem

probates and not to ante mortem probates since
in such cases the testator himself files the
petition and will identify the document himself.
in the probate of a holographic will, the

document itself must be produced; a lost
holographic will cannot be probated. Gan
v. Yap, [104 Phil 509] Exception: When
copy of the will is produced or survives
Rodelas v. Aranza, [G.R. No. L-58509,
December 7, 1982]
INSERTION, CANCELLATION, ERASURE OR

ALTERATION IN A HOLOGRAPHIC WILL
A. If made after the execution of the will,
but without the consent of the testator,
such insertion is considered as not
written because the validity of the will
cannot be defeated by the malice or
caprice of a third person
B. If the insertion after the execution of the
will was with the consent of the testator,
the will remains valid but the insertion is
void.
C. If the insertion after the execution is
validated by the testator by his signature
thereon then the insertion becomes part
Page 176 of
of the will, and, the entire will becomes

void, because of failure to comply with
the requirement that it must be wholly
written by the testator
2. SUBSTANTIVE VALIDITY
ASPECTS OF THE WILL GOVERNED
NATIONAL LAW OF THE DECEDENT:
D. If the insertion made by a third person is

made contemporaneous to the execution
of the will, then the will is void because it
is not written entirely by the testator
BY
A. Order of succession
B. Capacity to succeed
C. Amount of successional rights
WHO MAY BE A WITNESS TO A WILL Any

person may be a witness provided he is:
D. Intrinsic validity
A. Of sound mind
VALIDITY OF JOINT WILLS
B. Of the age of 18 years or more
C. Not blind, deaf or dumb

D. Able to read and write
E. Domiciled in the Philippines
F.
Have not been convicted of falsification

of a document, perjury or false testimony
LAWS GOVERNING VALIDITY OF A WILL

1. FORMAL VALIDITY
Two or more persons cannot make a will

jointly, or in the same instrument, either for
their reciprocal benefit or for the benefit of a
third person.
NOTE: Joint wills executed by Filipinos in a
foreign country shall not be valid in the
Philippines, even though authorized by the
laws of the country where they may have
been executed.
AMENDMENT, REVOCATION AND

REPUBLICATION OF WILLS
AMENDMENT OF WILLS
FORMAL
VALIDITY
EXECUTED IN
PHILIPPINES
FILIPINO
ALIEN
1. Notarial only through a codicil
(a) CC of
Philippines
(a)CC of the
Philippines
2. Holographic in three ways

A.
Dispositions may be added below the

signature,
PROVIDED
that
said
dispositions are also dated and signed,
and everything is written by the hand of
the testator himself
B.
Certain dispositions or additional

matter may be suppressed or inserted
PROVIDED that said cancellation is
signed by the testator and written by the
hand of the testator himself
C.
Through a codicil which may either

be notarial or holographic
(b)Law of His
Country
FOREIGN
COUNTRY
(a) CC of
Philippines
(a) CC of
Philippines
(b) Law
where
Made
(b) Law of his

Country
*CC Civil Code
CIVIL LAW REVIEWER

383
(c) Law of
Country where
he resides
Page 177 of
R
E
VOCATION OF WILLS
d.
Completion of the subjective phase;

AND
1. By operation of law instances of revocation

by operation of law:
e.
Performed by the testator himself or

by some other person in his presence
and express direction
a. decree of legal separation
(The list is NOT exclusive.)
b. preterition
c.
legacy or credit against third person or

remission of debt was provided in will
and subsequently, testator brings action
against debtor
d. substantial transformation
thing bequeathed
of
DOCTRINE of PRESUMED REVOCATION:
Where the will cannot

be found following the death of the testator
and it is shown that it was in the testator's
possession when last seen, the presumption
is that he must have destroyed it with
animus revocandi.
Where the will cannot

be found following the death of the testator
and it is shown that the testator had ready
access to it, the presumption is that he must
have destroyed it with animus revocandi.
Where it is shown that

the will was in the custody of the testator
after its execution, and subsequently, it was
found among the testator's effects after his
death in such a state of mutilation,
cancellation, or obliteration, as represents a
sufficient act of revocation within the
meaning of the applicable statute, it will be
presumed, in the absence of evidence to the
contrary, that such act was perfomed by the
testator with animus revocandi.
Art. 832 A revocation made in a subsequent

will shall take effect, even if the new will
should become inoperative by reason of the
incapacity of the heirs, devisees or legatees
designated therein, or by their renunciation.
specific
e. when heir, devisee or legatee commits

any of the acts of unworthiness
2. By the execution of a will, codicil or other

writing executed as provided in case of wills
a.
b.
EXPRESS When there is a

revocatory clause expressly revoking the
previous will or a part thereof
IMPLIED When the provisions
thereof
are
partially
or
entirely
inconsistent with those of the previous
wills
3. By
burning,
tearing,
canceling,
obliterating the will with the intention
revoking it, by the testator himself, or
some other person in his presence, and
his express direction.
or
of
by
by
REQUISITES:
a.
Testamentary capacity at the time of

performing the act of destruction;
b.
Intent to revoke (animus revocandi);
c.
Actual physical act of destruction;
CIVIL LAW REVIEWER

383
EXCEPTION: Doctrine of Dependent Relative

Revocation when the testator provides in the
subsequent will that the revocation of the prior
one is dependent on the capacity or acceptance
of the heirs, devisees, or legatees instituted in
Page 178 of
the subsequent will. (Molo v, Molo, [90 Phil

37])
which can be revived only by another will

or codicil.
LAWS WHICH GOVERN REVOCATION

LAW FOR
REVOCATION
IN PHILIPPINES
LAW
FACTS DEMONSTRATING ART 837

Philippine Law
Philippine Law
OUTSIDE
PHILIPPIN
ES
Domicil
e
Non
Domicil
e
REVOCATION BASED
ILLEGAL CAUSE
Philippine Law
(a) Where will was
made
(b)Where
DOMICILED at time
of revocation
ON
FALSE
CONCLUSION ON THE FACTS
The Revocation of Will 2 by Will 3 does

not revive Will 1
This demonstrates the theory of instant

revocation because the revocatory effect of
the second will is immediate upon the first
will
OR
NOTE: This article only applies where the

revocation of the first will by the second will
is express.
a. The cause must be concrete, factual and

not purely subjective
b. It must be false
The testator must not know of its falsity
d. It must appear from the will that the

testator is revoking because of the cause
which is false.
Art. 834. The recognition of an

illegitimate child does not lose its legal
effect, even though the will wherein it
was made should be revoked.
Art. 837. If after making a will, the

testator makes a second will expressly
revoking the first, the revocation of the
second will does not revive the first will,
CIVIL LAW REVIEWER

383
In 1990, X executed Will 3, revoking Will

1
REQUISITES:
c.
In 1987, X executed Will 2, expressly

revoking Will 1
Revocation based on a false or illegal

cause is null and void.
In 1985, X executed Will 1
REPUBLICATION AND REVIVAL OF WILLS
If the testator wishes to republish a will

that is void as to form, the only way to
republish it is to execute a subsequent will
and reproduce it
The testator need only execute a

subsequent will or codicil referring to the
previous will if the testator wishes to
republish a will that is either:
a.
b.
Void for reason other than a

formal defect
Previously revoked
Page 179 of
REPUBLICATION
REVIVAL
Takes place by an act of

the testator
Takes
place
operation of law
Corrects extrinsic and

extrinsic defects
Restores
will
by
revoked
ALLOWANCE AND DISALLOWANCE OF

WILLS
I.
PROBATE OF A WILL
1. A special proceeding required for the
purpose of establishing the validity of
the will.
2. Probate of a will is mandatory
3. The probate court can only inquire into
the extrinsic validity of testamentary
provisions, which include the following:
II.
II.
DISALLOWANCE OF WILL - grounds for
disallowance of a will:
1. If the formalities required by law have
not been complied with;
2. If the testator was insane, or otherwise
mentally incapable of making a will, at
the time of its execution;
3. If it was executed through force or under
duress, or the influence of fear, or
threats;
4. If it was procured by undue and improper
pressure and influence, on the part of
the beneficiary or of some other person;
5. If the signature of the testator was
procured by fraud;
b. That his consent was not vitiated
6. If the testator acted by mistake or did

not intend that the instrument should be
his will at the time of affixing his
signature thereto.(Art 839)
c.
REVOCATION
a. That the testator was of sound and

disposing mind
That the will was signed by the

required number of witness
d. That the will is genuine

EXCEPTION: The probate court may pass upon
the intrinsic validity of the will when its probate
might become an idle ceremony if on the wills
face it appears to be intrinsically void. Nuguid
v. Nuguid, [17 SCRA 449]
Voluntary act of the

testator
Given
decree
by
With or without cause
Always
cause
for
May be partial or total
Always total EXCEPT

when the ground of
fraud or influence for
example affects only
certain portions of the
will
KINDS OF PROBATE
1. Post-Mortem
death
after
the
DISALLOWANCE
testators
judicial
a
legal
2. Ante-Mortem during his lifetime

FINAL DECREE OF PROBATE
B. INSTITUTION OF HEIRS
INSTITUTION OF HEIR
Once a decree of probate becomes final

in accordance with the rules of procedure
it becomes Res Judicata
1. It is an act by virtue of which a testator

designates in his will
It is conclusive as to the due execution of

the will (extrinsic validity only)
2. The person or persons who are to succeed

him in his property and transmissible
3. Rights and obligations
CIVIL LAW REVIEWER

383
Page 180 of
1.
If
REQUISITES FOR A VALID INSTITUTION OF

HEIR
one has no compulsory heirs:
1. Designation in will of person/s to succeed
a. He can give his estate to any person

qualified to inherit under him
a.
Directory - designation of name and

surname
b.
Mandatory identity of the heir

must be established, otherwise void
disposition, unless his identity becomes
certain.
b. However, he must respect restrictions

imposed by special laws
2. If one has compulsory heirs:
NOTE: If there is ambiguity in the designation,

the designation must be resolved by discerning
the testators intent. If the ambiguity cannot be
resolved, intestacy to that portion results.
2. Will specifically assigns to such person an
inchoate share in the estate.
a.
He can give only the

disposable portion to strangers
b.
Legitimes of compulsory
heirs must be respected
REQUISITES FOR THE

INSTITUTION OF HEIRS:
ANNULMENT
OF
3. The person so named has capacity to

succeed
1. Cause of institution of the heirs must be

stated in will
4. The will is formally valid
2. Cause must be shown to be false
5. No vice of consent is present
3. It appears from the face of the will that

the testator would not have made the
institution had he known the falsity of
the cause.
6. No preterition results from the effect of such

will
THREE PRINCIPLES IN THE INSTITUTION OF

HEIRS
1. Equality heirs who are instituted without a
designation of shares inherit in equal parts
2. Individuality heirs collectively instituted are
deemed individually named unless a
contrary intent is proven
3. Simultaneity when several heirs are
instituted, they are instituted simultaneously
and not successively
RULES ON A PERSONS RIGHT TO DISPOSE

OF HIS ESTATE
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383
RULES ON INSTITUTION OF ALIQUOT SHARE

LESS THAN OR IN EXCESS OF THE WHOLE
ESTATE:
1.
Intestacy Results if
a. the heir institutes an aliquot portion of
the estate
b. to only one heir If the heir institutes
several heirs to an aliquot part of the
2. Each heirs share shall be proportionally

increased:
a. There are more than one instituted heir
b. The testator intended the heirs to inherit
the whole estate
Page 181 of
c.
3.
The aliquot parts of each share do not

cover the whole inheritance
Each heirs share shall be proportionally

decreased:
a. There are more than one instituted heir
b. The testator intended the heirs to inherit
the whole estate
c. The aliquot parts of each share exceed
the whole inheritance
ELEMENTS OF PRETERITION
1. There must be an omission of one, some or
all of the heir/s in the will
2. The
omission
must
COMPULSORY HEIR
be
that
of
3. Compulsory heir omitted must be of the

DIRECT LINE
4. The omitted compulsory heir must be LIVING
at the time of testators death or must at
least have been CONCEIVED before the
testators death
DISTINGUISH PRETERITION FROM

DISINHERITANCE
PRETERITION
DISINHERITANCE
Deprivation
of
a
compulsory heir of his
legitime is tacit
Deprivation
of
compulsory
of
legitime is express
the
his
May be voluntary but

the law presumes that
it is involuntary
Always voluntary
Law presumes that

there has been merely
an
oversight
or
mistake on the part of
the testator
Done with a legal cause
Omitted heir gets not

only his legitime but
also his share in the
free
portion
not
disposed of by way of
legacies or devises
If
disinheritance
is
unlawful,
compulsory
heir is merely restored
to his legitime
5. The omission must be complete and total in

character. : There is no omission if
a.
A devise or legacy has been

given to the heir
b.
A donation inter vivos has

been previously given to the heir
c.
Anything is left from the

inheritance which the heir may get by
way of intestacy
C. SUBSTITUTION OF HEIRS
CLASSES OF SUBSTITUTION
1. Vulgar or Simple the testator may
designate one or more persons to substitute
the heir or heirs instituted in case such heir
or heirs should:
EFFECTS OF PRETERITION:
a. die before him (PREDECEASE)
1. The institution of heir is annulled
b. should not wish, (RENOUNCE) or
2. Devises and legacies shall remain valid as

long as they are not inofficious
3. If the omitted compulsory heir should die
before the testator, the institution shall be
effectual, without prejudice to the right of
representation
CIVIL LAW REVIEWER

383
c.
should be incapacitated to accept

the inheritance (INCAPACITATED)
Restricted simple substitution- The

testator may limit the operation of
simple substitution by specifying only
one or two of the three causes.
Page 182 of
2.
Brief or Compendious two or more persons
may be substituted for one; and one person
for two or more heirs
3. Reciprocal if heirs instituted in unequal
shares should be reciprocally substituted,
the substitute shall acquire the share of the
heir who dies, renounces, or incapacitated,
unless it clearly appears that the intention of
the testator was otherwise. If there are more
than one substitute, they shall have the
same share in the substitution as in the
institution
4. Fideicommissary Substitution - if the
testator institutes an heir with an obligation
to deliver to another the property so
inherited.
The heir instituted to such
condition is called the first heir or fiduciary
heir, the one to receive the property is the
fideicommissary or second heir
REQUISITES FOR
SUBSTITUTION:
1. A fiduciary or
with the dual
transmit to a
second heir
inheritance
FIDEICOMMISSARY
first heir instituted entrusted

obligation to preserve and to
fideicommissary substitute or
the whole or part of the
2. Such substitution must not go beyond one

degree from the heir originally instituted
3. The fiduciary or first heir and the second heir
are living and qualified to succeed at the
time of the death of the testator
4. The fideicommissary substitution must be
expressly made
5. The fideicommissary substitution is imposed
on the free portion of the estate and never
on the legitime
NOTE: Pending the transmission of the
property, the fiduciary is entitled to all the
rights of a usufructuary although the
fideicommissary is entitled to all the rights of
a naked owner.
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383
D. CONDITIONAL TESTAMENTARY
DISPOSITIONS AND DISPOSITIONS WITH
A TERM
TESTAMENTARY DISPOSITIONS
1. Condition future or uncertain event, or a
past event unknown to the parties, upon
which the performance of an obligation
depends
2. Term the day or time when an obligation
either becomes demandable or terminates
3. Modal Institution the statement of the
institution; application of the property left by
the testator or the charge imposed on him
4. Disposicion
Captatoria/Scriptura
Captatoria condition that the heir shall
make some provision in his will of the
testator or of any other person (prohibited
because it will make the making of the will a
contractual act)
5. Causal Condition condition us casual if it
depends upon chance and/or upon the will of
a third person
6. Mixed Condition - It is mixed if it depends
both partly upon the will of the heir himself
and upon chance and/or the will of a third
person
7. Potestative Condition one the fulfillment
of which depends purely on heir
8. Suspensive term one that merely
suspends the demandability of a right. It is
sure to happen
9. Caucion Muciana bond or security that
should be given in favor of those who would
get the property if the condition not be
complied with
INTERPRETATION
Page 183 of

When in doubt whether there is a condition or
merely a mode, consider the same as mode
ii.
If testator unaware of fact of

fulfillment- deemed fulfilled
iii.
If testator aware thereof
When in doubt as to whether there is

a mode or merely a suggestion, consider
same only as a suggestion
The condition suspends but does not
obligate, the mode obligates but does not
suspends (for he who inherits with a mode is
already
an
heir;
one
who
inherits
conditionally is not yet an heir.)
i.
If it can no longer be fulfilled again

deemed fulfilled
ii.
If it can be fulfilled again must be

fulfilled again
Constructive Compliance
a. if casual not applicable
RULES ON POTESTATIVE,
MIXED CONDITIONS
1.
CASUAL
AND
POTESTATIVE
Positive Potestative Condition:

General Rule must be fulfilled as soon as the
heir learns of the testators death
EXCEPTION
a.
the condition was already

complied with at the time the heir learns
of the testators death
b.
the condition is of such

nature that it cannot be fulfilled again
Negative Potestative Condition:
2.
Heir must give security to guarantee the

return of the value of property, fruits, and
interests, in cases of contravention
CASUAL OR MIXED
b. if mixed
i. If dependent partly on chance not
applicable
ii. If dependent partly on will of third
party
1. if
3rd
party
applicable
interested
2. if 3rd party not interested not

applicable
EFFECTS OF SUSPENSIVE CONDITION OR

TERM
The estate shall be placed under administration
until
1. condition is fulfilled
2. until it becomes certain condition will never
be fulfilled
3. until arrival of the term
Positive
GENERAL RULE may be fulfilled at any

other time (before testators death), unless
testator provides otherwise.
If ALREADY FULFILLED at the time of
execution of the will
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383
CONDITIONS PROHIBITING MARRIAGE

1. If a first marriage is prohibited condition
considered always as not imposed
2. If a subsequent marriage is prohibited as
imposed by the deceased spouse or by
his/her ascendants or descendants - valid
Page 184 of
3.
if
a subsequent marriage is prohibited and
imposed by anyone else- considered not
written
c.
Death of either spouse during the

pendency of a petition for legal separation
dismissal of the case
Illegitimate children and descendants
(legitimate or illegitimate)
E. LEGITIMES
The portion of the decedents estate

reserved by law is called the legitime.
The heirs for whom the law reserves such

portion are called compulsory heirs.
CLASSES OF COMPULSORY HEIRS

1. Primary those who have precedence over
and exclude other compulsory heirs
Legitimate children and descendants

(legitimate), with respect to their
legitimate parents and ascendants
2. Secondary those who succeed only in the

absence of the primary heirs
Legitimate parents and ascendants

(legitimate), with respect to their
legitimate children and descendants
3. Concurring those who succeed together

with the primary or the secondary
compulsory heirs
Widow or widower (legitimate) the

surviving spouse referred to is the
spouse of the decedent.
Testator is a
Legitimate Person
Testator is an
Illegitimate Person
Legitimate
children
and descendant
Legitimate children and

descendants
In
default
of
the
foregoing,
legitimate
parents
and
ascendants
Illegitimate
parents
and ascendants
Surviving spouse
In
default
of
the
foregoing, illegitimate
parents only
Illegitimate
children
and descendant
Surviving spouse
GENERAL
LEGITIMES
IN
1.
RULES
ASCERTAINING
Direct descending line

a. Rule of preference between lines
b. Rule of proximity
NOTE:
a. Mere estrangement is not a ground for the
disqualification of the surviving spouse as
heir
b. Effect of decree of legal separation:
i. On the offending spouse disqualified
ii.On the innocent spouse no effect
c.
2.
Right of representation ad infinitum in

case of predecease, incapacity or
disinheritance
Direct ascending line
a. Rule of division by line

b. Rule of equal division
CIVIL LAW REVIEWER

383
Page 185 of
3.
Non-impairment of legitime
a. Any compulsory heir who was given title
less than his legitime may demand that
the same be completed (Art 906)
4.
C
ollation or addition of the value of all
donations inter vivos to the net value of the
estate;
5. Determination of the amount of the legitime
from the total thus found;
EXCEPTIONS:
a. If the predecessor gave the compulsory
heir a donation inter vivos and provided
that it was not charged against the
legitime (Art 1062)
b. Testamentary dispositions made by the
predecessor to the compulsory heir,
unless the testator provides that it
should be considered part of the
legitime.
6. Imputation of all the value of all donations

inter vivos made to compulsory heirs against
their legitimes and of the value of all
donations inter vivos made to strangers
against the disposable free portion and
restoration to the hereditary estate if the
donation is inofficious.
7. If legitime is impaired,
reductions shall be made:
the
following
STEPS IN DETERMINING THE LEGITIME OF

COMPULSORY HEIRS:
a. First, reduce pro-rata non-preferred

legacies
and
devises,
and
the
testamentary dispositions.
1. Determination of the gross value of the

estate at the time of the death of the
testator;
b. Second, reduce pro rata the preferred

legacies and devises
2. Determination of all debts and charges

which are chargeable against the estate;
c.
Third, reduce the donations inter vivos

according to the inverse order of their
dates
3. Determination of the net value of the estate

by deducting all the debts and charged from
the gross value of the estate;
8. Distribution of the residue of the estate in

accordance with the will of the testator.
CIVIL LAW REVIEWER

383
Page 186 of
SHARES OF COMPULSORY HEIRS
HEIR
LEGITIME
FREE PORTION
LEGITIMATE CHILDREN & DESCENDANTS
1/2
1/2
LEGIMITATE PARENTS & ASCENDANTS
1/2
1/2
CHILDREN 1/2
1/4
1 (ONE) LEGITIMATE
CHILDREN/DESCENDANT & SURVIVING
SPOUSE
LEGITIMATE CHILDREN (LC) & SPOUSE
SPOUSE -1/4
CHILDREN 1/2
SPOUSE EQUAL TO SHARE
WHAT REMAINS
OF 1 (ONE) LC
LEGITIMATE CHILDREN (LC) &
ILLEGITIMATE CHILDREN (ILC)
LEGITIMATE PARENTS/ASCENDANT &

SURVIVING SPOUSE
LC -1/2
ILC 1/2 OF SHARE OF 1 (ONE)
WHAT REMAINS (IF
LC
ANY)
LEGITIMATE
PARENTS/ASCENDANT 1/2
1/4
SPOUSE 1/4
LEGIMITATE PARENTS/ASCENDANTS &
LEGITIMATE
ILLEGIMTATE CHILDREN
PARENTS/ASCENDANTS 1/2
1/4
ILLEGIMITATE CHILDREN 1/4

ILLEGITIMATE CHILDREN & SURVIVING
SPOUSE
ILC 1/3
1/3
SPOUSE 1/3
LEGIMIATE CHILDREN/DESCENDANTS,
SURVIVING SPOUSE & ILLEGITIMATE
CHILDREN
LC 1/2
SPOUSE EQUAL TO 1 (ONE)
WHATEVER
REMAINS
LC
ILC 1/2 OF SHARE OF ONE (1)
LC
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Page 187 of
LEGITIMATE PARENTS/ASCENDANTS,
LEGIMIATE
SURVIVING SPOUSE, & ILLEGITIMATE
PARENTS/ASCENDANTS 1/2
1/8 ESTATE
CHILDREN
SPOUSE 1/8
ILC 1/4
SURVIVING SPOUSE
GENERALLY
1/2
1/2
ARTICULO
1/3
2/3
ILLEGITIMATE CHILDREN ONLY
1/2
1/2
ILLEGITIMATE PARENTS
1/2
1/2
ILLEGITIMATE PARENTS & SURVIVING
ILLEGITIMATE PARENTS 1/4
1/2
MORTIS
SPOUSE
CIVIL LAW REVIEWER

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SPOUSE 1/4
Page 188 of
RESERVA TRONCAL
RESERVA TRONCAL: The reservation by virtue
of which an ascendant who inherits from his
descendant any property which the latter may
have acquired by gratuitous title from another
ascendant or a brother or sister, is obliged to
reserve the property for the benefit of relative
within the 3rd degree and who belong from the
same line from which the property came from.
It constitutes as an exception to both the

system of legitime and the order of intestate
succession.
PURPOSE OF RESERVA TRONCAL:
1. To reserve certain properties in favor of
certain persons;
2. To prevent person outside a family from
acquiring, by some chance or accident,
property which otherwise would have
remained with the said family;
3. To maintain a separation between paternal
and maternal lines.
1.
ORIGINATOR the ascendant, brother

or sister from whom the propositus had
acquired the property by gratuitous title
2.
PROPOSITUS The descendant who

died and from whose death the reservistas in
turn had acquired the property by operation
of law. The so-called ARBITER OF THE FATE
OF THE RESERVA TRONCAL.
NOTE: Prepositus can terminate the reserva
by:
a. Substituting
or
alienating
the
property
b. By bequeathing or devising it either
to the potential reservista or to other
third person
c. By partitioning it and assigning the
property to parties other than the
reservista
3.
RESERVISTA The ascendant, not

belonging to the line from which the
property came that is the only compulsory
heir and is obliged to reserve the property.
(Justice Vitugs View)
NOTE: Tolentino is of the view that even if
the reservista and the originator belong to
the same line, there is still an obligation to
reserve.
4.
RESERVATARIOS The relative of the

propositus within the 3rd degree and who
belong to the line from which the property
came and for whose benefit reservation is
constituted. They must be related by blood
not only to the propositus but also to the
originator.
REQUISITES OF RESERVA TRONCAL

1.
The property should have been acquired
by operation of law by an ascendant
(RESERVISTA)
from
his
descendant
(PROPOSITUS) upon the death of the latter.
NOTE: by operation of law is limited to
succession, either by legitime or intestacy
2.
The
property
should
have
been
previously acquired by gratuitous title by
the propositus from another ascendant or
from a brother or sister (ORIGINATOR).
NOTE:
gratuitous
encompasses
transmissions by donation, remission, and
testate or intestate succession.
3.
The propositus should have died without

any legitimate issue in the direct descending
line who could inherit from him.
All relationships must be legitimate.
Nieva v. Alcala, [41 Phil 495]
4. That there are relatives within the third

degree belonging to the line from which
said property came.
PERSONAL ELEMENTS
NOTE: The Civil Code did not provide for the

rules on how the reservatarios would
succeed to the reservista. However, the
following rules on intestacy have been
consistently applied:
a.
Rule of preference between the
lines
b.
Rule of proximity
c.
Right
of
representation
provided that the representative is a

relative within the 3rd degree, and that
he belongs to the line from which the
reservable property came
d.
full blood/double share rule in

Article 1006
The reservista had no power to appoint,

by will, which reservatarios were to get
the reserved property. Gonzales v. CFI,
[104 Phil 479]
2
EVENTS
TO
BE
CONSIDERED
TO
DETERMINE
THE
RIGHT
OF
THE
RESERVATARIOS OVER THE RESERVABLE
PROPERTY
1.
Death of Propositus all qualified

reservatario merely acquire an inchoate
right.
The reservistas own the property
subject to the resolutory condition
2.
Death of Reservista surviving
reservatarios acquire a perfect right.
OBLIGATIONS OF A RESERVISTA AND THE
CORRESPONDING
RIGHTS
OF
THE
RESERVATARIOS (A-I-S-A)
1. To inventory reserved properties
2. To annotate the reservable character (if
registered immovables) in the Registry of
Property within 90 days from acceptance by
the reservista
3. To appraise the movables
4. To secure by means of mortgage:
1.
The indemnity for any
deterioration of or damage to the
property occasioned by the reservistas
fault or negligence, and
2.
The payment of the
value of such reserved movables as may
be alienated by the reservista onerously
and gratuitously
3.
As
restitution
for
movables not alienated
RIGHT OF THE RESERVISTA OVER THE
RESERVABLE PROPERTY
1. The right of the reservista over the reserved
property is one of ownership
2. The ownership is subject to a resolutory
condition
3. The right of ownership is alienable
4. The right of ownership is registrable
RIGHT OF THE RESERVASTARIOS OVER THE
RESERVABLE PROPERTY
1. The reservatarios have a right of expectancy
over the property
2. The right is subject to a suspensive condition

3. The right is alienable, but subject to the
same suspensive condition
4. The right is registrable
PROPERTY SUBJECT TO RESERVATION:
GENERAL RULE: It must be the same
property which the reservista had acquired by
operation of law from the propositus upon the
latters death and which the latter, in turn had
acquired by gratuitous title during his lifetime
from another ascendant, brother or sister.
EXCEPTION: Substitution of the reservable
property through unavoidable necessity:
1.
Property is consumable
2.
Lost or destroyed through the fault of the
reservista
3. Deteriorated through the same cause
4.
It has been alienated
Reserva Maxima
Much of the
potentially reservable
property as possible
must be deemed
included in the part
that passes by
operation of law
Maximizes the scope

of reserve
Reserva Minima
Every single property
in the Prepositus estate
must be deemed to
pass, partly by will and
partly by operation of
law,
in
the
same
proportion
that the
part given by will bears
to the part not so given
Minima
finds
wider
acceptance here
EXTINGUISHMENT OF RESERVA TRONCAL

1. The death of the Reservista
2. The death of the all the Reservatorios
3. Waiver
or
renunciation
by
all
Reservatorios, provided none is born
subsequently
4. Total fortuitous loss of the reserved
property
5. Confusion or merger of rights
6. Prescription or adverse possession
IMPORTANT NOTES:
A
reservatario
may
dispose
of
his
expectancy to the reservable property
during the pendency of the reserva in its
uncertain and conditional form. If he dies
before the reservista, he has not transmitted
anything, but if he survives such reservista,
the transmission shall become effective.
A will may prevent the constitution of a

reserva. In testate succession, only the
legitime passes by operation of law. The
propositus may, by will, opt to give the
legitime of his ascendant without giving to
the latter properties he had acquired by
gratuitous title from another ascendant, or
brother or sister. In such case, reserva
troncal is avoided.
Howerver, if the ascendant was not
disentitled in the will to receive such
properties,
the
reserva
minima
rule
(proportional reserva) should be followed.
The rule holds that all properties passing to
the reservista must be considered as passing
partly by operation of law and partly by will
of the propositus. Thus, one-half of the
properties acquired by gratuitous title should
be reservable and the other half should be
free.
PRINCIPLE OF UNIMPAIRMENT OF THE

LEGITIME OF THE COMPULSORY HEIR
1. General Rule: The testator cannot deprive
his compulsory heirs of their legitime.
Exception: valid disinheritance
2. General Rule: He cannot impose upon the
same any burden, encumbrance, condition,
or substitution of any kind whatsoever.
Exception: express prohibition of the
partition of the estate for a period not
exceeding 20 years.
Renunciation or compromise as regards
future legitime between the person owing it
and his compulsory heir is void.
i.
ii.
The rights of the heirs

are merely inchoate because it is only
perfected upon the testators death.
Hence, there is still nothing to renounce.
No contract may be
entered into with respect to future
inheritance except in cases expressly
authorized by law.
EFFECTS OF INCOMPLETE LEGITIME

Incomplete Legitime
Preterition
Heir not entirely
Total omission of the
forgotten
heir
Less than the portion
Total deprivation of
of the legitime
legitime
Remedy is to demand
Effect is the total
for completion of
annulment of the
legitime
institution of heirs
STEPS IN DETERMINING THE LEGITIME OF

COMPULSORY
HEIRS
IF
THERE
ARE
DONATIONS:
1. Determination of the gross value of the
estate at the time of the death of the
testator;
2. Determination of all debts and charges
which are chargeable against the estate
this refers to the pre-existing obligations of
the testator during his lifetime, and not to
the charges or burdens which are created by
the testamentary dispositions found in the
will;
3. Determination of the net value of the estate
by deducting all the debts and charges from
the gross value of the estate;
4. Collation or addition of the value of all
donations inter vivos to the net value of the
estate;
5. Determination of the amount of the legitime
from the total thus found;
NOTE: proceeds of an insurance policy
where the beneficiary is a third person or
even a compulsory heir belongs exclusively
to the beneficiary and not to the estate of
the insured. Hence, not subject to collation.
6. Imputation of the value of all donatioins inter
vivos made to compulsory heirs against their
legitime and of the value of all donations
inter vivos made to strangers against the
disposable free portion and restoration to
the hereditary estate if the donation is
inofficious; and
7. Distribution of the residue of the estate in
accordance with the will of the testator.
REDUCTION
OF
TESTAMENTARY
DISPOSITIONS AND DONATIONS
The order of preference is as follows:
1. Legitime of compulsory heirs
2. Donation inter vivos
3. Preferential legacies or devises
4. All other legacies or devises
If after satisfying the legitime of the compulsory
heirs, the disposable portion is sufficient to
cover donations inter vivos but not the legacies
and devises, the rule is that such legacies and
devises will be reduced pro rate, after satisfying
those preferential ones.
DISINHERITANCE
CAUSES OF VACANCY IN SUCCESSION
1. Disinheritance - The testator creates it

himself
2. Repudiation - The heir does something
3. Incapacity/Predecease - Something happens
to the heir
HOW VACANCIES ARE FILLED
1. Substitution
2. Representation
3. Accretion
DISINHERITANCE
1. Heir is being deprived of his legitime.
2. Only in cases of testate succession.
NOTE:
Counterpart
in
intestate
is
unworthiness.
3. Even if validly disinherited, heir can still be
validly
restored
in the legitime
by
RECONCILIATION.
4. Reconciliation when in speaking terms
again, no particular form
5. In unworthiness, there must a pardon in
writing to remove incapacity to inherit.
However, it does not have to be in a will.
6. If
grounds
for
disinheritance
and
unworthiness are common, reconciliation
does not erase the fact that the heir is
unworthy.
7. As long as there is reconciliation, it should
be considered to have revoked the
inheritance as well as the unworthiness.
8. Ineffective disinheritance v. Preterition
REQUIREMENTS
FOR
VALID
DISINHERITANCE
1. Effected only through a valid will;
NOTE: Will containing disinheritance must
be probated.
2. For a cause expressly stated by law;
3. Cause must be expressly state in the will
itself;
4. Cause must be certain and true;
5. Unconditional;
6. Total; AND
7. The heir disinherited must be designated in
such a manner that there can be no doubt as
to his identity.
EFFECTS OF DISINHERITANCE
1. Total exclusion of the compulsory heir in
from the inheritance, which includes his
legitime, his intestate portion, and any
testamentary disposition made in a prior
will.
NOTE: Therefore, the heir loses his

legitime. As to the free portion, it passes
through
Substitution,
Accretion,
and
Intestacy.
2. The children or descendants of the person
disinherited shall take his or her place and
shall preserve the rights of compulsory heirs
with respect to the legitime.
NOTE: The disinherited heir can be
represented in the legitime.
a.
Only in the descending line, never in
the ascending
b.
In collateral line, only with respect to
nephews and nieces.
3. The disinherited parents shall not have the
usufruct or administration of the property
which constitutes the legitime.
GROUNDS FOR DISINHERITANCE
Grounds for Disinheritance Common To All
Compulsory Heirs
1. Attempt on the life of testator, spouse,
ascendant, descendant
a.
Conviction necessary
b.
In case of spouse, giving cause for
legal separation, no conviction needed
c.
Include
both
attempted
and
frustrated.
d.
Attempt on life of relatives, may be
consummated.
2. Accusation of a crime with penalty of
six years or more.
a.
Penalty imposable, not actually
imposed.
b.
Made by the heir in a proceeding as a
complainant or witness in a criminal
case.
c.
Found to be groundless, false.
d.
Groundless court should make a
positive finding that the testator has not
committed the crime. It is then false.
e.
Chismis not the one referred here,
it is outside criminal proceeding.
3. Induce testator to make/change the
will.
a.
Will purely personal
b.
Vices of consent.
c.
It does not punish the result but the
interference in the making/changing of
the will.
d.
Will + disinheritance (will making)
e.
Will + amended will + disinheritance

(will changing)
4. Support unjustifiably not given.
a.
Must prove obligation to give support
b.
Spouses: mutual obligation to give
support
c.
Reason must be unjustifiable
Grounds
for
Disinheritance
Common
between Ascendants and Descendants
Adultery and Concubinage with the

spouse of the testator
1. It must be the heir who committed such
liaison
2. With the legal spouse of the testator
3. Not necessarily incestuous
4. Applicable to both legitimate and illegitimate
descendant
Grounds
for
Disinheritance
Common
Ascendant and Spouse
Loss of parental authority
1.
Causes: Arts. 230, 231, 232 of the
Family Code
2.
Ascendant of testator
3.
Spouse has given cause for loss of
parental authority.
4.
No actual deprivation, but it must
exist. It means that the act is committed
which may be a cause for loss of parental
authority over their common children,
EXCEPT for those enumerated in A.
5.
There are no common grounds
between spouse and descendants.
Grounds for Disinheritance Only against
Descendant
1. Maltreatment of testator
a. By
word
slander,
offensive
language, insult, libel. May be spoken
or written.
b. By deed no need for violence,
something which caused the testator
to be humiliated. Laying hands if not
under attempt on life.
2. Leading a disgraceful life (or dishonest)
i.e., daughter living with a married man,
estafadora, prostitutes, drug dealers,
drug addict.
3. Commission of crime which carries with
it the penalty of civil interdiction
a. Descendant convicted of crime with

civil
interdiction.
Necessarily
imposable, not actually imposed.
b. Reclusion
temporal,
reclusion
perpetua.
Ground for Disinheritance Only against
Ascendants (Parents)
1. Abandonment by parents
a.
Willfully left the children to fend for
themselves
b.
Abdication of parental duties.
c.
Only refers to abandoned child.
d.
Induced
daughters
to
lead
a
disgraceful life also applicable to sons.
2. Attempt on the life of
against another parent.
one
parent
a.
b.
Parent v. parent
Even if parents are not married, it is
still a ground.
c.
No need for conviction. As long as
the heir can prove that there is an
attempt.
d.
They do not need to be spouses.
However, the testator must be a
common child.
Grounds for Disinheritance Only against
spouse refers to legal spouses only,
legally married to each other
1. Giving cause for legal separation
a.
No need for previous conviction
b.
Prove infidelity if cause is contested
c.
No need to prove grounds unless
contested by the heir.
d.
Legal separation instituted but not
terminated, OK
e.
If there is already a decree:
i.
Ground is conclusive
ii.
But, there is a need to
disinherit
iii.
Effects: Guilty spouse is not
entitled to inherit.
f.
See 10 causes under the Family
Code.
2. Support refusal to give support to the
children
a.
Offended the testator
b.
Common children of the testator and
the spouse
c.
Spouse refuses to give support to the

child
d.
Parents share in support of their
common children. Refusal of the other
spouse causes damage to the other.
(testator)
GROUND
CHILD/
PARENT/
DESCEND
ASCEND
SPOUSE
to
not
Adultery and Concubinage
N/A
Loss of parental authority
N/A
Attempt against the life of

the
testator,
spouse,
ascendant, descendant
Accusation of a crime with
penalty of six years
Induce
testator
make/change the will.
Support
unjustifiably
given
Grounds
Specific
Particular Heir
to
1.Maltreatment
1. Abandonment
of testator
2.
parents
Leading
disgraceful life
3.
of crime which
the
2. Attempt
with
it
penalty
of
civil interdiction
against
parent.
1 Giving Cause
Legal
on
the
life of one parent
Commission
carries
by
another
Separation
2. Support
IMPERFECT DISINHERITANCE: Disinheritance

which does not have one or more of the
essential requisites for its validity.
EFFECTS OF IMPERFECT DISINHERITANCE
1.
If the testator had made
disposition
of
the
entire
estate;
annulment
of
the
testamentary
disposition only in so far as they
prejudice the legitime of the person
disinherited;
does
not
affect
the
dispositions of the testator with respect
to the free portion
2.
If the testator did not
dispose of the free portion; compulsory
heir given all that he is entitled to
receive as if the disinheritance has not
been made, without prejudice to lawful
dispositions made by the testator in
favor of others
3.
Devisees,
legacies
and
other testamentary dispositions shall be
valid to such extent as will not impair the
legitime
IMPERFECT
DISINHERITANCE
Person disinherited may
be any compulsory heir
EXPRESS
INTENTIONAL
partial annulment
of
PRETERITION
The person omitted
must be a compulsory
heir in the direct line
IMPLIED
EITHER intentional or
unintentional
Effect:
total
annulment
of
REVOCATION OF DISINHERITANCE
1.
Reconciliation
NOTE: This refers to the resumption of
genuine cordial relationship between the
testator
and
the
disinherited
heir,
approximating that which prevailed before
the testator learned of the cause for
disinheritance, reciprocally manifested by
their actions subsequent to the act of
disinheritance.
2.
Subsequent institution of
the disinherited heir
3.
Nullity of the will which
contains the disinheritance
NOTES:
Even if validly disinherited, heir can still be

validly
restored
in the legitime
by
RECONCILIATION.
A subsequent reconciliation between the
offender and the offended person deprives
the latter of the right to disinherit and
renders ineffectual any disinheritance that
may have been made. (Art. 922)
Reconciliation when in speaking terms
again, no particular form required, it may
be express or tacit. However, mere civility
which may characterize their relationship is
not enough.
In order for reconciliation to be effective, the
testator must pardon the disinherited heir.
Such pardon must specifically refer to the
heir and to the acts causing the
disinheritance. The heir must accept the
pardon.
In unworthiness, there must a pardon in
writing to remove incapacity to inherit.
However, it does not have to be in a will.
If
grounds
for
disinheritance
and
unworthiness are common, reconciliation
does not erase the fact that the heir is
unworthy. What then is the effect of a
subsequent reconciliation upon the heirs
capacity to succeed?
1.
If disinheritance has
been made: Rule on reconciliation
applies, the disinheritance becomes
ineffective
2.
If disinheritance has
not
been
made:
The
rule
on
reconciliation does not apply, the heir
continues to be incapacitated to succeed
unless the testator pardoned him under
Art. 1033.
LEGACIES AND DEVISES

PERSONS CHARGED WITH LEGACIES AND
DEVISES:
1.
2.
3.
4.
Compulsory heir;
Voluntary heir;
Legatee or devisee;
Estate.
If the will is silent as to who

shall pay or deliver the legacy/devise,
1.
If
there
is
an
administration proceedings, there is a
presumption that such legacy or devise
constitutes a charge against the

decedents estate
2.
If
there
is
no
administration proceedings, it is a charge
upon the heirs (Art. 926, par. 2)
Since legacies and devises
are to be taken from the disposable free
portion of the estate, the provisions on
institution of heirs are generally applicable
to them
The legatees/devisees shall
be liable for the charge to the extent of the
value of the legacy/devise received.
The compulsory heir shall
NOT be liable for the charge beyond the
disposable portion given to him. It should
not affect his legitime.
ORDER OF PAYMENT IN CASE ESTATE IS

INSUFFICIENT TO COVER ALL LEGACIES
AND DEVICES
1. Remuneratory legacies or devises
2. Legacies or devises declared by the testator
to be preferential
3. Legacies for Support
4. Legacies for Education
5. Legacies
or
devises
of
a
specific,
determinate thing which forms a part of the
6. estate
7. All others, pro-rata
WHEN LEGACY/DEVISE CAN BE REVOKED BY

OPERATION OF LAW
1. If the testator transform the thing
bequeathed or devised in such a manner
that it does not retain its form and
denomination
2. If the testator, by any title or for any cause,
alienates the thing bequeathed or devised or
any part thereof
3. If the thing bequeathed or devised is totally
lost during the lifetime of the testator, or
after his death without the heirs fault
4. If the legacy is a credit against a third
person or the remission of a debt, and the
testator, subsequent to the making of the
will brings an action against such debtor for
payment
GROUNDS FOR REVOCATION OF LEGACIES
OR DEVISES
1. Testator transforms the thing bequeathed in

such a manner it does not retain either the
form or the denomination it had.
2. The testator by any title or for any cause
alienates the thing bequeathed, or any part
thereof, it being understood that in the latter
case the legacy or devise shall be without
only with respect to the part alienated
EXCEPT: when the thing should again
belong to the testator after alienation.
3. The thing bequeathed is totally lost during
the lifetime of the testator, or after his death
without the heirs fault;
4. Other
Causes:
nullity
of
the
will;
noncompliance with suspensive conditions
affecting the bequests; sale of the thing to
pay the debts of the deceased during the
settlement of his estate.
VALIDITY AND EFFECT OF LEGACY

Thing owned in part by testator
(Art. 929)
General Rule: Conveys only interest or part owned by testator

Exception: if testator otherwise provides
1. He may convey more than what he owns - the state should
try to acquire the part or interest owned by other parties.
If other parties are unwilling to alienate, the estate should
give the legatee/devisee the monetary equivalent
(analogy with Article 931)
2. He may convey less than what he owns (Article 794)
Thing owned by another

(Arts. 930-931)
General Rule:
1. If testator ordered acquisition of the thing - the
order should be complied with. If the owner is unwilling to
part with the thing, the legatee/devisee should be given
the monetary equivalent
2. If testator erroneously believed that the thing
belonged to him - legacy/device is void
Exception: if testator acquire the thing onerously or
gratuitously after making of the disposition, disposition is
validated
3. If testator knew that the thing did not belong to
him but did not order its acquisition - code is silent
but disposition should be considered valid - there is an
implied order to acquire and doubts must be resolved in
favor of intestacy
Thing already owned to the

legatee/devisee (Arts 932-933)
1.
If thing already belonged to legatee/devisee at

time of execution of will legacy/devise is void
2.
If thing was owned by another person at time of

making the will and thereafter it is acquired by
legatee/devisee:
a.
If testator erroneously believed that he owned

the thing legacy /devise is void
b.
If testator was not in error

i.
If thing was acquired onerously by L/D

L/D entitled to be reimbursed
ii.
If thing was acquired gratuitously by

L/D nothing is due
3.
If thing was owned by testator at time will was made

and L/D acquired the thing from him thereafter law is
silent
*Balane L/D deemed revoked
*Tolentino no intention to revoke (BUT if the testator has
not alienated the thing directly to the L/D, but to a 3rd
person and the former just acquired it from the latter,
there is an intention to revoke)
Legacy/Devise to remove an
encumbrance over a thing
belonging to testator (Art 932
par 2)
Valid, if the encumbrance can be removed for a consideration
Legacy/Devise of a thing pledged

or mortgaged (Article 934)
The encumbrance must be removed by paying the debt unless

the testator intended otherwise
BASIC
PRINCIPLES
SUCCESSION
=================================
III. Legal or Intestate Succession
(Arts. 960-1014)
A. General provisions (Arts. 960969)
(1) Relationship (Arts. 963-969)
(2) Right of representation (Arts.
970-977)
B. Order of intestate succession
(Arts. 978-1014, 992)
=================================
III. GENERAL PROVISIONS ON LEGAL
OR INTESTATE SUCCESSION
LEGAL OR INTESTATE SUCCESSION: That
which is effected by operation of law in the
absence or default of a will.
CAUSES OF
GENERAL
1.
2.
INTESTATE
SUCCESSION
IN
In the absence of applicable

valid will
a.
Annulment of institution of
heirs.
b.
When will loses its validity.
c.
Testator did not make any
will.
d.
Will not probated.
e.
Revocation.
f.
Preterition
In the absence of qualified heirs
a.
Partial institution of heir. In
such case, intestacy takes place as to
the
undisposed
portion
(mixed
succession)
b.
Ineffective disinheritance (a
portion)
c.
Predecease
d.
Repudiation (one or all)
e.
Incapacity
f.
Disinheritance
g.
Institution
subject
to
conditions
i.
Suspensive condition did
not happen
ii.
Resolutory
condition
happens.
iii.
Expiration of term or period
of institution
iv.
Non-compliance
or
impossibility of compliance with the
will.
IN
INTESTATE
1. Intestate heirs always related by blood.

Except:
a.
Spouse - not related by blood,
stranger in the family
b.
Adoptive relation adopter/adopted,
fiction by law created by adoption,
purely personal
c.
State in the event no heir can
inherit.
2. Rule of Proximity The nearer excludes
the farther the relative nearest in degree
exclude the farther one, saving the right of
representation when it properly takes place.
NOTE: This is subject to rule of preference
between lines. In case of disposition made
under Art. 959 in general terms in favor or
the testators relatives, only rule of proximity
applies.
3. Rule of Preference Between Lines
Direct line is always preferred over
collateral lines. The direct descending line
shall exclude those in the direct ascending
and collateral lines, and those in the direct
ascending line shall, in turn, exclude those in
the collateral line.
4. Rule of equal division the relatives who
are in the same degree shall inherit in equal
shares same class
Exception:
a. Descending line difference in class in
the cases of legitimate or illegitimate
filiation.
i.
In case of paternal/maternal
lines
ii.
Collateral half or full blood
b. Ascending line the shares are divided
equally between maternal and paternal
lines, which could result to unequal
shares when there is only one
grandparent in the maternal line while
both grandparents survived in the
paternal side.
c. Division among brothers and sisters,
some of whom are of the full and others
of half blood; and
d. Division in cases where the right of
representation takes place.
5. Rule of Barrier between the legitimate
family and the illegitimate family the
illegitimate family cannot inherit by intestate
succession from the legitimate family and
vice-versa.
6. Rule of Double Share for full blood

collaterals when full and half-blood
brothers or sisters, nephews or nieces,
survive, the full blood shall take a portion in
the inheritance doubt that of the half-blood.
NOTE: In all cases where there has been an
institution of heirs, follow the [I.S.R.A.I.] order
of Justice Paras.
If the Institution fails,
Substitution occurs. If there is no substitute,
right of Representation applies in the direct
descending line to the legitime of the vacancy is
caused
by
predecease,
incapacity
or
disinheritance. The right of Accretion applies to
the free portion when the requisites in Article
1016 are present. If there is no substitute, and
the right of representation or accretion does not
apply, the rule of Intestate succession shall take
over.
RULES ON RELATIONSHIP
1.
Number
of
generations determines proximity
2.
Each generation forms
a degree
3.
A series of degrees
forms a line
4.
A line may be direct
or collateral. A direct line is that constituted
by the series of degrees among ascendants
and
descendants
(ascending
and
descending)
5.
A collateral line is that
constituted by the series of degrees among
persons who are not ascendants or
descendants, but who come from a common
ancestor.
6.
Full
blood:
same
father and mother, half blood: only one of
either parent is the same.
7.
In adoption, the legal
filiation is personal and exists only between
adopter and the adopted. The adopted is
deemed a legitimate child of the adopter.
EFFECTS OF INCAPACITY OR REPUDIATION
1. If there are several relatives of the same
degree and on or more of them are
unwilling or incapacitated to succeed, his
portion shall accrue to the others of the
same degree (right of accretion) save the
right of representation when it should
take place.
2. If the inheritance should be repudiated by
the nearest relative, should there be only
one, or by all the nearest relatives called by
law to succeed, should there be several,
those of the following degree shall inherit in

their own right (per capita) and cannot
represent the person repudiating the
inheritance.
REPRESENTATION: A right created by fiction of
law, by virtue of which the representative is
raised to the place and degree of the person
represented, and acquires the rights which the
latter would have if he were living or if he could
have inherited.
INSTANCES
OCCURS:
WHEN
REPRESENTATION
1. Predecease
2. Incapacity of Unworthiness
3. Disinheritance
NOTE: In case of repudiation, accretion
takes place.
Although a renouncer
cannot be
represented, he can represent the
person whose inheritance he has
renounced. Sayson v. CA, [205 SCRA
324]
CHARACTERISTICS OF REPRESENTATION
1. A right of subrogation
2. Exception to the rule on proximity and
equal division
3. Called to succession by law
4. Representative succeeds the decedent
and NOT the person represented
5. Takes place when there is vacancy in the
inheritance
brought
about
by
predecease, incapacity, or disinheritance
6. As a general rule, exercised only by the
grandchildren of the decedent
TESTAMENTARY
INTESTATE
When Takes Place
COMPULSORY HEIR:
LEGAL HEIR:
dies before the
testator
dies
before
testator
is unworthy to
succeed
is
unworthy
succeed
the
to
is disinherited
Effects Upon The Division
Acquires the right Acquires the right
with respect to the with respect to the
legitime
entire legal portion
Per stirpes
Per stirpes
IN
WHAT
KINDS
OF
REPRESENTATION OPERATES
1.
2.
SUCCESSION
Legitimes
The children and descendants of the person
disinherited shall take his or her place and
shall preserve the rights of compulsory heir
with respect to the legitime (Art 923)
And only when the heir to be
represented:
a. Predecease, becomes incapacitated, or
was disinherited by the testator.
b. Is a compulsory heir.
c. No right of representation if the heir to
be represented is a voluntary heir.
Intestate succession
Representation occurs in all intestate
estate. All legal heirs may be represented
when proper. (It is not proper only when the
heir to be represented repudiated his share
in the inheritance)
OUTLINE OF RULES:
KIND OF HEIR
Compulsory
Voluntary
Legal
Predecease
Incapacity
Renunciation
Transmits
nothing;
Transmits
nothing;
Transmits
nothing;
Transmits
nothing;
Representation
Representation
NO
Representation
Representation
Transmits
nothing;
Transmits
nothing;
Transmits
nothing;
Not applicable
NO
Representation
NO
Representation
NO
Representation
Transmits
nothing;
Transmits
nothing;
Transmits
nothing;
Representation
Representation
NO
Representation
IN WHAT LINES DOES REPRESENTATION

OBTAIN
3.
1. Legitime - in the direct descending line

only.
The rationale why an adopted child can

neither represent or be represented is
because the legal relationship created by
the adoption is strictly between the
adopter and the adopted. Teotica v. Del
Val, [13 SCRA 406]
Intestacy:
a. In the direct descending line.
QUALIFICATIONS TO REPRESENT
b.
1. The representative himself must

capacity to succeed the decedent
In the collateral line, it takes place

only in favor of the children of brother or
sisters (nieces and nephews of the
decedent, not grand-nieces or grandnephews), whether of the full or half
blood, and only if they concur with at
least 1 uncle or aunt.
NOTE: If all the brothers and sisters are

disqualified, the nephews and nieces shall
inherit per capita.
REPRESENTATION OF
ADOPTED CHILDREN
1.
Not applicable
An adopted child
can neither represent nor be represented
Representation does not exist in the

ascending line. Hence, the father cannot
represent the son in the inheritance from the
grandfather.
2.
Disinheritance
ILLEGITIMATE
OR
If the child to be
represented is legitimate only legitimate
children and descendants can represent him.
2.
If the child to be
represented is illegitimate both legitimate
and illegitimate children/descendants can
represent him.
have
2. The representative need not be qualified to

succeed the person represented.
HOW REPRESENTATION OPERATES
Division shall be made PER STIRPES.
Factual Situation
Division
If all the children are

disqualified
All grandchildren still

inherit per stirpes
If all the brothers

/sisters
are
disqualified
Nephews and nieces

inherit per capita
THE SUCCESSIONAL BARRIER
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 relatives
inherit in the same manner from the
illegitimate child. (Art 992)
The Barrier rule only applies if there is a
legitimate
and
illegitimate
relation.
Example: A is the legitimate son of B. C is
the illegitimate son of A. C cannot inherit
from B if A predeceases, or becomes
incapacitated or be disinherited by B.
EFFECTS OF REPUDIATION
1. By representative right of representation is
present
Example: A child who repudiates his
inheritance when his father died may still
represent the latter when his grandfather
dies.
2. By heir no right of representation
ORDER OF INTESTATE SUCCESSION
INTESTATE HEIRS: Those who are called by law
to the succession either in the absence of a will
or of qualified heirs, and who are deemed called
based on the presumed will of the decedent.
REGULAR ORDER OF SUCCESSION
1. Legitimate Children/Descendants
2. Illegitimate Children/Descendants
3. Legitimate Parents/ Ascendants
4.
Illegitimate Parents
5. Surviving Spouse
5. Brothers, Sisters, Nephews, Nieces
6. Other Collaterals to the 5th degree
7. State
NOTE: Decedent is a legitimate person
ORDER OF SUCCESSION (If descendent is a
legitimate person)
1. Legitimate Children/Descendants
2. Illegitimate Children/Descendants
3. Illegitimate Parents
4. Surviving Spouse
5. Brothers, Sisters, Nephews, Nieces

6. State
RULES OF EXCLUSION AND CONCURRENCE

Intestate Heir
EXCLUDES
CONCURS WITH
EXCLUDED BY
Legitimate children
and Legitimate
descendants
Ascendants,
collaterals
and state
No one
Surviving spouse
Illegitimate children
and Descendants
Illegitimate
parents,
collaterals
and state
No one
Legitimate parents and

legitimate ascendants
Collaterals
and state
Legitimate
children
Illegitimate
children and
surviving spouse
Illegitimate parents
Collaterals
and state
Legitimate
children and
illegitimate
children
Surviving spouse
Surviving spouse
Collaterals
other than
siblings,
nephews and
nieces
No one
Legitimate
children
Illegitimate
children
Surviving spouse
Legitimate
children and
legitimate parents
Illegitimate
children
Legitimate parents
and Illegitimate
parents
Siblings, nephews
nieces
All other
collaterals
and state
Legitimate
children,
illegitimate
children,
Surviving spouse
Legitimate
parents and
illegitimate
parents
Other collaterals
within 5th degree
Collateral
remoter in
degree and
state
Legitimate
children
Illegitimate
children
Legitimate
parents
Illegitimate
parents and
Collaterals in the
same degree
Surviving
spouse
State
No one
Everyone
No one
SUMMARY OF INTESTATE SHARES

HEIR
LEGITIME
FREE PORTION
TOTAL
LEGITIMATE CHILDREN &

DESCENDANTS
(1/2)
(1/2)
100%
LEGIMITATE PARENTS &

ASCENDANTS
(1/2)
(1/2)
100%
1 (ONE) LEGITIMATE
CHILDREN/DESCENDANT &
SURVIVING SPOUSE
SPOUSE

ILLEGITIMATE CHILDREN (ILC)
LEGITIMATE
PARENTS/ASCENDANT &
SURVIVING SPOUSE
CHILDREN 1/2
SPOUSE -1/4
SPOUSE -1/4
CHILDREN 1/2
LC -1/2
ILC 1/2 OF
SHARE OF 1
(ONE) LC
WHAT REMAINS (IF

ANY)
LEGITIMATE
PARENTS/ASCEN
DANT 1/2
WHOLE
ESTATE
DIVIDED BY
THE RATIO OF
2:1 FOR EACH
LEGITIMATE
CHILD AS
COMPARED TO
THE
ILLEGITIMATE
CHILD
PARENT 1/2
SPOUSE -1/4
LEGITIMATE
PARENTS/ASCEN
DANTS 1/2
ILLEGIMITATE
CHILDREN 1/4
SPOUSE - 1/2
ENTIRE
ESTATE IS
DIVIDED
EQUALLY
BETWEEN
TOTAL
NUMBER OF
CHILDREN &
SPOUSE
SPOUSE EQUAL
TO SHARE OF 1
(ONE) LC
SPOUSE 1/4
LEGIMITATE
PARENTS/ASCENDANTS &
ILLEGIMTATE CHILDREN
CHILDREN
1/2
SPOUSE - 1/2
PARENTS - 1/2
ILLEGITIMATE
CHILDREN - 1/4
ILC - 1/2
ILLEGITIMATE CHILDREN &

SURVIVING SPOUSE
LEGIMIATE
CHILDREN/DESCENDANTS,
SURVIVING SPOUSE &
ILLEGITIMATE CHILDREN
ILC 1/3
ILC - 1/6
ILC - 1/2
SPOUSE 1/3
SPOUSE - 1/6
SPOUSE - 1/2
WHOLE
ESTATE
DIVIDED BY
THE RATIO OF
2:1 FOR EACH
LEGITIMATE
CHILD AS
COMPARED TO
THE
ILLEGITIMATE
CHILD
LC 1/2
SPOUSE EQUAL
TO 1 (ONE) LC
ILC 1/2 OF
SHARE OF ONE
(1) LC
LEGITIMATE
PARENTS/ASCENDANTS,
SURVIVING SPOUSE, &
ILLEGITIMATE CHILDREN
LEGIMIATE
PARENTS/ASCEN
DANTS 1/2
SPOUSE 1/8
LEGITIMATE
PARENTS - 1/2
SPOUSE - 1/4
ILC - 1/4
SPOUSE - 1/8
ILC 1/4
SURVIVING SPOUSE
GENERA
LLY
(1/2)
(1/2)
100%
ARTICUL
O
MORTIS
(1/3)
(2/3)
100%
ILLEGITIMATE CHILDREN ONLY
(1/2)
(1/2)
100%
ILLEGITIMATE PARENTS
(1/2)
(1/2)
100%
ILLEGITIMATE PARENTS &

SURVIVING SPOUSE
ILLEGITIMATE
PARENTS 1/4
ILLEGITIMATE
PARENTS - 1/4
SPOUSE - 1/4
ILLEGIMITATE
PARENTS - 1/2
SPOUSE - 1/2
SPOUSE 1/4
SIBLINGS, NEPHEWS &
NIECE
(1/2)
(1/2)
100%
SPOUSE 1/2
SURVIVING SPOUSE, SIBLINGS,

NEPHEWS & NIECES
SPOUSE (1/2)
NEPHEWS/SIBLINGS
(1/2)
NEPHEWS/SIB
LINGS 1/2
WHEN DECEDENT HAS NO HEIRS

1.
Assignment and
Disposition of Assets
a. if decedent is a resident of the
Philippines at any time
i.
Personal property to the
municipality of last residence
ii.
Real property where
situated
b.
If decedent was never a resident
of the Philippines
Personal and real property
where respectfully situated
2.
How Property is
to be Used
a.
For
the
benefit
of
public
educational and charitable institutions in
the respective municipalities/cities
b.
Alternatively, at the instance of
an interested party, or motu proprio, the
court may order the permanent trust for
the benefit of the institutions concerned
CARDINAL
PRINCIPLES
OF
INTESTATE
SUCCESSION (By Justice Paras)
1. Even if there is an order of intestate
succession, the compulsory heirs are never
excluded. The Civil Code follows the
concurrence theory, not the exclusion theory.
2. Right of Representation in the collateral line
occurs only in intestate succession, never in
testamentary
succession
because
a
voluntary heir cannot be represented
(collateral relatives are not compulsory
heirs)
3. The intestate shares are either equal to or
greater than the legitime.
4. General Rule: Grand Children always inherit
by Right of Representation, provided
representation is proper.
Exception: Whenever all the children
repudiate, the grandchildren inherit in their
own right because Right of Representation
would not be proper
5. Nephews and nieces inherit either by Right
of Representation or in their Own Right
a. Right of Representation when they
concur with aunts and uncles (provided
that Right of Representation is proper)
b. Own Right: when they do not concur with
aunts and uncles
6. Illegitimate Children and Descendants of
legitimates cannot represent because of the
barrier, but both the Illegitimate and
Legitimate Children and Descendants of
Illegitimates can.
7. There can be reserva troncal in intestate
succession
8. A renouncer can represent, but cannot be
represented
9. A person who cannot represent a near

relative cannot also represent a relative
father in degree.
MIXED SUCCESSION OR PARTIAL INTESTACY
Mixed Succession: Succession that is effected
partly by will and partly by operation of law.
Rules:
1. The law of legitimes must be brought into
operation in partial intestacy because the
testamentary dispositions can affect only the
disposable free portion but never the
legitimes.
2. If among the concurring intestate heirs there
are compulsory heirs, whose legal or
intestate portions exceed their respective
legitmes,
then
the
amount
of
the
testamentary disposition must be deducted
from the disposable free portion, to be borne
by all the intestate heirs in the proportions
that they are entitled to receive from such
disposable free portion as intestate heirs.
3. If the intestate share of a compulsory heir is
equal to his legitime, then the amount of the
testamentary disposition must be deducted
only from the intestate shares of the others,
in the proportions stated above.
4. If the testamentary dispositions consume
the entire disposable free portion, then the
intestate heirs who are compulsory heirs will
get only their legitime, and those who are
not compulsory heirs will get nothing.
=================================
IV. Provisions Common to Testate
and Intestate Succession (Arts. 10151105)
A. Right of accretion (Arts. 10151023)
(1) Definition and requisites (Arts.
1015-1016)
B. Capacity to succeed by will or
intestacy (Arts. 1024-1040)
(1) Persons incapable of
succeeding (Arts. 1027, 739,
1032)
(2) Unworthiness vs.
Disinheritance
C. Acceptance and repudiation of
the inheritance (Arts. 1041-1057)
D. Collation (Arts. 908-910, 10611062)
E. Partition and distribution of
estate (Arts. 1078-1105)
(1) Partition (Arts. 1079, 1080)
(2) Partition inter vivos
(3) Effects of partition (Arts. 1091,

1097, 1100, 1104-1105)
=================================
IV. PROVISIONS COMMON TO
TESTATE AND INTESTATE
SUCCESSION
RIGHT TO ACCRETION: When two or more
persons are called to the same inheritance,
devisee, or legacy, the part assigned to one
who renounce or cannot receive his share or
who died before the testator, is added or
incorporated to that of his co-heirs, codevisees, or co-legatees
1. In Testamentary Succession
a.
Predecease
b.
Incapacity
c.
Repudiation
d.
Non-fulfillment
of
suspensive
condition imposed upon instituted heir
e.
Ineffective testamentary disposition
2. In Intestate Succession
a. Predecease of a legal heir (only when
representation does not apply)
b. Incapacity of legal heir (only when
representation does not apply)
c. Repudiation by a legal heir
ELEMENTS
OF
ACCRETION
IN
TESTAMENTARY SUCCESSION
1. Two or more persons are called to the same
inheritance, or to the same portion thereof,
pro indiviso (aliquot share)
a. In cases of legacy or devise, as long as
there is no specific designation of the
specific share of each legacy or devise.
b. Not necessarily equal.
c. Once a certain specific part of the free
portion has already been specifically
earmarked, there is no accretion and
there is no express provision on
accretion.
d. But, it is okay to earmark parts of the
free portion as long as no specific
property has been designated.
NOTE: The heir to whom the portion
goes by the right of accretion takes it in
the same proportion that they inherit
2. Renunciation, predecease or incapacity of
one (or more but less than all) of the
instituted heirs that result to a vacancy in
the inheritance, legacy or devise.
FUNDAMENTAL PRINCIPLES IN ACCRETION
1. Accretion in testate succession only takes

place in the free portion. No accretion in
the legitime because when the compulsory
heir repudiates his legitime, the other cocompulsory heir inherits the repudiated
share in their own right and not through
accretion. If the cause of the vacancy is
PID, representation will occur.
2. Accretion also takes place in cases of
devisees and legatees and usufructuaries
under the same conditions established for
heirs.
3. Accretion is subordinate to substitution,
because substitutes are instituted by the
testator; hence, express will prevails over
presumed will.
NOTE: if there is neither accretion nor
substitution in testamentary succession,
the part left vacant will lapse into testacy
4. The one that the heir gets from accretion
can be renounced separate from the
inheritance attributed to the heir who will
renounced the accrued inheritance.
SUMMARY:
I. In testamentary succession:
1. Legitime:
In case of predecease of an heir,
there is representation if there are
children or descendants; if none, the
others inherit in their own rights.
In case of incapacity, results are the
same as in predecease.
In case of disinheritance, results are
the same as in predecease.
In case of repudiation by an heir, the
others inherit in their own rights.
2. Disposable free portion:
Accretion takes place when requisites
are present, but if such requisites are
not present, the others inherit in
their own right.
II. In intestate succession:
In case of predecease, there is
representation if there are children or
descendants; if none, the others inherit
in their own rights.
In case of incapacity, results are the
same as in predecease.
In case of repudiation, there is always
accretion.
CAPACITY TO SUCCEED
The following are capable of succeeding:
1. Natural Persons
a.
General Rule must be (1) living
when succession opens, and (2) not
incapacitated or disqualified by law to
succeed.
NOTE: It is enough that the heir, devisee

or legatee be already conceived in
accordance with Arts 40 and 41, to be
considered living.
b.
If
institution
subject
to
a
suspensive condition successor must
be living both when decedent dies and
when the condition happens
c.
If
institution
subject
to
a
suspensive term must be alive only at
the moment of decedents death,
successor need not be alive when the
term arrives.
2. Juridical Persons
Organizations or associations which
possess juridical personality
WHO ARE INCAPABLE OF SUCCEEDING

A. ABSOLUTE INCAPACITY
1. Those not living at the time of death
except Arts. 1026, 1027, and 1030
2. Those who cannot be identified
uncertain persons (Art. 845)
3. Those who are not permitted by law to
inherit (Art. 1027)
B. RELATIVE INCAPACITY
1. Those Prohibited under Art 1027 due to
Undue Influence or Interest
a. Priest who heard the confession of the
testator during his last illness, or the
minister of the gospel who extended spiritual
aid to him during the same period
b. Relatives of such priest or minister of the
gospel within the 4th degree, the church,
order, chapter, community, organization, or
institution to which such priest or minister
may belong
c. Guardian with respect to testamentary
dispositions given by a ward in his favor
before the final accounts of the guardianship
have been approved, even if the testator
should die after the approval thereof;
EXCEPT if the guardian is his ascendant,
descendant, brother, sister, or spouse
d. Attesting witness to execution of will, their
spouses, parents, children or any one
claiming under such witness, spouse,
parents or children
e. Physician, surgeon, nurse, health officer or
druggist who took care of the testator during
his last illness
f. Individuals, associations, and corporations
not permitted by law to inherit
NOTE: Possible only in testamentary
succession.
Therefore,
if
the
one
incapacitated is a compulsory heir, it does
not affect the legitime but only the free
portion.
2. Those prohibited under Art 739 from

giving and receiving donation from each
other based on Morality or Public Policy
a. Those made between persons who were
guilty of adultery or concubinage at the
time of the donation;
b. Those made between persons found
guilty of the same criminal offense, in
consideration thereof;
c. Those made to a public officer or his
wife, descendants and ascendants, by
reason of his office.
NOTE: Possible only in testamentary
succession.
Therefore,
if
the
one
incapacitated is a compulsory heir, it does
not affect the legitime but only the free
portion.
3. The following are incapable of succeeding by
reason of unworthiness:
a. Parents who have abandoned their
children or induced their daughters to
lead a corrupt or immoral life, or
attempted against their virtue;
b. Any person who has been convicted of
an attempt against the life of the
testator, his or her spouse, descendants,
or ascendants;
c. Any person who has accused the testator
of a crime for which the law prescribes
imprisonment for six years or more, if
the
accusation
has
been
found
groundless;
d. Any heir of full age who, having
knowledge of the violent death of the
testator, should fail to report it to an
officer of the law within a month, unless
the authorities have already taken
action; this prohibition shall not apply to
cases wherein, according to law, there is
no obligation to make an accusation;
e. Any person convicted of adultery or
concubinage with the spouse of the
testator;
f. Any person who by fraud, violence,
intimidation, or undue influence should
cause the testator to make a will or to
change one already made;
g. Any person who by the same means
prevents another from making a will, or
from revoking one already made, or who
supplants, conceals, or alters the latter's
will;
h. Any person who falsifies or forges a
supposed will of the decedent. (756, 673,
674a)
NOTE: The cause of unworthiness shall be
without effect if the testator had knowledge
thereof at the time he made the will, or if,
having known of them subsequently, he should

condone them in writing.
This is applicable to both testamentary and legal
succession. It is total in the sense that it extends
not only to the free portion but also to the
legitime.
4. By Operation of Law The moment the
testator uses one of the acts of unworthiness
as a cause for disinheritance, he thereby
submits it to the rules on disinheritance.
Thus,
reconciliation
renders
the
disinheritance ineffective.
PARDON OF ACTS OF UNWORTHINESS
EXPRESS
IMPLIED
Made by the execution
Effected when testator
of a document or any
makes a will instituting
writing in which the
the unworthy heir with
descendent condones
knowledge of the
the cause of incapacity
cause of incapacity
Cannot be revoked
Revoked when the
testator revokes the
will or the institution
TIME TO DETERMINE THE CAPACITY

GENERAL RULE: at the moment of the death of
the descedent.
EXCEPTION:
a. Those disqualified under Art. 1032 (2,3,5)
wherein it is necessary to wait until final
judgment is rendered
b. Those disqualified under Art.1032 (4)
wherein it is necessary to wait for the
expiration for the month allowed for report
c. If the institution of the heirs, legacy or
devise is conditional, the time of compliance
with the condition shall be considered.
NOTE: The action for a declaration of
incapacity and recovery of the inheritance,
devise or legacy shall be 5 years from the time
the disqualified person took possession thereof.
ADDITIONAL NOTES
1. The capacity to succeed is governed by the
law of the nation of the decedent.
2. Persons not incapacitated by law may
succeed by will or ab intestato.
3. If the heir excluded from the inheritance by
reason of incapacity is a compulsory heir,
and if such compulsory heir has children or
descendant, the latter shall acquire the
incapacitated heirs right to the legitime (by
representation.).
4. A testamentary provision in favor of a
disqualified person, even though made
under the guise of an onerous contract, or
made through an intermediary, shall be void.

(Art. 755)
MANNER OF ACCEPTANCE OF INHERITANCE
1. Express
a. Public Document
b. Private Writing
2. Tacit Acceptance one resulting from acts
by which the intention to accept is
necessarily implied or which one would have
no right to do except in the capacity of an
heir. It can be presumed from certain acts of
the heir such as:
a. When heir sells, donates, or assigns his
right.
b. When heir renounces it for the benefit of
one or more heirs.
c. When renunciation is in favor of all heirs
indiscriminately for consideration
d. Other acts of tacit acceptance:
i.
Heir demands partition of the
inheritance
ii.
Heir alienates some objects of
the inheritance
iii.
Under Article 1057, failure to
signify acceptance or repudiation
within 30 days after an order of
distribution by the probate court.
CHARACTERISTICS OF REPUDIATION
1. Free and Voluntary Act
2. Irrevocable once made and cannot be
impugned, except in cases vitiating consent.
3. Retroactive
REQUISITES FOR A VALID REPUDIATION
Heir repudiating must be certain of two things
before repudiating:
a.
Death of the person from whom he is
to inherit;
b.
Right to the inheritance.
Who may accept or repudiate? Any

person having the free disposal of his
property UNLESS he is incapacitated such as
when he is a minor, deaf-mute who cannot
read and write, judicially declared insolvent,
under civil interdiction, in which cases his
guardian or representative shall be the
one to accept or repudiate. However, judicial
authorization is necessary in case of
repudiation.
If the beneficiary happens to be the POOR:

a. Acceptance person designated by the
testator to determine the beneficiaries and
to distribute the property. In default thereof,
the executor.
b. Repudiation beneficiaries themselves once

they are determined
If the beneficiary happens to be a
CORPORATION,
ASSOCIATION,
INSTITUTION, OR ENTITY:
a. Acceptance legal representative
b. Repudiation legal representative with
judicial authorization
If the beneficiary happens to be a MARRIED
WOMAN: she may either accept or repudiate
the inheritance without her husbands consent
How
is
repudiation
made?
The
repudiation of the inheritance shall be made
in:
a. a public document - acknowledged
before a notary public, or
b. authentic instrument equivalent to
an indubitable writing or a writing whose
authenticity is admitted or proved, or
c. by a petition presented to the court
having jurisdiction over the testamentary
or intestate proceedings.
RATIO: The law considers that the act of
repudiation is more solemn that the act of
acceptance and that repudiation produces
more violent and disturbing consequences.
If the heir repudiates the inheritance to the

prejudice of his own creditors, the latter may
petition the court to authorize them to
accept it in the name of the heir.
If an heir is both a testate and legal heir,
repudiation of the inheritance as a testate
heir, he is understood to have repudiated in
both capacities. However, should he
repudiate as a legal heir, without knowledge
of being a testate heir, he may still accept
the inheritance as a legal heir.
NOTES: If renounced in favor of other heirs,
does it mean acceptance? It depends:
a.
If specific heir whether or not
renouncing heir receives anything,
considered as acceptance on the part of
the heir. There are two transfers.
b.
If gratuitous
i.
In favor of all his co heirs
indiscriminately - there is repudiation
because heir deemed to have not
accepted. Hence, accretion takes
place.
ii.
In favor of all co-heirs but in
proportion different from those they
would
receive
by
accretion:
considered as tacit acceptance.
iii.
If gratuitous in favor of one
or some of his co-heirs deemed
c.
conveyance in favor of the co-heirs

specified, hence there is acceptance.
If onerously:
There
is
no
repudiation
Transfer considered
to be with consideration
There are also tax
implications because there are two
transfers.
EFFECTS
OF
ACCEPTANCE
AND
REPUDIATION
General Rule: irrevocable
Exception:
1. if made through any of the causes that
vitiates
consent
(mistake,
violence,
intimidation, undue influence and fraud)
2. when an unknown will appears
COLLATION: the act by virtue of which, the
persons who concur in the inheritance bring
back to the common hereditary mass the
property which they have received from him, so
that a division may be effected according to law
and the will of the testator.
To collate is to bring back or to return to the
hereditary mass, in fact or by fiction, property
which came from the estate of the decedent,
during his lifetime, but which the law considers
as an advance from the inheritance
PROPERTIES OR RIGHTS RECEIVED BY
COMPULSORY HEIR NOT SUBJECT TO
COLLATION
1. Property left by will
2. Property which may have been donated by
an ascendant of the compulsory heir
3. Property donated to the spouse of the
compulsory heir
4. Expenses for support, education, medical
attendance even in extraordinary illness,
apprenticeship, ordinary equipment or
customary gifts
5. Expenses incurred by parents in giving their
children a professional, vocational, or other
career
6. Wedding gifts consisting of jewelry, clothing
and outfit, given by parents or ascendants,
so long as they do not exceed 1/10 of the
disposable portion
OPERATIONS RELATED TO COLLATION
1. Collation adding to the mass of the
hereditary estate the value of the donation
or gratuitous disposition
2. Imputing or Charging crediting the
donation as an advance on the legitime (if
the donee is a compulsory heir) or on the
free portion (if the donee is a stranger)
3. Reduction determining to what extent the

donation will remain and to what extent it is
excessive or inofficious
4. Restitution return or payment of the
excess to the mass of hereditary estate.
PERSONS OBLIGATED TO COLLATE
GENERAL RULE: compulsory heirs
EXCEPTION:
a.
When the testator should
have so expressly provided; and
b.
When the compulsory heir
should have repudiated his inheritance
Grandchildren who survive with their uncles,

aunts, or first cousins, and inherit by right of
representation.
NOTE: Grandchildren may inherit from

grandparent in their own right (i.e. heirs next
in degree) and not by right of representation
if their parent repudiates the inheritance of
the grandparent, as no living person can be
represented
except
in
cases
of
disinheritance and incapacity. (In such cases,
grandchildren are not obliged to bring to
collation what their parent has received
gratuitously from their grandparent)
WHAT TO COLLATE
1. Any property or right received by gratuitous
title during the testators lifetime
2. All that they may have received from the
decedent during his lifetime
3. All that their parents would have brought to
collation if alive.
PROPERTIES NOT SUBJECT TO COLLATION
1. Absolutely no collation expenses for
support, education (elementary and
secondary only), medical attendance,
even
in
extraordinary
illness,
apprenticeship, ordinary equipment or
customary gifts.
2. Generally not imputable to legitime:
a. Expenses incurred by parents in giving
their children professional, vocational or
other career unless the parents so
provide, or unless they impair the
legitime
b. Wedding gifts by parents and ascendants
consisting of jewelry, clothing, and outfit
except when they exceed 1/10 of the
sum disposable by will.
PARTITION AND DISTRIBUTION
PARTITION AND DISTRIBUTION : The
separation, division and assignment of a thing
held in common among those to whom it may
belong. It includes every act which is intended
to put an end to indivision among co-heirs, and
legatees or devisees, although it should purport

to be a sale, exchange, compromise, or any
other transaction. It is not subject to any form
WHO MAY EFFECT PARTITION
i.
Decedent himself
during his lifetime by an act inter vivos or by
will;
ii.
Heir themselves;
iii.
Competent court; 3rd
person designated by the decedent
WHO CAN DEMAND PARTITION
1. Compulsory heir;
2. Voluntary heir
3. Legatee or devisee;
4.
Any person who has acquired interest in
the estate
WHEN PARTITION CANNOT BE DEMANDED
(PAPU)
1. When expressly Prohibited by the testator
himself for a period not exceeding 20 years;
2. When the co-heirs Agreed that the estate
shall not be divided for a period not
exceeding 10 years, renewable for another
10 years;
3. When Prohibited by law;
4. When to partition the estate would render it
Unserviceable for the use for which it is
intended.
NOTE:
Partition Inter Vivos it is one that
merely allocates specific items or pieces
of property on the basis of the proindiviso shares fixed by law or given
under the will to heirs or successors.
Partition is not itself a mode of acquiring
ownership, nor a title therefore, this
partition,
being
predicated
on
succession, necessitates relationship to
the decedent (in case of intestacy) or a
will duly probated (in case of testacy). A
partition inter vivos made in favor or
intestate heirs could be operative.
Dispositions, however, to non-intestate
heirs may suffer an impediment unless
based on a valid will, except perhaps
when such dispositions are intended to
take effect during the life of the testator
and the formalities of donations are
properly complied with.
PROHIBITION TO PARTITION
1. The prohibition to partition for a period not
exceeding 20 years can be imposed on the
legitime.
2. If the prohibition to partition is for more than

20 years, the excess is void.
3. Even if a prohibition is imposed, the heirs by
mutual agreement can still make the
partition.
LEGAL REDEMPTION IN FAVOR OF CO-HEIRS
The right of legal redemption predicated
upon the fact that the sale made by the coheir is effected before the partition of the
estate but after the death of the decedent.
Requisites:
1.
There must be
several co-heirs
2.
That one of them
sells his right to a stranger
3.
That the sale is
made before the partition
4.
That the right of
redemption must be exercised by one or
more of the co-heirs within 1 month from
the time they were notified in writing by
the co-heir vendor
5.
The
vendee
is
reimbursed for the price of the sale.
EFFECTS OF PARTITION
Confers upon each heir the exclusive
ownership of the property adjudicated.
After the partition, the co-heirs shall be
reciprocally bound to warrant the title to
(warranty against eviction) and the quality of
(warranty against hidden defects), each
property adjudicated.
The obligation of warranty shall cease in the
following cases:
i.
When the testator himself has
made the partition unless his intention
was otherwise, but the legitime shall
always remain unimpaired.
ii.
When it has been expressly
stipulated in the agreement of partition,
unless there has been bad faith.
iii.
When the eviction was due to
a cause subsequent to the partition, or
has been caused by the fault of the
distributee of the property.
EFFECTS OF INCLUSION OF INTRUDER IN
PARTITION
1. Between a true heir and several mistaken
heirs Partition is VOID
2. Between several true heirs and a mistaken
heir transmission to mistaken heir is VOID
3. Through error or mistake; share of true heir
is allotted to mistaken heir partition shall
not be rescinded unless there is bad faith or
fraud on the part of the other persons
interested,
but
the
latter
shall
be
proportionately obliged to pay the true heir
of his share
NOTE: Partition with respect to the mistaken
heir is VOID.
A VOID WILL MAY BE A VALID PARITION
1. If the will was in fact a partition; and
2. If the beneficiaries in the void will were legal
heirs
IMPORTANT PERIODS TO REMEMBER
PERIODS TO REMEMBER ON PARTITION
1 month or less Testator, if publicly known
before making a to be insane, burden of
will
proof is on the one claiming
validity of the will
20 years
Maximum period testator
can prohibit alienation of
dispositions
5
years
from To claim property escheated
delivery to the to the State
State
1 month
To report knowledge of
violent death of decedent
lest he be considered
unworthy
5 years from the Action for declaration of
time disqualified incapacity & for recovery of
person
took the inheritance, devise or
possession
legacy
30
days
from Must
signify
issuance of order acceptance/repudiation
of distribution
otherwise,
deemed
accepted
1
month
form Right
to
repurchase
written notice of hereditary rights sold to a
sale
stranger by a co-heir
10 years
To enforce warranty of
title/quality
of
property
adjudicated to co-heir from
the time right of action
accrues
5
years
from To enforce warranty of
partition
solvency of debtor of the
estate at the time partition
is made
4
years
form Action for rescission of
partition
partition on account of
lesion
END OF DISCUSSION
=========================
=================
III. LEASE
=========================
========
TOPIC UNDER THE SYLLABUS:
A. Lease of Things
B. Lease of Work or Services
C. Lease of Rural and Urban Lands
1. Qualified persons
2. Registration
3. Prohibitions
D. Contract for Piece of Work
E. Rights and Obligations of Lessor
and Lessee
=========================
========
CONTRACT OF LEASE is a contract by which
one person binds himself to grant temporarily,
the use of a thing or the rendering of some
service to another who undertakes to pay some
rent, compensation, or price
Characteristics Of Lease Of Things: (CLONSPEP-TP)
1. Consensual
2. Lessor need not be the owner
3. Onerous
4. Nominate
5. Subject matter must be within the commerce
of man (i.e. not belonging to public domain)
6. Principal contract
7. Purpose is to allow Enjoyment or use of a
thing
8. Purpose to which the thing will be devoted
should not be immoral
9. Period is Temporary
10. Period may be definite or indefinite
NOTE: Persons disqualified to buy under Arts.
1490 and 1491 of the Civil Code are also
disqualified to become lessees of the things
mentioned therein. (Art. 1646, NCC)
Kinds Of Lease
1. Lease of things (whether immovable or
movable property)
One of the parties binds himself to give to
another the enjoyment or use of a thing
For a price certain and
For a period which may be definite or
indefinite
NOTE: However, no lease for more than 99 years
shall be valid.
General Rule: The contract of lease may be
made orally
Exception: Lease of real property for more than
1 year (must be in writing to comply with Statute
of Frauds)
2. Lease of work (contract for a piece of

work)
One of the parties binds himself to
produce a result out of his work or labor
For a price certain
Duties Of A Contractor Who Furnishes Work
And Material
1. Duty to deliver
2. Duty to transfer ownership
3. Duty to warrant eviction and hidden defects
Remedies Of Employer In Case Of Defects
Ask contractor to remove the defect or to
execute another work
If contractor fails or refuses to remove the
defect, employer can ask another person to
do it at the contractors expense.
3. Lease of service
One party binds himself to render to the
other some service
For a price certain
CONTRACT
FOR A
PIECE OF
WORK
(Locatio
Operis)
The object of
contract is the
result of the
work without
considering
the labor that
produced it
If the result
promised is
not
accomplished,
the lessor is
not entitled to
compensation
CONTRACT
OF LEASE OF
SERVICE
(Locatio
Operarum)
CONTRACT
OF LEASE
OF THING
The object of
contract is the
service itself
and not the
result which it
generates
The object
of contract
is a thing
Even if the
result
intended is
not attained,
the services of
the lessor
must still be
paid.
In case of
breach, no
action for
specific
performance
Lessor has
to deliver
the thing
leased.
In case of
breach,
there can be
an action for
specific
performance
Elements
Of
A
Tenancy
Agreement
(PACAPS)
1. Parties are the landowner and the tenant or
agricultural lessee
2. Subject matter of the relationship is an
agricultural land
3. There is consent between the parties to the

relationship.
4. Purpose of the relationship is to bring about
agricultural production
5. There is personal cultivation on the part of
the tenant or agricultural lessee and
6. Harvest is shared between the landowner
and the tenant or agricultural lessee.
NOTE: Absence of any of the elements will not
make the alleged tenant a de facto tenant.
RENT is the compensation either in money,
provisions, chattels, or labor, received by the
lessor from the lessee.
REQUISITES:
1.
Must not be fictitious or nominal,
otherwise
the
contract
is
considered
essentially gratuitous
2.
Must be capable of determination
3.
May be in the form of products, fruits,
or construction, as long as it has value
Owner has the right to fix the rent because

the contract is consensual and not imposed
by law.
Increasing the rent is NOT an absolute right
of the lessor.
If the rent is fixed for the first time, courts
cannot interfere, but if it is a renewal, the
courts can settle the disagreements.
There being no agreement on the reasonable
compensation that a lessee must pay for its
continuing use and occupation of the
premises after the termination of the lease, it
was proper for the lower courts to determine
the same. MATERCCO v. First Landlink
Asia Development Corporation, [G.R. No.
175678 (2007)]
In lease of rural lands, lessee has no right to
a reduction of the rent on account of the
sterility of land leased, or by reason of the
loss of fruits due to ordinary fortuitous
events, except when the loss more than of
the fruits is through extraordinary and
unforeseen fortuitous events unless there be
stipulation to the contrary.
LEASE DISTINGUISHED FROM USUFRUCT

LEASE
USUFRUCT
Ownership on the Ownership of the thing
part of the lessor is on the part of the
not
necessary
to grantor is necessary to
constitute a contract constitute a usufruct
of lease
It is generally a It is always a real right
personal right and is
a real right only by
exception
It is limited to the
use specified in the
contract
Lessor places and
maintains the lessee
in
the
peaceful
enjoyment of the
thing
Its term is generally
for a definite period
It may be created by
contract as a general
rule
Lessee has no duty
to make repairs
Lessee has no duty
to pay taxes
Lessee
cannot
constitute a usufruct
of
the
property
leased
It includes all possible

uses and enjoyment of
the thing
Owner
allows
the
usufructuary to use and
enjoy the property
Its term may be for an
indefinite period
It may be created by
law, contract, last will
or prescription
Usufructuary has duty
to make repairs
Usufructuary has a duty
to pay taxes
Usufructuary
may
constitute a sublease
LEASE DISTINGUISHED FROM SALE

LEASE
SALE
Only the use or
Ownership is transferred
enjoyment is
transferred
Transfer is
Transfer is permanent
temporary
Lessor need not be
Seller must be the
the owner
owner at the time the
property is delivered
The price of the
Usually, the selling price
object (distinguished is mentioned
from the rent) is
usually not
mentioned
LEASE OF SERVICE DISTINGUISHED FROM
AGENCY
LEASE OF
AGENCY
SERVICES
It is based on
It is based on
employment
representation
the lessor of
agent represents his
services does not
principal and enter into
represent his
juridical acts
employer nor does
he execute juridical
acts
Principal contract
Preparatory contract
General Rule: A lease of real property is a
personal right
Exceptions:
1. If it is for more than one year and to be
enforceable it must be in writing
2. If it is registered with Registry of Property,
regardless of its period
Effects If Lease Of Real Property Is Not

Registered:
1. The lease is not binding on third persons
2. Such third person is allowed to terminate the
lease in case he buys the property from the
owner-lessor
3. Actual knowledge of existence and duration
of lease is equivalent to registration
4. Stranger knows of the existence of the lease,
but was led to believe that the lease would
expire soon or before the new lease in favor
of him begins, the stranger can still be
considered innocent
Persons Disqualified To Become Lessees:
1.
Husband and wife cannot lease to each
other their separate properties (Exception:
separation of property)
2. Those
disqualified
due
to
fiduciary
relationship
Guardian: ward
Agent: principal
Executor and administrators
Public officer: state property
Justices/judges: property under litigation
Others disqualified by law
Lease By Filipinos
May lease lands of public domain with an
area of 500 hectares and may acquire not
more than 12 hectares
Lease By Corporations
At least 60% Filipino-owned, may lease lands
of public domain for a period of 25 years,
renewable for not more than 25 years; the
area not to exceed more than 1,000 hectares
Rules On Lease Of Things When Lessee Is
An Alien
1. 99-year limit applies to aliens as long as it is
a lease of personal property
2. Aliens CANNOT lease public lands, and
cannot acquire private lands except through
succession
3. If lease of real property (private lands),
maximum of 25 years renewable for another
25 years (P.D. 713)
4. Under the Investors Lease Act of 1995, the
25-year period was extended to 50 years
renewable for another 25 years provided the
following conditions are met:
a. Lessee must make investments
b. Lease is approved by DTI
c. If terms are violated, DTI can terminate it
NOTE: the ILA did not do away with P.D. 713.
Under ILA the consent of DTI is required, while in
P.D. 713 it is not.
E. Rights and Obligations of Lessor

and Lessee
Obligations Of The Lessor (Art 1654) (DNM)
1.
To DELIVER THE THING which is the
object of the contract in such condition as to
render it fit for the use intended
2.
To make on the same during the lease all
the NECESSARY REPAIRS in order to keep it
suitable for the use to which it has been
devoted, unless there is a stipulation to the
contrary
3.
To MAINTAIN THE LESSEE IN THE
PEACEFUL AND ADEQUATE ENJOYMENT
OF THE LEASE for the entire duration of the
contract
This is true only if the contract is valid.
Where the contract is void, for having an
existent contract of lease, the lessor has
no right to lease the same property.
Bercero v. Capitol Development
Corporation,[
G.R.
No.
154765
(2007)]
Nature Of The Duty Of The Lessor To
Maintain Peaceful Possession Of The
Premises By The Lessor
This is merely a warranty that the lessee shall
not be disturbed in his legal, and not
physical, possession. Chua Tee Dee v.
Court of Appeals, 429 SCRA 418
Obligations Of The Lessee (Art. 1657) (PUP)
1.
PAY THE PRICE of the lease according to
the terms stipulated
2.
USE THE THING leased as a diligent
father of a family devoting it to the use
stipulated, and in the absence of stipulation,
to that which may be inferred from the nature
of the thing leased, according to the custom
of the place
3.
PAY THE EXPENSES for the deed of
lease
Rights Of The Lessee
1. Right to be respected in his possession
2. Right to be restored to said possession by the
means established by law or by the Rules of
Court, should he be disturbed therein
Remedies When Lessor Or Lessee Does Not
Comply With Their Obligations
1. Rescission and damages or
2. Damages while allowing the contract to
remain in force
Remedy Of Lessee Is Lessor Refuses To
Accept The Rentals
To make a proper tender of payment and
consignation in order to extinguish the debt
Rules On Changing The Form Of The Lease

The lessor can alter the thing leased provided
there is no impairment of the use to which
the thing is devoted under the terms of the
lease
Alteration can also be made by the lessee so
long as the value of the property is not
substantially impaired
Rules In Case Of Urgent Repairs
The lessee is obliged to tolerate the work,
although it may be very annoying to him and
although during the same time he may be
deprived of a part of the premises, if repairs
last for not more than 40 days
If repairs last for 40 days or more, lessee can
ask for reduction of the rent in proportion to
the time including the 1 st 40 days and the
part of the property of which he is deprived.
NOTE: In either case, rescission may be availed
of if the main purpose of the lease is to provide a
dwelling place and the property becomes
uninhabitable.
Effects If Lessor Fails To Make Urgent
Repairs
The lessee may:
1. Order repairs at the lessors cost
2. Sue for damages
3. Suspend the payment of the rent
4. Ask for rescission, in case of substantial
damage to him
EFFECT OF DESTRUCTION OF THE SUBJECT
MATTER WITH RESPECT TO THE LEASE
IF TOTALLY
IF ONLY PARTIALLY
DESTROYED
DESTROYED
Lease is extinguished
Lessee can choose
between reduction of
the rent and rescission
Rules Upon Termination Of Lease Governing
Useful Improvements Caused By The Lessee
If made in good faith and suitable to the use for
which the lease is intended, without altering the
form or substance of the property:
1. Lessor may appropriate the improvements
provided he pays the lessee of its value at
that time
2. If lessor does not appropriate, lessee may
remove the improvements even if the
principal thing may suffer damage,
3. If improvement is ornamental, no right of
reimbursement, but lessee may remove them
provided no damage is caused to the
principal thing
NOTE: Lessee has no right of retention of the

premises if the lessor does not pay. His only right
is right of removal if lessor does opt not to pay
and appropriate.
Kinds Of Trespass In Lease:
1. Trespass in fact (perturbacion de mere
hecho):
Lessor is not liable for the mere fact of a
trespass or trespass in fact made by a
third person of a leased property.
Mere fact or mere act of trespass is when
the third person claims no right whatever
Physical enjoyment is reduced
2. Trespass in law (perturbacion de derecho):
A third person claims legal right to enjoy
the premises
Lessor will be held liable
Duration Of Lease
1. Lease may be for a determinate time or fixed
period
Lease will be for the said period and it
ends on the day fixed without need of a
demand
2. Lease may be without a fixed period
a. For rural lands (Art. 1682)
It shall be for all time necessary for
the gathering of fruits which the
whole estate may yield in 1 year, or
which it may yield once
b. For urban lands (Art. 1687)
If rent is paid daily, lease is from day
to day
If rent is paid weekly, lease is from
week to week
If rent is paid monthly, lease is from
month to month
If rent is paid yearly, lease is from
year to year
Rules On Extension Of The Lease Period
1. If a lease contract for a definite term allows
lessee to extend the term, there is no
necessity for lessee to duly notify lessor of
his desire to so extend the term, unless the
contrary is stipulated.
2. may be extended as stipulation: lessee can
extend without lessors consent but lessee
must notify lessor.
3. may be extended for 6 years, agreed upon
by both parties as stipulation: this must be
interpreted in favor of the lessee. Hence,
ordinarily the lessee, at the end of the
original period, may either:
a. leave the premises
b. remain in possession
4. In co-ownership, assent of co-owner is
needed; otherwise, it is void or ineffective as
against non-consenting co-owners.
5. Where according to the terms of the contract,

the lease can be extended only by the written
consent of the parties thereto, no right of
extension can rise without such written
consent.
IMPLIED NEW LEASE (Tacita Reconducion)
Lease that arises if at the end of the
contract the lessee should continue enjoying
the thing leased for 15 days with the
acquiescence of the lessor, unless a notice to
the contrary had previously been given by
either party.
Period of the implied new lease is not that
of the original contract but the time
established in Arts 1682 and 1687 (see
Duration of Lease above)
Other terms of the original contract are
revived except option to purchase in case
such was in the original contract
NOTE: Terms that are revived are only those
which are germane to the enjoyment of
possession, but not those with respect to special
agreements which are by nature foreign to the
right of occupancy or enjoyment inherent in a
contract of lease such as an option to purchase
the leased premises. Dizon v. Magsaysay,
[G.R. No. 23399 (1974)]
Requisites For Implied New Lease:
1. The term of the original contract has
EXPIRED
2. The lessor HAS NOT GIVEN THE LESSEE a
notice to vacate
3. The lessee CONTINUED ENJOYING THE
THING LEASED FOR AT LEAST 15 DAYS
with the acquiescence of the lessor
When There Is No Implied New Lease:
1. When before or after the expiration of the
term, THERE IS A NOTICE TO VACATE
given by either party
2. When there is NO DEFINITE FIXED PERIOD
IN THE ORIGINAL LEASE CONTRACT as in
the case of successive renewals
EXTENSION DISTINGUISHED FROM
RENEWAL
EXTENSION OF
RENEWAL OF LEASE
LEASE CONTRACT
CONTRACT
Original contract
Original contract ceases
subsists
to exist
Creates additional
Creates a new contract
term
PERPETUAL LEASE
A lease contract providing that the lessee can
stay in the premises for as long as he wants
and for as long as he can pay the rentals and

its increases.
This is not permissible; it is a purely
potestative condition because it leaves the
effectivity and enjoyment of leasehold rights
to the sole and exclusive will of the lessee.
SUBLEASE
A lessee may sublease the thing leased
unless there is an express prohibition to do so
Remedy
of lessor if lessee violates
prohibition: action for rescission of the lease
and damages
If the prohibition to sublease is not express
but only implied, the sublease will still be
allowed
Duration of sublease cannot be longer than
that of the lease to which it is dependent
The prohibition against subleasing may not
embrace the taking in of boarders. Mallarte
v. Court of Appeals, G.R. No. 85108
(1989)
In a sublease arrangement, there are two
distinct leases: the principal lease and the
sublease.
SUBLEASE DISTINGUISHED FROM AN
ASSIGNMENT OF A LEASE
SUBLEASE
ASSIGNMENT
Lessee remains a Lessee is disassociated
party in the contract
from
the
original
contract of lease
Two leases and two
Only one (lessordistinct juridical
assignee who becomes
relationship (lessorthe lessee) because
lessee and sublessor- lessee transmits
sublessee)
absolutely his rights and
his personality
disappears
Sublessee does not Assignee has a direct
have
any
direct action against the lessor,
action against the there being novation
lessor
Subleasing is allowed Assignment
is
not
unless there is an allowed unless the lessor
express prohibition
gives his consent
NOTE: The sub-lessee is primarily liable to his
sub-lessor and only a court can extinguish
or modify this primary liability if the sublessor contests the pre-termination of the
principal lease by the lessor. Tamio v.
Ticson, G.R. No. 154895 (2004)]
Circumstances When A Sublessee Is Made
Liable To The Lessor:
1. For all acts which affect the use and
preservation of the thing leased in the
manner stipulated between the lessor and
the lessee
2. For any rent due to the lessor from the lessee

which the latter failed to pay
Sublessee is subsidiarily liable
Sublessee shall not be responsible
beyond amount of rent due from him, in
accordance with the terms of the
sublease, at the time of the extrajudicial
demand by the lessor
1.
2.
Grounds For Ejectment

1.
When the period agreed upon or that
which is fixed for the duration of leases (Arts.
1682 and 1687) has expired (see Duration of
Lease)
2.
Lack of payment of the price stipulated
In case lessor refuses to accept rentals,
lessee should make tender of payment,
and consignation otherwise there is no
payment
Willingness to pay is not payment
3.
Violation of any of the conditions agreed
upon in the contract
4.
When the lessee devotes thing leased to
any use or service not stipulated which
causes the deterioration thereof, or if he does
not observe the requirement in Art 1657.
R.A. 9341 - AN ACT ESTABLISHING
REFORMS IN THE REGULATION OF RENT OF
CERTAIN RESIDENTIAL UNITS, PROVIDING
THE MECHANISMS THEREFOR AND FOR
OTHER PURPOSES (APPROVED LAST DEC.
21, 2005)
Limitations Imposed Upon The Lessor For
The Protection Of The Lessee (SECS. 3, 5
AND 8)
1.
The rent of any residential unit covered
by this Act shall not be increased by more
than 10% annually as long as the unit is
occupied by the same lessee. When the
residential unit becomes vacant, the lessor
may set the initial rent for the next lessee.
2.
No lessor may demand more than 1
month advance rent. Neither can he demand
more than 2 months deposit which shall be
kept in a bank under the lessors account
name during the entire duration of the lease
agreement. Any and all interest that shall
accrue therein shall be returned to the lessee
at the expiration of the lease contract.
3.
No lessor or his successor-in-interest shall
be entitled to eject the lessee upon the
ground that the leased premises have been
sold or mortgaged to a third person
regardless of whether the lease or mortgage
is registered or not.
Grounds For Judicial Ejectment (SEC. 7)
3.
4.
5.
Assignment of lease or subleasing of

residential units in whole or part, including
the acceptance of boarders or bedspacers,
without
the
written
consent
of
the
onwer/lessor.
Arrears in payment of rent for a total of 3
months; Provided, That in the case of refusal
by the lessor to accept payment of the rental
agreed upon, the lessee may either deposit
by way of consignation, the amount in court,
or with the city or municipal treasurer, as the
case may be, or in a bank in the name of the
lessor and with notice to the latter, within 1
month after the refusal of the latter to accept
payment.
The lessee shall thereafter deposit the
rental within 10 days of every current
month. Failure to deposit the rental or 3
months shall constitute a ground for
ejectment.
The lessor, upon authority of the court in
case of consignation or upon joint
affidavit by him and the lessee to be
submitted to the city or municipal
treasurer and to the bank where the
deposit was made, shall be allowed to
withdraw the deposit.
Legitimate need of the owner/lessor to
repossess his /her property for his/her own
use or of any immediate member of his/her
family as a residential unit.
Need of the lessor to make necessary
repairs of the leased premises which is the
subject of an existing order of condemnation
by appropriate authorities concerned in order
to make the said premises safe and
habitable.
Expiration of the period of the lease
contract.
IV. PARTNERSHIP
=========================
========
A. CONTRACT OF PARTNERSHIP
B. RIGHTS AND OBLIGATIONS OF
PARTNERSHIP
C. RIGHTS AND OBLIGATIONS OF
PARTNERS AMONG THEMSELVES
D. OBLIGATIONS OF
PARTNERSHIP/PARTNERSHIP TO
THIRD PERSONS
E. DISSOLUTION
F. LIMITED PARTNERSHIP
=========================
========
CHAPTER 1: GENERAL PROVISIONS
A. CONTRACT OF PARTNERSHIP
1. DEFINITION
PARTNERSHIP - a contract wherein two or more
persons bind themselves to contribute money,
property, or industry to a common fund, with the
intention of dividing the profits among
themselves.
2. ELEMENTS
ELEMENTS OF A PARTNERSHIP:
There shall be a partnership whenever:
1. There is a meeting of the minds;
2. To form a common fund;
3. With intention that profits (and losses) will be
divided among the contracting parties.
ESSENTIAL FEATURES:
1. There must be a VALID CONTRACT.
2.
The parties must have legal capacity to

enter into the contract.
3. There must be a mutual contribution of
money, property, or industry to a
common fund.
4. There must be a lawful OBJECT.
5. The purpose or primary purpose must be to
obtain profits and divide the same among
the parties.
ADDITIONAL REQUIREMENT FOR JURICICAL
PERSONALITY
a.
It is also required that the
articles of partnership must NOT be kept
SECRET among the members; otherwise,
the association shall have no legal
personality and shall be governed by the
provisions on CO-OWNERSHIP (Art. 1775).
b.
"kept
secret
among
the
members" - secrecy directed not to third
persons but to some of the partners
c.
This does not mean that there
could be no contractual relations amongst
the parties; there is only no partnership or
association with distinct legal personality
CHARACTERISTICS:
1. Essentially contractual in nature (Art. 1767,
1784)
2. Separate juridical personality (Art. 1768)
3. Delectus personae
4. Mutual Agency (Art. 1803)
5. Personal liability of partners for partnership
debts
3. RULES TO DETERMINE EXISTENCE
GENERAL RULE: Persons who are NOT partners
as between themselves, CANNOT be partners as
to third persons. (Art. 1769(1))
EXCEPTION: Partnership by Estoppel under Art.
1825
Other Rules to Determine whether a
partnership exists: (Art. 1769)
The following, alone, do not establish partnership
1. Co-ownership or co-possession
2. Sharing of gross returns, whether or not the
persons sharing them have a joint or
common right or interest in any property
from which the returns are derived;
Receipt by a person of a share of the profits of a
business is prima facie evidence that he is a
partner in the business, UNLESS such were
received in payment:
1. Debt by installments or otherwise;
2. Wages or rent;
3. Annuity;
4. Interest on loan;
5. Consideration for sale of goodwill of
business/other property by installments
A partnership must have a lawful object or
purpose, and must be established for the
common benefit or interest of the partners.
When an unlawful partnership is dissolved by a
judicial decree, the profits shall be confiscated in
favor of the State, without prejudice to the
provisions of the Penal Code governing the
confiscation of the instruments and effects of a
crime.
EFFECTS OF AN UNLAWFUL PARTNERSHIP:
1. Void ab initio - never existed in the eyes of
the law. (Art. 1409(1))
2. Profits shall be confiscated in favor of the

government. (Art. 1770)
3. Instruments or tools and proceeds of the
crime shall also be forfeited in favor of the
government. (Art. 1770, Art. 45-RPC)
4. The contributions of the partners shall not be
confiscated unless they fall under no. 3. (See
Arts. 1411 and 1412)
Judicial decree is not necessary to dissolve an
unlawful partnership.
That there is no legally constituted partnership
DOES NOT mean that there are no contractual or
legal relations among the parties.
EFFECT OF PARTIAL ILLEGALITY:
Where a part of the business of a partnership is
legal and a part illegal, an account of that which
is legal may be had.
Where, without the knowledge or participation of
the partners, the firm's profits in a lawful
business have been increased by wrongful acts,
the innocent partners are not precluded as
against the guilty partners from recovering their
share of the profits.
4. HOW PARTNERSHIP FORMED
GENERAL RULE: No special form is required for
the validity of a contract. (Art. 1356)
BURDEN OF PROOF AND PRESUMPTION
1. Must be proven, not presumed.
2. Persons acting as partners presumed to have
entered into contract of partnership. Burden
of proof shifted to party denying its
existence.
3. Extant Parntership presumed to exist until
proven terminated.
4. Use of the term partner does not
necessarily show existence of partnership.
Non-use of the terms parntership or
partners not conclusive as to non-existence
or partnership, but entitled to weight.
5. PARTNERSHIP TERM
PARTNERSHIP AT WILL one in which no fixed
term is specified and is not formed for a
particular undertaking or venture which may be
terminated anytime by mutual agreement
PARTNERSHIP WITH A FIXED TERM the
term for which the partnership is to exist is fixed
or agreed upon or one formed for a particular
undertaking
6. UNIVERSAL VS. PARTICULAR; GENERAL

VS. LIMITED
UNIVERSAL VS. PARTICULAR
UNIVERSAL PARTNERSHIP OF ALL PRESENT
PROPERTY comprises the following:
1. Property which belonged to each of the
partners at the time of the constitution of the
partnership
2. Profits which they may acquire from all
property contributed
UNIVERSAL PARTNERSHIP OF PROFITS
comprises all that the partners may acquire by
their industry or work during the existence of the
partnership
Note: Persons who are prohibited from giving
donations or advantage to each other cannot
enter into a universal partnership. (Art. 1782)
PARTICULAR PARTNERSHIPhas
objects:
1. Determinate things
2. Their use or fruits
3. Specific undertaking
4. Exercise of profession or vocation
for
its
GENERAL VS. LIMITED

GENERAL PARTNERSHIPconsists of general
partners who are liable pro rata and subsidiarily
and sometimes solidarily with their separate
property for partnership debts.
LIMITED PARTNERSHIPone formed by 2 or
more persons having as members one or more
general partners and one or more limited
partners, the latter not being personally liable for
the obligations of the partnership
7. PARTNERSHIP BY ESTOPPEL
PARTNER BY ESTOPPELby words or conduct,
he does any of the ff.:
Directly represents himself to anyone as a
partner in an existing partnership or in a nonexisting partnership
Indirectly represents himself by consenting to
another representing him as a partner in an
existing partnership or in a non-existing
partnership
Elements to establish liability as a partner on
ground of estoppel:
Defendant
represented
himself
as
partner/represented by others as such and
not denied/refuted by defendant
Plaintiff relied on such representation
Statement of defendant not refuted
LIABILITIES IN ESTOPPEL
All partners
Partnership is liable
consented to
representation
No existing
Person who represented
partnership & all
himself & all those who
those represented
made representation liable
consented;
pro-rata/jointly
Not all partners of
existing partnership
consents to
representation
No existing
Person who represented
partnership & not
himself liable & those who
all represented
made/consented to
consented;
representation separately
None of partners in
liable
existing partnership
consented
8. PARTNERSHIP VS. JOINT VENTURE
Particular partnership distinguished from
joint venture: Heirs of Tan Eng Kee v. CA, G.R.
No. 126881, October 3, 2000
A particular partnership is distinguished from
joint venture, to wit:
1. A joint venture (an American concept similar
to our joint account) is a sort of informal
partnership, with no firm name and no legal
personality.
In
a
joint
account,
the
participating
merchants
can
transact
business under their own name, and can be
individually liable therefore; and
2. Usually, but not necessarily a joint venture is
limited to a single transaction, although the
business of pursuing to a successful
termination may continue for a number of
years; a partnership generally relates to a
continuing business of various transactions of
a certain kind.
It would seem that under Philippine law, a joint
venture is a FORM of PARTNERSHIP,
specifically a particular partnership which has for
its object specific undertaking.
The Supreme Court has, however, recognized
a distinction between these two business
forms and has held that although a
corporation cannot enter into a partnership, it
may, however, engage in a joint venture with
others. Aurbach v. Sanitary Wares, 180
SCRA 130 (1989)
9. PROFESSIONAL PARTNERSHIP
General
Professional
Partnership (Art.
1767, Par. 2): Two or more persons may also
form a partnership
profession.
for
the
exercise
of
The Architecture Act of 2004 (R.A. 9266)

grants that a firm, company, partnership,
corporation or association may be registered or
licensed as such for the practice of architecture
under the following conditions:
a. Only Filipino citizens properly registered
and licensed as architects under this Act
may, among themselves, or together with
allied technical professionals, form and
obtain registration as a firm, company,
partnership, association or corporation for
the practice of architecture;
b. Registered and licensed architects shall
compose at least seventy-five percent
(75%) of the owners, shareholders,
members
incorporators,
directors,
executive officers, as the case may be;
c. Individual
members of such
firm,
partnership association or corporation
shall be responsible for their individual
and collective acts as an entity and as
provided by law;
d. Such firm, partnership, association or
corporation shall be registered with the
Securities and Exchange Commission and
Board.
10. MANAGEMENT
See Rights and Obligations of Partners
Among Themselves
B. RIGHTS AND OBLIGATIONS OF
PARTNERSHIP
General Rule A partnership begins from the
moment of the execution of the contract, unless
it is otherwise stipulated.
Exception
1. Where immovable property/real rights
are contributed (Art. 1771)
Public instrument is necessary
Inventory of the property contributed must
be made, signed by the parties and attached
to the public instrument otherwise it is VOID
2. When the contract falls under the
coverage of the Statute of Frauds (Art.
1409)
3. Where capital is P3,000 or more, in
money or property (Art. 1772)
Public instrument is necessary
Must be registered with SEC
But failure to comply shall not affect the
liability of the partnership and the members
thereof to third persons
A void partnership under Article 1773, in
relation to Article 1771, may still be considered
a partnership de facto or by estoppel vis--vis

third persons; and may be considered by the
courts as an ordinary contract (though not
exactly an Art. 1767 partnership) from which
rights and obligations may legally stem. Torres
v. CA, 320 SCRA 428 (1999)
business or from transacting business with the

partnership as if he were a stranger (Art. 1866,
in relation to Arts. 1789, 1808, and 1854).
SEC Opinion, 1 June 1960: For purposes of

convenience in dealing with government offices
and
financial
institutions,
registration
of
partnership having a capital of less than Php
3,000 is recommended.
Unless otherwise stated, all partners are

considered agents and whatever any one of them
may do alone shall bind the partnership (Arts.
1803(1), 1818)
SEPARATE JURIDICAL PERSONALITY

The partnership has a juridical personality
separate and distinct from that of each of the
partners, even in case of failure to comply with
the requirements of Article 1772, first paragraph
(Registration with SEC).
As
1.
2.
3.
a JURIDICAL PERSON, a partnership may:

Acquire and possess property of all kinds;
Incur obligations; and
Bring suit, in conformity with the laws and
regulations of their organization. (See Art.
46)
DELECTUS PERSONAE - The selection or choice

of the person.
Implications: (Dean Villanueva)
The assignment of a partner of his share does
not make assignee a partner (Art. 1804 and
1813)
The existence of the partnership is closely
tied-up
to
the
particular
contractual
relationship of the partners (see instances of
dissolution of the partnership upon change of
contractual relationship.)
PARTNERSHIP RELATIONSHIP IS FIDUCIARY
IN NATURE
1. Right to choose co-partners No one can
become member of partnership without the
consent of all other partners
2. Power to dissolve partnership Allowed the
power, not necessarily the right, to dissolve
partnership. Dissolution must be in good
faith. Bad faith will not prevent dissolution
but may result in liability for damages.
Doctrine of Delectus Personae: Partnership at
will is predicated on the mutual desire and
consent of the partners. The right to choose with
whom to associate himself is the very foundation
and essence of that partnership. Ortega v. CA,
G.R. No. 109248, July 3, 1995
Delectus personarum; does not apply to a limited
partner who merely contributes his interest and
is not barred from engaging in competitive
MUTUAL AGENCY
(According to Dean Villanueva)
Partners can dispose of partnership property

even when in partnership name (Art. 1819)
Admission or representation made by any partner
concerning partnership affairs is evidence
against the partnership (Art. 1820)
Notice to any partner of any matter relating to
partnership affairs is notice to the partnership
(Art. 1821)
Wrongful act or omission of any partner acting
for partnership affairs makes the partnership
liable (Art. 1822)
Partnership bound to make good losses for acts
or misapplications of partners (Art. 1823)
UNLIMITED LIABILITY
(According to Dean Villanueva)
All partners are liable pro rata with all their
properties and after partnership assets have
been exhausted, for all partnership debts
(Art. 1816)
Any stipulation against personal liability of
partners for partnership debts is void, except
as among them (Art. 1817)
Partners are liable solidarily with the
partnership for everything chargeable to the
partnership when caused by the wrongful act
or omission of any partner acting in the
ordinary
course
of
business
of
the
partnership or with authority from the other
partners
and
for
partner's
act
or
misapplication of properties (Art. 1824)
A newly admitted partner into an existing
partnership is liable for all the obligations of
the partnership arising before his admission
but out of partnership property shares (Art.
1826)
Partnership creditors are preferred to those of
each of the partners as regards the
partnership property (Art. 1827)
Upon dissolution of the partnership, the

partners shall contribute the amounts
necessary to satisfy the partnership liabilities
(Art. 1839(4), (7))
PARTNERSHIP DISTINGUISHED FROM COOWNERSHIP AND CORPORATION

BASIS
Creation
Juridical
personali
ty
PARTNERS
HIP
Created by
a contract,
by mere
agreement
of the
parties
Has a
juridical
personality
separate
and distinct
from that of
each
partner
Purpose
Realization
of profits
Duration/
Term of
existence
No
limitation
COOWNER
SHIP
Created
by law
None
Common
enjoymen
t of a
thing or
right
10 years
maximu
m
Disposal/
Transfera
bility of
interest
Partner
may not
dispose of
his
individual
interest
unless
agreed
upon by all
partners
Co-owner
may
freely do
so
Power to
In absence
Co-owner
act with
3rd
persons
Effect of
d
e
a
t
h
of
stipulation
to contrary,
a partner
may bind
partnership
(each
partner is
agent of
partnership
)
Death of
partner
results in
dissolution
of
partnership
CORP
Created by
law
Has a
juridical
personality
separate
and
distinct
from that
of each
stockholde
r
Depends
on AOI
50 years
maximum,
extendible
to not
more than
50 years in
any one
instance
Stockholde
r has a
right to
transfer
shares
without
prior
consent of
other
stockholde
rs
Manageme
Dissoluti May be
o dissolved
n at any time
by the will
of any or all
of the
partners
# of
incorpora
tors
Minimum of
2 persons
Commen
cement
of
juridical
personali
ty
From the
moment of
execution
of contract
of
partnership
cannot
represent
the coownershi
p
nt is
vested
with the
Board of
Directors
Death of
co-owner
does not
necessari
ly
dissolve
coownershi
p
May be
dissolved
anytime
by the
will of
any or all
of the coowners
Minimum
of 2
persons
Death of
stockholde
r does not
dissolve
corporatio
n
None
Can only
be
dissolved
with the
consent of
the state
Minimum
of 5
incorporat
ors
From date
of
issuance
of
certificate
of
incorporati
on by the
SEC
WHO MAY BE PARTNERS

GENERAL RULE: Any person capacitated to
contract may enter into a contract of partnership.
EXCEPTIONS
Persons who are prohibited from giving each
other any donation or advantage cannot
enter into a universal partnership. (Art.
1782)
Persons suffering from civil interdiction.
Persons who cannot give consent to a
contract:
Minors
insane persons
deaf-mutes who do not know how to write
De Leon: There is no prohibition for partnerships
to be partners, BUT THIS IS DOUBTFUL AND
IMPRACTICAL on account of Art. 1768 (that a

partnership has a juridical personality separate
from that of each of the partners) and of the
essential attribute called delectus personae.
MAY CORPORATIONS ENTER INTO

PARTNERSHIP?
Philippine Corporate Law (2001) by Dean

Villanueva (p. 902) citing various SEC
Opinions:
Corporations
may
enter
into
partnership
agreements on the following conditions:
Authority to enter into a partnership relation
is expressly conferred by the charter or the
articles of incorporation (AoI), and the nature
of the business venture to be undertaken by
the partnership is in line with the business
authorized by the charter or AoI.
If it is a foreign corporation, it must obtain a
license to transact business in the country in
accordance with the Corporation Code of the
Philippines.
NOTE: How tax law treats the matter:
Notion of partnership no matter how created or
organized: a pool of insurance companies was
considered a partnership under applicable tax
law. Afisco v. CA, G.R. No. 112675, January
25, 1999
Without prejudice to the formation of a joint
venture. J.M. Tuazon v. Bolanos, 95 Phil. 106
(1954);
Aurbach
v.
Sanitary
Wares
Manufacturing, 180 SCRA 130 (1989)
WHAT MAY BE CONTRIBUTED
Must be in equal shares unless otherwise
stipulated (Art. 1790).
Money failure to contribute promised money
makes the promissory-partner liable for
the amount promised, and also for
interest due and damages arising from
the time the former should have
complied with his or her undertaking
(Art. 1786, 1) (upon perfection of
contract, unless contrary stipulation)
If there is fraud or misrepresentation,
action for rescission may be filed and the
party entitled to rescind, without
prejudice to any other right, has the
right to:
lien on, or right of retention over, the
surplus of partnership property after
satisfying partnership liabilities to third
persons (for any sum paid by the injured
partner for the purchase of an interest in
the partnership and for any capital or
advances contributed by the latter)
stand in place of creditors of the

partnership for any payments made by
the injured partner in respect of
partnership liabilities, after all liabilities to
third persons have been satisfied
indemnity by the guilty partner against all
partnership debts and liabilities (Art.
1838); relate to Art. 1831: with or
without fraud or misrepresentation,
injured
partner
may
seek
judicial
dissolution
Property
may
include
intangible
or
incorporeal, e.g. credit Lim Tong
Lim v. Phil. Fishing Gear, 316
SCRA 728 (1999)
Art. 1786, 1 and 2 applies: liable for

fruits from the time property should have
been delivered without need of demand; also
include obligation to preserve the promised
property with the diligence of a good father
of a family pending delivery.
Industry may concur with any or both of the
first two or in the absence of any one or
both
of
them;
manual
and/or
intellectual in consideration of share in
the profits; hence, as generally,
partners are not entitled to charge each
other. Marshs Appeal, 69 Pa. St. 30
Every partner is bound to work to the extent
of his ability for the benefit of the whole,
without regard to the services of his copartners, and without comparison of value;
for services to the firm cannot, from their
very nature, be estimated and equalized by
compensation of differences. Beatty v.
Wray, 7 Harris 519
BUT: a partner who has agreed to render
special service to the partnership, for the
performance of which he is qualified, and
which is one of the inducements for the other
members to enter the partnership, was found
liable civilly to account for the value of such
service upon a finding that he wrongfully
refused to perform such service.
BUT THEN AGAIN, specific performance not
available due to constitutional prohibition vs.
involuntary servitude
A limited partner is not allowed to contribute
services, only cash or other property (Art.
1845); otherwise, he is considered an
industrial and general partner and thus, not
exempted from personal liability.
WHEN IMMOVABLES OR REAL RIGHTS

CONTRIBUTED
GENERAL RULE: Failure to comply with the
requirement of appearance in public
instrument and SEC Registration will not
affect the liability of the partnership and the
members thereof to third persons. (Art.
1772, 2)
EXCEPTION: When IMMOVABLE PROPERTY/
REAL RIGHTS are contributed,
*public instrument + inventory*
made and signed by the parties and attached
to the public instrument (Arts. 1771 and
1773) is required for the benefit of third
persons.
EFFECT OF ABSENCE OF REQUIREMENTS

UNDER ARTICLES 1771 AND 1773
Condition of
Partnership
where Real
Property is
Contributed
No public
Instrument, No
Inventory
With Public
Instrument, No
Inventory
Bautista, E.
VOID
De Leon
VOID
With Public
Instrument, With
(Source: Bar Review Notes for Partnership

Law by Atty. Villareal)
Atty. Villareal: The safer view is De Leons due
to his simplified view of statute.
NOTE:
Partnerships void under Art.1773, in relation
Art. 1771 may still be considered either de
facto or estoppel partnerships vis--vis third
persons; may even be treated as an ordinary
contract from which rights and obligations
may validly arise, although not exactly a
partnership under the Civil Code. Torres v.
CA, 320 SCRA 428 (1999)
Failure to prepare an inventory of the immovable
property contributed, in spite of article 1773
declaring the partnership void would not render
the partnership void when:
NO THIRD PARTY INVOLVED (since Art. 1773
was intended for the protection of 3rd
parties;
Partners have MADE A CLAIM ON THE
PARTNERSHIP AGREEMENT.
OTHER CLASSIFICATIONS OF PARTNERSHIP

As to legality of existence
DE JURE PARTNERSHIPone which has
complied with all the legal requirements for its
establishment
DE FACTOone which has failed to comply with
all the legal requirements for its establishment
As to purpose
VOID
VOID
VALID
No Public
Instrument, With
Inventory
Inventory
But either party

may compel
execution of
public
instrument so it
may be
registered in the
registry of
property;
nonetheless,
partnership
agreement may
be enforced (cf.
Arts. 1356 to
1358)
VALID
COMMERCIAL OR TRADING PARTNERSHIP

one formed for the transaction of business
PROFESSIONAL
OR
NON
TRADING
PARTNERSHIPone formed for the exercise
of a profession
KINDS OF PARTNERS
VOID
VALID
CAPITALISTcontributes money or property

INDUSTRIALcontributes only industry
personal service
GENERALliability to 3rd persons extends
separate property
LIMITEDliability to 3rd persons limited
capital contribution
MANAGINGmanages the affairs/business
the partnership
LIQUIDATINGtakes charge of the winding
of partnership affairs upon dissolution
or
to
to
of
up
PARTNERS BY ESTOPPELnot really a partner

but liable as a partner for the protection of
innocent 3rd persons
CONTINUING
PARTNERcontinues
the
business of a partnership after dissolution by
reason of the admission of a new partner,
retirement, death or expulsion of one of the
partners
SURVIVING PARTNERafter a partnership has
been dissolved by death of any partner
SUBPARTNERnot a member of the partnership
who contracts with a partner with reference to
the latter's share in the partnership
OSTENSIBLEtakes active part and known to
the public as partner in the business
SECRETtakes active part in the business but is
not known to be a partner by outside parties
SILENTdoes not take any active part in the
business although he may be known to be a
partner
DORMANTdoes not take active part in the
business and is not known or held out as a
partner
C. RIGHTS AND OBLIGATIONS OF PARTNERS
AMONG THEMSELVES
1) OBLIGATIONS OF THE PARTNERS AMONG
THEMSELVES
PROMISED CONTRIBUTION
Obligations with respect to contribution of
property:
1. to contribute at the beginning of the
partnership or at the stipulated time the
money, property or industry which he may
have promised to contribute (Art. 1786)
To answer for eviction in case the partnership
is deprived of the determinate property
contributed (Art. 1786)
2. To answer to the partnership for the fruits of
the property the contribution of which he
delayed, from the date they should have
been contributed up to the time of actual
delivery (Art. 1786)
3. To preserve said property with the diligence
of a good father of a family pending delivery
to partnership (Art. 1163)
4. To indemnify partnership for any damage
caused to it by the retention of the same or
by the delay in its contribution (Arts. 1788,
1170)
Effect of failure to contribute property
promised:
Partners becomes ipso jure a debtor of the
partnership even in the absence of any demand
(See Art. 1169[1])
Remedy of the other partner is not rescission but

specific performance with damages from
defaulting partner (Art. 1788)
Obligations with respect to contribution of
money and money converted to personal
use:
1. To contribute on the date fixed the amount he
has undertaken to contribute to the
partnership
2. To reimburse any amount he may have taken
from the partnership coffers and converted to
his own use
3. To pay for the agreed or legal interest, if he
fails to pay his contribution on time or in case
he takes any amount from the common fund
and converts it to his own use
4. To indemnify the partnership for the damages
caused to it by delay in the contribution or
conversion of any sum for his personal
benefits
(See Art. 1788)
FIDUCIARY DUTY
A partnership is a fiduciary relationone entered
into and to be maintained on the basis of trust
and confidence. With that, a partner must
observe the utmost good faith, fairness, and
integrity in his dealings with the others:
He cannot directly or indirectly use partnership
assets for his own benefit;
He cannot carry on a business of the partnership
for his private advantage;
He cannot, in conducting the business of the
partnership, take any profit clandestinely;
He cannot obtain for himself that he should have
obtained for the partnership (e.g. business
opportunity)
He cannot carry on another
competition with the partnership;
business
in
He cannot avail himself of knowledge or

information which may be properly regarded as
the property of the partnership;
PROHIBITION AGAINST ENGAGING IN
COMPETITIVE BUSINESS
INDUSTRIAL PARTNER
- cannot engage in
business (w/n same line
of business with the
partnership) unless
CAPITALIST
PARTNER
- cannot engage in
business (with same
kind of business
with the
partnership expressly
permits him to do so.
(Art. 1789)
partnership) for his

own account, unless
there is a stipulation
to the contrary.
( Art. 1808)
CONSEQUENCES IF AN INDUSTRIAL
PARTNER ENGAGES IN ANY BUSINESS: (Art.
1789)
he can be excluded from the partnership; or
the capitalist partners can avail of the benefit
he obtained from the business, or
the capitalist partners have the right to file
an action for damages against the industrial
partner, in either case.
CONSEQUENCES
IF
THE
CAPITALIST
PARTNER ENGAGES IN A BUSINESS (which
competes with the business of the partnership):
1. he may be required to bring to the common
fund the profits he derived from the other
business; (Art. 1808)
2. he shall personally bear the losses; (Art.
1808)
3. he may be ousted form the partnership,
especially if there was a warning.
Obligations with respect to contribution to
partnership capital:
1. Partners must contribute equal shares to the
capital of the partnership unless there is
stipulation to contrary (Art. 1790)
2. Partners
(capitalist)
must
contribute
additional capital in case of imminent loss to
the business of the partnership and there is
no stipulation otherwise; refusal to do so shall
create an obligation on his part to sell his
interest to the other partners (Art. 1790)
Requisites:
1. There is an imminent loss of the business
the partnership
2. The majority of the capitalist partners are
the opinion that an additional contribution
the common fund would save the business
3. The capitalist partner refuses deliberately
contribute (not due to financial inability)
4. There is no agreement to the contrary
of
of
to
to
Obligation of managing partners who

collects debt from person who also owed
the partnership (Art. 1792)
1. Apply sum collected to 2 credits in proportion
to their amounts
2. If he received it for the account of
partnership, the whole sum shall be applied
to partnership credit
Requisites:
1. There exist at least 2 debts, one where the

collecting partner is creditor and the other,
where the partnership is the creditor
2. Both debts are demandable
The partner who collects is authorized to manage
and actually manages the partnership
Obligation of partner who receives share of
partnership credit
Obliged to bring to the partnership capital what
he has received even though he may have given
receipt for his share only (Art. 1793)
Requisites:
1. A partner has received in whole or in part, his
share of the partnership credit
2. The other partners have not collected their
shares
3. The partnership debtor has become insolvent
TO MANAGEMENT
BEARING THE RISK OF LOSS OF THINGS
CONTRIBUTED (Art. 1795)
Specific and determinate things
which are not fungible where
only the use is contributed
the ownership of which is
transferred to the partnership
Fungible things (consumable)
Things contributed to be sold
Things brought and appraised in
the inventory
which are not fungible where
only the use is contributed
Risk is borne
by partner
Risk is borne
by
partnership
Risk is borne
by
partnership
Risk is borne
by
partnership
Risk is borne
by
partnership
Risk is borne
by partner
RULES FOR DISTRIBUTION OF PROFITS AND

LOSSES
PROFITS
LOSSES
With
According to
According to
agreem
agreement
agreement
ent
Without
Share of capitalist
If sharing of
agreeme
partner is in
profits is
nt
proportion to his
stipulated capital
apply to sharing
contribution
of losses
Share of industrial If no profit
partner is not
sharing
fixed - as may be
stipulated just and equitable
losses shall be
under the
borne according
circumstances
to capital
contribution
Purely industrial
partner not
liable for losses
A stipulation which excludes one or more
partners from any share in the profits and losses
is void.
NOTE: Stipulation exempting a partner from
losses should be allowed. If a person can make a
gift to another, there is no sound reason why a
person cannot also agree to bear all the losses.
Of course, as far as THIRD PERSONS are
concerned, any such stipulation may be properly
declared void. (De Leon, pp. 124-125, citing
Espiritu and Sibal)
RIGHTS AND OBLIGATIONS WITH RESPECT
Partner is
appointed
manager in the
articles of
partnership
Partner is
appointed
manager after
constitution of
partnership
2 or more
persons
entrusted with
management of
partnership
without
specification of
duties/stipulation
that each shall
not act w/o the
other's consent
Power of
managing
partner is
irrevocable
without
just/lawful
cause;
Revocable
only when in
bad faith
Power is
revocable any
time for any
cause
Vote of
partners
representing
controlling
interest
necessary to
revoke power
Each may
execute all
acts of
administratio
n
In case of
opposition,
decision of
majority
shall prevail;
In case of tie,
decision of
partners
owning
controlling
interest shall
prevail
Absence or
disability of
any one
cannot be
alleged
unless there
is imminent
danger of
grave or
irreparable
injury to
partnership
If refusal of
partner is
manifestly
prejudicial to
interest of
partnership,
court's
intervention
may be
sought
Stipulated that
none of the
managing
partners shall act
w/o the consent
of others
Concurrence
of all
necessary for
the validity of
acts
Manner of
management not
agreed upon
All partners
are agents of
the
partnership
Unanimous
consent
required for
alteration of
immovable
property
Other rights and obligations of partners:

1. Right to associate another person with him in
his share without consent of other partners
(subpartnership)
2. Right to inspect and copy partnership books
at any reasonable hour
3. Right to a formal account as to partnership
affairs (even during existence of partnership):
4. If he is wrongfully excluded from partnership

business or possession of its property by his
copartners
5. If right exists under the terms of any
agreement
As provided by art. 1807
Whenever other circumstances render it just and
reasonable
Duty to render on demand true and full
information affecting partnership to any partner
or legal representative of any deceased partner
or of any partner under legal disability
Duty to account to the partnership as fiduciary
2) PROPERTY RIGHTS OF A PARTNER
His
rights
in
specific
partnership
property
His interest in the partnership
His
right
to
participate
in
the
management
(Art. 1810)
Nature of partner's right in specific
partnership propertya partner has an equal
right to possession which is not assignable and
such right is limited to the share of what remains
after partnership debts have been paid
Nature of partner's right in the partnership
a share in the profits and surplus
3. OBLIGATION OF PARTNERS WITH REGARD
TO THIRD PERSONS
Every partnership shall operate under a firm
name. Persons who include their names in
the partnership name even if they are not
members shall be liable as a partner
All partners shall be liable for contractual
obligations of the partnership with their
property, after all partnership assets have
been exhausted:
Pro rata
Subsidiary
Admission or representation made by any
partner concerning partnership affairs
within scope of his authority is evidence
against the partnership
Notice to partner of any matter relating to
partnership affairs operates as notice to
partnership, except in case of fraud:
Knowledge, of partner acting in
the particular matter, acquired
while a partner
Knowledge of the partner acting
in the particular matter then
present to his mind
Knowledge of any other partner
who reasonably could and
should have communicated it
to the acting partner
Partners and the partnership are solidary

liable to 3rd persons for the partner's
tort or breach of trust
Liability of incoming partner is limited to:
His share in the partnership
property
for
existing
obligations
His
separate
property
for
subsequent obligations
Creditors of partnership preferred in
partnership property & may attach
partner's share in partnership assets
Every partner is an agent of the
partnership
POWER OF PARTNER AS AGENT OF
PARTNERSHIP
Acts for carrying on in
the usual way the
business
of
the
partnership
Act
w/c
is
not
apparently
for
the
carrying of business in
the usual way
Acts of strict dominion
or ownership:
Assign partnership
property in trust
for creditors
Dispose of goodwill of business
Do an act w/c
would
make
it
impossible to carry
on
ordinary
business
of
partnership
Confess
a
judgment
Enter
into
compromise
concerning
a
partnership claim
or liability
Submit partnership
claim or liability to
arbitration
Renounce claim of
partnership
Acts in contravention of
a
restriction
on
authority
Every partner is an
agent
and
may
execute acts with
binding effect even if
he has no authority
Except:
when
3rd
person
has
knowledge of lack of
authority
Does
not
bind
partnership
unless
authorized by other
partners
Partnership not liable

to 3rd persons having
actual
or
presumptive
knowledge of the
restrictions
EFFECTS OF CONVEYANCE OF REAL
PROPERTY BELONGING TO PARTNERSHIP
Title in partnership name,
Conveyance
in
partnership name
Title in partnership name,

Conveyance in partner's
name
Title in name of 1/ more

partners, Conveyance in
name if partner/partners
in
whose name title
stands
Title in name of 1/more/all

partners or 3rd person in
trust
for
partnership,
Conveyance executed in
partnership name if in
name of partners
Title in name of all
partners, Conveyance in
name of all partners
Conveyance passes
title
but
partnership
can
recover if:
Conveyance
was
not in the usual
way of business, or
Buyer
had
knowledge of lack
of authority
Conveyance does
not pass title but
only
equitable
interest, unless:
Conveyance
was
not in the usual
way of business, or
2.
Buyer had
knowledge of lack
of authority
Conveyance passes
title
but
partnership
can
recover if:
Conveyance
was
not in the usual
way of business, or
Buyer
had
knowledge of lack
of authority
Conveyance
will
only pass equitable
interest
Conveyance
pass title
will
ASSIGNMENT OF INTEREST IN PARTNERSHIP

Assignment is subject to three (3)
conditions:
made in good faith
for fair consideration
after a fair and complete disclosure of all
important information as to its value
RIGHTS OF AN ASSIGNEE:
Get whatever assignor-partner would have
obtained
Avail usual remedies in case of fraud in the
management
Ask for annulment of contract of assignment if he

was induced to join through any of the vices of
consent
Demand an accounting (only in case of
dissolution)
4) RESPONSIBILITY OF PARTNERSHIP TO
PARTNERS
To refund the amounts disbursed by partner in
behalf of the partnership + corresponding
interest from the time the expenses are made
(loans and advances made by a partner to the
partnership aside from capital contribution)
To answer for obligations partner may have
contracted in good faith in the interest of the
partnership business
To answer for risks in consequence of its
management
E. DISSOLUTION AND WINDING UP
DISSOLUTIONchange in the relation of the
partners caused by any partner ceasing to be
associated in the carrying on of the business;
partnership is not terminated but continues until
the winding up of partnership affairs is
completed
WINDING UPprocess of settling the business
or partnership affairs after dissolution
TERMINATIONthat point when all partnership
affairs are completely wound up and finally
settled. It signifies the end of the partnership
life.
CAUSES OF DISSOLUTION:
1) Without violation of the agreement between
the partners
By termination of the definite term/
particular undertaking specified in the
agreement
By the express will of any partner, who
must act in good faith, when no definite
term or particular undertaking is specified
By the express will of all the partners who
have not assigned their interest/ charged
them for their separate debts, either
before or after the termination of any
specified term or particular undertaking
By the bona fide expulsion of any partner
from the business in accordance with
power conferred by the agreement
B) In contravention of the agreement between
the partners, where the circumstances do not
permit a dissolution under any other provision of
this article, by the express will of any partner at
any time
C) By any event which makes it unlawful for

business to be carried on/for the members to
carry it on for the partnership
Loss of specific thing promised by partner before
its delivery
D) Death of any partner
E) Insolvency of a partner/partnership
F) Civil interdiction of any partner
G) Decree of court under art. 1831
GROUNDS FOR DISSOLUTION BY DECREE OF
COURT (Art. 1831)
Partner declared insane in any judicial
proceeding or shown to be of unsound
mind
Incapacity of partner to perform his part
of the partnership contract
Partner guilty of conduct prejudicial to
business of partnership
Willful or persistent breach of partnership
agreement or conduct which makes it
reasonably impracticable to carry on
partnership with him
Business can only be carried on at a loss
Other
circumstances
which
render
dissolution equitable
Upon application by purchaser of
partner's interest:
o After termination of specified
term/particular undertaking
o Anytime if partnership at will
when
interest
was
assigned/charging order issued
1) EFFECTS OF DISSOLUTION
AUTHORITY
OF
PARTNERSHIP
PARTNER
TO
BIND
GENERAL RULE: Authority of partners to bind

partnership is terminated
EXCEPTIONS
1. To wind up partnership affairs
2. Complete transactions not finished
Qualifications:
With respect to partners
Authority of partners to bind partnership by new
contract is immediately terminated when
dissolution is not due to ACT, DEATH or
INSOLVENCY (ADI) of a partner (art 1833);
If due to ADI, partners are liable as if partnership
not dissolved, when the ff. concur:
If cause is ACT of partner, acting

partner must have knowledge of
such dissolution
If cause is DEATH or INSOLVENCY,
acting
partner
must
have
knowledge/ notice
With respect to persons not partners (Art.
1834)
Partner continues to bind partnership even after
dissolution in ff. cases:
Transactions in connection to winding up
partnership
affairs/completing
transactions
unfinished
Transactions which would bind partnership if not
dissolved, when the other party/obligee:
Situation 1 Had extended credit to partnership prior to
dissolution &
Had no knowledge/notice of dissolution, or
Situation 2 i. Did not extend credit to partnership
Had known partnership prior to dissolution
Had no knowledge/notice of dissolution/fact of
dissolution not advertised in a newspaper of
general circulation in the place where partnership
is regularly carried on
Partner cannot bind the partnership anymore
after dissolution:
Where dissolution is due to unlawfulness to carry
on with business (except: winding up of
partnership affairs)
Where partner has become insolvent
Where partner unauthorized to wind up
partnership affairs, except by transaction with
one who:
Situation 1 i. Had extended credit to partnership prior to
dissolution &
ii. Had no knowledge/notice of dissolution, or
Situation 2 Did not extend credit to partnership prior to
dissolution
Had known partnership prior to dissolution
Had no knowledge/notice of dissolution/fact of
dissolution not advertised in a newspaper of
general circulation in the place where partnership
is regularly carried on
2) DISCHARGE OF LIABILITY
Dissolution does not discharge existing liability of
partner, except by agreement between:
Partner and himself
person/partnership continuing the business
partnership creditors
Rights of partner where dissolution not in
contravention of agreement:
Apply partnership property to discharge
liabilities of partnership
Apply surplus, if any to pay in cash the net

amount owed to partners
Rights of partner where dissolution in
contravention of agreement:
Partner who did not cause dissolution wrongfully:
Apply partnership property to discharge liabilities
of partnership
Apply surplus, if any to pay in cash the net
amount owed to partners
Indemnity for damages caused by partner guilty
of wrongful dissolution
Continue business in same name during agreed
term
Posses partnership property if business is
continued
Partner who wrongly caused dissolution:
If business not continued by others - apply
partnership property to discharge liabilities of
partnership & receive in cash his share of surplus
less damages caused by his wrongful dissolution
If business continued by others - have the value
of his interest at time of dissolution ascertained
and paid in cash/secured by bond & be released
from all existing/future partnership liabilities
Rights of injured partner where partnership
contract is rescinded on ground of
fraud/misrepresentation by 1 party:
1. Right to lien on surplus of partnership
property after satisfying partnership liabilities
2. Right to subrogation in place of creditors
after payment of partnership liabilities
3. Right of indemnification by guilty partner
against all partnership debts & liabilities
3) SETTLEMENT OF ACCOUNTS BETWEEN
PARTNERS
Assets of the partnership:
Partnership property (including goodwill)
Contributions of the partners
Order of Application of Assets:
Partnership creditors
Partners as creditors
Partners as investorsreturn of capital
contribution
Partners as investorsshare of profits if
any
4)
WHEN
BUSINESS
OF
DISSOLVED
PARTNERSHIP IS CONTINUED
Creditors of old partnership are also
creditors of the new partnership which
continues the business of the old one w/o
liquidation of the partnership affairs
Creditors have an equitable lien on the
consideration
paid
to the retiring
/deceased partner by the purchaser when
retiring/deceased partner sold his interest

w/o final settlement with creditors
Rights if retiring/estate of deceased
partner:
To have the value of his interest
ascertained as of the date of
dissolution
To receive as ordinary creditor the
value of his share in the dissolved
partnership with interest or profits
attributable to use of his right, at his
option
Persons Authorized to Wind Up
Partners designated by the agreement
In absence of agreement, all partners who have
not wrongfully dissolved the partnership
Legal representative of last surviving partner
A partners share cannot be returned without
first dissolving and liquidating the business
for the partnerships outside creditors have
preference over the enterprises assets. The
firms property cannot be diminished to their
prejudice. Magdusa v. Albaran, 115 Phil.
511 (1962)
Due to its separate juridical personality from
the individual partners, it is thus the
partnership having been the recipient of the
capital contributions which must refund the
equity of retiring partners. Such duty does
not pertain to partners who managed the
business. The amount to be refunded, supra,
consistent with the partnership being a
separate and distinct entity, must necessarily
be limited to what to the firms total
resources. It can only pay out what it has for
its total assets. But this is subject to the
priority enjoyed by outside creditors. After
all the (said) creditors have been paid,
whatever is left of the partnership assets
becomes available for the payment of
partners shares. Villareal v. Ramirez, 406
SCRA 145
F. LIMITED PARTNERSHIP
Characteristics:
1. Formed by compliance with statutory
requirements
2. One or more general partners control the
business
3. One or more general partners contribute to
the capital and share in the profits but do not
participate in the management of the
business and are not personally liable for
partnership obligations beyond their capital
contributions
4. May ask for the return of their capital

contributions under conditions prescribed by
law
5. Partnership debts are paid out of common
fund and the individual properties of general
partners
Right of remaining gen partners (if given) or

continue business in case of death, insanity,
retirement, civil interdiction, insolvency
Right
of
limited
partner
(if
given)
to
demand/receive property/cash in return for
contribution
Certificate must be filed with the SEC
DIFFERENCES BETWEEN GENERAL AND

LIMITED PARTNER/PARTNERSHIP
GENERAL
Personally liable for
partnership obligations
When manner of mgt.
not agreed upon, all
general partners have
an equal right in the
mgt. of the business
Contribute cash,
property or industry
Proper party to
proceedings by/against
partnership
Interest not assignable
w/o consent of other
partners
Name may appear in
firm name
Prohibition against
engaging in business
Retirement, death,
insolvency, insanity of
general partner
dissolves partnership
LIMITED
Liability extends
only to his capital
contributions
No participation in
management
Contribute cash or
property only, not
industry
Not proper party to
proceedings
by/against
partnership
Interest is freely
assignable
Name must appear
in firm name
No prohibition
against engaging in
business
Does not have
same effect; rights
transferred to legal
representative
REQUIREMENTS FOR FORMATION OF

LIMITED PARTNERSHIP:
Certificate of articles of the limited
partnership must state the ff. matters:
1. Name of partnership + word "ltd."
2. Character of business
3. Location of principal place of business
4. Name/place of residence of members
5. Term for partnership is to exist
6. Amount of cash/value of property contributed
7. Additional contributions
8. Time agreed upon to return contribution of
limited partner
9. Sharing of profits/other compensation
Right of limited partner (if given) to substitute an
assignee
Right to admit additional partners
Right of limited partners (if given) to priority for
contributions
To validly form a limited partnership, all that is

required is SUBSTANTIAL COMPLIANCE IN GOOD
FAITH with all the requirements under Art. 1844
(i.e. signing and swearing to a certificate, affixing
the word Limited to the partnership name,
etc.). If no substantial compliance, then the firm
becomes a general partnership to third persons
(but as amongst the partners, still limited).
WHEN GENERAL PARTNER NEEDS
CONSENT/RATIFICATION OF ALL LIMITED
PARTNERS:
1. Do any act in contravention of the certificate
2. Do any act which would make it impossible to
carry on the ordinary business of the
partnership
3. Confess judgment against partnership
4. Possess partnership property/assign rights in
specific partnership property other than for
partnership purposes
5. Admit person as general partner
6. Admit person as limited partner - unless
authorized in certificate
7. Continue business with partnership property
on death, retirement, civil interdiction,
insanity or insolvency of gen partner unless
authorized in certificate
SPECIFIC RIGHTS OF LIMITED PARTNERS:
1. Right to have partnership books kept at
principal place of business
2. Right to inspect/copy books at reasonable
hour
3. Right to have on demand true and full info of
all things affecting partnership
4. Right to have formal account of partnership
affairs whenever circumstances render it just
and reasonable
5. Right to ask for dissolution and winding up by
decree of court
6. Right to receive share of profits/other
compensation by way of income
7. Right to receive return of contributions
provided the partnership assets are in excess
of all its liabilities
REQUISITES
FOR
RETURN
OF
CONTRIBUTION OF LIMITED PARTNER:
1. All liabilities of partnership have been paid/if
not yet paid, at least sufficient to cover them
2. Consent of all members has been obtained
3. Certificate is cancelled/amended as to set

forth withdrawal /reduction of contribution
LIABILITIES OF A LIMITED PARTNER
To the partnership
For the difference between his contribution as
actually made and that stated in the
certificate as having been made, and
For any unpaid contribution which he agreed
in the certificate to make in the future time
As a trustee for the partnership
For the specific property stated in the
certificate as contributed by him but which
he had not contributed;
For the specific property of the partnership
which had been wrongfully returned to him;
and
Money or other property wrongfully paid or
conveyed to him on account of his
contribution.
DISSOLUTION OF LIMITED PARTNERSHIP
(Priority in Distribution of Assets):
Those due to creditors, including limited partners
Those due to limited partners in respect of their
share in profits/compensation
Those due to limited partners of return of capital
contributed
Those due to general partner other than capital
& profits
Those due to general partner in respect to profits
Those due to general partner for return of capital
contributed
AMENDMENT OF CERTIFICATE OF
PARTNERSHIP
1. In case any of the ten enumerated changes
and circumstances in Art. 1864, par. 2 are
present.
2. It must be signed and sworn to by all the
members including the new members if some
are added; in case of substitution, the
assigning limited partner must also sign.
3. The cancellation or amendment must be
recorded in the SEC.
Any person who suffers loss by reliance on
false statement in certificate may hold liable
for damages any party to the certificate who
knew the statement to be false at the time
the latter signed the certificate or came to
know such falsity subsequently but within
sufficient time before reliance to enable such
party to cancel or amend the certificate or
file the proper petition for such purpose
(under Art. 1865). (Art. 1847; Walraven
v. Ramsay, 55 N.W.d 853).
A general partners DIIC (death, insolvency,
insanity, or civil interdiction) dissolves the
partnership unless the business is continued

by the surviving general partners under a
right stated in the certificate or with their
common (i.e. all) consent (Art. 1860). Still,
even if allowed under the certificate or
consented to by all, there must be an
amendment further to Arts. 1864 and 1865
(cf. Bautista). Otherwise, limited partners
will not be able to avail of the protection of
the law as regards liability. The partnership
will be considered general Lowe v. Arizona
Power & Light Co., 427 P. d. 366
A limited partner shall not become liable as a
general partner, unless in addition to the
exercise of his rights and powers as a limited
one, he takes part in the control (and
management) of the business
(Art.
1848; Holzman v. Escamilla, 195 P. d.
833). Actually, a person may be general and
limited at the same time provided this is
stated in the certificate. He shall have all the
powers, rights, and restrictions of a general
partner; but with respect to his capital
contribution, his right against the other
members of the firm would be that of a
limited partner (Art. 1853).
A limited partner may also loan money to
and transact other business with the firm.
BUT, he cannot: (1) receive or hold as
collateral any partnership property; or (2)
receive from a general partner or from
the firm any payment, conveyance,
release if at that time assets of the firm
are not sufficient to discharge liabilities to
outside creditors; Art. 1854: any
violation would be fraud on such
creditors.
The remedy of a general partner who suffers
from or faces interference from his limited
partners is dissolution. Weil v. Diversified
Properties, 319 F. Supp
V. AGENCY
=========================
========
A. DEFINITION OF AGENCY
B. POWERS (ARTS. 1877-1878
C. EXPRESS V. IMPLIED AGENCY
D. AGENCY BY ESTOPPEL
E. GENERAL VS. SPECIAL AGENCY
F. AGENCY COUCHED IN GENERAL
TERMS
G. AGENCY REQUIRING SPECIAL
POWER OF ATTORNEY
H. AGENCY BY OPERATION OF LAW
I. RIGHTS AND OBLIGATIONS OF
PRINCIPAL
J. MODES OF EXTINGUISHMENT
=========================
========
A. DEFINITION OF AGENCY
CONTRACT OF AGENCY is a contract whereby a
person binds himself to render some service or to
do something in representation or on behalf of
another, with the consent or authority of the
latter.
Characteristics:
Consensual: perfected by mere consent;
Nominate: it has its own name;
Preparatory: entered into as means to enter into
other contracts
Principal: does not depend on another contract
for its existence and validity;
Unilateral/Bilaterial:
Unilateral: if contract is gratuitous or it creates
obligations for only one party (i.e. the agent)
Bilateral: if contract is for compensation or gives
rise to reciprocal rights and obligations
its representative character & its derivative

authority.
Purpose: Extend the personality of the principal
through the facility of the agent
Capacity of the Parties:
Principal
He may be a natural or a juridical person
He must be capacitated. General RULE: If a
person is capacitated to act for himself or his
own right, he can act through an agent.
The agent is not liable where he was ignorant of
the principals incapacity
Agent
Insofar as third persons are concerned, it is
enough that the principal is capacitated.
Insofar as his obligations to his principal are
concerned, the agent must be able to bind
himself.
As an agent, some mental capacity is necessary,
therefore, those who are absolutely incapacitated
(ex. Insane persons) cannot be agents.
ESSENTIAL ELEMENTS
Consent of the parties to establish the
relationship;
Object of the contract is the execution of a
juridical act in relation to third persons;
Agent acts as a representative and not for
himself; and
Agent acts within the scope of his authority.
An illegal termination of agency does not justify
reinstatement of the agent as such. The agency
cannot be compelled by the courts to be
reinstated because such relationship can only be
given effect with the consent of the principal.
Orient Air Services v. CA, G.R. No. 76931,
May 29, 1991
Nature: Since it is a contract, there must be a

meeting of the minds as to consent, object, and
cause.
Acts That Cannot Be Done By Agent:

Personal Acts ex. making of a will
Criminal or Illegal Acts
Exception to contractual nature:

When the agency is created by operation of
law
Ex: Agency by Estoppel
Nature of Relationship between Principal

and Agent:
Fiduciary based on trust & confidence
Agent is estopped from asserting interest
adverse to his principals
Agent must not act as an adverse party
Agent must not act for an adverse party
Agent must not use or disclose secret information
Agent must give notice of material facts
Basis: Representation
The acts of the agent on behalf of the principal
within the scope of his authority produce the
same legal and binding effects as if they were
personally done by the principal.
Hence, the distinguishing features of agency are
GENERAL RULE: Knowledge of the agent is

imputed to the principal even though the
agent never communicated it to his principal
EXCEPTIONS:
Where the interests of the agent are adverse to
those of the principal;
Agent Acts in Bad Faith or Where the person
claiming the benefit of the rule colludes with the
agent to defraud the principal.
B. POWERS (ARTS. 1877-1878)
Special powers of attorney are necessary in
the
following
cases:
(PECWAM-LLBBOCARO)
To make such payments as are not usually
considered as acts of administration;
To effect novations which put an end to
obligations already in existence at the time
the agency was constituted;
To compromise, to submit questions to
arbitration, to renounce the right to appeal
from a judgment, to waive objections to the
venue of an action or to abandon a
prescription already acquired;
To waive any obligation gratuitously;
To enter into any contract by which the
ownership of an immovable is transmitted or
acquired either gratuitously or for a valuable
consideration;
To make gifts, except customary ones for charity
or those made to employees in the business
managed by the agent;
To loan or borrow money, unless the latter act be
urgent and indispensable for the preservation
of the things which are under administration;
To lease any real property to another person for
more than one year;
To bind the principal to render some service
without compensation;
To bind the principal in a contract of partnership;
To obligate the principal as a guarantor or surety;
To create or convey real rights over immovable
property;
To accept or repudiate an inheritance;
To ratify or recognize obligations contracted
before the agency;
Any other act of strict dominion.
A special power to sell excludes the power to
mortgage; and a special power to mortgage
does not include the power to sell.
Special Power of Attorney - an instrument in
writing by which one person, as principal,
appoints another as his agent and confers upon
him the authority to perform certain specified
acts or kinds of acts on behalf of the principal.
The special power of attorney can be included in
the general power when it specifies therein the
act or transaction for which the special power is

required.
Powers Not Included in the Power to
Mortgage
To sell
To execute a second mortgage
To mortgage for the agents or any 3rd
persons
benefit,
UNLESS
clearly
indicated
Compromise
- Submission to Arbitration
Rationale:
A principal may authorize his agent to
compromise because of absolute confidence
in the latters judgment and discretion to
protect the formers rights and obtain for him
the best bargain in the transaction.
If the transaction would be left in the hands
of an arbitrator, said arbitrator may not enjoy
the trust of the principal.
The agent must act within the scope of his
authority. He may do such acts as may be
conducive to the accomplishment of the purpose
of the agency.
Requisites for Principal to be Bound by Act
of Agent:
The agent must act in behalf of the principal
authority
When a principal NOT BOUND by act of
agent:
The latter acts without or beyond the scope
of his authority in the formers name
Exceptions:
Where the acts of the principal have
contributed to deceive a 3rd person in
good faith;
Where the limitations upon the power
created by the principal could not have
been known by the 3rd person;
Where the principal has placed in the
hands of the agent instruments signed by
him in blank;
Where the principal has ratified the acts
of the agent
The latter acts within the scope of his
authority but in his own name, EXCEPT when
the transaction involves things belonging to
the principal
NOTE: The agent is not deemed to have
exceeded the limits of his authority should he
perform the agency in a manner more
advantageous to the principal than that indicated
by him, since he is authorized to do such acts as

may be conducive to the accomplishment of the
purpose of the agency.
The powers of an agent are particularly broad
in the case of one acting as a general agent
or manager; such a position presupposes a
degree of confidence reposed and investiture
with liberal powers for the exercise of
judgment and discretion in transactions and
concerns which are incidental or appurtenant
to the business entrusted to his care and
management. In the absence of an
agreement to the contrary, a managing agent
may enter into contracts that he deems
reasonably necessary or requisite for the
protection of the interests of his principal
entrusted to his management. Eurotech v.
Cuizon, G.R. No. 167552, April 23, 2007
Distinction between Agency & Lease of
Work/Service
AGENCY
LEASE OF
WORK/SERVICE
Representation
Employment
Agent can make the

principal personally
liable.
Guardian has no power

to impose personal
liability on the ward.
Distinction between Agency & Lease of

Property
AGENCY
LEASE OF PROPERTY
Agent is controlled by
the principal.
Lessee is not controlled

by the lessor.
Agency may involve

things other than
property.
Lease of property
involves property.
Agent can bind the

principal.
Lessee cannot bind the

lessor.
Distinction between Agency to Sell & Sale

AGENCY TO SELL
SALE
Agent exercises
discretionary powers
Lessor ordinarily
performs only
ministerial functions
Agent receives the

goods as the principals
goods
Buyer receives the

goods as owner
3 persons are involved:

principal, agent and
the 3rd person with
whom the agent
contracts
2 persons are involved:

lessor and lessee
Agent delivers the

proceeds of the sale
Buyer pays the price
Buyer, as a general
rule, cannot return the
object sold
Relates to commercial
or business
transactions
Relates more to the

matters of mere
manual or
mechanical
execution
Agent can return the

object in case he is
unable to sell the same
to a third person
Distinction between Agency & Guardianship

AGENCY
GUARDIANSHIP
Agent represents a
capacitated person
A guardian represents
an incapacitated
person.
Agent is appointed by
the principal and can
be removed by the
latter.
Guardian is appointed
by the court and
stands in loco parentis.
Agent is subject to the

directions of the
principal.
Guardian is not subject

to the directions of the
ward but must act for
the benefit of the latter
Agent in dealing with

Buyer can deal with the
the thing received is
thing as he pleases,
bound to act according
being the owner
to the instructions of
his principal
Distinction between Agent & Contractor
AGENT
INDEPENDENT
CONTRACTOR
Represents his
principal
Employed by the
employer
Acts under the

principals control
and instruction
Acts according to his own

method
Principal is liable for

torts committed by
the agent within the
Employer not liable for

torts committed by the
independent contractor.
scope of his
authority
Distinction between Agency and
Partnership
AGENCY
PARTNERSHIP
An agent must submit
to the principals right
to control
A co-partner is not
subject to co-partners
right to control, unless
there is an agreement
to that effect
The agent assumes no

personal liability where
he acts within the
scope of his authority
The partner binds not

only the firm members
but himself as well
The agent takes his

agreed share of profits
not as owner but as an
agreed measure of
compensation for his
services
The profits belong to all

the partners as
common proprietors in
agreed proportions
C. EXPRESS VS. IMPLIED AGENCY

Express agent has been actually authorized
by the principal, either orally or in writing
Implied agency is implied from the acts of
the principal, from his silence, or lack of
action, or his failure to repudiate the
agency knowing that another person is
acting on his behalf without authority, or
from the acts of the agent which carry out
the agency,
OTHER CLASSIFICATIONS OF AGENCY
As to character
Gratuitous agent receives no compensation
for his services
Onerous agent receives compensation for
his services
As to extent of business of the principal
General agency comprises all the business of
the principal
Special agency comprises one or more
specific transactions
As to authority conferred
Couched in general terms only acts of
administration
Couched in specific terms only the
performance of a specific act/s
As to nature and effects
Ostensible or Representative agent acts
in the name and representation of the
principal
Simple or Commission agent acts in his
own name but for the account of the

principal.
Forms of Agency
GENERAL RULE: Appointment of an agent may
be oral or written; no formal requirements
EXCEPTION: When the law requires a specific
form (ex. agents sale of real
property or any interest therein)
Agency is presumed to be for compensation,
unless there is proof to the contrary.
The agent does not have to prove that the
agency is for compensation.
But the prima facie presumption that the
agency is for a compensation may be
contradicted by contrary evidence
Broker - negotiate contracts relative to property
in behalf of others and for a compensation/fee
When Broker Entitled to Compensation:
Whenever he brings to his principal a party
who is able and willing to take the property,
and enter into a valid contract upon the
terms named by the principal, although the
particulars may be arranged and the matter
negotiated and completed between the
principal and the purchaser directly
However, a broker is never entitled to
commission for unsuccessful efforts.
The broker should be paid his commission
where he is the efficient procuring cause
in bringing the sale.
Efficient procuring cause: when there is a
close proximate and causal connection
between the efforts and labor of the agent
and the principals sale of property. Manotoc
Brothers v. CA, 221 SCRA 224 (1993)
LAW ON DOUBLE AGENCY
Disapproved by law for being against public
policy and sound morality EXCEPT where the
agent acted with full knowledge and
consent of the principals
Right of agent to compensation in case of
double agency:
With knowledge of both principals - recovery
can be had from both principals
Without the knowledge of both principals the agent can recover from neither
With knowledge of one principal - as to the
principal who knew of that fact and as to the
agent, they are in pari delicto and the courts
shall leave them as they were, the contract
between them being void as against public policy
and good morals
ACCEPTANCE BY AGENT
Forms of Acceptance by Agent:

Express - when it is oral or written
Implied -when it can be inferred from the
acts of the agent which carry out the
agency, or from his silence or inaction
according to the circumstances
Between persons who are present implied
acceptance if the principal delivers his power of
attorney to the agent and the latter receives it
without any objection
Between persons who are absent
acceptance not deemed implied from the silence
of the agent.
EXCEPTIONS:
When the principal transmits his power of
attorney to the agent who receives it without
any objection
When the principal entrusts to him by letter or
telegram a power of attorney with respect to
the business in which he is habitually
engaged as an agent, and he did not reply to
the letter or telegram
D. AGENCY BY ESTOPPEL
There is really no agency at all, but the alleged
agent seemed to have apparent or ostensible,
although not real, authority to represent another.
Distinction between Agency by Estoppel &
Implied Agency
BASIS
Existence
of actual
agency
Reliance
by 3rd
persons
What is meant by present?

Generally, face to face, but includes people
conversing directly through technology (ex. over
the telephone).
Power of Attorney - Instrument in writing by
which one person, as principal, appoints another
as his agent and confers upon him the authority
to perform certain specified acts or kinds of acts
on behalf of the principal; primary purpose is to
evidence agents authority to third parties within
whom the agent deals
Construction of Power of Attorney:
GENERAL RULE: Strictly construed and strictly
pursued; held to grant only those specified
powers
EXCEPTION: when strict construction will
destroy the very purpose of the power
Ways of Giving Notice of Agency & Its
Effect:
By special information - the person appointed
as agent is considered as such with respect to
the person to whom it was given.
By public advertisement - the agent is
considered as such with regard to any person
How do you revoke an agency?

In the same manner as it was constituted.
However, constitution by Special Information
may be revoked by notice in a daily newspaper,
provided it can be proven that 3rd persons in
question read the revocation
Nature of
Authority
AGENCY BY
ESTOPPEL
IMPLIED
AGENCY
No agency at all
There is an
actual agency
Can be invoked
only by a 3rd
person who in
good faith relied
on the conduct
of the principal
in holding the
agent out as
being authorized
Such reliance is
not needed,
since the agent
is a real agent
An agent by
estoppel has
none of the
rights of an
agent, except
where the
principals
conduct are such
that the agent
reasonably
believed that the
principal
intended him to
act as an agent
An agent by
implied
appointment
has all the
rights and
liabilities of an
agent, i.e. has
actual authority
to act on behalf
of the principal
An agency couched in general terms comprises

only acts of administration, even if the principal
should state that he withholds no power or that
the agent may execute such acts as he may
consider appropriate, or even though the agency
should authorize a general and unlimited
management.
Will an authority embodied in a letter be
sufficient?
Yes. Jimenez v. Rabot, 38 Phil 387 (1918)
Attorney-In-Fact
One who is given authority by his principal to
do a particular act not of a legal character
The term is, in loose language, used to
include agents of all kinds, but in its strict
sense, it means an agent having a special
authority created by a deed.
V. GENERAL VS. SPECIAL AGENCY
BASIS
Scope of
Authority
Nature of
Service
Authorized
Extent to
Which
Agent May
Bind the
Principal
Terminatio
n of
Authority
Constructi
on of
Principals
Instruction
s
GENERAL
AGENCT
SPECIAL
AGENT
All acts
connected with
the business or
employment in
which he is
engaged
Specific acts in
pursuance of
particular
instructions or
with restrictions
necessarily
implied from the
act to be done
No continuity of
service
Involves
continuity of
service
May bind his
principal by an
act within the
scope of his
authority
although it may
be contrary to
the latters
special
instructions
Apparent
authority does
not terminate
by the mere
revocation of his
authority
without notice
to the third
party
Merely advisory
in nature
Can not bind his

principal in a
manner beyond
or outside the
specific acts
which he is
authorized to
perform
Duty imposed
upon the third
party to inquire
makes
termination of
the relationship
as between the
principal and
agent effective
as to such third
party unless the
agency has been
entrusted for the
purpose of
contracting with
such third party
Strictly
construed as
they limit the
agents authority
E. AGENCY COUCHED IN GENERAL TERMS

Agency Couched in General Terms: Covers
only MERE ACTS OF ADMINISTRATION even if:
The principal should state that he withholds no
power
The agent may execute such acts as he may
consider appropriate
The agency should authorize a general and
unlimited management
How are contracts of agency construed?

Contracts of agency, as well as general powers of
attorney, must be interpreted in accordance with
the language used by the parties.
The real intention of the parties is primarily
determined from the language used and
gathered from the whole instrument.
In case of doubt, resort must be had to the
situation, surroundings and relations of the
parties. The intention of the parties must be
sustained rather than defeated.
If the contract is open to 2 constructions, one of
which would uphold the intention while the other
would overthrow it, the former is to be chosen.
F. AGENCY REQUIRING SPECIAL POWER OF
ATTORNEY
Special powers of attorney are necessary in
the
following
cases:
(PECWAM-LLBBOCARO)
To make such payments as are not usually
considered as acts of administration;
To effect novations which put an end to
obligations already in existence at the time
the agency was constituted;
To compromise, to submit questions to
arbitration, to renounce the right to appeal
from a judgment, to waive objections to the
venue of an action or to abandon a
prescription already acquired;
To waive any obligation gratuitously;
To enter into any contract by which the
ownership of an immovable is transmitted or
acquired either gratuitously or for a valuable
consideration;
To make gifts, except customary ones for charity
or those made to employees in the business
managed by the agent;
To loan or borrow money, unless the latter act be
urgent and indispensable for the preservation
of the things which are under administration;
To lease any real property to another person for
more than one year;
To bind the principal to render some service
without compensation;
To bind the principal in a contract of partnership;
To obligate the principal as a guarantor or surety;
To create or convey real rights over immovable
property;
To accept or repudiate an inheritance;
To ratify or recognize obligations contracted
before the agency;
Any other act of strict dominion.
A special power to sell excludes the power to
mortgage; and a special power to mortgage

does not include the power to sell.
Special Power of Attorney - an instrument in
writing by which one person, as principal,
appoints another as his agent and confers upon
him the authority to perform certain specified
acts or kinds of acts on behalf of the principal.
The special power of attorney can be included in
the general power when it specifies therein the
act or transaction for which the special power is
required.
Mortgage
To sell
To execute a second mortgage
To mortgage for the agents or any 3rd
persons
benefit,
UNLESS
clearly
indicated
Compromise
- Submission to Arbitration
Rationale:
A principal may authorize his agent to
compromise because of absolute confidence
in the latters judgment and discretion to
protect the formers rights and obtain for him
the best bargain in the transaction.
If the transaction would be left in the hands
of an arbitrator, said arbitrator may not enjoy
the trust of the principal.
authority. He may do such acts as may be
conducive to the accomplishment of the purpose
of the agency.
Requisites for Principal to be Bound by Act
of Agent:
The agent must act in behalf of the principal
authority
When a principal NOT BOUND by act of
agent:
The latter acts without or beyond the scope
of his authority in the formers name
Exceptions:
Where the acts of the principal have
contributed to deceive a 3rd person in
good faith;
Where the limitations upon the power
created by the principal could not have
been known by the 3rd person;
Where the principal has placed in the
hands of the agent instruments signed by
him in blank;
Where the principal has ratified the acts
of the agent
The latter acts within the scope of his
authority but in his own name, EXCEPT when
the transaction involves things belonging to
the principal
NOTE: The agent is not deemed to have
exceeded the limits of his authority should he
perform the agency in a manner more
advantageous to the principal than that indicated
by him, since he is authorized to do such acts as
may be conducive to the accomplishment of the
purpose of the agency.
The powers of an agent are particularly broad
in the case of one acting as a general agent
or manager; such a position presupposes a
degree of confidence reposed and investiture
with liberal powers for the exercise of
judgment and discretion in transactions and
concerns which are incidental or appurtenant
to the business entrusted to his care and
management. In the absence of an
agreement to the contrary, a managing agent
may enter into contracts that he deems
reasonably necessary or requisite for the
protection of the interests of his principal
entrusted to his management. Eurotech v.
Cuizon, G.R. No. 167552, April 23, 2007
G. RIGHTS AND OBLIGATIONS OF PRINCIPAL
OBLIGATIONS OF THE PRINCIPAL
Obligations of the Principal to the Agent:
(CARIP)
Comply with all the obligations agent contracted
in representation of the principal
Advance sums necessary for the execution of the
agency, when agent so requests; liable for
reimbursement
regardless
of
the
undertakings success whenever agent had
advanced & has no fault; includes interest
Reimburse the agent for all advances made by
him provided the agent is free from fault
Indemnify the agent for all the damages which
the execution of the agency may have
caused the latter without fault or negligence
on his part
Pay the agent the compensation agreed upon or
the reasonable value of the latters services
Liability of 3rd persons to the Principal
In Contract a 3rd person is liable to the
principal upon contracts entered into by his
agent, as if the contract has been entered
into by the principal.
In Tort the 3rd persons tort liability to the
principal, insofar as the agent is involved in
the tort, arises in 3 situations:
Where the 3rd person damages or injures

property or interest of the principal in the
possession of the agent
Where the 3rd person colludes with the agent
to injure/defraud the principal
Where the 3rd person induces the agent to
violate his contract with the principal to
betray the trust reposed upon him by the
principal.
Requisites for solidary liability of principals
There are 2 or more principals
The principals have all concurred in the
appointment of the same agent
The agent is appointed for a common transaction
or undertaking
NOTE: The rule in Art. 1915 applies even when
the appointments were made by the principals in
separate acts, provided that they are for the
same transaction. The solidarity arises from the
common interest of the principals and not from
the act of constituting the agency.
Rule where 2 persons contract separately
with agent and principal
Two persons may contract separately with the
agent and the principal with regard to the same
thing. If the two contracts are incompatible with
each other, the one of prior date shall be
preferred. This is subject, however, to the rules
on Double Sales under Article 1544 of the Civil
Code (i.e. for movables: first in possession, first
in right; for immovables: first to register in good
faith, first in right; absent any inscription: first in
possession or party who presents oldest title
acquires ownership).
Agents Right of Retention:
Specific (only for those goods connected with
the agency) and
Until the principal effects the reimbursement
and pays the indemnity
PRINCIPALS LIABILITIES FOR EXPENSES
GENERAL RULE: Principal is liable for the
expenses incurred by the agent
EXCEPTIONS: (AFUS)
If the agent acted in contravention of the
principal's instructions, unless the latter
should wish to avail himself of the
benefits derived from the contract
When the expenses were due to the fault of
the agent
When the agent incurred them with
knowledge that an unfavorable result
would ensue, if the principal was not
aware thereof
When it was stipulated that the expenses
would be borne by the agent, or that the

latter would be allowed only a certain
sum
Who can be estopped to deny agency?
Estoppel of Agent- one professing to act as
agent is estopped to deny his agency
both as against his asserted principal and
the third persons interested in the
transaction in which he is engaged
Estoppel by the Principal
As to agent one knowing another is acting
as his agent and fails to repudiate his
acts, or accept the benefits of them, will
be estopped to deny the agency as
against such other
As to sub-agent for the principal to be
estopped from denying his liability to a
third person, he must have known or be
charged
with
knowledge
of
the
transaction and the terms of the
agreement between the agent and subagent
As to third persons one who knows that
another is acting as his agent or
permitted another to appear as his agent,
to the injury of third persons who have
dealt with the apparent agent as such in
good faith and in the exercise of
reasonable prudence, is estopped to deny
the agency
Estoppel of Third Persons a third person,
having dealt with one as an agent may be
estopped to deny the agency as against
the principal, agent or 3rd persons in
interest
Estoppel of the Government - government
neither estopped by the mistake/error of
its agents; may be estopped through
affirmative acts of its officers acting
within the scope of their authority
Distinction between Ratification and
Estoppel
RATIFICATION
ESTOPPEL
Rests on intention
Rests on prejudice
Affects the entire

transaction from the
beginning
Affects only relevant

parts of the transaction
Substance of
ratification is
confirmation of an
authorized act or
conduct after it has
been done
Substance of estoppel
is the principals
inducement to another
to act to his prejudice
Distinction between Apparent Authority &
Authority by Estoppel
APPARENT
AUTHORITY
Though not actually
granted, principal
knowingly
permits/holds out the
agent as possessing
the necessary powers
to act in a certain way
AUTHORITY BY
ESTOPPEL
Where the principal, by
his negligence, permits
his agent to exercise
powers not granted to
him, even though the
principal may have no
notice or knowledge of
the conduct of the
agent
OBLIGATIONS OF THE AGENT

OBLIGATIONS OF THE AGENT TO THE PRINCIPAL
General: (GOC)
Act with utmost good faith & loyalty for the
furtherance of principals interests
Obey principals instructions
Exercise reasonable care
Specific: (FADI CALAMARI)
Carry out the agency
Answer for damages which through his nonperformance the principal may suffer
Finish the business already begun on the
death of the principal should delay entail
any danger (exception to the rule that
death extinguishes agency)
Observe the diligence of a good father of a
family in the custody and preservation of
the goods forwarded to him by the owner in
case he declines an agency, until an agent
is appointed
Advance necessary funds if there be a
stipulation to do so (except when the
principal is insolvent)
Act in accordance with the instructions of the
principal, and in default thereof, to do all
that a good father of a family would do
Exceptions (to the rule that the agent must
not depart from the instructions of
principal): (SAI)
Theres a sudden emergency
If the instructions are ambiguous
If the departure is so insubstantial that
it does not affect the result and the
principal suffers no damage thereby
Not to carry out the agency if it would
manifestly result in loss or damage to the
principal
Answer for damages if there being a conflict
between his & his principals interests, he
prefers his own
Not to loan to himself if he has been authorized
to loan money at interest
Render an account of his transactions and

deliver to the principal whatever he may
have received by virtue of the agency (If the
agent fails to deliver and instead converts or
appropriates for his own use the money or
property belonging to his principal, he may
be charged with ESTAFA.)
Be responsible in certain cases for the act of
the substitute appointed by him
Pay interest on funds he has applied to his own
use
Distinctions between Authority and the
Principals Instructions
AUTHORITY
INSTRUCTIONS
Sum total of the
Contemplates only a
powers committed to
private rule of guidance
the agent by the
to the agent;
principal
independent and
distinct in character
Refers to the manner or
mode of agents action
Relates to the
subject/business with
which the agent is
empowered to deal or
act
Limitations of authority Without significance as
are operative as
against those with
against those who
neither knowledge nor
have/charged with
notice of them
knowledge of them
Contemplated to be
Not expected to be
made known to third
made known to those
persons dealing with
with whom the agent
the agent
deals
When agent has a right to disobey the
principals instructions:
When the instruction calls for the performance of
illegal acts
Where he is privileged to do so to protect his
security in the subject matter of the agency
When obligation to account not applicable:
If the agent acted only as a middleman with
the task of merely bringing together the
vendor and the vendees.
If the agent had informed the principal of the
gift/bonus/profit he received from the
purchaser and his principal did not object
thereto.
Where a right of lien exists in favor of the
agent.
When agent may incur personal liability
When the agent expressly binds himself
When the agent exceeds his authority
When an agent by his act prevents
performance on the part of the principal
When a person acts as an agent without
authority or without a principal

A person who purports to act as agent of an
incapacitated principal
The means adopted are reasonable under the

circumstances;
The emergency really exists;
Appointment of Sub-agent:
If the principal has not prohibited the agent from
appointing a substitute, he will be liable to
3rd persons for the acts of the sub-agent
within the scope of his authority
If there is a prohibition but nevertheless the
agent appoints a sub-agent, all the subagents acts are void as to the principal.
If there is authority to appoint and sub-agent is
not designated by the principal, the agent will
be liable for all the acts of the sub-agent if
the sub-agent is notoriously incompetent or
insolvent.
If there is authority to appoint and sub-agent is
designated by the principal, the agent is
released from any liability from the acts of
the sub-agent.
If the appointment of a sub-agent is not
authorized but not prohibited, it shall be valid
if it is beneficial to the principal. But, should
the principal incur damage due to such
appointment, the agent shall be primarily
responsible for the acts of the sub-agent.
When 3rd persons can repudiate the

contract
Before actual ratification by the principal, or
before the principal has signified his willingness
to ratify the agents acts.
Responsibility of 2 or More Agents

Appointed Simultaneously:
GENERAL RULE: Liable jointly
EXCEPTION: When solidarity has
stipulated, in which case, each
becomes solidarily liable for
fulfillment of the agency; and for
negligence of his fellow agent(s)
been expressly
of the agents
(1) the non(2) the fault or
EXCEPTION TO THE EXCEPTION: when one of

the other agent/s acts beyond the scope of his
authority innocent agent is NOT liable
Effect where 3rd person aware of limits of
agents power: If the agent exceeds his
authority, it shall be VOID unless the principal
ratifies it.
DOCTRINE OF AGENCY BY NECESSITY
An agency can never be created by necessity;
what is actually created is additional authority in
an agent appointed and authorized before the
emergency arose.
The existence of emergency or other unusual
conditions may operate to invest in an agent
authority to meet the emergency, provided:
(PURE)
The agents enlarged authority is exercised
for the principals protection
The agent is unable to communicate with
principal;
Effect of the principal receiving the benefits

of the transaction
He is deemed to have ratified it. A principal may
not accept the benefits of a transaction and at
the same time repudiate its burdens
Conditions for Ratification:
The principal must have capacity and power to
ratify
He must have had knowledge of material facts
He must ratify the acts in its entirety
The act must be capable of ratification
The act must be done in behalf of the principal
To be effective, ratification need not be
communicated or made known to the agent or
the third party. The act or conduct of the
principal rather than his communication is the
key. But before ratification, the third party is free
to revoke the unauthorized contract.
Effects of Ratification
With respect to agent - relieves the agent
from liability to the third party for the
unauthorized transaction, and to his principal
for acting without authority; may recover
compensation
With respect to principal - assumes
responsibility for the unauthorized act, as if
the agent had acted under original authority
but not liable for acts outside the authority
approved by his ratification
With respect to 3rd persons - bound by
ratification to the same extent as if the
ratified act had been authorized; cannot raise
the question of the agents authority to do
the ratified act
Ratification is spelled out when the principal
brings legal proceedings to enforce the
contract entered into by the unauthorized
agent, subject to qualification, however, that
the bringing of legal proceedings is not
deemed ratification where the principals
action is undertaken to avert a greater loss
rather than to assert a gain. Robinson v.
Borse
ACTS OF THE AGENT
In behalf of the principal,

within the scope of
authority
Without or beyond scope

of authority
Within the scope of

authority but in the agents
name
Within the scope of the

written power of attorney
but agent has actually
exceeded his authority
according to an
understanding between
him & the principal
With improper motives
NOTE: Agent always liable for fraud but not for

negligence, which shall be judged with more or
less rigor by the courts, according to whether the
agency was or was not for compensation.
Authorize
d
princi
Principal still responsible for the
pal
Mismanageme
acts contracted by the agent with
still
nt of the
respect to 3rd persons;
liable
business by the Principal, however, may seek
Beyond
agent
recourse from the agent
the
Principalscope
civilly liable so long as
of isthecommitted by the
Tort committed
the tort
agent
by the agent
agent while
performing his duties
s
in furtherance
of the principals
author
business
Agent in good
Principalityis liable for damages
GR:
faith but
Principal not
EFFECT prejudices 3rd
liable
parties
Excep
Binds principal;
Agent in bad
Only the
agent is liable for
tion:
Agent not personally liable
faith and
damages
principal
prejudices 3rd
takes
persons
advantag
e
of
a
contract
Contract is unenforceable as
or
against the principal but
receives
the agent to the third person
benefits
made
under
Not binding on the principal;
false
Principal has no cause of action
represent
rd
against the 3 parties and
ation
of
vice versa
his agent
3. For the
agents own
benefit
principal still
liable; agents
motive
immaterial
Insofar as 3rd persons are

concerned (not required
to inquire further than the
terms of the written
power, agent acted within
Commission Agent - one whose business is to
scope of his authority;
receive and sell goods for a commission and who
Principal estopped
is entrusted by the principal with the possession
Motive is immaterial; as long
ofas
goods to be sold, and usually selling in his own
within the scope of authority,
name.
valid
Distinction between Commission Agent &
Broker
COMMISSION AGENT
BROKER
Engaged
in
the
purchase and sale for a
principal of personal
property which has to
be
placed
in
his
possession
and
disposal
No
custody
or
possession of the thing
he disposes; merely a
go-between,
an
intermediary between
the seller and the
buyer
Has a relation with

principal,
buyer
or
seller, and property
which is the object of
the transaction
Maintains no relation
with the thing which he
purchases or sells
Distinction between Ordinary Agent &

Commission Agent
ORDINARY AGENT
COMMISSION AGENT
Acts for and in behalf May act in his own
of his principal
name or in that of the
principal
Need
not
have Must be in possession
possession
of
the of
the
thing
he
principals goods
disposes
Obligations of a Commission Agent: (RMCB)
Responsible for the goods received by him, as
described in the consignment, UNLESS upon
receiving them he should make a written
statement of the damage and deterioration
suffered by the same
If goods are of the same kind and mark but
belonging to different owners, make a
distinction by counter marks and designate
the merchandise respectively belonging to
each principal
He cannot, without consent of the principal, sell
on credit; should he do, principal may
demand
payment
in
cash,
but
the
commission
agent
entitled
to
any
interest/benefit which may result from such
sale
If an agent receives guarantee commission (a del
credere agent), he shall bear the risk of
collection and shall pay the principal the
proceeds of the sale on the same terms
agreed upon with the purchaser. The agent
shall be liable for damages if he does not
collect the credits of his principal at the time
when they become due and demandable,
UNLESS he proves, that he exercised due
diligence for that purpose.
J. MODES OF EXTINGUISHMENT
Agency is Extinguished: (EDWARD)
By the expiration of the period for which the
agency was constituted.
By the death, civil interdiction, insanity or
insolvency of the principal or of the agent;

By the withdrawal of the agent;
By the accomplishment of the object or purpose
of the agency;
By its revocation;
By the dissolution of the firm or corporation
which entrusted or accepted the agency
(Art. 1919)
The list not exclusive; causes particular only to
agency; may be extinguished by the modes of
extinguishment
of obligations
in
general
whenever they are applicable, like loss of the
thing and novation
Agency is TERMINATED, as a matter of law, upon
the outbreak of war.
Presumption of Continuance of Agency when once shown to have existed, an agency
relation will be presumed to have continued, in
the absence of anything to show its termination.
Continuance of Agency
Parties must be
Present,
Capacitated and
Solvent
Modes of extinguishing an agency,
generally: (ASO)
Agreement
Subsequent acts of the parties which may be
either:
By the act of both parties or by mutual
consent
By the unilateral act of one of them
NOTE: Even if the reason for extinguishing the
agency is not true, the agent cannot insist on
reinstatement.
The agent can only demand
damages.
What happens if the subject matter of the
agency is lost or destroyed?
In the absence of any agreement by the parties
to the contrary, the loss or destruction of the
subject matter of the agency terminates the
agents authority to deal with reference to it
EXCEPTIONS:
If it is possible to substitute other material for
that which was destroyed without substantial
detriment to either party
If the destroyed subject matter was not in fact
essential to the contract
A partial loss or destruction
Form of renunciation
It is not always necessary for the agent to

renounce the agency expressly. He can do so
impliedly, such as:
Where he has conducted himself in a manner
incompatible with his duties as agent
When he abandons the object of his agency and
acts for himself in committing a fraud upon
his principals
When he files a complaint against the principal
and adopts an antagonistic attitude towards
him
Exceptions
to Extinguishment by Death
(CKID)
If the agency is coupled with an interest
If the act of the agent was executed without the
knowledge of the death of the principal and
the third person who contracted with the
agent acted in good faith
To avoid damage
If it has been constituted in the common interest
of the principal and of the agent, or in the
interest of a third person who has accepted
the stipulation in his favor
Can the heirs continue the agency?
GENERAL RULE: agency calls for personal
services on the part of the agent; rights &
obligations are not transmissible
EXCEPTIONS:
Agency by operation of law, or a presumed or
tacit agency
Agency is coupled with an interest in the subject
matter of the agency (ex. power of sale in a
mortgage).
Exceptions to Extinguishment Upon Loss or
Destruction of Subject Matter
If it is possible to substitute other material for
that which was destroyed without substantial
detriment to either party or if the destroyed
subject matter was not in fact essential to the
contract;
A partial loss or destruction does not always
result in a complete termination of the agency,
and under such circumstances, while the agency
may be ended in so far as the destroyed property
is concerned, it may continue in existence as to
other property not affected
If the loss brought about by the principal
(ex.. principal sells subject matter to
another party even if an agent has been
constituted in reference to it), principal
liable for damages for his wrongful
terminating act; if subject matter is lost
without principals fault, no liability
assumed by him
Change of Circumstance:
GENERAL RULE: when there is a basic change
in the circumstances surrounding the transaction,

which was not contemplated by the parties and
which would reasonably lead the agent to believe
that the principal would not desire him to act, the
authority of the agent is terminated
EXCEPTIONS:
If the original circumstances are restored within a
reasonable period of time, the agent's
authority may be revived
Where the agent has reasonable doubts as to
whether the principal would desire him to act,
his authority will not be terminated if he acts
reasonably
Where the principal and agent are in close daily
contact, the agent's authority to act will not
terminate upon a change of circumstances if
the agent knows the principal is aware of the
change and does not give him new
instructions
Revocation - termination of the agency by the
subsequent act of the principal
Renunciation/Withdrawal - termination of the
agency by the subsequent act of the agent
May the agency be extinguished at will?
AGENT may do so but subject to the contractual
obligations owing to the principal (i.e. fixed
period of time for the agency or purpose not
yet accomplished);
Expressly or impliedly
conducted himself in a manner incompatible
with his duties;
abandons the object of agency and acts for
himself in committing a fraud upon his
principal;
he files a complaint against the principal and
adopts an antagonistic attitude towards
him
with just cause - give due notice
without just cause - liable for damages if
the principal suffers damages thereby
UNLESS the agent should base his
withdrawal upon the impossibility of
continuing the performance of the agency
without grave detriment to himself
The mere fact that the agent violates his
instructions does not amount to renunciation,
and although he may thus render himself
liable to the principal, he does not cease to
become an agent.
PRINCIPAL may also revoke the agency at will
EXCEPTION: agency coupled with interest
When a bilateral contract depends upon the
agency
When the agency is the means of fulfilling an
obligation already contracted
When a partner is appointed as manager of a
partnership in the contract of partnership
and his removal from the management is

unjustifiable.
Exception to the exception: when the
agent acts to defraud the principal
Implied Revocation of Agency
Principal appoints a new agent for the same
business or transaction (only if there is
incompatibility); effective as between the
principal and the agent only if communicated
to the agent; does not prejudice rights of
third persons acting in good faith without
knowledge of the revocation
Principal
directly
manages
the
business
entrusted to the agent, or deals directly with
3rd persons
Effect of Issuance of a Special Power of
Attorney:
The general power is impliedly revoked as to
matters covered by the special power because a
special power naturally prevails over a general
power.
Principals Liability for Damages despite
Revocation
If the agency was constituted for a fixed period,
the principal shall be liable for damages
occasioned by the wrongful discharge of the
agent before the expiration of the period
fixed
Even if there was no time fixed for the
continuance of the agency, but the agent can
prove that the principal acted in bad faith by
revoking the agency in order to avoid the
payment of commission about to be earned,
the principal can be held liable for damages
Necessity of Notice of Revocation
As to the agent - express notice always
necessary; sufficient notice if the party to be
notified actually knows, or has reason to
know, a fact indicating that his authority has
been
terminated/suspended;
revocation
without notice to the agent will not render
invalid an act done in pursuance of the
authority
As to 3rd persons express notice necessary
As to former customers - actual notice must
be given to them because they always
assume the continuance of the agency
relationship
As to other persons - notice by publication is
enough
Effect of Extinguishment without Notice
Act of agent deemed valid insofar as 3rd parties
acting in good faith and without knowledge of
revocation
VI. CREDIT TRANSACTIONS

============================
=====

A. Loan
1. Commodatum vs. Mutuum
2. Obligations of bailor and bailee
3. Interest and the suspension of
usury law
===========================
===========
CREDIT
TRANSACTIONS
include
all
transactions involving the purchase or loan of
goods, services or money in the present with a
promise to pay or deliver in the future (contract
of security)
2 Types of Credit Transactions:
1. Secured transactions those supported by
a collateral or an encumbrance of property
2. Unsecured transactions those supported
only by a promise to pay or the personal
commitment of another such as a guarantor
or surety
SECURITY is something given, deposited or
serving as a means to ensure the fulfillment or
enforcement of an obligation or of protecting
some interest in the property
2 Types of Security:
1. Personal when an individual becomes a
surety or a guarantor
2. Real or Property when an encumbrance is
made on property (e.g. mortgage or pledge)
BAILMENT - is the delivery of property of one
person to another in trust for a specific purpose,
with a contract, express or implied, that the trust
shall be faithfully executed and the property
returned or duly accounted for when a special
purpose is accomplished or kept until the bailor
reclaims it. Generally, it is contractual, but may
also be created by operation of law.
PARTIES IN BAILMENT
1. BAILOR The lender/giver; the party who
delivers possession/custody of the
thing bailed
2. BAILEE The recipient; the party who
receives the possession/custody of
the thing delivered
LOAN
CHARACTERISTICS
1. Real Contract delivery is essential for
perfection of the loan (BUT a promise to lend,
being consensual, is binding upon the
parties)
2. Unilateral Contract - only the borrower has
the obligation
1. COMMODATUM VS. MUTUUM

KINDS
1. COMMODATUM bailor delivers to bailee a
non-consumable thing so that the latter may
use it for a certain time and return the
identical thing
Kinds of commodatum:
a.
Ordinary
commodatum
bailee uses the thing for a certain period

of time
b.
Precarium
bailor
may
demand the thing loaned at will; exists in
cases where:
i. There is no stipulation as to the
duration of the contract or use of the
thing loaned
ii. Use of the thing is merely tolerated by
the owner
2.
MUTUUM OR SIMPLE LOAN - lender
delivers to the borrower money or other
consumable thing upon the condition that the
latter will pay the same amount of the same
kind and quality
LOAN
1. Delivery by one
party
and
the
receipt by the other
party of a given
sum of money or
other consumable
thing
upon
an
agreement, express
or implied
2. To repay the same
amount
of
the
same
kind
and
quality, w/ or w/o
interest
CREDIT
Ability of an individual
to borrow money or
things by virtue of the
confidence
or
trust
reposed by a lender
that he will pay what
he may promise w/in a
specified period
COMMODATUM
(Articles 1935-1952)
CHARACTERISTICS AND CERTAIN RULES TO
REMEMBER:
1. Gratuitous: If there is compensation, then
its not commodatum. It may be a lease.
2. Personal:
Death
of
lender/borrower
EXTINGUISHES the contract
3.
4.
5.
6.
7.
a. Borrower cant lend or lease the

thing to third persons
i. EXCEPTION: when stipulated
that he can
ii. EXCEPTION: the members of
the borrowers household
may make use of the thing
iii. EXCEPTION TO EXCEPTION:
when
stipulated
that
members of the househould
cannot use or if the nature
of the thing forbids such use
Subject Matter:
a. Generally non-consumables (can be
real or personal property)
b. If consumable, it must be for
exhibition (1936)
Ownership
a. Lender does not have to be the
owner of the thing loaned in
commodatum
Right of retention:
a. Borrower cant retain the thing
loaned just because he has claims
against lender
b. Borrow can retain if he suffers
damages by reason of hidden flaws
in the thing lent (1951)
Presumption
of
solidary
liability
of
borrowers
a. If there are two or more borrowers,
the presumption is that they are
solidarily liable
Fruits: a stipulation to make use of fruits is
valid, but it is never presumed. The
enjoyment of the fruits must only be
incidental to the use of the thing itself - if
enjoyment of fruits is primary reason, it is a
usufruct.
d.
LENDS THE SUBJECT

MATTER TO A 3RD PERSON - he lends or
leases the thing to a third person who is
not a member of his household
e.
INGRATITUDE - being
able to save the thing borrowed or his
own thing, he chose to save the latter
2. OBLIGATIONS OF BAILOR AND BAILEE

OBLIGATIONS OF BAILEE (borrower)
1. To take care of the thing with ordinary
diligence
2. To pay for ordinary expenses
3. To be liable for loss due to fortuitous
event if stipulated that he is such
OBLIGATIONS OF THE BAILOR (lender) (ADREAD-HA)
1. Primary obligation of the bailor:
General Rule: To allow the bailee the use of the
thing loaned for the duration of the period
stipulated or until the accomplishment of the
purpose for w/c the commodatum was
constituted.
Exceptions: Bailor may demand the return of
the thing or its temporary use when:
a.
Bailor has an urgent need for the thing
(Art. 1946) the contract is suspended
b. Bailee commits an act of ingratitude (Art.
1948)
When borrower is liable for loss of the thing

(ADLIB)
a.
BAD FAITH if the

bailee devotes the thing to any purpose
different from that for which it has been
loaned
b.
DELAY - he keeps it
longer than the period stipulated or after
the accomplishment of the use for which
the commodatum has been constituted
c.
HAS
BEEN
DELIVERED W/ APPRAISAL - the thing
loaned has been delivered with appraisal
of its value, UNLESS there is a stipulation
exempting the bailee from responsibility
in case of a fortuitous event
If the bailee should commit an offense

against the person, the honor or the
property of the bailor, or of the wife or
children under his parental authority
If the bailee imputes to the bailor any
criminal offense, or any act involving
moral turpitude, even though he should
prove it, UNLESS the crime or the act has
been committed against the bailee
himself, his wife, or children under his
authority
If the bailee unduly refuses the bailor
support when the bailee is legally or
morally bound to give support to the
bailor
2. May demand the thing at will when the

contract is a precarium
PRECARIUM a kind of commodatum where the

bailor may demand the thing at will. It is a
contract by which the owner of a thing, at the
request of another person, gives the latter the
thing for use as long as the owner shall tolerate
3. To refund the extraordinary expenses (Art.
1949)
General Rule Notice should be given by the
bailee to the bailor regarding such extraordinary
expenses and consent should be obtained
Exception Where the extraordinary expenses
are so urgent that the reply to the notification
cannot be awaited w/o danger
4. If the extraordinary expenses arise from the
actual use of the thing and even though
bailee acted w/o fault, the expenses will be
borne equally by both the bailor and the
bailee (50-50) (Art. 1949, par. 2)
REASONS:
a. Bailee pays
because of the benefit
derived from the use of the thing
b. Bailor pays the other because he is the
owner and the thing will be returned to him
Exception Stipulation to the contrary (e.g.
different apportionment or sole burden by bailee
or bailor)
5. All other expenses which are not necessary
for the use and preservation of the thing
must be shouldered by the borrower (bailee)
6.
The depreciation caused by the reasonable
and natural use of the thing is borne by the bailor
(Art. 1943)
REASON: parties to the contract know that the
thing borrowed cannot be used without
deterioration due to ordinary wear and tear.
Exceptions:
a. When there is a stipulation to the contrary
b. When the bailee is guilty of fault or
negligence
c. If he devotes the thing to any purpose
different from that for which has been
loaned
7. To pay damages for known hidden flaws (Art.
1951)
Requisites: (the following must concur)
a. There is a flaw or defect in the thing loaned
b. The flaw or defect is hidden
c.
c.
c.
c.
The bailor is aware thereof
d. Bailor does not advise the bailee of the same
e. The bailee suffers damages by reason of the
flaw or defect
8.
The bailor has no right of abandonment for

expenses and damages (Art. 1952)
REASON: expenses and/or damages may exceed
the value of the thing loaned
SIMPLE LOAN OR MUTUUM
(Arts. 1933-1961)
SIMPLE LOAN OR MUTUUM is a contract

whereby one of the parties delivers to another
money or other fungible thing w/ the
understanding that the same amount of the
same kind and quality shall be paid.
Nature of Mutuum
a. Bilateral borrowers promise to pay is the
consideration for the lenders
obligation to furnish the loan
b. No criminal liability upon failure to pay
Subject Matter
a. Fungible or consumable - depending on
the intent of the parties; that the return of
the thing is equivalent only and not the
identical thing
Fungible things those which are usually
dealt with by number, weight, or measure so
that any given portion is treated as the
equivalent of any other unit or portion.
depends upon the intention of
the parties (as opposed to consumable or
nonconsumable which depends upon its
nature)
- A fungible from the viewpoint of
the parties is easily replaceable
b. Money
If the transfer of ownership is on a nonfungible thing, with the obligation of the
other to give things of the same kind,
quantity and quality, it is a barter
FORM OF PAYMENT
1. If the thing loaned is money
stipulated, otherwise that which
tender in the Philippines. In
extraordinary inflation or deflation,
currency
is legal
case of
payment
shall be in the value of the currency at the

time of the creation of the obligation.
2. If other than money another thing of the
same kind, quality and quantity. If impossible
to do so, payment must be its value at the
time of perfection of the loan.
3. INTEREST AND THE SUSPENSION OF

USURY LAW
INTEREST
General Rule Interest must be expressly
stipulated in writing, and it must be lawful
(Art. 1956)
1. When an obligation, regardless of its source,
is breached, the contravenor can be held
liable for damages.
2. If obligation consists in the payment of a sum
of money (loan, forbearance of money,
judgment money)
a. Interest due is what has been
stipulated by the parties
b. The interest shall earn legal interest
from the time of judicial demand
c. If theres no stipulation, the rate is
12%
from
default
(judicial
or
extrajudicial demand)
2. If obligation is not a loan or forbearance of
money
a. Interest on the amount of damages
awarded may be imposed at the
discretion of the court at 6%
b. No interest shall be adjudged on
unliquidated claims or damages,
except when or until the amount can
be
established
with
reasonable
certainty
c. Where the amount is established with
reasonable certainty, the interest
shall begin from the time the claim is
made judicially or extrajudicially
d. But when such certainty cannot be so
reasonably established the time the
demand is made, the interest shall
begin to run only from the date the
judgment of the court is made
e. The actual base (principal) for the
computation of the legal interest
shall, in any case, be on the amount
finally adjudged.
3. When judgment of court awarding a sum of
money becomes final and executory, 12%
interest from such until its payment
Eastern Assurance and Surety Corporation
v. CA [322 SCRA 73, Jan. 18, 2000]
Exceptions:
1. Indemnity for damages the debtor in
delay is liable to pay legal interest
(6%/12%) as indemnity for damages even
in the absence of a stipulation for the
payment of interest. Interest as indemnity
for damages is payable only in case of
default or non-performance of contract.
Basis for computation for indemnity:

a. Central Bank Circular 416 12% p.a. in
cases of:
Loans
Forbearance of money, goods or
credits
Judgments involving such loans
or forbearance, in the absence of
the express agreement as to such
rate of interest
During the interim period from
the date judgment until actual
payment
b. Art. 2209 of the Civil Code 6% p.a. in
cases of:
Other sources (e.g. sale)
Damages arising from injury to
persons
Loss of property which does not
involve a loan
2. Interest accruing from unpaid interest interest due shall earn interest from the time
it is judicially demanded although the
obligation may be silent upon this point.
Determination of interest payable in kind:
Its value shall be appraised at the current price
of the products or goods at the time and place of
payment. (Art. 1958)
NOTE: In case of an unstipulated interest paid
by mistake, the debtor may recover as in the
case of solutio indebiti or undue payment. If such
was voluntarily paid, there can be no
recovery as in the case of natural obligations.
COMPOUNDING INTEREST (Art. 1959)
May be availed of only when there is a written
stipulation in the contract for the payment of
interest.
General Rule Accrued interest (interest due
and unpaid) shall not earn interest
Exceptions:
When judicially demanded(e.g. when
case is filed to collect)
When there is an express stipulation
made by the parties: that the interest due
and unpaid shall be added to the principal
obligation and the resulting total amount
shall earn interest
USURY
USURY is the contracting for or receiving
something in excess of the amount allowed by
law for the loan or forbearance of money, goods
or chattels.
ELEMENTS OF USURY: (LUIT)
1. Loan or forbearance
2. Understanding between the parties that he
loan shall be paid.
3. Unlawful intent to take more than the legal
rate.
4. Taking or agreeing to take for the use of the
loan of something in excess of what is
allowed by law.
NOTE: Usury now is legally inexistent. In Art.
1306 of NCC, contracting parties may establish
such stipulations, clauses, terms and conditions
as they may deem convenient, provided they are
not contrary to law, morals, good customs, public
order, or public policy. This may be invoked to
annul the excessive stipulated interest.
However, Usury law has NOT been repealed
Since the mortgage contract derives its

vitality from the validity of the principal
obligation, the invalid stipulation on interest
rate is similarly insufficient to render void the
ancillary mortgage contract. Sps. Carpo v.
Chua, [G.R. No. 150773 & 153599,
September 20, 2005]
BARTER A contract whereby one person

transfers the ownership of non-fungible things
to another with the obligation on the part of
the latter to give things of the same kind,
quantity and quality, shall be considered a
barter.
========================
==============
B. Deposit
1. Voluntary Deposit
2. Necessary Deposit
3. Judicial Deposit
========================
==============
DEPOSIT
(Arts. 1962-2009)
DEPOSIT is constituted from the moment a
person receives a thing belonging to another,
with the obligation of safely keeping it and of
returning the same. Safekeeping must be the
principal purpose of the contract.
Characteristics
1. Real - because it is perfected only by the
delivery of the subject matter
BUT an agreement to constitute a deposit
is binding and enforceable, since it is
merely consensual
2. Unilateral - if gratuitous
3. Bilateral - if with compensation
Creation of deposit (Art. 1964)
1. By virtue of a court order or
2. By law
3. Not by the will of the parties
4. Depositary must not be the owner of the
property deposited (Art. 1962)
Kinds of Deposit
1. Judicial - when an attachment or seizure of
property in litigation is ordered
2. Extrajudicial (Art. 1967)
a.
Voluntary - delivery is made by
the will of the depositor or by two or more
persons each of whom believes himself
entitled to the thing deposited
b.
Necessary - made in compliance
with a legal obligation, or on the occasion
of any calamity, or by travelers in hotels
and inns or by travelers with common
carriers. There is lack of free choice in the
depositor.
BASIS
Creati
on
JUDICIAL
Will of the court
Purpos
e
Security
ensure the
a party
property
recover in
favorable
judgment
or
to
right of
to the
or
to
case of
EXTRAJUDICIAL
Will
of
the
contracting
parties
Custody
and
safekeeping
Subjec
t
Matter
Cause
Generally
immovables
Movables only
Always onerous
Return
of
thing
In
whose
behalf
it
is
held
Upon order of the

court / end of
litigation
Person who has a
right
May
be
compensated but
generally
gratuitious
Upon demand of
depositor
Depositor or / 3rd
person designated
Deposit is generally gratuitous: (Art. 1965)

General Rule A deposit is generally gratuitous.
Exceptions: (SBSJ)
a.
When
there
is
a
contrary stipulation
b.
Where depositary is
engaged in the business of storing goods
c.
Where
property
is
saved without knowledge of the owner
d.
Judicial deposit
Subject Matter of Deposit (Art. 1966)
General Rule: Only movable or personal
property may be the object of deposit (whether
voluntary or necessary)
Exception: In judicial deposit, it may cover both
movable and immovable property
Depositor need not be the owner of the
thing
General Rule: The depositor must be the owner
of the thing deposited
Exceptions: It may belong to another person
than the depositor
a. When two or more persons claiming to be
entitled to a thing may deposit the same
with a third person. In such case, the third
person assumes the obligation to deliver
to the one to whom it belongs.
b. Interpleader the action to compel the
depositors to settle their conflicting
claims. Here one of the depositors is not
the owner.
Form of contract of deposit
General Rule: A contract of deposit may be
entered into (but not perfected) orally or in
writing (Art. 1969)
Exception: Delivery of the thing deposited is
needed for perfection.
DEPOSITARY
CAPACITATED /
DEPOSITOR
INCAPACITATED
Depositary is subject
to ALL the obligations
of a depositary
DEPOSITARY
INCAPACITATED /
DEPOSITOR
CAPACITATED
Depositary does not
incur the obligations of
a depositary
Depositary must return

the property either to:
Depositary, however,
is liable to:
a) Return the thing
deposited while still
in his possession;
AND
b) Pay the depositor
the amount by w/c
he
may
have
benefited himself w/
the thing or its price
subject to the right
of any 3rd person
who acquires the
thing in good faith
a) The legal
representative of the
incapacitated, OR
b) The depositor
himself if he should
acquire capacity
BASIS
Demandabi
lity
Benefit
Preference
of credit
IRREGUL
AR
DEPOSIT
Demandable
at will of the
irregular
depositor for
whose benefit
the
deposit
has
been
constituted
Benefit
accrues to the
depositor
Depositor has
preference
over
other
creditors with
respect
to
thing
deposited
MUTUUM
Lender is bound
by the provisions
of the contract
and cannot seek
restitution until
the
time
of
payment
as
provided in the
contract
has
arisen
Necessity of the
borrower
Enjoy
no
preference
in
the distribution
of the debtors
property
OBLIGATIONS OF THE DEPOSITARY

(SRT-CCC-ULC-RITT-RPPT-TL-HR)
1. Two primary obligations (Art. 1972)
a. Safekeeping of the object
Degree of Care same diligence as he
would exercise over his property
REASONS:
i.
Essential requisite of judicial

relation
which
involves
the
depositors confidence in his good
faith and trustworthiness
ii.
The
presumption
that
the
depositor took into account the
diligence which the depositary is
accustomed with respect to his
own property
b. Return of the thing when required
Even though a specified term or time for
such may have been stipulated in the
contract
The depositary cannot excuse himself from
liability, in the event of loss, by claiming that he
exercised the same amount of care toward the
thing deposited as he would towards his own if
such care is less than that required by the
circumstances
2. Obligation not to Transfer deposit (Art.
1973)
General Rule: The depositary is not allowed to
deposit the thing with a third person
REASON: A deposit is founded on trust and
confidence and it can be supposed that the
depositor, in choosing the depositary, has taken
into consideration the latters qualification
Exception: The depositary is authorized by
express stipulation
LIABILITIES: Depositary is liable for loss of the
thing deposited when:
a. He transfers the deposit with a third
person without authority although there is
no negligence on his part and the third
person;
b. He deposits the thing with a third person
who is manifestly careless or unfit
although authorized, even in the absence
of negligence; or
c. The thing is lost through the negligence
of his employees whether the latter are
manifestly careless or not.
Exemption from liability: The thing is lost

without the negligence of the third person
with whom he was allowed to deposit the
thing if such third person is not manifestly
careless or unfit. (i.e., minor)
3. Obligation not to Change the way of

deposit (Art. 1974)
General Rule: Depositary may not change the

way of the deposit
Exception: If there are circumstances indicating
that the depositor would consent to the change.
This is a situation wherein the depositary would
reasonably presume that the depositor would
agree to the change if he knows of the facts of
the situation.
Requisites:
a. The depositary must notify the depositor
of such change; and
b. Must wait for the reply of the depositor to
such change.
These requisites may not be dispensed
with unless delay would cause danger.
4. Obligation to Collect on the choses in
action deposited (Art. 1975)
If the thing deposited should earn
interest, the depositary is under the
obligation to:
a. Collect the interest as it becomes due
b. Take such steps as may be necessary
to preserve its value and the right
corresponding to it
The depositary is bound to collect the
capital, as well as the interest, when due
Contract of rent of safety deposit boxes
(Art. 1975)
- A contract for the rent of safety deposit
boxes is not an ordinary contract of lease
of things, but a special kind of deposit;
hence, it is not to be strictly governed by
the provisions on deposit.
- The prevailing rule in the US is that the
relation between a bank renting out
safety deposit boxes and its customer
with respect to the contents of the box is
that of bailor and bailee.
5. Obligation not to Commingle things if so
stipulated (Art. 1976)
General Rule: The depositary is permitted to
commingle grain or other articles of the same
kind and quality
Effects:
a. The various depositors of the mingled
goods shall own the entire mass in
common
b. Each depositor shall be entitled to such
portion of the entire mass as the amount
deposited by him bears the whole
Exception: When there is a stipulation to the

contrary
Relation between bank and depositor

(Art. 1980)
6. Obligation not to make Use of the things

deposited (Art. 1977)
General Rule: Deposit is for safekeeping of the
subject matter and not for its use
Exceptions:
a. Expressly authorized by the depositor
b. Such use is necessary for its preservation but
limited for the purpose only
Effect of unauthorized use: Liability for
damages
Effects of authorized use: (Art. 1978)
a. If the thing
consumable:
deposited
is
non-
General Rule: The contract loses the

character of a deposit and acquires that
of a commodatum, despite the fact that
the parties may have denominated it as a
deposit
Exception: Safekeeping is still the
principal purpose of the contract
b. If the thing deposited is money or
other consumable thing:
General Rule: Converts the contract into
a simple loan or mutuum
Exception: Safekeeping is still the
principal purpose of the contract, but it
becomes an irregular deposit.
Bank
deposits are in the nature of irregular
deposits but they are really loans
governed by the law on loans.
7. Liability for Loss
event (Art. 1979)
through
fortuitous
Fixed, savings, and current deposits of

money in banks and similar institutions
shall be governed by the provisions
concerning simple loan
a. Contract of loan deposits in banks
are really loans because the bank can
use the same for its ordinary
transactions
b. Relation of creditor and debtor
the relation between a depositor and
a bank is that of a creditor and a
debtor.
8. Obligation when the thing deposited is

Closed and Sealed (Art. 1981)
The depositary has the obligation to:
a. Return the thing deposited when
delivered closed and sealed in the
same condition
b. Pay for damages should the seal or
lock be broken through his fault,
which is presumed unless proven
otherwise
c. Keep the secret of the deposit when
the seal or lock is broken, with or
without his fault
When depositary justified in opening
closed and sealed subject matter (Art.
1982):
a. The
depositary
is
presumed
authorized to do so if the key has
been delivered to him
b. When the instructions of the depositor
as regards the deposit cannot be
executed without opening the box or
receptacle (Necessity)
General Rule: Depositary is not liable for loss

through fortuitous event without his fault
Exceptions: (SUDA)
a. If it is so stipulated
b. If he uses the thing without the depositors
permission
c. If he delays in its return
d. If he allows others to use it, even though he
himself may have been authorized to use
the same
9. Obligation
to
Return
products,
accessories and accessions (Art. 1983)
NOTE: Liability for loss without fortuitous event:

Depositary presumed at fault since he is in
possession
(Art. 1265)
12. Where Third person appears to be the

owner (Art. 1984)
10. Obligation to pay Interest on sums

converted for personal use (Art. 1983)
11. The depositary who receives the thing in
deposit
cannot
require
that
the
depositor Prove his ownership over the
thing (Art. 1984)
The depositary may be relieved from

liability when:
a. He advised the true owner of the
thing of the deposit
b. If the owner, in spite of such
information, does not claim it within
the period of one month (30 days)
13. Obligation of the depositary when there

are Two or more depositors (Art. 1985)
a. Divisible thing and joint depositors
each one of the depositors can
demand only his share proportionate
thereto
b. Indivisible thing or solidary depositors
rules on active solidarity
General Rule: Each one of the
depositors may do whatever may be
useful to the others (Art. 1212)
Exception: Anything w/c may be
prejudicial to the other depositors
General Rule: The depositary may
return the thing to any one of the
solidary depositors
Exception: When a demand, judicial
or extrajudicial, for its return has been
made by one of them in which case
delivery should be made to him
c.
Return to one of the depositors

stipulated
If by stipulation, the thing should
be returned to one of the
depositors, the depositary is
bound to return it only to the
person designated, although he
has not made any demand for its
return
14. Obligation to Return to the person to

whom return must be made (Art. 1986)
a. The depositary is obliged to return the
thing deposited, when required, to:
The depositor;
To his heirs or successors; or
To the person who may have been
designated in the contract.
b. If the depositor was incapacitated at
the time of making the deposit, the
property must be returned to:
His guardian or administrator
To the person who made the
deposit
c.
To the depositor himself should he

acquire capacity
Even if the depositor had capacity at
the time of making the deposit, but
he subsequently loses his capacity
during the deposit, the thing must be
returned to his legal representative
15. Obligation to return at the Place of

return (Art. 1987)
same as the general rule of law regarding
the place of payment (Art. 1251)
GENERAL RULE: At the place agreed upon by
the parties, transportation expenses shall be
borne by the depositor
EXCEPTION: In the absence of stipulation, at the
place where the thing deposited might be even if
it should not be the same place where the
original deposit was made
16. Obligation to return upon the Time of
return (Art. 1988)
General Rule: The thing deposited must be
returned to the depositor upon demand, even
though a specified period or time for such return
may have been fixed
Exceptions:
a. When the thing is judicially attached while
in the depositarys possession
b. When notified of the opposition of a third
person to the return or the removal of the
thing deposited
17. Right of the depositary to return the
Thing deposited (Art. 1989)
NOTE: In this case, it is the depositary who is
returning the deposit WITH OR WITHOUT THE
DEMAND of the depositor.
General Rule: The depositary may return the
thing deposited, notwithstanding that a period
has been fixed for the deposit, if:
a. The deposit is gratuitous
b. The reason is justifiable
Remedy if depositor refuses to receive
the thing: The depositary may deposit
the thing at the disposal of the judicial
authority
Exception: When the deposit is for a valuable
consideration, the depositary has no right to
return the thing before the expiration of the time
designated
even
if
he
should
suffer
inconvenience as a consequence
18.
Depositarys liability in case of Loss by

force majeure or government order (Art.
1990)
Depositary is not liable in cases of loss by

force majeure or by government order.
However, he has the duty to deliver to
the depositor money or another thing he
receives in place of the thing.
19. Liability in case of alienation by the

depositarys Heir (Art. 1991)
When alienation is done in GOOD FAITH:

a. Return the value of the thing
deposited
b. Assign the right to collect from the
buyer
The heir does not need to pay the
actual price of the thing deposited
When alienation is done in BAD FAITH:
a. Liable for damages
b. Pay the actual price of the thing
deposited
20. Depositary may Retain the thing in

pledge until the full payment of what
may be due him by reason of the
deposit (Art. 1994)
The thing retained serves as security for

the payment of what may be due to the
depositary by reason of the deposit (see
Arts. 1965, 1992 & 1993)
NOTE: The debt must be prior to the
deposit
IRREGULAR
DEPOSIT
May be demanded at
will by the irregular
depositor for whose
benefit the deposit
has been constituted
Only benefit is that
which accrues to the
depositor
Depositor
has
preference over other
creditors
MUTUUM
Lender is bound by the
provision
of
the
contract and cannot
seek restitution until
the time for payment,
as provided in the
contract, has arisen
If with interest, benefit
if both parties
No preference
Obligations of the Depositor: (PLD)

1. Obligation
to
pay
expenses
of
preservation (Art. 1992)
- Applies only when the deposit is gratuitous
2. Obligation to pay losses incurred due to

character of thing deposited (Art. 1993)
General Rule: The depositary must be
reimbursed for loss suffered by him because
of the character of the thing deposited.
Exceptions:
a. Depositor was not aware of the danger
b. Depositor was not expected to know the
dangerous character of the thing
c. Depositor notified the depositary of such
dangerous character
d. Depositary was aware of the danger
without advice from the depositor
3. Effect
of
death
of
depositor
or
depositary (Art. 1995)
a. Deposit gratuitous death of either of the
depositor or depositary extinguishes the
deposit (personal in nature). By the word
extinguished, the law really means that
the depositary is not obliged to continue
with the contract of deposit.
b. Deposit
for
compensation
not
extinguished by the death of either party
Extinguishment of Deposit
a. Upon the loss or deterioration of the thing
deposited;
b. Upon the death of the depositary, ONLY in
gratuitous deposits;
c. Other provisions in the Civil Code
(novation, merger, etc.)
NECESSARY DEPOSIT
A deposit is necessary when: (LCCT)
1. It is made in compliance with a legal
obligation
2. It takes place on the occasion of any
calamity, such as fire, storm, flood, pillage,
shipwreck, or other similar events
There must be a causal relation between
the calamity and the constitution of the
deposit
3. Made by passengers with common carriers
As to baggages the passengers or their
agents carry
4. Made by travelers in hotels or inns (Art.
1998)
Before keepers of hotels or inns may be

held responsible as depositaries with
regard to the effects of their guests, the
following must concur:
Elements:
a. They have been previously informed
about the effects brought by the
guests; and
b. The latter have taken the precautions
prescribed
regarding
their
safekeeping.
The hotel-keeper cannot free himself from

responsibility by posting notices to the
effect that he is not liable for the articles
brought by the guest (Art. 2003)
Effect: Any stipulation between the hotelkeeper
and
the
guest
whereby
the
responsibility of the former (as set forth in Art.
1998-2001) is suppressed or diminished shall
be VOID.
Extent of liability:
a. Liability in hotel rooms which come
under the term baggage or articles
such as clothing as are ordinarily used
by travelers
b. Include those lost or damages in hotel
annexes such as vehicles in the
hotels garage.
When hotel-keeper liable: (Art. 2000

2002)
NOTE: In the following cases, the hotelkeeper is liable REGARDLESS of the
amount of care exercised:
a. The loss or injury to personal property
is caused by his servants or
employees as well as by strangers
(Art. 2000)
b. The loss is caused by the act of a thief
or robber done without the use of
arms and irresistible force (Art.
2001)
Reason: Hotel-keeper is apparently
negligent
When hotel-keeper not liable:

a. The loss or injury is caused by force
majeure, like flood, fire, theft or
robbery by a stranger (not the hotelkeepers servant or employee) with
the use of firearms or irresistible force
EXCEPTION: Unless the hotel-keeper
is guilty of fault or negligence in
failing to provide against the loss or
injury from his cause
b. The loss is due to the acts of the
guests, his family, servants, visitors
c. The loss arises from the character of
the things brought into the hotel
Exemption or diminution of liability:
Hotel-keepers right to retain

The hotel-keeper has a right to retain the
things brought into the hotel by the
guest, as a security for credits on account
of:
a. Lodging
b. Supplies usually furnished to hotel
guests
Reason: It is given to hotel-keepers to
compensate them for the liabilities
imposed upon them by law. The right of
retention recognized in this article is in
the nature of a pledge created by
operation of law.
In compliance with a
legal obligation (governed by the law
establishing it, and in case of deficiency,
the rules on voluntary deposit e.g. Arts.
538, 586 and 2104)
Made on the occasion of

any calamity (governed by the rules on
voluntary deposit and Art. 2168)
SEQUESTRATION OR JUDICIAL DEPOSIT
When judicial deposit takes place: When an

attachment or seizure of property in litigation is
ordered by a court. (Art. 2005)
Nature: Auxiliary to a case pending in court
Purpose: To maintain the status quo during the
pendency of the litigation or to insure the right of
the parties to the property in case of a favorable
judgment
Depositary of sequestered property: person
appointed by the court. (Art. 2007)
Obligations:
a. To take care of the property with the diligence
of a good father of the family. (Art. 2008)
b.
He may not be relieved of his responsibility until

the litigation is ended or the court so orders.
(Art. 2007)
Applicable law: The law on judicial deposit is
remedial or procedural in nature. Hence, the
Rules of Court are applicable. (Art. 2009)
BASIS
Cause
origin
or
Purpose
Subject
Matter
Remunerati
on
In
whose
behalf it is
held
JUDICIAL
DEPOSIT
By will of the
courts
Security;
Secure the right
of a party to
recover in case of
favorable
judgment.
Either movable or
immovable
property
but
generally,
immovable
Always
remunerated
(onerous)
In behalf of the
person who, by
the
judgment,
has a right
EXTRAJUDIC
IAL DEPOSIT
By will of the
parties.
Hence, there
is a contract
Custody;
Safekeeping
of the thing
CHARACTERISTICS OF THE CONTRACT

1. Accessory dependent for its existence
upon the principal obligation guaranteed by it
hence if principal contract is void, then
guaranty is also void
2. Subsidiary and Conditional takes effect
only when the principal debtor fails in his
obligation subject to limitation
3. Unilateral
a. It gives rise only to a duty on the part of
the guarantor in relation to the creditor
and not vice versa
b. It may be entered into even without the
intervention of the principal debtor.
4. Distinct Person a person cannot be the
personal guarantor of himself
Only movable
property
Generally
gratuitous,
but may be
compensated
In behalf of
the depositor
or
third
person
designated
========================
==============
C. Guaranty and Suretyship
1. Nature and extent of guaranty
2. Effects of guaranty
3. Extinguishment of guaranty
4. Legal and judicial bonds
========================
==============
GUARANTY AND SURETYSHIP
(Arts. 2047-2084)
GUARANTY By guaranty, a person called the
guarantor, binds himself to the creditor, to fulfill
the obligation of the principal debtor in case the
latter should fail to do so. It is a contract between
the guarantor and the creditor.
Cause of contract of guaranty

1. Presence of cause which supports
principal obligation: Cause of the contract
is the same cause which supports the
obligation as to the principal debtor. The
consideration which supports the obligation
as to the principal debtor is a sufficient
consideration to support the obligation of a
guarantor or surety.
2. Absence of direct consideration or
benefit to guarantor: Guaranty or surety
agreement is regarded valid despite the
absence of any direct consideration received
by
the
guarantor
or
surety,
such
consideration need not pass directly to the
guarantor or surety; a consideration moving
to the principal will suffice.
MARRIED WOMAN AS GUARANTOR (Art.
2049)
General Rule: Married woman binds only her
separate property
Exceptions:
1. With her husbands consent, binds the
community or conjugal partnership property
2. Without husbands consent, in cases
provided by law, such as when the
guaranty has redounded to the benefit of the
family
GUARANTY
UNDERTAKEN
WITHOUT
KNOWLEDGE OF DEBTOR (Art. 2050)
a.
To
Rights of third persons who pay:
1. Payment without the knowledge or
against the will of the debtor:
a. Guarantor can recover only insofar as the
payment has been beneficial to the
debtor (Art. 1236)
b. Guarantor cannot compel the creditor to
subrogate him in his rights (Art. 1237)
2. Payment with knowledge or consent of
the debtor: Subrogated to all the rights
which the creditor had against the debtor
(Art. 2067)
secure the payment of a loan at

maturity guarantee of the punctual
payment of a loan at maturity and all other
obligations of indebtedness
b. To secure payment if any debt to be
subsequently incurred construed as
continuing when it is evident from the terms
that the object is to give a standing credit to
the principal debtor to be used from time to
time either indefinitely or until a certain
period, especially if the right to recall the
guaranty is expressly reserved.
Double or sub-guaranty (Art. 2051(2))

One constituted to guarantee the obligation of a
guarantor. It should not be confounded with
guaranty wherein several guarantors concur.
Guaranty of conditional obligations: A

guaranty may secure all kinds of obligations, be
they pure or subject to a suspensive or resolutory
condition.
1. Principal
obligation
subject
to
a
suspensive condition the guarantor is
liable only after the fulfillment of the
condition.
2. Principal
obligation
subject
to
a
resolutory condition the happening of
the condition extinguishes both the principal
obligation and the guaranty
GUARANTY OF VOIDABLE, UNENFORCEABLE,

AND NATURAL OBLIGATIONS (Art. 2052(2))
A guaranty may secure the performance of a:
1. Voidable contract such contract is
binding, unless it is annulled by a proper
court action
2. Unenforceable contract because such
contract is not void
3. Natural obligation the creditor may
proceed against the guarantor although he
has no right of action against the principal
debtor for the reason that the latters
obligation is not civilly enforceable.
When the debtor himself offers a
guaranty for his natural obligation, he
impliedly recognizes his liability, thereby
transforming the obligation from a
natural into a civil one.
GUARANTY OF FUTURE DEBTS (Art. 2053)
Continuing Guaranty or Suretyship:
1. Not limited to a single transaction but which
contemplates a future course of dealings,
covering a series of transactions generally for
an indefinite time or until revoked.
2. It is prospective in its operation and is
generally intended to provide security with
respect to future transactions.
3. Future debts, even if the amount is not yet
known, may be guaranteed but there can be
no claim against the guarantor until the
amount of the debt is ascertained or fixed
and demandable.
Examples:
GUARANTORS LIABILITY CANNOT EXCEED

PRINCIPAL OBLIGATION (Art. 2054)
General Rule: Guaranty is a subsidiary and
accessory contract guarantor cannot bind
himself for more than the principal debtor
If he does, his liability shall be reduced to
the limits of that of the debtor.
But the guarantor may bind himself for
less than that of the principal.
Exceptions:
1. Interest, judicial costs, and attorneys
fees as part of damages may be
recovered creditors may recover from the
surety as part of their damages the
abovementioned
fees
even
without
stipulation and even if the surety would
thereby become liable to pay more than the
total amount stipulated in the bond.
REASON: Surety is made to pay, not by
reason of the contract, but by reason of his
failure to pay when demanded and for
having compelled the creditor to resort to
the courts to obtain payment.
Interest runs from: (demand)
a.
Filing of the complaint
judicial demand); or
(upon
b.
The time demand was made upon

the surety until the principal obligation is
fully paid (upon extra-judicial demand)
2. Penalty may be provided surety may be

held liable for the penalty provided for in a
bond for violation of the condition therein.
Principals liability may exceed guarantors
obligations
The amount specified in a surety bond as the
suretys obligation does not limit the extent of
the damages that may be recovered from the
principal, the latters liability being governed by
the obligations he assumed under his contract.
GUARANTY NOT PRESUMED (Art. 2055)
Guaranty requires the expression of consent on
the part of the guarantor to be bound. It cannot
be presumed because of the existence of a
contract or principal obligation.
Guaranty Covered by the Statute of Frauds
Guaranty must not only be expressed but
must so be reduced into writing.
Hence, it shall be unenforceable by action,

unless the same or some note or
memorandum thereof be in writing, and
subscribed by the party charged, or by his
agent; evidence, therefore, of the agreement
cannot be received without the writing, or a
secondary evidence of its contents.
It need not appear in a public document.
Guaranty Strictly Construed

Strictly construed against the creditor in favor of
the guarantor and is not be extended beyond its
terms or specified limits. Doubt in the terms and
conditions of the guaranty or suretyship
agreement should be resolved in favor of the
guarantor or surety.
1. Liability for obligation stipulated
guarantor is not liable to obligations assumed
previous to the execution of the guaranty
unless an intent to be so liable is clearly
indicated
2. Liability of surety limited to a fixed
period the surety must only be bound in
the manner and to the extent, and under the
circumstances which are set forth or which
may be inferred from the contract of
guaranty or suretyship, and no further.
3. Liability of surety to expire on maturity
of principal obligation such stipulation is
unfair and unreasonable for it practically
nullifies the nature of the undertaking it had

assumed.
Remedy of surety: Foreclose the counterbond
put up by the principal debtor (if there is any)
GUARANTY DISTINGUISHED FROM
SURETYSHIP
GUARANTY
SURETYSHIP
Liability depends upon Assumes liability as a
an
independent regular party to the
agreement to pay the undertaking
obligation
if
the
primary debtor fails
to do so
Engagement
is
a Charged as an original
collateral undertaking
promisor
Secondarily liable Primarily
liable
he contracts to pay if, undertakes directly for

by the use of due the payment without
diligence, the debt reference
to
the
cannot be paid
solvency of the principal,
and is so responsible at
once the latter makes
default,
without
any
demand by the creditor
upon
the
principal
whatsoever
or
any
notice of default
Only binds himself to Undertakes to pay if the
pay if the principal principal does not pay,
cannot or is unable to without regard to his
pay
ability to do so
Insurer
of
the Insurer of the debt
solvency
of
the
debtor
Does
not
contract Pay the creditor without
that the principal qualification
if
the
will pay, but simply principal debtor does not
that he is able to do pay.
Hence,
the
so
responsibility
or
obligation assumed by
the surety is greater or
more onerous than that
of a guarantor
QUALIFICATIONS OF GUARANTOR (Arts.
2056-2057) (SIC)
1. He possesses integrity
2. He has the capacity to bind himself
3. He has sufficient property to answer for
the obligation which he guarantees
Exception:
The
creditor
waives
the
requirements
Effect of Subsequent Loss of Required
Qualifications: The qualifications need only be
present at the time of the perfection of the

contract.
The
subsequent
loss
of
the
qualifications would not extinguish the liability of
the guarantor, nor will it extinguish the contract
of guaranty.
Remedy
of
creditor:
Demand
another
guarantor with the proper qualifications
Exception: Creditor may waive it if he chooses
and hold the guarantor to his bargain.
NOTE: Art. 2058 is not applicable to a contract of

suretyship.
Article 2057:
1. Requires conviction in the first instance of a
crime involving dishonesty to have the right
to demand another.
2. Judicial declaration of insolvency is not
necessary in order for the creditor to have a
right to demand another guarantor.
Exception: The creditor may, prior thereto,

secure a judgment against the guarantor, who
shall be entitled, however, to a deferment of the
execution of said judgment against him, until
after the properties of the principal debtor shall
have been exhausted, to satisfy the latters
obligation.
Estate of Hemady v. Luzon Surety; The

supervening incapacity of a guarantor
DOES NOT terminate the guaranty for it
merely gives the creditor the OPTION to
demand another guarantor. He is not bound
to substitute the guarantor.
EXCEPTIONS
TO
THE
EXCUSSION (Art. 2059)
Selection of Guarantor:
1. Specified
person
stipulated
as
guarantor: Substitution of guarantor may
not be demanded
REASON: The selection of the guarantor is:
a. A term of the agreement;
b. As a party, the creditor is, therefore,
bound thereby.
2. Guarantor selected by the principal
debtor: Debtor answers for the integrity,
capacity, and solvency of the guarantor.
3. Guarantor personally designated by the
creditor: Responsibility of the selection
should fall upon the creditor because he
considered the guarantor to have the
qualifications for the purpose.
RIGHT OF GUARANTOR TO BENEFIT OF
EXCUSSION OR EXHAUSTION (Art. 2058)
1. Guarantor only secondarily liable
guarantor binds himself only in case the
principal debtor should fail to do so. If the
principal debtor fulfills the obligation
guaranteed, the guarantor is discharged from
any responsibility.
2. All legal remedies against the debtor to
be first exhausted to warrant recourse
against the guarantor for payment, it may
not be sufficient that the debtor appears
insolvent. Such insolvency may be simulated.
Right of Creditor to Secure Judgment

against Guarantor prior to Exhaustion
General Rule: An ordinary personal guarantor
(NOT a pledgor or mortgagor), may demand
exhaustion of all the property of the debtor
before he can be compelled to pay.
BENEFIT
OF
The guarantor is not entitled to the benefit

of excussion:
1. As provided in Art. 2059: (I-SAW-U)
a. If the guarantor has expressly waived it
Waiver
Waiver is valid but it must be made in
express terms.
b. If he has bound himself solidarily with the
debtor liability assumed that of a surety
Guarantor becomes primarily liable as
a solidary co-debtor. In effect, he
renounces in the contract itself the
benefit of exhaustion.
c. In case of insolvency of the debtor
guarantor guarantees the solvency of the
debtor
If the debtor becomes insolvent, the
liability of the guarantor as the debtor
cannot fulfill his obligation
d. When he (debtor) has absconded, or
cannot be sued within the Philippines the
creditor is not required to go after a debtor
who is hiding or cannot be sued in our
courts
Exception: Debtor has left a manager or
representative
e. If it may be presumed that a judicial action
including execution on the property of the
principal debtor would not result in the
satisfaction of the obligation if such is
the case, the guarantor can no longer

require the creditor to resort to all such
remedies against the debtor as the same
would be but a useless formality. It is not
necessary that the debtor be judicially
declared insolvent.
2. If he does not comply with Art. 2060: In
order that the guarantor may make use of
the benefit of excussion, he must:
(not in litigation or encumbered) of the debtor

within the Philippines.
DUTY OF THE CREDITOR TO RESORT TO ALL
LEGAL REMEDIES (Art. 2061)
After the guarantor has fulfilled the conditions
required for making use of the benefit of
exhaustion, it becomes the duty of the creditor
to: Exhaust all the property of the debtor pointed
out by the guarantor
a. Set it up against the creditor upon the

latters demand for payment from him;
b. Point out to the creditor:
i.
Available property of the debtor the
guarantor
should
facilitate
the
realization of the excussion since he is
the most interested in its benefit.
ii.
Within the Philippine territory
excussion of property located abroad
would be a lengthy and extremely
difficult proceeding and would not
conform with the purpose of the
guaranty to provide the creditor with
the means of obtaining the fulfillment
of the obligation.
iii.
Sufficient to cover the amount of the
debt.
If he fails to do so, he shall suffer the loss but

only to the extent of the value of the said
property, for the insolvency of the debtor.
3. If he is a judicial bondsman and subsurety (Art. 2084) because he is solidarily

liable
4. Where a pledge or mortgage has been
given by him as a special security
5. If he fails to interpose it as a defense
before judgment is rendered against him
PROCEDURE WHEN CREDITOR SUES (Art.

2062)
DUTY OF CREDITOR TO MAKE PRIOR

DEMAND FOR PAYMENT FROM GUARANTOR
(Art. 2060)
1. When demand to be made only after
judgment on the debt for obviously the
exhaustion of the principals property cannot
even begin to take place before judgment
has been obtained.
2. Actual demand to be made joining the
guarantor in the suit against the principal
debtor is not the demand intended by law.
There must be an actual demand and not
judicial demand.
DUTY OF THE GUARANTOR TO SET UP
BENEFIT OF EXCUSSION (Art. 2060)
As soon as he is required to pay, guarantor must
also point out to the creditor available property
Resort to all legal remedies includes accion

pauliana, among others.
Joinder of Guarantor and Principal as
Parties Defendant
General Rule: The guarantor, not being a joint
contractor with his principal, cannot be sued with
his principal.
Exception: Where it would serve merely to
delay the ultimate accounting of the guarantor or
if no different result would be attained if the
plaintiff were forced to institute separate actions
against the principal and the guarantors.
1. Sent against the principal The guarantor

cannot be sued with his principal, much less
alone, except in the cases mentioned in Art.
2059 where the guarantor is not entitled to
the benefit of excussion.
As a rule, the creditor may hold the
guarantor only after judgment has been
obtained against the principal debtor and
the latter is unable to pay.
2. Notice to guarantor of the action
guarantor must be notified so that he may
appear, if he so desires, and set up defenses
he may want to offer
a. Guaranty
appears
voluntary
appearance does not constitute a
renunciation of his right to excussion.
b. Guaranty does not appear
i. He cannot set up the defenses which,
by appearing are allowed to him by
law; and
ii. It may no longer be possible for him

to question the validity of the
judgment rendered against the debtor
3. Hearing before execution can be issued
against the guarantor a guarantor is
entitled to be heard before an execution can
be issued against him where he is not a party
in the case involving his principal.
EFFECTS OF COMPROMISE (Art. 2063)
Compromise a contract whereby the parties,
by making reciprocal concessions, avoid a
litigation or put an end to one already
commenced.
1. Compromise between creditor and principal
debtor benefits the guarantor but does not
prejudice him.
2. Compromise between guarantor and the
creditor benefits but does not prejudice the
principal debtor.
REASON: A compromise binds only the parties
thereto and not third persons. Thus, it cannot
prejudice the guarantor or debtor who was not
party to the compromise. But if it benefits a third
person, then the compromise may bind that third
person.
SUB-GUARANTORS RIGHT TO EXCUSSION
(Art. 2064)
Sub-guarantor enjoys the benefit of excussion
with respect to:
1. Principal debtor; and
2. Guarantor
REASON: He stands with respect to the guarantor
on the same footing as the latter does with
respect to the principal debtor.
BENEFIT OF DIVISION AMONG SEVERAL
GUARANTORS (Art. 2065)
1. In whose favor applicable - should there be
several guarantors of only one debtor and for the
same debt, the obligation to answer for the same
is divided among all.
2. Cannot be availed of if there are:
a. Two or more debtors of one debt, even if
they be bound solidarily, each with
different guarantors; or
b. Two or more guarantors of the same
debtor but for different debts
c. If any of the circumstances enumerated in
Art. 2059 should take place, as would the
benefit of exhaustion of the debtors
property.
3. Extent of liability of several guarantors

joint obligation: the obligation to answer for
the debt is divided among all of them. The
guarantors are not liable to the creditor beyond
the shares which they are respectively bound to
pay.
Exception: Solidarity has been expressly
stipulated
Benefit
of
Guarantors:
Excussion
among
Several
In order that the guarantor may be entitled to the

benefit of division, it is not required that he point
out the property of his co-guarantors.
REASON: Obligation of the guarantor with respect
to his co-guarantors is not subsidiary but direct
and does not depend as to its origin on the
solvency or insolvency of the latter.
RIGHT TO INDEMNITY OR REIMBURSEMENT
(Art. 2066) (DELT)
1. Total amount of the debt - The guarantor
has no right to demand reimbursement until
he has actually paid the debt, unless by the
terms of the contract, he is given the right
before making payment.
2. Legal interest - It is immaterial that the
debt did not earn interest for the creditor,
because the guarantors right to legal
interest is granted by law by virtue of the
payment he has made, and is independent of
the creditors right to claim interest which
was necessarily regulated by the stipulations
between him and the debtor.
3. Expenses incurred by the guarantor The expenses referred to are only those that
the guarantor has to satisfy in accordance
with law as a consequence of the guaranty.
These expenses are limited to those incurred
by the guarantor after having notified the
debtor that payment has been demanded of
him by the creditor.
Exception: The guarantor cannot demand
for reimbursement for litigation expenses,
when such expenses are due to its failure to
fulfill its obligation to pay upon demand.
(Tuason vs. Machuca, GR No. L-22177,
December 2, 1924)
4. Damages, if they are due.
Exceptions to
Reimbursement
Right
to
Indemnity
or
1.
Where the guaranty is constituted without the

knowledge or against the will of the principal
debtor, the guarantor can recover only
insofar as the payment had been beneficial to
the debtor
2. Payment by a third person who does not
intend to be reimbursed by the debtor is
deemed to be a donation, which, however,
requires the debtors consent. But the
payment is in any case valid as to the
creditor who has accepted it (Art. 1238)
3. Waiver
GUARANTORS
(Art. 2067)
RIGHT
TO
SUBROGATION
SUBROGATION
transfers
to
the
person
subrogated, the credit with all the rights thereto
appertaining either against the debtor or against
third persons, be they guarantors or possessors
of mortgages,
subject
to
stipulation
in
conventional subrogation.
1. Accrual, basis, and nature of right right
of subrogation is necessary to enable the
guarantor to enforce the indemnity given in
Art. 2066
a. Arises by operation of law upon payment
by the guarantor
b. It is not a contractual right
c. The guarantor is subrogated, by virtue of
the payment, to the right of the creditor,
not those of the debtor.
2. When right not available since
subrogation is the means of effectuating the
right of the guarantor to be reimbursed, it
cannot therefore be invoked in those cases
where the guarantor has no right to be
reimbursed.
EFFECT OF PAYMENT BY GUARANTOR
WITHOUT NOTICE TO DEBTOR (Art. 2068)
When the guarantor pays the creditor, but
debtor has already paid the latter, then
debtor can set up against the guarantor
defense of previous extinguishments of
obligation by payment.
the
the
the
the
Hence, guarantor must notify the debtor before

making payment.
REASON: The guarantor cannot be allowed,
through his own fault or negligence to prejudice
or impair the rights or interests of the debtor.
NOTE: In case of an unenforceable contract, if

the debtor consents to the guarantor paying, the
guarantor can seek reimbursement from the
debtor. If the debtor did not consent to the
guarantor paying, the guarantor cannot seek
reimbursement from the guarantor.
EFFECT OF PAYMENT BY GUARANTOR
BEFORE MATURITY (Art. 2069)
Debtors obligation with a period
demandable only when the day fixed comes.
1. The guarantor who pays before maturity is
not entitled to reimbursement since there is
no necessity for accelerating payment.
2. A contract of guaranty being subsidiary in
character, the guarantor is not liable for the
debt before it becomes due.
Exception: The debtor will be liable if the
payment was made:
a.
With his consent; or
b.
Subsequently ratified (express or
implied) by him
EFFECT OF REPEAT PAYMENT BY THE
DEBTOR (Art. 2070)
General Rule: Before the guarantor pays the
creditor, he must first notify the debtor.
If he fails to give notice and the debtor
repeats payment:
Guarantors Remedy: collect from the
creditor
No cause of action against the debtor for the
return of the amount paid by him.
In a gratuitous guaranty if guarantor was
prevented to notify because of a fortuitous
event, and creditor becomes insolvent,
debtor shall reimburse guarantor.
Exception: The guarantor may still claim
reimbursement from the debtor in spite of lack of
notice if the following conditions are present:
a.
The creditor becomes insolvent
b.
That guarantor was prevented by
a fortuitous event to advise the debtor of
the payment
c.
The guaranty is gratuitous
RIGHT
OF
GUARANTOR
TO
PROCEED
AGAINST DEBTOR BEFORE PAYMENT (Art.
2071)
General Rule: Guarantor has no cause of action
against the debtor until after the former has paid
the obligation.
Exceptions: Art. 2071 enumerates instances
when the guarantor may proceed against the
debtor even before the payment. (PAID-SIT)
1. When he is sued for the payment;

2. In case of insolvency of the principal
debtor;
3. When the debtor has bound himself to
relieve him from the guaranty within a
specified period, and this period has
expired;
4. When the debt has become demandable,
by reason of the expiration of the period
for payment;
5. After the lapse of ten years, when the
principal obligation has no fixed period for
its maturity, unless it be of such nature
that it cannot be extinguished except
within a period longer than ten years;
6. If there are reasonable grounds to fear
that the principal debtor intends to
abscond;
7. If the principal debtor is in imminent
danger of becoming insolvent.
Purpose: To enable the guarantor to take
measures for the protection of his interest in view
of the probability that he would be called upon to
pay the debt.
Remedy to which the Guarantor Entitled
The guarantor cannot demand reimbursement for
indemnity when he has not paid the obligation.
REMEDIES AVAILABLE:
1. To obtain release from the guaranty; or
2. To demand security that shall protect him
from:
a. Any proceedings by the creditor; and
b. Against the insolvency of the debtor.
Guarantors remedies are alternative. He has the
right to choose the action to bring.
Suit by Guarantor against Creditor before
Payment
The guarantors or suretys action for release can
only be exercised against the principal debtor
and not against the creditor.
REASON: The creditor cannot be compelled to
release the guarantor before payment of his
credit.
Release of the guarantor imports an
extinction of his obligation to the creditor,
connoting remission or a novation by subrogation
which requires the creditors assent.
ARTS. 2066 and 2071 Distinguished
ART. 2066
ART. 2071
(RIGHT OF
(RIGHT OF
GUARANTOR TO
GUARANTOR TO
REIMBURSEMENT
PROCEED AGAINST
AFTER PAYMENT)
DEBTOR EVEN
BEFORE PAYMENT)
Provides
for
the
enforcement of the
rights of the guarantor
against
the
debtor
after he has paid the
debt gives a right of
action after payment
Substantive right
Gives a right of action,
which,
without
the
provisions of the other
might be worthless
Provides
for
the
protection before he
has paid but after he
has become liable
gives
a
protective
remedy before payment
Preliminary remedy
Remedy given seeks to
obtain
from
the
guarantor release from
the guaranty or to
demand a security that
shall protect him from
any proceedings by the
creditor and from the
danger of insolvency of
the debtor.
Recovery of Surety against Indemnitor even
before Payment
1. Indemnity agreement for the benefit of
surety not for the benefit of the creditor
2. Indemnity agreement may be against
actual loss as well as liability such
agreement is enforceable and not violative of
any public policy
a. Indemnity against loss indemnitor
will not be liable until the person to be
indemnified makes payment or sustains
loss
b. Indemnity
against
liability
indemnitors liability arises as soon as the

liability of the person to be indemnified
has arisen without regard to whether or
not he has suffered actual loss
c. Such agreement valid - A stipulation in
an indemnity agreement providing that
the indemnitor shall pay the surety as
soon as the latter becomes liable to make
payment to the creditor under the terms
of the bond, regardless of whether the
surety has made payment actually or not,
is valid and enforceable, and in
accordance therewith, the surety may
demand from the indemnitor even before
the creditor has paid.
Where
the
principal
debtors
are
simultaneously the same persons who
executed the indemnity agreement, the
position occupied by them is that of a
principal debtor and indemnitor at the
same, and their liability being joint and
several.
GUARANTOR OF A THIRD PERSON AT

REQUEST OF ANOTHER (Art. 2072)
The guarantor who guarantees the debt of an
absentee at the request of another has a right to
claim reimbursement, after satisfying the debt
from:
1. The person who requested him to be a
guarantor;
2. The debtor
DEFENSES AVAILABLE TO CO-GUARANTORS

(Art. 2074)
RIGHTS OF THE GUARANTOR AGAINST THE

DEBTOR (BRIB)
1. Indemnification
2. Benefit of Subrogation
3. Benefit of Compromise
4. Right to obtain or demand a security under
Art. 2071
LIABILITY OF SUB-GUARANTOR IN CASE OF

INSOLVENCY OF GUARANTOR (Art. 2075)
BETWEEN CO-GUARANTORS
RIGHT TO CONTRIBUTION OF GUARANTOR
WHO PAYS
(Art. 2073)
Presumption of joint liability of several
guarantors when there are:
1. Two or more guarantors
2. Same debtor
3. Same debt
Effect: Each is bound
proportionate share.
to
pay
only
his
When Art. 2073 Applicable:

1. When one guarantor has paid the debt to
the creditor;
2. Payment by such guarantor must have
been made:
a. By virtue of a judicial demand (benefit
of division must have ceased); or
b. Because the principal debtor is
insolvent;
3. Guarantor
who
paid
is
seeking
reimbursement from each of his coguarantors
the
share
which
is
proportionately owing him.
Effect of Insolvency of Any Guarantor:
Follows the rule on solidary obligations: The
share of the insolvent guarantor shall be borne
by the others including the paying guarantor in
the same joint proportion.
Accrual and Basis of Right:
The right of reimbursement is acquired ipso jure
without need of any prior cession from the
creditor by the guarantor.
General Rule: All defenses which the debtor

would have interposed against the creditor (i.e.
fraud, prescription, remission, illegality, etc.).
Exception: Those which cannot be transmitted
for being purely personal to the debtor.
Sub-guarantor is liable to the co-guarantors in

the same manner as the guarantor whom he
guaranteed in case of the insolvency of the
guarantor for whom he bound himself as subguarantor.
CAUSES
OF
EXTINGUISHMENT
GUARANTY (Art. 2076) (PL3CN-ARFP)
OF
General Rule: Guaranty being accessory, it is

extinguished when principal obligation is
extinguished, the causes of which are:
1. Payment or performance;
2. Loss of the thing due;
3. Condonation or remission of the debt;
4. Confusion or merger of the rights of the
creditor and debtor;
5. Compensation; and
6. Novation
7. Other causes:
a. Annulment;
b. Rescission;
c. Fulfillment of a resolutory condition;
d. Prescription
Exception: The guaranty itself may be directly
extinguished although the principal obligation
still remains such as in the case of the release
of the guarantor made by the creditor.
Material Alteration of Principal Contract
any agreement between the creditor and the
principal debtor which essentially varies the
terms of the principal contract without the
consent of the surety, will release the surety from
liability.
Such material alteration would constitute a
novation or change of the principal contract,
which is consequently extinguished. Upon such
extinguishments, the accessory contract to
guaranty is also terminated and the guarantor
cannot be held liable on the new contract to
which he has not given his consent.
When Alteration Material where such

change will have the effect of making the
obligation more onerous.
1. Imposes a new obligation or added burden on
the party promising; or
2. Takes away some obligation already imposed,
changing the legal effect of the original
contract and not merely the form thereof.
RELEASE BY CONVEYANCE OF PROPERTY
(Art. 2077)
General Rule: Payment is made in money.
Exception: Any substitute paid in lieu of money
which is accepted by the creditor extinguishes
the obligation and in consequence, the guaranty.
If the creditor accepts property in payment

of a debt from the debtor, the guarantor is
relieved from responsibility. This is also true
even in case the creditor is subsequently
evicted from the property.
In case of eviction: Eviction revives

principal obligation but not the guaranty.
the
REASON: The creditors action against the debtor

is for eviction and this is different from what the
guarantor guaranteed.
RELEASE
OF
GUARANTOR
CONSENT OF OTHERS (Art. 2078)
WITHOUT
a.
a.
a.
a.
Prejudicial or not or
b. For a long or short period of time
Consent of the guarantor is a must!
Extension must be based on some new
agreement between the creditor and the
principal debtor by virtue of which the creditor
deprives him of his claim.
1. Where
obligation
payable
in
installments: where a guarantor is liable for
different payments:
General Rule: An extension of time to one
or more will not affect the liability of the
surety for the others.
Exception: When the unpaid balance has
become automatically due by virtue of an
acceleration clause for failure to pay an
installment.
Effect of exception: The act of the creditor
extending the payment of said installment,
without the guarantors consent, discharges the
guarantor.
REASON: The extension constitutes an extension
of the payment of the whole amount of the
indebtedness
EFFECT: The release benefits all to the extent of

the share of the guarantor released.
2. Where consent to an extension is

waived in advance by the guarantor:
Such waiver is not contrary to law, nor to
public policy
REASON: A release made by the creditor in favor

of one of the guarantors without the consent of
the others may prejudice the others should a
guarantor become insolvent.
Effect: Amounts to the suretys consent to all

the extensions granted.
RELEASE BY EXTENSION OF TERM GRANTED

BY CREDITOR TO DEBTOR (Art. 2079)
Release Without Consent of Guarantor:
Creditor grants an extension of time to the
debtor without the consent of the guarantor.
EFFECT: Guarantor
undertaking.
is
discharged
from
his
REASON: To avoid prejudice to the guarantor

The debtor may become insolvent during the
extension, thus depriving the guarantor of his
right to reimbursement.
It doesnt matter if the extension is:
NOTE: The mere failure or neglect on the part of

the creditor to enforce payment or to bring an
action upon a credit, as soon as the same or any
part of it matures, does not constitute an
extension of the term of the obligation, and
therefore, the liability of the guarantor is not
extinguished.
In order to constitute an extension
discharging a surety, it should appear that
the extension was: (DEW)
1. For a Definite period
2. Pursuant to an Enforceable agreement
between the principal and the creditor
3. Made Without the consent of the surety or
with a reservation of rights with respect to
him.
The contract must be one which precludes

the creditor from, or at least hinders him in,
enforcing the principal contract within the
period during which he could otherwise have
enforced it, and precludes the surety from
paying the debt.
The law does not even grant the surety the

right to sue the creditor for delay, as
protection against the risks of possible
insolvency of the debtor; but in view of the
efficacy of the action on the contract against
the surety, beginning with the date the
obligation becomes due, his vigilance must
be exercised rather against the principal
debtor.
RELEASE WHEN GUARANTOR CANNOT BE

SUBROGATED (Art. 2080)
If there can be no subrogation because of the

fault of the creditor, the guarantors are
thereby released, even if the guarantors are
solidary.
If the creditor has acquired a lien upon the
property of a principal, the creditor at once
becomes charged with the duty of retaining
such security, or maintaining such lien in the
interest of the surety, and any release or
impairment of this security as a primary
resource of payment of a debt, will discharge
the surety to the extent of the value of the
property
or
lien
released
for
there
immediately arises a trust relation between
the parties, and the creditor as trustee is
bound to account to the surety for the value
of the security in his hands.
REASON: The act of one cannot prejudice

another. It also avoids collusion between the
creditor and the debtor or a third person.
DEFENSES
AVAILABLE
TO
GUARANTOR
AGAINST CREDITOR (Art. 2081)
General Rule: All defenses, which pertain to the
principal debtor and are inherent in the debt.
Exception: Those which are purely personal to
the debtor.
obligation and another person (surety) is also

under a direct and primary obligation or other
duty to the obligee, who is entitled to but one
performance, and as between the two who are
bound, the second, rather than the first should
perform.
If a person binds himself solidarily with the
principal debtor, the contract is called
suretyship and the guarantor is called a
surety.
NATURE OF SURETYS UNDERTAKING
1. Liability is contractual and accessory but
direct:
2. Liability is limited by terms of contract
3. Liability arises only if principal debtor is
held liable
a. In the absence of collusion, the surety is
bound by a judgment against the
principal event though he was not a party
to the proceedings;
b. The creditor may sue, separately or
together, the principal debtor and the
surety;
c. A demand or notice of default is not
required to fix the suretys liability
EXCEPTION: Where required by the
provisions of the contract of suretyship
d. A surety bond is void where there is no
principal debtor because such an
undertaking
presupposes
that
the
obligation is to be enforceable against
someone else besides the surety, and the
latter can always claim that it was never
his intention to be the sole person
obligated thereby.
NOTE: Surety is not entitled to
exhaustion
4. Undertaking is to creditor, not to debtor:
The suretys undertaking is that the principal
shall fulfill his obligation and that the surety
shall be relieved of liability when the
obligation secured is performed.
EXCEPTION: Unless otherwise expressly
provided.
NOTE: Surety is not entitled
principals default
to notice
of
SURETYSHIP
5. Prior demand by the creditor upon

principal not required: Surety is not
exonerated by neglect of creditor to sue
principal
SURETYSHIP is a relation which exists where

one person (principal) has undertaken an
Strictissimi Juris Rule Applicable Only to

Accommodation Surety
NOTE: Art 2081 does not cover a surety.
REASON: An accommodation surety acts

without motive of pecuniary gain and hence,
--should be protected against unjust pecuniary
impoverishment by imposing on the principal,
duties akin to those of a fiduciary.
This rule will apply only after it has been
definitely ascertained that the contract is one of
suretyship or guaranty.
Strictissimi Juris Rule Not Applicable to
Compensated Sureties
REASONS:
1. Compensated corporate sureties are business
association organized for the purpose of
assuming classified risks in large numbers,
for profit and on an impersonal basis.
2. They are secured from all possible loss by
adequate
counter-bonds
or
indemnity
agreements.
3. Such corporations are in fact insurers and in
determining their rights and liabilities, the
rules peculiar to suretyship do not apply.
Effect of negligence of creditor: Mere

negligence on the part of the creditor in
collecting from the debtor will not relieve the
surety from liability.
========================
==============
D. Pledge
1. Definition
2. Kinds
3. Essential requirements
4. Obligation of pledge
5. Rights of pledgor
6. Perfection (Arts. 2093, 2096)
7. Foreclosure (Arts. 2112, 2115)
8. Pledge by operation of law (Art.
2121-2122)
9. Distinguished from chattel
mortgage (Arts. 2140, 1484)
========================
==============
LEGAL AND JUDICIAL BONDS
PROVISIONS COMMON TO PLEDGE AND

MORTGAGE (Arts. 2085-2123)
MEANING AND FORM OF BOND (Art. 2082)

Bond an undertaking that is sufficiently
secured, and not cash or currency
Bondsman a surety offered in virtue of a
provision of law or a judicial order.
Qualifications of personal bondsman: (SIC)
1. He possesses integrity;
2. He has the capacity to bind himself;
3. He has sufficient property to answer for the
obligation which he guarantees.
PLEDGE OR MORTGAGE IN LIEU OF BOND
(Art. 2083)
Guaranty or suretyship is a personal security.
Pledge or mortgage is a property or real security.
If the person required to give a legal or judicial
bond should not be able to do so, a pledge or
mortgage sufficient to cover the obligation shall
be admitted in lieu thereof.
BONDSMAN NOT ENTITLED TO EXCUSSION
(Art. 2084)
A judicial bondsman and the sub-surety are not
entitled to the benefit of excussion.
REASON: They are not mere guarantors, but
sureties whose liability is primary and solidary.
1.
2.
3.
4.
5.
6.
Essential Requisites to Contracts of

Pledge and Mortgage: (FARCAS)
Constituted to secure the fulfillment of a
Pledgor or mortgagor be the absolute
owner of the thing pledged or mortgaged
The persons constituting the pledge or
mortgage have the free disposal of their
property, and in the absence thereof, that
they be legally authorized for the purpose
Cannot exist without a valid obligation
Debtor retains the ownership of the thing
given as a security
When the principal obligation becomes due,
the thing in which the pledge or mortgage
consists may be alienated for the
payment to the creditor.
Important Points
1. Future property cannot be pledged or
mortgaged
2. Pledge/mortgage executed by one who is not
the owner of the property pledged or
mortgaged is without legal existence and
registration cannot validate it.
3. Mortgage of a conjugal property by one of the
spouses is valid only as to of the entire
property
4.
In
5.
6.
7.
8.
9.
case of property covered by Torrens title, a

mortgagee has the right to rely upon what
appears in the certificate of title and does not
have to inquire further.
Pledgor or mortgagor has free disposal of
property
Thing pledged or mortgaged
may be
alienated.
Creditor not required to sue to enforce his
credit
Pledgor or mortgagor may be third person
The liability of an accommodation pledgor or
mortgagor extends only to the property
pledged or mortgaged.
PLEDGE
Constituted
on
movables
Property is delivered
to the pledgee, or by
common consent to a
3rd person
Not valid against 3rd
persons
unless
a
description of the
thing pledged and
the
date
of
the
pledge appear in a
public instrument
MORTGAGE
Constituted on
immovables
Delivery not necessary
Not valid against 3rd

persons if not
registered
Right of Creditor where Debtor fails to

Comply with his Obligation
1. Creditor is merely entitled to move for the
sale of the thing pledged or mortgaged with
the formalities required by law in order to
collect
2. Creditor cannot appropriate to himself the
thing nor can he dispose of the same as
owner.
Prohibition against pactum commissorium
Stipulation is null and void - stipulation
where thing pledged or mortgaged shall
automatically become the property of the
creditor in the event of nonpayment of the
debt within the term fixed
Requisites of pactum commissorium:

a. There should be a pledge or mortgage
b. There should be a stipulation for an
automatic appropriation by the creditor of
the property in the event of nonpayment
Effect on Security Contract
Nullity of the stipulation does not affect
validity and efficacy of the principal contract
Important Points
1. Debtor -owner bears the risk of loss of the
property
2. Pledge or mortgage is indivisible
Exceptions to the rule of indivisibility:
a.
Where each one of several things
guarantees determinate portion of credit
b.
Where only portion of loan was
released
Example: X borrowed 80k from the bank
and he mortgaged his 100 ha. property.
Lender was only able to release 40k due
to CB restrictions. The Court held that the
bank can only foreclose on 50% of the
mortgaged land (50 ha.) Central Bank v.
CA, [139 SCRA 46]
c.
Where there was failure of
consideration
3. The rule that real property, consisting of
several lots should be sold separately,
applies to sales in execution, and not to
foreclosure of mortgages
4. The mere embodiment of a real estate
mortgage and a chattel mortgage in one
document does not have the effect of fusing
both securities into an indivisible whole
5. Contract of pledge or mortgage may secure
all kinds of obligation, be they pure or subject
to a suspensive or resolutory condition
6. A promise to constitute pledge or mortgage
gives rise only to a personal right binding
upon the parties and creates no real right in
the property. What exists is only a right of
action to compel the fulfillment of the
promise, but there is no pledge or mortgage
yet.
7. Under RPC, estafa is committed by a person
who, pretending to be the owner of any real
property, shall convey, sell, encumber or
mortgage the same knowing that the real
property is encumbered shall dispose of the
same as unencumbered. It is essential that
fraud or deceit be practiced upon the vendee
at the time of the sale.
PLEDGE (Arts. 2093-2123)
PLEDGE is a contract by virtue of which the
debtor delivers to the creditor or to a third
person a movable or document evidencing
incorporeal rights for the purpose of securing the
fulfillment of a principal obligation with the
understanding that when the obligation is
fulfilled, the thing delivered shall be returned
with all its fruits and accessions.
6.
Kinds of Pledge:
1. Voluntary or conventional - created by
agreement of the parties
2. Legal - created by operation of law
Contract of pledge gives the creditor the right to

retain the thing in his possession or in that of
a third person to whom it has been delivered,
until the debt is paid
Characteristics of Pledge:
1. Real - perfected by delivery
2. Accessory - has no independent existence of
its own
3. Unilateral - creates obligation solely on the
part of the creditor to return the thing subject
upon the fulfillment of the principal obligation
4. Subsidiary - obligation incurred does not
arise until the fulfillment of the principal
obligation
7. Creditor :
a. Shall take care of the thing pledged with
the diligence of a good father of a family
Cause or Consideration in Pledge

1. Principal obligation in so far as the
pledgor is concerned
2. Compensation stipulated for the pledge
or mere liberality of the pledgor- if
pledgor is not the debtor
PROVISIONS APPLICABLE ONLY TO PLEDGE
1. Transfer of possession to the creditor or to
third person by common agreement is
essential in pledge
a. ACTUAL DELIVERY is important
b.
CONSTRUCTIVE delivery or symbolic
delivery of the key to the warehouse is
sufficient to show that the depositary
appointed by common consent of the
parties was legally placed in possession.
b. Has the right to the reimbursement of the

expenses made for its preservation and is
liable
for its loss or deterioration by
reason of fraud, negligence, delay or
violation of the terms of the contract, and
not due to fortuitous event
c.
May bring the actions which pertain to

the owner of the thing in order to recover
it from, or defend it against a 3rd person
d. Cannot use the thing without the

authority of the owner, and if he should
do so, or misuse the thing, the owner
may ask that it be judicially or
extrajudicially deposited
e. May use the thing if it is necessary for the
preservation of the thing (e.g. car has to
be driven once in a while)
f.
May either claim another thing in pledge

or demand immediate payment of the
principal obligation if he is deceived on
the substance or quality of the thing
2. All movables within commerce of men may

be pledged as long as susceptible of
possession
8. Pledgee:
a. Take care of the thing with diligence of a
good father of a family.
3. Incorporeal right may be pledged. The

instruments pledged shall be delivered to the
creditor and if negotiable, must be indorsed.
b. Cannot deposit the thing pledged with a

third person, unless there is a stipulation
authorizing him to do so
4. Pledge shall take effect against 3rd persons

only if the ff appears in a public instrument:
a. Description of the thing pledged
b. Date of the pledge
c.
5. Thing pledged may be alienated by the

pledgor or owner only if with the consent of
the pledgee. Ownership of the thing pledged
is transmitted to the vendee or transferee as
soon as the pledgee consents to the
alienation, but the latter shall continue in
possession
Is responsible for the acts of his agents or

employees with respect to the thing
pledged
d. Has no right to use the thing or to

appropriate the fruits without the
authority of the owner
e. May cause public sale of the thing
pledged if, without fault on his part, there
is danger of destruction, impairment or
diminution in value of the thing. The
proceeds of the auction shall be a
security for the principal obligation.
9.
1.
Pledgor:
a. Has the responsibility for flaws of the
thing pledged.
b. Cannot ask for the return of the thing
against the will of the creditor, unless and
until he has paid the debt and its interest,
with expenses in a proper case
c.
Is allowed to substitute the thing which is

in danger of destruction or impairment
without any fault on the part of the
pledgee, with another thing of the same
kind and quality
d. May require that the thing be deposited

with a 3rd person if through the
negligence or willful act of the pledgee
the thing is in danger of being lost or
impaired
EXTINGUISHMENT OF PLEDGE (R2P23A)
1. If the thing pledged is returned by the
pledgee to the pledgor or owner, pledge is
extinguished.
2. A statement in writing by the pledgee that he
renounces or abandons the pledge is
sufficient to extinguish it. For this purpose,
neither the acceptance by the pledgor or
owner, nor the return of the thing pledged is
necessary,
the
pledgee
becoming
a
depositary.
3. If subsequent to the perfection of the pledge,
the thing is in the possession of the pledgor
or owner, there is prima facie presumption
that the thing has been returned by the
pledgee.
4. If the thing is in the possession of 3rd person
who has received it from the pledgor or
owner after the constitution of the pledge,
there is prima facie presumption that the
thing has been returned by the pledgee
5. Payment of the debt
6. Sale of the thing pledged at public auction
Formalities required in sale by a creditor if
credit not paid in due time:
1. The debt is due and unpaid
2. The sale must be at a public auction
3. There must be notice to the pledgor and
owner, stating the amount due, and
4. The sale must be made with the intervention
of a notary public
EFFECT OF THE SALE OF THE THING
PLEDGED
Extinguishes the principal obligation whether

the price of the sale is more or less than the
amount due
2. If the price is more than amount due, the
debtor is not entitled to the excess unless
the contrary is provided
3. If the price of the sale is less, neither is the
creditor entitled to recover the deficiency.
Contrary stipulation is void.
Legal Pledges
1. Necessary expenses shall be refunded to
every possessor, but only possessor in good
faith may retain the thing until he has been
reimbursed
Useful expenses shall be refunded only to the
possessor in good faith with the same right of
retention, the person who has defeated him in
the possession having the option of refunding
the amount of the expenses or of paying the
increase in value which the thing may have
acquired and by reason thereof. (Art. 546)
2. He who has executed work upon a movable
has a right to retain it by way of pledge until
he is paid. (Art. 1731)
3. The agent may retain the things which are
the objects of agency until the principal
effects the reimbursement and pays the
indemnity. (Art. 1914)
4. The laborers wages shall be a lien on the
goods manufactured or the work done. (Art.
1707)
Special
Laws
apply
to
pawnshops
and
establishments which are engaged in making
loans secured by pledges. Provisions of the Civil
Code shall apply subsidiarily.
========================
==============
E. Real Mortgage
1. Definition and characteristics
2. Essential requisites
3. Foreclosure
========================
==============
MORTGAGE
REAL MORTGAGE (Arts. 2124-2131) is a

contract whereby the debtor secures to the
creditor the fulfillment of a principal obligation,
specially subjecting to such security immovable
property or real rights over immovable property
in case the principal obligation is not complied
with at the time stipulated.
OBJECTS OF REAL MORTGAGE:
1. Immovables
2. Alienable real rights in accordance with the
laws, imposed upon immovables.
General Rule: Future property cannot be
object of mortgage
Exception:
(AFTER-ACQUIRED
PROPERTIES) A stipulation subjecting to the
mortgage lien, improvements which the
mortgagor may subsequently acquire, install,
or use in connection with the real property
already
mortgaged
belonging
to
the
mortgagor is valid Peoples Bank and Trust
Co. v. Dahican Lumber Co., [20 SCRA 84
(1967)]
Example: X owns a factory. In that factory, he
installed a machine and subsequently
mortgaged it. The parties may validly
stipulate that if the original machine is
replaced, the replacement shall be subject to
the mortgage. The reason for this is that
after-acquired properties are understood to
be replacements, as the original machine
may be subject to wear and tear.
Important Points
1. As a general rule, the mortgagor retains
possession of the property. He may deliver
said property to the mortgagee without
altering the nature of the contract of
mortgage.
2. It is not an essential requisite that the
principal of the mortgage credit bears
interest, or that the interest as compensation
for the use of the principal and the enjoyment
of its fruits be in the form of a certain percent
thereof.
Kinds of Mortgage:
1. Voluntary
2. Legal
3. Equitable one which, although it lacks the
proper formalities of a mortgage shows the
intention of the parties to make the property as a
security for a debt (governed by Arts. 1365,
1450, 1454, 1602, 1603, 1604 and 1607)
ESSENTIAL REQUISITES OF MORTGAGE:

(FADVAP)
1. Constituted to secure the fulfillment of a
2. Mortgagor be the absolute owner of the thing
pledged or mortgaged
3. Mortgagor has free disposal of the property,
and in the absence thereof, that he be legally
authorized for the purpose
4. Cannot exist without a valid obligation
5. When the principal obligation becomes due,
the thing in which the mortgage consists may
be alienated for the payment to the creditor.
6. Appears in a public document duly recorded
in the Registry of Property to be validly
constituted
If the instrument is not recorded, the
mortgage
is
nevertheless
binding
LEGAL MORTGAGE: the persons in whose favor
the law establishes a mortgage have no other
right than to demand the execution and the
recording of the document in which the mortgage
is formalized.
1.
2.
3.
4.
5.
INCIDENTS OF REGISTRATION OF
MORTGAGE
Mortgagee
entitled
to
registration
of
mortgage as a matter of right
Proceedings for registration do not determine
validity of mortgage or its effect
Registration is without prejudice to better
right of third parties
Mortgage deed once duly registered forms
part of the records for the registration of the
property mortgaged
Mortgage by surviving spouse of his/her
undivided share of conjugal property can be
registered
Effect of Invalidity of Mortgage on principal

obligation
1. Principal obligation remains valid
2. Mortgage deed remains as evidence of a
personal obligation
Effect of Mortgage
1. Creates right in rem or real rights. A lien
inseparable from the property mortgaged,
enforceable against the whole world as long
as it is registered. If not registered the
third party must know of the mortgage.
2. Creates merely an encumbrance. The law
considers void any stipulation forbidding the
owner from alienating the immovable
mortgaged (Art. 2130).
The mortgagors default does not operate

to vest in the mortgagee the ownership of
the encumbered property.
His failure to redeem the property does
not automatically vest ownership of the
property to the mortgagee.
EXTENT OF MORTGAGE (AIGRiPE)

A real estate mortgage constituted on immovable
property is not limited to the property itself but
also extends to its:
1. Accessions
2. Improvements
3. Growing fruits
4. Rents or income
5. Proceeds of insurance should the property be
destroyed
6.Expropriation value of the property should it be
expropriated.
obtain the consent of the debtor. Alienation of

the mortgage credit is valid even if it is not
registered. Registration is necessary only to
affect third persons.
Laws
1.
2.
3.
4.
Foreclosure of Mortgage is the remedy

available to the mortgagee by which he subjects
the mortgaged property to the satisfaction of the
obligation to secure which the mortgage was
given.
To exclude them, it is necessary that there be

an express stipulation to that effect.
But if the mortgaged estate passes into the
hands of a third person, the mortgage does not
extend to any machinery, object, chattel or
construction which he may have brought or
placed there and which such third person may
remove whenever it is convenient for him to do
so.
MORTGAGE
TO
SECURE
FUTURE
ADVANCEMENTS (BLANKET OR DRAGNET
CLAUSE)
Blanket/Dragnet Clause - one which is specifically
phrased to subsume all debts of past or future
origin.
General Rule: There must be a stipulation for
the inclusion of future advancements.
Mortgage with a dragnet clause enable the
parties to provide continuous dealings, the
nature or extent of which may not be known or
anticipated at the time, and they avoid the
expense and inconvenience of executing a new
security on each new transaction.
A mortgage given to secure future advancements
is a continuing security and is not discharged
by the repayment of the amount named in the
mortgage, until the full amount of the
advancements is paid.
ALIENATION
OR
ASSIGNMENT
OF
MORTGAGE CREDIT
The mortgage credit is a real right which may be
alienated by the mortgagee without need to
Governing Mortgage
New Civil Code
P.D. 1952
Revised Administrative Code
R.A. 4882, as regards aliens becoming
mortgages
A foreclosure sale retroacts to the date of

registration of the mortgage and that a
person who takes a mortgage in good faith
and for valuable consideration, the record
showing clear title to the mortgagor, will be
protected against equitable claims on the
title in favor of third persons of which he had
no actual or constructive notice St. Dominic
Corporation v. IAC, 151 SCRA 577 (1987)
Mere inadequacy of the price obtained at the
sheriffs sale will not be sufficient to set aside
the sale unless the price is so inadequate as
to shock the conscience of the court taking
into consideration the peculiar circumstances
attendant thereto. Sulit v. CA, 268 SCRA
441 (1997)
The action to recover a deficiency after
foreclosure prescribes after 10 years from the
time the right of action accrues (Arts. 1142 &
1144)
JUDICIAL FORECLOSURE (governed by Rule 68

of Rules of Court): (J-PACE-PC)
1. Judicial action for the purpose in the proper
court which has jurisdiction over the area
wherein the real property involved or a
portion thereof is situated
2. Court order to mortgagor to pay mortgage
debt with interest and other charges within a
period of not less than 90 days nor more than
120 days from the entry of judgment
3. Sale to the highest bidder at public auction,
should the mortgagor fail to pay at the time
directed.
Confirmation of sale, which operates to divest
the rights of all parties in the action and to vest
their rights to the purchase, subject to the right
of
redemption allowed by law

4. Execution of judgment
5. Application of proceeds of sale to:
a. Costs of the sale;
b. Amount due the mortgagee;
c. Claims of junior encumbrancers or
persons holding subsequent mortgages in
the order of their priority; and
d. The balance, if any shall be paid to the
mortgagor
6. Sheriffs
certificate
is
executed,
acknowledged and recorded to complete the
foreclosure
Nature of Judicial Foreclosure Proceedings
1. Quasi in rem action
2. Foreclosure is only the result or incident of
the failure to pay debt
3. Survives death of mortgagor
EXTRAJUDICIAL FORECLOSURE (governed by
Act No. 3135, as amended)
1. Express authority to sell is given to the
mortgagee
2. Authority is not extinguished by death of
mortgagor or mortgagee
3. Public sale should be made after proper
notice (posting and publication)
4. Surplus proceeds of foreclosure sale belong
to the mortgagor or his assigns
5. Debtor has the right to redeem the property
sold within 1 year from and after the date of
sale
6. Remedy of party aggrieved by foreclosure is
a petition to set aside sale and cancellation of
writ of possession
7. Republication is necessary for the validity of
a postponed foreclosure sale (parties have no
right to waive the publication requirement)
Procedure for Extrajudicial Foreclosure of
Real Estate Mortgage (Act No. 3135 )
&
Chattel Mortgage
(Act No. 1508, A.M. N0. 99-10-05-0; January
15, 2000)
(ARC-DIN-REA)
1. Filing of application before the Executive
Judge through the Clerk of Court
2. Clerk of Court will examine whether the
requirements of the law have been complied
with, that is, whether the notice of sale has
been posted for not less than 20 days in at

least 3 public places of the municipality or
city where the property is situated, and if the
same is worth more than P400.00, that such
notice has been published once a week for at
least 3 consecutive weeks in a newspaper of
general circulation in the city or municipality
3. The certificate of sale must be approved by
the Executive Judge
4. In extrajudicial foreclosure of real mortgages
in
different
locations
covering
one
indebtedness,
only
one
filing
fee
corresponding to such debt shall be collected
5. The Clerk of Court shall issue certificate of
payment
indicating
the
amount
of
indebtedness, the filing fees collected, the
mortgages sought to be foreclosed, the
description of the real estates and their
respective locations
6. The notice of sale shall be published in a
newspaper of general circulation
7. The application shall be raffled among all
sheriffs
8. After the redemption period has expired, the
Clerk of Court shall archive the records
9. No auction sale shall be held unless there are
at least 2 participating bidders, otherwise the
sale shall be postponed to another date. If on
the new date there shall not be at least 2
bidders, the sale shall then proceed. The
names of the bidders shall be reported by the
Sheriff or the Notary Public who conducted
the sale to the Clerk of Court before the
issuance of the certificate of sale
Right of mortgagee to recover deficiency
1. Mortgagee is entitled to recover deficiency
2. If the deficiency is embodied in a judgment, it
is referred to as deficiency judgment
3. Action for recovery of deficiency may be filed
even during redemption period
4. Action to recover prescribes after 10 years
from the time the right of action accrues
Nature of power of foreclosure by
extrajudicial sale
1. Conferred for mortgagees protection
2. An ancillary stipulation supported by the
same cause or consideration for the
mortgage
3.
A
prerogative of the mortgagee
Stipulation of Upset Price or tipo
A stipulation of minimum price at which the
property shall be sold to become operative in the
event of a foreclosure sale at public auction is
NULL and VOID
Effect of inadequacy of price in foreclosure
sale
1. Where there is right to redeem
General Rule:
Inadequacy of price is
immaterial because the judgment debtor
may redeem the property
Exception: The price is so inadequate as to
shock the conscience of the court taking into
consideration the peculiar circumstances
2. Property may be sold for less than its fair
market value upon the theory that the lesser
the price the easier for the owner to redeem
3. The value of the mortgaged property has no
bearing on the bid price at the public auction,
provided that the public auction was regularly
and honestly conducted
Waiver of security by creditor
1. Mortgagee may waive right to foreclose his
mortgage and maintain a personal action for
recovery of the indebtedness
2. Remedies are alternative, not cumulative.
3. Options in case the debtor dies:
a.
To waive mortgage and claim
entire debt from the mortgagors estate
as an ordinary claim
b. To judicially foreclose mortgage and prove
any deficiency
c. To rely on the mortgage exclusively
without filing a claim for deficiency
NOTE: Foreclosure retroacts to the date of
registration of mortgage
REDEMPTION is a transaction by which the
mortgagor reacquires or buys back the property
which may have passed under the mortgage or
divests the property of the lien which the
mortgage may have created.
KINDS OF REDEMPTION
1. Equity of redemption: right of the
mortgagor to redeem the mortgaged
property after his default in the performance
of the conditions of the mortgage but before
confirmation of the sale.
a.
Applies to judicial foreclosure of

real mortgage and chattel mortgage
foreclosure
b.
A second mortgagee acquires only
the equity of redemption vested in the
mortgagor, and his rights are strictly
subordinate to the superior lien of the
first mortgagee.
NOTE:
Redemption
of
the
banking
institutions is allowed within 1 year from
confirmation of sale
2. Right of redemption: right of the
mortgagor to redeem the property within a
certain period after it was sold for the
satisfaction of the debt
a.
Applies
only
to
extrajudicial
foreclosure of real mortgage
NOTE: The right of redemption, as long as within
the period prescribed, may be exercised
irrespective of whether or not the mortgagee has
subsequently conveyed the property to some
other party Sta. Ignacia Rural Bank, Inc. v.
CA, 230 SCRA 513 (1994)
A sale by the mortgagor to a third party of the
mortgaged property during the period of
redemption transfers only the right to redeem
the property and the right to possess, use, and
enjoy the same during the period. The judgment
debtor remains in possession of the property
foreclosed and sold during the period of
redemption, but he cannot make a conveyance of
the ownership of the property, since it belongs to
the purchaser at the foreclosure sale Dizon v.
Gaborro, 83 SCRA 688 (1978)
PERIOD OF REDEMPTION
Extra-judicial (Act No. 3135)
a. Natural person 1 year from registration
of the certificate of sale with Registry of
Deeds
b. Juridical person same rule as natural
person
c. Juridical person (mortgagee is bank) 3
months after foreclosure or before
registration of certificate of foreclosure
whichever is earlier (Sec. 117 of General
Banking Law)
Judicial before confirmation of the sale by the
court
Periods of
redemption
Mortgage:
Judicial
Foreclosure
BANKS
NONBANK
Extrajudicial
Foreclosure
BANKS
NONBANKS
Individual
debtors/mortga
gors
1 year
from
registrati
on of
sale
Juridical persons
as
debtors/mortga
gors
1 year
from
registrati
on of
sale
1 year
from
registrati
on of
sale
1 year
from
registrati
on of
sale
Until
registrati
on of
certificat
e of sale
or 3
months
from sale
whichev
er is
earlier
1 year
from
registrati
on of
sale
NOTE: Allowing redemption after the lapse of the

statutory period when the buyer at the
foreclosure sale does not object but even
consents to the redemption, will uphold the
policy of the law which is to aid rather than
defeat the right of redemption Ramirez v. CA,
219 SCRA 598 (1993)
AMOUNT OF THE REDEMPTION PRICE:
1. Mortgagee is not a bank (Act No. 3135 in
relation to Sec. 28, Rule 39 of Rules of Court)
a. Purchase price of the property
b. 1% interest per month on the purchase
price
c. Taxes paid and amount of purchasers
prior lien, if any, with the same rate of
interest computed from the date of
registration of sale, up to the time of
redemption
2. Mortgagee is a bank (GBL 2000)
a.
Amount due under the mortgage deed
b.
Interest
c.
Cost and expenses
NOTE: Redemption price in this case is
reduced by the income received from the
property
Junior Mortgagees
1.
After
the
foreclosure sale, there remains in the second
mortgagee a mere right of redemption. His
remedy is limited to the right to redeem by
paying off the debt secured by the first
mortgage.
2. He is entitled to the payment of his credit the
excess of the proceeds of the auction sale.
3. In case the credit of the first mortgagee has
absorbed the entire proceeds of the sale, the
second mortgage is extinguished, since the
mortgage cannot be enforced beyond the

total value of the mortgaged property.
Mortgagee in Possession one who has
lawfully
acquired
actual
or
constructive
possession of the premises mortgaged to him,
standing upon his rights as mortgagee and not
claiming under another title, for the purpose of
enforcing his security upon such property or
making its income help to pay his debt
RIGHTS AND OBLIGATIONS OF MORTGAGEE
IN POSSESSION
1. Similar to an antichresis creditor entitled to
retain such possession until the indebtedness
is satisfied and the property redeemed.
2. Without right to reimbursement for useful
expenses
RIGHT OF PURCHASER TO WRIT OF
POSSESSION
Writ of Possession order whereby the sheriff
is commanded to place in possession of real or
personal property the person entitled thereto
such as when a property is extrajudicially
foreclosed.
The issuance of the writ of possession in an
extrajudicial foreclosure is merely a ministerial
function.
The purchaser at the foreclosure sale is entitled
as of right to a writ of possession.
Before lapse of redemption period file an
ex parte application and file a bond
After lapse of redemption period file an ex
parte application and no need for a bond
========================
==============
F. Antichresis
1. Definition and Characteristics
2.
Obligations
of
Antichretic
Creditor
========================
==============
ANTICHRESIS
(Arts. 2132-2139)
ANTICHRESIS is a contract whereby the creditor
acquires the right to receive the fruits of an
immovable of the debtor, with the obligation to
apply them to the payment of the interest, if
owing, and thereafter to the principal of the

credit.
pledge. Tavera v. El Hogar Filipino, Inc. [68

Phil 712]
CHARACTERISTICS
1. Accessory contract it secures the
performance of a principal obligation
Formal contract it must be in a specified form
to be valid (Art. 2134)
A stipulation authorizing the antichretic creditor

to appropriate the property upon the nonpayment of the debt within the agreed period is
void (Art. 2088)
SPECIAL REQUISITES:
1. Only the fruits of an immovable property
2. Delivery of the immovable is necessary for
the creditor to receive the fruits and not that
the contract shall be binding
3. Amount of principal and interest must be
specified in writing (otherwise, void)
4. Express agreement that debtor will give
possession of the property to creditor and
that the latter will apply the fruits to the
interest, if any, then to the principal of his
credit
NOTE: The obligation to pay interest is not
essential in a contract of antichresis, there being
nothing in the Code to show that antichresis is
only applicable to securing the payment of
interest-bearing
loans.
On
the
contrary,
antichresis is susceptible of guaranteeing all
kinds of obligations, pure or conditional
OBLIGATIONS OF ANTICHRETIC CREDITOR:
(FAT-P)
1. To pay taxes and charges on the estate,
including necessary expenses
NOTE: Creditor may avoid said obligation by:
a. Compelling
debtor
to
reacquire
enjoyment of the property
b. By stipulation to the contrary
2. To apply all the fruits, after receiving them, to
the payment of interest, if owing, and
thereafter to the principal
3. To render an account of the fruits to the
debtor
4. To bear the expenses necessary for its
preservation and repair
REMEDIES OF CREDITOR IN CASE OF NONPAYMENT OF DEBT
1. Action for specific performance
2. Petition for the sale of the real property as in
a foreclosure of mortgages under Rule 68 of
the Rules of Court
NOTE: The parties, however, may agree on an
extrajudicial foreclosure in the same manner as
they are allowed in contracts of mortgage and
========================
==============
G. Chattel Mortgage
1. Definition and characteristics
2. Registration
========================
==============
CHATTEL MORTGAGE
CHATTEL MORTGAGE (Arts. 2140-2141) is a
contract by virtue of which a personal property is
recorded in the Chattel Mortgage Register as
security for the performance of an obligation.
NOTE: If the movable, instead of being recorded
is delivered to the creditor, it is a pledge and not
a chattel mortgage.
CHATTEL MORTGAGE
Involves
movable
property
Delivery
of
the
personal property is
NOT necessary
Registration
is
necessary for validity
Procedure: Sec 14 of
Act
no
1508,
as
amended
If
the
property
is
foreclosed, the excess
over the amount due
goes to the debtor
Creditor is entitled to
recover deficiency from
the debtor EXCEPT if it
is a security for the
purchase of personal
property
in
installments
PLEDGE
Involves
movable
property
Delivery
of
the
personal property is
necessary
Registration
is
NOT
necessary for validity
Procedure: Art 2112 of
Civil Code
If the property is sold,
the
debtor
is
not
entitled to the to the
excess UNLESS it is
otherwise agreed or in
case of legal pledge
Creditor is not entitled
to recover deficiency
notwithstanding
any
stipulation
to
the
contrary
Laws Governing Chattel Mortgage

1. Chattel Mortgage Law, Act No. 1508, as
amended
2. Civil Code
3. Revised Administrative Code
4.
1.
Be
Revised Penal Code

5. Ship Mortgage Decree of 1978 (P.D. 1521)
governs mortgage of vessels of domestic
ownership
Affidavit of Good Faith - An oath in a contract
of chattel mortgage wherein the parties
"severally swear that the mortgage is made for
the purpose of securing the obligation specified
in the conditions thereof and for no other
purposes and that the same is a just and valid
obligation and one not entered into for the
purpose of fraud.
Not essential to the validity of the
mortgage but only transforms a valid one
into a preferred one
Absence vitiates a mortgage only as
against third persons without notice
NOTE: A chattel mortgage can only cover
obligations existing at the time the mortgage is
constituted.
A mortgage that contains a
stipulation in regard to future advances in the
credit will take effect only from the date the
same are made and not from the date of the
mortgage Jaca v. Davao Lumber Co., 113
SCRA 107 (1982)
EFFECT OF REGISTRATION
1. Creates real rights binding notice and
symbolical possession
2. Adds nothing to mortgage
NOTE: Registration of assignment of mortgage is
not required
RIGHT OF REDEMPTION
When the condition of a chattel mortgage is
broken, the ff may redeem:
a. Mortgagor;
b. Person holding a subsequent mortgage;
c. Subsequent attaching creditor.
Redemption can be done within 30 days from the

time the condition is broken.
An attaching creditor who so redeems shall

be subrogated to the rights of the mortgagee
and entitled to foreclose the mortgage in the
same manner that the mortgagee could
foreclose it
The redemption is made by paying or
delivering o the mortgagee the amount due
on such mortgage and the costs and
expenses incurred by such breach of
condition before the sale
Right of Mortgagee to Possession
fore default, mortgagee is not entitled to the

possession of the property (otherwise, it will
become a pledge)
2. When default occurs and the creditor desires
to foreclose, he has the right to take the
property.
3. If the debtor refuses to surrender the
property, the creditors remedy is to institute
an action to effect judicial foreclosure or to
secure possession preliminary to sale.
The creditor cannot take the property by
force nor can the sheriff seize the property.
FORECLOSURE OF CHATTEL MORTGAGE
1. Public sale
2. Private sale there is nothing illegal, immoral
or against public order in an agreement for
the private sale of the personal properties
covered by chattel mortgage
Period to Foreclose
1. After 30 days from the time the condition was
broken
2. The 30-day period is the minimum period
after violation of the mortgage condition for
the creditor to cause the sale at public
auction with at least 10 days notice to the
mortgagor and posting of public notice of
time, place, and purpose of such sale, and is
a period of grace for the mortgagor, to
discharge the obligation.
3. After the sale at public auction, the right of
redemption is no longer available to the
mortgagor.
Civil Action to Recover Credit
1. Independent action not required
2. Mortgage lien deemed abandoned by
obtaining a personal judgment (civil action to
recover amount of loan)
Right of Mortgagee to Recover Deficiency
1. Where mortgage foreclosed: creditor may
maintain action for deficiency although
Chattel Mortgage Law is silent on this point.
Reason is chattel mortgage is only given as a
security and not as payment of the debt.
2. Where mortgage constituted as security
for purchase of personal property
payable in installments: no deficiency
judgment can be asked and any contrary
agreement shall be void
3. Where
mortgaged
property
subsequently
attached
and
sold:
mortgagee is entitle to deficiency judgment
in an action for specific performance
Application of Proceeds of Sale

1. Costs and expenses of keeping and sale
2. Payment of the obligation
3. Claims of persons holding subsequent
mortgages in their order
4. Balance, if any, shall be paid to the
mortgagor, or person holding under him
=========================
=============
H. Concurrence and Preference of
Credits
1. Solutio Indebiti
2. Negotiorum Gestio
=========================
=============
Solutio Indebiti and Negotiorium Gestio
Solutio Indebiti (Art 2154)
The principle of solution indebiti provides

that if something is received when there
is no right to demand it, and it was
unduly delivered through mistake, the
obligation to return it arises.
In such a case, a creditor-debtor
relationship is created under a quasicontract whereby the payor becomes the
creditor who then has the right to
demand the return of payment made by
mistake, and the person who has no right
to receive such payment becomes
obligated to return the same
The principle ofsolutio indebiti applies
where
(1) a payment is made when there exists
no binding relation between the payor,
who has no duty to pay, and the person
who received the payment; and
(2) the payment is made through
mistake, and not through liberality or
some other cause
(Siga-An v. Villanueva, GR 173227
January 2009)
Negotiorium Gestio (Art 2144)
One who voluntarily takes charge of the

agency/management of the business or
property of another (without any power
from the latter), is obliged to continue

such agency or management until:
o The termination of the affair or its
incidents or
o He has required the person
concerned to substitute him (if the
owner is in a position to do so)
However, this juridical relation does not
arise in the following:
o When the property or business is
NOT neglected or abandoned
o If the manager has been impliedly
authorized by the owner
=========================
=============
I. Concurrence and Preference of
Credits
1. Meaning of Concurrence and
Preference
2. Preferred Credits on Specific
Movables
3. Exempt Property
4. Classification of Credits
=========================
=============
CONCURRENCE AND PREFERENCE OF
CREDITS
(Arts. 2236-2251)
CONCURRENCE OF CREDIT implies possession
by two or more creditors of equal rights or
privileges over the same property or all of the
property of a debtor.
PREFERENCE OF CREDIT is the right held by a
creditor to be preferred in the payment of his
claim above others out of the debtors assets.
Preference creates no interest or lien on
the property, but merely a preference to
the application of the proceeds.
The right of preference can be made
effective only by being asserted and
maintained. Otherwise, it is lost.
General Provisions:
1. The debtor is liable with all his property,
present and future, for the fulfillment of
his obligations, subjects to exemptions
provided by law
- Exempt property:
a.
Present property
1.
Family home (Arts
152, 153 and 155, NCC)
2.
Right to receive
support as well as money or
property obtained by such support
shall not be levied
upon on
attachment or execution (Art 205,
NCC)
3.
Sec 13, Rule 39,
Rules of Court (Ordinary tools,
lettered gravestones, necessary
clothing, etc.)
4.
Sec 118, the Public
Land Act,( CA No. 141, as
amended)
b.
Future property
A debtor who obtains a discharge
from his debts on account of
insolvency, is not liable for the
unsatisfied claims of his creditors
with said property (Secs. 68 and 69,
Insolvency Law, Act No. 1956)
c.
Property in custodia legis
and of public domain
2. Insolvency shall be governed by the
Insolvency Law (Act No. 1956, as
amended)
3. Exemption of conjugal property or
absolute community or property provided
that:
a. Partnership or community subsists
b. Obligations
of
the
insolvent
spouse have not redounded to the
4. If there is co-ownership, and one of the
co-owners is the insolvent debtor, his
undivided share or interest in the
property shall be possessed by the
assignee in insolvency
proceedings
because it is part of his assets
5. Property held by the insolvent debtor as a
trustee of an express or implied trust,
shall be excluded from the insolvency
proceedings
CLASSIFICATION OF CREDITS
1. Special preferred credits (Arts 2241 and
2242 of NCC)
a. Considered as mortgages or pledges of
real or personal property or liens within
the
purview
of
legal
provisions
governing insolvency
b. Taxes due to the State shall first be
satisfied
2. Ordinary preferred credits (Art 2244) preferred in the order given by law
3. Common credits (Art 2245) - credits of
any other kind or class, or by any other
right or title not comprised in Arts 22412244 shall enjoy no preference
Order of Preference of Credit
1. Credits which enjoy preference with respect
to specific movables, exclude all others to the
extent of the value of the personal property
to which the preference refers.
2. If there are 2 or more credits with respect to
the same specific movable property, they
shall be satisfied pro rata, after the payment
of duties, taxes and fees due the State or any
subdivision thereof
3. Those credits which enjoy preference in
relation to specific real property or real rights,
exclude all others to the extent of the value
of the immovable or real right to which the
preference refers.
4.
If there are 2 or more

credits with respect to the same specific real
property or real rights, they shall be satisfied
pro rata, after the payment of the taxes and
assessment of the taxes and assessments
upon the immovable property or real right.
5.
The excess, if any, after

the payment of the credits which enjoy
preference with respect to specific property,
real or personal, shall be added to the free
property which the debtor may have, for the
payment of other credits.
6.
Those credits which do

not enjoy any preference with respect to
specific property, and those which enjoy
preference, as to the amount not paid, shall
be satisfied according to the following rules:
Order established by Art. 2244

Common credits referred to in Art. 2245
shall be paid pro rata regardless of dates.
NOTE: Preference of mortgage credits is

determined by the priority of registration,
following the maxim prior tempore potior jure
(He who is first in time is preferred in right.)
1.
=========================
=============
J. Insolvency Law
1. Definition of insolvency
2. Suspension of payments
3. Voluntary insolvency
4. Involuntary insolvency
=========================
=============
INSOLVENCY LAW FRIA
FRIA DEFINITION OF INSOLVENCY
Financial condition of a debtor that is generally
unable to pay its or his liabilities as they gall due
in the ordinary course of business or has
liabilities that are greater than its or his assets
For FRIA to be applicable, there must be
insolvency proceedings in the courts designated
by the Supreme Court to hear and resolve cases
brought under this act
PURPOSES OF FRIA
1. To effect equitable distribution of the
insolvents property among its or his
creditors
2. To benefit the debtor in discharging him
from his liabilities and enabling him to
start afresh with the property set apart to
him as exempt
3. To ensure or maintain certainty and
predictability of commercial affairs
FRIA DEFINTION OF DEBTOR
Sole proprietorship (juridical debtor)
Partnership (juridical debtor)
Corporation (juridical debtor)
Individual debtor who has become
insolvent (natural debtor)
NATURE OF PROCEEDINGS
Insolvency proceedings in FRIA are proceedings
in rem
HOW JURISDICTION IS ACQUIRED
Jurisdiction is acquired upon publication of notice
of the commencement of proceedings in any
MODES OF REHABILITATION
Court-supervised rehabilitation
Pre-negotiated rehabilitation
Out of court or informal restructuring
agreements or rehabilitation plans
COURT-SUPERVISED REHABILITATION
Owner, partnership or corporation may
initiate proceedings for rehabilitation,
which the proper court oversees and
deliver a final judgment regarding the
rehabilitation plan
REHABILITATION
o Restoration of the debtor to a
condition of successful operation
and solvency
o The debtor is economically
feasible and its creditors can
recover by way of present value of
payments projected in the plan
REHABILITATION PLAN
o Plan by which the financial wellbeing and viability of the insolvent
debtor can be restored using
various means
REHABILITATION RECEIVER
o Persons or persons, natural or
juridical, appointed as such by the
court entrusted with powers and
duties set forth in the FRIA
KINDS
Voluntary proceedings
o Filing a petition for rehabilitation
with the court done by the
insolvent debtor
Involuntary proceedings
o Filed by a creditor or group of
creditors
o Claim or aggregate claim is at
least P1M or at least 25% of
capital stock or partners
contribution, whichever is higher
TYPES OF PROCEEDINGS
Initiation proceedings
o
Attachments in the petition for

rehabilitation: Voluntary
Proceedings
1. Identification of debtor, principal
activities and addresses
2. State fact of and cause of debtors
insolvency or inability to pay debt
3. Specific relief sought pursuant to
the Act
4. Grounds which petition is based
5. Other information required by the
act, depending on the kind of
relief requested
6. List of debtors, liabilities and
creditors with addresses, amounts
of claims and collaterals
7. Inventory of assets, includes

receivables and claims against 3rd
parties
8. Rehabilitation plan
9. Names of at least 3 nominees for
rehabilitation receiver position
10. Other documents required by the
Act or rules promulgated by the
SC
Attachments in the petition for
rehabilitation: Involuntary
Proceedings
1. Identification of debtor, principal
activities and addresses
2. Circumstances sufficient for a
petition to initiate rehabilitation
proceedings
3. Specific relief sought
4. Rehabilitation plan
5. Names of at least 3 nominees for
rehabilitation receiver position
6. Other information required
depending on relief requested
7. Other documents required by the
act or rules promulgated by the
SC
GROUNDS TO INITIATE INVOLUNTARY

PROCEEDINGS
No genuine issue of fact on law on the
claim/s of the petitioner/s (creditors) and
demandable payments due have not
been made for at least 60 days or debtor
failed in meeting obligations
A third-person creditor other than
petitioner/s has initiated foreclosure
against debtor, preventing debtor to pay
debts due or will render him insolvent
Action on the Petition and
Commencement of Proceedings
If court finds the petition for rehabilitation
to be sufficient in form and substance, it
shall within 5 working days from filing,
issue a Commencement Order.
If in the same period the court finds the

petition deficient, court may give
petitioner time to amend or supplement
petition, or to submit documents
necessary to fix said petition.
5 working days provided for
issuing the order will be reckoned
from date of filing the amended
petition or submission of
additional documents
Commencement order:
Identifies the debtor
Summarizes the grounds for

initiating the proceedings
States the relief
States the legal effects of the CO
Declares that the debtor is under
rehab
Directs publication in newspaper
of general circulation in the
Philippines
Appoints a rehabilitation receiver
Summarizes the requirements and
deadlines for creditors to establish
their claims against the debtor (5)
days before the initial hearing
Sets the case for initial hearing
Suspension/Stay Order (effects)
Suspend
all
actions
or
proceedings for enforcement of
claims against the debtor
Suspend all actions to enforce any
judgment, attachment or other
provisional remedies against the
debtor
Prohibit the debtor from selling,
encumbering,
transferring
or
disposing in any manner any of its
properties except in the ordinary
course of business
Prohibit the debtor from making
any payment of its outstanding
liabilities
as
of
the
commencement date
Note: Stay order applies to
government financial institutions
(Sec 20)
Exceptions to the Stay and Suspension
Order
Cases already pending appeal in
the SC as of the commencement
date. Provided that any final
judgment on the appeal be
referred
to
the
court
for
appropriate action
o Cases pending in specialized court
or quasi-judicial agency, on the
courts discretion
o Enforcement of claims against
sureties
and
other
persons
solidarily liable with debtor and 3rd
party accommodation mortgagors
even issuers of letters of credit
UNLESS the property subject of
the
3rd
party/accommodation
mortgage is necessary for the
rehabilitation of the debtor as
determined by the court (in other
-
words, secured creditors can

enforce their claims/foreclose if
the security theyre holding is not
necessary for rehabilitation)
o To any form of action of
customers
of
a
security
market participant to recover
or claim securities entrusted
to the latter in the ordinary course
of the latters business
o To the actions of a licensed broker
or dealer to sell pledged securities
of a debtor pursuant to a
securities
pledge
or
margin
agreement
o To the clearing and settlement of
financial transactions through the
facilities of a clearing agency
o To any criminal action against the
debtor/owner
o Effectivity and Duration of
Commencement Order
o Unless lifted by the court, CO shall
be effective for the duration of the
rehabilitation proceedings.
o Minimum requirements must be
met:
Rehabilitation plan complies with
minimum contents prescribed by
the act
Sufficient
monitoring
by
rehabilitation receiver
Debtor has met with creditors in
attempts for consensus proposed
by rehabilitation plan
Rehabilitation receiver submits a
report, a preliminary evaluation of
how
realistic
the
goals
of
rehabilitation plan are and how
reasonable and realistic success is
based on
Sufficient assets to rehabilitate
debtor
Sufficient cash flow to maintain
operations of debtor
Petition is not a filing intended to
defraud creditors and delay claims
Debtors, partners, stockholders,
directors and officers acting in
good faith and due diligence
Debtor likely to be able to pursue
viable rehabilitation plan
Attachments on petition for rehabilitation
are not materially false
If petitioner is the debtor, he has met
with creditors representing of total
o
o
o
obligation made in good faith. If petitioner

is a creditor, he has met with the debtor,
made a good faith effort to reach
consensus
Effect of Failure to File Notice of Claim
Instead of filing a notice of claim, the
creditor files a subsequent belated claim
Such claim shall not be entitled to
participate in rehabilitation proceedings
Creditor is still entitled to receive
distributions arising from rehabilitation
Rehabilitation Receiver
Within 40 days from initial hearing, the
rehabilitation receiver shall submit a
report to court stating preliminary
findings
and
recommendations
on
whether:
Debtor is insolvent, causes of
insolvency including any unlawful
acts done by oweners which may
have
contributed
to
the
insolvency
If the rehab plan is indeed feasible
and reasonable in relation to goals
and underlying assumptions
Substantial likelihood exists or not
Petition should be dismissed or
not
Debtor should be liquidated
and/or dissolved or not
Giving due course to or dimissal of
petition
or
conversion
of
proceedings
Within
10
days
from
receipt
of
rehabilitation receiver report mentioned
in section2 24, court may
Give due course to petition upon
finding
Debtor is insolvent
Substantial likelihood for success
exists
Debtor
shall
comply
with
provisions of the Rehab Plan and
take action to carry out the plan
Payments made to creditors
according to the Rehab Plan
Contracts
with
creditors
interpreted as continuing to the
extent that they do not conflict
with the Rehab Plan
Compromises on amounts or
rescheduling
of
timing
of
payments by debtor shall be
binding to creditor regardless
whether plan ins a success or not
Claims after approval of plan not

treated by the plan are not
subject to suspension order
o Period
for
confirmation
of
rehabilitation plan
Court has a maximum period of 1

year from date of filing of petition
to confirm rehabilitation plan. If no
plan is confirmed within said
period proceedings may upon a
motion or motu proprio be
converted to one for liquidation of
the debtor
o Accounting
discharge
of
Rehabilitation Receiver
Upon
confirmation
of
rehabilitation plan, rehabilitation
receiver shall provide a final
report and accounting to the
court. Unless the plan requires or
describes
the
role
of
the
rehabilitation
receiver
after
approval of the plan, curt shall
discharge rehabilitation receiver
of duties.
o Termination Proceedings
Upon motion of any stakeholder or

rehabilitation
receiver,
the
rehabilitation
plan
may
be
terminated by order of court.
Failure of rehabilitation:
Dismissal of petition by court
Debtor
fails
to
submit
a
rehabilitation plan
Under
rehabilitation
plan
submitted by debtor, there is no
substantial
likelihood
for
rehabilitation
Though amended and approved,
debtor fails to implement the
rehabilitation plan, failure to
realize objectives
Commission of fraud in securing
the approval for the plan
Analogous circumstances as may
be defined by rules of procedure
Court action upon break of or failure
of rehabilitation plan (upon motion
of an affected party)
Issue an order directing breach be
cured within specified period,
failing which, proceeding may be
converted to liquidation
Issue
and
order
converting
proceedings to liquidation
Allow
debtor
to
submit
amendments to plan subject to
approval
under
same
requirements for approval under
provisions
Issue any other order to remedy
breach consistent with present
regulation
Enforce applicable provision of
rehabilitation plan through writ of
execution
Effects of termination
The discharge of the rehabilitation
receiver subject to his submission
of a final accounting
The lifting of the Stay Order and
any other court order holding in
abeyance any action for the
enforcement of a claim against
the debtor
PROVIDED, that if the termination
is due to failure of rehabilitation or
dismissal of petition for reasons
other than technical grounds,
proceedings will automatically be
converted to LIQUIDATION
2. PRE-NEGOTIATED REHABILITATION
Parties to file a petition for
negotiated rehabilitation plan
Insolvent debtor by itself; or
Jointly with any of its creditors
pre-
Requisites for a petition for a prenegotiated rehabilitation plan

Petition must be filed by
o An insolvent debtor by itself or
jointly with any of its creditors
o With the court
The pre-negotiated rehabilitation plan
must be endorsed or approved by
creditors holding at least 2/3 of the total
liabilities of the debtor, including secured
claims of the debtor and unsecured
creditors holding more than 50% of the
total unsecured claims of the debtor
Documents that must accompany the
petition as a minimum
Schedule of debtors debts and liabilities
Inventory of debtors assets
The pre-negotiated Rehabilitation Plan,
including the names of at least 3 qualified
nominees for rehabilitation receiver
Summary of disputed claims against

debtor, and report on provisioning of
refunds to account for appropriate
payments
Procedure for pre-negotiated rehabilitation

Filing of the petition
Issuance of Court Order
Publication of the order in a
newspaper of general circulation in
the Philippines once a week for at
least two consecutive weeks
Objection
to
the
petition
or
rehabilitation plan if any
Hearing on the objections if necessary
Approval of the plan
Cause for which objection may be made to
petition or plan
The allegation in the petition or the
Rehabilitation Plan or the attachments
thereto are materially false or misleading
The majority of any class of creditors do
not in fact support the Rehabilitation Plan
The Rehabilitation Plan fails to accurately
account for a claim against the debtor
and the claim is not categorically
declared as contested claim; or
The support of the creditors, or any of
them was induced by fraud
Note: if objection is meritorious, the
debtor is directed to cure the defect
within a reasonable period
Note: if the debtors/creditors supporting
the plan acted in bad faith or the
objection is non-curable, the Court may
order conversion of proceedings into
liquidation
Note: if the objection is not meritorious or
the objection is cured, the rehabilitation
plan is deemed approved
Effect of Approval of Plan
Same effect as confirmation of Plan under
Court=Supervised Rehabilitation
3.
OUT-OF-COURT
OR
INFORMAL
RESTRUCTING
AGREEMENTS
OR
REHABILITATION PLANS
Informal restructuring/workout agreement
or rehabilitation plan defined
Done outside or without the intervention of court
provided it meets the minimum requirements set
for the in the Act
Requisites for an Out-of-court or informal

restructuring/workout
agreement
or
rehabilitation plan
The debtor must agree to the out-of-court
or
informal
restructuring/workout
agreement or Rehabilitation Plan
It must be approved by creditors
representing at least 67% of the
SECURED obligations of the debtor
It must be approved by creditors
representing at least 75% of the
UNSECURED obligations of the debtor
It must be approved by creditors holding
at least 85% of the TOTAL LIABILITIES,
SECURED and UNSECURED, of the debtor
Standstill Period
It is a period that may be agreed upon by the
parties pending negotiation/finalization of the
out-of-court agreement or Rehab Plan (similar to
a stay order)
Requirements for the standstill period to be
enforceable against 3rd parties
Agreement is approved by creditors

representing 50% of the total liabilities of
the debtor
Notice is published
o Must invite creditors to participate
in the negotiation
o All creditors must be given due
notice
Period does not exceed 120 days
Effect of Standstill Period

Any court action shall not stay the plans
implementation UNLESS the relevant party is
able to secure a TRO or injunctive relieve from
the Court of Appeals to stay the implementation
of proceedings
The effect of the approval of the plan is the same
to that of confirmation of Plan under Court
Supervised Rehabilitation
Notice of Out-of-Court rehabilitation plan is
required
Published once a week for at least 3 consecutive
weeks in a newspaper of general circulation in
the Philippines. It shall take effect after 15 days
from the date of the last publication of the notice
thereof
Amendments or modification to the plan
Amendments or modification must be made in

accordance with the terms of the agreement and
with due notice on all creditors
LIQUIDATION OF INSOLVENT JURIDICAL
DEBTORS
I.
Voluntary Liquidation:
a. An insolvent debtor may apply for
liquidation by filing a verified petition
for liquidation with the court
i. Contents:
1. Schedule of debtors liabilities
with a list of creditors
2. An inventory of all its assets
3. Names of at least 3 nominees to
the position of liquidator
b. Procedure:
i. Filing of Petition (Sec 90)
ii. If court finds petition sufficient in
form and substance, it shall issue
the Liquidation Order (Sec 104)
iii. Publication of the petition or
motion in a newspaper of general
circulation once a week for 2
consecutive weeks [Sec 112 (d)]
iv. Hearing
for
election
and
appointment of liquidator [Sec
112 (j)]
v. Direct payments of any claims and
conveyance of any property due
the debtor to the liquidator [Sec
112 (e)]
vi. Liquidation of the debtors assets
and payment of his debts by the
Liquidator (Sec 119)
vii. Discharge of Liquidator (Sec 122)
viii. Appeal if proper
II.
Involuntary Liquidation:
a. A verified petition may be filed in
court by 3 or more creditors with the
aggregate claims of at least 1M or at
least 25% of the subscribed capital
stock or partners contributions of the
debtor, whichever is higher.
i. Contents:
1. Must show that theres
no genuine issue of
fact or law on the
claim/s
of
the
petitioner/s, and that
the
due
and
demandable payments
thereon have not been
made for at least 180
days or the debtor has
failed
generally
to
meet its liabilities as
they fall due
2. Must show that no
substantial likelihood
that the debtor may be
rehabilitated
b. Procedure:
i. Filing of the petition of 3 or
more creditors (Sec 91)
ii. Issuance of order:
1. Directing publication of
petition or motion in a
newspaper of general
circulation
once
a
week for 2 consecutive
weeks
2. Directing the debtor
and all creditors to file
their comment on the
petition
iii. Filing of comments
iv. Consideration of comments
filed by the court
v. Issuance of the liquidation
order
vi. Publication of the petition or
motion in a newspaper of
general circulation once a
week for 2 consecutive weeks
[Sec 112 (d)]
vii. Hearing for election and
appointment of the liquidator
[Sec 112 (j)]
viii. Direct payments of any claims
and
conveyance
of
any
property due the debtor to the
liquidator [Sec 112 (e)]
ix. Liquidation of the debtors
assets and payment his debts
by the Liquidator (Sec 119)
x. Discharge of Liquidator (Sec
122)
xi. Appeal if proper
Note: Under both voluntary and involuntary
liquidation, the debtor or the 3 or more creditors
may initiate liquidation proceedings by filing a
motion in court at any time during the pendency
of the court-supervised or pre-negotiated
rehabilitation proceedings.
Ching vs. Landbank of the Philippines [201

SCRA 190 (1991)]: SC held that the SEC has
jurisdiction only with regard to petitions of
juridical debtors to be declared in the state of
suspension of payments. PD. 902-A cannot be
stretched to include petitions for insolvency.
Petitions for declaration of insolvency of private
corporations are within the original and exclusive
jurisdiction of regular courts. SEC may entertain
such petitions only as an incident of and in
continuation of its already acquired jurisdiction
over petitions to be declared in the state of
suspension payments.
INSOLVENCY OF INDIVIDUAL DEBTORS
I.
Suspension of Payments: postponement,

by court order, of the payment of debts of
one who possesses sufficient property to
cover all his debts but foresees the
impossibility of meeting them when they
respectively fall due (Sec 94)
a. Purpose: to suspend or delay the
payment of debts; debtors inability to
meet his obligations when they
respectively fall due, despite the fact
that he has sufficient assets to cover
his liabilities (De Leon)
b. A debtor may file a verified petition
for suspension of payments if:
i. Individual debtor possesses
sufficient property to cover all
his debts
ii. But
he
foresees
the
impossibility of meeting them
when they respectively fall
due
iii. Contents:
1. He has to state his
residence 6 months
before filing of his
petition (and file in the
court where he resided
6 months prior to the
filing)
2. Schedule
of
debts/liabilities
3. Inventory of assets
4. Proposed
agreement
with creditors
c.
Procedure:
i. Filing of petition by debtor
(Sec 94)
ii. Issuance by the court of an

order calling a meeting of
creditor (Sec 95)
iii. Publication of said order and
service of summons
iv. Meeting of the creditors for
the
consideration
of the
debtors proposition (Sec 97)
v. Approval of the creditors of
the debtors proposition
vi. Objections, if any, to the
decision which must be made
within 10 days from the date
of the last creditors meeting
(Sec 100)
vii. Issuance of order by the court
directing that the agreement
be carried out in case the
decision is declared valid or
when no objection to said
decision has been presented
(Sec 101)
d. Effect of filing a petition for
suspension of payments:
i. No disposition in any manner
of his property may be made
by the individual debtor,
except those used in the
ordinary
operation
of
commerce or of industry in
which he is engaged [Sec 95
(e)].
ii. No payments may be made by
the individual debtor outside
of
the
necessary
and
legitimate expenses of his
business or industry [Sec 95
(f)].
iii. Suspension Order: Upon
motion by the debtor, the
court may issue an order
suspending
any
pending
execution
against
the
individual debtor provided that
properties held as security by
secured creditors shall not be
subject of such suspension
order (Sec 96, par. 1).
iv. No creditor shall sue or
institute proceedings to collect
his claim from the debtor from
the time of filing of petition as
long as proceedings remain
pending, except:
1. Those creditors with
claims for personal
labor,
maintenance,
expenses of last illness
and funeral of wife or
children of the debtor,
incurred
60
days
before petition is filed.
2. Secured debtors.
e. Creditors meeting (Only creditor
included in the schedules filed by the
debtor shall be cited to appear and
take part in the meeting)
i. To form a majority (Rule of
Double Majority):
1. 2/3 of the creditors
voting unite on the
same proposition, and
2. That
the
claims
represented by said
majority vote amount
to at least 3/5 of the
total liabilities of the
debtor [Sec 97 (d)]
ii. If the majority agrees, the
court will approve on the
agreement
of
the
creditors/debtors as regards
the payment
iii. But
petition
is
deemed
rejected when:
1. the
number
of
creditors representing
at least 3/5 of the
liabilities
of
the
individual debtor do
not attend, or
2. if the double majority
rule are not in favor of
the
proposed
agreement (Sec 99)
iv. Effect
of
disapproval
of
petition: Court shall declare
the proceedings terminated
and the creditors shall be at
liberty to exercise the rights
which may correspond to
them (Sec 100, par. 2)
v. Causes for which objection
may be made to the decision
of the meeting:
1. Defects in the call for
the meeting, in the
holding thereof and in
the
deliberations,
which prejudice the
right of the creditors;
2. Fraudulent connivance
between one or more
creditors
and
the
individual debtor ot
vote in favor of the
proposed agreement;
3. Fraudulent connivance
of
claims
for
the
purpose of obtaining a
majority.
vi. Effect of failure or individual
debtor to perform agreement:
If the debtor fails, wholly or in
part,
to
perform
the
agreement decided upon the
meeting of the creditors, all
rights which the creditors had
against the debtor before the
agreement shall revest in
them (Sec 102).
Distinctions between Suspension of
Payments and Insolvency:
Purpose
Property
Amount of
Indebtedness
SUSPENSION
OF
PAYMENTS
Suspend or
delay the
payment of
debts
Debtor has
sufficient
property
Amount of
indebtedness
is not affected
INSOVENCY
Discharge the
debtor from
the payment
of debts
Debtor does
not have
sufficient
property
Creditors
receive less
than their
credits, and in
case there are
preferences,
some
creditors may
not receive
any amount at
all
LIQUIDATION OF INDIVIDUAL INSOLVENT

DEBTORS
I.
Voluntary Liquidation
a. A verified petition may be filed by an
insolvent
debtor
(owing
debts
exceeding the amount of P500,000) in
the court of the province or city in
which he has resided 6 months prior

to filing the petition.
i. Contents:
1. Schedule of debts and
liabilities
2. Inventory of Assets
3. Proposed
Agreement
with creditors
b. Procedure:
i. Filing of the petition by the
debtor
praying
for
the
declaration of insolvency (Sec
103)
ii. If the court finds the petition
sufficient
in
form
and
substance, it shall issue the
Liquidation Order (Sec 104)
iii. Publication of the petition or
[Sec 112 (d)]
iv. Hearing for election and
appointment of the liquidator
[Sec 112 (j)]
v. Direct payments of any claims
and
conveyance
of
any
vi. Liquidation of the debtors
assets and payment of his
debts by the Liquidator (Sec
119)
vii. Discharge of Liquidator (Sec
122)
viii. Appeal if proper
c.
Effect of filing of petition: The filing of

the petition shall be an act of
insolvency (Sec 103). Once the
petition is filed, it ipso facto takes
away and deprives the debtor of the
right to do or commit any act of
preference as to creditors, pending
the final adjudication.
d. Effects of errors in description or

omission of property in inventory:
i. The erroneous or ambiguous
description of the insolvents
property in inventory does not
affect the title of purchasers in
the insolvency proceedings.
Legal title of the property of
the insolvent passes to the
liquidator and is administered
in the insolvency proceedings

regardless of errors in the
inventory.
ii. If the insolvent omits property
from his inventory, it is the
duty of the liquidator to
recover any property or its
value, fraudulently conveyed
by the debtor [Sec 119 (f)].
iii. Even property exempt from
execution must be included in
order to preclude possible
fraudulent omission under the
pretext that such property is
exempt.
e. If the debt exceeds the secured
property:
i. To the extent of the unsecured
portion, the creditor can join
the proceedings.
ii. If the creditor wants to
participate as an ordinary
creditor, he has to let go of
the mortgage.
II.
Involuntary Liquidation
a. Purpose: It is not a mere personal
action against the insolvent for the
collection of debts, but its purpose is
to impound all of his non-exempt
property, to distribute it equitably
among his creditors, and release him
from further liability.
b. Any creditor or group of creditors,
with a claim of or with claims
aggregating at least P500,000, may
file a verified petition in the court of
the province or city in which the
individual debtor resides.
i. Petitioning creditor must post
a bond.
ii. Petition must allege at least
one act of insolvency.
1. Any
debtor
who
commits an act of
insolvency
may
adjudged
insolvent.
The
date
of
adjudication
of
insolvency retroacts to
the date of the filing of
the
petition
for
insolvency.
c. Acts of Insolvency:
i. That such person is about to
depart or has departed from
the Republic of the Philippines,
with intent to defraud his
creditors;
ii. That being absent from the
Republic of the Philippines,
with intent to defraud his
creditors, he remains absent;
iii. That he conceals himself to
avoid the service of legal
process for the purpose of
hindering or delaying the
liquidation or of defrauding his
creditors;
iv. That he conceals, or is
removing, any of his property
to avoid its being attached or
taken on legal process;
v. That he has suffered his
property to remain under
attachment or legal process
for three (3) days for the
purpose
of
hindering
or
delaying the liquidation or of
defrauding his creditors;
vi. That he has confessed or
offered to allow judgment in
favor of any creditor or
claimant for the purpose of
hindering or delaying the
liquidation or of defrauding
any creditors or claimant;
vii. That he has willfully suffered
judgment to be taken against
him by default for the purpose
of hindering or delaying the
liquidation or of defrauding his
creditors;
viii. That he has suffered or
procured his property to be
taken on legal process with
intent to give a preference to
one or more of his creditors
and thereby hinder or delay
the liquidation or defraud any
one of his creditors;
ix. That he has made any
assignment,
gift,
sale,
conveyance or transfer of his
estate, property, rights or
credits with intent to hinder or
delay
the
liquidation
or
defraud his creditors;
x. That he has, in contemplation
of insolvency, made any
payment, gift, grant, sale,

conveyance or transfer of his
estate, property, rights or
credits;
xi. That being a merchant or
tradesman, he has generally
defaulted in the payment of
his current obligations for a
period of thirty (30) days;
xii. That for a period of thirty (30)
days, he has failed, after
demand, to pay any moneys
deposited with him or received
by him in a fiduciary; and
xiii. That an execution having been
issued against him on final
judgment for money, he shall
have been found to be without
sufficient property subject to
execution
to
satisfy
the
judgment.
d. Procedure:
i. Filing of the petition by any
creditor or group of creditors
and posting of required bond
(Sec 105)
ii. Issuance of Order to Show
Cause (Sec 106): court will
order the individual debtor to
defend himself and state why
he is not an insolvent.
1. Nothing in the order
shall impair the rights
of a secured creditor to
enforce his lien in
accordance with its
terms
(secured
creditor may foreclose
notwithstanding
an
order forbidding the
debtor
to
alienate/encumber any
of his property)
2. If the debtor cannot be
found, the creditors
may ask the court to
issue
an
order
directing the sheriff to
take possession of the
debtors property
in
order for it to be sold
at a public sale (sale
under execution)
iii. Service of order to show cause
iv. Filing of answer or motion to
dismiss by individual debtor
v. Hearing of the case (Sec 107)
vi. Issuance of the Liquidation

Order
vii. Publication of the petition or
[Sec 112 (d)]
viii. Hearing for election and
appointment of liquidator [Sec
112 (j)]
ix. Direct payments of any claims
and
conveyance
of
any
x. Liquidation of the debtors
assets and payment of his
debts by the Liquidator (Sec
119)
xi. Discharge of Liquidator (Sec
122)
xii. Appeal if proper
e. The petitioners shall pay the debtor
all costs, expenses, damages due to
the proceedings if the case is
dismissed, withdrawn by them or if
the debtor is not insolvent.
f.
Absent Individual debtor:

i. Resides
outside
the
Philippines;
ii. Departed from the Philippines;
iii. Cannot be found with due
diligence; or
iv. Hides to avoid service of the
order to show cause (Sec 108)
g. Liquidation Process if the individual

debtor is absent:
i. Creditors must file the petition
ii. Petitioning creditors must:
1. Submit the required
affidavits for the Order
of publication
2. Present
the
bonds
equivalent to twice the
amount of their claims
against the debtor
iii. Court shall issue and Order
directing the sheriff to take a
sufficient
amount of the
debtors property not exempt
from execution to satisfy the
claim;
iv. The sheriff shall then:
1. Take said property
2. Prepare a complete
inventory
of
the
property within 3 days
from said taking and
may be extended for
good cause;
3. Give such to the court
as soon as completed;
4. Prepare a schedule of
the
names
and
residences
of
the
creditors
and
the
amounts due to them.
Distinction between Voluntary and
Involuntary Liquidation:
VOLUNTARY
INVOLUNTARY
Number of
creditors
One
Filed by:
Insolvent
debtor
Acts of
insolvency
Must not be
guilty
Amounts of
indebtedness
Bond
Order of
Adjudication
Must exceed
P500,000
Not Required
May be
granted ex
parte
Province or
city in which
debtor has
resided for 6
months prior
to petition
Upon filing of
the voluntary
petition
Any creditor or
group of
creditors
3 or more
creditors with
qualifications
set by laws
Must have
committed one
or more
Not less than
P500,000
Required
Granted only
after hearing
Length of
residence (for
RTC)
When does
the court
order the
adjudication?
Immaterial
Only until after

hearing the
case
PROVISIONS COMMON TO LIQUIDATION IN

INSOLVENCY OF INDIVIDUAL AND JURIDICAL
DEBTORS
What is a liquidation order? The liquidation
order shall:
a) declare the debtor insolvent
b) Order the liquidation of the debtor, or in
case of a juridical debtor, declare it as
dissolved
c) Order the sheriff to take the property of
the debtor
d) Order the publication of the petition in a

e) Direct payments of any claims and
conveyance of any property due to the
debtor to the liquidator
f) Prohibit the transfer of property and
payment by the debtor
g) Direct all creditors to file their claims with
the liquidator within the period set by the
rules
h) Authorize
the
payment
of
admin
expenses ad they become due
Effects of the Liquidation Order
a) The juridical debtor is dissolved and its
juridical existence terminated
b) Legal title of all the assets of the debtor
shall be vested in the liquidator/court
c) All contracts of the debtor shall be
deemed terminated unless the liquidator,
w/in 90 days from the date of his
assumption of office, declares otherwise
and the contracting party agree
d) No separate action for the collection of an
unsecured claim shall be allowed (direct
claims to liquidator)
e) No foreclosure proceeding shall be
allowed for 180 days
Rights of Secured Creditors: The Liquidation
Order shall NOT affect the right of a secured
creditor to enforce his lien. He may:
a) Waive his right under the security, prove
his claim in the liquidation proceedings
and share in the distribution of assets
b) Maintain his rights under the security
a. If he chooses to maintain:
i. If the value of the property
used as security is LESS
than the claim it secures,
the liquidator may convey
the
property
to
the
secured creditor and the
creditor will be admitted in
the
liquidation
proceedings as a creditor
for the balance (basically,
he can recover deficiency)
ii. If it is MORE, the liquidator
may convey the property
to the creditor and waive
the
debtors
right
of
redemption upon receiving
the
excess
from
the
creditor
b. The liquidator may sell the
property and satisfy the secured
c.
creditors entire claim from the

proceeds
The
secured
creditor
may
foreclose/enforce his lien
Functions of Liquidator
The liquidator shall be deemed an officer of the
court with the principal duly of preserving and
maximizing the value and recovering the
assets of the debtor, with the end of
liquidating them and discharging to the
extent possible all the claims against the
debtor.
The powers, duties and responsibilities of the
liquidator shall include, but not limited to:
a. to sue and recover all the assets,
debts and claims, belonging or due to the
debtor;
b. to take possession of all the property of
the debtor except property exempt by law
from execution;
c. to sell, with the approval of the
court, any property of the debtor
which has come into his possession
or control;
d. to redeem all mortgages and pledges,
and so satisfy any judgment which may
be an encumbrance on any property sold
by him;
e. to settle all accounts between the debtor
and his creditors, subject to the approval
of the court;
f. to recover any property or its value,
fraudulently conveyed by the debtor;
g. to recommend to the court the creation of
a creditors' committee which will assist
him in the discharge of the functions and
which shall have powers as the court
deems just, reasonable and necessary
NOTE: In sum, the liquidator shall have the
right and duty to take all reasonable steps to
manage and dispose of the debtor's assets
with a view towards maximizing the
proceedings therefrom, to pay creditors and
stockholders, and to terminate the debtor's
legal existence.
When can a secured creditor be allowed to
vote for a liquidator?
a) he waives his security or lien; or
b) has the value of the property subject of
his security or lien fixed by agreement
with the liquidator, and is admitted for
the balance of his claim.
NOTE: The creditors entitled to vote will elect the

liquidator in open court. The nominee receiving
the highest number of votes cast in terms of
amount of claims and who is qualified shall be
appointed as the liquidator.
When can the court appoint the liquidator?
a) on the date set for the election of the
liquidator, the creditors do not attend;
b) the creditors who attend, fail or refuse to
elect a liquidator;
c) after being elected, the liquidator fails to
qualify; or
d) a vacancy occurs for any reason
whatsoever, In any of the cases provided
herein, the court may instead set another
hearing of the election of the liquidator.
What are the qualifications of the
Liquidator?
a) A citizen of the Philippines or a resident of
the Philippines in the six (6) months
immediately preceding his nomination;
b) Of good moral character and with
acknowledged integrity, impartiality and
independence;
c) Has the requisite knowledge of insolvency
and other relevant commercial laws, rules
and procedures, as well as the relevant
training and/or experience that may be
necessary to enable him to properly
discharge the duties and obligations of a
rehabilitation receiver; and
d) Has no conflict of interest: Provided, That
such conflict of interest may be waived,
expressly or impliedly, by a party who
may be prejudiced thereby.
Preliminary Registry of Secured and
Unsecured Creditors:
The liquidator shall prepare a preliminary registry
of claims within twenty (20) days from his
assumption into office.
Unsecured Creditors defined
They are Secured Creditors who have:
a) Waived their security or lien; or
b) Who has fixed the value of the property
subject of their security or lien by
agreement with the liquidator and is
admitted as a creditor for the balance,
shall be considered as unsecured
creditors.
The liquidator shall make the registry available
for public inspection and provide publication
notice (on where and when they may inspect it)

to:
a) Creditors,
b) Individual debtors owner/s of the sole
proprietorship-debtor,
c) Partners of the partnership debtor; and
d) Shareholders or members of the
corporation-debtor.
Right of Set-off
Debtor and Creditor are MUTUALLY Debtor and
Creditor of each other: One Debt shall be SET
OFF against the other, The Balance, if any shall
be allowed in the liquidation proceedings.
Opposition or Challenge to Claims
A Challenge to Claim or Claims may be
submitted to the court by serving a certified copy
on the liquidator and the creditor holding the
challenged claim; within thirty (30) days from the
expiration of the period for filing of applications
for recognition of claims, creditors, individual
debtors, owner/s of the sole proprietorshipdebtor.
Who may submit a Challenge to Claim or
Claims:
a) Partners of the partnership-debtor;
b) Shareholders or members of the
corporation-debtor; and
c) Other interested parties
Transactions that may be rescinded or
nullified
The Following Transactions may be Rescinded or
Nullified:
a) Any transaction occurring prior to the
issuance of the Liquidation Order; or
b) A transaction entered into by the debtor
or involving its assets; in case of the
conversion of the rehabilitation
proceedings prior to the commencement
date.
Grounds for rescission or nullification:
a) It was executed with intent to defraud a
creditor or creditors; or
b) It constitutes undue preference of
creditors.
The Liquidation Plan.
The Liquidator shall submit a Liquidation Plan to
the court within three (3) months from his
assumption into office,
The Liquidation Plan shall, as a minimum
enumerate:
a) All the assets of the debtor; and

b) A schedule of liquidation of the assets
and payment of the claims.
NOTE: Duty of the Court to exempt and set
apart for the use and benefit of the said
insolvent such real and personal property

as is by law exempt from execution.
LIQUIDATION
REHABILITATION
COURT SUPERVISED
Voluntary
Proceeding
s
How
Made
Purpose
- verified
petition
Establish
insolvency
and the
viability of
rehabilitatio
n in court
Involuntar
y
Proceeding
s
- verified
petition
Establish
insolvency
and the
viability of
rehabilitatio
n in court
PRENEGOTIATED
-verified
petition
the approval of
the
Rehabilitation
plan in court
INFORMAL
RESTRUCTU
RING
AGREEMENT
Done without
court
intervention
provided that
it meets the
minimum
requirement
of FRIA
To negotiate
terms of the
rehabilitation
plan without
court
intervention
INSOLVENT JURIDICAL
DEBTORS
Voluntary
Involunta
ry
1) verified
petition for
liquidation in
court
2) verified
motion to
convert
pending
rehabilitation
proceeding
into a
liquidation
proceeding
1) verified
petition
for
liquidation
in court
2) verified
motion to
convert
pending
rehabilitati
on
proceedin
g into a
liquidation
proceedin
g
To establish
the
insolvency of
debtor for
purposes of
liquidation
To
establish
the
insolvency
of debtor
for
purposes
of
liquidation
INDIVIDUAL INSOLVENT DEBTORS
Voluntary
Liquidati
on
Verified
petition
court of
the
city/provin
ce where
debtor has
resided 6
months
prior to
filing
*filing of
such
petition=a
ct of
insolvency
to apply
for
discharge
of debts
and
liabilities
Involunta
ry
Liquidati
on
Verified
petition in
the court
of the
province
or city in
which the
individual
debtor
resides
to
impound
all of
debtors
nonexempt
property,
to
distribute
it
equitably
among his
creditors
and to
release
Suspensi
on of
Payments
Verified
petition
before
city/provin
ce where
debtor has
resided 6
months
prior to
filing
to be
declared in
a state of
suspension
of
payment
him
from
further
liability
Parties
Filed by
Insolvent
Debtor
-sole
proprietorshi
p: owner
partnership:
partners
corporation:
majority
vote of BoD
or trustees
+ 2/3 vote
of SH
representing
outstanding
capital stock
or 2/3 vote
of members
Filed by
Creditor or
group of
creditors
with
aggregate
claim of at
least 1M or
at least 24%
of
subscribed
capital stock
or partners
contribution
s, whichever
is higher
Filed by
Insolvent
debtor by
itself or jointly
with other
creditors
Rehabilitation
Plan must be
approved by:
1) debtor
2) creditors
representing
at least 67%
of the
SECURED
obligations of
the debtor
3) creditors
representing
at least 75%
of the
UNSECURED
obligations of
the debtor
4) creditors
holding at
least 85% of
the TOTAL
LIABILITIES,
SECURED and
UNSECURED,
of the debtor
Filed by the
Insolvent
debtor
3 or more
creditors
with the
aggregate
claims of
at least
1M or at
least 25%
of the
subscribed
capital
stock or
partners
contributio
ns of the
debtor,
whichever
is higher
Individual
debtor
Creditor or
group of
creditors
with a
claim or
aggregate
claim of at
least 500K
Individual
debtor
Grounds
Debtors
insolvency
or inability
to pay its
obligations
as they
become due
1) no
genuine
issue of fact
or law on
the claim/s
of the
petitioner/s
and that the
due and
demandable
payments
have not
been made
for at least
Pre-negotiated
Rehabilitation
plan which
must approved
by creditors
holding at
least 2/3 of
total liabilities
including:
a) secured
creditors
holding more
than 50% of
the total
Consent of the
parties
involved to
the informal
re-structuring
agreement
Rehabilitation
is no longer
possible
1) no
genuine
issue of
fact or law
on the
claim/s of
the
petitioner/
s, and that
the due
and
demandab
le
payments
Debtor
doesnt
have
sufficient
properties
to cover
his
liabilities
and the
debts
which he
owes
exceeds
500k
Acts of
Insolvency
which
tends to
delay the
liquidation
or to
defraud
any
creditors
like:
1)debtor
has
departed
Debtor has
sufficient
property to
cover all
his debts
BUT
foresees
the
impossibili
ty of
meeting
debts
when they
become
from the
60 days or
that the
debtor has
generally
failed to
meet its
liabilities as
they fall due
Minimu
m
require
ments of
the
petition
1) schedule
of debtors
liabilities
with list of
creditors
2)an
inventory of
all its assets
3)Rehabilitat
ion Plan
4) names of
at least 3
nominees to
the position
of receiver
2)creditor,
other than
the
petitioner/s
has initiated
foreclosure
proceedings
against the
debtor that
will prevent
the debtor
from paying
its debts as
they
become due
or will
render it
insolvent
1)
circumstanc
es sufficient
to support
petition
2)specific
relief sought
3)Rehabilitat
ion Plan
4) names of
at least 3
nominees to
the position
of receiver
secured claims
of the debtor
and
b) unsecured
creditors
holding more
than 50% of
the total
unsecured
claims of the
debtor
thereon
have not
been
made for
at least
180 days
or the
debtor has
failed
generally
to meet its
liabilities
as they
fall due
Philippines
, with
intent to
defraud
his
creditors;
2) he
conceals
himself to
avoid the
service of
legal
process
for the
purpose of
hindering
or
delaying
the
liquidation
2) no
substantia
l likelihood
that the
debtor
may be
rehabilitat
ed
1) schedule of
debtors
liabilities with
list of creditors
2)an inventory
of all its assets
3) prenegotiated
Rehabilitation
plan and
names of at
least 3
nominees to
the position of
receiver
N/A
1) schedule
of debtors
liabilities with
list of
creditors
2)an
inventory of
all its assets
3) names of
at least 3
nominees to
the position
of liquidator
none
due
1)schedul
e of debts
and
liabilities
2)
inventory
of assets
Posting of
bond in
the
amount
determine
d by the
court
1)schedule
of debts
and
liabilities
2)inventor
y of assets
3)propose
d
agreement
with
creditors
Court
Action
(if
sufficien
t in form
and
substanc
e)
Publicati
on
COMMENCEMENT ORDER
-shall appoint a
rehabilitation receiver
-summarize requirements
and deadlines for creditors
to establish their claim
-include a STAY or
SUSPENSION ORDER
none
4) summary of
disputed
claims against
debtor and
report on the
provisioning of
funds
Court order
-shall appoint a
rehabilitation
receiver, if
provided in the
plan
- service of
petition to
each creditor
who is not a
petitioner
holding at least
10% of total
liabilities of
debtor
-
Once a week
for 2
consecutive
weeks in a
newspaper of
general
circulation;
with first
publication
made within 7
days from
issuance of
Order
Insolvent
debtor or
creditor may
seek court
assistance for
the execution
or
implementatio
n of the
agreed
Rehabilitation
Plan
Liquidation
Order
Notice of
Rehabilitation
plan:
published
once a week
for 3
consecutive
weeks in a
newspaper of
general
circulation
Petition or
motion: Once
a week for 2
consecutive
weeks in a
newspaper of
general
circulation
Court
Order:
1)publicati
on
2)directing
debtors
and
creditors
to file
comment
Liquidatio
n order
1) show
cause
order
2)
liquidation
order
none
none
Liquidatio
n order
Petition or
motion:
Once a
week for 2
consecutiv
e weeks in
a
newspape
r of
general
circulation
Court
Order:
1) calling
of
creditors
meeting
2)publicati
on of said
order and
service of
such order
to all
creditors
3)suspend
any
pending
execution
against
debtor
upon
motion
Order:
Once a
week for 2
consecutiv
e weeks in
a
newspaper
of general
circulation;
with first
publication
made
within 7
days from
issuance of
Order
Hearing
Effect
1) for
the
determination of the
creditors
2) determine any
objections to the
appointment of receiver
3) direct creditors to
comment on the
Rehabilitation Plan
4) direct the rehabilitation
receiver to evaluate the
financial condition of the
debtor and submit report
within 40 days
-there shall be a waiver of
taxes and fees due to the
National Government and
to LGUs from the issuance
of the commencement
order until approval of the
Rehabilitation plan or the
dismissal of petition,
whichever is earlier
CONFIRMATION OF
REHABILITATION PLAN
1) Rehabilitation plan and
its provisions shall be
binding upon the debtor
and all creditors whether or
not such persons have
participated in the
proceeding
2) debtor shall comply with
the provisions
3)payments shall be made
to creditors in accordance
with the plan
4)contracts bet. Debtor and
creditors shall be
interpreted as continuing to
apply to the extent that
they dont conflict with the
For the
determination
of the
objections to
the
Rehabilitation
plan
N/A
For the
election and
appointment
of liquidator
Approval of the
Rehabilitation
plan shall have
the legal effect
as
Confirmation
of Plan
CRAM DOWN
EFFECT: the
Rehabilitation
Plan shall
have the
same legal
effect as
Confirmation
of a Plan
LIQUIDATION ORDER:
1)The juridical debtor is dissolved and its juridical
existence terminated
2)Legal title of all the assets of the debtor shall be
vested in the liquidator/court
3)All contracts of the debtor shall be deemed
terminated unless the liquidator, w/in 90 days from
the date of his assumption of office, declares
otherwise and the contracting party agree
4)No separate action for the collection of an
unsecured claim shall be allowed (direct claims to
liquidator)
5) No foreclosure proceeding shall be allowed for 180
days
*court has 120

days from date
of filing to
approve the
Plan. Failing to
do so, the
Rehab Plan
shall be
deemed
approved.
For the
election
and
appointme
nt of
liquidator
For the
election
and
appointme
nt of
liquidator
For the
election
and
appointme
nt of
liquidator
SUSPENSI
ON
ORDER:
No
creditor
shall sue
or institute
proceedin
gs to
collect his
claim from
the debtor
from the
time of
filing of
the
petition
and for so
long as
the
proceedin
gs remain
pending
Except:
a)those
creditors
having
claims for
personal
plan
5) any
compromises/reschedule of
timing of payments by
debtor shall be binding on
the creditor regardless
whether the plan is
successfully implemented
6) claims arising after the
approval of the plan that
are otherwise not treated
by the Plan are NOT subject
to Suspension Order
labor,
maintenan
ce,
expense of
last illness
of debtor
60 days
prior filing
b) secured
creditors
COMMODATUM
Object
Purpose
Obligation
Status of
Ownership
Ability to
demand
return
Nonconsumable
Except:
consumable if
used for
exhibition
purposes only
Temporary
use of the
thing
Take care of
the thing with
due diligence
Return the
thing upon
expiration of
period or
purpose
Retained by
bailor
Anytime, if no
period or
purpose has
been agreed
upon or if by
mere
tolerance only
(precarium)
MUTUUM
DEPOSIT
Fungible/
consumable
(i.e. money)
Movable/person
al property
Nonconsumable
Consumption
Safekeeping
Use or
consumption
Return a thing
of the same
kind and
quality
Passes to
bailee
Only after the
expiration of
the period
Take care of the

thing
Do not use the
thing deposited
unless
authorized or is
required for its
preservation
Retained by the
depositor
Anytime
Compensatio
n
Exchange
(sale)
Exchange a
thing of the
same kind,
quality and
quantity
Gratuitous or
onerous
Gratuitous or
onerous
WAREHOUSE
RECEIPTS ACT
Goods (chattels,
merchandise)
Store for profit
Take care of the

goods
Do not commingle
with other goods
Issue a receipt for
the goods
Passes to the
other party
(mutual
exchange)
Cannot
demand
return
because
contract is
already
extinguished
Rescission
only if
grounds exist
If there is an
urgent
necessity
Acts of
ingratitude by
the bailee
Essentially
gratuitous
BARTER
onerous
Retained by the
depositor
Anytime up to:
a. Surrender of
warehouse
receipt
b. Offer to pay
warehouse
mans lien
c. Sign the
acknowledg
ement
Onerous
Object
Requisit
es
Immovables
Real
Rights
over
immovables (leasehold
rights)
Movables
Movables
Incorporeal rights
Except:
can
CM evidenced
by
buildings
by negotiable
agreement
and
no instruments, bills
innocent third party of lading, shares of
prejudiced
stock,
bonds,
warehouse receipts
1. Constituted to secure fulfillment of principal obligation
2. Mortgagor/Pledgor absolute owner
3. Mortgagor/Pledgor has free disposal/legal authority
*RM, CM and Pledge is VALID as between the parties even if
registration requirements are not complied with BUT is not binding to
3rd persons
To bind
3rd
persons
Must be registered in
the RD
the CM Registry
Delivery
?
Generally not required
*If vehicle, must also

be registered in the
LTO
Generally not required
Effect of
default
Must be in a public
instrument with a
description of thing
pledged and the
date
Immovables
1. Must
be
in
writing
2. Express
agreement
between debtorcreditor that the
fruits
will
be
applied
to
payment
of
interest if any,
and then to the
principal
the RD
Delivery essential
to
constitute
pledge
Delivery
essential
only so that the
antichretic
creditor
can enjoy the fruits
Ownership does not pass to the creditor upon default. Principle of pactum comissorium
applies
Except: In pledge, after two sales and the thing remains unsold, the pledgee can appropriate
(in this case, he has to waive his claim)
Foreclos
ure
Deficien
cy
Extrajudicial/Judicial
Creditor can sue for
deficiency in either EJ/J
Sale through a notary

public
No
express
right
granted by law, BUT
allowed
by
jurisprudence
Except: No deficiency
in sale on movables in
installment
(Recto
Law)
Extrajudicial
Private sale
No deficiency
Extrajudicial/Judicial
Creditor can sue for
deficiency in either
EJ/J
VIII. LAND TITLES AND DEEDS

=========================
========
A. Torrens System
1. Concept and background
2. Certificate of title
B. Regalian Doctrine
1. Concept
2. Effects
3. Concept of native title, time
immemorial possession
C. Citizen Requirements
D. Non-Registrable Properties
E. Original Registration
1.
Registration
process and requirements
2.
Who may apply
a. Under P.D. 1529
b. Under C.A. 141
3. Remedies
4. Cadastral registration
F. Subsequent Registration
1. Voluntary Dealings
2. Involuntary Dealings
G. Dealings With Unregistered Land
=========================
========
1.
CONCEPT AND BACKGROUND
LAND TITLE is evidence of the owners right or

extent of interest, by which he can maintain
control and as a rule assert right to exclusive
possession and enjoyment of property
DEED is an instrument in writing by which any
real estate or interest therein is created,
alienated, mortgaged, or assigned, or by which
title to any real estate may be affected in law or
equity
LAND
REGISTRATION
is
a
judicial
or
administrative proceeding whereby a persons
claim over a particular land is determined and
confirmed or recognized so that such land and
the ownership thereof may be recorded in a
public registry
TORRENS SYSTEM is a system for registration
of land under which, upon the landowners
application, the court may, after appropriate
proceedings, direct the issuance of a certificate
of title
PURPOSES: (QUIP-CC)
1. To quiet title to the land and to stop forever
any question as to the legality of said title
2. To relieve the land of unknown claims
3. To guarantee the integrity of land titles and to
protect their indefeasibility once the claim of
ownership is established and recognized
4. To give every registered owner complete peace
of mind
5. To issue a certificate of title to the owner which
shall be the best evidence of his ownership of
the land
6. To avoid conflicts of title in and to real estate
and to facilitate transactions. Lagarda v.
Saleeby [31 Phil 590, 1915]
The registration of property is to: (1) avoid possible
conflicts of title, and (2) facilitate transactions
relative to real property by giving the public the
right to rely upon the face of the Torrens certificate
of title and to dispense with the need of inquiring
further, EXCEPT when the party concerned has
actual knowledge of facts and circumstances that
should impel a reasonably cautious man to make
such further inquiry. Capitol Subdivision v.
Province of Negros, [7 SCRA 60 ,1963)
NATURE OF TORRENS SYSTEM
Judicial in character and not merely

administrative
Proceeding is in rem (binding upon the
whole world)
In a registration proceeding, the judgment of the

court confirming the title, and ordering its
registration in ones name constitutes, when final,
res judicata against the whole world. Ronald Ting
v. Heirs of Lirio, [G.R. No. 168913, March 14,
2007]
TORRENS TITLE is a certificate of ownership
issued under the Torrens System, through the
Register of Deeds, naming and declaring the owner
of the real property described therein, free from all
liens and encumbrances except such as may be
expressly noted there or otherwise reserved by
law. (See Section 44, PD 1529)
General Rule A title once registered cannot be
impugned, altered, changed, modified, enlarged,
or diminished
Exception Direct proceeding permitted by law,
usually for the protection of innocent third
persons
2. CERTIFICATE OF TITLE
PROBATIVE VALUE OF THE TORRENS TITLE

Torrens Title may be received in evidence in
all Philippine courts , and shall be conclusive as
to all matters contained therein, principally as to
the identity of the land owner except so far as
provided in the Land Registration Act.
3. Accretion
As opposed to an unregistered deed of sale,

the certificate of title certainly deserves more
probative value. Indeed, a Torrens Certificate
is evidence of indefeasible title of property in
favor of the person in whose name appears
thereinsuch holder is entitled to the
possession of the property until his title is
nullified. Pascual v. Coronel, [527 SCRA
474, 2007]
Accretion to registered lands

needs new registration
TYPES OF TORRENS CERTIFICATES OF TITLE

1. ORIGINAL CERTIFICATE OF TITLE - the first
title issued in the name of the registered
owner by the Register of Deeds (ROD)
covering a parcel of land which had been
registered by virtue of a judicial or
administrative proceeding.
2. TRANSFER CERTIFICATE OF TITLE - the title
issued by the ROD in favor of the transferee
to whom the ownership of the already
registered land had been transferred by
virtue of a sale or other modes of
conveyance.
MODES OF ACQUIRING TITLE
1. Public Grant
A conveyance of public land
by government to a private
individual
2. Acquisitive
Requisites: ONCE
Prescription
Open,
Continuous,
Exclusive, and
Notorious possession
If in good faith & with just
title: 10 yrs. uninterrupted
possession is required
If in bad faith & without just
title: 30 yrs. continuous
possession is required
Only available if the land
possessed is public, alienable
and disposable
A property registered under
the Torrens System is not
subject to prescription
Prescription is unavailing not
only against the registered

owner, but also against his
hereditary successors
Requisites: G-C-A
1. The deposit of soil or
sediment be gradual and
imperceptible,
2. It is the result of the
current of the waters
(river/sea), and
3. The land where accretion
takes place is adjacent to
the banks of rivers or the
sea coast
There must be No human

intervention,
4. Reclamation
5. Voluntary
Transfer
6. Involuntary
Alienation
7. Descent or
Devise
8. Emancipation
Patent/Grant
(Certificate of
Land Ownership
Award)
The current causing the

alluvial deposit must be
from a river. If it is from
the sea, the deposit will
pertain to the state.
(Government of the
Phils. v. Cabangis 53
Phil. 112 (1929))
Filling of submerged land by
deliberate act and reclaiming
title thereto
Must be initially owned
by the government
May be subsequently
transferred to private
owners
1. Private grant
2. Voluntary execution of
deed of conveyance
Contractual relationship
between the parties
Consensual
No consent from the
owner of land
Forcible acquisition by
the State
Hereditary succession to the
estate of deceased owner
To ameliorate the sad plight
of tenant-farmers (to answer
their problems)
Such grant is not
transferable except by
hereditary succession
LAWS IMPLEMENTING LAND REGISTRATION

1. Property Registration Decree (P.D. 1529, as
amended)
2. Cadastral Act (Act 2259, as amended)
3. Public Land Act (Commonwealth Act 141, as
amended)
4. Emancipation Decree (P.D. 27, as amended)
5. Comprehensive Agrarian Reform Law of 1988
(R.A. 6657, as amended)
ADMINISTRATION OF THE TORRENS SYSTEM
1.
Land Registration Authority
(LRA)
Agency charged with the efficient execution of
the laws relative to the registration of lands,
under the executive supervision of the DOJ
Composition:
a. Administrator
b. 2 Deputy Administrators (as assistants)
The Functions of the LRA are: (SAC)
2.
Extend speedy and effective assistance
to the Dept. of Agrarian Reform, the Land
Bank,
and
other
agencies
in
the
implementation of the land reform program
of the government
2.
Extend assistance to
courts in ordinary and cadastral land
registration proceedings
3.
Be
the
central
repository of records relative to original
registration of lands titled under the Torrens
system, including the subdivision and
consolidation plans of titled lands
2.
Register Of Deeds (ROD)
It is the public repository of records
and
instruments affecting registered or unregistered
lands and chattel mortgages in the province or
city wherein such office is situated
Composition:
a. Register of Deeds
b. Deputy (as assistant)
The functions of the ROD: (PIDI)
1.
Immediately register an instrument
presented for registration dealing with real or
personal property which complies with the
requisites for registration
2.
Shall see to it that said instrument bears
the proper documentary and science stamps
and that the same are properly cancelled
3.
If the instrument is not registerable, he
shall deny the registration thereof and inform
the presentor of such denial in writing,
stating the ground or reason therefore, and
advising him of his right to appeal by
consulta in accordance with Sec. 117 of PD
1529
4.
Pr
epare and keep an index system which
contains the names of all registered owners
and lands registered
The function of the ROD with reference to
registration of deeds, encumbrances, instruments,
and the like is ministerial in nature, provided the
applicant complies with all the requisites. Baranda
v. Gustilo, [165 SCRA 757, 1988]
It is enough that in the RODs opinion an
instrument is registrable for him to register it. The
act being an administrative act does not
contemplate notice to and hearing of interested
parties. Ledesma v. Villasenor, [13 SCRA 494,
1965]
The determination of whether a document is valid
or not is a function that belongs to a court of
competent jurisdiction, and not to the ROD.
Almirol v. ROD of Agusan, [G.R. No. L-22486,
March 20, 1968]
Instances when the ROD may validly deny
registration of a voluntary instrument:
1. Where there are more than 1 copy of the
owners duplicate certificate of title and not all
such copies are presented to the ROD
2. Where the voluntary instrument bears on its
face an infirmity
3. Where the validity of the instrument sought to
be registered is in issue in a pending court suit,
notice of which must be given to parties
4. Registration may be suspended Balbin v.
ROD, [28 SCRA 12,1969]
The ROD may also refuse to register a private
document since Section 112 of PD 152 provided
that deeds of conveyances affecting lands should
be verified and acknowledged before a notary
public or other public officer authorized by law to
take acknowledgement. Gallardo v. IAC, [155
SCRA 248, 1987]
NOTE: When the ROD is in doubt as to the proper
action to take on an instrument or deed presented
to him for registration, he should submit the
question to the Administrator of the LRA en
consulta (Section 117, PD 1529).
B. REGALIAN DOCTRINE
1. CONCEPT
Under the Regalian doctrine which is embodied in
Section 2, Article XII of the 1987 Constitution, all
lands of the public domain belong to the State,
which is the source of any asserted right to
ownership of land. ll lands of the public domain,

waters, minerals, coal, petroleum and other
mineral oils, all forces of potential energy,
fisheries, forests, or timber, wildlife, flora and
fauna, and natural resources belong to the state.
With the exception of agricultural lands, all other
natural resources shall not be alienated
2. EFFECTS
All lands not appearing to be clearly within
private ownership are presumed to belong to the
State. Unless public land is shown to have been
reclassified or alienated to a private person by
the State, it remains part of the inalienable public
domain.
To
overcome
this
presumption,
incontrovertible evidence must be established
that the land subject of the application is
alienable or disposable.
To prove that the land subject of an
application for registration is alienable, an
applicant must establish the existence of a
positive act of the government such as a
presidential proclamation or an executive order;
an administrative action; investigation reports of
Bureau of Lands investigators; and a legislative
act or a statute. The applicant may also secure a
certification from the Government that the lands
applied for are alienable and disposable.
3. CONCEPT OF NATIVE
TIME IMMEMORIAL
D. NON-REGISTRABLE PROPERTIES
NON-REGISTRABLE PROPERTIES
Article 420
1. Those intended for public
NCC
use, such as roads, rivers,
torrents, ports and bridges
constructed by the State,
banks, shores, roadsteads,
and others of similar
character
2. Those which belong to the
State, without being for
public use, and are intended
for some public service or for
the development of the
national wealth.
Arts. 5 & 6,
Water Code
(PD 1067 )
TITLE,
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 ICCs/IPs, havenever been public
lands and are thus indisputably presumed to
have been held that way sincebefore the Spanish
Conques
C. CITIZEN REQUIREMENTS
1. INDIVIDUALS AND
CORPORATIONS
1. Rivers and their natural

beds;
2. Continuous or intermittent
waters of springs and brooks
running in their natural beds
and the beds themselves;
3. Natural lakes and lagoons;
4. All
other
categories
of
surface waters such as water
flowing over lands, water
from rainfall whether natural
or artificial, and water from
agriculture runoff, seepage
and drainage;
5. Atmospheric water;
6. Subterranean
or
ground
water;
7. Seawater;
Found in private lands:
8. Continuous or intermittent
waters rising on such lands;
9. Lakes and lagoons naturally
occuring on such lands;
10. Rain water and falling on
such lands;
11. Subterranean
or
ground
waters; and
12. Waters
in
swamps
and
marshes
Forest or timberland, public
forest, forest reserves lands,
mineral lands
Only Filipino citizens may acquire not more than

12 hectares by purchase, homestead or grant, or
lease not more than 500 hectares.
Regalian
Doctrine
under the
1935, 1973,
and 1987
Constitution
Private corporations may lease not more than

1,000 hectares for 25 years renewable for
another 25 years
It is not the court which determines the

classification of lands of the public domain into
agricultural, forest or mineral but the Executive
Branch of the government, through the Office of
Alienable lands of the public domain:
the President. Bureau of Forestry v. CA, [153

SCRA 351, 1987]
The State has an imprescriptible right to cause
the reversion of a piece of property belonging to
the public domain if title has been acquired
through fraudulent means. Republic v. Heirs of
Alejaga, [393 SCRA 361, 2002]
indicium of possession in the concept of an owner.

Such an act strengthens ones bona fide claim of
acquisition of ownership. Republic v. Sta. AnaBurgos, [523 SCRA 309, 2007]
b. Always filed with the RTC of the place
where land is situated
c. Indorsed to the MTC if there is no
controversy over the land or if its value is
less than 100,000
d. In cases of delegated jurisdiction to the
MTC, appeal is directed to the CA
e. If land is situated between boundaries of
2 provinces, application must be filed:
When boundaries are not defined:
with the RTC of the place where it is
declared for taxation purposes;
When boundaries are defined: a
separate plan for each portion must
be made by a surveyor and a
separate application for each lot must
be filed with the appropriate RTC
A land classified as a military reservation zone,

until reclassified or released from the said
classification remains inalienable public land.
Republic v. Southside, [G.R. No. 156951,
Sept. 22, 2006]
E. ORIGINAL REGISTRATION
Types Of Registration:
1. Original Registration
2. Subsequent Registration
ORIGINAL REGISTRATION UNDER P.D. 1529
is a proceeding brought before the RTC (as a land
registration court) to determine title or ownership
of land on the basis of an application for
registration or answer by a claimant in a
cadastral registration.
1. REGISTRATION
REQUIREMENTS
PROCESS
AND
Kinds Of Judicial Registration:

1. Judicial/Voluntary/Ordinary by filing
with the proper court; application by the
private individual himself
2. Administrative/Involuntary/Cadastral
compulsory registration initiated by the
government
Procedure In Ordinary Land Registration
(SurF-D-TraPS-AHJ-DECT)
1. SURvey of land by the Bureau of Lands or a
duly licensed private surveyor
- Survey plan must be duly approved by
the Director of Lands.
2. Filing of application for registration by the
applicant
a. With all muniments of titles and copies
thereof with survey plan approved by
Bureau of Lands
MUNIMENTS OF TITLE are instruments or
written evidence which applicant hold or possess
to enable him to substantiate and prove title to
his estate.
Tax declarations or realty tax payment of
property are not conclusive evidence of
ownership. At most, they serve as a good
3. Setting of the Date of initial hearing of

application by the RTC
- Within 5 days, set hearing 45-90 days from
date of order
4. Transmittal of the application and the date of
the initial hearing, with all the documents or
other evidence attached thereto, by the Clerk
of Court to the LRA
5. Publication of notice of the filing of the
application and the date and place of the
hearing in the Official Gazette. The notices
required are mandatory.
a. Publication of notice of initial hearing
i.
Once in the Official Gazette (this
confers jurisdiction upon the court)
ii.
Once in a newspaper of general
circulation
Purpose of publication:
1.
To confer
jurisdiction
over the land applied for upon the court
2.
To charge the whole
world with knowledge of the application of
the land involved, and invite them to take
part in the case and assert and prove their
rights over the subject land
b. Mailing
Within 7 days after publication of said
notice in the OG, mailing of notice to:
i.
Persons named in the notice
ii.
Sec. of Public Highways, Provincial
Governor, and Mayor, if the applicant
requests to have the line of a public
way or road determined
iii.
Sec. of Agrarian Reform, Solicitor
iv.
General, Director of Lands, Director

of Fisheries, and Director of Mines, if
the land borders on a river,
navigable stream, or shore, or on an
arm of the sea where a river or
harbor lies
Other persons as the court may
deem proper
c. Posting
Posting in conspicuous place on subject
land and on bulletin board of municipal
building at least 14 days before initial
hearing
6. Service of notice by the sheriff upon
contiguous owners, occupants and those
known to have interests in the property
7. Filing of answer to the application by any
person whether named in the notice or not
8. Hearing by the court
9. Promulgation of judgment by the Court
10. Issuance of the decree declaring the
decision final and instructing the LRA to
issue a decree of confirmation and
registration
Decree issued by LRA after finality of judgment;
contains technical description of land.
i.
Decrees dismissing application
ii.
Decrees
of
confirmation
and
registration
*0. Subject only to appeal
11. Entry of the decree of registration in the
LRA
1 year after the date of entry, it becomes
incontrovertible and amendments will not be
allowed except clerical errors. It is deemed
conclusive as to the whole world.
- Puts an end to litigation
- Purpose of Torrens system is protected
12. Sending a copy of the decree of registration
to the corresponding ROD
13. Transcription of the decree of registration
in the registration book and issuance of the
owners duplicate original certificate of title
to the applicant by the ROD upon payment
of the prescribed fees
NOTE: Noncompliance with the requisites will
make the Certificate of Title (CT) issued invalid
and cancellable by the courts.
2 .WHO MAY APPLY

a. UNDER PD 1529 (OPAL)
1.
Those who by themselves or through their
predecessors-in-interest have been in open,
continuous, exclusive, notorious possession
and occupation of alienable and disposable
lands of the public domain under a bona fide
claim of ownership since June 12, 1945 or
earlier
2. Those who acquired ownership of private
land by prescription under the provisions of
existing laws
3. Those who acquired ownership of private
lands or abandoned river beds by right of
accession or accretion under the existing
laws
4. Those who have acquired ownership of land
in any manner provided for by law
NOTE: All these persons must be natural-born
Filipino citizens.
By way of exception juridical
persons may apply for registration of leased
agricultural and disposable lands not exceeding
1,000 hectares in area for a period of 25 years and
renewable for not more than 25 years (Sec. 3,
Article XII, 1987 Constitution), and except
when the land has been previously acquired by
prescription by a natural person and subsequently
transferred to a juridical entity. In this case, a
corporation may apply for judicial confirmation of
title. Dir. of Lands v. IAC and ACME, [146 SCRA
159 (1986]
Limitation
To Ownership
Of Land By
Corporation:
1. Private Lands
a. At least 60% Filipino (Sec. 7, Article XII,
1987 Constitution)
b. Restricted as to extent reasonably
necessary to enable it to carry out
purpose for which it was created
c. If engaged in agriculture, it is restricted to
1,024 hectares
2. Patrimonial Property of the State (Sec. 3,
Article XII, 1987 Constitution)
a. May only Lease (CANNOT own land of the
public domain) for 25 years renewable
b. Limited to 1,000 hectares
c. Apply to both Filipinos & foreign
corporations
Determinative of this issue is the character of the
parcels of land whether they were still public or
already private when the registration proceedings
were commenced.
If they are already private
lands, the constitutional prohibition against
acquisitions by a private corporation would not
apply. Natividad v. CA, [202 SCRA 439, 1991]
FORM OF THE APPLICATION
(Sec. 15, PD 1529): (WSS)

1.
Written
2.
Signed by
the applicant or person duly authorized in his
behalf
- If there is more than 1 applicant, the
application shall be signed and sworn to
by and in behalf of each.
2. Sworn to before an officer authorized to
administer oath for the province or city where
the application was actually signed
CONTENTS OF APPLICATION
(Sec. 15, P.D. 1529): (MADFARCE)
1. Manner of acquisition of land
2. Assessed value of the land and the buildings
and other improvements based on the last
assessment for taxation purposes
3. Description of the land applied for together
with the buildings and improvements; the
plan approved by Director of Lands and the
technical descriptions must be attached
4. The court may require Facts to be stated in
the application in addition to those prescribed
by the Decree not inconsistent therewith and
may require the filing of additional papers
5. Full names and addresses of All occupants of
the land and those of the Adjoining owners, if
known; and if not known, the applicant shall
state the extent of the search made to find
them
6. If the application describes the land as
bounded by a public or private way or Road,
it shall state whether or not the applicant
claims any portion of the land within the
limits of the way or road, and whether the
applicant desires to have the line of way or
road determined (Sec. 20, PD 1529)
7. Citizenship and Civil status of the applicant
if married, name of spouse, and
if the marriage has been legally
dissolved,
when
and
how
the
marriage relation was terminated
8. Mortgage or Encumbrance affecting the land
or names of other persons who may have an
interest therein, legal or equitable
9. If the applicant is a non-resident of the
Philippines, he shall file an instrument
appointing an agent residing in the Phils. and
shall agree that service of any legal process
shall be of the same legal effect as if made
upon the applicant within the Philippines
(Sec. 16, PD 1529)
Where To File Application
General Rule RTC of the province or city
where the land is situated
File together
with application
all original
muniments of titles or copies thereof and a survey
plan of the land as approved by the Bureau of
Lands
P.D. 1529 has eliminated the distinction between
the general jurisdiction vested in the RTC and the
limited jurisdiction conferred upon it by the former
law when acting merely as land registration court.
Aimed at avoiding multiplicity of suits, the change
has
simplified
registration
proceedings
by
conferring upon the RTCs the authority to act not
only on original applications but also those filed
after original registration, with power to hear and
determine all questions arising upon such
applications or petitions. Averia v. Caguioa, [146
SCRA 459, 1986]
If there are several parcels of land situated in
different provinces/cities but belong to one owner,
he must file in RTC of each province/city where the
different parcels of land are located for registration
purposes
Exception Delegated jurisdiction of the MTC to
hear and determine cadastral or land registration
cases covering lots where:
there is no controversy or opposition, or
contested lots, the value of which does not
exceed 100,000
AMENDMENTS IN ORDINARY REGISTRATION
PROCEEDINGS
1. Striking out one or
The court may strike
more of the parcels of
out at any time
land applied for or by a
severance of the
application
2. Substantial change in New technical
boundaries, increase in
description and new
area, inclusion of
publication and notice
additional land
are necessary
3. Joinder, substitution,
File motion with court
or discontinuance of any
of the parties
4. Decrease in area
File motion with court;
no need for new
publication or notice
If the amendment consists in the inclusion in the
application for registration an area or parcel of land
not previously included in the original application,
as published, a new publication of the amended
application must be made. The purpose of the new
publication is to give notice to all persons
concerned regarding the amended application.
Without a new publication, the registration court
cannot acquire jurisdiction over the area or parcel
of land that is added to the area covered by the
original application, and the decision of the

registration court would be a nullity insofar as
the decision concerns the newly included land.
But if the amendment consists in the exclusion of
a portion of the area covered by the original
application and the original plan as previously
published, a new publication is not necessary. In
the latter case, the jurisdiction of the court is not
affected by the failure of a new application.
Benin v. Tuason, [57 SCRA 531, 1974]
Requisites of Opposition: an opposition may
be filed by any person claiming an interest
1. Set forth objections to the application
2. State interest claimed by oppositor
3. Apply for the remedy desired
4. Signed and sworn to by him or by some
other duly authorized person
5. Filed on or before the date of initial hearing
6. If only a portion of the land applied for is
contested and such portion is not properly
delimited, court may require submission of
a division plan approved by the Director of
Lands
GENERAL DEFAULT
Those persons who
did not appear and
answer within the
time prescribed
SPECIAL DEFAULT
When a party appears at
initial hearing without
having filed an answer
and asks court for time to
file answer but failed to
do so within period
allowed
b. UNDER C.A. 141

Judicial Confirmation of Imperfect or
Incomplete Title under the Public Land Act
In rem, judicial proceedings

The decree of registration issued is
conclusive and final
Governed by court procedure and law of
evidence
When To File
Extended up to December 31, 2020, as provided
in Sec. 2 of RA 9176
Limitation To Area Applied For
Maximum of 12 hectares (Sec. 3, RA 6940)
What Applicant Must Prove
The land is alienable and disposable land of
the public domain, and
His possession was for the length of time and
in the manner and concept required by law
NOTE: Form, Contents, Notice, Mailing, Posting

Requirements are the same as those required in
original registration under PD 1529.
A judicial declaration that a parcel of land is public,
does not preclude even the same applicant from
subsequently seeking a judicial confirmation of his
title to the same land, provided he thereafter
complies with the provisions of Sec. 48 of C.A. 141,
as amended and as long as said public land
remains alienable and disposable. Director of
Lands v. CA, [106 SCRA 426, 1981]
Proof of Private Ownership (STOP)
1. Spanish title (inadmissible and ineffective
proof of ownership in land registration
proceedings filed after Aug. 16, 1976)
2. Tax declarations and tax payments (not
conclusive evidence of ownership, must be
coupled with proof of actual possession for
the period required by law)
3. Other kinds of proof (ex. testimonial
evidence to prove accretion, deeds of sale)
4. Presidential issuances and legislative acts
(constitutive of a fee simple title or absolute
title in favor of the grantee, a law ceding full
ownership to a government institution)
The holder of a Spanish title may still lose his
ownership of the real property to the occupant who
actually possesses the same for the required
prescriptive period. Taking the law as a whole, it
has clearly set a deadline for the filing of
applications for registration of ALL Spanish titles
under the Torrens system (i.e., 6 months from its
effectivity or on 14 August 1976), after which, the
Spanish titles may no longer be presented to prove
ownership. Spanish titles can no longer be
countenanced as indubitable evidence of land
ownership. Santiago v. SBMA, [G.R. No.
156888, November 20, 2006]
JUDGMENT is a decision of court constituting its
opinion after taking into consideration the
evidence submitted.
It becomes final upon the lapse of 15 days counted
from the receipt of notice of the judgment.
However, notwithstanding the lapse of the 15-day
period from receipt of judgment by the parties, the
court continues to retain control over the case until
the expiration of 1 year after the entry of decree of
registration by the LRA. Republic v. Assosacion
Benevola de Cebu [178 SCRA 692, 1989]
In special proceedings the purpose of execution of
judgment is to establish a status, condition or fact;
in land registration proceedings, the ownership by
a
person of a parcel of land is sought to be
established. After the ownership has been
proved and confirmed by judicial declaration, no
further proceeding to enforce said ownership is
necessary, except when the adverse or losing
party had been in possession of the land and the
winning party desires to oust him therefrom.
Ronald Ting v. Liro, [G.R. No. 168913,
March 14, 2007]
Post-Judgment Incidents
1. Writ of Possession: order to sheriff to
deliver the land to the successful party
litigant; no prescription against: (1) the
loser and (2) anyone unlawfully and
adversely occupying
When writ may not issue: When a party
entered into property after issuance of final
decree, is not an oppositor in registration
proceeding, and is in possession of land for at
least 10 years
2. Writ of Demolition: the complement of
writ
of
possession;
to
demolish
improvements introduced by oppositor or
his successor in interest
Means to Recover Possession
1. Forcible entry
2. Unlawful detainer
3. Accion publiciana
4. Accion reivindicatoria
Decree of Registration
The decree issued by the LRA pursuant to
the order of the court.
Binds the land, quiets title thereto, subject
only to such exceptions or liens as may be
provided by law
Conclusive upon all persons including the
government
Contents of The Decree (DMD-DO)
1. Date, hour and minute of its entry
2. Whether the owner is married or
unmarried, and if married, the name of the
spouse; provided that if the land is conjugal
property, the decree shall be issued in the
name of both spouses
3. If the owner is under disability, the nature
of such disability, and if a minor, his age
4. Description of the land and shall set forth
the estate of the owner, and also show their
relative easements, liens, attachments, and
other encumbrances
5. Other matters to be determined in
pursuance of the law
Process of Issuing The OCT

1. Within 15 days from finality of order of
judgment directing registration of title court
orders the LRA to issue decree of registration
and certificate of title
2. Clerk of court will send order of court and
copies of judgment
3. Writ of Demolition may be issued. The court
has authority to order, as a consequence of
the writ of possession issued by it, the
demolition of improvements introduced by
the defeated oppositor or his successor-ininterest
4. Administrator will issue a decree of
registration and original and duplicate of OCT
that is signed by the Administrator, enter and
file decree of registration in LRA
5. Send to ROD the original and duplicate of
title and certificate for entry in his
registration book
6. Enter in record book, dated, signed,
numbered and sealed to take effect upon
date of entry
7. ROD to send notice to registered owner ready
for delivery after payment of fees
8. ROD shall send duplicate and note on each
certificate of title to whom it is issued
9. Original copy to be filed in ROD
10. Bound in consecutive order
Attributes and Limitations on Certificates of
Title and Registered Lands
1. Free from liens and encumbrances
General Rule Claims and liens of whatever
character existing against the land prior to the
issuance of the certificate of title are cut off by
such certificate and the certificate so issued binds
the whole world, including the government.
Exceptions: (CNT-PD)
i.
Those noted on the certificate
ii.
Liens, claims, or rights arising or
existing
under
the
laws
and
the
Constitution, which are not by law required
to appear on record in the Register of
Deeds in order to be valid
iii.
Unpaid real estate taxes levied and
assessed within 2 years immediately
preceding the acquisition of any right over
the land by an innocent purchaser for value
iv.
Any public highway, or private way
established or recognized by law, or any
government irrigation, canal or lateral
thereof, if the certificate of title does not
state the boundaries of such highway or
irrigation canal or lateral thereof have been
determined
v. Any disposition of the property or limitation
on the issue thereof pursuant to PD 27 or
of
any other law or regulations on agrarian
reform
2.
Incontrovertible and indefeasible

General Rule Upon expiration of 1 year
from and after the entry of the decree of
registration in the LRA, the decree and the
corresponding certificate of title becomes
incontrovertible and indefeasible.
Exceptions: (PNF)
a.
If previous
valid title of the same land exists
b.
When land
covered is not capable of registration
c.
When
acquisition of certificate is attended
by fraud
title shall not be subject to collateral attack. It

cannot be altered, modified, or cancelled except in
a direct proceeding in accordance with the law.
Torrens title cannot be collaterally attacked. The
question on the validity of a Torrens title, whether
fraudulently issued or not, can be raised only
in an action expressly instituted for that purpose.
The action for the declaration of nullity of deed of
sale commenced by the petitioners in the RTC is
not the direct proceeding required by law to attack
a Torrens certificate of title. Tapuroc v.
Loquellano de Mende, 512 SCRA 97 (2007
4.
The rule on the incontrovertible nature of a

certificate of title applies when what is
involved is the validity of the OCT, not when
it concerns that of the TCT. Arguelles v.
Timbancaya, [72 SCRA 193, 1976]
2.
Registered land not subject to

prescription
a. Even adverse, notorious and continuous
possession under claim of ownership for
the period fixed by law is ineffective
against a Torrens title. JM Tuason and
Co. Inc. v. CA, [93 SCRA 146, 1979]
b. The fact that the title to the land was
lost does not mean that the land ceased
to be registered land before the
reconstitution of its title.
It cannot
perforce be acquired by prescription.
Ruiz v. CA, [79 SCRA 525 , 1977]
c. Laches may be invoked to bar
reconveyance of land to the registered
owner only if there are intervening
rights of third persons which may be
affected or prejudiced if such land is
returned to the registered owner. De
Lucas v. Gamponia, [100 Phil 277 ,
1956]
With respect to a claim of acquisitive

prescription, it is baseless when the land
involved is a registered land since no title to
registered land in derogation of that of the
registered owner shall be acquired by adverse
possession. Feliciano v. Zaldivar, [G.R. No.
162593, Sept. 26, 2006]
3.
Certificate of
collateral attack
title
not
subject
to
Sec. 48 of P.D. 1529 provides that a certificate
Torrens Certificate presumed valid and

devoid of flaws
General Rule Torrens Certificate of Title is
presumed to have been regularly issued,
valid, and without defects. The buyer has the
right to rely upon the face of the Torrens title
and dispense with the trouble of inquiring
further.
Exception When he has actual knowledge
of facts and circumstances that would impel
a reasonably cautious man to make inquiry.
While, it is a familiar doctrine that a forged or

fraudulent document may become the root of a
valid title, if title to the property has been
transferred from the forger to an innocent
purchaser in good faith, the same does not apply in
case of banking institutions or those engaged in
real estate for they are expected expected to
exercise more care and prudence than private
individuals in their dealing with registered lands. In
the absence of inquiry, the respondent Bank
cannot and should not be regarded as a
mortgagee/purchaser in good faith. Erasusta v.
CA, [G.R. No. 149231, July 17, 2006]
5.
General incidents of registered land
Registered land or the owners thereof are not

relieved from the following:
a. From any rights incident to the relation of
husband and wife, landlord and tenant
b. From liability to attachment or levy on
execution
c. From liability to any lien of any
description established by law on the land
and buildings thereon, or in the interest of
the owner in such land or buildings
d. From any right or liability that may arise
due to change of the law on descent
e. From the rights of partition between coowners
f. From the right of the government to take
the land by eminent domain
g. From liability to be recovered by an

assignee in insolvency or trustee in
bankruptcy under the laws relative to
preferences
h. From any other rights or liabilities
created by law and applicable to
unregistered land
6.
Where certificate of title is obtained

by a trustee
a. Trustee who obtains a Torrens title in his
name, over property held in trust by
him for another cannot repudiate the
trust relying on the registrations, such
being one of the limitations upon the
finality of title
b. Trustee could not perforce legally
convey ownership of the registered
property in her will for she is not the
absolute owner thereof
adjudicate lands already covered by a Certificate of

Title, it is nonetheless true that this rule only
applies where there exists no serious controversy
as to the certificates authenticity vis--vis the land
covered therein. Republic v. Vera, 120 SCRA
210 (1983)
BASIS
Nature
Applicant
PD 1529
Voluntary
Landowner
Lands
covered
usually
involves
private land
3. CADASTRAL REGISTRATION
CADASTRAL REGISTRATION is a proceeding in
rem initiated by the filing of a petition for
registration by the government, not by the
persons claiming ownership of the land subject
thereof, and the latter are, on the pain of losing
their claim thereto, in effect, compelled to go to
court to make known their claim or interest
therein and to substantiate such claim or interest
Procedure: (NN-CP-PAHD-DI)
1. Notice of cadastral survey published once
in OG and posted in conspicuous place with
a copy furnished to the mayor and
barangay captain
2. Notice of date of survey by the Bureau of
Land Management and posting in bulletin
board of the municipal building of the
municipality or barrio, and he shall mark
the boundaries of the lands by monuments
set-up in proper places thereon
3. Cadastral survey
4. Filing of petition
5. Publication (twice in successive issues of
OG), mailing, posting
6. Filing of answer
7. Hearing of the case
8. Decision
9. Issuance of the decree and certificate of
title
NOTE: The cadastral court is not limited to a
mere adjudication of ownership in favor of one or
more claimants.
If there are no successful
claimants, the property is declared public land.
Additionally, while the court has no jurisdiction to
Parties
Purpose
Person who
requests
the survey
Effect of
judgment
it may also
refer to public
agricultural
lands if the
object of the
action is
confirmation of
an imperfect
title
Applicant and
opponent
Petitioner
comes to court
to confirm his
title and seeks
the registration
of the land in
his name
Landowner
no adverse
claim
if the
applicant fails
to prove his
title, his
application
may be
dismissed
without
prejudice (no
res judicata)
CADASTRAL
Compulsory
Director of
Lands
all classes of
lands are
included
Government,
Landowners
must come to
court as
claimants of
their own lands
Government
asks the court
to settle and
adjudicate the
title of the land
Government
if none of the
applicants can
prove that he
is entitled to
the land, the
same shall be
declared public
(res judicata)
PATENTS
Classification of Land of Public Domain:
The classification is the exclusive prerogative of
executive and not of the judiciary
Anyone who applies for confirmation of imperfect
title has the burden of proof to overcome the

presumption that the land sought to be
registered forms part of public domain (Regalian
doctrine)
Under the Constitution:
1. Agricultural the
subject to alienation
2. Forest or timber
3. Mineral lands
4. National park
only
classification
Under the Public Land Act:

1. Alienable/disposable:
a. Agricultural
b. Residential, commercial, industrial
c. Educational, charitable
d. Town sites and for public and quasipublic uses
2. Timber lands: inalienable
3. Mineral lands: inalienable
If patent or title is issued, it is void ab
initio for lack of jurisdiction
General Rule It is not subject to
acquisitive prescription even if in
possession for long time, it will not ripen
into ownership
Exception Mineral lands and forest
lands acquired before inauguration of
Commonwealth in November 15, 1935
because there are vested rights which are
protected
FISHPONDS
Before: It was included in the definition of
agriculture,
therefore
the
conversion
of
agricultural land to fishponds did not change
character of land
Now: It has a restricted meaning; Fishponds are
of a distinct category and cannot be alienated
but may be leased from government
When Government Grant Deemed Acquired
by Operation of Law:
1. Deed of conveyance issued by government
patent/grant
2. Registration with the ROD: mandatory, it is
the operative act to convey and transfer
title
3. Actual physical possession, open and
continuous
Land ceased to be part of public domain
& now ownership vests to the grantee
Any further grant by Government on
same land is null and void
Upon registration, title is indefeasible
Title Issued Pursuant to Registration of

Patent:
1. Indefeasible when registered, and deemed
incorporated with Torrens system 1 year
after the issuance of patent
2. GR: May not be opened 1 year after entry
by
LRA
(otherwise,
confusion
and
uncertainty on the government system of
the distribution of public lands may arise
and this must be avoided)
Exception: if it is annullable on ground of
fraud, then it may be reopened even after 1
year because registration does not shield
bad faith
The court, in the exercise of its equity
jurisdiction, may direct reconveyance
even without ordering cancellation of
title
Homestead Restrictions:
1. Land cannot be alienated within 5 years after
approval of application for patent
2. It cannot be liable for satisfaction of debt
within 5 years after approval of patent
application
3. Subject to repurchase of heirs within 5 years
after alienation when allowed already
4. No
private
corporation,
partnership,
association may lease land unless it is solely
for commercial, industrial, educational,
religious or charitable purpose, or right of
way (subject to consent of grantee and
approval of Secretary of Environment &
Natural Resources)
Exceptions:
1. Action for partition because it is not a
conveyance
2. Alienations or encumbrances made in favor
of the government
Erring Homesteader not Barred by Pari Delicto
- Pari delicto rule does not apply in void
contracts
- Violation of prohibition results in void contract
- Action to recover does not prescribe
KIND
S
Home
stead
Paten
t
TO
WHOM
GRANTE
D
To any
Filipino
citizen
over the
age of 18
years or
head of a
family
OTHER REQUIREMENTS
Grantee does not own more

than 12 hectares of land in the
Philippines or has not had the
benefit of any gratuitous
allotment of more than 12
hectares
must have resided
continuously for at least 1 year
in the municipality where the
Free
Paten
t
Sales
Paten
t
To any
natural
born
citizen of
the
Philippine
s
(filing
ended
Dec. 31,
2000)
Citizens of
the
Philippine
s of lawful
age or
head of
the family
may
purchase
public
agricultur
al land of
not more
than 12
hectares
To any
citizen of
legal age
for
residential
purposes
Speci
al
Paten
t
To NonChristian
Filipinos
under the
Public
Land Act
land is situated
must have cultivated at least
1/5 of the land applied for
Grantee does not own more
than 12 hectares of land
has continuously occupied
and cultivated, either by
himself or his predecessors-ininterest, tracts of disposable
agricultural public land for at
least 30 years prior to March
28,1990
has paid real property taxes
on the property while the same
has not been occupied by any
person
grant will be limited to 12
hectares only
to have at least 1/5 of the
land broken and cultivated
within 5 years from the date of
the award (public auction)
shall have established actual
occupancy, cultivation, and
improvement of at least 1/5 of
the land until the date of such
final payment
for agricultural lands suitable
for residential, commercial or
industrial purposes, patent is
issued only after:
1.) full payment of purchase
price, and
2.) completion of the
construction of permanent
improvements appropriate for
purpose for which the land is
purchased (must be completed
within 18 months from date of
award)
does not own a home lot in
the municipality in which he
resides
in good faith, established his
residence on a parcel of land of
public domain not needed for
public service
not more than 1000 sq. m.
occupant must have
constructed his house on the
land and actually resided
therein
no public auction required
not subject to any restriction
against encumbrance or
alienation
Secretary of the DILG shall
certify that the majority of the
non-Christian inhabitants of
any given reservation have
advanced sufficiently in
civilization
Procedure for Registration of Public Lands:

(IFEFI)
1. Official issues an instrument of conveyance
2. File the instrument with ROD
3. Instrument is to be entered in books and
owners duplicate to be issued
Instrument is only a contract between
Government and private person and
does not take effect as conveyance if
unregistered, it is registration which is
operative act of conveying land;
evidence of authority for ROD to
register
4. Fees to be paid by grantee
5. After issuance of certificate of title, land is
deemed registered land within the purview of
the Torrens system
RESTRICTION ON ALIENATION/ ENCUMBRANCE
OF LANDS TITLED PURSUANT TO PATENTS:
1.
Lands
under
free
patent
or
homestead patent is prohibited from being
alienated/encumbered, except if in favor of
the government, within 5 years from and
after the issuance of the patent or grant.
When lands are conveyed within that period,
the owner-vendor, his widow or heirs, may
repurchase the same within five years from
conveyance, such right cannot be waived.
Republic v. Heirs of Felipe Alejaga, Sr.,
393 SCRA 361 (2002)
2.
Transfer or conveyance of any
homestead after 5 years but before 25 years
after the issuance of the title without the
approval of the DENR Secretary
3.
Lands acquired under emancipation
patents issued to landless tenants and
farmers
must
not
be
alienated
or
encumbered within 10 years from issuance of
the title
4.
Conveyances
and
encumbrances
made by persons belonging to the nonChristian tribes may be made only when the
person
making
the
conveyance
or
encumbrance is able to read and understand
the language in which the instrument or deed
is written. If illiterate, must be approved by
the then Commissioner of Mindanao and Sulu
NATURE OF TITLE TO PUBLIC LANDS
CONVEYED:
1. Indefeasible And Conclusive
The certificate of title becomes indefeasible and
incontrovertible upon the expiration of one year
from the date of the issuance of the order for the
issuance of the patent. As such, the land cannot be
the subject of a cadastral proceeding nor decreed
to another person
In
absence of registration, title to public land is
not perfected and therefore not indefeasible
In case of 2 titles obtained on same date, the
one procured through a decree of registration is
superior than patent issued by director of lands
2 titles procured by one person: one from
homestead patent, and one from judicial decree
and sold to 2 different persons, the one who
bought it for value and in good faith and who
registered first shall have preference
A free patent obtained through fraud or
misrepresentation is void. Furthermore, the
one-year prescriptive period provided in the
Public Land Act does not bar the State from
asking for the reversion of property acquired
through such means. Once a patent is registered
and the corresponding certificate of title issued,
the land covered by them ceases to be part of
the public domain and becomes private property.
indefeasibility of a title does not attach to titles
secured by fraud and misrepresentation. Wellsettled is the doctrine that the registration of a
patent under the Torrens System does not by
itself vest title; it merely confirms the registrants
already existing one. Verily, registration under
the Torrens System is not a mode of acquiring
ownership. Therefore, under Section 101 of
Commonwealth Act No. 141, the State -- even
after the lapse of one year -- may still bring an
action for the reversion to the public domain of
land that has been fraudulently granted to
private individuals. Further, this indefeasibility
cannot be a bar to an investigation by the State
as to how the title has been acquired, if the
purpose of the investigation is to determine
whether fraud has in fact been committed in
securing the title. Republic v. Heirs of
Alejaga, [393 SCRA 361, 2002]
4. REMEDIES
REMEDIES AVAILABLE TO AGGRIEVED PARTY
IN REGISTRATION PROCEEDINGS
Motion to Lift/Set Aside order of default
(Rule 9 3)
By defaulted oppositor
Before judgment
Fraud, accident, mistake, excusable negligence
(FAME) and with valid defense, under oath
Motion for New Trial
(Rule 37)
By aggrieved party
Within 15 days from receipt of judgment
Grounds (FAMINE):
a. FAME
b.
b.
Newly discovered evidence:
Discovered after trial
not discovered earlier even with exercise of
diligence
will probably alter judgment
c. Award of excessive damages, or insufficiency
of evidence to justify decision, or that the
decision is against the law
Appeal
by aggrieved party
Within 15 days from notice of judgment
To the CA by ordinary appeal; thence to SC by
petition for review
Relief from Judgment
(Rule 38 2)
By aggrieved party
Within 60 days from knowledge of, and 6 months
from, judgment
no new trial
upon finality of judgment
Requisites:
a. FAME, with affidavit of merit; in case of
extrinsic fraud, state that deprived of hearing
or prevented from appealing
b. After judgment
c. Person deprived of right is party to case
(applicant or oppositor)
Petition for Review of Registration Decree
( 32 PD1529)
By aggrieved party, including person deprived of
opportunity to be heard
To be filed in same registration case
Within 1 year after entry of decree of
registration
it will not prosper if transferred to innocent
purchaser for value
Grounds:
a. actual or extrinsic fraud, committed outside
trial, preventing petitioner from presenting
his side
b. fatal infirmity in the decision for want of due
process
c. lack of jurisdiction of the court
Requisites:
a. Petitioner has a real and dominical right
b. He has been deprived of such right
c. Through actual or extrinsic fraud
d. The petition is filed within 1 year from the
issuance of the decree
e. The property has not been passed on to an
innocent purchaser for value (IPV)
Action for
Reconveyance
(96 PD 1529/ 102 Act 496)
By aggrieved party, whose land was registered
wrongly to another person
Before issuance of decree, or within/after 1 year

from entry
Available so long as property not yet passed to
IPV
action in personam
if based on fraud, it must be instituted within 4
years from the discovery of the fraud
if based on implied trust: it must be filed within
10 years from issuance of OCT,
if action brought by registered owner or his
children, co-heir, or plaintiff in possession:
imprescriptible
if based on expressed trust: imprescriptible
if based on void contract: imprescriptible
Action for Damages
By aggrieved party
After 1 year from decree and no reconveyance
possible due to IPV
Within 4 years from discovery of fraud (actual or
constructive)
Against person responsible for fraud
Requisites:
a. Person is wrongfully deprived of his land by
registration in name of another
b. No negligence on his part
c. Barred/ precluded from bringing an action
(after 1 year from decree)
d. Action for compensation has not prescribed
Action for Compensation from the
Assurance Fund
By person deprived of his land by reason of
operation of Torrens System, provided: no
negligence on his part and barred from
recovering land
Against person responsible for fraud, and ROD
and National Treasurer
Compensation: fair market value of land at
time of loss. Amount to be recovered not
limited to 500,000 which is maintained as
standing fund. If fund is not sufficient, National
Treasurer is authorized to make up for
deficiency from other funds available to
Treasury even if not appropriated.
Execution first against person responsible for
fraud; if insolvent, against national treasury.
Thereafter,
the
Government
shall
be
subrogated to the rights of plaintiff to go
against other parties or securities
Any court of competent jurisdiction: RTC in city
where property lies or resident of plaintiff
Requisites:
a.
The aggrieved party sustained loss or
damage, or is deprived land or any estate or

interest therein
b.
Such loss, damage or deprivation was
occasioned by the bringing of the land under
the operation of the Torrens system or arose
after the original registration of the land
c.
The loss, damage or deprivation was due
to: fraud, or any error, omission, mistake, or
misdescription in any certificate of title or in
any entry or memorandum in the registration
book. (Loss or damage should not be due to
breach of trust or mistake in resurvey
resulting in expansion of area in certificate of
title.)
d.
The aggrieved party was not negligent.
e.
He is barred under the provisions of PD
1529 or under the provisions of any law from
recovering such land;
f.
The action has not prescribed: must be
instituted within 6 years from the issuance of
the certificate of title (If plaintiff is minor,
insane or imprisoned, he has additional 2
years after disability is removed to file the
action.)
Cancellation Suits
By aggrieved party or the government
In case of double title: earlier title prevails,
unless procured by fraud or is jurisdictionally
flawed. The later title is void even if IPV derives
title therefrom
In case of non-registered land: to be filed by
the Sol-Gen for cancellation of title or reversion
to State)
Voiding or cancellation of OCT does not affect
derivative TCTs if their holders not given
opportunity to be heard and defend their title
Annulment of Judgment
May only be availed of when the ordinary
remedies of new trial, petition for relief, or
other appropriate remedies are no longer
available through no fault of the petitioner.
Linzag v. CA, [291 SCRA 304 , 1998]
Reversion Suit
The objective is the cancellation of the title and
the consequential reversion of the land to the
State
Grounds:
a. Violation of Sections 118, 120, 121 and
122 of the Public Land Act (ex. alienation
or sale of homestead executed within the
5 year prohibitory period)
b. When the land patented and titled is not
capable of registration
c. Failure of the grantee to comply with
conditions imposed by law to entitle him
to a patent or grant
d. When area is an expanded area
e. When the land is acquired in violation of
the Constitution (e.g. land acquired by an
alien)
Indefeasibility of title, prescription, laches, and
estoppel do not bar reversion suits
Quieting of Title
(Article 476 of the new civil code)
By registered owner or person with an equitable
right or interest in the property. Mamadsul v.
Moson, [190 SCRA 82, 1990]
An ordinary civil case brought to remove clouds
on the title to real property or any interest
therein, by reason of any contract, record,
claim, encumbrance, or proceeding that is void,
voidable or unenforceable, and may be
prejudicial to said title
Quasi-in rem
If plaintiff is in possession, imprescriptible;
if not in possession, must be brought within 10
years from loss of possession
Criminal Action
( 116 Act 496)
The State may criminally prosecute for perjury
the party who obtains registration through
fraud, such as by stating false assertions in the
sworn answer required of applicants in
cadastral proceedings. People v. Cainglet, 16
SCRA 749 (1966)
MORE ON THE ASSURANCE FUND
Upon entry of certificate in name of owner or
TCT, of 1% based on assessed value of land
shall be paid to the ROD as a contribution to the
assurance fund. In case there is no assessment
yet, a sworn declaration of 2 disinterested
persons on the value of the land, subject to court
approval, is required.
This shall be in the custody of the National
Treasurer. It shall be invested until the principal
plus interest aggregates to 500,000. The excess
shall be paid to the Assurance Fund and be
included in the annual report of Treasurer to
Secretary of Budget.
PETITIONS AND MOTIONS AFTER ORIGINAL
REGISTRATION:
1. Lost Duplicate Certificate
a.
Person in interest makes a
sworn statement regarding the loss or
destruction of the owners duplicate
certificate of title to be filed with ROD. If
statement is false, he can be charged with
the complex crime of estafa through
falsification of public document
b.
File a petition for replacement of
lost or destroyed owners duplicate of OCT/
TCT in court for the issuance of new title
c.
After notice and hearing, the
court is to order issuance of new title with a

memorandum that it is issued in place of lost
certificate (duplicate)
2. Adverse claim in registered land
Different from lis pendens:
Lis pendens has no expiration period but
adverse claim is only for 30 days.
Lis pendens is a notice that property is in
litigation while adverse claim signifies that
somebody is claiming better right
Recent Ruling: adverse claim can only be
removed upon court order, therefore, it is
considered to be the more permanent and
stable one as compared to lis pendens
3. Petition Seeking Surrender of Duplicate
Title
When a person in possession of the owners
duplicate certificate fails to surrender the same to
the ROD, a party in interest may file a petition in
the RTC to compel the surrender of such duplicate
title.
Grounds: registration pursuant to voluntary and
involuntary conveyances and issuance of a new
certificate and for purposes of amendment or
alteration
After hearing, the court may order issuance of a
new certificate and annul the old certificate
The new certificate shall contain an annotation
regarding the annulment of the old certificate
4. Amendment and Alteration of Certificate
of Title
A certificate of title entered in a registration book
cannot be altered, amended except in direct
proceeding in court (summary proceeding). A
court order is necessary to alter entries of such
registration books.
A petition for such purpose may be filed by the (a)
registered owner, or (b) other person having an
interest in the registered property, or (c) in proper
cases, the ROD with the approval of the LRA
Administrator
Grounds (CRIMENN):
1. New interest that does not appear on the
instrument have been created
2. Interest have been terminated or ceased
3. Omission or error was made in entering
certificate
4. Name of person on certificate has been
changed
5. Registered
owner
has
married
or
registered as married and the marriage

has terminated
6. Corporation, which owned registered
land, has dissolved and has not conveyed
the property within 3 years after its
dissolution
7. When there is reasonable ground for
the amendment or alteration. What
corrections are permitted in title (which
does not include lands included in
original; technical description as long as
original decree of registration will not be
reopened and rights or interest of persons
not impaired; old survey was incorrect;
substitution of name of registered owner)
a. Alterations which do not impair
rights and
b. Alterations which impair rights:
with consent of all parties
c. Alterations to correct obvious
mistakes
5. Reconstitution of Original Certificate
of Title
The restoration of the instrument which is
supposed to have been lost or destroyed in its
original form and condition, under the custody of
ROD
Sources:
1.
a.
b.
c.
d.
e.
f.
2.
a.
b.
Purpose: to have the same reproduced, after

proper proceedings, in the same form they were
when the loss or destruction occurred. Heirs of
Pedro Pinote v. Dulay, [187 SCRA 12, 1990]
The applicant should prove :
1. The loss or the destruction of the
title sought to be reconstituted
and
2. At the time the said title was lost
or
destroyed,
he
was
the
registered owner thereof
a. When reconstituted, the new title has
the same validity as old one
b. Kinds of Reconstitution:
a. Judicial
b. Administrative
JUDICIAL RECONSTITUTION
Process:
1.
File a petition with the RTC (In rem
proceeding)
2.
The court shall cause a NOTICE to
be PUBLISHED, POSTED and MAILED. Noncompliance voids the proceeding as such
requirements are jurisdictional
3.
When the court grants the
petition, it shall issue a corresponding
order to ROD.
c.
FOR OCT (in this order):

Owners duplicate of the
Co-owners, mortgagees
or lessees duplicate of said certificate
Certified copy of such
certificate, previously issued by the
ROD
Authenticated copy of the
decree of registration or patent, as the
case may be, which was the basis of the
certificate of title,
Deed of mortgage, lease,
or encumbrance containing description
of property covered by the certificate of
title and on file with the ROD, or an
authenticated copy thereof indicating
that its original had been registered
Any
other
document
which, in the judgment of the court, is
sufficient
and
proper
basis
for
reconstitution.
FOR TCT
Same as sources (a), (b),
and (c) for reconstitution of OCT
Deed of transfer or other
document containing description of
property covered by TCT and on file
with the ROD, or an authenticated copy
thereof indicating its original had been
registered and pursuant to which the
lost or destroyed certificate of title was
issued
Same as sources (e) and
(f) for reconstitution of OCT
ADMINISTRATIVE RECONSTITUTION
May be availed of only in case of:
1.
Substantial loss or destruction
of the original land titles due to fire, flood,
or other force majeure as determined by
the Administrator of the LRA
2.
The number of certificates of
title lost or damaged should be at least
10% of the total number in the possession
of the Office of the ROD
3.
These lost or damaged titles
should not be less than 500, and
4.
Petitioner must have the
duplicate copy of the certificate of title
(RA 6732)
Sources:
1. Owners duplicate of the certificate of
title
2. Co-owners, mortgagees, or lessees
duplicate of said certificate
Contents
a.
That the owners duplicate
of the certificate of title had been lost
or destroyed
b.
That
no
co-owners,
mortgagors, or lessees duplicate had
been issued
c.
The location, area and
boundaries of the property
d.
The nature and description
of the buildings or improvements, if
any, which do not belong to the owner
of the land, and the names and
addresses of the owners of such
buildings or improvements
e.
The names and addresses of
the (a) occupants or persons in
possession of the property, (b) of the
owners of the adjoining properties
and (c) of all persons who may have
any interest in the property
f.
A detailed description of the
encumbrance, if any, affecting the
property
g.
A statement that no deeds
or other instruments affecting the
property have been presented for
registration, or, if there be any, the
registration thereof has not been
accomplished, as yet
NOTE:
The law provides for retroactive application
thereof to cases 15 years immediately preceding
1989
When the duplicate title of the landowner is lost,
the proper petition is not reconstitution of title,
but one filed with the court for issuance of new
title in lieu of the lost copy
PUBLICATION, MAILING AND POSTING IN
PETITIONS FOR RECONSTITUTION OF TITLE:
Notice shall be PUBLISHED twice in successive
issues of the Official Gazette,
Must be POSTED on the main entrance of the
provincial building and of the municipal building
of the municipality or city where the land is
situated, and
Must be SENT BY REGISTERED MAIL or
otherwise, at the expense of the petitioner, to
every person named in said notice (actual
occupants and adjacent owners).
PUBLICATION, POSTING AND SENDING BY MAIL
should be done at least 30 days prior to date of
hearing. These notice requirements are mandatory

and jurisdictional. Non-compliance voids the
proceeding.
The publication of the petition ,the service of the
notice of hearing to the adjoining owners and
actual occupants of the land, as well as posting of
the notices are mandatory and jurisdictional
requisites If an order of reconstitution is issued
without any previous publication, such order of
reconstitution is null and void. Even the publication
of the notice of hearing in a newspaper of general
circulation like the Manila Daily Bulletin, is not a
substantial compliance with the law because
Section 13 specifies publication in the OG and does
not provide for any alternative medium or manner
of publication. MWSS v. Sison, [124 SCRA 394,
1983]
Notice must be actually sent or delivered to parties
affected by the petition for reconstitution. The
order of reconstitution issued without compliance
with the said requirement never becomes final - it
was null and void. Manila Railroad v. Moya,
[215 Phil 593, 1984]
Service of notice of the petition for reconstitution
filed under RA 26 to the occupants of the property,
owners of the adjoining properties, and all persons
who may have any interest in the property is NOT
REQUIRED if the petition is based on the owners
duplicate certificate of title or on that of the coowners, mortgagees, or lessees. Sections 9 and
10 requires that 30 days before the hearing (1) a
notice be published in 2 successive issues of the
OG at the expense of the petitioner, and (2) such
notice be posted at the main entrances of the
provincial building and of the municipal hall where
the property is located. The notice shall state the
following: (1) the number of the certificate of title,
(2) the name of the registered owner, (3) the
names of the interested parties appearing in the
reconstituted certificate of title, (4) the location of
the property, and (5) the date on which all persons
having an interest in the property must appear and
file such claims as they may have. Puzon v. Sta.
Lucia, [353 SCRA 699, 2001]
The failure to meet any of the necessary
publication, notice of hearing and mailing
requirements did not vest jurisdiction of the case to
the court. Thus, the judgment rendered by the RTC
regarding the reconstitution of title is void.
Republic v. Sanchez [G.R. No. 146081, July
17, 2006]
When the owners duplicate certificate of title has
not been lost, but is in fact in the possession of
another person, then the reconstituted certificate
is
void, because the court that rendered the
decision had no jurisdiction. Consequently, the
issuance of TCT No. T-17993 is also void, as it
emanated from the void in Zaldivars name. The
indefeasibility of a Torrens title does not apply
where fraud attended the issuance of the title,
such as when it was based on void documents.
Feliciano v. Zaldivar, [G.R. No. 162593,
September 26, 2006]
6. Registration of Transaction evidenced
by lost document
ROD is forbidden to effect registration of lost or
destroyed documents
Steps by interested parties:
1. Procure an authenticated copy of lost or
destroyed instrument
2. Secure an order from court
OFFENSES IN LAND REGISTRATION:
1. Larceny
2. Perjury: false statement under oath
3. Fraudulent procurement of certificate
4. Forgery
a. Forging of seal in ROD, name, signature
or handwriting of any officer of court of
ROD
b. Fraudulent stamping or assistance in
stamping
c. Forging of handwriting, signature of
persons authorized to sign
d. Use of any document which an
impression of the seal of the ROD is
forged
5. Fraudulent sale: sale of mortgaged property
under the misrepresentation that it is not
encumbered;
deceitful
disposition
of
property as free from encumbrance
F. SUBSEQUENT REGISTRATION
SUBSEQUENT REGISTRATION
Where
incidental
matters
after
original
registration may be brought before the land
registration court by way of motion or petition
filed by the registered owner or a party in
interest.
Rules as to the necessity and effects of
registration in general
1. Except a will that purports to convey or
affect a registered land, the mere
execution of the deeds of sale,
mortgage, or lease or other voluntary
documents serve only 2 purposes:
a. as a contract between the parties
thereto, and
b. as evidence of authority to the ROD
to register such documents

2. It is only the act of registering the
instrument in the ROD of the province or
city where the land lies which is the
operative act that conveys ownership or
affects the land insofar as third persons
are concerned.
3. The act of registration creates a
constructive notice to the whole world of
such voluntary or involuntary instrument
or court writ or process.
VOLUNTARY
DEALINGS
Refer
to
deeds,
instruments,
or
documents which are
results of the free and
voluntary acts of the
parties thereto
Sale
Real property
mortgage
Lease
Pacto de retro sale
Extra-judicial
settlement
Free
patent/homestead
Powers of attorney
Trusts
An
innocent
purchaser for value of
registered
land
becomes
the
registered owner the
moment he presents
and
files
a
duly
notarized and valid
deed of sale and the
same is entered in the
day book and at the
same
time
he
surrenders
or
presents the owners
duplicate
certificate
of title covering the
land sold and pays
the registration fees
Need to present title
to record the deed in
INVOLUNTARY
DEALINGS
Refer to such writ or
order or process issued
by a court of record
affecting registered land
which by law should be
registered
to
be
effective, and also to
such instruments which
are not the willful acts of
the registered owner and
which may have been
executed even without
his knowledge or against
his consent
Attachment
Injunction
Mandamus
Sale on execution of
judgment or sales for
taxes
Adverse claims
Notice of lis pendens
Entry thereof in the day

book of the ROD is
sufficient notice to all
persons even if the
owners
duplicate
certificate of title is not
presented to the ROD
No
presentation
required; annotation in
registry & to make

memorandum on title
entry book is sufficient
1. VOLUNTARY DEALINGS
Operative Act: registration by owner, if deed is
not registered, is binding only between parties
General Rule MIRROR DOCTRINE: Where
there is nothing on the certificate of title to
indicate any cloud or vice in the ownership of the
property, or any encumbrance thereon, the
purchaser is not required to explore further than
what the Torrens title upon its face indicates in
quest for any hidden defect or inchoate right that
may defeat his right thereto. Fule v. Legare,[ 7
SCRA 351, 1963]
Every person dealing with registered land may
safely rely on the correctness of the certificate of
title issued therefore Even if a decree in a
registration proceeding is infected with nullity,
still, an innocent purchaser for value relying on a
Torrens title issued in pursuance thereof is
protected. Cruz v. CA & Suzara, [281 SCRA
491, 1997]
Although generally a forged or fraudulent deed is
a nullity and conveys no title, however, there are
instances where such a fraudulent document
may become the root of a valid title. One such
instance is where the certificate of title was
already transferred from the name of the true
owner to the forger, and while it remained that
way, the land was subsequently sold to an
innocent purchaser. Fule v. Legare, [7 SCRA
351, 1963]
Exceptions (BOB-MILK)
1. Where the purchaser or mortgagee is a
bank/financing institution, the general rule
that a purchaser or mortgagee of the land
is not required to look further than what
appears on the face of the title does not
apply. Dela Merced v. GSIS, [365 SCRA
1, 2001]
2. The ruling in Fule v. Legare cannot be
applied where the owner still holds a valid
and existing certificate of title covering the
same property because the law protects
the lawful holder of a registered title over
the transfer of a vendor bereft of any
transmissible right. Tomas v. Tomas, [98
SCRA 280, 1980]
3. Purchaser in bad faith. Egeo v. CA, [174
SCRA 484, 1989]
4. Where a person buys land not from the
registered owner but from one whose rights

to the land has been merely annotated on
the certificate of title. Quiniano v. CA, [39
SCRA 221, 1971]
5. Sufficiently strong indications to impel closer
inquiry into the location, boundaries, and
condition of the lot. Francisco v. CA, [153
SCRA 330, 1987]
Persons legal interest cannot raise this exception
Principle of caveat emptor simply requires the
purchaser of real property to be aware of the
alleged title of the vendor such that one who buys
without checking the vendor's title takes all the
risks and losses consequent to such failure. While a
buyer of registered land need not go beyond its
certificate of title, the buyer is obliged to
investigate or inspect the property sold to him
when there are circumstances that would put him
on guard, such as the presence of occupants other
than the registered owner. This does not apply in
this case. DOro Land v. Claunan,[ 516 SCRA
681, 2007]
6. Purchases land with a certificate of title
containing a notice of lis pendens
7. Purchaser had full knowledge of flaws and
defects of the title. Bernales v. IAC, [166
SCRA 519, 1988]
Process of Registration: (Generally)
1. File the instrument creating or transferring
the interest and the certificate of title with
ROD, including:
a. Owners duplicate
b. Payment of fees and documentary stamp
tax
c. Evidence of full payment of real estate
tax
d. Document of transfer: 1 additional copy
for city/provincial assessor
2. ROD shall make a memorandum on the
certificate of title, signed by him
3. Issuance of the TCT
Registration of Real Property Mortgage
1. Execution of deed in a form sufficient in law
(public instrument)
2. Registration with ROD where the land lies
a. Present deed of mortgage together with
b. Owners Duplicate and affidavit of good
faith
c. Payment of fees
d. ROD shall enter upon original certificate of
title and upon duplicate a memorandum
(date, time of filing, signature, file number
assigned to deed)
e. ROD to note on the deed the date and time
of filing, and reference to volume and

page of the registration book in which it
was registered
3. No duplicate need be issued
Registration of Chattel Mortgage
1. Execution of document
2. Present the document together with affidavit
of good faith
3. Payment of fees
4. ROD enters in Day Book in strict order of their
presentation chattel mortgages and other
instruments
relating
thereto
(primary
process)
5. ROD thereafter enters in a more detailed
form the essential contents of the instrument
in
the
Chattel
Mortgage
Register
(complementary process)
Effects of Registration
1. Creates a lien that attaches to the property in
favor of the mortgagee
2. Constructive notice of his interest in the
property to the whole world
Effects of Failure to Register
*1. Valid between parties but void against 3rd
persons
*2. If instead of registration, it is delivered, it
shall be a pledge and not a chattel mortgage
(if no chattel mortgage deed executed)
*3. Actual knowledge is same effect as
registration
An Affidavit of Good Faith states that:
1. Mortgage is made to secure obligation
specified
2. That it is a valid and just obligation
3. That it is not entered into for purposes of
fraud
Effect of Absence of Affidavit of Good Faith
*4. Vitiates mortgage as against creditors and
subsequent encumbrancers
*5. Mortgage is not valid as between parties
*6. No need to be in public document
Registration of Lease
It is the lessee, not the lessor, who is required to
initiate the registration.
1.
File with ROD the instrument creating

lease together with owners duplicate of
2.
ROD to register by way of memorandum
upon certificate of title
3.
No new certificate shall be issued
NOTE: When there is prohibition in mortgaged

property as regards subsequent conveyances, etc.,
leasehold cannot be registered in the title thereof
Effects of Registration
1. Creates a real right but without prejudice to
rights of 3rd persons
2. If it is not registered, it is valid as between
parties but not to 3rd persons without notice
May Aliens Register Lease? Yes
1. May be granted temporary rights for residential
purposes
2. Limit: 25 years, renewable for another 25 years
Who Else May Register? Builder in Good Faith
Registration of Trust
1. Implied Trust: present a sworn statement
claiming interest by reason of an implied trust
with description of land, the name of the
registered owner and a reference to the
number of the certificate of title shall be
registered in ROD
2. Express Trust: instrument creating the trust
does not prohibit registration
Registration of Appointed Trustee by Court
*7. Certified copy of decree shall be presented to
ROD and surrender duplicate certificate
*8. Cancel duplicate & new certificate shall be
entered by ROD
2. INVOLUNTARY DEALINGS
Transactions affecting land in which cooperation of
registered owner is not needed, or even against his
will
1. Attachment
A writ issued at the institution or during progress of
an action commanding the sheriff to attach the
property, rights, credits, or effects of the defendant
to satisfy demands of the plaintiff
Kinds:
b.
c.
d.
Preliminary
Garnishment
Levy on execution
Registration of Attachment/Other Liens

1. Copy of writ in order to preserve any lien,
right, or attachment upon registered land
may be filed with ROD where land lies,
containing number of certificate of title of
land to be affected or description of land
2. ROD to index attachment in names of both
plaintiff and defendant or name of person for
whom property is held or in whose name
stands in the records
3.
If
duplicate of certificate of title is not

presented:
a. ROD shall, within 36 hours, send notice
to registered owner by mail stating that
there has been registration and request
him to produce duplicate so that
memorandum may be made
b. If the owner neglects or refuses to
comply, the ROD shall report the matter
to the court
c. The court, after notice, shall enter an
order to owner to surrender certificate
at the time and place named therein
4. Although notice of attachment is not
noted in duplicate, notation in book of
entry of ROD produces the effect of
registration already.
Effects of Registration of Attachment

(REEA)
1. Creates real right
2. Has priority over execution sale
3. But between 2 attachments, one that is
registered earlier is preferred
4. If it is not registered, actual knowledge is the
same as registration
2. Execution Sale
To enforce a lien of any description on registered
land, any execution or affidavit to enforce such
lien shall be filed with ROD where land lies
Register in registration book & memorandum
upon proper certificate of title as adverse claim
or as an encumbrance
To determine preferential rights between 2 liens:
priority of registration of attachment
3. Tax Sale
Sale of land for collection of delinquent taxes and
penalties due the government
a.
In personam (all persons
interested shall be notified so that they may
be given an opportunity to be heard)
b.
Notice to be given to
delinquent tax payer at his last known
address
c.
Publication of notice must
also be made in English, Spanish, and local
dialect, posted in a public and conspicuous
place in the place where the property is
situated and at the main entrance of the
provincial building
d.
Sale cannot affect rights of
other lien holders unless given the right to
defend their rights: due process must be
strictly observed
e.
Tax lien is superior to an
attachment
f.
There is no need to register a

tax lien because it is automatically registered
once the tax accrues
g.
But the sale of registered land
to foreclose a tax lien needs to be registered
Procedure of Registration of Tax Sale
1.
Officers return shall be submitted to the
ROD together with the owners duplicate title
2.
Register in the registration book
3.
Memorandum shall be entered in the
certificate
as
an
adverse
claim
or
encumbrance
4.
After the period of redemption has expired
and no redemption was made (2 years from
registration of auction sale), title must be
cancelled and a new title will be issued
5.
Before the cancellation, notice shall be sent
to registered owner, with the directive that he
surrender title and show cause why it should
not be cancelled
4.
Adverse Claim
A notice to third persons that someone is claiming
an interest on the property or has a better right
than the registered owner thereof. The disputed
land is subject to the outcome of the dispute.
Sajonas v. CA, [258 SCRA 79, 1996]
Claim is adverse when:
1. A claimants right or interest in the
registered land is adverse to the
registered owner;
2. Such right arose subsequent to date of
original registration
3. No other provision is made in the
Decree for the registration of such right
or claim (Sec. 70, PD 1529)
A mere money claim cannot be registered as an
adverse claim. Sanchez v. CA, [69 SCRA 327,
1976]
Actual knowledge is equivalent to registration of
adverse claim.
No 2nd adverse claim based on the same ground
may be registered by the same claimant.
Formal Requisites of an Adverse Claim for
Purposes of Registration (WNR)
a.
Adverse claimant must state
the following in writing:
1. His alleged right or interest
2. How and under whom such alleged right
or interest is acquired
3. The description of the land in which the
right or interest is claimed
4. The certificate of title number
b.
Such statement must be signed
c.
and sworn to before a notary public

Claimant shall state his
residence or place to which all notices may
be served upon him
NOTE: Noncompliance with said formal requisites

renders such adverse claim non-registrable and
ineffective.
PERIOD OF EFFECTIVITY; WHEN CANCELLED
The adverse claim shall be effective for a period
of 30 days from the date of registration and it
may be cancelled:
a.
After the lapse of 30 days,
upon the filing by the party-in-interest
of a verified petition for such purpose
b. Before the lapse of said 30 days, upon
the filing by the claimant of a sworn
petition withdrawing his adverse claim
c. Before the lapse of the 30-day period,
when a party-in-interest files a petition
in the proper RTC for the cancellation of
the adverse claim and, after notice and
hearing, the court finds that the claim is
invalid. If the court also finds the claim
to be frivolous, it may fine the claimant
the amount of not less than 1,000
pesos nor more than 5,000 pesos, in its
discretion
For this purpose, the interested party must file
with the proper court a petition for cancellation
of adverse claim, and a hearing must also first be
conducted. The Register of Deeds cannot on its
own automatically cancel the adverse claim.
Diaz-Duarte v. Ong, [298 SCRA 388, 1998]
An adverse claim may exist concurrently with a
subsequent annotation of a notice of lis pendens.
Ty Sin Tei v. Dy Piao, [103 Phil 858, 1958]
When an adverse claim exists concurrently with a
notice of lis pendens, the notice of adverse claim
may be validly cancelled after the registration of
such notice, since the notice of lis pendens also
serves the purpose of the adverse claim.
Villaflor v. Juezan, [184 SCRA 315, 1990]
NOTICE OF LIS PENDENS
It merely creates a contingency and not a lien
The purpose of the notice of lis pendens is to
constructively advise, or warn all people who
deal with the property that they so deal with it at
their own risk, and whatever rights they may
acquire in the property in any voluntary
transaction are subject to the results of the
action, and may well be inferior and subordinate
to those which may be finally determined and
laid down therein. Heirs of Marasigan v. IAC,

[152 SCRA 253, 1987]
When Notice of Lis Pendeds is Proper:
(RQCPO)
1. To recover possession of real estate
2. To quiet title thereto
3. To remove clouds upon the title thereof
4. For partition, and
5. Any other proceeding of any kind in court
directly affecting the title to the land or the
use of occupation thereof or the building
thereon.
Effect of Registration:
1.
Impossibility of alienating the property in
dispute during the pendency of the suit
2.
It may still be alienated but the purchaser
is subject to the final outcome of pending suit
3.
ROD is duty-bound to carry over notice of
lis pendens on all new titles to be issued
Cancellation of Lis Pendens: (M-NUVD)
Before final judgment, the court may order
the cancellation:
1.
After showing that notice is only for
purpose of molesting an adverse party
2.
When it is shown that it is not necessary to
protect the right of the party who caused the
registration thereof
3.
When the consequences of the trial are
unnecessarily delaying the determination of
the case to the prejudice of the other party
4.
ROD may also cancel by verified petition of
party who caused such registration
5.
Deemed cancelled when certificate issued
by clerk of court stating manner of disposal
of proceeding is registered
When Lis Pendedns has no Application:
(P2LAR)
1.
Preliminary attachment
2.
Proceedings for the probate of wills
3.
Levies on execution
4.
Proceedings for administration of
estate of deceased persons and
5.
Proceedings in which the only object
is the recovery of a money judgment
Other Parties Required to Register:
1. Assignee in Involuntary Proceeding for
Insolvency
It is the duty of the officer serving the notice to file
a copy of such notice to ROD where the property of
the debtor is located
Assignee elected or appointed by court shall be
entitled to entry of a new certificate of registered
land upon presentment of copy of assignment with
the bankrupts duplicate certificate of title

New certificate shall not state that it is entered
into by him as assignee or trustee in insolvency
proceedings
Judgment/Order Vacating Insolvency
Proceedings
a. order shall also be registered
b. Surrender title issued in name of assignee &
debtor shall be entitled to entry of new certificate
2. Government in Eminent Domain
a.
Copy of judgment filed in ROD
which states description of property,
certificate number, interest expropriated,
nature of public use
b.
Memorandum shall be made or
new certificate of title shall be issued
c.
The government does not seek
registration of the land in its own name
d.
The objective of the proceeding is
the adjudication of title to the lands
involved in the proceeding
G. DEALINGS WITH UNREGISTERED

LAND
SYSTEM OF REGISTRATION FOR
UNREGISTERED LANDS
a.
System
of
registration
for
unregistered land under the Torrens System
(Act 3344)
b. Before, it only covered voluntary dealings.
Now, it includes involuntary dealings
c. Effect: if prospective, it binds 3rd persons
after registration but yields to better rights
of 3rd person prior to registration (limited
effect to 3rd parties)
d. Reason: no strict investigation involved
e. Subsequent dealings are also valid if
recorded
f. ROD keeps day book and a register, and an
index system is also kept
g. Procedure:
1.
Presentment of instrument dealing
in unregistered land
2.
If found in order, register
3. If found defective, then registration is
refused writing his reason for refusal
FILING of APPLICATION
Survey plan approved by
Bureau of Lands
Muniments of title
SETTING OF DATE of
Initial Hearing by court
order
Set 45-90 days from order
Transmittal of documents
and evidence to LRA
ANNEX A: ORDINARY LAND REGISTRATION

PROCEEDINGS
NOTICE of Initial Hearing

Publication - 1x in OG
1x in newspaper
Mailing - to named parties
w/in (7) days from OG
Posting - (14) days at least
before initial hearing
INITIAL HEARING
JUDGMENT
Appeal
TRIAL
same order as ordinary
civil proceedings
Order of Default vs.

all who did not oppose
(15) days
FINALITY OF JUDGMENT
Decree of finality
Instruction to LRA to issue
decree of registration
Entry of DECREE OF
REGISTRATION in LRA
Copy sent to Registrar of
Deeds
OCT
Transcription of the
decree and issuance of
the OCT
Filing of
OPPOSITION
By any party
claiming interest
On/ before
hearing OR time
allowed by court
CADASTRAL
SURVEY
President
orders Dir. Of
Lands to cause
cadastral survey
NOTICE of
Survey to
persons
appearing to
claim interest
Publication
1x in OG
Mailing
Posting
Geodetic
Engineer/
employees of
Bureau of
Lands inform
occupants/
persons
claiming
STATE FILES
PETITION
Instituted by Dir.
of Lands
(represented by
Sol-Gen)
Containing:
technical
description
survey plan
interest
Persons
claiming
interest
cooperate w/
Engineer re:
boundaries
HEARING
JUDGMENT
ANSWER to
Petition
Same as ordinary land reg.

proceedings
Any claimant
files answer
(partakes of an
action to
recover) on/
before hearing
OR time allowed
by court
NOTICE of
Initial Hearing
to parties
appearing to have
interest and
adjoining owners
Publication 2x
in OG
(successive
issues)
Mailing
Posting
DECREE
MOTION TO
DISMISS
If land covered
prior OCT
pursuant to land
patent
if barred by res
judicata
Appeal
Court may
issue writ of
possession
or order
demolition
ANNEX B:
CADASTRAL
REGISTRATION
PROCEEDINGS
O. TORTS
=================================
I. Principles
A. Abuse of right; elements
B. Unjust enrichment
C. Liability without fault
D. Acts contrary to law
E. Acts contrary to morals
II. Classification of Torts
A. According to manner of
commission: intentional, negligent
and strict liability
B. According to scope: general or
specific
=================================
I. PRINCIPLES
Art. 2176. Whoever by act or omission causes
damage to another, there being fault or
negligence, is obliged to pay for the damage
done. Such fault or negligence, if there is no preexisting contractual relation between the
parties, is called a quasi-delict and is governed
by the provisions of this Chapter. (1902a)
ELEMENTS OF QUASI DELICT/TORTS:
1. Act or omission
2. Damage or injury is caused to another
3. Fault or negligence is present
4. There is no pre-existing contractual
relations between the parties
5. Causal connection between damage
done and act/omission
NEGLIGENCE
The omission of that degree of diligence which is
required by the nature of the obligation and
corresponding to the circumstances of the
persons, time and place. (Art. 1173, NCC)
KINDS OF NEGLIGENCE
1. Quasi delict (Art. 2176 NCC)
2. Criminal negligence (Art. 356 RPC)
3. Contractual negligence (NCC provisions on
contracts particularly Arts. 1170 to 1174)
ABUSE OF RIGHTS (ART 19)
1. There is a legal right or duty
2. The right or duty is exercised in bad faith
3. For the sole intent of prejudicing or injuring
another
Common element under Articles 19 and
21: the act must be intentional
CIVIL LAW REVIEWER
An action can only prosper when

damage, material or otherwise, was
suffered by the plaintiff. An action based
on Articles 19-21 will be dismissed if the
plaintiff merely seeks recognition
A defendant may likewise be guilty of
tort under Articles 19-21 even if he acted
in good faith. Here, liability to pay moral
damages may not be imposed on the
defendant who acted in good faith.
GENERAL SANCTION (ART. 20)

For all other provisions of law which do
not especially provide their own sanction
In the exercise of his legal right or duty
Willfully or negligently causes damage to
another
Article 20 does not distinguish, the act
may be done either willfully or
negligently
CONTRA BONUS MORES (ART 21)
1. There is an act which is legal
2. But which is contrary to morals, good
custom, public order or public policy
3. And it is done with intent to injure
Damages are recoverable even if no
positive law has been violated
UNJUST ENRICHMENT
ELEMENTS:
a.
That a person is benefited
without a valid basis or justification, and
b.
That such benefit is derived at
anothers expense or damage.
CONCEPT OF VICARIOUS LIABILITY
A person who himself is not guilty of negligence
is made liable for the conduct of another
II.
CLASSIFICATION OF TORTS
COMISSION OF TORTS
1. INTENTIONAL (DELICT): Every person
criminally liable for a felony is also civilly liable.
NOTE: QUASI DELICT includes acts done
through FAULT.
2. NEGLIGENT (QIUASI DELICT): Whoever by
act or omission causes damage to another,
there being fault or negligence, is obliged to pay
for the damage done. Such fault or negligence,
if there is no pre-existing contractual relation
Page 52 of 383
3.
STRICT LIABILITY: Persons Expressly Made
Liable By Law Even without Fault
ACCORDING TO SCOPE
GENERAL TORTS: Covered by Art. 2176 on
Quasi-Delict
SPECIFIC TORTS: These are those found in
specific provisions of law, including the Chapter
on Human Relations, Common Carriers, etc.
=================================
III. The Tortfeasor
A. The direct tortfeasor
(1) Natural persons
(2) Juridical persons
B. Persons made responsible for
others
(1) In General
(a) Quasi-delicts under Article
2180, how interpreted
Family Code, Arts. 218-219,
221
(b) Indirect liability for
intentional acts
(c) Presumption of negligence on
persons indirectly responsible
(d) Nature of liability; joint or
solidary?
(2) In Particular
(a) Parents
(b) Guardian
(c) Owners and managers of
establishments and
enterprises
(d) Employers
(e) State
(f) Teachers and heads of
establishments of arts and
trades
C. Joint tortfeasors (Art. 2194, Civil
Code)
=================================
III. TORTFEASOR
TORTFEASOR - Whoever by act or omission
causes damage to another, there being no fault
or negligence is obliged to pay for the damage
done (art 2176).
CORPORATE TORTFEASOR
A corporation is civilly liable in the same manner
as natural persons for torts, because "generally
CIVIL LAW REVIEWER
speaking, the rules governing the liability of a

principal or master for a tort committed by an
agent or servant are the same whether the
principal or master be a natural person or a
corporation, and whether the servant or agent
be a natural or artificial person. All of the
authorities agree that a principal or master is
liable for every tort which he expressly directs or
authorizes, and this is just as true of a
corporation as of a natural person, A corporation
is liable, therefore, whenever a tortious act is
committed by an officer or agent under express
direction or authority from the stockholders or
members acting as a body, or, generally, from
the directors as the governing body.
PERSONS VICARIOUSLY
LIABLE the
obligation imposed in 2176 is demandable not
only for ones own act or omission but also for
those persons for whom one is responsible (art
2180).
VICARIOUS LIABILITY
A person who himself is not guilty of
negligence is made liable for the conduct of
another
NOTE: Vicarious liability is not governed by the
doctrine of respondeat superior. Employers or
parents are made liable not only because of the
negligent or wrongful act of the person for whom
they are responsible but also because of their
own negligence (i.e. liability is imposed on the
employer because he failed to exercise due
diligence in the selection and supervision of his
employees)
Whenever an employees negligence causes
damage or injury to another, there instantly
arises a presumption juris tantum that the
employer failed to exercise diligentissimi patris
families in the selection (culpa in eligiendo) or
supervision (culpa in vigilando) of its employees.
To avoid liability for a quasi-delict committed by
its employee, an employer must overcome the
presumption by presenting convincing proof that
he exercised the care and diligence of a good
father of a family in the selection and
supervision of his employee
EXCEPTION: The doctrine of respondeat
superior is applicable in:
a. Liability of employers under Article 103
of the RPC
b. Liability of a partnership for the tort
committed by a partner
WHO ARE
LIABLE:
THE
PERSONS
VICARIOUSLY
Page 53 of 383
1.
PARENTS
The
father, and in case of his death or incapacity,
the mother are responsible for damage
caused by minor children who live in their
company.
Father and Mother shall jointly exercise
parental authority over common children. In
case of disagreement, father's decision shall
prevail (Art. 211).
NOTE: Persons liable for the act of minors
other than parents:
a. Those exercising substitute parental
authority
b. Surviving grandparents
c. Oldest sibling, over 21 years old
unless unfit or unqualified
d. Childs actual custodian, over 21
years old unless unfit or disqualified
2.
GUARDIANS
Guardians are liable for damages caused by
the minor or incapacitated persons who are
under their authority and who live in their
company.
3.
OWNERS
&
MANAGERS
OF
ESTABLISHMENT/
ENTERPRISE - Owners & managers of
establishment or enterprise are responsible
for damages caused by their employees who
are:
o in the service of the branches in which
the latter are employed OR
o in occasion of their function
4.
EMPLOYERS
Employers shall be liable for damages
caused by their:
o employees and
o household helpers
who are acting w/in the scope of their
assigned task even though the former are
not engaged in any business or industry
(unlike in RPC subsidiary liability of
employer attaches in case of insolvency of
employer for as long as the employer is
engaged in business/industry)
DEFENSES AVAILABLE TO EMPLOYERS:
o exercise of due diligence ins election
and supervision of employees
o act/omission
was
made
outside
working hours and in violation of
company rules
5.
STATE - The state is
responsible when it acts through a special
agent, but not when the same is caused by
CIVIL LAW REVIEWER
an official to whom task done properly

pertains in which case Art 2176 is applicable
6.
SCHOOL
ADMINISTRATOR, TEACHER - Teachers or
heads of establishments of arts & trades
shall be liable for damages caused by their
pupils, students & apprentices as long as
they remain in their custody even if they are
beyond the age of majority
NOTE: Art. 2180 applies to all including
academic
institution
per
weight
of
jurisprudence based on obiter of Justice JBL
Reyes in the Exconde case. Exconde v.
Capuno, [G.R. No. L-10134, June 29,
1957]
TEACHERS LIABILITY:
The basis of the teachers liability is the
principle of loco parentis (stand in place of
parents). So long as the students remain in
the protective and supervisory capacity of
teachers, the latter shall be deemed to have
custody over the students. Its not necessary
for the students to board and live with the
teachers so that there can be custody over
them.
SCHOOLS LIABILITY:
GENERAL RULE: The School itself is NOT
liable as party defendants
EXCEPTIONS: Art. 218 of Family Code
schools are expressly made liable
School is liable as an employer, as in the
case where the tortfeasor is a teacher, an
employee of the school. St. Francis High
vs. CA, [194 SCRA 341]
School has a contract with the student,
and thus, if the tortfeasor is a stranger, the
school is liable for the breach of the
contract. PSBA cs. CA, [205 SCRA 729]
FAMILY CODE PROVISIONS:

a.
Family Code, Art 218 - The school,
its administration & teachers or the
individual, entity or institution engaged in
child care shall have special parental
authority & responsibility over the minor
child under their supervision, instruction or
custody (authority & responsibility shall
apply to all authorized activities whether
inside or outside the premises or the
school, entity or institution).
b. Family Code, Art 219 - Those given the
authority & responsibility shall be solidarily
Page 54 of 383
& principally liable for damages caused by

act/omission of the unemancipated minor;
parents, judicial guardian or person
exercising substitute parental authority
over said minor shall be subsidiarily liable.
JOINT TORTFEASORS
Joint tortfeasors are all the persons who
command, instigate, promote, encourage,
advise, countenance, cooperate in, aid or abet
the commission of a tort, or who approve of it
after it is done, if done for their benefit.
The responsibility of two or more persons who
are liable for quasi-delict is solidary
SPECIAL RULES
1. CHILDREN
The action of the child will not necessarily be
judged according to the standard of an adult.
But if the minor is mature enough to understand
and appreciate the nature and consequences of
his actions, he will be considered negligent if he
fails to exercise due care and precaution in the
commission of such acts.
NOTE: Applying the provisions of the RPC,
Judge Sangco takes the view that a child
who is 9 or below is conclusively presumed
to be incapable of negligence. On the other
hand, if the child is above 9 years but below
15, there is a disputable presumption of
absence or negligence.
Absence
of
negligence
does
not
necessarily mean absence of liability. A child
under 9 years can still be subsidiarily liable
with his property (Art. 100 RPC)
Absence of negligence of the child may

not excuse the parents from their vicarious
liability under Art. 2180 NCC or Art. 221 FC.
2. PHYSICAL DISABILITY
GENERAL RULE: a weak or accident prone
person must come up to the standard of a
reasonable man, otherwise, he will be
considered as negligent
EXCEPTION: If the defect amounts to a real
disability, the standard of conduct is that of a
reasonable person under like disability.
3. EXPERTS AND PROFESSIONALS
They should exhibit the case and skill of one
who is ordinarily skilled in the particular field
that he is in; the rule regarding experts is
applicable not only to professionals who have
undergone formal education. (Fernando v. CA)
CIVIL LAW REVIEWER
4. NATURE OF ACTIVITY
There are activities which by nature impose
duties to exercise a higher degree of
diligence (ex. Banks, Common Carriers)
5. INTOXICATION
GENERAL RULE:
Mere intoxication is not
negligence nor establishes want of ordinary
care. But it may be considered to prove
negligence.
EXCEPTION: Under Art. 2185 of the NCC it is
presumed that a person driving a motor vehicle
has been negligent if at the time of the mishap,
he was violating any traffic regulation
6. INSANITY
An insane person is exempt from liability.
However, by express provision of law, there may
be civil liability even when the perpetrator is
held to be exempt from criminal liability. The
insanity of a person does not excuse him or his
guardian from liability based on quasi delict (Art.
2180 and 2182 NCC)
=================================
V. Proximate Cause
A. Concept
(1) Definition
(2) Test
(3) Distinguished from immediate
cause
(4) Distinguished from intervening
cause
(5) Distinguished from remote and
concurrent
B. Cause in fact
(1) Substantial factor test
(2) Concurrent causes
C. Legal cause
(1) Natural and probable
consequences
(2) Foreseeability
D. Efficient intervening cause
E. Cause vs. Condition
F. Last clear chance
=================================
V. PROXIMATE CAUSE
A. CONCEPT OF PROXIMATE CAUSE
PROXIMATE CAUSE is defined as that cause
which, in natural and continuous sequence,
unbroken by any efficient intervening cause,
Page 55 of 383
produces the injury, and without which the result

would not have occurred.
More comprehensively, proximate cause is
that cause acting first and producing the injury,
either immediately or by setting other events in
motion, all constituting a natural and continuous
chain of events, each having a close causal
connection with its immediate predecessor, the
final event in the chain immediately effecting
the injury as natural and probable result of the
cause
which
first
acted,
under
such
circumstances that the person responsible for
the first event should, as an ordinarily prudent
and intelligent person, have reasonable ground
to expect at the moment of his act or default
that an injury to some person might probably
result therefrom.
NECESSARY LINK
Vda. de Bataclan v. Medina, [G.R. No. L10126, October 22, 1957]

It may be that ordinarily, when a passenger
bus overturns, and pins down a passenger,
merely causing him physical injuries, if
through some event,
unexpected
and
extraordinary, the overturned bus is set on
fire, say, by lightning, or if some highwaymen
after looting the vehicle sets it on fire, and the
passenger is burned to death, one might still
contend that the proximate cause of his death
was the fire and not the overturning of the
vehicle. But in the present case and under the
circumstances obtaining in the same, we do
not hesitate to hold that the proximate cause
of the death of Bataclan was the overturning
of the bus, this for the reason that when the
vehicle turned not only on its side but
completely on its back, the leaking of the
gasoline from the tank was not unnatural or
unexpected; that the coming of the men with
aBrinas
lightedv.torch
wasofinthe
response
to the call
People
Philippines,
G.R.for
Lhelp,
made
not only25,
by 1983.
the passengers, but
30309,
November
most
probably, cause
by the
driver
and is the
The proximate
of the
injury
not
conductor
and cause
that because
it
necessarilythemselves,
the immediate
of, or the
was
very
dark (about
2:30
theinjury.
morning),
cause
nearest
in time
to, in
the
It is the
only
rescuers
had
to carry
light with them;
when the
causes
area independent
of and
each
coming
as the
they
did from
area with
where
other that
nearest
is toaberural
charged
the
lanterns
flashlights
available,
disaster. and
So long
as therewere
is a not
natural,
direct
they
to use a torch,
the most
handy and
and had
continuous
sequence
between
the
available;
was more
negligent and
act what
the injury
(sic) natural
that itthan
can
that
said rescuers
should
approach
reasonably
be said
that innocently
but for the
act the
the
overturned
to extendsuch
the negligent
aid and
injury
could notvehicle
have occurred,
effect
rescue requested
them. and
In
act is the proximate
cause of from
the injury,
other
words,
the coming therefore
of the men
whoever
is responsible
is with
liablethe
for
torch
was to
be expected
and was
natural
damages
resulting
therefrom.
One
who
sequence
the overturning
of the bus,
the
negligentlyof creates
a dangerous
condition
trapping
of someliability
of its passengers
bus, the
cannot escape
for the natural
and
trapping
some of its thereof,
passengers
and the
probable of
consequences
although
the
call
help or an act of God for which
act for
of aoutside
third person,
he is not responsible intervenes to precipitate
the loss.
NOTE:
If
plaintiff's
negligence
is
only
contributory,
he
is
considered
partly
responsible only. Plaintiff may still recover from
defendant but the award may be reduced by the
courts in proportion to his own negligence
IMMEDIATE CAUSE
The cause nearest in time to, the injury.
INTERVENING CAUSE
CIVIL LAW REVIEWER
Page 56 of 383
Phoenix Construction v. IAC, [G.R. L65295, March 10, 1987]

If the intervening cause is one which in
ordinary human experience is reasonably to be
anticipated or one which the defendant has
reason to anticipate under the particular
circumstances,
the
defendant
may
be
negligence among other reasons, because of
failure to guard against it; or the defendant
may be negligent only for that reason. Thus
one who sets a fire may be required to foresee
that an ordinary, usual and customary wind
arising later wig spread it beyond the
defendant's own property, and therefore to
take precautions to prevent that event. The
person who leaves the combustible or
explosive material exposed in a public place
may foresee the risk of fire from some
independent source. ... In all of these cases
there is an intervening cause combining with
the defendant's conduct to produce the result
and in each case the defendant's negligence
consists in failure to protect the plaintiff against
that very risk.
REMOTE CAUSE
Manila Electric Co. v. Remoquillo, [G.R. No.
L-8828, May 18, 1956]
A prior and remote cause cannot be made the
be of an action if such remote cause did nothing
more than furnish the condition or give rise to
the occasion by which the injury was made
possible, if there intervened between such prior
or remote cause and the injury a distinct,
successive, unrelated, and efficient cause of the
injury, even though such injury would not have
happened but for such condition or occasion. If
no danger existed in the condition except
because of the independent cause, such
condition was not the proximate cause. And if
an independent negligent act or defective
condition sets into operation the instances,
which result in injury because of the prior
defective condition, such subsequent act or
condition is the proximate cause.
CONCURRENT CAUSE
Where several causes producing an injury are
concurrent and each is an efficient cause
without which the injury would not have
happened, the injury may be attributed to all or
any of the causes and recovery may be had
against any or all of the responsible persons
although under the circumstances of the case, it
may appear that one of them was more
culpable, and that the duty owed by them to the
injured person was not the same. No actor's
negligence ceases to be a proximate cause
merely because it does not exceed the
CIVIL LAW REVIEWER
negligence of other actors. Each wrongdoer is

responsible for the entire result and is liable as
though his acts were the sole cause of the injury.
B. CAUSE IN FACT
BUT FOR TEST
The (but for) test requires a plaintiff to establish
that the act complained of probably caused the
subsequent
disability.
NELSON
V.
FIBREBOARD CORPORATION, [912 F.2d 469]
The test applied to determine whether negligent
conduct was the efficient, or proximate cause of
the injury or loss suffered by the claimant is
whether such conduct is a cause without which
the injury would not have taken place (which
test is frequently referred to as the "sine qua
non rule"), or is the efficient cause which set in
motion the chain of circumstances leading to the
injury. {Sangco, Philippine Law on Torts
and Damages, 1994)
SUBSTANTIAL FACTOR
It is the rule under the substantial factor test
that if the actor's conduct is a substantial
factor in bringing about harm to another, the
fact that the actor neither foresaw nor should
have foreseen the extent of the harm or the
manner in which it occurred does not prevent
him from being liable. Philippine Rabbit Bus
Lines v. IAC, [G.R. 66102, August 30, 1990]
CONCURRENT CAUSES
If one suffers damage as the proximate result of
the negligence of two others, and the damage
would not have occurred but for the negligence
of each of such parties, both are liable to the
person so injured. MENNE v. CELOTEX
CORPORATION, [861 F.2d 1453]
C. LEGAL CAUSE
TEST OF FORSEEABILITY
Where the particular harm was reasonably
foreseeable at the time of the defendants
misconduct, his act or omission is the legal
cause thereof. Foreseeability is the fundamental
test of the law of negligence. To be negligent,
the defendant must have acted or failed to act
in such a way that an ordinary reasonable man
would have realized that certain interests of
certain persons were unreasonably subjected to
a general but definite class of risk which made
the actors conduct negligent, it is obviously the
consequence for the actor must be held legally
responsible. Otherwise, the legal duty is entirely
defeated. Accordingly, the generalization may
Page 57 of 383
be formulated that all particular consequences,

that is, consequences which occur in a manner
which was reasonably foreseeable by the
defendant at the time of his misconduct are
legally caused by his breach of duty.
TEST OF NATURAL AND PROBABLE CAUSES
A natural consequence of an act is the
consequence which ordinarily follows it. A
probable consequence is one that is more likely
to follow than fail to follow its supposed cause
but it is need one be one which necessarily
follow such cause. (Sangco, Philippine Law
on Torts and Damages, 1994)
HINDSIGHT TEST
A party guilty of negligence or omission is
responsible for all the consequences which a
prudent and experienced party, fully acquainted
with all the circumstances which in fact exist,
whether they could have been ascertained by
reasonable diligence, or not, would have thought
at the time of the negligent act as reasonably
possible to follow, if they had been suggested to
his mind.
ORBIT TEST
If the foreseeable risk to plaintiff created a duty
which the defendant breached, liability is
imposed for any resulting injury within the orbit
or scope of such injury, it is not the unusual
nature of the act resulting in injury that is the
test of foreseeability, but whether the result of
the act is within the ambit of the hazards
covered by the duty imposed upon defendant.
D. EFFICIENT INTERVENING CAUSE
An independent intervening cause as one which

is so distinct as to sever the connection of cause
and effect between the negligent act and the
injury BARTELS v. CITY of WILLISTON, [629
F.2d 509]
If an independent cause intervenes, which is of
itself sufficient to produce the result, it is
regarded as proximate cause, and the originator
of the first cause is relieved from liability
MICHAEL v. U.S., [338 F.2d 219]
E. CAUSE/CONDITION
CIVIL LAW REVIEWER
Phoenix Construction v. IAC, G.R. L-65295,

[March 10, 1987]
Many courts have sought to distinguish
between the active "cause" of the harm and
the existing "conditions" upon which that cause
operated. If the defendant has created only a
passive static condition, which made the
damage possible, the defendant is said not to
be liable. But so far as the fact of causation is
concerned, in the sense of necessary
antecedents which have played an important
part in producing the result it is quite
impossible to distinguish between active forces
and passive situations, particularly since, as is
invariably the case, the latter are the result of
other active forces which have gone before.
The defendant who spills gasoline about the
premises creates a "condition," but the act may
be culpable because of the danger of fire.
When a spark ignites the gasoline, the
condition has done quite as much to bring
about the fire as the spark; and since that is
the very risk, which the defendant has created,
the defendant will not escape responsibility.
Even the lapse of a considerable time during
which the "condition" remains static will not
necessarily affect liability; one who digs a
trench in the highway may still be liable to
another who fans into it a month afterward.
"Cause" and "condition" still find occasional
mention in the decisions; but the distinction is
now almost entirely discredited. So far as it has
any validity at all, it must refer to the type of
case where the forces set in operation by the
defendant have come to rest in a position of
apparent safety, and some new force
intervenes. But even in such cases, it is not the
distinction between "cause" and "condition"
which is important but the nature of the risk
and the character of the intervening cause.
E. LAST CLEAR CHANCE

Canlas v. Court of Appeals, [G.R. 112160,
February 28, 2000]
In essence, the doctrine of last clear chance is
to the effect that where both parties are
negligent but the negligent act of one is
appreciably later in point of time than that of
the other, or where it is impossible to
determine whose fault or negligence brought
about the occurrence of the incident, the one
who had the last clear opportunity to avoid
the impending harm but failed to do so, is
chargeable with the consequences arising
therefrom.
Page 58 of 383
Stated differently, the rule is that the

antecedent negligence of a person does not
preclude recovery of damages caused by the
supervening negligence of the latter, who had
the last fair chance to prevent the impending
harm by the exercise of due diligence.
=================================
VI. Legal Injury
A. Concept
B. Elements of right
C. Violation of right or legal injury
D. Classes of injury
(1) Injury to persons
(2) Injury to property
(3) Injury to relations
=================================
VI. LEGAL INJURY
DAMAGE the detriment, injury or loss which is
occasioned by reason of fault of another in the
property or person
DAMAGES the pecuniary compensation,
recompense or satisfaction for an injury
sustained, or as otherwise expressed, the
pecuniary consequences which the law imposes
for the breach of some duty or the violation of
some rights
DAMNUM ABSQUE INJURIA or Damage
without Injury a person may have suffered
physical hurt or injury, but for as long as no
legal injury or wrong has been done, there is no
liability
INJURY
DAMAGE
DAMAGES
Legal
Loss, hurt or The
invasion of a harm which recompense
legal right
results from or
the injury
compensatio
n
awarded
for
the
damage
suffered
=================================
VII. Intentional Torts
A. General
(1) Concept
(2) Classes
(a) Interference with persons
and property
CIVIL LAW REVIEWER
(b) Interference with relations

B. Interference with rights to
persons and property
(1) Intentional physical harms
(a) General
(b) Violation of persons security,
physical injuries (Art. 33, Civil Code)
(c) False imprisonment (illegal
detention)
(d) Trespass to land
(e) Interference with personal
property
(2) Intentional non-physical harms
(a) General
(b) Violation of personal dignity
(c) Infliction of emotional
distress
(d) Violation of privacy
(e) Disturbance of peace of mind
(f) Malicious prosecution
(g) Defamation
(h) Fraud or misrepresentation
(formerly deceit)
(i) Seduction
(j) Unjust dismissal
C. Interference with relations
(1) General
(a) Concept
(b) Kinds
(2) Family relations
(a) Alienation of affection
(b) Loss of consortium
(c) Criminal conversation
(adultery)
(3) Social relations
(a) Meddling with or disturbing
family relations
(b) Intriguing to cause another
to be alienated from his friends
(4) Economic relations
(a) Interference with contractual
relations
(b) Unfair competition
(5) Political relations
(a) Violation of right to suffrage
(NCC, Art. 32)
(b) Violation of other political
rights (freedom of speech,
press, assembly and petition,
etc.)
(6) Defenses
Page 59 of 383
(a) Absence of element

(b) Privilege
(c) Prescription
(d) Waiver
(e) Force majeure
=================================
VI. INTERNATIONAL TORTS
1. BREACH OF A PROMISE TO MARRY
GENERAL RULE: Breach of a promise to marry
by itself is not actionable.
EXCEPTION: In cases where there is another act
independent of the breach of a promise to marry
which gives rise to liability
a. Cases where there was financial
damage
b. Social humiliation caused to one of
the parties
c. Where there was moral seduction
d. If the breach was done in a manner
that is clearly contrary to good
morals
Moral seduction connotes the idea of

deceit, enticement, superior power or
abuse of confidence on the part of the
seducer to which the woman has yielded
for which the seducer can be held liable
for damages. Gashem Shookat Baksh
v. CA, [G.R. No. 97336, February 19,
1993]
Sexual intercourse is not by itself a basis
for recovery but damages could be
awarded if the sexual intercourse is not a
product of voluntariness or mutual
desire. Constantino v. Mendez, [G.R.
NO. 57227, May 14, 1992]
2. SEDUCTION
WITHOUT
BREACH
OF
PROMISE TO MARRY
Seduction by itself, is also an act
contrary to morals, good customs and
public policy
The defendant is liable if he employed
deceit, enticement, superior power or
abuse of confidence in successfully
having sexual intercourse with another
even if he satisfied his lust without
promising to marry the offended party
It may not even matter that the plaintiff
and the defendant are of the same
gender
3. SEXUAL ASSAULT
Defendant is liable for all forms of sexual
assault
CIVIL LAW REVIEWER
4. DESERTION BY A SPOUSE
A spouse has the legal obligation to live
with his/her spouse. If a spouse does not
perform his/her duty to the other, he
may be liable for damages for such
omission because the same is contrary
to law, morals, good customs and public
policy.
5.
TRESPASSES AND DEPRIVATION OF

PROPERTY
2 KINDS:
A.
TRESPASS
TO
AND/OR
DEPRIVATION OF REAL PROPERTY
Liability for damages under the RPC
and Art. 451 of the Civil Code
requires intent or bad faith
A builder in good faith who acted
negligently may be held liable under
Art. 2176 NCC
Art. 448 of the Civil Code in relation
to Art. 456 does not permit action for
damages where the builder, planter
or sower acted in good faith. The
landowner is limited to the options
given to him under article 448
B. TRESPASS TO AND/OR DEPRIVATION
OF PRIVATE PROPERTY
In tort, trespass extends to all cases
where a person is deprived of his
personal property even in the
absence of criminal liability
Examples: theft, robbery
It may cover cases where the
defendant was deprived of personal
property for the purpose of obtaining
possession of real property. The
defendant who was landlord, was
held liable because he deprived the
plaintiffs, his tenants of water in
order to force them to vacate the lot
they were cultivating. Magbanua v.
IAC, [137 SCRA 352]
The right to disconnect and deprive
the customer, who unreasonably fails
to pay his bills of electricity should
be exercised in accordance with the
law and rules. Example: If a company
disconnects the electricity service
without prior notice as required by
the rules, the company commits a
tort under Art. 21 NCC, Manila
Electric Co. v. CA, [G.R. No.
132539, July 11, 2001]
6. ABORTION AND WRONGFUL DEATH
Page 60 of 383
Damages may be recovered by both

spouses if:
a.The abortion was cause through the
physicians negligence or
b. Done intentionally without their
consent
NOTE: A doctor who performs an illegal
abortion is criminally liable under Art.
259 RPC
Husband of a woman who voluntarily
procured her abortion may recover
damages from the physician who cause
the same on account of distress and
mental anguish attendant to the loss of
the unborn child and the disappointment
of his parental expectation. [Geluz v.
CA, 2 SCRA 80]
7. ILLEGAL DISMISSAL
The right of the employer to dismiss an
employee should not be confused with
the manner in which the right is
exercised and its effects.
If the dismissal was done anti-socially
and oppressively, the employer should
be deemed to have violated Art. 1701 of
the NCC (which prohibits acts of
oppression by either capital or labor
against the other) and Art. 21
An employer may be held liable for
damages if the manner of dismissing is
contrary to morals good customs and
public policy.
8. MALICIOUS PROSECUTION
An action for damages brought by one
against another whom a criminal
prosecution, civil suit, or other legal
proceeding
has
been
instituted
maliciously and without probable cause,
after termination of such prosecution,
suit or proceeding in favor of the
defendant therein.
The action which is terminated should be
one begun in malice, without probable
cause to believe that the charges can be
sustained
STATUTORY BASIS: Art. 19-21, 2, 32,
33, 35, 2217, 2219(8) NCC
ELEMENTS:
a. The fact of the prosecution and the
further fact that the defendant was
himself the prosecutor; and that the
action was finally terminated with an
acquittal
CIVIL LAW REVIEWER
b. That in bringing the action, the

prosecutor acted without probable cause
c. The prosecutor was actuated or impelled
by legal malice
NOTE: Presence of probable cause signifies
absence of malice.
Absence of malice signifies good faith on
the part of the defendant. Good faith
may even be based on mistake of law.
Acquittal presupposes that criminal
information is filed in court and final
judgment rendering dismissing the case.
Nevertheless, prior acquittal may include
dismissal by the prosecutor after
preliminary
investigation.
Globe
Mackay and Radio Corp v. CA, [G.R.
No. 81262, August 25, 1989]
9. PUBLIC HUMILIATION
Such acts also constitute an offense
under Art. 359, RPC (Slander by Deed)
A person can be held liable for damages
for slapping another in public. Patricio
v. Hon. Oscar Leviste, [G.R. No. L51832, April 26, 1989]
A defendant may likewise be guilty of a
tort even if he acted in good faith if the
action has caused humiliation to another.
Grand Union Supermarket v. Espino,
[G.R. No. L-48250, December 28,
1979]
10. UNJUST ENRICHMENT
ELEMENTS:
a. That a person is benefited without a
valid basis or justification, and
b. That such benefit is derived at anothers
expense or damage.
11. OSTENTATIOUS DISPLAY OF WEALTH
Thoughtless extravagance for pleasure
or display during a period of public want
or emergency
12. VIOLATION OF RIGHT OF PRIVACY AND
FAMILY RELATIONS
The following acts though they may not
constitute a criminal offense, shall
produce a cause of action for damages,
prevention and other relief:
a.
Prying into the privacy of
another's residence
b.
Meddling with or disturbing the
private life or family relations of
another
c.
Intriguing to cause another to
be alienated from his friends
d.
Vexing or humiliating another
on account of his religious beliefs,
Page 61 of 383
lowly station in life. Place of birth,

physical defect, or other personal
condition
13. DERELICTION OF OFFICIAL DUTY OF
PUBLIC OFFICERS
May be brought by any person suffering from
material or moral loss because a public
servant refuses or neglects, without just
cause to perform his official duty (art 27).
REQUISITES:
a.
Defendant is a public officer
charged with the performance of a
duty in favor of the plaintiff
b.
3perform such duty (ministerial)
c.
Plaintiff sustained material or
moral loss as consequence of such
non-performance
d.
The amount of such damages, if
material
14. ECONOMIC RELATIONS
A. UNFAIR COMPETITION
Unfair
competition
in
agricultural,
commercial or industrial enterprises or in
labor through the use of force,
intimidation, deceit. Machination or other
unjust,
oppressive
or
highhanded
method (Art 28)
B. INTERFERENCE
One becomes liable in an action for
damages for a nontrespassory invasion
of another's interest in the private use
and enjoyment of asset if
(a) the other has property rights and
privileges with respect to the use or
enjoyment interfered with,
(b) the invasion is substantial,
(c) the defendant's conduct is a legal
cause of the invasion, and
(d) the invasion is either intentional and
unreasonable
or
unintentional
and
actionable under general negligence
rules. 7
ELEMENTS OF TORT INTERFERENCE :
(1) existence of a valid contract;
(2) knowledge on the part of the third
person of the existence of contract; and
(3) interference of the third person is
without legal justification or excuse. So
Ping Bun v. CA, [G.R. 120554,
September 21, 1999]
15. MALICIOUS PROSECUTION
ELEMENTS
CIVIL LAW REVIEWER
a. That the defendant was himself the

prosecutor/
he
instigated
its
commencement
b. That it finally terminates in his
acquittal
c. That in bringing it the prosecutor
acted without probable cause, and
d. That he was actuated by legal
malice, that is, by improper and
sinister motive
16. VIOLATION OF RIGHTS AND LIBERTIES
OF ANOTHER PERSON
Any public officer or employee, or any
private individual, who directly or indirectly
obstructs, defeats, violates or in any manner
impedes or impairs any of the rights and
liberties (under Article 32 of the NCC) of
another person shall be liable to the latter
for damages.
17. NUISANCE
ELEMENTS
a. Any act, omission, establishment,
condition of property, or anything
else
b. Which:
Injures or endangers the health or
safety to others, or
Annoys or offends the senses, or
Shocks,
defies,
or
disregards
decency or morality, or
Obstructs or interferes with the
free passage of any public highway
or streets, or any body of water, or
Hinders or impairs use of property
KINDS
Nuisance Per Se - denounced as
nuisance by common law or by statute
Nuisance Per Accidens - those which are
in their nature not nuisances, but may
become so by reason of their locality,
surroundings, or the manner in which they
may be conducted, managed, etc.
Public - affects a community or
neighborhood or any considerable number
of persons
Private - one that is not included in the
foregoing definition; affect an individual or
a limited number of individuals only
REMEDIES AGAINST PUBLIC NUISANCES
Prosecution under the RPC or any
local ordinance
Civil action
Abatement,
without
judicial
proceeding
Page 62 of 383
REMEDIES
AGAINST
PRIVATE
NUISANCES
1.
Civil Action
2.
Abatement,
without
judicial
proceedings
WHO MAY AVAIL OF REMEDIES
Public officers
Private persons - if nuisance is

specially injurious to himself; the
ff. must be made:
a. Demand be first made upon owner or
possessor of the property to abate
nuisance
b. That such demand has been rejected
c. That the abatement be approved by
the district health officer and
executed with the assistance of local
police
d. That the value of destruction does
not exceed P3,000
DOCTRINE OF ATTRACTIVE NUISANCE
Cases within the general rule that one is liable
for the injury resulting to another from
failure to exercise the degree of care
commensurate with the circumstances the
attractiveness of the premises or of the
dangerous instrumentality to children of
tender years is to be considered as an implied
invitation, which takes the children who
accepted it out of the category of a trespasser
and puts them in the category of invitees,
towards whom the owner of the premises or
instrumentality owes the duty of ordinary..
CIVIL LAW REVIEWER
Page 63 of 383
=================================
VII. Negligence
A. Concept
B. Good father of a family or
reasonably prudent man
C. Standard of care
(1) Civil Code, Art. 1173
(2) Emergency Rule
D. Unreasonable risk of harm
E. Evidence
F. Presumption of negligence
(1) Legal provisions
(2) Res ipsa loquitur
G. Defenses
(1) Complete
(a) Absence of element
(b) Accident or fortuitous event
(c) Damnum absque injuria
(d) Authority of law
(e) Assumption of risk
(f) Last clear chance
(g) Prescription (Civil Code, Arts.
1144, 1146, and 1150)
(h) Waiver
(i) Double recovery (Civil Code,
Art. 2177)
=================================
VII. NEGLIGENCE
ELEMENTS OF QUASI DELICT/TORTS:
1. Act or omission
2. Damage or injury is caused to another
3. Fault or negligence is present
4. There is no pre-existing contractual
relations between the parties
5. Causal connection between damage
done and act/omission
3. Contractual negligence (NCC provisions

on contracts particularly Arts. 1170 to
1174)
NOTE:
Failure of the court to make any
pronouncement, favorable or unfavorable, as
to the civil liability of the accused amounts
to a reservation of the right to have the civil
liability litigated and determined in a
separate action. The rules nowhere provide
that if the court fails to determine the civil
liability it becomes no longer enforceable.
Jarantilla v. CA, [171 SCRA 42]
A quasi-delict is a separate legal

institution under the Civil Code and is
entirely apart and independent from a delict
or crime a distinction exists between the
civil liability arising from a crime and the
responsibility for quasi-delicts or culpa extracontractual. Castillo v. CA, [176 SCRA
591]
TESTS OF NEGLIGENCE
Did the defendant in doing the alleged

negligent act use the reasonable care and
caution which an ordinary prudent person
would have used in the same situation?
If not, then he is guilty of

negligence
Could a prudent man, in the case under

consideration, foresee harm as a result of
the course pursued?
If so, it as the duty of the actor to

take precautions to guard against harm
NEGLIGENCE - The omission of that degree of

diligence which is required by the nature of the
obligation
and
corresponding
to
the
circumstances of the persons, time and place
KINDS OF NEGLIGENCE
1. Quasi delict (Art. 2176 NCC)
2. Criminal negligence (Art. 356 RPC)
CIVIL LAW REVIEWER
Page 64 of 383
DISTINGUISHED FROM OTHER SOURCES OF OBLIGATION:
Vinculum Juris
Proof Needed
Defense available
Pre-existing contract
Burden of proof
CONTRACT
Contract
Preponderance of evidence
Exercise of extraordinary diligence
(in contract of carriage), Force
Majeure
There is a pre-existing contract
Contractual party.
Prove the ff.:
1. existence of a contract
2. breach
CONTRACT
Vinculum Juris
Contract
Proof Needed
Preponderance
of
evidence
Exercise
of
extraordinary
diligence (in contract
of carriage), Force
Majeure
There is a pre-existing
contract
Contractual party.
Prove the ff.:
1. existence of a
contract
2. breach
Solidary
Defense available
Pre-existing contract
Burden of proof
Liability of Employer
Reservation Requirement
Effect of judgment of
acquittal in a criminal case
involving
same
act/omission
CIVIL LAW REVIEWER
Civil aspect of the

quasi-delict
is
impliedly
instituted
with criminal action,
but
under
2000
Crimpro Rules it is
independent
and
separate
Not a bar to recover
civil damages EXCEPT
when
judgment
pronounces that the
negligence
from
which damage arise is
QUASI DELICT
Negligent
act/
omission
(culpa,
imprudence)
Preponderance of evidence
Exercise of diligence of a good father of a
family in the selection and supervision of
employees
No pre-existing contract
Victim.
Prove the ff.:
1.damage
2. negligence
3.causal connection between negligence
and damage done
DELICT
Act / omission committed by means of dolo
(deliberate, malicious, in bad faith)
Proof beyond reasonable doubt
No pre-existing contract
Prosecution. Accused is presumed innocent until
the contrary is proved.
Subsidiary
Civil aspect is Impliedly instituted with criminal
action
Not a bar to recover civil damages
Page 65 of 383
non-existent
CIVIL LAW REVIEWER
Page 66 of 383
CIRCUMSTANCES TO CONSIDER
1. Time
2. Place
3. Personal circumstances of the Actors
GOOD FATHER OF A FAMILY (pater familias)
The only standard of conduct used in the

Philippines (Art. 1173 NCC)
Morales, [G.R. 169467, February 25, 2010]

EVIDENCE
1. NEGLIGENCE - plaintiff must prove negligence
of defendant
Exceptions:
a.
In cases where negligence is presumed or
imputed
by
law
this
is
only
rebuttable/presumption juris tantum
b.
Principle of res ipsa loquitur (the thing
speaks for itself) - grounded on the difficulty in
proving thru competent evidence, public policy
considerations
A reasonable man is deemed to have

knowledge of the facts that a man should be
expected to know based on ordinary human
experience.
The law presumes or requires a man to possess

ordinary capacity to avoid harming his
neighbors unless a clear and manifest
incapacity is shown and the law does not hold
him liable for unintentional injury unless,
possessing such capacity, he might and ought
to have foreseen the danger. Corliss v. Manila
Railroad
2. DAMAGE / INJURY
The law fixes no arbitrary age at which a minor

can be said to have the necessary capacity to
understand and appreciate the nature and
consequences of his acts. Taylor v. Meralco,
[16 Phil 8]
NOTE:
If
plaintiff's
negligence
is
only
contributory, he is considered partly responsible
only. Plaintiff may still recover from defendant but
the award may be reduced by the courts in
proportion to his own negligence
EMERGENCY RULE
Under this rule, one who suddenly finds himself in
a place of danger, and is required to act without
time to consider the best means that may be
adopted to avoid the impending danger, is not
guilty of negligence, if he fails to adopt what
subsequently and upon reflection may appear to
have been a better method, unless the danger in
which he finds himself is brought about by his own
negligence
DELSAN
Transport
v.
C&A
Construction, [G.R. 156034, October 1, 2003]
Proximate Cause - the adequate and efficient

cause which in the natural order of events and
under the particular circumstances surrounding
the case, would naturally produce the event
UNREASONABLE RISK OF HARM

Indeed, a higher degree of care is required of
someone who has in his possession or under his
control an instrumentality extremely dangerous in
character, such as dangerous weapons or
substances. Such person in possession or control of
dangerous instrumentalities has the duty to take
exceptional precautions to prevent any injury being
done thereby. Unlike the ordinary affairs of life or
business which involve little or no risk, a business
dealing with dangerous weapons requires the
exercise of a higher degree of care. Pacis v.
3.
CAUSAL
CONNECTION
BETWEEN
NEGLIGENCE AND DAMAGE Defendants
negligence must be the proximate cause of the
injury sustained by the plaintiff to enable plaintiff
to recover. Thus, if plaintiffs own conduct is the
cause of the injury there can be no recovery.
A person claiming damages for the negligence of

another has the burden of proving the existence of
such fault or negligence causative thereof. The
facts constitutive of negligence must be
affirmatively established by competent evidence.
Whosoever relies on negligence for his cause of
action has the burden in the first instance of
proving the existence of the same if contested,
otherwise his action must fail. PLDT v. CA, G.R.
L-57079, [September 29, 1989]
PRESUMPTION OF NEGLIGENCE
1. DRIVER PRESUMED NEGLIGENT BY LAW IF:
a. He had been found guilty or reckless
driving or violating traffic regulations at
least twice within the next preceding two
months.
b. at the time of the mishap, he was violating
any traffic regulation.
2. COMMON CARRIERS
Article 1733 of the New Civil Code mandates that
common carriers, by reason of the nature of their
business, should observe extraordinary diligence in
the vigilance over the goods they carry.
In case of loss of the goods, the common carrier is
presumed to have been at fault or to have acted
negligently.
In case of death of or injuries to passengers,
common carriers are presumed to have been at
fault or to have acted negligently
3.
DEFENDANT
IN
POSSESSION
OF
DANGEROUS WEAPONS OR SUBSTANCES,
SUCH AS FIREARMS AND POISON
There is prima facie presumption of negligence
on the part of defendant if death or injury
results from such possession
EXCEPTION: The possession or use thereof is
indispensable in his occupation or business
4. RES IPSA LOQUITOR
(The thing speaks for itself) - Grounded on the
difficulty in proving thru competent evidence,
public policy considerations.
Where the thing which causes injury is shown to be
under the management of the defendant, and the
accident is such as in the ordinary course of things
does not happen if those who have the
management use proper care, it affords reasonable
evidence, in the absence of an explanation by the
defendant, that the accident arose from want of
care. Layugan v. IAC, [G.R. 73998, November
14, 1998]
G. DEFENSES TO QUASI DELICT

1. CONTRIBUTORY NEGLIGENCE - the plaintiff
was also negligent together with the
defendant; to constitute a defense, proximate
cause of injury/damage must be the
negligence of defendant
2. CONCURRENT NEGLIGENCE if both
parties are equally negligent the courts will
leave them as they are; there can be no
recovery
3. DOCTRINE OF LAST CLEAR CHANCE even though a persons own acts may have
placed him in a position of peril and an injury
results, the injured is entitled to recover if the
defendant thru the exercise of reasonable

care and prudence might have avoided
injurious consequences to the plaintiff. This
defense is available only in an action by the
driver or owner of one vehicle against the
driver or owner of the other vehicle involved.
REQUISITES:
a.
Plaintiff was in a position of
danger by his own negligence
b.
Defendant knew of such position
of the plaintiff
c.
Defendant had the last clear
chance to avoid the accident by exercise
of ordinary care but failed to exercise such
last clear chance and
d.
Accident occurred as proximate
cause of such failure
Who may invoke: Plaintiff

NOTE:
o
o
o
The doctrine is inapplicable to

Joint tortfeasors
Defendants concurrently negligent
As against 3rd persons
4. EMERGENCY RULE - "one who suddenly

finds himself in a place of danger, and
is required to act without time to consider
the best means that may be adopted to
avoid the impending danger, is not guilty of
negligence, if he fails to adopt what
subsequently and upon reflection may
appear to have been a better method,
unless the emergency in which he finds
himself is brought about by his own
negligence."
An individual will nevertheless be subject to
liability if the emergency was brought
about by his own negligence. Valenzuela
v. CA, [253 SCRA 303]
NOTE: Applicable only to situations that are
sudden and unexpected such as to deprive
actor of all opportunity for deliberation
(absence of foreseeability); the action shall still
be judged by the standard of the ordinary
prudent man
FACTORS TO CONSIDER:
a. Gravity of the Harm to be avoided
b. Alternative courses of action - If the
alternative presented to the actor is too
costly, the harm that may result may still
be
considered
unforeseeable
to
a
reasonable man
c. Social Value and Utility of the Action The act which subjects an innocent person
to an unnecessary risk is a negligent act if
the risk outweighs the advantage accruing
to the actor and even to the innocent
person himself.
d. Person exposed to the risk - A higher
degree of diligence is required if the person
involved is a child.
5. DOCTRINE OF ASSUMPTION OF RISK
Volenti non fit injuria / That to which a
person assents is not deemed in law an
injury.
REQUISITES:
a. Intentional exposure to a known
danger
b. One who voluntarily assumed the risk
of an injury from a known danger
cannot recover in an action for
negligence or an injury is incurred
c. Plaintiffs acceptance of risk (by
law/contract/nature of obligation) has
erased defendants duty so that his
negligence is not a legal wrong
d. Applies to all known danger
6. DUE DILIGENCE - diligence required by
law/contract/ depends on circumstances of
persons, places, things
7. FORTUITOUS EVENT - no person shall be
responsible for those events which cannot
be foreseen, or which though foreseen were
inevitable
REQUISITES:
a. The cause of the unforeseen and
unexpected occurrence, or of the failure
of the debtor to comply with his obligation,
must be independent of the human will;
b. It must be impossible to foresee the
event which constitutes caso fortuito or if
it can be foreseen it must be impossible to
avoid
c. The occurrence must be such as to
render it impossible for the debtor to
fulfill his obligation in a normal manner
d. The obligor must be free from any
participation in the aggravation of the
injury resulting to the creditor.
GENERAL RULE: Fortuitous Event is a

complete defense and a person is not
liable if the cause of the damage is a
fortuitous event.
EXCEPTION: It is merely a partial
defense and the courts may mitigate the
damages if the loss would have resulted in
any event [Art. 2215(4) NCC]
NOTE: A person may still be liable for a
fortuitous event if such person made an
ASSUMPTION OF RISK.
8. DAMNUM ABSQUE INJURIA a principle
that involves damage without injury,
therefore no liability is incurred; there is no
legal injury
9. LAW specific provision of law
EXAMPLES
The owner or lawful possessor of a thing
has the right to exclude any person from
the enjoyment and disposal thereof. For this
purpose, he may use such force as may be
reasonably necessary to repel or prevent an
actual or threatened unlawful physical
invasion or usurpation of his property (Art.
429 NCC)
Article 11 of the Revised Penal Code (Act
3815):
i.
Self-Defense
ii.
Defense of Property
iii.
Obedience to Lawful Order
iv.
Lawful Exercise of a right or
duty
10. EXERCISE OF THE DILIGENCE OF A
GOOD FATHER OF A FAMILY IN THE
SELECTION AND SUPERVISION OF
EMPLOYEES
11. PRESCRIPTION
a. Injury to right of plaintiff/quasi delict
- 4 years
b. Defamation - 1 year
c. When no specific provision, must be
counted from the day they may be
brought
12. PROSCRIPTION
AGAINST
DOUBLE
RECOVERY - Responsibility for fault or
negligence under quasi-delict is entirely
separate and distinct from civil action
arising from the RPC but plaintiff cannot
recover damages twice for same act or
omission of the defendant
13. WAIVER/ CONSENT
14. ACT OR OMISSION IS NOT THE
PROXIMATE CAUSE OF THE DAMAGE
15. OTHER GROUNDS Motion To Dismiss:
a. Lack of jurisdiction over person of
defendant
b. Lack of jurisdiction over subject
matter
c. Venue improperly laid
d. Plaintiff has no legal capacity to sue
e. There is another action pending
between same parties for same cause
f. Cause of action is barred by prior
judgment /statute of limitations
g. Pleading asserting claim states no
cause of action
h. Claim set forth in pleading has been
paid, waived, abandoned, extinguished
i. Claim is unenforceable under the
provision of statute of fraud
j. Condition precedent for filing claim
has not been complied with
===============================
IX. Special Liability in Particular
Activities
A. General
(1) Concept
B. Products Liability
(1) Manufacturers or processors
a. Elements
b. Consumer Act [RA 7394, Sec.
92-107, (Ch. 1)]
C. Nuisance (Civil Code, Arts. 694707)
(1) Nuisance per se and nuisance
per accidence
(2) Public nuisance and private
nuisance
(3) Attractive nuisance
D. Violation of constitutional rights
(1) Violation of civil liberties

E. Violation of rights committed by
public officers
F. Provinces, cities and municipalities
G. Owner of motor vehicle
H. Proprietor of building or structure
or thing
I. Head of family
X. Strict Liability
a. Animals
(1) Possessor and user of an animal
b. Nuisance (supra)
(1) Classes: Per se or per accidents;
Public or Private
(2) Easement against nuisance
c. Products Liability (supra)
(1) Consumer Act
===============================
IX. SPECIAL LIABILITY
STRICT LIABILITY: PERSONS EXPRESSLY MADE
LIABLE BY LAW EVEN WITHOUT FAULT
1. POSSESSOR OF AN ANIMAL
GENERAL RULE: The possessor of an animal or
whoever may make use of the same is
responsible for the damage which it may cause
EXCEPTIONS:
a. Force majeure
b. Fault of the injured/damaged person
2. OWNER OF MOTOR VEHICLE
In motor vehicle mishap, the owner is
solidarily liable with the driver if:
a. he was in the vehicle, and
b. could have, through due diligence,
prevented the misfortune
A Driver is Presumed Negligent by law If:
c. He had been found guilty or reckless
driving or violating traffic regulations at
least twice within the next preceding
two months.
d. at the time of the mishap, he was
violating any traffic regulation.
NOTE: Every owner of a motor vehicle shall file
with the proper government office a bond executed
by a government-controlled corporation or office,
to answer for damages to third persons.
3. MANUFACTURERS & PROCESSORS OF
FOODSTUFFS, DRINKS, TOILET ARTICLES
& SIMILAR GOODS

They are liable for death and
injuries caused by any harmful substances
used although no contractual relation exists
between them and the consumers
CONSUMER ACT R.A. 7394
NOTE ON STIPULATIONS: The stipulation in a
contract of a clause preventing, exonerating or
reducing the obligation to indemnify for damages
effected, as provided for in this and in the
preceding Articles, is hereby prohibited, if there is
more than one person responsible for the cause of
the damage, they shall be jointly liable for the
redress established in the pertinent provisions of
this Act. However, if the damage is caused by a
component or part incorporated in the product or
service, its manufacturer, builder or importer and
the person who incorporated the component or
part are jointly liable.
SUMMARY OF LIABILITIES:
1. Any Filipino or foreign manufacturer, producer,
and any importer, shall be liable for redress,
independently of fault, design, manufacture,
construction, assembly and erection, formulas and
handling and making up, presentation or packing
of their products, as well as for the insufficient or
inadequate information on the use and hazards
thereof.
NOTE: The manufacturer, builder, producer or
importer shall not be held liable when it evidences:
a) that it did not place the product on the
market;
b) that although it did place the product on the
market such product has no defect;
c) that the consumer or a third party is solely at
fault.
NOTE: This liability applies to tradesman/seller
when the persons named above cannot be, or are
not identified, or when the tradesman did not
preserve the goods adequately.
2. The service supplier is liable for redress,
independently of fault, for damages caused to
consumers by defects relating to the rendering of
the services, as well as for insufficient or
inadequate information on the fruition and hazards
thereof.
3. The suppliers of durable or nondurable
consumer
products
are
jointly
liable
for
imperfections in quality that render the products
unfit or inadequate for consumption for which they
are designed or decrease their value, and for those

resulting from inconsistency with the information
provided on the container, packaging, labels or
publicity messages/advertisement, with due regard
to the variations resulting from their nature, the
consumer being able to demand replacement to
the imperfect parts.
4. Suppliers are jointly liable for imperfections in
the quantity of the product when, in due regard for
variations inherent thereto, their net content is less
than that indicated on the container, packaging,
labeling or advertisement.
5. The service supplier is liable for any quality
imperfections that render the services improper for
consumption or decrease their value, and for those
resulting from inconsistency with the information
contained in the offer or advertisement.
6. When services are provided for the repair of
any product, the supplier shall be considered
implicitly bound to use adequate, new, original
replacement parts, or those that maintain the
manufacturer's technical specifications unless,
otherwise authorized, as regards to the latter by
the consumer.
NOTE: The supplier's ignorance of the quality
imperfections due to inadequacy of the products
and services does not exempt him from any
liability.
4. PROVINCES, CITIES & MUNICIPALITIES
Shall be liable for damages for the death or
injuries suffered by any person by reason of the
defective condition of roads, streets, bridges,
public buildings, and other public works under
their control or supervision
5. PROPRIETOR OF BUILDING OR STRUCTURE
Responsible for the damages resulting from any
of the ff.:
1.
Total or partial collapse of building or

structure if due to lack of necessary
repairs
2.
Explosion of machinery which has not

been taken cared of with due diligence, and
the inflammation of explosive substances
which have not been kept in a safe and
adequate place
3.
By excessive smoke, which may be

harmful to persons or property
4.
By falling of trees situated at or near

highways or lanes, if not caused by force
majeure
5.
By emanations from tubes, canals,

sewers or deposits of infectious matter,
constructed without precautions suitable to
the place
6. ENGINEER, ARCHITECT OR CONTRACTOR

If damage of building or structure is caused
by defect in construction which happens
within 15 years from construction; action
must be brought within 10 years from
collapse
7. HEAD OF FAMILY THAT LIVES IN A BUILDING
OR PART THEREOF
Liable for damages caused by things
thrown or falling from the same
8.
NUISANCES
ELEMENTS
a. Any act, omission, establishment, condition
of property, or anything else
b. Which:
Injures or endangers the health or safety
to others, or
Annoys or offends the senses, or
Shocks, defies, or disregards decency or
morality, or
Obstructs or interferes with the free
passage of any public highway or streets,
or any body of water, or
Hinders or impairs use of property
KINDS
Nuisance Per Se - denounced as nuisance
by common law or by statute
Nuisance Per Accidens - those which are in
their nature not nuisances, but may become
so by reason of their locality, surroundings, or
the manner in which they may be conducted,
managed, etc.
Public
affects
a
community
or
neighborhood or any considerable number of
persons
Private - one that is not included in the
foregoing definition; affect an individual or a
limited number of individuals only
REMEDIES AGAINST PUBLIC NUISANCES
Prosecution under the RPC or any local

ordinance
Civil action
Abatement, without judicial proceeding
REMEDIES AGAINST PRIVATE NUISANCES
Civil Action
Abatement, without judicial proceedings
WHO MAY AVAIL OF REMEDIES
Public officers
Private persons - if nuisance is

specially injurious to himself; the ff.
must be made:
a. Demand be first made upon owner or
possessor of the property to abate
nuisance
b. That such demand has been rejected
c. That the abatement be approved by
the district health officer and
executed with the assistance of local
police
d. That the value of destruction does
not exceed P3,000
DOCTRINE OF ATTRACTIVE NUISANCE Cases
within the general rule that one is liable for the
injury resulting to another from failure to
exercise the degree of care commensurate with the
circumstances the attractiveness
of
the
premises or of the dangerous instrumentality to
children of tender years is to be considered as
an implied invitation, which takes the children who
accepted it out of the category of a trespasser and
puts them in the category of invitees, towards
whom the owner of the premises or instrumentality
owes the duty of ordinary.
9. PUBLIC OFFICERS
Art. 32 Any public officer or employee, or any
private individual, who directly or indirectly
obstructs, defeats, violates or in any manner
impedes or impairs any of the following rights and
liberties of another person shall be liable to the
latter for damages:
(1) Freedom of religion;
(2) Freedom of speech;
(3) Freedom to write for the press or to
maintain a periodical publication;
(4) Freedom from arbitrary or illegal detention;
(5) Freedom of suffrage;
(6) The right against deprivation of property
without due process of law;
(7) The right to a just compensation when

private property is taken for public use;
(8) The right to the equal protection of the
laws;
(9) The right to be secure in one's person,
house,
papers,
and
effects
against
unreasonable searches and seizures;
(10) The liberty of abode and of changing the
same;
(11) The privacy of communication and
correspondence;
(12) The right to become a member of
associations or societies for purposes not
contrary to law;
(13) The right to take part in a peaceable
assembly to petition the Government for
redress of grievances;
(14) The right to be a free from involuntary
servitude in any form;
(15) The right of the accused against
excessive bail;
(16) The right of the accused to be heard by
himself and counsel, to be informed of the
nature and cause of the accusation against
him, to have a speedy and public trial, to meet
the witnesses face to face, and to have
compulsory process to secure the attendance
of witness in his behalf;
(17) Freedom from being compelled to be a
witness against one's self, or from being
forced to confess guilt, or from being induced
by a promise of immunity or reward to make
such confession, except when the person
confessing becomes a State witness;
(18) Freedom from excessive fines, or cruel
and unusual punishment, unless the same is
imposed or inflicted in accordance with a
statute which has not been judicially declared
unconstitutional; and
(19) Freedom of access to the courts.
Art. 34 When a member of a city or municipal
police force refuses or fails to render aid or
protection to any person in case of danger to life or
property, such peace officer shall be primarily
liable for damages, and the city or municipality
shall be subsidiarily responsible therefor. The civil
action herein recognized shall be independent of
any criminal proceedings, and a preponderance of
evidence shall suffice to support such action.
===============================
DAMAGES-BOOK II
I. General Considerations
A. Classification
(1) Under Art. 2197 of the Civil Code
(2) According to purpose
(3) According to manner of
determination
(4) Special and ordinary
II. Actual and Compensatory Damages
A. Concept
B. Requisites
(1) Alleged and proved with
certainty
(2) Not speculative
C. Component Elements
(1) Value of loss; unrealized profit
(2) Attorneys fees and expenses of
litigation
(3) Interest
D. Extent or scope of actual damages
(1) In contracts and quasi-contracts
(2) In crimes and quasi-delicts
===============================
X. DAMAGES
A. GENERALLY
DAMAGES MAY BE: (MENTAL)
1. Actual or compensatory;
2. Moral;
3. Nominal;
4. Temperate or moderate;
5. Liquidated; or
6. Exemplary or corrective.
NOTE:
A complaint for damages is a personal action
Proof of pecuniary loss is necessary to

successfully recover actual damages from the
defendant. No proof of pecuniary loss is
necessary in case of moral, nominal,
temperate, liquidated or exemplary damages.
The assessment of damages, except liquidated
ones, is left to the discretion of the court
according to the circumstances of each case.
B. ACTUAL
Adequate compensation for the value of

loss suffered or profits which obligee failed to
obtain
EXCEPTIONS:
1. Law
2. Stipulation
KINDS OF ACTUAL OR COMPENSATORY

DAMAGES
a.
General
Damage
natural,
necessary and logical consequences of a
particular
wrongful act which result in
injury; need not be specifically pleaded
because the law itself implies or presumes
that they resulted from the wrongful act
b.
Special Damages - damages
which are the natural, but not the necessary
and inevitable result of the wrongful act.
(i.e., attorneys fees)
VALUE OF LOSS SUFFERED

Destruction of things, fines or penalties,
medical & hospital bills, attorney's fees,
interests, cost of litigation
REQUIREMENTS:
i.
Need to be pleaded
ii.
Pray for the relief that claim for loss be
granted
iii.
Prove the loss
Formula: American Expectancy Table of Mortality

or the Actuarial of Combined Experience Table of
Mortality
[2/3 x 80 (age at the time of death)] x monthly
earnings x 12 = GROSS EARNINGS
GE - Approximate Expenses (50% of GE) = Net
Earnings
WHEN LOSS NEED NOT BE PROVED:

a.
Liquidated
damages
previously
agreed upon; liquidated damages take the
place of actual damages except when
additional damages incurred
b.
If damages other than actual are
sought
c.
Loss is presumed (ex: loss if a child
or spouse)
d.
Forfeiture of bonds in favor of the
government for the purpose of promoting
public interest or policy (ex: bond for
temporary stay of alien)
CONTRACTS AND QUASI-CONTRACTS
a. Damages in case of Good Faith
i.
Natural and probable consequences
of breach of obligations
ii.
Parties have foreseen or could have
reasonably foreseen at the time the
obligation was created
b. Damages in case of Bad Faith
i.
It is sufficient that damages may be
reasonably attributed to the nonperformance of the obligation.
CRIMES AND QUASI-CRIMES
a.
Defendant is liable for all damages
that
are
natural
and
probable
consequences of the act complained of;
b.
Not necessary that damages have
been foreseen or could have been
reasonably foreseen.
LOSS OF EARNING CAPACITY:

Variables to consider are:
a. life expectancy
b. net income/earnings total of the earnings
less expenses necessary for the creation of
such earnings and less living or other
incidental expenses
LOSS OF PROFITS (Lucrum Cessans)

May be determined by considering the average
profit for the preceding years multiplied by the
number of years during which the business was
affected by the wrongful act or breach
ATTORNEYS FEES
They are actual damages. It is due to the
plaintiff and not to counsel
Plaintiff must allege the basis of his claim for
attorneys fees in the complaint; the basis
should by one of the cases under Art. 2208
WHEN ARE ATTORNEYS FEES RECOVERABLE:
In the absence of stipulation, attorney's fees
and expenses of litigation, other than judicial
costs, cannot be recovered, except:
a. When exemplary damages are
awarded;
b. When the defendant's act or
omission has compelled the plaintiff
to litigate with third persons or to
incur expenses to protect his
interest;
c. In criminal cases of malicious
prosecution against the plaintiff;
d. In case of a clearly unfounded civil
action or proceeding against the
plaintiff;
e. Where the defendant acted in gross
and evident bad faith in refusing to
satisfy the plaintiff's plainly valid,

just and demandable claim;
f. In actions for legal support;
g. In actions for the recovery of wages
of household helpers, laborers and
skilled workers;
h. In actions for indemnity under
workmen's
compensation
and
employer's liability laws;
i. In a separate civil action to recover
civil liability arising from a crime;
j. When at least double judicial costs
are awarded;
WHEN IS ACTUAL DAMAGES MITIGATED:
a. Contributory negligence
b. In contracts. Quasi-contracts and quasidelict
i.
Plaintiff has contravened the terms
of contract
ii.
Plaintiff derived some benefit as
result of contract
iii.
In case where exemplary damages
are to be awarded, that the defendant
acted upon the advice of counsel
iv.
That the loss would have resulted in
any event
v.
That since the filing of the action,
the defendant has done his best to
lessen the plaintiff's loss or injury
===============================
III. Moral Damages
A. Concept (Arts. 2217-2218)
B. When recoverable (Arts. 22192220)
(1) In seduction, abduction, rape
and other lascivious acts
(2) In acts referred to in Arts. 21,
26, 27, 28, 29, 32, 34 & 35, Civil
Code
(3) In cases of malicious prosecution
IV. Nominal Damages
A. Concept
B. When awarded
V. Temperate or Moderate Damages
A. Concept
B. When awarded
VI. Liquidated Damages
A. Concept (Civil Code, Art. 2226)
B. Rules governing in case of breach
of contract
VII. Exemplary or Corrective Damages
A. Concept (Civil Code, Art. 2229)
B. When recovered
(1) In criminal offenses (Civil Code,
Art. 2230)
(2) In quasi-delicts (Civil Code, Art.
2231)
(3) In contracts and quasi-contracts
(Civil Code, Art. 2232)
C. Requisites
(1) Arts. 2233, 2234
===============================
C. MORAL
MORAL DAMAGES Include: (PBMF-MWSS)
a. Physical suffering
b. Besmirched reputation
c. Mental anguish
d. Fright
e. Moral shock
f. Wounded feelings
g. Social humiliation
h. Serious anxiety
i. Sentimental value of real or personal
property may be considered in adjudicating
moral damages
j. The social and economic/financial standing
of the offender and the offended party
should be taken into consideration in the
computation of moral damages
k. Moral damages is awarded only to enable
the injured party to obtain means,
diversions or amusements that will serve to
alleviate the moral suffering he has
undergone, by reason of defendant's
culpable action and not intended to enrich
a complainant at the expense of defendant
IN WHAT CASES MAY MORAL DAMAGES BE
RECOVERED (Enumeration Not Exclusive):
a. Criminal offense resulting in physical
injuries
b. Quasi-delicts causing physical injuries
c. Seduction, abduction, rape or other acts of
lasciviousness
d. Adultery and concubinage
e. Illegal or arbitrary detention or arrest
f. Illegal search
g. Libel, slander or other form of defamation
h. Malicious prosecution
i.
Acts mentioned in art 309 of the RPC

relating to disrespect of the dead and
interference with funeral
j. Acts and actions referred to in arts 21, 26,
27, 28, 29, 30, 32, 34 and 35
k. The parents of the female seduced,
abducted, raped, or abused
l. Spouse, descendants, ascendants and
brother and sisters for acts mentioned in
art 309
m. Art 2220 - in cases of willful injury to
property or breaches of contract where
defendant acted fraudulently or in bad faith
GENERAL RULE: The plaintiff must allege and
prove the factual basis for moral damages and its
causal relation to the defendants act
EXCEPTION: Moral damages may be awarded to
the victim in criminal proceedings without the need
for pleading proof of the basis hereof.
D. NOMINAL DAMAGES
Adjudicated in order that a right of the
plaintiff, which has been violated or invaded
by the defendant, may be vindicated or
recognized, and not for the purpose of
indemnifying the plaintiff for any loss suffered
by him
ELEMENTS:
a. Plaintiff has a right
b. Right of plaintiff is violated
c. Purpose is not to identify but vindicate or
recognize right violated
NOTE:
The Law presumes damage although actual

or compensatory damages are not proven
They are damages in the name only and

are allowed simply in recognition of a technical
injury based on a violation of a legal right
Nominal damages cannot coexist with

actual or compensatory damages
E. TEMPERATE OR MODERATE DAMAGES
More than nominal but less than compensatory
where some pecuniary loss has been suffered
but its amount can't be proved with certainty
due to the nature of the case
In cases where the resulting injury might be
continuing and possible future complications
directly arising from the injury, while certain to
occur are difficult to predict, temperate

damages can and should be awarded on top of
actual or compensatory damages; in such
cases there is no incompatibility between
actual and temperate damages.
REQUISITES:
a. Some pecuniary loss
b. Loss is incapable of pecuniary estimation
c. Must be reasonable
F. LIQUIDATED DAMAGES
Those agreed upon by the parties to a contract,
to be paid in case of breach thereof
WHEN
LIQUIDATED
DAMAGES
MAY
EQUITABLY REDUCED:
a. Iniquitous or unconscionable
b. Partial or irregular performance
BE
G. EXEMPLARY
EXEMPLARY OR CORRECTIVE DAMAGE

Imposed by way example or correction for
the public good, in addition to the moral,
temperate, liquidated to compensatory
damages
NOTE:
Exemplary
damages
cannot
be
recovered as a matter of right; the court will
decide whether or not they should be
adjudicated.
WHEN IMPOSABLE:
Criminal offenses exemplary damages as a part
of the civil liability may be imposed when the crime
was committed with one or more aggravating
circumstances. Such damages are separate from
fines and shall be paid to the offended party.
Quasi-delicts exemplary damages may be
granted if the defendant acted with gross
negligence.
Contracts and quasi-contracts the court may
award exemplary damages if the defendant acted
in a wanton, fraudulent, reckless, oppressive, or
malevolent manner.
WHAT MUST BE PROVED:
a. While the amount of exemplary damages
need not be proved, the plaintiff must show
that he is entitled to moral, temperate or
compensatory damages before the court
may consider the question of whether or

not
exemplary
damages
should
be
awarded.
b. In case liquidated damages have been
agreed upon, although no proof of loss is
necessary in order that such liquidated
damages may be recovered, nevertheless,
before the court may consider the question
of granting exemplary in addition to the
liquidated damages, the plaintiff must show
that he would be entitled to moral,
temperate or compensatory damages were
it not for the stipulation for liquidated
damages.
===============================
XIII. Damages in Case of Death
A. In crimes and quasi-delicts causing
death
(1) In death caused by breach of
conduct by a common crime
IX. Graduation of Damages
A. Duty of injured party
(1) Art. 2203
B. Rules
(1) In crimes
(2) In quasi-delict (Civil Code, Art.
2214)
(3) In contracts, quasi-contracts and
quasi-delicts (Civil Code, Art. 2215)
(4) Liquidated damages (Civil Code,
Art. 2227)
(5) Compromise
X. Miscellaneous Rules
A. Damages that cannot co-exists
(1) Nominal with other damages
(Art. 2223)
(2) Actual and Liquidated (Art.
2226)
B. Damages that must co-exist
(1) Exemplary with moral,
temperate, liquidated or
compensatory
C. Damages that must stand alone
(1) Nominal Damages (Art. 2223)
===============================
H. DAMAGES IN CASE OF DEATH
BY CRIMES AND QUASI-DELICT
1.
Medical & Hospital Bills
2. Damages for death
i.
Minimum amount: P50,000
ii.
Loss of earning capacity unless
deceased had permanent physical
disability not caused by defendant so
that deceased had no earning capacity
at time of death
iii.
Support, if deceased was obliged to
give support (for period not more than 5
years)
iv.
Moral damages
IN CASES OF COMMON CARRIER
Article 2206 shall also apply to the death of a
passenger caused by the breach of contract by a
common carrier. (See Preceding heading)
I .GRADUATION
DUTY OF INJURED PARTY.
The party suffering loss or injury must exercise the
diligence of a good father of a family to minimize
the damages resulting from the act or omission in
question.
RULES
1.
Responsibility for fault or negligence
under the preceding article is entirely
separate and distinct from the civil liability
arising from negligence under the Penal
Code. But the plaintiff cannot recover
damages twice for the same act or omission
of the defendant.
2.
In quasi-delicts, the contributory
negligence of the plaintiff shall reduce the
damages that he may recover.
3.
In contracts, quasi-contracts, and
quasi-delicts, the court may equitably
mitigate the damages under circumstances
other than the case referred to in the
preceding article, as in the following
instances:
(1)
That
the
plaintiff
himself
has
contravened the terms of the contract;
(2) That the plaintiff has derived some
benefit as a result of the contract;
(3) In cases where exemplary damages are
to be awarded, that the defendant acted
upon the advice of counsel;
(4) That the loss would have resulted in any
event;
(5) That since the filing of the action, the
defendant has done his best to lessen the
plaintiff's loss or injury.
4.
Liquidated
damages,
whether
intended as an indemnity or a penalty, shall
be equitably reduced if they are iniquitous or
unconscionable.
5.
There may be a compromise upon
the civil liability arising from an offense; but
such compromise shall not extinguish the
public action for the imposition of the legal
penalty.
J. MISCELLANEOUS RULES
Damages that cannot co-exists
1. Actual and Liquidated damages
2. Nominal with Actual, Moral or Temperate
damages
Damages that must co-exist
1. Exemplary with moral, temperate, liquidated or
compensatory damages
a. One must prove that he is entitled to moral,
temperate or compensatory damages before the
court may consider if the award for exemplary
damages.
b. No proof of loss is necessary in order that
liquidated damages may be recovered. However,
before the court may consider the question of
granting exemplary in addition to the liquidated
damages, the plaintiff must show that he would be
entitled to moral, temperate or compensatory
damages were if not for the stipulation for
liquidated damages

2012 Ateneo Civil Law Summer Reviewer

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CIVIL LAW

ATTY. BENJAMIN LERMA

ATENEO CENTRAL BAR OPERATIONS 2012

CIVIL LAW REVIEWER

A. Essential Requisites (Art. 1261)

CIVIL LAW REVIEWER

E. General vs. Special Agency

CIVIL LAW REVIEWER

CIVIL LAW REVIEWER

TOPICS UNDER THE SYLLABUS

TOPICS UNDER THE SYLLABUS

CIVIL LAW REVIEWER

General Rule - 15 days after completion of

b) Mandatory Effect of Laws

Publication is MANDATORY for all

Compliance with the Law (art.3):

c) Irretroactivity of Laws (art. 4)

Customs which are contrary to law, public order

Mandatory and Prohibitory laws (art. 5):

Exceptions - When waiver is

e) Repeal of Laws (art. 7)

Judgment of the Courts (Arts. 8-9)

CIVIL LAW REVIEWER

Governing Laws (Arts. 14-17)

General Rule- Rights may be waived

Legal Periods (Art. 13, as amended by Sec.

d) Waiver of Rights (art.6)

Lex rei sitae:

Rules on Prohibitive Laws (art. 17)

General Rule - Prohibitive laws concerning

b) Duty to Act with Justice, Observe

Similarities: In Arts. 19-21, at the core

c) Actions for Breach of Promise to

CIVIL LAW REVIEWER

d) Unjust Enrichment at the Expense of

Distinguished from solutio indebiti: Mistake is

Protection of Human Dignity (Art. 26)

Meddling with or disturbing the private life or

iguing to cause another to be alienated from

Relief Against Public Officials (Art. 27)

CIVIL LAW REVIEWER

TOPICS UNDER THE SYLLABUS

1. Juridical Capacity v. Capacity to Act

Full Civil Rights: union of both juridical capacity

CIVIL LAW REVIEWER

Circumstances that Modify or Limit Capacity

1. When Personality Begins and Ends

Exception The conceived child shall be

shall prove the same. In the absence of proof, it

3. Rights of Juridical Persons

Acquire and possess property of all kinds

CIVIL LAW REVIEWER

law creating them does not fix the

TOPICS UNDER THE SYLLABUS

f. Subsequent Marriage Without

2. ESENTIAL AND FORMAL REQUIREMENTS

CIVIL LAW REVIEWER

2. or the residence of either party is

located that there is no means of

No legal impediment during the entire

CIVIL LAW REVIEWER

competent evidence of the marriage between his

4. MARRIAGES SOLEMNIZED ABROAD

were Filipino citizens but, later on, one of