Fundamentals of Laws

FUNDAMENTALS OF PROPERTY OWNERSHIP
Fundamentals of Property Ownership
March 4, 2016fundamentals of property ownership
PROPERTY refers to things which are capable of satisfying human wants and needs and
are susceptible of appropriation.
Under Philippine law, specifically Article 414 of the New Civil Code, property is classified
into two: immovable or real property and movable or personal property.
The distinction between the two is very important as there are different laws regarding
their acquisition, use, loss, sale, registration, possession and so on.
Immovable Property
What are real properties according to the law?
Art. 415. The following are immovable property:
(1) Land, buildings, roads and constructions of all kinds adhered to the soil;
*These are immovable as they are more or less of a permanent structure independent
and forms an integral part of the land. Land is immovable by nature and by definition.
(2) Trees, plants, and growing fruits, while they are attached to the land or form an
integral part of an immovable;
*Since trees and plants are annexed to the land, they form part of it and may even be
part of the property of the owner of the land in where they are attached. They are
immovable if they are spontaneous products of the soil and incorporated to the land
through cultivation and labor. They may either be immovable by incorporation or by
nature.
(3) Everything attached to an immovable in a fixed manner, in such a way that it cannot
be separated therefrom without breaking the material or deterioration of the object;
*Another thing attached to another principal immovable would also make it immovable if
the permanency of attachment of the thing is almost tantamount to its unification to the
principal immovable that their separation would cause damage and deterioration. This is
another example of immovable by incorporation.
(4) Statues, reliefs, paintings or other objects for use or ornamentation, placed in
buildings or on lands by the owner of the immovable in such a manner that it reveals the
intention to attach them permanently to the tenements;
*It must be noted that these objects must be placed by their owners permanently to the
land or building even if such land or building is not owned by him. The intent of the
owner of the objects must be looked upon so as to know that he wanted to incorporate it
permanently which would make these objects also immovables.
(5) Machinery, receptacles, instruments or implements intended by the owner of the

tenement for an industry or works which may be carried on in a building or on a piece of
land, and which tend directly to meet the needs of the said industry or works;
*For these objects to become immovable, these must be placed by the owner of the
tenement or the property where these objects would be attached and where the industry
or works would be carried. These objects must also be essential to said industry or
works.
(6) Animal houses, pigeon-houses, beehives, fish ponds or breeding places of similar
nature, in case their owner has placed them or preserves them with the intention to
have them permanently attached to the land, and forming a permanent part of it; the
animals in these places are included;
*The constructions mentioned must be intended by the owner to be permanently a part

of the land. The animals though can be transferred from place to place are also included.
(7) Fertilizer actually used on a piece of land;
*These are immovable by destination. If they are used, they form part of the land.
(8) Mines, quarries, and slag dumps, while the matter thereof forms part of the bed, and
waters either running or stagnant;
*While these resources remain unsevered, they are considered immovable.
(9) Docks and structures which, though floating, are intended by their nature and object
to remain at a fixed place on a river, lake, or coast;
*It can be inferred in the way they are constructed that they are to stay in fixed place
and as a permanent fixture to their location.
(10) Contracts for public works, and servitudes and other real rights over immovable
property. (334a)
*These are considered real property just because the law said so. Real property itself,
produces real right or real right is always regarded as real property.
To further understand and better differentiate Real Property from a personal or movable
property, real property may be immovable by:
Immovable by nature or those which cannot be moved from one place such as those
mentioned in Nos. 1 (with respect to lands and roads) and 8 in Art. 415 of the Civil Code
Immovable by incorporation, or those which are attached to an immovable in a fixed

manner as to form an integral part thereof like buildings, walls or fences, trees, statues,
animal houses, it is placed in an immovable for the utility it gives to the activity carried
thereon, such as machinery installed in a building to meet the needs of an industry in the
building, and docks on a river or those mentioned in Nos. 1 (except lands and roads), 2, 3
and 4 of Art 415.
Immovable by destination, or those which are placed in an immovable for the use,
exploitation or perfection of such immovable, such as those mentioned in Nos. 4, 5, 6, 7
and 9 of Art. 415
Immovable by analogy, or those which are considered immovable by operation of law

because it is regarded as united to the property such as those mentioned in No. 10 of
Art. 415
References:
De Leon, H., & De Leon, J. H. (2011). Comments and Cases on Property. Quezon City: Rex
Printing Company, Inc.
Jurado, D. (1999). Civil Law Reviewer. Quezon City: Rex Printing Company, Inc.
The New Civil Code of the Philippines
Movable Property
PERSONAL PROPERTY
As previously mentioned in this post, property in the Philippines is classified by law also
as personal property. To also distinguish a personal from real property, this test can be
employed whether it is personal:
By description if the object can be moved one place to another and this will not cause
injury to the immovable to which it may be attached;
By exclusion, if it is not included in the enumeration found in Art. 415 of the Civil Code of
the Philippines.
By provision of the law, if real property is considered as personalty by special provision of

the law
What are personal properties according to the law?
Art. 416. The following things are deemed to be personal property:
(1) Those movables susceptible of appropriation which are not included in the preceding
article;
*By appropriability it means that it can be capable of being possessed by men. Therefore
all other things which are not falling under Art. 415 are considered as personal property.
(2) Real property which by any special provision of law is considered as personal
property;
*There are properties which by nature are real properties. However, special laws and
judicial decisions may define them in another manner. These will be controlling and will
therefore adopt the status of being a personal property instead.
(3) Forces of nature which are brought under control by science; and
*These forces of nature may be for example, electricity, gas, heat, light, oxygen and so
forth which, if controlled by man and became subject of appropriation, will become
personal properties.
(4) In general, all things which can be transported from place to place without
impairment of the real property to which they are fixed. (335a)
*By nature these things which can be transported from place to place without causing
impairment to where they are previously attached is movable.
Art. 417. The following are also considered as personal property:
(1) Obligations and actions which have for their object movables or demandable sums;
and
*This provision contemplate various contracts which have for their object movable
properties or demandable sums or those amounts which are liquidated or determined.
Being so, the subject matter being movable, it makes the right created therein as
likewise personal right.
(2) Shares of stock of agricultural, commercial and industrial entities, although they may
have real estate. (336a)
*This provision includes all juridical entities although they do not issue shares of stock
which may mean participation or interest in a business. This also recognizes that
although real estate are involved, the law still considers them personal property.
What are the other classification of personal property?
Art. 418 has further classified movables based on its capability to being used repeatedly.
It can further be classified accordingly:
By nature or as to their likelihood of being consumed when it is used according to their
nature as mentioned in Art. 418 of the New Civil Code:
Art. 418. Movable property is either consumable or nonconsumable. To the first class
belong those movables which cannot be used in a manner appropriate to their nature
without their being consumed; to the second class belong all the others. (337).
By intention or as to their possibility of being substituted by another property having the

same kind or quality can be either be fungible or being replaceable by an equal quality
and quantity, either by the nature of the substitute or by agreement of the parties. It is
also non-fungibles, in opposite, are irreplaceable because identical objects must be
returned.
References:
Classification of Properties
CLASSIFICATION OF PROPERTIES ACCORDING TO WHOM IT BELONGS
The New Civil Code expressly classified property according to ownership by this article:
Article 419. Property is either of public dominion or of private ownership.
What are properties of public dominion?
Public dominion or property owned by the State (or its political subdivisions) in its
public or sovereign capacity and intended for public use and not for the use of the State
as a juridical person.
Article 420. The following things are property of public dominion:
Those intended for public use, such as roads, canals, rivers, torrents, ports
and bridges constructed by the State, banks, shores, roadsteads, and others
of similar character;
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;
Art. 424. Property for public use, in the provinces, cities, and municipalities,
consist of the provincial roads, city streets, municipal streets, the squares,
fountains, public waters, promenades, and public works for public service paid
for by said provinces, cities, or municipalities.
*These subdivisions, however cannot register as their own any part of the public domain
unless it can be proved that the grant thereof has been made or possessed under the
concept of an owner. They have no authority to control or regulate properties of public
domain for they are under the authority of Congress.
What are the kinds of properties of public dominion?
Property intended for public use or which can be used by everybody and others of
similar character
Property which is not for public use but intended for public service or those
which can be used only by duly authorized persons, such as government buildings and
vehicles
Property intended for the development of national wealth such as minerals, coal,
oil, forest, and other natural resources
Further, under the 1987 Constitution (Section 3 Article XII) Lands of the public domain
are classified into:
Section 3. Lands of the public domain are classified into agricultural, forest or
timber, mineral lands and national parks. Agricultural lands of the public
domain may be further classified by law according to the uses to which they
may be devoted. Alienable lands of the public domain shall be limited to
agricultural lands. x x x
Agricultural
Forest or timber
Mineral lands
National parks
Examples of public dominion: 1987 Constitution: agricultural, forest, timber, national

parks, mineral lands, water, minerals, oils, coal, petroleum, sources of potential energy,
fisheries, wildlife, flora, fauna, roads, canals, rivers, banks, shores and others similar in
character. Agricultural land is the only alienable and disposable land of the government
What are the characteristics of properties of public domain?
It is beyond the commerce of man
It cannot be acquired by prescription
It cannot be registered under the Land Registration Law and be the subject of a Torrens
Title
It cannot be levied upon by execution nor can be attached.
What are properties of private ownership?
Private ownership or property owned by the State in its private capacity, and is known
as patrimonial property. It may also be owned by private persons, either individually or
collectively.
Here are the provisions of the law which point out to this classification:
Article 421. All other property of the State, which is not of the character stated
in the preceding article, is patrimonial property.
*Patrimonial property is the property of the State owned by it in its private or proprietary
capacity, i.e., the property is not intended for public use, or for some public service, or
for the development of the national wealth.
Article 422. Property of public dominion, when no longer intended for public
use or for public service, shall form part of the patrimonial property of the
State.
*Under Article 422 there must be a formal declaration by the executive or possibly
legislative department of the government that the property of the State is no longer
needed for public use of for public service; otherwise, the property continues to be
property of public dominion notwithstanding the fact that it is not actually devoted for
such use or service.
Art. 423. The property of provinces, cities, and municipalities is divided into
property for public use and patrimonial property. (343)
*The political subdivisions of the national government may also own properties in their
private capacity.
Article 425. Property of private ownership, besides the patrimonial property of

the State, provinces, cities, and municipalities, consists of all property
belonging to private persons, either individually or collectively.
What are the differences between public domain and patrimonial properties?
Public dominion cannot be acquired by prescription, even by city or municipality.
Patrimonial property of the State may be the subject of acquisition through prescription.
Public lands become patrimonial property upon express government manifestation that
the property is already patrimonial and declaration that these are already alienable and
disposable.
And only when the property has become patrimonial can the prescriptive period for the
acquisition of property of the public domain begin to run.
113 of the Civil Code: All things that are within the commerce of man are susceptible to
prescription, and that the property of the State or any of its subdivisions not patrimonial
in character shall not be the object of prescription.
How are lands of public domain reclassified?
A positive act of the Government is necessary to enable such reclassification, and the
exclusive prerogative to classify public lands under existing laws is vested in the
Executive Department, not in the courts.
Section 2. All lands of the public domain, waters, minerals, coal, petroleum,
and other mineral oils, all forces of potential energy, fisheries, forests or
timber, wildlife, flora and fauna, and other natural resources are owned by the
State. With the exception of agricultural lands, all other natural resources
shall not be alienated. x x x
*The Constitution places a limit on the type of public land that may be alienated. Under
Section 2, Article XII of the 1987 Constitution, only agricultural lands of the public
domain may be alienated; all other natural resources may not be.
Article XII, Section 3, of the 1987 Constitution states:
Sec 3. x x x Alienable lands of the public domain shall be limited to agricultural

lands. Private corporations or associations may not hold such alienable lands
of the public domain except by lease, for a period not exceeding twenty-five
years, renewable for not more than twenty-five years, and not to exceed one
thousand hectares in area. Citizens of the Philippines may lease not more than
five hundred hectares, or acquire not more than twelve hectares thereof by
purchase, homestead or grant.
*The Constitution has laid down a prohibition for private corporations or associations to
own lands of public domain but may enjoy such only by lease in accordance to the terms
expressly provided in the abovementioned section.
Article 422. Property of public dominion, when no longer intended for public
use or for public service, shall form part of the patrimonial property of the
State.
*Under Article 422 there must be a formal declaration by the executive or possibly
legislative department of the government that the property of the State is no longer
needed for public use of for public service; otherwise, the property continues to be
property of public dominion notwithstanding the fact that it is not actually devoted for
such use or service.
What lands may not be declared open to disposition or concession?
Those which have been reserved for public or quasi-public uses;
Those which have been appropriated by the government;
Those which have become private property like the friar lands and the ancestral lands
under the IPRA Law
The Revised Forestry code also provides that no land of the public domain 18% in slope
or over shall be classified as alienable and disposable;
Submerged lands like the waters (sea or bay) above them are part of the inalienable
natural resources.
What are the classification of lands under the Constitution?
Classification under 1935 Constitution- Agricultural, forest or timber
Classification under 1973 Constitution- Agricultural, industrial, commercial, residential,

resettlement, mineral, timber and mineral lands
Classification under 1987 Constitution- Agricultural, forest, timber and national parks
All others under the 1987 Constitution are patrimonial property
No public land can be acquired except by a grant from the State

References:
1987 Constitution of the Philippines
Cebu oxygen & Acetylene Co., Inc. V Bercilles, 66 SCRA 281, 1975)
Who can own lands in the Philippines?
As a general rule only Filipino citizens and Corporations/Partnerships where at least 60%
of the Authorized Capital Stocks (ACS) of which is owned by Filipino citizens.
However the following are the cases wherein the abovementioned rule can be excused:
Property is acquired prior to the effectivity of the 1935 Constitution;
Acquisition by hereditary succession being the legal heir
Acquisition of not more than 40% interest in a condominium project pursuant to R.A.
4726;
Former natural born citizen of the Philippines who became a citizen of another country
but is now returning to the Philippines to reside permanently, subject to limitations under
BP 185 and RA 8179;
Filipina who marries an foreigner but retains her Philippine citizenship can acquire and
own land;
From the above enumeration, the 1987 Constitution, Article XII has laid down two
sections to justify some of the above exceptions:
SECTION 7. Save in cases of hereditary succession, no private lands shall be

transferred or conveyed except to individuals, corporations, or associations
qualified to acquire or hold lands of the public domain.
SECTION 8. Notwithstanding the provisions of Section 7 of this Article, a
natural-born citizen of the Philippines who has lost his Philippine citizenship
may be a transferee of private lands, subject to limitations provided by law.
Who are natural and natural born citizens?
Natural citizens of the Philippines are:
Citizens of the Philippines at the time of the adoption of the 1987 Constitution
Those whose fathers or mothers are citizens of the Philippines (any parent)
Those born before January 17, 1973, of Filipino mothers, who elect Philippine citizenship
upon reaching the age of majority (18 years old) born anywhere in the world
Natural born citizens are those:
Born in the Philippines
Those born of Filipino mothers and non-Filipino father who elect Philippine citizenship
upon reaching the age of majority
Naturalized under Naturalization Law
Citizens of the Philippines who marry aliens but have not renounced their Phil.
Citizenship
Those who acquired dual citizenship
Those who acquired derivative (origin or descent) citizenship
The unmarried child, legitimate or not or adopted, below 18 years of age, of those who
re-acquire Philippine citizenship upon effectivity of this Act shall be deemed citizens of
the Philippines.
Section 7 of Art. XII of 1987 Constitution states that a natural born citizen of the
Philippines who has lost his Phil. citizenship may be a transferee of private lands subject
to limitations provided by law
Rules regarding former natural born Filipino citizens acquiring lands in the
Philippines
Mode of acquisition may be through both voluntary deeds (sale or donation) and
involuntary deeds (foreclosure, execution, tax delinquency sale)
Area allowed (maximum)
If the purpose is for residence:
1,000 square meters of urban land
1 hectare of rural land
2.If the purpose is for business
(refers to the use of land primarily, directly and actually in the conduct of business or
commercial activities in the broad areas of agriculture, industry and services, including
the lease of land but excluding the buying and selling thereof)
5,000 square meters of urban land
3 hectares of rural land
A transferee who acquired urban or rural land for residential purpose while still a Filipino
citizen may acquire additional urban or rural land for residential purpose which, when
added to that already owned shall not exceed the maximum area allowed by law. It shall
also apply to a transferee who already owns urban or rural land for business purpose
while still a Filipino citizen.
A transferee who has already acquired urban land for residential purpose shall be
disqualified to acquire rural land for residential purpose and vice versa.
A transferee of residential land under BP 185 may still avail of the right to acquire land
for business purpose under RA 8179.
*In case of married couples where both are former natural born Filipino citizens, both of
them may avail provided that the total acquisition shall not exceed the maximum area
allowed.
Can aliens acquire lands in the Philippines?
General rule: Aliens are not qualified to acquire land in the Philippines.
Exceptions:
Aliens may acquire private land by inheritance
PD 713 (May 27, 1975) Allows Americans who were formerly Filipino citizens, Americans
who became permanent residents of the Philippines and Americans who have resided in
the Philippines continuously for at least 20 years and are in good faith had acquired
private residential lands for family dwelling purposes in the Philippines prior to July 3,
1974 to continue holding such lands and transfer ownership over the same to qualified
persons or entities.
BP 8179 (March 16, 1982)Former natural born citizens of the Philippines who has lost his
citizenship may be transferee of a private land up to a maximum area of 1,000sqm in
case of urban land and 1 hectare for rural to be used as his residence; In case of married
couples, only one may avail and if both the total area should not exceed the maximum
herein fixed
RA 8179 (March 28, 1996) 5,000sqm urban land/ 3 hectares rural land for business or
other purposes
RA 9225 (August 29, 2003) Aliens may re-acquire Filipino citizenship
References:
1987 Constitution of the Philippines
See Borromeo vs. Descallar, G.R. No. 159310, February 24, 2009
Ownership
What is land ownership?
Land ownership is the right and interest which a person has in land to the exclusion of
others. It is the independent right of exclusive enjoyment and control over land for the
purpose of deriving there from all advantages required by the reasonable needs of the
holder of the right and the promotion of the general welfare but subject to the
restrictions imposed by law and the rights of others
What are the kinds of ownership?
Full ownership refers to all the rights of the owner. This may include the right to
possess, use and enjoy the property, to the fruits, accessories, to consume the thing by
its use, dispose or alienate or vindicate and recover. The law has given the owner these
right by virtue of this provision:
Art. 428. The owner has the right to enjoy and dispose of a thing, without other
limitations than those established by law. The owner has also a right of action against
the holder and possessor of the thing in order to recover it. (348a)
Full ownership may enjoy these bundle of rights as elements or attributes of ownership:
a. Right to Possess (jus possedendi)
b. Right to Use and Enjoy (jus utendi)
c. Right to Receive the Fruits & Accessories (jus fruendi)
d. Right to Abuse and Consume (jus abutendi)
e. Right to Dispose or Alienate (jus disponendi)
f. Right to Recover Possession and/or Ownership (jus vindicandi)
g. Right to Construct any work or make plantation or excavation
h. Right to have ownership of the Hidden treasures found in the property;
i. Right to Exclude others; and
j. Right to Fence the property.
Naked ownership refers to ownership where the right to use and the fruits has been
denied
Sole ownership refers to ownership which is vested to only one person.
Co-ownership refers to ownership rights to own a whole property together with the
others and at the same time owner of an aliquot part thereof. Co-ownership defined by
law as:
Art. 484. There is co-ownership whenever the ownership of an undivided thing
or right belongs to different persons.x x x
What are the characteristics of ownership?
It is a general right over all utilities of a thing subject to the limitations of real rights of
others.
It is an independent right since it can exist without the necessity of any other right.
It is an abstract right because it can exist distinct and independent of its constituent
parts.
It is an exclusive right for there can only be one ownership but there may be two or more
owners.
It is generally a perpetual right and is not usually limited by time and may last as long as
the thing exists.
It is an elastic right since the power included therein may be reduced in quantity or
quality without affecting the nature of the dominion.
What are the types of estates?
Freehold Estate- which indicates title of ownershipFee simple-absolute title
Fee tail-one designed to pass title from the grantee to his heirs/ the intent of the grantor
being to keep the property in the grantees line of issue
Life Estate-one held for the duration of the life of the grantee
Less-than-freehold estate-a right short of title
Estate for years- in the nature of lease
Tenancy from period to period
Tenancy at will
What are the essential requisites of tenancy relationship?

The subject matter is agricultural land
The parties are the landowner and the tenant
There is consent
The purpose is agricultural production
There is personal cultivation by the tenant
There is sharing of harvest between the parties
CO-OWNERSHIP
Art. 484. There is co-ownership whenever the ownership of an undivided thing

or right belongs to different persons. In default of contracts, or of special
provisions, co-ownership shall be governed by the provisions of this Title.
(392)
What are the rights of co-owners?
There is no co-ownership when the different portions owned by different people are
already concretely determined and separately identifiable, even if not yet technically
described.
Art. 493. Each co-owner shall have the full ownership of his part and of the
fruits and benefits pertaining thereto, and he may therefore alienate, assign or
mortgage it, and even substitute another person in its enjoyment, except
when personal rights are involved. But the effect of the alienation or the
mortgage, with respect to the co-owners, shall be limited to the portion which
may be allotted to him in the division upon the termination of the co-
ownership. (399)
2. A co-owner may sell his right over an undivided portion to the extent owned by him. If
the co-owner sells the whole property as his, the sale will affect only his share but not
those of the co-owners who did not consent to the sale. No co-owner is obliged to remain
in the co-ownership and the co-owner may demand at anytime partition of the thing
owned in common.
Art. 1612. If several persons, jointly and in the same contract, should sell an undivided
immovable with a right of repurchase, none of them may exercise this right for more
than his respective share. The same rule shall apply if the person who sold an
immovable alone has left several heirs, in which case each of the latter may only
redeem the part which he may have acquired. (1514)
Art. 1514. A person to whom a document of title has been transferred, but not
negotiated, acquires thereby, as against the transferor, the title to the goods, subject to
the terms of any agreement with the transferor. If the document is non-negotiable, such
person also acquires the right to notify the bailee who issued the document of the
transfer thereof, and thereby to acquire the direct obligation of such bailee to hold
possession of the goods for him according to the terms of the document. Prior to the
notification to such bailee by the transferor or transferee of a non-negotiable document
of title, the title of the transferee to the goods and the right to acquire the obligation of
such bailee may be defeated by the levy of an attachment of execution upon the goods
by a creditor of the transferor, or by a notification to such bailee by the transferor or a
subsequent purchaser from the transfer of a subsequent sale of the goods by the
transferor. (n)
Art. 1884. The agent is bound by his acceptance to carry out the agency, and is liable for
the damages which, through his non-performance, the principal may suffer. He must also
finish the business already begun on the death of the principal, should delay entail any
danger. (1718)
3. The right of repurchase may be exercised by a co-owner to the extent of his share
alone. Stated in the preceding articles are the right of redemption/pre-emption.
Art. 1623. The right of legal pre-emption or redemption shall not be exercised except
within thirty days from the notice in writing by the prospective vendor, or by the vendor,
as the case may be. The deed of sale shall not be recorded in the Registry of Property,
unless accompanied by an affidavit of the vendor that he has given written notice
thereof to all possible redemptioners. The right of redemption of co-owners excludes
that of adjoining owners. (1524a)
What is diverse co-ownership?
Diverse co-ownership is when benefits are assorted to different kinds such as to different
owners or shareholders in a corporation.
What are surface, subsurface and air rights?
Land, in its legal significance, extends from the surface downwards to the center of the
earth and extends upwards indefinitely to the skies
The surface and subsurface rights of an owner entitle him to construct thereon any
works or make any plantations and excavations without detriment to servitudes and
special laws.
Air right is the right of an owner to use and control the air space over his land subject to
the requirements of navigation, laws or contract.
What is the right to accession?
The ownership of property gives the right by accession to everything which is produced
thereby, or which is incorporate or attached thereto whether naturally or artificially.
With respect to the produce of the property, to the owner belongs the natural fruits
(spontaneous products of the soil), industrial fruits (those produced by land by cultivation
or labor) and civil fruits (the rental income of buildings and lands)
With respect to immovable properties, the owners of lands adjoining the banks of rivers
belongs the accretion that they gradually receive from the effects of the current of the
water. The owners of estates adjoining ponds, lagoons do not acquire the land left fry by
the natural decrease of the waters or those lost in extraordinary floods.
Whenever a river, changing its course by natural causes, opens a new bed through a
private estate, this bed shall become of public dominion.
What are the kinds of accession?
ACCESSION DISCRETA or the rights pertaining to the owner of a thing over everything
which is produced thereby such as natural, industrial and civil fruits
ACCESSION CONTINUA or the right pertaining to the owner of a thing over everything
which is incorporated or attached thereto either naturally or artificially
ACCESSION INDUSTRIAL or which takes place in case of building, planting or sowing
ACCESSION NATURAL which may be through:
ALLUVION or the ACCRETION which lands adjoining the banks of rivers gradually receive
from the effects of the current of the river
AVULSION or the accretion which takes place whenever the current of a river, creek or
torrent segregates from an estate on its bank a known portion of a land and transfers it
to another estate
What are the rules on hidden treasure?
Art. 438. Hidden treasure belongs to the owner of the land, building, or other
property on which it is found.Nevertheless, when the discovery is made on the
property of another, or of the State or any of its subdivisions, and by chance,
one-half thereof shall be allowed to the finder. If the finder is a trespasser, he
shall not be entitled to any share of the treasure. If the things found be of
interest to science of the arts, the State may acquire them at their just price,
which shall be divided in conformity with the rule stated. (351a)
Art. 439. By treasure is understood, for legal purposes, any hidden and unknown deposit
of money, jewelry, or other precious objects, the lawful ownership of which does not
appear. (352)
What is the difference between possession and ownership?
Possession and ownership- Possession may signify outward evidence of title but it is not
necessarily the title itself. Ownership refers to the evidence of right over the property.
One may possess a property but not own it like in lease or in the case of informal
settlers.
Ownership by possession- it is meant as the exercise either by the same person who
holds and enjoys the property or material possession. It may also be in the name of the
other like symbolic possession which is acquired by the execution of a public instrument
What is the difference between possession and occupation?
The law requires both possession and occupation for an applicant for an applicant or an
original registration.
Possession is the holding of a thing or the enjoyment of a right; it should also include the
idea of occupation. To constitute the foundation of prescriptive right under a claim of
title, possession must be adverse of in hostility to the true owner. Occupation can be
held by another in his name constructive possession.
What is the rule in case of conflict of possession?
In case of conflict or dispute regarding possession, the rule of preference is as follows:
The present possessor shall be preferred;
If there are two possessors, the one longer in possession;
If the dates of the possession are the same, the one who presents a title;
If both possessors have titles, the court shall determine the rightful possessor and owner
of the land.
References:
Tolentino, A. (1999). Civil Code of the Philippines, Vol. II. Quezon City: Central Professional
Books, Inc.
Waite V. Peterson 8 Phil 449, G.R. No. L-3636 August 29, 1907
Limitations upon the Right of Ownership
Limitations upon the right of ownership:
General limitation imposed by the State in the exercise of its inherent powers.
Limitations imposed by specific provisions of the law;

Limitations imposed by the transferor of the property;
Limitations imposed by the owner himself; and
Limitations inherent in the property.
A. GENERAL LIMITATIONS imposed by the State for its benefit is through its three
inherent powers:
Police power refers to the right of the State to enact laws or regulations in relation to
persons and property as may promote public health, public morals, public safety, and the
general welfare and convenience of the people. It is also imposed towards ones personal
liberty or property to promote the general welfare. It may be through an imposition of
restraint upon liberty or property for the purpose of promoting the common good.
Eminent domain refers to the power of the State to take private property for public use
upon payment of just compensation. It is expressly provided in the New Civil Code that:
Art. 435. No person shall be deprived of his property except by competent

authority and for public use and always upon payment of just compensation.
Should this requirement be not first complied with, the courts shall protect
and, in a proper case, restore the owner in his possession. (349a)
Taxation refers to the power of the State to impose charge or burden upon persons,
property, or property rights, for the use and support of the government and to enable it
to discharge its appropriate functions.
B. LIMITATION IMPOSED BY LAW such as legal easement, zoning regulations, building

code, rent control, urban and agrarian reform, subdivision regulations, escheat.
C. LIMITATION IMPOSED BY THE OWNER HIMSELF such as voluntary servitudes,

mortgages, pledges, lease and deed of restrictions.
D. LIMITATION IMPOSED BY THE TRANSFEROR OF THE PROPERTY such as

donation, usufruct.
E. INHERENT LIMITATION example Co-ownership.
References:
Mun. of Pasay v. Manaois, et al., L-3485, June 30, 1950
Tolentino, A. (2002). Commentaries and Jurisprudences on the Civil Code of the

Philippines. Quezon City: Central Lawbook Publishing Co., Inc.
Modes of Acquiring Ownership
What are the modes of acquiring ownership?
Public Grant is the administrative method of acquiring public lands, such as homestead
settlement, free patent and sales patent.
Private Grant is the voluntary transfer or conveyance of privately owned property by

an owner, such as by sale or donation. It is the transfer of title to land by the owner
himself or his duly authorized representative to another by mutual consent. The Consent
of the grantor is an essential element.
Voluntary Transfer of Private Grant is the process by which a land is transferred with
the consent and conformity of the owner such as by sale or donation.
Involuntary Alienation or Involuntary Grant is the process by which a land is taken

against the consent of the owner, such as expropriation proceedings, execution of
judgment, tax sales and foreclosure. This method of transfer does not require the
consent or cooperation of the owner of the land, since this is usually carried out against
his will.
Descent or Devise (Descent) is acquired by virtue of inheritance, which requires a

degree of relationship. (Devised) In devise, succession need not be in favor of a relative.
Title to the property is transferred by way of will executed by the Testator. Title by
descent may be acquired by virtue of hereditary succession to the estate of a deceased
owner. To be an heir, it requires certain degree or relationship with the decedent. In the
case of devise, however, succession need not be in favor of a relative. Even a stranger
may acquire title by devise if appropriate disposition has been made in his favor by the
testator in the latters will.
Reclamation is the filling of submerged land by deliberate act of the Government. In

the Philippines, there exists no such grant, express or implied, to private landowners. It is
only the government that can assert title to reclaimed land.However,the government
may declare it property of the adjoining owners and as an increment thereto only when it
is no longer necessary for public use.
Accretion is the process by which a riparian land gradually and imperceptively receives
addition made by the water to which the land is contiguous. However, this law cannot be
invoked for application to cases where the accretion is caused by action of the bay which
is a part of the sea, since such alluvial formation along the seashore is part of the public
domain and, therefore, not open to acquisition by adverse possession by private persons.
Art. 457. To the owners of lands adjoining the banks of rivers belong the
accretion which they gradually receive from the effects of the current of the
waters. (336)
Prescription is when one acquires ownership and other real rights through the lapse of
time in the manner and under the conditions laid down by law. It is a mode of acquisition
of title through continuous, open, adverse possession in the concept of an owner for the
period fixed by law.(as discussed in this article )
What is the application of prescription concerning properties of public

dominion and patrimonial property?
Public dominion cannot be acquired by prescription, even by city or municipality
Patrimonial property of the State may be the subject of acquisition through prescription
Public lands become patrimonial property upon express government manifestation that
the property is already patrimonial and declaration that these are already alienable and
disposable.
And only when the property has become patrimonial can the prescriptive period for the
acquisition of property of the public domain begin to run.
References:
Pea, N. (1966). Registration of Land Titles and Deeds. Quezon City: Central Lawbook
Publishing Co., Inc.
Relevant Terms and Concepts in Ownership
A. ACCION INTERDICTAL-is a summary action to recovery physical or material

possession only. It consists of the summary actions of Forcible Entry and Unlawful
Detainer.
B. Forcible Entry -is a summary action to recover physical possession of real property
when a person originally in possession thereof is deprived by: force, intimidation,
strategy, threat, and stealth.
C. Unlawful Detainer -is a kind of action that must be brought when possession is being
unlawfully withheld after the expiration or termination of the right to hold possession, by
virtue of any contract whether express or implied.
D. ACCION PUBLICIANA -is an ordinary civil proceeding to recover the better right of
possession, except in cases of forcible entry and unlawful detainer. What is involved is
not possession de facto but possession de jure.
E. ACCION REINVINDICATORIA -is an action to recover real property based on ownership.

Here, the object is the recovery of the dominion over the property as owner.
F. CAVEAT EMPTOR (BUYER BEWARE)- requires the purchaser to be aware of the

supposed title of the vendor and one who buys without checking the vendors title takes
all the risks and losses consequent to such failure. The actual possession by people other
than the vendor should, at least, put the purchaser upon inquiry. Site identification and
survey are a must also. An action for reconveyance is a legal and equitable remedy
granted to the rightful owner of land which has been wrongfully or erroneously registered
in the name of another for the purpose of compelling the latter to transfer or convey the
land to him.
G. DECREE OF REGISTRATION- Issued by the administrator of LRA upon order of the

court. It shall bind the land and quiet title thereto which is the purpose of Torrens
System. Land becomes registered only upon transcription of the decree in the original
registration book by the Register of Deeds and not on the date of issuance of the
decree.
Certificate of title becomes indefeasible after one year from issuance of the decree.
H. DOCTRINE OF SELF-HELP- 429. 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 reasonable necessary to repel or prevent an actual or
threatened unlawful physical invasion or usurpation of his property.
I. ESTATE-an Estate refers to the totality of the assets owned by a person which include
real and personal properties and the interest thereof.
J. PERSONAL ACTION-are those actions filed for the recovery of personal properties,i.e.
replevin.
K. PERSONAL RIGHT-refers to the power belonging to one person to demand from

another the fulfillment of a prestation or object to give, to do, or not to do.
L. POSSESSION-the holding of a thing or the enjoyment of a right.
M. REAL ACTION-are those actions filed for the recovery of real properties, i.e. accion
interdictal; accion publiciana; and accion reinvindicatoria.
N. REAL RIGHT-is one that confers upon the holder an autonomous power to derive
directly from an appropriate property/ thing certain economic advantages, independently
of whoever should be the possessor of a property/ thing.
O. REGALIAN DOCTRINE-all lands of whatever classification and other natural resources

not otherwise appearing to be clearly within private ownership belong to the State. It
also means that is the State reserved the full ownership of all natural resources or
natural wealth that may be found in the bowels of the earth.
P. RES NULLIUS-Everything on earth must have an owner. Res Nullius is a Latin term that
means things (res) without and owner (nullius). Since everything must have an owner, if
there are no private owners or claimants, then that particular property is presumed to be
owned by the State. Likewise, when a person dies without any heir, then the State
succeeds to the estate of the deceased.
Q. RIPARIAN OWNER-is the owner of the property adjoining or abutting the bank of a
river.
R. SOLUTIO INDEBITI-means that no person shall enrich himself at the expense of

another.
S. STEWARSHIP PRINCIPLE OF PROPERTY OWNERSHIP- provides that the property owners

are bound to use or utilize their lands in a manner that will promote welfare and benefits
not only for themselves but also for the State. Ownership of land carries with it a distinct
social obligation. Owners are obliged to use their properties to promote the general
welfare and not only their interest, thus the State may regulate or control land
ownership.
T. WRIT OF DEMOLITION- If the writ of possession issued in a land registration proceeding

implies the delivery of possession of the land to the successful litigant therein, a writ of
demolition must, likewise, issue, especially considering that the latter writ is but
compliment of the former which, without said writ of demolition, writ of possession would
be ineffective. Demolition is upon special order of the court.
U. WRIT OF POSSESSION- Employed to enforce a judgment to recover the possession of

land. It commands the sheriff to enter the land and give possession of it to the person
entitled under judgment.
Usufruct
The law expressly provides that a usufruct is:
Art. 562. Usufruct gives a 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. (467)
*Usufruct is a real right by virtue of which a person is given 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 provides otherwise.
What are the requisites of usufruct?
Essential requisites are those that are the right to enjoy the property of another; and
Accidental the obligation of preserving the form and substance of such property.
What is abnormal usufruct?
Abnormal usufruct involves properties which must be consumed or expended or else,

it would be useless to the usufructuary. This is an exception to the rule that the usufruct
must preserve the form and substance of the usufruct. Thisrefers to that where the
usufructuary does not have any obligation to preserve the form and substance of the
property which is the object of the usufruct. The law has laid down the rules for abnormal
usufructs in the following articles:
Art. 573. Whenever the usufruct includes things which, without being
consumed, gradually deteriorate through wear and tear, the usufructuary shall
have the right to make use thereof in accordance with the purpose for which
they are intended, and shall not be obliged to return them at the termination
of the usufruct except in their condition at that time; but he shall be obliged to
indemnify the owner for any deterioration they may have suffered by reason of
his fraud or negligence. (481)
Art. 574. Whenever the usufruct includes things which cannot be used without
being consumed, the usufructuary shall have the right to make use of them
under the obligation of paying their appraised value at the termination of the
usufruct, if they were appraised when delivered. In case they were not
appraised, he shall have the right to return at the same quantity and quality,
or pay their current price at the time the usufruct ceases. (482)
What is caucionjuratoria?
The caucionjuratoria refers to the usufructuary, which files a verified petition in court
asking for the delivery of the house and furniture necessary for himself and his family
without filing any bond or security. This may also apply to instruments or tools necessary
for an industry or vocation in which the usufructuary is engaged. The usufructuary shall
take care of the property/ things given in usufruct as good father of a family. This case
is contemplated in this article:
Art. 587. If the usufructuary who has not given security claims, by virtue of a
promise under oath, the delivery of the furniture necessary for his use, and
that he and his family be allowed to live in a house included in the usufruct,
the court may grant this petition, after due consideration of the facts of the
case.The same rule shall be observed with respect to implements, tools and
other movable property necessary for an industry or vocation in which he is
engaged.If the owner does not wish that certain articles be sold because of
their artistic worth or because they have a sentimental value, he may demand
their delivery to him upon his giving security for the payment of the legal
interest on their appraised value. (495)
References:

Easement
What is easement or servitude?
An easement is a real right constituted on anothers property which must be corporeal

and immovable and the owner of such will be abstained from doing or allowing another
person to do something on his property for another thing or persons benefit. The right
may be to use the lands surface or the air space above it. It is also called a non-
possessory interest in real property because they give the easement holder the right to
use the property but not to possess it.
The law define easement as:
Art. 613. An easement or servitude is an encumbrance imposed upon an

immovable for the benefit of another immovable belonging to a different
owner. x xx
Who are the parties in an easement?
The law laid down the two parties in an easement:
Art. 613.Xxx The immovable in favor of which the easement is established is

called the dominant estate; that which is subject thereto, the servient estate.
(530)
*The dominant estate is which an immovable or real property in favor of which the
easement is established; and
The servient estate is which the estate subject to the easement.
What are the modes of acquiring easements?
Art. 615. Easements may be continuous or discontinuous, apparent or non-

apparent. Continuous easements are those the use of which is or may be
incessant, without the intervention of any act of man.
*Continuous and apparent easement are required either by virtue of a title or by

prescription after ten (10) years
Discontinuous easements are those which are used at intervals and depend
upon the acts of man.
Apparent easements are those which are made known and are continually kept
in view by external signs that reveal the use and enjoyment of the same.
Non-apparent easements are those which show no external indication of their

existence. (532)
*Continuous non-apparent easement and discontinuous easements whether apparent or

non-apparent can only be acquired by virtue of a title.
Appurtenant easement- allows the owner of a parcel of land to use the land next to it.
Easement by necessity- owners of land have the right to enter and leave their property,
to prevent them from land locking and make their property useless.
Easement by prescription- the claimant uses anothers land for a period of time as
defined by state of law and usually requires that the use is uninterrupted, continuous,
adverse without the owners consent, visible, open and notorious.
References:
Prescription
What is prescription?
Prescription is the loss or acquisition of a right through lapse of time. The law defined
it by the following article as:
Art. 1106. By prescription, one acquires ownership and other real rights
through the lapse of time in the manner and under the conditions laid down by
law. In the same way, rights and conditions are lost by prescription. (1930a)
What are the types of prescription?
1. Acquisitive prescription is when one acquires ownership and other real rights
through the lapse of time in the manner and under the conditions laid down by law. It is
also known as adverse possession. It must be enough that the possession should be in
the concept of an owner, public, peaceful, uninterrupted and adverse. Adverse
possession has two kinds namely:
Ordinary Acquisitive Prescription which requires possession of things in good faith

and with just title for the time fixed by law which is 10 years.
Extraordinary Acquisitive Prescription which is the acquisition of ownership and
other real rights without the need of title or of good faith or any other condition and
would prescribe in 30 years.
The aforementioned discussion is supported by these provisions:
Art. 1117. Acquisitive prescription of dominion and other real rights may be
ordinary or extraordinary. Ordinary acquisitive prescription requires possession
of things in good faith and with just title for the time fixed by law. (1940a)
Art. 1118. Possession has to be in the concept of an owner, public, peaceful

and uninterrupted. (1941)
2. Extinctive prescription is when rights and actions are lost through the lapse of
time in the manner and under the conditions laid down by law. It is also known as
liberatory prescription. A persons uninterrupted adverse possession of patrimonial
property for at least 30 years, regardless of good faith or just title, ripens into ownership
pursuant to Art. 1137 of the Civil Code. The period begins upon the declaration of the
government that the subject land is no longer intended for public service. Without such
express declaration, the property, even if classified as alienable or disposable, remains
property of public dominion, pursuant to Art. 420[2] of the Civil Code.
What is the difference between prescription and laches?
Prescription one acquires ownership and other real rights through the lapse of time in
the manner and under the action laid down by law; it is at least 30-year uninterrupted
use of alienable property of the government reckon from the predecessor-in-interest. It is
sometimes called adverse possession. Prescription is concerned with the fact of delay.It
is a matter of time, statutory, applies at law and is based on a fixed time
Laches the failure or neglect, for an unreasonable and unexplained length of time, to
do that which by exercising due diligence could or should have been done earlier; it is
negligence or omission to assert a right within a reasonable time, warranting a
presumption that the party entitled to assert it either has abandoned it or declined to
assert it. Delay in asserting the complainants rights. Laches is concerned with the effect
of delay. Laches is principally a question of inequity of permitting a claim to be enforced,
this inequity being founded on some change in the condition of the property of the
relation of the parties, apply in equity are not based on fixed time.
REFERENCES:

Paras, E. (2000). Civil Code of the Philippines, Annotated. Quezon City: Rex Printing
Company, Inc.
FUNDAMENTALS OF LAND TITLE AND REGISTRATION
Torrens System
March 7, 2016fundamentals of land title and registration
What is land registration?
Land registration is a judicial or administrative proceeding whereby a persons claim of

ownership over a particular land is determined and confirmed or recognized so that such
land and the ownership thereof may be recorded in a public registry.
What is Torrens title?
Torrens title is the certificate of ownership issued by the land Register of Deeds, naming
and declaring the owner of the real property described therein, free from all liens and
encumbrances except such as may be expressly noted thereon or otherwise reserved by
law. Its effect is that it can be conclusive against the whole world, it is guaranteed to be
indefeasible, unassailable, and imprescriptible. The title once registered cannot be
impugned, altered, changed, modified, enlarged, or diminished except in some direct
proceeding permitted by law.
What are the kinds of registration?
1. Original registrationis the first registration of the land whereby an Original Certificate
of Title is entered in the Registry of Property and a duplicate owners copy is issued to
the owner by the Register of Deeds. It can be further classified into:
a. Judicial registration which will be done through the courts. It may either be voluntary
where it instituted by the applicant under the provisions of Act 496 or PD 1529 or
compulsory at the instance of the State under provision of Act 2259 (Cadastral Act)
1. Voluntary -instituted by the applicant

2. Compulsory- at the instance of the State
b. Administrative registration wherein theacquisition of land patents to public agricultural
lands and registration thereof under Section 107 of CA No. 141 (The Public Land Act)
What is subsequent registration?
Subsequent registration is a process where the Original Certificate of Title is cancelled

and subsequently registered under a Transfer Certificate of Title in favor of the new
owner in cases of land conveyance such as sale, donation or assignment.
Who may apply for original registration of title?
According to Presidential Decree 1529 Amending and Codifying the Laws Relative to
Registration of Property and for Other Purposes, or also known as Property registration
Decree, it has laid down the enumeration of who may apply for original registration of
Title.
Section 14. Who may apply. The following persons may file in the proper Court of First
Instance an application for registration of title to land, whether personally or through
their duly authorized representatives:
(1) Those who by themselves or through their predecessors-in-interest have been in

open, continuous, exclusive and notorious possession and occupation of alienable and
disposable lands of the public domain under a bona fide claim of ownership since June
12, 1945, or earlier.
(2) Those who have acquired ownership of private lands by prescription under the
provision of existing laws.
(3) Those who have 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 other manner provided for by law.
Where the land is owned in common, all the co-owners shall file the application jointly.
Where the land has been sold under pacto de retro, the vendor a retro may file an
application for the original registration of the land, provided, however, that should the
period for redemption expire during the pendency of the registration proceedings and
ownership to the property consolidated in the vendee a retro, the latter shall be
substituted for the applicant and may continue the proceedings.
A trustee on behalf of his principal may apply for original registration of any land held in
trust by him, unless prohibited by the instrument creating the trust.
What are the attributes and limitations on certificates of title and registered lands?
A. Free from liens and encumbrances

B. Incontrovertible and Indefeasible
C. Certificate of title not subject to Collateral Attack
What are the parts and information on the title?
Title Form Information- where the type of form, date of revision and serial number can
be found
Survey Information- where the parcel identity (lot, block, survey plan number),
location, adjoining parcels, tie point, tie line, bearings and distances from corner to
corner and the area and date of survey can be found
Registration Information- where the name of the Register of Deeds, title number, book
number, page number, place/time/date of registration, name and signature of registrar
and historical information (date and place of original registration, OCT No., Volume No.,
Page No., Decree No., record/name of original owner, number of cancelled title for OCT)
can be found
Ownership Information- where the name/s of all persons whose interest make up the
full ownership, citizenship, civil status, postal address
What is Homestead patent?
It is issued (by the Director Lands) over land not of the public domain is a nullity, devoid
of force and effect against the owner whose title is covered by an OCT or TCT.
What is the Registration of title under Act 3344?
Registration of untitled lands or lands with imperfect titles is ineffective against third
persons. That in case of double sale, the title registered under the Torrens System is
superior than title registered under Act 3344. Registration under the Torrens System, at
the Registry of Deeds is needed so that title shall be binding upon third parties.
What is a decree of registration?
It is issued by the administrator of LRA upon order of the court. It shall bind the land and
quiet title thereto the purpose of Torrens System. Land becomes registered only upon
transcription of the decree in the original registration book by the Register of Deeds and
not on the date of issuance of the decree. Certificate of title becomes indefeasible after
ONE YEAR from issuance of the decree.
What is an assurance fund?
Sec 95 of Property Registration Decree provides that a person who, without negligence
on his part sustain loss or damage or is deprived of land or any estate or interest therein
in consequence of the bringing of the land under the operation of Torrens System or
arising after the original registration of the land, through fraud or in consequence of any
error, may bring an action in any court of competent jurisdiction for the recovery of
damages paid out of the Assurance Fund within 6 years from the time the right to bring
such action accrues.
The assurance fund is intended to relive innocent persons from the harshness of the
doctrine that a certificate of title is conclusive evidence of indefeasible title to the land.
What is the rule on conveyance of only a portion of a land?

The Register of Deeds shall not enter any new title in favor of the grantee until a plan
indicating the portions into which the land has been subdivided shall first be presented,
together with the technical descriptions thereof. Meantime, the deed of conveyance may
be annotated at the owners certificate.
References:
Cadastral Act, Act No. 2259
Comprehensive Agrarian Reform Law of 1988
Pea, N. Registration of Land Titles and Deeds. Quezon City: Rex Printing Company, Inc.
Presidential Decree No. 27, Decreeing the Emancipation of Tenants from the Bondage of
theOil, Transferring to Them the Ownership of the Land They Till and Providing the
Instruments and Mechanism Therefor
Property Registration Decree 1529, Amending and Codifying the Laws Relative to
Registration of Property and for Other Purposes
Public Land Act, Com. Act No. 141, Title and Application of the Act, Lands to Which It
Refers, and Classification, Delimitation and Survey Thereof for Concession
Certificate of Title
What is a certificate of title?
Certificate of title is the true copy of the decree of registration or the transcription
thereof and like the decree shall also be signed by the LRA Administrator. This is the
certificate of ownership issued under the Torrens system of registration by the
government, thru the Register of Deeds. It names and declare who the owner in fee
simple is and described the property with utmost particularity and free from all liens and
encumbrances except as those noted or reserved by law. Legally defined, a certificate of
title is the transcript of the decree of registration made by the Register of Deeds.
Title is not synonymous with Torrens certificate of titles. It is a generic word which means
proof, evidence or muniment of ownership such as tax declaration, realty tax receipts,
deed of sale and Torrens Certificate of Title (best evidence of ownership)
Land title refers to that upon which ownership is based. It is the evidence of the right of
the owner or the extent of his interest where he can maintain control and right to
exclusive possession and enjoyment of property.
Muniments of title are instruments or written evidences that the applicant hold or
possesses to enable him to substantiate and prove title to his estate.
What are the attributes and limitations on certificates of title and registered lands?
1. Free from liens and encumbrances
2. Incontrovertible and Indefeasible
3. Incontrovertible and indefeasible.
4. Certificate of title not subject to Collateral Attack
What are the parts and information on the title?
Title Form Information- where the type of form, date of revision and serial number can
be found
Survey Information- where the parcel identity (lot, block, survey plan number),
location, adjoining parcels, tie point, tie line, bearings and distances from corner to
corner and the area and date of survey can be found
Registration Information- where the name of the Register of Deeds, title number, book
number, page number, place/time/date of registration, name and signature of registrar
and historical information (date and place of original registration, OCT No., Volume No.,
Page No., Decree No., record/name of original owner, number of cancelled title for OCT)
can be found
Ownership Information- where the name/s of all persons whose interest make up the
full ownership, citizenship, civil status, postal address
What are the common annotations on title?
1. Cloud on title is any condition revealed by a title search which affects the title to the
property, usually relatively unimportant items but which cannot be removed without
quitclaim or court action.
Quieting of title is an action brought to remove clouds on the title to real property or any
interest therein, by reason of any instrument, record, claim, encumbrance or proceeding
which is apparently valid or effective but is in truth and in fact invalid, ineffective,
voidable, or unenforceable, and may be prejudicial to said title as defined in Article 476
of the New Civil Code:
Art. 476. Whenever there is a cloud on title to real property or any interest therein, by
reason of any instrument, record, claim, encumbrance or proceeding which is apparently
valid or effective but is in truth and in fact invalid, ineffective, voidable, or
unenforceable, and may be prejudicial to said title, an action may be brought to remove
such cloud or to quiet the title.
An action may also be brought to prevent a cloud from being cast upon title to real
property or any interest therein.
2. Notice of lispendens- LisPendens is a Latin term meaning a pending litigation. A

Notice of LisPendens, when registered with the registry of deeds where the land is
recorded serves as a warning to third parties that a particular real property is in
litigation. Before the final judgment, the notice of lispendens may be cancelled upon
order of the court, action of the register of deeds at the instance the party who caused
the registration of the notice or verified petition of the party who caused the registration
thereof.
3. Section 4 Rule 74 of the Rules of Court governs the Title that is acquired through
extra-judicial settlement. Title is subject to claims of third party, with interest, for a
period of two (2) years.
4. Deed of restrictions refers to limitation on use of property such as in subdivision and

condominium.
a. These are conditions or limitations placed in a deed by the owner when the property is
transferred to another party. It is usually created by individual parties and affects a
particular property.
b. Those conditions placed in the deeds by developers and usually affect the entire
subdivision are called restrictive covenants
c. If restrictions placed are unreasonable or unlawful restraints on an owners use of a
land they will be unenforceable.
5. Easement or right-of-wayrefers to right given to another property or the dominant

property. The law has defined it as:
Art. 613. An easement or servitude 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. (530)
6. Writ of preliminary attachment is a judicial order emanating from a legal action,

authorizing the Sheriff or other public officer to take all the property or rights of any
party so as to preserve the property to satisfy future judgment in favor of the Plaintiff.
Attachment is governed by Rule 57 of the Rules of Court. There are three kinds of
Attachment.
7. Writ of executionis a court order authorizing the sheriff to execute the final judgment
for the sale of the property.
8. Mortgageis the property is used as collateral and security for a loan.
9. Adverse claimis whoever that claims any part or interest in registered land adverse to
the registered owner, arising subsequent to the date of the original registration, may,
make a statement in writing setting forth fully his alleged right or interest, and how or
under whom acquired, a reference to the number of the certificate of title of the
registered owner, the name of the registered owner, and a description of the land in
which the right or interest is claimed. Some of the characteristics of an adverse claim
includes:
a. Title cannot be defeated by an adverse claim

b. First: refers to petition of the party who claims any part or interest in registered land
arising subsequent to the date of original registration
c. Second: refers to the petition filed in court by a party in interest for the cancellation of
the adverse claim upon a showing that the same is invalid.
d. While the law states that the adverse claim shall be effective for a period of thirty (30)
days from the date of registration, however, the cancellation is still necessary to render it
ineffective otherwise the inscription will remain annotated and shall continue as a lien
upon the property.
10. Encroachments are unauthorized physical intrusions of a building or other form of

real property onto an adjoining property. It can mean a trespass, and the owner of the
property being encroached on can take court action either to force the removal of the
encroachment or to recover damages.
Encroachment of long-standing use may result to an easement right by prescription or

adverse possession.
11. Liens (Money Claim) -These are claims or charges against the property to provide
security for a debt or obligation. A lien allows the creditor to have the property sold to
satisfy the debt in case of default. To enforce it, the creditor must take legal action and
obtain a court order to have the property sold. Liens against real estate may reduce the
value of the property; however, the owner can still convey title to another party. The
following are the kinds of lien:
a. JUDGMENT LIENis imposed when a judgment concludes a lawsuit is issued and

recorded by the court and in effect, it will be done on both the real and personal property
of a defendant/debtor. It will only be cleared when after a satisfaction of judgment is
recorded and issued to a debtor, say, a property is sold to satisfy a debt. This is a
general, involuntary lien.
b. MORTGAGE LIEN automatically ends after payment of loan. If loan remains unpaid
then the lender may foreclose and sell the property. This lien is a specific, voluntary lien
created after a lender makes a loan using real estate as security. The property owner
signs a mortgage document that creates a lien against the property. A specific and
involuntary lien, it is used when a property owner does not pay for the work or materials
provided.
c. MECHANICS LIEN is a protection on the part of a supplier/contractor who provides

materials or services for the real estate
d. REAL ESTATE TAX LIEN which due to the is a levy on real property determined on the
basis of a fixed proportion of the value of the property, it give the creditor the right to
sell a property at a tax sale to satisfy outstanding tax delinquencies, plus interest and
penalties. However the delinquent property owner may redeem the property so long as
all obligations will be paid before (equitable redemption right) or after (statutory
redemption right) the tax sale.
What are the statutory liens affecting title?
First: Claims or rights arising or existing under the laws and Constitution of the
Philippines
Second: unpaid realty taxes

Third: 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 that
the boundaries of such highway or irrigation canal or lateral thereof have been
determined
Fourth: Any disposition of the property or limitation on the use thereof by virtue or
pursuant to PD 27 or any other law or regulations on Agrarian reform
References:
Pea, N. Registration of Land Titles and Deeds. Quezon City: Rex Printing Company, Inc.
The Rules of Court of the Philippines
The New Civil Code
Reconstitution of Certificate of Title
What is the reconstitution of certificate of title?
Reconstitution of certificate of title is the restoration of the instrument which is supposed

to have been lost or destroyed in its original form and condition, under the custody of the
Register of Deeds.
What are the kinds of reconstitution of certificate of title?
1. Judicial reconstitution which partakes the nature of a land registration proceeding in

rem. As PD 1529 states:
Section 2. Nature of registration proceedings; jurisdiction of courts. Judicial proceedings

for the registration of lands throughout the Philippines shall be in rem and shall be based
on the generally accepted principles underlying the Torrens system.
2. Administrative reconstitution which may be availed of only in case of:
a) Substantial loss or destruction of the original land titles due to fire, flood, or other
force majeure as determined by the Administrator of the Land Registration Authority;
b) 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 Register of Deeds;
c) In no case shall the number of Certificates of title lost or damaged be less than 500;
and
d) The Petitioner must have the duplicate copy of the certificate of Title. (RA 6732)
What are the other petitions/transactions after original registration?

1. Amendment and Alteration of Certificate of Title
2. Surrender of Withheld Duplicate Certificate of Title
3. Replacement of Lost Duplicate Certificate of Title
What are the laws governing the reconstitution of title?
A. Act 496: Land Registration Act of 1903 (approved November 6, 1902, effective January
1, 1903)
1. Governs the homesteading, selling, and leasing of portions of the public domain of the
country
2. The purpose of the Torrens System of Registration is to quiet title to the land
3. Perfects for the issuance of patents without compensation to certain native settlers
4. The Court of Land Registration, the Register of Deeds and the Torrens system of
registration were created
5. Real estate ownership may be judicially confirmed and recorded in the archives of the
government
6. The term public land referred to all lands of the public domain whose title still
remained with the government; excluded the patrimonial property and friar lands
7. Act No. 926 is the first Public Land Act (1903)
8. Act No. 2874 is the second Public Land Act (1919) and was passed under the Jones
Law
B. Act No. 2259: Cadastral Act (effective on February 11, 1913)

1. Only unregistered lands may be the subject of a cadastral survey and those already
titled cannot be the subject of cadastral proceedings.
2. It aims to settle and adjudicate any lands upon order of the President to the Director of
Lands to make a government survey in the interest of the public. All conflicting interests
on lands shall be adjudicated (to be settled by law) through the Solicitor General who
represents the Director of Lands.
3. The cadastral court over previously titled lands is only focused on correction of
technical errors in the description of the land.
4. The decree was awarded to the person with better claim and shall be the basis for the
insurance of certificate of title which shall have the same effect as a certificate of title
granted under the Property Registration Decree
C. CA No. 141: Public Land Act (approved on November 7, 1936, effective on December
1, 1936)
1. The law governed the classification and disposition of lands of the public domain
2. It is the first law for judicial confirmation of imperfect and incomplete titles
3. Free patent under rule states that the area of the land must not exceed 24 hectares
for any natural Filipino citizens and cultural minorities
4. The qualification includes: must be a natural born citizen, does not own more than 24
hectares of land since July 24, 1926, continuous occupation and cultivation for at least 30
years, pays realty tax of the property. Cultural minorities are required to have a
continuous occupation and cultivation of the land since July 24, 1955 whether disposable
or not for at least 30 years, not an owner of any real property.
D. PD 1529: Property Registration Decree (approved on June 11, 1978, effective on June
11, 1978)
1. Amended and codified the laws relative to registration of property

2. Included judicial confirmation of imperfect or incomplete titles which tackled cadastral,
voluntary and involuntary registration proceedings and the certificate of land transfer
and emancipation patents
3. The court may dismiss the application of the applicant with or without prejudice to the
right to file a new application for the registration of the same land Court of First Instance
was given the exclusive jurisdiction over all applications for original registration of title to
lands, including improvements and interests therein and over all petitions filed after
original registration of title.
4. Homestead patent Issued by the Director Lands over land not of the public domain is a
nullity, devoid of force and effect against the owner whose title is covered by an OCT or
TCT.
5. Registration of untitled lands or lands with imperfect titles is ineffective against third
persons. That in case of double sale, the title registered under the Torrens System is
superior than title registered under Act 3344. Registration under the Torrens System, at
the Registry of Deeds is needed so that title shall be binding upon third parties.
E. PD 892 (issued on February 16, 1976)
1. Discontinued the system of land registration under the Spanish Mortgage Law and the
use of Spanish titles as evidence in land registration proceedings
2. Holders of Spanish titles must apply for registration within 6 months or until August
16, 1976 from this decrees effectivity or else their titles would produce no registration
3. Under this decree, Spanish titles can no longer be used as evidence of ownership
F. 1987 Constitution
1. SEC 3, ARTICLE XII refers to ownership of government lands which states that for
Citizens of the Philippines they can lease not more than 500 hectares and acquire not
more than 12 hectares
2. Free Patent rule under the Constitution states that any natural born citizen of the
Philippines who is not the owner of more than 12 hectares and who, for at least 30 years
including his predecessor-in-interest has continuously occupied the land. He shall be
entitled an area not to exceed 12 hectares-Torrens title issued on the basis of the free
patent becomes as indefeasible as one that was judicially secured upon the expiration of
one year from date of issuance of patent.
G. RA 6732 (approved July 17, 1989)
1. Allowing administrative reconstitution of original copies of certificates of titles lost or

destroyed due to fire, flood and other force majeure;
2. Administrative reconstitution available to original certificates of title lost are at least
10% of all the titles in the Registry of Deeds but not less than 500 titles whichever is
higher;
3. Administrative reconstitution of titles shall be without prejudice to parties whose rights
or interests may been annotated on the lost or destroyed original certificates of titles.
H. RA 6657 Comprehensive Agrarian Reform Program/ CARP (approved June 15, 1988)
1. Applicable to all agricultural lands regardless of produce

2. The choice of productive landholdings belongs to the owner of the land
3. Retention is 5 hectares to landowners; plus 3 hectares for each child 15 years old and
above, actually tilling and managing the farm
4. Beneficiary : limited to 3 hectares only
5. Under CARP, a landless beneficiary is one who owns less than 3 hectares of
agricultural land
I. RA 7042 amended by RA 8179: Foreign Investment Act (approved: March 28, 1996)
1. Allows natural-born Filipino citizen who lost their Philippine citizenship to acquire
private lands subject to limitation of the law. Land limits: 5,000 square meters, in case of
urban land and 3 hectares in case of rural land.
J. RA 8371: Indigenous Peoples Rights Act (approved on October 29, 1997)
1. Indigenous Peoples Rights Act of 1997

2. Rights of ownership is limited to ancestral lands only
3. Law dealing with specific group of people
K. RA 9176 (approved November 13, 2002)
1. Extending the period until December 31, 2020 for the filing of applications for
administrative legalization (free patent) and judicial confirmation of imperfect and
incomplete titles to alienable and disposable lands of the public domain, amending for
this purpose CA 141
2. If further, limits the area to be applied for to 12 hectares only
L. RA 9225: Citizenship Retention and Re-acquisition Act (approved August 29, 2003)
1. This law provided that natural born citizens of the Philippines, who have lost their
Philippine citizenship by reason of their naturalization as citizens of foreign country, are
hereby deemed to have re-acquired Philippine citizenship upon taking their oath of
allegiance to the republic and shall enjoy full civil and political rights and be subject to all
attendant liabilities and responsibilities under the existing laws of the Philippines.
Therefore, limitation on ownership under RA 7402 as amended by RA 8179 is deemed
not applicable under this law.
M. RA 9700: Comprehensive Agrarian Reform Law/CARPER (approved August 7, 2009)

1. It extended the program for another 5 years
2. It is the redistribution of private and public agricultural lands to help the beneficiaries
survive as small independent farmers, regardless of the tenurial arrangement
3. It covers: alienable and disposable lands of public domain suitable for agriculture
4. It awards ceiling of 3 hectares for beneficiaries and payment of beneficiaries must be
30 years at 6% interest per annum to Land Bank. Awarded lands shall not be sold to non-
beneficiary of the program
5. The lands covered may be disposed before 10-year period only to the government,
Land Bank or program beneficiaries and may be disposed or encumbered after 10yrs
from date of registration
6. Conversion is allowed after 5 years if applicable and no conversion on irrigated lands
7. The law has laid down a penalties of either3 years imprisonment or 15k fine or both
J. RA 10023: The New Residential Free Patent Law of 2010 (approved March 9, 2010)
1. The law has made any Filipino citizen who is an actual occupant of a residential land
provided that in highly urbanized cities, the land should not exceed 200sqm or 500sqm
in other cities as qualified for the free patent. The land should not exceed 750sqm for
first class and second class municipalities and in all other municipalities, it should not
exceed 1000sqm provided further that the land is not needed for public service or public
use.
2. It covers coverage: All lands that are zoned as residential areas including town sites as
defined under Public Land Act provided that none of the provisions of PD 705 have been
violated; zoned residential area located inside a delisted military reservation or
abandoned military camp and those of local government units or town sites
3. Those special patents may be granted under the name of the national agency of local
government notwithstanding any provision of law to the contrary and subject to private
rights, if any public land actually occupied and used for public schools, municipal halls,
public plazas or parks and other government institutions for public use.
4. All lands titled under this section shall not be disposed of unless sanctioned by
Congress if owned by the national agency or sanctioned by the Sanggunian concerns
through an approved ordinance if owned by the local govt.
References:
Agcaoili, O. (2011). Property Registration Decree and Related Laws. Quezon City: Rex
OBLIGATIONS AND CONTRACTS

Breach of a Contract of Sale
March 4, 2016law on sales, obligations and contracts
What are the remedies of the seller for breach of contract of sale according to the law?
When the seller is prejudiced due to the breach of contract by the buyer, the following
provisions of the law shall govern:
Action for payment of the price
Art. 1595. Where, under a contract of sale, the ownership of the goods has passed to the
buyer and he wrongfully neglects or refuses to pay for the goods according to the terms
of the contract of sale, the seller may maintain an action against him for the price of the
goods.
*The seller may maintain an action for payment of the price when the ownership of the
goods sold already passed to the buyer and he fails to pay in a wrongful manner
attributable to him.
Where, under a contract of sale, the price is payable on a certain day, irrespective of
delivery or of transfer of title and the buyer wrongfully neglects or refuses to pay such
price, the seller may maintain an action for the price although the ownership in the
goods has not passed. But it shall be a defense to such an action that the seller at any
time before the judgment in such action has manifested an inability to perform the
contract of sale on his part or an intention not to perform it.
*The seller may also demand payment when he likewise fails to pay and neglects
wrongfully the date certain for its payments, irrespective of delivery and the transfer of
title to the buyer.
Although the ownership in the goods has not passed, if they cannot readily be resold for
a reasonable price, and if the provisions of article 1596, fourth paragraph, are not
applicable, the seller may offer to deliver the goods to the buyer, and, if the buyer
refuses to receive them, may notify the buyer that the goods are thereafter held by the
seller as bailee for the buyer. Thereafter the seller may treat the goods as the buyers
and may maintain an action for the price. (n)
*The seller may ask for payment of the price if the goods cannot be resold for a
reasonable price and the buyer refuses to accept them even before the ownership to
goods has passed.
Action for damages for non-acceptance of the goods
Art. 1596. Where the buyer wrongfully neglects or refuses to accept and pay for the
goods, the seller may maintain an action against him for damages for nonacceptance.
The measure of damages is the estimated loss directly and naturally resulting in the
ordinary course of events from the buyers breach of contract.
Where there is an available market for the goods in question, the measure of damages
is, in the absence of special circumstances showing proximate damage of a different
amount, the difference between the contract price and the market or current price at the
time or times when the goods ought to have been accepted, or, if no time was fixed for
acceptance, then at the time of the refusal to accept.
If, while labor or expense of material amount is necessary on the part of the seller to
enable him to fulfill his obligations under the contract of sale, the buyer repudiates the
contract or notifies the seller to proceed no further therewith, the buyer shall be liable to
the seller for labor performed or expenses made before receiving notice of the buyers
repudiation or countermand. The profit the seller would have made if the contract or the
sale had been fully performed shall be considered in awarding the damages. (n)
*The seller may demand for damages when the buyer fails to accept the goods without
lawful case and fails to pay the price agreed upon. He may also demand damages when
the ownership has not yet passed and the seller cannot recover the price of the goods.
He also has an action for damages when the goods are not yet identified at the time of
the contract. The damages may be measured by the labor performed and expenses
incurred for the materials or the profit that would have been realized have it not for the
non-acceptance of the buyer.
Action for rescission
Art. 1597. Where the goods have not been delivered to the buyer, and the buyer has
repudiated the contract of sale, or has manifested his inability to perform his obligations
thereunder, or has committed a breach thereof, the seller may totally rescind the
contract of sale by giving notice of his election so to do to the buyer. (n)
*The remedy afforded by this provision is applicable in the sale of goods which have not
yet been delivered to the buyer and the buyer repudiated the contract of sale,
manifested his inability to perform his obligations or there is mere breach of the
provisions of the contract of sale. The notice of rescission must be given by the seller.
The breach must not be slight or casual but must be substantial enough to defeat the
very essence of the contract.
What are the remedies of the buyer for breach of contract of sale according to the law?
When the buyer is prejudiced due to the breach of contract by the seller, the following
Action for specific performance
Art. 1598. Where the seller has broken a contract to deliver specific or ascertained
goods, a court may, on the application of the buyer, direct that the contract shall be
performed specifically, without giving the seller the option of retaining the goods on
payment of damages. The judgment or decree may be unconditional, or upon such
terms and conditions as to damages, payment of the price and otherwise, as the court
may deem just. (n)
* The buyer may, without giving the seller the option to retain the goods on payment of
damages, may ask for specific performance. However there may be instances in a court
decision the judgment maybe unconditional, or upon such terms and conditions as to the
payment of damages, payment of the price and otherwise, the court may order whatever
it may deem just.
Action for rescission or damages for breach of warranty
Art. 1599. Where there is a breach of warranty by the seller, the buyer may, at his
election:
(1) Accept or keep the goods and set up against the seller, the breach of warranty by
way of recoupment in diminution or extinction of the price;
(2) Accept or keep the goods and maintain an action against the seller for damages for
the breach of warranty;
(3) Refuse to accept the goods, and maintain an action against the seller for damages
for the breach of warranty;
(4) Rescind the contract of sale and refuse to receive the goods or if the goods have
already been received, return them or offer to return them to the seller and recover the
price or any part thereof which has been paid.
When the buyer has claimed and been granted a remedy in anyone of these ways, no
other remedy can thereafter be granted, without prejudice to the provisions of the
second paragraph of Article 1191.
Where the goods have been delivered to the buyer, he cannot rescind the sale if he
knew of the breach of warranty when he accepted the goods without protest, or if he
fails to notify the seller within a reasonable time of the election to rescind, or if he fails
to return or to offer to return the goods to the seller in substantially as good condition as
they were in at the time the ownership was transferred to the buyer. But if deterioration
or injury of the goods is due to the breach or warranty, such deterioration or injury shall
not prevent the buyer from returning or offering to return the goods to the seller and
rescinding the sale.
Where the buyer is entitled to rescind the sale and elects to do so, he shall cease to be
liable for the price upon returning or offering to return the goods. If the price or any part
thereof has already been paid, the seller shall be liable to repay so much thereof as has
been paid, concurrently with the return of the goods, or immediately after an offer to
return the goods in exchange for repayment of the price.
Where the buyer is entitled to rescind the sale and elects to do so, if the seller refuses to
accept an offer of the buyer to return the goods, the buyer shall thereafter be deemed to
hold the goods as bailee for the seller, but subject to a lien to secure payment of any
portion of the price which has been paid, and with the remedies for the enforcement of
such lien allowed to an unpaid seller by Article 1526.
(5) In the case of breach of warranty of quality, such loss, in the absence of special
circumstances showing proximate damage of a greater amount, is the difference
between the value of the goods at the time of delivery to the buyer and the value they
would have had if they had answered to the warranty. (n)
* In case of recoupment, the buyer may accept the goods and set up the sellers breach
to reduce or extinguish the price. He may accept or not the goods and in both cases,
maintain an action for damages for breach of warranty. In rescission, he may do such if
there is refusal to receive the goods; or if goods have already been received, return them
and recover what was paid or any part of it concurrently with return or immediately after
it.
These remedies are alternative, without prejudice to paragraph 2 of Art. 1191 (that a
party may still seek rescission after choosing specific performance if the latter is
impossible). Buyer cannot rescind if he is knowledgeable of the breach and still accepted
the goods without protest, or fails within reasonable time to notify the seller of his
election to rescind, or fails to return or offer to return the goods in substantially as good
condition as it was. If seller refuses to accept an offer to return the goods and the buyer
elected rescission, buyer shall be deemed to hold the goods as bailee for the seller
subject to lien to secure payment of any portion of the price which has been paid. There
is loss, in case of breach of warranty of quality, when there was a difference between
value of the goods at the time of delivery and value they would have had if they had
answered to the warranty.
What are the remedies of the seller in case of default in payment of price?
Anticipatory breach- The seller has reasonable grounds to believe that the property sold
will be lost so he may rescind the sale
Failure of the buyer to pay the purchase price-In the sale of immovable property even
though it may have been stipulated that rescission will only take place upon failure to
pay the price, he may still demand payment until the judicial or extrajudicial rescission of
the contract.
What are the remedies of the buyer in case of disturbance in the property and in
condominium projects?
Suspension of payment-If the buyer gets disturbed in the possession and ownership or
has a reasonable grounds to fear such disturbance of the property, by a vindicatory
action or a foreclosure of mortgage, the buyer may suspend payment until the
disturbance is removed by the seller or seller gives security for the return of the price in
proper case unless otherwise stipulated.
Subdivision and condominium projects-PD 957 provides that when the owner or
developer of the condominium project fails to develop it according to the approved plan
and within the time limit for complying with the same, the buyer who pays in installment
may desist from paying further provided he gives due notice to the seller. The law also
allows the buyer to be reimbursed of all the amount paid.
What is Equitable Mortgage?
Pacto de retro is presumed to be Equitable Mortgage when:
Art. 1602: The contract shall be presumed to be an equitable mortgage, in any of the
following cases:
(1) When the price of a sale with right to repurchase is unusually inadequate;
(2) When the vendor remains in possession as lessee or otherwise;
(3) When upon or after the expiration of the right to repurchase another instrument
extending the period of redemption or granting a new period is executed;
(4) When the purchaser retains for himself a part of the purchase price;
(5) When the vendor binds himself to pay the taxes on the thing sold;
(6) In any other case where it may be fairly inferred that the real intention of the parties
is that the transaction shall secure the payment of a debt or the performance of any
other obligation.
What are the effects when the thing sold is lost?
Loss before perfection of the contract- Contract is void
Loss at the time of perfection of contract of sale-Contract is Void
If thing is partially lost-the vendee may choose between withdrawing from the contract
and demanding the remaining part, paying its price in proportion to the total sum agreed
upon
Loss after perfection of the contract of sale
After delivery to buyer- buyer bears the loss
Before delivery to the buyer
-Non fungible/ fungible thing without consideration as to its weight, number or measure-
buyer bears the loss
-fungible thing for a price fixed in accordance with its weight, number or measure-seller
bears the loss
References
De Leon, H. (2010). Comments and Cases on Sales. Quezon City: Rex Printing Company,
Inc.
New Civil Code of the Philippines
Contracts
March 4, 2016obligations and contracts
What is a contract?
According to the New Civil Code:
Art. 1305. A contract is a meeting of minds between two persons whereby one binds
himself, with respect to the other, to give something or to render some service. (1254a)
*A contract is the manifestation of the will of one or more parties which takes a legal
form wherein they bind themselves in favour of the other, reciprocally to fulfil an action
to give, to do or not to do.
What are the characteristics of contracts?
Relativity
Obligatory Force and Consensuality
Mutuality
Autonomy
A contract is relative wherein it would only be binding to the parties of the contract and
to their successors, assignees and heirs in proper cases.
It has an obligatory force and consensual because a contract functions as a law between
the parties and needs the consent of both parties so as to be binding to them. Contracts
are perfected by mere consent and from that moment the parties are bound not only to
the fulfilment 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.
A contract is mutual because its validity and performance cannot be left to the will of one
of the parties. The contract must bind both parties; its validity or compliance should be
agreed thereto by both parties.
A contract is autonomous because the parties are free to stipulate anything they deem
convenient provided that they are not contrary to law, morals, good customs, public
order and public policy.
What are the essential elements of a contract?

The essential elements of a contract are cannot be absent or else no contract would
exist. These are the following:
Consent (as discussed in this article *insert hyperlink*)
Object (as discussed in this article *insert hyperlink*)
Cause/Consideration (as discussed in this article *insert hyperlink*)
References:

Philippines. Quezon City: Central Lawbook Publishing Co.., Inc.
Essential Requisites of a Contract
CONSENT
A consent is manifested by the concurrence of the offer and the acceptance upon the
thing and the cause which are to constitute the contract. The very essence of consent is
the conformity of the parties in the stipulations laid down in the contract. The moment
there is meeting of the minds and their acceptance of the contract is made known to
each other makes the contract come to life and binds them accordingly. Consent is best
described in this article:
Art. 1319. Consent is manifested by the meeting of the offer and the acceptance upon
the thing and the cause which are to constitute the contract. The offer must be certain
and the acceptance absolute. A qualified acceptance constitutes a counter-offer.
Acceptance made by letter or telegram does not bind the offerer except from the time it
came to his knowledge. The contract, in such a case, is presumed to have been entered
into in the place where the offer was made. (1262a)
*Offer is understood as a proposal made by one party to enter into a contract and it must
be certain or definite, complete and intentional. However acceptance is the
manifestation by the offeree of his assent to the terms of the offer and it must be
absolute, a qualified acceptance constitutes counter-offer.
Who are the persons incapacitated to give consent?
According to this article, the following cannot give their consent to a contract:
Art. 1327. The following cannot give consent to a contract:

Unemancipated minors;
*Unemancipated minors cannot enter into a valid contract and those already entered
cannot be made binding upon them unless they reach the age of majority and
afterwhich, they ratify the same. The contract entered by the unemancipated minor will
become voidable.
Insane or demented persons, and deaf-mutes who do not know how to write. (1263a)
*The law recognizes that the insanity of the party must be existent at the time of the
entering of the contract. However if the contract is entered into during a lucid interval or
the period where the proper reasoning, judgement and mental capacity is restored, then
the contract is enforceable and binding. As for the case of deaf-mutes, they must be
accompanied by their incapacity to write.
What are the vices of consent?
These provisions lay down the vices of consent and its effect to the contract:
Art. 1330. A contract where consent is given through mistake, violence, intimidation,
undue influence, or fraud is voidable. (1265a)
*These mentioned by the law are the defects of the will of the party which when proven
would make the contract voidable. Consent must be intelligent or with the knowledge of
the stipulation in the contract, free and spontaneous. However if the consent is vitiated
by these causes then it would render the consent given questionable. It is used with
insidious words or machinations of one of the contracting parties, the other is induced to
enter into a contract which without them he would have not agreed to.
-Causal fraud- fraud was used to obtain consent and would make the contract voidable
-Incidental fraud- fraud was present in the performance of the obligation and would incur
damages
-the failure to disclose facts when there is a duty to reveal them as when the parties are
bound by confidential relations also constitutes fraud
-silence when there is a duty to speak may constitute fraud
-a mere expression of an opinion does not signify fraud unless made by an expert and
the other party, has relied on the formers special knowledge
Art. 1331. In order that mistake may invalidate consent, it should refer to the substance
of the thing which is the object of the contract, or to those conditions which have
principally moved one or both parties to enter into the contract.
Mistake as to the identity or qualifications of one of the parties will vitiate consent only
when such identity or qualifications have been the principal cause of the contract.
A simple mistake of account shall give rise to its correction. (1266a)

*Mistake can be mistake of the object which must refer to the substance of the thing and
to render the contract void, it must be proven that without such mistake, the consent
would have not been given. Mistake can also be towards the person the consenting party
is contracting with. It must not only be on the name of the person but on the
considerable character of that party which would concern the confidence or trust of the
other. It must be the principal cause of the other party for entering in to the contract.
OBJECT
The Object of a contract pertains to the thing, right or service which is the subject
matter of the obligation arising from the contract
Things which cannot be the OBJECT of Contract
Things which are outside the commerce of men
Intransmissible rights
Future inheritance, except in cases expressly authorized by law
Services which are contrary to law, morals, good customs, public order, public policy
Impossible things or service
Objects which are not possible of determination as to their kind
CAUSE OR CONSIDERATION
The cause or consideration of a contract is the immediate, direct and most proximate
reason which explains and justifies the creation of the obligation. It is the cause of the
contract; or the reason or the purpose why the parties entered in to the contract. It is the
moving basis of the parties resorting in to making a contract. It is also supported by this
article:
Art. 1350. In onerous contracts the cause is understood to be, for each contracting party,
the prestation or promise of a thing or service by the other; in remuneratory ones, the
service or benefit which is remunerated; and in contracts of pure beneficence, the mere
liberality of the benefactor. (1274)
What are the requisites of the cause or consideration of the contract?
Cause should be in existence at the time of the celebration of the contract
Art. 1352. Contracts without cause, or with unlawful cause, produce no effect whatever.
The cause is unlawful if it is contrary to law, morals, good customs, public order or public
policy. (1275a)
*Contract must be, at the time of entering, contain a cause or consideration. The parties
must have an intrinsic or juridical reason to enter into a contract. Absence of which
would want cause and would be render the contract null and void.
Cause should be true
Art. 1353. The statement of a false cause in contracts shall render them void, if it should
not be proved that they were founded upon another cause which is true and lawful.
(1276)
*The cause should not be fictitious or simulated, such as when the parties agree among
themselves to consider a fact true when in reality it is not, because this false
consideration would also render the contract null and void.
Cause should be licit or lawful
Art. 1354. Although the cause is not stated in the contract, it is presumed that it exists
and is lawful, unless the debtor proves the contrary. (1277)
*The presumption of validity and lawfulness of the contract is in good faith and it is
sufficient in the absence of proof to the contrary.
References:

Forms of Contract
What are the forms of a contract?
Contracts as a general rule, shall be obligatory in whatever form they may have been
entered into, provided all the essential requisites which is consent, object and cause, for
their validity are present. The law upholds the content or spirit of the contract over form
thus giving validity to contracts which may even be oral. As expounded on this article:
Art. 1356. Contracts shall be obligatory, in whatever form they may have been entered
into, provided all the essential requisites for their validity are present. However, when
the law requires that a contract be in some form in order that it may be valid or
enforceable, or that a contract be proved in a certain way, that requirement is absolute
and indispensable. In such cases, the right of the parties stated in the following article
cannot be exercised. (1278a)
However, there are certain cases when the law or the parties may require a certain form
of a contract. As mentioned in this article:
Art. 1357. If the law requires a document or other special form, as in the acts and
contracts enumerated in the following article, the contracting parties may compel each
other to observe that form, once the contract has been perfected. This right may be
exercised simultaneously with the action upon the contract. (1279a)
*Some instances include when the law requires that a contract be in some form in order
that it may be valid, when the law requires that a contract be in some form in order that
it may be enforceable and when the law requires that a contract be in some form for the
convenience of the parties or for the purpose of affecting third persons.
What are the forms for validity?
Donation of a real property must be in a public document
Donation of personal property the value of which exceeds Php 5,000 must be at least in
writing.
The authority of the agent to sell a piece of land must be in writing
Acts and contracts which have for their object the creation, transmission, modification or
extinguishment of real rights over immovable property
The cession, repudiation or renunciation of hereditary rights or those of conjugal

partnership of gain
The power to administer property or any other power which has for its object an act
appearing or which should appear in a public document or should prejudice a third
person
The cession of actions or rights proceeding from an act appearing in a public document
What are the forms for enforceability and convenience?
Statue of fraud. The writing provides for more reliable proof.
If the form for validity is complied with but the law requires another form then the parties
must observe that form.
What is a contract of adhesion?
Contract of adhesion where one party prepares the stipulations while the other affixes his
signature or his adhesion thereto. These are binding as ordinary contracts and the party
who adheres is free to reject its entirety.
References:

Defective Contracts
DEFECTIVE CONTRACTS
Defective contracts are those which may be relatively ineffective in relation to certain
parties. The following are the kinds of defective contracts:
Rescissible Contracts
Voidable Contracts
Unenforceable Contracts(as discussed in this article)
Void or inexistent contracts(as discussed in this article)
RESCISSIBLE CONTRACTS
Rescissible Contracts are those validly agreed upon but, by reason of lesion or
economic prejudice may be rescinded in cases established by law. These are contracts
which can be rescinded as a remedy given by law to prevent damage by restoration of
their condition at the moment prior to time of the celebration of the contract.
Art. 1380. Contracts validly agreed upon may be rescinded in the cases established by
law. (1290)
What contracts are rescissible?
Art. 1381. The following contracts are rescissible: (1) Those which are entered into by
guardians whenever the wards whom they represent suffer lesion by more than one-
fourth of the value of the things which are the object thereof;
*Lesion is the injury which one of the parties may suffer by virtue of a contract
disadvantageous to him. The lesion must be made known or could have been made
known at the time of the making of the contract for contract to be rescinded. Guardians
must only manage the property of the ward and must resort to guardianship court for
any acts of administration.
(2) Those agreed upon in representation of absentees, if the latter suffer the lesion
stated in the preceding number;
*Legal representatives of absentees have the same powers and duties with guardians.
(3) Those undertaken in fraud of creditors when the latter cannot in any other manner
collect the claims due them;
*The contract must have been executed with the intention of prejudicing the rights of
creditors. This intention must be proved since, despite causing damage if the fraudulent
intent is not present then the contract cannot be rescinded.
(4) Those which refer to things under litigation if they have been entered into by the
defendant without the knowledge and approval of the litigants or of competent judicial
authority;
*This contract refer to those that are executed by defendants involving ownership or
possession of a thing and such contract is made without the knowledge or approval of
the plaintiff or the court.
(5) All other contracts specially declared by law to be subject to rescission. (1291a)
VOIDABLE CONTRACTS
Voidable contracts are those in which all of the essential elements for validity are
present, although the element of consent is vitiated. A contract will be voidable of
annullable due to certain instances such as when there is want of capacity or consent.
Until invalidated, the contract remains to be valid and binding between the parties. The
law expressly provides that:
Art. 1390. The following contracts are voidable or annullable, even though there may
have been no damage to the contracting parties:
(1) Those where one of the parties is incapable of giving consent to a contract;
(2) Those where the consent is vitiated by mistake, violence, intimidation, undue
influence or fraud.
These contracts are binding, unless they are annulled by a proper action in court. They
are susceptible of ratification. (n)
What contracts are voidable?
Those where one of the parties is incapable of giving consent to a contract;
Art. 1327. The following cannot give consent to a contract: (1) Unemancipated
minors; (2) Insane or demented persons, and deaf-mutes who do not know how to write.
(1263a)
Those where the consent is vitiated by
Art. 1330. A contract where consent is given through mistake, violence, intimidation,
undue influence, or fraud is voidable. (1265a)
UNENFORCEABLE CONTRACTS
Unenforceable contracts are those which cannot be enforced by proper action in court
unless they are ratified. This kind of contract does not produce any legal effect unless
ratified.
What contracts are unenforceable?
The following article is an enumeration of what are unenforeceable contracts:
Art. 1403. The following contracts are unenforceable, unless they are ratified:
(1) Those entered into in the name of another person by one who has been given no
authority or legal representation, or who has acted beyond his powers;
(2) Those that do not comply with the Statute of Frauds as set forth in this number. In the
following cases an agreement hereafter made 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: (a) An agreement that by its
terms is not to be performed within a year from the making thereof; (b) A special
promise to answer for the debt, default, or miscarriage of another;(c) An agreement
made in consideration of marriage, other than a mutual promise to marry; (d) An
agreement for the sale of goods, chattels or things in action, at a price not less than five
hundred pesos, unless the buyer accept and receive part of such goods and chattels, or
the evidences, or some of them, of such things in action or pay at the time some part of
the purchase money; but when a sale is made by auction and entry is made by the
auctioneer in his sales book, at the time of the sale, of the amount and kind of property
sold, terms of sale, price, names of the purchasers and person on whose account the
sale is made, it is a sufficient memorandum; (e) An agreement of the leasing for a longer
period than one year, or for the sale of real property or of an interest therein; (f) A
representation as to the credit of a third person.
(3) Those where both parties are incapable of giving consent to a contract.
What is the Statute of Frauds?
The Statute of Frauds is a legal provision which requires agreements for the sale of
real estate to be in writing in order to be enforceable.The contracts/agreements under
the Statute of Frauds require that the same be evidenced by some note, memorandum
or writing, subscribed by the party charged or his agent, otherwise, the said contracts
shall be enforceable.The Statute of Frauds apply only to executory contracts, not to those
that are partially or completely fulfilled.
VOID CONTRACTS
Void contracts are those where all of the requisites of a contract are present but the
cause, object or purpose is contrary to law, morals, good customs, public order or public
policy, or contract itself is prohibited or declared void by law.
What contracts are void?

The following article is an enumeration of what are void contracts:
Art. 1409. The following contracts are inexistent and void from the beginning: (1) Those
whose cause, object or purpose is contrary to law, morals, good customs, public order or
public policy; (2) Those which are absolutely simulated or fictitious; (3) Those whose
cause or object did not exist at the time of the transaction; (4) Those whose object is
outside the commerce of men; (5) Those which contemplate an impossible service; (6)
Those where the intention of the parties relative to the principal object of the contract
cannot be ascertained; (7) Those expressly prohibited or declared void by law.These
contracts cannot be ratified. Neither can the right to set up the defense of illegality be
waived.
What are inexistent contracts?
Inexistent contracts those where one or some or all of the requisites essential for the
validity of a contract are absolutely lacking. This is equivalent to nothing like that of a
void contract. It is absolutely wanting in civil effects. Void and inexistent contracts are
terms which may be interchanged.
References:

LAWS OF SALE
Contract of Sale
March 4, 2016law on sales
What is a contract of sale?
According to Art. 1458 of the New Civil Code, it is defined as:
Article 1458. By the contract of sale one of the contracting parties obligates himself to
transfer the ownership and to deliver a determinate thing, and the other to pay therefor
a price certain in money or its equivalent.
A contract of sale may be absolute or conditional.
*It is an agreement between two parties whereby one, who is the seller or vendor,
obligates himself to deliver something to the other party who is the buyer or vendee who
is bound to pay a sum of money or its equivalent.
What are the essential elements of a contract of sale?
In general, the rules governing a simple contract also apply to a contract of sale. The
following must be present:
Consent or meeting of the minds wherein the contract of sale is perfected at the
moment there is a meeting of minds upon the thing which is the object of the contract
and upon the price thereof. This is when the seller agrees to deliver the thing subject of
the contract and the buyer, the price thereof. The essence of this is that the parties
agree to the terms of the contract which will bind them.
Object or subject matter or the determinate thing, as what the law referred to which
the seller is bound to deliver and the buyer is bound to receive upon payment of its sum.
Cause or consideration or the price certain in money or its equivalent which does not
include goods or merchandise although they have their own value in money. Its
equivalent may mean any goods given as the token of payment and where these are
assessed and evaluated as its price equivalent. The price however must not be fictitious
or else it would be void.
What are the characteristics of a contract of sale?
Consensual because it can be perfected by the mere giving of consent and meeting of
the minds of the parties;
Bilateral because both of the parties are bound to fulfil correlative obligations such as
the seller is to deliver the thing which is the subject of the contract and the buyer, to pay
the price;
Onerous because the thing sold is conveyed in exchange for the purchase price and the
price is in consideration of the thing sold;
Nominate because it is given a name in the Civil Code
Principal because it does not require the existence of another contract for it to be valid
and existing.
What are the types of Sales Agreement?
Absolute Sale- one wherein there is no condition whatever and imposes upon the vendor
the obligation to deliver the real estate, subject matter of the agreement to the vendee
who upon the receipt of the property hands over and pays the purchase price that has
been previously agreed upon with the vendor.
The Deed of Absolute Sale where both parties agree on and accept the real estate to be
or being conveyed and price therefore that the vendee should pay for it. This transaction
is the most common where the title of the real estate, subject sale, is free from and clear
of any alien or encumbrance whatever. No other condition is necessary except the actual
delivery and transfer of the property to the vendee without delay. The deed will then be
registered to the proper Registry of Deeds as required by the Torrens Registration Law.
Sale in Exchange or Barter where the real properties is subject to the transaction is
deeded in exchange of and for another real property that is acceptable to the vendor
without any additional monetary consideration. It is essential in the transaction that the
title of both properties in the exchange is valid and unencumbered or free from any liens
or encumbrances of any nature.
Conditional Sale-This is an agreement to sell or buy real estate with certain conditions
that must be accomplished by either or both the parties so as to extinguish and or create
ownership over the subject property. This is merely an executory contract in
contemplation of the law and the right of ownership is withheld for the meantime. In
other words, the certificate of title of the real property is not turned over to the vendee
until and after certain conditions have been accomplished by either or both the parties.
Then it becomes an executed contract.
It may be:
Sale on installments- commonly adopted for the sale of lots in a land subdivision or units
in a condominium or townhouse project. Its principal feature is that the purchase price is
fixed at a certain amount that shall be paid in equal monthly or yearly installments for a
period of five or ten years.
Contract to Sell- This is similar to sale on installments except that the period allowed for
the final payment of the purchase price is much shorter in duration.
Pacto de Retro- The sale in which the vendor is granted the right to repurchase the
property sold on a certain date fixed in the Contract. This is done by returning to the
vendee the entire purchase price including the expenses for the preparation of the
contract and the necessary and useful expenses on the property sold. This is termed as
conventional redemption under Article 1691 of the New Civil Code.
There are other forms of Conditional Sale where ownership and possession of subject
property are transferred to the vendee upon execution of the contract such as:
Sale with mortgage- A portion of the purchase price is initially paid by the vendee and
the vendor delivers possession and ownership of subject property tot eh vendor who,
thereafter, execute a Deed of Mortgage on the same property in favor of the vendor to
guarantee payment in full of the balance of the purchase price.
Sale with assumption of mortgage- The Vendor pays in cash a portion of subject property
to the vendee who assumes the payment of the existing mortgage on the property that
represents the balance of the purchase price.
Dacion en Pago- This is an agreement where the encumbered property of the vendor is
sold by the latter to his creditor or mortgagee as vendee to satisfy or in payment of his
existing loan and other charges.
What is the difference between a contract to sell and a conditional sale?
Transfer of title In a contract to sell, the title does not automatically pass to the buyer
upon payment of the price, a contract of absolute sale still has to be entered into by the
parties.
In a conditional sale, the sale will be deemed fulfilled upon the happening of the
condition which may or may not occur. If the condition do not happen then the contract
of sale will be abated.
Sale of property to a third person In a contract to sell, a third person not an
immediate party to the contract cannot be considered a buyer in good faith despite
payment of the price and the prospective buyer cannot recover the property. This in
effect will cause defect in the title of the buyer.
In a conditional sale, upon the happening of the suspensive condition, the title of the
seller or ownership to the thing sold will automatically transfer to the buyer and will bar
the seller to transfer it to any other person. In this case, the first buyer may seek
reconveyance of the property since the second buyer will be deemed a buyer in bad faith
and will have a defect in his title
References:
Inc.
Leabres V. Court of Appeals, 146 SCRA 158, 1986
Parties to a Contract of Sale

Who has the capacity to capacity to buy or to sell?
In general all persons who may enter into a simple contract may also enter into a
contract of sale. All persons either natural or juridical is given the legal capacity to buy
and sell. However there are those given by law an absolute and relative incapacity to
enter into a contract of sale.
Art. 1489. All persons who are authorized in this Code to obligate themselves, may enter
into a contract of sale, saving the modifications contained in the following articles.
Where necessaries are those sold and delivered to a minor or other person without
capacity to act, he must pay a reasonable price therefor. Necessaries are those referred
to in Article 290. (1457a)
*This provision of the New Civil Code mentioned about necessaries which is defined in
Art. 194 of the Family Code as everything indispensable for sustenance, dwelling,
clothing, medical, attendance, education, and transportation.
Kinds of Incapacity:
Absolute incapacity
Relative incapacity
Specific incapacity
Who are those with absolute incapacity according to the law?

Those that are considered absolutely incapable of entering into a contract of sale are
those that cannot bind themselves because of reasons for example like age, defect
intellect and mental capacity.
Article 1327: The following cannot give consent to a contract:
Unemancipated minors
*Those which have not yet reached the age of majority which is 18 years old.
Insane or demented persons and
Deaf-mutes who do not know how to write
Article 1328: Contracts entered into during a lucid interval are valid. Contracts agreed to
in a state of drunkenness or during a hypnotic spell are voidable.
*Lucid interval is the period wherein the person suffering from mental illness is restored
to his normal intellectual capacity, intelligence, judgment and reason.
Article 1390: The following contracts are voidable or annullable, even though there may
have been no damage to the contracting parties:
One of the parties is incapable of giving consent (want of capacity)
Consent is vitiated by mistake, violence, intimidation, undue influence or fraud (vitiated
consent)
These contracts are binding, unless they are annulled by a proper court action. They are
susceptible of ratification.
Who are those with relative incapacity according to the law?
Those that are considered relatively incapable of entering into a contract of sale are in
relation only to certain persons and classes of property.
Articles 1490: Husband and wife cannot sell property to each other, except
When separation of property was agreed upon in marriage settlements
When there has been judicial separation of property under Art 191
*This is to prevent commission of fraud or prejudice to third persons, the other taking
undue influence over the other and to avoid indirect donations. However the husband
and wife cannot sell property to each other except when a separation of property was
agreed upon in the marriage settlements and where there has been a judicial separation
of property as provided by law.
Who are those with specific incapacity according to the law?
Those that are considered specifically incapable of entering into a contract of sale are in
relation only to their occupation and relation to other persons due to public policy, public
order, public morals and so forth.
Art. 1491. The following persons cannot acquire by purchase, even at a public or judicial
auction, either in person or through the mediation of another:
The guardian, the property of the person or persons who may be under his guardianship;
*The relationship of the guardian and ward is so intimate that the influence is so great
which might cause highly suspicious and fraudulent contract of sale. This influence is
assumed to last while the guardian is still functioning in its capacity, the property is still
under his control and accounts have finally been settled.
Agents, the property whose administration or sale may have been entrusted to them,
unless the consent of the principal has been given;
*This incapacity rests on the principle that the agent and principal rest on one juridical
person. The agent stands on fiduciary relationship with his principal. He is prohibited to
buy the property he is supposed to sell unless the principal consented thereto.
Executors and administrators, the property of the estate under administration;
*The prohibition applies to properties under the administration of the executor and
administrator. Executors do not administer the hereditary rights of any heir and thus not
part of the property administered by them.
Public officers and employees, the property of the State or of any subdivision thereof, or
of any government-owned or controlled corporation, or institution, the administration of
which has been intrusted to them; this provision shall apply to judges and government
experts who, in any manner whatsoever, take part in the sale;
*This prohibition applies to properties belonging to the State or any subdivision thereof
or any government-owned or controlled corporations or institutions and those
administered by these public officials.
Justices, judges, prosecuting attorneys, clerks of superior and inferior courts, and other
officers and employees connected with the administration of justice, the property and
rights in litigation or levied upon an execution before the court within whose jurisdiction
or territory they exercise their respective functions; this prohibition includes the act of
acquiring by assignment and shall apply to lawyers, with respect to the property and
rights which may be the object of any litigation in which they may take part by virtue of
their profession.
*The prohibition applies to properties subject of litigation to the persons disqualified by
virtue of this provision. It applies during the pendency of litigation involving the property.
Such as when the property is subject to the judicial action of the judge or a lawyer, who
by virtue of his profession, takes part on the purchase of the property.
Any others specially disqualified by law. (1459a)
*These are for example, aliens who cannot purchase agricultural lands prohibited by the
Constitution, an officer managing an execution sale cannot purchase the subject
property as prohibited by the Rules of Court or an unpaid seller who prohibited in buying
the goods in the resale of the same at a public or private sale as barred by the New Civil
Code of the Philippines.
References:
Inc.
Subject Matter
What can be the objects of a contract of sale?
1. Things which should be determinate as well as licit or lawful so as not to be contrary
to public law, morals, public order, good customs and so forth. It must also be within the
commerce of men or susceptible of appropriation and transmissible from one person to
the other.
The thing must be determinate; specifically separated and particularly designated;
determinable
The thing must be licit-must not be contrary to law, morals, good customs, public order
or public policy; not outside the commerce of men and not impossible
The vendor must have the right to transfer ownership thereof, at the time it is delivered
since delivery transfers ownership
The thing or object of sale may be presently existing or it may exist in the future provide
in the latter case it has potential existence
The sole owner of the thing may sell an undivided interest therein.
2. Rights which can even be personal or not intransmissible. However there are objects
which is by law prohibited to be sold such as those that involves transmissible rights like
right to vote, right to public office and services
What are the goods which may be the objects of sale?
Existing goods or those owned or already possessed by the seller
Future goods or those which are still to be manufactured, raised or acquired. No
contract may be entered into upon future inheritance except in cases expressly
authorized by law.
Contract to Sell; Absolute Sale; Conditional Sale
1. What is a contract to sell?
A contract to sell is a kind of sale whereby payment of the contract price is made at
some future date and that ownership of the property shall be retained by the owner until
full payment thereof is made. It is a bilateral contract whereby the prospective seller
binds himself to sell a thing to a prospective buyer upon the fulfillment of the payment of
the price. The transfer of title to the buyer will only happen not by the fact of payment
but by entering into another contract which is the contract of absolute sale. The
prospective buyer reserves the ownership to the object which is the subject matter of the
sale.
2. What is an absolute sale?
An absolute sale is defined as an agreement without any stipulated conditions to be
complied by either the seller or buyer. It is where there are no other conditions which
need to be fulfilled before the ownership of the thing sold be transferred. Mere delivery
of the thing already passes the title to the buyer. The payment of the purchase price is
not essential to transfer ownership, so long as the property has already been delivered.
Non-payment would only give the seller the right to demand for the sum.
3. What is a conditional sale?
A conditional sale is a bilateral contract whereby the element of consent is present
although conditioned upon the happening of a contingent event which may or may not
occur. If the suspensive condition is fulfilled, the contract of sale is thereby perfected,
such that if there had already been previous delivery of the property subject of the sale
to the buyer, ownership thereto automatically transfers to the buyer by operation of law
without any further act having to be performed by the seller.
Obligations of the Parties

What are the Obligations of the vendor?
1) To transfer the ownership of the thing sold to the buyer
2) To deliver the thing
3) To warrant the thing sold
What are the Obligations of the vendee?

1.) To accept delivery;
2.) To pay the price of the thing; and
3.) To bear the expenses for the execution and registration and putting the goods in a
deliverable state, if such is the stipulation.
In an ordinary contract for the sale of goods, the buyer has no right to pay the price in
installments. Neither can he be required to make partial payments. The buyer is also
obliged to pay interest for the period between delivery of the subject matter of the sale
and the purchase price or in case the subject property produce fruits or income and in
cases of default from the buyer, from the time of judicial or extra-judicial demand for
payment of the price.
What are the rules on transfer of ownership?

General rule:
Only the owner of the property can pass ownership to it.
But the seller is not required to have ownership at the time of the perfection of the sale.
It is sufficient that he has ownership at the time of the thing sold I delivered because it is
delivery that transfers ownership.
Where goods are sold by a person who is not the owner thereof and who does not sell
them under the authority or with the consent of the owner, the buyer acquires no better
title to the goods than the seller had, unless the owner of the goods is by his conduct
precluded from denying the sellers authority.
Exceptions:
Where the owner by his conduct is precluded from denying the sellers authority or
estopped
Where the sale is made under the provisions of any factors acts, recording laws or any
provision of the law enabling the apparent owner of goods to dispose of them as if he
was the true owner thereof such as sale by an agent
Where the sale is made under a statutory power of sale or under the order of the court of
competent jurisdiction
Where the purchase is made in a merchants store, fairs or markets
Where the seller of goods has a voidable title thereto, but his title has not been avoided
at the time of the sale, the buyer acquires a good title to the goods, provided he buys
them in good faith, for value and without notice of the sellers defects.
What are the obligations regarding delivery of the thing?

The ownership of the thing sold is transferred to the vendee upon the actual or
constructive delivery thereof. The thing sold shall be understood as delivered when it is
placed in the control and possession of the vendee.
What are the kinds of delivery?

The law on sales admits four kinds of delivery/ tradition (tradicio):
Real Tradition- from hand to hand by certain material or possessory acts by the vendee
done in the presence with the consent of the vendor
Legal or Constructive- when the delivery is not actual but represented by other signs or
acts indicative of delivery
Legal- sale made through a public instrument
Symbolic- delivery of keys to the place when goods are stored
Traditio longa manu
Traditio brevi manu
Traditio constitutum possessorium
Quasi tradition- which is used to indicate the transfer of rights or incorporeal property
and may be defined as the exercise of the right by the grantee with the acquiescence of
the vendor or the placing of the title of the ownership in the possession of the vendee.
Tradition by operation of law- which covers all other cases not already enumerated and in
which the delivery is effected solely by virtue of an express provision of the law
Where the parties have stipulated that ownership in the things shall not pass until full
purchase price is paid.
What are the rules on delivery in cases of sale of real estate?

The seller is bound to deliver what is in the contract.
If the sale is made with a statement of its area, at the rate of a certain price per unit of
measure or number and the seller cannot deliver all the area stated in the contract, the
buyer has the right to proportionately reduce the price or rescind the contract provided
the lack in the area is at least 1/10 or more of the area contracted.
If the sale was made with a statement of the area at the rate of a certain price for a unit
of measure or number and a portion of the land delivered is of an inferior quality that
that agreed upon in the contract through the land measures exactly the are upon, the
buyer has the right to proportionately reduce the price or rescind the contract provided
the lack in the area is at least 1/10 or more of the area contracted.
If the buyer could not prove that he would not have brought the land had he known of
the smaller area or its inferior quality, he may still rescind the contract even though the
lack in area is less that 1/10 of the area agreed upon, or the inferior value of the property
sold does not exceed 1/10 of the price agreed upon.
If the sale was made with a statement of the area and at the rate of a certain price for a
unit of measure or number and the land delivered was greater in area or number than
that stated in the contract, the buyer may accept the area included in the contract and
reject the rest. If he accepts the whole are, he must pay for the same at the contract
price.
If the sale is for lump sum and not at the rate of a certain sum for a unit of a measure or
number, there shall be no increase or decrease in the price, although there be a greater
or less area or number than that stated in the contract.
When two or more real estate are sold for a single price, the rule is the same as when
the real estate is sold for a lump sum. There shall be no increase or decrease in the price
irrespective of any difference in the area actually delivered and the area in the contract.
The right of the buyer to a proportionate reduction if the price or rescission of the
contract of sale must be exercised within 6 months from delivery date.
Price and Delivery

What are the rules regarding the price?
Price certain in money:
When the parties have fixed it
When it is certain with reference to another certain thing
When the determination of the price is left to the judgment of a specified person or
persons
Gross inadequacy of price does not affect a contract of sale except as it may indicate a
defect in the consent or that the parties really intended a donation or some other
contract.
If the price is simulated or pretended the sale is void but the act may be shown to have
been in reality a donation or some other contract.
The fixing of the price cannot be left to the will of one of the parties unless it is accepted
by the other.
There will be no contract of sale if the price cannot be fixed which will give no obligations
to the parties.
What constitutes delivery in a sale?
Delivery of the thing together with the payment of the price, marks the consummation of
the contract and sale. The act of delivery must be coupled with the intention of
delivering the thing and putting the buyer under control. Without the intention, the act is
insufficient. Such effect is supported by this provision in the New Civil Code:
Art. 1496. The ownership of the thing sold is acquired by the vendee from the moment it
is delivered to him in any of the ways specified in Articles 1497 to 1501, or in any other
manner signifying an agreement that the possession is transferred from the vendor to
the vendee. (n)
What are the kinds of delivery?Actual or Real delivery happens when the thing sold
falls under the control and possession of the buyer. This can be done through passing of
the movable thing hand to hand. The law evidenced such definition by this provision:
Art. 1497. The thing sold shall be understood as delivered, when it is placed in the
control and possession of the vendee. (1462a)
2. Legal or Constructive is understood as those acts which are taken as equivalent of
delivery despite lack of non-physical possession of the thing itself and considered as
having the same effects to that of a real or actual delivery. This kind of delivery may be
affected in certain ways as laid down in following provisions:
Art. 1498. When the sale is made through a public instrument, the execution thereof
shall be equivalent to the delivery of the thing which is the object of the contract, if from
the deed the contrary does not appear or cannot clearly be inferred.
*The mere execution of the public instrument gives the presumptive delivery of the
property such as when a deed is notarized or the sale of registered land, the title is
transferred. The possession of the documents also means possession of the whole
property.
With regard to movable property, its delivery may also be made by the delivery of the
keys of the place or depository where it is stored or kept. (1463a)
*This type of constructive delivery is called symbolic tradition. To effect delivery, a token,
object or part of the property may be given to constitute delivery of the whole. Like when
even just a key is delivered, it may mean to deliver the entire house or car that the key
represents.
Art. 1499. The delivery of movable property may likewise be made by the mere consent
or agreement of the contracting parties, if the thing sold cannot be transferred to the
possession of the vendee at the time of the sale, or if the latter already had it in his
possession for any other reason. (1463a)
*The first part of this provision refer to a kind of constructive delivery called tradition
longa manu (long hand delivery). This takes place by the mere consent or agreement of
the parties that when the seller points or directs the buyer to the property, it may
already mean that he is placing it under the buyers control and possession. Another
type is traditio brevi manu (short hand delivery) where delivery is effected by the buyer
already possessing the thing sold by virtue of another title. For example, when the buyer
is possessing the property as a lessee but buys it and attains control and possession by
the complete turnover to him by the seller.
Art. 1500. There may also be tradition constitutum possessorium. (n)
*This type is the opposite of tradio brevi manu since the delivery happens when the
seller continues in possession of the property already sold not as the owner but in
another capacity. The delivery of the buyer already takes place by mere agreement of
the parties. Such as when the seller remains a tenant of the buyer.
Art. 1501. With respect to incorporeal property, the provisions of the first paragraph of
article 1498 shall govern. In any other case wherein said provisions are not applicable,
the placing of the titles of ownership in the possession of the vendee or the use by the
vendee of his rights, with the vendors consent, shall be understood as a delivery. (1464)
*This type is called quadi-tradio and can only be made with respect to corporeal things.
Those incorporeal things may only be delivered by execution of a public document and
when this is inapplicable, by placing the titles of ownership in the possession of the
vendee or by allowing the buyer to use his rights as new owner with the sellers consent.
References
Inc.
Marella V. Teyes and Paterno, 12 Phil 1, 1908
Soler V. Chelsey, 43 Phil 529, 1922
Warranties and Formalities in a Contract of Sale

What are the warranties in a contract of sale?
Express Warranty- any affirmation of fact or any promise by the seller relating to the
thing is an express warranty if the natural tendency of such affirmation or promise is to
induce the buyer to purchase the same, and if the buyer purchases the thing relying
thereon.
The vital question is express warranty is: whether or not a statement or affirmation
accompanying as sale is a warranty depends upon whether the conditions were such
that the buyer had a right to understand and did not understand that was said by the
seller was meant as a warranty.
Implied warranty-arises from the mere fact that a contract of sale is perfected. It does
not apply to one who sells by virtue of an authority in fact or in law (sheriff sale). There
are two kinds of implied warranty:
Warranty against eviction- An implied warranty on the part of the seller that he has a
right to sell at the time when ownership is to pass and that the buyer shall from that
time have and enjoy the legal and peaceful possession of the thing
Warranty against hidden defects-An implied warranty that the thing shall be free from
any hidden defects or any change or encumbrances not declared or known to the buyer
-Hidden defects are those which are not visible to vendee who is not an expert and to a
vendee who is an expert but even with the use of his trade or profession could not detect
such defect.
-Requisites of hidden defects: The defect must exist at the time of the sale, must be
important or serious, notice was given to the vendor within a reasonable time and within
prescriptive period and no waiver was made
Warranty against eviction- Eviction is the judicial process whereby the vendee by virtue
of a final judgment based on a right prior to the sale or an act imputable to the vendor, is
deprived of the whole or a part of the thing purchased.
In order for the vendor to be liable for his warranty, the vendor must be summoned in
the suit for eviction at the instance of the vendee and there is no waiver on the part of
the vendee.
What are the formalities of a contract of sale?
As a general rule, the form of a contract is manner of how it would be executed or
manifested. A contract of sale may take any general form of a simple contract.
What does the law say about the forms of a contract of sale?
The New Civil Code has recognized the need for a certain form for a contract of sale for
its validity and enforceability in this provision:
Art. 1356. Contracts shall be obligatory, in whatever form they may have been entered
into, provided all the essential requisites for their validity are present. However, when
the law requires that a contract be in some form in order that it may be valid or
enforceable, or that a contract be proved in a certain way, that requirement is absolute
and indispensable. In such cases, the right of the parties stated in the following article
cannot be exercised. (1278a)
Art. 1357. If the law requires a document or other special form, as in the acts and
contracts enumerated in the following article, the contracting parties may compel each
other to observe that form, once the contract has been perfected. This right may be
exercised simultaneously with the action upon the contract. (1279a)
*The requisites of validity referred in this provision refer to essential to perfect a simple
contract as already discussed in this post (insert link for the post about what is a
contract of sale).
However, the contract may be required by law to follow a certain form depending on its
subject and manner of execution. The law has required that the following should be in a
public instrument:
Art. 1358. The following must appear in a public document:

(1) Acts and contracts which have for their object the creation, transmission,
modification or extinguishment of real rights over immovable property; sales of real
property or of an interest therein a governed by Articles 1403, No. 2, and 1405;
(2) The cession, repudiation or renunciation of hereditary rights or of those of the
conjugal partnership of gains;
(3) The power to administer property, or any other power which has for its object an act
appearing or which should appear in a public document, or should prejudice a third
person;
(4) The cession of actions or rights proceeding from an act appearing in a public
document.
All other contracts where the amount involved exceeds five hundred pesos must appear
in writing, even a private one. But sales of goods, chattels or things in action are
governed by Articles, 1403, No. 2 and 1405. (1280a)
Likewise, the contracts of sale are also governed by the Statute of Frauds which may
prohibit its enforceability and bar its ratification if not complied with. The Statue of
Frauds, however only apply to executory contracts or where there are no performance
yet and not to those already consummated even if partially. These rules aim to avoid
injustice to the party who has not yet performed his obligation so as not to enable him to
keep the benefits he received without doing his obligation. (omitted provisions done
purposely for sake of discussion).
Art. 1403. The following contracts are unenforceable, unless they are ratified:
x xx
(2) Those that do not comply with the Statute of Frauds as set forth in this number. In
the following cases an agreement hereafter made 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:
(a) An agreement that by its terms is not to be performed within a year from the making
thereof;
x xx
(d) An agreement for the sale of goods, chattels or things in action, at a price not less
than five hundred pesos, unless the buyer accept and receive part of such goods and
chattels, or the evidences, or some of them, of such things in action or pay at the time
some part of the purchase money; but when a sale is made by auction and entry is made
by the auctioneer in his sales book, at the time of the sale, of the amount and kind of
property sold, terms of sale, price, names of the purchasers and person on whose
account the sale is made, it is a sufficient memorandum;
(e) An agreement of the leasing for a longer period than one year, or for the sale of real
property or of an interest therein;
x xx
*In summary the following must be in writing to be enforceable: sale of personal
property at a price not less than P500.00, sale of real property or an interest therein,
sale of property not to be performed within a year from the date thereof and Applicable
statute requires that the contract of sale be in a certain form.
What is reformation of instrument?

Reformation of instrument means that there having a meeting of the minds of the
parties to a contract, however, their true intention thereof is not expressed in the
instruments purporting to embody the agreement by reason of fraud, accident, mistake,
and inequitable conduct. This is done to reveal the true intentions of the party and only
applicable to written contracts.
References
Inc.
Option Money v Earnest Money

What is an option contract?
An option contract is a contract granting a privilege in one person, for which he has
paid a consideration, which gives him the right to buy certain merchandise at anytime
within the agreed period, at a fixed price. It is separate and distinct from the main
contract itself which the parties may enter into upon the consummation of the option. An
option contract should have a consideration at all times or else it would be void.
What is an option in a contract of sale?
Option is a mere promise or offer to buy or sell real estate. An option to purchase, for
instance is a right of election of a prospective buyer to purchase which when exercised
by him becomes a contract of sale.
What does the law say about option contract?
Art. 1479. A promise to buy and sell a determinate thing for a price certain is reciprocally
demandable.
An accepted unilateral promise to buy or to sell a determinate thing for a price certain is
binding upon the promissor if the promise is supported by a consideration distinct from
the price. (1451a)
*The second paragraph in this provision is referred to as option. This unilateral promise
to sell or buy a determinate thing does not bind the promissor though accepted until a
consideration distinct from the price supports this perfected contract.
Example would be when A promises to sell to B a car which B accepts. S is not bound to
sell his car if there is not promise on the part of B to buy. However if the promise is
supported by a consideration distinct from the price, as when B paid or promised to pay
a sum of money to A for giving him the right to buy the car whenever he pleases during
a certain period of time, then a perfected option contract is entered in to.
What is earnest money?

An earnest money is something of value to show that the buyer was really in earnest,
and given to the seller to bind the bargain. It is a partial payment or a part of the
purchase price and may prove to show the perfection of a contract.
What does the law say about earnest money?
Art. 1482. Whenever earnest money is given in a contract of sale, it shall be considered
as part of the price and as proof of the perfection of the contract. (1454a)
*This payment function as the consideration to be paid by the buyer and is given to show
interest in the sale. In law, it is considered a part of the purchase price and give rise to a
consummated contract of sale.
What is the difference between option money and earnest money?

In paying earnest money it forms part of the purchase price, given when there is already
a perfected sale, and the buyer must pay the balance.
While an option money is distinct and separate from the purchase price of the principal
contract, may apply to a sale not yet perfected and the buyer is not bound to buy
despite payment of option money. However an option money can become an option
money so long as the parties agree to it.
References:
Inc.
Maceda Law
What is the Maceda Law? (R.A. 6552)
R.A. 6552 or An Act to Provide Protection to Buyers of Real Estate on Installment
Payments is also known as the Maceda Law. It governs the sale or financing of real
estate on instalment payments. It is for the purpose of public policy to protect buyers of
real estate on installment payments against onerous and oppressive conditions.
Where does the Maceda Law apply?
Section 3. In all transactions or contracts involving the sale or financing of real estate on
installment payments, including residential condominium apartments but excluding
industrial lots, commercial buildings and sales to tenants under Republic Act Numbered
Thirty-eight hundred forty-four, as amended by Republic Act Numbered Sixty-three
hundred eighty-nine, x x x
*This would apply to transactions or contracts involving the sale OR financing of real
estate on instalment payments, including residential condominium apartments; and
buyer defaults in payment of succeeding instalments.
What re the rights of the buyer under the Maceda Law?
If buyer has paid at least two (2) years of installments
Section. 3 x x x where the buyer has paid at least two years of installments, the buyer is
entitled to the following rights in case he defaults in the payment of succeeding
installments:
(a) To pay, without additional interest, the unpaid installments due within the total grace
period earned by him which is hereby fixed at the rate of one month grace period for
every one year of installment payments made: Provided, That this right shall be
exercised by the buyer only once in every five years of the life of the contract and its
extensions, if any.
(b) If the contract is canceled, the seller shall refund to the buyer the cash surrender
value of the payments on the property equivalent to fifty per cent of the total payments
made, and, after five years of installments, an additional five per cent every year but not
to exceed ninety per cent of the total payments made: Provided, That the actual
cancellation of the contract shall take place after thirty days from receipt by the buyer of
the notice of cancellation or the demand for rescission of the contract by a notarial act
and upon full payment of the cash surrender value to the buyer.
Section 6. The buyer shall have the right to pay in advance any installment or the full
unpaid balance of the purchase price any time without interest and to have such full
payment of the purchase price annotated in the certificate of title covering the property.
*The buyer must pay, without additional interest, the unpaid instalments due within the
total grace period earned by him. There shall be one (1) month grace period for every
one (1) year of instalment payments made. Note that this right shall be exercised by the
buyer ONLY once in every 5 years of the life of the contract and its extensions.
In actual cancellation can only take place after 30 days from receipt by the buyer of the
notice of cancellation OR demand for rescission by a notarial act AND upon full payment
of the cash surrender value to the buyer. Note that the seller shall refund to the buyer
the cash surrender value of the payments on the property equivalent to 50% of the total
payments made. After five (5) years of instalments, there shall be an additional 5% every
year but not to exceed 90% of the total payments made
The buyer shall have the right to sell his rights or assign the same to another person OR
to reinstate the contract by updating the account during the grace period and before
actual cancellation of the contract. The buyer shall have the right to pay in advance any
instalment or the full unpaid balance of the purchase price any time without interest and
to have such full payment of the purchase price annotated in the certificate of title
covering the property.
If buyer has paid less than two (2) years of instalments
Section 4. In case where less than two years of installments were paid, the seller shall
give the buyer a grace period of not less than sixty days from the date the installment
became due.
If the buyer fails to pay the installments due at the expiration of the grace period, the
seller may cancel the contract after thirty days from receipt by the buyer of the notice of
cancellation or the demand for rescission of the contract by a notarial act.
Section 5. Under Section 3 and 4, the buyer shall have the right to sell his rights or
assign the same to another person or to reinstate the contract by updating the account
during the grace period and before actual cancellation of the contract. The deed of sale
or assignment shall be done by notarial act.
*The seller shall give the buyer a grace period of NOT less than 60 days from the date
the instalment became due. If the buyer fails to pay the instalments due at the
expiration of the grace period, the seller may cancel the contract after 30 days from
receipt by the buyer of the notice of cancellation or the demand for rescission of contract
by a notarial act. The buyer shall have the right to sell his rights or assign the same to
another person OR to reinstate the contract by updating the account during the grace
period and before actual cancellation of the contract.
The buyer shall have the right to pay in advance any instalment or the full unpaid
balance of the purchase price any time without interest and to have such full payment of
the purchase price annotated in the certificate of title covering the property.
Reference:
REPUBLIC ACT No. 6552- An Act to Provide Protection to Buyers of Real Estate on
Installment Payments. (Rep. Act No. 6552)
Double Sale
What is a double sale?
A double sale is the selling of the same property by the same seller to different buyers
with conflicting rights.The following instances must be concurring: there are two or more
transactions must constitute valid sales, they must pertain exactly to the same object or
subject matter, they must be bought from the same or immediate seller and two or more
buyers who are at odds over the rightful ownership of the subject matter must represent
conflicting interests.
What is the remedy to a double sale according to law?
The New Civil Code has provided for the instance which will constitute a double sale and
the manner on how it would be resolved:
Art. 1544. If the same thing should have been sold to different vendees, the ownership
shall be transferred to the person who may have first taken possession thereof in good
faith, if it should be movable property.
Should it be immovable property, the ownership shall belong to the person acquiring it
who in good faith first recorded it in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person who in good
faith was first in the possession; and, in the absence thereof, to the person who presents
the oldest title, provided there is good faith. (1473)
*This provision lays down the rules of preference to who shall be given priority in a
double sale. When it involves a personal property, the first possessor in good faith shall
be preferred. If it involves a real property, the first registrant in good faith and if there is
nothing to show this fact then the first possessor in good faith shall follow and if still
cannot be determined then the person with oldest title in good faith shall be given
precedence.
References
Inc.
Breach of a Contract of Sale

March 4, 2016law on sales, obligations and contracts
What are the remedies of the seller for breach of contract of sale according to
the law?
When the seller is prejudiced due to the breach of contract by the buyer, the following
Action for payment of the price
Art. 1595. Where, under a contract of sale, the ownership of the goods has passed to the
buyer and he wrongfully neglects or refuses to pay for the goods according to the terms
of the contract of sale, the seller may maintain an action against him for the price of the
goods.
*The seller may maintain an action for payment of the price when the ownership of the
goods sold already passed to the buyer and he fails to pay in a wrongful manner
attributable to him.
Where, under a contract of sale, the price is payable on a certain day, irrespective of
delivery or of transfer of title and the buyer wrongfully neglects or refuses to pay such
price, the seller may maintain an action for the price although the ownership in the
goods has not passed. But it shall be a defense to such an action that the seller at any
time before the judgment in such action has manifested an inability to perform the
contract of sale on his part or an intention not to perform it.
*The seller may also demand payment when he likewise fails to pay and neglects
wrongfully the date certain for its payments, irrespective of delivery and the transfer of
title to the buyer.
Although the ownership in the goods has not passed, if they cannot readily be resold for
a reasonable price, and if the provisions of article 1596, fourth paragraph, are not
applicable, the seller may offer to deliver the goods to the buyer, and, if the buyer
refuses to receive them, may notify the buyer that the goods are thereafter held by the
seller as bailee for the buyer. Thereafter the seller may treat the goods as the buyers
and may maintain an action for the price. (n)
*The seller may ask for payment of the price if the goods cannot be resold for a
reasonable price and the buyer refuses to accept them even before the ownership to
goods has passed.
Action for damages for non-acceptance of the goods
Art. 1596. Where the buyer wrongfully neglects or refuses to accept and pay for the
goods, the seller may maintain an action against him for damages for nonacceptance.
The measure of damages is the estimated loss directly and naturally resulting in the
ordinary course of events from the buyers breach of contract.
Where there is an available market for the goods in question, the measure of damages
is, in the absence of special circumstances showing proximate damage of a different
amount, the difference between the contract price and the market or current price at the
time or times when the goods ought to have been accepted, or, if no time was fixed for
acceptance, then at the time of the refusal to accept.
If, while labor or expense of material amount is necessary on the part of the seller to
enable him to fulfill his obligations under the contract of sale, the buyer repudiates the
contract or notifies the seller to proceed no further therewith, the buyer shall be liable to
the seller for labor performed or expenses made before receiving notice of the buyers
repudiation or countermand. The profit the seller would have made if the contract or the
sale had been fully performed shall be considered in awarding the damages. (n)
*The seller may demand for damages when the buyer fails to accept the goods without
lawful case and fails to pay the price agreed upon. He may also demand damages when
the ownership has not yet passed and the seller cannot recover the price of the goods.
He also has an action for damages when the goods are not yet identified at the time of
the contract. The damages may be measured by the labor performed and expenses
incurred for the materials or the profit that would have been realized have it not for the
non-acceptance of the buyer.
Action for rescission
Art. 1597. Where the goods have not been delivered to the buyer, and the buyer has
repudiated the contract of sale, or has manifested his inability to perform his obligations
thereunder, or has committed a breach thereof, the seller may totally rescind the
contract of sale by giving notice of his election so to do to the buyer. (n)
*The remedy afforded by this provision is applicable in the sale of goods which have not
yet been delivered to the buyer and the buyer repudiated the contract of sale,
manifested his inability to perform his obligations or there is mere breach of the
provisions of the contract of sale. The notice of rescission must be given by the seller.
The breach must not be slight or casual but must be substantial enough to defeat the
very essence of the contract.
What are the remedies of the buyer for breach of contract of sale according to
the law?
When the buyer is prejudiced due to the breach of contract by the seller, the following
Action for specific performance
Art. 1598. Where the seller has broken a contract to deliver specific or ascertained
goods, a court may, on the application of the buyer, direct that the contract shall be
performed specifically, without giving the seller the option of retaining the goods on
payment of damages. The judgment or decree may be unconditional, or upon such
terms and conditions as to damages, payment of the price and otherwise, as the court
may deem just. (n)
* The buyer may, without giving the seller the option to retain the goods on payment of
damages, may ask for specific performance. However there may be instances in a court
decision the judgment maybe unconditional, or upon such terms and conditions as to the
payment of damages, payment of the price and otherwise, the court may order whatever
it may deem just.
Action for rescission or damages for breach of warranty
Art. 1599. Where there is a breach of warranty by the seller, the buyer may, at his
election:
(1) Accept or keep the goods and set up against the seller, the breach of warranty by
way of recoupment in diminution or extinction of the price;
(2) Accept or keep the goods and maintain an action against the seller for damages for
the breach of warranty;
(3) Refuse to accept the goods, and maintain an action against the seller for damages
for the breach of warranty;
(4) Rescind the contract of sale and refuse to receive the goods or if the goods have
already been received, return them or offer to return them to the seller and recover the
price or any part thereof which has been paid.
When the buyer has claimed and been granted a remedy in anyone of these ways, no
other remedy can thereafter be granted, without prejudice to the provisions of the
second paragraph of Article 1191.
Where the goods have been delivered to the buyer, he cannot rescind the sale if he
knew of the breach of warranty when he accepted the goods without protest, or if he
fails to notify the seller within a reasonable time of the election to rescind, or if he fails
to return or to offer to return the goods to the seller in substantially as good condition as
they were in at the time the ownership was transferred to the buyer. But if deterioration
or injury of the goods is due to the breach or warranty, such deterioration or injury shall
not prevent the buyer from returning or offering to return the goods to the seller and
rescinding the sale.
Where the buyer is entitled to rescind the sale and elects to do so, he shall cease to be
liable for the price upon returning or offering to return the goods. If the price or any part
thereof has already been paid, the seller shall be liable to repay so much thereof as has
been paid, concurrently with the return of the goods, or immediately after an offer to
return the goods in exchange for repayment of the price.
Where the buyer is entitled to rescind the sale and elects to do so, if the seller refuses to
accept an offer of the buyer to return the goods, the buyer shall thereafter be deemed to
hold the goods as bailee for the seller, but subject to a lien to secure payment of any
portion of the price which has been paid, and with the remedies for the enforcement of
such lien allowed to an unpaid seller by Article 1526.
(5) In the case of breach of warranty of quality, such loss, in the absence of special
circumstances showing proximate damage of a greater amount, is the difference
between the value of the goods at the time of delivery to the buyer and the value they
would have had if they had answered to the warranty. (n)
* In case of recoupment, the buyer may accept the goods and set up the sellers breach
to reduce or extinguish the price. He may accept or not the goods and in both cases,
maintain an action for damages for breach of warranty. In rescission, he may do such if
there is refusal to receive the goods; or if goods have already been received, return them
and recover what was paid or any part of it concurrently with return or immediately after
it.
These remedies are alternative, without prejudice to paragraph 2 of Art. 1191 (that a
party may still seek rescission after choosing specific performance if the latter is
impossible). Buyer cannot rescind if he is knowledgeable of the breach and still accepted
the goods without protest, or fails within reasonable time to notify the seller of his
election to rescind, or fails to return or offer to return the goods in substantially as good
condition as it was. If seller refuses to accept an offer to return the goods and the buyer
elected rescission, buyer shall be deemed to hold the goods as bailee for the seller
subject to lien to secure payment of any portion of the price which has been paid. There
is loss, in case of breach of warranty of quality, when there was a difference between
value of the goods at the time of delivery and value they would have had if they had
answered to the warranty.
What are the remedies of the seller in case of default in payment of price?
Anticipatory breach- The seller has reasonable grounds to believe that the property sold
will be lost so he may rescind the sale
Failure of the buyer to pay the purchase price-In the sale of immovable property even
though it may have been stipulated that rescission will only take place upon failure to
pay the price, he may still demand payment until the judicial or extrajudicial rescission of
the contract.
What are the remedies of the buyer in case of disturbance in the property and
in condominium projects?
Suspension of payment-If the buyer gets disturbed in the possession and ownership or
has a reasonable grounds to fear such disturbance of the property, by a vindicatory
action or a foreclosure of mortgage, the buyer may suspend payment until the
disturbance is removed by the seller or seller gives security for the return of the price in
proper case unless otherwise stipulated.
Subdivision and condominium projects-PD 957 provides that when the owner or
developer of the condominium project fails to develop it according to the approved plan
and within the time limit for complying with the same, the buyer who pays in installment
may desist from paying further provided he gives due notice to the seller. The law also
allows the buyer to be reimbursed of all the amount paid.
What is Equitable Mortgage?
Pacto de retro is presumed to be Equitable Mortgage when:
Art. 1602: The contract shall be presumed to be an equitable mortgage, in any of the
following cases:
(1) When the price of a sale with right to repurchase is unusually inadequate;
(2) When the vendor remains in possession as lessee or otherwise;
(3) When upon or after the expiration of the right to repurchase another instrument
extending the period of redemption or granting a new period is executed;
(4) When the purchaser retains for himself a part of the purchase price;
(5) When the vendor binds himself to pay the taxes on the thing sold;
(6) In any other case where it may be fairly inferred that the real intention of the parties
is that the transaction shall secure the payment of a debt or the performance of any
other obligation.
What are the effects when the thing sold is lost?
Loss before perfection of the contract- Contract is void
Loss at the time of perfection of contract of sale-Contract is Void
If thing is partially lost-the vendee may choose between withdrawing from the contract
and demanding the remaining part, paying its price in proportion to the total sum agreed
upon
Loss after perfection of the contract of sale
After delivery to buyer- buyer bears the loss
Before delivery to the buyer
-Non fungible/ fungible thing without consideration as to its weight, number or measure-
buyer bears the loss
-fungible thing for a price fixed in accordance with its weight, number or measure-seller
bears the loss
References
Inc.
Extinguishment of Sale
How is a sale extinguished?
This provision of the New Civil Code has laid down three instances on how a sale can be
extinguished:
Art. 1600. Sales are extinguished by the same causes as all other obligations, by those
stated in the preceding articles of this Title, and by conventional or legal redemption.
(1506)
What is conventional redemption?
The happening of conventional redemption is best defined under this provision:
Art. 1601. Conventional redemption shall take place when the vendor reserves the right
to repurchase the thing sold, with the obligation to comply with the provisions of Article
1616 and other stipulations which may have been agreed upon. (1507)
*Conventional redemption isthe right which the vendor reserves to himself, to reacquire
the property sold provided he returns to the vendee the price of the sale, expenses of
the contract, any other legitimate payments made therefore, the necessary and useful
expenses made on the thing sold and fulfills other stipulations which may have been
agreed upon.
What is Pacto de Retro sale?

Pacto de Retro sale refers to the sale wherein the seller has the right to repurchase
the subject matter or the property being sold.The essence of a pacto de retro sale is that
the title and ownership of the property sold transfers immediately to the vendee a retro.
However it is still subject to the resolutory condition of repurchase of the subject
property by a vendor a retro within the period agreed upon by them, or, in the absence
thereof, as provided by law or else it would vests upon the vendee a retro absolute title
and ownership over the property sold by operation of law.
What is the redemption period for pacto de retro sale?
This period applies to conventional redemption and not to those contracts which involves
a sale with a right of repurchase. The period of redemption laid down by law is expressed
in this provision:
Art. 1606. The right referred to in Article 1601, in the absence of an express agreement,
shall last four years from the date of the contract.
Should there be an agreement, the period cannot exceed ten years.
However, the vendor may still exercise the right to repurchase within thirty days from
the time final judgment was rendered in a civil action on the basis that the contract was
a true sale with right to repurchase. (1508a)
*If there is an agreement: period agreed upon cannot exceed 10 years and in the
absence of the period, 4 years from the date of the contract. The vendor who fails to
repurchase the property within the period agreed upon may, however, exercise the right
to repurchase within 30 days from the time final judgment was rendered in a civil action
on the basis that the contract was a true sale with right of repurchase.
What is legal redemption?

Legal redemption is the right to be subrogated, upon the same terms and conditions
stipulated in the contract, in the place of one who acquires a thing by purchase or dation
in payment, or by any other transaction whereby ownership is transferred by onerous
title. It must be exercised within thirty (30) days from the notice in writing by the vendor.
This does not apply to barter, donation, transmission of things by hereditary title,
mortgage, lease.
What are the instances of legal redemption?
Under the Civil Code
Sale of co-owner of his share to a stranger
When a credit or other incorporeal right in litigation is sold
Sale of an heir of his hereditary rights to a stranger
Sale of adjacent rural lands not exceeding one hectare
Sale of adjacent small urban lands bought merely for speculation
Under special laws
An equity of redemption in cases of judicial foreclosures
A right of redemption in cases of extra-judicial foreclosures
Redemption of homesteads
Redemption of tax sales
Redemption by an agricultural tenant of land sold by the landowner
What is the time provided for the vendor a retro to redeem or repurchase a
thing?
If there is no agreement as to the period for redemption- 4 years from date of contract
If there is agreed period, it must be done within the fixed period
If the parties agreed as to the period within which to repurchase but have not fixed a
definite period,- 10 years from the date of the contract to redeem but shall not extend
beyond 10 years
Vendor a retro may still exercise his right to redeem within 30 days from the time of the
final judgment on the basis that the contract was a true sale with right to repurchase.
What is the rules for legal redemption by co-owner?
Art. 1620: A co-owner of a thing may exercise the right of redemption in case the shares
of all the other co-owners or of any of them, are sold to a third person. If the price of the
alienation is grossly excessive, the redemptioner shall pay only a reasonable one.
Should two or more co-owners desire to exercise the right of redemption, they may only
do so in proportion to the share they may respectively have in the thing owned in
common.
Requisites:
There is c-ownership
There is alienation of all or any of the shares
The sale was made to a stranger
The legal redemption was exercised before partition
What is the rules for legal redemption by an adjacent owner?
Art. 1621: The owners of adjoining lands shall also have the right of redemption when a
piece of rural land, the area of which does not exceed one hectare, is alienated, unless
the grantee does not own any rural land.
This right is not applicable to adjacent lands which are separated by brooks, drains,
ravines, roads and other apparent servitudes for the benefit of other estates.
If two or more adjoining owners desire to exercise the right of redemption at the same
time, the owner of the adjoining land of smaller area shall be preferred; and should both
lands have the same area, the one who first requested the redemption.
Requisites:
Both lands are rural
The lands are adjacent to each other
There is an alienation
The land are is less than 1 hectare
Rights of adjacent owners:
Right of pre-emption which the preferential right to buy the urban land before the same
is sold to a third person
In the event the urban land has been sold, the adjacent owners have the right of
redemption.
What is the doctrine of caveat emptor (buyer beware)?

Requires the purchaser to be aware of the supposed title of the vendor and one who
buys without checking the vendors title takes all the risks and losses consequent to such
failure. The actual possession by people other than the vendor should, at least, put the
purchaser upon inquiry. Site identification and survey are a must also.
An action for reconveyance is a legal and equitable remedy granted to the rightful owner
of land which has been wrongfully or erroneously registered in the name of another for
the purpose of compelling the latter to transfer or convey the land to him.
References
Inc.
LAW ON LEASE
Lease
March 6, 2016law on lease
What is lease?
Lease is a consensual, bilateral, onerous and commutative contract by virtue of which

one person binds himself to grant temporarily the use of the thing or to render some
service to another who undertakes to pay some rent.
Art. 1842. The right to an account of his interest shall accrue to any partner, or his legal
representative as against the winding up partners or the surviving partners or the person
or partnership continuing the business, at the date of dissolution, in the absence of any
agreement to the contrary. (n)
What are the properties which may be leased?
1. Lease of Public Domain which must be those alienable lands (agricultural lands) of
1,000 hectares maybe leased by private corporation for 25 years and 12 hectares by
Filipino citizens
2. Private Lands and/or improvements thereof.
What is the recording of lease of personal property?
As a general rule, the lease of real property is personal right. However if the lease
partakes of the nature of real right if the lease real property is more than one (1) year or
is registered regardless of duration.
Who are the persons disqualified to be lessees?
A husband and a wife cannot lease to each other their separate properties except if
separation of property was agreed upon or if there has been judicial separation of
property.
This is to prevent prejudice to creditors and to prevent the stronger spouse from
influencing unduly the weaker spouse. Also, those mentioned in this article of the New
Civil Code are disqualified:
Art. 1491. The following persons cannot acquire by purchase, even at a public or judicial
auction, either in person or through the mediation of another:
(1) The guardian, the property of the person or persons who may be under his
guardianship;
(2) Agents, the property whose administration or sale may have been entrusted to them,
unless the consent of the principal has been given;
(3) Executors and administrators, the property of the estate under administration;
(4) Public officers and employees, the property of the State or of any subdivision thereof,
or of any government-owned or controlled corporation, or institution, the administration
of which has been entrusted to them; this provision shall apply to judges and
government experts who, in any manner whatsoever, take part in the sale;
(5) Justices, judges, prosecuting attorneys, clerks of superior and inferior courts, and
other officers and employees connected with the administration of justice, the property
and rights in litigation or levied upon an execution before the court within whose
jurisdiction or territory they exercise their respective functions; this prohibition includes
the act of acquiring by assignment and shall apply to lawyers, with respect to the
property and rights which may be the object of any litigation in which they may take part
by virtue of their profession.
(6) Any others specially disqualified by law. (1459a)
*Persons referred to in Article 1491 of the New Civil Code are disqualified because of
fiduciary relationships
References:
The New Civil Code
Obligations of Lessor and Lessee
What are the obligations of the lessor?
Obligations of the lessor is expressly enumerated in this article of the New Civil Code:
Art. 1654. The lessor is obliged:
(1) To deliver the thing which is the object of the contract in such a condition as to render
it fit for the use intended;
(2) To make on the same during the lease all the necessary repairs 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.
(1554a)
*The lessor is also obliged not to alter the form in such a way as to impair the use to
which the thing is devoted
What are the obligations of the Lessee?
Obligations of the lessee is expressly enumerated in this article of the New Civil Code:
Art. 1657. The lessee is obliged:
(1) To pay the price of the lease according to the terms stipulated;
(2) To use the thing leased as a diligent father of a family, devoting it to the use
stipulated; 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) To pay expenses for the deed of lease. (1555)
*The lessee is obliged to pay rent, to use the thing leased as a diligent father of a family,
devoting it to the use stipulated, to pay expenses for the deed of lease, to notify the
lessor of usurpation or untoward acts, to notify the lessor of need for repairs, to return
the property leased upon.
What are the 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 the period is 40 days or more, lessee can ask for
reduction of the rent in proportion to the time including the 1st 40 days and the part of
the property of which he is deprived
What are the effects if lessor fails to make urgent repairs?
The lessee may:

1. Order repair 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
What are the kinds of trespass in lease?
Art. 1664. The lessor is not obliged to answer for a mere act of trespass which a third
person may cause on the use of the thing leased; but the lessee shall have a direct
action against the intruder.
There is a mere act of trespass when the third person claims no right whatever. (1560a)
1. Trespass in fact is when the physical enjoyment is reduced. There is a mere physical
disturbance on the property leased such as an intrusion of an intruder without any legal
claim to justify his entry into the property. The lessor will not be held liable. The duty to
maintain the lessee in the peaceful enjoyment of the lease is a warranty that the lessee
shallnot be disturbed in hislegal, and notphysical, possession
2. Trespass in lawis whena third person claims legal right to enjoy the premisesand the
lessor will be held liable.
References:
The New Civil Code
Robles V. LizarragaHnos. G.R. No. L-16736, December 22, 1921
Duration of Lease
What is the duration of lease?
Lease made for a determinate time or fixed period be for the said period and it ends on
the day fixed without need of a demand. But if there is no fixed period for rural lands 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. It is exemplified in this article of the New Civil
Code:
Art. 1680. The lessee shall have no right to a reduction of the rent on account of the
sterility of the land leased, or by reason of the loss of fruits due to ordinary fortuitous
events; but he shall have such right in case of the loss of more than one-half of the fruits
through extraordinary and unforeseen fortuitous events, save always when there is a
specific stipulation to the contrary.
Extraordinary fortuitous events are understood to be: fire, war, pestilence, unusual flood,
locusts, earthquake, or others which are uncommon, and which the contracting parties
could not have reasonably foreseen. (1575)
As for urban lands the following rules shall apply, and below is the supporting article of
the law:
a) If rent is paid daily: lease is from day to day
b) If rent is paid weekly: lease is from week to week
c) If rent is paid monthly: lease is from month to month
d) If rent is paid yearly: lease is from year to year
Art. 1687. If the period for the lease has not been fixed, it is understood to be from year
to year, if the rent agreed upon is annual; from month to month, if it is monthly; from
week to week, if the rent is weekly; and from day to day, if the rent is to be paid daily.
However, even though a monthly rent is paid, and no period for the lease has been set,
the courts may fix a longer term for the lease after the lessee has occupied the premises
for over one year. If the rent is weekly, the courts may likewise determine a longer period
after the lessee has been in possession for over six months. In case of daily rent, the
courts may also fix a longer period after the lessee has stayed in the place for over one
month. (1581a)
What is implied new lease?

Implied lease is which when at the end of the contract the lessee continues 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. It is required that the term of the
original contract has expired, the lessor has not given the lessee a notice to vacate and
the lessee continued enjoying the thing leased for at least 15 days with acquiescence of
the lessor.
When is there no implied new lease?
The is no implied lease when before or after the expiration of the term, there is a notice
to vacate given by either party and when there is no definite fixed period in the original
lease contract as in the case of successive renewals. Its effect includes that the period of
the new lease is not that stated in the original contract but the time in Article 1682 and
1687 and other terms of the original contract are revived.
Note that the 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 as discussed by the court in the case of Dizon
V.Magsaysay (GR No. 23399, May 31,1974).
What is perpetual lease?
Perpetual lease is 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. However,
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.
Note that In Jespajo Realty V. CA, 27 Sept. 2002, the SC upheld a lease contract, which
provides that the lease contract shall continue for an indefinite period provided that the
lessee is up-to-date in the payment of his monthly rentals for the contract is one with a
period subject to a resolutory condition.
References:
Divino V. Fabie de Marcos, G.R. No. L-13924,January 3, 1962
DizonV..Magsaysay ,GR No. 23399, May 31,1974
Jespajo Realty V. Court of Appeals,G.R. No. 113626, September 27, 2002
The New Civil Code
Lease v Sublease
What is the difference between assignment of lease and sublease?
As a general rule, the lessee cannot assign the lease without consent of the lessor
except if there is stipulation to the contrary. This is because the aassignment of this
nature constitutes a novation by substituting the person of the debtor so the creditor-
lessor must consent.
What is sublease?
Sublease is a separate and distinct contract of lease wherein the original lessee becomes
a sublessor to a sublessee. It is allowed unless expressly prohibited and the sublessee is
subsidiarily liable for any rent due. This is expressed in this article:
Art. 1651. Without prejudice to his obligation toward the sublessor, the sublessee is
bound to the lessor for all acts which refer to the use and preservation of the thing
leased in the manner stipulated between the lessor and the lessee. (1551)
What are the rights of Lessee to Sublease?
Unlike in assignment, a lessee may generally sublease the property in the absence of
express prohibition. This is supported by the following articles:
Art. 1649. The lessee cannot assign the lease without the consent of the lessor, unless
there is a stipulation to the contrary. (n)
Art. 1650. When in the contract of lease of things there is no express prohibition, the
lessee may sublet the thing leased, in whole
or in part, without prejudice to his responsibility for the performance of the contract
toward the lessor. (1550)
What are the rights of lessor if sublease is expressly prohibited but entered into by
Lessee?
a. Rescission and damages;

b. Damages only (Contract will be allowed to remain in force)
c. Ejectment
What are the instances when sublessee is liable to the lessor?
This is when all acts which refer to the use and preservation of the thing leased in the
manner stipulated between the lessor and the lessee. Also, the sublessee is subsidiarily
liable to the lessor for any rent due from the lessee. The sublessee shall not be
responsible beyond the amount of rent due from him. This is better explained in this
article:
Art. 1652. The sublessee is subsidiarily liable to the lessor for any rent due from the
lessee. However, the sublessee shall not be responsible beyond the amount of rent due
from him, in accordance with the terms of the sublease, at the time of the extrajudicial
demand by the lessor.
Payments of rent in advance by the sublessee shall be deemed not to have been.
References:
The New Civil Code
Purchase of Real Property
What are the rules in the purchase of the leased property?
This article of the New Civil Code may be followed in the purchase of a leased property:
Art. 1676. The purchaser of a piece of land which is under a lease that is not recorded in
the Registry of Property may terminate the lease, save when there is a stipulation to the
contrary in the contract of sale, or when the purchaser knows of the existence of the
lease.
If the buyer makes use of this right, the lessee may demand that he be allowed to gather
the fruits of the harvest which corresponds to the current agricultural year and that the
vendor indemnify him for damages suffered.
If the sale is fictitious, for the purpose of extinguishing the lease, the supposed vendee
cannot make use of the right granted in the first paragraph of this article. The sale is
presumed to be fictitious if at the time the supposed vendee demands the termination of
the lease, the sale is not recorded in the Registry of Property. (1571a)
*As a general rule, the purchaser of thing leased can terminate the lease except if the
lease is recorded in Registry of Property, there is stipulation in the contract of sale that
purchaser shall respect the lease, the purchaser knows the existence of the lease, the
sale is fictitious or the sale is made with right of repurchase.
References:
F.S. DivinaGracia Agro Commercial V. Court of Appeals, G.R. No. L-47350, April 21, 1981
The New Civil Code
Judicial Ejectment
What are the grounds for judicial ejectment?
The grounds for judicial ejectment is expressly laid down in this article of the New Civil
Code:
Art. 1673. The lessor may judicially eject the lessee for any of the following causes:
(1) When the period agreed upon, or that which is fixed for the duration of leases under
Articles 1682 and 1687, has expired;
(2) Lack of payment of the price stipulated;
(3) Violation of any of the conditions agreed upon in the contract;
(4) When the lessee devotes the thing leased to any use or service not stipulated which
causes the deterioration thereof; or if he does not observe the requirement in No. 2 of
Article 1657, as regards the use thereof.
*The demand of payment must be coupled with demand to vacate the premises.
Otherwise, the Unlawful Detainer case will not prosper. The ejectment of tenants of
agricultural lands is governed by special laws. A notice or demand to vacate does not
have to expressly use the word vacate as it suffices that the demand letter puts the
lessee or occupant on notice that if he does not pay the rentals or comply with the terms
of the lease contract, it should move out of the leased premises
The rules set down by Republic Act (RA) 9653 or the Rent Control Act of 2009 may also
be followed in the lease of rented condominium unit:
SEC. 9. Grounds for Judicial Ejectment. Ejectment shall be allowed on the following
grounds:
1. Assignment of lease or subleasing of residential units in whole or in part, including the

acceptance of boarders or bedspacers, without the written consent of the owner/lessor;
2. Arrears in payment of rent for a total of three (3) months: Provided, That in the case of
refusal by the lessor to accept payment of the rent 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 barangay chairman, or in a bank in the name of and
with notice to the lessor, within one (1) month after the refusal of the lessor to accept
payment.
The lessee shall thereafter deposit the rent within ten (10) days of every current month.
Failure to deposit the rent for three (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 or barangay
chairman and to the bank where deposit was made, shall be allowed to withdraw the
deposits;
3. Legitimate need of the owner/lessor to repossess his or her property for his or her own
use or for the use of any immediate member of his or her family as a residential unit:
Provided, however, That the lease for a definite period has expired: Provided, further,
that the lessor has given the lessee the formal notice three (3) months in advance of the
lessors intention to repossess the property and: Provided, finally, that the owner/lessor
is prohibited from leasing the residential unit or allowing its use by a third party for a
period of at least (1) year from the time of repossession;
4. 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: Provided, That after said repair, the
lessee ejected shall have the first preference to lease the same premises: Provided,
however, That the new rent shall be reasonably commensurate with the expenses
incurred for the repair of the said residential unit and: Provided, finally, That if the
residential unit is condemned or completely demolished, the lease of the new building
will no longer be subject to the aforementioned first preference rule in this subsection;
and
5. Expiration of the period of the lease contract.
References:
The New Civil Code
Maximo Roxas, et al. VS. IAC, CelestinoPernes ,et al. GR. No. 74279, January 20, 1988
Republic Act (RA) 9653 An Act Establishing Reforms in the Regulation of Rent of Certain
Residential Units, Providing the Mechanisms Therefor and for Other Purposes, July 14,
2009
LAW ON MORTGAGE
Real Estate Mortgage
March 6, 2016law on mortgage
What is a real estate mortgage?
Real estate mortgageis 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
What are the essential requisites of real estate mortgage?
1. Secures the fulfillment of a principal obligation;

2. Mortgagor, must be the absolute owner of the thing mortgaged; and
3. Mortgagor must have free disposal of their property, or be legally authorized for such
purpose.
The abovementioned enumeration is based on this article of the law:
Art. 2085. The following requisites are essential to the contracts of pledge and mortgage:
(1) That they be constituted to secure the fulfillment of a principal obligation;

(2) That the pledgor or mortgagor be the absolute owner of the thing pledged or
mortgaged;
(3) That 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.
Third persons who are not parties to the principal obligation may secure the latter by
pledging or mortgaging their own property. (1857)
Other special requisites include the following:
1. It can cover only immovable property and alienable real rights imposed upon
immovables;
2. It must appear in a public instrument;
3. Registration in the registry of property is necessary to bind third persons, but not for
the validity of the contract
When the principal obligation becomes due, the things in which was mortgaged may be
alienated for the payment to the creditor. This is supported by this article:
Art. 2087. It is also of the essence of these contracts that when the principal obligation
becomes due, the things in which the pledge or mortgage consists may be alienated for
the payment to the creditor. (1858)
Mortgagor retains ownership of the thing given as a security.
What are the Kinds of real estate mortgage?
1. Voluntary- agreed to by the parties or constituted by the will of the owner of the
property on which it is created
2. Legal- one required by law
3. Equitable- one which, although lacking the formalities of a mortgage, shows the
intention of the parties to make the property a security for a debt
What is the rule for alien mortgagors?
1. An alien may accept mortgage but he is prohibited from taking possession of the
mortgaged property during the existence of the mortgage and even after default of the
mortgage except for the purpose of :
Foreclosure of mortgage
Receivership for a period of 5 years from the actual possession
Participating in the bidding or taking part in any sale of the property mortgaged in
cases of foreclosure
The mortgagee has the right to rely on what appears on the face of the certificate and in
the absence of suspicion the mortgagee has no obligation to look beyond thereon. If the
title bears the name of the real owner and the mortgagee was constituted by an
impostor without consent of the owner then the mortgage is null and void.
References:
Guillermo Adriano v. Romulo Pangilinan, GR 137471, January 16, 2002
Paras, E. (2013). Civil Code Volume V (Special Contracts). Quezon City: Rex Printing
Company, Inc.
The New Civil Code
Pactum Commissorium
Prohibition against pactumcommissorium?
The stipulation whereby the thing used as security shall automatically become the
property of the creditor or there is the automatic transfer of ownership in the event of
non-payment of the debt in due time.
As a general rule, PactumCommissorium is forbidden by law and is declared null and void
except the pledgee may appropriate the thing pledged if after the first and second
auctions, the thing is not sold as required by this article;
Art. 2112. The creditor to whom the credit has not been satisfied in due time, may
proceed before a Notary Public to the sale of the thing pledged. This sale shall be made
at a public auction, and with notification to the debtor and the owner of the thing
pledged in a proper case, stating the amount for which the public sale is to be held. If at
the first auction the thing is not sold, a second one with the same formalities shall be
held; and if at the second auction there is no sale either, the creditor may appropriate
the thing pledged. In this case he shall be obliged to give an acquittance for his entire
claim. (1872a)
What is pacta non aliendo?
Pacta non aliendo refers to a stipulation in a mortgage which prohibits the mortgagor
from alienating the mortgaged property subject to the mortgage within the mortgage
period.
References:
Company, Inc.
Perez v. Cortez, 35 Phil. 211
The New Civil Code
Foreclosure
What is foreclosure?
Foreclosure is the remedy available to the mortgagee by which he subjects the

mortgaged property to the satisfaction of the obligation, to secure that for which the
mortgage was given. It may mean the usual methods including the sale of the goods at a
public auction.The right to foreclose a mortgage prescribes in ten (10) years.
What are the kids of foreclosure?
1. ORDINARY- an ordinary execution sale is governed by the pertinent provisions of Rule

39 of the Rules of Court
2. JUDICIAL ordinary action for foreclosure under Rule 68 of the Rules of Court.
3. EXTRAJUDICIAL- when mortgagee is given a special power of attorney to sell the

mortgaged property by public auction, under Act No. 3135
What is Act No. 3135 on Extrajudicial Foreclosure of Real Property all about?
The law covers only real estate mortgages. It is intended merely to regulate the
extrajudicial sale of the property mortgaged.The authority to sell is not extinguished by
the death of the mortgagor/mortgagee as it is an essential and inseparable part of a
bilateral agreement. No sale can be legally made outside the province in which the
property sold is situated; and in case the place within said province in which the sale is
to be made is the subject of stipulation, such sale shall be made in the said place in the
municipality building of the municipality in which the property or part thereof is situated
What is the procedure for Extrajudicial Foreclosure of both real estate mortgage under
Act No. 3135 and Chattel Mortgage under Act No. 1508?
1. Filing of application before the Executive Judge through the Clerk of Court;
2. Clerk of Court will examine whether the requirement 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 three (3) public places of the municipality or city where the property is situated,
and where the same is more than P400.00, that such notice has been published once a
week for at least three (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 pursuant to

Section 1, PD No. 1079;
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 two (2) participating bidders,
otherwise the sale shall be postponed to another date. If on the new date there shall not
be at least two (2) bidders, the sale shall then proceed. The names of the bidders shall
be reported to the Sheriff or the Notary Public, who conducted the sale to the Clerk of
Court before the issuance of the certificate of sale
References:
Act No. 3135, An Act to Regulate the Sale of Property Under Special Powers Inserted in
or Annexed to Real-Estate Mortgages
IFC Service Leasing and Acceptance Corporation v. Venancio Nera, L-21720, Jan. 30, 1967
Company, Inc.
C.N. Hodges, et al. v. Jose Manuel Lezema, et al., L-20630, Aug. 31, 1965
The New Civil Code
Redemption
What is redemption?
Redemption is the transaction by which the mortgagor reacquired 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.
What are the kinds of redemption?
1. Equity of Redemption is theright of mortgagor to redeem the mortgaged property after

his default in the performance of the conditions of the mortgage within the 90-day period
from the date of the service of the order of foreclosure or even thereafter but before the
confirmation of the sale. It applies to judicial foreclosure of real mortgage and chattel
mortgage foreclosure.
2. Right of Redemption is the right of mortgagor to redeem the mortgaged property

within one year from the date of registration of the certificate of sale. It applies only to
extrajudicial foreclosure of real mortgage. It is best supported by this article:
Art. 1606. The right referred to in Article 1601, in the absence of an express agreement,
shall last four years from the date of the contract.
Should there be an agreement, the period cannot exceed ten years.
However, the vendor may still exercise the right to repurchase within thirty days from
the time final judgment was rendered in a civil action on the basis that the contract was
a true sale with right to repurchase. (1508a)
What are the Periods of Redemption?
The following are the periods of redemption for the following:
a) Natural person has one year from registration of the certificate of sale with Registry of
Deeds
b) Juridical personhas thesame rule as natural person
c) Juridical person(Mortgagee is a bank) isthree months after foreclosure or before
registration of certificate of foreclosure whichever is earlier
d) Extrajudicial, the provisions of Act No. 3135 applies
What is the amount of the Redemption Price?
The following rules govern:
Mortgage 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
Mortgagee is a bank (General Banking Law 2000)

a) Amount due under the mortgage deed
b) Interest
c) Cost and expenses
What is the redemption period in mortgage for homestead or free patent?
1. Mortgagee is a rural bank under RA 720 as amended-2 years from registration of the
sheriffs certificate of sale (titles or untitled); if the mortgagor fails to redeem he may still
repurchase from the expiration of 2 years pursuant to Sec 119 of Public Land Act within 5
years
2. If land is mortgaged to parties other than rural banks, the mortgagor may redeem the
property within 1 years and if he fails he or his heirs may repurchase from the expiration
of 2 years from the same law within 5 years.
References:
Act No. 3135, An Act to Regulate the Sale of PropertyUnder Special Powers Inserted in or
Annexed to Real-Estate Mortgages
Hi-Yield Realty, Inc. v. CA, etc. GR 138978, Sep. 12, 2002
Company, Inc.
The New Civil Code
MARITAL PROPERTY RELATIONS
Property Relations between Husband and Wife
March 7, 2016marital property relations
In what order does the property relations between husband and wife
governed?
Art. 74. The property relationship between husband and wife shall be governed in the
following order:
(1) By marriage settlements executed before the marriage;
(2) By the provisions of this Code; and
(3) By the local custom. (118)
*Local custom may mean any rule of conduct formed by repetition of acts uniformly
observed as a social rule, legally binding and obligatory. It must be proved as a fact to
be binding.
What is marriage settlement?
Marriage settlement is defined as a contract entered into by persons who are about to be
married for the purpose of fixing the condition of the conjugal partnership with regard to
present and future property.The Marriage Settlement must follow certain conditions such
as it must be in writing form, signed by the parties and executed before the celebration
of the marriage as required by this provision of the Family Code or EO. 209.
Art. 77. The marriage settlements and any modification thereof shall be in writing,
signed by the parties and executed before the celebration of the marriage. They shall
not prejudice third persons unless they are registered in the local civil registry where the
marriage contract is recorded as well as in the proper registries of properties. (122a)
* To be enforceable against third persons it must be registered in the local civil registry
where the marriage contract is recorded as well as the registry of properties.
What are the systems that the future spouses may agree in the marriage settlement?
The regime of ABSOLUTE COMMUNITY OF PROPERTY
The CONJUGAL PARTNERSHIP OF GAINS
COMPLETE SEPARATION OF PROPERTY
Art. 75. The future spouses may, in the marriage settlements, agree upon the regime of
absolute community, conjugal partnership of gains, complete separation of property, or
any other regime. In the absence of a marriage settlement, or when the regime agreed
upon is void, the system of absolute community of property as established in this Code
shall govern. (119a)
*The spouses may stipulate or agree on any arrangement so long as it is not contrary to
law. Spouses who were married after the effectivity of the Family Code (August 03,
1988) without any pre-nuptial agreement shall be governed by the Absolute Community
of Property.
References:
Family Code of the Philippines [Executive Order No. 209]
Sta. Maria, M. (2010). Persons and Family Relations Law. Quezon City: Rex Printing
Company, Inc.
Absolute Community Property
What is the System of Absolute Community of Property (ACP)?
In ACP, the spouses are considered co-owners of all property brought into the marriage,
as well as those acquired during the marriage, which are not otherwise excluded. The
commencement of this regime is laid down in this article:
Art. 88. The absolute community of property between spouses shall commence at the
precise moment that the marriage is celebrated. Any stipulation, express or implied, for
the commencement of the community regime at any other time shall be void. (145a)
What are included in the ACP?
Community property shall consist of all the property owned by the spouses at the time of
the celebration of the marriage or acquired thereafter. The inclusions of ACP is further
enumerated and explained in the following articles:
Art. 91. Unless otherwise provided in this Chapter or in the marriage settlements, the
community property shall consist of all the property owned by the spouses at the time of
the celebration of the marriage or acquired thereafter. (197a)
Art. 92. The following shall be excluded from the community property:
(1) Property acquired during the marriage by gratuitous title by either spouse, and the
fruits as well as the income thereof, if any, unless it is expressly provided by the donor,
testator or grantor that they shall form part of the community property;
(2) Property for personal and exclusive use of either spouse. However, jewelry shall form
part of the community property;
(3) Property acquired before the marriage by either spouse who has legitimate
descendants by a former marriage, and the fruits as well as the income, if any, of such
property. (201a)
Art. 93. Property acquired during the marriage is presumed to belong to the community,
unless it is proved that it is one of those excluded therefrom. (160)
What are excluded in the ACP?
Property acquired during the marriage by gratuitous title by either spouse, and the fruits
as well as the income thereof, if any, unless it is expressly provided by the donor,
testator or grantor that they shall form part of the community property;
Property for personal and exclusive use of either spouse. However, jewelry shall form
part of the community property;
Property acquired before the marriage by either spouse who has legitimate descendants
by a former marriage, and the fruits as well as the income, if any, of such property.
What are the obligations chargeable to the community of property?
Support;
Debts and Obligations (if contracted by both spouses and if redounded to the benefit of
the family);
Taxes and Expenses;
Expenses to enable spouse to commence or complete a professional or vocational

course, or other activity for self-improvement;
Value of what is donated or promised by both spouses in favor of common legitimate

children for the exclusive purpose of commencing or completing a professional or
vocational course;
Expenses of litigation between the spouses;

In case only of insufficiency or absence of exclusive property of the debtor-spouse, which
shall be considered as advances to be deducted from the share of the debtor-spouse
upon liquidation of the community;
The abovementioned enumeration is supported by these provisions:
Art. 94. The absolute community of property shall be liable for:
The support of the spouses, their common children, and legitimate children of either
spouse; however, the support of illegitimate children shall be governed by the provisions
of this Code on Support;
All debts and obligations contracted during the marriage by the designated
administrator-spouse for the benefit of the community, or by both spouses, or by one
spouse with the consent of the other;
Debts and obligations contracted by either spouse without the consent of the other to
the extent that the family may have been benefited;
All taxes, liens, charges and expenses, including major or minor repairs, upon the
community property;
All taxes and expenses for mere preservation made during marriage upon the separate
property of either spouse used by the family;
Expenses to enable either spouse to commence or complete a professional or vocational

course, or other activity for self-improvement;
Ante-nuptial debts of either spouse insofar as they have redounded to the benefit of the
family;
The value of what is donated or promised by both spouses in favor of their common
legitimate children for the exclusive purpose of commencing or completing a
professional or vocational course or other activity for self-improvement;
Ante-nuptial debts of either spouse other than those falling under paragraph (7) of this
Article, the support of illegitimate children of either spouse, and liabilities incurred by
either spouse by reason of a crime or a quasi-delict, in case of absence or insufficiency
of the exclusive property of the debtor-spouse, the payment of which shall be considered
as advances to be deducted from the share of the debtor-spouse upon liquidation of the
community; and
(10) Expenses of litigation between the spouses unless the suit is found to be
groundless.
If the community property is insufficient to cover the foregoing liabilities, except those
falling under paragraph (9), the spouses shall be solidarily liable for the unpaid balance
with their separate properties. (161a, 162a, 163a, 202a-205a)
Art. 95. Whatever may be lost during the marriage in any game of chance, betting,
sweepstakes, or any other kind of gambling, whether permitted or prohibited by law,
shall be borne by the loser and shall not be charged to the community but any winnings
therefrom shall form part of the community property. (164a)
What is the manner of administration of ACP?
The manner administration is expressly provided in these articles:
Art. 96. The administration and enjoyment of the community property shall belong to
both spouses jointly. In case of disagreement, the husbands decision shall prevail,
subject to recourse to the court by the wife for proper remedy, which must be availed of
within five years from the date of the contract implementing such decision.
Xxx
Art. 97. Either spouse may dispose by will of his or her interest in the community
property. (n)
Art. 98. Neither spouse may donate any community property without the consent of the
other. However, either spouse may, without the consent of the other, make moderate
donations from the community property for charity or on occasions of family rejoicing or
family distress. (n)
When is sole administration allowed?
The following are the instances when sole administration may be allowed:
One spouse is incapacitated or otherwise unable to participate in the administration of

common properties;
A spouse abandons the other (there must a court order);
During the pendency of a legal separation case (there must be a court order);
Art. 96. X x x In the event that one spouse is incapacitated or otherwise unable to
participate in the administration of the common properties, the other spouse may
assume sole powers of administration. These powers do not include disposition or
encumbrance without authority of the court or the written consent of the other spouse.
In the absence of such authority or consent, the disposition or encumbrance shall be
void. However, the transaction shall be construed as a continuing offer on the part of the
consenting spouse and the third person, and may be perfected as a binding contract
upon the acceptance by the other spouse or authorization by the court before the offer
is withdrawn by either or both offerors. (206a)
*The power to administer do not include the powers of disposition or encumbrance which
must have the authority of the court or written consent of the spouse. In the absence of
such authority/consent, the disposition or encumbrance shall be void. Any transaction
entered by the wife without the court or the husbands authority is unenforceable in
accordance with Article 1317(32) of the Civil Code. Being an unenforceable contract, the
Contract to Sell is susceptible to ratification. No waiver of rights, interests, shares and
effects of the absolute community during the marriage shall be allowed. All property
acquired during the marriage, whether the acquisition appears to have been made,
contracted, or registered in the name of one or both spouses, it is presumed to be
conjugal unless the contrary is proved.
How is Absolute Community of Property Regime dissolved?
It can be dissolved by the instances laid down in this article:
Art. 99. The absolute community terminates:
(1) Upon the death of either spouse;
(2) When there is a decree of legal separation;
(3) When the marriage is annulled or declared void; or
(4) In case of judicial separation of property during the marriage under Articles 134 to
138. (175a)
References:
Matthews V. Taylor, GR No. 164584, June 22, 2009
Company, Inc.
Conjugal Partnership of Gains
What is the Conjugal Partnership of Gains (CPG)?
The Conjugal Partnership of Gains applies if agreed upon in the marriage settlement.
Under this regime, the husband and the wife place in a common fund the proceeds,
products, fruits and income from their separate properties and those acquired by either
or both spouses through their effort or by chance, and upon dissolution of the marriage
or of the partnership, the net gains or benefits obtained by either or both spouses shall
be divided equally between them, unless otherwise agreed in the marriage settlements.
This regime is thoroughly explained in this article:
Art. 106. Under the regime of conjugal partnership of gains, the husband and wife place
in a common fund the proceeds, products, fruits and income from their separate
properties and those acquired by either or both spouses through their efforts or by
chance, and, upon dissolution of the marriage or of the partnership, the net gains or
benefits obtained by either or both spouses shall be divided equally between them,
unless otherwise agreed in the marriage settlements. (142a)
What are included in the Conjugal Partnership of Gains (CPG)?
Properties acquired by onerous title during the marriage at the expense of the common
fund.
Properties obtained during the marriage from the labor, industry, work or profession of
either or both spouses.
Fruits from conjugal properties and net fruits from separate properties
Share in hidden treasures
Acquired thru chance
Livestock
For further elaboration, the following articles of the Family Code explains that:
Art. 116. All property acquired during the marriage, whether the acquisition appears to
have been made, contracted or registered in the name of one or both spouses, is
presumed to be conjugal unless the contrary is proved. (160a)
Art. 117. The following are conjugal partnership properties:

Those acquired by onerous title during the marriage at the expense of the common fund,
whether the acquisition be for the partnership, or for only one of the spouses;
Those obtained from the labor, industry, work or profession of either or both of the
spouses;
The fruits, natural, industrial, or civil, due or received during the marriage from the
common property, as well as the net fruits from the exclusive property of each spouse;
The share of either spouse in the hidden treasure which the law awards to the finder or
owner of the property where the treasure is found;
Those acquired through occupation such as fishing o
Regime of Separation of Property
What is the Regime of Separation of Property?
The Regime of Separation of Property governs that each spouse shall own, dispose of,
possess, administer and enjoy his or her own separate estate, without need of consent of
the other. In this regime, each spouse shall belong all earnings from his/her profession,
business or industry and all fruits, natural, industrial or civil, due or received during the
marriage from his or her separate property.
Art. 143. Should the future spouses agree in the marriage settlements that their
property relations during marriage shall be governed by the regime of separation of
property, the provisions of this Chapter shall be suppletory. (212a)
What are the obligations chargeable to separate property?
Support of illegitimate children of either spouse;
Liabilities by reason of crime or quasi-delict;
Expenses of litigation if found to be groundless;
Losses in any game of chance;
Debts contracted during the marriage (contracted without the consent of one spouse
and which did not benefit the family);
Ante-nuptial debt which did not benefit the family;

Taxes incurred on a separate property which is not used by the family;
Expenses incurred during the marriage on a separate property ifnot for its preservation;
and the property is not used by the family.
The following provisions of the Family Code shall also govern the separate properties of
each spouse:
Art. 144. Separation of property may refer to present or future property or both. It may
be total or partial. In the latter case, the property not agreed upon as separate shall
pertain to the absolute community. (213a)
Art. 145. Each spouse shall own, dispose of, possess, administer and enjoy his or her
own separate estate, without need of the consent of the other. To each spouse shall
belong all earnings from his or her profession, business or industry and all fruits, natural,
industrial or civil, due or received during the marriage from his or her separate property.
(214a)
Art. 146. Both spouses shall bear the family expenses in proportion to their income, or, in
case of insufficiency or default thereof, to the current market value of their separate
properties.The liabilities of the spouses to creditors for family expenses shall, however,
be solidary. (215a)
References:
Company, Inc.
Property Regime of Unions without Marriage
What is the property regime of unions without marriage?
The following provisions of the New Civil Code shall apply in these respective cases:
Art. 147. The conjugal partnership shall be governed by the rules on the contract of
partnership in all that is not in conflict with what is expressly determined in this Chapter.
(1395)
*This applies when a man and a woman, suffering no legal impediment to marry each
other, so exclusively live together as husband and wife under a void marriage or without
the benefit of marriage. Wages and salaries earned by either party during the
cohabitation shall be owned by the parties in equal shares and will be divided equally
between them. This is true even if only one party earned the wages and the other did
not contribute thereto.
Art. 148. The following shall be the exclusive property of each spouse:
(1) That which is brought to the marriage as his or her own;
(2) That which each acquires, during the marriage, by lucrative title;
(3) That which is acquired by right of redemption or by exchange with other property
belonging to only one of the spouses;
(4) That which is purchased with exclusive money of the wife or of the husband. (1396)
*This applies in cases where the parties in unions are incapacitated to marry each other.
It refers to the property regime of bigamous marriages, adulterous relationships in state
of concubinage, relationships where both man and woman are married to other persons.
Wages and salaries earned by each party belong to him or her exclusively. Only property
acquired by both of the parties thru actual joint contribution of money, property, or
industry shall belong to the co-ownership, in proportion to their respective
contributions.
References:
Company, Inc.
Separation of Property of Spouses during Marriage
How is separation of property of spouses during the marriage effected?

The system of Complete Separation of Property will only govern if there is an express
declaration in the marriage settlement. Separation of property may also be ordered by
the court upon finality of decree of legal separation, joint petition of the spouses or
petition for Judicial Separation due to a sufficient cause. The spouse if prior to marriage
did not stipulate in any written marital agreement their property relationship through
separation of property, they cannot alter this relationship after the marriage without
mandatory judicial approval. The following may be the cause:
Art. 135. Any of the following shall be considered sufficient cause for judicial separation
of property:
That the spouse of the petitioner has been sentenced to a penalty which carries with it
civil interdiction;
That the spouse of the petitioner has been judicially declared an absentee;
That loss of parental authority of the spouse of petitioner has been decreed by the court;
That the spouse of the petitioner has abandoned the latter or failed to comply with his or
her obligations to the family as provided for in Article 101;
That the spouse granted the power of administration in the marriage settlements has
abused that power; and
That at the time of the petition, the spouses have been separated in fact for at least one
year and reconciliation is highly improbable.
In the cases provided for in Numbers (1), (2) and (3), the presentation of the final
judgment against the guilty or absent spouse shall be enough basis for the grant of the
decree of judicial separation of property. (191a)
What is separation-in-fact orseparation-de-facto?
Separation in fact is the cessation of the cohabitation or common life of the husband and
wife under the same roof but are still providing for their mutual duty of support and their
duty to support and maintain the children. The separation-in-fact between husband and
wife shall not affect the regime of absolute community or conjugal partnership, if without
judicial approval.
References:
Company, Inc.
FUNDAMENTALS OF SUCCESSION
Succession
March 15, 2016fundamentals of succession
What is succession?
Succession is the placing of one person in the place of another and defined as the
transmission of rights and properties from one person to another. In this sense,
succession may be inter vivos or mortis causa, depending upon whether the transfer is
effective during the lifetime or inter vivos of the giver, or after his death or mortiscausa.
The New Civil Code defined it as:
Art. 774. Succession is a mode of acquisition by virtue of which the property, rights and
obligations to the extent of the value of the inheritance, of a person are transmitted
through his death to another or others either by his will or by operation of law. (n)
What are the elements of succession?
Decedent who is the person who died and whose property is transmitted through
succession. It is the general term applied to the person whose property is transmitted
through succession, whether or not he left a will. The testator is the decedent whose
properties are to be transferred to his successor through a written will. A transfer of
property from a decedent without a will is called intestate. The law defined it as:
Art. 775. In this Title, decedent is the general term applied to the person whose
property is transmitted through succession, whether or not he left a will. If he left a will,
he is also called the testator. (n)
Successor or the heir or person to whom the property or property rights is to be

transferred. They may also be called as heirs, devisees or legatees which is defined by
law as:
Art. 782. An heir is a person called to the succession either by the provision of a will or
by operation of law.
Devisees and legatees are persons to whom gifts of real and personal property are
respectively given by virtue of a will. (n)
Death of the decedent which causes the rights to the succession are transmitted from
the moment of the death of the decedent.
Inheritance refers to the properties or property rights of a decedent, which is the subject
matter of succession. Also known as Inheritance.
What are the kinds of successors?
Compulsory heirs are those for whom the legitime is reserved by law, and who succeed
whether the testator likes it or not. They cannot be deprived by the testator of their
legitime except by disinheritance properly effected.
They may be primary or those who have precedence over and exclude other Compulsory
Heirs as in the case of Legitimate Children and Descendants (LCD); They may also
be secondary or those who succeed only in the absence of the Primary Compulsory Heirs
as in the cases of Legitimate Parents and Ascendants (LPA); Lastly, they may also
be concurring o those who succeed together with the Primary or Secondary Heirs as in
the cases of Illegitimate Children and Descendants (ICD)Surviving Spouse (SS)
Voluntary heirs are those other than the compulsory heirs. The devisee is the person to
whom a gift of real property is given by virtue of a will while a legatee is the person to
whom a gift of personal property (bequest) is given by virtue of a will.
References:
Paras, E. (1999). Civil Code III (Succession). Quezon City: Rex Printing Company, Inc.
Viardo v. Belmonte, et al. L-14122, Aug. 21, 1962
Settlement of Estate
How may an estate be settled?
The estate may be settled judicially or through the aid of courts or extra-judicially or only
among the parties concerned.
What are the requirements for a valid extra-judicial settlement of estate?
The decedent left no will.
The decedent left no debts, or if there were debts left, all had been paid.
The heirs are all of legal age, or if they are minors, the latter are represented by their
judicial guardian or legal representatives;
The partition was made by means of a public instrument or affidavit duly filed with the
Register of Deeds.
(The affidavit must be executed by the heirs and must contain the necessary allegations
to support a valid extrajudicial settlement of estate. The affidavit shall be published in a
newspaper of general circulation, once a week for three (3) consecutive weeks.)
Who are responsible for the collation of the estate?
Executor or the person named in the will by the testator to carry out its contents.
Administrator or the person appointed by the court to administer and distribute the
estate of the decedent if there is no will, or if no executor named in the will, or if the
person named in the will does not act or execute its contents.
References:
Mercado v. Santos, 66 Phil. 215
Testamentary Succession
What is testamentary succession?
Testamentary succession is defined in this provision:
Art. 779. Testamentary succession is that which results from the designation of an heir,
made in a will executed in the form prescribed by law. (n)
What are the rules in testamentary succession?

Any person who is 18 years old and above of sound mind may make a valid last will and
testament.
What is a will?
A will is an act whereby a person is permitted, with the formalities prescribed by law, to
control to a certain degree the disposition of his estate upon his death. It may either be
a holographic will which is one entirely written, dated, and signed by the testator himself
and is subject to no formalities or a notarial will which is a will other than a Holographic
Will that conform to all the requirements of law.
Holographic Will is one entirely written, dated, and signed by the testator himself and is
subject to no formalities.
Notarial Will is a will other than a Holographic Will that conform to all the requirements of
law.
What is a codicil?
A codicil is a supplement or an addition to a will, made after the execution of a will and
annexed to the will and to be taken as part thereof, by any disposition made in the
original will is explained, added to, or altered.
References:
Johnny S. Rabadilla v. CA and Maria Marlena Coscoluella y BellezaVillacarlos, GR 113725,

June 29, 2000
Disinheritance
What is disinheritance?
Disinheritance isan act by which an owner of an estate deprives a person who would
otherwise be his heir, or the right to inherit it. It can be effected only through a will
wherein the legal cause shall be specified. The cause must be one authorized or
enumerated by law. The burden of proving the truth of the cause of the disinheritance
shall rest upon the heirs of the testator, if the disinherited heir should deny it. Further,
the New Civil Code has made mention of disinheritance in this article:
Art. 915. A compulsory heir may, in consequence of disinheritance, be deprived of his

legitime, for causes expressly stated by law. (848a)
What are the grounds for disinheritance of a descendant?
The grounds for disinheritance is expressly stated in this article:
Art. 919. The following shall be sufficient causes for the disinheritance of children and
descendants, legitimate as well as illegitimate:
(1) When a child or descendant has been found guilty of an attempt against the life of
the testator, his or her spouse, descendants, or ascendants;
*There should be a final judgment of conviction by a court of justice of the guilt of the
descendant which however, may come before or after the execution of the will and the
guilt must be established.
(2) When a child or descendant 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;
*The act of accusing as understood in this paragraph may include the institution of a
criminal action, or even the mere statement of the heir as a witness in a case against the
testator, a statement where said heir affirms or corroborates the accusation. As a matter
of fact, if the heir-witness is in possession of facts which might result in the testators
acquittal and the heir-witness deliberately fails to reveal said facts, there is also an
accusation.
(3) When a child or descendant has been convicted of adultery or concubinage with the
spouse of the testator;
*It is essential that there must be a final judgment of conviction either in the adultery
caseor in the concubinage case before this Article can be applied.
(4) When a child or descendant by fraud, violence, intimidation, or undue influence

causes the testator to make a will or to change one already made;
*No judicial demand is needed for the law does not require this. Note that when a judicial
pronouncement is needed, the law says so.
(5) A refusal without justifiable cause to support the parent or ascendant who disinherits
such child or descendant;
(6) Maltreatment of the testator by word or deed, by the child or descendant;
*Note that maltreatment by an ascendant of a descendant does not constitute a ground

for the descendant to disinherit the ascendant, for while it may be an abuse, it is
generally in the exercise of a power. The reverse is however repugnant to natural law,
and is therefore a ground for disinheritance.
(7) When a child or descendant leads a dishonorable or disgraceful life;
*There need not be final judgment of conviction. The essence of the cause is that
anything that brings dishonor or disgrace to the family of the testator merits correction
in the form of disinheritance. However, a single act is not ordinarily sufficient, for
leading a life implies continuity.
(8) Conviction of a crime which carries with it the penalty of civil interdiction. (756,
853,674a)
What are the grounds for disinheritance of an ascendant?
Art. 920. The following shall be sufficient causes for the disinheritance of parents or
ascendants, whether legitimate or illegitimate:
(1) When the parents have abandoned their children or induced their daughters to live a
corrupt or immoral life, or attempted against their virtue;
*Abandonment is indeed physical, moral, social or educational; hence, it does not have
the technical signification of abandonment under the Rev. Penal Code. Moreover,
whether intentional or not, the negligent and careless failure to perform the duties of
parenthood is a significant element of abandonment.
(2) When the parent or ascendant has been convicted of an attempt against the life of
the testator, his or her spouse, descendants, or ascendants;
(3) When the parent or ascendant has accused the testator of a crime for which the law
prescribes imprisonment for six years or more, if the accusation has been found to be
false;
(4) When the parent or ascendant has been convicted of adultery or concubinage with
the spouse of the testator;
(5) When the parent or ascendant by fraud, violence, intimidation, or undue influence
causes the testator to make a will or to change one already made;
(6) The loss of parental authority for causes specified in this Code;
(7) The refusal to support the children or descendants without justifiable cause;
(8) An attempt by one of the parents against the life of the other, unless there has been
a reconciliation between them. (756, 854, 674a)
*Note well that this paragraph does not apply when the attempt is against the life of a
person other than the other parent. When a father for instance attempts to kill his own
father-in-law, the son of the offending father cannot disinherit him on this ground.
What are the grounds for disinheritance of a spouse?
Art. 921. The following shall be sufficient causes for disinheriting a spouse:
(1) When the spouse has been convicted of an attempt against the life of the testator,
his or her descendants, or ascendants;
(2) When the spouse has accused the testator of a crime for which the law prescribes
imprisonment of six years or more, and the accusation has been found to be false;
(3) When the spouse by fraud, violence, intimidation, or undue influence cause the
testator to make a will or to change one already made;
(4) When the spouse has given cause for legal separation;
(5) When the spouse has given grounds for the loss of parental authority;
(6) Unjustifiable refusal to support the children or the other spouse. (756, 855, 674a)
References:
Intestate Succession
What is legal or intestate succession?
Legal or intestate succession is a legal succession because it takes effect through the
operation of law because there is no decedents last will and testament to dispose the
estate. A person who died without leaving a will is said to have died intestate.
When is there intestate succession?
There is intestate succession when there is no written will, the will is void, the will lost its
validity or no one is named as successor in the will.
What is mixed succession?
The law defined it as:
Art. 780. Mixed succession is that effected partly by will and partly by operation of law.
(n)
*A testator made a will but omitted some properties, rights or has acquired some
properties after the execution of his last will and testament.
References:
http://realestatelawyer.com.ph

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FUNDAMENTALS OF PROPERTY OWNERSHIP

Fundamentals of Property Ownership

March 4, 2016fundamentals of property ownership

March 4, 2016fundamentals of property ownership

What are real properties according to the law?

Art. 415. The following are immovable property:

(5) Machinery, receptacles, instruments or implements intended by the owner of the

*The constructions mentioned must be intended by the owner to be permanently a part

(7) Fertilizer actually used on a piece of land;

*While these resources remain unsevered, they are considered immovable.

Immovable by incorporation, or those which are attached to an immovable in a fixed

Immovable by analogy, or those which are considered immovable by operation of law

The New Civil Code of the Philippines

March 4, 2016fundamentals of property ownership

By provision of the law, if real property is considered as personalty by special provision of

What are personal properties according to the law?

Art. 416. The following things are deemed to be personal property:

Art. 417. The following are also considered as personal property:

What are the other classification of personal property?

By intention or as to their possibility of being substituted by another property having the

The New Civil Code of the Philippines

March 4, 2016fundamentals of property ownership

CLASSIFICATION OF PROPERTIES ACCORDING TO WHOM IT BELONGS

Article 419. Property is either of public dominion or of private ownership.

What are properties of public dominion?

What are the kinds of properties of public dominion?

Examples of public dominion: 1987 Constitution: agricultural, forest, timber, national

What are the characteristics of properties of public domain?

It is beyond the commerce of man

It cannot be acquired by prescription

It cannot be levied upon by execution nor can be attached.

What are properties of private ownership?

Article 425. Property of private ownership, besides the patrimonial property of

Public dominion cannot be acquired by prescription, even by city or municipality.

How are lands of public domain reclassified?

Article XII, Section 3, of the 1987 Constitution states:

Sec 3. x x x Alienable lands of the public domain shall be limited to agricultural

What lands may not be declared open to disposition or concession?

Those which have been reserved for public or quasi-public uses;

Those which have been appropriated by the government;

What are the classification of lands under the Constitution?

Classification under 1935 Constitution- Agricultural, forest or timber

Classification under 1973 Constitution- Agricultural, industrial, commercial, residential,

All others under the 1987 Constitution are patrimonial property

No public land can be acquired except by a grant from the State

1987 Constitution of the Philippines

The New Civil Code of the Philippines

Who can own lands in the Philippines?

March 4, 2016fundamentals of property ownership

Property is acquired prior to the effectivity of the 1935 Constitution;

Acquisition by hereditary succession being the legal heir

SECTION 7. Save in cases of hereditary succession, no private lands shall be

Who are natural and natural born citizens?

Natural citizens of the Philippines are:

Natural born citizens are those:

Born in the Philippines

Naturalized under Naturalization Law

Those who acquired dual citizenship

Those who acquired derivative (origin or descent) citizenship

Area allowed (maximum)

If the purpose is for residence:

1,000 square meters of urban land

1 hectare of rural land