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CIVIL LAW

TABLE OF CONTENTS 6.   Domicile and Residence of Persons ... 35  


  Family Code ............................................. 36  
GENERAL PRINCIPLES ................................ 1   1.   Effect and Retroactivity ....................... 36  
I.   General principles .......................................... 2   2.   Repeal and Amendment ..................... 36  
  Effect and Application of Laws ................. 2     Marriage and Personal Relationship
1.   When Laws Take Effect ......................... 2   Between Spouses ............................................. 37  
2.   Ignorance of the Law............................. 2   1.   Concept of Marriage............................ 37  
3.   Retroactivity of Laws ............................. 2   2.   Agreements Prior to Marriage ............ 37  
4.   Mandatory or Prohibitory Laws............. 2   3.   Requisites ............................................ 37  
5.   Waiver of Rights .................................... 2   4.   Law Governing Validity of Marriages
6.   Repeal of Laws ...................................... 3   Abroad .......................................................... 41  
7.   Judicial Decisions .................................. 3   5.   Common-Law Marriages .................... 42  
8.   Duty to Render Judgment ..................... 3   6.   Void and Voidable Marriages .............. 42  
9.   Presumption and Applicability of 7.   The Law on Separation of the Spouses
Custom ........................................................... 3   53  
10.   Legal Periods .................................... 4   8.   Legal Separation ................................. 53  
11.   Applicability of Penal Laws ................... 4     Rights and Obligations of Spouses ......... 58  
12.   Binding Effect ................................... 4   1.   Live Together....................................... 58  
II.   PRIVATE INTERNATIONAL LAW .................. 6   2.   Family Domicile .................................. 58  
  Introduction ............................................... 6   3.   Support................................................ 58  
1.   Basis ...................................................... 6   4.   Management of Family Life ................ 58  
2.   Definition ............................................... 6   5.   Effect of Neglect of Duty ..................... 58  
3.   Scope ..................................................... 6   6.   Exercise of Profession ......................... 58  
4.   Sources .................................................. 6   7.   Use of Surname ................................... 59  
  Jurisdiction and Choice of Law .................. 7     Property Relations of Spouses ................ 59  
1.   Jurisdiction ............................................ 7   1.   Marriage Settlements ......................... 59  
2.   Choice of Law ........................................ 8   2.   Donations by Reason of Marriage
3.   The Problem of Characterization .......... 9   (Donations Propter Nuptias) ........................ 60  
4.   The Problem of Renvoi ........................ 10   3.   Property Regimes – Absolute
5.   Notice and Proof of Foreign Law ........ 10   Community of Property and Conjugal
  Personal Law ............................................ 12   Partnership of Gains ..................................... 61  
1.   Nationality ............................................ 12     Family Relations ...................................... 70  
2.   Domicile ............................................... 14   1.   The Family as an Institution................ 70  
3.   Principles on Personal Status and 2.   Effects of Family Relationship on Legal
Capacity ........................................................ 15   Disputes ........................................................ 71  
  Choice of Law Problems ........................... 16   3.   The Family Home ................................. 71  
1.   Choice-of-Law in Family Relations ...... 16     Paternity and Filiation ............................. 74  
2.   Choice of Law in Property .................... 19   1.   Legitimate Children ............................ 74  
3.   Choice Of Law In Contracts ................. 20   2.   Proof of Filiation .................................. 75  
4.   Choice of Law in Wills, Succession and 3.   Illegitimate Children ........................... 76  
Administration of Estates ............................. 21   4.   Legitimated Children .......................... 77  
5.   Choice of Law in Torts and Crimes ..... 22     Adoption .................................................. 78  
6.   Choice of Law Affecting Corporations 1.   RA 8552: Domestic Adoption Law ..... 78  
and Other Juridical Entities ......................... 23   2.   RA 8043: The Law on Inter-country
  Foreign Judgments.................................. 26   Adoption ...................................................... 83  
1.   Recognition and Enforcement of Foreign   Support .................................................... 85  
Judgments ................................................... 26   1.   What it Comprises ............................... 85  
2.   Procedure for Enforcement ................. 27   2.   Who are Obliged ................................. 85  
3.   Support Pending Litigation on the Status
PERSONS AND FAMILY RELATIONS ....... 29   of Marriage ................................................... 86  
III.   PERSONS AND FAMILY RELATIONS ..... 30   4.   Amount................................................ 86  
  Persons and Personality .......................... 30   5.   When Demandable ............................. 86  
1.   Concept of Person and Personality..... 30   6.   Options ................................................ 86  
2.   Commencement and Termination of 7.   Attachment ......................................... 86  
Personality ................................................... 30     Parental Authority and Custody of Children
3.   Death .................................................... 31   87  
4.   Juridical Persons .................................. 31     Emancipation .......................................... 88  
5.   Restrictions on Civil Capacity.............. 32     Summary Judicial Proceedings under FC89  

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1.   Separation in Fact ............................... 89   5.   What Do No Affect Possession [Art. 537,


2.   Incidents involving Parental Authority89   CC] 127  
  Care and Education of Children .......... 90   6.   Rules to Solve Conflicts pf Possession
  Surnames.................................................. 91   [Art. 538, CC] .............................................. 127  
1.   Surnames of Children .......................... 91   7.   Rules on Co-Possession ..................... 127  
2.   Wife After and During Marriage .......... 91   8.   Loss or Unlawful Deprivation of a
3.   Confusion and Change of Names ....... 92   Movable Property........................................128  
  Rules Governing Persons who are Absent 9.   Loss/Termination of Possession [Art.
92   555, CC] ......................................................129  
1.   Provisional Measures in Case of Absence 10.   Rules for Loss of Movables ............129  
[Arts. 381-383, CC] ....................................... 92     Usufruct ................................................. 130  
2.   Declaration of Absence [Arts. 384-389, 1.   Objects of Usufruct ........................... 130  
CC] 93   2.   Characteristics................................... 130  
3.   Administration of the Property of the 3.   Classification ...................................... 131  
Absentee [Arts. 387-389, CC] ...................... 94   4.   Rights and Obligations of Usufructuary
4.   Presumption of Death [Arts. 390-392, 132  
CC] 94   5.   Special Cases of Usufruct .................. 135  
  Funerals ................................................... 95   6.   Rights of the Owner ........................... 137  
  Entries in the Civil Register ..................... 96   7.   Extinguishment/Termination [Art. 603,
1.   CC ........................................................ 96   CC] 137  
2.   RA 9048 as Amended by RA 10172 .... 97   8.   Conditions Not Affecting Usufruct..... 139  
3.   Rule 108, Rules of Court ..................... 98     Easement ................................................ 139  
PROPERTY................................................100   1.   Essential Features: ............................. 139  
IV.   PROPERTY ............................................. 101   2.   General Rules ..................................... 141  
  Characteristics ........................................ 101   3.   Classification ...................................... 141  
  Classification .......................................... 101   4.   Relevance of Classifications ..............142  
1.   Based on Mobility [Immovable or 5.   Creation ..............................................142  
Movable] ..................................................... 101   6.   Rights and Obligations of Owners of
2.   Based on Ownership/ Rights-Holder 103   Dominant and Servient Estates .................. 143  
3.   Based on Consumability ................... 104   7.   Extinguishment of Easements .......... 144  
4.   Based on Susceptibility to Substitution 8.   Voluntary Easements ........................ 145  
104   9.   Legal Easements ............................... 145  
5.   Hidden Treasure ................................ 104   10.   Kinds of Private Legal Easements 145  
6.   Based on the Constitution [Sec. 3, Art.   Nuisance ................................................ 150  
XII] 105   1.   Nuisance v. Trespass ......................... 150  
  Ownership ............................................. 105   2.   Nuisance v. Negligence..................... 150  
1.   Definition and Concept ..................... 105   3.   Classes ............................................... 151  
2.   Types of Ownership ........................... 105   4.   Doctrine of Attractive Nuisance ......... 151  
3.   Rights of an Owner ........................... 105   5.   Liability in Case of Nuisance .............. 151  
4.   Actions to Recover Ownership and 6.   Regulation of Nuisances ....................152  
Possession of Property .............................. 106     Modes of Acquiring Ownership and Other
5.   Limitations on Ownership ................. 108   Real Rights ..................................................... 154  
  Accession ................................................ 110   1.   Occupation ........................................ 154  
1.   Classification of Accession ................. 110   2.   Donation ............................................ 155  
  Co-Ownership .......................................... 117   3.   Tradition .............................................162  
1.   Requisites ............................................ 117     Prescription ............................................ 163  
2.   What Governs Co-Ownership ............. 117   1.   Rationale ............................................ 163  
3.   Characteristics..................................... 117   2.   Kinds of Prescription .......................... 163  
4.   Sources of Co-Ownership .................. 118   3.   No Prescription Applicable ............... 164  
5.   Rights of Co-Ownership ..................... 118   4.   Prescription or Limitation of Actions 165  
6.   Rules.................................................. 120   5.   Interruption [Art. 1155, CC] ............... 165  
7.   Termination or Extinguishment ......... 121     LEASE .................................................... 166  
  Possession .............................................. 123   1.   General Concept of Lease ................. 166  
1.   Concept of Possession ....................... 123   2.   Lease of Things ................................. 166  
2.   Essential Requisites of Possession ....124   3.   Lease of Work and Labor ................... 170  
3.   Classes of Possession.........................124   OBLIGATIONS AND CONTRACTS............ 172  
4.   Acquisition of Possession...................126   V.   OBLIGATIONS............................................. 173  
  Obligations, in General .......................... 173  

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1.   Definition ............................................ 173   1.   Four Types of Obligations in Juridical


2.   Elements of an Obligation ................. 173   Science ....................................................... 237  
3.   Kinds of Prestations ........................... 173   2.   Two Conditions Necessary for Natural
4.   Classification of Obligations .............. 173   Obligations ................................................ 237  
5.   Sources of Obligation......................... 174     Estoppel .................................................240  
  Nature and Effect of Obligations ........... 175   1.   Definition ...........................................240  
1.   Obligation “To Give” .......................... 175   2.   Kinds of Estoppel ..............................240  
2.   Obligation “To Do” or “Not To Do”.... 176   3.   Laches ...............................................240  
3.   Breach ................................................ 176     Trusts ......................................................241  
4.   Legal Excuse for Breach ..................... 181   1.   Governing Rules ................................ 242  
5.   Remedies Available in Case of Breach 2.   Parties [Art. 1440, CC]....................... 242  
182   3.   Kinds of Trust .................................... 242  
  Kinds of Civil Obligations ...................... 185   SALES ...................................................... 246  
1.   Pure Obligations ............................... 185   VII.   Sales ...................................................... 247  
2.   Conditional Obligations .................... 185     Nature and Form of Contract ................ 247  
3.   Obligations with a Period or Term .... 188   1.   Definition of Sales ............................. 247  
4.   Alternative or Facultative Obligations 2.   Formation and Essential Requisites of a
190   Contract of Sale ......................................... 247  
5.   Divisible and Indivisible Obligations . 191   3.   Form of Contract of Sale [Art. 1483, CC]
6.   Obligations with a Penal Clause ........192   252  
7.   Joint and Solidary Obligations ........... 193   4.   Stages of Contract of Sale ................ 252  
  Extinguishment of Obligations .............. 197   5.   Obligations Created .......................... 252  
1.   Payment or Performance ................... 197   6.   Characteristics of a Contract of Sale 253  
2.   Loss of the Thing Due or Impossibility or 7.   Sale Distinguished from Other Contracts
Difficulty of Performance ........................... 202   253  
3.   Condonation ...................................... 203   8.   Kinds of Contract of Sale .................. 255  
4.   Confusion or Merger of Rights ..........204     Capacity to Buy or Sell .......................... 255  
5.   Compensation ...................................205   1.   Kinds of Incapacity ............................ 255  
6.   Novation ............................................206   2.   Effects of Incapacity .......................... 257  
VI.   Contracts ...............................................209     Effects of the Contract When the Thing Sold
  General Provisions .................................209   has Been Lost ................................................. 258  
1.   Principal Characteristics of Contracts 1.   Res Perit domino ................................ 258  
209   2.   Prior to Perfection of Contract .......... 258  
2.   Classification of Contracts ................. 212   3.   At Time of Perfection ........................ 258  
3.   Stages of a Contract........................... 212   4.   After Perfection but Before Delivery . 258  
4.   Elements of Contracts ........................ 212   5.   After Delivery..................................... 258  
  Essential Requisites ............................... 213     Obligations of the Vendor ..................... 259  
1.   Consent .............................................. 213   1.   Obligations of the Vendor in General259  
2.   Object of Contracts ............................218   2.   When Seller is Not the Owner ........... 259  
3.   Cause of Contracts .............................219   3.   Sale by Person having a Voidable Title
  Form of Contracts ................................... 221   259  
1.   Kinds of Formalities Required by Law 4.   Manner of Transfer............................ 259  
221   5.   Concept of Delivery ...........................260  
  Reformation of Instruments .................. 223   6.   When Delivery Does Not Transfer Title
1.   Cases Where Reformation is Proper . 224   260  
2.   Who May Ask for Reformation .......... 224   7.   Kinds of Delivery.................................261  
3.   Cases Where Reformation is Not Proper 8.   Double Sales ..................................... 262  
224   9.   Property Registration Decree ........... 263  
  Interpretation of Contract ..................... 225   10.   Risk of Loss ................................... 264  
1.   Primacy of Intention .......................... 225   11.   Warranties ......................................... 264  
2.   Rules on Doubts [Art. 1378, CC]........ 226     Obligations of the Vendee ..................... 268  
3.   Rule 123, Rules of Court .................... 226   1.   Obligation to Accept Delivery ........... 268  
  Defective Contracts ............................... 227   2.   Obligation to pay the price ............... 269  
1.   Rescissible Contracts ........................ 227   3.   Obligation to Bear the Expenses for the
2.   Voidable Contracts ............................ 230   Execution and Registration of the Sale and
3.   Unenforceable Contracts .................. 232   Putting the Goods in a Deliverable State, if so
4.   Void or Inexistent Contracts .............. 234   Stipulated .................................................. 270  
  Natural Obligations ............................... 237  

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CIVIL LAW

  Actions and Remedies for Breach of 4.   Characteristics of Sale of a


Contract of Sale.............................................. 270   Condominium or Subdivision Unit and Similar
1.   General Remedies [Art. 1191, CC] ...... 270   Contracts .....................................................291  
2.   B. Remedies of the Seller .................. 270     The Condominium Act (RA 4726) ......... 292  
3.   Recto Law: Sale of Movables on 1.   Definition of Condominium [Sec. 2, RA
Installment – Arts. 1484-1486. CC ............ 273   4762 ] ......................................................... 292  
4.   Sale of Immovables ........................... 274   2.   Transfers or Conveyances of a Unit or an
5.   Secs. 23 and 24, PD 957 ................... 274   Apartment, Office or Store, or Other Space
6.   Maceda Law (RA 6552): Sale of Therein [Sec. 5, RA 4726] .......................... 292  
Immovables on Installment ....................... 274   3.   Rights of a Condominium Unit Owner
7.   Remedies of the Buyer ...................... 275   (aside from Rights Arising from Ownership)
  VII. Extinguishment of Sale ................... 276   [Sec. 6, RA 4726] ....................................... 293  
1.   Causes ............................................... 276   4.   Partition by Sale [Sec. 8, RA 4726]... 293  
2.   Conventional Redemption ................ 276   5.   Declaration of Restrictions by Owner of
3.   Equitable Mortgage .......................... 278   Project - Precondition to Conveyance [Sec. 9,
4.   Legal Redemption............................ 280   RA 4726] .................................................... 293  
  Assignment of Credits ........................... 283   6.   F. Assessment in Accordance with
1.   Definition ........................................... 283   Declaration of Restrictions [Sec. 20, RA 4726]
2.   Nature ............................................... 283   293  
3.   Perfection .......................................... 283   7.   How Lien Enforced after Non-Payment of
4.   Assignment Distinguished from Other Assessed Fees [Sec. 20, RA 4726] ............ 294  
Terms ......................................................... 283   8.   Involuntary Dissolution of the
5.   Binding Effect .................................... 283   Condominium Corporation [Sec. 12, RA 4726]
6.   Consent not Necessary ..................... 283   294  
7.   Effect of Payment by Debtor after 9.   Power of Attorney Held by Corporation in
Assignment of Credit ................................. 283   Case of Voluntary Dissolution of
8.   Extent of Assignment of Credit ......... 284   Condominium Corporation [Sec. 15, RA 4726]
9.   Warranties of the Assignor of Credit 284   294  
10.   Sale of Successional or Hereditary 10.   Sale, Exchange, Lease, or Disposition
Rights 284   by Corporation of the Common Areas [Sec. 16,
11.   Sale of Whole of Certain Rights, Rents, or RA 4726] .................................................... 294  
Products ..................................................... 285   11.   Stockholder/Member Demanding
12.   Liability of Vendor of Inheritance for Payment for Shares or Interest (Appraisal
Fruits Received .......................................... 285   Right) [Sec. 17, RA 4726] ........................... 294  
13.   Liability of Vendee for Debts and 12.   Requirement for Registration of
Charges on Estate ...................................... 285   Conveyance with the Register of Deeds [Sec.
14.   Legal Redemption in Sale of Credit or 18, RA 4726] ............................................... 294  
Other Incorporeal Right in Litigation ........ 285   13.   Realty Tax on Condominiums [Sec.
  Documents of Title ................................ 286   25, RA 4726] .............................................. 294  
1.   Definition ........................................... 286     The Bulk Sales Law (as Amended) [Act
2.   Purpose of Documents of Title ......... 286   No. 3952]........................................................ 295  
3.   Negotiable Documents of Title ......... 286   1.   Sale and Transfer in Bulk [Sec. 2, Act No.
4.   Non-Negotiable Documents of Title 286   3952] .......................................................... 295  
5.   Warranties of Seller of Documents of 2.   Obligations of the Seller If the
Title 286   Transaction is Covered by the Bulk Sales Law
6.   Rules on Levy/Garnishment of Goods 295  
287   3.   Fraudulent and Void Sale, Transfer or
  Performance of Contract ....................... 287   Mortgage [Sec. 4, Act No. 3952] ............... 296  
1.   Delivery of Thing Sold ....................... 287   4.   Transfer without Consideration or for
2.   Payment of Price ............................... 288   Nominal Consideration [Sec. 7, Act No. 3952]
  The Law on Sale of Subdivision and 296  
Condominium (PD 957) ................................. 289   5.   Inapplicability [Secs. 1 and 8, Act No.
1.   Definitions ......................................... 289   3952] .......................................................... 296  
2.   Requirements for Owners and 6.   Agency-in-Charge [Sec. 10, Act No.
Developers ................................................. 289   3952] .......................................................... 296  
3.   Requirement for Dealers, Brokers, and 7.   Penalty [Sec. 11, Act No. 3952] ......... 296  
Salesmen ...................................................290   AGENCY ....................................................297  
VIII.   Agency ...................................................298  

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  Definition of Agency .............................. 298   3.   Right to Formal Account ................... 326  


1.   As a Type of Contract ........................ 298   4.   Property Rights of Partners .............. 327  
2.   As a Legal Relationship .................... 298   5.   Right to Participate in Management 328  
3.   Effects of Agency ............................... 298   6.   Right to be Reimbursed by the
  Kinds of Agency ..................................... 299   Partnership ................................................ 329  
1.   In General .......................................... 299   7.   Right to Ask for Dissolution [Arts.
2.   As to Manner of Creation ................. 300   1830(2) and 1831, CC] ................................ 329  
3.   As to Extent of Business Covered ..... 301   8.   Obligation to Render True and Full
4.   As to Authority Conferred ................. 301   Information ................................................ 329  
5.   Special Kinds of Agency .................... 302   9.   Obligation to Account and Act as Trustee
6.   Kinds of Agents ................................. 303   329  
  Rights and Obligations of the Agent .... 304   10.   Obligation not to Engage in Another
1.   Rights of Agents................................ 304   Business ..................................................... 330  
2.   Obligations of Agents ....................... 306   11.   Obligation to Share in the Profits/Losses
3.   Liability of Agents ............................. 310   330  
  Rights and Obligations of the Principal . 311     Obligations of the Partnership/Partners to
1.   Obligations ......................................... 311   Third Persons .................................................. 331  
2.   Liability of the Principal ..................... 312   1.   Operate Under a Firm Name ............. 331  
  Rights and Obligations of Third Persons 2.   Liability for Partnership Debts ........... 331  
313   3.   Liability of Partners for Partnership
1.   Rights of Third Persons ...................... 313   Contracts .................................................... 332  
2.   Obligations of Third Persons ............. 313   4.   Liability for Admission by a Partner .. 333  
  Modes of Extinguishment ...................... 314   5.   Liability for Wrongful Acts of a Partner
1.   In General ........................................... 314   333  
2.   Revocation.......................................... 314   6.   Liability for Misapplication of Money or
3.   Withdrawal by the Agent ................... 316   Property ..................................................... 333  
4.   Death, Civil Interdiction, Insanity or 7.   Liability in Case of Partnership by
Insolvency ................................................... 316   Estoppel ..................................................... 333  
5.   Dissolution, Accomplishment, 8.   Liability of an Incoming Partner ....... 334  
Expiration .................................................... 316   9.   Liability with Regard to Personal
PARTNERSHIP ..........................................317   Creditors of Partners.................................. 335  
IX.   PARTNERSHIP .......................................318     Dissolution and Winding Up ................. 336  
  Contract of Partnership ..........................318   1.   Concepts............................................ 336  
1.   Elements ............................................ 318   2.   Causes of Dissolution ........................ 336  
2.   Essential Features .............................. 318   3.   Effects of Dissolution ........................ 337  
3.   Parties ................................................ 319   4.   Winding Up Partners......................... 339  
4.   Object ................................................. 319   5.   Rights of Partners in Case of Dissolution
5.   Form .................................................. 320   339  
6.   Duration ............................................ 320   6.   Rights of Partners in Case of Rescission
7.   Rules to Determine Existence ............ 321   340  
8.   Kinds of Partnerships ......................... 321   7.   Settling of Accounts between Partners
9.   Kinds of Partners ................................ 321   340  
10.   Partnership, Distinguished from 8.   Rights of Creditors of Dissolved
Other Contracts ......................................... 322   Partnership ................................................. 341  
  Rights and Obligations of the Partnership 9.   Rights of a Retired Partner or a
324   Representative of Deceased Partner .......... 341  
1.   Right to Contribution, Right to Warranty 10.   Right to an account ...................... 342  
324     Limited Partnership ............................... 342  
2.   Right to Have Sums Applied Pro Rata 1.   Definition ........................................... 342  
325   2.   Characteristics................................... 342  
3.   Right to be Compensated ................. 325   3.   General and Limited Partners
4.   Right to Accounting of Profits Received Distinguished ............................................. 342  
without the Consent of the Other Partners325   4.   General and Limited Partnership
5.   Obligation to Reimburse Partners .... 325   Distinguished ............................................. 343  
  Rights and Obligations of Partners Inter Se 5.   Formation .......................................... 343  
326   6.   Management ..................................... 344  
1.   Right to Associate Another in Share 326   7.   Obligations of a Limited Partner ...... 344  
2.   Right to Inspect Partnership Books .. 326   8.   Rights of a Limited Partner ............... 345  

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9.   Dissolution ........................................ 347   5.   Obligations of Antichretic Creditor ... 374  


10.   Settlement of Accounts ................ 347   6.   Remedies of Creditor in Case of Non-
11.   Amendment or Cancellation of Payment of Debt ........................................ 374  
Certificate ................................................... 348     Quasi-Contracts .................................... 375  
12.   Limited Partnerships Formed Prior to 1.   Negotiorum Gestio (Unauthorized
the CC 348   Management) ............................................ 375  
CREDIT TRANSACTIONS ........................ 349   2.   Solutio Indebiti (Undue Payment) .... 376  
X.   Credit transactions ....................................350   3.   Other Quasi-Contracts ...................... 377  
  Loan ....................................................... 350     Concurrence and Preference of Credits 378  
1.   Commodatum ................................... 350   1.   When Rules on Preference Applicable
2.   Mutuum ............................................. 352   378  
  Deposit................................................... 354   2.   Classification of Credits .................... 378  
1.   Voluntary Deposit ............................. 354   3.   Order of Preference of Credits ..........380  
2.   Necessary Deposit ............................. 355   4.   Exempt Property ................................ 381  
3.   Judicial Deposit or Sequestration ..... 356   SUCCESSION ........................................... 382  
  Guaranty and Suretyship....................... 357   XI.   Succession ............................................. 383  
1.   Nature and Extent of Guaranty ......... 357     General Provisions ................................. 383  
2.   Nature and Extent of Suretyship ...... 359   1.   Definition ........................................... 383  
3.   Effect of Guaranty ............................. 360   2.   Object of Succession and Transmission
4.   Extinguishment of Guaranty ............. 362   383  
5.   Legal and Judicial Bonds .................. 363   3.   Subjects of Succession ...................... 384  
  Pledge .................................................... 363     Testamentary Succession...................... 384  
1.   Characteristics................................... 363   1.   Wills ................................................... 384  
2.   Kinds .................................................. 363   2.   Institution of Heir ............................... 391  
3.   Essential Requisites .......................... 364   3.   Substitution of Heirs ......................... 392  
4.   Requisites for Perfection ................... 364   4.   Testamentary Dispositions with a
5.   Obligations of Pledgee ..................... 364   Condition, a Term, and a Mode ................. 393  
6.   Rights of Pledgor .............................. 365   5.   Legitime ............................................ 394  
7.   Foreclosure ........................................ 365   6.   Reserva Troncal ................................ 397  
8.   Pledge as Distinguished from Chattel 7.   Disinheritance ................................... 399  
Mortgage ................................................... 365   8.   Legacies and Devises ........................ 401  
9.   Pactum Commissorium .................... 366     Legal or Intestate Succession ............... 403  
10.   Equitable Mortgage ...................... 366   1.   General Provisions ............................ 403  
  Chattel Mortgage .................................. 366   2.   Order of Intestate Succession .......... 406  
1.   Form of Chattel Mortgage ................ 366     Provisions Common to Testate and
2.   Obligations Secured.......................... 366   Intestate Succession ..................................... 408  
3.   Objects of Chattel Mortgage ............ 367   1.   Right of Accretion ............................ 408  
4.   Mortgagor’s Right to Alienate the 2.   Capacity to Succeed by Will or Intestacy
Collateral ................................................... 367   409  
5.   Foreclosure ........................................ 367   3.   Acceptance and Repudiation of the
  Real Mortgage ....................................... 368   Inheritance ................................................. 410  
1.   Objects of Real Mortgage [Art. 2124, CC] 4.   Collation ............................................ 410  
368   5.   Partition and Distribution of Estate ...412  
2.   Obligations Secured.......................... 368   LAND TITLES AND DEEDS ....................... 416  
3.   Characteristics................................... 368   XII.   LAND TITLES AND DEEDS .................... 417  
4.   Kinds .................................................. 369     Torrens System ....................................... 417  
5.   Principle of Indivisibility of 1.   General Principles .............................. 417  
Pledge/Mortgage ...................................... 370   2.   Torrens System ................................. 418  
6.   Recording Required .......................... 370   3.   Administration of The Torrens System
7.   Foreclosure of Mortgage ................... 370   419  
8.   Waiver of Security by Creditor........... 372   4.   Certificate of Title ..............................420  
9.   Redemption....................................... 372   5.   Effect of Registration under the Torrens
  Antichresis ............................................. 373   System .......................................................420  
1.   Characteristics................................... 373     The Regalian Doctrine........................... 422  
2.   Formal Requisites ............................. 373   1.   Effects ................................................ 422  
3.   Object of the Contract ....................... 373   2.   Concept of Native Title, Time
4.   As Distinguished from Other Contracts Immemorial Possession............................. 423  
373     Citizenship Requirement ....................... 424  
vi
CIVIL LAW

1.   Individuals ......................................... 424  


2.   Corporations...................................... 424  
  Original Registration ............................. 425  
1.   Kinds of Original Registration .......... 425  
2.   Who May Apply ................................. 425  
3.   Procedure in Ordinary Land Registration
426  
4.   Evidence Necessary ........................... 430  
  Subsequent Registration ...................... 430  
1.   Voluntary Dealings............................. 431  
2.   Involuntary Dealings ......................... 433  
  Cadastral Registration .......................... 435  
  Judicial Confirmation of Imperfect Title 437  
1.   Filing of the Application:................... 437  
2.   Procedure in Judicial Confirmation .. 438  
3.   Evidence Necessary to Substantiate
Application ................................................. 438  
  Remedies ............................................... 438  
  Petitions and Motions after Original
Registration ................................................... 440  
  Dealings with Unregistered Lands........ 441  
  Non-Registrable Properties .................. 442  
TORTS AND DAMAGES........................... 444  
XIII.   Torts/quasi-delicts ................................445  
  Preliminary Considerations ...................445  
1.   Definition of Tort ............................... 445  
2.   Definition of Quasi-Delict ................. 445  
3.   Quasi-Delict Distinguished from Crime
445  
4.   Culpa Aquiliana Distinguished from
Culpa Contractual ...................................... 445  
  Negligence............................................. 447  
1.   Negligence ........................................ 447  
2.   Cause ................................................. 455  
3.   Defenses ............................................ 457  
  Intentional Torts ................................... 460  
1.   Human Relations Torts .................... 460  
2.   Independent Civil Actions ................. 465  
  Liability Attached to Specific Persons...468  
1.   Strict Liability ....................................468  
XIV.   DAMAGES ............................................. 478  
  Definition ............................................... 478  
1.   When Allowed ................................... 478  
2.   Types of Damages ............................. 478  
  Actual and Compensatory Damages .... 479  
  Moral Damages .....................................485  
  Nominal Damages ............................... 490  
  Temperate Damages ............................. 491  
  Liquidated Damages ............................. 492  
  Exemplary or Corrective Damages ........ 493  
  Graduation of Damages ........................ 495  
  Miscellaneous Rules.............................. 497  

vii
U.P. LAW BOC GENERAL PRINCIPLES CIVIL LAW

GENERAL PRINCIPLES
Civil Law

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I.   GENERAL In specific instances provided by law, mistake as to


difficult legal questions has been given the same

PRINCIPLES effect as a mistake of fact. [Tolentino]

The laws referred to by this article are those of the


  Effect and Application of Philippines. There is no conclusive presumption of
knowledge of foreign laws. [Tolentino]
Laws
3.  Retroactivity of Laws
1.   When Laws Take Effect Laws shall have no retroactive effect, unless the
contrary is provided. [Art. 4. CC.]
Laws shall take effect after fifteen days following the
completion of their publication either in the Official General Rule: All statutes are to be construed as having
Gazette, or in a newspaper of general circulation in the only prospective operation.
Philippines, unless it is otherwise provided. [Art. 2,
Civil Code (hereinafter, CC), as amended by E.O. 200] Exceptions:
a.   When the law itself expressly provides
General Rules: Exceptions to Exception:
The clause "unless it is otherwise provided" refers to 1.   Ex post facto law
the date of effectivity and not to the requirement of 2.   Impairment of contract
publication itself, which cannot, in any event, be b.   In case of remedial statutes
omitted. [Tañada v. Tuvera, G.R. No. L-63915 (1986)] c.   In case of curative statutes
d.   In case of laws interpreting others
Publication is indispensable in every case, but the e.   In case of laws creating new rights [Bona v.
legislature may in its discretion provide that the usual Briones, G.R. No. L-10806 (1918)].
fifteen-day period shall be shortened or extended. f.   Penal Laws favorable to the accused [Art. 22,
[Tañada v. Tuvera, G.R. No. L-63915 (1986)] RPC].
When, on the other hand, the administrative rule goes
beyond merely providing for the means that can 4.  M andatory or Prohibitory
facilitate or render least cumbersome the
implementation of the law but substantially increases
Laws
the burden of those governed, it behooves the agency
to accord at least to those directly affected a chance to Art. 5, CC. Acts executed against the provisions of
be heard, and thereafter to be duly informed, before mandatory or prohibitory laws shall be void, except
that new issuance is given the force and effect of law. when the law itself authorizes their validity.
[Commissioner v. Hypermix, G.R. No. 179579 (2012)]
Par. 3, Art. 17, CC. Prohibitive laws concerning
Exception: Interpretative regulations and those persons, their acts or property, and those which
internal in nature. [Tañada v. Tuvera, G.R. No. L-63915 have for their object public order, public policy and
(1986)] good customs shall not be rendered ineffective by
laws or judgments promulgated, or by
determinations or conventions agreed upon in a
2.  I gnorance of the Law foreign country.
Ignorantia legis non excusat.
Art. 3, CC. Ignorance of the law excuses no one 5.  W aiver of Rights
from compliance therewith.
Art. 6, CC. Rights may be waived, unless the waiver
Conclusive Presumption: That everyone knows the is contrary to law, public order, public policy,
law, even if they have no actual knowledge of the law. morals, or good customs, or prejudicial to a third
person with a right recognized by law.
Mistake of Fact and Difficult Questions of Law
These may excuse a party from the legal Waiver: voluntary and intentional relinquishment or
consequences of his conduct; but not ignorance of law. abandonment of a known legal right or privilege. It has
been ruled that a waiver to be valid and effective must

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U.P. LAW BOC GENERAL PRINCIPLES CIVIL LAW

be couched in clear and unequivocal terms which subject and not have enacted conflicting statutes.
leave no doubt as to the intention of a party to give up Hence, all doubts must be resolved against any
a right or benefit which legally pertains to him. [RB implied repeal, and all efforts should be exerted in
Michael Press v Galit, G.R. No. 153510 (2008)] order to harmonize and give effect to all laws on the
subject. [Republic v. Marcopper Mining, G.R. No.
The waiver should be made in a positive manner [Dona 137174 (2000)]
Adela v. Tidcorp, G.R. No. 201931 (2015)]

Requisites of a Valid Waiver:


7.  Judicial Decisions
a.   Existence of a right
b.   Knowledge of the existence thereof Art. 8, CC. Judicial decisions applying or
c.   An intention to relinquish the right. [Herrera v. interpreting the laws or the Constitution shall form
Borromeo, G.R. No. L-41171, (1987)] a part of the legal system of the Philippines.

General Rule: Rights may be waived. Jurisprudence cannot be considered as an


independent source of law; it cannot create law. [1
Exceptions: Camus 38 as cited in Tolentino]
a.   If the waiver is contrary to law, public order, public
policy, morals or good customs The doctrine of Stare Decisis gives stability to the
b.   If the waiver prejudices a third person courts and fills the gaps of the law to adapt to
c.   If the alleged rights do not yet exist changing times.
d.   If the right is a natural right
The interpretation or construction placed by the courts
No compromise upon the following questions shall establishes the contemporaneous legislative intent of
be valid: the law. The latter as so interpreted and construed
a.   The civil status of persons; would thus constitute a part of that law as of the date
b.   The validity of a marriage or a legal separation; the statute is enacted. It is only when a prior ruling of
c.   Any ground for legal separation; this Court finds itself later overruled, and a different
d.   Future support; view is adopted, that the new doctrine may have to be
e.   The jurisdiction of courts; applied prospectively in favor of parties who have
f.   Future legitime [Art. 2035, CC.]. relied on the old doctrine and have acted in good faith
in accordance therewith. [Pesca v. Pesca, G.R. No.
136921 (2001)]
6.  R epeal of Laws
Laws are repealed only by subsequent ones, and their 8.  D uty to Render Judgment
violation or non-observance shall not be excused by
disuse, or custom or practice to the contrary. Art. 9, CC. No judge or court shall decline to render
judgment by reason of the silence, obscurity or
When the courts declared a law to be inconsistent with insufficiency of the laws.
the Constitution, the former shall be void and the
latter shall govern. Art. 9, CC talks about the principle of equity which is
justice with mercy.
Administrative or executive acts, orders and
regulations shall be valid only when they are not Exception:
contrary to the laws or the Constitution. [Art. 7, CC.] This article does not apply to criminal prosecutions
because where there is no law punishing an act, the
Two Kinds of Repeal [Tolentino]: case must be dismissed. [Tolentino]
a.   Express or Declared: contained in a special
provision of a subsequent law; names the law
repealed. 9.  P resumption and
b.   Implied or Tacit: takes place when the provisions Applicability of Custom
of the subsequent law are incompatible or
inconsistent with those of an earlier law.
Art. 10, CC. In case of doubt in interpretation or
application of laws, it is presumed that the
The fundament is that the legislature should be
lawmaking body intended right and justice to
presumed to have known the existing laws on the
prevail.

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Territoriality Principle
Art. 11, CC. Customs which are contrary to law, Penal laws and those of public security and safety
public order or public policy shall not be shall be obligatory upon all who live or sojourn in the
countenanced. Philippine territory, subject to the principles of public
international law and to treaty stipulations. [Art. 14,
Art. 12, CC. A custom must be proved as a fact, CC.]
according to the rules of evidence.
Exemptions to the Territoriality Principled under
International Law (Theory of Extraterritoriality):
Ignorance is positive proof that said custom does not
1.   When the offense is committed by a foreign
exist.
sovereign while in Philippine territory
2.   When the offense is committed by diplomatic
10.   Legal Periods representatives
3.   When the offense is committed in a public or
Art. 13, CC. When the laws speak of years, months, armed vessel of a foreign country.
days or nights, it shall be understood that years are
of three hundred sixty-five days each; months, of 12.   Binding Effect
thirty days; days, of twenty-four hours; and nights
from sunset to sunrise. Nationality Principle
Art. 15, CC. Laws relating to family rights and
If months are designated by their name, they shall
duties, or to the status, condition and legal capacity
be computed by the number of days which they
of persons are biding upon citizens of the
respectively have.
Philippines, even though living abroad.
In computing a period, the first day shall be
excluded, and the last day included. It is true that owing to the nationality principle
embodied in Article 15 of the CC, only Philippine
nationals are covered by the policy against absolute
Note:
divorces, the same being considered contrary to our
Sec. 31, Revised Administrative Code. "Year" shall concept of public policy and morality. However, aliens
be understood to be twelve calendar months; may obtain divorces abroad, which may be recognized
"month" of thirty days, unless it refers to a specific in the Philippines, provided they are valid according to
calendar month in which case it shall be computed their national law. [Dacasin v. Dacasin, G.R. No.
according to the number of days the specific month 168785 (2010)]
contains; "day," to a day of twenty-four hours; and
"night," from sunset to sunrise. Lex Rei Sitae
Art. 16, CC. Real property as well as personal
Policy on Last Day being a Legal Holiday/Sunday property is subject to the law of the country where
If the period arises by statute or orders by the it is stipulated.
government, the last day will automatically be
considered the next working day However, intestate and testamentary successions,
both with respect to the order of succession and to
If the period arises from a contractual relationship, the the amount of successional rights and to the
act will still be due on that Legal Holiday/Sunday intrinsic validity of testamentary provisions, shall
be regulated by the national law of the person
There obviously exists a manifest incompatibility in the whose succession is under consideration, whatever
manner of computing legal periods between the CC may be the nature of the property and regardless of
and the Revised Administrative Code of 1987. Since the country wherein said property may be found.
the Administrative Code is the more recent law, it
governs the computation of legal period [CIR v.
Personal and real property are governed where the
Primetown, G.R. No. 162155 (2007)]
land (situs) is.

11.  Applicability of Penal However, intestate and testate succession are


governed by nationality principle and cannot be made
Laws to follow Philippine rule

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When a foreign law is involved it must be alleged and


proved or it will be assumed to be same as ours
(Doctrine of Processual Presumption)

Art. 16, par. 2 is bolstered by Art. 1039 of the CC, which


further provides that capacity to succeed is governed
by the law of the nation of the decedent. [Ancheta v.
Guersey-Dalaygon, G.R. No. 139868 (2006)]

Lex Loci Celebrationis; Lex Loci Contractus


Art. 17, CC. The forms and solemnities of contracts,
wills, and other public instruments shall be
governed by the laws of the country in which they
are executed.

When the acts referred to are executed before the


diplomatic or consular officials of the Republic of
the Philippines in a foreign country, the solemnities
established by Philippine laws shall be observed in
their execution.

Prohibitive laws concerning persons, their acts or


property, and those which have, for their object,
public order, public policy and good customs shall
not be rendered ineffective by laws or judgments
promulgated, or by determinations or conventions
agreed upon in a foreign country.

Lex loci celebrationis: Marriage governed by laws in


the country

Lex loci contractus: Forms and solemnities of


contracts governed by laws of the land where they are
executed

When performed in front of a Filipino diplomatic or


consular office, Filipino solemnities will be used.

Note: Arts. 15, 16 and 17 are rules of conflict of laws.

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II.   PRIVATE Public International Law v. Private International Law


[Coquia and Aguiling-Pangalangan]

INTERNATIONAL As to
Public
International
Private
International

LAW Law
States and
Law

Persons internationally Individuals or


  Introduction involved recognized
organizations
corporations

States in their Private


The world is divided into many territorial units, each relationships transactions
imposing its own set of laws. With the developed amongst between
means of transportation and communication, Transactions themselves private
distances between these nations have shortened involved (Except cases individuals
allowing more and more people to travel and enter of human which involve a
into contracts. These dynamics cause the occurrence rights foreign
of events that contain elements significant to more violations) element
than one legal system which give rise to problems that State may
private international law seeks to resolve. [Coquia and resort to
Aguiling-Pangalangan] diplomatic
protest,
1.   Basis peaceful
means of All remedies
Its incorporation in municipal laws is based not on settlement of provided by
extraterritorial validity of the foreign law but on comity international municipal laws
of nations. disputes such of the state
Remedies
as diplomatic such as resort
“Comity,” in the legal sense, is neither a matter of negotiations, to courts or
absolute obligation, on the one hand, nor of mere arbitration or administrative
courtesy and good will, upon the other. But it is the conciliation or tribunals
recognition which one nation allows within its territory adjudication
to the legislative, executive or judicial acts of another by filing a case
nation, having due regard both to international duty before
and convenience, and to the rights of its own citizens international
or of other persons who are under the protection of its tribunals
laws. [Hilton v Guyot, 159 US 113 (1895)]
3.  Scope
2.  D efinition
a.   Adjudicatory jurisdiction: Determines the
That part of municipal law which governs cases circumstances that allow for a legal order to
involving a foreign element. impose upon its judiciary the task of deciding
multi-state and multinational disputes
That part of law which comes into play when the issue b.   Choice-of-law: Refers to the probable sources
before the court affects some fact or event, or from which the applicable law of the controversy
transaction that is so closely connected with a foreign may be derived.
system of law as to necessitate recourse to that c.   Recognition and enforcement of foreign
system. [Chesire] judgments: Deals with the study of situations
which justify recognition by the forum court of a
The law concerning the rights of persons within the judgment rendered by a foreign court or the
territory and dominion of one nation by reason of acts, enforcement of such within the forum.
private or public, done within the dominion of another
nation. 4.  S ources
a.   Codes and Statutes
b.   Treaties and International Conventions

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c.   Treatises, Commentaries and Studies of Learned Competence or power of a court to render a


Societies judgment that will bind the parties to a case.
d.   Judicial Decisions
Required in in personam proceedings. Acquired by
  Jurisdiction and Choice of the voluntary appearance of a party and his
submission to authority.
Law How Acquired
a.   Over the person of the PLAINTIFF – acquired
1.   Jurisdiction from the moment he invokes the aid of the
[Coquia And Aguiling-Pangalangan] court by filing a suit.
b.   Over the person of the DEFENDANT:
Judicial Jurisdiction Legislative Jurisdiction •   When he enters his appearance
The ability of the state Exception: If he appears for the purpose
The power or authority of protesting the jurisdiction of the court.
to promulgate laws
of a court to try a case, •   When he is served with the legal process
and enforce them on
render judgment and within the state
all persons and
execute it in o   Personal service [Rule 14, Section 6,
property within its
accordance with law Rules of Court]
territory.
o   Substituted service [Rule 14, Section
7, Rules of Court]
a.  Basis of Exercise of Judicial o   When subsequent proceedings arise
Jurisdiction out of his original cause of action
including counterclaims filed by the
Traditional Approach: Based on the state’s physical defendant
power over persons and property within its territory.
2.   Jurisdiction over the Property
Modern Approach: Minimum contacts and Results either from:
fundamental fairness test a.   Seizure of the property under a legal process;
Minimum contacts must exist between the forum and or
defendant. Due process only requires that a b.   Institution of legal proceedings wherein the
defendant, if not present within the territory, should court’s power over the property is recognized
have certain minimum contacts with it such that and made effective
maintenance of the suit does not offend traditional
notions of fair play and substantive justice. It includes Due process is satisfied by summons through
presence in the state through acts of authorized publication in these in rem and quasi in rem
agents. [International Shoe Co. v. Washington, 326 US proceedings
310 (1945)]
3.   Jurisdiction over the Subject Matter
Minimum contacts must exist among the forum,
defendant and the cause of action. [Shaffer v Heitner, More than the general power conferred by law to
433 US 186 (1977)] take cognizance of cases of a general class to
which the case belongs. It must be properly
Long-Arm Statutes – Municipal Laws that specify the invoked by filing a petition. And it cannot be
kinds of contacts upon which jurisdiction will be conferred by consent of the parties.
asserted by the forum court. These laws allow a court
to obtain to obtain personal jurisdiction over an out- 4.   Direct vs. Indirect Jurisdiction
of-state defendant who has sufficient connection with Direct Jurisdiction Indirect Jurisdiction
the state, e.g. tortious act done within the state, or a answers the question
answers the question
contract celebrated in the state. WON a court can
WON a court can try
recognize and/or
and decide a case
enforce a judgment
b.  Types of Judicial
Jurisdiction c.   Ways of Dealing with a
1.   Jurisdiction over the Person Conflicts Problem

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•   When the foreign law is purely FISCAL


1.   Dismiss the Case OR ADMINISTRATIVE in nature;
a.   For Lack of Jurisdiction: Absent jurisdiction •   When the application of foreign law will
over the person, property or subject matter, work UNDENIABLE INJUSTICE TO
the court should dismiss the case. Otherwise, CITIZENS of the forum;
a judgment rendered will be void. •   When the case involves REAL OR
b.   Doctrine of Forum Non Conveniens: Literally PERSONAL PROPERTY situated in the
means “forum is inconvenient.” Thus , even if forum;
the court assumes jurisdiction over the •   When the application of the foreign law
parties and the subject matter, it may decline might ENDANGER THE VITAL INTEREST
to try the case on the ground that the of the state;
controversy may be more suitably tried
•   When the foreign law is CONTRARY TO
elsewhere.
GOOD MORALS
2.   Assume Jurisdiction
Courts may apply either: 2.  C hoice of Law
a.   FORUM LAW; or
b.   FOREIGN LAW. a.  Approaches to Choice of
The presence of any one of the following factors Law
would justify the application of forum law:
a.   A specific law of the forum decrees that 1.   Approaches to Choice of Law
internal law should apply a.   Traditional approaches: For simplicity,
convenience, uniformity and predictability. At
Examples: times, at the expense of just results.
•   Real and personal property are subject to •   Vested-Rights Theory
the law of the country where they are An act done in a foreign jurisdiction gives
situated. [Art. 16, CC] rise to the existence of a right if the laws
•   Revocation of a will done outside the of that state provides so.
Philippines may be valid if done
according to the law of the place where This right vests in the plaintiff and he
the will was made or lex domicile. [Art. carries it with him to be enforced in any
829, CC] forum he chooses to bring suit.
•   Filipinos are prohibited from making
joint wills even when done abroad. [Art. The forum refers to the law of the place
819, CC] of occurrence of the “last act” necessary
b.   The proper foreign law was not properly to complete the cause of action.
pleaded and proved •   Local Law Theory
•   Foreign law must be proved as a fact The court treats a case as purely
through Rules of Evidence (e.g. official domestic case and applies local law
publication or copy, which has been regardless of foreign elements.
consularized) •   Cavers’ Principles of Preference
•   Doctrine of Processual Presumption – Made with reference to principles of
absent contrary proof, foreign law is preference based on considerations of
presumed to be the same as Philippine justice and social expediency and should
law. not be the result of mechanical
c.   The case falls under any of the exceptions to application of the rule.
the application of foreign law.
•   When the foreign law is CONTRARY to an It aims to provide a fair accommodation
important PUBLIC POLICY of the forum; of conflicting state policies and afford fair
treatment to the parties.
•   When the foreign law is CONTRARY to an
important PUBLIC POLICY of the forum;
b.   Modern Approaches
•   When the foreign law is PENAL in nature;
•   Place of Most Significant Relationship
•   When the foreign law is PROCEDURAL in Identifies a plurality of factors and
nature; factual contacts in light of choice of law
principles:

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o   The needs of the interstate and Single-aspect method (Traditional)


international system; Concentrates on one element of a situation in order to
o   Relevant policies of the concerned connect the case to a particular legal community.
states;
o   The relevant policies of other Multi-aspect method (Modern Approach)
interested states and the relative All important factors of the case are analyzed and the
interests of those in the applicable law is arrived at by “rationally elaborating
determination of the particular and applying the policies and purposes underlying the
issue; particular legal rules that come in question as well as
o   The protection of justified the needs of interstate or international intercourse”
expectations of the parties;
o   The basic policies underlying the The Philippines follows the single-aspect
particular field of law; method. Examples:
o   Certainty, predictability and •   Philippine law governs citizens of the
uniformity of result; and Philippines in matters relating to family
o   Ease in the determination and the rights, duties, the status, condition and
application of the law to be applied legal capacity of persons. [Art. 15, CC]
TORT CONTRACT •   Real and personal property are governed
•   Law chosen by the by the law of the country where they are
•   Place where the parties. situated. [Art. 16, CC]
injury occurred •   National law of the deceased person
•   Place where In absence thereof, the governs intestate and testamentary
negligent conduct following: succession both with respect to order of
occurred •   Place of contracting succession, amount of successional rights
•   Domicile, residence •   Place of negotiation and intrinsic validity of testamentary
or nationality of the •   Place of performance provisions regardless of where the property
parties •   Domicile, residence, may be found. [Art. 16, CC]
•   Place where the nationality, place of •   Law of the place of execution governs the
relationship between incorporation and forms and solemnities of wills and other
the parties is entered place of business of public instruments. [Art. 17, CC]
the parties •   When acts are executed before the
diplomatic or consular officials of the
•   Interest Analysis Republic of the Philippines in a foreign
Looks at the policy behind the laws of the country, the solemnities established by
involved state and the interest each state Philippine laws shall be observed in their
had in applying its own law. execution. [Art. 17, CC]
•   Comparative Impairment •   Prohibitive laws concerning persons, acts
Weighs conflicting interests and apply or property and those which have as their
the law of the state whose interest would object, public order, public policy, and
be more impaired if its laws were not good customs are to be governed by
followed. Philippine law, unaffected by laws,
•   Functional Analysis judgments and determinations of foreign
This approach looked into the general countries. [Art. 17, CC]
policies of the state beyond those
reflected in its substantive law and to CHARACTERIZATION
policies and values “relating to effective Characterization is an escape device because by
and harmonious intercourse between characterizing the problem differently, it can produce
states.” results which the forum court considers as just and
sound.

3.  The Problem of The process by which a court at the beginning of the


Characterization choice-of-law process assigns a disputed question to
an area in substantive law.

a.  Characterization and the


Single Aspect Method

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U.P. LAW BOC GENERAL PRINCIPLES CIVIL LAW

Subject-Matter Characterization •   Transmission – reference is made to a third state


Classification by a court of a factual situation into a
legal category. b.  Limitation
Substance-Procedure Dichotomy
The process of renvoi is not applicable in instances
Directs the court to the extent it will apply foreign law.
where there is a FALSE CONFLICT. There’s a false
•   SUBSTANTIVE – the court MAY apply foreign law. conflict when one of the states does not have a real
•   PROCEDURAL – SHALL apply forum law interest in applying its law in the controversy.
Statute of Frauds Examples:
•   SUBSTANTIVE – if the words of the law relate to •   Competing states have the same substantive law
forbidding the CREATION of obligation. and the third concerned state has no interest in
•   PROCEDURAL – one that forbids applying its law.
ENFORCEMENT of the obligation. •   The decedent was a domiciliary and national of
only one state.
Statutes of Limitation and Borrowing Statute
General Rule: Statutes of limitations were classified as
procedural because they barred only the legal remedy c.   Various Ways of Dealing
without impairing the substantive right involved. with the Problem of Renvoi
Exception: If the statute provides a shorter period for 1.   Reject the renvoi - Forum conflict rules is deemed
certain types of claims that fall within a wider to refer only to the internal law of that state (i.e.
classification covered by a general statute of that which would apply to a domestic case with no
limitations. (Specificity Test) conflict-of-laws complications)
2.   Accept the renvoi – looks into not just the internal
Borrowing statutes law of the foreign state, but also the choice-of-law
Bars the filing of a suit in the forum if it is already rules applicable in multi-state cases.
barred by the statute of limitations in the place where 3.   Desistance or mutual disclaimer of jurisdiction
the cause of action arose. (e.g. Forum court looks at foreign law; foreign law
does not apply to non-residents; therefore, no one
Philippines has passed a borrowing statute. has applicable laws; Forum court then applies
forum law)
b.  Depacage 4.   Foreign Court Theory – the forum court would
assume the same position that the foreign court
Phenomenon where “different aspects of a case would take were the case litigated in the foreign
involving a foreign element may be governed by court.
different systems of laws.”
•   A case may be dissected into different issues, each 5.  N otice and Proof of
analyzed as to which law shall apply.
•   When such issue by issue analysis results in the Foreign Law
application of different laws to different issues,
then depecage occurs. a.  Extent of Judicial Notice
•   Depecage is the effect of issue by issue analysis.
General Rule: Judge is not authorized to take judicial
4.  T he Problem of Renvoi notice of foreign law and is presumed to know only
domestic law.

a.  Definition Exception: When judicial notice is allowed. [Rule 129,


Section 1, Rules of Court]
Procedure whereby a jural matter presented is
referred by the conflict of laws rules of the forum to a It is allowed when the court is evidently familiar with
foreign state, the conflict of laws rule of which, in turn, such foreign law. [Delgado v. Republic, G.R. No. L-
refers the matter to the law of the forum or a third 2546 (1950)]
state.
•   Remission – reference is made back to the law of Familiarity with the foreign law may be because
the forum Philippine law was derived therefrom or the judge had

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previously ruled upon it in other cases. [Coquia and •   When the foreign law is PENAL in nature;
Aguiling-Pangalangan] •   When the foreign law is PROCEDURAL in
nature;
Burden of Proof •   When the foreign law is purely FISCAL OR
The party whose cause of action or defense depended ADMINISTRATIVE in nature;
upon the foreign law has the burden of proving the •   When the application of foreign law will work
foreign law. UNDENIABLE INJUSTICE TO CITIZENS of the
forum;
Such foreign law is treated as a question of fact to be
•   When the case involves REAL OR PERSONAL
properly pleaded and proved in conformity with the
PROPERTY situated in the forum;
law of evidence of the state where it is presented.
•   When the application of the Foreign law
might ENDANGER THE VITAL INTEREST of
b.  Proof of Foreign Law the state;
•   When the foreign law is CONTRARY TO
Methods to prove foreign law GOOD MORALS
1.   Official publication of the law (and consularized)
[Rule 132, Section 24, Rules of Court]
2.   Copy of the law attested by the officer having the
legal custody of the record or by his deputy. (and
consularized) [Rule 132, Section 24, Rules of
Court]
3.   Learned treatises and expert witness for
unwritten foreign law [Rule 130, Section 46, Rules
of Court]

Effect of Failure to Plead and Prove Foreign Law


1.   Dismiss the case for inability to establish a cause
of action
2.   Processual Presumption / Presumed Identity –
assume that the foreign law is the same as the law
of the forum
3.   Apply the law of the forum

c.   Exceptions to the
Application of Foreign Law
1.   A specific law of the forum decrees that internal
law should apply
Examples:
•   Real and personal property are subject to the
law of the country where they are situated.
[Art. 16, New CC]
•   Revocation of a will done outside the
Philippines may be valid if done according to
the law of the place where the will was made
or lex domicile. [Art. 829, New CC]
•   Filipinos are prohibited from making joint
wills even when done abroad. [Art. 819, CC]
2.   The proper foreign law was not properly
pleaded and proved
3.   The case falls under any of the exceptions
to the application of foreign law.

•   When the foreign law is CONTRARY to an


important PUBLIC POLICY of the forum;

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  Personal Law b.   Applicant honorably held office under the


government of the Philippines or any of the
provinces, cities, municipalities or political
1.   Nationality subdivisions;
c.   Established a new industry or introduced a
useful invention in the Philippines;
a.  Importance of a Personal d.   Married to a Filipino woman;
Law e.   Had been engaged as a teacher in a public or
recognized private school not established for
An individual’s personal law follows him wherever he exclusive instruction of children particular
is and governs those transactions which affect him nationality or race in any of the branches of
most closely. education or industry for a period of 2 years;
f.   Born in the Philippines
Importance of Nationality in the Philippines 3.   CHARACTER
Regulates a.   Must be of good moral character;
1.   Civil status b.   Must believe in the principles underlying the
2.   Capacity Philippine Constitution; and
3.   Condition c.   Must have conducted himself in a proper and
4.   Family rights and duties irreproachable manner during the entire
5.   Laws on succession period of his residence in the Philippines
6.   Capacity to succeed 4.   PROPERTY
a.   Must own real estate in the Philippines worth
not less than P5000; or
b.  Determination of b.   Must have some lucrative trade, profession or
Nationality lawful occupation
5.   LANGUAGE: Must be able to speak and write
According to Article IV of the 1987 Constitution, the English or Spanish and any one of the principal
following are Filipino citizens: Philippine languages
1.   Those who are citizens of the Philippines at the 6.   CHILDREN:
time of the adoption of the Constitution (1987) a.   Enrolled his minor children of school age in
2.   Those whose fathers or mothers are citizens of the any of the public or private schools
Philippines recognized by the Bureau of Private Schools;
3.   Those born before January 17, 1973 of Filipino where Philippine history, government and
mothers, who elect Philippine citizenship upon civics are taught and prescribed as part of
reaching the age of majority school curriculum;
4.   Those who are naturalized in accordance with law b.   During the entire period of the residence
required
NATURAL-BORN CITIZENS c.   Prior to the hearing of petition for
Natural-born citizens are those who are citizens of the naturalization
Philippines without having to perform any act to
acquire or perfect citizenship. Disqualification
The following cannot be naturalized [Sec. 4,
The Philippines follows the jus sanguinis principle Commonwealth Act No. 473]:
which means the rule of descent or blood. 1.   Commission of a crime involving moral turpitude
2.   Not receiving and dealing with Filipinos in his
NATURALIZED CITIZENS home or visiting Filipino homes in the community
Naturalized citizens refer those who underwent a in a spirit of friendship, friendliness and equality
procedure provided by law in order to acquire or without any discrimination.
perfect citizenship. 3.   Applicant’s country does not grant reciprocal
rights to Filipino citizens at the time of the hearing
Qualifications for Applicants of his application.
1.   AGE: Must not be less than 21 years of age on the 4.   Persons opposed to organized government or
date of the hearing of the petition; affiliated with any association or group of persons
2.   RESIDENCE: Must have resided in the Philippines who uphold and teach doctrines opposing all
for a continuous period of not less than 10 years; organized governments
a.   May be reduced to 5 years in the following 5.   Persons defending or teaching the necessity or
cases: propriety of violence, personal assault, or

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assassination for the success and predominance 4.   FOREIGN-BORN children AFTER


of their ideas; NATURALIZATION are considered citizens if:
6.   Polygamists or believers in the practice of a.   He registers himself as a Philippine
polygamy; citizen; and
7.   Persons suffering from mental alienation or b.   Take the necessary oath of allegiance;
incurable contagious diseases c.   Within 1 year from reaching the age of
8.   Citizens or subjects of nations with whom the majority
United States and the Philippines are at war,
during the period of such war Loss of Citizenship
1.   By naturalization in foreign countries;
Rationale: Naturalization is a privilege and not a right. 2.   By express renunciation of citizenship;
The law must be strictly construed against the 3.   By subscribing to an oath of allegiance to support
applicant the constitution or laws of a foreign country upon
attaining 21 years of age or more, subject to
Procedure [Com. Act No. 473] certain exceptions;
1.   Declaration of intention to become a citizen must 4.   By rendering service to, or accepting commission
be filed 1 year prior to the filing of petition, unless in the armed forces of a foreign country, subject to
the applicant is exempted: certain exceptions;
a.   Born in the Philippines and received their 5.   By having been declared by competent authority,
primary and secondary education in public or a deserter of the Philippine armed forces in time
private schools recognized by the of war, unless pardoned;
Government not limited to any race or 6.   By marriage of a woman to a foreigner, if by virtue
nationality; of the laws of her husband’s country, she acquires
b.   Resided continuously for 30 years or more nationality;
before filing of application; 7.   By cancellation of the certificate of naturalization
c.   Widow and minor children of an alien who a.   It was obtained fraudulently or illegally;
declared his intention to become citizen and b.   Person naturalized shall return to his native
dies before naturalization. country or to some foreign country and
2.   Petition for naturalization must be filed. establish his permanent residence therein
3.   The petition will be heard after publication in the within 5 years from the issuance of the
Official Gazette or newspaper of general certificate;
publication. c.   Petition was made on an invalid declaration
4.   If the petition is approved, there will be a of intention;
rehearing 2 years after the promulgation of the d.   Minor children failed to graduate from the
judgment awarding naturalization schools required through the fault of their
5.   Taking of the oath of allegiance to support and parents either by neglect to support them or
defend the Constitution and the laws of the by transfer to another school;
Philippines e.   Naturalized citizen allowed himself to be
used as a dummy
Derivative Citizenship [Sec. 15, Com. Act No. 473]
1.   Wife shall be deemed a citizen if she is: Methods of reacquiring Philippine citizenship [Frivaldo
a.   Any woman now of may hereafter be v. COMELEC, G.R. No. 87193 (1989)]
married to a citizen of the Philippines; 1.   By direct act of Congress;
and 2.   By naturalization;
b.   Might herself be lawfully naturalized. 3.   By repatriation.
2.   Minor children born in the Philippines shall
be considered citizens; c.   Problems in Applying
3.   FOREIGN-BORN minor children
a.   IN THE PHILIPPINES at the time of Nationality Principle
naturalization: shall automatically become
Philippine citizens; Dual or Multiple Citizenship
b.   NOT IN THE PHILIPPINES at the time An individual can be claimed as a national of 2 or more
of naturalization: deemed a Filipino states pursuant to the rule that each State determine
citizen only during his minority. who its own nationals are. [Hague Convention on
Unless, he begins to reside Conflict of National Laws]
permanently in the Philippines when
still a minor.

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Examples: For juridical persons: domicile is determined by the


•   Child born of parents who are nationals of a law creating or recognizing it. In the absence thereof it
country applying jus sanguinis in a country shall be understood to be the place where their legal
applying jus soli principle; representation or place of business is.
•   Citizen who marries an alien may acquire the
citizenship of his/her spouse if the spouse’s Under private international law
national law allows. The place with which a person has a settled
connection for certain legal purposes, either because
Not followed under Philippine law – Filipino spouse his home is there or because that place is assigned to
retains Philippine citizenship unless by his or her act him by law.
or omission, he/she is deemed to have renounced it
The place of his true, fixed permanent home and
Statelessness principal establishment, and to which, whenever he is
Types absent, he has the intention of returning.
De Jure De Facto
an individual who has an individual possessed To acquire a domicile, there must be concurrence of
been stripped of his of a nationality but intention to make it one’s domicile and physical
nationality by his own whose country does not presence.
former government give them protection
without having an outsider their own b.  General Rules on Domicile
opportunity to acquire territory. Commonly
another known as refugees 1.   No person shall be without a domicile.
2.   A person’s domicile of origin prevails until he
Illustration acquires a new domicile.
When a child is born in a country following jus 3.   A person can have only one domicile for a given
sanguinis principle of parents whose national law purpose or a given time under the law of a
follows jus soli principle particular State.

Remedies General Rule: A person cannot have two


1.   Convention on the Status of Refugees provided simultaneous domiciles.
some basic rights of stateless persons.
2.   Convention on the Reduction on Statelessness Exception: Domicile may vary depending on the
enumerates certain conditions such as marriage, purpose (e.g. domicile for divorce will be different
divorce, adoption, naturalization, expatriation, from domicile for the purpose of running for
under which an individual would not lose public office.)
nationality at the risk of becoming stateless, 4.   It establishes a connection between a person and
unless a new nationality is provided. Also a particular territorial unit.
prohibits states from depriving their nationals of 5.   The burden of proving a change of domicile is
their identity as punishment or a discriminatory upon whoever alleges that a change has been
instrument for political, religious or ethnic secured.
reasons Without overwhelming evidence to show a change
of domicile, the court will decide in favor of the
continuance of an existing domicile.
2.  D omicile
c.   Kinds Of Domicile
a.  Definition
1.   Domicile of origin – refers to a person’s domicile
Domicile is defined by municipal law (Philippine Law) at birth
and private international law. a.   Legitimate Child – domicile of father
b.   Illegitimate Child – domicile of mother
Under municipal law c.   Emancipated Child – may acquire domicile
For the exercise of civil rights and the fulfillment of of choice
civil obligations, the domicile of natural persons is the 2.   Domicile of choice (Voluntary Domicile) – freely
place of their habitual residence. [Art. 50, CC] chosen by a person sui juris

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Acquired by the concurrence of physical presence b.  Legislative Jurisdiction


in the new place and unqualified intention to
make that place one’s home Distinguished from Judicial
3.   Constructive domicile Jurisdiction
By operation of law, a domicile is assigned to
person legally incapable of choosing their own Status, once established by the personal law of the
domicile. Included are minors, and the mentally party, is given UNIVERSAL RECOGNITION.
disabled

How one’s domicile of origin is lost


c.   Beginning and End of
1.   Actual removal or change of domicile Personality
2.   A bona fide intention of abandoning the former
residence and establishing a new one The determination of the exact moment personality
3.   Acts which correspond with the purpose begins is referred to the individual’s personal law.

In the absence of concurrence of all these, the domicile A declaration of death issued by a competent court is
of origin is deemed to continue. [Pundaodaya v. considered valid for all purposes. Upon the death of a
COMELEC, G.R. No. 179313 (2009)] person, some of his rights and obligations are totally
extinguished while others are passed on to his
successors.
3.  Principles on Personal
Status and Capacity d.  Absence
a.  Definition Three ways of addressing conflict of laws problem
regarding absence:
Personal status 1.   There is a rebuttable presumption that a person is
Includes both condition and capacity. dead when he has been absent for a number of
years
Embraces such matters as: 2.   A person’s unexplained absence is judicially
1.   The beginning and end of human investigated and established which results in
personality legal effects similar to those of death
2.   Capacity to have rights in general 3.   A judicial decree shall have to be issued declaring
3.   Capacity to engage in legal transactions the person dead before the legal effects of death
4.   Protection of personal interests take place.
5.   Family relations, particularly the relations
between: The Philippines follows the first.
a.   Husband and wife
b.   Parent and child e.   Name
c.   Guardian and ward
6.   Transactions of family law, especially General Rule: No person can change his name or
a.   Marriage surname without judicial authority.
b.   Divorce
c.   Separation Exceptions (according to Jurisprudence):
d.   Adoption 1.   That the name is ridiculous or tainted with
e.   Legitimation dishonor or extremely difficult to pronounce.
f.   Emancipation 2.   When the change is necessary to avoid confusion
7.   Succession (both testate and intestate) 3.   When the right to a new name is a consequence of
a change in status
Capacity 4.   A sincere desire to adopt a Filipino name to erase
The union of juridical capacity and capacity to act signs of a former alien nationality which unduly
PRODUCES complete civil capacity hamper social and business life.
Juridical Capacity Capacity to Act
the fitness of a man to Whether an alien’s change of name is valid DEPENDS
the power to do acts
be the subject of legal SOLELY ON HIS PERSONAL LAW.
with juridical effects
relations

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f.   Age of Majority   Choice of Law Problems


Age of majority is determined by the individual’s
personal law. 1.   Choice-of-Law in Family
Relations
g.  Capacity
Art. 15, CC. Laws relating to family rights and
Capacity to act is governed by his personal law. duties, or to the status, condition and legal capacity
of persons are binding upon citizens of the
The incapacities attached to his legal status go with Philippines, even though living abroad.
him wherever he is.
Governing Law: Lex Nationalii.

a.  Marriage
Philippine Policy on Marriage and the Family
In case of doubt, courts will apply FORUM law because
marriage is greatly influenced by the values of society.
[Prof. Aguiling-Pangalangan]

This policy is expressed in various laws. Examples:


Sec. 2, Art. XV, 1987 Constitution. Marriage, as an
inviolable social institution, is the foundation of the
family and shall be protected by the State.

Art. 220, CC. In case of doubt, all presumptions


favor the solidarity of the family. Thus, every
intendment of law or facts leans toward the validity
of the marriage , the indissolubility of the marriage
bonds, the legitimacy of children, the community of
property during the marriage, the authority of
parents over their children, and the validity of
defense for any member of the family in case of
unlawful aggression.

Extrinsic Validity of Marriage: Lex Loci Celebrationis


Covers questions relating to formalities or “external
conduct required of the parties or of third persons
especially of public officers, necessary to the formation
of a legally valid marriage.”

Governing Law: Lex Loci Celebrationis

All States recognize as valid marriages celebrated in


foreign countries if they complied with the formalities
prescribed therein [The Hague Convention]

All marriages solemnized outside the Philippines in


accordance with the laws in force in the country where
they were solemnized, and valid there as such, shall
also be valid in this country. [par. 1, Art. 26, FC]

Formal Requisites under Philippine Law: [Art. 3, FC]:


1.   Authority of the solemnizing officer

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2.   A valid marriage license except in cases provided Under Philippine law, marriage between spouses with
in Chapter 2 of this Title; and at least 1 Filipino officiated by the Philippine consul
3.   A marriage ceremony which takes place with the general, consul or vice consul must comply with the
appearance of the contracting parties before the FORMAL AND INTRINSIC REQUIREMENTS under
solemnizing officer and their personal declaration Philippine law.
that they take each other as husband and wife in 1.   Valid marriage license and due publication and
the presence of not less than two witnesses of registration
legal age.
2.   Alien must comply with marriage requisites under
Exceptions to the rule of lex loci celebrationis: Lex his or her national law and submit a certificate of
nationalii legal capacity to contract marriage issued by his
1.   Either/both parties are below 18 years old diplomatic or consular office
2.   Bigamous or polygamous marriages
3.   Subsequent marriage without recording: 3.   Stateless persons or refugees shall submit an
a.   The judgment of nullity of the first marriage affidavit in lieu of the certificate of legal capacity.
b.   Partition and distribution of the properties of
the spouses Effects of Marriage
c.   Delivery of the children’s presumptive Refers to personal relations between spouses and
legitimes property relations of the spouses
4.   Mistake as to identity of the contracting party
5.   One of the parties was psychologically Governing Law on Personal Relations Between the
incapacitated to comply with the essential marital Spouses: Lex Nationalii
obligations
6.   Incestuous Includes mutual fidelity, respect, cohabitation,
7.   Void by reason of public policy support and the right of the wife to use the husband’s
family name.
The abovementioned involve the question capacity to
marry, which is a substantive requirement for If the spouses are of different nationalities, generally,
marriage. Since personal law governs questions of the national law of the husband may prevail if not
intrinsic validity, the above are exceptions to lex loci contrary to law, customs and good morals of the form.
celebrationis because they are controlled by lex
nationalii. Under Philippine law, both husband and wife have the
right to fix the family domicile. [Art. 69,FC]
Intrinsic Validity of Marriage: Personal Law of the
Parties – Lex Nationalii or Lex Domicilii Property Relations of Spouses
Refers to the capacity or general ability of a person to According to The Hague Convention on the Law
marry (e.g. age requirement and parental consent). applicable to Matrimonial Property Regimes the
governing law:
Governing Law: Personal Law, either Lex Nationalii or 1.   Internal law designated by the spouses
Lex Domicilii before the marriage; or
Note: In the Philippines: Lex nationalii 2.   In the absence thereof, the internal law of
the state in which both spouses fix their
Intrinsic requirements of marriage habitual residence.
No marriage shall be valid, unless these essential .
requisites are present: PRINCIPLE OF IMMUTABILITY
1.   Legal capacity of the contracting parties who The applicable law continues notwithstanding any
must be a male and female; and change of their nationality or habitual residence. [Art.
2.   Consent freely given in the presence of the 7, The Hague Convention on Matrimonial Property
solemnizing officer [Art. 2, FC] Regime]

Consular marriages Governing Law for Filipinos: Philippine Law


Marriage celebrated by a diplomatic agent or consular Under Philippine law, absent a contrary stipulation in
official in accordance with his state law shall be a marriage settlement, property relations are
considered valid as long as it is not prohibited by the governed by Philippine law [Art. 80, FC]
state of celebration. [Art. 9, Hague Convention on
Validity of Marriages] Exceptions:
1.   Both spouses are aliens

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2.   With respect to extrinsic validity of Note: In both choice of law approaches, since the
contracts affecting property not situated in action turns on the validity of the marriage, lex fori,
the Philippines and executed in the country which is crucial in divorce, plays no substantial role in
where property is located annulment and declaration of nullity.
3.   With respect to extrinsic validity of
contracts entered into in the Philippines Bases of Jurisdiction
but affecting property situated in a foreign 1.   Lex loci celebrationis,
country requiring different formalities 2.   Law of marital domicile,
3.   Any court which acquires personal jurisdiction
b.  Divorce and Separation over the parties.

Divorce may be either: Grounds


1.   Absolute – termination of legal Based on the defects at the time of the celebration of
relationship between spouses by an act of the marriage
law
2.   Relative or Legal Separation – separation from d.  Parental Relations
bed and board
Includes paternity which is the civil status of the father
Rules or mother with respect to the child and filiation which
1.   Bases of obtaining jurisdiction over divorce is the status of the child in relation to his parents.
proceedings:
a.   Domicile of one of the parties; or Governing Law
b.   Marital domicile Legitimacy of the child is submitted to the personal
2.   On grant of divorce: law of the parents which is either:
a.   Lex nationalii; 1.   Lex nationalii; or
b.   Lex Fori 2.   Lex domicilii.

Divorce Decrees Obtained by Filipinos Note: In the Philippines, it is determined by the


General Rule: Decrees of absolute divorce obtained by national law of the parents. If the parents belong to
Filipinos abroad are not valid and are not recognized different nationalities, it is determined by the national
in Philippine jurisdiction. law of the father.

Exception: If decree is obtained by alien spouse Determination of Legitimacy of a Child


capacitating him to marry, the Filipino spouse shall Kinds of filiations
have capacity to marry. [Art. 26, FC] 1.   Natural
a.   Legitimate – governed by the personal law of
Note: However, in the case of Republic v. Tanedo- the father
Manalo [G.R. No. 221029 (2018)], the Supreme Court b.   Illegitimate – governed by the personal law of
declared that “the foreign divorce secured by a Filipino the mother
against a foreign spouse is also considered valid in the 2.   Adopted
Philippines.”
Parental Authority over the Child
Validity of Foreign Divorce Between Foreigners Most countries follow the personal law of the father.
This will be recognized in the Philippines under the
principle of international comity, provided it does not In the Philippines, joint exercise of parental authority
violate a strongly held policy of the Philippines. by the father and mother [Art. 211, FC]

c.   Annulment and Declaration e.   Adoption


of Nullity
An act by which relations of paternity and affiliation
Governing Law are recognized as legally existing between persons not
Traditional approach: LEX LOCI CELEBRATIONIS so related by nature.

Modern Approach: LAW OF THE MARITAL DOMICILE Bases of Adoption Jurisdiction


because it is considered to have the most significant General Rule: Child’s personal law, if the
interest in the status of the spouses. adopter and adoptee have different domiciles

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Exception: Adopter’s personal law is Kinds of Movables:


considered, if the child’s domicile is merely •   Choses in possession – tangible objects
constructive •   Choses in action – intangible objects

Governing law on the process of adoption: LEX


DOMICILII
b.  Capacity to Transfer or
Acquire Property
2.  C hoice of Law in Property Real property – governed by the law of the place
where the property is located (LEX SITUS)
a.  The Controlling Law
c.   Extrinsic and Intrinsic
1.   Immovable: LEX SITUS
a.   Determined by the law of the place where the Validity of Conveyances
land is situated
b.   Connecting factor is immovable itself Formalities, essential validity, and effects of
and not the parties conveyance – governed by LEX SITUS.
2.   Movables:
a.   LEX DOMICILII Rationale: The validity and effect of conveyance of
Rights over movables are governed by the law property are treated as a question of property rather
of owner’s domicile For simplicity and than contract.
convenience because it is difficult to
anticipate where they may be situated at a d.  Exception to Lex Situs Rule
given time
b.   LEX SITUS 1.   The transaction does not affect transfer of
Based on the state’s power over its territory title to/ownership of the land – LEX
INTENTIONIS or LEX VOLUNTATIS
State where property is located has the sole 2.   Contracts where real property is offered by
power to decide the validity and effects of way of a security for the performance of an
transfer of the property obligation such as a loan.
c.   LEX LOCI ACTUS a.   LOAN – covered by rules on ordinary
Law of the place where the transaction was contracts
completed b.   MORTGAGE – LEX SITUS
d.   PROPER LAW OF THE FORUM 3.   Testate or intestate succession and
Law of the state having the most real capacity to succeed – LEX NATIONALII
connection with the transfer

Note: In the Philippines however, in light of Article 16


e.   Situs of Certain Properties
of the CC, one need not classify the subject property,
as the aforementioned provision expressly provides Situs of Personal Property for Tax Purposes
that, “real and personal property are subject to the law The maxim mobilia sequuntur personam has been
of the country where they are situated (LEX SITUS).” viewed as a mere fiction of law having its origins in
considerations of general convenience and public
Traditional approach – physically part of the country policy. It cannot be applied to limit the right of the
and subject to the laws state to tax property within its jurisdiction. It yields to
established facts of legal ownership, actual presence,
Modern approach – situs is the and control elsewhere, and cannot be applied if it
place most closely and significantly related to the would result in inescapable and patent injustice.
issue [Wells Fargo Bank and Union Trust Compny v.
Collector, G.R. No. 46720 (1940)]
Thus, the only time the court has to classify the subject
property is when it is located in a foreign country Situs of Money
WHICH HAS A LAW THAT DISTINGUISHES BETWEEN Where such funds are located physically or where the
REAL AND PERSONAL PROPERTY. [Coquia and institution holding such funds is located
Aguiling-Pangalangan]

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Situs of Debts May be implied from the parties’ contemporaneous


Unsettled in Philippine jurisdiction, however, Prof. and subsequent acts
Aguiling-Pangalangan suggests that the law which
governs the contract from which the debt arises shall c.   Capacity to Enter into
also govern the transfer of the debt.
Contracts
Corporate Shares of Stock
1.   For tax purposes – domicile of the corporation Governed by the personal law of the parties –
2.   For sale – place where the title to the goods 1.   LEX NATIONALII; Or
passes from the seller to the buyer 2.   LEX DOMICILII

3.  Choice Of Law In Contracts d.  Choice of Law Issues in


Conflicts Contracts Cases
a.  Extrinsic Validity of
Choice of Forum Clause
Contracts Under the principle of freedom of contract, parties
may stipulate the law to govern their contract.
Lex Loci Celebrationis •   Questions of venue, not jurisdiction
Art. 17, CC. The forms and solemnities of contracts, •   Includes arbitration, not only choice of court.
wills, and other public instruments shall be
governed by the laws of the country in which they Contracts with Arbitration Clause
are executed. Arbitration clause – a provision in a contract
stipulating that any dispute arising from the contract
When the acts referred to are executed before the shall be submitted to a particular body for arbitration.
diplomatic or consular officials of the Republic of
the Philippines in a foreign country, the solemnities An arbitration clause, stipulating that the arbitral
established by Philippine laws shall be observed in award is final and binding, does not oust our courts of
their execution. jurisdiction as the international arbitral award, is still
judicially reviewable under certain conditions.
This principle is derived from a broader proposition
that the place governs the act (locus regit actum). The pertinent features of R.A. 9285 applying and
incorporating the UNCITRAL Model Law are the
b.  Intrinsic Validity of following: (1) the RTC must refer to arbitration in
proper cases; (2) foreign arbitral awards must be
Contracts confirmed by the RTC; (3) the RTC has jurisdiction to
review foreign arbitral awards; (4) grounds for judicial
Lex Loci Contractus review different in domestic and foreign arbitral
Law of the place of making. Looks into where “the last awards; (5) RTC decision of assailed foreign arbitral
act is done which is necessary to bring the binding award appealable. [Korea Technologies v. Lerma, G.R.
agreement into being so far as the acts of the parties No. 143581, 2008]
are concerned.”

Lex Loci Solutionis e.   Adhesion Contracts


Law of the place of performance governs all matters
relating to the: Contracts that are not negotiated by the parties and
1.   Time drafted by only one dominant party. The only
2.   Place and manner of performance participation of the other party would be to affix his
3.   Sufficiency of performance signature
4.   Valid excuses for non-performance
General Rule: Not void per se
Lex Loci Intentionis
Law intended by the parties. Intent may be expressed Exception: The court may not recognize the law
in a choice-of-law provision, unless contrary to law, stipulated and invoke public interest or public policy,
morals, good customs, public order or public policy of when there is an undue advantage made by a
the Philippines [Art. 1306, CC]; or dominant party.

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f.   Special Contracts Art. 17, CC. The forms and solemnities of contracts,
wills, and other public instruments shall be
1.   Carriage of Goods by Sea governed by the laws of the country in which they
2.   Contracts for International Air Transportation are executed.
a.   The Warsaw Convention was concluded in
order to establish uniform rules and Art. 815, CC. When a Filipino is in a foreign country,
regulations on the liability of international he is authorized to make a will in any of the forms
airline carriers in cases of death, injuries of established by the law of the country in which he
passengers or loss or damage of cargo. may be. Such will may be probated in the
b.   Any action for damages may be brought Philippines.
either:
i.   In the court of the domicile of the Art. 816, CC. The will of an alien who is abroad
carrier; produces effect in the Philippines if made with the
ii.   In his principal place of business formalities prescribed by the law of the place in
through which the contract has been which he resides, or according to the formalities
made; OR observed in his country, or in conformity with those
iii.   Before the court at the place of which this Code prescribes.
destination.
c.   The procedural rules of the forum shall
Art. 817, CC. A will made in the Philippines by a
apply.
citizen or subject of another country, which is
d.  
executed in accordance with the law of the country
g.  Limitations to Choice of of which he is a citizen or subject, and which might
Law be proved and allowed by the law of his own
country, shall have the same effect as if executed
1.   Parties may not select a law that has no according to the laws of the Philippines.
connection at all with the transaction or the
parties Filipino nationals
2.   If the law selected should change, the law as 1.   LEX LOCI CELEBRATIONIS – formalities
changed will govern. established by the law of the country where the
will is executed [Art. 17 and 815, CC]
Exception: If the change is so revolutionary that it 2.   LEX NATIONALII – formalities prescribed under
was never contemplated by the parties Philippine law

3.   Should not be interpreted to oust the jurisdiction Note: There is no express provision, only by analogy
court already acquired over the parties and the with rules applicable to aliens. The ratio is that it
subject matter cannot be assumed that the Code places the Filipino
4.   Public policy deemed written into contracts citizen in a worse position that the alien in relation to
impressed with public interest our law
5.   Cognovit Clauses / Confession of Judgment
Clauses – debtor may agree to be subject to the For Aliens
jurisdiction of a specific court in case of breach or 1.   LEX NATIONALII [Art. 816 and 817, CC]
default in payment. 2.   LEX DOMICILII
3.   LEX LOCI CELEBRATIONIS
4.  C hoice of Law in Wills, With Regard to Joint Wills
Succession and 1.   By Filipinos: VOID under Philippine law on the
ground of public policy. [Art. 818, CC]
Administration of Estates 2.   By Foreigners: VALID UNLESS it affects heirs in
the Philippines.
a.  Extrinsic Validity Of Wills
b.  Intrinsic Validity Of Wills
Includes age, testamentary capacity of the testator
and the form of the will. Governed by the national law of the decedent [Art. 16,
CC]

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Includes issues of substance such as order of 2.   If none, the law that will sustain the validity
succession, amount of successional rights and of the trust.
intrinsic validity of testamentary provisions [Art. 16,
CC] Will creating a trust
Testamentary trusts depend for their extrinsic
c.   Interpretation of Wills validity on the will which created them. The rules
governing wills as to capacity and extrinsic
Governed by the rules of interpretation of the national requirements apply (lex loci celebrationis).
law of the decedent [Art. 16, CC]
As to intrinsic validity, since a trust involves
property, the rule of lex situs determines the
d.  Revocation validity of a trust created by a last will and
testament. [Coquia and Aguiling-Pangalangan]
When done in the Philippines
Philippine Law applies
5.  C hoice of Law in Torts and
Done outside the Philippines, by a person Crimes
domiciled in the Philippines
1.   LEX DOMICILII – Philippine Law
2.   LEX LOCI ACTUS – Law of the place of a.  Policies Underlying
revocation Substantive Tort Law
3.   LEX LOCI CELEBRATIONIS – Law of the [Coquia And Aguiling-Pangalangan]
place where the will was made [Balane]
1.   To deter undesirable or wrongful conduct;
Done outside the Philippines, by a non- and
domiciliary 2.   To rectify the consequences of the tortious
1.   LEX LOCI CELEBRATIONIS – Law of the act by distributing the losses that result from
place where the will was made accident and product liability.
2.   LEX DOMICILII – Law of the place where
testator was domiciled at the time of
revocation
b.  Lex Loci Delicti Commissi
for Torts
e.   Probate
Law of the place where the alleged tort was
FORUM LAW governs because disallowance is committed.
essentially procedural in character 1.   Under COMMON law jurisdiction, the place
where the tort was committed is the place
However, the court will look into the law of the foreign where the last event necessary to make an actor
state where the will was made as to whether the liable occurred (adheres to vested rights
extrinsic requirements in the execution of the will have theory)
been complied with. 2.   CIVIL law states on the other hand view the
place where the alleged tort was committed
as the place where tortious conduct was
f.   Administration of Estates committed

Nationality and domicile does not affect Traditional View on Jurisdiction – an actor liable by
administration LEX LOCI DELICTI COMMISSI is liable everywhere

Authority of the administrator or executor is limited to Modern Theories on Foreign Tort Liability
the authority of the court that appointed such. 1.   The Most Significant Relationship
Considers the state’s contacts with the occurrence
TRUSTS and the parties.
Refers to a right of property held by one person for the
benefit of another. With the widespread criticism of the traditional
rule of lex loci delicti commissi, modern theories
Governing Law have been advanced to arrive at just results.
1.   Choice of law provision; Considering that the complaint is one of torts, the

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Philippine law should apply since it the situs of the e.   Lex Loci Delicti For Crimes
alleged tortious conduct, it has the most
significant relationship with the case, and it is the General rule: law of the place where the crime was
state intimately concerned with the ultimate committed based on the territoriality principle
outcome of the case. [Saudi Arabian Airlines v. CA,
G.R. No. 122191, (1998)] NULLUM CRIMEN SINE LEGE. An act is punishable if
it has been made punishable as a crime by law.
2.   Interest Analysis
Considers the relevant concerns the state may Developments in public international law now
have in the case and its interest in having its law includes acts considered as a crime under
applied on that issue. international law.
3.   Cavers’ Principle of Preference Exceptions to Lex Loci Delicti:
Considers justice and social expediency 1.   Crimes committed by state officials, diplomatic
representatives and officials of recognized
c.   Foreign Tort Claims international organizations
2.   Crimes committed on board foreign vessels even
Tortious liability is transitory - the liability resulting if it is within the territorial waters of the coastal
from the conduct is “deemed personal to the state, except: (Art. 27 of UNCLOS)
perpetrator of the wrong, following him a.   When the consequences of said crime
whithersoever he may go, so that compensations may extend to the coastal state;
be exacted from him in any proper tribunal which may b.   When it will disturb the peace or good order
obtain jurisdiction of the defendant’s person, the right of the country;
to sue not being confined to the place where the cause c.   When the assistance of local authorities has
of action arises.” been requested by the master of the ship or
diplomatic agent or consular officer of the
Philippine Rule on Foreign Torts flag state; or
There is no specific statutory law governing the d.   When such measures are necessary for the
damages arising from foreign torts. It is suggested suppression of illicit traffic in narcotic drugs
that the English Rule may be followed such that the or psychotropic substances.
tort committed abroad is actionable in the country 3.   Crimes committed by Philippine nationals
where it was committed and also under Philippine abroad under Article 2 of the Revised Penal
law. [Coquia and Aguiling-Pangalangan] Code:
a.   On a Philippine ship or airship
d.  Distinguishing between b.   Forgery or counterfeit any coin or currency
note of the Philippine Islands or obligations
Torts and Crimes and securities issued by the Government of
the Philippine Islands
TORTS CRIMES c.   Introduction of those mentioned above into
Transitory Local the Philippines
Personal to the Injury to the state where d.   Public officers or employees committing an
tortfeasor committed offense in the exercise of their functions
Affront against e.   Crimes against national security and the law
Injury to an individual
sovereignty and good of nations, defined in Title One of Book Two
who may be situated
order of the State where of the RPC.
in any place
it occurs
Amenable to suit in
whatever jurisdiction
Can be sued only where 6.  C hoice of Law Affecting
crime was committed
he is found Corporations and Other
Penal laws are
Torts law assigns the
promulgated to punish Juridical Entities
liability to perpetrators
and reform the
in order to indemnify
the victim for injuries
perpetrators and deter a.  Corporations
them and others from
sustained
violating the law

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Corporation Domicile or Residence of Foreign Corporations


It is an artificial being created by operation of law and When the law creating or recognizing them, or any
possesses only the rights and powers conferred upon other provision does not fix the domicile of juridical
it in its charter. persons, domicile is:
1.   The place where their legal representation is
Foreign Corporation established; or
One formed, organized and existing under the laws of 2.   Where they exercise their principal functions [Art.
a state other than those of Philippines; such laws 51, CC]
allowing Filipino citizens and corporation to do
business there If a foreign corporation is granted a license to operate
in the Philippines, it acquires domicile here.
It shall have the right to transact business in the
Philippines after it shall have obtained a license in Jurisdiction over Foreign Corporations
accordance with the Corporation Code and a Consent Doctrine – a foreign corporation shall be
certificate of authority from the appropriate recognized and allowed to transact business in any
government agency. state which gives its consent. Under Philippine law,
this doctrine is established in Sections 125, 126, 127
Four Basic Theories: [Bank of Augusta v. Earle, 38 U.S. and 128 of the Corporation Code.
519, 1839]
1.   A corporation has no legal status beyond the Foreign corporations doing business in the Philippines
bounds of sovereignty within which it was created are bound by Philippine law except for: [Art. 129,
Corporation Code]
Exception: It can act with another State’s 1.   Provisions for creation, formation, organization
express or implied consent. (Consent or dissolution
Doctrine) 2.   Provisions which fix the relations liabilities,
2.   A corporation cannot exercise powers not responsibilities or duties of stockholders,
granted by its corporate charter or by the members, or officers of the corporation
laws of the state of incorporation
3.   No state is under any obligation to adhere Service upon foreign corporations doing business in
to the doctrine of comity. It has the power the Philippines [Sec. 14, Rule 14, ROC]
to refuse to recognize or prevent the
foreign corporation from acting within its General Rule: Resident Agent
jurisdiction Exception: If the corporation DOES NOT have a resident
4.   A state is not obliged to grant the foreign agent, then service may be made on:
corporation privileges and immunities 1.   Government official designated by law;
common to citizens of that state 2.   Any of its officers or agent within the Philippines;
3.   Summons through diplomatic channels
Personal law of a Corporation
Law of the state where it is incorporated Right of Foreign Corporation to Bring Suit and be
Sued
Fixes the domicile of the corporation and determines License to transact business in the Philippines is a
the capacity to enter into certain contracts. prerequisite for filing a suit before Philippine courts.
Such corporation may be sued or proceeded against
It governs the powers and the rights of the before Philippine courts or administrative tribunals.
corporation, as well those of its officers and [Sec. 133, Corporation Code]
shareholders.
A foreign corporation which does business without a
Exceptions to the Rule of Incorporation license can still be sued.
1.   Test Constitutional and Statutory Restrictions
A state may exclude a foreign corporation from Exceptions to the License Requirement
doing business within its territory, or prescribe Foreign corporations do not need to have a license
any conditions as a prerequisite. in order to commence suits in the Philippines
2.   Control Test During War under the following instances:
Courts may pierce the veil of corporate identity 1.   Isolated Transactions
and look into the nationality of the controlling Isolated transactions are those that are
stockholders to determine the “citizenship” of occasional, incidental and casual, and not of
the corporation a character or business to indicate a

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purpose to engage in business. [Pacific 8.   Collecting information in the Philippines


Micronisian Line v. Del Rosario, G.R. No. L- 9.   Services auxiliary to an existing isolated contract
7154 (1954)] of sale which are not on a continuing basis

They not constitute “doing business” as b.  Partnerships


contemplated by law. There is no continuity
of conduct and intention to establish a Governing Law
continuous business within the state. 1.   LAW OF DOMICILE governs the determination of
2.   Action to Protect Trademark, Trade Name, the entitlements and limitations applicable to the
Goodwill, Patent or for Unfair Competition partnership
Based on equity considerations 2.   PERSONAL LAW governs:
3.   Agreements Fully Transacted Outside the a.   Legal capacity of foreign corporations to
Philippines contract
The transaction must be wholly celebrated b.   Determination of the existence of the
and consummated abroad. partnership
4.   Counterclaim c.   Determination of the grounds for dissolution
Petition filed is merely a corollary defense and termination of the partnership
in a suit against it. 3.   PHILIPPINE LAW governs:
a.   Creation of their establishments in the
Definition and Scope of “Transacting Philippines
Business” b.   Mercantile operations
Under the Foreign Business Registration Act c.   Jurisdiction of the courts of the Philippines
and Foreign Investments Act, acts that
constitute DOING BUSINESS includes: Extraterritorial enforcement of in personam
1.   Soliciting orders, service contracts, opening judgments against partnership
offices
2.   Appointing representatives or distributors either: There is jurisdiction over the partnership or
a.   Domiciled in the Philippines unincorporated association if under the
b.   Stay in the country for 180 days or more circumstances, there is jurisdiction over an individual
3.   Participating in the management, supervision, or
control of any domestic business, firm, entity, or A judgment against a partnership or association is
corporation in the Philippines enforceable against its assets in every state.
4.   Any other act that implies a continuity of
commercial dealings or arrangements
5.   The exercise of some functions normally incident
to, and in progressive prosecution of,
commercial gain or of the purpose and object of
the business organization

Not Doing Business


1.   Activities which do not bring any direct receipts or
profits to the foreign corporations
2.   Mere investment as a shareholder in a domestic
corporation and/or exercise of rights as such
investor
3.   Having a nominee director or officer to represent
interests in such corporation
4.   Appointing a representative or distributor
domiciled in the Philippines which transacts
business in its own name and for its own accounts
5.   Publication of general advertisement through
any media
6.   Maintaining of stocks of goods in the Philippines
solely for the purpose of having the same
processed by another entity
7.   Consignment of equipment with a local company
to be used in the processing of products for export

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  Foreign Judgments Res judicata


A matter already settled cannot be relitigated.
•   Those who have contested an issue shall be
1.   Recognition and bound by the result of the contest
•   Matters once tried and decided with finality in one
Enforcement of Foreign jurisdiction shall be considered as settled
Judgments between the parties
•   Prevents parties from litigating issues that have
Foreign Judgment been determined by a valid local judgment
All decisions rendered outside the forum
Under Philippine law: [Sec. 40, Rule 39, ROC]
Encompasses judgments, decrees, and orders of •   Judgment or final order upon a SPECIFIC THING
foreign governments and sister states in a federal – renders it conclusive upon the title to the thing
government •   Judgment against a PERSON – presumptive
evidence of a right between parties and their
Functions of Recognition and Enforcement successors in interest.
The successful plaintiff may try to enforce judgment in
another state where defendant can be located if he d.  Requisites for Recognition
fails to obtain satisfaction in the court which granted
it. or Enforcement
A successful defendant may assert that decision in 1.   Rendered by a court with jurisdiction over the
order to preclude the plaintiff from filing a suit on the parties and the case
same claim in another forum. LEX FORI or the internal law of the forum where
the foreign judgment was rendered governs
matters of remedy and procedure such as service
a.  Distinction between of process in determining whether jurisdiction was
Recognition and properly obtained. [Northwest Orient Airlines Inc.
v. Court of Appeals and C.F. Sharp & Co. Inc., 241
Enforcement SCRA 192, 1995]
a.   In personam jurisdiction is based on consent
1.   Recognition – passive act of giving effect to a
of the parties; or the relation of the parties or
foreign judgment without necessity of filing an
events to the forum
action in the other forum.
b.   In rem jurisdiction is based on the State’s
2.   Enforcement – requires filing of an action in court
power over the property found within the
wherein a new judgment must be handed down.
territory
2.   Judgment must be valid under the laws of the
b.  Bases of Recognition and court that rendered It
Enforcement of Foreign 3.   Judgment must be final and executory to
constitute res judicata in another action
Judgments A foreign judgment that is merely interlocutory or
provisional, contemplating a fuller investigation
1.   Comity – in order to obtain a reciprocal treatment leading to a later final decision, creates no
from the courts of other countries, State are obligation on the forum court to recognize or
compelled to take foreign judgments as they enforce it. (i.e. support and custody)
stand and to give them Full Faith and Credit 4.   (Reciprocity) State where foreign judgment was
2.   Obligation of foreign judgment – derived from the obtained allows recognition or enforcement of
vested rights theory. It considers the foreign Philippine judgements
judgment as imposing a duty or obligation on the This is a reiteration of international comity.
losing litigant. 5.   Judgment must be for a fixed sum of money
Foreign judgment must specify performance or
c.   Policies Underlying delivery, otherwise, there is nothing for the forum
court to enforce.
Recognition and 6.   Judgment must NOT be CONTRARY to the
Enforcement PUBLIC POLICY or GOOD MORALS of the country
where it is to be enforced

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U.P. LAW BOC GENERAL PRINCIPLES CIVIL LAW

7.   Judgement must not have been obtained by


fraud, collusion, mistake of fact or mistake of law

Decisions will not be disturbed, whether it was


reached through adversary proceeding or by default,
in the absence of fraud or collusion. [Somportex v.
Philadelphia Chewing Gum Corp., 453 F.2d 435 (1971)]

Grounds are decided by the court where enforcement


is sought on the basis of its internal law.

2.  P rocedure for Enforcement


When a foreign judgment is recognized, it is not
instantaneously executed as a judgment.

Three Modes of Enforcement:


a.   By filing a new action in the court where
enforcement is sought
1.   Filed in the proper court attaching an
authenticated copy of the foreign judgment.
2.   Authentication calls for the Philippine consul
assigned to the country where the foreign
judgment was decreed to certify that it had
been rendered by a court of competent
jurisdiction.
b.   Summary proceeding or Exequatur procedure
1.   A validation proceeding by the court
2.   It results in giving the foreign judgment the
same effect as a local judgment.
c.   Judgment Registration
An authenticated copy of the foreign judgment is
filed in the registrar’s office together with other
proofs required by domestic laws. It results in
conversion of foreign judgment into local one that
is immediately executory.

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U.P. LAW BOC GENERAL PRINCIPLES CIVIL LAW

SUMMARY OF CONFLICTS OF LAW RULES LEX LOCI CONTRACTUS


Nationality Art. 15, CC and Art. 16, CC Intrinsic Validity LEX LOCI SOLUTIONIS
Domicile Art. 50, CC and Art. 51, CC LEX INTENTIONIS
Personal Status Personal law (Nationality or PERSONAL LAW, which can
Capacity to enter
and Capacity Domicile) either be lex nationalii or lex
into contract
Family Relations domicilii (Art. 15, CC)
Extrinsic Validity: Interpretation LEX INTENTIONIS
Lex loci celebrationis (Art. 26 Wills, Successions, Administration of Estates
st
FC, 1 par.) Filipino makes a will abroad
Exceptions: Art. 35(1), (4), (5), Lex Nationalii; Lex Loci
(6), FC; Art. 36, FC; Art. 37 FC; Celebrationis
Art. 38, FC Extrinsic Validity Alien makes a will in the
Intrinsic Validity: Personal law Philippines
Lex nationalii (Art. 15m CC) or Lex Nationalii; Lex Domicilii;
Marriage
Lex domicilii Lex Loci Celebrationis
Personal relations of the Lex Nationalii (par. 2, Art. 16,
spouses – Personal law Intrinsic Validity
CC)
(lex nationalii or lex domicilii) Lex nationalii (based on
(Art. 15, CC) Interpretation of nationality principle)
Property relations – see Art. Wills If terms are clear and
80 FC unambiguous, lex intentionis
Generally, lex rei sitae If done outside by one not
Lex fori for grounds of divorce domiciled in the Philippines
In the Philippines, see Art. 26, Lex loci celebrationis or Lex
Divorce and
FC domicilii
Separation
Lex nationalii or lex domicilii If done outside by one
And
as basis for adjudicative domiciled in the Philippines
Grounds for Legal Revocation
jurisdiction Lex loci actus or Lex domicilii
Separation
(matrimonial jurisdiction or or lex loci celebrationis
domicile of one spouse) If done within the Philippines
Traditional approach: LEX Lex loci actus – so Philippine
Annulment and
LOCI CELEBRATIONIS law (in accordance with CC
Declaration of
Modern approach: LEX provisions)
Nullity
DOMICILII (marital domicile) LEX FORI
Probate
Determination of legitimacy: LEX LOCI CELEBRATIONIS
PERSONAL LAW (lex If there is an effective choice
nationalii or lex domicilii) of law – courts of the place
Parental relation
Parental authority: where the trust is being
PERSONAL LAW of father administered
Adoption: PERSONAL LAW If there is no effective choice
Trusts
Property of law – law that will sustain
Immovables Lex situs the validity of the trust (place
Lex domicilii, lex situs, lex loci of administration or domicile)
Movables
actus, proper law of the forum For testamentary trusts –
BUT in the Lex situs, be it real or follow rules on wills
Philippines personal property Torts and Crimes
Extrinsic Validity: LEX SITUS Situs of the tort
(Art. 16(1), CC) place of injury or LEX LOCI DELICTI COMMISSI
Intrinsic Validity: LEX SITUS place of conduct
Conveyances
(Art. 16(1), CC) For crimes LEX LOCI DELICTI
Unless we can prove LEX Corporations and Juridical Entities
INTENTIONIS Personal law of Place of incorporation
Contracts corporations (domicile)
LEX LOCI CELEBRATIONIS
Extrinsic Validity (Art. 17, CC)
Exception: LEX INTENTIONIS

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U.P. LAW BOC PERSONS AND FAMILY RELATIONS CIVIL LAW

PERSONS AND FAMILY


RELATIONS
Civil Law

Page 29 of 497
U.P. LAW BOC PERSONS AND FAMILY RELATIONS CIVIL LAW

III.   PERSONS AND Art. 41, CC. For civil purposes, the fetus is
FAMILY RELATIONS considered born if it is alive at the time it is
completely delivered from the mother’s womb.
However, if the fetus had an intra-uterine life of less
  Persons and Personality than seven months, it is not deemed born if it dies
within twenty-four hours after its complete delivery
from the maternal womb.
1.   Concept of Person and
Birth: complete removal of the fetus from the mother’s
Personality womb.
Persons: Any being, physical, moral, real, juridical and Before birth, a fetus is merely part of the mother’s
legal susceptible of rights and obligations or being the internal organs. It is enough that the child lives even
subject of legal relations. for an instant. [Tolentino]

Juridical Capacity Capacity to Act Proof that the fetus was alive upon separation is
Fitness of a person to complete respiration as a test or sign of independent
Power to do acts with
be the subject of legal life.
legal effect
relations
Passive Active It is presumed that the child was alive and it is the
Aptitude for the holding Aptitude for the opposing party who has the burden of proof.
and enjoyment of rights exercise of rights
Inherent in natural Intra-Uterine Life When Considered Born
Must be acquired
persons If alive (e.g. can breathe
Lost through death and 7 months or more independently, etc.)
Lost upon death
other causes upon delivery
Cam exist without Must exist with juridical If alive after completion
capacity to act capacity Less than 7 months of 24 hours from
Cannot be limited or May be restricted or delivery
restricted limited
Personality of Conceived Child
Art. 37, CC. Juridical capacity, which is the fitness a.   Limited: only for purposes favorable to it.
to be the subject of legal relations, is inherent in b.   Conditional: it depends upon the child being born
every natural person and is lost only through death. alive later
Capacity to act, which is the power to do acts with
legal effect, is acquired and may be lost. A conceived child can acquire rights while still in the
mother’s womb. It can inherit by will or by intestacy.
N.B. Juridical capacity can exist even without capacity
to act; the existence of the latter implies that of the Period of Conception: the first 120 days of the 300
former. Full civil capacity is the existence of both days preceding the birth of the child. [Tolentino]
capacity to act and juridical capacity.
An aborted fetus never acquired legal rights/civil
Capacity and incapacity depends on the law, therefore personality because it was not alive at the time of
it cannot be modified by agreements. It is a matter of delivery from the mother’s womb. No damages can be
public interest. [Tolentino] claimed in behalf of the unborn child since an action
for pecuniary damages on account of personal injury
or death pertains primarily to the one injured. [Geluz v.
2.  C ommencement and CA, G.R. No. L-16439 (1961)]
Termination of Personality “This is not to say that the parents [of an aborted fetus]
are not entitled to collect any damages at all. But such
Art. 40, CC. Birth determines personality; but the
damages must be those inflicted directly upon them
conceived child shall be considered born for all
as distinguished from the injury or violation of the
purposes favorable to it, provided that it be born
rights of the [aborted fetus]” e.g. moral damages for
later with the conditions specified in the following
their loss and the disappointment of their parental
article.

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expectations (Art. 2217, CC). [Geluz v. CA, G.R. No. L- Both over 15 and under
Male
16439 (1961)] 60; different sexes
Both over 15 and under
Older
3.  Death 60; same sex
One under 15 or over
60, the other between One between 15 and 60
Art. 42, CC. Civil personality is extinguished by those ages
death. The effect of death upon the rights and
obligations of the deceased is determined by law,
by contract and by will. 4.  J uridical Persons
Art. 43, CC. If there is a doubt, as between two or The following are juridical persons [Art. 44, CC.]:
more persons who are called to succeed each other, a.   The State and its political subdivisions;
as to which of them died first, whoever alleges the b.   Other corporations, institutions and entities for
death of one prior to the other, shall prove the public interest or purpose, created by law; their
same; in the absence of proof, it is presumed that personality begins as soon as they have been
they died at the same time and there shall be no constituted according to law:
transmission of rights from one to the other. 1.   Juridical persons mentioned in Nos. 1 and 2
of the preceding article are governed by the
Criminal liability ends with death but civil liability may laws creating or recognizing them. [par. 1,
be charged against the estate [People v. Tirol, G.R. No. Art. 45, CC]
L-30538 (1981)]. 2.   Upon the dissolution of corporations,
institutions and other entities for public
Note: Article 43 [CC] provides a statutory presumption interest or purpose mentioned in No. 2 of
when there is doubt on the order of death between article 44, their property and other assets
persons who are called to succeed each other (only). shall be disposed of in pursuance of law or the
charter creating them. If nothing has been
The statutory presumption of Article 43 was not specified on this point, the property and other
applied due to the presence of a credible eyewitness assets shall be applied to similar purposes for
as to who died first [Joaquin v. Navarro, G.R. No. 5426 the benefit of the region, province, city or
(1953)]. municipality which during the existence of the
institution derived the principal benefits from
Even mere inference, when drawn from established the same. [Art. 47, CC.]
facts and weighed by common experience, may prevail c.   Corporations, partnerships and associations for
over the presumption of Art. 43 [Joaquin v. Navarro, private interest or purpose to which the law grants
G.R. No. 5426 (1953)]. a juridical personality, separate and distinct from
that of each shareholder, partner or member.
Art. 43, CC v. Sec. 3(jj), Rule 131, Rules of Court 1.   Private corporations are regulated by laws of
(hereinafter, ROC) general application on the subject.
Art. 43 Sec. 3(jj), Rule 131 2.   Partnerships and associations for private
interest or purpose are governed by the
Only use the presumptions when there are no facts
provisions of this Code concerning
to get inferences from
partnerships [pars. 2 and 3, Art. 45, CC].
Only used for Cannot be used for
succession purposes succession purposes
Only during death in Art. 46, CC. Juridical persons may acquire and
In any circumstance calamities, wreck, possess property of all kinds, as well as incur
battle or conflagration obligations and bring civil or criminal actions, in
conformity with the laws and regulations of their
Sec. 3(jj), Rule 131, ROC: Presumption of organization.
Survivorship
Age Presumed Survivor Concept of Juridical Persons is that an abstract being
Both under 15 Older is formed for the realization of a collective purpose
that the law granted with capacity for rights and
Both above 60 Younger
obligations. It requires recognition of the State and is
One under 15, the other
One under 15 independent of the members. [Tolentino]
above 60

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Kinds of Persons Effects on Contracts


Natural Person Juridical Person 1.   They cannot give consent to a contract [Art. 1327
Human beings Artificial, abstract (1), CC]
Products of procreation Products of fiction 2.   A contract where one of the parties is a minor is
voidable [Art. 1390(1), CC]
3.   A contract is unenforceable when both of the
5.  R estrictions on Civil parties are minors (incapable of giving consent)
Capacity [Art. 1403(3), CC]
4.   Minority cannot be asserted by the other party in
an action for annulment [Art. 1397, CC]
a.  Presumption of Capacity 5.   Not obliged to make restitution except insofar as
he has been benefited [Art. 1399, CC]
Art. 37, CC. Juridical capacity, which is the fitness 6.   Minor has no right to demand the thing/price
to be the subject of legal relations, is inherent in voluntarily returned by him [Art. 1426, CC]
every natural person and is lost only through death. 7.   Minor has no right to recover voluntarily paid sum
Capacity to act, which is the power to do acts with or delivered thing, if consumed in good faith [Art.
legal effect, is acquired and may be lost. 1427, CC]
8.   Must pay reasonable amount for necessaries
b.  Restrictions on Capacity to delivered to him [Art. 1489, CC]

Act Estoppel works against minors who misrepresent


their ages in a contract and are compelled to comply
Art. 38, CC. Minority, insanity or imbecility, the with its terms. [Mercado v. Espiritu, G.R. No. L-11872
state of being a deaf-mute, prodigality and civil (1917)]
interdiction are mere restrictions on capacity to act,
and do not exempt the incapacitated person from When a minor made no active misrepresentation as to
certain obligations, as when the latter arise from his minority and such minority is known to the other
his acts or from property relations, such as party, the contract may be annulled by the minor upon
easements. attaining the age of majority. [Bambalan v. Maramba,
G.R. No. L-277710 (1928)]
Art. 39, CC. The following circumstances, among
others, modify or limit capacity to act: age, insanity, Minors are obliged to make restitution insofar as they
imbecility, the state of being a deaf-mute, penalty, have been benefited [Art. 1399, CC; Braganza v. Villa
prodigality, family relations, alienage, absence, Abrille, G.R. No. L-12471 (1959)].
insolvency and trusteeship. The consequences of
these circumstances are governed in this Code, Effects on Marriage
other codes, the Rules of Court, and in special laws. 1.   May not yet contract marriage [Art. 5, Family
Code (hereinafter, FC)].
A married woman, twenty-one years of age or over, 2.   Marriages, where one of the parties is below 18,
is qualified for all acts of civil life, except in cases even with the consent of parents/guardians, are
specified by law. void [Art. 35, FC].

Capacity to act is not limited on account of religious Effect on Crimes [R.A. 9344]
belief or political opinion. General Rule: EXEMPTED from criminal liability
Exception: Acted with discernment, and the minor is
General Rule: Incapacitated persons are not exempt between 15 and 18 years of age.
from certain obligations arising from his acts or
property relations. INSANITY

MINORITY Insanity includes many forms of mental disease,


either inherited or acquired. A person may not be
Who are minors? insane but only mentally deficient (idiocy, imbecility,
Those whose age are below the age of majority. feeble-mindedness).

RA 6809 (1989): An act lowering the age of majority Prevailing Presumption: Every person is of sound
from twenty-one to eighteen years. mind, in the absence of proof to the contrary. [par. 1,
Art. 800, CC]

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1.   Cannot give consent to a contract if he/she also


It is presumed that a person who enters into a contract does not know how to write [Art. 1327(2), CC]
is of sound mind. The burden of proof of insanity rests 2.   Can make a valid WILL, provided: he must
upon him who alleges insanity. [Engle v. Doe, G.R. No. personally read the will. The contents of the same
L-23317 (1925)] (see Exception below) have either been read personally by him or
otherwise communicated to him by 2 persons [Art.
Effect on Contracts 807, CC]
1.   Incapacity to give consent to a contract [Art. 3.   Cannot be a witness to the execution of a will [Art.
1327(2), CC] 820, CC]
2.   Contracts entered into during lucid intervals are 4.   Voidable if one of the parties is a deaf-mute who
valid [Art. 1328, CC]. Burden of proof lies with does not know how to write [Art. 1390, CC]
party asserting the contract was entered into by 5.   Unenforceable if both of the parties are deaf-
the insane during a lucid interval. mutes and do not know how to write [Art. 1403(3),
3.   Restitution of benefits [Art. 1399, CC] CC]
4.   Voidable if one of the parties is insane [Art. 1390,
CC] PRODIGALITY
5.   Unenforceable if both of the parties are insane
[Art. 1403 (3), CC] Incompetent includes prodigals [Sec. 2, Rule 92, ROC]

Effect on Crimes Prodigality may be inferred but must show a morbid


General rule: EXEMPTED from criminal liability [Art. state of mind and a disposition to spend, waste, and
12(1), Revised Penal Code (hereinafter, RPC)] lessen the estate to such an extent as is likely to
expose the family to want of support, or to deprive the
Exception: Acted during lucid interval [Art. 1328,CC]. forced heirs of their undisposable part of the estate.
[Martinez v. Martinez, G.R. No. 445 (1902)]
Effect on Marriage
May be annulled if either party was of unsound mind Note: It is not the circumstance of prodigality, but the
unless the such party after coming to reason, freely fact of being under guardianship that restricts
cohabited with the other [Art. 45(2), FC] capacity to act.

Action for annulment of marriage must be filed by the CIVIL INTERDICTION


sane spouse who had no knowledge of the other’s
insanity, or by any relative/guardian of the insane 1.   It is an accessory penalty imposed upon persons
before the death of either party; or by the insane who are sentenced to a principal penalty not lower
spouse during a lucid interval or after regaining sanity than reclusion temporal [Art. 41, RPC].
[Art. 47(2), FC] 2.   Offender is deprived of rights of parental
authority, or guardianship, of marital authority, of
In the absence of proof that the defendant had lost his the right to manage his property and of the right
reason or became demented a few moments prior to to dispose of such by any act inter vivos [Art. 34,
or during the perpetration of the crime, it is presumed RPC]
that he was in a normal condition of mind. It is 3.   For the validity of marriage settlements, the
improper to conclude that he acted unconsciously, in participation of the guardian shall be
order to relieve him from responsibility on the ground indispensable [Art. 123, FC]
of exceptional mental condition, unless his insanity 4.   Sentence of one’s spouse to a penalty which
and absence of will are proven. [USA v. Vaguilar, G.R. carries with it civil interdiction is sufficient cause
No. L-9471 (1914)] for judicial separation of property [Art. 135 (1), FC]
5.   The administration of exclusive property of either
Capacity to act must be supposed to attach to a person spouse may be transferred by the court to the
who has not previously been declared incapable, and other spouse when one of them is sentenced to
such capacity is presumed to continue so long as the civil interdiction [Art. 142 (3), FC]
contrary be not proved, that is, that at the moment of
his acting he was incapable, crazy, insane, or out his FAMILY RELATIONS
mind [Standard Oil v. Arenas, G.R. No. L-5921 (1911)]
1.   Justifying circumstance if acted in defense of
DEAF-MUTISM person/rights of spouse, ascendants,
descendants, brothers/sisters, and other relatives
th
up to the 4 civil degree [Art. 11(2), RPC]

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2.   Mitigating circumstance if acted in the immediate condition is the unavoidable consequence of


vindication of a grave offense/felony committed conflicting laws of different states. [Cordora vs
against his spouse, ascendants or relatives of the COMELEC, G.R. No. 176947 (2009)]
same civil degree [Art. 13(5), RPC]
3.   Incestuous and void marriages: Aliens cannot own or operate public utilities.
a.   Between ascendants and descendants of any Corporations should be at least 40% Filipino and their
degree; managaing or executive officials should be Filipinos.
b.   Between brothers and sisters, whether full or Furthermore, alien Corporations cannot operate for
half-blood. [Art. 37, FC] more than 50 years. [Sec. 11, Art. XII, 1987
4.   Donations/grants of gratuitous advantage Constitution]
between spouses during the marriage shall be
VOID, except moderate gifts during family ABSENCE
occasions [Art. 87, FC]
5.   Prescription does not run between spouses, Art. 390, CC. After an absence of seven years, it
parent and child, guardian and ward (Art. 1109) being unknown whether or not the absentee still
6.   Descendants cannot be compelled to testify in a lives, he shall be presumed dead for all purposes,
criminal case, against his parents and except for those of succession.
grandparents.
Unless: the crime was against the descendant OR The absentee shall not be presumed dead for the
by one parent against the other [Art. 215, FC] purpose of opening his succession till after an
7.   Spouses cannot sell property to each other, absence of ten years. If he disappeared after the
EXCEPT: age of seventy-five years, an absence of five years
a.   Absolute separation is agreed upon in the shall be sufficient in order that his succession may
marriage settlements be opened.
b.   Judicial separation of property [Art. 1490]
8.   A suit between family members cannot prosper The following shall be presumed dead for all
without any showing that earnest effort towards a purposes, including the division of the estate among
compromise have been made but have failed (Art. the heirs [Art. 391, CC.]:
151, FC) 1.   A person on board a vessel lost during a sea
EXCEPT: voyage, or an aeroplane which is missing, who
a.   questions on civil status of persons; has not been heard of for four years since the loss
b.   validity of a marriage or a legal separation; of the vessel or aeroplane;
c.   any ground for legal separation; 2.   A person in the armed forces who has taken part
d.   future support; in war, and has been missing for four years;
e.   jurisdiction of courts; and 3.   A person who has been in danger of death under
f.   future legitime [Art. 2035]. other circumstances and his existence has not
been known for four years.
ALIENAGE
Art. 41, CC. A marriage contracted by any person
Dual Citizenship v. Dual Allegiance [Cordora v. during subsistence of a previous marriage shall be
COMELEC, G.R. No.176947 (2009)] null and void, unless before the celebration of the
Dual Citizenship Dual Allegiance subsequent marriage, the prior spouse had been
Arises when, as a result absent for four consecutive years and the spouse
of the concurrent Refers to the situation present has a well-founded belief that the absent
application of the in which a person spouse was already dead. In case of disappearance
different laws of two or simultaneously owes, where there is danger of death under the
more states, a person is by some positive act, circumstances set forth in the provisions of Article
simultaneously loyalty to two or more 391 of the CC, an absence of only two years shall be
considered a national states sufficient.
by said states
Result of individual’s For the purpose of contracting the subsequent
Involuntary
volition marriage under the preceding paragraph the
spouse present must institute a summary
For candidates with dual citizenship, it should suffice proceeding as provided in this Code for the
if, upon the filing of their certificates of candidacy, they declaration of presumptive death of the absentee,
elect Philippine citizenship to terminate their status as
persons with dual citizenship considering that their

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without prejudice to the effect of reappearance of 5.   Justices, judges, prosecuting attorneys, clerks of
the absent spouse. superior and inferior courts, and other officers and
employees connected with the administration of
Art. 42, CC. The subsequent marriage referred to in justice, the property and rights in litigation or
the preceding Article shall be automatically levied upon an execution before the court within
terminated by the recording of the affidavit of whose jurisdiction or territory they exercise their
reappearance of the absent spouse, unless there is respective functions; this prohibition includes the
a judgment annulling the previous marriage or act of acquiring by assignment and shall apply to
declaring it void ab initio. lawyers, with respect to the property and rights
which may be the object of any litigation in which
A sworn statement of the fact and circumstances of they may take part by virtue of their profession.
reappearance shall be recorded in the civil registry 6.   Any others specially disqualified by law
of the residence of the parties to the subsequent
marriage at the instance of any interested person, PHYSICAL INCAPACITY/DISEASE
with due notice to the spouses of the subsequent
marriage and without prejudice to the fact of Art. 46, FC. Any of the following circumstances
reappearance being judicially determined in case shall constitute fraud referred to in Number 3 of the
such fact is disputed. preceding Article:
xxx
INSOLVENCY AND TRUSTEESHIP
(3) Concealment of sexually transmissible disease,
Rescissible Contracts [Art. 1381, CC] regardless of its nature, existing at the time of
1.   Those which are entered into by guardians marriage.
whenever the wards whom they represent suffer
lesion by more than one-fourth of the value of the Art. 820, CC. Any person of sound mind and of the
things which are the object thereof; age of eighteen years or more, and not blind, deaf
2.   Those agreed upon in representation of or dumb, and able to read and write, may be a
absentees, if the latter suffer the lesion stated in witness to the execution of a will mentioned in
the preceding number; Article 805 of this Code.
3.   Those undertaken in fraud of creditors when the
latter cannot in any other manner collect the
claims due them;
6.  D omicile and Residence of
4.   Those which refer to things under litigation if they Persons
have been entered into by the defendant without
the knowledge and approval of the litigants or of For Natural Persons:
competent judicial authority; The place of their habitual residence [Art. 50, CC]
5.   All other contracts specially declared by law to be
subject to rescission. For Juridical Persons:
The place where their legal representation is
The following persons cannot acquire by purchase, established, or where they exercise their primary
even at a public or judicial auction, either in person functions, unless there is a law or other provision that
or through the mediation of another [Art. 1491, CC.]: fixes the domicile [Art. 51, CC]
1.   The guardian, the property of the person or
persons who may be under his guardianship; Domicile v. Residence
2.   Agents, the property whose administration or sale While domicile is permanent (there is intent to
may have been entrusted to them, unless the remain), residence is temporary and may be changed
consent of the principal has been given; anytime (there is no necessary intent to remain).
3.   Executors and administrators, the property of the
estate under administration; Requisites of Domicile:
4.   Public officers and employees, the property of the a.   Residence or bodily appearance in a new locality
State or of any subdivision thereof, or of any b.   Intention to permanently remain there (animus
government-owned or controlled corporation, or manendi); and
institution, the administration of which has been c.   An intention to abandon the old domicile (animus
intrusted to them; this provision shall apply to non revertendi)
judges and government experts who, in any
manner whatsoever, take part in the sale;

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There must be animus manendi coupled with animus


non revertendi. One must have actual change of   Family Code
domicile and a bona fide intention to establish a new
residence. [Poe Llamanzares v. COMELEC, G.R. No. 1.   Effect and Retroactivity
221697 (2016)]
Art. 256, FC. This Code shall have retroactive effect
Kinds of Domicile insofar as it does not prejudice or impair vested or
a.   Domicile of Origin: Domicile of parents of a acquired rights in accordance with the CC or other
person at the time he was born.
laws.
b.   Domicile of Choice: Domicile chosen by a person,
changing his domicile of origin. Domicile where he
intends to remain (animus revertendi). The Family Code took effect on August 3, 1988

A 3rd requisite is necessary: intention not to 2.  R epeal and Amendment


return to one’s domicile as his permanent place.
c.   Domicile by Operation of Law (i.e. Art. 69, Art. 255, FC. If any provision of this Code is held
domicile of minor). invalid, all the other provisions not affected thereby
shall remain valid.
A married woman does not lose her domicile to
her husband. Unless there is a clear proof of
abandonment, domicile of origin subsists
[Romualdez-Marcos v. COMELEC, G.R. No. 119976
(1995)].

Foundlings cannot be considered stateless and


citizenship is not required for domicile [Poe-
Llamanzares v. COMELEC, G.R. No. 221697 (2016)]

A house is not necessary to establish domicile [Jalosjos


v. COMELEC, G.R. No. 193237 (2012)

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  Marriage and Personal accordance with Article 21 [CC] aforesaid. [Wassmer v.


Velez, G.R. No. L-20089 (1964)]
Relationship Between Article 21 [CC] may be applied in a breach of promise
Spouses to marry where the woman is a victim of moral
seduction. [Baksh v. CA, G.R. No. 97336 (1993)]

1.   Concept of Marriage The essential feature is seduction, that in law is more


than mere sexual intercourse, or a breach of a promise
Marriage: of marriage; it connotes essentially the idea of deceit,
a.   A special contract of permanent union; enticement, superior power or abuse of confidence on
b.   Between a man and a woman; the part of the seducer to which the woman has
c.   Entered into in accordance with law; yielded. [Tanjanco v. CA, G.R. No. 18630 (1966)
d.   For the establishment of conjugal and family life. quoting US v. Buenaventura]
e.   It is the foundation of the family and an inviolable
social institution; Maintaining intimate sexual relations with another for
f.   Its nature, consequences, and incidents are a whole year is incompatible with the idea of
governed by law and not subject to stipulation, seduction. [Tanjanco v. CA, G.R. No. 18630 (1966)]

EXCEPT that marriage settlements may fix the


property relations during the marriage within the
3.  Requisites
limits provided by this Code. [Art. 1, FC.]
a.  Kinds of Requisites and
Sec. 2, Art. XV, Constitution. Marriage, as an Effects of Non-Compliance
inviolable social institution, is the foundation of the
family and shall be protected by the State/ Essential Requisites Formal Requisites (Art.
(Art. 2, FC) 3, FC)
Marriage is an institution, in the maintenance of which Legal capacity of the Authority of
in its purity the public is deeply interested. It is a contracting parties, solemnizing officer
relation for life and the parties cannot terminate it at who must be a male [subject to Art. 35 (2),
any shorter period by virtue of any contract they may and a female FC]
make. The reciprocal rights arising from this relation, Consent (of the
so long as it continues, are such as the law determines contracting parties)
from time to time, and none other. [Goitia v. Campos A valid marriage license
freely given in the
Rueda, G.R. No. 11263 (1916)] (subject to exceptions)
presence of a
solemnizing officer
2.  A greements Prior to Marriage ceremony

Marriage Exceptions for a valid marriage license:


1.   Marriages in articulo mortis or when one or both
The future spouses may, in the marriage settlements, parties are at the point of death;
agree upon the regime of absolute community, 2.   Marriage in isolated places with no available
conjugal partnership of gains, complete separation of means of transportation;
property, or any other regime. [Art. 75, FC] 3.   Marriage among Muslims or other ethnic cultural
communities; and
Extrajudicial dissolution of the conjugal partnership 4.   Marriages of those who have lived together as
without judicial approval is void. [Espinosa v. Omana, husband and wife WITHOUT ANY LEGAL
A.C. No. 9081 (2011)] IMPEDIMENT for at least 5 years

Mere breach of promise to marry is not an actionable Effect of Absence of Essential Requisites
wrong. But to formally set a wedding and go through Absence Defect or Irregularity
all the above-described preparation and publicity, Void Voidable
only to walk out of it when the matrimony is about to
be solemnized, is quite different. This is palpably and Note: An irregularity in a formal requisite will not
unjustifiably contrary to good customs for which affect the validity of the marriage and instead makes
defendant must be held answerable in damages in

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the party responsible for such irregularity civilly,


criminally or administratively liable. [Art. 4, FC] However, absence of such does not make the
marriage void or voidable. Absence will merely
b.  Essential Requisites delay the issuance of the marriage license by
three months (Art 15, FC).
1.   GENDER
3.   CONSENT FREELY GIVEN
N.B.: The best source for citing the requirement of
male/female is still statutory, as provided explicitly in Consent here refers to the consent of the contracting
the Family Code: Art. 1, FC. Marriage is a special parties; NOT of the parent/guardian in those cases
contract of permanent union between a man and a where such consent is required (when either party is
woman… between 18 to 21 years of age).

Changing of sex in one’s birth certificate on the basis The consent must refer to the contracting parties’
of sex reassignment shall be denied; otherwise, it bona fide intention to be married to the other. i.e. to
would result in confusion and would allow marriage make the woman his wife. [People v. Santiago, G.R. No.
between persons of the same sex which is in defiance 27972 (1927)]
of the law, as marriage is a union between a man and
a woman. [Silverio v. Republic, G.R. No. 174689 (2007)] In People v. Santiago, it was held that the marriage
entered into by a person whose real intent is to avoid
But when the change in sex happens naturally, as prosecution for rape is void for total lack of consent.
when the person has Congenital Adrenal Hyperplasia Here, it was the intent of the accused, not the victim of
(CAH) or is “biologically or naturally intersex,” the rape, whom he married under duress, that was
determining factor in their gender classification would considered. The accused did not intend to make the
be what they, having reached the age of majority, with victim his wife. He merely used such marriage to
good reason thinks is their sex. Change in name and escape criminal liability. [G.R. No. 27972 (1927)]
sex as registered is here allowed. [Republic v.
Cagandahan, G.R. No. 166676 (2008)] Defect
Art. 45, FC states that a marriage may be annulled for
2.   AGE any of the following causes existing at the time of the
marriage: xxx (3) that the consent of either party was
Legal Capacity obtained by fraud, unless such party afterwards, with
full knowledge of the facts constituting the fraud,
Art. 5, FC. Any male or female of the age of
freely cohabited with the other as husband and wife.
eighteen years or upwards not under any of the
impediments mentioned in Articles 37 and 38, may
Fraud here refers to matters which relate to the
contract marriage.
marital relation:
a.   Non-disclosure of previous conviction by final
Male or female 18 years old and above, not under any judgment of a crime involving moral turpitude;
of the impediments mentioned in Arts. 37 (incestuous b.   Concealment of pregnancy by another man;
marriages) and 38, FC (marriages against public c.   Concealment of a sexually transmitted disease;
policy) may contract marriage. d.   Concealment of drug addiction, alcoholism,
lesbianism, or homosexuality [Art. 46, FC]
Limited Emancipation:
a.   Parental Consent: Needed for parties between
18 to 20 years old. c.   Formal Requisites
If no parental consent is obtained, it makes the 1.   MARRIAGE CEREMONY
marriage voidable [Art. 45, FC].
No prescribed form or religious rite for the
The party who may file for annulment is the party solemnization of marriage is required. [Art. 6, FC]
who contracted marriage without parental
consent or the parent/guardian of the party aged The couple's written agreement where they declare
18-20 [Art. 47, FC]. themselves as husband and wife, signed by them
before a judge and two capable witnesses, even
b.   Parental Advice: Needed for parties between 21 though it was independently made by them, still
to 25 years old. counts as a valid ceremony. [Martinez v. Tan, G.R. No.
L-4904 (1909)]

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Minimum Requirements Prescribed by Law: Articulo Mortis


a.   Appearance of contracting parties personally (in addition to those abovementioned)
before the solemnizing officer [Art. 3, FC] Ship Captain or Airplane Chief may solemnize a
b.   Personal declaration that they take each other as marriage in articulo mortis between passengers or
husband and wife. [Art. 3, FC] crew members [Arts. 7 and 31, FC]
c.   Presence of at least two witnesses of legal age. A Military Commander of a unit may solemnize
[Art. 3, FC] marriages in articulo mortis between persons within
d.   The declaration shall be contained in the the zone of military operation [Arts. 7 and 32, FC]
Marriage Certificate. [Art. 6, FC] Marriages Abroad
e.   Marriage certificate shall be signed by the Consul-general, consul or vice-consul may
contracting parties and their witnesses and solemnize marriages between Filipino citizens
attested by the solemnizing officer. [Art. 6, FC] abroad [Arts. 7 and 10, FC]

N.B. In a marriage in articulo mortis, when one or both General rule: Those solemnized by any person not
parties are unable to sign the marriage certificate, it legally authorized to perform marriages are void.
shall be sufficient for one of the witnesses to write the
name of said party, which shall be attested by the Exception: Unless such marriages were contracted
solemnizing officer. [par. 2, Art. 6. FC] with either or both parties believing in good faith that
the solemnizing officer had the legal authority to do
Places where marriage shall be publicly solemnized: so. [Art. 35(2), FC]
Chambers of the judge or in open court
a.   Church, chapel, or temple A marriage can be held outside the judge’s chambers
b.   Office of the consul-general, consul, or vice- or courtroom only in the following instances:
consul [Art. 8, FC] a.   at the point of death
b.   remote places in accordance with Art. 29, FC
Exceptions: c.   upon request of both parties in writing in a sworn
a.   Marriages performed in articulo mortis or in statement to this effect. [Navarro v. Domagtoy,
remote places. [Art. 29, FC] A.M. No. MTJ-96-1088 (1996)]
b.   Where both parties request in writing that
marriage be solemnized at a place designated by But where a judge solemnizes a marriage outside his
them. jurisdiction, there is a resultant irregularity in the
formal requisite laid down in Article 3, which while it
N.B. Non-compliance with this requirement does not may not affect the validity of the marriage, may
invalidate the marriage (premise: more witnesses = subject the officiating official to administrative
more people can notify officer of impediments to liability. [Navarro v. Domagtoy, A.M. MTJ-96-1088
marriage). (1996); Aranes v. Occiano, MTJ-02-1390 (2002)]
2.   AUTHORITY OF THE SOLEMNIZING OFFICER A marriage which preceded the issuance of the
marriage license is void and the subsequent issuance
Who May Solemnize Marriage: of such license cannot render valid the marriage.
Normal Circumstances Except in cases provided by law, it is the marriage
Incumbent member of the Judiciary, within his license that gives the solemnizing officer the authority
jurisdiction. [Art. 7, FC] to solemnize a marriage. [Aranes v. Occiano, MTJ-02-
Priest, Rabbi, Imam or Minister of any Church or 1390 (2002)].
Religious Sect who must be:
a.   Duly authorized by his church or religious 3.   MARRIAGE LICENSE
sect;
b.   Registered with the civil registrar general; General Rule: License required, which is issued by local
c.   Acting within the limits of the written registrar of city or municipality where either
authority granted to him by his church or contracting party habitually resides [Art. 9, FC]. Each
religious sect; contracting party should file separately. [Art. 11, FC]
d.   At least one of the contracting parties
belongs to the solemnizing officer’s church or Sec. 15, R.A. No. 10354. Certificate of Compliance.
religious sect. [Art. 7, FC] – No marriage license shall be issued by the Local
Municipal and City Mayors [Secs. 444-445, Local Civil Registrar unless the applicants present a
Government Code] Certificate of Compliance issued for free by the

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local Family Planning Office certifying that they e.   Marriages by Muslims and Ethnic cultural
had duly received adequate instructions and minorities provided they are solemnized in
information on responsible parenthood, family accordance with their customs, rites or practices.
planning, breastfeeding, and infant nutrition. [Art. 33, FC]
f.   Marriage by parties who have cohabited for at
Where Valid: License valid in any part of the least 5 years without any legal impediment to
Philippines marry each other. [Art. 34, FC; Ninal v. Badayog,
G.R. No. 133778 (2000)]
Period of Validity: It will be valid for 120 days from
date of issue, automatically cancelled at the expiration Note: A false affidavit of having lived together for
of such period. 5 years as husband and wife cannot be considered
as a mere irregularity in the formal requisites of
Marriages celebrated without a marriage license marriage but a complete absence, rendering their
before the effectivity of the Family Code are void ab marriage void ab initio. [De Castro v. Assidao-De
initio as marriage license was an essential requisite in Castro, G.R. No. 160172 (2008)]
the CC. [Kho v. Republic, G.R. No. 147862 (2016)]
Requisites for the 5-year cohabitation to be valid for
License obtained by false affidavit [of having lived the exemption from acquiring a marriage license
together as husband and wife for 5 years] will not be a.   The man and woman must have been living
considered a defect but total absence of license, together as husband and wife for at least five
rendering their marriage void ab initio. [De Castro v. years before the marriage;
Assidao-De Castro, G.R. No. 160172 (2008)] b.   The parties must have no legal impediment to
marry each other;
Special Situations c.   The fact of absence of legal impediment between
Anyone between 18-21 years old who has not yet been the parties must be present at the time of
emancipated by reason of marriage must present the marriage;
written consent that was given by his or her parent or d.   The parties must execute an affidavit stating that
guardian. [Art. 14, FC] they have lived together for at least five years [and
are without legal impediment to marry each
Anyone between 21-25, on the other hand, must ask other]; and
for advice from his or her parents or guardians. If the e.   The solemnizing officer must execute a sworn
advice wasn’t obtained, the marriage license will only statement that he had ascertained the
be released 3 months after the publication of the qualifications of the parties and that he had found
application. [Art. 15, FC] no legal impediment to their marriage [Borja-
Manzano vs. Judge Sanchez, A.M. MTJ-00-1329
Foreign National (2001)].
a.   When either or both parties are foreign nationals:
certificate of legal capacity to contract marriage 4.   MARRIAGE CERTIFICATE
issued by a diplomatic or consular official, shall be Where parties declare that they take each other as
submitted before a marriage license can be husband and wife; contains the following:
obtained [Art. 21, FC] a.   Full name, sex, age of party;
b.   Stateless persons or refugees from other b.   Citizenship, religion, habitual residence;
countries: Affidavit stating circumstances c.   Date and precise time of celebration of marriage;
showing capacity to contract marriage, instead d.   That marriage license was properly issued (except
of certificate of legal capacity [Art. 21, FC] in marriages of exceptional character);
e.   That parental consent was secured, when
Exceptions to the Marriage License Requirement required;
a.   Marriage in articulo mortis [Art. 27, FC] f.   That requirement as to parental advice was
The marriage may be solemnized without the complied with, when required;
necessity of a marriage license. It remains valid g.   That parties have entered into marriage
even if ailing party survives. settlements, if any [Art. 22, FC]
b.   Between passengers or crew members in a ship or
airplane [Art. 31, FC] N.B. Not an essential or formal requisite without which
c.   Persons within a military zone [Art. 32, FC] the marriage will be void [Madridejo v. de Leon, G.R.
d.   Marriage in remote and inaccessible places [Art. No. L-32473 (1930)]. It is the best evidence that a
28, FC] marriage does exist. [Tenebro v. CA, G.R. No. 150758
(2004)]

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Absence and Irregularity of Marriage License and Requirements


Contract Inherent in the parties,
independent of the
carried everywhere
parties
There is a presumption of regularity of official acts, Lex Nationalii – Laws
and the issuance of the Civil Registrar of a Certificate Lex loci celebrationis- If
relating to family rights
of Due Search and Inability to Find the application for valid where celebrated,
and duties, or to the
a marriage license certifies its inexistence, rendering then valid everywhere;
status, condition, and
the marriage void. [Republic v. CA and Castro, G.R. No. forms of contracting
legal capacity of
103047 (1994)] marriage are to be
persons are binding
regulated by the law
upon Phil citizens even
Before a marriage can be solemnized, a valid marriage where it is celebrated.
though living abroad
license must be presented first, otherwise, it is void. [Art. 2, CC]
[Art. 15, CC]
[Moreno v. Bernabe, A.M. No. MTJ-94-963 (1995)] Foreign marriages void
Foreign marriages may
under Phil law due to
Non-existence of a marriage contract will not be void under Phil law
lack of an essential
overthrow the presumption of a valid marriage where due to absence of a
requisite, even if valid
all the requisites for its validity have been complied formal requisite under
under foreign laws, will
with. [People v. Borromeo, G.R. No. L-61873 (1984)] foreign laws.
not be recognized.

4.  L aw Governing Validity of Proof of Foreign Marriage in order that it may be


upheld:
Marriages Abroad a.   Provisions of the foreign law
b.   Celebration of the marriage in accordance with
GENERAL RULE IN CONTRACTS said provisions

As to form: Governed by the laws of the country in Foreign Divorces


which they were executed [Art. 17, CC] If the foreign spouse obtains a valid divorce decree
abroad capacitating him/her to remarry, the Filipino
As to Substantive Requirements: Laws relating to spouse shall have capacity to remarry under Philippine
family rights and duties, or to the status, condition and law. [Art. 26(2)]
legal capacity of persons, prohibitive laws regarding
the person, his or her property, those which have for Divorces obtained abroad by Filipino citizens against
their object public order, public policy and good their foreign spouses are no longer void under
customs bind all Filipinos regardless of location. [Arts. Philippine law, provided that the party pleading it
15 and 17, CC] proves (1) the divorce as a fact and (2) its conformity to
the foreign law allowing it. [Republic of the Philippines
MARRIAGES CELEBRATED ABROAD v. Manalo, G.R. No. 221029 (2018)]

General Rule: Marriages solemnized abroad in Marriages Dissolved by Foreign Judgment


accordance with the laws in force in that country shall The citizenship of the spouses at the time of the
be valid in the Philippines. [par. 1, Art 26, FC] divorce determines their capacity to obtain a valid
divorce. [Quita v. Dandan, G.R. No. 124862 (1998)]
Exceptions:
a.   Marriage where one or both parties are below 18 A marriage between two Filipinos cannot be dissolved
years old [Art. 35(1), FC] even by a divorce obtained abroad, because of Articles
b.   Bigamous or polygamous marriage [Art. 35(4), 15 and 17 of the CC [Garcia v. Recio, G.R. No. 138322
FC] (2001)].
c.   Mistake in identity [Art. 35 (5), FC]
d.   Marriages void under Article 53 [Art. 35 (6), FC] Aliens may obtain divorces abroad, which may be
e.   Psychological incapacity [Art. 36, FC] recognized in the Philippines, provided they are valid
f.   Incestuous marriages [Art. 37, FC] according to their national law. The marriage tie when
g.   Marriage void for reasons of public policy [Art. 38, thus severed as to one party, ceases to bind
FC] either. [Van Dorn v. Romillo, G.R. No. L-68470 (1985)]

Essential Requisites Formal Requisites A divorce obtained abroad by a couple, who are both
aliens, may be recognized in the Philippines, provided

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it is consistent with their respective national laws. Neither party can encumber or dispose by acts inter
[Garcia v. Recio, G.R. No. 138322 (2001)] vivos of his or her share in the property acquired
during cohabitation and owned in common,
Note: Divorces obtained abroad by Filipino citizens without the consent of the other, until after the
may now be validly recognized in the Philippines but termination of their cohabitation.
only in cases of mixed marriages involving a Filipino
and a foreigner. [Republic of the Philippines v. Manalo, When only one of the parties to a void marriage is
G.R. No. 221029 (2018)] in good faith, the share of the party in bad faith in
the co-ownership shall be forfeited in favor of their
In mixed marriages involving a Filipino and a common children. In case of default of or waiver by
foreigner, Article 26 of the Family Code allows the any or all of the common children or their
former to contract a subsequent marriage in case the descendants, each vacant share shall belong to the
divorce is (1) “validly obtained abroad by the alien respective surviving descendants. In the absence of
spouse and (2) is of the type that legally dissolves the descendants, such share shall belong to the
marriage and capacitating him or her to remarry.” innocent party. In all cases, the forfeiture shall take
[Garcia v. Recio, G.R. No. 138322 (2001)] place upon termination of the cohabitation.

Note: Following the ruling of Republic of the Art. 148, FC. In cases of cohabitation not falling
Philippines v. Manalo, the divorce may now be one that under the preceding Article, only the properties
was validly obtained by the Filipino spouse against the acquired by both of the parties through their actual
foreigner spouse [G.R. No. 221029 (2018)]. joint contribution of money, property, or industry
shall be owned by them in common in proportion to
Courts will only determine (1) whether the foreign their respective contributions. In the absence of
judgment is inconsistent with an overriding public proof to the contrary, their contributions and
policy in the Philippines; and (2) whether any alleging corresponding shares are presumed to be equal.
party is able to prove an extrinsic ground to repel the The same rule and presumption shall apply to joint
foreign judgment, i.e. want of jurisdiction, want of deposits of money and evidences of credit.
notice to the party, collusion, fraud, or clear mistake of
law or fact. If there is neither inconsistency with public If one of the parties is validly married to another, his
policy nor adequate proof to repel the judgment, or her share in the co-ownership shall accrue to the
Philippine courts should, by default, recognize the absolute community or conjugal partnership
foreign judgment as part of the comity of nations. existing in such valid marriage. If the party who
[Fujiki vs Marinay, G.R. No. 1196049 (2013)] acted in bad faith is not validly married to another,
his or her shall be forfeited in the manner provided
5.  C ommon-Law Marriages in the last paragraph of the preceding Article.

Art. 147, FC. When a man and a woman who are The foregoing rules on forfeiture shall likewise
capacitated to marry each other, live exclusively apply even if both parties are in both bad faith.
with each other as husband and wife without the
benefit of marriage or under a void marriage, their Though there is no technical marital partnership
wages and salaries shall be owned by them in equal between person living as husband and wife, without
shares and the property acquired by both of them being lawfully married, nevertheless there is between
through their work or industry shall be governed by them an informal civil partnership which would entitle
the rules on co-ownership. the parties to an equal interest in property acquired by
their joint efforts [Lesaca v. Lesaca, G.R. No. L-3605
In the absence of proof to the contrary, properties (1952)]
acquired while they lived together shall be
presumed to have been obtained by their joint 6.  V oid and Voidable
efforts, work or industry, and shall be owned by
them in equal shares. For purposes of this Article, a Marriages
party who did not participate in the acquisition by
the other party of any property shall be deemed to Presumption of Marriage
have contributed jointly in the acquisition thereof if Art. 220, CC. In case of doubt, all presumptions
the former's efforts consisted in the care and favor the solidarity of the family. Thus, every
maintenance of the family and of the household. intendment of law or facts leans toward the validity
of the marriage, the indissolubility of the marriage

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bonds, the legitimacy of children, the community of such action or defense shall prescribe in ten years
property during marriage, the authority of parents after this Code shall taken effect.
over their children, and the validity of defense of
any member of the family in case of unlawful 1.   ABSENCE OF REQUISITES
aggression.
Art. 4(1), FC. The absence of any essential or formal
a.   Semper Praesumitur Pro Matrimonio: requisites shall render the marriage void ab initio,
Presumption in favor of a valid marriage [Art. 220, except as stated in Article 35.
CC]
b.   The presumption that a man and a woman Art. 5, FC. Any male or female of the age of
deporting themselves as husband and wife have eighteen years or upwards not under any of the
entered into a lawful contract of marriage is impediments mentioned in Articles 37 and 38, may
satisfactory if uncontradicted. [Sec. 3 (aa), Rule contract marriage.
131, ROC]
c.   In marriages of exceptional character, the
Void from the Beginning [Art. 35, FC]
existence of the marriage is presumed, even in the
a.   Marriage where any party is below eighteen years
total absence of a marriage license. [Vda. De
of age even with the consent of parents or
Jacob v. CA, G.R. No. 135216 (1999)]
guardians
d.   If a marriage certificate is missing, and all means
b.   Marriage solemnized by any person not legally
have not yet been exhausted to find it, then the
authorized to perform marriages unless such
marriage is presumed to exist [Sevilla v. Cardenas,
marriages were contracted with either or both
G.R. No. 167864 (2006)]
parties believing in good faith that the
solemnizing officer had legal authority to do so.
Absence of a marriage certificate is not proof of
Note: One’s belief in good faith that the
absence of marriage. To prove the fact of marriage,
solemnizing officer has the required authority is a
the following would constitute competent evidence: 1.
mistake of fact, and not of law.
the testimony of witnesses to matrimony; 2.
c.   Marriage solemnized without a valid marriage
documentary photos or videos of the wedding; 3. the
license, except in marriages under exceptional
couple’s public cohabitation; and 4. birth and
circumstances
baptismal certificates of children born during the
d.   Bigamous or polygamous marriages not falling
union. [Trinidad v. CA, G.R. No. 118904 (1998)]
under Article 41 (Art. 41: subsequent marriage by
present spouse who obtained a declaration of
a.  Void Marriages presumptive death for absent spouse prior to the
subsequent marriage)
e.   There is a mistake as to the identity of the other
TYPES OF VOID MARRIAGES
contracting party
1.   Absence of any formal/essential requisites [Art.
f.   Subsequent marriages that are void under Article
35, FC]
53 (Non-compliance with Art. 52)
2.   Bigamous and polygamous marriages
3.   Subsequent marriage, upon reappearance of
To be considered void on the ground of absence of a
spouse [Art. 42, FC]
marriage license, the law requires that the absence of
4.   Bad faith of both spouses
such marriage license must be apparent on the
5.   Psychologically Incapacitated spouse [Art. 36, FC]
marriage contract, or at the very least, supported by a
6.   Void subsequent marriages
certification from the local civil registrar that no such
7.   Incestuous Marriages [Art. 37, FC]
marriage license was issued to the parties. [Alcantara
8.   Void by reasons of public policy [Art. 38, FC]
v. Alcantara, G.R. No. 167746 (2007)]
9.   Non-compliance with recording requirement after
declaration of nullity [Art. 53, FC]
2.   BIGAMOUS AND POLYGAMOUS MARRIAGES
PERIOD TO FILE FOR ACTION OR DEFENSE FOR
No Judicial Declaration Of Nullity
ABSOLUTE NULLITY
A person entered into a subsequent marriage
WITHOUT first getting a judicial declaration of nullity
Art. 39, FC. The action or defense for the of the first void marriage. [Art. 40, FC]
declaration of absolute nullity shall not prescribe.
However, in case of marriage celebrated before the Presumptive Death
effectivity of this Code and falling under Article 36,

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Failure of the spouse present to obtain a judicial


declaration of presumptive death before entering a Only the spouse present can file or institute a
subsequent marriage. [Art. 41, FC] summary proceeding for the declaration of
presumptive death of the absentee. [Bienvenido v. CA,
Bad Faith of both spouses G.R. No. 111717 (1994)]
Both spouses entering a subsequent marriage after
presumptive death, who acted in bad faith. [Art. 44, While an action for declaration of death or absence
FC] under Rule 72, Section 1(m), expressly falls under the
category of special proceedings, a petition for
It is now settled that the fact that the first marriage is declaration of presumptive death under Article 41 of
void from the beginning is not a defense in a bigamy the Family Code is a summary proceeding, as provided
charge. As with a voidable marriage, there must be a for by Article 238 of the same Code. [Republic v.
judicial declaration of the nullity of a marriage before Granada, G.R. No. 187592 (2012)]
contracting the second marriage. [Mercado vs Tan,
G.R. No. 137110 (2000)] The belief of the present spouse must be the result of
proper and honest to goodness inquiries and efforts to
The accused may still be charged with the crime of ascertain the whereabouts of the absent spouse and
bigamy, even if there is a subsequent declaration of whether the absent spouse is still alive or is already
the nullity of the second marriage, so long as the first dead. This is drawn from circumstances before and
marriage was still subsisting when the second after the disappearance and the nature and extent of
marriage was celebrated. [Capili vs People, G.R. No. inquiries made. [Republic v. Granada, G.R. No. 187592
183805 (2013)] (2012)]

3.   SUBSEQUENT MARRIAGE WHEN ONE SPOUSE Effect of Reappearance of Absent Spouse


IS ABSENT General Rule: The subsequent marriage remains valid.
Exception: It is automatically terminated by the
Requirements for Subsequent Marriage to be Valid recording of the affidavit of reappearance of the
When Prior Spouse is Absent [Art. 41, FC] absent spouse at the instance of any interested
a.   Subsequent marriage due to ordinary absence person, with due notice to the spouses of the
where: subsequent marriage. [Art. 42, FC]
1.   Absent spouse had been absent for 4
consecutive years; Note: It is the recording of the affidavit of
2.   The spouse present had a well-founded belief reappearance that automatically terminates the
that absent spouse is dead; and subsequent marriage. Hence, if absentee spouse
3.   Judicial declaration of presumptive death reappears without recording affidavit of
was secured (no prejudice to the effect of the reappearance, then there is no legal effect.
reappearance of the absent spouse). Meanwhile, absentee spouse cannot remarry.
b.   Subsequent marriage due to extraordinary [Tolentino]
absence where:
1.   Absent spouse had been missing for 2 Exception to the Exception: If there is a judgment
consecutive years; annulling the previous marriage or declaring it void ab
2.   There is danger of death under the initio. [Art. 42, FC]
circumstances set forth in Art. 391 CC
attendant to the disappearance; Good Faith: Period of absence for presumptive death
i.   Onboard vessel lost at sea voyage, is MANDATORY thus cannot be shortened by good
airplane, faith and if be done so will be void. This period is
ii.   Armed forces in war, or counted from when the party last heard from his/her
iii.   Danger of death under other absentee spouse. [Jones v. Hortiguela, G.R. No. 43701
circumstances, existence not known (1937)]
3.   The spouse present had a well-founded belief
that the missing person is dead; and Difference between Absence in the CC and Family
4.   Judicial declaration of presumptive death Code
was secured (no prejudice to the effect of the Family Code
CC (Art. 390)
reappearance of the absent spouse). (Art. 41)
4 years under
Institution of a summary proceeding is not sufficient. Absent for at
As to period normal
There must also be a summary judgment. (Balane) least 7 years
circumstances

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2 years under
Absent for at
extraordinary N.B. Although 7 years is required for the presumption
least 4 years
circumstances of death of an absentee in the CC, the FC makes an
In order to Declaration of exception for the purpose of remarriage by limiting
remarry, presumptive such requirement to 4 years.
As to
summary death is not
remarriage 4.   BAD FAITH OF BOTH SPOUSES
proceeding is necessary
necessary Art. 44, FC. If both spouses of the subsequent
Can be marriage acted in bad faith, said marriage shall be
instituted by void ab initio and all donations by reason of
the spouse marriage and testamentary dispositions made by
As to who can
present, any The spouses one in favor of the other are revoked by operation of
institute the
interested themselves law.
action
party, and the
subsequent 5.   PSYCHOLOGICAL INCAPACITY
spouse Art. 36, FC. A marriage contracted by any party
Subsequent who, at the time of the celebration, was
marriage is Upon psychologically incapacitated to comply with the
automatically reappearance, essential marital obligations of marriage, shall
terminated by judicial likewise be void even if such incapacity becomes
As to effect on
the recording proceeding is manifest only after its solemnization.
subsequent
of an affidavit necessary to
marriage
of declare The application of Art. 36 is confined to the most
reappearance marriage null serious cases of personality disorders clearly
of the absent and void demonstrative of an utter insensitivity or inability to
spouse give meaning and significance to the marriage.
Well-founded
Generally
belief that the The psychological illness that must have afflicted a
As to ground believed to be
absent spouse party at the inception of the marriage should be a
dead
is dead malady so grave and permanent as to deprive one of
awareness of the duties and responsibilities of the
Related Provisions matrimonial bond he or she is about to assume.
Art. 390, CC. After an absence of 7 years, it being [Marcos v. Marcos, G.R. No. 136490 (2000)]
unknown whether or not the absentee still lives, he
shall be presumed dead for all purposes, except for There are 3 characteristics for determining
those of succession. psychological incapacity:
a.   Gravity;
The absentee shall not be presumed dead for the b.   Antecedent; and
purpose of opening his succession till after an c.   Incurability [Santos v. Bedia-Santos, G.R. No.
absence of 10 years. If he disappeared after the age 112019 (1995)]
of 75 years, an absence of 5 years shall be sufficient
in order that his succession may be opened. Molina Doctrine in Psychological Incapacity
a.   The burden of proof to show the nullity of the
The following shall be presumed dead for all marriage belongs to the plaintiff. This is to be
purposes, including the division of the estate among investigated by the OSG for collusion.
the heirs: b.   The root cause of the psychological incapacity
a.   A person on board a vessel lost during a sea must be:
voyage, or an aeroplane which is missing, who has 1.   Medically or clinically identified;
not been heard of for four years since the loss of 2.   Alleged in the complaint;
the vessel or aeroplane; 3.   Sufficiently proven by the experts; and
b.   A person in the armed forces who has taken part 4.   Clearly explained in the decision.
in war, and has been missing for four years; c.   The incapacity must be proven to be existing at
“the time of the celebration” of the marriage.
A person who has been in danger of death under d.   Such incapacity must also be shown to be
other circumstances and his existence has not medically or clinically permanent or incurable.
been known for four years. [Art. 391, CC.]

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e.   Such illness must be grave enough to bring about In the task of ascertaining the presence of
the disability of the party to assume the essential psychological incapacity as a ground for the nullity of
obligations of marriage. marriage, the courts, which are concededly not
f.   The essential marital obligations must be those endowed with expertise in the field of psychology,
embraced by Articles 68 up to 71 of the Family must of necessity rely on the opinions of experts in
Code as regards the husband and wife as well as order to inform themselves on the matter, and thus
Articles 220, 221, and 225 of the same Code in enable themselves to arrive at an intelligent and
regard to parents and their children. judicious judgment. [Kalaw v. Fernandez, G.R. No.
g.   Interpretations given by the National Appellate 166357 (2015)]
Matrimonial Tribunal of the Catholic Church in the
Philippines, while not controlling/decisive, should The stringent requirements set forth by Molina should
be given great respect by our courts. be relaxed and applied case-to-case. To require the
h.   The trial court must order the prosecuting allegation of the root cause of psychological
attorney or fiscal and the Solicitor General to incapacity by an accredited psychologist may prove
appear as counsel for the state. No decision shall too expensive for the parties. But where the parties
be handed down unless the Solicitor General had full opportunity to present expert opinions, such
issues a certification. [Republic v. Molina, G.R. will be weighed by the Court in its decision. [Ting v.
108763 (1997)] Velez-Ting, G.R. No. 166562, (2009)]

Art. 36, FC must not be confused with a divorce law 6.   INCESTUOUS MARRIAGES
that cuts the marital bond at the time the grounds for
Marriages between the following are considered
divorce manifest themselves; rather, it must be limited
incestuous, and are therefore void ab initio
to cases where there is a downright incapacity or
a.   Between ascendants and descendants of any
inability to assume and fulfill the basic marital
degree, legitimate or illegitimate
obligations, not a mere refusal, neglect or difficulty,
b.   Between brothers and sisters, whether full or
much less, ill will, on the part of the errant spouse.
half blood, legitimate or illegitimate [Art. 37, FC]
[Republic v. Romero, G.R. No. 209180 (2016)]
7.   AGAINST PUBLIC POLICY
The senseless and protracted refusal of one of the
parties to fulfill the marital obligation "To procreate Marriages between the following are considered
children based on the universal principle that against public policy, and are therefore void ab initio:
procreation of children through sexual cooperation is a.   Between collateral blood relatives, legitimate or
the basic end of marriage." is equivalent to illegitimate, up to the fourth civil degree;
psychological incapacity. “A man who can but won’t is b.   Between step-parents and step-children;
psychologically incapacitated” [Tsoi v. CA, G.R. 119190 N.B. Stepbrothers and stepsisters can marry
(1997)] because marriages between them are not among
those enumerated in Article 38.
Psychological incapacity maybe established by the c.   Between parents-in-law and children-in-law;
totality of the evidence presented. Personal medical d.   Between adopting parent and adopted child;
examination could be dispensed with. [Marcos v. e.   Between the surviving spouse of the adopting
Marcos, G.R. No. 136490 (2000)] parent and the adopted child;
f.   Between the surviving spouse of the adopted child
There is no requirement that the respondent be and the adopter;
medically examined first. [Republic v. San Jose, G.R. g.   Between an adopted child and a legitimate child
No. 168328 (2007)] of the adopter;
h.   Between adopted children of the same adopter;
“Pathological liar” considered as psychological an:
incapacity, Molina guidelines met. [Antonio v. Reyes, i.   Between parties where one, with the intention to
G.R. No. 155800 (2006)] marry the other, killed that other person's spouse,
or his or her own spouse [Art. 38, FC]
Note: This case also gave weight to the fact that the
Church annulled the marriage. Note: The following relationships are outside of
Articles 37 and 38, and are therefore not impediments
Marriages where both parties are afflicted with grave, to marriage:
severe and incurable psychological incapacity shall a.   Brother-in-law with sister-in-law;
likewise be void [Te v. Te, G.R. No 161793 (2009)]. b.   Stepbrother with stepsister;
c.   Guardian with ward;

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d.   Adopted with illegitimate child of the adopter; custody and support decided by court in a proper
e.   Adopted son of the husband with adopted proceeding.
daughter of the wife. b.   Property Regime: dissolved and liquidated (party
in bad faith shall forfeit his/her share in favor of
8.   NON-COMPLIANCE WITH RECORDING the common children or if there are none, children
REQUIREMENT AFTER DECLARATION OF of the guilty spouse by a previous marriage, and in
NULLITY case there are none, to the innocent spouse).
c.   Donation propter nuptias: remains valid, (but if
Subsequent marriage of spouses, where the the donee contracted marriage in bad faith,
requirements of recording under Art. 52 have not have donations are revoked by operation of law)
been complied with, shall be null and void. [Art. 53, d.   Insurance benefits: innocent spouse may revoke
FC] designation of guilty party as beneficiary, even if
such designation is stipulated as irrevocable.
The judgment of annulment or of absolute nullity of e.   Succession Rights: party in bad faith shall be
the marriage, the partition and distribution of the disqualified to inherit from the innocent spouse,
properties of the spouses and the delivery of the whether testate or intestate.
children's presumptive legitimes shall be recorded in
the appropriate civil registry and registries of property; Both spouses guilty of bad faith
otherwise, the same shall not affect third persons. If both spouses of the subsequent marriage acted in
[Art. 52, FC.] bad faith, all donations by reason of marriage and
testamentary dispositions made by one party in favor
Previous marriage declared Void ab Initio or of the other are revoked by operation of law. [Art. 44,
Annulled FC]
The word “solely” in Art. 40 referred to validating
subsequent marriages but NOT to limiting the Who may file the petition for nullity of void
purposes for which a judicial declaration of nullity can marriages?
be invoked. [Domingo v. CA, G.R. No. 104818 (1993)] General Rule: Only the husband or wife may file the
petition. [AM No. 02-11-10 SC, Sec. 2]
N.B. Separation of property is also a valid purpose for
filing for a judicial declaration of nullity. Specifically, A.M. No. 02-11-10-SC extends only to
marriages covered by the Family Code, which took
Under the CC, no judicial declaration for nullity of effect on August 3, 1988, but, being a procedural rule
previous marriage was required to contract a that is prospective in application, is confined only to
subsequent marriage. [People v. Mendoza, G.R. No. L- proceedings commenced after March 15, 2003.
5877 (1954)] [Ablaza v. Republic, G.R. No 158298 (2010)]

It is the law effective at the time of the Exceptions:


second/subsequent marriage which controls (i.e. CC a.   Nullity of marriage cases commenced before
or FC). Thus: effectivity of A.M. No. 02-11-10-SC
a.   Even if the judge’s first marriage contracted in b.   Marriages celebrated during the effectivity of the
1965 was void for not having a marriage license, CC. [Carlos v. Sandoval, G.R. No 179922 (2008)]
the requirement for a judicial declaration of nullity
in Art. 40 still applies for because his subsequent However, the absence of a provision in the CC cannot
marriage was contracted in 1991. [Atienza v. be construed as a license for any person to institute a
Brillantes, MTJ-92-706 (1995)] nullity of marriage case. Such person must appear to
b.   Where both marriages were contracted prior to be the party who stands to be benefited or injured by
the effectivity of the FC, the requirement of Art. 40 the judgment in the suit, or the party entitled to the
does not apply to the second marriage where a avails of the suit. [Carlos v. Sandoval, G.R. No 179922
right is already vested and on which the FC cannot (2008)]
have retroactive effect. [Apiag v. Cantero, MTJ-95-
1070 (1997)] Procedure in Attacking a Void Marriage
General Rule: Void Marriages may be attacked
Effects of Termination of Bigamous Marriage under collaterally or directly.
Art. 42 [Arts. 43, FC] Exception: A person in a void marriage must first file
a.   Children of subsequent marriage: conceived for a declaration of nullity in order to subsequently
prior to its termination considered legitimate; marry.

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Requisites for Valid Remarriage a.   The court shall provide for the support of the
a.   The previous marriage should be judicially spouses,
declared void or annulled (final judgment) [Terre b.   The custody and support of the common children,
v. Terre, A.M. No. 2349 (1992), Atienza v. Brillantes, giving paramount consideration to their moral
A.M. No. MTJ-92-706 (1995)]; Wiegel v. Sempio- and material welfare, their choice of parent with
Dy, G.R. No. L-53703 (1986)]. whom they wish to remain.
b.   Must comply with the requirements of Art. 52, FC: c.   The court shall also provide for visitation rights of
Art. 52, FC. The judgment of annulment or of other parent. [Art. 49, FC]
absolute nullity of the marriage the partition and
distribution of the properties of the spouses and the Effect of Res Judicata
delivery of the children's presumptive legitimes Suffice it to state that parties are bound not only as
shall be recorded in the appropriate civil registry regards every matter offered and received to sustain or
and registries of property; otherwise the same shall defeat their claims or demand but as to any other
not affect third persons. admissible matter which might have been offered for
that purpose and of all other matters that could have
Safeguard against collusion and No confession of been adjudged in that case. [Mallion vs Alcantara, G.R.
judgment No. 141528 (2006)]
In the cases referred to in the preceding paragraph, no
judgment shall be based upon a stipulation of facts or Effect of Final Judgment Declaring Nullity
confession of judgment. [Art. 48 (2), FC] The effects provided for by paragraphs (2), (3), (4) and
(5) of Article 43 and by Article 44 shall also apply in
Stipulation of Facts the proper cases to marriages which are declared void
An admission by both parties after agreeing to the ab initio or annulled by final judgment under Articles
existence of any of the grounds or facts that would 40 and 45 [Art. 50(1), FC].
constitute a void/voidable marriage
Final judgment in such cases shall provide for:
Confession of Judgment a.   Liquidation, partition, and distribution of the
The admission by one party admitting his/her fault to properties of the spouses
cause the invalidity of the marriage. b.   Custody and support of the common children
c.   Delivery of their presumptive legitimes
Although the admission of guilt of the wife constitutes
a confession of judgment, the husband was also able UNLESS: such matters had been adjudicated in
to present other evidence to support the allegation. previous judicial proceedings. [Art. 50(2), FC]
Hence, there was no collusion. [Ocampo v.
Florenciano, G.R. No. L-13553 (1960)] All creditors of the spouses/property regime shall be
notified of the proceedings for liquidation [Art. 50(2
Participation of the OSG and 3), FC]
The obvious intent of the AM 02-11-10-SC was to
require the OSG to appear as counsel for the State in In the partition, the conjugal dwelling and lot shall be
the capacity of a defensor vinculi (i.e., defender of the adjudicated to the spouse with whom majority of the
marital bond) to oppose petitions for, and to appeal common children remain [Art. 102 and 129, Art. 50(4),
judgments in favor of declarations of nullity of FC]
marriage under Article 36 of the Family Code, thereby
ensuring that only the meritorious cases for the Tender Years Presumption
declaration of nullity of marriages based on Children below 7 years age will be in the custody of the
psychological incapacity-those sufficiently evidenced mother.
by gravity, incurability and juridical antecedence-
would succeed. [Mendoza v. Republic, G.R. No. 157649 Presumptive legitimes, computed as of the date of
(2012)] the final judgment, shall be delivered in cash, property
or sound securities:
No Motion to Dismiss a.   Unless the parties, by mutual agreement
AM 02-11-10-SC Sec. 7 prohibits the filing of a motion judicially approved, had already provided for such
to dismiss in actions for annulment of marriage. [Art. 51(1), FC]
[Aurelio v. Aurelio, G.R. No. 175367 (2011)] b.   The children/guardian/trustee of property may
ask for the enforcement of the judgment [Art.
Effect of pendency of action for declaration of 51(2), FC]
nullity:

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c.   The delivery of the presumptive legitimes shall Nature of an Action for Annulment
not prejudice the ultimate successional rights, but Action in rem, concerns status of parties; res is relation
the value of the properties already received shall between parties or marriage tie; jurisdiction depends
be considered as advances on their legitime [Art. on nationality or domicile not the place of celebration.
51(3), FC]
1.   LACK OF PARENTAL CONSENT
Generally, children born or conceived within void
marriages are illegitimate. 18 ≤ x < 21 without parental consent
Exceptions:
a.   Children conceived or born before the judgment Note: Art. 14, FC states that in case either or both of
under Article 36 has become final and executory the contracting parties, not having been emancipated
[Art. 54, FC] by a previous marriage, are between the ages of
b.   Children conceived or born of subsequent eighteen and twenty-one, THEY SHALL, in addition to
marriages under Article 53 [Art. 54, FC] the requirements of the preceding articles:
a.   Exhibit to the local civil registrar the consent to
b.  Voidable or Annullable their marriage of their father, mother, surviving
parent or guardian, or persons having legal
Marriages charge of them, in the order mentioned
i.   Manifested in writing by the interested
Art. 4, FC states that “xxx A defect in any of the party, who personally appears before the
essential requisites shall render the marriage voidable proper local civil registrar, or
as provided in Article 45.” ii.   In the form of an affidavit made in the
presence of two witnesses and attested
Grounds for Annulment [Art. 45, FC] before any official authorized by law to
1.   The party in whose behalf it is sought to have the administer oaths
marriage annulled was eighteen years of age or b.   Record such personal manifestation in both
over but below twenty-one, and the marriage was applications for marriage license, and the
solemnized without the consent of the parents, affidavit, if one is executed instead, shall be
guardian or person having substitute parental attached to said applications.
authority over the party, in that order, unless after
attaining the age of twenty-one, such party freely In defending the requirement of parental consent,
cohabited with the other and both lived together the Court held that the State has power to make
as husband and wife; adjustments in the constitutional rights of minors
2.   Either party was of unsound mind, unless such based on the following grounds: 1) the peculiar
party after coming to reason, freely cohabited vulnerability of children, 2) to protect minors from
with the other as husband and wife; immature decision making and prevent unstable
3.   The consent of either party was obtained by marriages, 3) on the presumption that parents act
fraud, unless such party afterwards, with full in the best interests of their children in child
knowledge of the facts constituting the fraud, rearing. (Moe v. Dinkins, (US Case, 1981))
freely cohabited with the other as husband and
wife; May be Ratified by the party 18 or above but
4.   The consent of either party was obtained by below 21 upon free cohabitation upon reaching 21
force, intimidation or undue influence, unless
the same having disappeared or ceased, such 2.   INSANITY
party thereafter freely cohabited with the other as
husband and wife; Presumption: A person is presumed to be of sound
5.   Either party was physically incapable of mind. The burden of proof is on the person alleging
consummating the marriage with the other, and insanity.
such incapacity continues and appears to be Mental incapacity or insanity is a vice of consent. It can
incurable; or be ratified by cohabitation after insanity is cured or
6.   Either party was afflicted with a sexually- during a lucid interval.
transmissible disease found to be serious and
appears to be incurable. Mere mental weakness is not a ground for annulment,
but if found grave enough, it may amount to
psychological incapacity.

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Intoxication, somnambulism where one had no If husband knew of pregnancy, the marriage cannot be
mental capacity to give consent is equivalent to annulled on the ground of concealment.
insanity
The woman was 7 months pregnant at the time she
Must exist at the time of the celebration of the met petitioner. He cannot claim that the pregnancy
marriage. Insanity that occurs after the celebration of was concealed from him and that he was defrauded
marriage does not constitute a cause for nullity into marrying her. [Buccat v. Buccat, G.R. No 47101
[Katipunan v. Tenorio, G.R. No. 43442 (1937)] (1941)]

Test of Insanity: Whether the party at the time of But where the wife concealed the fact that she was 4
marriage was capable of understanding the nature months pregnant during the time of the marriage and
and consequences of marriage itself (Sempio-Diy) was “naturally plump,” Delizo could hardly be
expected to know, by mere looking, whether or not she
3.   FRAUD was pregnant at the time of the marriage. [Aquino v.
Delizo, G.R. No. L-15853 (1960)]
Art. 46, FC. Any of the following circumstances
shall constituted fraud referred to in Number 3 of Note: May be ratified upon free cohabitation after
the preceding Article: knowledge of fraud.
(1)   Non-disclosure of a previous conviction by
final judgment of the other party of a crime Concealment of Sexually Transmissible Disease
involving moral turpitude; Art. 45 (6) STD Art. 46 (3) STD
(2)   Concealment by the wife of the fact that at the The concealing of the
time of marriage, she was pregnant by a man STD is a type of fraud
Ground for annulment
other than her husband; which is a ground for
(3)   Concealment of sexually transmissible annulment
disease, regardless of its nature, existing at Does not have to be
Must be concealed
the time of marriage; or concealed
(4)   Concealment of drug addiction, habitual Must be serious and Need not be serious nor
alcoholism or homosexuality or lesbianism incurable incurable
existing at the time of marriage. It is the concealment
The STD itself is the
that gives rise to the
No other misrepresentation or deceit as to ground for annulment
annulment
character, health, rank, fortune or chastity shall
constitute such fraud as will give grounds for the Concealment of Drug Addiction, Habitualism,
action of annulment of marriage. Homosexuality or Lesbianism
Recovery or rehabilitation from STD, drug addiction,
Note: The enumeration of the grounds for annulment and habitual alcoholism will NOT bar action for
under Art. 46 for reasons of fraud or vice of consent is annulment; the defect is not the disease, but the fraud
exclusive. No other misrepresentation or deceit of which vitiated consent.
character, health, rank, fortune or chastity shall
constitute fraud. It is the concealment of homosexuality, and not
homosexuality per se, that vitiates the consent of the
Non-Disclosure of Conviction of Crime: innocent party. [Almelor v. RTC, G.R. No. 179620
a.   The crime must involve moral turpitude (2008)]
b.   Must be convicted by final judgment
c.   Conviction must be prior to marriage Effect of Cure to Fraud in Art. 46
Recovery or rehabilitation from STD, drug addiction,
Concealment of Pregnancy and habitual alcoholism will NOT bar action for
Wife must have: annulment; the defect is not the disease, but the fraud
a.   Concealed her pregnancy AND which vitiated consent.
b.   Pregnancy is by another man other than her
husband Wife gave birth 3 months after marriage, and husband
then filed for annulment on the ground of
Fraud against very essence of marriage: importance concealment of non-virginity. Denied. Court held that
of procreation of children; an assault to the integrity of it was unbelievable that husband could not have
the union by introducing ALIEN BLOOD. noticed when wife had been at least 6 months

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pregnant prior to marriage. [Buccat v. Buccat, G.R. No If the potent spouse was aware, it is implied that
47101 (1941)] he/she renounced copulation by consenting to the
marriage. [Tolentino]
The Supreme Court granted annulment because the
wife concealed the fact that she was 4 months When both spouses are impotent, marriage cannot be
pregnant during the time of the marriage. Since Delizo annulled because neither spouse is aggrieved.
was “naturally plump,” Aquino could hardly be [Sempio-Dy]
expected to know, by mere looking, whether or not she
was pregnant at the time of the marriage. [Aquino v. An impotent plaintiff could not have expected
Delizo, G.R. No. L-15853 (1960)] copulation with the other spouse. [Tolentino]

It is the concealment of homosexuality, and not REFUSAL of wife to be examined DOES NOT
homosexuality per se, that vitiates the consent of the PRESUME impotency [Jimenez v Canizares, G.R. No. L-
innocent party. Such concealment presupposes bad 12790 (1960)]
faith and intent to defraud the other party in giving
consent to the marriage. [Almelor v. RTC, G.R. No. N.B. If she continues to refuse the physical exam, she
179620 (2008)] can be held in contempt & ordered confined in jail until
she does so.
4.   FORCE, INTIMIDATION, UNDUE INFLUENCE
6.   SEXUALLY-TRANSMISSIBLE DISEASE
Force must be one as to prevent party from acting as a SERIOUS AND INCURABLE
free agent; will destroyed by fear/compulsion
Affliction of STD is unknown to the other spouse. The
Intimidation must be one as to compel the party by a other spouse must also be free from a similar STD.
reasonable/well-grounded fear of an imminent and [Balane]
grave evil upon his person/properties
a.   Degree of intimidation: age, sex, condition of Requisites
person borne in mind a.   Should exist at the time of the marriage
b.   Threat or intimidation as not to act as free agent; b.   Should be found serious
c.   Should appear to be incurable
May be ratified upon voluntary cohabitation after
force, intimidation, or undue influence has ceased or Rationale: danger to the health of spouse &
disappeared. offspring/s

5.   IMPOTENCY Not subject to ratification: cannot be ratified or


validated by cohabitation.
Impotency refers to the person’s physical condition
where sexual intercourse with a person of the opposite Who may file, prescription, ratification
sex is impossible. It does not refer to mere sterility. Ground Who can Prescriptio Ratificati
(Art. 45, file (Art. n (art. 47, on (Art.
Refers to the inability to copulate, not procreate. FC) 47, FC) FC) 45, FC)
Party 18 Within 5 Free
Potency is presumed; party who alleges impotency or above years after cohabitati
has burden of proof [Jimenez v. Canizares, G.R. No. L- but attaining on of the
12790 (1960)] below 21 age of 21 party who
entered
To constitute, fraud, the concealed impotency exist at Lack of the
time of marriage, and be continuous and incurable. If Parental Parent or marriage
incapacity can be remedied or is removable by Consent guardian Before party without
operation, not annullable [Sarao v. Guevarra, G.R. No. who did below 21 parental
47063SUPPL 263 (1940)] not give reaches 21 consent
consent after
Only the potent spouse can file the action for attaining
annulment and he/she must not have been aware of age of 21
the other’s impotency at the time of marriage. Sane Free
[Sempio-Dy] Any time
Insanity spouse cohabitati
before the
with no on of

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knowledg death of insane Presence of Prosecutor


e of the either party party after To prevent collusion between the parties, fabrication
other’s insane or suppression of evidence, the prosecuting attorney
insanity party or fiscal shall appear on behalf of the State. [Art. 48,
Legal comes to FC]
guardian reason
of insane In a legal separation or annulment case, the
party prosecuting attorney must first rule out collusion as a
During lucid condition sine qua non for further proceedings. A
interval or certification by the prosecutor that he was present
after during the hearing and even cross-examined the
Insane plaintiff does not suffice to comply with the mandatory
regaining
party requirement. [Corpuz v. Ochoterena, A.M. No. RTJ- 04-
sanity, and
before 1861 (2004)]
death Effects of Pending Decree of Annulment
Free
cohabitati The Court shall provide for the support of spouses and
on of the support and custody of common children (Art. 49, FC).
Within 5 In determining which parent should have custody of
Injured defrauded
years after them, their moral and material welfare shall be given
Fraud (defraude party after
discovery of paramount consideration. [Art. 49, FC; Luna and Luna
d) party having
fraud v. IAC, G.R. No. L-68374 (1985)]
full
knowledg Effects of Decree of Annulment
e of fraud
Free (Same as Decree of Nullity)
cohabitati
The effects provided for by paragraphs (2), (3), (4) and
on of the
(5) of Article 43 and by Article 44 shall also apply in
injured
Within 5 the proper cases to marriages which are declared void
party after ab initio or annulled by final judgment under Articles
years after
the force 40 and 45 [Art. 50(1), FC].
Force, disappeara
or
Intimidati Injured nce of force,
intimidati Comparative Table on Void and Voidable Marriages
on, undue party undue
on or Void Voidable
influence influence,
undue No validity from
or
influence the time of
intimidation
has performance; Valid until
Nature
ceased or inexistent from annulled
disappear the very
ed beginning
Cannot be Susceptible Can be ratified,
Within 5 Cannot be
Potent ratified by to subject to 2
Impotence years after ratified
spouse action Ratification exceptions
marriage
prescribes Only co- ACP or any
Cannot be ownership [Art. other property
Within 5
Healthy ratified by 147, FC] ; No ACP regime in
STD years after Property
party action or CPG despite accordance
marriage Relation
prescribes having entered with the
into a marriage marriage
Marriages not subject to ratification settlement settlement
a.   One spouse is incurably impotent Illegitimate under Children are
b.   One spouse has incurable STD Art. 165, FC (with legitimate if
Status of
Arts. 36 and 53, conceived or
Reason: Public policy and health. Children
FC as exceptions born prior to
under Art. 54, FC) the decree
Note: Though these marriages cannot be ratified, the
petition for annulment will prescribe within 5 years.

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May be attacked solidarily liable for the support of the family. The
directly or spouse present shall, upon proper petition in a
collaterally, but summary proceeding, be given judicial authority
Cannot be
for the purpose of to administer or encumber any specific separate
attacked
remarriage, a property of the other spouse and use the fruits or
collaterally
judicial proceeds thereof to satisfy the latter’s share.
How
declaration of
Impugned Cannot be
nullity is required Neither does separation in fact affect CPG (Art. 127,
impugned after
[Art. 40, FC] FC), subject to the same exceptions.
death of one of
the parties
Can be impugned De Facto Separation is the separation of spouses in
even after death fact, without obtaining a judicial decree of legal
of the parties separation.
A proper
interested person Agreement to Separate
Who May (depending on A notary public should not facilitate the disintegration
A party to the of a marriage and the family by encouraging the
Challenge the dates of
marriage separation of the spouses
Validity marriage and of
filing of and extrajudicially dissolving the conjugal
proceeding) partnership. [Espinosa v. Omana, A.C. No. 9081 (2011)]
Susceptible
Does not Absolute Divorce
to Prescribes
prescribe Where a marriage between a Filipino citizen and a
Prescription
foreigner is validly celebrated and a divorce is
thereafter validly obtained abroad by the alien spouse
7.  The Law on Separation of capacitating him or her to remarry, the Filipino spouse
the Spouses shall have capacity to remarry under Philippine law.
[par. 2, Art. 26, FC, as amended by Executive Order
SEPARATION IN FACT (De Facto Separation) 227)]
When a husband and wife are separated in fact, or one
has abandoned the other and one of them seeks Note: A foreign divorce obtained by the Filipino spouse
judicial authorization for a transaction where the against his foreigner spouse is now considered valid.
consent of the other spouse is required by law but such [Republic v. Manalo, G.R. 221029 (2018)]
consent is withheld or cannot be obtained, a verified
petition may be filed in court alleging the foregoing If both parties are Muslims, there is a presumption
facts. that the Muslim Code or Muslim law is complied with.
If together with it or in addition to it, the marriage is
The petition shall attach the proposed deed, if any, likewise solemnized in accordance with the CC of the
embodying the transaction, and, if none, shall Philippines, whichever comes first is the validating rite
describe in detail the said transaction and state the and the second rite is the merely ceremonial one. But,
reason why the required consent thereto cannot be in this case, as long as both parties are Muslims, this
secured. In any case, the final deed duly executed by Muslim Code will apply. [Zamoranos v. People, G.R.
the parties shall be submitted to and approved by the No. 193902 (2011)]
court. [Art. 239, FC.]
One of the effects of irrevocable talaq, as well as other
Rule: The separation in fact between husband and kinds of divorce, refers to severance of matrimonial
wife shall not affect the regime of absolute bond, entitling one to remarry. [Zamoranos v. People,
community EXCEPT that [Art. 100, FC.]: G.R. No. 193902 (2011)]
a.   The spouse who leaves the conjugal home or
refuses to live therein, without just cause, shall 8.  L egal Separation
not have the right to be supported;
b.   When the consent of one spouse to any An action for legal separation involves nothing more
transaction of the other is required by law, judicial than the bed-and-board separation of the spouses. It
authorization shall be obtained in a summary is purely personal in nature. [Lapuz Sy v. Eufemio, G.R.
proceeding; No. L-30977 (1972)]
c.   In the absence of sufficient community property,
the separate property of both spouses shall be

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Grounds for Legal Separation [Art. 55, FC]: The grounds for legal separation are exclusive. [Art.
a.   Repeated physical violence or grossly abusive 55, FC]
conduct directed against the petitioner, a
common child, or a child of the petitioner; These must be filed within 5 years after occurrence of
b.   Physical violence or moral pressure to compel the cause [Art. 57, FC]
petitioner to change religious or political
affiliation; Acts of Violence according to R.A. No. 9262 (as
c.   Attempt of respondent to corrupt or induce the grounds for legal separation under Art. 55(1), FC)
petitioner, a common child, or a child of the a.   Causing physical harm to the woman or her child;
petitioner, to engage in prostitution, or b.   Threatening to cause the woman or her child
connivance in such corruption or inducement; physical harm;
d.   Final judgment sentencing the respondent to c.   Attempting to cause the woman or her child
imprisonment of more than six years, even if physical harm;
pardoned; d.   Placing the woman or her child in fear of
e.   Drug addiction or habitual alcoholism of the imminent physical harm;
respondent; e.   Attempting to compel or compelling the woman
f.   Lesbianism or homosexuality of the respondent; or her child to engage in conduct which the
woman or her child has the right to desist from or
It is the concealment of homosexuality, and not desist from conduct which the woman or her child
homosexuality per se, that vitiates the consent of has the right to engage in, or attempting to
the innocent party. Such concealment restrict or restricting the woman's or her child's
presupposes bad faith and intent to defraud the freedom of movement or conduct by force or
other party in giving consent to the marriage. threat of force, physical or other harm or threat of
[Almelor v. RTC, G.R. No. 179620 (2008)] physical or other harm, or intimidation directed
g.   Contracting by the respondent of a subsequent against the woman or child. This shall include, but
bigamous marriage, whether in the Philippines not limited to, the following acts committed with
or abroad; the purpose or effect of controlling or restricting
h.   Sexual infidelity or perversion; the woman's or her child's movement or conduct:
Adultery is not a continuing crime; it is 1.   Threatening to deprive or actually depriving
consummated at every moment of carnal the woman or her child of custody to her/his
knowledge. Thus, every sexual act is a ground for family;
legal separation. [People v. Zapata and Bondoc, 2.   Depriving or threatening to deprive the
G.R. No. L-3047 (1951)] woman or her children of financial support
legally due her or her family, or deliberately
A civil action for legal separation based on providing the woman's children insufficient
concubinage may proceed ahead of, or financial support;
simultaneously with, a criminal action for 3.   Depriving or threatening to deprive the
concubinage; conviction is not a perquisite woman or her child of a legal right;
[Gandionco v. Penaranda, G.R. No. 79284 (1987)] 4.   Preventing the woman in engaging in any
i.   Attempt by the respondent against the life of the legitimate profession, occupation, business
petitioner; or or activity or controlling the victim's own
j.   Abandonment of petitioner by respondent money or properties, or solely controlling the
without justifiable cause for more than one year. conjugal or common money, or properties;
Abandonment is not mere physical estrangement f.   Inflicting or threatening to inflict physical harm on
but also financial and moral desertion. There oneself for the purpose of controlling her actions
must be an absolute cessation of marital or decisions;
relations, duties, and rights with the intention of g.   Causing or attempting to cause the woman or her
perpetual separation. [Dela Cruz. v. Dela Cruz, child to engage in any sexual activity which does
G.R. No. L-19565 (1968)] not constitute rape, by force or threat of force,
physical harm, or through intimidation directed
Note: The death of one party in a legal separation case against the woman or her child or her/his
abates the action. This is because the death of either immediate family;
spouse automatically dissolves the marriage. An h.   Engaging in purposeful, knowing, or reckless
action for legal separation is also purely personal conduct, personally or through another, that
between the spouses. [Lapuz Sy v. Eufemio, G.R. No. L- alarms or causes substantial emotional or
30977 (1972)] psychological distress to the woman or her child.

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This shall include, but not be limited to, the When to File Action
following acts: An action for legal separation shall be filed within five
1.   Stalking or following the woman or her child years from the time of the occurrence of the cause.
in public or private places; [Art. 57, FC]
2.   Peering in the window or lingering outside
the residence of the woman or her child; Cooling-off and Reconciliation Effects
3.   Entering or remaining in the dwelling or on An action for legal separation shall in no case be tried
the property of the woman or her child before six months shall have elapsed since the filing
against her/his will; of the petition. [Art. 58, FC]
4.   Destroying the property and personal
belongings or inflicting harm to animals or Actions cannot be tried unless the court has
pets of the woman or her child; and attempted to reconcile the spouses, and determined
5.   Engaging in any form of harassment or that despite such efforts, reconciliation is highly
violence; improbable [Art. 59]
i.   Causing mental or emotional anguish, public
ridicule or humiliation to the woman or her child, N.B. This is without prejudice to judicial determination
including, but not limited to, repeated verbal and of custody of children, alimony, and support pendente
emotional abuse, and denial of financial support lite.
or custody of minor children of access to the
woman's child/children. Courts can still resolve other issues, pending the
waiting period or cooling off period. In resolving other
DEFENSES FOR LEGAL SEPARATION issues, courts should try not to touch, as much as
possible, on the main issue (i.e. adultery if that is the
Grounds for denying legal separation [Art. 56, FC]: ground used). However, Court must still receive
a.   Condonation by aggrieved party – after the evidence if just to settle incidental issues of support
commission of the offense; may be express or and custody. [Araneta v. Concepcion, G.R. No. L-9667
implied. (1956)]

That plaintiff-husband and his wife agreed to go N.B. This provision of the Family Code dictating a
to the house of his cousin and there slept together mandatory 6-month cooling-off period does not apply
as husband and wife for two nights – all these in cases where violence, as used in R.A. No. 9262
facts have no other meaning than that (Anti-Violence Against Women and their Children), is
reconciliation between them was effected and alleged. The case should be heard as soon as possible
there was condonation of the wife by the husband. by the court.
This reconciliation occurred almost 10 months
after he came to know of her infidelity. [Bugayong Confession of Judgment
v. Ginez, G.R. No. 10033 (1957)] No decree of legal separation shall be based upon a
b.   Consent by aggrieved party to the commission of stipulation of facts or a confession of judgment. [par.
the offense – before the commission of the 1, Art. 60, FC]
offense; may be express (e.g. written agreement,
[Matubis v. Praxedes, G.R. No. L-11766 (1960)] or N.B. Art. 60 par. 1 applies only if the judgment was
implied based solely on the stipulation of facts or solely on the
c.   Connivance between parties in the commission of confession of judgment. Thus, if other grounds were
the offense used, Art. 60 par. 1 is not applicable. [Balane]
d.   Mutual guilt or Recrimination between spouses
in the commission of any ground for legal The prohibition on confession of judgment does not
separation mean that the Court will not grant petition if one party
e.   Collusion between parties to obtain decree of admits to being guilty of the charges of adultery. The
legal separation point of this provision is that the Court should still
f.   Prescription of action for legal separation [Art. admit evidence, not decide just based on an admission
57: 5 years from occurrence of the cause of action] of guilt. Because what is prohibited is handing down a
g.   Reconciliation of parties during pendency of decree of legal separation based solely on a
action [Art. 66 (1)] confession of judgment. [Ocampo v Florenciano, G.R.
h.   Death of either party during pendency of action No. 13553 (1960)]
[Lapuz Sy v. Eufemio, G.R. No. L-30977 (1972)]

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Effects of Filing Petition f.   Innocent spouse may also revoke designation of


a.   The spouses are entitled to live separately, but the guilty spouse as beneficiary in an Insurance policy,
marital bond is not severed. [Art. 61 (1), FC] even if such stipulations are irrevocable. [Art. 64.
b.   Administration of community or conjugal property FC; cf. Sec. 11, P.D. 612]
– If there is no written agreement between the g.   Obligation for mutual support ceases, but the
parties, the court shall designate one of them or a court may order the guilty spouse to support the
third person to administer the ACP or CPG. [Art. innocent spouse. [Art. 198]
61, par. 2, FC] h.   The wife shall continue to use the surname of the
husband even after the decree for legal
Effects of Pendency separation. [Laperal v. Republic, G.R. No. L-18008
The Court shall provide for: [Art. 62, cf. Art. 49, FC] (1992)]
a.   Support of spouses
b.   Custody of children: The court shall give custody Reconciliation
of children to one of them, if there is no written Should the spouses reconcile, they should file a
agreement between the spouses. corresponding joint manifestation under oath of such
c.   Visitation rights of the other spouse reconciliation, duly signed by them and filed with the
court in the same proceeding for legal separation. [Art.
Effects of Decree of Legal Separation 65]
a.   The spouses can live separately [Art. 63, FC] but
the marriage bonds are not severed. Effects of Reconciliation
b.   The ACP or CPG shall be dissolved and liquidated, a.   Proceedings for legal separation shall be
and the share of the guilty spouse shall be terminated at whatever stage. [Art. 66]
forfeited in favor the common children, previous b.   If there is a final decree of legal separation, it shall
children, or innocent spouse, in that order [Art. 63, be set aside. [Art. 66]
FC; cf. Art. 43(2), FC] c.   The separation of property and forfeiture of share
c.   Custody of the minor children shall be awarded to of guilty spouse shall subsist, unless the spouses
the innocent spouse [Art. 63, FC; cf. Art 213, FC] agree to revive their former property regime or to
d.   Guilty spouse shall be disqualified from Inheriting institute another property regime. [Art. 66 cf. Art.
from innocent spouse by intestate succession. The 67]
provisions in favor of the guilty party in the will of d.   Joint custody of children is restored.
the innocent spouse shall also be revoked by e.   The right to intestate succession by guilty spouse
operation of law. [Art. 63, FC] from innocent spouse is restored.
e.   Donations in favor of the guilty spouse may be f.   The right to testamentary succession depends on
revoked [Art. 64, FC] but this action prescribes the will of the innocent spouse.
after 5 years from the decree of legal separation.

Void Marriages, Voidable Marriages, and Legal Separation


Void Marriages Voidable Marriages Legal Separation
a.   Repeated physical
violence
a.   One is a minor
b.   Pressure to compel to
b.   No authority to marry
change religious/
c.   No valid marriage
political affiliations
license a.   Lack of parental
c.   Corruption/
d.   Bigamous and consent
inducement to
polygamous b.   Insanity
engage in prostitution
marriages c.   Fraud
d.   Final judgment with
Grounds e.   Mistake of identity d.   Force, intimidation
sentence of more than
f.   Void subsequent e.   Undue influence
6 years
marriage f.   Impotence
e.   Drug addiction/
g.   Psychological g.   Serious and
habitual alcoholism
incapacity incurable STD
f.   Homosexuality/
h.   Incestuous marriages
lesbianism
i.   Marriages against
g.   Bigamous marriage
public policy
h.   Sexual infidelity or
perversion

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i.   Attempts against the


life of petitioner
j.   Abandonment
without just cause for
more than 1 year
a.   Condonation
b.   Consent
c.   Connivance
Defenses NONE
d.   Collusion
e.   Mutually guilty
f.   prescription
a.   Lack of parental
consent
1.   Spouses – 5 years
after turning 21
2.   Parents – before
the spouse turns
21
b.   Insanity
1.   Insane spouse –
during lucid
intervals Within 5 years from the
Prescription No prescription
2.   Sane occurrence of the cause
spouse/guardian
– lifetime
c.   Fraud – 5 years after
the discovery of the
fraud
d.   Force, intimidation,
undue influence – 5
years after cessation
e.   Impotence/STD – 5
years from marriage
According to A.M. No. 02-
11-10-SC):
a.   Before March 18,
2003 (petition for
nullity or celebration
Only the spouses (cannot
of marriage) – any
Who can file Only the spouses survive the death of the
party
plaintiff)
b.   On and after March
18, 2003 (petition for
nullity or celebration
of marriage) – only
the spouses
a.   Live separately
b.   Designate either of
In the absence of adequate provisions in a written them or a third person
agreement: as administrator of
Effects of Pendency a.   Support of spouses property
b.   Support and custody of children c.   Support of spouses
c.   Visitation rights d.   Support and custody
of children
e.   Visitation rights

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  Rights and Obligations of 3.  Support


Spouses The spouses are jointly responsible for the support of
the family. The expenses for such support and other
N.B. These rights and duties are not subject to conjugal properties shall be paid:
stipulation between the spouses and though they may a.   From the conjugal property;
voluntarily agree to any change in their personal b.   If none, income or the fruits of their separate
relations, this agreement will be void and have no properties;
legal effect. c.   If none, from their separate properties, wherein
they shall be liable in proportion to their
properties [Art. 70, FC]
1.   Live Together
In the case of a separation de facto, if it is proved that
The right to live together refers to the right of the husband and wife were still living together at the
consortium which is “not susceptible of precise or time of his death, it would be safe to presume that she
complete definition but, broadly speaking, was dependent on the husband for support, unless it
companionship, love, affection, comfort, mutual is shown that she is capable of providing for herself.
services, sexual intercourse—all belonging to the [SSS v. Aguas, G.R. No. 165546 (2006)]
marriage state—taken together make up what we
refer to as consortium.
4.  M anagement of Family
General Rule: It is their obligation to do so
(cohabitation). It is also their obligation to observe
Life
mutual love, respect and fidelity and render mutual
help and support. (Art. 68) This is the right and duty of both spouses. The
expenses for such management shall be paid in
Exception: One spouse living abroad or there are valid accordance with the provisions of Article 70 [Art. 71,
and compelling reasons [Art. 69 (2), FC] – at the FC].
discretion of the court.
5.  E ffect of Neglect of Duty
Exception to the Exception: Incompatibility with the
solidarity of the family [Art. 69 (2). FC] In case the other spouse neglects his or her duties or
commits acts which tend to bring danger, dishonor or
If the wife abandons the family domicile (vs obligation injury to the family, the aggrieved party may apply to
of cohabitation) with justifiable cause i.e. being forced the court for relief. [Art. 72. FC]
to perform lewd sexual acts, the husband’s obligation
to support her is not terminated. The law will not Note: Injury contemplated is physical, moral,
permit the husband to terminate the obligation to emotional or psychological, not financial.
support his wife by his own wrongful acts in driving the
wife to seek protection in her parents’ home. [Goitia v.
Campos Rueda, G.R. No. 11263 (1916)] 6.  E xercise of Profession
A court cannot compel a married woman to go back to Either spouse may exercise any legitimate profession,
her husband, but the court may decree that support be without need for consent of the other. [Art. 73, FC]
terminated. [Arroyo v. Vasquez de Arroyo, G.R. No. L-
17014 (1921)] The other spouse may only object on valid, serious,
and moral grounds.
2.  F amily Domicile In case of disagreement, the Court shall decide
whether:
The husband and wife shall fix the family domicile. a.   The objection is proper, and
[Art. 69, FC] b.   Benefit has accrued to the family before OR after
the objection. If before, enforce resulting
In case of disagreement, the court shall decide. [Art. obligation against the separate property of the
69 (1), FC] spouse who has not obtained consent. [Art. 73,
FC]

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7.  Use of Surname   Property Relations of


Although marriage is one of the events required to be Spouses
recorded in the civil register, a woman does not
register her married name. Neither does a married
woman file a petition for change of name in order to
1.   Marriage Settlements
use her husband’s surname.
According to Art. 74, FC, property relations between
Specific Rules: husband and wife are governed:
a.   For Married Women a.   By marriage settlements executed before the
A woman may use [Art. 370, CC]: marriage;
1.   Her maiden first name and surname and add b.   By the provisions of this Code;
her husband’s surname; or c.   By the local custom.
2.   Her maiden first name and her husband’s
surname; or Requisites for Validity
3.   Her husband’s full name, but prefixing a word Art. 75, FC. The future spouses may, in the
indicating that she is his wife, such as Mrs. marriage settlements, agree upon the regime of
b.   For Widows: A widow may use the deceased absolute community, conjugal partnership of
husband’s surname as though he were still living, gains, complete separation of property, or any
in accordance with Art. 370 [Art. 373, CC] other regime. In the absence of marriage
c.   In case of Annulment [Art. 371, CC] settlement, or when the regime agreed upon is
1.   If the wife is the guilty party, she shall resume void, the system of absolute community of property
her maiden name and surname as established in this Code shall govern.
2.   If the wife be innocent
i.   She may resume her maiden name and The parties have the freedom to stipulate regarding
surname; or their property relations in their marriage settlements
ii.   She may choose to continue employing in which the lex intentionis of the parties govern the
her former husband’s surname, unless: contract. When the couple agree on a property regime
a)   The court decrees otherwise; or on their marriage settlement, the provisions of the
b)   She or the former husband is Code are merely suppletory.
married again to another person
d.   For Legally Separated Spouses [Art. 372, CC] - N.B. Marriage settlements are considered accessory to
The wife shall continue using her name and the marriage, therefore as per Art. 81, stipulations in
surname employed before the legal separation. consideration of future marriage and donations will be
void if the marriage does not take place.
N.B. From the foregoing provisions, it can be gleaned
that a woman is not mandated by law to adopt her Should the surviving spouse contract a subsequent
husband’s name after marriage. Art. 370, CC is merely marriage without compliance with the foregoing
directory, since it provides that a woman may choose requirements, a mandatory regime of complete
any of the options provided. separation of property shall govern the property
relations of the subsequent marriage [Art. 103(3), FC]

Marriage Settlement Rules


When modifications can be made
General rule: Before marriage is celebrated [Art. 76,
FC}
Property regime is dissolved and liquidated [Art.
63 (2). FC]
Reconciliation in case of legal separation [Arts. 66
and 67, FC]
When abandoned spouse petitions the court for
judicial separation of property [Art. 128, FC]
Sufficient cause for judicial separation of property
[Art. 135, FC]
Voluntary dissolution of ACP or CPG by the
spouses [Art. 136, FC]

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b.   Parents of one or both spouses


Requirements of marriage settlements and any c.   Third persons to either or both spouses
modification thereof [Art. 77, FC]
Made in writing Rules for Donations BEFORE Marriage
Signed by the parties General rule: Future spouses who agree upon a regime
Executed before the marriage celebration other than ACP cannot donate to each other more
Not to prejudice third persons unless registered in than 1/5 of their present property (excess shall be
the local civil registry where the marriage is considered void). [Art. 84, FC]
recorded and in registries of property
If executed by a person below 21 years, valid only Donations of property subject to encumbrances
when persons required to give consent to the a.   Are considered valid.
marriage (father, mother, or guardian, b.   In case of foreclosure:
respectively) are made parties to the agreement 1.   if property value < obligation, donee shall not
[Art. 78, FC] be liable for the deficiency
2.   if property value > obligation, donee shall be
entitled to the excess [Art. 85, FC]
2.  D onations by Reason of
Marriage (Donations Grounds for Revocation of Donation Propter Nuptias
[Art. 86, FC]
Propter Nuptias) a.   If the marriage is not celebrated or judicially
declared void ab initio, EXCEPT donations made
In donations propter nuptias, the marriage is really a in marriage settlements.
consideration, but not in the sense of giving birth to b.   When the marriage takes place without the
the obligation. There can be a valid donation even if consent of the parents or guardians, as required
the marriage never took place, but the absence of by law.
marriage is a ground for the revocation of the c.   When the marriage is annulled, and the donee
donation. [Solis v. Barroso , G.R. No. 27939 (1928)] acted in bad faith.
d.   Upon legal separation, if the donee is the guilty
The donation must be in a public document and not spouse.
merely privately stipulated. [Solis v. Barroso , G.R. No. e.   If there is a resolutory condition, and it is not
27939 (1928)] complied with.
f.   When donee has committed an act of ingratitude:
Donations propter nuptias are without onerous [Art. 765, CC]
consideration, marriage being merely the occasion or 1.   An offense against person or property of
motive for the donation, not its cause. Being donor, or his wife or children under parental
liberalities, they remain subject to reduction for authority.
inofficiousness upon the donor’s death, if they should 2.   An imputation to the donor of any criminal
infringe the legitime of a forced heir. [Mateo v. offense, or any act involving moral turpitude,
Lagua,G.R. No. L-26270 (1969)] even if proven, unless the crime is committed
against the donee, his wife or children under
Requisites of donations propter nuptias his authority.
a.   Made before the celebration of marriage 3.   Refusing to support the donor, if he/she is
b.   Made in consideration of marriage legally required to do so.
c.   In favor of one or both of the future spouses
d.   Donor must be one of the betrothed or any third Effects of Judicial Declaration of Nullity
person Donations by reason of marriage shall remain valid
EXCEPT that if the donee contracted marriage in bad
Donations excluded faith, such donations made to said donee are revoked
a.   Ordinary wedding gifts given after the celebration by operation of law [Art. 43 (3)]. Thus, even if spouse
of the marriage in good faith condones the donee, the donation
b.   Donations in favor of future spouses made before propter nuptias is still forfeited
marriage but not in consideration thereof .
c.   Donations made in favor of persons other than the Effects provided for by Art. 43(2), (3), (4), and (5) and
spouses even if founded on the intended marriage by Art. 44 shall also apply to marriages that are
declared void ab initio or annulled by final judgment
Who may donate under Article 40 (Judicial declaration of nullity) and 45
a.   Spouses to each other (Voidable marriages). [Art. 50, FC]

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Rules for Donations DURING Marriage


3.  Property Regimes –
General rule: Spouses cannot donate to each other, Absolute Community of
directly or indirectly; donations made by spouses to
each other during the marriage are void. [Art. 87, FC] Property and Conjugal
These donations refer to donations inter vivos,
[Tolentino]
Partnership of Gains
Governing Law
Exception: Moderate gifts on the occasion of any
Art. 80, FC. In absence of a contrary stipulation in
family rejoicing.
a marriage settlement, the property relations of the
spouses shall be governed by Philippine laws,
The prohibition on donations can only be assailed by
regardless of the place of the celebration of the
persons who bear such relation to the parties or the
marriage and their residence.
property itself, that their rights are being interfered
with. Here, the insurance company of the donated car
cannot assail the validity of the donation. In addition, N.B. By the Nationality Rule [Art. 15, CC], the rule that
the codal exception of “moderate gifts” depends on Absolute Community Property (ACP) is the default
the income class of the spouses and a car could be mode of property relations absent any marriage
considered a “moderate gift” that does not infringe settlement applies to all Filipinos, regardless of the
the prohibition of donation between spouses. [Harding place of the marriage and their residence.
v. Commercial Union, G.R. No. L-12707 (1918)]
Exceptions
A spouse cannot donate to persons which the other a.   Where both spouses are aliens
spouse may inherit from as it constitutes an indirect b.   With respect to the extrinsic validity of contracts
donation. [Nazareno v. Birog, 45 O.G. No. 5 (1947)] affecting property not situated in the Philippines
and executed in the country where the property is
Rules for Donations Between Common-Law located
Spouses c.   With respect to the extrinsic validity of contracts
The donation between common-law spouses falls entered into in the Philippines but affecting
within the provision prohibiting donations between property situated in a foreign country whose laws
spouses during marriage. [Matabuena v. Cervantes, require different formalities for its extrinsic
G.R. No. L-2877 (1971)] validity [Art. 80, FC]

In order to fall under the prohibition, it must be proved Art. 81, FC. Everything stipulated in the settlements
that they were living in a common-law relationship at or contracts referred to in the preceding articles in
the time of the donation. [Sumbad v. CA, G.R. No. consideration of a future marriage, including
106060 (1999)] donations between the prospective spouses made
therein, shall be rendered void if the marriage does
Distinguished from Ordinary Donations not take place. However, stipulations that do not
Donations propter depend upon the celebration of marriage shall be
Ordinary Donations valid.
nuptias
Does not require Express acceptance
express acceptance required e.g. recognition of paternity of illegitimate child
May include future Cannot include future
property property Waiver Not Allowed
If present property is General Rule: No waiver of rights, shares and effects of
No limit to donation of the absolute community of property during the
donated and property
present property marriage can be made
regime is not absolute
provided legitimes are Exception: In case of judicial separation of property.
community, limited to
not impaired When the waiver takes place upon a judicial
1/5 [Art. 84, FC]
Grounds for revocation separation of property, or after the marriage has been
Grounds for revocation dissolved or annulled, the same shall appear in a
found in donation laws
found in Art. 86, FC public instrument and shall be recorded as provided in
CC provisions
Article 77. The creditors of the spouse who made such
waiver may petition the court to rescind the waiver to
the extent of the amount sufficient to cover the
amount of their credits. [Art. 89, FC.]

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Provisions on Co-ownership Apply ownership of their separate property. However, the


The provisions on co-ownership shall apply to the spouses also place in common fund the proceeds,
absolute community of property between the spouses products, fruits and income of their separate property
in all matters not provided for in this Chapter. [Art. and those acquired by either or both spouses through
90., FC] their efforts or by chance.

N.B. The creditors of the spouse who made such The presumption applies that all properties acquired
waiver may petition the court to rescind the waiver to during the marriage belong to the CPG. There are 3
the extent of the amount sufficient to cover the distinct patrimonies in this system, the husband’s
amount of their credits. capital property, the wife’s paraphernal property and
the conjugal property.
a.  Absolute Community of
Property c.   Separation of Property

The community property consists of all the property Each spouse has complete control and ownership of
owned by the spouses at the time of the celebration of his or her own properties which will include “all
the marriage and those either one or both of them earnings from his or her profession, business or
acquired during the marriage. There is a presumption industry and all fruits, natural, industrial or civil, due
in law that properties acquired during the marriage or received during the marriage form his or her
belong to the community, unless it is proved that it is separate property.” Expenses of the family shall be
one of those excluded therefrom. shouldered by the spouses in proportion to their
income, or, in case of insufficiency or default thereof,
to the current market value of their separate
b.  Conjugal Partnership of properties.
Gains
This property regime was formerly the default regime
under the CC. In this regime, the spouses retain

Comparison of ACP and CPG


Absolute Community of Property Conjugal Partnership of Gains
Default property regime for marriages
celebrated before the Family Code took effect
When it At the precise moment of the celebration of
commences the marriage [Art. 88, FC] For marriages after the Family Code, if agreed
to by the parties through a marriage
settlement.
Proceeds, products, fruits, and income of their
All the property owned by the spouses at the
separate properties
time of the celebration of the marriage or
Everything acquired by them during marriage
acquired thereafter [Art. 91, FC]
through their own efforts
Under the ACP, spouses cannot exclude
specific properties from the regime unless Everything acquired by them by chance.
done in settlement.
Winnings from gambling shall accrue to the
What it community property but obligations from Specific properties (Art. 117, FC)
consists of gambling shall not. [Art. 95, FC] a.   Acquired by onerous title during the
marriage at the expense of the common
Property acquired during is presumed to have fund;
been obtained through joint efforts of parties, b.   Acquired through the labor, industry,
even though one did not actually participate in work, or profession of either or both
the acquisition. This is true for a party whose spouses
efforts consisted in the care and maintenance c.   Fruits from common property and net
of the family household. Such is regarded as fruits of the exclusive property of each
contributions to the acquisition of common spouse
property by one who has no salary, income,

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work or industry. [Ocampo v. Ocampo, G.R. No. d.   Share of either spouse in hidden treasure,
198908 (2015)] whether as finder or owner of property
where treasure was found
e.   Acquired through occupation such as
fishing or hunting
f.   Livestock existing at dissolution of
partnership in excess of what is brought by
either spouse to the marriage
g.   Acquired by chance, such as winnings
from gambling or betting
Moral damages arising from a contract paid
from the CPG [Zulueta v. Pan American World
Airways, G.R. No. L-28589 (1973)]
Loans contracted during the marriage are
conjugal, and so is any property acquired
therefrom [Mendoza v. Reyes, G.R. No. L-31625
(1983)]
Property purchased by installment, paid partly
with conjugal funds and partly with exclusive
funds, if full ownership was vested during the
marriage; the CPG shall reimburse the owner-
spouse [Art. 118, FC]
If a winning ticket is bought by conjugal funds,
the prize is conjugal (otherwise, the prize is
exclusive property of the spouse who owns the
ticket)
Improvement on exclusive property: if original
value < new value (where new value = value of
land + value of improvements + net change in
value), then land becomes conjugal property,
subject to the reimbursement of the value of
the property of the owner-spouse at the
dissolution of the CPG
Property belonging to one spouse converted
into another kind totally different in nature
from its original form during marriage
becomes conjugal in the absence of proof that
the expenses of the conversion were
exclusively for the account of the original
owner-spouse, subject to reimbursement of
the value of the original property from the
conjugal partnership
Properties acquired before the marriage, for
those with legitimate descendants with a Property brought into the marriage by each
former marriage (to protect rights of children spouse as his/her own
by a former marriage)
Properties acquired during the marriage by a Properties acquired during the marriage by a
gratuitous title, i.e. donation, inheritance by gratuitous title, i.e. donation, inheritance by
What remains
testate and intestate succession, including the testate and intestate succession, including the
exclusive
fruits of such properties fruits of such properties
property
Except: When expressly provided by the donor Except: When expressly provided by the donor
or testator that the property shall form part of or testator that the property shall form part of
the ACP the ACP
Property acquired by right of redemption, by
Properties for personal use
barter, or by exchange with property belonging
to either spouse

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Except: Jewelry (partakes of the nature of an Plata v. Yatco, G.R. No. L-20825 (1964): Plata
investment) purchased property when she was single.
When married, she and her husband Bergosa
co-signed a mortgage on the property. Upon
foreclosure, Bergosa was sued for illegal
detainer. A writ of execution on the property
was carried out but Plata refused to leave the
premises. SC ruled that Plata cannot be held
in contempt. Property is not conjugal. Her
husband signing as co-mortgagor does not
convert it to CPG. She could ignore execution
because the decision was for her husband
alone.
Property purchased with exclusive money of
either spouse
Property purchased by installment, paid partly
with conjugal funds and partly with exclusive
funds, if full ownership was vested before the
marriage (Art. 118, FC)

Even if the installment is completed after the


marriage, the property is exclusive if
ownership was vested in one spouse before the
marriage [Lorenzo v. Nicolas, G.R. No. L-4085
(1952)]
All property acquired during the marriage,
All properties acquired during the marriage
whether made, contracted, or registered in the
Presumption form part of the ACP, unless it be proven that
name of one spouse, are presumed conjugal
they are excluded. (Art. 93, FC)
unless the contrary is prove. (Art. 116, FC)
Arts. 121-123, FC
Art. 94, FC a.   Support of the following:
a.   Support of the following: 1.   Spouses;
1.   Spouses; 2.   Common children;
2.   Common children; 3.   Legitimate children of previous
3.   Legitimate children of previous marriage;
marriage; 4.   Illegitimate children – follow the
4.   Illegitimate children – follow the provisions on Support; Partnership
provisions on Support; ACP liable in assets liable in case responsibilities
case of absence or insufficiency of the under Art. 121 have been covered and
exclusive property of the debtor- there is absence or insufficiency of the
spouse but the payment shall be exclusive property of the debtor-
considered as advance to the share of spouse but the payment shall be
Charges and
the debtor-spouse. considered as advance to the share of
Obligations
b.   Expenses to enable either spouse to the debtor-spouse.
commence/ complete a b.   Expenses to enable either spouse to
professional/vocational course or activity commence/complete a professional/
for self-improvement; vocational course or activity for self-
c.   Value donated or promised by both improvement;
spouses in favor of common legitimate c.   Value donated or promised by both
children for the exclusive purpose of spouses in favor of common legitimate
commencing/ completing a children for the exclusive purpose of
professional/ vocational course or activity commencing/ completing a professional/
for self-improvement vocational course or activity for self-
improvement
If community property is insufficient, the If conjugal partnership property is insufficient,
spouses are solidarily liable for the unpaid the spouses are solidarily liable for the unpaid

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balance from their separate properties except balance from their separate properties except
for: for:
a.   Debts contracted by either spouse before a.   Debts contracted by either spouse before
marriage which have not redounded to marriage which have not redounded to the
the benefit of the family; benefit of the family;
b.   Support of illegitimate children; and b.   Support of illegitimate children; and
c.   Liabilities incurred by either spouse c.   Liabilities incurred by either spouse
arising from crime or quasi-delict. arising from crime or quasi-delict.

Gambling losses of any kind (i.e. legal or Gambling losses of any kind (i.e. legal or
illegal) shall be borne by the losing spouse’s illegal) shall be borne by the losing spouse’s
separate property (Art. 95, FC) separate property (Art. 123, FC)

DBP v. Adil, G.R. No. L-4085 (1988): Loan


contracts signed by both spouses are conjugal,
and they are jointly liable for payment, even if
only one spouse signs a subsequent
promissory note.

Ayala Investment v. Ching, G.R. No. 118305


(1998): The Supreme Court ruled that the
indirect benefits that might accrue to a
husband in signing as a surety or guarantee in
an agreement not in favor of the family but in
favor of his employer corporation are not
benefits that can be considered as giving a
direct advantage accruing to the family.
Hence, the creditors cannot go against the
conjugal partnership property in satisfying the
obligation subject of the surety agreement. A
contrary view would put in peril the conjugal
partnership by allowing it to be given
gratuitously as in cases of donation of conjugal
partnership property, which is prohibited.
The administration and enjoyment of the CPG
shall belong to both spouses jointly. In case of
disagreement, the husband’s decision shall
prevail, subject to recourse to the court by the
wife for proper remedy, within 5 years from the
The administration and enjoyment of the
date of contract (Art. 124, FC)
community property shall belong to both
spouses jointly. In case of disagreement, the
De Ansaldo v. Sheriff of Manila, G.R. No. L-
husband’s decision shall prevail, subject to
43257 (1937): Spouses are not co-owners of
Ownership, recourse to the court by the wife for a proper
CPG during the marriage and cannot alienate
administration, remedy, within 5 years from the date of
the supposed ½ interest of each in the said
enjoyment, contract (Art. 96, FC)
properties. The interest of the spouses in the
and disposition
CPG is only inchoate or a mere expectancy and
does not ripen into title until it appears after
the dissolution and liquidation of the
partnership that there are net assets.
Disposition or encumbrance of conjugal
Either spouse may, through a will, dispose of
property requires the following: Authority of
his or her interest in the community property.
the court or written consent of the other
(Art. 97, FC) However, the will should refer only
spouse. The absence of such will render such
to his or her share in the community property.
encumbrance void. (Art. 124, par. 2, FC)

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Donation of one spouse without the consent of


the other is not allowed. (Art. 98, FC)

Exceptions:
Moderate donations to charity due to family
Consent or approval by both spouses, or
rejoicing or distress
authority given by the court in lieu of the
consent of the other spouse.
ACP allows donations in excess of one-fifth of
present property of future spouses because the
donation would form part of the community
property once the marriage is celebrated. (Art.
84, FC)
Jader-Manalo v. Camaisa, G.R. No. 147978 (2002): Mere awareness of a transaction is NOT
consent.

Homeowner’s Savings & Loan Bank v. Dailo, G.R. No. 153802 (2005):
In the absence of (court) authority or written consent of the other spouse, any disposition or
encumbrance of the conjugal property shall be void.

Cheeseman v. IAC, G.R. No. 7483 (1991):


If however, one of the spouses is an alien, the Filipino spouse may encumber or dispose of the
property w/o the consent of the former. The property is presumed to be owned exclusively by the
Filipino spouse.
Terminates upon [Art. 99, FC]:
a.   Death of either spouse – follow rules in
Terminates upon [Art. 126, FC; cf. Art. 99, FC]:
Art. 103
a.   Death
b.   Legal separation – follow rules in Arts. 63
b.   Legal separation
Dissolution of and 64
c.   Annulment or judicial declaration of
the regime c.   Annulment or judicial declaration of
nullity
nullity – follow rules in Arts. 50 and 52
Judicial separation of property
Judicial separation of property during marriage
– follow rules in Arts. 134 to 138
De facto separation does not affect the ACP, De facto separation does not affect the CPG,
except that: except that:
a.   Spouse who leaves the conjugal home a.   Spouse who leaves the conjugal home
without just cause shall not be entitled to without just cause shall not be entitled to
support; however, he/she is still required support; however, he/she is still required
to support the other spouse and the family to support the other spouse and the family
Rules on de
b.   If consent is necessary for transaction but b.   If consent is necessary for transaction but
facto
is withheld or otherwise unobtainable, is withheld or otherwise unobtainable,
separation
authorization may be obtained from the authorization may be obtained from the
court court
c.   Support for family will be taken from the c.   Support for family will be taken from the
ACP partnership property.
d.   If ACP is insufficient, spouses shall be d.   If partnership property is insufficient,
solidarily liable spouses shall be solidarily liable
If it is necessary to administer or encumber If it is necessary to administer or encumber
separate property of spouse who left, spouse separate property of spouse who left, spouse
present may ask for judicial authority to do present may ask for judicial authority to do
Effect of de
this. this.
facto
If ACP is not enough and one spouse has no If partnership property is not enough and one
separation
separate property, spouse who has property is spouse has no separate property, spouse who
liable for support, according to provisions on has property is liable for support, according to
support. provisions on support.
Abandonment [Art. 101, FC] Abandonment [Art. 128, FC]

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Present/aggrieved spouse may petition the Present/aggrieved spouse may petition the
court for: court for:
a.   Receivership a.   Receivership
b.   Judicial separation of property b.   Judicial separation of property
c.   Authority to be the sole administrator of c.   Authority to be the sole administrator of
the absolute community, subject to the partnership property, subject to
precautionary conditions that the court precautionary conditions that the court
may impose may impose

A spouse is deemed to have abandoned the A spouse is deemed to have abandoned the
other when he or she has left the conjugal other when he or she has left the conjugal
dwelling without any intention of returning. dwelling without any intention of returning.
Rules on
Abandonment
Spouse is prima facie considered to have Spouse is prima facie considered to have
abandoned the other spouse and the family if abandoned the other spouse and the family if
he or she has: he or she has:
a.   Left for a period of 3 months a.   Left for a period of 3 months
b.   Failed to inform the other spouse of his or b.   Failed to inform the other spouse of his or
her whereabouts for a period of 3 months her whereabouts for a period of 3 months
Partosa-Jo v. CA, G.R. No. 82606 (1992):
Physical separation of the spouses, coupled
with the husband’s refusal to give support to
the wife, sufficed to constitute abandonment
as a ground for an action for the judicial
separation of their conjugal property.
Procedure [Art. 129, FC]
Procedure [Art. 102, FC]
a.   Prepare an inventory of all properties
a.   Inventory of assets of ACP and of spouses,
b.   Amounts advanced by CPG in payment of
with market values
personal debts and obligations shall be
b.   Obligations are paid with community
credited to the CPG
property, and separate obligations not
c.   Reimburse each spouse for the use of
charged to ACP paid by respective assets
his/her exclusive funds in the acquisition
of spouses
of property or for the value of his or her
exclusive property, the ownership of which
If obligations exceed the assets of the ACP,
has been vested by law in the conjugal
nothing is divided. Creditors can go after the
partnership
separate properties of the spouses, which are
d.   Debts and obligations of CPG shall be
solidarily liable for the deficiency
paid out of the conjugal assets, otherwise
a.   Delivery of whatever remains in their
both spouses are solidarily liable with
exclusive property
their exclusive property
Liquidation of b.   Balance, or net remainder is divided
e.   Remains of the exclusive properties shall
assets and equally between the spouses, irrespective
be delivered to respective owner-spouses.
liabilities of how much each brought into the
f.   Indemnify loss/deterioration of movables
community
belonging to either spouse, even due to
c.   If personal obligations of a spouse exceed
fortuitous event, used for the benefit of
his/her separate property, creditor can go
the family
after the share of the spouse on the net
g.   Net remainder of CPG shall constitute the
remainder of the ACP, without prejudice
profits which shall be divided equally
to the provisions of law on forfeitures and
between husband and wife except when:
delivery of presumptive legitimes
1.   A different proportion or division was
d.   After covering all community obligations
agreed upon in the marriage
and obligations of spouses, balance of
settlements
separate properties shall be delivered to
2.   There has been a voluntary waiver or
respective spouses or their heirs, and they
forfeiture of such share as provided in
will also divide into two equal shares
the FC
whatever is left of the community assets,
h.   Presumptive legitimes are delivered to
without prejudice to the provisions of law
common children

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on forfeitures and delivery of presumptive i.  Conjugal dwelling goes to:


legitimes 1.   Spouse with whom majority of
common children choose to remain
(below 7 y.o. = deemed to have
chosen the mother based on the
tender years presumption)
2.   Whoever the court chooses in case of
lack of majority
Rules in case of termination of marriage by death of one of the spouses [Art. 104, FC]:
a.   The community property shall be liquidated in the same proceeding for the settlement of
the estate of the deceased spouse.
b.   If no such judicial settlement proceeding is instituted, surviving spouse shall liquidate the
community property either judicially or extra-judicially within one year from the death of the
deceased spouse.
1.   If no liquidation is made within the period, any disposition or encumbrance involving
community property of the terminated marriage shall be void.
2.   Non-compliance with liquidation procedures would mean that a subsequently
contracted marriage will follow a regime of complete separation of property.
Procedure for liquidation of properties of two marriages [Art. 104, FC]:
a.   Determine the capital, fruits, and income of each community upon such proof as may be
considered according to the rules of evidence.
b.   In case of doubt as to which community the existing properties belong, they shall be divided
between two communities in proportion to the capital and duration of each.

Separation of Property of the Spouses and Administration of Common Property by One Spouse During the
Marriage
Art. 134, FC. In the absence of an express declaration in the marriage settlements. The separation of property
between spouses during the marriage shall not take place except by judicial order. Such judicial separation of
property may either be voluntary or for sufficient cause.

Sufficient Causes and Grounds for Return to Previous Regime


Sufficient Causes for Judicial Separation of Property Grounds for Return to Previous Regime
[Art. 135, FC] [Art. 141, FC]

Spouse of petitioner has been sentenced to a penalty


Termination of the civil interdiction
which carries with it the penalty of civil interdiction

Spouse of petitioner is judicially declared an absentee Reappearance of absentee spouse

Loss of parental authority of the spouse of petitioner Restoration of parental authority to the spouse previously
has been decreed by the court deprived of it

Spouse of petitioner has abandoned the latter or


When the spouse who left the conjugal home without
failed to comply with his or her obligations to the
legal separation resumes common life with the other
family

When the court, being satisfied that the spouse granted


The spouse granted the power of administration in
the power of administration in will not again abuse that
the marriage settlements has abused that power
power, authorizes the resumption of said administration
At the time of the petition, the spouses have been
Reconciliation and resumption of common life of the
separated in fact for at least 1 year and reconciliation
spouses who had been separated in fact for at least 1 year
is highly improbable.
When after voluntary dissolution of the ACP or CPG has
been judicially decreed upon the joint petition of the
spouses, they agree to the revival of the former property

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regime. No voluntary separation of property may


thereafter be granted.

Separation of Property
Agreed upon in the marriage settlements by the spouses

Mandatory under Arts. 103 & 130, FC (subsequent marriages contracted by a surviving spouse
without judicial settlement of previous property regime)
When it applies
Judicial separation of property (Voluntary or just cause)

Default property regime when there is reconciliation between spouses after judicial separation
of property

Present or future property or both

Each spouse’s earnings from his or her own profession, business, or industry
What it consists
of Natural, industrial or civil fruits of spouse’s separate properties

May be total or partial


If partial, property not considered separate is presumed to pertain to the ACP

Family expenses: Both spouses are liable in proportion to their income; if insufficient, based on
Liabilities the current value of their separate properties

Creditors for family expenses: Spouses solidarily liable

Spouses may own, dispose, possess, and administer separate estates without the consent of
the other

Ownership, Administration of exclusive properties may be transferred between spouses when:


administration, One spouse becomes the other spouse’s guardian
enjoyment, and a.   One spouse is judicially declared an absentee
disposition b.   One spouse is given the penalty of civil interdiction
c.   One spouse becomes a fugitive

Conveyance between the spouses is allowed under Art. 1490, NCC.

In Re: voluntary dissolution of CPG of Sps. Bermas, G.R. No. L-20379 (1965): A voluntary separation of properties is
not perfected by mere consent but upon the decree of the court approving the same. The petition for voluntary
separation of property was denied because the children of the 1st and 2nd marriages were not informed; the separation
of property may prejudice the rights and shares of the children.

Maquilan v. Maquilan, G.R. No. 155409 (2007):


A compromise agreement with judicial recognition is valid, pending petition for declaration of nullity of marriage.

Property Regime of Unions without Marriage (Arts. 147-148)


Art. 147, FC Art. 148, FC
Man and woman living together as Man and woman living together as husband
husband and wife, with capacity to marry and wife, NOT capacitated to marry
Applicability
(Art.5, without any legal impediment) a.   Under 18 years old
•   -at least 18 years old b.   Adulterous relationship

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•   not violative of Art. 37 (incestuous c.   Bigamous/polygamous marriage


void marriage) d.   Incestuous marriages under Art. 37
•   not violative of Art. 38 (void marriage e.   Void marriages by reason of public policy
by reason of public policy) under Art. 38
•   not bigamous
Other void marriages due to absence of
formal requisite

Salaries and wages Owned in equal shares Separately owned by parties

Properties acquired
through exclusive Remains exclusive, provided there is proof Remains exclusive
funds

Properties acquired
Owned in common in proportion to respective
by both through Governed by rules on co-ownership
contribution
work and industry

Owned in equal shares since it is


presumed to have been acquired through
joint efforts

If one party did not participate in


acquisition, presumed to have contributed
No presumption of joint acquisition. When
Properties acquired jointly, if the former’s effort consisted in
there is evidence of joint acquisition but none
while living the care and maintenance of family and
as to the extent of actual contribution, there is
together household
a presumption of equal sharing.
N.B. Neither party can encumber or
dispose by acts inter vivos his share in co-
owned property without the consent of the
other party until cohabitation is
terminated.

Where only one party to a void marriage is If one party is validly married to another his/her
in good faith, share of party in bad faith is share in the co-owned properties will accrue to
forfeited: the ACP/CPG of his/her existing valid
•   In favor of their common children marriage.
•   In case of default of or waiver by any
or all of the common children or their If the party who acted in bad faith is not validly
Forfeiture
descendants, each vacant share shall married to another, his/her share shall be
belong to the respective surviving forfeited in the same manner as that provided
descendants in Art 147.
•   In the absence of such descendants,
such share belongs to the innocent The same rules on forfeiture shall apply if both
party parties are in bad faith.

  Family Relations cherishes and protects. Consequently, family relations


are governed by law and no custom practice or
agreement destructive of the family shall be
1.   The Family as an recognized or given effect.

Institution Art. 150, FC. Family relations include those


1.   Between husband and wife
Art. 149, FC. The family being the foundation of the 2.   Between parents and children
nation is a basic social institution which public policy

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3.   Among other ascendants and descendants Suits between brothers-in-law can prosper even
4.   Among brothers and sisters, full or half blood without a verified complaint or petition. [Guerrero v.
RTC, G.R. No 109068 (1994)]
The family is an institution that is governed by law. The
The enumeration of brothers and sisters as members
internal aspect of the family is sacred and inaccessible
of the same family under does not comprehend
to law because law must respect the freedom of action
sisters-in-law and brothers-in-law. [Gayon v. Gayon,
of man.
G.R. No. L-28394 (1970)].

2.  E ffects of Family 3.  The Family Home


Relationship on Legal
What Constitutes the Family Home
Disputes The family home is the dwelling house where family
resides and the land on which it is sustained [Art. 152]
Art. 151, FC. No suit between members of the same
family shall prosper unless it should appear from the Limitations on the Family Home
verified complaint or petition that earnest efforts The family home must be part of the properties of the
toward a compromise have been made but that the absolute community or the conjugal partnership, or of
same have failed. If it is shown that no such efforts the exclusive properties of either spouse with the
were in fact made the case must be dismissed. other’s consent. It may also be constituted by an
unmarried head of a family in his or her own property.
Note: In case of doubt, all presumptions favor the [Art. 156, FC]
solidarity of the family. [Art. 220, CC]
The actual value of the family home shall not exceed,
General Rule: No suit between members of the same at the time of its constitution, the amount of
family shall prosper. [Art. 151, FC] P300,000 in urban areas, and P200,000 in rural
Exception: Suits between members of the same family areas, or such amounts as may hereafter be fixed by
shall prosper only if it shall appear in a verified law. [Art. 157, FC]
complaint or petition that:
a.   Earnest efforts towards a compromise have been A person may constitute, or be the beneficiary of, only
made; one home. [Art. 161, FC]
b.   Such efforts have failed; and
c.   Such earnest efforts and the fact of failure must Who May Constitute the Family Home
be alleged. The family home may be constituted
The case will be dismissed if it is shown that no such a.   Jointly by the husband and wife; or
efforts were made. [Art. 151, FC] b.   An unmarried head of the family [Art. 152]

Exception to the Exception: Note: A person may constitute and be the beneficiary
A verified complaint or petition is not needed for of only one family home [Art. 161]
matters not subject to compromise.
When Deemed Instituted
Under Art 2035, CC the following cannot be subject The family home is deemed constituted on a house
of compromise: and lot form the time it is occupied as a family
a.   Civil status of persons, residence. [Art. 153, FC]
b.   Validity of marriage or a legal separation
c.   Any ground for legal separation, Exemption from Forced Sale, Execution,
d.   Future support (as it is presumed to be needed for Attachment
the survival of the one receiving support), General Rule: The family home is exempt from the
e.   Jurisdiction of courts, following from the time of its constitution and so long
f.   Future legitime. as any of its beneficiaries actually resides therein:
a.   Execution;
Art. 151, FC only applies when the case is exclusively b.   Forced sale;
among family members. Whenever a stranger is c.   Attachment [Art. 153]
included as a party to the case, Art. 151 does not apply.
[Hontiveros v. RTC, G.R. No. 125465 (1999)] Exceptions in the exemption of the family home from
execution:

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a.   Nonpayment of taxes. [Patricio v. Dario, G.R. No. 170829 (2006)]


b.   Debts incurred prior to the constitution of the
family home. Requirements for the sale, alienation, donation,
c.   Debts secured by mortgages on the premises assignment, or encumbrance of the family home
before or after such constitution. 1.   The written consent of the person constituting it;
d.   Debts due to laborers, mechanics, architects, 2.   That of the spouse of the person constituting it;
builders, materialmen and others who have and
rendered service or furnished material for the 3.   That of majority of the beneficiaries of legal age
construction of the building. [Art. 155, FC]: [Art. 158, FC]

Beneficiaries of the Family Home When Terminated


a.   The husband and wife, or an unmarried person The family home shall continue despite the death of
who is the head of a family; and one or both of the spouses or of the unmarried head of
b.   Their parents, ascendants, descendants, the family:
brothers, and sisters whether relationship be 1.   for a period of ten years; or
legitimate or illegitimate, who are living in the 2.   for as long as there is a minor beneficiary
family home and who depend on the head of the And the heirs cannot partition the same unless the
family for support. [Art. 154, FC.] court finds compelling reasons therefor. The rule shall
apply regardless of whoever owns the property or
Requisites to be a Beneficiary of the Family Home: constituted the family home [Art. 159, FC.]
a.   The relationship is within those enumerated in
Art. 150, FC. General Rule
b.   They live in the family home Article 159 imposes the proscription against the
c.   They are dependent for legal support on the head immediate partition of the family home regardless of
of the family its ownership. This signifies that even if the family
home has passed by succession to the co-ownership of
The law explicitly provides that occupancy of the the heirs, or has been willed to any one of them, this
family home either by the owner thereof or by “any of fact alone cannot transform the family home into an
its beneficiaries” must be actual. That which is ordinary property, much less dispel the protection cast
“actual” is something real, or actually existing, as upon it by the law. The rights of the individual co-
opposed to something merely possible, or to owner or owner of the family home cannot subjugate
something which is presumptive or the rights granted under Article 159 to the
constructive. Actual occupancy, however, need not be beneficiaries of the family home. [Arriola v. Arriola,
by the owner of the house specifically. Rather, the G.R. No. 177703 (2008)]
property may be occupied by the “beneficiaries”
enumerated in Article 154 of the Family Code, which When the Family Home may be Sold
may include the in-laws where the family home is The family home may be sold alienated, donated,
constituted jointly by the husband and wife. But the assigned, or encumbered by the owner or owners
law definitely excludes maids and overseers. They are thereof with the written consent of the person
not the beneficiaries contemplated by the Code. The constituting the same the latter’s spouse and a
beneficiaries of the family home are: (1) The husband majority of the beneficiaries of legal age. In case of
and wife, or an unmarried person who is the head of a conflict the court shall decide. [Art. 158, FC.]
family; and (2) Their parents, ascendants,
descendants, brothers and sisters, whether the Re: Claims Not Among Those in Art. 155
relationship be legitimate or illegitimate. The term When a creditor whose claim is not among those
"descendants" contemplates all descendants of the mentioned in Art. 155, obtains a judgment in his favor,
person or persons who constituted the family home and he has reasonable grounds to believe that the
without distinction; hence, it must necessarily include family home is actually worth more than the maximum
the grandchildren and great grandchildren of the amount fixed in Art. 157, he may apply to the court
spouses who constitute a family home. Ubi lex non which rendered the judgment for an order directing
distinguit nec nos distinguire debemos. However, the sale of the property under execution. The court
cannot demand support from his paternal shall also order if it finds that the actual value of the
grandmother if he has parents who are capable of family home exceeds the maximum amount allowed
supporting him. The law first imposes the obligation by law as of the time of its constitution. If the increased
of legal support upon the shoulders of the parents, actual value exceeds the maximum allowed in Art.
especially the father, and only in their default is the 157and results from subsequent voluntary
obligation imposed on the grandparents. improvements introduced by the person or persons

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constituting the family home, by the owner or owners Note: The provisions of this Chapter shall also govern
of the property, or by any of the beneficiaries, the same existing family residences insofar as said provisions
rule and procedure shall apply. [Art. 160, par. 1, FC.] are applicable. [Art. 162, FC.]

To warrant the execution of sale of the family home


under Art 160, the following facts need to be
established: 1. there was an increase in actual value, 2.
the increase resulted from voluntary improvements, 3.
the increase in actual value exceeded the maximum
limit allowed by Art 157 [Eulogio vs. Bell, G.R. No.
186322 (2015)]

The actual value of the family home shall not exceed


at the time of its constitution the amount of three
hundred thousand pesos in urban areas and two
hundred thousand pesos in rural areas or such
amounts as may hereafter be fixed by law.

In any event, if the value of the currency changes after


the adoption of this Code, the value most favorable for
the constitution of a family home shall be the basis of
evaluation.

Urban areas include chartered cities and


municipalities. All others are deemed to be rural
areas. [Art. 157, FC.]

Procedure to avail of right under Art. 160


a.   The creditor must file a motion in the court
proceeding where he obtained a favorable
decision for a writ of execution against the family
home.
b.   There will be a hearing on the motion where the
creditor must prove that the actual value of the
family home exceeds the maximum amount fixed
by the FC either at the time of its constitution or
as a result of improvements introduced
thereafter.
c.   If the creditor proves that the actual value exceeds
the maximum amount the court will order its sale
in execution.
d.   If the family home is sold for more than the value
allowed, the proceeds shall be applied as follows:
1.   First, the obligation enumerated in Article 157
must be paid
2.   Then the judgment in favor of the creditor will
be paid, plus all the costs of execution
3.   The excess, if any, shall be delivered to the
judgment debtor

General Rule
The proof that the house is the family home must be
alleged against creditors; Applied the rule in Art. 160,
FC. [Versola v. Mandolaria, G.R. No. 164740 (2006)]

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  Paternity and Filiation IMPUGNING LEGITIMACY


Grounds for impugning legitimacy of a child are:
[Art. 166, FC]
The filiation of children may be by nature or by
adoption. Natural filiation may be legitimate or Legitimacy of a Child may be Impugned only on the
illegitimate. [Art. 163, FC.] Following Grounds:
a.   Physical impossibility for the husband to have
Kinds of Filiation [Arts. 163, 164, 165]: sexual intercourse with his wife within the first 120
1.   Natural days of the 300 days which immediately preceded
a.   Legitimate the child's birth due to:
b.   Illegitimate 1.   Physical incapacity of the husband to have
2.   Legal Fiction (Adoption) sexual intercourse with his wife
2.   Husband and wife were living separately as to
1.   Legitimate Children make sexual intercourse impossible
3.   Serious illness of the husband absolutely
Children conceived OR born during the marriage of preventing sexual intercourse
the parents are legitimate. b.   Other biological or scientific reasons, except
Artificial Insemination
Children conceived as a result of artificial insemination c.   And in case of Artificial Insemination, the
of the wife with the sperm of the husband or that of a written consent of either parent was vitiated
donor or both are likewise legitimate children of the through fraud, violence, mistake, intimidation, or
husband and his wife, provided, that both of them undue influence
authorized or ratified such insemination in a written
instrument executed and signed by them before the Mere proximate separation between the spouses is not
birth of the child. The instrument shall be recorded in sufficient physical separation to constitute as ground
the civil registry together with the birth certificate of for impugning legitimacy. [Macadangdang v. CA, G.R.
the child. [Art. 164, FC] No. L-49542 (1980)]

NATURAL/BIOLOGICAL Serious illness of the husband which absolutely


A child conceived or born during a valid marriage is prevented him from having sexual intercourse with his
presumed to belong to that marriage, regardless of wife, like if the husband was already in comatose or in
the existence of extramarital relationships. [Liyao v. a vegetative state, or sick with syphilis in the tertiary
Liyao, G.R. No. 138969 (2002)] stage so that copulation was not possible. But
tuberculosis, even in its most crucial stage, does not
ARTIFICIAL INSEMINATION preclude copulation between the sick husband and his
Requisites to be considered legitimate: wife. [Andal v. Macaraig, G.R. No. 2474 (1951)]
a.   Artificial insemination made on wife
b.   Sperm comes from any of the following: Blood-type matching is an acceptable means of
1.   Husband impugning legitimacy, covered by Art. 166(2), under
2.   Third Person Donor "biological or other scientific reasons." But this is only
3.   Husband and third person donor conclusive of the fact of non-paternity. [Jao v. CA, G.R.
c.   In case of donor sperm, husband and wife must No. L-49162 (1987)]
authorize/ratify insemination in a written
instrument Only the man (and his heirs in certain situations) can
1.   Executed & signed by husband and wife impugn the legitimacy of the child. [Benitez-Badua v.
before the birth of the child. CA, G.R. No. 105625 (1994)]
2.   Recorded in the civil registry together with
the birth certificate of the child. Legitimacy with Regard to the Mother:
a.   Child considered legitimate although [Art. 167,
Dual consent is required whether the semen used FC]:
comes from the husband or a third person donor 1.   Mother may have declared against its
[Tolentino] legitimacy
2.   Mother may have been sentenced as an
Common children born before the annulment are adulteress (also applies to wife who was
legitimate, and therefore entitled to support from raped)
each of the spouses. [De Castro v. Assidao-De Castro, b.   If the marriage is terminated and the mother
G.R. No. 160172 (2008)] contracted another marriage within 300 days

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after the termination of the former marriage, the Exception: That the heirs of the husband may file the
following rules shall govern in the absence of action or continue the same within the periods
proof to the contrary [Art 168]: prescribed in Art. 170 [Art. 171]:
1.   If born before 180 days after the solemnization 1.   If the husband died before the expiration of the
of the subsequent marriage – child is period fixed for bringing his action
considered conceived during the former 2.   If he should die after the filing of the complaint
marriage, provided it be born within 300 days without having desisted therefrom
after termination of the former marriage 3.   If the child was born after the death of the
2.   If born after 180 days following the husband.
celebration of the subsequent marriage –
child is considered conceived during such Sayson v. CA, G.R. No. 89224-25 (1992): Legitimacy
marriage, even if it be born within 300 days can only be attacked directly.
after the termination of the former marriage

Note: The legitimacy or illegitimacy of a child born


2.  P roof of Filiation
after 300 days following the termination of the
marriage – burden of proof upon whoever alleges the The filiation of legitimate children is established by
status. [Art. 169] any of the following:
a.   The record of birth appearing in the civil register
If nobody asserts the legitimacy or illegitimacy of the or a final judgment; or
child described in Art. 169, the child should be b.   An admission of legitimate filiation in a public
considered illegitimate unless legitimacy is proved. document or a private handwritten instrument
Legitimacy cannot be presumed here since the birth and signed by the parent concerned.
was beyond the 300-day period of gestation. While it
goes against the policy of law to lean in favor of In the absence of the foregoing evidence, the
legitimacy, this interpretation is better than the legitimate filiation shall be proved by:
anomalous situation created by Art. 169, which is a a.   The open and continuous possession of the status
child without a status. (Tolentino) of a legitimate child; or
b.   Any other means allowed by the Rules of Court
Action for Impugning Legitimacy [Arts. 170 and 171, and special laws. [Art. 172, FC.]
FC.]
May be brought within 1, 2, or 3 years from the Legitimate children may establish their filiation by
knowledge of the birth, or the knowledge of any of the following [Art. 172]:
registration of birth. a.   Primary Evidence
a.   Within 1 year - if husband or any heirs reside in the 1.   Their record of birth appearing in the civil
same city or municipality where the child was born registry.
or his birth was recorded. 2.   An admission of his filiation by his parent in a
b.   Within 2 years - if the husband or all heirs live in public document or a private handwritten
the Philippines but do not reside in the same city instrument and signed by said parent
or municipality where the child's birth took place b.   Secondary Evidence
or was recorded 1.   Proof of open and continuous possession of
c.   Within 3 years - if the husband or all heirs live status as legitimate child
outside the Philippines when the child's birth took 2.   Any other means stated by the rules of court
place or was recorded in the Philippines or special laws

If the birth of the child has been concealed or was Note: Only in the absence of primary evidence can
unknown to the husband, the above periods shall be secondary evidence be admitted
counted:
a.   From the discovery or knowledge of the birth of Action for Claiming Filiation (Legitimate Children)
the child, or [Art. 173, FC]:
b.   From the discovery or knowledge of its a.   The child can bring the action during his or her
registration, whichever is earlier. lifetime
General Rule: Only the husband can impugn the b.   If the child dies during minority or in a state of
legitimacy of a child. If he does not bring an action insanity, such action shall be transmitted to his
within the prescribed periods, he cannot file such heirs, who shall have a period of five years within
action anymore thereafter, and this is also true with his which to institute the action.
heirs.

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c.   The action commenced by the child shall survive signed by the parents and sworn for it to be admitted
notwithstanding the death of either or both of the as evidence. [Mendoza v. Mella, G.R. No. L-18752
parties (1966)]

Rights of Legitimate Children [Art. 174, FC] Signature of the father on the birth certificate is
a.   To bear the Surnames of the father and the considered as an acknowledgement of paternity and
mother, in conformity with the provisions of the mere presentation of a duly authenticated copy of
CC on surnames such certificate will successfully establish filiation.
b.   To receive support from their parents, their [Eceta v. Eceta, G.R. 157037 (2004)]
ascendants, and in proper cases, their brothers
and sisters, in conformity with the provisions of Unsigned birth certificates are not evidence of
the Code on Support recognized filiation. [Baluyut v. Baluyut, G.R. No. L-
c.   To be entitled to the legitimate and other 33659 (1990)]
Successional rights granted to them by the CC
The due recognition of an illegitimate child in a record
of birth, a will, a statement before a court of record, or
3.  Illegitimate Children in any authentic writing, is in itself a consummated act
of acknowledgement of the child, and no further court
Children conceived and born outside a valid marriage action is required. [De Jesus v. Estate of Decedent Juan
are illegitimate, unless otherwise provided in this Gamboa Dizon, G.R. No. 142877 (2001)]
Code. [Art. 165.]
Secondary Evidence
Who are illegitimate children Rule 130, Sec. 40 is limited to objects commonly
General Rule: Those conceived and born outside of a known as family possessions reflective of a family's
valid marriage. [Art. 165] reputation or tradition regarding pedigree like
inscriptions on tombstones, monuments, or coffin
Exceptions: plates. [Jison v. CA, G.R. No. 124853 (1998)]
a.   Children of marriages void under Art. 36
(psychological incapacity); and "Su padre [Your father]" ending in a letter is only proof
b.   Under Art. 53 (subsequent marriages which did of paternal solicitude and not of actual paternity.
not comply with Art. 52). [SEMPIO-DY] Signature on a report card under the entry of
"Parent/Guardian" is likewise inconclusive of open
Illegitimate children may establish their illegitimate admission. [Heirs of Rodolfo Bañas v. Heirs of Bibiano
filiation in the same way and on the same evidence as Bañas, G.R. No. L-25715 (1985)]
legitimate children.
Mere possession of status as an illegitimate child does
The action must be brought within the same period not make an illegitimate child recognized but is only a
specified in Article 173, except when the action is ground for bringing an action to compel judicial
based on the second paragraph of Article 172, in which recognition by the assumed parent. [Gono-Javier vs.
case the action may be brought during the lifetime of CA, G.R. No. 111994 (1994)]
the alleged parent. [Art. 175, FC.]
To prove open and continuous possession of the status
General Rule: Illegitimate children may establish their of an illegitimate child, there must be evidence of the
illegitimate filiation in the same way and on the same manifestation of the permanent intention of the
evidence (primary or secondary) as legitimate supposed father to consider the child as his, by
children. continuous and clear manifestations of parental
affection and care, which cannot be attributed to pure
Action for Claiming Filiation [Art. 145, FC] charity. [Perla v. Baring, G.R. No. 172471 (2012)]
a.   For actions based on primary evidence, the same
periods stated in Art. 173 apply. Meanwhile, the lack of participation of the supposed
b.   For actions based on secondary evidence, the father in the preparation of a baptismal certificate
action may only be brought during the lifetime of renders this document incompetent to prove
the alleged parent. paternity. Baptismal certificates are per
se inadmissible in evidence as proof of filiation and
Primary Evidence they cannot be admitted indirectly as circumstantial
Baptismal certificates are given probative value only evidence to prove the same [Perla v. Baring and Perla
for births before 1930. Birth certificates must be (2012)]

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3.   Provided, the father has the right to institute


By "open and continuous possession of the status of a an action before the regular courts to prove
legitimate child" is meant the enjoyment by the child non-filiation during his lifetime [RA 9255]
of the position and privileges usually attached to the 4.   The use of the word “may” in Art. 176 readily
status of a legitimate child, like bearing the paternal shows that an acknowledged illegitimate
surname, treatment by the parents and family of the child is under no compulsion to use the
child as legitimate, constant attendance to the child's surname of his illegitimate father. The word
support and education, and giving the child the “may” is permissive and operates to confer
reputation of being a child of his parents. [De Jesus v. discretion upon the illegitimate children.
Syquia, G.R. No. L-39110 (1933)] [Grande v. Antonio, G.R. No. 206248 (2014)]
c.   Shall be entitled to Support in conformity with the
Other Evidence Family Code
DNA evidence can be used as proof of paternity. d.   Legitime shall consist of one-half of the legitime
[Agustin v. CA, G.R. No. 162571 (2005)] of a legitimate child.

DNA evidence can still be used even after the death of


the parent. [Estate of Rogelio Ong v. Diaz, G.R. No..
4.  L egitimated Children
171713 (2007)]
Children conceived and born outside of wedlock of
Marriage certificates cannot be used as proof of parents who, at the time of conception of the former,
filiation. [Lim v. CA, G.R. Ni. L-39381 (1975)] were not disqualified by any impediment to marry
each other, or were so disqualified only because either
There are four significant procedural aspects of a or both of them were below eighteen (18) years of age,
traditional paternity action that parties have to face: may be legitimated. [Art. 177, FC. (as amended by RA
a prima facie case, affirmative defenses, presumption 9858)]
of legitimacy, and physical resemblance between the
putative father and the child. A prima facie case exists General Rule: "Legitimated" children are illegitimate
if a woman declares — supported by corroborative children who because of the subsequent marriage of
proof — that she had sexual relations with the putative their parents are, by legal fiction, considered
father; at this point, the burden of evidence shifts to legitimate.
the putative father. Further, the two affirmative
defenses available to the putative father are: (1) To be Capable of Legitimation:
incapability of sexual relations with the mother due to a.   The child must have been conceived and born
either physical absence or impotency, or (2) that the outside of wedlock; and
mother had sexual relations with other men at the b.   The parents, at the time of the child's conception,
time of conception. [Gotardo v. Buling, G.R. No. 165166 were not disqualified by any impediment to marry
(2012)] each other, or disqualified only because either or
both of them were below 18 years old. [Art. 177, as
Illegitimate children shall use the surname and shall amended by RA 9858, FC.]
be under the parental authority of their mother, and
shall be entitled to support in conformity with this Procedure and Effects:
Code. The legitime of each illegitimate child shall a.   Legitimation shall take place by a subsequent
consist of one-half of the legitime of a legitimate child. valid marriage between the parents. The
Except for this modification, all other provisions in annulment of a voidable marriage shall not affect
the CC governing successional rights shall remain in the legitimation. [Art. 178]
force. [Art. 176, FC.] b.   Effects of legitimation shall retroact to the time of
the child’s birth [Art. 180]
Rights of Illegitimate Children: c.   Legitimation of children who died before the
a.   Use the Surname and be under the parental celebration of the marriage shall benefit their
authority of the mother descendants [Art. 181]
b.   However, may use the surname of father if
1.   Their filiation has been expressly recognized Grounds for Impugning Legitimation:
by the father through the record of birth a.   The subsequent marriage of the child's parents is
appearing in the civil register; or void.
2.   There is an admission in a public document or b.   Those born under these circumstances:
private handwritten instrument made by the 1.   There was an impediment to the marriage at
father. the time of conception AND

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2.   The subsequent marriage of the parents is


valid   Adoption
c.   The child is not really the child of the alleged
parents. [Sempio-Dy] Adoption is a juridical act, which creates between two
persons a relationship similar to that which results
Rights: from legitimate paternity and filiation.
The same as those of legitimate children [Art. 179, FC]

Impugning legitimation [Art. 182, FC] It requires a proceeding in rem, and may only be
a.   May be made only by those who are prejudiced in proven by a judicial decree issued by a court of
their rights competent jurisdiction, not by open and continuous
b.   Within five years from the time their cause of cohabitation
action accrues

Legitimation Adoption
The law merely makes legal what The law creates by fiction a relation
Legal effect
exists by nature which did not in fact exist
Persons affected Natural children Strangers (generally)
Procedure Extrajudicial acts of parents Always by judicial decree
Both parents

Except:
1.   One spouse seeks to adopt the
legitimate child of the other
Who should apply Both parents 2.   One spouse seeks to adopt his
own illegitimate child, provided
that the other spouse has
signified their consent thereto
3.   Spouses are legally separated
from each other
Same status and rights with that of Creates a relationship only between
a legitimate child not only in the child and the adopting parents
Effect on parent-child relationship
relation to the legitimizing parents [Sayson v. CA, G.R. No. 89224-25
but also to other relatives (1992)]

the adoptee or is the spouse of the adoptee’s


1.   RA 8552: Domestic parent
Adoption Law f.   In a position to support and care for his/her
children in keeping with the means of the
(February 25, 1998) family
g.   Has undergone pre-adoption services
a.  Who can adopt 2.   Aliens [Sec. 7b]: Same for Filipinos provided
further that:
1.   Filipino Citizens [Sec. 7a] a.   His/her country has diplomatic relations with
a.   Of legal age the Philippines
b.   With full civil capacity and legal rights b.   Has been living in the Philippines for 3
c.   Of good moral character and has not been continuous years prior to the filing of
convicted of any crime involving moral application and maintains such residence
turpitude until the decree is entered (provided that
d.   Emotionally and psychologically capable of absences not exceeding 60 days per 1 year for
caring for children professional, business, or emergency reasons
e.   At least sixteen (16) years older than adoptee, are allowed)
except when adopter is biological parent of c.   Has been certified by his/her diplomatic or
consular office or any appropriate

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government agency that he/she has the legal Persons whose written consent is necessary for
capacity to adopt in his/her country adoption (Sec. 9)
d.   His/her government allows the adoptee to 1.   The prospective adoptee if 10 years or older
enter his/her country as his/her adoptee and 2.   The prospective adoptee’s biological parents,
reside there permanently as an adopted child legal guardian or the government instrumentality
e.   Has submitted all the necessary clearances or institution that has custody of the child
and such certifications as may be required 3.   The prospective adopters’ legitimate and adopted
children who are 10 years or older
Requirements in c, d, and e may be waived 4.   The prospective adopters’ illegitimate children, if
under the following circumstances: any, who are 10 years or older and living with them
i.   Adopter is a former Filipino Citizen who 5.   The spouse, if any, of the person adopting or to be
th
seeks to adopt a relative within the 4 adopted.
degree of consanguinity or affinity
ii.   Adopter seeks to adopt the legitimate or Note: A decree of adoption shall be effective as of the
illegitimate child of his/her Filipino date the original petition was filed. It also applies in
spouse case the petitioner dies before the issuance of the
iii.   Adopter is married to a Filipino Citizen decree of adoption to protect the interest of the
and seeks to adopt jointly with his/her adoptee.
th
spouse a relative within the 4 degree of
consanguinity or affinity of the Filipino c.   Foundlings
spouse
Foundling shall refer to a deserted or abandoned
3.   Guardians infant or a child found, with parents, guardian, or
With respect to their wards, after the termination of relatives being unknown, or a child committed in an
the guardianship and clearance of his/her orphanage or charitable or similar institution with
accountabilities. unknown facts of birth and parentage and registered
in the Civil Register as a foundling. [Sec. 3 (h), Rules
b.  Who Can Be Adopted (Sec. And Regulations To Implement The Domestic Adoption
8) Act Of 1998]

1.   Minor who has been administratively or judicially When is a child considered a foundling
declared available for adoption It shall be the duty of the Department or the child-
2.   Legitimate son/daughter of one spouse by placing or child-caring agency which has custody of
another the child to exert all efforts to locate his/her unknown
3.   Illegitimate son/daughter by a qualified adopter biological parent(s). If such efforts fail, the child shall
to improve the child’s status to that of legitimacy be registered as a foundling and subsequently be the
4.   A person of legal age if, prior to the adoption, said subject of legal proceedings where he/she shall be
person has been consistently considered and declared abandoned. [Sec. 5, RA 8552]
treated by the adopter(s) as his/her child since
minority If efforts to locate the child's parent/s fail, the child
5.   A child whose previous adoption has been shall be registered as a foundling and within three (3)
rescinded months from the time he/she is found, be the subject
6.   A child whose biological or adoptive parent(s) has of legal proceedings where he/she shall be declared
died, provided that no proceedings shall be abandoned. [Sec. 5, Rules And Regulations To
initiated within 6 months from the time of death Implement The Domestic Adoption Act Of 1998]
of said parent(s) [Sec. 8]
Domestic laws on adoption also support the principle
Exceptions to the Requirement of a Certification that that foundlings are Filipinos. These laws do not
the Child is Available for Adoption (Sec. 4): provide that adoption confers citizenship upon the
1.   Adoption of an illegitimate child by his/her adoptee. Rather, the adoptee must be a Filipino in the
biological parent; first place to be adopted. The most basic of such laws
2.   Adoption of a child by his/her stepparent; is Article 15 of the CC which provides that "laws
th
3.   Adoption by a relative within the 4 civil degree by relating to family rights, duties, status, conditions,
consanguinity or affinity legal capacity of persons are binding on citizens of the
Philippines even though living abroad." Adoption
deals with status, and a Philippine adoption court will
have jurisdiction only if the adoptee is a Filipino.

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Recent legislation is more direct. R.A. No. 8043 •   Written certification that a local/national
entitled "An Act Establishing the Rules to Govern the radio/TV case was aired on 3 different
Inter-Country Adoption of Filipino Children and For occasions
Other Purposes" (otherwise known as the "Inter- •   Publication in 1 newspaper of general
Country Adoption Act of 1995"), R.A. No. 8552, circulation
entitled "An Act Establishing the Rules and Policies on •   Police report / barangay certification of
the Adoption of Filipino Children and For Other due diligence
Purposes" (otherwise known as the Domestic •   Returned registered mail to last known
Adoption Act of 1998) and this Court's A.M. No. 02-6- address of parents
02-SC or the "Rule on Adoption," all expressly refer to c.   Birth certificate, if available
"Filipino children" and include foundlings as among d.   Recent photo and photo upon abandonment
Filipino children who may be adopted. [Poe- of child
Llamanzares v. COMELEC, G.R. No. 221697 (2016)]

d.  Pre-Adoption Procedures
1.   Voluntary Commitment of biological parent(s)
wanting to put their child up for adoption

Counseling on their options other than adoption


¯
Explaining to them the implications of losing their
parental authority over the child
¯
Continuing services shall be provided after
relinquishment to cope with feelings of loss, etc.
and other services for the reintegration to the
community of the biological parent(s)
¯
Biological parent(s) who decided to put the child for
adoption shall sign the Deed of Voluntary
Commitment (DVC), which shall be rescissible
within 3 months from signing of the same

2.   Involuntary Commitment of abandoned or


neglected child
Filing of a petition at Regional DSWD in the form of
an affidavit and with the required supporting
documents
¯
Posting of the petition, then recommendation by
the Regional Director of the DSWD (5 days each)
¯
Issuance of certification by DSWD Secretary
declaring the child legally available for adoption
within 3 months following involuntary commitment

3.   Required supporting documents for a petition


for the declaration of involuntary commitment:
a.   Social Case Study Report by DSWD / LGU /
institution charged with child’s custody
b.   Proof of efforts to locate the child’s
parents/known relatives

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e.   Adoption Procedures
[Aguiling-Pangalangan]

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Note: d.   When only adopters survive, they shall inherit


DSWD must certify the child as legally available for 100% of the estate
adoption as a prerequisite for adoption proceedings. e.   When only collateral blood relatives survive,
[R.A. 9253] ordinary rules of legal or intestate succession
shall apply. [Art. 190 (as amended), FC]
After the decree of adoption, the court may also issue 4.   Name [Art. 365, CC.]
a travel authority, if needed. An adopted child shall bear the surname of the
adopter
The case study report by the DSWD/LGU is
indispensable. Without it, the adoption decree shall be RA 8552 allows the change of first name to be
void. [DSWD v. Judge Belen, RTJ-96-1362 (1997)] instituted in the same proceeding as the adoption:
“the decree of adoption shall state the name by
f.   Who May Not Adopt which the child is to be known.”

Art. 184, FC (as amended by RA 8552) The law is silent as to what middle name the
The following may not adopt: adoptee may use but the SC has held that an
1.   The guardian, with respect to the ward, prior to adoptee is entitled to all the rights provided by law
the approval of the final accounts rendered upon to a legitimate child, including the right to bear the
the termination of the guardianship surname of her father and mother. [In re: Adoption
2.   Any person convicted of a crime of moral of Stephanie Nathy Astorga Garcia, G.R. No. 148311
turpitude (2005)]
5.   Nationality
Adoption does not confer citizenship: Sec. 3, Art. 4
g.  Rights of an Adopted Child of the Constitution: Philippine citizenship may be
lost/acquired [only] in the manner provided by law.
1.   Parental Authority [Sec. 16, RA 8552] The right to confer citizenship belongs to the State
Except in cases where the biological parent is the (political) and cannot be granted by a citizen
adopter’s spouse, all legal ties between biological through adoption. Adoption creates a relationship
parent and adoptee shall be severed, and the between the adopter and adoptee, not between
same shall then be vested on the adopters. the State and the adoptee.
2.   Legitimacy [Sec. 17, RA 8552]
The adoptee shall be considered the legitimate
son/daughter of the adopters for all intents and
h.  Rescission of Adoption
purposes, and as such is entitled to all rights and
obligations provided by law to legitimate children Adoptee may file action for rescission, with the
born to them without discrimination of any kind. assistance of DSWD if he/she is a minor or over 18 but
3.   Succession [Sec. 18, RA 8552] incapacitated, based on the ff grounds [Sec. 19, FC]:
In legal and intestate succession, the adopter and 1.   Repeated physical and verbal maltreatment by
the adoptee shall have reciprocal rights of adopters despite having undergone counseling
succession without distinction from legitimate 2.   Attempt on life of adoptee
filiation. However, if the adoptee and his/her 3.   Sexual assault or violence
biological parents had left a will, the law on 4.   Abandonment or failure to comply with parental
testamentary succession shall govern. obligations

Legal or intestate succession to the estate of the Note: Adoption, being in the best interest of the child,
adopted shall be governed by the following rules: shall not be subject to rescission by the adopter.
a.   Legitimate and illegitimate children, However, the adopter may disinherit the child based
descendants and the surviving spouse of the on causes enumerated in Art. 919 [CC]:
adoptee shall inherit in accordance with the 1.   Conviction of an attempt on the life of the adopter
ordinary rules of legal/intestate succession 2.   Having accused, without grounds, the adopter of
b.   When the surviving spouse OR illegitimate a crime punishable by imprisonment for more
children AND adopters concur, they shall than 6 years
inherit on a 50-50 basis 3.   Conviction of adultery/concubinage with the
c.   When the surviving spouse AND illegitimate adopter’s spouse
children AND adopters concur, they shall 4.   Having caused the adopter to make or change a
inherit on a 1/3-/1/3-1/3 basis will by force, intimidation or undue influence
5.   Refusal without just cause to support the adopter
6.   Maltreatment of the adopter by word/deed

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7.   Living a dishonorable/disgraceful life


8.   Conviction of a crime which carries with it the
2.  R A 8043: The Law on
penalty of civil interdiction Inter-country Adoption
Effects of Rescission [Sec. 20, RA 8552]: (June 7, 1995)
1.   Parental authority of the adoptee's biological
parents, if known, OR the legal custody of the INTER-COUNTRY ADOPTION refers to the socio-
DSWD shall be restored IF the adoptee is still a legal process of adopting a Filipino child by a foreigner
minor or incapacitated or a Filipino citizen permanently residing abroad
2.   Reciprocal rights and obligations of the adopters where the petition is filed, the supervised trial custody
and the adoptee shall be extinguished is undertaken, and the decree of adoption is issued
3.   Court shall order the Civil Registrar to cancel the outside the Philippines
amended certificate of birth of the adoptee and
restore his/her original birth certificate
4.   Succession rights shall revert to its status prior to
a.  Who Can Adopt
adoption, but only as of the date of judgment of
judicial rescission Any foreign national or a Filipino citizen permanently
5.   Vested rights prior to judicial rescission shall be residing abroad who has the qualifications and none
respected of the disqualifications under the Act may file an
application if he/she:
Note: Rescission contemplates a situation where the 1.   Is at least 27 years of age and at least 16 years
adoption decree remains valid until its termination older than the child to be adopted, at the time of
application unless the adopter is the parent by
nature of the child to be adopted or the spouse of
i.   Rectification of Simulated such parent
Birth 2.   If married, his/her spouse must jointly file for the
adoption
Simulation of birth is the tampering of LCR records to 3.   Has the capacity to act and assume all rights and
make it appear that a certain child was born to a responsibilities of parental authority under his
person who is not his/her biological parent, causing national laws, and has undergone the appropriate
said child to lose his/her true identity/status. counseling from an accredited counselor in
his/her country
Sec. 21-b [RA 8552]: Any person who shall cause the 4.   Has not been convicted of a crime involving moral
fictitious registration of the birth of a child under the turpitude
name(s) of a person(s) who is not his/her biological 5.   Is eligible to adopt under his/her national law
parent(s) shall be guilty of simulation of birth, and 6.   Is in a position to provide the proper care and
shall be punished by prision mayor in its medium support and to give the necessary moral values
period and a fine not exceeding P50,000.00. and example to all his children, including the child
to be adopted
Sec. 22 [RA 8552]: A person who has, prior to the 7.   Agrees to uphold the basic rights of the child as
effectivity of RA 8552, simulated the birth of a child embodied under Philippine laws, the U.N.
shall not be punished for such act, PROVIDED: Convention on the Rights of the Child, and to
•   The simulation was for the child’s best interest abide by the rules and regulations issued to
•   Child has been treated consistently as his own implement the provisions of this Act
8.   Comes from a country with whom the Philippines
•   Petition filed within 5 years of RA 8552’s
has diplomatic relations and whose government
effectivity (2003)
maintains a similarly authorized and accredited
agency and that adoption is allowed under
Three-in-one Procedure
his/her national laws
•   Correction of entries in birth certificate 9.   Possesses all the qualifications and none of the
•   Deed of Voluntary Commitment or Declaration of disqualifications provided in applicable Philippine
abandonment laws.
•   Adoption decree
b.  Who Can be Adopted
1.   Only a legally-free child may be the subject of
inter-country adoption.

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2.   A legally-free child is one who has been Adopted children do not have a right to represent their
voluntarily or involuntarily committed to the adopters in successional interests. Although an
DSWD of the Philippines, in accordance with the adopted child is deemed to be a legitimate child and
Child and Youth Welfare Code. have the same rights as the latter, these rights do not
3.   No child shall be matched to a foreign adoptive include the right of representation (because the
family unless it is satisfactorily shown that the adopted child has no right to inherit from the
child cannot be adopted locally (last resort). grandparent). The relationship created by the
4.   In order that such child may be considered for adoption is between only the adopting parents and the
placement, the following documents must be adopted child. It does not extend to the blood
submitted to the Board: relatives of either party. [Sayson v. CA, G.R. No.
a.   Child study 89224-25 (1992)]
b.   Birth Certificate / Foundling Certificate
c.   Deed of Voluntary Commitment/ Decree of
Abandonment/ Death Certificate of parents
d.   Medical Evaluation / History
e.   Psychological Evaluation, as necessary
f.   Recent photo of the child

Where the petition for adoption was granted after the


child had shot and killed a girl, the Supreme Court did
not consider the retroactive effect given to the decree
of adoption so as to impose a liability upon adopting
parents at a time when adopting parents had no
actual or physically custody over the child. Retroactive
effect may perhaps be given to the granting of the
petition for adoption where such is essential to permit
the accrual of some benefit or advantage in favor of
the adopted child. In the instant case, however, to hold
that parental authority had been retroactively lodged
in the adopting parents so as to burden them with
liability for a tortuous act that they could not have
foreseen and which they could not have prevented
would be unfair and unconscionable. [Tamargo v. CA,
G.R. No. 85044 (1992)]

Adoption is a juridical act, proceeding in rem. Because


it is artificial, the statutory requirements in order to
prove it must be strictly carried out. Petition must be
announced in publications and only those proclaimed
by the court are valid. Adoption is never presumed.
[Lazatin v. Campos, G.R. No. L-43955-56 (1979)]

Validity of facts behind a final adoption decree cannot


be collaterally attacked without impinging on that
court’s jurisdiction. [Santos v. Aranzanso, G.R. No. L-
23828 (1966)]

Participation of the appropriate government


instrumentality in performing the necessary studies
and precautions is important and is indispensable to
assure the child’s welfare. [DSWD v. Belen, GRTJ-96-
1362 (1997)]

Consent for adoption must be written and notarized.


[Landingin v. Republic, G.R. No. 164948 (2006)]

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  Support When two or more are obliged to give support, the


payment shall be divided between them in proportion
to their resources.
1.   What it Comprises
Also, in case of urgent need and by special
Consists of everything indispensable for sustenance, circumstances, judge may order only one obligor to
dwelling, clothing, medical attendance, education furnish support without prejudice to reimbursement
and transportation, in keeping with the financial from other obligors of the share due from them. [Art.
capacity of the family. [Art. 194, FC] 200, FC]
a.   Education includes a person’s schooling or
training for some profession, trade or vocation, If there are multiple recipients and only one obligor,
the right to which shall subsist beyond the age of and the latter has no sufficient means to satisfy all
majority. [Art. 194, FC] claims:
b.   Transportation includes expenses in going to and a.   Observe order in Article 199 as to whose claim
from school, or to and from place of work. [Art. shall be satisfied first;
194, FC] b.   But if the concurrent obligees are the spouse and
a child subject to parental authority, the child
shall be preferred.
2.  W ho are Obliged The above preference given to a child under parental
authority over the spouse should prevail only if the
To support each other: person obliged to support pays it out of his separate
a.   Spouses property. So if the support comes from ACP or CPG,
b.   Legitimate ascendants and descendants; the above rule of preference for the child does not
c.   Parents and their children (legitimate and apply. [Tolentino]
illegitimate) and the children of the latter
(legitimate and illegitimate); Properties Answerable for Support
d.   Legitimate brothers and sisters, whether of full or CPG or ACP shall answer for the support of the spouse,
half-blood; [Art. 195] their common children, and the legitimate children of
e.   Illegitimate brothers and sisters, whether of full or either spouse [Arts. 94 and 121, FC]
half-blood, except when the need for support of
one (of age) is due to a cause imputable to his/her For legitimate ascendants; [all other] descendants,
fault or negligence. [Art. 196] whether legitimate or illegitimate; and brothers and
sisters, whether legitimately or illegitimately related:
Note: Both legitimate and illegitimate children are From the separate property of the obligor. If no
entitled to support. The only difference is the source of separate property, the ACP/CPG (if financially
support, which for illegitimate children is the parent’s capable) shall advance the support, to be deducted
separate properties. Where the illegitimate parent is from the obligor’s share upon liquidation of such
legally married to another person, their CPG or ACP regime. [Art. 197, FC]
cannot answer for support for the illegitimate child of
one of them unless the parent has no adequate Even if the parents-in-law were the ones who called for
separate property, in which case support will be taken the physician’s services for the childbirth of their
from the CPG or ACP subject to reimbursement (Arts. daughter-in-law, it is the woman’s husband who is
122, 197, FC). bound to pay the fees due to the physician. [Pelayo v.
Lauron, G.R. No. L-4089 (1909)]
Order of support:
If there are multiple obligors The amount of support is variable and, for this reason,
a.   Spouse no final judgment on the amount of support is made
b.   Descendants, nearest in degree as the amount shall be in proportion to the resources
c.   Ascendants, nearest in degree or means of the giver and the necessities of the
d.   Brothers and Sisters [Art. 199, FC] recipient. [Gotardo v. Buling, G.R. No. 165166 (2012)]

The order of liability among ascendants and When Stranger Gives Support
descendants would be: 1. legitimate children and When, without the knowledge of the person obliged
descendants, 2. legitimate parents and ascendants, 3. to give support, it is given by a stranger, the stranger
illegitimate children and their descendants. has the right to claim the same from the person
[Tolentino] obliged, unless it appears that he gave it without
intention of being reimbursed. [Art. 206, FC]

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Person Obliged Refuses or Fails To Give Support except from the date of judicial or extra-judicial
When the person obliged to give support unjustly demand.
refuses or fails to give support when urgently needed,
any third person may furnish support to the needy Support pendente lite may be claimed in accordance
individual, with right of reimbursement from the with the Rules of Court.
person obliged to give support. This particularly
applies when the father or mother of a minor child Payment shall be made within the first 5 days of each
unjustly refuses to support or fails to give support to corresponding month. When the recipient dies, his
the child when urgently needed. [Art. 207, FC] heirs shall not be obliged to return what he has
received in advance.
Contractual Support or That Given By Will [Art. 203, FC]
The excess in amount beyond that required for legal
support shall be subject to levy on attachment or
execution. [Art. 208, FC]
6.  O ptions
Reason: The amount of support agreed upon in the a.   Payment of the amount; or
contract or given in the will can be more than what the b.   Receiving and maintaining the recipient in the
recipient needs. [Sempio-Diy] home of the provider, unless there is a legal or
moral obstacle for doing so.
Furthermore, contractual support shall be subject to
adjustment whenever modification is necessary due to 7.  Attachment
changes in circumstances manifestly beyond the
contemplation of the parties. [Art. 208, FC] The right to receive support as well as any money or
property obtained as such support shall not be levied
3.  Support Pending upon on attachment or execution. [Art. 205, FC]

Litigation on the Status of This is to protect that which the law gives to the
recipient against want and misery. [Tolentino]
Marriage
Pending legal separation or annulment, and for
declaration of nullity, support pendente lite for spouses
and children will come from the ACP/CPG. After final
judgment granting the petition, mutual support
obligation between spouses ceases. (But in legal
separation, court may order guilty spouse to give
support to innocent spouse.) [Art. 198, FC]

Note: In Art. 100, de facto separation does not affect


the ACP and the CPG, except that the spouse who
leaves the conjugal home without just cause shall not
be entitled to support.

4.  A mount
The amount of support is in proportion to the means
of the provider and the needs of the receiver, and can
be reduced or increased if such circumstances change.
[Arts. 201, 202, FC]

5.  W hen Demandable
The obligation to give support shall be demandable
from the time the person who has a right to receive the
same needs it for maintenance, but it shall not be paid

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  Parental Authority and Who Exercises Authority in Cases of Death,


Absence, Unsuitability, Remarriage, or Separation
Custody of Children of Parents:
In case one parent is absent or already dead, the
present or surviving parent [Art. 212, FC]
Parental authority is the mass of rights and
obligations which parents have in relation to the Remarriage of the surviving parent shall not affect
person and property of their children until their his/her parental authority over the children, unless the
emancipation, and even after this under certain court appoints another person to be the guardian of
circumstances. [Manresa] the children or their property [Art. 212, FC]
1.   In case of a void/annulled marriage, and there is
Parental Authority includes [Art. 209, FC]: no agreement between spouses, the parent
1.   The caring for and rearing of children for civic designated by the court [Art. 43 par. 1; Art. 49, FC]
consciousness and efficiency; 2.   Innocent spouse gets custody of minor children in
2.   The development of the moral, mental and legal separation [Art. 63 par. 3, FC]
physical character and well-being of said children 3.   The court shall take into account all relevant
considerations, especially the choice of the child
Parental authority and responsibility may not be over seven years of age, unless the parent chosen
renounced or transferred except in the cases is unfit [Art. 213 par. 1, FC]
authorized by law. [Art. 210, FC] 4.   Substitute parental authority [Art. 214, FC]
a.   In case of death, absence or unsuitability of
Cases When Parental Authority May Be Transferred the parents, substitute parental authority
or Terminated: shall be exercised by the surviving
1.   Adoption; grandparent
2.   Guardianship; or b.   When several grandparents survive, the one
3.   Commitment of the child in an entity or institution designated by the court shall exercise
engaged in child care or in a children’s home parental authority, taking into account all
relevant considerations, especially the choice
Rules as to the Exercise of Parental Authority of the child over seven years of age, unless the
Jointly exercised by the father and mother over their grandparent chosen is unfit
common children, but in case of disagreement, the
father's decision shall prevail, unless there is a judicial Descendant’s Privilege of Refusal to Testify [Art. 215,
order to the contrary [Art. 211, FC] FC]: No descendant shall be compelled, in a criminal
case, to testify against his parents and grandparents.
Exercised by the mother if the child is illegitimate
[Art.176, FC] Exception: When such testimony is indispensable in 1.
a crime against the descendant, or 2. a crime by one
Children under parental authority shall always parent against the other.
observe respect and reverence towards their parents
and are obliged to obey them [Art. 211, FC] TENDER YEARS PRESUMPTION
No child under 7 years of age shall be separated from
Characteristics of Parental Authority the mother, unless the court finds compelling reasons
1.   Natural right and duty of parents [Art. 209, FC] to order otherwise. [Art. 213 par 2; Art. 363, CC;
2.   Cannot be renounced, transferred or waived, Gamboa v. CA, G.R. No. 174485 (2007)]
except in cases authorized by law [Art. 210, FC]
3.   Jointly exercised by the father and the mother Examples of compelling reasons for custody to be
[Art. 211, FC] granted to the father:
4.   Purely personal and cannot be exercised through 1.   When the mother is insane;
agents 2.   With a communicable disease that might
5.   Temporary endanger the life or health of the child;
3.   Is maltreating the child; or
Parental Preference Rule 4.   Has another child by another man who lives with
The natural parents, who are of good character and her. [Cervantes v. Fajardo, G.R. No. 79955 (1989)]
who can reasonably provide for the child, are ordinarily
entitled to custody as against all persons. [Santos v. Note: Alleged lesbianism [Gualberto v. Gualberto, G.R.
CA, G.R. No. 112019 (1995)] No. 154994 (2005)], prostitution or infidelity to
husband does not necessarily make a mother unfit as

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parent. It must be shown that such lesbianism,


prostitution or infidelity adversely affect the child.   Emancipation
PERSONS EXERCISING SUBSTITUTE PARENTAL Art. 234, FC. Emancipation takes place by the
AUTHORITY IN DEFAULT OF PARENTS OR attainment of majority. Unless otherwise provided,
JUDICIALLY APPOINTED GUARDIAN (in this order): majority commences at the age of eighteen years.
1.   The surviving grandparent [Art. 214, FC]
2.   Oldest brother or sister, over 21 years old, unless Emancipation shall terminate parental authority over
unfit or unqualified. the person and property of the child who shall then be
3.   Child’s actual custodian, over 21 years old, unless qualified and responsible for all acts of civil life, save
unfit or unqualified. the exceptions established by existing laws in special
cases.
Note: The same order applies to the appointment of Contracting marriage shall require parental consent
judicial guardian over the property of the child until the age of twenty-one.

SUBSTITUTE PARENTAL AUTHORITY OVER


Art. 236, FC. Nothing in this Code shall be construed
DISADVANTAGED CHILDREN [Art. 217, FC]
to derogate from the duty or responsibility of parents
Entrusted in summary judicial proceedings to:
and guardians for children and wards below twenty-
1.   Heads of children’s homes
one years of age mentioned in the second and third
2.   Orphanages
paragraphs of Article 2180 of the CC.
3.   Similar institutions duly accredited by the proper
government agency (such as the DSWD)
Persons between ages twenty-one and twenty-four,
Who Are Disadvantaged Children: shall be obliged to ask their parents or guardian for
1.   Foundlings – one who is deserted or abandoned advice upon the intended marriage.
as an infant or a child, with parents, guardian, or 1.   No advice or unfavorable advice: marriage license
relatives being unknown or one who is committed shall not be issued till after three months
in an orphanage or charitable or similar institution following the completion of the publication of the
with unknown facts of birth and parentage application therefor
2.   Abandoned – one who has no proper parental 2.   Sworn statement by the contracting parties that
care or guardianship, or whose parents or advice has been sought, together with written
guardians have deserted him for a period of at advice if any or refusal to give advice: attached to
least six continuous months the application for the marriage license [Art. 15,
3.   Neglected – one whose basic needs have been FC]
deliberately unattended or inadequately
attended RA 6809: Emancipation takes place only upon
4.   Abused – one who is taken advantage of, reaching the age of majority. Likewise, the
exploited and maltreated requirement for parental concession is that the
5.   Others similarly situated son/daughter is 18 yrs. of age, in which case he/she is
already of majority age.
PERSONS EXERCISING SPECIAL PARENTAL
AUTHORITY [Art. 218, FC]
1.   School, its administrators and teachers; or
2.   The individual, entity or institution engaged in
child care
Note: Exercised over minor child while under their
supervision, instruction or custody.

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  Summary Judicial b.   The notice shall be accompanied by a copy of the


petition and shall be served at the last known
Proceedings under FC address of the spouse concerned. [Art. 242, FC]

Procedure:
Procedural rules provided for in this Title shall apply a.   A preliminary conference shall be conducted by
to: the judge personally without the parties being
1.   Separation in fact between husband and wife assisted by counsel.
2.   Abandonment by one of the other b.   After the initial conference, if the court deems it
3.   Incidents involving parental authority useful, the parties may be assisted by counsel at
the succeeding conferences and hearings. [Art.
Note: Until modified by the Supreme Court, the 243, FC]
procedural rules herein shall apply in all cases falling c.   If the petition is not resolved at the initial
under the aforementioned matters. Such cases shall conference, said petition shall be decided in a
be decided in an expeditious manner, without regard summary hearing. Basis of summary hearing (at
to technical rules. [Art. 238, FC] the sound discretion of the court):
1.   Affidavits
1.   Separation in Fact 2.   Documentary evidence
3.   Oral testimonies at the court’s sound
A verified petition alleging the following facts is discretion. If testimony is needed, the court
required when [Art. 239, FC]: shall specify the witnesses to be heard and
a.   A husband and wife are separated in fact; or, the subject-matter of their testimonies,
b.   One has abandoned the other directing the parties to present said
witnesses. [Art. 246(a), FC]
Situation: Where one of them seeks judicial
authorization for a transaction where the consent of When appearance of spouses required:
the other spouse is required by law but such consent is a.   In case of non-appearance of the spouse whose
withheld or cannot be obtained consent is sought, the court shall inquire into the
reasons for his failure to appear, and shall require
The petition shall: such appearance, if possible. [Art. 244, FC]
a.   Attach the proposed deed, if any, embodying the b.   If, despite all efforts, the attendance of the non-
transaction, if none, shall describe in detail the consenting spouse is not secured, the court may
said transaction and state the reason why the proceed ex parte and render judgment as the facts
required consent thereto cannot be secured. and circumstances may warrant. In any case, the
b.   The final deed duly executed by the parties shall judge shall endeavor to protect the interests of the
be submitted to and approved by the court. [Art. non-appearing spouse. [Art. 245, FC]
239, FC]
Nature of judgment
Separate Claim for Damages: Claims for damages by The judgment of the court shall be immediately final
either spouse, except costs of the proceedings, may be and executory. [Art. 247, FC]
litigated only in a separate action. [Art. 240, FC]
Rules applicable for administering or encumbering
Jurisdiction: Jurisdiction over the petition shall, upon separate property of spouse
proof of notice to the other spouse, be exercised by the The petition for judicial authority to administer or
proper court authorized to hear family cases, if one encumber specific separate property of the
exists, or in the regional trial court or its equivalent abandoning spouse and to use the fruits or proceeds
sitting in the place where either of the spouses resides. thereof for the support of the family shall also be
[Art. 241, FC] governed by these rules. [Art. 248, FC]

Notification to other spouse:


a.   Upon the filing of the petition, the court shall
2.  I ncidents involving
notify the other spouse, whose consent to the Parental Authority
transaction is required, of said petition, ordering
said spouse to show cause why the petition should Procedure
not be granted, on or before the date set in said a.   Such petitions shall be verified and filed in the
notice for the initial conference. proper court of the place where the child resides.
[Art. 250, FC]

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b.   Upon the filing of the petition, the court shall


notify the parents or, in their absence or   Care and Education of
incapacity, the individuals, entities or institutions
exercising parental authority over the child. [Art.
Children
251, FC]
Every child:
Note: 1.   Is entitled to parental care;
Petitions filed under Articles 223, 225 and 235 of this 2.   Shall receive at least elementary education;
Code involving parental authority shall be verified. 3.   Shall be given moral and civic training by the
[Art. 249, FC] parents or guardian;
4.   Has a right to live in an atmosphere conducive to
The rules in Chapter 2 hereof shall also govern his physical, moral and intellectual development.
summary proceedings under this Chapter insofar as [Art. 356, NCC]
they are applicable [Art. 253, FC]
Duties of the child:
The foregoing rules in Chapter 2 (Separation in Fact) 1.   Obey and honor his parents or guardian;
and (Incidents Involving Parental Authority) hereof 2.   Respect his grandparents, old relatives, and
shall likewise govern summary proceedings filed for: persons holding substitute parental authority;
a.   Declaration of presumptive death [Art. 41, FC] 3.   Exert his utmost for his education and training;
b.   Delivery of presumptive legitime [Art. 51, FC] 4.   Cooperate with the family in all matters that make
c.   Fixing of family domicile [Art. 69, FC] for the good of the same. [Art. 357, NCC]
d.   Disagreements regarding one spouse’s
profession, occupation, business, or activity [Art. Every parent and every person holding substitute
73, FC] parental authority shall see to it that the rights of the
e.   Disposition or encumbrance of common property child are respected and his duties complied with, and
in ACP where one spouse is incapacitated or shall particularly, by precept and example, imbue the
unable to participate in the administration; child with high-mindedness, love of country,
administration of absolute community in a veneration for the national heroes, fidelity to
disagreement and the wife takes recourse within democracy as a way of life, and attachment to the
five years [Art. 96, FC] ideal of permanent world peace. [Art. 358, NCC]
f.   Disposition or encumbrance of common property
in CPG where one spouse is incapacitated or The government promotes the full growth of the
unable to participate in the administration; faculties of every child.
administration of partnership property in a The government will establish, whenever possible:
disagreement and the wife takes recourse within 1.   Schools in every barrio, municipality and city
five years, [Art. 124, FC] where optional religious instruction shall be
taught as part of the curriculum at the option of
When wife and husband are de facto separated and the parent or guardian;
the CPG is insufficient, the spouse present shall, upon 2.   Puericulture and similar centers;
a petition, be given judicial authority to administer or 3.   Councils for the Protection of Children;
encumber any specific property of the other spouse 4.   Juvenile courts. [Art. 359, NCC]
and use the fruits and proceeds thereof to satisfy the
latter’s share. [Art. 127 (3), FC] The Council for the Protection of Children shall look
after the welfare of children in the municipality.
Functions:
1.   Foster the education of every child in the
municipality
2.   Encourage the cultivation of the duties of parents
3.   Protect and assist abandoned or mistreated
children, and orphans
4.   Take steps to prevent juvenile delinquency
5.   Adopt measures for the health of children
6.   Promote the opening and maintenance of
playgrounds
7.   Coordinate the activities of organizations devoted
to the welfare of children, and secure their
cooperation. [Art. 360, NCC]

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8.   Juvenile courts will be established, as far as


practicable, in every chartered city or large   Surnames
municipality.[Art. 361, NCC]
1.   Surnames of Children
Whenever a child is found delinquent by any court, the
father, mother, or guardian may in a proper case be a.   Legitimate and legitimated children shall
judicially admonished. [Art. 362, NCC] principally use the surname of the father. [Art.
364, FC]
b.   An adopted child shall bear the surname of the
adopter. [Art. 365, FC]
c.   A natural child acknowledged by both parents
shall principally use the surname of the father. If
recognized by only one of the parents, a natural
child shall employ the surname of the recognizing
parent. [Art 366, FC]
d.   Natural children by legal fiction shall principally
employ the surname of the father [Art. 367, FC]
e.   Illegitimate children referred to in Article 287
shall bear the surname of the mother. [Art 368,
FC]
f.   Children conceived before the decree annulling a
voidable marriage shall principally use the
surname of the father. [Art. 369, FC]

2.  W ife After and During


Marriage
a.   A married woman may use [Art. 370, FC]:
1.   Her maiden first name and surname and add
her husband's surname, or
2.   Her maiden first name and her husband's
surname or
3.   Her husband's full name, but prefixing a word
indicating that she is his wife, such as "Mrs."
b.   In case of annulment of marriage, and the wife is
the guilty party, she shall resume her maiden
name and surname. If she is the innocent spouse,
she may resume her maiden name and surname.
However, she may choose to continue employing
her former husband's surname, unless [Art. 371,
FC]:
1.   The court decrees otherwise, or
2.   She or the former husband is married again
to another person.
c.   When legal separation has been granted, the wife
shall continue using her name and surname
employed before the legal separation. [Art. 372,
FC]
d.   A widow may use the deceased husband's
surname as though he were still living, in
accordance with Article 370. [Art 373, FC]

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3.  Confusion and Change of   Rules Governing Persons


Names who are Absent
In case of identity of names and surnames, the
younger person shall be obliged to use such additional 1.   Provisional Measures in
name or surname as will avoid confusion. [Art. 374,
FC]
Case of Absence [Arts.
381-383, CC]
In case of identity of names and surnames between
ascendants and descendants, the word "Junior" can Art. 43, CC. If there is a doubt as between two or
be used only by a son. Grandsons and other direct more persons who are called to succeed each other
male descendants shall either [Art. 375, FC]: as to which of them died first whoever alleges the
a.   Add a middle name or the mother's surname, or death of one prior to the other shall prove the same;
b.   Add the Roman Numerals II, III, and so on. in the absence of proof it is presumed that they died
at the same time and there shall be no transmission
Usurpation of a name and surname may be the subject of rights from one to the other.
of an action for damages and other relief. [Art. 377, FC]
Note: Art, 43 provides a statutory presumption when
The unauthorized or unlawful use of another person's
there is doubt on the order of death between persons
surname gives a right of action to the latter [Art. 378,
who are called to succeed each other (only).
FC]
Presumption in the Rules of Court [Rule 131, sec. 3,
The employment of pen names or stage names is
(jj.) (Presumption of survivorship)]
permitted, provided it is done in good faith and there
is no injury to third persons. Pen names and stage Age Presumed Survivor
names cannot be usurped. [Art. 379, FC]

Except as provided in the preceding article, no person Both under 15 Older


shall use different names and surnames. [Art 380, FC]

Illegitimate Children shall use the surname and shall Both above 60 Younger
be under the parental authority of their mother.
However, they may use the surname of their father if
their filiation has been expressly recognized by their
father through: One under 15, the
One under 15
a.   record of birth in civil register other above 60
b.   admission in public document
c.   admission in private handwritten document Both over 15 and under
Male
60; different sexes

Both over 15 and under


Older
60; same sex

One under 15 or over


60, the other between One between 15 and 60
those ages

Note: Applicable only to two or more persons who


perish in the same calamity, and it is not shown who
died first, and there are no particular circumstances
from which it can be inferred.

A marriage contracted by any person during


subsistence of a previous marriage shall be null and

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void, unless before the celebration of the subsequent Art. 383, CC. In the appointment of a
marriage, the prior spouse had been absent for four representative, the spouse present shall be
consecutive years and the spouse present has a well- preferred when there is no legal separation.
founded belief that the absent spouse was already If the absentee left no spouse, or if the spouse
dead. In case of disappearance where there is danger present is a minor, any competent person may be
of death under the circumstances set forth in the appointed by the court.
provisions of Article 391 of the CC, an absence of only
two years shall be sufficient. [Article 41., FC] Requisites: The judge may appoint a person to
represent absentee when:
General Rule: Marriage contracted by any person a.   Person disappears from his domicile
during the subsistence of a previous marriage is void. b.   His whereabouts are unknown
c.   No agent to administer his property
Exceptions: The following subsequent marriage of the d.   An interested party, a relative, or a friend files the
present spouse is valid: action
a.   Subsequent marriage due to ordinary absence
where: Who may be appointed as representative?
1.   The prior spouse had been absent for 4 a.   Spouse present shall be preferred when there is
consecutive years; no legal separation
2.   The spouse present had a well-founded belief b.   If no spouse or spouse is incapacitated, any
that absent spouse is dead; and competent person
3.   Judicial declaration of presumptive death
was secured (no prejudice to the effect of the
reappearance of the absent spouse). 2.  D eclaration of Absence
b.   Subsequent marriage due to extraordinary
absence where:
[Arts. 384-389, CC]
1.   The prior spouse had been missing for 2
consecutive years; Art. 384, CC. Two years having elapsed without any
2.   There is danger of death attendant to the news about the absentee or since the receipt of the
disappearance [Art. 391, CC]; last news, and five years in case the absentee has
3.   The spouse present had a well-founded belief left a person in charge of the administration of his
that the missing person is dead; and property, his absence may be declared.

Judicial declaration of presumptive death was secured The following may ask for the declaration of absence]:
(no prejudice to the effect of the reappearance of the a.   The spouse present;
absent spouse). b.   The heirs instituted in a will, who may present an
authentic copy of the same;
Exception to the Exception: c.   The relatives who may succeed by the law of
Art. 381, CC. When a person disappears from his intestacy;
domicile, his whereabouts being unknown, and d.   Those who may have over the property of the
without leaving an agent to administer his absentee some right subordinated to the
property, the judge, at the instance of an interested condition of his death [Art. 385, CC].
party, a relative, or a friend, may appoint a person
to represent him in all that may be necessary. Art. 386, CC. The judicial declaration of absence
shall not take effect until six months after its
This same rule shall be observed when under publication in a newspaper of general circulation.
similar circumstances the power conferred by the
absentee has expired. When may absence be declared?
Two years without any news about the absentee.
Art. 382, CC. The appointment referred to in the Five years if the absentee left a person in charge of
preceding article having been made, the judge administration of his property.
shall take the necessary measures to safeguard the
rights and interests of the absentee and shall Declaration takes effect only after six months after
specify the powers, obligations and remuneration publication in a newspaper of general circulation.
of his representative, regulating them, according to
the circumstances, by the rules concerning Who may ask for a declaration of absence?
guardians. a.   Spouse present

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b.   Heirs instituted in a will, who may present an


authentic copy of the same;
4.  P resumption of Death
c.   Relatives who may succeed by the law of [Arts. 390-392, CC]
intestacy;
d.   Those who may have some right over the property After an absence of 7 years, it being unknown whether
of the absentee, subordinated to the condition of or not the absentee still lives, he shall be presumed
his death. dead for all purposes, except for those of succession.
The absentee shall not be presumed dead for the
3.  Administration of the purpose of opening his succession till after an absence
of 10 years. If he disappeared after the age of 75 years,
Property of the Absentee an absence of 5 years shall be sufficient in order that
his succession may be opened. [Art. 390, CC]
[Arts. 387-389, CC]
The following shall be presumed dead for all
An administrator of the absentee's property shall be purposes, including the division of the estate among
appointed in accordance with Article 383. [Art. 387, the heirs:
FC] a.   A person on board a vessel lost during a sea
voyage, or an aeroplane which is missing, who has
The wife who is appointed as an administratrix of the not been heard of for four years since the loss of
husband's property cannot alienate or encumber the the vessel or aeroplane;
husband's property, or that of the conjugal b.   A person in the armed forces who has taken part
partnership, without judicial authority. [Art. 388., CC] in war, and has been missing for four years;
c.   A person who has been in danger of death under
The administration shall cease in any of the following other circumstances and his existence has not
cases [Art. 389, CC]: been known for four years. [Art. 391, CC]
a.   When the absentee appears personally or by
means of an agent; General rule: A person shall be presumed dead for all
b.   When the death of the absentee is proved and his purposes after absence for a period of 7 years.
testate or intestate heirs appear;
c.   When a third person appears, showing by a proper Exception: Succession
document that he has acquired the absentee's a.   In succession, 10 years is required for presumption
property by purchase or other title. of death.
b.   If absentee disappeared after age of 75, 5 years
In these cases the administrator shall cease in the shall be sufficient.
performance of his office, and the property shall be at
the disposal of those who may have a right thereto Extraordinary Absence
Only 4 years is required for presumption to arise if:
Who may administer the property? a.   A person on board a vessel lost during a sea
a.   Spouse present shall be preferred when there is voyage, or an aeroplane which is missing, who has
no legal separation not been heard of for four years since the loss of
b.   If no spouse or spouse is incapacitated, any the vessel or aeroplane;
competent person b.   A person in the armed forces who has taken part
in war, and has been missing for four years;
When will the administration of property cease? c.   A person who has been in danger of death under
Administrator shall cease in performance of his office, other circumstances and his existence has not
and property shall be disposed in favor of those who been known for four years.
have a right thereto when
a.   Absentee appears personally or by means of an Note: Although 7 years is required for the presumption
agent of death of an absentee in the CC, Art. 41 of the Family
b.   Testate or intestate heirs appear, upon proof of Code makes an exception for the purpose of
death of absentee remarriage by limiting such requirement to 4 years.
c.   Third person appears, with a proper document Art. 41 also limits the required 4 years in Art. 391 for
showing he has acquired absentee’s property by absence under exceptional circumstances to only 2
purchase or other title years.

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Art. 392, CC. If the absentee appears or without


appearing his existence is proved he shall recover
  Funerals
his property in the condition in which it may be
found and the price of any property that may have The duty and the right to make arrangements for the
been alienated or the property acquired therewith; funeral of a relative shall be in accordance with the
but he cannot claim either fruits or rents. order established for support, under Article 294 [Art.
305, CC]:
1.   Spouse
2.   Descendants in the nearest degree. In case of
descendants of the same degree, the oldest shall
be preferred.
3.   The ascendants in the nearest degree. In case of
ascendants, the paternal shall have a better right
4.   The brothers and sisters, the oldest shall be
preferred.
5.   Municipal authorities – if there are no persons
who are bound to support or if such persons are
without means

Nature of funeral: Every funeral shall be in keeping


with the social position of the deceased. [Art. 306, CC]

The funeral shall be:


1.   In accordance with the expressed wishes of the
deceased.
2.   In the absence of such expression, his religious
beliefs or affiliation shall determine the funeral
rites.
3.   In case of doubt, the form of the funeral shall be
decided upon by the person obliged to make
arrangements for the same, after consulting the
other members of the family [Art. 307, CC]

Note: No human remains shall be retained, interred,


disposed of or exhumed without the consent of the
persons mentioned in articles 294 and 305.

Damages: Any person who shows disrespect to the


dead, or wrongfully interferes with a funeral shall be
liable to the family of the deceased for damages,
material and moral [Art. 309, CC]

Funeral Expenses: The construction of a tombstone or


mausoleum shall be deemed a part of the funeral
expenses, and shall be chargeable to the conjugal
partnership property, if the deceased is one of the
spouses [Art. 310, CC].

Guidelines in Making Funeral Arrangements


1.   The persons who are preferred in the right to
make funeral arrangements may waive the right
expressly or impliedly in which case the right and
duty immediately descend to the person next in
the order.
2.   It must be in keeping with the social position of
the deceased.

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3.   Law shall prevail over the will of the persons who


have the right to control the burial of deceased –   Entries in the Civil
exhumation, evidential purpose, disposition of
corpse by deceased, mutilation of corpses and
Register
autopsies.
4.   Corpses which are to be buried at public expenses 1.   CC
may also be used for scientific purposes under
certain conditions. Acts, events and judicial decrees concerning the civil
5.   Expressed wishes of the deceased is given priority status of persons shall be recorded in the civil register.
provided that it is not contrary to law and must not [Art. 407, CC]
violate the legal and reglementary provisions
concerning funerals and disposition of the The following shall be entered in the civil register [Art.
remains (time, manner, place or ceremony) 408, CC]:
6.   In the absence of expressed wishes, his religious a.   Births;
beliefs or affiliation shall determine the funeral b.   marriages;
rights. c.   deaths;
7.   In case of doubt, the persons in Art. 199 shall d.   legal separations;
decide. e.   annulments of marriage;
8.   Any person who disrespects the dead or interferes f.   judgments declaring marriages void from the
with the funeral shall be liable for material and beginning;
moral damages. g.   legitimations;
h.   adoptions;
i.   acknowledgments of natural children;
j.   naturalization;
k.   loss, or
l.   recovery of citizenship;
m.   civil interdiction;
n.   judicial determination of filiation;
o.   voluntary emancipation of a minor; and
p.   changes of name.

In cases of legal separation, adoption, naturalization


and other judicial orders mentioned in the preceding
article, it shall be the duty of the clerk of the court
which issued the decree to ascertain whether the same
has been registered, and if this has not been done, to
send a copy of said decree to the civil registry of the
city or municipality where the court is functioning. [Art.
409, CC]

The books making up the civil register and all


documents relating thereto shall be considered public
documents and shall be prima facie evidence of the
facts therein contained. [Art. 410, CC]

Every civil registrar shall be civilly responsible for any


unauthorized alteration made in any civil register, to
any person suffering damage thereby. However, the
civil registrar may exempt himself from such liability if
he proves that he has taken every reasonable
precaution to prevent the unlawful alteration. [Art.
411, CC]

All other matters pertaining to the registration of civil


status shall be governed by special laws. [Art. 413, CC]

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Before the amendment by RA 10172, no correction


2.  R A 9048 as Amended by must involve the change of sex, nationality, age or
RA 10172 status of the petitioner. After the amendment, change
of sex can now be subjected to correction without
An act authorizing the city or municipal civil registrar judicial order under the rules of this Act.
or the consul general to correct a clerical or
typographical error in an entry and/or change of first Civil Register refers to the various registry books and
name or nickname in the civil register without need of related certificates and documents kept in the archives
a judicial order, amending for this purpose articles 376 of the local civil registry offices, Philippine Consulates
and 412 of the CC of the Philippines and of the Office of the Civil Registrar General.

General Rule: No entry in a civil register shall be Who may file the petition and where? [Sec. 3, RA
changed or corrected without a judicial order 9048]
a.   Any person having direct personal interest in the
Exceptions: correction of a clerical or typographical error in an
a.   Clerical or typographical errors or entry and/or change of first name or nickname in
b.   Intersex persons the civil register
b.   Verified petition with the local civil registry office
Clerical or Typographical Errors of the city or municipality
Change of: first name or nickname, day and month in 1.   where the record being sought to be
the date of birth, or sex of a person corrected or changed is kept
2.   where the interested party is presently
This exception applies where it is patently clear that residing or domiciled, if it will be impractical
there was a clerical or typographical error or mistake to submit in the place where record is kept
in the entry, which can be corrected or changed by the (i.e. when party has migrated to another
concerned city or municipal civil registrar or consul place in the country)
general in accordance with the provisions of this Act 3.   nearest Philippine Consulates, if the
and its implementing rules and regulations petitioner is presently residing or domiciled in
foreign countries
Intersex persons
Sexual development of intersex persons—those whose Note: All petitions for the clerical or typographical
sex chromosomes, genitalia, and/or secondary sex errors and/or change of first names or nicknames may
characteristics are determined to be neither be availed of only once.
exclusively male nor female, makes gender
classification at birth inconclusive. It is only at maturity Grounds for Change of First Name or Nickname.
that the gender of such persons become fixed. [Sec. 4, RA 9048]
The petition for change of first name or nickname may
In the case of Jennifer Cagandahan, who suffered from be allowed in any of the following cases:
Congenital Adrenal Hyperplasia and had two sex a.   The petitioner finds the first name or nickname to
organs and whose female sex organs did not develop be ridiculous, tainted with dishonor or extremely
normally, the Court granted her petition to change her difficult to write or pronounce.
registered sex from female. [Republic v Cagandahan, b.   The new first name or nickname has been
G.R. No. 166676 (2008)]. habitually and continuously used by the petitioner
and he has been publicly known by that first name
Note: or nickname in the community: or
Clerical or typographical error refers to a mistake c.   The change will avoid confusion.
committed in the performance of clerical work in
writing, copying, transcribing or typing an entry in the Form and Contents of the Petition: The petition for
civil register that is harmless and innocuous (i.e. correction of a clerical or typographical error, or for
misspelled name, misspelled place of birth, mistake in change of first name or nickname, as the case may be,
the entry of day and month in the date of birth or the shall be in the form of an affidavit, subscribed and
sex of the person or the like, which is visible to the eyes sworn to before any person authorized by the law to
or obvious to the understanding, and can be corrected administer oaths. The affidavit shall set forth facts
or changed only by reference to other existing record necessary to establish the merits of the petition and
or records) shall show affirmatively that the petitioner is
competent to testify to the matters stated. The
petitioner shall state the particular erroneous entry or

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entries, which are sought to be corrected and/or the where the corresponding civil registry is located. [Rule
change sought to be made. [Sec. 5, RA 9048] 108, Sec. 1, ROC]

The petition shall be supported with the following Entries subject to cancellation or correction [Rule
documents: 108, Sec. 2, ROC]
a.   A certified true machine copy of the certificate or Upon good and valid grounds, the following entries in
of the page of the registry book containing the the civil register may be cancelled or corrected:
entry or entries sought to be corrected or a.   births;
changed. b.   marriages;
b.   At least two (2) public or private documents c.   deaths;
showing the correct entry or entries upon which d.   legal separations;
the correction or change shall be based; and e.   judgments of annulments of marriage;
c.   Other documents which the petitioner or the city f.   judgments declaring marriages void from the
or municipal civil registrar or the consul general beginning;
may consider relevant and necessary for the g.   legitimations;
approval of the petition. h.   adoptions;
i.   acknowledgments of natural children;
No petition for correction of erroneous entry j.   naturalization;
concerning the date of birth or the sex of a person shall k.   election, loss or recovery of citizenship
be entertained except if the petition is accompanied by l.   civil interdiction;
earliest school record or earliest school documents m.   judicial determination of filiation;
such as, but not limited to, medical records, baptismal n.   voluntary emancipation of a minor; and
certificate and other documents issued by religious o.   changes of name.
authorities; nor shall any entry involving change of
gender corrected except if the petition is accompanied Parties
by a certification issued by an accredited government When cancellation or correction of an entry in the civil
physician attesting to the fact that the petitioner has register is sought, the civil registrar and all persons
not undergone sex change or sex transplant. The who have or claim any interest which would be
petition for change of first name or nickname, or for affected thereby shall be made parties to the
correction of erroneous entry concerning the day and proceeding. [Rule 108, Sec. 3, ROC]
month in the date of birth or the sex of a person, as the
case may be, shall be published at least once a week Notice and Publication
for two (2) consecutive weeks in a newspaper of Upon the filing of the petition, the court shall, by an
general circulation. order, fix the time and place for the hearing of the
same, and cause reasonable notice thereof to be given
Furthermore, the petitioner shall submit a certification to the persons named in the petition. The court shall
from the appropriate law enforcement agencies that also cause the order to be published once a week for
he has no pending case or no criminal record. three (3) consecutive weeks in a newspaper of general
circulation in the province. [Rule 108, Sec. 4, ROC]
The petition and its supporting papers shall be filed in
three (3) copies to be distributed as follows: first copy Opposition
to the concerned city or municipal civil registrar, or the The civil registrar and any person having or claiming
consul general; second copy to the Office of the Civil any interest under the entry whose cancellation or
Registrar General; and third copy to the petitioner correction is sought may, within fifteen (15) days from
notice of the petition, or from the last date of
publication of such notice, file his opposition thereto.
3.  Rule 108, Rules of Court [Rule 108, Sec. 5, ROC]
Cancellation or correction of entries in the civil registry Expediting Proceedings.
The court in which the proceeding is brought may
Who may file petition and Where it may be filed. make orders expediting the proceedings, and may also
Any person interested in any act, event, order or decree grant preliminary injunction for the preservation of the
concerning the civil status of persons which has been rights of the parties pending such proceedings. [Rule
recorded in the civil register, may file a verified petition 108, Sec. 6, ROC]
for the cancellation or correction of any entry relating
thereto, with the Court of First Instance of the province

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Order
After hearing, the court may either dismiss the petition
or issue an order granting the cancellation or
correction prayed for. In either case, a certified copy of
the judgment shall be served upon the civil registrar
concerned who shall annotate the same in his record.
[Rule 108, Sec. 7, ROC]

Note: In the case of one who, due to being biologically


intersex, was registered at birth as female but later
showed more matured male genitalia and himself
identified as male, the Court granted the petition to
change their registered sex from female to male.
[Republic v Cagandahan, G.R. No. 166676 (2008)]

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PROPERTY
Civil Law

Page 100 of 497


U.P. LAW BOC PROPERTY CIVIL LAW

IV.   PROPERTY   Classification


Property – All things which are, or may be, the object 1.   Based on Mobility
of appropriation. [Art. 414, CC]
[Immovable or Movable]
  Characteristics a.  Real or Immovable
Things cannot be considered as property when they Property [Art. 415, CC]
are not susceptible of appropriation because of
physical impossibility (i.e., sun and moon) or legal IMMOVABLES BY NATURE: cannot be moved from
impossibility (i.e., live human body). [de Leon] place to place; their intrinsic qualities have no utility
except in a fixed place. [pars. 1 & 8]
1.   Land, buildings, roads, and constructions of all
kinds adhered to the soil
2.   Mines, quarries, and slag dumps, while the
matter thereof forms part of the bed, and waters
either running or stagnant

Note: Buildings have been considered as


immovables by nature, despite:
•   Agreement by the parties e.g. they constitute a
separate mortgage on the building and the land
[Punsalan v. Lacsamana, G.R. No. L -55729
(1983)]
•   Separate Ownership i.e. a building on rented land
is still considered an immovable. [Tolentino]
•   No matter who built it e.g. whether it is erected by
the owner, usufructuary, or lessee of the land
[Ladera v. Hodges, G.R. No. 8072-R (1952)]

Note further: Where Building Is Treated As Personal


Property: Doctrine of Estoppel
Parties may by agreement treat buildings as
movables, effective only as to them, but void if rights
of third persons are involved. It is based, partly, upon
the principle of estoppel. [Tumalad v. Vicencio, G.R.
No. L-30173 (1971); Evangelista v. Alto Surety, G.R. No.
L-11139 (1958)]

IMMOVABLES BY INCORPORATION: essentially


movables but are attached to an immovable in such a
way as to be an integral part [Pars. 2, 3, & 7]
1.   Trees and plants: only immovables when they
are attached to the land or form an integral part
of an immovable. Note: By special treatment of
Act 1508 (Chattel Mortgage Law), growing crops
may be subject of a Chattel Mortgage. For the
purpose of attachment: growing crops are to be
attached in the same manner as realty. [Sec. 7,
Rule 59]
2.   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 - Res
vinta in Roman Law

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U.P. LAW BOC PROPERTY CIVIL LAW

Note: Whether attached by the owner himself or parties would be prejudiced. That characterization is
some other person effective between the parties. [Makati Leasing v.
3.   Fertilizer actually used on a piece of land Wearever, G.R. No. L-58469 (1983)]

IMMOVABLES BY DESTINATION: essentially 3.   Animal houses, etc.


movables but by the purpose for which they have been Requisites:
placed in an immovable, partake of the nature of an a.   Placed by the owner or the tenant (as agent);
immovable [Pars. 4, 5, 6 & 9] b.   With the intention of permanent attachment;
c.   Forming a permanent part of the immovable.
Note: Must be attached by the owner himself or his
agent. 4.   Docks and structures which, though floating,
are intended by their nature and object to
1.   Statues, reliefs, paintings etc. remain at a fixed place on a river, lake, or coast
Requisites: (need not be placed by owner of land)
a.   Placed by the owner or by the tenant (as
agent); BY ANALOGY [Par. 10]
b.   With intention of attaching them Contracts for public works, servitudes, other real
permanently even if adherence will not rights over immovable property e.g. usufruct and lease
involve breakage or injury. of real property for a period of 1 year and registered.
c.   Where the improvement or ornaments
placed by the lessee are not to pass to the b.  Personal or Movable
owner at the expiration of the lease, they
remain movables for chattel mortgage CATEGORIES OF MOVABLES [Arts. 416,417, CC]:
purposes. [Davao Sawmill v. Castillo, G.R. No. 1.   Everything not included in Art. 415 (by exclusion);
L-40411 (1935)] 2.   All things that can be transported from one place
to another Without substantial injury to the
2.   Machinery, etc. which tend directly to meet the immovable to which it is attached (by description)
needs of the said industry or works (e.g. sewing
machines owned by the owner of a garment Unless expressly included in Art. 415 (Test by
factory) Exclusion is Superior)
3.   Real property which by any special provision of
The moment they are separated, (from the law is considered as a movable (e.g. Growing
immovable or from the industry or work in which crops under the Chattel Mortgage Law)
they are utilized) they revert to being movables. 4.   Forces of nature brought under the control of
science (e.g. electricity, gas, heat, oxygen)
Requisites: 5.   Obligations and actions which have for their
a.   Must be machinery, receptacles, instruments, object movables or demandable sums
or implements 6.   Shares of stock of agricultural, commercial and
b.   Placed by the owner or the tenant (as agent); industrial entities, although they may have real
c.   The machine, receptacle, instrument, estate (e.g. certificates evidencing ownership of
implement must also be essential to the shares)
business (tend directly to meet the needs of
industry or work) in order to be considered
realty. [Mindanao Bus Co. v City Assessor, G.R. c.   Importance and
No. L-17870 (1962)] Significance of
Note:
Classification under the CC
Machinery which is movable in its nature only
becomes immobilized when placed in a plant by the 1.   In the determination of the offenses committed
owner of the property or plant, but not when so placed (e.g. Arts. 293, 308, 312, RPC)
by a tenant, a usufructuary, or any person having only 2.   In the forms of contracts
a temporary right, unless such person acted as the a.   Subject matter of specific contracts (e.g.
agent of the owner. [Davao Sawmill v. Castillo, G.R. No. REM, Antichresis, Pledge, Chattel Mortgage)
L-40411 (1935)] b.   Donations of real property to be valid are
required to be in a public instrument [Art.
Parties may, by agreement, treat as personal property 749, CC] but a donation of a movable may be
that which by nature would be real, as long as no third made orally or in writing. [Art. 748, CC]

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3.   For acquisitive prescription CLASSIFICATIONS


4.   Actions for recovery of possession Administered by the State [Art. 420, CC]
a.   Possession of real property - recovered 1.   Those intended for public use. (roads, canals,
through accion reivindicatoria, accion rivers, torrents, ports and bridges constructed by
publiciana, forcible entry and unlawful the State, banks, shores, roadsteads, and others
detainer (accion interdictal). of similar character)
b.   Possession of movable property - recovered 2.   Those (w/o being for public use) and are intended
through replevin. for some public service:May be used only by
5.   Determination of Proper Venue of Actions; Real authorized persons but exists for the benefit of all,
Actions v. Personal Actions [Secs. 1-2, Rule 4, e.g. fortresses, unleased mines and civil buildings.
ROC] 3.   Those for the development of the national wealth.
6.   Determination of the governing law (Private Includes natural resources such as minerals, coal,
International Law) oil and forest.
Note: Distinction unimportant for property 4.   Patrimonial property:
situated in the Philippines a.   Owned by the State over which it has the
7.   In Transactions Affecting third persons same rights as private individuals in relation
a.   In transactions involving real property – must to their own property.
be recorded in the Registry of Property to b.   Subject to the administrative laws and
affect third persons. regulations on the procedure of exercising
b.   In transactions involving personal property – such rights, e.g. friar lands, escheated
registration is not required, except for chattel properties and commercial buildings.
mortgages. [Chattel Mortgage Register; Art. c.   Purpose:
2140, CC] i.   Enables the State to attain its economic
8.   Preference of credits [Arts. 2241-2242, CC] ends
9.   Double sales [Art. 1544, CC] ii.   Serves as a means for the State’s
10.   Taxation - If the property is subject to real estate subsistence and preservation
taxes iii.   Enables the State to fulfill its primary
mission
d.   Conversion of property of public dominion for
2.  B ased on Ownership/ public use to patrimonial property:
Rights-Holder i.   Property of public dominion, when no
longer intended for public use or for
Property is either: public service, shall form part of the
a.   Of public dominion; or patrimonial property of the State [Art.
b.   Of private ownership. [Art. 419, CC] 422, CC]
ii.   An express declaration by the State
Churches and other consecrated objects are (either by the Congress or by the
considered outside the commerce of man; they are President, if the power was provided by
considered neither public nor private property. law) that the property of public
dominion has been converted into
patrimonial property, even though it
a.  Public Dominion was classified as alienable or
disposable. [Heirs of Malabanan v.
Property of public dominion is outside the commerce Republic, G.R. No. 179987 (2009)]
of man. They cannot be the subject matter of private
contracts, cannot be acquired by prescription and they Administered by Municipal Corporations [Art. 424
are not subject to attachment and execution nor (1), CC]
burdened with a voluntary easement. 1.   Property for public use, in the provinces, cities, and
municipalities, consist of the provincial roads, city
As enumerated by Art. streets, municipal streets, the squares, fountains,
Public Dominion
420, CC public waters, promenades, and public works for
Used in Art XII, Section public service paid for by said provinces, cities, or
Public Domain
2, 1987 Constitution municipalities.
Public Lands Public Land Act 2.   Patrimonial property of Municipal Corporations:
a.   All other property possessed by any of them
(provinces, cities, and municipalities) [Art.
424 (2), CC]

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b.   The province or municipality, as a juridical sea so as to become part of the shore. The land having
entity, also possesses private property to disappeared on account of the gradual erosion in case
answer for its economic necessities. of natural expropriation, and having remained
c.   General Presumption: that land comes from submerged until they were reclaimed by the
the State upon the creation of the government, they are public land. [Government v.
municipality. All lands in the possession of the Cabangis, G.R. No. L-28379 (1929)]
municipality are properties of public dominion
held in trust for the State’s inhabitants are
subject to the control and supervision of the
3.  Based on Consumability
State.
Only applies to movable property, determined by
Exception: Properties acquired with their own funds in nature [Art. 418, CC]
their private or corporate capacity over which the a.   Consumable goods: movables which cannot be
political subdivision has ownership and control. A used in a manner appropriate to their nature
municipal corporation must prove that they acquired without their being consumed.
the land with their own corporate funds. [Salas v. b.   Non-consumable goods: all those excluded in the
Jarencio,G.R. No. L-29788 (1972)] first category

Note: 4.  B ased on Susceptibility to


The Local Government Code classifies property of
LGUs into: Substitution
1.   Property of LGU in its governmental character,
which is broader than Art. 424, CC Only applies to movables, determined by the intention
2.   Property of LGU in its proprietary character. of the parties.
a.   Fungibles: things that, because of their nature or
the will of the parties, are capable of being
b.  Private Ownership substituted by others of the same kind, not
having a distinct individuality.
Can be exercised by the state in its private capacity or b.   Non-fungibles: things that cannot be
by private persons. substituted for another; if the parties agreed that
the same thing be returned, it is not fungible.
KINDS
1.   Patrimonial property - Property owned by the
State and its political subdivisions in their private 5.  H idden Treasure
capacity; all property of the State not included in
NCC 420 (on public dominion) [NCC 421-424] Any hidden and unknown deposit of money, jewelry or
2.   Property belonging to private persons, either other precious objects, the lawful ownership of which
individually or collectively [Art. 425, CC] does not appear. [Art. 439, CC]

CONVERSION General Rule: Hidden treasure belongs to the owner of


Alienable Public Land converted to Private Property the land, building, or other property on which it is
through Prescription found [Art. 438, CC]

Alienable public land held by a possessor – Exceptions:


personally/through predecessors-in-interest, openly, Finder of hidden treasure is entitled to one-half (1/2)
continuously and exclusively – for 30 years is if:
converted to private property by the mere lapse or a.   Finding is by chance;
completion of the period. The application for b.   Finder is not co-owner of the property where it is
confirmation is a mere formality, because land had found;
already been converted, giving rise to a registrable c.   Finder is not trespasser;
title. [Director of Lands v. IAC, G.R. No. 73002 (1986)] d.   Finder is not an agent of landowner;
e.   Finder is not owner of the land, building, or other
Private Land converted to Property of Public property
Dominion through abandonment and reclamation
Through the gradual encroachment or erosion by the If the things found may be of interest to science or the
ebb and flow of the tide, private property may become arts, the State has a right to acquire them at their just
public if the owner appears to have abandoned the price, which shall be divided in conformity with the
land, and permitted it to be totally easten up by the rule stated. [Art. 438, CC]

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For purposes of hidden treasure, a usufructuary is


considered a stranger to property; naked owner gets   Ownership
owner’s share (Art. 566, CC).
1.   Definition and Concept
6.  B ased on the Constitution
Independent right of exclusive enjoyment and control
[Sec. 3, Art. XII] of a thing.

a.   Public Agricultural Land; May be exercised in everything not prohibited by


b.   Mineral Land; public law or the rights of another. [Art. 427, CC]
c.   Timber Land;
d.   National Parks. Note the four persons treated by Property Law:
a.   The OWNER
b.   He who is in the CONCEPT OF AN OWNER
c.   The POSSESSOR
d.   The “Squatter.”

2.  T ypes of Ownership
a.   Full Ownership - With complete rights over the
property.
b.   Naked Ownership - Absence of jus fruendi and
jus utendi.
c.   Sole Ownership - Ownership vested only in one
person
d.   Co-Ownership - Ownership vested in 2 or more
persons in ideal shares or undivided interest.
e.   Beneficial ownership - Right to enjoy the use
and fruits of a property

3.  Rights of an Owner
1.   Right to enjoy and dispose of a thing, without
other limitations than those established by law.
2.   Right of action against the holder and possessor
of the thing in order to recover it.
3.   Jus Utendi: right to use and enjoy
4.   Jus Fruendi: right to receive the fruits
5.   Jus Abutendi: right to consume a thing by use
6.   Jus Disponendi: right to alienate, encumber,
transform or even destroy the thing owned
7.   Jus Vindicandi: right to recover possession of
property based on a claim of ownership
8.   Jus Possidendi: right to possess the property
(Implied from all the other rights)
9.   Jus Accessionis: right to whatever is attached to
the thing in such a way that they cannot be
separated without injury
10.   Jus Tresauris: right to hidden treasure
11.   Right to Exclude; Doctrine of Self-Help [Art. 429,
CC]
12.   Right to enclose or fence [Art. 430, CC]
13.   Right to receive just compensation in case of
expropriation [Art. 435, CC] but not if the
property seized by competent authority in the

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exercise of police power, unless seizure is DOCTRINE OF SELF-HELP [Arts. 429-430, CC]
unjustified 1.   The owner or a third person may use this right for
14.   Right of owner of land to its surface and the benefit of the owner, acting as negotiorum
everything under it, except natural resources - gestor may use such force as may be reasonably
the owner may make any works, plantations, and necessary to repel or prevent an actual or
excavations subject to servitudes and special threatened unlawful physical invasion or
laws and ordinances and reasonable needs of usurpation of his property.
aerial navigation [Art. 437, CC]
Requisites:
a.  Protecting Property a.   Person exerting force is owner or lawful
possessor
REAL RIGHTS v. PERSONAL RIGHTS b.   There is actual or threatened unlawful
physical invasion or usurpation of property
Real Rights c.   Force used against aggressor is reasonably
Rights that confer upon its holder an autonomous necessary to repel/prevent such aggression
power to derive directly from a thing certain economic
advantages independently of whoever the possessor Exception: Cannot be used against agents of the
of the thing. state acting in their official functions or from other
lawful form of action against the possessor
The number of real rights is an open classification:
1.   Ownership 2.   Every owner may enclose or fence his land or
2.   Real right of Possession tenements by any other means without detriment
3.   Usufruct to servitudes constituted thereon.
4.   Easement
5.   Recorded lease 4.  A ctions to Recover
6.   Real Estate Mortgage
7.   Chattel Mortgage Ownership and Possession
8.   Pledge of Property
9.   Antichresis
10.   Retention
11.   Pre-emption a.  Immovable Property
12.   Redemption
13.   Stewardhip Accion Reivindicatoria
14.   Certificate of Ancestral Domain Title; Certificate An action to recover ownership of real property. It
of Ancestral Domain Claims in the IPRA Law includes, but is not limited to possession.

Personal Rights Accion Publiciana


Rights of a person to demand from another as a An action for the recovery of real right of possession
definite passive subject, the fulfillment of a prestation of real property (posession de jure).
to give, to do or not to do.
Note: actions for ejectment not filed within 1 year must
ACTION IN REM v. ACTION IN PERSONAM v. be filed as accion publiciana.
ACTION QUASI IN REM
Accion Interdictal - Action for Ejectment
Action in rem - Action against a property, judgment A summary action for recovery of actual, material or de
binding against the whole world. facto physical possession through either an action for
Forcible Entry or Unlawful Detainer.
Action in personam - Action against a specific person,
judgment binding against that particular person. Forcible Entry Unlawful Detainer
Lawful possessor
Possessor refused to
Action quasi in rem - Action against a specific deprived through
vacate upon demand by
property with respect to a person. FISTS:
owner
1.   Force
b.  Remedies 2.   Intimidation
Note: Legal possession
3.   Strategy
(by permission/
4.   Threats, and
tolerance) becomes
5.   Stealth

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unlawful upon failure to Applicable made in a legal proceeding or


vacate To: asserts that an instrument or
Prescription: 1 year entry in plaintiff’s favor is not
from dispossession what it purports to be;
Prescription of action: 1
(force, intimidation, 3.   To boundary disputes;
year from last notice to
threats) or from 4.   To deeds by strangers to the
vacate.
knowledge of title UNLESS purporting to
dispossession (strategy, convey the property of the
stealth) plaintiff;
5.   To instruments invalid on their
ACTION TO QUIET TITLE/PREVENT CLOUD face; or
ACTION TO QUIET TITLE 6.   Where the validity of the
A common law remedy for the removal if any cloud instrument involves a pure
upon a doubt or uncertainty with respect to title to question of law
real property. [Paras]. A cloud on title is a 1.   There is a cloud on title to real
semblance of title (legal or equitable) which property or any interest to real
legally appears valid but is, in fact, unfounded. It is property;
in the nature of a quasi in rem action. 2.   The plaintiff must have legal
Applicable to real property, subject or equitable title to, or
In General Requisites
to certain exceptions. interest in the real property;
1.   To declare the invalidity of a and
claim on a title or the 3.   Plaintiff must return the
invalidity of an interest in benefits received from the
property. defendant.
2.   To free the plaintiff and all When the plaintiff is in possession
those claiming under him of the property, the action to quiet
from any hostile claim on the title does not prescribe.
property. When the plaintiff is not in
possession of the real property, the
Notes: action to quiet title may prescribe
To prevent multiplicity of suits, an depending upon the right of action
Purpose filed by the plaintiff:
action for quieting of title takes
precedence over an ejectment case. 1.   10 yrs. – if plaintiff is a
[Luzuriaga v. Adil, G.R. No. L-58912 possessor with a real right, i.e.
(1985) Prescription accion publiciana, or if action
is for reconveyance on the
Pending an action for quieting of basis of a constructive trust
title, possession of actual possessor under Art. 1456, CC
must be respected until the case is 2.   30 yrs. – if plaintiff is the
decided on the merits. [Balbecino v. owner of real property
Judge Ortega, G.R. No. L-14231
(1962). Note: An action to quiet title may
1.   To prevent future or further be defeated by a claim of ordinary
litigation on the ownership of or extraordinary acquisitive
the property. prescription by the defendant.
2.   To protect the true title and
Why Bring
possession. ACTION TO PREVENT A CLOUD
an Action to
3.   To protect the real interest of “Cloud on title” means a semblance of title, either
Quiet Title
both parties. legal or equitable, or a claim or a right in real
4.   To determine and make property, appearing in some legal form but which
known the precise state of the is, in fact, invalid or which would be inequitable to
title for the guidance of all. enforce.
1.   To questions involving Legal title: the party is the registered
Does Not Legal Title
interpretation of documents; owner of the property.
Cover and Is v. Equitable
2.   To mere written or oral Equitable title: the person has the
Not Title
assertions of claim, EXCEPT IF beneficial ownership of the property.

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1.   There is a claim emerging by 6.   Where the validity of the


reason of: instrument involves a pure
a.   Any instrument e.g. a question of law
contract, or any deed of 1.   Plaintiff has a title to a real
conveyance, mortgage, property or interest therein;
assignment, waiver, etc. 2.   Defendant is bent on creating a
covering the property cloud on the title or interest
concerned; therein. The danger must not
b.   Any record, claim, Requisites be merely speculative or
encumbrance e.g. an imaginary but imminent; and
attachment, lien, 3.   Unless the defendant is
inscription, adverse claim, restrained or stopped, the title
lis pendens, on a title; or or interest of the plaintiff will be
c.   Any proceeding e.g. an prejudiced or adversely affect
extrajudicial partition of
property. b.  Movable Property
2.   The claim should appear valid
or effective and extraneous
Replevin
evidence is needed to prove
For manual delivery of movable property, for either
A Cloud their validity or invalidity;
ownership or possession
Exists If: Test: Would the owner of the
property in an action for
Requisites for recovery of property [Art. 434, CC]
ejectment brought by the
1.   Property must be identified; and
adverse party be required to
2.   Plaintiff must rely on the strength of his title
offer evidence to defeat a
Ei incumbit probatio qui dicit, non qui negat: “He
recovery?
who asserts, not he who denies must prove.”
As a general rule, a cloud is not
created by mere verbal or parole 5.  L imitations on Ownership
assertion of ownership or an
interest in property. a.  General Limitations
3.   Such instrument, etc. is, in truth
and in fact, invalid, ineffective,
Taxation, Eminent domain, Police power
voidable, or unenforceable, or
has been extinguished or
terminated, or has been barred b.  Specific Limitations
by extinctive prescription; and
4.   Such instrument, etc. may be 1.   Legal Servitudes [Arts. 644, 678, 679, 649, 637,
prejudicial to the true owner or 652, 676, 684-687, CC]
possessor. Once requisites are satisfied, the servient owner
1.   To questions involving may ask the Court to declare the existence of an
interpretation of documents; easement.
2.   To mere written or oral 2.   Must not injure the rights of a third person [Sic
assertions of claim, EXCEPT IF Utere Tuo Ut Alienum Non Laedas (Art. 431, CC)]
made in a legal proceeding or 3.   Actions in a State of Necessity
Does Not asserts that an instrument or The owner of a thing has no right to prohibit the
Cover and entry in plaintiff’s favor is not interference of another with the same, if the
Is Not what it purports to be; interference is necessary to avert an imminent
Applicable 3.   To boundary disputes; danger and the threatened damage, compared to
To: 4.   To deeds by strangers to the the damage arising to the owner from the
title UNLESS purporting to interference, is much greater. The owner may
convey the property of the demand from the person benefited, indemnity for
plaintiff; the damage to him. [Art. 432, CC]
5.   To instruments invalid on their 4.   Nuisance [Art. 694, CC]
face; or 5.   Limitations imposed by the owner himself
6.   Limitations imposed by the party transmitting
the property either by the contract or will

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SUMMARY OF ACTIONS
Action Venue Summon Prayer Basis Prescription Jurisdiction

Prior physical
possession for
Forcible Entry/
Real In forcible entry;
Unlawful Possession 1 year MTC
Action personam Notice to vacate
Detainer
for unlawful
detainer

Accion Real In Real right of 10 years


Possession RTC
Publiciana Action personam Possession [Art. 555(4), CC]

GF: 10 years
BF: 30 years
[Art. 1137, CC]

Exception (i.e. no
Accion Real In
Possession Ownership acquisitive prescription): RTC
Reivindicatoria Action personam
Torrens Title and
property of public
dominion;
Exception to exception:
laches

RTC or MTC
Real In Constructive 10 years
Reconveyance Title (depending on
Action personam trust [Art. 1456, CC]
value)

If plaintiff in possession,
imprescriptible
RTC or MTC
Quieting of Real Quasi-in Quieting of Otherwise, 10 years
Ownership (depending on
Title Action rem Title (based on constructive
value)
trust) [Heirs of Jose
Olviga vs. CA, G.R, No.
104813 (1993)]
RTC or MTC
Personal In Possession or GF: 4 years
Replevin Possession (depending on
Action personam Ownership BF: 8 years
value)

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  Accession owner mixes his cattle with those of another and


they interbreed, thus co-ownership is applied
[Siari Valley Estate v. Lucasan, G.R. No. L-13281
Accession – the right by virtue of which the owner of a (1960)].
thing becomes the owner of everything that is
produced thereby, or which is incorporated or 5.   Industrial – produced by lands of any kind
attached thereto, either naturally or artificially. [Art. through cultivation or labor [Art. 442 (2), CC].
440, CC]
Standing trees are not fruits since they are
Not a mode of acquiring property; it does not depend considered immovables although they produce
upon a new title. fruits themselves. However, they may be
considered as industrial fruits when they are
Accessories – things joined to or included with the cultivated or exploited to carry on an industry, as
principal thing for the latter’s embellishment, better in tree plantation.
use, or completion, but which cannot be separated
without damage or injury. 6.   Civil – easily prorated for under Art. 544, CC they
are deemed to accrue daily and belong to the
GENERAL PRINCIPLES OF ACCESSION possessor in good faith in that proportion (e.g.
1.   Accessio cedit principali - the accessory follows dividends, rents of buildings, price of leases or
the principal, and not the other way around lands and the amount of perpetual or life
[Philippine National Bank v De Jesus, G.R. No. annuities or other similar income).
149295 (2003)]
Note exception found in Art. 120, FC on reverse Note:
accession. Natural and industrial fruits are real property while
2.   No one shall be unjustly enriched at the expense still ungathered.
of another [Arts. 447-452]
Only those that are manifest or born are considered as
1.   Classification of Accession natural or industrial fruits.

Principles Applicable to Accession Discreta


a.  With Respect to 1.   Time of Accrual depending on kind:
Immovables a.   Annuals: from the time seedlings appear on
the ground.
ACCESSION DISCRETA b.   Perennials: from the time fruits actually
Right of ownership to the fruits. [Art. 441, CC] appear on the plants.
c.   Young of animals: from the time they are in
General Rule: To the owner of the principal belongs the the womb, although unborn – beginning of
natural, industrial and civil fruits. maximum ordinary period of gestation.
d.   Fowls: from the time of incubation.
Exceptions: [GULA – Good faith, Usufruct, Lease, 2.   He who receives the fruits has the obligation to
Antichresis] pay the expenses incurred by a third person in the
1.   Possession in good faith (fruits belong to production, gathering and preservation of the
possessor by good faith for as long as he remains fruits. [Art. 443, CC]
in good faith) a.   Exception: Owner does not have to pay if land
2.   Usufruct (to usufructuary) is recovered before gathering from a
3.   Lease (to lessee in civil law lease of agricultural possessor in bad faith.
land; lessor gets rentals as civil fruits) b.   But if owner recovers land from possessor in
4.   Antichresis bad faith, he may choose to acquire the land
and he can make the possessor, builder,
Kinds of Fruits planter, sower account for the fruits that have
1.   Natural – spontaneous products of soil and the been gathered, with the obligation to deduct
young and other products of animals [Art. 442 (1), the expenses for producing, harvesting and
CC] preservation of the fruits.

Partus sequitur ventrem: To the owner of female


animals would also belong the young of such
animals although this cannot apply when the

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ACCESSION CONTINUA Situation #1: Both the landowner (LO) and the
Right pertaining to the owner of a thing over owner of materials (OM) are in GF
everything that is incorporated or attached thereto Rights: Shall own what is built,
either naturally or artificially (by external forces). planted, sown
(materials/improvements)
ACCESSION CONTINUA ARTIFICIAL OR [Accessio cedit principali]
INDUSTRIAL LO in GF
Building, planting or sowing on land owned by Liabilities: shall pay for the value
another (over immovables). of the materials (no one shall be
unjustly enriched at the expense
General rule: Whatever is built, planted or sown on the of another)
land of another + improvements or repairs made Rights:
thereon, belong to the owner of the land subject to the 1.   Limited right of removal
rules on BPS. [Art. 445, CC] (can only be resorted to if
OM in GF no injury can be inflicted on
Presumptions: the work constructed); or
1.   All works, sowing and planting are presumed 2.   Right to reimbursement for
made by the owner and at his expense, unless the the value of materials.
contrary is proved.
2.   The owner of the principal thing owns the natural, Situation #2: Both the LO and OM are in BF
industrial and civil fruits, except when the Both LO and
following persons exist: Parties will be treated as though
OM in BF
a.   Possessor in Good Faith both acted in GF [Art. 453, CC]
b.   Usufructuary
c.   Lessee Situation #3: LO in BF, while OM in GF
d.   Antichretic creditor Rights: To own what is built,
planted, sown
Meaning of bad faith (materials/improvements)
On the part of the landowner
Whenever the building, planting or sowing was done Liabilities: shall pay for the value
with his knowledge and without opposition on his part. LO in BF
of the materials, as well as pay
[par. 2, Art. 453, CC] OM indemnity for damages
On the part of the owner of materials Note: Subject to OM’s absolute
Allows the use of his materials without protest. right of removal
Rights:
On the part of the builder, planter and sower 1.   Absolute right of removal +
He is a possessor in bad faith at the time of BPS if he Right to indemnification for
knows that damages; OR
1.   He does not have title to the land, and thus, has no OM in GF
2.   Right to reimbursement for
right to build thereon; or the value of materials +
2.   He has no permission to build, plant, or sow on the Right to indemnification for
land which he possesses but does not own. damages
Note: Situation #4: LO in GF, while OM in BF
Bad faith leads to liability for damages and the loss of
Rights:
the works or the improvement without
1.   Right to acquire the
reimbursement.
improvements without
paying indemnity
Bad faith of one party neutralizes the bad faith of the LO in GF
2.   Right to acquire indemnity
other.
for damages if there are
hidden defects known to
Rules [Arts. 446-455, CC]
OM
a.   Case where the landowner differs from the
Lose materials without right to
owner of materials [Art. 447, CC] OM in BF
indemnity (no right of removal)

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b.   CASE WHERE ONE BUILDS, PLANTS, OR SOWS 2.   Right to reimbursement for


ON LAND OWNED BY ANOTHER (BPS v. LO) the value of materials +
[Arts. 448-454, CC] Right to indemnification for
damages
Situation #1: BPS in GF [Art. 448, CC]
Options: Situation #4: LO in GF, while BPS in BF [Art. 449-
1.   Acquire improvements after 451, CC]
Landowner paying BPS for their value; Right to collect damages in any
[Art. 446, CC] or case AND option to:
2.   Oblige the one who built or 1.   Acquire improvements
Note: Option is planted to pay the price of without paying indemnity if
given solely to the land unless its value is the improvements are still
LO, GF of BPS considerably more than that standing on the land;
is immaterial of the building or trees, and 2.   Sell the land to BP or collect
the one who sowed, the rent from the sower unless
proper rent value of the improvements
Generally, has right to in which case there will be a
LO in GF
reimbursement for the forced lease; or
improvement. 3.   Order demolition of
Pending LO’s payment, has improvements or restoration
right to retention of the land of land to its former
(during this period, BPS is not condition at the expense of
required to pay rent) the BPS
Whatever fruits (rents) he
BPS in GF receives during the period of Landowner must STILL pay for
retention must be deducted necessary expenses for
from whatever indemnity is due preservation
to him; and in case it exceeds 1.   Pay damages to landowner
the value of the indemnity, the 2.   Loses materials without
excess shall be returned to the right to indemnity
owner of the land. [de Leon, BPS in BF 3.   No right to refuse to buy the
citing Mendoza v. De Guzman, land
G.R. No. L-28721 (1928)] 4.   Recover necessary expenses
for preservation of land
NOTE, HOWEVER: Landowner can be forced to
choose under pain of direct contempt or court can c.   CASE WHERE LO, BPS, AND OM ARE
choose for him. DIFFERENT PERSONS [Art. 455, CC]

Situation #2: Both the LO and BPS are in BF Note: If there are 3 parties in BPS, solve the problem
Both LO and by considering the options open to the landowner
Parties will be treated as though
BPS in BF vis-à-vis BPS depending on their good faith or bad
both acted in GF [Art. 453, CC]
faith; apply Art. 455, CC re: one who acted in good
faith. Art. 455, CC shall not apply if the owner
Situation #3: LO in BF, while BPS in GF makes use of the right granted by Article 450.
1.   Must indemnify BPS for the
improvements AND pay General Rules [de Leon]:
damages as if he himself 1.   OM in GF entitled to reimbursement for the
did the BPS value of the materials used (regardless of the
LO in BF GF or BF of the LO and/or the BPS),
2.   Has no option to sell the
land and cannot compel
BPS to buy the land without PRIMARILY, from the BPS. If the BPS be
the latter’s consent insolvent, then the LO shall be subsidiarily
Rights: liable to the OM [par. 1, Art. 455, CC]
1.   Absolute right of removal +
BPS in GF Requisites for the LO’s subsidiary liability
Right to indemnification for
damages; OR •   The OM acted in GF;
•   BPS is insolvent; and

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•   The LO appropriates the accession to 4.   If only the BPS acted in BF, he becomes liale
himself. to the OM for the value of the materials +
2.   The BPS who has paid the OM may seek damages. Should he become insolvent, the
reimbursement from the LO (value of LO shall pay for the value of the materials, but
materials + labor) [par. 2, Art. 455, CC] will not be liable for damages. Additionally,
he shall still be liable to the LO [Arts. 450-
Requisites: 451, CC]
•   The BPS acted in GF; and 5.   If only the LO acted in GF, he can exercise any
•   The LO appropriates the improvement to of his options under Arts. 449 and 450, both
himself. having an additional right to ask for damages
3.   if only the OM is in BF, he loses his materials, [Art. 451, CC].He shall also not be subsidiarily
as well as his right to indemnity. He also liable to the OM.
becomes liable for damages. [Arts. 449, 451, 6.   If ALL acted in BF, they shall be treated as
CC] though all of them acted in GF [Art. 453, CC]
7.  

Landowner Builder/Planter/Sower Owner of Materials


ALL Acted in Good Faith
a.   Right to acquire improvements a.   Collect value of material
and pay indemnity to BPS; primarily from BPS and
a.   Right of retention until
subsidiarilty liable to OM subsidiarily to landowner if
necessary and useful expenses
b.   Sell the land to BP except if BPS is insolvent; and
are paid
the value of the land is b.   Limited right of removal (if the
b.   To pay value of materials to OM
considerably more; or removal will not cause any
c.   Rent to S injury)
LO in GF BPS in GF OM in BF
a.   Right to acquire improvements a.   Right of retention until
and pay indemnity to BPS; necessary and useful expenses
a.   Lose the material without right
b.   Sell land to BP except if the are paid
to indemnity
value of the land is considerably b.   Keep improvements without
b.   Must pay for damages to BPS
more; or indemnity to OM and collect
c.   Rent to S damages from him
LO in GF BPS in BF OM in BF
a.   Right to collect damages from
BPS in any case and the option a.   Recover from BPS (as if both
to either are in GF)
1.   Acquire improvements w/o b.   If BPS acquires improvements,
Recover necessary expenses for
paying for indemnity; remove materials if feasible w/o
preservation of land from LO unless
2.   Demolition or restoration; injury
LO sells land
or c.   No action against LO but may
3.   Sell to BP, or to rent to be liable to LO for
sower consequential damages
b.   Pay necessary expenses to BPS
ALL Acted in Bad Faith
Same as when all acted in GF under Art. 453
LO in BF BPS in GF OM in GF
a.   Acquire improvement after
paying indemnity and damages
a.   May remove improvements a.   Remove materials at any event
to BPS unless the latter decides
b.   Be indemnified for damages in b.   Collect value of materials from
to remove
any event BPS; subsidiarily from LO, if LO
b.   Subsidiarily liable to OM for
c.   Pay OM the value of the is made to pay for
value of materials if he acquires
materials improvements and damages
improvements and pays
damages to BPS; no subsidiary

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liability if BPS chooses removal


in any event
LO in BF BPS in BF OM in GF
a.   Right to acquire improvements 1.   Collect value of materials
and pay indemnity to BPS; primarily from BPS and
subsidiarily liable to OM subsidiarily from LO if LO
a.   No right of retention
b.   Has option to: acquires the improvements
b.   Pay value of materials to OM
1.   Sell the land to BP except if 2.   Collect damages from BPS
and pay him damages
the value of the land is 3.   Absolute right to remove
considerably more; or materials in any event (if BPS
2.   Rent to S acquires improvements)
LO in GF BPS in BF OM in GF
a.   LO has right to collect damages
from BPS in any case and the a.   Collect value of materials
option to either: primarily from BPS and
1.   Acquire improvements w/o a.   Right to necessary expenses subsidiarily from LO
paying for indemnity; b.   Pay value of materials to OM b.   Collect damages from BPS
2.   Demolition or restoration; c.   Pay damages to OM/LO c.   If BPS acquires improvements,
or absolute right of removal in any
3.   Sell to BP or rent to S event
b.   Pay necessary expenses to BPS
LO in BF BPS in GF OM in BF
Acquire improvements and pay
a.   Receive indemnity for damages
indemnity and damages to BPS a.   Right to indemnity
b.   Absolute right of removal of
unless the latter decides to remove b.   Loses right to the materials
improvements in any event
materials

ACCESSION CONTINUA NATURAL LAND Requisites: [ACFI – Abrupt, caused by Current or other
DEPOSITS, ETC. Forces of nature, Identifiable]
1.   Segregation and transfer of land is sudden and
Alluvium abrupt;
Soil is gradually deposited on banks adjoining the 2.   Caused by the current of the water; and
river. 3.   The portion of land transported must be known
and identifiable; or
Requisites: [GAC – Gradual, Adjacent, Currents] 4.   Can also apply to sudden transfer by other forces
1.   Deposit of soil or sediment is gradual and of nature such as land transferred from a
imperceptible; mountain slope because of an earthquake.
2.   As a result of the action of the currents of the
waters of the river and should have no human Effect: The ownership of the detached property is
intervention; retained by the owner subject to removal within 2
3.   Land where the accretion takes place is adjacent to years from the detachment.
the banks of the rivers; and
4.   Deemed to Exist: When the deposit of the sediment In case of uprooted trees, the owner retains ownership
has reached a level higher than the highest level if he makes a claim within 6 months. This refers only
of the water during the year, i.e. higher than the to uprooted trees and does not include trees which
river bank. remain planted on a known portion of land carried by
the force of the waters. In this latter case, the trees are
Effect: The riparian owner automatically owns the regarded as accessions of the land through gradual
Alluvion but it does not automatically become changes in the course of adjoining stream. [Payatas v.
registered property in his name. Tuazon, G.R. No. L-30067 (1929)]

AVULSION CHANGE OF COURSE OF RIVER


A known portion of land is segregated from one estate
by the forceful current of a river, creek or torrent and Requisites:
transferred to another. 1.   Change in the natural course of the waters of the
river; and

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2.   Such change causes the abandonment of the river


beds. They belong to the owners of the nearest margins or
banks if [Art. 465]:
“Natural Bed”: ground covered by its waters 1.   Formed through successive accumulation of
during the highest floods. [Binalay v. Manalo, G.R. alluvial deposits
No. 92161 (1991)] 2.   On non-navigable and non-floatable rivers
3.   Such change is sudden or abrupt 3.   If island is in the middle: divided longitudinally in
4.   Change is permanent half.
4.   if nearer to one margin or bank, to the nearer
Effects: reparian owner
1.   Owners whose lands are occupied by the new
course automatically become owners of the old Note: If a landowner allows the sea or a lake to eat up
bed, in proportion to the area they lost his land completely, it is a case of natural
2.   Owners of the lands adjoining the old bed are expropriation and if the land later reappears, he does
given the right to acquire the same by paying the not regail ownership thereof. [Republic v. Cabangis,
value of the land. Not exceeding the value of the G.R. No. L-28379 (1929)]
land invaded by the new bed (the old property of
the owner) b.  With Respect to Movable
3.   The new bed opened by the river on a private
estate shall become of public dominion. Property
Exceptions: CONJUNCTION/ADJUNCTION
a.   Where the river simply dries up, There is adjunction or conjunction when 2 movables
abandoned riverbed belongs to the belonging to different owners are attached to each
State because there are no persons other such that separation is impossible without
whose lands are occupied by the injury. For example, the paint of B is used on the
waters of the river. canvass of C.
b.   Where the government reverts back
the course of the river, no Basic Rule: If separation is possible without injury,
compensation. then should separate. If this is not possible, then
adjunction or conjunction.
Division of River into Branches: When the current
causes division of river into branches and a piece of Kinds
land or part thereof is isolated or separated, there is 1.   Inclusion (e.g. jewel on ring)
no accession and the owner of the land retains his 2.   Soldering (adjoining two or more metals)
ownership. [Art. 463] a.   Ferruminatio (same metals)
b.   Plumbatura (different metals)
FORMATION OF ISLANDS 3.   Escritura (writing)
4.   Pintura (painting)
They belong to the State if [Art. 464]: 5.   Weaving
1.   Formed on the seas within the jurisdiction of the
Philippines. Requisites
2.   Formed on lakes, or 1.   There are 2 movables belonging to 2 different
3.   Formed on navigable or floatable rivers: owners;
a.   Capable of affording a channel or passage for 2.   They are united in such a way that they form a
ships and vessels; single object; and
b.   Must be sufficient not only to float bancas and 3.   They are so inseparable that their separation
light boats, but also bigger watercraft; would impair their nature or result in substantial
c.   Deep enough to allow unobstructed injury to either component.
movements of ships and vessels.
OWNERSHIP OF NEW OBJECT FORMED BY
Test of whether river is navigable: Whether it can be ADJUNCTION
used as a highway of commerce, trade and travel
Owner of Principal Object
Note: There is no accession when islands are formed Good Faith: Acquires the thing but with the duty to
by the branching of a river; the owner retains indemnify the owner of the accessory. (Article 466).
ownership of the isolated piece of land.

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there will be a co-ownership based on


Owner of Accessory proportional value (not volume).
Good Faith: Has a right to demand separation even 2.   If caused by the will of one party in bad faith,
though there may be damage if the accessory is more then the party in bad faith loses the entire thing.
valuable.
Note:
If Owner of Principal Object in Bad Faith: Demand Good faith in accession does not necessarily exclude
value of the accessory plus damages, OR Demand negligence, which gives rise to damages.
separation even if the principal will be destroyed plus
damages (par. 2, Art.470) Some commentators say that commixtion or
confusion is not a true case of accession since there is
If Owner of Accessory in Bad Faith: Loses the thing no principal or accessory.
plus is liable for damages (Article 470)
Also, there is a co-ownership.
If both are in bad faith, treat as if both are in good faith
(Article 453 by analogy). In accession, everything goes to one party. Thus, this
happens only if one party is in bad faith.
Test to determine the principal thing
In the order of application, the principal is that: SPECIFICATION
1.   To which the other has been united as an Takes place when the work of a person is done on the
ornament or for its use or perfection (“Rule of material of another, such material, in consequence of
importance and purpose”). the work itself, undergoes a transformation.
2.   Of greater value.
3.   Of greater volume. It is the transformation of another’s material by the
4.   That of greater merits, taking into consideration application of labor.
all the pertinent legal provisions, as well as the
comparative merits, utility and volume of their Examples: Turning grapes into wine, flour into bread
respective things. [Manresa]
Rules:
When separation allowed 1.   Person in good faith
1.   When separation will not cause any injury; or
2.   When the accessory is more precious: General rule: Worker becomes the owner but must
a.   Owner of accessory may demand separation indemnify the owner (who was also in good faith)
even though the principal thing may suffer for the value of the material.
[Art. 469, CC].
b.   Owner who caused the union shall bear the Exception: If the material is more valuable than
expenses for separation even if he acted in the new thing, the owner of the material may
good faith. choose:
3.   When the owner of the principal is in bad faith. a.   To take the new thing but must pay for the
value of the work or labor; or
Note: In painting and sculptures, writings, printed b.   To demand indemnity for the value of the
matter, engravings and lithography, the board, metal, material.
stone, canvas, paper or parchment are deemed as the
accessory things [par. 2, Art. 468, CC] If the owner was in bad faith, maker may
appropriate the new thing without paying the
MIXTURE owner, or require the owner to pay him the value
The union of materials belonging to different owners of the thing or his work, with right to indemnity.
where the components lose their identity.
2.   Person in bad faith
Kinds
1.   Commixtion: mixture of solid things General rule: Owner may either appropriate the
2.   Confusion: mixture of liquid things, and includes new thing to himself without paying the maker, or
mixture of gases owner may demand value of material plus
damages
Rules:
1.   If caused by the will of the parties or by chance or Exception: The first option is not available in case
by the will of one party but is in good faith, then the value of the work, for artistic or scientific

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reasons, is considerably more than that of the


material, in which case the owner of the material   Co-Ownership
can ask for payment of material and damages.
The form of ownership when the ownership of an
3.   Person made use of material with consent and undivided thing or right belongs to different persons.
without objection of owner [Art. 484, CC]

Rights shall be determined as though both acted 1.   Requisites


in good faith
a.   Plurality of owners;
b.   Object must be an undivided thing or right; and
c.   Each co-owner’s right must be limited only to his
ideal or abstract share of the physical whole.

2.  W hat Governs Co-


Ownership
1.   Contracts;
2.   Special laws; and
3.   The CC

3.  Characteristics
1.   There are 2 or more co-owners.
2.   There is a single object which is not materially or
physically divided and his ideal share of the
whole.
3.   There is no mutual representation by the co-
owners.
4.   It exists for the common enjoyment of the co-
owners.
5.   It has no distinct legal personality.
6.   It is governed first of all by the contract of the
parties; otherwise, by special legal provisions, and
in default of such provisions, by the provisions of
Title III on Co-Ownership.

Only limitation
Each co-owner of realty held pro indiviso exercises his
rights over the whole property and may use and enjoy
the same with no other limitation than that he shall
not injure the interests of his co-owners. [Pardell v.
Bartolome, G.R. No. L-4656 (1912)]

Co-ownership Distinguished from Partnership


Co-Ownership Partnership
As to creation
Can be created Can be created only by
without formalities of contract, express or
a contract implied
As to Juridical Personality
Has juridical
Has no juridical or
personality distinct
legal personality
from partners
As to Purpose

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Purpose is collective Purpose is to obtain d.  Testamentary Disposition


enjoyment of the thing profits
As to Disposition of Shares or Donation Inter Vivos
Consent of other co-
Partner needs to be When a donation is made to several persons jointly, it
owners not needed;
authorized; he cannot is understood to be in equal shares, and there shall be
transferee
substitute another as a no right of accretion among them, unless the donor
automatically
partner in his place has otherwise provided. [Art. 753, CC]
becomes co-owner
As to Existence of Mutual Agency
A partner can Exception: Donations to spouses jointly, right of
There is no mutual accretion is presumed unless donor provides
generally bind the
representation otherwise.
partnership
As to Effect of Death or Incapacity
A donor or testator may prohibit partition for a period
Does not result in
Results in dissolution which shall not exceed 20 years.
dissolution
As to Formal Requisites
No public instrument e.   By Fortuitous Event or by
is needed even if the May be made in any Chance
object of the co- form except when real
ownership is a real property is contributed 1.   Co-ownership between owners of 2 things that are
property mixed by chance or by will of the owners [Art. 472,
As to Agreement on the Period CC]
An agreement to keep There may be 2.   Hidden Treasure [Art. 438, CC]
the thing undivided for agreement as to a
a period of more than definite term without When the discovery is made on the property of
10 years is void limit set by law another, or of the State or any of its subdivisions,
and by chance, one-half shall be allowed to the
4.  S ources of Co-Ownership finder

a.  Law f.   By Occupancy
Harvesting and Fishing: Co-ownership by two or more
1.   Cohabitation: co-ownership between common
persons who have seized a res nullius thing
law spouses [See Arts. 147, 148, 90, FC]
2.   Purchase creating implied trust [Art. 1452, CC]
3.   Easement of party wall: co-ownership of part- 5.  R ights of Co-Ownership
owners of a party wall [Art. 658, CC]
4.   Condominium Law: co-ownership of the common a.  Right to Share in the
areas by holders of units [Sec. 6, RA 4726]
Benefits as Well as the
b.  Contract Charges [Art. 485, CC]
1.   By Agreement of Two or More Persons [Art. 494, 1.   Proportionality – The share of the co-owners
CC] shall be proportional to their respective interests.
2.   By the creation of a Universal Partnership of all Any stipulation to the contrary is void. [Art. 48,
present property [Arts. 1778-1779, CC] par. 1, CC]
3.   By Association and Societies with Secret Articles 2.   Presumption of Equality – The portions
[Art. 1775, CC] belonging to the co-owners in the co-ownership
shall be presumed equal, unless the contrary is
proved. [Art. 48, par. 2, CC]
c.   Intestate Succession
Co-ownership between the heirs before partition of b.  Right to Use the Thing
the estate [Art. 1078, CC] Owned In Common [Art.
486, CC]

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Limitations: e.   Right to Repair [Art. 489,


1.   In accordance with the purpose for which the co-
ownership is intended CC]
2.   In such a way as not to injure the interest of the
co-ownership Repairs for preservation may be made at the will of
3.   In such a way as not to prevent the other co- one of the co-owners, but he must, if practicable, first
owners from using it according to their right notify his co-owners of the necessity for such repairs.

Expenses to improve or embellish the thing shall be


c.   Right to Bring an Order in decided upon by a majority.
Ejectment [Art. 487, CC]
f.   Right to Oppose
A co-owner may bring such an action without joining
all the other co-owners as co-plaintiffs because the Alterations
suit is presumed to have been filed to benefit his co-
owners. If the plaintiff/co-owner claims to be the sole General Rule: Unanimous Consent
owner, the action should be dismissed. [Adlawan vs. None of the co-owners shall, without the consent of
Adlawan, G.R. No. 161919, (2006)] the others, make alterations in the thing owned in
common, even though benefits for all would result
therefrom.
d.  Right to Compel Other Co-
Owners to Contribute to Rationale: Alteration is an act of ownership.
the Expenses of
Alteration – a change in the nature or use of a thing
Preservation and to the 1.   Change of the thing from the state or essence in
Taxes [Art. 488, CC] which the others believe it should remain
2.   Withdrawal of the thing from the use to which
Obligation to contribute to expenses of preservation they wish it to be intended
and to taxes 3.   Any other transformation which prejudices the
Each co-owner shall have a right to compel the other condition or substance of the thing or its
co-owners to contribute: enjoyment by the others. (Manresa)
1.   To the necessary expenses (incurred for
preservation of the thing or right) Exception: If the withholding of the consent by one or
more of the co-owners is clearly prejudicial to the
If practicable, he must first notify his co-owners of common interest, the courts may afford adequate
the necessity for such repairs. [Art. 489, CC] relief.
2.   To the taxes
3.   To the useful expenses (expenses to improve or g.  Right to Full Ownership of
embellish the thing) [Arts. 546, 547, CC]
His Part and of the Fruits
Not refundable unless they shall be decided upon and Benefits Pertaining
by a majority. [Art. 489, CC] thereto [Art. 493, CC]
As for the expenses for pure luxury or mere pleasure, He may therefore alienate, assign or mortgage his
these are not refundable for not serving purposes of part, and even substitute another person in its
preservation. [Art. 548, CC] enjoyment, except when personal rights are involved.
Renunciation Exception: When personal rights are involved.
Any co-owner may exempt himself from this
obligation to contribute by renouncing so much of his
undivided interest as may be equivalent to his share of h.  Right to Partition
the expenses and taxes. General Rule: Each co-owner may demand at any time
the partition of the thing owned in common, insofar
No such waiver shall be made if it is prejudicial to the as his share is concerned
co-ownership. [Art. 488, CC]
Limitations

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1.   An agreement to keep the thing undivided for a j.   Right to Protest Against


certain period of time, not exceeding 10 years,
shall be valid. [Art. 494, CC] Acts of the Majority which
2.   A donor or testator may prohibit partition for a are Prejudicial to the
period which shall not exceed 20 years. [Art.
494, CC]
Minority [Art. 492(3), CC]
3.   Neither shall there be any partition when it is
prohibited by law. [Art. 494, CC] For the administration and better enjoyment of the
4.   When partition would render the thing thing owned in common, the resolutions of the
unserviceable for the use for which it is intended majority of the co-owners shall be binding.
[Art. 495, CC]
5.   When another co-owner has possessed the There shall be no majority unless the resolution is
property as exclusive owner and for a period approved by the co-owners who represent the
sufficient to acquire it by prescription. controlling interest in the object of the co-ownership.

Note: No prescription shall run in favor of a co-owner Judicial intervention: The court, at the instance of an
or co-heir against his co-owners or co-heirs so long as interested party, shall order such measures as it may
he expressly or impliedly recognizes the co-ownership. deem proper, including the appointment of an
[Art. 494, CC] administrator, in the following cases:
1.   If there be no majority, or
For prescription to run in favor of a co-owner, the 2.   If the resolution of the majority is seriously
following elements must concur to show adverse prejudicial to those interested in the property
possession of a co-owner: owned in common.
1.   He has performed unequivocal acts of repudiation
amounting to an ouster of the other co-owners; Examples of acts seriously prejudicial:
2.   Such positive acts of repudiation have been made 1.   Call for a substantial change of the thing
known to the other co-owners; and 2.   Authorizing leases, loans, and other contracts
3.   The evidence thereon must be clear and without the necessary security, thereby exposing
convincing. [Salvador v. CA, supra] the property to serious danger
4.   His possession is open, continuous, exclusive, and 3.   Continued employment of an administrator who
notorious. is guilty of fraud or negligence in his management
(Manresa)
i.   Right to Redemption [Art.
1619, CC]
6.  R ules
Legal redemption – the right to be subrogated, upon a.  On Renunciation of Share
the same terms and conditions stipulated in the
contract, in the place of one who acquires a thing by Note: this is different from renunciation of co-
purchase or dation in payment, or by any other ownership
transaction whereby ownership is transmitted by
onerous title. A co-owner may exempt himself from the payment of
expenses of preservation by renouncing his undivided
A co-owner of a thing may exercise the right of interest in the co-ownership as may be equivalent to
redemption in case the shares of all the other co- his share in of the necessary expenses and taxes. [Art.
owners or of any of them are sold to third person. [Art. 488, CC]
1620, CC]
A co-owner who has not waived his share in the co-
As legal redemption is intended to minimize co- ownership may be compelled to pay his share in the
ownership, once a property is subdivided and cost of its maintenance but he may not be compelled
distributed among the co-owners, the community to renounce.
ceases to exist and there is no more reason to sustain
any right of legal redemption. Every act intended to Waiver of renunciation is not allowed if it is prejudicial
put an end to indivision among co-heirs is deemed to to the co-ownership.
be a partition. [Avila vs. Sps. Barabat, supra]
b.  Repairs for Preservation

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General rule: A co-owner has the right to compel the Improvement/


other co-owners to contribute to the expenses of Embellishing the Majority of co-owners
preservation, maintenance, or necessary repairs of the Thing/ Useful expenses
thing or right owned in common and to the taxes. [Art.
488, CC] d.  Rules on Multi-Story House
Requirement of notice: If practicable, the co-owner [Art. 490, CC]
must first notify the co-owners of the necessity for the
repairs. [Art. 489, CC] Applies when:
1.   The different stories of a house belong to
Exception to the requirement of notice: If different owners;
impracticable or where the repairs are very urgent and 2.   The titles of ownership do not specify the terms
the other co-owners are in remote places and cannot under which they should contribute to the
be reached by an ordinary means of communication. necessary expenses; and
3.   There exists no agreement on the subject.
Lack of notice even if practicable: Does not exempt
other co-owners to contribute. The co-owner who Part of the House Manner of Contribution
advanced them has the burden of proving that they All owners contribute in
Main and party walls,
were properly incurred. proportion to the value
the roof, and the other
of the story belonging to
things used in common
c.   Embellishments or each
Floor of the entrance,
Improvements front door, common All owners contribute
yard, and sanitary pro rata or equally
General rule: Requires consent of majority of co- works common to all
owners representing the controlling interest in the Each owner bears the
undivided thing. [Art. 492, CC] The floor of each co-
cost of maintaining the
owner’s story
floor of his story
Rationale: These expenses are not essential or 1.   Stairs from the first
important to the preservation of the thing owned in entrance to the first
common, and therefore, can afford to be delayed. story – pro rata
sharing of all
Requirement of notice: Notice must first be given to owners except the
the minority unless it is impracticable to do so. [Art. owner of the ground
489, CC] floor
Stairs 2.   Stairs from the first
Intervention of the courts: At the instance of an to the second story -
interested party, the court may take such measures, as pro rata sharing of
it may deem proper, including the appointment of an all owners except
administrator, in the following cases: the owner of the
1.   No majority; OR ground floor and
2.   The resolution of the majority is seriously that of the first
prejudicial to the interests of the co-owners. [Art. story; and so on.
489, CC]

Act of Co-Owner Consent Needed 7.  Termination or


May be made at will
by any co-owner but
Extinguishment
Preservation must first notify other
co-owners if a.  Total Destruction of Thing
practicable or Loss of the Property Co-
Alterations Consensus of Majority
Lease for more than 1
Owned
Consensus of Majority Is there still co-ownership if a building is destroyed?
year
Yes, over the land and the debris.
Acts of administration Majority of co-owners

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b.  Merger of All Interests in mortgage, servitude, or any real rights belonging to


them before the division was made. [Art. 499, CC]
One Person
The creditors or assignees of the co-owners may take
This may take place by any of the causes which are part in the division of the thing owned in common and
sufficient to transmit title to an obligation, either by object to its being effected without their concurrence
assignment, subrogation, and sale of inheritance.
Rights against individual co-owners in case of
c.   Acquisitive Prescription partition [Art. 497, CC]
The creditors are allowed to take part in the partition.
This is a mode of acquiring ownership by a possessor
through the requisite lapse of time. Reason for the rule: They own part of the interest of the
co-owners who made the assignment or alienation.
It may be ordinary or extraordinary. [Art. 1117, CC]
Intervention of creditors and assignees
General Rule: Creditors may take part in the division.
d.  Partition or Division [Art. They need to establish the existence of the credit
496, CC] during co-ownership.

May be judicial or extrajudicial: Exception: If the partition was already executed, they
1.   Extrajudicial partition – The agreement may be cannot impugn partition
oral or written.
2.   Judicial partition – governed by the Rules of Court Exception to the exception: If there was fraud, or a
insofar as they are consistent with the CC. [Art. previous formal opposition to prevent the partition,
496, CC] without prejudice to right of debtor/assignor to
maintain its validity.
Action for partition will determine:
1.   Whether or not the plaintiff is indeed a co-owner Rules on notice to creditors and assignees:
of the property 1.   The law does not expressly require previous notice
2.   How the property will be divided between the to the creditors and assignees before a partition,
plaintiff and defendant. but the latter have the right of creditors and
assignees to take part in the division.
Incidents of Partition
1.   Mutual accounting for benefits received and If notice is not given, the partition may be
reimbursement for expenses made [Art. 500, CC] impugned by creditor/assignee if made in fraud of
2.   Payment of damages by each co-owner by reason creditors.
of his negligence or fraud. [Art. 500, CC]
3.   Liability of each co-owner for defects of title and Once notice has been given, it is the duty of
quality of the portion assigned to each of the co- creditors and assignees to intervene and make
owners. [Art. 501, CC] known their stand.
2.   If they fail, they cannot question the division
Effects of Partition made, except in cases of fraud.
1.   Confers exclusive ownership of the property 3.   If they formulate a formal question, they can
adjudicated to a co-heir. contest such partition
2.   Co-heirs shall be reciprocally bound to warrant
the title to and the quality of each property Partition of an indivisible thing [Art. 498, CC]
st
adjudicated. 1 option: The co-owners can agree that one of them
3.   Reciprocal obligation of warranty shall be shall be the sole owner by paying the value of other co-
proportionate to the respective hereditary shares owners’ shares
nd
of co-heirs. 2 option: If they cannot agree who among them shall
rd
4.   An action to enforce warranty must be brought be sole owner, the property will be sold to a 3 person
within 10 years from the date the right accrues. and the proceeds distributed among them
5.   The co-heirs shall not be liable for the subsequent
insolvency of the debtor of the estate.
Right of third parties e.   Sale of Property Co-Owned
The partition of a thing owned in common shall not
prejudice third persons, who shall retain the rights of The sale shall be resorted only if:

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U.P. LAW BOC PROPERTY CIVIL LAW

1.  
2.  
The property is essentially indivisible
The co-owners cannot agree that the entire   Possession
property be allotted or assigned to one of them,
who shall reimburse the other co-owners of their The holding of a thing or the enjoyment of a right. [Art.
shares. 523, CC]

Four Types of Possession


f.   Termination of Period 1.   With just title from true owner - Possession with a
Agreed Upon by the Co- title in fee simple – Possession derived from the
Owners right of dominion or possession of an owner. This
is the highest degree of possession.
1.   An agreement to keep the thing undivided for a 2.   With just title but not from the true owner -–
certain period of time, not exceeding 10 years, Possession of an adverse claimant whose title is
shall be valid. [Art. 494, CC] sufficient to transfer ownership but is defective
2.   A donor or testator may prohibit partition for a such as when the seller is not the true owner or
period which shall not exceed 20 years. [Art. could not transmit his rights thereto to the
494, CC] possessor who acted in good faith;
3.   With juridical title - Possession is predicated on a
juridical relation existing between the possessor
g.  Expropriation and the owner of the thing, e.g., lessee,
usufructuary, depositary, agent, pledgee, and
This is the taking of private property rights by the trustee;
government for just compensation when it is for a 4.   “Squatters” - Mere holding or possession without
public purpose. any right or title at all, e.g., theft, squatter, etc.;

1.   Concept of Possession
Possession includes the idea of occupation. It cannot
exist without it.

Right of possession Right to possess


(jus possessionis) (jus possidendi)
Incident to
Independent right
ownership

Possession is not a definitive proof of ownership nor is


non-possession inconsistent therewith [Heirs of G.
Bofill v. CA, G.R. No. 107930 (1994)].

Extent of possession
a.   Actual – consists in manifestation of acts of
dominion over the thing of such a nature as a
party would naturally exercise over his own
property.
b.   Constructive – possession of a portion of the
thing under claim of ownership is a constructive
possession of the whole of such thing, if the
remainder is not in the adverse possession of
another.

Possession in the eyes of the law does not mean that a


man has to have his feet on every square meter of
ground before it can be said that he is in possession.
[Ramos vs. Director of Lands, G.R. No. 13298, (1918)]

Object of Possession [Art. 530, CC]

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a.   Must be susceptible of being appropriated One who possesses as a mere holder, not in the
b.   Need not be susceptible of prescription – things concept of owner, acknowledges in another a superior
must be within the commerce of men right which he believes to be ownership, whether his
belief is right or wrong: e.g. tenant, usufructuary,
What May Not Be Possessed borrower in commodatum.
a.   Res communes
b.   Property of public dominion c.   Possession in the Concept
c.   Right under discontinuous and/or non-apparent
easement of an Owner.
•   May be exercised by the owner himself or one who
2.  E ssential Requisites of claims to be so.
Possession •   DOES NOT refer to the possessor‘s inner belief or
disposition regarding the property in his
a.   Occupancy – There must be holding or control of possession.
a thing or right. Also known as possession in fact. •   Possession in the concept of an owner refers to his
b.   Intent to possess (animus possidendi) – The overt acts which tend to induce the belief on the
holding must be with intention to possess. part of others that he is the owner.
c.   Must be in one’s own right – May be held by a •   Possession in the concept of an owner is ius
person in his own name or in that of another possidendi.

3.  Classes of Possession d.  Possession in Good Faith


and Possession in Bad
a.  Possession for Oneself, or Faith [Art. 456, CC]
Possession Exercised in
POSSESSOR IN GOOD FAITH [Arts. 526-527, 544,
One’s Own Name and 546-547, 548, 552, 1132, 1134, CC]
Possession in the Name of
Another [Art. 524, CC] One who is unaware that there exists a flaw which
invalidates his acquisition of the thing. He believes
In one’s own name – the fact of possession and the that the person from whom he received a thing was the
right to such possession is found in the same person. owner of the same and that therefore he is now the
owner based upon ostensible title or mode of
In the name of another – the one in actual possession acquisition, e.g. sale, donation, inheritance, or other
is without any right of his own, but is merely an means of transmitting ownership.
instrument of another in the exercise of the latter’s
possession. It can either be: Note: Error in the application of the law or in the legal
1.   Voluntary – when exercised by virtue of an consequences of certain acts, or in the interpretation
agreement, E.g. agents or administrators of doubtful provisions or doctrines, may properly serve
appointed by the owner or possessor. Third as basis for good faith.
person may also voluntary exercise possession in
the name of another, but it does not become Has rights to:
effective unless ratified by the person in whose 1.   Fruits
name it is exercised. 2.   Necessary expenses
2.   Necessary or legal – when exercised by virtue of 3.   Right of retention
law, E.g. representatives who exercise possession 4.   Removal of useful/ornamental without damage
in behalf of a conceived child, juridical persons, 5.   No liability for deterioration.
persons not sui juris, and the CPG. 6.   May acquire full ownership by prescription.
7.   Presumption of just title [Art. 541, CC]
8.   Possessor can bring all actions necessary to
b.  Possession in the Concept protect his possession, availing himself of any
of a Holder with the action which an owner can bring, except accion
reinvindicatoria which is substituted by accion
Ownership Belonging to publiciana.
Another [Art. 525, CC] 9.   He can ask for the inscription of possession in the
registry of property.

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10.   He can do on the thing possessed everything that EXCEPT: when he holds the same adversely
the law authorizes an owner to do: he can against all of them with notice to them the
exercise the right of pre-emption and is entitled exclusive claim of ownership.
to the indemnity in case of appropriation. Refers to all kinds of possession, whether in
11.   Has presumption of continuity of good faith [Arts. concept of owner or not, in good faith or in bad
528 and 529, CC) faith, and in one’s own name or another’s – in
12.   Non-interruption of possession [Arts. 554 and reference to things only, NOT rights.
561, CC]
13.   Right to be protected in his possession 2.   Entitlement to fruits/expenses : Possessor in
Good Faith – Arts. 544, 526-527, CC
In general, every possessor has a right to be a.   As to the fruits
respected in his possession. If disturbed therein, i.   Fruits already received [Art. 544(1), CC]
possessor has a right to be protected in or •   Entitled to all the fruits until
restored to possession [Art. 539, CC] possession is legally interrupted (i.e.
before summons)
“Every possessor” – includes all kids of ii.   Fruits still pending [Art. 545, CC]
possession, from that of an owner to that of a •   Entitled to pro-rate the fruits already
mere holder, except that which constitutes a growing when his possession is legally
crime. interrupted.
14.   Lawful possessor can employ self-help [Art. 429, b.   As to necessary expenses [Art. 546, (1), CC]
CC] and [Art. 540, CC] i.   Imposed by the thing itself and have no
relation to the desire or purpose of the
Reason for the rule: To prevent anyone from possessor; hence they are reimbursed,
taking the administration of justice into his own whatever may be the juridical character of
hands. Even the owner cannot forcibly eject the the person who advanced them.
possessor, but must resort to the courts. ii.   The possessor in good faith may retain the
15.   Extension to the movables within or inside [Arts. thing until he is reimbursed for necessary
542 and 426, CC] expenses.
c.   As to useful expenses [Arts. 546 (2) and 547,
Other Consequences CC]
1.   Possession is converted into ownership after the •   Incurred to give greater utility or
required lapse of time necessary of prescription productivity to the thing
[Art. 540, CC] •   They are reimbursed only to the possessor
in GF as a compensation or reward for
To consolidate title by prescription, the him. Possessor in BF cannot recover such
possession must be under claim of ownership, expenses
and it must be peaceful, public and uninterrupted.
•   The possessor in good faith may retain the
thing until he is reimbursed for useful
It is only the conviction of ownership externally
expenses.
manifested, which generates ownership.
•   The other party has the option to:
i.   Refund the amount of expenses; or
Acts of possessory character done by virtue of a
license or mere tolerance on the part of the real ii.   Pay the increase in value which the
owner are not sufficient and will not confer title by thing may have acquired
prescription or adverse possession. d.   As to ornamental expenses or expenses for
pure luxury [Art. 548, CC]
The possessor in good faith is not entitled to
The following cannot acquire title by prescription:
a refund for ornamental expenses. But he
•   Lessees, trustees, pledges, tenants on shares
may remove the ornamental improvements if
or planters and all those who hold in the
they do not cause damage to the principal
name or in representation of another.
thing.
•   Mere holders placed in possession of the
property by the owner, such as agents, POSSESSOR IN BAD FAITH
employees. One who is aware that there exists in his title or mode
•   Those holding in a fiduciary character like of acquisition a flaw which invalidates it.
receivers, attorneys, depositaries and
antichretic creditors. Requisites:
•   Co-owner, with regard to common property:

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1.   Possessor has a title or mode of acquisition; concept of an owner (e.g., owner sells the
2.   There is a flaw or defect in said title or mode; property and becomes lessee)
b.   Constructive possession (See discussion in
Examples of vice or defect in title : Concept of Possession)
a.   Grantor was not the owner
b.   Requirements for transmission were not 2.   By the fact that the thing is subject to the action
complied with of our will
c.   Mistake in the identity of the person
d.   Property was not really res nullius Possession is acquired through the following
modes of constructive delivery:
3.   The possessor is aware of the flaw or defect in the a.   Traditio simbolica – delivering an object or
title symbol placing the thing under the control of
the transferee
Rights of a possessor in bad faith b.   Traditio longa manu – the transferor points
1.   Right to be respected in possession; [Art. 539, CC] out to the transferee the things which are
2.   Right to necessary expenses and the expenses for being transferred, or they merely agree or
production, gathering, and preservation of fruits; consent that delivery has been effected
[Arts. 545 and 546, CC]
3.   Does not have right to reimbursement of 3.   By the proper acts and legal formalities
expenses for luxury but may remove them as long established for acquiring such right
as the principal thing suffers no injury, or may sell
them to the owner who opts to buy the removable Acquisition by virtue of a just title such as when
ornaments. property is transmitted by succession, donation,
4.   No right to reimbursement for useful contract, or execution of a public instrument, etc.
improvements and no limited right of removal.
b.  By Whom May Possession
Obligations of a possessor in bad faith be Acquired [Art. 532, CC]
1.   Reimburse the value of fruits received and which
the legitimate possessor could receive; [Art. 549,
1.   The same person who is to enjoy it
CC]
2.   His legal representative
2.   Pay in proportion to the charges, expenses of
3.   His agent
cultivation and the net proceeds upon cessation of
4.   Any person without any power whatever
good faith; [Art. 545, CC]
3.   Costs of litigation; [Art. 550, CC]
this case, the possession shall not be considered as
4.   Liability to the deterioration/loss of a thing
acquired until the person in whose name the act of
possessed in every case, including fortuitous
possession was executed has ratified the same,
events. [Art. 552, CC]
without prejudice to the juridical consequences of
negotiorum gestio in a proper case.
4.  A cquisition of Possession
c.   Preference of Possession
a.  Ways of Acquiring [Art. 538, CC]
Possession [Art. 531, CC]
Possession as a fact cannot be recognized at the same
1.   By the material occupation of a thing or the time in two different personalities except in the cases
exercise of a right of co-possession
a.   Possession is acquired through the following
modes of constructive delivery: In case a dispute arises, the order of preference is as
i.   Traditio brevi manu – If the follows:
transferee/buyer already had possession 1.   The present possessor shall be preferred
of the object under a different title even 2.   If there are two possessors, the one longer in
before the sale (e.g., lessee subsequently possession is preferred
buys the property) 3.   If the dates of the possession are the same, the
ii.   Traditio constitutum possessorium – the one who presents a title is preferred
transferor/seller continues in the 4.   If all the foregoing conditions are equal, the thing
possession of the object, but not in the shall be placed in judicial deposit pending

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determination of its possession or ownership


through proper proceedings.
6.  R ules to Solve Conflicts pf
Possession [Art. 538, CC]
5.  W hat Do No Affect
General Rule: Possession cannot be recognized in two
Possession [Art. 537, CC] different personalities, except in cases of co-
possession by co-possessors without conflict of claims
The person in possession does not lose the same nor or interest.
does the person who resorts to the following acquire
it: In case of conflicting possession – preference is given
a.   Acts merely tolerated to:
1.   Those which because of neighborliness or a.   Present possessor or actual possessor;
familiarity, the owner of property allows b.   If there are two or more possessors, the one longer
another person to do on the property; in possession;
2.   Permissive use merely tolerated by the c.   If the dates of possession are the same, the one
possessor cannot affect possession and who presents a title; or
cannot be the basis of acquisitive d.   If all conditions are equal, the thing shall be
prescription. Possession to constitute the placed in judicial deposit pending determination
foundation of prescriptive right must be of possession or ownership through proper
possession under claim of title; it must be proceedings.
adverse. [Cuaycong v. Benedicto, G.R. No. L-
9989 (1918)]
3.   A possessor by tolerance is necessarily bound
7.  Rules on Co-Possession
by an implied promise to vacate upon
demand, failing which a summary action for a.   For the entire period that the co-possession
ejectment is the proper remedy against him. lasted, each one of the participants of a thing
[Peran vs. CFI, G.R. No. L-57259, (1983)] possessed in common shall be deemed to have
b.   Acts executed clandestinely and without the exclusively possessed the part allotted to him
knowledge of the possessor [Art. 1118, CC] upon division thereof [Art. 543, CC]
b.   Interruption in the possession of the whole or a
Possession by possessor is not affected as long as part of the thing possessed in common shall be
it remains clandestine and unknown. Possession to the prejudice of all possessors [Ibid].
has to be in the concept of an owner, public, c.   In case of civil interruption, Rules of Court applies
peaceful and uninterrupted. [Ibid].
c.   Acts of violence as long as the possessor objects
thereto [Art. 536, CC] Possessor in GF Possessor in BF
1.   Possession cannot be acquired through force Fruits Received
or intimidation as long as there is a possessor
who objects thereto. This includes forcibly Must reimburse the
taking away the property from another, and Entitled to the fruits while legitimate possessor for
also when one occupied the property in the possession is in good faith fruits received or could
absence of another, and repels the latter and before legal have been received, less
upon his return. interruption [Art. 544, CC) expenses under Art. 443,
2.   He who believes that he has an action or a CC [Art. 549, CC]
right to deprive another of the holding of a Pending Fruits
thing must invoke the aid of a competent
court, if holder refuses to deliver the thing Entitled to part of the
[Art. 536, CC]. expenses of cultivation,
3.   Ratio: Acts mentioned do not constitute true and to a part of the net
possession. They do not interrupt the period harvest, in proportion to
Goes to the legitimate
the time of the
of prescription nor affect the rights to the possessor who recovers
possession.
fruits. possession (Art. 549, CC)
Indemnity may be, at the
owner’s option, in money,
OR by allowing full

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U.P. LAW BOC PROPERTY CIVIL LAW

cultivation and gathering a.  Possession of Movable


of the fruits [Art. 545, CC]
Acquired in Good Faith (in
Charges
Concept of Owner) is
Must share with the
legitimate possessor, in
Equivalent to Title [Art.
proportion to the time of
Same as with GF [Art. 559, CC]
545, CC]
the possession [Art. 545,
CC] Doctrine of irrevindicability: Possession in good faith
of a movable is presumed ownership. However, it is
Necessary Expenses
merely presumptive because it can be defeated by the
Right to reimbursement true owner.
Reimbursement only
and retention in the
[Art. 546, CC]
meantime [Art. 546, CC] Rationale: To facilitate transactions on movable
Useful Expenses property which are usually done without special
formalities
Right of retention until
reimbursed; Owner’s Requisites of the doctrine of irrevindicability:
option to reimburse him 1.   The possession should be in good faith;
either for expenses or for 2.   The former owner voluntarily parted with the
increase in value which possession of the thing; and
the thing may have 3.   The possession is in the concept of owner.
No right to
acquired [Art. 546, CC]
reimbursement and no
right of removal [Art. Exceptions:
Limited right of removal – 1.   Owner or possessor has lost the movable
547, CC]
should not damage property; or
principal and owner does 2.   Owner or possessor has been unlawfully deprived
not exercise option of of a movable.
paying the expenses or
increase in value [Art. Unlawful deprivation – includes all cases of taking
547, CC] that constitute a criminal offense (conviction is not
Ornamental Expenses necessary), such as theft, robbery, estafa, etc.,
including those involving abuse of cionfidence. [Dizon
Limited right of removal Limited right of removal v. Suntay, G.R. No. L-30817, (1972)]
[Art. 548, CC] [Art. 549, CC]
Deterioration or Loss b.  Period to Recover [Arts.
No liability unless due to 1140, 1132, 1133, CC]
fraud or negligence after
Liable in every case [Art.
becoming in BF after 1.   8 years – from the time the possession of the
552, CC]
service of summons [Art. movable is lost, unless the possessor has acquired
552, CC] the ownership by prescription under Art. 1132, CC,
Costs of Litigation that is through uninterrupted possession without
need of any other condition [Art. 1140, CC]
Bears cost [Art. 550, CC] Bears cost [Art. 550, CC]
2.   4 years – action to recover prescribes if there is
uninterrupted possession in good faith [Art. 1132,
8.  L oss or Unlawful CC]
3.   No prescription – if possessed through a crime
Deprivation of a Movable [Art. 1133, CC]
Property
c.   Finder of Lost Movable
One who has lost any movable or has been unlawfully [Arts. 719-720, CC]
deprived thereof, may recover it from the person in
possession of the same. [Art. 559, CC] 1.   Whoever finds a movable, which is not a treasure,
must return it to its previous possessor.

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2.   If the previous possessor is unknown, the finder which has not been annulled at the time of the
shall immediately deposit it with the mayor of the sale. [Art. 1506, CC]
city or municipality where the finding has taken d.   If the present possessor has already become
place. owner of the thing through acquisitive
3.   The finding shall be publicly announced by the prescription.
mayor for two consecutive weeks in the way he
deems best.
4.   If the movable cannot be kept without
deterioration, or without expenses which
considerably diminish its value, it shall be sold at
public auction 8 days after the publication.
5.   Six (6) months from the publication having
elapsed without the owner having appeared, the
thing found, or its value, shall be awarded to the
finder. The finder and the owner shall be obliged,
as the case may be, to reimburse the expenses.
6.   If the owner should appear in time, he shall be
obliged to pay, as a reward to the finder, 1/10 of
the sum or of the price of the thing found.

9.  L oss/Termination of
Possession [Art. 555, CC]
A possessor may lose his possession:
a.   By the abandonment of the thing;
b.   By an assignment made to another either by
onerous or gratuitous title;
c.   By the destruction or total loss of the thing, or
because it goes out of commerce;
d.   By the possession of another, subject to the
provisions of Art. 537, CC if the new possession
has lasted longer than 1 year. But the real right of
possession is not lost till after the lapse of 10
years.

10.  Rules for Loss of


Movables
General rule: One may recover it from the person in
possession of the same [Art. 559, CC]

Exceptions:
a.   If present possessor acquired it in good faith at a
public sale, unless the original owner reimburses
the price paid for the movable. [Art. 559, CC]
b.   If the present possessor purchased it in a
merchant’s store, fair or markets [Art. 1505,
CC]. This is to protect the innocent buyer to
facilitate commercial sales and give stability to
business transactions. A buyer cannot be
reasonably expected to look behind the title of
every article when he buys at a store [Sun
Brothers vs. Velasco, 54 O.G. 5143, (1958)]
c.   If the present possessor purchased it in good
faith from one who has a voidable title thereto,

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  Usufruct Lease Usufruct


Real right only if, as in
Usufruct is a temporary real right which gives a right the case of a lease over
to enjoy the property as well as its fruits of another a real property, the
with the obligation of preserving its form and lease is registered, or is Always a real right
substance, unless the title constituting it or the law for more than one year.
otherwise provides. [Art. 562, CC] Otherwise, it is only a
personal right
Constituted by: [PILL: Prescription, Inter vivos acts, Lessor may or may not
Law, Last Will] Can be created only by
be the owner (as when
1.   Law the owner or by a duly
there is sublease or
2.   Will of private persons expressed in acts inter authorized agent acting
when the lessor is only a
vivos in behalf of the owner
usufructuary)
3.   Will of private persons expressed in a last will
4.   Prescription [Art. 563, CC] May be created, as a
May be created by law,
rule, only by contract
contract, last will, or
Can be constituted over: and by way of exception
prescription
1.   The whole or part of the fruits of the thing by law
2.   A right, provided it is not strictly personal or The owner or owner is
intransmissible. [Art. 564, CC] Owner is passive
more or less active
As the usufructuary has
Kind Governing law Lessee generally has no
the duty to make
Usufruct in general CC (Arts. 561, 566-612) duty for repairs
ordinary repairs
Legal usufruct Law which created it
Voluntary usufruct Act constituting it Usufructuary pays for
Lessee generally pays
Law on prescription and the annual charges and
Mixed usufruct no taxes
the extent of use taxes on the fruits
Lessee cannot
Usufructuary may lease
Easement Usufruct constitute a usufruct on
the property to another
the property leased
Maybe constituted only Maybe constituted on
on an immovable either movable or
property immovable property 1.   Objects of Usufruct
Not extinguished by the Extinguished by the
death of dominant owner death of usufructuary Independent Rights
A servitude which is dependent on the tenement to
Involves a right of
Non-possessory right which it attaches cannot be the object of usufruct.
possession in an
over an immovable
immvovable
Things
Limited to particular or •   Non-consumable things: Consumable things,
Includes all the uses and
specific use of the but only as to their value if appraised, or on an
the fruits of the property
servient estate equal quantity and quality if they were not
appraised.
There can be no easement over a usufruct because an •   Unproductive things: e.g. sterile or absolutely
easement may be constituted only on corporeal real unproductive land, or things for mere pleasure,
property. such as promenades, statues or paintings, even if
they do not produce any utility.
There can be no usufruct over an easement because
easement cannot exist by itself. Usufruct must have an
existence of its own separate from the property.
2.  C haracteristics
a.   It is a real right;
Lease Usufruct b.   Of temporary duration;
Generally covers only a Covers all fruits and c.   The purpose is to derive all advantages from the
particular or specific use uses as a rule thing due to normal exploitation.

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a.  Natural Characteristics •   Natural because a contrary intention may prevail.

•   Includes only jus utendi, jus fruendi) and jus Reasons for preserving form and substance
possidendi 1.   To prevent extraordinary exploitation;
2.   To prevent abuse, which is frequent;
•   Usufructuary must preserve the form or substance
3.   To prevent impairment.
of the thing.
•   Preservation is a natural requisite, not essential Exception: In an abnormal usufruct, alteration is
because the title constituting it or the law may allowed.
provide otherwise.
•   Usufruct is extinguished by the death of the
usufructuary.

3.  Classification
Voluntary: created by the will of private persons
•   By act inter vivos– such as contracts and donations:
•   By donation of the usufruct;
•   By retention of the usufruct by donor;
•   Where a usufruct is constituted inter vivos and for valuable consideration, the contract
is unenforceable unless in writing;
AS TO •   By act mortis causa – such as testament
MANNER OF Legal: as provided by law.
CREATION Usufruct of parents over the property of unemancipated children. (now limited to the
collective daily needs of the family) [Art. 226, CC]

Mixed: created both by law and the acts of persons, i.e. by acquisitive prescription.
The rights and duties of the usufructuary provided by law may be modified or eliminated by
the parties.
If the usufructuary is authorized to alienate the thing in case of necessity, it is the
usufructuary who determines the question of necessity
Simple: only one usufructuary enjoys the property.
Multiple: several usufructuaries enjoy the property as co-usufructuaries.
Simultaneous: at the same time.
Successive: one after the other.
AS TO
NUMBER OF Limitations
BENEFICIARIES •   If by donation, ALL donees must be alive. [Art. 756, CC]
•   Fiduciary and the second heir must be alive at the time of the death of the testator. [Art.
863, CC]
•   If by testamentary succession, there must be only 2 successive usufructuaries, and both
must be alive or at least already conceived at the time of the testator’s death and later
born alive. [Art. 869, CC]
Rights: Must not be strictly personal or intransmissible.
Things
Normal: involves non-consummable things where the form and substance are preserved.
AS TO OBJECT Abnormal or irregular: when the usufruct includes things which cannot be used in a
OF USUFRUCT manner appropriate to its nature without being consumed.
Quasi-usufruct [Art. 574, CC
Includes things which cannot be used without being consumed.
Money may be the object of usufruct. [Alunan v. Veloso, G.R. No. 29158 (1928)]
Pure – without term or condition
With a term – with a period, which may either be suspensive (from a certain day) or
AS TO
resolutory (to a certain day)
EFFECTIVITY
Conditional – subject to a condition which may either be suspensive (from a certain event)
or resolutory (until a certain event)

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Total: all consumed by the usufruct.


As to Fruits
AS TO THE Partial: only on certain aspects of the usufruct’s fruits.
EXTENT OF Singular: only on particular property of the owner.
THE Universal: pertains to the usufruct over universal property, i.e. over
As to the object
USUFRUCT an entire patrimony, a while inheritance of a compulsory heir, a
dowry;

4.  R ights and Obligations of N.B. In the case of civil


fruits, no need to
Usufructuary prorate, as civil fruits
accrue daily [Art. 544,
a.  Rights as to the Thing and CC]
its Fruits Right to Civil fruits – deemed to accrue daily, and
3 belong to the usufructuary in proportion to the
[SER IAL: Set-off, Enjoy, Receive, Remove, Retain,
time the usufruct may last.
Improve, Accession, Lease]
Whenever a usufruct is constituted on the right to
1.   To enjoy the property personally [Art. 572, CC]
receive a rent or periodical pension, whether in
2.   To receive the fruits of the property [Art. 567,
money or in fruits, or in the interest on bonds or
CC]
securities payable to bearer, each payment due
shall be considered as the proceeds or fruits of
Right to fruits pending at the beginning of
such right.
usufruct
Whenever it consists in the enjoyment of benefits
Fruits pending at the Fruits pending at the accruing from a participation in any industrial or
beginning of the termination of the commercial enterprise, the date of the
usufruct usufruct distribution of which is not fixed, such benefits
Belong to the Belong to the naked shall have the same character.
usufructuary owner
Right to enjoy any increase through accessions
Without need to The owner shall and servitudes, including products of hunting
reimburse the expenses reimburse to the and fishing.
to the owners usufructuary ordinary
cultivation expenses 3.   To lease the thing in usufruct [Art. 572, CC]
from the proceeds of the
fruits (not to exceed the Exceptions
value of the fruits) a.   Lease of rural lands will subsist during the
rd
Without prejudice to the Rights of innocent 3 agricultural year despite expiration of the
rd
right of 3 persons e.g. parties should not be usufruct [Art. 572, CC]
if the fruits arose by prejudiced. b.   Legal usufructs cannot be leased.
building, planting, c.   Caucion juratoria (lease would show that the
sowing by a possessor in usufructuary does not need the property
good faith, the pending badly).
crop expenses of d.   Usufruct is purely personal, e.g. title creating
cultivation and of the usufruct provides that usufructuary shall
net harvest and charges personally use and enjoy the property given in
shall be prorated usufruct.
between said possessor e.   Art. 567, CC does not apply to civil fruits
and the usufructuary in because civil fruits are deemed to accrue daily
proportion to the time of and belong to the usufructuary in proportion
possession [Art. 545, to the time the usufruct may last. [Art. 569,
CC] CC]

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Effect of the transfer of right: d.   When the things, whatever their nature, are
The transfer or lease of the usufruct does not delivered under appraisal as equivalent to
terminate the relation of the usufructuary with the their sale.
owner.
Notes:
Death of the transferee does not terminate the Future crops may be sold but such sale would be
usufruct but it terminates upon the death of the void if usufruct terminates prior to harvest of
usufructuary who made the transfer. future fruits. The buyer’s remedy is to recover from
the usufructuary.
Rules as to Lease:
•   The property in usufruct may be leased even The usufructuary-lessor is liable for the act of the
without the consent of the owner. substitute.
•   The lease should be for the same period as
the usufruct. A usufructuary who alienates or leases his right of
Exception: leases of rural lands continues for usufruct shall answer for any damage which the
the remainder of the agricultural year. things in usufruct may suffer through the fault or
•   A lease executed by the usufructuary before negligence of the person who substitutes him.
the termination of the usufruct and subsisting [Art. 590, CC]
after the termination of the usufruct must be
respected, but the rents for the remaining A usufructuary can sell or alienate his right of
period will belong to the owner. usufruct, apart from the thing held in usufruct, but
•   If the usufructuary has leased the lands or the right of usufruct remains a temporary real
tenements given in usufruct, and the usufruct right.
should expire before the termination of the
lease, he or his heirs and successors shall 4.   To enjoy any increase which the thing may
receive only the proportionate share of the acquire through accession
rent that must be paid by the lessee. [Art.
568, CC] 5.   To make improvements on the property as he
may deem proper [Art. 579, CC]
•   It is the usufructuary and not the naked owner
who has the right to choose the tenant.
He may improve the thing without altering its
•   As corollary to the right of the usufructuary to form and substance. He may also remove
all the rent, to choose the tenant, and to fix
improvements made by him if it is possible to do
the amount of the rent, she necessarily has
so without damage to property.
the right to choose herself as the tenant
thereof; and, as long as the obligations she Registration of improvements – to protect
had assumed towards the owner are fulfilled. rd
usufructuary against 3 persons
[Fabie v. Gutierrez David, G.R. L-123 (1945)]
•   A lease executed by the owner before the 6.   To remove improvements he made as long as no
creation of the usufruct is not extinguished by damage is caused to the property
such usufruct.
Limitations on the Right to Lease the Property Whenever the usufructuary can remove the
General rule: Usufructuary cannot do the improvements without injury to the property in
following: usufruct, he has the right to do so, and the owner
a.   Cannot alienate or dispose of the objects cannot prevent him from doing so even upon
included in the usufruct; payment of their value.
b.   Cannot renounce a servitude;
c.   Cannot mortgage or pledge a thing. This right does not involve an obligation – if the
usufructuary does not wish to exercise it, he
Exceptions: cannot be compelled by the owner to remove the
a.   When the right of usufruct is converted into improvements.
the right of ownership;
b.   When the things are consumable [Art. 574, This right to remove improvements can be
CC]; enforced only against the owner, not against a
c.   When the things by their nature are intended purchaser in good faith to whom a clean title has
for sale, such as the merchandise in a been issued.
commercial establishment; and

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7.   To set-off the improvements he made against The surviving spouse of the usufructuary may
any damage to the property [Art. 580, CC] dispose his/her usufructuary right like any
other hereditary property, and may be the
The improvements should have increased the subject of attachment or execution [Bogacki
value of the property, and that the damages are v. Inserto, G.R. No. L-39187 (1982)]
imputable to the usufructuary.Increase in value
and the amount of damages are set off against 2.   To bring action and oblige the owner to give him
each other. proper authority and necessary proof in cases of
usufruct to recover property or real right [Art.
Rules: 578, CC]
•   If the damages exceed the increase in value,
the difference should be paid by the The provision applies if the purpose of the action
usufructuary as indemnity. is to recover real or personal property, or real right
•   If the increase in value exceeds the damages, over real or personal property.
and the improvements are of such nature that
they can be removed without injury to the The action may be brought in the name of the
thing in usufruct, the settlement of the usufructuary.
difference must be agreed upon by the
parties. If a favorable judgement is obtained, the usufruct
•   If the improvements cannot be removed shall be limited to the fruits, and the naked
without injury, the excess in value accrues to ownership shall belong to the owner.
the owner.
Upon termination of the case, the usufruct of the
8.   To retain the thing/property until he is action also terminates.
reimbursed for taxes on the capital and
advances for extraordinary expenses [Art. 612, 3.   To exercise all rights of a co-owner with respect
CC] to the administration and collection of
fruits/interests from the property in cases of
The usufructuary has the right of retention until he usufruct of a part of a property owned in
is reimbursed of the amount he paid for taxes and common [Art. 582, CC]
the increase in value cause by extraordinary
repairs he made. Usufructuary is bound by the partition made by
the owners of the undivided property even if he did
He has no right to reimbursement for useful not take part in the partition. His usufruct is
improvements. transferred over the part allotted to the co-owner.

b.  Rights as to the Legal c.   Obligations at the


Right of Usufruct Itself Beginning of the Usufruct
or before Exercising the
[ABE – Alienate, Bring action, Exercise all rights] Usufruct
1.   To alienate or mortgage the right itself – Art.
572, CC •   To make, after notice to the owner or his
legitimate representative, an inventory of all the
The usufructuary may alienate his right of property, which shall contain an appraisal of the
usufruct, even by a gratuitous title (e.g.donation); movables and a description of the condition of the
but all the contracts he may enter into as such immovables; and
usufructuary shall terminate upon the expiration •   To give security, binding himself to fulfill the
of the usufruct. [Art. 572, CC] obligations imposed upon him in accordance with
this Chapter.
Except:
a.   Parental usufruct [Arts. 225 and 226, FC] Note: These requirements are not conditions
b.   Usufruct given in consideration of the person precedent to the commencement of the right of the
of the usufructuary intended to last during his usufruct but merely to the entry upon the possession
lifetime and enjoyment of the property.

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No bond is required in the following: 1.   To take care of the property


•   No prejudice would result; [Art. 585, CC] 2.   To replace the young of animals that die or are
•   Usufruct is reserved by a donor; [Art. 584, CC] lost
•   Gratitude on the donee’s part demands that the 3.   To make ordinary repairs
donor be excused from filing the bond. 4.   To inform/notify the owner of urgent
•   Title constituting usufruct excused usufructuary. extraordinary repairs
5.   To allow the naked owner to make works and
•   A usufructuary may take possession under a
improvements not prejudicial to the usufruct
caucion juratoria (bond by oath) [Art. 587, CC]
6.   To pay annual taxes and charges on the fruits
7.   To pay interest on taxes on capital paid by the
Note:
naked owner
It is only by way of exception that a caucion juratoria is
8.   To pay debts if the usufruct is over the entirety of
allowed, and only under the special circumstances:
a patrimony
•   Proper court petition; 9.   To secure the approval of the owner or the court
•   Usufruct is over a house, furniture or tools of a to collect credit
trade and the necessity for delivery of furniture, 10.   To notify owner of any prejudicial act to the
implements or house included in the usufruct; usufruct by a third person
•   Approval of the court; and 11.   To pay expenses and costs for litigation if incurred
•   Sworn promise. because of the usufruct

A usufructuary under this can neither alienate his right


nor lease the property, for that would mean that he
e.   Obligations at the Time of
does not need the dwelling or the implements and the Termination of the
furniture. Usufruct
Effect of failure to give bond: [Art. 586, CC] [RIP – Return, Indemnify, Pay interest ]
2

•   The owner may demand that the immovable


properties be placed under administration; 1.   To return the thing upon termination
•   That the movable properties be sold and the 2.   To pay legal interest for the duration of the
proceeds of the sale be the property held in usufruct on the expenses for extraordinary repairs
usufruct – legal interest of 6% shall be the fruits; 3.   To pay proper interest on sums paid as taxes by
•   That the public bonds, instruments of credit the owner
payable to order or to bearer be converted into 4.   To indemnify the naked owner for any loss caused
registered certificates or deposited in a bank or by the negligence of the usufructuary or his
public institution; and transferees
•   That the capital or sums in cash and the proceeds
of the sale of the movable property be invested in
safe securities.
5.  S pecial Cases of Usufruct
•   The owner may, until the usufructuary gives
security, retain in his possession the property in a.  Usufruct over a Pension or
usufruct as administrator, subject to the a Periodical Income [Art.
obligation to deliver to the usufructuary the net
proceeds, after deducting the sums, which may be 570, CC]
agreed upon or judicially allowed him for such
administration. Each payment/benefit shall be considered a civil fruit.
[ce Leon]
d.  Obligations during the Being a civil fruit, the usufructuary is entitled to it in
Usufruct proportion to the time the usufruct lasts.

[CAPCORN – Care, Allow improvements, Pay AIDE b.  Usufruct of Property


(Annual taxes, Interest, Debts, Expenses for litigation),
Collect credit, Ordinary repairs, Replace animals, Owned in Common [Art.
Notify UP (Urgent repairs, Prejudicial act)] 582, CC]
The usufructuary takes the place of the co-owner as to:
•   Management;

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•   Fruits; and d.  Usufruct over Fruit Bearing


•   Interest.
Trees and Shrubs and
Effect of partition: Woodlands [Arts. 575-577,
•   The right of the usufructuary is not affected by the CC]
division of the property in usufruct among the co-
owners. The usufructuary may fell or cut trees in accordance to
•   After partition, the usufruct is transferred to the the following:
part allotted to the co-owner. 1.   habitual felling or cutting of the owner;
2.   customs of the place as to manner, amount, and
c.   Usufruct Constituted on a season
Flock or Herd of Livestock Note the rule in accession if a tree falls on another’s
[Art. 591, CC] land.

On sterile stock: same rules on fungible property He cannot fell or cut trees in a manner that will
govern. (i.e. it is an abnormal usufruct – may dispose prejudice the land.
of or consume the animal [Art. 574, CC]
The usufructuary may make necessary thinnings to
On fruitful stock: ensure that the remaining trees may properly grow.
•   Must replace ordinary losses of the stock with
the young if: e.   Usufruct on a Right of
1.   Some animals die from natural causes; or
2.   Some animals are lost due to rapacity of Action to Recover Property
beasts of prey. or Real Rights Over
Note: If the number of the young produced is less
than the animals that died from natural causes or
Property [Art. 578, CC]
due to beasts of prey, then the usufructuary does
The action may be brought in the name of the
not have to replace those which are in excess of
usufructuary.
the young that he currently has.
•   No obligation to replace if: If the purpose is the recovery of the property or right,
1.   There is a total loss of animals because of he has the also the right to oblige the owner to give the
some unexpected or unnatural loss (like
authority for such purpose, as well as to furnish him
contagious disease or any other uncommon
whatever pieces of evidence he may have.
event, provided the usufructuary has no
fault); or
2.   All perish, the usufructuary should deliver the f.   Usufruct on Mortgaged
remains to the owner. Property [Art. 600, Cc]
•   If there is partial loss, the usufruct subsists on the
remainder. If the usufruct is over the entire patrimony of the
owner, Art. 598, CC should apply.
Note:
1.   If all the animals should perish, without his fault, If the usufructuary mortgaged the usufruct himself, he
the usufructuary shall still deliver the remains is liable to pay his own debt.
which may have been saved to the owner.
2.   If the loss, either partial or whole is without fault of
the usufructuary, he has no duty to replace them.
g.  Usufruct over an Entire
3.   Bad use as provided in Art. 603 gives the owner the Patrimony [Art. 598, CC]
right to bring an action, but does not warrant the
extinguishment of the usufruct. [Art. 610, CC] Applies when:
1.   the usufruct is a universal one
2.   the naked owner has debts or is obliged to make
periodical payments

General Rule: The usufructuary is NOT liable for the


owner’s debts.

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Exceptions: b.  During the Usufruct


1.   when stipulated, in which case the usufructuary
shall be liable for the debt specified
•   Retains title to the thing or property.
2.   if there is no specification, he is liable only for
debts incurred by the owner before the usufruct •   He may alienate the property: he may not alter the
was constituted form or substance of the thing; nor do anything
3.   when the usufruct is constituted in fraud of prejudicial to the usufructuary.
creditors •   He may construct buildings, make improvements
and plantings, provided:
In no case shall the usufructuary be responsible for 1.   The value of the usufruct is not impaired; and
debts exceeding the benefits under the usufruct 2.   The rights of the usufructuary are not
(except when the contrary intention appears). prejudiced.
•   He can constitute a voluntary easement over
land/building held in usufruct, but if it affects the
h.  Usufruct over Deteriorable usufructuary right, the usufruct mas give his
Property [Art. 753, CC] consent. If easement is perpetual, consent of both
must be obtained [Art. 689-690, CC]
The usufructuary has the right to make use of it in
accordance with the purpose for which they are
intended.
7.  Extinguishment/Terminati
on [Art. 603, CC]
It is sufficient if the usufructuary returns the things in
the condition in which they may have been found at a.   By the death of the usufructuary, unless a
the time of the expiration of the usufruct despite contrary intention clearly appears  
ordinary defects caused by use and deterioration
produced by age and time. Exceptions:
Except: when it is caused by the usufructuary’s fraud 1.   In cases of multiple usufructs, the usufruct
and negligence ends at the death of the last survivor [Art.
611, CC]
If usufructuary does not return the things upon the i.   If it was simultaneously constituted: ALL
expiration of the usufruct, he should pay an indemnity USUFRUCTUARIES must be alive or at
equivalent to the value of the things at the time of such least conceived at the time of the
expiration. constitution
ii.   If successively constituted by virtue of a
i.   Usufruct over Consumable donation: ALL DONEES-
USUFRUCTUARIES must be alive at the
Property [Art. 574, CC] time of donation
iii.   If successively constituted by virtue of a
The usufructuary shall have the right to make use of will: there should only be 2 successive
them under the obligation of paying their appraised usufructuaries and both must have been
value at the termination of the usufruct, if they were alive at the time of testator’s death
appraised when delivered. 2.   If the period is fixed using the life of another
person as reference or there is a resolutory
If not appraised, he shall have the right to return at the condition
same quantity and quality, or pay their current price at i.   In this case the death of the usufructuary
the time the usufructuary ceases. would not affect the usufruct and the
right is instead transmitted to the heirs of
6.  R ights of the Owner the usufructuary until the expiration of
the term or the fulfillment of the
condition
a.  At the Beginning of the 3.   When the contrary intention appears
Usufruct i.   If the usufructuary dies before the
happening of the resolutory condition =
See obligations of usufructuary at the beginning of USUFRUCT EXTINGUISHED
the usufruct discussed above. ii.   Usufruct is personal and it cannot be
extended beyond the lifetime of the
usufructuary. [Sanchez Roman and SC]

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But if the owner wants to


b.   By the expiration of the period for which it was construct another
constituted, or by the fulfillment of any building, he can occupy
resolutory condition provided in the title the land and use the
creating the usufruct; materials.

In favor of juridical persons [Art. 605, CC] If owner uses the


Usufruct cannot be constituted in favor of a town, materials and occupies
corporation, or association for more than fifty the land, he must pay the
years. usufructuary during the
continuance of the
If before the expiration of such period the town is usufruct the interest on
abandoned, or the corporation or association is the value of the land and
dissolved, the usufruct shall be extinguished. materials.

Usufruct granted for the time that may elapse Art. 608, CC
before a third person attains a certain age [Art. If destroyed property is insured before termination of
606, CC] the usufruct
It shall subsist for the number of years specified Usufructuary can
even if the third person should die before the continue enjoying the
period expires unless such usufruct has been new building if a new one
expressly granted only in consideration of the is built.
existence of such person. When insurance premium
paid by owner and
Usufructuary shall
c.   By merger of the usufruct and ownership in the usufructuary (par. 1)
receive interest on the
same person; interest on the insurance
Illustration: H was the usufructuary of land owned indemnity if owner does
by X. X dies, leaving in his will, the naked not wish to rebuild.
ownership of the land to H. the usufruct is
Owner shall receive the
extinguished because now H is both the naked
full amount of the
owner and the usufructuary.
insurance indemnity in
case of loss, and either of
d.   By renunciation of the usufructuary;
the following, depending
  on the case:
Limitations:
•   Must be express: tacit renunciation is not When the insurance
If he does not rebuild,
sufficient; taken by the naked owner
usufruct continues over
•   Does not need the consent of naked owner; only because
the remaining land and
and usufructuary refuses to
materials (plus interests)
contribute to the
•   If made in fraud of creditors, they may rescind
premium (par. 2)
the waiver through an action under Art. 1381, If the owner rebuilds,
CC (accion pauliana). usufruct does not
continue on the new
e.   By the total loss of the thing in usufruct; building, but owner
Situation Effect should pay interest on
the value of the land and
Art. 607, CC materials
If destroyed property is not insured
Insurance proceeds go to
Usufruct continues over When insurance taken by the usufructuary.
If the building forms part
the land and materials usufructuary only No obligation to rebuild.
of an immovable under
(plus interests), if owner depends on value of Usufruct continues on
usufruct
does not rebuild. usufructuary’s insurable the land.
Usufruct continues over interest Owner has no share in
If usufruct is on the the land and materials insurance proceeds.
building only (plus interests), if owner
does not rebuild.

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f.   By the termination of the right of the person


constituting the usufruct;   Easement
Example: usufructs constituted by a vendee a
retro terminate upon redemption. An easement or servitude is an encumbrance
imposed upon an immovable by nature for the benefit
g.   By prescription. of another immovable belonging to a different owner.
Adverse possession against the owner or the [Art. 613, CC]
usufructuary.
It is not the non-use which extinguishes the It is a real right which burdens a thing with a prestation
usufruct by prescription, but the use by a 3
rd of determinate servitudes for the exclusive enjoyment
person. of one who is not an owner of a tenement.
There can be no prescription as long as the
usufructuary receives the rents from the lease of Dominant Estate – the immovable in favor of which
the property, or he enjoys the price of the sale of the easement is established.
his right.
Servient Estate – the immovable which is subject to
the easement.
8.  C onditions Not Affecting
Usufruct 1.   Essential Features:
a.  Expropriation of Thing in a.   It is a real right – it gives an action in rem or real
action against any possessor of the servient estate
Usufruct [Art. 609, CC]
This may only affect third persons when
If naked owner alone was given the indemnity, he has registered.
the option:
•   To replace with equivalent thing; or Owner of the dominant estate can file a real action
•   To pay to the usufructuary legal interest on the for enforcement of right to an easement.
indemnity. This requires a security to be given by
the naked owner for the payment of the interest. Action in rem: an action against the thing itself,
instead of against the person.
If both the naked owner and the usufructuary were
separately given indemnity, each owns the indemnity b.   It is a right enjoyed over another’s property (jus
given to him, the usufruct being totally extinguished. in re aliena).

If usufructuary alone was given the indemnity: When the dominant and the servient estates have
1.   He must give it to the naked owner and compel the same owner, the easement is extinguished.
the latter to return either the interest or to replace Separate ownership is a prerequisite to an
the property. easement.
2.   He may even deduct the interest himself, if the
naked owner fails to object. The acknowledgment of an easement is a
admission that the property belongs to another.
b.  Bad Use of Thing in
c.   It can only exist between neighboring estates in
Usufruct [Art. 610, CC] case of real easements.
Does not extinguish the usufruct but entitles the owner d.   It is a right constituted over an immovable by
to demand delivery and administration of the thing nature (land and buildings), not over movable
with the obligation to pay the net proceeds of fruits. properties or even immovable by incorporation, by
destination or by analogy. [Art. 613, CC]
The bad use must cause considerable injury not to the
thing, but to the owner. Immovable: used in its common and not in the
legal sense, meaning only property immovable by
Usufructuary is liable for damages caused to property. nature can have easements.

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They cannot be established on things beyond the It cannot be alienated separately from the
commerce of man, (i.e. property of public tenement affected or benefited.
dominion).
Any alienation of the property covered carries with
e.   It limits the servient owner’s right of ownership it the servitudes affecting said property. But this
for the benefit of the dominant estate. affects only the portion of the tenement with the
easement, meaning that the portions unaffected
Right of limited use but no right to own and can be alienated without the servitude.
possess the servient estate.
i.   It is indivisible. [Art. 618, CC]
There exists a limitation on ownership: the
dominant owner is allowed to enjoy or use part of If the servient estate is divided between two or
the servient estate, and owner of the servient more persons, the easement is not modified, and
estate is restricted in his enjoyment of his each of them must bear it on the part that
property. corresponds to him.

Being an abnormal limitation of ownership, it If the dominant estate is divided between two or
cannot be presumed [de Leon]. more persons, each of them may use the
easement in its entirety, without changing the
f.   It creates a relation between tenements. place of its use, or making it more burdensome in
any other way.
There is no transfer of ownership, but a
relationship is created, depending on the type of j.   It has permanence because once it attaches,
easement. whether used or not, it continues and may be used
anytime
General Rule: It may consist in the owner of the
dominant estate demanding that the owner of the Perpetual: exists as long as property exists, unless
servient estate refrain from doing something it is extinguished.
(servitus in non faciendo) or that the latter permit
that something be done over the servient property Easement Distinguished from Lease
(servitus in patendo), but not in the right to Easement Lease
demand that the owner of the servient do
something (servitus in faciendo) except if such act Real right only when it is
is an accessory obligation to a praedial servitude registered, or when its
Real right, whether
(obligation propter rem) subject matter is real
registered or not
property and the duration
Servient owner merely allows something to be exceeds one year
done to his estate. May be constituted only
May be constituted on
on an immovable
Exception: Praedial servitudes real or personal property
property
•   Right to place beams in an adjoining wall to Limited to use of real
support a structure. Limited right to both the
property of another but
•   Right to use another’s wall to support a use and possession of the
without the right to
building. property of another
possess
g.   It is inherent or inseparable from estate to which
Easement Distinguished from Usufruct
they actively or passively belong. [Art. 617, CC]
Easement Usufruct
Easements are merely accessory to the May be constituted only May be constituted on
tenements, and a “quality thereof.” They cannot on an immovable either movable or
exist without tenements. property immovable property

Easements exist even if they are not expressly Not extinguished by the
Extinguished by the death
stated or annotated as an encumbrance on the death of dominant
of usufructuary
titles. owner

h.   It is intransmissible.

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Involves a right of Discontinuous: Used at


Non-possessory right intervals, and dependent
possession in an
over an immovable upon the acts of man.
immovable
Apparent: Made known
Limited to particular or and continually kept in
Includes all the uses and
specific use of the AS
the fruits of the property view by external signs that
servient estate INDICATION
reveal the use and
OF ITS
enjoyment of the same
EXISTENCE
2.  G eneral Rules [Art. 615, CC]
Non-apparent: No
external indication of their
a.   Nulli res sua servi: No one can have a servitude existence.
over one’s own property. Positive: Imposes upon the
owner of the servient
b.   Servitus in faciendo consistere nequit: A servitude estate the obligation of
cannot consist in doing. allowing something to be
AS TO THE
done, or extraordinarily or
OBJECT OR
Although some easements seem to impose a doing it himself.
OBLIGATION
positive prestation upon the owner of the servient Negative: Prohibits the
IMPOSED [Art.
estate, in reality, the primary obligation is still owner of the servient
616, CC]
negative. estate from doing
something that he could
Illustration: Under Art. 680, CC: the owner of a lawfully do if the easement
tree whose branches extend over to a neighboring did not exist
property is required to cut off the extended Legal: created by law,
branches, but the real essence of the easement is whether for public use or
the obligation NOT TO ALLOW the branches of for the interest of private
the tree to extend beyond the land. persons.
Example: Natural drainage
c.   Servitus servitutes esse non potest: There can be of waters, Abutment of
no servitude over another servitude. land, Aqueduct, etc.
Voluntary: created by the
d.   A servitude must be exercised civiliter – in a way will of the owners of the
least burdensome to the owner of the servient estate through contract,
estate. last will or donation.
These must be recorded in
e.   A servitude must have a perpetual cause. the Registry of Property to
AS TO ITS
prejudice third persons.
CAUSE OR
Mixed: created partly by
3.  Classification ORIGIN
will or agreement and
Real or Praedial: exists partly by law.
for the benefit of a
particular tenement. [Art. Note:
613, CC] There is no such thing as a
Personal: exists for the JUDICIAL EASEMENT. The
AS TO
benefit of persons without Courts cannot create
RECIPIENT OF
a dominant tenement e.g. easements, they can only
BENEFITS
usus habitatio (right to declare the existence of
reside in a house) and one, if it exists by virtue of
operae servorum (right to the law or will of the
the labor of slaves) in parties. [Castro v. Monsod,
Roman law. [Art. 614, CC] G.R. No. 183719 (2011)]
Continuous: Use is or may
AS TO ITS be incessant, without the
EXERCISE intervention of any act of
man

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owned in common by two or more persons. [Art.


4.  R elevance of 624, CC]
Classifications
Deed of recognition by owner of servient estate:
a.   Determines what easements can be acquired by •   By an affidavit or a formal deed acknowledging
prescription [Art. 620, CC] the servitude; or
b.   Determines what easements can be acquired by •   By final judgment: Owner of the dominant estate
title [Art. 622, CC] must file a case in Court to have the easement
c.   Determines how to compute the prescriptive declared by proving its existence through other
period [Art. 621, CC] evidence.
d.   Determines how easement is lost by prescription The existence of an apparent sign is considered as
[Art. 631 (2), CC] title.

Illustration: The presence of 4 windows was considered


5.  C reation an apparent sign that created a negative easement of
light and view (altius non tollendi) i.e. not to build a
When an easement is established, all rights necessary structure that will cover the windows. [Amor v.
for its use are considered granted. [Art. 625, CC] Florentino, G.R. No. L-48384 (1943)].
How acquired
Kind of easement
Title Prescription b.  By Law (Legal Easements)
Continuous and
YES YES Easements imposed by law have for their object either
apparent (CA)
Continuous Non- public use or the interest of private persons. [Art. 634,
YES NO CC]
apparent (CNA)
Discontinuous
YES NO These easements may be modified by agreement of
Apparent (DA)
the interested parties, whenever the law does not
Discontinuous Non-
YES NO prohibit it or no injury is suffered by a third person.
apparent (DNA)
[Art. 636, CC]

a.  By Title or by Something c.   By Will of the Owners


Equivalent to a Title (Voluntary Easements)
Every owner of a tenement or a piece of land may
•   Continuous and apparent easements may be establish the easements that he may deem suitable
acquired by virtue of a title. [Art. 620, CC] and best provided he does not contravene the laws,
•   Continuous non-apparent easements, and public policy, or public order. [Art. 688, CC]
discontinuous ones, whether apparent or not, are
acquired only by virtue of a title. [Art. 622, CC] Note: If an owner constitutes an easement over his
•   The absence of a document or proof showing the own property and makes such easement available to
origin of an easement which cannot be acquired the general public, said owner may not arbitrarily
by prescription may be cured by a deed of discriminate against certain persons by not letting
recognition by the owner of the servient estate or them use the easement. [Negros Sugar Company v
by a final judgment. [Art. 623, CC] Hidalgo, G.R. No. L-42334 (1936)]
•   The existence of an apparent sign of easement
between two estates, established or maintained d.  By Prescription
by the owner of both, shall be considered as a title
in order that the easement may continue actively
Continuous and apparent easements may be acquired
and passively.
by prescription of 10 years. [Art. 620, CC]
Unless: at the time the ownership of either of the
Requisites:
two estates is transferred, the contrary should be
a.   The easement must be continuous and apparent;
provided in the title of conveyance of either of
b.   The easement must have been used for 10 years;
them, or the sign aforesaid should be removed
and
before the execution of the deed. This provision
c.   There is no need for good faith or just title.
shall also apply in case of the division of a thing

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Note: However, if established in a general way, without


Example of a continuous and apparent easement is of specific purpose, the easement can be used for all
light and view, as opposed to a right of way which is the needs of the dominant estate.
discontinuous but apparent, and thus cannot be •   To notify the owner of the servient estate before
acquired by prescription. making repairs and to make repairs in a manner
least inconvenient to the servient estate [Art.
Mere passage which was permitted and is under an 627(2), CC]
implied license cannot be the basis of prescription. •   Not to alter the easement or render it more
[Archbishop of Manila v Roxas, G.R. No. L-7386 (1912)] burdensome.
The owner of the dominant estate may make
6.  R ights and Obligations of repairs at his expense, but he cannot alter the
easement or make it more burdensome.[Art. 627,
Owners of Dominant and CC]
Making the easement more burdensome means
Servient Estates widening the easement. [Valderrama v. North
Negros Sugar Co., G.R. No. L-23810 (1925)]
a.  Rights of Dominant Estate •   To contribute to expenses of works necessary for
Owner use and preservation of servitude, if there are
several dominant estates. [Art. 628, CC]
1.   To use the easement and exercise all rights The contribution is in proportion to the benefits
necessary for it [Art. 625, CC] which each may derive from the work.
2.   The owner of the dominant estate is granted Anyone who does not wish to contribute may
the right to use the principal easement, and all exempt himself by renouncing the easement for
accessory servitudes. the benefit of the others.
Example: Easement of drawing water carries with If the owner of the servient estate should make
it the easement of right of way to the place where use of the easement in any manner whatsoever,
water is drawn. he shall also be obliged to contribute to the
expenses in the proportion stated, saving an
Limitation: Only for the original immovable and agreement to the contrary.
the original purpose. •   To do at his expense all necessary works for the
3.   To make, at his own expense, on the servient use and preservation of the easement [Art. 627,
estate, any works necessary for the use and CC]
preservation of the servitude, but without
altering it or rendering it more burdensome. The necessity of the works determines extent of
[Art. 627(1), CC] such works.
4.   In a right of way, to ask for change in width of
easement sufficient for the needs of the c.   Rights of the Servient
dominant estate. [Art. 651, CC]
The needs of the dominant property ultimately
Estate Owner
determine the width of the passage. And these
needs may vary from time to time. [Encarnacion 1.   To retain the ownership of the portion of the
v. CA, G.R. No. 77628 (1991)] estate on which the easement is established [Art.
5.   To renounce totally the easement, if he desires 630, CC]
to be exempt from contributing to the 2.   To use the easement, unless there is an
expenses. [Art. 628, CC] agreement to the contrary [par. 2, Art. 628, CC]
3.   To change the place or manner of the use of the
easement, provided it be equally convenient [par.
b.  Obligations of Dominant 2, Art. 629, CC]
Estate Owner
In case the easement becomes very inconvenient for
•   To use the easement for the benefit of immovable the servient estate owner, or if it prevents him from
and in the manner originally established [Art. making any important works, repairs, or
626, CC] improvements, the easement MAY BE CHANGED,
provided:
If established for a particular purpose, the 1.   He offers another place/manner equally
easement cannot be used for a different one. convenient

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2.   Does not cause injury to the dominant estate f.   By the redemption agreed upon between the
owner owners of the dominant and servient estates.
3.   Does not cause injury to those who have a right
to use the easement, if any. a.  Other Causes not
d.  Obligations of Servient Mentioned in Art. 631, CC
Estate Owner 1.   Annulment and rescission of the title constituting
the voluntary easement;
•   Not to impair the use of the easement [Art. 629(1), 2.   Termination of the right of grantor of the voluntary
CC] easement;
•   To contribute proportionately to expenses if he 3.   Abandonment of the servient estate;
uses the easement [Art. 628(2), CC] Owner of the servient estate gives up ownership of
the easement (e.g. the strip of land where the
Unless there is an agreement to the contrary right of way is constituted) in favor of the
dominant estate. The easement is extinguished
To pay for the expenses incurred for the change of because ownership is transferred to the dominant
location or form of the easement owner, who now owns both properties.
4.   Eminent domain;
The government’s power to expropriate property
7.  Extinguishment of for public use, subject to the payment of just
Easements compensation.
5.   Special cause for extinction of legal rights of way: if
Ways by which an easement may be extinguished: right of way no longer necessary. [Art. 655, CC]
[Art. 631, CC] [MINERRO – Merger, Impossibility, Non- a.   If the right of way granted to a surrounded
use, Expiration, Renunciation, Redemption, Other estate ceases to be necessary because its
causes] owner has joined it to another abutting on a
a.   By merger in the same person of the ownership of public road, the owner of the servient estate
the dominant and servient estates – must be may demand that the easement be
absolute, perfect and definite, and not merely extinguished, returning what he may have
temporary. If the merger is temporary, there is at received by way of indemnity. The interest on
most a suspension of the easement, but no the indemnity shall be deemed to be in
extinguishment. payment of rent for the use of the easement.
b.   By a non-user for ten years – there is inaction, and b.   The same rule shall be applied in case a new
not outright renunciation. This is due to the road is opened giving access to the isolated
voluntary abstention by the dominant owner, and estate.
not due to a fortuitous event. Note: Non-user c.   In both cases, the public highway must
cannot extinguish servitudes not yet exercised. substantially meet the needs of the dominant
Extinguishment by non-use only applies to estate in order that the easement may be
easements which being in use are later extinguished.
abandoned. 6.   Right of way ceases to be necessary [Art. 655, CC]:
c.   When either or both of the estates fall into such a.   Owner of the dominant estate has joined to
condition that the easement cannot be used – another abutting on a public road.
impossibility referred to must render the entire b.   A new road is opened giving access to the
easement unusable for all time. Impossibility of isolated estate.
using the easement due to the condition of the c.   Requisite: the public highway must
tenements (e.g. flooding) only suspends the substantially meet the needs of the dominant
servitude until it can be used again. Exception: If estate in order that the easement may be
the suspension exceeds 10 years, the easement is extinguished
deemed extinguished by non-use. 7.   Owner of the servient estate may demand that the
d.   By the expiration of the term or the fulfillment of easement be extinguished.
the condition, if the easement is temporary or 8.   Owner of the servient estate must return indemnity
conditional – applies only to voluntary he received (value of the land)
easements.
e.   By the renunciation of the owner of the dominant
estate – must be specific, clear, express
(distinguished from non-user); or

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man descend from the higher estates (as well as


8.  V oluntary Easements the stones or earth which they carry with them).
Every owner of a tenement or piece of land may 2.   Riparian Banks [Art. 638, CC]
establish thereon the easements which he may deem The banks of rivers and streams are subject
suitable, and in the manner and form which he may throughout their entire length and within a zone
deem best. [Art. 688, CC] of 3 meters for urban areas, 20 meters for
agricultural areas and 40 meters for forest areas
The owner of a thing, the usufruct of which belongs to (PD 1067, Water Code as amended by PD 1067)
another, may impose, without the consent of the along their margins, to the easement of public use
usufructuary, any servitudes which will not injure the in the general interest of navigation, floatage,
right of usufruct. [Art. 689, CC] fishing, recreation and salvage.
Whenever the naked ownership belongs to one person Estates adjoining the banks of navigable or
and the beneficial ownership to another, no perpetual floatable rivers are subject to the easement of
voluntary easement may be established thereon towpath for the exclusiveservice of river
without the consent of both owners. [Art. 690, CC] navigation and floatage. If it be necessary to
occupy lands of private ownership, the proper
Consent of all co-owners is required to impose an indemnity shall first be paid.
easement on an undivided tenement. [Art. 691, CC]
3.   Dam [Art. 639, CC]
9.  L egal Easements Whenever for the diversion of water it should be
necessary to build a dam, and the person who is
Easements imposed by law have for their object either to construct it is not the owner of the banks, or
public use of the interest of private persons. [Art. 634, lands which must support it, he may establish the
CC] easement of abutment of a dam, after payment of
the proper indemnity.
a.  Law Governing Legal 4.   Drawing Water and Watering Animals [Arts.
Easements 640-641, CC]
Compulsory easements for drawing water or for
1.   For public easements watering animals can be imposed only for reasons
•   Special laws and regulations relating thereto. of public use in favor of a town or village, after
(e.g. PD 1067 and PD 705) payment of the proper indemnity.
•   By the provisions of Chapter 2, Title VII, Book
II, CC. Easements for drawing water and for watering
2.   For private legal easements animals carry with them the obligation of the
•   By agreement of the interested parties owners of the servient estates to allow passage to
whenever the law does not prohibit it and no persons and animals to the place where such
rd
injury is suffered by a 3 person. easements are to be used, and the indemnity shall
•   By the provisions of Chapter 2, title VII, Book include this service.
II.
The width of the easement must not exceed 10
meters.
10.  Kinds of Private Legal
Easements 5.   Aqueduct [Arts. 642-646, CC]
Any person who may wish to use upon his own
estate any water of which he can dispose shall
a.  Those Established for The have the right to make it flow through the
Use of Waters or Relating intervening estates, with the obligation to
indemnify their owners, as well as the owners of
to Waters the lower estates upon which the waters may filter
or descend.
1.   Natural Drainage [Art. 637, CC]
Lower estates are obliged to receive the waters Easement of aqueduct for private interest cannot
which naturally and without the intervention of be imposed on buildings, courtyards, annexes, or

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outhouses, or on orchards or gardens already the sea if suitable to the needs of the
existing. tenement is sufficient;
4.   The isolation of the immovable is NOT due to the
This easement does not prevent the owner of the dominant owner’s own acts e.g. if he constructs
servient estate from closing or fencing it, or from building to others obstructing the old way; and
building over the aqueduct in such manner as not 5.   There is payment of indemnity;
to cause the latter any damage, or render a.   If right of way is permanent and continuous
necessary repairs and cleanings impossible. for the needs of the dominant estate = value
of the land + amount of damage caused to
This easement is considered as continuous and the servient estate;
apparent, even though the flow of the water may b.   If right of way is limited to necessary passage
not be continuous, or its use depends upon the for cultivation of the estate and for gathering
needs of the dominant estate, or upon a schedule crops, without permanent way = damage
of alternate days or hours. Therefore, it can be caused by encumbrance.
created by prescription. N.B.: In the appropriation
of water, there is a need to apply for water rights. Rules for establishing Right of Way:
1.   Must be established at the point least prejudicial
6.   Stop Lock or Sluice Gate [Art. 647, CC] to the servient estate. [Art. 650, CC]
The construction of a stop lock or sluice gate in the 2.   Insofar as consistent with the first rule, where the
bed of the stream from which the water is to be distance from the dominant estate to a public
taken, for the purpose of improving an estate. highway is shortest.
3.   The criterion of least prejudice to the servient
Such person may demand that the owners of the estate must prevail over the criterion of shortest
banks permit its construction, after payment of distance although this is a matter of judicial
damages, including those caused by the new appreciation. While shortest distance may
easement to such owners and to the other ordinarily imply least prejudice, it is not always so
irrigators. as when there are permanent structures
obstructing the shortest distance; while on the
b.  Right of Way [Arts. 649- other hand, the longest distance may be free of
obstructions and the easiest or most convenient
657, CC] to pass through. [Quimen v. CA, G.R. No. 112331
(1996)]
Who may demand 4.   The fact that LGV had other means of egress to
1.   The owner of the dominant estate; or the public highway cannot extinguish the said
2.   Any person with the real right to cultivate or use easement, being voluntary and not compulsory.
the dominant estate e.g. a usufructuary, a de jure The free ingress and egress along Mangyan Road
possessor. created by the voluntary agreement between the
parties is thus legally demandable with the
Note: a lessee cannot demand such easement, corresponding duty on the servient estate not to
because the lessor is the one bound to maintain him in obstruct the same. [La Vista Association v. CA,
the enjoyment of the property. G.R. No. 95252 (1997)]
5.   The width of the easement of right of way shall be
Requisites: that which is sufficient for the needs of the
1.   The dominant estate is surrounded by other dominant estate, and may accordingly be
immovables owned by other persons; changed from time to time. [Art. 651, CC]
2.   There must absolutely be no access i.e. means of
entrance or exit/egress to a public highway; Obligations In Permanent And Temporary
3.   Even if there is access, it is difficult or dangerous Easements Of Right Of Way
to use, or grossly insufficient;
Permanent right of way Temporary right of way
a.   Mere inconvenience in the use of an outlet
does not render the easement a necessity; Indemnity
b.   An adequate outlet is one that is sufficient for Consists of the damages
the purpose and needs of the dominant Consists of the damages
and the value of the
owner, and can be established at a only.
land.
reasonable expense;
c.   Does not necessarily have to be by land – an Necessary repairs
outlet through a navigable river or a lake or

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Dominant owner to Servient owner to spend a.   Easements of the right of way for the passage
spend on such. on such. of livestock known as animal path, animal
trail or any other, and those for watering
Share in taxes places, resting places and animal folds, shall
The dominant owner be governed by the ordinances and
shall reimburse a regulations relating thereto, and, in the
Servient owner to spend absence thereof, by the usages and customs
proportionate share of
on such. of the place.
taxes to the proprietor
of the servient estate. b.   Without prejudice to rights legally acquired,
the animal path shall not exceed in any case
Rules on Indemnity for Estates Enclosed Through a the width of 75 meters, and the animal trail
Sale, Exchange, Partition or Donation. that of 37 meters and 50 centimeters.
c.   Whenever it is necessary to establish a
Sale, exchange or
Donation compulsory easement of the right of way or
partition
for a watering place for animals, the
Buyer, grantee or donee provisions of this Section and those of Articles
as dominant owners 640 and 641 shall be observed. In this case
The buyer or grantee the width shall not exceed 10 meters
The donee shall pay the
shall grant the right of
donor indemnity. c.   Party Wall [Arts. 658-666,
way without indemnity.
Seller, grantor or donor CC]
as dominant owners
Refers to all those mass of rights and obligations
The donee shall grant
The seller or grantor emanating from the existence and common
the right of way without
shall pay indemnity. enjoyment of wall, fence, enclosures or hedges, by the
indemnity.
owners of adjacent buildings and estates separated by
such objects.
Notes on extinguishment
•   Extinguishment is not automatic. The owner of Nature
the servient estate must ask for such 1.   A common wall which separates two estates, built
extinguishment. by common agreement at the dividing line such
•   Indemnity paid to the servient owner must be that it occupies a portion of both estates on equal
returned without interest. Interest on account of parts.
indemnity is deemed to be rent for use of 2.   A party wall is a special form of co-ownership (a
easement. kind of compulsory co-ownership).
a.   Each owner owns part of the wall but it
Special Rights of Way cannot be separated from the other portions
1.   Right of way to carry materials for the belonging to the others. A party wall has a
construction, repair, improvement, alteration or special characteristic that makes it more of an
beautification of a building through the estate of easement as it is called by law.
another. b.   An owner may use a party wall to the extent
2.   Right of way to raise on another’s land scaffolding of the ½ portion on his property.
or other objects necessary for the work.
Party Wall Co-Ownership
If it be indispensable for the construction, repair, Before division of
improvement, alteration or beautification of a Shares of the co-owners
shares, a co-owner
building, to carry materials through the estate of cannot be physically
cannot point to any
another, or to raise therein scaffolding or other segregated but they
definite portion of the
objects necessary for the work, the owner of such can be physically
property as belonging
estate shall be obliged to permit the act, after identified.
to him.
receiving payment of the proper indemnity for the None of the co-owners
damage caused him. [Art. 656, CC] may use the community
3.   Right of way for the passage of livestock known as There is no such
property for his
animal path, animal trail, watering places, resting limitation.
exclusive benefit
places, animal folds. [Art. 657, CC] because he would be

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invading the rights of •   The right to use by the other party is not
the others. interfered with;
Any owner may free •   The consent by the other owner is needed if a
himself from party wants to open a window; and
contributing to the cost In a co-ownership, •   The condition of the building is determined by
of repairs and partial renunciation is experts.
construction of a party allowed. 2.   To increase the height of the wall.
wall by renouncing all •   He does this at his expense, including the
his rights thereto. thickening of the wall on his land.
•   He shall indemnify the other party for any
When Existence Of Easement Of Party Wall Is damages.
Presumed 3.   To acquire a half-interest in any increase in
1.   In dividing walls of adjoining buildings up to the height or thickness of the wall, paying a
point of common elevation. proportionate share in the cost of the work and
2.   In dividing walls of gardens or yards situated in the value of the land covered.
cities, or towns, or in rural communities. Note that the value of the land must be appraised
3.   In fences, walls and live hedges dividing rural at the time of acquisition.
lands. 4.   To renounce his part ownership of a party wall if
he desires to demolish his building supported by
Note: A title or an exterior sign, or any other proof the wall.
showing that the entire wall in controversy belongs
exclusively to one of the adjoining property owners He shall bear all the expenses of repairs and work
may rebut these presumptions. necessary to prevent any damage which the
demolition may cause to the party wall.
When Existence Of An Exterior Sign Is Presumed
[Art. 660, CC] Obligations Of Owners Of A Party Wall
1.   Whenever in the dividing wall of buildings there is •   To contribute proportionately to the repair and
a window or opening. maintenance of the party wall unless he
2.   Whenever one side is straight and plumb on all its
renounces his part-ownership.
facement, and on the other, it has similar 1.   This includes the renunciation of the share in
conditions on the upper part, but the lower part the wall and the land
slants or projects outward. 2.   He cannot renounce his part if his building is
3.   Whenever the entire wall is built within the being supported by the party wall
boundaries of one of the estates.
•   If he raises the height of the wall, he must:
4.   Whenever the dividing wall bears the burden of
1.   Bear the cost of maintenance of the
the binding beams, floors and roof frame of one of
additions;
the buildings, but not those of the others.
2.   Bear the cost of construction, if the wall
5.   Whenever the dividing wall between courtyards,
cannot support the additional height;
gardens, and tenements is constructed in such a
3.   Give additional land, if necessary to thicken
way that the coping sheds the water upon only
the wall;
one of the estates.
4.   Pay for damages, if necessary, even if
6.   Whenever the dividing wall, being built of
temporary; and
masonry, has stepping stones, which at certain
5.   Bear the increased expenses for preservation
intervals project from the surface on one side only,
but not on the other.
7.   Whenever lands enclosed by fences or live hedges d.  Easement of Light and
adjoin others that are not enclosed. View [Arts. 667-681, CC]
Note: The deposit of earth or debris on one side alone Easement of light (jus luminum) is the right to admit
is an exterior sign that the owner of that side is the light from the neighboring estate by virtue of the
owner of the ditch or drain. The presumption is an opening of a window or the making of certain
addition to those enumerated in Art. 660, CC. openings.
Right Of Owners Of A Party Wall Easement of view (jus prospectus) is the right to make
1.   Generally, part-owners may use the wall in openings or windows, to enjoy the view through the
proportion to their respective interests, estate of another and the power to prevent all
provided that:

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constructions or works which would obstruct such Notes on the Acquisition of the Easement
view or make the same difficult. •   Period of acquisitive prescription depends upon
whether the easement of light and view is positive
Necessarily includes the easement of light. or negative, and only starts to run from the time
the owner asserting the servitude has forbidden
It is possible to have light only without a view. the owner of the adjoining tenement from doing
something he could lawfully do.
Note: If an owner has an easement of view, he also has •   THUS, although the action to compel the closure
an easement of light, but not vice versa. might have prescribed because the easement has
been created by prescription, the owner of the
Nature adjoining estate may still build on his own land a
•   Positive: Opening a window through a party wall structure that might obstruct the view for 10 years,
1.   When the opening is made through the wall thus extinguishing it by non-user.
of another
2.   When a part owner of a party wall opens a e.   Drainage of Buildings [Art.
window therein, such act implies the exercise
of the right of ownership by the use of the 674, CC]
entire thickness of the wall.
3.   The easement is created only after the lapse The owner of a building is obliged to construct its roof
of the prescriptive period. or covering in such manner that the rain water shall
•   Negative: Formal prohibition upon the owner of fall on his own land or on a street or public place, and
the adjoining land or tenement. NOT on the land of his neighbor, even though the
1.   Formal means that the prohibition has been adjacent land may belong to two or more persons, one
notarized [Cortes v Yu-Tibo, G.R. No. 911 of whom is the owner of the roof.
(1903)]
2.   When a person opens a window on his own Even if it should fall on his own land, the owner shall
building, he is exercising his right of be obliged to collect the water in such a way as not to
ownership on his property, which does not cause damage to the adjacent land or tenement.
establish an easement.
3.   Coexistent is the right of the owner of the The true easement is Article 675 where the adjacent
estate has the obligation of receiving the rain water
adjacent property to build or plant on his own
falling from a neighboring roof and giving it an outlet
land, even if such structures or planting cover
on his own lot so as not to cause damage to the
the window.
dominant estate.
4.   If the adjacent owner does not build
structures to obstruct the window, such is
Easement of drainage if buildings [Art. 676, CC] – to
considered mere tolerance and NOT a waiver
give outlet to rain water collected
of the right to build.
5.   An easement is created only when the owner
opens up a window and subsequently f.   Intermediate Distances
prohibits or restrains the adjacent owner from [Arts. 677-681, CC]
doing anything that may tend to cut off or
interrupt the light and the 10-year Prohibiting the contraction and plantings near
prescriptive period has lapsed by a notarial fortified places or fortresses without complying with
prohibition. special laws, ordinances and regulations relative
hereto. Art. 677, CC, in effect, establishes an easement
Note: in favor of the State. The general prohibition is
•   In buildings separated by a public way or alley, not dictated by the demands of national security.
less than 3 meters wide, the distances required (2
m, 60 cm) do not apply. The following must comply with the regulations or
•   If an easement is acquired to have direct views, customs of the place:
balconies or belvederes, the owner of the servient •   Construction of aqueduct, well, sewer, etc. [Art.
estate must not build at less than 3 meters from 678, CC]
the boundary line of the two tenements. •   Constructions, which by reason of their nature or
•   The distances may be stipulated by the parties, but products are dangerous or noxious.
should not be less than what is prescribed by the
law (2 meters and 60 cm).

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Planting of trees [Art. 679, CC]


No trees shall be planted near a tenement or piece of
land belonging to another except at the distance   Nuisance
authorized by the ordinances or customs of the place.
Art. 694, CC A nuisance is any act, omission,
In the absence of regulations: establishment, condition of property, or anything
•   At least 2 meters from the dividing line of the else which:
estates if tall trees are planted. (1)   Injures or endangers the health or safety of
•   At least 50 centimeters if shrubs or small trees are others; or
planted. (2)   Annoys or offends the senses; or
(3)   Shocks, defies or disregards decency or
In case of violation, a landowner shall have the right to morality; or
demand the uprooting of the plant even if it has grown (4)   Obstructs or interferes with free passage of
spontaneously. any public highway or street, or any body of
water; or
Branches, Roots and Fruits (5)   Hinders or impairs the use of property.
If the branches of any tree should extend over a
neighboring estate, tenement, garden or yard, the Note: To constitute a nuisance there must be an
owner of the latter shall have the right to demand that arbitrary or abusive use of property or disregard of
they be cut off. commonly accepted standards set by society.

If it be the roots of a neighboring tree, which should A municipal body has the power to declare and abate
penetrate into the land of another, the latter may cut nuisances. BUT it has no power to find as fact that a
them off himself within his property. particular thing is a nuisance. The determination of
whether or not a nuisance exists is a judicial function,
Fruits naturally falling upon adjacent land belong to because to declare something a nuisance is to deprive
the owner of said land. its use. [Iloilo Cold Storage v Mun. Council of Iloilo, G.R.
No. L-7012 (1913)].
g.  Lateral and Subjacent
Support [Arts. 684-687, 1.   Nuisance v. Trespass
CC] Nuisance Trespass
The proprietor is prohibited from making dangerous Use of one’s own
excavations upon his land as to deprive any adjacent property in such a
land or building of sufficient lateral or subjacent manner as to cause
support. injury to the property or
Direct infringement of
right or interest of
another’s right of
Easement of lateral and subjacent support is deemed another, and generally
property.
essential to the stability of buildings. results from the
commission of an act
Support is lateral when a vertical plane divides the beyond the limits of the
supported and supporting lands. property affected.
Injury is consequential. Injury is immediate.
Support is subjacent when the supported land is
above the supporting land.
2.  N uisance v. Negligence
h.  Nuisance [Arts. 682-683,
CC] Nuisance Negligence
Whether it was Whether the
See Next Section. unreasonable for the defendant’s use of his
defendant to act as he property was
did in view of the unreasonable as to
threatened danger or plaintiff, without regard

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harm to one in plaintiff’s to foreseeability of b.  According to Scope of


position. injury.
Injurious Effects
Liability for the resulting
injury to others Test: Not the number of persons annoyed but the
Liability is based on a
regardless of the degree possibility of annoyance to the public by the invasion
want of proper care
of care or skill exercised of its rights – the fact that it is in a public place and
to avoid such injury. annoying to all who come within its sphere.
Principles ordinarily
apply where the cause Principles ordinarily 1.   Public: Nuisance that affects a community or
of action is for apply where the cause neighborhood or any considerable number of
continuing harm caused of action is for harm persons [Art. 695, CC].
by continuing or resulting from one act
recurrent acts which which created an Public nuisances are indictable (person liable may
cause discomfort or unreasonable risk of be charged with a crime).
annoyance to plaintiff in injury.
the use of his property. 2.   Private: One which violates only private rights
and produces damages to but one or a few specific
persons.
3.  Classes
4.  D octrine of Attractive
a.  According to Nature
Nuisance
Per se Per accidens
One who maintains on his premises dangerous
An act, occupation or instrumentalities or appliances of a character likely to
structure which is a One that becomes a attract children in play, and who fails to exercise
nuisance at all times nuisance by reason of ordinary care to prevent children from playing
and under any circumstances and therewith or resorting thereto, is liable to a child of
circumstances, surroundings. tender years who is injured thereby, even if the child is
regardless of location or technically a trespasser in the premises. [Jarco
surroundings Marketing Corp. v. CA, G.R. No. 129792 (1999)]
The wrong is
established by proof of Proof of the act and its Reason for doctrine: Although the danger is apparent
the mere act. It becomes consequences are to those of age, it is so enticing or alluring to children
a nuisance as a matter necessary. of tender years as to induce them to approach (Ibid).
of law.
Note: The attractive nuisance doctrine is generally not
That which depends applicable to bodies of water in the absence of some
upon certain conditions unusual condition or artificial feature.
and circumstances, and
its existence being a A swimming pool is not an attractive nuisance, for
Nuisance under any and question of fact, it while it is attractive, it is merely a duplication of a work
all circumstances, cannot be abated of nature [Hidalgo Enterprises v. Balandan, G.R. L-
because it constitutes a without due hearing 3422, (1952)]
direct menace to public thereon in a tribunal
health or safety, and, for authorized to decide
that reason, may be whether such a thing 5.  L iability in Case of
abated summarily under does in law constitute a Nuisance
the undefined law of nuisance. [Iloilo Ice and
necessity Cold Storage v.
Municipal Council of a.  Who are Liable
Iloilo, supra; Monteverde
v. Generoso, G.R. No. Every successive owner or possessor of property who
28491 (1928)] fails or refuses to abate a nuisance in that property
started by a former owner or possessor is liable

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therefor in the same manner as the one who created For solidary liability, there must be some joint or
it. [Art. 696, CC] concurrent act or community of action or duty, or the
several wrongful acts done at several times must have
b.  Liability of Creator of concurred in their effects as one single act to produce
the injury complained of.
Nuisance
If there exists a common design, or some joint or
He who creates a nuisance is liable for the resulting concurrent act or community of action or duty, or
damages and his liability continues as long as the several wrongful acts done at several times which
nuisance continues. have concurred in their effects as one single act to
1.   There must be a breach of some duty on the part produce the injury complained of, liability is solidary
of the person sought to be held liable for damages
resulting from a nuisance before an action will lie
against him.
e.   Right to Recover Damages
2.   No one is to be held liable for a nuisance which he
cannot himself physically abate without legal The abatement of a nuisance does not preclude the
action against another for that purpose. right of any person injured to recover damages for its
3.   Where several persons, acting independently, past existence. [Art. 697, CC]
cause damage by acts which constitute a
nuisance, each is liable for the damage which he Abatement and damages are cumulative remedies.
has caused or for his proportionate share of the
entire damage. No Prescription
The action to abate a public or private nuisance is NOT
extinguished by prescription. [Art. 1143(2), CC]
c.   Liability of Transferees
Exception: Easements, under Art. 631(2), CC are
The grantee of land upon which there exists a nuisance extinguished by a non-use for 10 years
created by his predecessors in title is not responsible
therefore merely because he becomes the owner of the
premises, or merely because he permits it to remain. 6.  R egulation of Nuisances
Since the injurious effect of a nuisance is continuing,
every successive owner or possessor, who fails or a.  Public Nuisance
refuses to abate it, has the same liability as the
original owner. Remedies
The remedies against a public nuisance are:
To render the new owner or possessor liable, it is 1.   Prosecution under the Penal Code or any local
necessary that he has actual knowledge of the ordinance;
existence of the nuisance, and that it is within his 2.   A civil action; or
power to abate the same. 3.   Extrajudicial abatement.
a.   It must be reasonably and efficiently
If he cannot physically abate the nuisance without exercised
legal action against another person, then he shall not b.   Means employed must not be unduly
be liable for such nuisance. oppressive on individuals, and
c.   No more injury must be done to the property
d.  Nature of Liability or rights of individuals than is necessary to
accomplish the abatement.
All persons who participate in the creation or d.   No right to compensation if property taken or
maintenance of a nuisance are jointly and severally destroyed is a nuisance.
liable for the injury done.
Abatement without Judicial Proceedings,
If 2 or more persons who create or maintain the 1.   Police Power of the State
nuisance act entirely independent of one another, and The police power of the State includes the right
without any community of interest, concert of action, to destroy or abate by summary proceeding
or common design, each is liable only so far as his acts whatever may be regarded as a public nuisance
contribute to the injury.
2.   Right to Compensation
Property taken or destroyed for the purpose of
abating a nuisance is not take for public use;

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thus, there is no obligation to make nuisance is acquired or should have been acquired
compensation for such taking. by the person entitled to abate.
3.   The person who has the right to abate must give
3.   Need for Abatement reasonable notice of his intention to do so, and
One of the most serious hindrances to the allow thereafter a reasonable time to enable the
enjoyment of life and property is a nuisance. other to abate the nuisance himself.
Provisions for its abatement are indispensable 4.   The means employed must be reasonable and for
(Report of the Code Commission, p.51). any unnecessary damage or force, the actor will
be liable. The right to abate is not greater than the
Action for Abatement necessity of the case and is limited to the removal
1.   The district health officer shall take care that one of only so much of the objectionable thing as
or all of the remedies against a public nuisance actually causes the nuisance.
are availed of.
2.   If a civil action is brought by reason of the The property must not be destroyed unless it is
maintenance of a public nuisance, such action absolutely necessary to do so.
shall be commenced by the city or municipal
mayor. b.  Private Nuisance
3.   The district health officer shall determine whether
or not abatement, without judicial proceedings, is Private Nuisance: That which is not included in the
the best remedy against a public nuisance. definition of a public nuisance [Art. 695, CC]
4.   A private person may file an action on account of
a public nuisance if it is especially injurious to him. Remedies [Art. 705, CC]
General rule: An individual has no right of action The remedies against a private nuisance are:
against a public nuisance. The abatement 1.   A civil action; or
proceedings must be instituted in the name of the 2.   Extrajudicial abatement.
State or its representatives. a.   The procedure for extrajudicial abatement of
a public nuisance by a private person will also
Exception: An individual who has suffered some be followed.
special damage different from that sustained by the b.   The person extrajudicially abating a nuisance
general public may maintain a suit in equity for an liable for damages if:
injunction to abate it, or an action for damages which i.   If he causes unnecessary injury; or
he has sustained. ii.   If an alleged nuisance is later declared by
the courts to be not a real nuisance.
The action becomes a tort if an individual has suffered
particular harm, in which case the nuisance is treated Remedies of the property owner
as a private nuisance with respect to such person. A person whose property is seized or destroyed as a
nuisance may resort to the courts to determine
Requisites of the right of a private individual to whether or not it was in fact a nuisance.
abate a public nuisance 1.   An action for replevin;
1.   That demand be first made upon the owner or 2.   To enjoin the sale or destruction of the property;
possessor of the property to abate the nuisance; 3.   An action for the proceeds of its sale and damages
2.   That such demand has been rejected; if it has been sold; or
3.   That the abatement be approved by the district 4.   To enjoin private parties from proceeding to abate
health officer and executed with the assistance of a supposed nuisance.
the local police; and
4.   That the value of the destruction does not exceed
P3000.

Rules
1.   The right must be exercised only in cases of urgent
or extreme necessity. The thing alleged to be a
nuisance must be existing at the time that it was
alleged to be a nuisance.
2.   A summary abatement must be resorted to within
a reasonable time after knowledge of the

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  Modes of Acquiring a.  Requisites


Ownership and Other 1.   The property must be a corporeal personal
property susceptible of appropriation;
Real Rights 2.   The property is either res nullius (no owner) or res
derelict (abandoned property);
1.   Occupation 3.   There is seizure or apprehension with the intent to
2.   By operation of Law appropriate; and
3.   Donation 4.   There is an observance of requisites or conditions
4.   Tradition prescribed by law.
5.   Intellectual Property
6.   Prescription b.  Kinds
7.   Succession
1.   Of Animals
Mode Title a.   Wild or feral animals – seizure
(hunting/fishing) in open season by means
Serves merely to give the not prohibited.
Directly and immediately
occasion for its b.   Tamed/domesticated animals
produces a real right.
acquisition or existence. General Rule: belong to the tamer for as long
Cause Means as tamed animal retains the habit of
returning to the place where it is kept, but
Proximate cause Remote cause upon recovering freedom, are susceptible to
Essence of the right, occupation unless claimed within 20 days
Means whereby that from seizure by another. [Art. 716, CC]
which is to be created or
“essence” is transmitted. c.   Tame/domestic animals – not acquired by
transmitted.
occupation except when abandoned.

1.   Occupation 2.   Of Other Personal Property


a.   Abandoned – may be acquired
Occupation Possession b.   Lost
Mode of acquiring Raises the presumption c.   Hidden treasure – finder gets ½ by
ownership of ownership occupation; landowner gets ½ by accession;
Only of corporeal except in CPG system, share goes to the
Over any kind of property partnership.
personal property
Object must be
Property may be owned 3.   Of Land
without an owner (res
by somebody Land cannot be the object of occupation [Art.
nullius)
Requires an intent to May be had in the 714, CC]
acquire ownership concept of a mere holder
May not take place Public Domain: belong to the State
May exist without
without some form of
occupation Abandoned Private Land: deemed as patrimonial
possession
Generally of longer property of the State; can be
Short duration
duration
Cannot lead to another
May lead to another c.   Special Rules [Art. 716, CC]
mode which is
mode of acquisition
prescription 1.   Occupation of a Swarm of Bees

How Occupation Is Effected: The owner of a swarm of bees shall have a right to
a.   By hunting and fishing pursue them to another’s land, indemnifying the
b.   By finding movables which never had any owner possessor of the latter for the damage.
c.   By finding movables which have been abandoned
by the owner If the owner has not pursued the swarm, or ceases
d.   By finding hidden treasures to do so within 2 consecutive days, the possessor
[See Arts 438-439, CC] of the land may occupy or retain the same, the

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owner having lost his ownership by leaving, 5.   Lost Movables; Procedure After Finding Lost
abandoned them (no more intention to recover) Movables [Art. 719, CC]
a.   Rights and obligations of the finder of lost
2.   Occupation of Domesticated Animals personal property are based on a quasi-
Wild animals are possessed only while they are contract.
under one's control; domesticated or tamed b.   One who has lost his property does not
animals are considered domestic or tame if they necessarily abandon it.
retain the habit of returning to the premises of the c.   Lost things cannot be acquired by
possessor. [Art. 560, CC] prescription, even if extraordinary.
d.   Owner may still recover it from the person in
3.   Pigeons and Fish [Art. 717, CC] possession of the same.
Pigeons or fish which change their breeding place e.   If the owner is not known, finder must deliver
to another belonging to a different owner. Unless the thing to the mayor of the city or
enticed by some artifice or fraud, they shall municipality where it was found. The finding
belong to the owner of the breeding place to shall be publicly announced by the mayor for
which they have transferred. two consecutive weeks as he deems best.
f.   Abandonment must be voluntary and
4.   Hidden Treasure [Arts. 718, 438, CC] intentional. Under Art 719, CC implied
a.   He who by chance discovers hidden treasure abandonment is presumed when six (6)
in another’s property: ½ shall be allowed to months from publication have elapsed
the finder. without the owner having appeared- in which
b.   If the finder is a trespasser, he shall not be case, the thing is awarded to the finder.
entitled to any share of the treasure. g.   If the owner should appear in time, he is
c.   If the things found be of interest to science or obliged to give finder a 10% reward based on
the arts, the State may acquire them at their the sum or price of the thing found.
just price, which shall be divided in h.   The expenses, including transportation,
conformity with the rule stated. storage, and publication, shall be reimbursed
by the finder, or by the owner in case the latter
claims the thing.

2.  D onation
Donation is an act of liberality whereby a person disposes gratuitously of a thing or right in favor of another,
who accepts it. (Simple donation)

Although under Art 725, CC, donation is an act, it is really a contract. The essential requisites of consent, subject
matter, and cause must be present.

Nature Generally, donation includes all forms of gratuitous dispositions.


Effect The patrimony or asset of the donor is decreased, while that of the donee is increased.
[CADAF – Capacity, Animus donandi, Delivery, Acceptance, Form]

a.   Capacity of donor to make donation


b.   Donative intent (animus donandi)
c.   Delivery (actual or constructive)
Requisites
d.   Acceptance by donee
e.   Necessary form prescribed by law

Note: Acceptance by the done is required because donation is never obligatory. One cannot be
compelled to accept the generosity of another.
Other a.   When a person gives to another a thing or right on account of the latter's merits or of the
instances services rendered by him to the donor, provided they do not constitute a demandable debt.
considered (Remuneratory donation)
as a b.   When the gift imposes upon the donee a burden that is less than the value of the thing given.
donation (Onerous donation)

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Donation Inter Vivos [Art. 729, CC]


Donation which shall take effect during the lifetime of the donor upon
concurrence of the requirements of donation, though the property shall not be
delivered until after the donor's death.

General Rule: Irrevocable


Exceptions:
a.   Subsequent birth of the donor’s children;
b.   Donor’s failure to comply with imposed conditions;
c.   Donee’s ingratitude; or
d.   Reduction of donation by reason of inofficiousness.
Donation Propter Nuptias [Art. 86, FC]
A special type of donation made by reason of marriage.

Requisites:
a.   Must be made before the celebration of marriage;
b.   Made in consideration of the marriage; and
c.   Made in favor of one or both of the future spouses.
As to its
taking effect Causes for revocation of donation propter nuptias [Art. 86, CC]:
a.   If the marriage is not celebrated or judicially declared void ab initio, except
donations made in the marriage settlements;
Kinds of
b.   When the marriage takes place without the consent of the parents or
Donations
guardian, as required by law;
c.   When the marriage is annulled, and the donee acted in bad faith;
d.   Upon legal separation, the one being the guilty spouse;
e.   If it is with a resolutory condition and the condition is complied with; or
f.   When the donee has committed an act of ingratitude as specified by the
provisions of the CC on donations in general.
Donation Mortis Causa [Art. 728, CC]
It only becomes effective upon the death of the donor, as the donor’s death
ahead of the donee works as a suspensive condition for the existence of the
donation.

Characteristics:
a.   The transferor retains ownership and control of the property while alive;
b.   The transfer is revocable at will before his death; and
c.   The transfer will be VOID if the transferor should survive the transferee.
a.   Simple - made out of pure liberality or because of the merits of the donee.
b.   Remuneratory - made for services already rendered to the donor.
As to cause c.   Onerous - imposes a burden inferior in value to property donated.
or d.   Improper - burden equal in value to property donated
consideration e.   Sub-modo or modal - imposes a prestation upon donee as to how property
donated will be applied.
f.   Mixed donations – e.g. sale for price lower than value of property.

Ordinary Donations v. Donations Propter Nuptias

Ordinary Propter Nuptias


As to requirement of express acceptance
Necessary Not required
As to future property
Cannot include future property May include future property (same rule as wills)
As to limit on donation of present property

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No limit to donation of present property provided legitimes If present property is donated and property regime is
are not impaired. other than ACP, limited to 1/5.
As to grounds for revocation
Enumerated in Arts. 760 and 765, CC Enumerated in Art. 86, FC

Inter Vivos v. Mortis Causa


Inter vivos Mortis causa
As to formalities
Must be in the form of a will, with all the formalities
Executed and accepted with formalities prescribed by CC.
for the validity of wills.
As to effectivity
Effective during the lifetime of the donor. Effective after the death of the donor.
As to acceptance
Acceptance must be made after the death of the
donor, the donation being effective only after the
Acceptance must be made during the lifetime of the donor. death of donor. Acceptance during the donor’s lifetime
is premature and ineffective because there can be no
contract regarding future inheritance.
As to transfer of ownership for right of disposition
Ownership is immediately transferred. Delivery of Upon acceptance by the donee, but the effect of such
possession is allowed after death. retroacts to the time of death of the donor.
As to revocation
Irrevocable – may be revoked only for the reasons provided
Revocable upon the exclusive will of the donor.
in Arts. 760, 764, 765, CC.
As to reduction or suppression
When it is excessive or inofficious, being preferred, it is When it is excessive or inofficious, it is reduced first, or
reduced only after the donations mortis causa had been even suppressed.
reduced or exhausted.
As to effect if donor survives donee
Not affected. Donation is void.

Notes:
The nature of the act, whether it’s one of disposition or of execution, is controlling to determine whether the donation
is mortis causa or inter vivos.

What is important is the time of transfer of ownership even if transfer of property donated may be subject to a condition
or a term.

Whether the donation is inter vivos or mortis causa depends on whether the donor intended to transfer ownership over
the properties upon the execution of the deed. [Gestopa v. CA, G.R. No. 111904 (2002)]

FORMALITIES REQUIRED
FOR MOVABLES [Art. 748, CC] FOR IMMOVABLES [Art. 749, CC]
The donation of a movable may be made orally or in
General Rule: Must be in a public document
writing. Oral donation requires simultaneous delivery.
If donation and acceptance are in the same instrument:
If value of property exceeds P5,000:
a.   It must in a public instrument
•   Donation and acceptance must be in writing; b.   Instrument must specify the property donated and
otherwise, it is void.
the charges

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•   It need not be in public instrument; neither is it


necessary that the acceptance be in the same If donation and acceptance are in separate instruments:
instrument as the deed of donation a.   It must be in a public instrument
b.   Instrument must specify the property and the
If value is P5,000 or less: charges
•   If orally: there must be simultaneous delivery c.   Acceptance must also be in a public instrument
•   If in writing: donation is valid even without d.   It must be made during the lifetime of the donor
simultaneous delivery e.   Donor must be notified in authentic form of such
•   In every case, acceptance must be made known to acceptance made in a separate instrument
the donor for perfection of a donation to take place. f.   Fact of such notification must be noted in both
instruments

Exceptions:
a.   Donations propter nuptias: need no express
acceptance
b.   Onerous donations: governed by rules on contracts

Notes:
a.   Donation of real property in a private instrument is
null and void.
b.   Registration is not necessary for the donation to be
considered valid and effective. This is only comes
into play with respect to affected third persons.
c.   There is nothing that prevents the donor or his heirs
to execute a public document ratifying a previous
donation that has been avoided for lack of
compliance with the legal requisites. This
ratification had the effect of a new donation
[Abragan v. Centenera, G.R. No. 22173, (1924)].
d.   Action to declare the inexistence of a void donation
does not prescribe [Art. 1410, CC].

What may be donated


Limitation:
a.   The donor reserves, in full ownership or usufruct,
sufficient means for support of himself and all
relatives entitled to be supported by donor at the
time of acceptance. [Art. 750, CC].
b.   The donor reserves property sufficient to pay donor’s
debts contracted before donation, otherwise,
All present property of the donor or part thereof donation is in fraud of creditors [Arts. 759, 1387,
CC].
c.   Donations provided for in marriage settlements
between future spouses – must be not more than
1/5 of present property.
d.   Donation propter nuptias by an ascendant
consisting of jewelry, furniture or clothing not to
exceed 1/10 of disposable portion.
What may not be donated
a.   Future property; those which the donor cannot dispose of at the time of the donation [Art. 751, CC]
b.   More than what he may give or receive by will [Art. 752, CC]
If exceeds: inofficious
Limitations
a.   Reservation of sufficient means for support of donor and relatives [Art. 750, CC]

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1.   A donor may donate his present property provided he reserves sufficient property in ownership or in
usufruct for the support of himself and all of his relatives who are entitled to be supported by him
2.   Present property: property which the donor can rightfully dispose of at the time of donation
3.   Donation without reservation is not null and void in its entirety; it is only subject to reduction by the court
4.   Limitation applies to simple, remunerative and modal donations but not to onerous ones nor to donations
mortis causa
b.   Donations cannot comprehend future property [Art. 751, CC]
1.   Future property: understood as anything which the donor cannot dispose of at the time of the donation
2.   Nobody can dispose of that which does not belong to him
3.   Future inheritance cannot be donated because it is future property, but upon the death of his predecessor,
the inheritance ceases to be future amd consequently, may be the object of donation. [Osorio v Osorio,
supra]
c.   Amount of donation limited to what donor may give by will [Art. 752, CC]
1.   A person may not donate more than he can give by will
2.   Limitation applies where donor has forced or compulsory heirs
Donations made to several persons jointly
A joint donation (donation to two or more persons) could
not be accepted by a donee, independently of the other
donee/s. [Genato v. de Lorenzo, G.R. No. L-24983 (1968)] Exception: those given to husband and wife, except when
the donor otherwise provides
No accretion – one donee does not get the share of the
other donees who did not accept [Art. 753, CC]
Donor
Who are NOT allowed:
a.   Guardians and trustees with respect to the property
Who are allowed: All persons who may contract (of legal entrusted to them [Art. 736, CC]
age) and dispose of their property [Art. 735, CC] b.   Those disqualified by reason of public policy [Art.
739, CC]
Donor’s capacity is determined at the time of the making 1.   Those made between persons guilty of adultery
of donation [Art. 737, CC] Subsequent incapacity is or concubinage at the time of the donation;
immaterial. 2.   Those made between persons guilty of the same
criminal offense if the donation is made in
Note:Capacity to donate is NOT required for donations consideration thereof; or
mortis causa. 3.   Those made to a public officer, his spouse,
descendants, and/or ascendants by reason of
the office.
Donee
Who are not allowed:
Who are allowed to accept donations: a.   Made between person who are guilty of adultery or
a.   Those who are not specifically disqualified by law concubinage [Art. 739, CC]
[Art. 738, CC] b.   Made between persons found guilty of the same
b.   Those who are allowed, with qualifications: criminal offense, in consideration thereof [Art. 739,
1.   Minors, insane/imbecile, deaf-mute and others CC]
who are incapacitated [see NCC 38], provided c.   Made to a public officer or his wife, descendant and
that their acceptance is done through their ascendants, by reason of his office [Art. 739, CC]
parents or legal representatives [Art. 741, CC] d.   Those who cannot succeed by will [Art. 740, CC] –
2.   Conceived and unborn children, provided that covers those stated under Arts. 1027 and 1032, CC
the donation is accepted by those who would e.   Those made to incapacitated persons, although
legally represent them if they were already born simulated under the guise of another contract [Art.
743, CC]
Acceptance of the donation
Who may accept [Art. 745, CC] When to accept: during the lifetime of the donor or donee
a.   Donee personally [Art. 746, CC]

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b.   Authorized person with a special power for the


purpose or with a general sufficient power
What the donee acquires with the thing
He shall be subrogated to all the rights and actions that would pertain to the donor in case of eviction [Art. 754, CC]
Obligation of the donor
No obligation to warrant [Art. 754, CC] Exception: when the donation is onerous
Shall be is liable for eviction or hidden defects in case of bad faith on his part [Art. 754, CC]
Obligation of the donee
If the donation so states, the donee may be obliged to
pay the debts previously contracted by the donor and in
Exception: when contrary intention clearly appears
no case shall he be responsible for the debts exceeding
the value of the thing donated [Art. 758, CC]
SPECIAL PROVISIONS
What may be reserved by the donor [Art. 755, CC]
Right to dispose of some of the things donated, or of
If the donor dies without exercising this right
some amount which shall be a charge thereon
Donation of naked ownership to one donee and usufruct to another [Art. 756, CC]
The naked ownership and the usufruct may be donated separately, provided that all the donees are living at the
time of the donation.
Payment of donor’s debt [Art. 758, CC]
a.   If expressly stipulated, the donee must pay only the debts contracted before the donation unless specified
otherwise.
But in no case shall the donee be responsible for debts exceeding the value of the property donated unless
clearly intended.
b.   If there’s no stipulation, the donee will be answerable only for the donor’s debt only in case the donation is in
fraud of creditors.
Reversion [Art. 757, CC]
The property donated may be restored or returned to
a.   Donor or his estate (reversion may be for any case and circumstance); or
b.   Another person (such persons must all be living at the time of the donation)

Note: Any reversion stipulated by the donor in favor of a third person in violation of what is provided in the foregoing
shall be void, but shall not nullify the donation.
Double donations [Art. 744, CC]
Rule: Priority in time, priority in right.
a.   If movable: one who first took possession in good faith.
b.   If immovable: one who recorded in registry of property in good faith
c.   If there is no inscription, the one who first took possession in good faith.
d.   If there is no possession, one who can present the oldest title.
Excessive/Inofficious Donations [Art. 752, CC]
Inofficious donation: a type of donation in which a person gives or receives more than what he may give or receive by
will. If a donation is inofficious, it shall be reduced with regard to the excess.

But this reduction shall not prevent the donations from taking effect during the life of the donor, nor shall it bar the
donee from appropriating the fruits.

Note: Only those who, at the time of the donor's death, have a right to the legitime and their heirs and successors-
in-interest may ask for the reduction or inofficious donations.

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If, there being two or more donations, the disposable portion is not sufficient to cover all of them, those of the more
recent date shall be suppressed or reduced with regard to the excess.
Donations cannot comprehend future property
Future property: understood as anything which the donor cannot dispose of at the time of the donation.

Note: It is immaterial that the then-future property may subsequently belong to the donor.
In fraud of creditors [NCC 759]
Donation is always presumed to be in fraud of creditors, when at the time thereof the donor did not reserve
sufficient property to pay his debts prior to the donation.

The donee shall be responsible for donor’s debts only when the donation has been made in fraud of creditors,
otherwise creditors may rescind donation by way of accion pauliana.
VOID DONATIONS
a.   Donation between spouses
General Rule: Every donation or grant of gratuitous advantage, direct or indirect, between the spouses during
the marriage shall be VOID. The prohibition applies to persons living together as husband and wife without a
valid marriage.
Exception: Moderate gifts which the spouses may give each other on the occasion of any family rejoicing.
b.   Those made between persons mentioned under Art. 739, CC
c.   Those made to persons incapacitated to succeed by will. [Art. 740, CC]

REVOCATION/REDUCTION

Reduction
•   Total withdrawal of amount, whether the legitime is impaired or not
•   Benefits the donor

Revocation
•   Amount is only insofar as the legitime is prejudiced
•   Benefits the donors heirs (except when made on the ground of the appearance of a child)

Time of Action Transmissibility Effect Liability (Fruits)


Birth, appearance, adoption
Property is returned
If the property has been
sold, its value at the time of
Transmitted to children and donation shall be returned.
Within 4 years from birth, Fruits returned from the
descendants upon the If the property was
legitimation and adoption filing of the complaint
death of donor mortgaged, the donor may
redeem the mortgage, with
right to recover the amount
from the donee
Non-compliance with condition

May be transmitted to Property returned,


Fruits received after having
Within 4 years from non- donor’s heirs and may be alienations and mortgages
failed to fulfill condition
compliance exercised against donee’s void subject to rights of
returned
heirs third persons in good faith

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Ingratitude
Applies to all donations EXCEPT: Mortis causa; Propter nuptias; Onerous donations
Property returned, but
Not transmitted to heirs of alienations and mortgages
Within 1 year after
donor/ donee, but if donor effected before the notation Fruits received from the
knowledge by donor of the
dies during pendency of of the complaint for filing of the complaint
fact and it was possible for
case, heirs may be revocation in the registry of returned
him to bring the action
substituted. property subsist. Later ones
shall be void.
Failure to reserve sufficient means for support
Reduced to the extent
At any time, by the donor or
Not transmissible necessary to provide Donee entitled
relatives entitled to support
support
Inofficiousness for being in excess of what the donor can give by will
Donation takes effect on
Within 5 years from the the lifetime of donor.
Transmitted to donor’s
death of the donor [NCC Reduction only upon his Donee entitled
heirs
1149] death with regard to the
excess
Fraud against creditors
Rescission within 4 years
Transmitted to creditor’s Returned for the benefit of Fruits returned/ if
from the perfection of
heirs or successors-in- the creditor who brought impossible, indemnify
donation/ knowledge of the
interest the action creditor for damages
donation

The delivery of a thing constitutes a necessary and


3.  Tradition indispensable requisite for the purpose of acquiring
the ownership of the same by virtue of a contract.
It is a derivative mode of acquiring ownership and
other real rights by virtue of which, there being
intention and capacity on the part of the grantor and c.   Kinds
grantee and the pre-existence of said rights in the
estate of the grantor, they are transmitted to the Real Tradition (Physical delivery): thing is physically
grantee through a just title. delivered or transferred from hand to hand

Constructive Tradition: Delivery of the thing is not


a.  Requisites real nor material but consists merely in certain facts
[JOPIC – Just cause, Outward form, Pre-existence, indicative of the same.
Intention, Capacity] 1.   Symbolic tradition - Delivery of signs or things
which represent that which is being transmitted
1.   Pre-existence in the estate of the grantor of the (e.g. delivery of keys or title)
right to be transmitted; 2.   Tradition by public instrument - Substitution of
2.   Just cause or title for the transmission; real delivery of possession by a public writing
3.   Intention on the part of the grantor to grant and with the delivery of the document which
on the part of the grantees to acquire; evidences the transaction
4.   Capacity to transmit and to acquire; and 3.   Tradition longa manu - Grantor points out to the
5.   An act that gives it outward form, physically, grantee the thing to be delivered
symbolically, or legally. 4.   Tradition brevi manu - When the grantee is
already in possession of the thing under another
b.  Purpose title [e.g. lessee buys the thing leased to him
(lessee becomes owner)]
Ownership and other real rights are transferred, 5.   Tradition constitutum possessorium - Opposite
among other means, by tradition. of brevi manu; owner alienates a thing but

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remains in possession [e.g. Owner sells a property


but continues to posess the same as a lessee   Prescription
(owner becomes lessee)]
By prescription, one acquires ownership and other real
Quasi tradition: Delivery of incorporeal things or rights through the lapse of time in the manner and
rights by the use of grantee of such rights with under the conditions laid down by law. In the same
grantor’s consent way, rights and conditions are lost by prescription. It is
a means of acquiring ownership and other real rights
By operation of law: Those not included in the or losing rights or actions to enforce such rights
foregoing modes, but delivery is effected solely by through the lapse of time.
virtue of an express provision of law (e.g. Art. 1434, CC
on estoppel) 1.   Rationale
It is purely statutory in origin. It is founded on grounds
of public policy which requires for the peace of society,
that juridical relations susceptible of doubt and which
may give rise to disputes, be fixed and established after
the lapse of a determinate time so that ownership and
other rights may be certain for those who have claim in
them.

2.  K inds of Prescription
a.  Acquisitive Prescription
1.   The acquisition of ownership and other real rights
through possession in the concept of owner of a
thing in the manner and condition provided by
law.
2.   May be ordinary or extraordinary:
a.   Ordinary: requires possession of things in
good faith and with just title for the time fixed
by law.
b.   Extraordinary: acquisition of ownership and
other real rights without need of title or of
good faith or any other condition.

Prescription where possession in good faith converted


into possession in bad faith:
1.   Ordinary
•   Movable properties - 4 years
•   Immovable properties - 10 years
2.   Extraordinary:
•   Movable properties - 8 years
•   Immovable properties - 30 years

As a mode of acquisition, prescription requires


existence of following:
1.   Capacity of the claimant to acquire by
prescription;
2.   A thing capable of acquisition by prescription;
3.   Adverse possession of the thing under certain
conditions; and
4.   Lapse of time provided by law.

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5.   Possession must be in the concept of owner, not acquired by prescription or adverse possession. [PD
holder. 1529]

The following are only required in ordinary acquisitive RIGHTS NOT EXTINGUISHED BY PRESCRIPTION
prescription: [Art. 1143, CC]
1.   Good faith of the possessor; and a.   To demand a right of way, regulated by Art. 649,
2.   Proof of just title CC;
b.   To bring an action to abate a public or private
Note: nuisance.
•   For extraordinary prescription, only possession in
the concept of owner is required; no need of good ACTION TO QUIET TITLE IF PLAINTIFF IS IN
faith and just title. POSSESSION
•   Possession has to be in the concept of an owner, When plaintiff is in possession of the property: the
public, peaceful, and uninterrupted. action to quiet title does not prescribe.

The reason is that the owner of the property or right


b.  Extinctive Prescription may wait until his possession is disturbed or his title is
assailed before taking steps to vindicate his right.
The loss or extinguishment of property rights or actions
through the possession by another of a thing for the VOID CONTRACTS
period provided by law or through failure to bring the The action or defense for the declaration of the
necessary action to enforce one’s right within the inexistence of a contract does not prescribe. [Art. 1410,
period fixed by law. CC]

Acquisitive Prescription Extinctive Prescription ACTION TO DEMAND PARTITION


No prescription shall run in favor of a co-owner or co-
Requires positive action Requires inaction of the heir against his co-owners or co-heirs so long as he
of the possessor (a owner out of possession expressly or impliedly recognizes the co-ownership.
claimant) who is not the or neglect of one with a [Art. 494, CC]
owner right to bring his action
Applicable to all kinds of PROPERTY OF PUBLIC DOMINION
Applicable to ownership Prescription, both acquisitive and extinctive, does not
rights, whether real or
and other real rights run against the State in the exercise of its sovereign
personal
function to protect its interest EXCEPT with respect to
Vests the property and Vests the property and its patrimonial property which may be the object of
raise a new title in the raise a new title in the prescription. [Art. 1113, CC]
occupant occupant
Results in the acquisition PRESCRIPTION DISTINGUISHED FROM LACHES
Merely results in the loss
of ownership or other real Prescription Laches
of a real or personal right,
rights in a person as well
or bars the cause of Concerned with the fact Concerned with the effect
as the loss of said
action to enforce said of delay of delay
ownership or real rights
right
in another Principally a question of
Can be proven under the Should be affirmatively inequity of permitting a
general issue without its pleaded and proved to claim to be enforced, this
being affirmatively bar the action or claim of A question or a matter of inequity being founded
pleaded the adverse party time on some subsequent
change in the condition
or the relation of the
3.  No Prescription Applicable parties
Statutory NOT statutory
BY OFFENDER: The offender can never acquire,
through prescription, movable properties possessed Applies at law Applies at equity
through a crime. Being a defense of equity,
REGISTERED LANDS: No title to registered land in Cannot be availed of
need not be specifically
derogation of the title of the registered owner shall be unless it is especially
pleaded

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pleaded as an affirmative 2.   A quasi-contract


allegation All other actions whose
5 years [Art.
periods are not fixed in the CC
NOT based on a fixed 1149, CC]
Based on a fixed time or in other laws
time
Actions upon:
4 years [Art. 1.   An injury to the rights of
4.  P rescription or Limitation 1145, CC] the plaintiff
2.   A quasi-delict
of Actions 1.   Actions for [Art. 1147, CC]
a.   Forcible entry within
a.  To Recover Movable one year from date of
dispossession thru
Properties FISTS or unlawful
detainer 1 year from
1.   The action prescribes in 8 years from the time the date of last demand
possession thereof is lost. [Art. 1140, CC] b.   Defamation
2.   However, the action shall not prosper if it is 2.   Actions upon an injury to
brought after 4 years when the possessor has the rights of the plaintiff
already acquired title by ordinary acquisitive or upon a quasi-delict
prescription. [Art. 1132, CC] resulting from any act of
3.   If the possessor acquired the movable in good any public officer
faith at a public sale, the owner cannot obtain its involving the exercise of
return without reimbursing the price paid. powers arising from
Martial Law including the
1 year
b.  To Recover Immovables arrest, detention and/or
trial of the plaintiff
General Rule: Real actions prescribe after 30 years [Art. 3.   To recover possession de
1141, CC] facto [Art. 554 (4), CC]
4.   To revoke a donation on
Exception: The possessor has acquired ownership of the ground of ingratitude
the immovable by ordinary acquisitive prescription [Art. 769, CC]
through possession of 10 years. [Art. 1134, CC] 5.   To rescind or recover
damages if immovable is
Action for reconveyance sold with non-apparent
1.   Based on fraud: Prescribes 4 years from the burden or servitude [Art.
discovery of fraud. 1560 (3,4), CC]
2.   Based on implied or constructive trust: 10 years 6.   To enforce warranty of
from the alleged fraudulent registration or date of solvency of debts in
issuance of certificate of title over the property. assignment of credits
[Art. 1629, CC]
c.   Other Actions
5.  I nterruption [Art. 1155, CC]
Prescriptive
Period Prescription of actions is interrupted when:
1.   Action to foreclose a a.   They are filed before the court
mortgage (from the time b.   When there is a written extrajudicial demand by
the principal obligation the creditors
becomes due and c.   When there is any written acknowledgment of the
10 years [Art. demandable debt by the debtor
1144, CC] 2.   Actions upon:
a.   A written contract Types of interruption
b.   An obligation created a.   Natural - Any natural cause that interrupts the
by law possession for more than one year
c.   A judgment b.   Civil
6 years [Art. Actions upon: 1.   For acquisitive prescription – starts from the
1145, CC] 1.   An oral contract time judicial summons are received

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2.   For extinctive prescription – starts from the


time action is filed in court, written   LEASE
extrajudicial demand by the creditors is
received, or when there is written 1.   General Concept of Lease
acknowledgment of the debt by the debtor
[Art. 1155, CC]
a.  Characteristics of Every
Civil actions are deemed commenced from the date of Lease
the filing and docketing of the complaint with the Clerk
of Court. [Cabrera v. Tiano, G.R. No. L-17299 (1963)] 1.   Temporary duration
2.   Onerous
A written extrajudicial demand wipes out the period 3.   Price is fixed according to the duration of the
that has already elapsed and starts anew the contract [Tolentino]
prescriptive period [The Overseas Bank of Manila v.
Geraldez, G.R. No. L-46541 (1979)]
b.  Kinds of Lease [Art. 1642,
Not all acts of acknowledgement of a debt interrupt CC]
prescription. To produce such effect, the
acknowledgment must be “written”, so that the 1.   Lease of things
payment, if not coupled with the communication a.   Movables and immovables
signed by the payor would interrupt the running of the b.   One of the parties binds himself to give to
period of prescription [PNB v. Osete, G.R. No. L-24997 another the enjoyment or use of a thing for a
(1968)] price certain, and for a period which may be
definite or indefinite, but not to exceed 99
Suspension in case of acquisitive prescription years [Art. 1643, CC].
The period of interruption shall be counted in favor of c.   Special provisions for lease of rural and urban
prescription (i.e. as if interruption never happened but lands
1
is merely suspended) if: 2.   Lease of work or services [Arts. 1700-1712, CC]
a.   Judicial summons is void a.   One of the parties binds himself to execute a
b.   Plaintiff should desist from the complaint piece of work or to render to the other some
c.   Possessor be absolved from the complaint service for a price certain, but the relation of
principal and agent does not exist between
Note: There is no suspension in extinctive prescription. them [Art. 1644, CC].
b.   Household help
Effects of interruption c.   Contract of Labor [Arts. 1713-1731, CC]
a.   All the benefits acquired so far from the d.   Lease of services of common carrier [Arts.
possession ceases 1732-1763, CC]
b.   When the prescription runs again, it will be reset
(i.e. entirely new prescriptive period)
2.  L ease of Things
a.  General Concept
Art. 1643, CC. In the lease of things, one of the
parties binds himself to give to another the
enjoyment or use of a thing for a price certain, and
for a period which may be definite or indefinite.
However, no lease for more than ninety-nine years
shall be valid.

Special characteristics
a.   Essential purpose is to transmit the
use/enjoyment of a thing
b.   Consensual

1
Excluded from Bar Coverage: 1) Household Service; 2) Contract of
Labor; 3) Contract for Piece of Work

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c.   Onerous The lease of a piece of rural land, when its duration has
d.   Price is fixed in relation to the period of not been fixed, is understood to have been for all the
use/enjoyment time necessary for the gathering of the fruits which the
e.   Temporary whole estate leased may yield in one year, or which it
may yield once, although two or more years have to
Subject Matter elapse for the purpose. [Art. 1682, CC]
General Rule: The subject matter must be within the
commerce of man. If the period for the lease has not been fixed, it is
Exceptions: Consumable things cannot be the subject understood to be from year to year, if the rent agreed
matter of lease, except: upon is annual; from month to month, if it is monthly;
a.   Consumable only for display or advertising (lease from week to week, if the rent is weekly; and from day
ad pompam et ostentionem) to day, if the rent is to be paid daily. However, even
b.   Goods are accessory to an industrial though a monthly rent is paid, and no period for the
establishment, e.g. coal in a factory [Art. 1645, lease has been set, the courts may fix a longer term for
CC] the lease after the lessee has occupied the premises for
over one year. If the rent is weekly, the courts may
b.  Lease of Things as likewise determine a longer period after the lessee has
been in possession for over six months. In case of daily
Distinguished from Other rent, the courts may also fix a longer period after the
Concepts lessee has stayed in the place for over one month. [Art.
1687, CC]
Sale
In lease, only use and enjoyment is transferred, while d.  Assignment of Lease
in sale, ownership is transferred; In lease, price may be
in money, fruits, some other useful things, or even The lessee cannot assign the lease without the consent
some prestation, unlike in sale where the price must be of the lessor, unless there is a stipulation to the
in money or its equivalent. contrary. [Art. 1649, CC]

Usufruct
Lease is not a real right except when lease is registered
and for a period of more than 1 year, whereas usufruct
e.   Sublease
is a real right; lessor need not be owner of the thing
and the use is limited to that in the contract, whereas When in the contract of lease of things there is no
a usufruct generally includes all possible uses and express prohibition, the lessee may sublet the thing
manner of enjoyment of property. leased, in whole or in part, without prejudice to his
responsibility for the performance of the contract
Commodatum toward the lessor. [Art. 1650, CC]
Lease is essentially onerous, whereas a commodatum
is essentially gratuitous. Under the House Rental Law (R.A. No. 887), there is a
presumption that there would be no sublease unless
the lessor allows it.
c.   Period of Lease
Distinguished from assignment
Cannot be perpetual – there must always be a period, In assignment, there is a transfer to a third person of
whether definite or indefinite. However, no lease for the rights and obligations arising from the lease
more than 99 years shall be valid. contract, whereas in a sublease, there is another
contract of lease where the original lessee becomes a
If at the end of the contract the lessee should continue lessor, and the original lease contract remains binding
enjoying the thing leased for fifteen days with the on the lessee.
acquiescence of the lessor, and unless a notice to the
contrary by either party has previously been given, it is Obligation of sublessee to lessor
understood that there is an implied new lease, not for Without prejudice to his obligation toward the
the period of the original contract, but for the time sublessor, the sublessee is bound to the lessor for all
established in Arts. 1682 and 1687, CC. The other terms acts which refer to the use and preservation of the
of the original contract shall be revived [Art. 1670, CC]. thing leased in the manner stipulated between the
lessor and the lessee. [Art. 1651, CC]

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The sublessee is subsidiarily liable to the lessor for any 3.   To pay expenses for the deed of lease.
rent due from the lessee. However, the sublessee shall 4.   To suspend the payment of the rent in case the
not be responsible beyond the amount of rent due from lessor fails to make the necessary repairs or to
him, in accordance with the terms of the sublease, at maintain the lessee in peaceful and adequate
the time of the extra-judicial demand by the lessor. enjoyment of the property leased. [Art. 1658, CC]
Payments of rent in advance by the sublessee shall be 5.   To tolerate the work, if during the lease it should
deemed not to have been made, so far as the lessor's become necessary to make some urgent repairs
claim is concerned, unless said payments were upon the thing leased, which cannot be deferred
effected in virtue of the custom of the place. [Art. 1652, until the termination of the lease. This lessee is
CC] obligated to tolerate although it may be very
annoying to him, and although during the same,
f.   Rights and Obligations of he may be deprived of a part of the premises. [Art.
1662, CC]
Lessor
Rules in case of repairs
Rights and Obligations of Lessor [Art. 1654, CC] a.   If the repairs last more than forty days the rent
a.   To deliver the thing which is the object of the shall be reduced in proportion to the time -
contract in such a condition as to render it fit for including the first forty days - and the part of
the use intended; the property of which the lessee has been
b.   To make on the same during the lease all the deprived.
necessary repairs in order to keep it suitable for b.   When the work is of such a nature that the
the use to which it has been devoted, unless there portion which the lessee and his family need
is a stipulation to the contrary; for their dwelling becomes uninhabitable, he
c.   To maintain the lessee in the peaceful and may rescind the contract if the main purpose
adequate enjoyment of the lease for the entire of the lease is to provide a dwelling place for
duration of the contract. the lessee.
d.   To not alter the form of the thing leased in such a 6.   To bring to the knowledge of the proprietor, within
way as to impair the use to which the thing is the shortest possible time, every usurpation or
devoted under the terms of the lease. [Art. 1661, untoward act which any third person may have
CC] committed or may be openly preparing to carry out
upon the thing leased. In case of failure, lessee
The lessor is not obliged to answer for a mere act of liable for damages which may be suffered by the
trespass which a third person may cause on the use of proprietor through the lessee’s negligence. [Art.
the thing leased but the lessee shall have a direct 1663, CC]
action against the intruder. There is a mere act of 7.   To advise the owner, with the same urgency, of the
trespass when the third person claims no right need of all necessary repairs in order to keep the
whatever. [Art. 1664, CC] property suitable to the use for which it has been
devoted. In case of failure, lessee liable for
The provisions governing warranty, contained in the damages which may be suffered by the proprietor
Title on Sales, shall be applicable to the contract of through the lessee’s negligence. If the lessor fails
lease. In the cases where the return of the price is to make urgent repairs, the lessee, in order to
required, reduction shall be made in proportion to the avoid an imminent danger, may order the repairs
time during which the lessee enjoyed the thing. [Art. at the lessor’s cost. [Art. 1663, CC]
1653, CC] 8.   To return the thing leased, upon the termination
of the lease, as he received it, save what has been
g.  Rights and Obligations Of lost or impaired by the lapse of time, or by ordinary
wear and tear, or from an inevitable cause. [Art.
Lessee 1665, CC]
Rights and Obligations of Lessee [Art. 1657, CC] Responsibility for deterioration of loss
1.   To pay the price of the lease according to the terms The lessee is responsible for the deterioration or loss of
stipulated; the thing leased, unless he proves that it took place
2.   To use the thing leased as a diligent father of a without his fault. This burden of proof does not apply
family, devoting it to the use stipulated; and in the when the destruction is due to earthquake, flood,
absence of stipulation, to that which may be storm or other natural calamity. [Art. 1667, CC]
inferred from the nature of the thing leased,
according to the custom of the place;

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The lessee is liable for any deterioration caused by Remedy of Lessee:


members of his household and by guests and visitors. 1.   Demand that he be allowed to gather the fruits of
[Art. 1668, CC] the harvest which corresponds to the current
agricultural year; and
Useful improvements in good faith made by lessee 2.   Demand that the vendor indemnify him for
[Art. 1678, CC] damages suffered.

Conditions: i.   Remedies
1.   Improvements are suitable to the use for which the
lease is intended 1.   Ejectment
2.   Improvements does not alter the form or
substance of the property leased Grounds [Art. 1673, CC]:
a.   When the period agreed upon, or that which is
Effect: The lessor upon the termination of the lease fixed for the duration of leases under Arts.
shall pay the lessee one- half of the value of the 1682 and 1687, CC has expired;
improvements at that time. b.   Lack of payment of the price stipulated;
c.   Violation of any of the conditions agreed upon
If lessor refuses to reimburse, lessee may remove the in the contract;
improvements, even though the principal thing may d.   When the lessee devotes the thing leased to
suffer damage thereby. He shall not, however, cause any use or service not stipulated which causes
any more impairment upon the property leased than is the deterioration thereof; or if he does not
necessary. observe the requirement in No. 2 of Art. 1657,
CC as regards the use thereof.
In case of ornamental expenses
1.   Lessee not entitled to reimbursement Note: The ejectment of tenants of agricultural
2.   Lessee may remove the ornamental objects, lands shall be governed by special laws.
provided:
a.   no damage is caused to the principal thing 2.   Right to Ask for Writ of Preliminary Mandatory
b.   lessor does not choose to retain them by Injunction in Unlawful Detainer Cases
paying their value at the time the lease is
extinguished.
Art. 1674, CC. In ejectment cases where an appeal
is taken the remedy granted in Article 539, second
h.  Rights of Purchaser of paragraph, shall also apply, if the higher court is
Leased Land to Terminate satisfied that the lessee's appeal is frivolous or
dilatory, or that the lessor's appeal is prima facie
the Lease [Art. 1676, CC] meritorious. The period of ten days referred to in
said article shall be counted from the time the
The purchaser of a piece of land which is under a lease appeal is perfected.
that is not recorded in the Registry of Property may
terminate the lease.
Art. 539. Every possessor has a right to be
Exceptions: respected in his possession; and should he be
1.   when there is a stipulation to the contrary in the disturbed therein he shall be protected in or
contract of sale restored to said possession by the means
2.   when the purchaser knows of the existence of the established by the laws and the Rules of Court.
lease
3.   when the sale is fictitious for the purpose of A possessor deprived of his possession through
extinguishing the lease forcible entry may within ten days from the filing
•   The sale is presumed to be fictitious if at the of the complaint present a motion to secure from
time the supposed vendee demands the the competent court, in the action for forcible
termination of the lease, the sale is not entry, a writ of preliminary mandatory injunction
recorded in the Registry of Property. to restore him in his possession. The court shall
4.   When sale is with the right of redemption decide the motion within thirty (30) days from the
filing thereof.
•   The purchaser in a sale with the right of
redemption cannot make use of the power to
3.   Rescission or Specific Performance, plus
eject the lessee until the end of the period for
damages
the redemption. [Art. 1677, CC]

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utilization of the fruits, all in accordance with the


Alternative remedies: Upon failure of the lessee to custom of the place.
pay the stipulated rent at the time agreed upon,
the lessor may elect between the remedies of Notes:
performance and rescission. In either case, he is •   Land tenancy on shares shall be governed by
entitled to such damages as are appropriate. special laws, the stipulations of the parties, the
[Tolentino] provisions on partnership and by the customs of
the place. [Art. 1684, CC]
j.   Lease of Rural and Urban •   The tenant on shares cannot be ejected except in
cases specified by law. [Art. 1685, CC]
Lands
Special Provisions for Lease of Urban Lands
Distinction The kind of repairs on urban property for which the
The purpose of the property is the controlling factor in lessor is liable is determined by [Art. 1686, CC]:
determining whether the land is rural or urban. 1.   Stipulation
2.   Custom of the place
Urban: principal purpose if dwelling 3.   In case of doubt it is understood that the repairs
are chargeable against him.
Rural: principal purpose is exploitation of the soil.
Duration of Lease [Art. 1687, CC]
Special Provisions for Lease of Rural Lands If not fixed:
Lessee shall have no right to a reduction of the rent: 1.   It is understood to be from year to year, if the rent
1.   On account of the sterility of the land leased, or agreed upon is annual;
by reason of the loss of fruits due to ordinary 2.   From month to month, if it is monthly;
fortuitous events [Art. 1680, CC]
However, even though a monthly rent is paid, and
Exception: Lessee has right to reduction in case of no period for the lease has been set, the courts
the loss of more than one-half of the fruits through may fix a longer term for the lease after the
extraordinary and unforeseen fortuitous events, lessee has occupied the premises for over one
save always when there is a specific stipulation to year.
the contrary. 3.   From week to week, if the rent is weekly;
Extraordinary fortuitous events are understood to If the rent is weekly, the courts may likewise
be: fire, war, pestilence, unusual flood, locusts, determine a longer period after the lessee has
earthquake, or others which are uncommon, and been in possession for over six months.
which the contracting parties could not have 4.   From day to day, if the rent is to be paid daily.
reasonably foreseen.
2.   If the fruits are lost after they have been In case of daily rent, the courts may also fix a
separated from their stalk, root or trunk [Art. longer period after the lessee has stayed in the
1681, CC] place for over one month.
Duration of Lease When the lessor of a house, or part thereof, used as a
If not fixed, it is understood to have been for all the dwelling for a family, or when the lessor of a store, or
time necessary for the gathering of the fruits which the industrial establishment, also leases the furniture, the
whole estate leased may yield in one year, or which it lease of the latter shall be deemed to be for the
may yield once, although two or more years have to duration of the lease of the premises. [Art. 1688, CC]
elapse for the purpose. [Art. 1682, CC]

Obligation of outgoing lessee 3.  Lease of Work and Labor


Allow the incoming lessee or the lessor the use of the
premises and other means necessary for the a.  Household Service
preparatory labor for the following year
Household service shall always be reasonably
Obligation of incoming lessee or the lessor compensated and any stipulation to the contrary shall
Permit the outgoing lessee to do whatever may be be void. Compensation shall be on top of lodging, food,
necessary for the gathering or harvesting and and medical attendance.

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Obligations of the head of the family:


1.   Furnish suitable and sanitary quarters, adequate
food, and medical attendance.
2.   Opportunity for at least elementary education, if
house helper is under 18.
3.   Treat the house helper in a just and humane
manner.
4.   Bear funeral expenses in case of death, if house
helper has no relatives living nearby.
5.   To not terminate the contract before expiration of
the period fixed, except for a just cause.
6.   To provide a written statement of the nature and
duration of service and efficiency and conduct of
the house helper, if demanded upon
extinguishment of service.

Period: Maximum of 2 years, but renewable.

Limitations:
1.   House helper shall not be required to work more
than 10 hours a day.
2.   House helper shall be allowed 4 days vacation
each month, with pay.

b.  Contract of Labor
The relation between capital and labor are not merely
contractual, but are so imbued with public interest that
labor contracts are subject to special laws.

c.   Contract for a Piece of


Work
A contract where the contractor binds himself to
execute a piece of work for the employer, in
consideration of a certain price or compensation. The
contractor may either employ only his labor or skill, or
also furnish the material.

d.  Grounds of Termination of
Lease
1.   Expiration of the period
2.   Total loss of the thing
3.   Resolution of the right of lessor (lessor-
usufructuary and usufruct expires)
4.   Will of the purchaser or transferee of things
5.   Rescission

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OBLIGATIONS AND
CONTRACTS
Civil Law

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V.   OBLIGATIONS c.   NOT TO DO: negative personal obligation; to


abstain from doing an act; includes the obligation
not to give.
  Obligations, in General Requisites of a Prestation:
a.   POSSIBLE - physically and juridically;
1.   Definition b.   ASSESSABLE - Must have a possible equivalent
in money.
c.   DETERMINATE, or at least, DETERMINABLE
Art. 1156, CC. An obligation is a juridical necessity
to give, to do or not to do.
4.  C lassification of
Note: Art. 1156 provides the definition of civil
obligations only (…juridical necessity); it does not
Obligations
cover natural obligations.
a.  As to Sanction
It is the legal relation established between one party
and another, whereby the latter is bound to the 1.   CIVIL OBLIGATION (or perfect obligation) – give
fulfillment of a prestation which the former may a right of action to compel their performance; the
demand of him. [Manresa] sanction is judicial process
2.   NATURAL OBLIGATION – midway between civil
An obligation is a juridical relation, whereby a person and purely moral obligations; there is a juridical
(called the creditor) may demand from another (called tie, but performance is left to the will of the
the debtor) the observance of a determinate conduct, debtor; after voluntary fulfillment by the obligor,
and in case of breach, may obtain satisfaction from the the sanction is the law
assets of the latter. [Ramos] 3.   MORAL OBLIGATION (or imperfect obligation) –
the sanction is conscience or morality. These
obligations are not judicially demandable. Moral
2.  E lements of an Obligation duty is not a valid consideration.
a.   ACTIVE SUBJECT (Obligee/Creditor): The person Natural Obligations
(natural or juridical) who has the right or power to
Art. 1423, CC. Natural obligations, not being based
demand the prestation.
on positive law but on equity and natural law, do
b.   PASSIVE SUBJECT (Obligor/Debtor): The person
not grant a right of action to enforce their
bound to perform the prestation.
performance, but after voluntary fulfillment by the
c.   PRESTATION (Object): The conduct required to
obligor, they authorize the retention of what has
be observed by the debtor/obligor (to give, to do,
been delivered or rendered by reason thereof.
or not to do).
d.   VINCULUM JURIS (Juridical or Legal Tie; Efficient
Cause): That which binds or connects the parties Natural obligations are midway between civil
to the obligation. [de Leon] obligations and purely moral obligations. It is
distinguished from moral in that it produces some
It is established by: juridical effects (ex. Right to retention), but is
a.   law distinguished from civil in that it does not give rise to
b.   bilateral acts (e.g. contracts giving rise to an action to compel its performance [Tolentino].
obligations stipulated therein)
c.   unilateral acts (e.g. crimes and quasi- Payment is voluntary when the debtor knows that the
delicts) obligation is a natural one which cannot be coerced
nor recovered through solutio indebiti.

3.  Kinds of Prestations “Fulfillment” does not refer only to the delivery of


things, but also to the performance of an act, the
a.   TO GIVE: real obligation; to deliver either (1) a giving of security, and the execution of a document.
specific or determinate thing, or (2) a generic or
indeterminate thing. Payment by mistake by a debtor believing the
b.   TO DO: positive personal obligation; includes all obligation to be a civil one, may be recovered on the
kinds of work or service. principle of solutio indebiti [de Leon].

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The contractor builds additional works, but is paid the Art. 1158, CC. Obligations derived from law are not
additional cost of such works. Payor characterizes the presumed. Only those expressly determined in this
payment as a "mistake," and not a "voluntary" Code or in special laws are demandable, and shall
fulfillment under Art. 1423 of the Civil Code. Hence, it be regulated by the precepts of the law which
urges the application of the principle of solution establishes them; and as to what has not been
indebiti. However, it is not enough to prove that the foreseen, by the provisions of this Book.
payments made by payor to contractor were "not due"
because there was no prior authorization or Obligations arise when imposed by the law itself and
agreement with respect to additional works. There is a cannot be presumed; examples include obligation to
further requirement that the payment by the debtor pay taxes and obligation to support one’s family.
was made either through mistake or under a cloud of
doubt. In short, for the provisions on solutio indebiti to
apply, there has to be evidence establishing the frame b.  Contracts
of mind of the payor at the time the payment was
made [Uniwide v Titan-Ikeda, G.R. No. 126619, (2006)]. Art. 1159, CC. Obligations arising from contracts
have the force of law between the contracting
parties and should be complied with in good faith.
b.  As to Subject Matter
1.   REAL – obligation to give This article expresses the principle of autonomy of will.
2.   PERSONAL – obligation to do or not to do
Obligations arise from stipulation of the parties; it has
c.   As to the Affirmativeness the force of law and should be complied with in good
faith in accordance with the stipulations and terms;
or Negativeness of the examples include obligation to pay loan by virtue of an
Obligation agreement.

1.   POSITIVE/AFFIRMATIVE – obligation to give or c.   Quasi-Contracts


to do
2.   NEGATIVE: obligation not to give or not to do
Art. 1160, CC. Obligations derived from quasi-
contracts shall be subject to the provisions of
d.  As to Persons Obliged Chapter 1, Title XVII, of this Book.
Obligations arise from lawful, voluntary and unilateral
1.   UNILATERAL – only one of the parties is bound acts enforceable to the end that no one shall be
2.   BILATERAL – both parties are bound unjustly enriched or benefited at the expense of
a.   Reciprocal – performance by one is another.
dependent on the performance by the other
b.   Non-reciprocal – performance by one is Kinds:
independent of the other [Paras] 1.   Negotiorum gestio (Officious management) –
voluntary management of the property or affairs
5.  S ources of Obligation of another without knowledge or consent of the
latter; obligation is to continue the same until
termination of the affair and its incidents
Art. 1157, CC. Obligations arise from:
(1)   Law;
Exceptions:
(2)   Contracts;
a.   When property is not neglected
(3)   Quasi-contracts;
b.   If manager is tacitly authorized [Art. 2144, CC]
(4)   Acts or omissions punished by law; and
(5)   Quasi-delicts.
2.   Solutio indebiti (Payment not due) – when
something is received when there is no right to
demand it and unduly delivered through mistake;
obligation is to return the undue payment [Art.
2154, CC]
a.  Law
d.  Acts or Omissions
Punishable by Law

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Art. 1161, CC. Civil obligations arising from criminal


  Nature! and! Effect! of!
offenses shall be governed by the penal laws,
subject to the provisions of Article 2177, and of the
Obligations!
pertinent provisions of Chapter 2, Preliminary Title,
on Human Relations, and of Title XVIII of this Book, 1.   Obligation “To Give”
regulating damages.
a.  Type of Things
Civil liability arises as a consequence of criminal
offense; examples include obligation of a thief to Limited
return as stolen car and duty of killer to indemnify Specific Thing Generic Thing
Generic Thing
victim’s heirs. Particularly
designated or
e.   Quasi-Delicts physically
Object is When the
segregated
designated generic objects
Art. 1162, CC. Obligations derived from quasi- from all others
only by its are confined to
delicts shall be governed by the provisions of of the same
class/ genus/ a particular
Chapter 2, Title XVII of this Book, and by special class [Art.1460,
species. class.
laws. CC];
Identified by
Obligations arise from damages caused to another individuality.
through an act or omission, there being fault or Can be
Can be
negligence but no contractual relations exist between Cannot be substituted by
substituted by
the parties. substituted any of the
any of the
against the same
same class
A single act or omission may give rise to different obligee’s will. particular
and same kind.
causes of action. class.

A concurrence of scope in regard to negligent acts


does not destroy the distinction between the civil b.  Rights and Duties of
liability arising from a crime and the responsibility for Parties
cuasi-delitos or culpa extra-contractual. The same
negligent act causing damages may produce civil Duties of the Debtor Rights of the Creditor
liability arising from a crime... or create an action for To Give a Specific Thing
cuasi-delito or culpa extra-contractual. [Barredo vs. 1.   To preserve or take 1.   To compel delivery
Garcia, G.R. No. L-48006 (1942)] care of the thing [Art. 1165, CC]
due with the proper 2.   To fruits from the
diligence of a good time the obligation
father of a family to deliver arises
[Art. 1163, CC] [Art. 1164, CC]
2.   To deliver the thing 3.   To accessions and
itself [Art. 1165, CC] accessories, even if
3.   To deliver the fruits not mentioned
of the thing [Art. 1166, CC]
1164, CC] 4.   Not to be
4.   To deliver its compelled to
accessions and receive a different
accessories [Art. one, although of
1166, CC] the same value as,
a.   accessions – or more valuable
everything than that which is
which is due [Art. 1244, CC]
produced by a 5.   To recover
thing, or which damages in case of
is incorporated breach, exclusive or
or attached in addition to

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thereto, specific 2.   To shoulder the at the cost of the


excluding fruits performance [Arts. cost of execution debtor [Art. 1167,
b.   accessories – 1165, 1170, CC] should he fail to do CC]
things destined it [Art. 1167, CC] 2.   To recover
for the 3.   To undo what has damages in case of
embellishment, been poorly done breach [Art. 1170,
use or [Art. 1167, CC] CC]
preservation of 4.   To pay damages in
another thing case of breach [Art. Note: The debtor cannot
of more 1170, CC] be compelled to
importance perform his obligation.
5.   To pay damages in The ultimate sanction
case of breach [Art. of civil obligations is
1170, CC] indemnification of
To Give a Generic Thing damages. This would
1.   To take care of the be tantamount to
thing [Art. 1163, CC] involuntary servitude.
2.   To deliver a thing of Not To Do
the quality 1.   To ask that the 1.   To ask to undo
intended by the obligation be what should not be
parties taking into complied with [Art. done, at the
consideration the 1165, CC] debtor’s expense.
purpose of the 2.   To ask that the [Art. 1168, CC]
obligation and obligation be 2.   To recover
other complied with by a damages, where it
circumstances [Art. third person at the would be physically
1246, CC] expense of the or legally
3.   Creditor cannot debtor impossible to undo
demand a thing of 3.   To recover 1.   Not to do what what should not
superior quality; damages in case of should not be done have been done,
neither can the breach [Art. 1165, 2.   To shoulder cost of because of :
debtor deliver a CC] undoing what a.   the very nature
thing of inferior 4.   Not to be should not have of the act itself;
quality. compelled to been done [Art. b.   rights acquired
4.   To pay damages in receive a different 1168, CC] by third
case of breach [Art. one, although of 3.   To pay damages in persons who
1170, CC] the same value as, case of breach [Art. acted in good
or more valuable 1170, CC] faith;
Note: No legal than that which is c.   when the
accessory obligations due [Art. 1244, CC] effects of the
arise until thing is acts prohibited
separated from others are definite in
of their kind. [Reyes and character and
Puno] will not cease
even if the
thing
2.  O bligation “To Do” or prohibited be
“Not To Do” undone.

a.  Rights and Duties of 3.  Breach


Parties
Those who in the performance of their obligations are
Duties of the Debtor Rights of the Creditor guilty of:
To Do a.   FRAUD (dolo): The fraud contemplated by the
1.   To do it [Art. 1167, 1.   To have the foregoing provision is the deliberate and
CC] obligation executed

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intentional evasion of the normal fulfillment of and not merely on the percentage of the amount not
obligations. paid. [Cannu v Galang, G.R. No. 139523 (2005)]
b.   NEGLIGENCE (culpa): Fault or negligence of the
debtor as an incident in the fulfillment of an b.  Default, Delay, or Mora
existing obligation.
c.   DELAY (mora): Delay in the fulfillment of the Failure to perform an obligation on time which
obligation. The delay however must be imputable constitutes breach of the obligation. [de Leon]
to the debtor/obligor.
d.   AND THOSE WHO IN ANY MANNER Rules on Default, Delay, or Mora
CONTRAVENE THE TENOR THEREOF: Covers Unilateral Obligations Reciprocal Obligations
any illicit act which impairs the strict and faithful
General Rule: “No
fulfillment of the obligation
demand, No delay.”
Are liable for damages. [Art. 1170, CC]
The mere expiration of
a.  Complete Failure to the period fixed by the
Perform parties is not enough in Neither party incurs in
order that the debtor delay if the other does
Slight or Casual may incur in delay. not comply or is not
Substantial Breach Those obliged to deliver ready to comply in a
Breach
1.   Partial breach or to do something proper manner with
1.   Total breach incur in delay from the what is incumbent upon
2.   There is partial/
2.   Amounts to non- time the obligee him. From the moment
substantial
performance, basis judicially or one of the parties
performance in
for rescission extrajudicially demands fulfills his obligation,
good faith
(resolution) under from them the delay by the other
3.   Gives rise to
Art. 1191 and fulfillment of their begins. [Art. 1169 par. 3,
liability for
payment of obligation. [Art. 1169 CC]
damages only [Art.
damages par. 1, CC]
1234, CC]
No delay if neither
Exceptions: Demand is performs.
If the obligation has been substantially performed in
not necessary in order
good faith, the obligor may recover as though there
that delay may exist
had been a strict and complete fulfillment, less
damages suffered by the obligee. [Art. 1234, CC] under the
circumstances listed in
Art 1169 par 2, (1)-(3).
In order that there may be substantial performance of
an obligation, there must have been an attempt in
good faith to perform, without any willful or Demand may be judicial or extrajudicial.
intentional departure therefrom. The deviation from Reminder is not considered a demand for
the obligation must be slight, and the omission or performance. It must appear that the tolerance or
defect must be technical and unimportant, and must benevolence of the creditor must have ended.
not pervade the whole or be so material that the object [Tolentino]
which the parties intended to accomplish in a
particular manner is not attained. The non- When demand is not necessary in order that delay
performance of a material part of a contract will may exist [par. 2, Art. 1169, CC]
prevent the performance from amounting to a 1.   When demand would be useless, as when the
substantial compliance… The compulsion of payment obligor has rendered it beyond his power to
is predicated on the substantial benefit derived by the perform; such as:
obligee from the partial performance. Although a.   When the impossibility is caused by some act
compelled to pay, the obligee is nonetheless entitled or fault of the debtor (e.g. debtor absconded
to an allowance for the sum required to remedy or has destroyed the thing to be delivered);
omissions or defects and to complete the work agreed b.   When the impossibility is caused by a
upon. [International Hotel Corp v Joaquin, G.R. No. fortuitous event, but the debtor has bound
158361 (2013)] himself to be liable in cases of such event.
[Tolentino]
The question of whether a breach of contract is 2.   When from the nature and the circumstances of
substantial depends upon the attending circumstances the obligation it appears that the designation of

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the time when the thing is to be delivered or the 2.   The debtor is exempted from risk of loss of the
service is to be rendered was a controlling motive thing, which is borne by the creditor.
for the establishment of the contract (time is of 3.   The expenses incurred by the debtor for the
the essence); preservation of the thing after the mora shall be
3.   When the law so provides; or chargeable to the creditor.
4.   When the obligation expressly so declares; 4.   If the obligation bears interest, the debtor does
not have to pay from the time of delay.
Note: It is insufficient that the law or obligation 5.   The creditor is liable for damages.
fixes a date for performance. It must further state 6.   The debtor may relieve himself of the obligation
expressly that after the period lapses, default will by consigning the thing. [Tolentino]
commence;
Compensatio morae
KINDS OF DELAY; REQUISITES AND EFFECTS Delay of both parties in reciprocal obligations.
1.   Moral Solvendi;
2.   Mora Accipiendi; The parties in a bilateral contract can regulate the
3.   Compensatio Morae order in which they shall comply with their reciprocal
prestations. Otherwise, the fulfillment must be
Mora solvendi simultaneous and reciprocal. Thus, one party cannot
demand performance by the other without offering to
Delay on the part of the debtor to fulfil his obligation comply with his own prestation. [Tolentino]
either to give (ex re) or to do (ex persona).
Effects:
Requisites: 1.   Delay of the obligor cancels delay of obligee (and
1.   Obligation must be liquidated, due and vice versa) hence it is as if there is no default.
demandable 2.   The liability of the first infractor shall be equitably
2.   Non-performance by the debtor within the period tempered by the courts. If it cannot be determined
agreed upon which of the parties first violated the contract, the
3.   Demand, judicial or extra-judicial, by the creditor, same shall be deemed extinguished, and each
unless demand is not necessary under the shall bear his own damages. [Art. 1192, CC]
circumstances enumerated in Art 1169 par (2).
Cessation of the Effects of Mora
There is no mora solvendi in: 1.   Express or implied renunciation by the creditor;
1.   Negative obligations because delay is impossible 2.   Prescription. [Tolentino]
[de Leon]
2.   Natural obligations [Tolentino] Equitable Tempering under Art. 1192 vs.
Under Art. 2215 [Ong v Bognalbal, G.R. No.
Effects:
149140, (2006)]
1.   The debtor is liable for damages. [Art. 1170, CC]
Art 1192 Art 2215
2.   For determinate objects, the debtor shall bear the
risk of loss, even if the loss is due to fortuitous “In contracts, quasi-
events. [1165 par 3, CC] contracts, and quasi-
delicts, the court may
Mora accipiendi “In case both parties equitably mitigate the
Delay on the part of the creditor to accept the have committed a damages under
performance of the obligation. breach of the circumstances other
obligation, the liability than the case referred
It is necessary however, that it be lawful for the debtor of the first infractor to in the preceding
to perform, and that he can perform. [Tolentino] shall be equitably article, as in the ff.
tempered by the courts. instances:
Requisites: xxx” (1) That the plaintiff
1.   Debtor offers performance. himself has
2.   Offer must be in compliance with the prestation contravened the terms
as it should be performed. of the contract xxx”
3.   Creditor refuses performance without just cause. Second infractor not Does not appear to
liable for damages at consider which infractor
Effects: all; only the first first committed the
1.   The responsibility of the debtor is reduced to fraud infractor is liable, but breach
and gross negligence.

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with his liability To influence a party


mitigated regarding an incident to
the contract (dolo
Articles 1192 and 2215 are not irreconcilably incidente)
conflicting. The plaintiff referred to in Article 2215(1) Result
should be deemed to be the second infractor, while the Breach of the obligation Vitiation of consent
one whose liability for damages may be mitigated is Remedy
the first infractor. Furthermore, the directions to Innocent party may
equitably temper the liability of the first infractor in annul the contract(if
Articles 1192 and 2215 are both subject to the Obligee may recover
dolo causante)
discretion of the court, despite the word "shall" in damages (Art. 1344, CC)
Damages (both dolo
Article 1192, in the sense that it is for the courts to causante or incidente)
decide what is equitable under the circumstances. Obligation Involved
[Ong v Bognalbal, G.R. No. 149140, (2006)] Voidable obligation (if
dolo causante)
Valid obligation
c.   Fraud (Dolo) in the Valid obligation (if dolo
incidente)
Performance of the
Obligation Dolo Causante – that which determines or is the
essential cause of the contract
Art. 1171, CC. Responsibility arising from fraud is
demandable in all obligations. Any waiver of an Dolo Incidente – refers only to some particular or
action for future fraud is void. accident of the obligation

Fraud (dolo) is the deliberate or intentional evasion of In order that fraud may vitiate consent, it must be the
the normal fulfilment of an obligation. [de Leon] dolo causante and not merely the dolo incidente,
A waiver of future fraud is void but past fraud may be inducement to the making of the contract. The false
subject of a valid waiver by the aggrieved party. [de representation was used by plaintiff to get from
Leon] defendant a bigger share of net profits. This is just
incidental to the matter in agreement... because
The fraud referred to here is that mentioned in Art. despite plaintiff’s deceit, respondent would have still
1170, which is the malice or bad faith in the entered into the contract. [Woodhouse vs. Halili, G.R.
performance of an existing obligation, and not the No. L-4811 (1953)]
fraud or deceit used to procure a contract. [Tolentino]
Requisites for Fraud to Vitiate a Contract (Dolo
Distinguished from Causal Fraud Causante)
Causal Fraud 1.   It must have been employed by one contracting
Fraud in the party upon the other;
(dolo causante and
Performance 2.   It must have induced the other party to enter into
dolo incidente)
[Art. 1170, CC] the contract;
[Arts. 1338, 1344, CC]
Definition 3.   It must have been serious; and
The deliberate and 4.   It must have resulted in damage or injury to the
intentional evasion of Every kind of deception party seeking annulment. [Tolentino]
the normal fulfilment of for the purpose of
obligations. leading another party d.  Negligence (Culpa) in the
[International Corporate into error and execute a Performance of the
Bank v Gueco,G.R. No. particular act.
141968 (2001)] Obligation
When Present
During the performance During the time of birth Art. 1172, CC. Responsibility arising from
of a pre-existing or perfection of the negligence in the performance of every kind of
obligation obligation obligation is also demandable, but such liability
Purpose may be regulated by the courts, according to the
To secure consent of circumstances.
To evade normal
another to enter the
fulfilment of obligation
contract(dolo causante)

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Art. 1173, CC. The fault or negligence of the obligor which may proceed from any force majeure. The
consists in the omission of that diligence which is fact that travellers are constrained to rely on the
required by the nature of the obligation and vigilance of the keeper of the hotels or inns shall be
corresponds with the circumstances of the persons, considered in determining the degree of care
of the time and of the place. required of him.

Diligence Required [de Leon] Art. 2001, CC. The act of a thief or robber, who has
1.   By stipulation of the parties entered the hotel is not deemed force majeure,
2.   By law, in the absence of stipulation unless it is done with the use of arms or through an
3.   Diligence of a good father of a family, if both the irresistible force.
contract and law are silent. [par. 2, Art. 1173, CC]
4.   Future negligence may be waived except in cases Art. 2002, CC. The hotel-keeper is not liable for
where the nature of the obligation or the public compensation if the loss is due to the acts of the
requires another standard of care (i.e. common guest, his family, servants or visitors, or if the loss
carriers) arises from the character of the things brought into
the hotel.
Note: Only future simple negligence may be
waived. Future gross negligence may not be
Test of Negligence
waived since such negligence amounts to fraud.
“Whether or not the defendant, in doing the alleged
negligent act, used the reasonable care and caution,
Exceptions:
which an ordinary and prudent person would have
1.   Common Carriers
used in the same situation” If not, then he is guilty of
Art. 1733, CC. Common carriers, from the nature of negligence. [Mandarin Villa Inc. v. CA, G.R. No. 119850
their business and for reasons of public policy, are (1996)]
bound to observe extraordinary diligence in the
vigilance over the goods and for the safety of the Question of Fact
passengers transported by them, according to all There is no fixed standard of diligence applicable to
the circumstances of each case. each and every obligation. Each case must be
determined upon its particular facts and
Such extraordinary diligence in the vigilance over circumstances, and the degree of diligence required
the foods is further expressed in articles 1734, 1735, for the purpose of an obligation must depend upon the
and 1745, Nos. 5, 6, and 7, while the extraordinary circumstances of the particular obligation. [Tolentino]
diligence for the safety of the passengers is further
set forth in articles 1755 and 1756. Kinds of Civil Negligence
Culpa Contractual Culpa Aquiliana
2.   Hotel and inn-keepers Negligence is merely
Negligence is direct,
incidental in the
Art. 1998, CC. The deposit of effects made by substantive and
performance of an
travellers in hotels or inns shall also be regarded as independent.
obligation.
necessary. The keepers of hotels or inns shall be There is always a pre- There may or may not
responsible for them as depositaries, provided that existing contractual be a pre-existing
notice was given to them, or to their employees, of relation. contractual obligation.
the effects brought by the guests and that, on the The source of obligation
part of the latter, they take the precautions which of defendant to pay The source of obligation
said hotel-keepers or their substitutes advised damages is the breach is the defendant’s
relative to the care and vigilance of their effects. or non-fulfillment of the negligence itself.
contract.
Art. 1999, CC. The hotel-keeper is liable for the Proof of the existence of
vehicles, animals and articles which have been the contract and of its
introduced or placed in the annexes of the hotel. The negligence of the
breach or non-
defendant must be
fulfillment is sufficient
proved.
Art. 2000, CC. The responsibility referred to in the prima facie to warrant
two preceding articles shall include the loss of, or recovery.
injury to the personal property of the guests caused Proof of diligence in the
Proof of diligence in the
by the servants or employees of the keepers of selection and
selection and
hotels or inns as well as strangers; but not that supervision of the

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employees is NOT supervision of the 2.   Act of Man: Force majeure is a superior or


available as defense, employee is a defense. irresistible force, which is essentially an act of
but may mitigate man; includes unavoidable accidents, even if
damages. there has been an intervention of human element,
provided that no fault or negligence can be
Extent of Damages to be Awarded [Art. 2201, CC] imputed to the debtor.
Good Faith Bad Faith
Obligor is liable for Obligor shall be Liability in case of Fortuitous Event
those that are the responsible for all No person shall be responsible for fortuitous events,
natural and probable damages which may be UNLESS:
consequences of the reasonably attributed 1.   expressly specified by law [Arts. 552 (2); 1942,
breach of the to the non-performance 2147, 2148, 2159, CC]
obligation, and which of the obligation. 2.   liability specified by stipulation
the parties have 3.   the nature of the obligations requires assumption
foreseen or could have Any waiver or of risk [Art. 1174, CC]
reasonably foreseen at renunciation made in 4.   debtor is guilty of concurrent or contributory
the time the obligation the anticipation of such negligence
was constituted. liability is null and void. 5.   debtor has promised to deliver the same thing to
two or more persons who do not have the same
interest [par. 3, Art. 1165, CC]
e.   Contravention of the Tenor 6.   the thing is lost due to the obligor’s fraud,
of the Obligation negligence, delay or contravention of the tenor of
the obligation [Art. 1170, CC]
This refers to a violation of the terms and conditions 7.   the obligation to deliver a specific thing arises
stipulated in the obligation, which must not be due to from a crime [Art. 1268, CC]
a fortuitous event or force majeure. [de Leon] 8.   the object is a generic thing, i.e. the genus never
perishes
“In any manner contravenes the tenor” means any
illicit act, which impairs the strict and faithful Note: ‘Genus nunquam perit’ only pertains to
fulfillment of the obligation, or every kind of defective physical perishing. The genus may still perish
performance. [Tolentino] legally. [Labitag]

Requisites of Exemption Based on Force Majeure


4.  L egal Excuse for Breach 1.   The event must be independent of the debtor’s
will (fraud or negligence).
a.  Fortuitous Events 2.   The event must be unforeseeable or inevitable.
3.   The event renders it impossible for debtor to fulfill
Art. 1174, CC. Except in cases expressly specified by his obligation in a normal manner.
the law, or when it is otherwise declared by 4.   The debtor must be free from any negligence or
stipulation, or when the nature of the obligation participation in the aggravation of the injury to the
requires the assumption of risk, no person shall be creditor [Tolentino; de Leon]
responsible for those events which could not be 5.   It must be the sole cause, not merely a proximate
foreseen, or which, though foreseen, were cause.
inevitable.
b.  Act of Creditor
A happening independent of the will of the debtor and
which makes the normal fulfillment of the obligation The debtor is also released from liability when the
impossible. [de Leon] non-performance of the obligation is due to the act of
the creditor himself. [Tolentino]
Fortuitous Event May Be Produced By Two General
Causes: Note:
1.   Act of God: An accident, due directly or exclusively When there is contributory negligence by the debtor
to natural causes without human intervention, that renders him liable despite the fortuitous event,
which by no amount of foresight, pains or care, the court may equitably mitigate damages.
reasonably to have been expected, could have
been prevented.

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Mere difficulty to foresee the happening is not The injured party may choose between the
impossibility to foresee the same. [Republic v. Luzon fulfillment and the rescission of the obligation,
Stevedoring, G.R. No. L-21749, (1967)] with the payment of damages in either case. He
may also seek rescission, even after he has chosen
5.  R emedies Available in fulfilment, if the fulfillment of the obligation should
become impossible.
Case of Breach
The court shall decree the rescission claimed,
a.  Action for Specific unless there be just cause authorizing the fixing of
a period.
Performance (In Obligation
to Give Specific Thing) This is understood to be without prejudice to the
rights of third persons who have acquired the thing,
The creditor has a right to compel the debtor to in accordance with articles 1385 and 1388 and the
perform the prestation. Mortgage Law.

When what is to be delivered is a determinate thing, Rescission


the creditor, in addition to the right granted him by The unmaking of a contract, or its undoing from the
Art. 1170 (indemnification for damages), may compel beginning, and not merely its termination [Pryce Corp
the debtor to make the delivery. [par 1, Art. 1165, Par. 1, v Pagcor, G.R. No. 157480 (2005)]
CC]
Right to Rescind
The power to rescind obligations is implied in
b.  Action for Substituted reciprocal ones, in case one of the obligors should not
Performance (in Obligation comply with what is incumbent upon him. The injured
to Give Generic Thing and party may choose between fulfillment and rescission
of the obligation, with payment of damages in either
Obligation to Do) case. The rescission on account of breach of
stipulations is not predicated on injury to economic
Par. 2, Art. 1165, CC. If the thing is indeterminate or interests of the party plaintiff but on the breach of faith
genetic, he may ask that the obligation be complied by the defendant, that violates the reciprocity between
with at the expense of the debtor. the parties. [Universal Food Corporation v. CA, G.R. No.
L-29155 (1970)]
Art. 1167, CC. If a person is obliged to do something
fails to do it, the same shall be executed at his cost. Effect of Rescission under Art 1191
Extinguishes the obligatory relation as if it had never
This same rule shall be observed if he does it in been created, the extinction having a retroactive
contravention of the tenor of the obligation. effect. Both parties must surrender what they have
Furthermore, it may be decreed that what has been respectively received and return each other as far as
poorly done be undone. practicable to their original situation. [Tolentino]

A third person may perform another’s obligation to Rescission may take place extrajudicially, by
deliver a generic thing or an obligation to do, unless it declaration of the injured party. But if the debtor
is a purely personal act, at the expense of the debtor. impugns the declaration of rescission, it shall be
Debtor cannot avoid obligation by paying damages if subject to judicial determination. If the debtor does
the creditor insists on performance. not oppose the extrajudicial declaration of rescission,
such declaration will produce legal effect.
c.   Rescission (Resolution in The party who deems the contract violated may
Reciprocal Obligations) consider it resolved or rescinded, and act accordingly,
without previous court action, but it proceeds at its
Art. 1191, CC. The power to rescind obligations is own risk. For it is only the final judgment of the
implied in reciprocal ones, in case one of the corresponding court that will conclusively and finally
obligors should not comply with what is incumbent settle whether the action taken was or was not correct
upon him. in law. But the law definitely does not require that the
contracting party who believes itself injured must first
file suit and wait for a judgment before taking

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extrajudicial steps to protect its interest. [UP v Delos exists or if a decree


Angeles, G.R. No. L-28602 (1970)] of rescission is
applied for before
Under Art 1191, the right to rescind an obligation is the courts
predicated on the violation of the reciprocity between The parties are not
parties, brought about by a breach of faith by one of restored to their
them. Rescission, however, is allowed only where the Requires mutual
original situation; prior
breach is substantial and fundamental to the restitution to restore the
to termination, parties
fulfillment of the obligation. [Del Castillo Vda de parties to their original
are obliged to comply
Mistica v Naguiat,G.R. No. 137909 (2003); Cannu v situation
with their contractual
Galang, G.R. No. 139523 (2005)]. obligations

It will not be permitted in casual or slight breach.


[Song Fo v. Hawaiian Philippines, G.R. No. 23769,
d.  Damages, in Any Event
(1925)]
Art. 1170, CC. Those who in the performance of their
Distinguished from Rescission under Art. 1380 obligations are guilty of fraud, negligence, or delay,
Rescission / Resolution Rescission [Art. 1380, and those who in any manner contravene the tenor
[Art. 1191, CC] CC] thereof, are liable for damages.
Based on non-
Based on lesion or
performance or non-
fraud upon creditors.
e.   Subsidiary Remedies of
fulfillment of obligation. Creditors
Action is instituted by
Action is instituted only
either party or by a
by the injured party. 1.   Accion Subrogatoria
third person.
Art. 1177, CC. The creditors, after having pursued
Subsidiary action, in
the property in possession of the debtor to satisfy
Principal action, the absence of any
their claims, may exercise all the rights and bring
retaliatory in character. other legal means to
all actions of the latter for the same purpose, save
obtain reparation.
those which are inherent in his person; they may
Applies to either
Applies only to reciprocal also impugn the acts which the debtor may have
unilateral or reciprocal
obligations where one done to defraud them.
obligations even when
party is guilty of non-
the contract has been
fulfillment Right of the creditor to exercise all of the rights and
fully fulfilled
Court cannot grant a bring all the actions which his debtor may have
In some cases, court may against third persons.
period or term within
grant a term for
which one must
performance. In order to satisfy their claims against the debtor,
comply.
creditors have the ff. successive rights:
Non-performance by
Non-performance by the 1.   To levy by attachment and execution upon all the
the other party is
other party is important. property of the debtor, except those exempt from
immaterial.
execution;
2.   To exercise all the rights and actions of the debtor,
Distinguished from Termination [Pryce Corp v
except such are inherently personal to him; and
PAGCOR, G.R. No. 157480, (2005)]
3.   To ask for the rescission of the contracts made by
Rescission Termination
the debtor in fraud of their rights.
May be effected:
1.   by both parties by
Requisites
mutual
May be effected by 1.   The person to whom the right of action pertains
agreement, or
mutual agreement or must be indebted to the creditor
2.   unilaterally by one
by one party exercising 2.   The debt is due and demandable
of them declaring
one of its remedies as a 3.   The creditor must be prejudiced by the failure of
a rescission
consequence of the the debtor to collect his debts due him from third
without the
default of the other persons, either through malice or negligence
consent of the
4.   The debtors assets are insufficient (debtor is
other if a legally
insolvent)
sufficient ground

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5.   The right of action is not purely personal to the on WoN new debts
debtor contracted by the
debtor fall under the
Previous approval of the court is not necessary to scope of accion
exercise the accion subrogatoria. pauliana.
Fraudulent intent is
2.   Accion Pauliana No need for fraudulent
required if the contract
Creditors may also impugn the acts which the debtor intent
rescinded is onerous
may have done to defraud them. [Art. 1177, CC] Prescribes in 4 years
No period for
from the discovery of
prescription
Par. 3, Art. 1381. The following contracts are the fraud
rescissible:
(3) Those undertaken in fraud of creditors when the 3.   Other Specific Remedies
latter cannot in any other manner collect the claims
due them. Accion Directa
Subsidiary liability of sublessee to the lessor for rent
Rescission, which involves the right of the creditor to due from the lessee. [Art. 1652, CC]
attack or impugn by means of rescissory action any act
of the debtor which is in fraud and to the prejudice of General Rule: The sublessee is subsidiarily liable to the
his rights as creditor. lessor for any rent due from the lessee.

Requisites [Cheng v. CA, G.R. No. 144169 (2001)] Exception: The sublessee shall not be responsible
a.   There is a credit in favor of the plaintiff prior to the beyond the amount of rent due from him, in
alienation by the debtor accordance with the terms of the sublease, at the time
b.   The debtor has performed a subsequent contract of the extra-judicial demand by the lessor.
conveying patrimonial benefit to third person/s.
c.   The debtor’s acts are fraudulent to the prejudice Re: Advance Payments
of the creditor. Payments of rent in advance by the sublessee shall be
d.   The creditor has no other legal remedy to satisfy deemed not to have been made, so far as the lessor's
his claim claim is concerned, unless said payments were
e.   The third person who received the property is an effected in virtue of the custom of the place.
accomplice to the fraud.

An accion pauliana thus presupposes the following: Vendor has right of action against possessor whose
1.   A judgment; right is derived from the vendee
2.   the issuance by the trial court of a writ of Art. 1608, CC. The vendor may bring his action
execution for the satisfaction of the judgment, against every possessor whose right is derived from
and; the vendee, even if in the second contract no
3.   the failure of the sheriff to enforce and satisfy the mention should have been made of the right to
judgment of the court. repurchase, without prejudice to the provisions of
the Mortgage Law and the Land Registration Law
It requires that the creditor has exhausted the property with respect to third persons.
of the debtor. The date of the decision of the trial court
is immaterial. What is important is that the credit of Laborer/materialsman has right of action against
the plaintiff antedates that of the fraudulent owner of piece of work up to the amount owed by the
alienation by the debtor of his property. After all, the latter to the contractor. [Art. 1729, CC]
decision of the trial court against the debtor will General Rule: Those who put their labor upon or furnish
retroact to the time when the debtor became indebted materials for a piece of work undertaken by the
to the creditor. [Cheng v CA, supra] contractor have an action against the owner up to the
amount owing from the latter to the contractor at the
Accion Subrogatoria Accion Pauliana time the claim is made.
Credit must exist before
Not necessary that the fraudulent act Exception: The following shall not prejudice the
creditor’s claim is prior [Tolentino] laborers, employees and furnishers of materials:
to the acquisition of
I.   the a.   Payments made by the owner to the contractor
right by the debtor Note: Commentators before they are due;
have conflicting views

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b.   Renunciation by the contractor of any amount due


him from the owner.   Kinds of Civil Obligations
Note: The foregoing article is subject to the provisions 1.   Pure Obligations
of special laws.
Art. 1179, CC. Every obligation whose performance
Art. 1730, CC. If it is agreed that the work shall be does not depend upon a future or uncertain event,
accomplished to the satisfaction of the proprietor, or upon a past event unknown to the parties, is
it is understood that in case of disagreement the demandable at once.
question shall be subject to expert judgment.
Every obligation which contains a resolutory
If the work is subject to the approval of a third condition shall also be demandable, without
person, his decision shall be final, except in case of prejudice to the effects of the happening of the
fraud or manifest error. event.
Principal has right of action against substitute of Its effectivity or extinguishment does not depend upon
agent in cases when the agent is liable for acts of the fulfillment or non-fulfillment of a condition or
appointed substitute upon the expiration of a term or period. A pure
The agent shall be responsible for the acts of the obligation is IMMEDIATELY DEMANDABLE.
substitute:
a.   When he was not given the power to appoint one;
b.   When he was given such power, but without 2.  C onditional Obligations
designating the person, and the person appointed
was notoriously incompetent or insolvent. [Art. Art. 1181, CC. In conditional obligations, the
1892, CC] acquisition of rights, as well as the extinguishment
or loss of those already acquired, shall depend
Art. 1893, CC. In the cases mentioned in Nos. 1 and upon the happening of the event which constitutes
2 of the foregoing, the principal may furthermore the condition.
bring an action against the substitute with respect
to the obligations which the latter has contracted A condition is a future AND uncertain event. This
under the substitution. includes acquisition of proof/knowledge of a past
event unknown to the parties.
Petitioner cannot invoke the credit of a different
creditor to justify the rescission of the subject deed of a.  Kinds of conditions
donation, because the only creditor who may benefit
from the rescission is the creditor who brought the AS TO EFFECT
action; those who are strangers to the action cannot 1.   SUSPENSIVE – Obligation shall only be effective
benefit from its effects. [Siguan v. Lim, G.R. No. upon the fulfillment of the condition [Art. 1181, CC].
134685, (1999)] The obligee acquires a mere hope or expectancy,
protected by law, upon the constitution of the
obligation.
Before Fulfillment After Fulfillment
The demandability and
acquisition/ effectivity
of the rights arising
from the obligation is
The obligation arises or
suspended.
becomes effective.
The creditor may bring
II.   The obligor can be
the appropriate actions
compelled to comply
for the preservation of
with what is incumbent
his right. Anything paid
upon him.
by mistake may be
recovered [Art 1188, CC].
However, this excludes
fruits and interests.

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Doctrine of Constructive Fulfillment of Suspensive a matter of justice and condition that has been
Conditions convenience complied with
Art. 1186, CC. The condition shall be deemed [Art. 1187, par. 1] [Art. 1187, par. 2]
fulfilled when the obligor voluntarily prevents its If unilateral, the debtor
The power of the court
fulfillment. shall appropriate the
includes the
fruits and interests
determination of
Suspensive condition is deemed fulfilled when: received, unless from
whether or not there
a.   Obligor intends to prevent obligee from the nature and
will be any retroactive
complying with the condition circumstance it should
effect. This rule shall
b.   Obligor actually prevents obligee from complying be inferred that the
likewise apply in
with the condition intention of the persons
obligations with a
constituting the same
resolutory condition
The two requisites must concur. Mere intention of the was different. [Art. 1187
[Art. 1190 par. 3]
debtor to prevent the happening of the condition, or to par 1]
place ineffective obstacles to its compliance, without
actually preventing the fulfillment, is insufficient. 2.   RESOLUTORY – The obligation is demandable at
[International Hotel Corporation v. Joaquin, G.R. No. once, without prejudice to the effects of the
158361 (2013)] happening of the event [par. 2, Art. 1179, CC]. The
rights are immediately vested to the creditor but
Doctrine does not apply to: always subject to the threat or danger of
a.   Resolutory conditions extinction by the happening of the resolutory
b.   External contingency that is lawfully within the condition [Tolentino].
control of the obligor [Taylor v Uy Tieng, G.R. No.
L-16109 (1922)] Before Fulfillment After Fulfillment
c.   Obligor, in preventing the fulfilment of the Whatever may have
condition, acts pursuant to a right been paid or delivered
by one or both of the
Principle of Retroactivity in Suspensive Conditions parties upon the
Par. 1, Art. 1187, CC. The effects of a conditional constitution of the
obligation to give, once the condition has been Preservation of obligation shall have to
fulfilled, shall retroact to the day of the constitution creditor’s rights [par. 1, be returned upon the
of the obligation. Nevertheless, when the Art. 1188, CC] also fulfillment of the
obligation imposes reciprocal prestations upon the applies to obligations condition [par. 1, Art.
parties, the fruits and interests during the with a resolutory 1190, CC]. There is no
pendency of the condition shall be deemed to have condition. return to the status quo.
been mutually compensated. If the obligation is However, when the
unilateral, the debtor shall appropriate the fruits condition is not fulfilled,
and interests received, unless from the nature and rights are consolidated
circumstances of the obligation it should be and they become
inferred that the intention of the person absolute in character.
constituting the same was different.
AS TO CAUSE/ORIGIN
Rationale: Obligation is constituted when its essential 1.   POTESTATIVE – The fulfillment of the condition
elements concur. The condition imposed is only an depends on the sole act or decision of a party.
accidental element. 2.   CASUAL – The fulfilment of the condition
depends upon chance or upon the will of a third
This applies to consensual contracts only. This does person. [Art. 1182, CC]
not apply to real contracts which can only be perfected 3.   MIXED – The fulfilment of the condition depends
by delivery. partly upon the will of a party to the contract and
partly upon chance and/or will of a third person.
Effects of the Happening of Suspensive Conditions
To Give To Do/Not To Do Exclusively
Condition and obligation are
If reciprocal, the fruits In obligations to do or upon the
valid.
and interests shall be not to do, the court Creditor’s Will
deemed to have been shall determine the Exclusively Condition and obligation are void
mutually compensated retroactive effect of the upon the because to allow such condition
Debtor’s Will would be equivalent to

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in case of a sanctioning obligations which are Re: Obligation to Deliver a Determinate Thing
Suspensive illusory. It also constitutes a When the conditions have been imposed with the
Condition direct contravention of the intention of suspending the efficacy of an obligation
[Art. 1182, CC] principle of mutuality of to give, the following rules shall be observed in case
contracts. There is nothing to of the improvement, loss or deterioration of the thing
demand until the debtor wishes during the pendency of the condition [Art. 1189, CC]:
to. 1.   If the thing is lost without the fault of the debtor,
Exclusively the obligation shall be extinguished;
Condition and obligation are
upon the 2.   If the thing is lost through the fault of the debtor,
valid because in such situation,
Debtor’s Will he shall be obliged to pay damages; it is
the position of the debtor is
in case of a understood that the thing is lost when it perishes,
exactly the same as the position
Resolutory or goes out of commerce, or disappears in such a
of the creditor when the condition
Condition way that its existence is unknown or it cannot be
is suspensive. It does not render
[par. 2, Art. recovered;
the obligation illusory.
1179, CC] 3.   When the thing deteriorates without the fault of
the debtor, the impairment is to be borne by the
Defendant executed an endorsement saying that creditor;
she’ll pay her debt if the house in which she lives is 4.   If it deteriorates through the fault of the debtor,
sold. Such condition depended upon her exclusive will; the creditor may choose between the rescission of
thus, it is void. [Osmeña vs. Rama, G.R. No. 4437 the obligation and its fulfillment, with indemnity
(1909)] for damages in either case;
5.   If the thing is improved by its nature, or by time,
The condition that payment should be made by the improvement shall inure to the benefit of the
Hermosa as soon as he receives funds from the sale of creditor;
his property in Spain is a mixed condition. The 6.   If it is improved at the expense of the debtor, he
condition implies that the obligor already decided to shall have no other right than that granted to the
sell the house and all that was needed to make the usufructuary.
obligation demandable is that the sale be
consummated and the price thereof remitted to the Re: Obligations To Do and Not To Do
islands. There were still other conditions that had to
concur to effect the sale, mainly that of the presence Par. 3, Art. 1190, CC. As for the obligations to do
of a buyer, ready, able and willing to purchase the and not to do, the provisions of the second
property under the conditions set by the intestate. paragraph of article 1187 shall be observed as
[Hermosa vs. Longara, G.R. No. L-5267 (1953)] regards the effect of the extinguishment of the
obligation.
Loss, Deterioration, or Improvement of a Specific
Thing before Fulfillment of Suspensive Condition in Without Debtor’s With Debtor’s
Obligations to Give (Art. 1189) or of Resolutory Fault/Act Fault/Act
Condition in Obligations to Do or Not to Do [par. 2, Loss
Art. 1190, CC]
IV.   Obligation is converted
III.   Obligation is
into one of indemnity for
A thing is deemed lost: extinguished.
damages.
1.   When it perishes;
Deterioration
2.   When it goes out of
VI.   Creditor may choose
Loss of a commerce of man; or
between bringing an
Thing 3.   When it disappears in such
action for rescission of
a manner that its existence
V.   Impairment to be borne the obligation OR
is unknown or it cannot be
by the creditor. bringing an action for
recovered
specific performance,
Any reduction or impairment in
Deterioration with damages in either
the substance or value of a thing
of a Thing case.
which does not amount to a loss
Improvement
Anything added to, incorporated
Improvement VII.   Improvement at theVIII.   Improvement by the
in, or attached to the thing that is
of a Thing debtor’s expense, the thing’s nature or by time
due.
debtor shall ONLY have shall inure to the benefit
usufructuary rights. of the creditor.

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Art. 1193, CC. Obligations for whose fulfillment a


Upon the happening of the resolutory condition, the day certain has been fixed, shall be demandable
rules of Article 1189 shall be applied to the party who only when that day comes.
is bound to return (i.e. the creditor in the original
obligation). Obligations with a resolutory period take effect at
once, but terminate upon the arrival of the day
b.  Impossible Conditions certain.

Art. 1183, CC. Impossible conditions, those contrary A day certain is understood to be that which must
to good customs or public policy and those necessarily come, although it may not be known
prohibited by law shall annul the obligation which when.
depends upon them. If the obligation is divisible,
that part thereof which is not affected by the If the uncertainty consists in whether the day will
impossible or unlawful condition shall be valid. come or not, the obligation is conditional, and it
The condition not to do an impossible thing shall be shall be regulated by the rules of the preceding
considered as not having been agreed upon. Section.

In testaments (Art. 873, CC) and donations (Art. 727, Art. 1180, CC. When the debtor binds himself to pay
CC), an unlawful or impossible condition does not when his means permit him to do so, the obligation
annul the transaction. The condition is merely deemed shall be deemed to be one with a period, subject to
not written. the provisions of Article 1197.

Period or Term
c.   Positive and Negative Interval of time, which either suspends demandability
Conditions or produces extinguishment.

Positive [Art. 1184, CC] Negative [Art. 1185,CC] The period must be: future, certain, and possible.
The condition that [Tolentino]
The condition that
some event will not
some event happen at a
happen at a A fortuitous event does not interrupt the running of the
determinate time shall
determinate time shall period. It only relieves the contracting parties from the
extinguish the
render the obligation fulfillment of their respective obligations during the
obligation
effective from the period.
1.   as soon as the time
moment
expires or
1.   the time indicated Term/Period and Condition Distinguished
2.   if it has become
has elapsed, or Term/Period Condition
indubitable that the
2.   if it has become Interval of time which is Fact or event which is
event will not take
evident that the future and certain future and uncertain
place.
event cannot occur. Must necessarily come,
although it may not be May or may not happen
Where no date of fulfilment is stipulated, condition known when
must be fulfilled within a reasonable time or time No effect on existence of Gives rise to an
probably contemplated according to the nature of the the obligation, only its obligation or
obligation [par. 2, Art. 1185, CC]. demandability or extinguishes one
performance already existing
3.  Obligations with a Period No retroactive effect
unless there is an
or Term agreement to the
Has retroactive effect
contrary
Under Art. 1193, CC: When it is left
When it is left
a.   Obligations for whose fulfillment a day certain exclusively to the will of
exclusively to the will of
has been fixed¾ shall be demandable only when the debtor, the
the debtor, the very
that day comes. existence of the
existence of the
b.   Obligations with a resolutory period¾ take effect obligation is not
obligation is affected
at once, but terminate upon arrival of the day affected
certain.

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Kinds of Period [Art 1193] b.   When he does not furnish to the creditor the
a.   Ex die – period with a suspensive effect. guaranties or securities which he has promised;
Obligation becomes demandable after the lapse c.   When by his own acts he has impaired said
of the period. guaranties or securities after their establishment,
b.   In diem – period with a resolutory effect. and when through a fortuitous event they
Obligation becomes demandable at once but is disappear, unless he immediately gives new ones
extinguished after the lapse of the period. equally satisfactory;
d.   When the debtor violates any undertaking, in
Effect of Advance Payment or Delivery consideration of which the creditor agreed to the
Art. 1195, CC. Anything paid or delivered before the period;
arrival of the period, the obligor being unaware of e.   When the debtor attempts to abscond [Art. 1198,
the period or believing that the obligation has CC]
become due and demandable, may be recovered, f.   When required by law or stipulation;
with the fruits and interests. g.   If parties stipulated an acceleration clause
[Tolentino]
This is in contrast to payment by mistake of the obligor
before the occurrence of the suspensive condition, The obligation immediately becomes due and
where the law doesn’t state that fruits and interests demandable even if the period has not yet expired. The
may be recovered. However, the provisions on solution obligation becomes a pure one. [Tolentino]
indebiti can be applied. [Tolentino]
When Courts May Fix Period [Art. 1197, CC]
Loss, Deterioration, or Improvement of the Thing General Rule: The court is not authorized to fix a period
Before Period Expires for the parties [de Leon]
Art. 1194, CC. In case of loss, deterioration or
improvement of the thing before the arrival of the Exceptions: If the Court determines that one of the 3
day certain, the rules in Article 1189 shall be circumstances are present, it must decide the period
observed. “probably contemplated by the parties” [Araneta v.
Phil. Sugar Estates, G.R. No. L-22558 (1967)]
Benefit of the Period a.   obligation does not fix a period, but from its
nature and circumstances, it can be inferred that
Art. 1196, CC. Whenever in an obligation a period is
a period was intended
designated, it is presumed to have been
b.   the period is void, such as when it depends upon
established for the benefit of both the creditor and
the will of the debtor
the debtor, unless from the tenor of the same or
c.   If the debtor binds himself when his means permit
other circumstances it should appear that the
him to do so.
period has been established in favor of one or of the
other.
Note: In every case, the courts shall determine such
period as may under the circumstances have been
Period for the benefit of either creditor or debtor probably contemplated by the parties.
Creditor Debtor
Debtor may oppose any Once fixed by the courts, the period cannot be
Creditor may demand premature demand on changed by them. [Art. 1197, CC]
the fulfillment or the part of the obligee
performance of the for the performance of Art. 1197, CC does not apply to contract of services and
obligation at any time the obligation, or if he to pure obligations.
but the obligor cannot so desires, he may
compel him to accept renounce the benefit of The court, however, to prevent unreasonable
payment before the the period by interpretations of the immediate demandability of
expiration of the period. performing his pure obligations, may fix a reasonable time in which
obligation in advance. the debtor may pay. [Tolentino]
If the period is for the benefit of the debtor alone, he The only action that can be maintained by the creditor
shall lose every right to make use of it under Art. 1197, CC is the action to ask the courts to fix
a.   When after the obligation has been contracted, he the term within which the debtor must comply with his
becomes insolvent, unless he gives a guaranty or obligation. The fulfillment of the obligation itself
security for the debt; cannot be demanded until after the court has fixed the

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period for compliance therewith, and such period has liability on the part of does not give rise to any
arrived. the debtor. liability on the part of
the debtor.
Art. 1197, CCapplies to a situation in which the parties
intended a period. [Where] no period was intended by a.  Alternative Obligations:
the parties… Their mere failure to fix the duration of
their agreement does not necessarily justify or
Definition
authorize the courts to do so. Based on the reasons
Several prestations are due but the performance of
[herein], the agreement subsisted as long as the
one is sufficient. [de Leon]
parents and the children mutually benefited from the
arrangement. Effectively, there is a resolutory
Right of Choice [Art. 1200, CC]
condition in such agreement. When a change in the
Belongs to the debtor, UNLESS—
condition occurs, the agreement may be deemed
1.   it is expressly granted to the creditor
terminated. [Macasaet v Macasaet, G.R. Nos. 154391-
2.   it is expressly granted to a third person
92 (2004)]
Limitations to the right of choice [Tolentino]
4.  A lternative or Facultative 1.   indivisible (cannot choose part of one prestation
and part of another; See par. 2, Art. 1199, CC)
Obligations 2.   impossible prestations
3.   unlawful prestations
Alternative and Facultative Conditions 4.   those which could not have been the object of the
Distinguished obligation
Alternative Facultative
Obligations Obligations When choice shall produce effect
Of the two or more Choice shall produce no effect except from the time it
prestations, only one is has been communicated. [Art. 1201, CC]
Of the two or more
due, while the other/s
prestations, several are
may be performed in Form of notice
due.
substitution of the one Notice of selection or choice may be in any form
due. provided it is sufficient to make the other party know
IX.   May be complied with that the selection has been made. It can be:
May be complied with
by performance of 1.   oral
by performance of one
another prestation in 2.   in writing
of the prestations which
substitution of that 3.   tacit
are alternatively due.
which is due. 4.   any other equivocal means [Tolentino]
Choice of prestation
Choice of prestation
may pertain to debtor, Selection may be implied from the fact of performance
pertains only to the
creditor, or third [Tolentino]
debtor.
person.
XI.   Loss/impossibility of Consent of other party
Loss/impossibility of all the prestation due to The law does not require the other party to consent to
prestations due to fortuitous event is the choice made by the party entitled to choose. The
fortuitous event shall sufficient to extinguish only possible exception is when the debtor has chosen
extinguish the the obligation. a prestation which could not have been the object of
obligation. the obligation; the creditor’s consent would bring
X.   Loss/impossibility of about a novation of the obligation [Ibid.]
Loss/impossibility of the substitute/s does
one of the prestations not extinguish the Consent in obligations with various debtors and
does not extinguish the obligation, provided the creditors
obligation. obligation which is due In a joint obligation w/ various debtors and creditors,
subsists the consent of all is necessary to make the selection
XII.   Culpable loss of the effective. If the obligation is solidary, and there is no
Culpable loss of any of
object which the debtor stipulation to the contrary, the choice by one will be
the objects alternatively
may deliver in binding personally upon him but not as to the others
due before the choice is
substitution before the [Tolentino].
made may give rise to
substitution is effected

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Debtor cannot make a choice, or delays selection Creditor may claim the
If through the creditor's acts the debtor cannot make Debtor is released from price/value of any of
a choice according to the terms of the obligation, the the obligation. them, with indemnity
latter may rescind the contract with damages. [Art for damages.
1203, CC] Some prestations lost/impossible
Creditor may claim any
If the debtor does not select at the time when of those subsisting
performance should be effected, the choice can be Debtor to deliver that
without a right to
made for him by the creditor by applying Art. 1167 in which he shall choose
damages OR
obligations to do (debtor considered to have waived from among the
price/value of the thing
his right, subject to equity considerations) [Tolentino]. remainder.
lost, with right to
damages.
Effect of notice of choice One prestation remains
The effect of the notice is to limit the obligation to the Creditor may claim the
object or prestation selected. The obligation is remaining thing
converted into a simple obligation to perform the without a right to
prestation chosen. Once a selection has been Debtor to perform that
damages OR the
communicated, it is irrevocable [Ibid.] which remains.
price/value of the thing
lost with right to
Instances when obligation is converted into a simple damages.
obligation
1.   The person with the right of choice has
communicated his choice [Arts. 1201 and par. 1, b.  Facultative Obligations
1205, CC]
2.   Only one prestation is practicable [Art. 1202, CC] Definition
Only one prestation is agreed upon, but the obligor
Loss of Specific Things or Impossibility of may render another in substitution. [Art. 1206, CC]
Performance of Prestations in an Alternative
Obligation Loss or deterioration of Substitute in Facultative
If Debtor’s Choice [Art. 1204, CC] Obligations [Art. 1206, CC]
Fortuitous Event Debtor’s Fault Before Substitution is After Substitution is
Made Made
All prestations lost/impossible
If due to bad faith or The loss or
Creditor shall have a
fraud of obligor: obligor deterioration of the
right to indemnity for
is liable. substitute on account
damages based on the
of the obligor’s delay,
value of the last thing
negligence, or fraud,
Debtor is released from which disappeared or
renders the obligor
the obligation. service which become
liable because once
impossible, plus
If due to the negligence the substitution is
damages other than the
of the obligor: obligor is made, the obligation is
value may also be
not liable. converted into a
awarded
simple one with the
Some prestations lost/impossible substituted thing as
Debtor to perform that the object of the
Debtor to perform that
which the debtor shall obligation.
which he shall choose
choose from among the
from among the
remainder, without
remainder.
liability for damages. 5.  D ivisible and Indivisible
One prestation remains
Debtor to perform that Debtor to perform that
Obligations
which remains. which remains.
Divisible Obligations
Ones which are susceptible of partial performance,
If Creditor’s Choice [Art. 1205, CC]
that is, the debtor can legally perform the obligation
Fortuitous Event Debtor’s Fault by parts and the creditor cannot demand a single
All prestations lost/impossible performance of the entire obligation [Tolentino]

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Indivisible Obligations clause does not carry with it the nullity of the principal
Ones which cannot be validly performed in parts obligation [Art.1230, CC].
[Tolentino]
Purposes of Penalty
Rules a.   Funcion coercitiva de garantia - to insure the
a.   Divisibility/indivisibility refers to the performance performance of the obligation.
of the prestation and not to the thing which is the b.   Funcion liquidatoria - to liquidate the amount of
object thereof. The thing may be divisible, yet the damages to be awarded to the injured party in
obligation may be indivisible. case of breach of the principal obligation
b.   When the obligation has for its object the (compensatory).
execution of a certain number of days of work, the c.   Funcion restrictamente penal - to punish the
accomplishment of work by metrical units, or obligor in case of breach of the principal
analogous things which by their nature are obligation (punitive).
susceptible of partial performance, it shall be
divisible [Art.1225, par. 2, CC]. Rules on Penalty
c.   Even though the object or service may be a.   The penalty shall substitute the indemnity for
physically divisible, an obligation is indivisible if so damages and payment of interest in case of non-
provided by law or intended by the parties. compliance [Art. 1226, CC], UNLESS:
d.   In obligations not to do, divisibility or indivisibility 1.   There is an express provision to that effect
shall be determined by the character of the 2.   The obligor refuses to pay the penalty
prestation in each particular case. 3.   The obligor is guilty of fraud in non-
e.   A joint indivisible obligation gives rise to fulfillment
indemnity for damages from the time any one of In this case, damages and interest aside from the
the debtors does not comply with his undertaking penalty may be awarded [Tolentino]
[Art. 1224, CC]. b.   Debtor cannot exempt himself from the
performance of the principal obligation by paying
Effect the stipulated penalty UNLESS this right has been
Creditor cannot be compelled to receive partially the expressly reserved for him [Art. 1227, CC].
prestation in which the obligation consists; neither c.   Creditor cannot demand the fulfillment of the
may the debtor be required to make the partial principal obligation and demanding the
payment [Art. 1248, CC], UNLESS: satisfaction of the penalty at the same time
a.   The obligation expressly stipulates the contrary. UNLESS the right has been clearly granted to him
b.   The different prestations constituting the objects [Art. 1227, CC]. A tacit or implied grant is
of the obligation are subject to different terms admissible.
and conditions. 1.   If the creditor chooses to demand the
c.   The obligation is in part liquidated and in part satisfaction of the penalty, he cannot
unliquidated. afterwards demand the fulfillment of the
obligation.
Cessation of Indivisibility 2.   If there was fault on the part of the debtor,
a.   By conversion of the obligation into an obligation creditor may demand not only the
to pay damages satisfaction of the penalty but also the
b.   By novation of the obligation payment of damages.
c.   By death of creditor or the debtor (division among 3.   If the creditor has chosen to demand the
heirs of the deceased) fulfillment of the principal obligation and the
performance thereof becomes impossible
without his fault, he may still demand the
6.  O bligations with a Penal satisfaction of the penalty.
Clause
Enforcement of the Penalty
Penal Clause The enforcement of the penalty can be demanded by
An accessory undertaking to assume greater liability the creditor only when the non-performance is due to
in case of breach. It is generally a sum of money, but the fault or fraud of the debtor. However, the creditor
it can be any other thing like an act or abstention. does not have to prove fault or fraud, since the non-
[Tolentino] performance gives rise to the presumption of fault.
Thus, the burden of proof to show that non-
If the principal obligation is void, the penal clause performance was due to force majeure or creditor’s
shall also be void. However, the nullity of the penal acts lies with the debtor. [Tolentino]

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Proof of Actual Damage Each debtor is liable only for a proportionate part of
Proof of actual damage suffered by the creditor is NOT the debt, and each creditor is entitled only to a
NECESSARY in order that the penalty may be enforced proportionate part of the credit. [Tolentino]
[Art. 1228, CC]
Terms used for Joint Obligations
That proof of actual damages is not necessary is 1.   Mancomunada
applicable only to the general rule stated in Art. 1226, 2.   Mancomunada simple
where penalty shall substitute for damages and 3.   Pro rata
interest, but not to the exceptions where interest or 4.   “We promise to pay”, followed by signatures of
damages aside from the penalty may be awarded. two or more persons [Tolentino]

Liquidated damages Presumption of Joint Obligation


The penalty is exactly identical with what is known as An obligation is presumed joint if there is a
“liquidated damages” in Art. 2226, CC. concurrence of several creditors, or of several debtors,
or of several creditors and debtors in one and the same
In cases where there has been partial or irregular obligation [Art. 1207, CC]
compliance, as in this case, there will be no substantial
difference between a penalty and liquidated damages Exceptions:
insofar as legal results are concerned and either may 1.   When the obligation expressly states that there is
be recovered without the necessity of proving actual solidarity
damages and both may be reduced when proper. 2.   When the law requires solidarity, i.e. quasi-delicts
[Filinvest v CA, G.R. No.138980 (2005)] [Art. 2194, CC], joint payees by mistake [Art. 2157,
CC], acts under articles 19-22 if committed by two
When Penalty may be Reduced [Art. 1229, CC]: or more persons acting jointly
a.   If the principal obligation has been partly 3.   When the nature of the obligation requires
complied with. solidarity
b.   If the principal obligation has been irregularly 4.   When a charge or condition imposed upon heirs or
complied with. legatees, and the testament expressly makes the
c.   If the penalty is iniquitous or unconscionable, charge or condition in solidum
even if there has been no performance. 5.   When the solidary responsibility is imputed by a
final judgment upon several defendants
The question of whether a penalty is reasonable or
iniquitous can be partly subjective and partly Presumption of Divisibility in Joint Obligations
objective. Its resolution would depend on such factor Credit or debt shall be presumed to be divided into as
as, but not necessarily confined to, the type, extent many equal shares as there are creditors or debtors,
and purpose of the penalty, the nature of the the credits or debts being considered distinct from one
obligation, the mode of breach and its consequences, another. [Art.1208, CC]
the supervening realities, the standing and
relationship of the parties, and the like, the application Principal Effects of Joint Liability [Tolentino]
of which, by and large, is addressed to the sound 1.   Demand by one creditor upon the debtor,
discretion of the court. [Ligutan v CA, G.R. No. 138677 produces the effects of default only with respect
(2002)] to the creditor who demanded and the debtor on
whom the demand was made, but not with
respect to others.
7.  Joint and Solidary 2.   Interruption of prescription by the judicial
Obligations demand of one creditor upon a debtor does not
benefit the other creditors nor interrupt the
prescription as to other debtors.
a.  Joint Obligations 3.   Vices of each obligation arising from the personal
defect of a particular debtor or creditor does not
The whole obligation, whether capable of division into affect the obligation or right of the others.
equal parts or not, is to be paid or performed by 4.   Insolvency of a debtor does not increase the
several debtors (joint debtors) and/or demanded by responsibility of his co-debtors, nor does it
several creditors (joint creditors). authorize a creditor to demand anything from his
co-creditors.
5.   Defense of res judicata is not extended from one
debtor to another.

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JOINT DIVISIBLE OBLIGATION Summary: in case of breach


One where a concurrence of several creditors, or of Joint Divisible Joint Indivisible
several debtors, or of several creditors and debtors, by Obligations Obligations
virtue of which, each of the creditors has a right to In case of breach where
demand, and each of the debtors is bound to render one of the joint debtors
compliance with his proportionate part of the fails to comply with his
prestation which constitute the object of the undertaking, the
obligation (obligacion mancomunada). obligation can no
In case of breach of
longer be fulfilled or
JOINT INDIVISIBLE OBLIGATION obligation by one of the
performed. Thus, the
debtors, damages due
Art. 1209, CC. If the division is impossible, the right action must be
must be borne by him
of the creditors may be prejudiced only by their converted into one for
alone.
collective acts, and the debt can be enforced only indemnity for damages,
by proceeding against all the debtors. If one of the with each debtor liable
latter should be insolvent, the others shall not be only for his part in the
liable for his share. price or value of the
prestation.
When there are several debtors or creditors, but the
prestation is indivisible, the obligation is joint, Joint Indivisible Obligations and Prescription
UNLESS solidarity has been stipulated [Tolentino] The act of a joint creditor which would ordinarily
interrupt the period of prescription would not have an
When Indivisible [Art. 1225, CC] effect on prescription because the indivisible character
1.   Obligations to give definite things of the obligation requires collective action of the
2.   Obligations not susceptible of partial creditors. Hence, the act of one alone is ineffective to
performance interrupt prescription [Tolentino]
3.   Indivisibility is provided by law or intended by the
parties, even though object or service may be b.  Solidary Obligations
physically divisible
4.   In obligations not to do, when character of An obligation where there is concurrence of several
prestation requires indivisibility creditors, or of several debtors, or of several creditors
and several debtors, by virtue of which, each of the
Plurality of Creditors in Joint Indivisible creditors has the right to demand, and each of the
If one or some of the creditors demands the prestation, debtors is bound to render, entire compliance with the
the debtor may legally refuse to deliver to them. He prestation which constitutes the object of the
can insist that all the creditors together receive the obligation (obligacion solidaria).
thing, and if any of them refuses to join the others, the
debtor may deposit the thing in court by way of Each debtor is liable for the entire obligation (solidary
consignation. [Tolentino] debtor or passive solidarity), and each creditor is
entitled to demand the entire obligation (solidary
Plurality of Debtors in Joint Indivisible creditor or active solidarity) [Tolentino]
The obligation can be performed by them only by
acting together. Hence all must be sued. If any of the Solidarity may exist although the creditors and the
debtors is not willing to perform, the prestation is debtors may not be bound in the same manner and by
converted into an indemnification for damages. the same periods and conditions. [Art. 1211, CC]
[Tolentino]
Terms used for Solidary Obligations
Failure of one debtor to perform in a joint indivisible 1.   Mancomunada solidaria
obligation gives rise to indemnity for damages 2.   Joint and several
Art. 1224, CC. A joint indivisible obligation gives 3.   In solidum
rise to indemnity for damages from the time anyone 4.   Juntos o separamende
of the debtors does not comply with his 5.   “I promise to pay”, followed by signatures of two
undertaking. The debtors who may have been or more persons
ready to fulfill their promises shall not contribute to 6.   Individually and collectively
the indemnity beyond the corresponding portion of 7.   Individually liable
the price of the thing or of the value of the service 8.   Individually and jointly liable
in which the obligation consists.

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Distinguished from Indivisibility As to Uniformity


Art. 1210, CC. The indivisibility of an obligation does 1.   Uniform – Parties are bound by the same
not necessarily give rise to solidarity. Nor does conditions or terms
solidarity of itself imply indivisibility. 2.   Non-uniform – Parties are bound by different
conditions or terms
Solidarity Indivisibility
Refers to the legal tie Active Solidary Obligation (among creditors)
(vinculum juris), and Refers to the prestation Art. 1214, CC. The debtor may pay any one of the
consequently to the that is not capable of solidary creditors; but if any demand, judicial or
subjects or parties of partial performance extrajudicial, has been made by one of them,
the obligation payment should be made to him.
More than one creditor
Exists even if there is A relationship of mutual agency is created among co-
or more than one
only one creditor creditors.
debtor (plurality of
and/or one debtor
subjects)
Each creditor may Each creditor cannot Effects of Active Solidarity [Tolentino]
demand the entire demand more than his 1.   Death of solidary creditor does not transmit
prestation and each share and each debtor solidarity to his heirs but rather to all of them
debtor is bound to pay is not bound to pay taken together (joint)
the entire prestation more than his share 2.   Each represents the other in receiving payment
Effect of breach: and all other advantageous acts (i.e. interrupt
Effect of breach: Obligation is converted prescription and render the debtor in default for
Solidarity remains to indemnity for the benefit of all creditors)
damages 3.   Each one of the solidary creditors may do
All debtors are liable for Only the debtors guilty whatever may be useful to the others, but not
breach committed by a of breach of obligation anything which may be prejudicial to the latter.
co-debtor liable for damages [Art. 1212, CC]
All debtors are 4.   One creditor does NOT represent all others in acts
Other debtors are not such as novation (even if advantageous),
proportionately liable
liable if one debtor is compensation and remission. In this case, even if
for insolvency of one
insolvent debtor is released, the other creditors can still
debtor
enforce their rights against the creditor who made
Kinds of Solidary Obligations the novation, compensation or remission [par. 2,
As to Source Art. 1215, CC]
1.   Legal – imposed by law 5.   The creditor who collects the debt, shall be liable
2.   Conventional – agreed upon by parties to the others for the share in the obligation
3.   Real – imposed by the nature of the obligation corresponding to them. [par. 2, Art. 1215, CC]
6.   The credit and its benefits is divided equally
As to Parties Bound among them, unless agreement to the contrary.
1.   Active (solidarity among creditors) – Each creditor 7.   Debtor may pay any one of the solidary creditors;
has the authority to claim and enforce the rights but if any demand, judicial or extrajudicial, has
of all, with the resulting obligation of paying been made by one of them, payment should be
everyone what belongs to him. made to him who demanded [Art. 1214, CC]
2.   Passive (solidarity among debtors) – Each debtor
can be made to answer for the others, with the A solidary creditor cannot assign his rights without the
right on the part of the debtor-payor to recover consent of the others [Art. 1213, CC]. Such an
from the others their respective shares. assignment produces no effect whatsoever
3.   Mixed (solidarity among creditors and debtors) –
Solidarity is not destroyed by the fact that the Passive Solidary Obligation
obligation of each debtor is subject to different Art. 1216, CC. The creditor may proceed against any
conditions or periods. The creditor can commence one of the solidary debtors or some or all of them
an action against anyone of the debtors for the simultaneously. The demand made against one of
compliance with the entire obligation minus the them shall not be an obstacle to those which may
portion or share which corresponds to the debtor subsequently be directed against the others, so
affected by the condition or period. [Art. 1211, CC] long as the debt has not been fully collected.

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Art. 1217, CC. Payment made by one of the solidary (Reason: prescription extinguishes the mutual
debtors extinguishes the obligation. If two or more representation among solidary debtors)
solidary debtors offer to pay, the creditor may 6.   Interests due by delay of one is borne by all of
choose which offer to accept. them

He who made the payment may claim from his co- Defenses Available to a Solidary Debtor [Art. 1222, CC]
debtors only the share which corresponds to each, 1.   Those derived from the nature of the obligation
with the interest for the payment already made. If Defenses inherent in an obligation include non-
the payment is made before the debt is due, no existence of the obligation because of absolute
interest for the intervening period may be simulation or illicit object, nullity due to defect in
demanded. capacity or consent of all debtors,
unenforceability, non-performance of suspension
When one of the solidary debtors cannot, because condition or non-arrival of period, extinguishment
of his insolvency, reimburse his share to the debtor of the obligation, res judicata, and prescription.
paying the obligation, such share shall be borne by 2.   Those personal to him
all his co-debtors, in proportion to the debt of each. Personal defenses such as minority, insanity,
fraud, violence, or intimidation will serve as a
Art. 1222, CC. A solidary debtor may, in actions filed complete exemption of the defendant debtor from
by the creditor, avail himself of all defenses which liability to the creditor
are derived from the nature of the obligation and of 3.   Those pertaining to his own share
those which are personal to him, or pertain to his 4.   Those personally belonging to other co-debtors
own share. With respect to those which personally but only as regards that part of the debt for which
belong to the others, he may avail himself thereof the latter are responsible.
only as regards that part of the debt for which the
latter are responsible. Comparing demand upon Solidary Debtor and
Payment by a Solidary Debtor
A relationship of mutual guaranty is created among
Demand Upon a Payment by a Solidary
co-debtors.
Solidary Debtor Debtor
The demand made
Effects of Passive Solidarity [Tolentino]
against one of them
1.   Each debtor can be required to pay the entire
shall not be an obstacle Full payment made by
obligation, but after payment he can recover from
to those which may one of the solidary
the co-debtors their respective shares
subsequently be debtors extinguishes
2.   Each debtor may set up his own claims against the
directed against the the obligation [Art. 1217,
creditor as payment of the obligation
3.   Remission of the entire debt affects all debtors, others so long as the CC].
but when remission is limited to the share of one debt has not been fully
collected [Art. 1216, CC].
debtor, the other debtors are still liable for the
balance of the obligation The creditor may
If two or more solidary
a.   The remission of the whole obligation, proceed against any
debtors offer to pay, the
obtained by one of the solidary debtors, does one of the solidary
creditor may choose
not entitle him to reimbursement from his co- debtors or all
which offer to accept
debtors. [Art. 1220, CC] simultaneously [Art.
[Art. 1217, CC].
b.   The remission made by the creditor of the 1216, CC].
share which affects one of the solidary The solidary debtor who
debtors does not release the latter from his made the payment
responsibility towards the co-debtors, in case A creditor’s right to shall have the right to
the debt had been totally paid by anyone of proceed against the claim from his co-
them before the remission was effected. [Art. surety exists debtors the share which
1219] independently of his corresponds to them
4.   All debtors are liable for the loss of the thing due, right to proceed against with interest, UNLESS
even if only one of them is at fault, or after the principal barred by prescription
incurring delay it is lost by fortuitous event or illegality [Art. 1218,
5.   Interruption of prescription as to one debtor CC].
affects all others, but renunciation of prescription
already had does not prejudice the others. Art 2047, CC specifically calls for the application of the
provisions on solidary obligations to suretyship
contracts. In particular, Art. 1217, CC recognizes the

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right of reimbursement from a co-debtor in favor of the


one who paid (i.e., the surety). In contrast, Art 1218 is   Extinguishment of
definitive on when reimbursement is unavailing, such
that only those payments made after the obligation
Obligations
has prescribed or became illegal shall not entitle a
solidary debtor to reimbursement. [Diamond Builders MODES OF EXTINGUISHING OBLIGATIONS
v. Country Bankers, G.R. No. 171820 (2007)] Art. 1231, CC. Obligations are extinguished:
(1)   By payment or performance;
PASSIVE SOLIDARITY SURETYSHIP (2)   By the loss of the thing due;
the solidary debtor and the surety, answers for a (3)   By the condonation or remission of the debt;
debt which is not properly his own (4)   By the confusion or merger of the rights of
both may demand reimbursement from the debtor creditor and debtor;
personally bound in the prestation paid (5)   By compensation;
a surety does not incur (6)   By novation.
liable, not only for the
liability unless the
debt of another but also Other causes of extinguishment of obligations,
principal debtor is held
for one properly his own such as annulment, rescission, fulfillment of a
liable
resolutory condition, and prescription, are
the one who paid may the surety who paid the
governed elsewhere in this Code.
claim reimbursement obligation is entitled to
from his co-debtors for be indemnified by the
the share which principal debtor with 1.   Payment or Performance
corresponds to each the right to subrogation
an extension granted by a.   Payment
the creditor to one of an extension granted to 1.   The delivery of money OR
the solidary debtors the principal debtor 2.   The performance of an obligation [Art.1232]
without the consent of without the consent of
the other solidary the surety would lead to b.   Object of Payment
debtors would not the dissolution of the Principle of Integrity of Payment
release the latter from suretyship 1.   Integrity of Prestation
their obligations Art. 1233, CC. A debt shall not be understood to
have been paid unless the thing or service in which
Loss of the thing or impossibility of performance of the obligation consists has been completely
the passive/mixed solidary obligation [Art. 1221, CC] delivered or rendered, as the case may be.
Without
The obligation shall be
fault of the 2.   Identity of Prestation
extinguished.
debtors
Art. 1244, CC. The debtor of a thing cannot compel
All debtors shall be responsible to
the creditor to receive a different one, although the
the creditor, for the price and the
With fault latter may be of the same value as, or more
payment of damages and interest,
of any of valuable than that which is due.
without prejudice to their action
the debtors
against the guilty or negligent
In obligations to do or not to do, an act or
debtor.
forbearance cannot be substituted by another act
Through a All debtors shall be responsible to or forbearance against the obligee's will.
fortuitous the creditor, for the price and the
event after payment of damages and interest,
Exceptions to Art. 1244, CC:
one without prejudice to their action
i.   If the obligation is facultative [Art. 1206, CC]
incurred in against the guilty or negligent
ii.   If the creditor agrees (Dation in payment)
delay debtor.
[Art. 1245, CC]
iii.   Substantial Performance by Debtor
(Creditor only has a right to damages) [Art
1234, CC]

If the obligation has been substantially


performed in good faith, the obligor may
recover as though there had been a strict

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and complete fulfillment, less damages payment by a joint debtor [Monte de Piedad y Caja
suffered by the obligee. de Ahorros de Manila v Rodrigo, G.R. No. L-42928
(1936]) but not a solidary co-debtor.
Requisites: 4.   A third person not interested in the obligation; but
a)   There must be substantial the creditor is not bound to accept payment by
performance (its existence depends him, unless there is a stipulation to the contrary
upon the circumstances of each [Art 1236, CC].
particular case); and
rd
b)   The obligor must be in good faith [de Note: When payment is made by a 3 person without
Leon] the consent of the debtor, such payment has NO
c)   The omission or deviation must be EFFECT on the running of the prescriptive period.
slight or technical, and does not [Tolentino]
constitute material breach of the
obligation. [International Hotel Corp. v. Payment by a third person
Joaquin, G.R. No. 158361, (2013)] Art. 1236, CC. The creditor is not bound to accept
iv.   When the obligee accepts the payment or performance by a third person who has
performance, knowing its no interest in the fulfillment of the obligation,
incompleteness or irregularity, and unless there is a stipulation to the contrary.
without expressing any protest or
objection, the obligation is deemed fully Whoever pays for another may demand from the
complied with. [Art. 1235, CC] debtor what he has paid, except that if he paid
without the knowledge or against the will of the
Necessity of Complete Performance debtor, he can recover only insofar as the payment
Art. 1248, CC. Unless there is an express stipulation has been beneficial to the debtor.
to that effect, the creditor cannot be compelled
partially to receive the prestations in which the Art. 1237, CC. Whoever pays on behalf of the debtor
obligation consists. Neither may the debtor be without the knowledge or against the will of the
required to make partial payments. latter, cannot compel the creditor to subrogate him
in his rights, such as those arising from a mortgage,
However, when the debt is in part liquidated and in guaranty, or penalty.
part unliquidated, the creditor may demand and
the debtor may effect the payment of the former Articles 1236 and 1237 merely lay down a presumption.
without waiting for the liquidation of the latter. However, by virtue of the parties’ freedom to contract,
the parties could stipulate otherwise. But such mutual
This provision only covers a situation where there is agreement, being an exception to presumed course of
one debtor and one creditor. It does not apply to joint events as laid down by Articles 1236 and 1237, must be
obligations, nor solidary obligations where debtors are adequately proven [Carandang v. de Guzman, G.R. No.
bound under different terms. [Tolentino] 160347 (2006)].
c.   By whom Payment by a third person without the knowledge and
Payor must have free disposal of the thing due and consent of the debtor cannot be recovered from the
capacity to alienate it. [Art. 1239, CC] creditor. The right of the third person who paid in such
case is against the debtor whose obligation he has
Free disposal of the thing due means that the thing to paid. The law limits his recovery to the amount by
be delivered must not be subject to any claim or lien or which the debtor has been benefited, if the debtor had
encumbrance of a third person. no knowledge of such payment. [Tolentino]
Capacity to alienate means that the person is not Reimbursement & Subrogation Distinguished
incapacitated to enter into contracts [Arts. 1327, 1329, Reimbursement Subrogation
CC] and for that matter, to make a disposition of the Includes
thing due. [de Leon] reimbursement, but
1.   The debtor or his duly authorized agent also the exercise of
2.   The debtor’s heir or successor in interest Personal action to
other rights attached to
3.   A third person interested in the fulfillment of the recover amount paid
the original obligation
obligation (i.e. co-debtor, guarantor) whether the (e.g. guaranties,
debtor consents to it or not, and even without securities)
debtor’s knowledge [Art 1302, CC]. This includes

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i.   If obligation is to deliver a determinate


Art. 1238, CC. Payment made by a third person who thing: wherever the thing might be at the
does not intend to be reimbursed by the debtor is moment the obligation was constituted.
deemed to be a donation, which requires the ii.   In any other case: domicile of debtor [Art.
debtor's consent. But the payment is in any case 1251]
valid as to the creditor who has accepted it.
f.   Time of Payment
d.   To whom
1.   The person in whose favor the obligation has Upon demand, EXCEPT-
been constituted; or 1.   When time is of the essence
2.   His successor in interest; or 2.   When the debtor loses the benefit of the period
3.   Any person authorized to receive it [Art. 1240, 3.   When the obligation is reciprocal
CC]
g.   Form of Payment
Payment to a person who is incapacitated to Art. 1249, CC. The payment of debts in money shall
administer his property shall be valid: be made in the currency stipulated, and if it is not
1.   if he has kept the thing delivered, OR possible to deliver such currency, then in the
2.   insofar as the payment has been beneficial to him. currency which is legal tender in the Philippines.
[Art. 1241 par 1, CC]
The delivery of promissory notes payable to order,
Payment made in good faith to any person in or bills of exchange or other mercantile documents
possession of the credit shall release the debtor. [Art. shall produce the effect of payment only when they
1242, CC] have been cashed, or when through the fault of the
creditor they have been impaired.
Examples of Art. 1242:
1.   An heir who collects credits for an hereditary In the meantime, the action derived from the
estate but is later incapacitated to inherit; original obligation shall be held in the abeyance.
2.   An assignee of a credit who collects, but the
assignment is later revoked or annulled. Legal Tender:
[Tolentino] Such currency which in a given jurisdiction can be used
in the payment of debts, and which cannot be refused
Payment made to the creditor by the debtor after the by the creditor.
latter has been judicially ordered to retain the debt
shall not be valid. [Art. 1243, CC] When payment not in legal tender is accepted by the
creditor:
Payment to a third person [par. 2, Art. 1241, CC] 1.   Demandability of obligation is suspended
Payment made to a third person shall also be valid 2.   Produces the effect of payment when:
insofar as it has redounded to the benefit of the i.   It is encashed; or
creditor. ii.   It was impaired due to creditor’s fault.
[Tolentino]
General Rule: Proof that such payment has redounded
to the benefit of the creditor is required. A check is not legal tender. Since obligations must be
paid in money that is legal tender, the payment by
Exceptions: check may be validly refused by the creditor, even if
1.   If after the payment, the third person acquires the such check may be good. [Tolentino]
creditor's rights (SUBROGATION);
2.   If the creditor ratifies the payment to the third Extraordinary inflation or deflation
person (RATIFICATION); Art. 1250, CC. In case an extraordinary inflation or
3.   If by the creditor's conduct, the debtor has been deflation of the currency stipulated should
led to believe that the third person had authority supervene, the value of the currency at the time of
to receive the payment (ESTOPPEL). [Art. 1241, the establishment of the obligation shall be the
CC] basis of payment, unless there is an agreement to
the contrary.
e.   Place of Payment
For extraordinary inflation (or deflation) to affect an
1.   In the place designated in the obligation. obligation, the following requisites must be proven:
2.   In the absence of stipulation—

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1.   an official declaration of extraordinary inflation or


deflation from the BSP The debtor’s right to apply payment can be waived and
2.   obligation was contractual in nature; and even granted to the creditor if the debtor so agrees
3.   parties expressly agreed to consider the effects of [Premiere Development v Central Surety, G.R. No.
the extraordinary inflation or deflation [Equitable 176246 (2009)]
PCI Bank v Ng Sheung, G.R. No. 171545 (2007)]
rd
Note: the 3 requisite does not folow the scheme of Limitations:
Art. 1250. CC 1.   Right of creditor to refuse partial payment [Art.
1248, CC]
a.  Application of Payments 2.   Rule on satisfaction of interest before the
Principal. [Art. 1453, CC]
Designation of the debt to which should be applied a 3.   Debtor cannot apply payment to a debt which is
payment made by a debtor who owes several debts to not yet liquidated
the same creditor. 4.   He cannot choose a debt with a period
(established for the creditor’s benefit) before the
Requisites: period has arrived.
1.   There is a plurality of debts 5.   Stipulation as to preference of payment.
2.   Debts are of the same kind [Tolentino]
3.   Debts are owed to the same creditor and by the
same debtor b.  Dation in Payment
4.   All debts must be due, UNLESS parties so
stipulate, or when application is made by the Delivery and transmission of ownership of a thing by
party for whose benefit the term has been the debtor to the creditor as an accepted equivalent of
constituted the performance of the obligation (dacion en pago).
5.   Payment made is not sufficient to cover all debts
[Art. 1252, CC] Requisites:
1.   Existence of a money obligation
Rules on Application of Payments 2.   Alienation to the creditor of a property by the
1.   Preferential right of debtor - debtor has the right debtor with the creditor’s consent
to select which of his debts he is paying. 3.   Satisfaction of the money obligation
[Tolentino]
2.   The debtor makes the designation at the time he c.   Payment by Cession
makes the payment.
3.   If not, the creditor makes the application, by so Special form of payment where the debtor
stating in the receipt that he issues, unless there assigns/abandons ALL his property for the benefit of
is cause for invalidating the contract. his creditors in order that from the proceeds thereof,
4.   If neither the creditor nor debtor exercises the the latter may obtain payment of their credits.
right to apply, or if the application is not valid, the
application is made by operation of law. Requisites:
5.   If debt produces interest, the payment is not to be 1.   There is a plurality of debts
applied to the principal unless the interests are 2.   There is a plurality of creditors
covered. 3.   Partial or relative insolvency of debtor
6.   When no application can be inferred from the 4.   Acceptance of the cession by the creditors [Art.
circumstances of payment, it is applied: (a) to the 1255, CC]
most onerous debt of the debtor; or (b) if debts
due are of the same nature and burden, to all the Debtor is released only for the net proceeds unless
debts in proportion. [Art. 1254, CC] there is a stipulation to the contrary.
7.   Rules of application of payment may not be
invoked by a surety or solidary guarantor. Cession and Dation Distinguished
Cession Dacion en pago
Rules on application of payment cannot be made
Plurality of creditors One creditor
applicable to a person whose obligation as a mere
Debtor must be Debtor not necessarily
surety is both contingent and singular. There must be
partially or relatively in state of financial
full and faithful compliance with the terms of the
insolvent difficulty
contract. [Reparations Commission v. Universal Deep
Sea Fishing Corp,G.R. Nos. L-21901 and L-21996
(1978)]

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Thing delivered is 5.   After the consignation has been made, the


Universality of property
equivalent of persons interested were notified thereof
is ceded
performance
Extinguishes obligation When tender and refusal not required [Art. 1256, CC]
Merely releases debtor to the extent of the 1.   Creditor is absent or unknown, or does not appear
for the net proceeds of value of the thing at the place of payment.
things ceded or delivered, as agreed 2.   Creditor is incapacitated to receive the thing due
assigned, unless there upon, proved or implied at the time of payment.
is contrary intention from the conduct of the 3.   Without just cause, creditor refuses to give
creditor receipt.
Involves all properties Does not involve all 4.   Two or more persons claim the same right to
of debtor properties of debtor collect (i.e. Interpleader)
Creditor does not 5.   Title of the obligation has been lost.
Creditor becomes
become owner of the
owner Unless there is an unjust refusal by a creditor to accept
ceded property
payment from a debtor, Article 1256 cannot apply. The
possession of the property by the petitioners being by
d.  Tender of Payment and mere tolerance as they failed to establish the existence
Consignation of any contractual relations between them and the
respondent, the bank deposit made by the petitioners
Tender of payment: Manifestation made by the intended as consignation has no legal effect [Llobrera
debtor to the creditor of his desire to comply with his v. Fernandez, G.R. No. 142882 (2006)].
obligation, with offer of immediate performance.
1.   Preparatory act to consignation What constitutes valid consignation
2.   Extrajudicial in character In order that the consignation of the thing due may
release the obligor, it must first be announced to the
Tender of payment must be made in the lawful persons interested in the fulfilment of the obligation.
currency. The tender of a check to pay for an obligation The consignation shall be ineffectual if it is not made
is not a valid tender of payment thereof. [Soco v strictly in consonance with the provisions which
Militante, G.R. No. L-58961, (1983)] regulate payment. [Art. 1257, CC]

Consignation: Deposit of the object of obligation in a Mere sending of letters without accompanying
competent court in accordance with the rules payment is not a valid tender of payment. When the
prescribed by law whenever the creditor unjustly tender of payment is not accompanied by the means
refuses payment or because of some circumstances of payment, interest is not suspended.
which render direct payment to the creditor
impossible or inadvisable. How consignation is made
1.   Principal act which constitutes a form of payment Consignation shall be made by depositing the things
2.   Judicial in character due at the disposal of judicial authority, before whom
the tender of payment shall be proved, in a proper
Requisites of consignation case, and the announcement of the consignation in
1.   There is a debt due other cases.
2.   Consignation is made because of some legal
cause The consignation having been made, the interested
a.   There was tender of payment and creditor parties shall also be notified thereof.
refuses without just cause to accept it
b.   Instances when consignation alone would Who bears the expenses
suffice as provided under Art. 1256 The expenses of consignation, when properly made,
3.   Previous notice of consignation was given to those shall be charged against the creditor. [Art. 1259, CC]
persons interested in the performance of the
obligation. Previous notice is essential to the Withdrawal of Consigned Amount
validity of the consignation and its lack invalidates Before the creditor has accepted the consignation, or
the same. [Soco v Militante, G.R. No. L-58961, before a judicial declaration that the consignation has
(1983)] been properly made, the debtor may withdraw the
4.   Amount or thing due was placed at the disposal of thing or the sum deposited, allowing the obligation to
the court remain in force [par. 2, Art. 1260, CC].

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After the consignation has been declared as properly


made, he can only withdraw if the creditor consents
2.  L oss of the Thing Due or
to the withdrawal. [Tolentino] Impossibility or Difficulty
The amount consigned with the trial court can no of Performance
longer be withdrawn by the debtor because creditor’s
prayer in his answer that the amount consigned be Loss
awarded to him is equivalent to an acceptance of the A thing is lost when it perishes, goes out of commerce
consignation, which has the effect of extinguishing or disappears in such a way that its existence is
debtor’s obligation [Pabugais v Sahijwani, G.R. No. unknown or it cannot be recovered [Art. 1189, no. 2, CC]
156846 (2004)].
The term “loss” covers all causes which may render
Effects of Consignation impossible the performance of the prestation. The
If accepted by the creditor or declared properly made impossibility of performance must be subsequent to
by the Court: the execution of the contract in order to extinguish the
1.   Debtor is released in same manner as if he had obligation. Otherwise, the result is not extinguishment
performed the obligation at the time of but inefficacy of the obligation under Arts. 1348 and
consignation 1493. [Tolentino]
2.   Accrual of interest is suspended from the moment
of consignation. Effects of Loss [Arts. 1262-1263, CC]
3.   Deterioration or loss of the thing or amount Obligation to Deliver a Obligation to Deliver a
consigned, occurring without the fault of debtor, Specific Thing Generic Thing
must be borne by creditor from the moment of Loss of a generic thing
deposit Obligation is does not extinguish an
extinguished if the obligation, EXCEPT in
Any increment or increase in the value of the thing thing was destroyed case of delimited
after consignation inures to the benefit of the creditor without fault of the generic things, where
debtor and before he the kind or class is
In a “Contract To Sell”, tender and consignation is has incurred delay. limited itself, and the
necessary to bring into effect the suspensive condition whole class perishes.
of payment which gives rise to the obligation on the
part of the SELLER to enter into a contract of sale. An obligation to pay money is generic; therefore, it is
Tender of payment alone is NOT enough [Adelfa not excused by fortuitous loss of any specific property
Properties v. CA, G.R. No. 111238 (1995)]. On the other of the debtor. The genus never perishes; genus
hand, in an “Option Contract”, tender of payment is nunquam perit. [Gaisano v. Insurance Company of
enough to perfect the contract of sale. North America, G.R. No. 147839 (2006)].

Consignation has a retroactive effect. (Tolentino) The article is applicable only to obligations "to do,"
and not to obligations "to give." The obligation to pay
Effects of Withdrawal by Debtor [Arts. 1260- 1261, rentals 16 or deliver the thing in a contract of lease
CC] falls within the prestation "to give"; hence, it is not
1.   Before approval of the court - Obligation remains covered within the scope of Article 1266. [Philippine
in force. National Construction Corporation v. CA and
2.   After approval of the court or acceptance by the Raymundo-Abarra, G.R. No. 116896 (1997)]
creditor, with the consent of the latter - Obligation
remains in force, but guarantors and co-debtors Actions Against Third Persons
are liberated. Preference of the creditor over the Art. 1269, CC. The obligation having been
thing is lost. extinguished by the loss of the thing, the creditor
3.   After approval of the court or acceptance by the shall have all the rights of action which the debtor
creditor, and without creditor’s consent - may have against third persons by reason of the
Obligation subsists, without change in the liability loss.
of guarantors and co-debtors, or the creditor’s
right of preference. Other cases where loss is attributed to debtor
4.   If the creditor authorizes the debtor to withdraw, a.   Law provides that the debtor shall be liable even
third persons who were benefited by the if the loss is due to fortuitous events [Arts. 1942,
consignation are not prejudiced by the revival of 1979, 2147, 2159, CC].
the obligation. b.   Obligor is made liable by express stipulation.

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c.   Nature of the obligation requires an assumption a.   If debtor has performed part of the obligation
of risk. when impossibility occurred, creditor must pay
d.   Fault or negligence concurs with the fortuitous the part done as long as he benefits from it.
event. b.   If debtor received full payment from creditor, he
e.   Loss occurs after delay. must return excess amount corresponding to part
f.   Debtor has promised to deliver the same thing to which was impossible to perform.
two or more different parties.
g.   Obligation arises from a criminal act. Partial loss ordinarily does not extinguish the
h.   Bailee in commodatum: saves his own thing and obligation, and the thing should be delivered to the
not the thing of the creditor, etc. [Art. 1942, CC]. creditor in its impaired condition. However, if the
i.   Depositary in deposit for certain instances [Art. portion lost is of such extent or nature that the
1979, CC]. obligation would not have been constituted without it,
then the obligation is extinguished. The intention of
Loss of the thing when in possession of the debtor the parties is the controlling factor in the solution of
Loss was due to the debtor’s fault. Burden of each case of partial loss. [Tolentino]
explaining the loss of the thing falls upon him,
UNLESS due to an earthquake, flood, storm, or other Doctrine of Unforeseen Events
natural calamity [Art. 1265, CC]. Art. 1267, CC. When the service has become so
difficult as to be manifestly beyond the
In Reciprocal Obligations contemplation of all the parties, the obligor may
Extinguishment of the obligation due to loss of the also be released therefrom, in whole or in part.
thing or impossibility of performance affects both the
creditor and debtor; the entire juridical relation is Requisites [Tolentino]:
extinguished. a.   The event or change in circumstances could not
have been foreseen at the time of the execution of
Partial loss the contract;
Art. 1264, CC. The courts shall determine whether, b.   It makes the performance of the contract
under the circumstances, the partial loss of the extremely difficult but not impossible;
object of the obligation is so important as to c.   The event must not be due to the act of any of the
extinguish the obligation. parties; and
d.   The contract is for a future prestation
Partial loss due to a fortuitous event does not
extinguish the obligation. The thing due shall be This only applies to absolutely exceptional changes of
delivered in its present condition, without any liability circumstances in which equity demands assistance for
on the part of the debtor, UNLESS the obligation is the debtor. [Tolentino]
extinguished when the part lost was of such extent as
to make the thing useless. Creditors’ rights
Art. 1269, CC. The obligation having been
Impossibility of Performance extinguished by the loss of the thing, the creditor
When prestation becomes legally or physically shall have all the rights of action which the debtor
impossible (by fortuitous event or force majeure), the may have against third persons by reason of the
debtor is released. [Arts. 1266, CC] loss.

Impossibility must have occurred without fault of This article refers to the rights and actions which the
debtor, and after the obligation has been constituted. debtor may have against third persons. It also refers to
any indemnity which the debtor may have already
Subjective impossibility received. [Tolentino]
Where there is no physical or legal loss, but the thing
belongs to another, the performance by the debtor
becomes impossible. The debtor must indemnify the 3.  Condonation
creditor for damages.
Condonation or Remission of the Debt
Partial Impossibility An act of liberality, by virtue of which, without
Courts shall determine whether it is so important as to receiving any equivalent, the creditor renounces the
extinguish the obligation. enforcement of the obligation. The obligation is
extinguished either in whole or in such part of the
same to which remission refers.

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Requisites: be presumed that the creditor delivered it


a.   Debt must be existing and demandable. voluntarily, unless the contrary is proved. [Art.
b.   Renunciation must be gratuitous. 1272, CC]
c.   Debtor must accept the remission. [Art. 1270, CC] b.   Delivery of a private document evidencing credit
made voluntarily by the creditor to the debtor
If the renunciation is not gratuitous, the nature of the implies the renunciation of the action of creditor
act changes and it may be: against the latter. [Art. 1272, CC]
a.   Dation in payment – when the creditor receives a c.   Accessory obligation of pledge has been remitted
thing different from that stipulated; when thing after its delivery is found in the
b.   Novation – when the object or principal conditions possession of the debtor or third person. [Art.
of the obligation have changed; 1274, CC]
c.   Compromise – when the matter renounced is in
litigation or dispute and in exchange of some Effect
concession which the creditor receives. Renunciation of the principal debt shall extinguish the
accessory obligations, but remission of the latter
Although the debtor must accept the remission, leaves the principal obligation in force. [Art. 1273, CC]
nothing prevents the creditor from making a unilateral
declaration of his right, abandoning and thereby
extinguishing his credit, as expressly allowed by Art 6.
4.  C onfusion or Merger of
Rights
It is essential that remission must be gratuitous, that
there is no equivalent received for the benefit given. If Confusion: The meeting in one person of the qualities
there is an equivalent, it may become dation in of creditor and debtor of the same obligation.
payment, novation, or compromise. [Tolentino]
Requisites
Kinds of Condonation a.   It should take place between principal debtor and
As to extent creditor. [Art 1276, CC]
a.   Total – extinguishes the entire obligation. b.   The very same obligation must be involved;
b.   Partial – refers to only a particular aspect of the c.   The confusion must be total, i.e. as regards the
obligation, i.e. amount of indebtedness or an whole obligation.
accessory obligation.
Effects
As to Form a.   In general
Art. 1270, CC. Condonation or remission is The obligation is extinguished from the time the
essentially gratuitous, and requires the acceptance characters of the debtor and creditor are merged
by the obligor. It may be made expressly or in the same person. [Art. 1275, CC]
impliedly.
b.   In case of joint or solidary obligations
One and the other kind shall be subject to the rules Confusion in Confusion in
which govern inofficious donations. Express Joint Obligation Solidary Obligation
condonation shall, furthermore, comply with the Extinguishes the entire
forms of donation. obligation, but the
Extinguishes the share
a.   Express Condonation other debtors may be
of the person in whom
•   Made formally: in accordance with forms of the two characters
liable for
ordinary donations. [Art. 1270, CC] reimbursement if
concur [Art. 1277, CC]
•   An express remission must be accepted in payment was made
order to be effective. prior to remission.
•   When the debt refers to movable or personal
property, Art 748 will govern; if it refers to Obligation is not extinguished when confusion takes
immovable or real property, Art 749 applies. place in the person of subsidiary debtor (i.e.
b.   Implied Condonation guarantor), but merger in the person of the principal
•   Inferred from the acts of the parties. debtor shall benefit the former.

Presumptions of Condonation: Note: Where, however, the mortgagee acquires


a.   Whenever the private document in which the debt ownership of the entire mortgaged property, the
is found is in the possession of the debtor, it shall mortgage is extinguished; but this does not
necessarily mean the extinguishment of the obligation

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secured thereby, which may become an unsecured


obligation. Compensation Payment
Capacity to dispose and
Requires capacity to
5.  C ompensation receive the thing is
unnecessary since
dispose of the thing
paid and capacity to
compensation operates
Compensation: Offsetting of two obligations which receive
by law
are reciprocally extinguished if they are of the same
Must be total
value, or extinguished to the concurrent amount if of May be partial
performance
different values.

Requisites [Art. 1279, CC] Compensation Counterclaim


a.   Each obligor is bound principally, and at the same Takes place by Must be pleaded to be
time a principal creditor of the other operation of law effectual
b.   Both debts must consist in a sum of money, or if
the things due are fungible, of the same kind & Kinds of Compensation
quality As to extent
Note: The term ‘consumable’ is erroneously used a.   Total – when two debts are of the same amount
in Art 1279. The appropriate term is ‘fungible’. [Art. 1281, CC]
[Tolentino] b.   Partial - when the two obligations are of different
c.   Both debts are due amounts and a balance remain
d.   Debts are liquidated and demandable
e.   There must be no retention or controversy over As to cause
either of the debts, commenced by third persons a.   Legal
and communicated in due time to the debtor b.   Voluntary
f.   Compensation is not prohibited by law c.   Judicial
d.   Facultative
To warrant the application of set off under Article 1278
of the Civil Code, the debtor’s admission of his Legal Compensation – takes place by operation of
obligation must be clear and categorical and not one law from the moment all requisites are present.
which merely arise by inference or implication from the
customary execution of official documents in Since it takes place ipso jure, when used as a defense,
assuming the responsibilities of a predecessor it retroacts to the date when all its requisites are
[Bangko Sentral v COA, G.R. No. 168964 (2006)]. fulfilled.

Effects Art. 1290, CC. When all the requisites mentioned in


a.   Both debts are extinguished to the concurrent article 1279 are present, compensation takes effect
amount, even though the creditors and debtors by operation of law, and extinguishes both debts to
are not aware of the compensation. the concurrent amount, even though the creditors
b.   Accessory obligations are also extinguished. and debtors are not aware of the compensation.

Debtor claiming its benefits must prove Legal compensation may apply to:
compensation; once proven, effects retroact from the 1.   Awards of attorney’s fees, against the litigant and
moment when the requisites concurred. not his lawyer [Gan Tion v. CA, G.R. No. L-22490
(1969)]
Compensation Distinguished from Other Modes of 2.   Bank deposits, against the accounts of a depositor
Extinguishment whose checks were dishonored [BPI v CA, G.R. No.
Compensation Confusion 116792 (1996)]
There must always be Involves only one
two obligations. obligation. Note: While a bank generally has a right of set-off over
There are two persons deposits for the payment of any withdrawals on the
who are mutually There is only one part of a creditor, the question of whether the remedy
debtors and creditors of person whom the is properly exercised is a separate matter and depends
each other in two characters of the on the bank’s role as the depository bank and as
separate obligations, creditor and debtor collecting agent for the check. The depositary bank
each arising from the meet. must have acted with the highest degree of care,
same cause.

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otherwise it may not exercise such right of setoff. such right at the time he gave his
[Associated Bank v Tan, G.R. No. 156940, (2004)] consent
With debtor’s Debtor may set up compensation
Voluntary Compensation – takes place when parties knowledge of debts previous to the
who are mutually creditors and debtors of each other but without assignment but not of
agree to compensate their respective obligations even consent subsequent ones
though one of the requisites of compensation may be Debtor may set up compensation
lacking. Without
of all credits prior and also later
debtor’s
to the assignment until he had
knowledge
Art. 1282, CC. The parties may agree upon the knowledge of the assignment
compensation of debts which are not yet due.

The only requisites of conventional compensation are


6.  N ovation
(1) that each of the parties can dispose of the credit he
Obligations may be modified by:
seeks to compensate, and (2) that they agree to the
a.   Changing their object or principal conditions;
mutual extinguishment of their credits [United
b.   Substituting the person of the debtor;
Planters v CA, G.R. No. 126890 ((2009)].
c.   Subrogating a third person in the rights of the
creditor. [Art. 1291, CC]
Judicial Compensation – takes place by judicial
decree
Extinguishment of an obligation by the substitution or
change of the obligation by a subsequent one which
Art. 1283, CC. If one of the parties to a suit over an extinguishes or modifies the first either by changing
obligation has a claim for damages against the the object or principal conditions, or by substituting
other, the former may set it off by proving his right the person of the debtor, or by subrogating a third
to said damages and the amount thereof. person in the rights of the creditor.

Facultative Compensation - When it can be claimed Unlike other modes of extinguishment, it is a juridical
by one of the parties who, however, has the right to act of dual function—it extinguishes an obligation, and
object to it. at the same time, it creates a new one in lieu of the old.
It operates as a relative, not an absolute, extinction.
This Compensation which can only be set up at the
option of a creditor, when legal compensation cannot Requisites
take place because some legal requisites in favor of a.   A previous valid obligation
the creditor are lacking. b.   Agreement of all the parties to the new obligation
c.   Animus novandi or intent to novate
Obligations which cannot be compensated [Arts. d.   Substantial difference between old and new
1287-1288, CC] obligations and, consequently, extinguishment of
a.   Contracts of depositum the old obligation
b.   Contracts of commodatum e.   Validity of the new obligation
c.   Future support due by gratuitous title
d.   Civil liability arising from a penal offense Effect
e.   Obligations due to the government If Original If New
f.   Damage caused to the partnership by a partner In General Obligation is Obligation is
Void Void
Right of a Guarantor Novation is New obligation
A guarantor may set up compensation as regards void if the is void, the old
what the creditor may owe the principal debtor. [Art. original obligation
1280, CC] Old
obligation was subsists,
obligation is
void, EXCEPT UNLESS the
Effect of Assignment of Rights by the Creditor to a extinguished
when parties
Third Person [Art. 1285, CC] and replaced
annulment intended that
Debtor cannot set up against by the new
may be claimed the former
With debtor’s assignee compensation one
only by the relations shall
consent pertaining to him against stipulated.
debtor, or be extinguished
assignor UNLESS he reserved when in any event
ratification [Art. 1297, CC]

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validates acts a.   New Kinds of Novation


that are obligation As to form
voidable [Art. void: No a.   Express – declared in an unequivocal terms
1298, CC] novation b.   Implied – the old and new obligations are on
a.   Original b.   New every point incompatible with each other
obligation obligation
is void: No voidable: Novation is not presumed
novation. Novation is In the absence of an unequivocal declaration of
b.   Original effective extinguishment of the pre-existing obligation, only
obligation proof of incompatibility between the old and new
voidable: obligation would warrant a novation by implication.
Effective if [California Bus Line v. State Investment, G.R. No.
contract is 147950 (2003)]
ratified
before Test of Incompatibility
novation. Whether or not the old and new obligation can stand
together, each one having an independent existence.
Accessory obligations are also extinguished, but may No incompatibility exists when they can stand
subsist only insofar as they may benefit third persons together. Hence, there is no novation. Incompatibility
who did not give their consent to the novation OR exists when they cannot stand together. Hence, there
those who may be affected, upon agreement between is novation.
the parties.
For there to be implied novation, the changes must be
The extension or shortening of the period for the essential, i.e. referring to the object, cause, or principal
performance of the obligation is generally considered conditions of the obligation.
as merely accidental and does not bring about a
novation. [Tolentino] As to effect
a.   Total
Original or new obligation with suspensive or b.   Partial
resolutory condition
Art. 1299, CC. If original obligation was subject to a Total Partial
suspensive or resolutory condition, the new 1.   Transfers to the person
A creditor, to
obligation shall be under the same condition, subrogated the credit
whom partial
unless it is otherwise stipulated. with all the rights thereto
payment has been
appertaining, either
made, may
Incompatible against the debtor or
Compatible Conditions exercise his right
Conditions third persons.
for the remainder,
a.   Fulfillment of both 2.   Obligation is not
and shall be
conditions: new extinguished, even if the
preferred to the
obligation becomes intention is to pay it.
person subrogated
demandable 3.   Defenses against the old
in his place in
b.   Fulfillment of creditor are retained,
virtue of the partial
condition concerning a.   Original obligation is unless waived by the
payment.
the original extinguished, while debtor.
obligation: old new obligation exists
obligation is revived; As to essence or object
new obligation loses b.   Demandability shall a.   Objective/Real
force be subject to b.   Subjective/Personal
c.   Fulfillment of fulfillment/
condition concerning nonfulfillment of the AS TO ESSENCE OR OBJECT
the new obligation: condition affecting it Objective/Real Subjective/Personal
no novation; 1.   Substitution of debtors
requisite of a 1.   Change of the i.   Expromision
previous valid and subject matter; ii.   Delegacion
effective obligation 2.   Change of cause or 2.   Subrogation of a third
lacking consideration; or person to the rights of
the creditor

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3.   Change of the i.   Conventional For subjective novation, it is insufficient that the


principal ii.   Legal juridical relation between the parties to the original
conditions or terms contract is extended to a third person. If the old
debtor is not released, no novation occurs and the
1.   Substitution of debtors third person who has assumed the debtor’s obligation
Expromision Delegacion becomes merely a co-debtor or surety or co-surety.
Debtor (delegante) [Conchinyan, Jr. v. R&B Surety and Insurance
offers or initiates the Company, G.R. No. L-47369, (1987)]
Initiative for change
change, and the
does not emanate from An accessory surety may not be released if he
creditor (delegatorio)
the debtor, and may expressly waives his discharge from the obligation in
accepts a third person
even be made without case of change or novation in the original agreement.
(delegado) as
his knowledge. [Molino v Security Diners International Corp, G.R. No.
consenting to the
substitution. 136780 (2001)].
Requisites
a.   Consent of the 2.   Subrogation
creditor and the Transfers to the person subrogated the credit with all
new debtor. Consent of old debtor, the rights thereto appertaining, either against the
b.   Knowledge or new debtor, and debtor or against third persons, be they guarantors or
consent of the old creditor. possessors of mortgages, subject to stipulation in a
debtor is not conventional subrogation. [Art. 1303, CC]
required.
Effects a.   Conventional Subrogation – takes place by
agreement of parties
a.   Old debtor is
released
Difference between Conventional Subrogation and
b.   Insolvency of the
Assignment of Credit [Licaros v Gatmaitan, G.R. No.
new debtor does
142838 (2001)]
not revive the old
obligation in case Conventional
Assignment of credit
the old debtor did subrogation
not agree to a.   Insolvency of the Debtor’s consent is Debtor’s consent is not
expromision. new debtor revives necessary. required.
c.   If with knowledge the obligation of Refers to the same right
and consent of the the old debtor if it Extinguishes an which passes from one
old debtor, the new was anterior and obligation and gives person to another, without
debtor can public, and known rise to a new one. modifying or extinguishing
demand to the old debtor. the obligation.
reimbursement of b.   New debtor can Defects/vices in the
Defects/vices in the old
the entire amount demand old obligation are
obligation are not cured.
paid and with reimbursement of cured.
subrogation of the entire amount
creditor’s rights. he has paid from b.   Legal Subrogation – takes place by operation of
d.   If without the original debtor. law
knowledge of the He may compel the
old debtor, the new creditor to Legal subrogation is not presumed, except in the
debtor can subrogate him to following circumstances:
demand all of his rights. i.   When creditor pays another creditor who is
reimbursement preferred, even without the debtor’s
only up to the knowledge
extent that the ii.   When a third person not interested in the
latter has been obligation pays with the express or tacit
benefited without approval of the debtor
subrogation of iii.   When, even without the knowledge of the
creditor’s rights. debtor, a person interested in the
fulfillment of the obligation pays, without
prejudice to the effects of confusion as to
the latter’s share [Art. 1302, CC]

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VI.   CONTRACTS 2.   The determination is not evidently inequitable


[Art. 1310, CC]. If it is inequitable, the court shall
decide what is equitable under the circumstances.
  General Provisions Similarly, contract changes must be made with the
consent of the contracting parties. The minds of all the
Contract - A contract is a meeting of the minds parties must meet as to the proposed modification,
between two persons whereby one binds himself, with especially when it affects and important aspect of the
respect to the other, to give something or to render agreement. Thus, any change must be mutually
some service [Article 1305] agreed upon; otherwise, it produces no binding effect.
[Philippine Savings Bank v. Sps. Castillo, G.R. No.
1.   Principal Characteristics 193178 (2011)]

of Contracts b.  Autonomy (also Freedom to


a.  Mutuality Contract)
Art. 1306, CC. The contracting parties may
Art. 1308, CC. The contract must bind both establish such stipulations, clauses, terms and
contracting parties; its validity or compliance conditions as they may deem convenient, provided
cannot be left to the will of one of them. they are not contrary to law, morals, good customs,
public order, or public policy.
Applicability to contract modifications:
Contract changes must be made with the consent of If the stipulation which violates the limitations set
the contracting parties. The minds of all the parties forth in the foregoing provision constitute the cause,
must meet as to the proposed modification, especially object, or purpose of the contract, such contract is
when it affects and important aspect of the denied legal existence, and thus, shall be deemed void
agreement. Thus, any change must be mutually from the beginning. [Casis]
agreed upon; otherwise, it produces no binding effect.
[Philippine Savings Bank v. Sps. Castillo, G.R. No. Contracting parties may establish any agreement,
193178 (2011)] term, and condition they may deem advisable,
provided they are not contrary to law, morals or public
General rule: Any contract which appears to be heavily policy. The right to enter into lawful contracts
weighed in favor of one of the parties so as to lead to constitutes one of the liberties guaranteed by the
an unconscionable result is void. Any stipulation Constitution. It cannot be struck down or arbitrarily
regarding the validity or compliance of the contract interfered with without violating the freedom to enter
which is left solely to the will of one of the parties is into lawful contracts. [Gateway Electronics Corporation
likewise invalid. [Floirendo v Metrobank, G.R. No. v Land Bank, G.R. Nos. 155217 and 156393 (2003)]
148325 (2007)].
It is necessary for the existence of a contract that two
Exception: The legality of contracts which is left to the distinct parties enter into it (auto-contracts).
will of either of the parties may be upheld if there was
a finding of the presence of essential equality of the The existence of a contract is not determined by the
parties to the contracts, thus preventing the number of persons who intervene in it, but by the
perpetration of injustice on the weaker party [GF number of parties; not by the number of individual
Equity v Valenzona, G.R. No. 156841 (2005)] wills but by the number of declarations of will.
A contract may expressly confer upon one party the As long as there are two distinct patrimonies, even if
right to cancel the contract because the exercise of they are represented by the same person, the contract
that right is a fulfillment of the provisions of the will be valid; e.g. an agent representing both the buyer
contract itself [Taylor v Uy Tieng Piao, G.R. No. L-16109 and the seller.
(1922)]
Special disqualifications in freedom to contract
The determination of the performance may be left to a
Art. 87, FC. Every donation or grant of gratuitous
third party as long as:
advantage, direct or indirect, between the spouses
1.   The decision has been made known to both
during the marriage shall be void, except
contracting parties [Art. 1309, CC]
moderate gifts which the spouses may give each

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other on the occasion of any family rejoicing. The b.   Pactum leonina one party bears the lion’s
prohibition shall also apply to persons living share of the risk
together as husband and wife without a valid Art. 1799, CC. A stipulation which excludes one or
marriage. more partners from any share in the profits or
Art. 1490, CC. The husband and the wife cannot losses is void.
sell property to each other, except: (1) When a c.   Pactum de non alenundo – a stipulation not
separation of property was agreed upon in the to alienate
marriage settlements; or (2) When there has been Art. 2130, CC. A stipulation forbidding the owner
a judicial separation of property under Article 191. from alienating the immovable mortgaged shall be
Art. 1491, CC. The following persons cannot void.
acquire by purchase, even at a public or judicial 2.   Contrary to morals
auction, either in person or through the mediation Morals deal with norms of good and right conduct
of another: evolved in a community. These norms may differ
(1)   The guardian, the property of the person or at different times and places and with each group
persons who may be under his guardianship; of people. [de Leon]
(2)   Agents, the property whose administration or 3.   Contrary to good customs
sale may have been entrusted to them, unless Customs consist of habits and practices which
the consent of the principal has been given; through long usage have been followed and
(3)   Executors and administrators, the property of enforced by society or some part of it as binding
the estate under administration; rules of conduct. It has the force of law when
(4)   Public officers and employees, the property of recognized and enforced by law. [de Leon]
the State or of any subdivision thereof, or of 4.   Contrary to public order
any government-owned or controlled Public order refers principally to public safety
corporation, or institution, the administration although it has been considered to mean also the
of which has been entrusted to them; this public weal. [de Leon]
provision shall apply to judges and 5.   Contrary to public policy
government experts who, in any manner Public policy is the principle under which freedom
whatsoever, take part in the sale; of contract or private dealing is restricted by law
(5)   Justices, judges, prosecuting attorneys, clerks for the good of the public. In determining whether
of superior and inferior courts, and other a contract is contrary to public policy, the nature
officers and employees connected with the of the subject matter determines the source from
administration of justice, the property and which such question is to be solved [Ferrazzini v
rights in litigation or levied upon an execution Gsell, G.R. No. L-10712 (1916)]
before the court within whose jurisdiction or
territory they exercise their respective A contract which is neither prohibited by law nor
functions; this prohibition includes the act of condemned by judicial decision, nor contrary to
acquiring by assignment and shall apply to public morals, contravenes no public policy. In the
lawyers, with respect to the property and absence of express legislation or constitutional
rights which may be the object of any litigation prohibition, a court, in order to declare a contract
in which they may take part by virtue of their void as against public policy, must find that the
profession. contract as to the consideration or thing to be
(6)   Any others specially disqualified by law. done, has a tendency to injure the public, is
Art. 1782, CC: Persons who are prohibited from against the public good, or contravenes some
giving each other any donation or advantage established interests of society, or is inconsistent
cannot enter into universal partnership with sound policy and good morals, or tends
clearly to undermine the security of individual
Limitations to stipulations/what not to stipulate rights, whether of personal liability or of private
1.   Contrary to law property [Gabriel v Monte de Piedad, G.R. No. L-
a.   Pactum commisorium: automatic 47806 (1941)]
appropriation
Art. 2088, CC: The creditor cannot appropriate the c.   Relativity
things given by way of pledge or mortgage, or
dispose of them. Any stipulation to the contrary is Par. 1, Art. 1311, CC. Contracts take effect only
null and void. between parties, their assigns and heirs, EXCEPT in
case where the rights and obligations arising from
the contract are not transmissible by their (1)

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nature, (2) by stipulation, or (3) by provision of law. Creditors of the contracting parties may rescind
The heir is not liable beyond the value of the contracts intended to defraud them although they
property he received from the decedent did not intervene therein [Reyes and Puno]

Art. 1317, CC. No one may contract in the name of 5.   Tortious Interference [Art. 1314, CC]
another without being authorized by the latter, or Any third person who induces another to violate
unless he has by law a right to represent him. his contract shall be liable for damages to the
other contracting party (even though the third
A contract entered into in the name of another by person is not bound by the stipulations).
one who has no authority or legal representation or
who has acted beyond his powers, shall be The word "induce" refers to situations where a
unenforceable, unless it is ratified expressly or person causes another to choose one course of
impliedly by the person on whose behalf it has been conduct by persuasion or intimidation.
executed, before it is revoked by the other
contracting party. Requisites:
a.   Existence of a valid contract
b.   The third person’s knowledge of the third
Exceptions to Relativity (Contracts may bind and affect
person of the existence of the contract
strangers in the ff. cases):
Note: Knowledge alone is not sufficient to
1.   Stipulations Pour Autrui [Art. 1311, par.2, CC]
make a third person liable for tortuous
If a contract should contain some stipulation in
interference. To sustain a case for tortuous
favor of a third person, he may demand its
interference, the defendant must have acted
fulfillment, provided:
with malice or must have been driven by
a.   He communicated his acceptance to the
purely impious reasons to injure the plaintiff.
obligor before its revocation (by the original
c.   Interference by third person without legal
parties).
justification or excuse. [Lagon v CA, G.R. No.
b.   The contracting parties must have clearly and
119107 (2005)]
deliberately conferred a favor upon the third
person (A mere incidental benefit or interest
of a person is not sufficient). d.  Consensual
c.   The stipulation favoring the third person is
only a part of the contract. Art. 1315, CC. Contracts are perfected by mere
d.   No relation of agency exists between any of consent and from that moment, the parties are
the parties and the third person favored. bound not only to the fulfillment of what has been
e.   The favorable stipulation should not be expressly stipulated but also to all consequences
conditioned or compensated by any kind of which according to their nature may be keeping in
obligation whatsoever. good faith, usage, and law.
2.   Accion directa – the creditor is authorized by the
statute to sue on his debtor’s contract Exceptions: Real contracts, such as deposit, pledge
Examples: and commodatum, are not perfected until the delivery
a.   Lessor against Sublessee [Art. 1651, 1652, CC] of the object of the obligation [Art. 1316, CC]. And
b.   Laborers of Contractor against Owner of the solemn contracts, which are perfected by compliance
work [Art. 1729, CC] with the formalities required by law.
3.   Third Person in Possession of Object of Contract
[Art. 1312, CC]
In contracts creating real rights, third persons
e.   Obligatory Force
who come into possession of the object of the
contract are bound thereby, subject to the Art. 1159, CC. Obligations arising from contracts
provisions of the Mortgage Law and the Land have the force of law between the contracting
Registration Laws. parties and should be complied with in good faith.
4.   Fraud of Creditors by Contracting Parties
(Accion Pauliana) [Art. 1313, CC] Art. 1308, CC. The contract must bind both
Creditors are protected in cases of contracts contracting parties; its validity or compliance
intended to defraud them. cannot be left to the will of one of them.

Art. 1315, CC. Contracts are perfected by mere


consent and from that moment, the parties are

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bound not only to the fulfillment of what has been 1.   Unilateral – only one party is bound by the
expressly stipulated but also to all consequences prestation, e.g. commodatum
which according to their nature may be keeping in 2.   Bilateral (synallagmatic)- both parties are
good faith, usage, and law. bound by reciprocal prestations, e.g. sale
•   All contracts are bilateral in the consent,
but not all are bilateral in effects.
2.  C lassification of Contracts j.   To their designation/name
1.   Nominate – where the law gives the contract
a.   To their subject matter a special designation or particular name; e.g.
1.   Things, e.g. sale, deposit, pledge deposit
2.   Services, e.g. agency, lease of services 2.   Innominate – where the contract has no
b.   To formation or perfection special name
1.   Consensual – consent is sufficient to perfect i.   Do ut des (I give so that you may give)
the contract [Art. 1315] ii.   Do ut facias (I give so that you may do)
2.   Real – delivery, actual or constructive, is iii.   Facio ut facias (I do so that you may do)
required in addition to consent [Art. 1316] iv.   Facio ut des (I do so that you may give)
3.   Solemn or formal – where special formalities
are required for perfection [Art. 1356] Art. 1307, CC. Innominate contracts shall be
c.   To relation to other contracts regulated by the stipulations of the parties, by the
1.   Principal – may exist alone; e.g. lease provisions of Titles I and II of this Book, by the rules
2.   Accessory – depends on another contract for governing the most analogous nominate contracts,
its existence, e.g. guaranty and by the customs of the place
3.   Preparatory – a preliminary step towards the
celebration of a subsequent contract; e.g.
agency 3.  Stages of a Contract
d.   To form
1.   Common or informal – may be entered into in a.   Preparation (conception or “generation”) – when
whatever form as long as there is consent, negotiations are in progress
object and cause b.   Perfection (or birth) – when the parties come to an
2.   Special or formal – required by law to be in agreement
certain specified form c.   Consummation (or death) - when the contract is
e.   To cause/by equivalence of prestations fully executed
1.   Onerous – there is an exchange of correlative
values, e. g. sale Preparation Perfection Consummation
2.   Remuneratory – where the outstanding Parties come
prestation is premised upon services or Exchanges of
to an Parties perform
benefits already received offers and
agreement. their
3.   Gratuitous – where no correlative prestation counter-
All the obligations
is received by one party, e. g. donation, offers.
essential under the
commodatum No contract
requisites contract
f.   To purpose yet
concur
1.   Transfer of ownership, e.g. sale The stage to
2.   Conveyance of Use, e.g. commodatum The stage to
look at to
3.   Rendition of Service, e.g. agency look at to
determine the
g.   To time of fulfillment determine
status of the
1.   Executed – where the obligations are fulfilled whether there
contract (i.e.,
at the time the contract is entered into has been a
valid, voidable,
2.   Executory – where fulfillment of obligations breach of the
void,
does not take place at the time the contract is contract
unenforceable)
made
h.   To risk
1.   Commutative – fulfillment is predetermined 4.  E lements of Contracts
in advance
2.   Aleatory – fulfillment is dependent upon 1.   Essential – those without which there is no
chance contract
i.   To the nature of the vinculum produced Consensual Solemn
Real
(ordinary) (formal)

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Essential
Elements
Consent, Object, and Cause   Essential Requisites
Delivery
of the Formality There is no contract unless the following requisites
Additional concur:
- thing to prescribed
Elements 1.   Consent of the contracting parties;
be by law
returned 2.   Object certain which is the subject matter of the
contract;
2.   Natural – those which are derived from the nature 3.   Cause of the obligation which is established. [Art.
of the contract and ordinarily accompany the 1318, CC]
same; they are presumed to exist unless the
contrary is stipulated 1.   Consent
3.   Accidental – those which exist only if stipulated
The meeting of the minds of the parties on the subject
matter and cause of the contract.

The facts that the signatures of the witnesses and the


notary public were forged does not negate the
existence of the contract for as long as the parties
consented to it. The signatures of the witnesses and
the notary public are necessary simply to make the
contract binding on the third person. [Soriano v.
Soriano, G.R. No. 130348 (2007)]

Requisites
a.   It must be manifested by the concurrence of the
offer and acceptance [Arts. 1319-1326, CC].
b.   The contracting parties must possess the
necessary legal capacity [Arts. 1327-1329, CC].
c.   It must be intelligent, free, spontaneous, and real
(not vitiated) [Arts. 1330-1346, CC]

A contract is perfected by mere consent. From the


moment of a meeting of the offer and the acceptance
upon the object and the cause that would constitute
the contract, consent arises. However, “the offer must
be certain” and “the acceptance seasonable and
absolute; if qualified, the acceptance would merely
constitute a counteroffer. [Insular Life v. Asset Builders
Corp., G.R. No. 147410 (2004)]

The facts that the signatures of the witnesses and the


notary public were forged does not negate the
existence of the contract for as long as the parties
consented to it. The signatures of the witnesses and
the notary public are necessary simply to make the
contract binding on the third person. [Soriano v.
Soriano, G.R. No. 130348 (2007)]

Offer
A unilateral proposition which one party makes to the
other for the celebration of the contract. [Tolentino]

Requisites of an Offer:
a.   Definite
b.   Intentional
c.   Complete

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Invitation to make offers (advertisements) “The offer must be certain” and “the acceptance
a.   Business advertisements of things for sale are seasonable and absolute; if qualified, the
NOT definite offers, just invitations to make an acceptance would merely constitute a counteroffer.
offer, UNLESS the contrary appears [Art. 1325, [Insular Life v. Asset Builders Corp., G.R. No. 147410,
CC]. (2004)]
b.   Advertisements for bidders are invitations to
make proposals, the advertiser is NOT bound to Acceptance must be absolute, unconditional, and
accept the lowest or highest bid; UNLESS the without variance of any sort from the offer. It must
contrary appears. The bidder is the offeror [Art. also be made known to the offeror. An acceptance
1326, CC]. not made in the manner prescribed is not effective
but constitutes a counter-offer. [Malbarosa v. CA,
The Terms and Conditions of the bidding G.R. No. 125761, (2003)]
disseminated… constitutes the "advertisement"
to bid on the project. The bid proposals or Requisites of acceptance:
quotations submitted by the prospective a.   Unqualified and unconditional, i.e. it must
suppliers… are the offers. The reply… constitutes conform with all the terms of the offer, otherwise
the acceptance or rejection of the respective it is a counter-offer [Art. 1319, CC]
offers. [Jardine Davies v. CA, G.R. No. 128066, b.   Directed and communicated to the offeror and
(2000)] learned by him [Art. 1319, CC] If made through an
c.   Statements of intention: no contract results even agent, the offer is accepted from the time the
if accepted. acceptance is communicated to such agent. [Art.
1322, CC]
In a letter informing another that the sender was c.   Made within the proper time
“in a position and is willing to entertain” the d.   May be express/implied, but is not presumed
purchase of a yacht under some terms, the word
“entertain” applied to an act does not mean the Acceptance must be absolute, unconditional, and
resolution to perform said act, but simply a without variance of any sort from the offer. It must also
position to deliberate for deciding to perform or be made known to the offeror. An acceptance not
not to perform said act. It was merely a position to made in the manner prescribed is not effective but
deliberate whether or not he would purchase the constitutes a counter-offer. [Malbarosa v. CA, supra]
yacht and invitation to a proposal being made to
him, which might be accepted by him or not. Contracts are perfected by mere consent
[Rosenstock v. Burke, G.R. No. 20732, (1924)] Contracts are perfected by mere consent, and from
that moment the parties are bound not only to the
Offer terminates upon— fulfillment of what has been expressly stipulated but
a.   Rejection by the offeree also to all the consequences which, according to their
b.   Incapacity (death, civil interdiction, insanity, or nature, may be in keeping with good faith, usage and
insolvency) of the offeror or offeree before law. [Art. 1315, CC]
acceptance is conveyed [Art. 1323, CC]
c.   Submission of a counter-offer Exceptions:
d.   Lapse of the time stated in the offer without a.   Real contracts, such as deposit, pledge and
acceptance being conveyed commodatum, are not perfected until the delivery
e.   Revocation of the offer before learning of of the object of the obligation [Art. 1316, CC]
acceptance b.   Formal contracts, where the law requires that a
f.   Supervening illegality before acceptance [Reyes contract be in some form or be proved in a certain
and Puno] way; the intent of the parties have to be
accompanied by the requisite formality [Art. 1356,
Acceptance CC]
To produce a contract, the acceptance must not
qualify the terms of the offer. It is necessary that the Cognition Theory
acceptance be unequivocal and unconditional, and Acceptance made by a letter or telegram does not bind
the acceptance and the proposition shall be without the offeror except from the time it came to his
any variation whatsoever; and any modification or knowledge. The contract, in such a case, is presumed
variation from the terms of the offer annuls the latter to have been entered into in the place where the offer
and frees the offeror. [Tolentino] was made. [par. 2, Art. 1319, CC]

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Option Contract 5.   When upon reaching the age of majority they


A preparatory contract in which one party grants to the ratify the same
other, for a fixed period, the option to decide whether 6.   When a minor opens a savings account
or not to enter into a principal contract [Art. 1324, CC] without the assistance of his parents,
provided that the minor is at least 7 years old
It binds the party who has given the option not to enter and can read and write [PD 1734].
into the principal contract with any other person b.   Insane or demented persons, UNLESS they
during the person designated, and within that period, contract during a lucid interval. [Art. 1328, CC]
to enter into such contract to whom the option was c.   Deaf-mutes who do not know how to read AND
granted if the latter should decide to use the option. write.
[Tolentino]
Minors were held in estoppel through active
With consideration Without consideration misrepresentation. [Mercado v. Espiritu, G.R. No. L-
Offeror may withdraw by 11872, (1917)]
Offeror cannot
communicating
unilaterally withdraw There is no estoppel if the minority was known by the
withdrawal to the offeree
his offer. other party, and there was no active misrepresentation
before acceptance.
on the part of the minors. [Bambalan v. Maramba, G.R.
Art. 1324, CCprovides the general rule regarding offer No. L-27710, (1928)]
and acceptance: when the offerer gives to the offeree
a certain period to accept, "the offer may be Persons disqualified to contract
withdrawn at any time before acceptance" except a.   Those under civil interdiction for transactions inter
when the option is founded upon consideration. vivos [Art. 34, RPC]
b.   Undischarged insolvents [Sec. 24, Insolvency Law]
However, Art. 1479, CC modifies the general rule, c.   Husband and wife cannot donate to each other
which applies to "a promise to buy and sell" [Art. 123, FC], nor sell to each other if the marriage
specifically. This rule requires that a promise to sell to is under the regime of Absolute Community of
be valid must be supported by a consideration distinct Property [Art.1490, CC]
from the price. The option can still be withdrawn, even d.   The ff. cannot purchase, whether in public or
if accepted, if the same is not supported by any private sale [Art. 1491, CC]:
consideration. [Tuazon v. Del Rosario-Suarez, G.R. No.
168325, (2010)] Prohibited Party Subject
Guardian Property of the ward
Capacity to Contract Agent Property of the Principal
There are two types of void contracts: Executors and Property under
a.   Those where one of the essential requisites of a Administrators administration
valid contract as provided for by Article 1318 of the Property under their
Civil Code is totally wanting; and Public Officers
administration
b.   Those declared to be so under Article 1409 of the Justices, judges,
Civil Code. By contrast, a voidable or annullable Property attached in
prosecutors, clerks
contract is one in which the essential requisites for litigation
of court, lawyers
validity under Article 1318 are present, but vitiated
by want of capacity, error, violence, intimidation, Incapacity to Give Consent vs. Disqualification to
undue influence, or deceit. [Francisco v. Pastor Contract
Herrera, G.R. No. 139982 (2000)] Incapacity to Give Disqualification to
Consent Contract
Persons incapacitated to give consent [Art. 1327, CC] Restrains the exercise Restrains the very right
a.   Minors, EXCEPT— of the right to contract itself
1.   For necessaries [Art.1427, CC] Based upon subjective
2.   Where the minor actively misrepresents his Based upon public
circumstances of
age (estoppel) policy and morality
certain persons
3.   When it involves a natural obligation and Voidable Void
such obligation is fulfilled voluntarily by the
minor [Art. 1425-27, CC] CONSENT
4.   Contracts by guardians or legal Requisites of Consent:
representatives a.   intelligent

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b.   free Mistake which vitiates consent is an error of fact, and


c.   spontaneous not an error of law. Ignorance of the law excuses no
d.   real one from compliance therewith [Art. 3, CC]; but the
modern tendency is to allow an excusable mistake of
VICES OF CONSENT law to be invoked as vitiating consent. [Tolentino]
A contract where consent is given through
a.   Mistake See also Art. 526, CC on Possession: Mistake upon a
b.   Intimidation doubtful or difficult question of law may be the basis
c.   Violence of good faith.
d.   Undue influence
e.   Fraud Ignorantia Facti Excusat vs. Ignorantia Legis
is voidable. [Art. 1330, CC] Neminem Excusat
Mistake of Fact Mistake of Law
Mistake One or both parties
Inadvertent and excusable disregard of a One or both
arrive at an erroneous
circumstance material to the contract [Reyes and contracting parties
conclusion on the
Puno] believe that a fact
interpretation of a
exists when in reality it
question of law or its
In order that mistake may invalidate consent, it should does not, or vice versa
legal effects
refer to the substance of the thing which is the object Does not vitiate consent
of the contract, or to those conditions which have EXCEPT when it
principally moved one or both parties to enter into the involves mutual error as
contract. [Art.1331, CC] There is no mistake if the party Vitiates consent to the effect of an
alleging it knew the doubt, contingency or risk agreement when the
affecting the object of the contract. [Art. 1333, CC] real purpose is
frustrated.
To invalidate consent, the error must be excusable. It
must be real error, and not one that could have been Note: The obligation to show that the terms of the
avoided by the party alleging it. An error so patent and contract had been fully explained to the party who is
obvious that nobody could have made it, or one which unable to read or understand the language of the
could have been avoided by ordinary prudence, cannot contract, when fraud or mistake is alleged, devolves
be invoked by the one who made it in order to annul on the party seeking to enforce it. [Art. 1332, CC]
his contract. A mistake that is caused by manifest
negligence cannot invalidate a juridical act. Intimidation
[Tolentino] One of the contracting parties is compelled by a
reasonable and well-grounded fear of an imminent
Requisites: and grave evil upon his person or property, or upon the
1.   The error must be substantial regarding: person or property of his spouse, descendants or
a.   The object of the contract (error in re) which ascendants, to give his consent.
may be:
i.   Mistake as to the identity of the thing To determine the degree of intimidation, the age, sex
(error in corpore) and condition of the person shall be borne in mind.
ii.   Mistake as to the substance of the [Art. 1335, CC]
thing (error in substantia)
iii.   Mistake as to the conditions of the The conveyance of several properties by the wife to her
thing provided, or husband’s creditors, though reluctant, is still consent.
iv.   Mistake as to the quantity of the thing She assented to the requirements of the defendants in
(error in quantitate) order that the civil and criminal actions against them
b.   The condition which primarily moved or would be dropped. A contract is valid even though one
induced one or both parties to enter the of the parties entered into it against his wishes and
contract. desires, or even against his better judgment. [Martinez
c.   Identity or qualifications of one of the parties v. HSBC, G.R. No. L-5496 (1910)]
(error in persona), but only if such was the
principal cause of the contract. Violence
2.   The error must be excusable Serious or irresistible force used to extort consent [Art.
3.   The error must be a mistake of fact and not of law. 1335, CC]

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Requisites: Fraud
1.   One party is compelled to give his consent by a When, through insidious words or machinations of one
reasonable and well-grounded fear of an evil; of the contracting parties, the other is induced to enter
2.   The evil must be imminent and grave; into a contract which, without them, he would not
3.   The evil must be upon his person or property, have agreed to. [Art. 1338, CC]
spouse, descendants or ascendants;
4.   The evil must be unjust. In order that fraud may make a contract voidable, it
should be serious and should not have been employed
If a contract is signed merely because of “fear of by both contracting parties. [Art. 1344, CC]
displeasing persons to whom obedience and respect
are due”, the contract is still valid, for by itself, Art. 1339, CC. Failure to disclose facts, when there
reverential fear is not wrong. [Paras] is a duty to reveal them, as when the parties are
bound by confidential relations, constitutes fraud.
Violence Intimidation
Physical compulsion Moral compulsion Art. 1340, CC. The usual exaggerations in trade,
External or prevents when the other party had an opportunity to know
Internal or induces the
the will to manifest the facts, are not in themselves fraudulent.
performance of an act
itself
Art. 1341, CC. A mere expression of an opinion does
Note: Violence or intimidation shall annul the
not signify fraud, unless made by an expert and the
obligation, although it may have been employed by a
other party has relied on the former's special
third person who did not take part in the contract. [Art.
knowledge.
1336, CC]

Undue Influence Art. 1342, CC. Misrepresentation by a third person


When a person takes improper advantage of his power does not vitiate consent, unless such
over the will of another, depriving the latter of a misrepresentation has created substantial mistake
reasonable freedom of choice. and the same is mutual.

Requisites: Art. 1343, CC. Misrepresentation made in good


1.   Improper advantage faith is not fraudulent but may constitute error.
2.   Power over the will of another
3.   Deprivation of the latter’s will of a reasonable Requisites:
freedom of choice 1.   It must be made in Bad faith
2.   One party must have employed fraud or insidious
Circumstances to consider: words or machinations
1.   Relationship of the parties (family, spiritual, 3.   Damage or injury resulted to the other party
confidential etc.) 4.   It must have been serious
2.   That the person unduly influenced was suffering 5.   It induced the other party to enter into a contract
from infirmity (mental weakness, ignorance etc.) 6.   It must have been employed by one contracting
[Art.1337, CC] party upon the other and not employed by both
contracting parties nor by third persons.
Note: By analogy, undue influence employed by a third
person may annul the contract. Dolo Causante vs. Dolo Incidente
Dolo Causante Dolo Incidente
Test of Undue Influence: Whether or not the influence Refers to those
exerted has so overpowered or subjugates the mind of Refers to those
deceptions or
a contracting party as to destroy his free agency, deceptions or
misrepresentations of a
making him express the will of another rather than his misrepresentations
serious character
own. [Coso-Fernandez v. Deza, G.R. No. L-16763 (1921)] which are not serious in
employed by one party
character and without
and without which the
Undue influence must be distinguished from which the other party
other party would not
intimidation, in that in intimidation there must be an would have still entered
have entered into the
unlawful or unjust act which threatens and which into the contract
contract
causes consent to be given, while in undue influence, Renders the contract Renders the party liable
there need not be an unjust or unlawful act. voidable for damages
[Tolentino]

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Dolo incidente (Incidental fraud) [Art. 1344, CC] c.   The purpose is to deceive or to hide from third
Those which are not serious in character and without persons although it is not necessary that the
which the other party would still have entered into the purpose be illicit or for purposes of fraud
contract.
Absolute Simulation Relative Simulation
Dolo causante (Causal fraud) (Simulados) (Disimulados)
Determines or is the essential cause of the consent, No real transaction is Real transaction is
while dolo incidente refers only to some particular or intended. hidden.
accident of the obligation. The effects of dolo causante Fictitious contract. Disguised contract.
are nullity of the contract and indemnification of Bound as to actual hidden
damages, while dolo incidente obliges the person agreement, so long as it
employing it to pay damages. [Tankeh v. DBP, G.R. No. Void. (Because there is does not prejudice a third
171428 (2013)] an absolute lack of person and is not contrary
cause) to law, morals, good
Fraud to vitiate consent must fulfill two conditions customs, public order or
1.   The fraud must be dolo causante or it must be public policy.
fraud in obtaining the consent of the party. The
deceit must be serious. The fraud is serious when The characteristic of simulation is the fact that the
it is sufficient to impress, or to lead an ordinarily apparent contract is not really desired or intended to
prudent person into error; that which cannot produce legal effects or in any way alter the juridical
deceive a prudent person cannot be a ground for situation of the parties. Thus, where a person, in order
nullity. The circumstances of each case should be to place his property beyond the reach of his creditors,
considered, taking into account the personal simulates a transfer of it to another, he does not really
conditions of the victim. intend to divest himself of his title and control of the
2.   The fraud must be proven by clear and convincing property; hence, the deed of transfer is but a sham.
evidence and not merely by a preponderance Lacking, therefore, in a fictitious and simulated
thereof. [ECE Realty v. Mandap, G.R. No. 196182, contract is consent which is essential to a valid and
(2014)] enforceable contract. [Manila Banking v. Silverio, G.R.
No. 132887 (2005)]
Note: However, fraud in its general sense (false
representation of a fact) coming about in the If the parties [merely] state a false cause in the
consummation stage of the sale, as opposed to the contract to conceal their real agreement, the contract
negotiation and perfection stages, entitles the is relatively simulated and the parties are still bound
aggrieved party to the rescission of the sales contract. by their real agreement. Hence, where the essential
[Sps. Tongson v. Emergency Pawnshop, GR. No. requisites of a contract are present and the simulation
167874 (2010)] refers only to the content or terms of the contract, the
agreement is absolutely binding and enforceable
SIMULATION OF CONTRACTS between the parties and their successors in interest.
Takes place when the parties do not really want the [Valerio v. Refresca, G.R. No. 163687 (2006)]
contract they have executed to produce the legal
effects expressed by its wordings. It may be absolute With respect to a third person acting in good faith, the
or relative [Arts. 1345-1346, CC] apparent contract must be considered as the true
contract. The declaration that the contract is
The primary consideration in determining the true simulated does not prejudice him.
nature of a contract is the intention of the parties. Such
intention is determined not only from the express Note: Relative simulation is presumed by law in case
terms of their agreement, but also from the of Art. 1602, CC (Contracts presumed to be Equitable
contemporaneous and subsequent acts of the parties. Mortgages)
[Spouses Lopez v. Sps. Lopez, G.R. No. 161925 (2009)]

Requisites: 2.  O bject of Contracts


a.   A deliberate declaration contrary to the will of the
parties; The subject matter; the thing, right or service which is
b.   Agreement of the parties to the apparently valid the subject matter of the obligation arising from the
act, and contract. [Tolentino]

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Requisites In case of doubt about the nature of the contract, it


a.   Within the commerce of men [Art. 1347, CC] must be deemed conditional as doubt shall be
b.   Not legally or physically impossible [Art.1348, CC] resolved in favor of greatest reciprocity of interests.
c.   In existence or capable of coming into existence
[See Arts. 1461, 1493, 1495, CC]
d.   Determinate or determinable, without the need of
3.  Cause of Contracts
a new contract between the parties [Arts. 1349 and
par. 2, 1460, CC] The essential and impelling reason why a party
assumes an obligation. Motive, on the other hand, is
All things or services may be the object of contracts, the particular reason for a contracting party which
EXCEPT: does not affect the other. [Manresa]
a.   Things which are outside the commerce of men
b.   Intransmissible rights Requisites:
c.   Future inheritance except in cases authorized by a.   Exists at the time of the contract is entered into
law [Arts. 1352 and par. 3, 1409, CC]
b.   Lawful [Id.].
Requisites: c.   True or real [Art.1353, CC]
1.   The succession has not yet been opened;
2.   The object of the contract forms part of the Cause vs. Object
inheritance; and Cause Object
3.   The promissor has an expectancy of a right As to Remuneration
which is purely hereditary in nature The service or benefit The thing which is given
which is remunerated in remuneration
Exceptions to the Exception As to Donation
1.   In case of marriage settlements under Art. The liberality of the The thing which is given
130, CC donor or benefactor or donated
2.   In case of partition of properties inter vivos by As to the Thing
the deceased under Art. 1080, NCC [JLT Agro Prestation or promise of
The thing or service
v. Balansag, G.R. No. 141882 (2005)] a thing or service by the
itself
other
d.   Impossible things or services: As to Contracting Parties
1.   Absolute or objective – when nobody can Different with respect to May be the same for
perform the service. It nullifies the contract each part both parties
2.   Relative or subjective – when due to the
special conditions or qualifications of the Distinguished from Motive
debtor it cannot be performed. If temporary, Cause Motive
it does not nullify the contract. Proximate reason for Remote reason for the
e.   Objects which are indeterminable as to their kind, contract contract
the genus should be expressed Objective or juridical Psychological and
reason purely personal reason
In order that a thing, right, or service may be the object Always the same for Differs for each
of a contract, it should be in existence at the moment each contracting party contracting party
of the celebration of the contract, or at least, it can Illegality affects Illegality does not affect
exist subsequently or in the future. existence or validity of existence or validity of
the contract contract
A showing of mere inconvenience, unexpected
impediments, or increased expenses is not enough to Note: Motive becomes the cause when it
relieve a party of the obligation. [De Castro v. Longa, predetermines the purpose of the contract.
G.R. No L-2152-53 (1951)]
Cause in contracts [Art. 1350]
A FUTURE THING may be the object of a contract. Onerous Remuneratory Pure
Such contract may be interpreted as a: Contracts Contracts Beneficence
a.   Conditional contract, where its efficacy should The Mere
depend upon the future existence of the thing. The service or
undertaking liberality of
b.   Aleatory contract, where one of the contracting benefit which is
or the promise the
parties assumes the risk that the thing will never remunerated
of the thing or benefactor
come into existence, e.g. insurance.

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service by the General Rule: NO EFFECT.


other party
Lesion or Exception:
Moral Obligation as a Cause inadequacy of Inadequacy of cause shall
In Villaroel v. Estrada, G.R. No. L-47248 (1940), where cause – cause is not invalidate the contract
a moral obligation is based upon a previous civil proportionate to when: (1) there is fraud,
obligation which has already been barred by the object mistake, undue influence
statute of limitations (prescription) at the time the (2) when parties intended a
contract is entered into, it constitutes a sufficient donation
cause or consideration to support a contract (natural
obligation). Note: Inadequacy of cause may be a badge of fraud.

BUT,
In Fisher v. Robb, G.R. No. 46274 (1939), if the moral
obligation arises wholly from ethical considerations, it
cannot constitute a sufficient cause to support an
onerous contract, as when the promise is made on the
erroneous belief that one was morally responsible for
the failure of an enterprise (moral obligation).

Effect of Lack of Cause, Unlawful Cause, False


Cause and Lesion (Arts. 1352 – 1355)
Cause Effect
VOID.
Lack of Cause – Note: Cause must exist at
absence or total the time of the perfection of
lack of cause the contract; it need not
exist later.
VOID.

If parts of a contract are


illegal but the rest are
supported by lawful cause,
claimant of such has the
burden of showing proof;
otherwise, the whole
contract is VOID.
Contrary to law,
morals, good
Contract with illegal cause
customs, public
may still produce effect in
policy and public
certain cases where parties
order (unlawful
are not of equal guilt: (1)
cause)
innocent party cannot be
compelled to perform his
obligation and he may
recover what has already
been given; (2) if both
parties are guilty, neither
can sue the other, the law
leaving them as they are (in
pari delicto).
REVOCABLE/VOIDABLE.
Falsity of cause –
Parties are given a chance
cause is stated but
to show that a cause really
is untrue
exists, and that said cause
is true and lawful.

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  Form of Contracts The amount of the


principal and the
interest, if any, must be
General rule Contracts of
specified in writing;
Par. 1, Art. 1356, CC. Contracts shall be antichresis
otherwise, the contract
obligatory, in whatever form they may have been of antichresis shall be
entered into, provided all the essential requisites void [Art. 2134]
for their validity are present Authority of the agent
Agency to sell land or must be in writing;
“Spiritual System” of the Spanish Code: The law looks any interest therein otherwise, the sale shall
more on the spirit rather than the form of contracts void [Art. 1874, CC]
Stipulation to pay
Exception: interest on loans, Must be expressly made
1.   When the law requires that a contract be in some interest for the use of in writing [Art. 1956, CC]
form in order that it may be valid [par. 2, Art. 1356, money
CC] Must be (1) in writing,
2.   When the law requires that a contract be proved signed by the shipper or
in a certain way to be enforceable (Statute of Stipulation limiting
owner; (2) supported by
Frauds) [par. 2, Art. 1356, CC] common carrier’s duty
a valuable consideration;
3.   When the law requires a contract to be in some of extraordinary
and (3) reasonable, just,
form for convenience, or to be effective against diligence to ordinary
and not contrary to
third parties [Arts. 1357 and 1358, CC] diligence
public policy [Art. 1744,
CC]
1.   Kinds of Formalities Chattel mortgage
Must be recorded in
Chattel Mortgage
Required by Law Register [Art. 2140, CC]
Requires transfer of the
a.  For the Validity of Transfer of large cattle
certificate of registration
[Sec. 523, Administrative
Contracts (Ad Esentia /Ad Code]
Solimnitatem/ Solemn
Contracts) b.  For the Purpose of Proving
the Existence of the
Formal or Solemn Special Form Required
Contract by Law
Contract (Ad Probationem/
Must be in a public Statute of Frauds)
instrument, specifying
therein the property Art. 1403, CC. The following contracts are
Donations of
donated and the value of unenforceable, unless they are ratified:
Immovables
the charges which the (1)   Those entered into in the name of another
donee must satisfy. [Art. person by one who has been given no authority
749, CC] or legal representation, or who has acted
Donation of movables beyond his powers;
when the value of the Must be in writing; (2)   Those that do not comply with the Statute of
personal property otherwise, the donation Frauds as set forth in this number. In the
donated exceeds is void. [Art. 748, CC] following cases an agreement hereafter made
P5,000 shall be unenforceable by action, unless the
An inventory of said same, or some note or memorandum, thereof,
property must be made, be in writing, and subscribed by the party
signed by the parties and charged, or by his agent; evidence, therefore,
Partnerships where
attached to the public of the agreement cannot be received without
immovable property is
instrument. Otherwise, the writing, or a secondary evidence of its
contributed
the contract of contents:
partnership is void. [Art. a.   An agreement that by its terms is not to be
1773, CC] performed within a year from the making
thereof;

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b.   A special promise to answer for the debt, property; sales of real property or of an
default, or miscarriage of another; interest therein a governed by Articles 1403,
c.   An agreement made in consideration of No. 2, and 1405;
marriage, other than a mutual promise to (2)   The cession, repudiation or renunciation of
marry; hereditary rights or of those of the conjugal
d.   An agreement for the sale of goods, partnership of gains;
chattels or things in action, at a price not (3)   The power to administer property, or any other
less than five hundred pesos, unless the power which has for its object an act
buyer accept and receive part of such appearing or which should appear in a public
goods and chattels, or the evidences, or document, or should prejudice a third person;
some of them, of such things in action or (4)   The cession of actions or rights proceeding
pay at the time some part of the purchase from an act appearing in a public document.
money; but when a sale is made by auction
and entry is made by the auctioneer in his All other contracts where the amount involved
sales book, at the time of the sale, of the exceeds five hundred pesos must appear in writing,
amount and kind of property sold, terms of even a private one. But sales of goods, chattels or
sale, price, names of the purchasers and things in action are governed by Articles, 1403, No.
person on whose account the sale is made, 2 and 1405.
it is a sufficient memorandum;
e.   An agreement of the leasing for a longer Article 1358 of the Civil Code which requires the
period than one year, or for the sale of real embodiment of certain contracts in a public
property or of an interest therein; instrument, is only for convenience, and registration of
f.   A representation as to the credit of a third the instrument only adversely affects third parties.
person. Formal requirements are, therefore, for the benefit of
Those where both parties are incapable of giving third parties. Non-compliance therewith does not
consent to a contract. adversely affect the validity of the contract nor the
contractual rights and obligations of the parties
•   This article speaks of contracts that cannot be thereunder. [Fule vs CA, G.R. No. 112212, (1998)]
proved except by written note or memorandum,
unless the party charged waives the objection Before the contracting parties may be compelled to
[Rule 123, Sec. 21, Rules of Court] execute the needed form, the contract should be:
•   This article applies to executory contracts only 1.   Perfected or valid
[Almirol v Monserrat, G.R. No. 23717, (1925)] 2.   Enforceable under the Statute of Frauds

An oral promise to reduce to writing an agreement Enumerated contracts in Art. 1358 are valid even when
that is within the Statute of Frauds is itself not reduced into writing, although parties may have
unenforceable [Reyes and Puno] recourse under Art. 1357 to compel execution of the
writing, except in the following cases:
1.   Solemn Contracts (action under Art. 1357 is not
c.   For the Effectivity of the available at all)
Contract Against Third 2.   Real Contracts (action under Art. 1357 is available
Persons if there is consent, subject matter, cause, and
delivery)
3.   Contracts under the Statutes of Fraud (remedy
Art. 1357, CC. If the law requires a document or
under Art. 1357 is applicable only if the defense of
other special form, as in the acts and contracts
the Statute is waived expressly or impliedly by the
enumerated in the following article, the contracting
party charged
parties may compel each other to observe that
form, once the contract has been perfected. This
Action under this Article 1357 may be exercised
right may be exercised simultaneously with the
simultaneously with (i.e. need not be separate nor
action upon the contract.
need it precede) the action to enforce the contract,
although questions of form must be decided first.
Art. 1358, Civil Code. 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

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  Reformation of instrument drawn up


and signed by them
consent of one was
vitiated.
Instruments does not correctly
express the terms of
their agreement.
Reformation – remedy in equity by means of which a
Equity of reformation is
written instrument is made or construed so as to Intended to declare the
ordinarily limited to
express or conform to the real intention of the parties inefficiency which the
written agreements,
when some error or mistake has been committed contract already carries
and its purpose is to
[Reyes and Puno] in itself and to render
establish and
the contract
perpetuate the true
Rationale: It would be unjust and inequitable to allow inefficacious.
agreement.
the enforcement of a written instrument which does
not reflect or disclose the real meeting of the minds of
Multi-Ventures Capital Management Corporation v
the parties [Reyes and Puno]
Stalwart, G.R. No. 157439 (2007)
1.   The presumption is that an instrument sets out
Requisites [Art. 1359, CC]:
the true agreement of the parties and that it was
1.   There must be a meeting of the minds of the
executed for valuable consideration. Thus, when
contracting parties
there is some error or mistake in the contract, the
2.   Their true intention is not expressed in the
onus probandi is upon the party who insists that
instrument;
the contract should be reformed.
3.   Such failure to express their true intention is due
2.   While intentions involve a state of mind,
to mistake, fraud, inequitable conduct, or
subsequent and contemporaneous acts of the
accident; and
parties as well as the evidentiary facts as proved
4.   There is clear and convincing proof of mistake,
and admitted can be reflective of one’s intention.
fraud, inequitable conduct, or accident
3.   Expediency and convenience, which was the
purpose of the execution of “purchase and sale
The appellant’s complaint states no cause of action,
agreement”, is not a ground for reformation of
for it fails to allege that the instrument to be reformed
instrument.
does not express the real agreement or intention of the
parties. Such allegation is essential since the object
Rosello-Bentir v Leanda, G.R. No. 128991 (2000)
sought in an action for reformation is to make an
1.   The right of reformation is necessarily an invasion
instrument conform to the real agreement or intention
or limitation of the parol evidence rule since, when
of the parties. Moreover, courts do not reform
a writing is reformed, the result is that an oral
instruments merely for the sake of reforming them,
agreement is by court decree made legally
but only to enable some party to assert right under
effective.
them as reformed. [Garcia vs. Bisaya, G.R. No. L-8060,
2.   The prescriptive period for actions based upon a
(1955)].
written contract and for reformation of an
instrument is ten (10) years under Article 1144 of
Note: If mistake, fraud, inequitable conduct, or
the Civil Code.
accident has prevented a meeting of the minds of the
parties, the proper remedy is not reformation of the
Quiros vs Arjona, G.R. No. 158901 (2004)
instrument but annulment of the contract [par. 2, Art.
In granting reformation, the remedy in equity is not
1359, CC]
making a new contract for the parties, but establishing
and perpetuating the real contract between the
The action for reformation of instrument should not be
parties which, under the technical rules of law, could
confused with the action for annulment of contract.
not be enforced but for such reformation.
[Veluz v Veluz, G.R. No. L-23261, (1968)]
NIA vs. Gamit, G.R. No. 85869, (1992)
Reformation v. Annulment [Veluz vs. Veluz, supra]
When the terms of an agreement have been reduced
Reformation of
Annulment to writing, it is considered as containing all the terms
Instrument
agreed upon and there can be, between the parties
Presupposes a valid, and their successors in interest, no evidence of such
Presupposes a defective
existing contract, in terms other than the contents of the written
contract in which the
which there had been a
minds of the parties did agreement, except when it fails to express the true
meeting of the minds of
not meet, or the intent and agreement of the parties thereto, in which
the parties but the
case, one of the parties may bring an action for the

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reformation of the instrument to the end that such true d.  Accident


intention may be expressed.
Art. 1364, CC. When through the ignorance, lack of
1.   Cases Where Reformation skill, negligence or bad faith on the part of the
person drafting the instrument or of the clerk or
is Proper typist, the instrument does not express the true
intention of the parties, the courts may order that
a.  Mistake the instrument be reformed.

The mistake should be of fact generally, and not of law No fraud exists in the sense that neither of the parties
[BPI v Fidelity and Surety Co., G.R. Ni. L-26743 (1927)] took part therein.

Mutual e.   Severe Pacto de Retro /


Art. 1361, CC. When a mutual mistake of the parties
causes the failure of the instrument to disclose their Relative Simulation
real agreement, said instrument may be reformed.
Art. 1365, CC. If two parties agree upon the
Unilateral mortgage or pledge of real or personal property,
Art. 1362, CC. If one party was mistaken and the but the instrument states that the property is sold
other acted fraudulently or inequitably in such a absolutely or with a right of repurchase,
way that the instrument does not show their true reformation of the instrument is proper.
intention, the former may ask for the reformation of
the instrument. 2.  W ho May Ask for
Art. 1363, CC. When one party was mistaken and
Reformation
the other knew or believed that the instrument did
not state their real agreement, but concealed that a.   Either party of his successors in interest, if the
fact from the former, the instrument may be mistake was mutual; otherwise,
reformed. b.   Upon petition of the injured party, or his heirs and
assigns
[Art. 1368, CC]
b.  Fraud
Active 3.  Cases Where Reformation
Art. 1362, CC. If one party was mistaken and the is Not Proper
other acted fraudulently or inequitably in such a
way that the instrument does not show their true a.   Simple donations inter vivos—wherein no
intention, the former may ask for the reformation of condition is imposed—because donation is an act
the instrument of liberality [Art. 725, CC] and cannot be
compelled);
Passive (concealment) b.   Wills—no reformation before the testator dies
Art. 1363, CC. When one party was mistaken and because the making of a will is strictly personal
the other knew or believed that the instrument did [Art. 784], a free act [Art. 839, CC], and essentially
not state their real agreement, but concealed that revocable [Art. 828, CC];
fact from the former, the instrument may be c.   When the real agreement is void—because there
reformed. is nothing to reform. The power of the court to
reform is not for accomplishing a vain thing
c.   Inequitable conduct [Tolentino].

Implied Ratification/Estoppel: the party who has


Art. 1362, CC. If one party was mistaken and the brought an action to enforce the instrument cannot
other acted fraudulently or inequitably in such a subsequently ask for its reformation [Art. 1367, CC]
way that the instrument does not show their true
intention, the former may ask for the reformation of
the instrument.

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  Interpretation of Contract

them for the benefit of one party and to the detriment


of the other, or by construction, relieve one of the
1.   Primacy of Intention parties from the terms which he voluntarily consented
to, or impose on him those which he did not. [Bautista
a.   If the terms of a contract are clear and leave no v CA, G.R. No. 1263655 (2000)].
doubt upon the intention of the contracting
parties, the literal meaning of its stipulations shall While ordinarily the literal sense of the words
control. employed is to be followed, such is not the case where
b.   If the words appear to be contrary to the evident they "appear to be contrary to the evident intention of
intention of the parties, the latter shall prevail the contracting parties." Intention shall prevail.
over the former. [Art 1370, CC] [Borromeo v Reyes, G.R. L-22962 (1972)]
c.   However general the terms of a contract may be,
they shall not be understood to comprehend Nomenclature is not decisive of the character
things that are distinct and cases that are A contract is what the law defines it to be, and not
different from those upon which the parties what it is called by the contracting parties. The Title of
intended to agree. [Art. 1372, CC] the contract does not necessarily determine its nature
[Tolentino]
CARDINAL TEST
Intention of the parties, to be derived from the Separability Clause
terms/language of the contract. Another fundamental rule in the interpretation of
contracts is that the terms, clauses and conditions
Where the language of a contract is plain and contrary to law, morals and public order should be
unambiguous, its meaning should be determined separated from the valid and legal contract and when
without reference to extrinsic facts or aids. The such separation can be made because they are
intention of the parties must be gathered from that independent of the valid contract. A lawful promise
language, and from that language alone. Courts made for a lawful consideration is not invalid merely
cannot make for the parties better or more equitable because an unlawful promise was made at the same
agreements than they themselves have been satisfied time and for the same consideration. [Kasilag v
to make, or rewrite contracts because they operate Rodriguez, G.R. No. 46623 (1939)]
harshly or inequitably as to one of the parties, or alter

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Exception:
a.   Where the statute expressly or by necessary
3.  Rule 123, Rules of Court
implication declares the entire contract void
b.   Where the terms, clauses, and conditions, by an Note: This is now found in Secs. 10-19, Rule 130.
established connection or by manifest intention of
the parties, is inseparable from the principal Art. 1379, CC. The principles of interpretation
obligation, and is a condition, juridically speaking, stated in Rule 123 of the Rules of Court shall
of that the nullity of which it would also occasion likewise be observed in the construction of
[Manresa] contracts

Interpretation of Contracts of Adhesion Rule 130


A contract of adhesion is just as binding as ordinary Sec. 10. Interpretation of a writing according to its
contracts. It is true that the SC has, on occasion, struck legal meaning. The language of a writing is to be
down such contracts as void when the weaker party is interpreted according to the legal meaning it
imposed upon in dealing with the dominant bears in the place of its execution, UNLESS the
bargaining party and is reduced to the alternative of parties intended otherwise.
taking it or leaving it, completely deprived of the
opportunity to bargain on equal footing. Nevertheless, Sec. 11. Instrument construed so as to give effect to
contracts of adhesion are not invalid per se; they are all provisions. In the construction of an
not entirely prohibited.The one who adheres to the instrument, where there are several provisions or
contract is in reality free to reject it entirely; if he particulars, such a construction is, if possible, to
adheres, he gives his consent. be adopted as will give effect to all.
While ambiguities in a contract of adhesion are to be
Sec. 12. Interpretation according to
construed against the party that prepared the same,
intention; general and particular provisions. In
this rule applies only if the stipulations in such
the construction of an instrument, the intention of
contract are obscure or ambiguous. If the terms
the parties is to be pursued; and when a general
thereof are clear and leave no doubt upon the
and a particular provision are inconsistent, the
intention of the contracting parties, the literal
latter is paramount to the former. So a particular
meaning of its stipulations shall control. In the latter
intent will control a general one that is
case, there would be no need for construction. [RCBC
inconsistent with it.
vs CA G.R. No. 133107(1999)]

Sec. 13. Interpretation according to


2.  R ules on Doubts [Art. circumstances. For the proper construction of an
1378, CC] instrument, the circumstances under which it was
made, including the situation of the subject
When it is absolutely impossible to settle doubts by thereof and of the parties to it, may be shown, so
the rules established in the preceding articles: that the judge may be placed in the position of
those who language he is to interpret.
When doubts are cast upon
the principal object/s of any
contract and it cannot be The contract shall Sec. 14. Peculiar signification of terms. The terms
known what may have been be null and void. of a writing are presumed to have been used in
the intention or will of the their primary and general acceptation, but
parties evidence is admissible to show that they have a
When doubts refer to the local, technical, or otherwise peculiar signification,
The least and were so used and understood in the particular
incidental circumstances of
transmission of instance, in which case the agreement must be
gratuitous contracts and it is
rights and interests construed accordingly.
absolutely impossible to
shall prevail.
settle doubts by the rules
When doubts refer to the The doubt shall be Sec. 15. Written words control printed. When an
incidental circumstances of settled in favor of instrument consists partly of written words and
onerous contracts and it is the greatest partly of a printed form, and the two are
absolutely impossible to reciprocity of inconsistent, the former (written) controls the
settle doubts by the rules interests. latter (printed).

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Sec. 16. Experts and interpreters to be used in


explaining certain writings. When the characters
  Defective Contracts
in which an instrument is written are difficult to be
deciphered, or the language is not understood by A contract that has caused a
the court, the evidence of persons skilled in particulardamage to one of the
deciphering the characters, or who understand the parties or to a third person and
Rescissible
language, is admissible to declare the characters which for EQUITABLE
or the meaning of the language. REASONS may be set aside
even if valid
A contract in which CONSENT
Sec. 17. Of Two constructions, which preferred.
of one of the parties is
When the terms of an agreement have been
Voidable or defective, either because of
intended in a different sense by the different
Annullable WANT OF CAPACITY or
parties to it, that sense is to prevail against either
(contrato nulo) because it is VITIATED , but
party in which he supposed the other understood
which contract is VALID until
it, and when different constructions of a provision
JUDICIALLY set aside
are otherwise equally proper, that is to be taken
A contract that for some reason
which is the most favorable to the party in whose
CANNOT BE ENFORCED,
favor the provision was made. Unenforceable
UNLESS RATIFIED in the
manner PROVIDED BY LAW
Sec. 18. Construction in favor of natural right. A contract which is an
When an instrument is equally susceptible of two ABSOLUTE NULLITY and
interpretations, one in favor of natural right and Void or
produces NO EFFECT, as if it
the other against it, the former is to be adopted. Inexistent
had never been executed or
entered into
Sec. 19. Interpretation according to usage. An [Tolentino]
instrument may be construed according to usage,
in order to determine its true character.
1.   Rescissible Contracts
Contracts which are valid until rescinded. All essential
requisites of a contract exist but there is injury or
damage to one of the parties or to third persons –
external or extrinsic defect consisting of an economic
damage or lesion. [Paras]

a.  Rescission
Rescission is a remedy granted by law to the
contracting parties and even to third persons, to
secure reparation for damages caused to them by a
contract, even if this should be valid, by means of the
restoration of things to their condition at the moment
prior to the celebration of said contract. [Tolentino]

Process designated to render inefficacious a contract


validly entered into and normally binding, by reason of
external conditions, causing an economic prejudice to
a party or to his creditors [Scaevola].

Remedy granted by law to the contracting parties and


to third persons in order to secure reparation for
damages caused them by a contract, even if the
contract is valid, by means of the restoration of things
to their condition prior to the celebration of said
contract [Manresa]

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Relief to protect one of the parties or a third person such that a party’s or unilateral and whether
from all injury and damages which the contract may breach thereof the contract has been
cause, to protect some preferential right [Aquino v. partakes of a tacit fully fulfilled
Tañedo, G.R. No. L-12457 (1919)] resolutory condition
which entitles the
Rescission is a remedy granted by law to the injured party to
contracting parties and even to third persons, to rescission.
secure reparation for damages caused to them by a Predicated on injury to
contract, even if this should be valid, by means of the economic interests of the
restoration of things to their condition at the moment Predicated on breach party plaintiff/lesion.
prior to the celebration of said contract. [Tolentino] of faith. HOWEVER, not all
economic prejudices are
Lesion recognized by law.
The injury which one of the parties suffers by virtue of Principal action that is
a contract which is disadvantageous for him. To give retaliatory in Subsidiary action.
rise to rescission, the lesion must be known or coud character.
have been known at the time of making of the The cause of action is
contract. [Tolentino] subordinated to the
existence of an economic
Lesion does not invalidate a contract except only in The reparation of
prejudice. Hence, where
special cases provided by law [Art. 1355, CC] damages for the
the defendant makes
breach is purely
good the damages
secondary.
b.  Characteristics of caused, the action
cannot be maintained or
Rescissible Contracts continued.
Mutual restitution when declared proper as between
1.   The defect consists in injury or damage either to the parties involved
one of the contracting parties or to third persons;
Constitutes abrogation
2.   Before rescission, they are valid, and therefore,
of the contract from the
legally effective;
Constitutes beginning and to restore
3.   They can only be attacked directly only and not
termination of the the parties to their
collaterally;
obligation and release relative positions as if no
4.   They can be attacked only by a contracting party
of the parties from contract has been made
or a third person who is injured or defrauded; and
further obligations Declares the contract
5.   They are susceptible of convalidation only by
from each other void at its inception and
prescription and not ratification
puts an end to it as
6.   Rescission is not a principal remedy, but a
though it never was
subsidiary one. It can only be availed of only if the
May be demanded May be demanded by a
injured party proves that he has no other legal
only by a party to the third party prejudiced in
means to obtain redress for the damage caused
contract the contract
[Art. 1177, CC]
May be denied by
7.   The rescission shall only be to the extent
court when there is Extension of time does
necessary to cover the damages caused i.e. partial
sufficient reason to not affect the right to ask
rescission [Art. 1384, CC]
justify the extension of for rescission
8.   The action to claim rescission must be
time
commenced within four years [Art. 1389, CC]
Non-performance is Various reasons of equity
the only ground for the are grounds for
c.   Distinguished from right to rescission rescission
Rescission/Resolution [Congregation of the Religious Virgin Mary v. Orola,
G.R. No. 169790 (2008)]
under Art. 1191
Art. 1191 – Rescission d.  Rescissible Contracts and
Art. 1381 – Rescission by
or Resolution for
Reason of Lesion Their Requisites [Arts.
Breach of Stipulation
Applies only to Applies whether
1381-1383, 1385, 1389, CC]
reciprocal obligations, obligations are reciprocal

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Art. 1381, CC. The following contracts are litigation may still be valid but is susceptible for
rescissible: rescission under Art. 1381(4).
(1)   Those which are entered into by guardians
whenever the wards whom they represent A definitive judicial determination with respect to the
suffer lesion by more than one-fourth of the thing subject of litigation is not a condition sine qua
value of the things which are the object non before the rescissory action contemplated under
thereof; Article 1381(4) of the Civil Code may be instituted. The
(2)   Those agreed upon in representation of primordial purpose of Article 1381(4) of the Civil Code
absentees, if the latter suffer the lesion stated is to secure the possible effectivity of the impending
in the preceding number; judgment by a court with respect to the thing subject
(3)   Those undertaken in fraud of creditors when of litigation. [Ada v. Baylon, G.R. No. 182435 (2012)]
the latter cannot in any other manner collect
the claims due them; Requisites before a Contract Entered Into in Fraud of
(4)   Those which refer to things under litigation if Creditors May Be Rescinded under Art. 1381 (3):
they have been entered into by the defendant 1.   There is a credit existing prior to the celebration of
without the knowledge and approval of the the contract, although not yet due or
litigants or of competent judicial authority; demandable;
2.   There is fraud, or at least, the intent to commit
All other contracts specially declared by law to be fraud to the prejudice of the creditor seeking
subject to rescission. rescission, which may be presumed or proved [Art
1387, CC];
Requisites for Rescission under Art. 1381 (1) (2), CC 3.   Creditor cannot in any legal manner collect his
1.   Contract was entered into by a guardian in behalf credit; insolvency of the debtor is not required;
of his ward or by a legal representative in behalf and
of an absentee [Arts. 1381 (1) and (2) CC] 4.   Object of the contract must not be legally in the
possession of a third person who did not act in bad
Note: A guardian is authorized only to manage the faith.
estate of the ward; should he dispose a portion
thereof without authority from the court by way of Accion Pauliana
a contract, the same is unenforceable under Art. The action to rescind contracts in fraud of creditors.
1403(1), irrespective of whether there is lesion or Consequently, accion pauliana presupposes a
not. judgment and unsatisfied execution which cannot
2.   It was entered into without judicial approval [Art. exist when the debt is not yet demandable at the time
1386, CC] the rescissory action is brought. [Tolentino]
3.   Ward or absentee suffered lesion of more than
one-fourth of the value of the property which is Note: Even secured creditors are entitled to accion
the object of the contract. [Art. 1381 (1) and (2), CC] pauliana.
4.   There is no other legal means of obtaining
reparation for the lesion. [Art. 1383, CC] Art. 1382, CC. Payments made in a state of
5.   Person bringing the action must be able to return insolvency for obligations to whose fulfillment the
whatever he may be obliged to restore. [Art. debtor could not be compelled at the time they
1385(1), CC] were effected, are also rescissible.
6.   Object of the contract must not be legally in the
possession of a third person who did not act in bad Requisites before payment made by Insolvent can
faith [Art. 1385(2), CC] be rescinded:
1.   It was made in a state of insolvency;
Note: for Art. 1381 (4): Any disposition of the thing 2.   Obligation must have been one which debtor
subject of litigation or any act which tends to render could not be compelled to pay at the time such
inutile the court’s impending disposition in such case payment was effected.
without the knowledge and approval of the litigants or
of the court, is unmistakably and irrefutably indicative Payment made by an insolvent is rescissible. [Art.
of bad faith. 1382, CC], but a debtor can be compelled to pay by the
creditor even before the expiration of the period since
However, even without knowledge or approval from by his insolvency he has already lost his right to the
the court, the conveyance of a property subject of benefit of such period. [Art. 1198(1), CC]

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The conflict can be resolved by considering the priority For persons under guardianship and for absentees,
of dates between the two debts. If the obligation with the period of four years shall not begin until the
a period became due before the obligation to the termination of the former's incapacity, or until the
creditor seeking the rescission became due, then the domicile of the latter is known. [Art. 1389, CC]
latter cannot rescind the payment even if such
payment was effected before the expiration of the Do all creditors benefit from the rescission?
period; but if the obligation with a period became due As a rule, the rescission should benefit only the
after the obligation to the creditor seeking rescission creditor who obtained the rescission, because the
became due, then the latter can rescind the payment. rescission is to repair the injury caused to him by the
[Manresa] fraudulent alienation. If a balance is left after
satisfying the claim of the creditor who brought the
Effects of Rescission [Art. 1385, CC] action, other creditors who are qualified to bring an
It creates an obligation of mutual restitutionan accion pauliana should be given the benefit of
obligation to return the things which were the object rescission, instead of requiring them to bring other
of the contract, together with their fruits, and the price rescissory actions. However, creditors who only
with its interests. became such after the fraudulent alienation, cannot
benefit from the rescission.
However, if the object of the contract is in the
possession of third persons in good faith, rescission Presumption of Fraud
cannot take place and indemnity for damages may be When alienation of property presumed in fraud of
demanded from the person causing the loss [Art. 1385, creditors:
CC] 1.   Alienation by gratuitous title if the debtor has not
reserved sufficient property to pay all of his debts
Art. 1191 Art. 1381 contracted before alienation [Art. 1387(1), CC]
Rescission in 2.   Alienation by onerous title if made by a debtor
Reciprocal Rescission by Reason of against whom some judgment has been rendered
Obligations Lesion in any instance or some writ of attachment has
(Resolution) been issued [Art. 1387(2), CC]
The action is based on a
party’s breach of obligation The test as to whether or not a conveyance is
A resolutory and cannot be instituted fraudulent is if it prejudices the rights of the creditors.
condition is implied except when the party [Tolentino]
upon breach of one suffering damage has no
party. other legal means to Badges of Fraud
obtain reparation. [Art. A conveyance leaving no property for other creditors to
1383, CC] attach is an evidence of fraud. [China Banking v. CA,
Creates the obligation to G.R. No. 129644 (2000)]:
return the things which 1.   Consideration is fictitious or inadequate;
were the object of the 2.   Transfer was made while suit had begun or
contract, together with pending;
Grants the injured their fruits, and the price 3.   Sale was upon credit by insolvent debtor;
party the option to with its interests 4.   There was large indebtedness or complete
pursue, either a This can only be carried out insolvency;
rescission or specific when he who demands 5.   Transfer consisted of all or nearly all property
performance of the rescission can return what especially when insolvent or greatly;
obligation, with he is obliged to restore, 6.   The transfer was made between father and son
payment of also when there are none when other above circumstances present; and
damages in either endangered third persons 7.   There was failure of vendee to take exclusive
case who did not act in bad possession of all property embarrassed
faith. Otherwise, damages financially.
may be demanded from
the person causing the
loss. [Art. 1385. CC]
2.  V oidable Contracts
Prescribes in 10
Prescribes in 4 years Contracts which are valid until annulled, unless
years
ratified. Defect is more or less intrinsic, as in the case
[Lalicon v. National Housing Authority, G.R. No.
of vitiated consent. [Paras]
185440, (2011)]

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Voidable or annullable contracts are existent, valid essentially exist in the


and binding, although they can be annulled because contract
of want of capacity or vitiated consent of one of the Needs ratification to Requires an act of
parties. [Tolentino] be effective ratification to be cured
Private interest alone Direct influence of the
Art. 1390, CC. The following contracts are voidable governs public interest is involved
or annullable, even though there may have been no May be compatible Based on a vice of the
damage to the contracting parties: with the perfect contract which
(1)   Those where one of the parties is incapable of validity of the contract invalidates it
giving consent to a contract; A remedy A sanction
(2)   Those where the consent is vitiated by Equity predominates The law predominates
mistake, violence, intimidation, undue May be demanded by
influence or fraud. Can be demanded only
third parties affected
by parties to the contract
by the contract
These contracts are binding, unless they are
annulled by a proper action in court. They are Who may institute action for annulment
susceptible of ratification. General Rule: Action for annulment may be instituted
by all who are thereby obliged principally or
Note: Art. 1390 refers to a “proper action in court”. The subsidiarily. Persons capable of giving consent and
validity of a voidable contract may only be attacked guilty parties who have caused the vitiation of
either by way of a direct action or by way of defense via consent cannot allege the incapacity or want of
a counterclaim, and not a special or affirmative consent of those they contracted with. This rule is
defense. [Jurado] sustained by the principle that he who comes to court
must come with clean hands [Art. 1397, CC].
Voidable/ Annullable Contracts:
a.   Those where one of the contracting parties is Requisites:
incapable of giving consent to a contract, and 1.   Plaintiff must have interest in the contract;
b.   Those where the consent is vitiated by mistake, 2.   The victim and not the party responsible for the
violence, intimidation, undue influence or fraud. vice or defect must assert the same

a.  Characteristics of Voidable Exception: If a third person is prejudiced in his rights


with respect to one of the contracting parties and can
Contracts show detriment which would postitively result to him
from the contract in which he has no intervention.
1.   Its defect consists of the vitiation of consent of one [Teves v. People’s Homesite & housing Corp., G.R. No.
of the contracting parties; L-21498 (1968)]
2.   It is binding until it is annulled;
3.   It is susceptible of convalidation by ratification or Effects of Annulment
prescription; once ratified, they become If contract has not yet been consummated – parties
absolutely valid and can no longer be annulled shall be released from the obligations arising
[Art. 1392, CC]; and therefrom.
4.   Its defect or voidable character cannot be invoked
by third persons. If contract has already been consummated - The
contracting parties shall restore to each other the
Note: Failure of an heir to obtain authority from his co- things which have been the subject matter of the
heirs does not result in his incapacity to give consent contract, with their fruits, and the price with its
so as to render the contract voidable, but rather, interest, except in cases provided by law. [Art. 1398-
renders the contract valid but unenforceable against 1402]
Conrado’s co-heirs for having been entered into
without their authority. [Heirs of Ureta, Sr. v. Heirs of Obligation of Mutual Restitution
Ureta, G.R. No. 165748 (2011)] General Rule: Upon annulment, the parties shall restore
to each other the subject matter of the contract with its
Rescission Annulment fruits and the price thereof with legal interest. [Art.
Merely produces the Declares the inefficacy 1398, CC]
inefficacy of the which the contract
contract, which did not already carries in itself Exception: When the defect of the contract consists in
the incapacity of one of the parties, the incapacitated

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person is not obliged to make any restitution except 1.   EXPRESS or


insofar as he has been benefited by the thing or price 2.   TACIT – When the person who has the right to
received by him [Art. 1399, CC] invoke it, with the knowledge of the reason which
renders the contract voidable and such reason
Art. 1399, CC cannot be applied to those cases where having ceased, executes an act implying an
the incapacitated person can still return the thing intention to waive his right [Art. 1393, CC]
which he has received.
Requisites of Ratification
Effects of Failure to Make Restitution 1.   Contract is tainted with a vice susceptible of being
Loss of thing by Loss of thing by cured;
Plaintiff Defendant 2.   Confirmation is effected by the person who is
If it is lost through the entitled to do so under the law;
If the loss of the onject
defendant’s fauly, he is 3.   It is effected with knowledge of the vice or defect
in his possession is
liable for fruits received, of the contract;
due to his fault or
value of the thing at the 4.   Cause of the nullity or defect have already
fraud, he cannot ask
time it was lost, with disappeared.
for annulment. [Art.
interest from the same
1400, CC]
date. The right to ratify may be transmitted to the heirs of
If the loss of the thing in his possession was due to the party entitled to such right. It may likewise be
a fortuitous event, the action for annulment is not exercised by the guardian of the incapacitated person
extinguished. [Tolentino] having such right. [Art. 1394, CC]

Three Ways or Modes of Convalidating a Voidable Ratification does not require the conformity of the
Contract [Jurado] contracting party who has no right to bring an action
1.   By prescription of the action for annulment for annulment. [Art. 1385, CC]
[Art.1391, CC]
2.   By ratification or confirmation [Art. 1392-1396, CC] Effect of Ratification
3.   By loss of the thing which is the object of the It extinguishes the action for annulment of a voidable
contract through the fraud or fault of the person contract. [Art. 1392, CC]
who is entitled to institute the action for the
annulment [Art.1401, CC] It cleanses the contract from all its defects from the
moment it was constituted [Art. 1396, CC]
Prescription of the Action for Annulment
Grounds for being Ratification has a retroactive effect [de Leon].
Reckoning Point
voidable
Intimidation, violence,
Four years from the time 3.  Unenforceable Contracts
the defect of the consent
or undue influence
ceases Unenforceable Contracts – contracts that by reason
Four years from of statutory defects do not confer any action to enforce
Fraud or Mistake
discovery thereof the same until and unless they are ratified in the
Minors and Four years from the time manner prescribed by law [Reyes]
Incapacitated Persons the guardianship ceases.
a.  Characteristics
Constructive Notice
Discovery or fraud must be reckoned from the time 1.   Cannot be enforced by a proper action in court
the document was registered in the office of the 2.   Susceptible of ratification
register of deeds. Registration constitutes 3.   Cannot be assailed by third persons [Art. 1408, CC]
constructive notice to the whole world. [Carantes v.
CA, G.R. No. L-33360 (1977)]

b.  Ratification
The act or means by virtue of which efficacy is given to
a contract which suffers from a vice of curable nullity
[Arts. 1392-1396, CC]. Ratification is either express or
tacit.

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b.  Kinds of Unenforceable
Contracts [Art. 1403, CC]
 
1.   Unauthorized contracts – those entered into by
one who has no authority or legal representation,
or who has acted beyond his powers [par. 1, Art.
1403, CC]
2.   Those which did not comply with the Statute of
Frauds [par. 2, Art. 1403, CC]
3.   Those where both parties are incapable of giving
consent to a contract [par. 3, Art. 1403, CC]

Contract where both


Contract entered into
Contracts covered by Statute of Frauds parties are incapable of
without authority
giving consent
Effect on the
No effect unless ratified. Cannot be enforced by a proper action in court
Contract
Not by direct action. Not by direct action.
As a defense, by Not by direct action. As a defense, by
motion to dismiss the As a defense, by motion to dismiss on the motion to dismiss the
How to assail complaint on the ground that the contract is unenforceable; complaint on the
ground that the Objection to the presentation of oral evidence ground that the
contract is to prove an oral contract [see Art. 1405] contract is
unenforceable unenforceable
Who can
By party against whom
assail -
By person whose the contract is being
cannot be
name the contract By party against whom the contract is being enforced; or his privies;
assailed by
was entered into / by enforced; or his privies or parents or
third persons
owner of property guardians, as it is a
[Art. 1408,
personal defense
CC]
When When a party asks the court to enforce the contract
Ratification by party against whom the
ratification of party
contract is being enforced
against whom the
Failure to object to the to the presentation of
contract is being
oral evidence to prove the contract amounts to
Ratification by person enforced; or his privies;
waiver [Art. 1405, CC]; makes it as binding as if
How to Cure whose name the or parents or guardians
written contract written form requirement is
Defect contract was entered
evidentiary by acceptance of benefits under the
into The ratification by one
contracts contract is no longer executory based
party converts the
on the principle that the one who has enjoyed
contract into a voidable
the benefits of a transaction should not be
contract [Art. 1407, CC]
allowed to repudiate its burdens

STATUTE OF FRAUDS UNENFORCEABLE AGREEMENTS UNLESS IN


Descriptive of statutes which requires certain WRITTEN MEMORANDUM AND SUBSCRIBED BY
classes of contracts to be in writing. Merely THE PARTIES CHARGED [par. 2, Art. 1403, CC]
regulates the formalities of the contract necessary 1.   Agreement not to be performed within 1 year
to render it enforceable. from the 
making 

2.   Special promise to answer for the debt,
The Statute of Frauds simply provides the method default or 
miscarriage of another 

by which the contracts enumerated therein may be 3.   Agreement made in consideration of
proved but does not declare them invalid because marriage other than 
“mutual” promise to
they are not reduced to writing. [Swedish Match v
marry
CA, G.R. No. 128120 (2004)]

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4.   Sale of goods, chattels or things in action, 2.   Must contain the names of the parties, the terms
priced not less 
than P500 and conditions of the contract, and a description of
5.   Leasing for period longer than one year OR the property sufficient to render it capable of
sale of real 
property or of an interest therein identification.
6.   Representation to the credit of a 3rd person 3.   Must contain the essential elements of the contract
expressed with certainty that may be ascertained
GENERAL RULES OF APPLICATION OF STATUTE from the note or memorandum itself, or some
OF FRAUDS other writing to which it refers or within which it is
1.   The Statute of Frauds is a Rule of Exclusion, i.e. connected, without resorting to parol evidence.
oral evidence might be relevant to the
agreements enumerated therein and might The purpose of the Statute is to prevent fraud and
therefore be admissible were it not for the fact perjury in the enforcement of obligations depending
that the law excludes said oral evidence. for their evidence on the unassisted memory of
2.   The defense of the Statute of Frauds may be witnesses, by requiring certain enumerated contracts
waived [Art. 1405, CC] and transactions to be evidenced by a writing signed
3.   Applies only to executory contracts and not those by the party to be charged. [Asia Productions v. Pano,
which have been consummated either totally or G.R. No. L-51058 (1992)]
partially. Or else, the exclusion of parol evidence
would promote fraud or bad faith. [Carbonnel v. Even if parol evidence was initially inadmissible, the
Poncio, G.R. No. L-11231 (1958)] same became competent and admissible because of
4.   The Statute of Frauds is exclusive that is, it applies the cross-examination, which elicited evidence
only to the agreements or contracts enumerated proving the evidence of a perfected contract. The
therein [Quintos v Morata, G.R. No. L-31732, cross-examination on the contract is deemed a waiver
(1930)] of the defense of the Statute of Frauds. [Limketkai
5.   The Statute of Frauds is a personal defense, that Sons Milling, Inc. v. CA, G.R. No. 118509 (1995)]
is, a contract infringing it cannot be assailed by
third persons [Art. 1408, CC] WHEN UNENFORCEABLE CONTRACTS BECOME
6.   Contracts infringing the Statute of Frauds are not VOIDABLE OR VALID [Art. 1407, CC]
void, they are merely unenforceable [Art. 1403, CC] Unenforceable contracts become voidable when
both parties are incapable of giving consent, if the
EXCEPTIONS TO APPLICATION OF STATUTE OF same is ratified by the parent or guardian of either
FRAUD party, or by one of the parties, after attaining or
1.   The Statute of Frauds cannot apply if the action is regaining capacity.
neither for damages because of the violation of an
agreement nor for the specific performance of Unenforceable contracts become valid when
said agreement ratification is made by the parents or guardians of
2.   The Statute of Frauds does not determine the both contracting parties or by the parties themselves
credibility or weight of evidence. It merely after attaining or regaining capacity.
concerns itself with the admissibility thereof.
3.   The Statute of Frauds does not apply if it is 4.  V oid or Inexistent
claimed that the contract does not express the
true agreement of the parties. As long as the true Contracts
or real agreement is not covered by the Statute of
Frauds, it is provable by oral evidence [Cuyugan v. Contracts which have no effect at all and cannot be
Santos, G.R. No. L-10265 (1916)] ratified or validated [Paras]

The Statute of Frauds simply provides the method by Those which, because of certain defects, generally
which the contracts enumerated therein may be produce no effect at all. They are considered as
proved but does not declare them invalid because they inexistent from its inception or from the very beginning
are not reduced to writing. [Swedish Match v. CA, G.R. [de Leon]
No. 128120 (2004)]:
Includes not only those contracts in which one of the
For a note or memorandum to satisfy the Statute, it: essential requisites is totally wanting, but also those
1.   Must be complete in itself. It must indicate at what which are declared void by positive provision of law or
price the thing is being sold, and state the mode of statute
payment. It cannot rest partly in writing and partly
in parol. [Swedish Match v. CA, supra]

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Art. 1409, CC. The following contracts are Void v. Inexistent Contracts
inexistent and void from the beginning: Void Inexistent
(1)   Those whose cause, object or purpose is Those where all the
contrary to law, morals, good customs, public requisites of a contract
order or public policy; are present but the
(2)   Those which are absolutely simulated or cause, object or Those where one or
fictitious; purpose is contrary to some or all of the
(3)   Those whose cause or object did not exist at law, morals, good requisites essential for
the time of the transaction; customs, public order the validity of a contract
(4)   Those whose object is outside the commerce of or public policy, or the are absolutely lacking
men; contract itself is
(5)   Those which contemplate an impossible prohibited or declared
service; void by law
(6)   Those where the intention of the parties Principle of pari delicto Principle of pari delicto is
relative to the principal object of the contract is applicable inapplicable
cannot be ascertained; May produce legal Cannot produce any
(7)   Those expressly prohibited or declared void by effects effect
law Covers Art. 1409 (1), Covers Art. 1409 (2) and
(3), (4), (5), (6) and (7) (3)
These contracts cannot be ratified. Neither can the
right to set up the defense of illegality be waived. Void v. Voidable Contracts
Void Voidable
a.  Characteristics of a Void Those where one of
Those where all the
essential requisites are
Contract the essential
present, but consent is
requisites is wanting,
vitiated by want of
1.   It does not produce any legal effect; either in fact or in law,
capacity, or by error,
2.   It is not susceptible of ratification; or is declared void by
violence, intimidation, or
3.   The right to set up the defense of inexistence or statute.
deceit
absolute nullity cannot be waived or renounced; Void; no contract at all Valid until annulled
4.   The action or defense for the declaration of their Must be assailed through
inexistence or nullity is imprescriptible; [Art. 1410] an action for that
Note: This provision does not apply to wills. May be assailed purpose by a party to the
[Gallanosa v. Arcangel, G.R. No. L-29300 (1978)] indirectly contract, and never by a
and third person (direct
5.   The inexistence or absolute nullity of a contract attack)
cannot be invoked by a person whose interests are Nullity may be set-up
not directly affected. [Art. 1421, CC] Nullity may only be set-
against anyone who
up against a party
asserts a right arising
Note: Article 1421 is subject to exceptions. For thereto.
from it.
instance, the creditors of a party to an illegal contract
Not susceptible to
may, under the conditions set forth in Article 1177 of May be validly ratified
ratification
said Code, exercise the rights and actions of the latter,
Action to declare
EXCEPT only those which are inherent in his person,
nullity does not Action for annulment
including therefore, his right to the annulment of said
prescribe [Art. 1410, prescribes
contract, even though such creditors are not affected
CC]
by the same, except indirectly, in the manner indicated
in said legal provision. [Pascual v. Secretary of Public
The law prohibits the spouses from selling property to
Works, G.R. No. L-10405 (1960)]
each other, subject to certain exceptions. [Art. 1490]
Similarly, donations between spouses during
A contract which is the direct result of a previous
illegal contract is also void and inexistent. [Art. 1421, marriage are prohibited. The prohibitions apply to
CC] common law relations. [Ching v. Goyanko, G.R. No.
165879 (2006)]

See: Pactum commissorium, Pactum de non alienado,


Pactum leonina discussed above.

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Divisibility of Contracts illegal purpose has not been accomplished, or no


In contracts with separate provisions, the invalidity of damage has yet been caused. [Art. 1415, CC]
one does not automatically render the other invalid. 4.   Agreement or contract not illegal per se but
Art. 1420 of the New Civil Code holds that "In case of a merely prohibited by law, and the prohibition is
divisible contract, if the illegal terms can be separated designed for the plaintiff’s protection. Plaintiff
from the legal ones, the latter may be enforced." may recover as allowing recovery enhances public
Contrary to the suppositions of petitioners, the invalid policy. [Art. 1416, CC] Note: When the assailed
stipulation is independent from the rest of the terms contracts are void ab initio, Art. 1416 cannot be
of the agreement and can easily be separated applied, as in the case of aliens purchasing
therefrom without doing violence to the manifest property despite knowing fully well the
intention of the parties. This being so, the legal terms constitutional prohibition against foreigners
of the contract can be enforced. [Spouses Litonjua v. L owning land in the Philippines at the time of
& R Corporation, March 27, 2000] purchase. [Frenzel v. Catito, G.R. No. 143958
(2003)]
In Pari Delicto Principle (in pari delicto, non oritur 5.   Payment of any amount in excess of the maximum
actio) [Art. 1411, CC] price of any article or commodity fixed by law [Art.
Parties to a void agreement cannot expect the aid of 1417, CC]
the law; the courts leave them as they are, because 6.   Contract whereby a laborer undertakes to work
they are deemed in pari delicto or "in equal fault." longer than the maximum number of hours fixed
[Menchavez v. Tevez, G.R. No. 153201 (2005)]. This by law [Art. 1418, CC]
requires: Example: PD 442 (as amended), or the Labor
1.   When the defect of a void contract consists in the Code, sets forth that the normal hours of work of
illegality of the cause or object of the contract and any that the normal hours of work of any
both parties are at fault or in pari delicto, the law employee shall not exceed eight hours a day
refuses them any remedy and leaves them where 7.   Contract whereby a laborer accepts a wage lower
they are. [Arts. 1411-1419, CC] than the minimum wage fixed by law. He may
2.   If the act in which the unlawful or forbidden cause recover the deficiency with legal interest, and the
consists does not constitute a criminal offense. employer shall be criminally liable [Art. 1419, CC]
[Art. 1412, CC] 8.   In case of divisible contracts, the legal
portions/terms may be enforced separately from
Rules: the illegal portions/terms [Art. 1420, CC]; and
1.   WHEN BOTH PARTIES ARE AT FAULT 9.   One who lost in gambling because of fraudulent
Neither party may recover what he has given by schemes practiced on him. He is allowed to
virtue of the contract, nor demand the recover his losses [Art. 315(3)(b)] even if gambling
performance of the other’s undertaking is prohibited
2.   WHEN ONLY ONE IS GUILTY
The innocent party may demand the return of The principle of in pari delicto admits of an exception
what he has given without obligation to comply under Art. 1416 of the Civil Code
with his promise. The party at fault cannot Under this article, recovery for what has been paid or
recover what he has given by reason of the delivered pursuant to an inexistent contract is allowed
contract, nor ask for the fulfillment of what has only when the following requisites are met:
been promised to him 1.   the contract is not illegal per se but merely
prohibited;
Exceptions to the Principle of In Pari Delicto: 2.   the prohibition is for the protection of the
1.   Payment of usurious interest Interest paid in plaintiffs; and
excess of the interest may be recovered by the 3.   if public policy is enhanced thereby. [Acabal v.
debtor. [Art. 1413, CC] Acabal, G.R. No. 148376 (2005)]
2.   Payment of money or delivery of property for an See also Arts. 1345 and 1346
illegal purpose, where the party who paid or
delivered repudiates the contract before the Non-Existing Cause or Object [Paras]
purpose has been accomplished, or before any Art. 1409(3) speaks of contracts “whose object or
damage has been caused to a third person. May cause did not exist at the time of the transaction.” This
allow the repudiating party to recover money or is not exactly correct because there can be valid
property. [Art. 1414, CC] [See Hulst v. PR Builders contracts involving future property; example, sale of
Inc., G.R. No. 156364 (2007)] future or after-acquired property. Thus, Justice J. B. L.
3.   Payment of money or delivery of property made by Reyes notes: “did not exist at the time of the
an incapacitated person. It is not necessary that

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transaction” should be “could not come into existence


because the object may legally be a future thing.”   Natural Obligations
Void contract cannot be novated [Art 1422, CC] Those based on equity and natural law, which do not
A contact which is a direct result of a previous illegal grant a right of action to enforce their performance,
contract, is also void and inexistent. This is based on but after voluntary fulfillment by the obligor, authorize
requisites of a valid novation [Art 1298, CC]. the retention of what has been delivered or rendered
by reason thereof [Art. 1423, CC]

Note: The binding tie is the conscience of man


In order that there may be a natural obligation there
must exist a juridical tie which is not prohibited by law
and which in itself could give a cause of action but
because of some special circumstances is actually
without legal sanction or means of enforcing
compliance by intervention of courts. [Tolentino]

1.   Four Types of Obligations


in Juridical Science
a.   Moral Obligations – duties of conscience
completely outside the field of law
b.   Natural Obligations – duties not sanctioned by
any action but have a relative judicial effect
c.   Civil Obligations – juridical obligations that are in
conformity with positive law but are contrary to
juridical principles and susceptible of being
annulled; enforceable by action
d.   Mixed Obligations – full juridical effect; falls
under civil obligations

2.  T wo Conditions Necessary
for Natural Obligations
a.   That there be a juridical tie between two persons;
and
b.   That this tie is not given effect by law

Natural Civil
Obligations Obligations
Not by court
Court action or
actions, but by
As to the coercive
good
enforceability power of public
conscience of
authority
debtor
Equity and Positive law [Art.
As to basis
natural justice 1157, CC]

Natural Obligations Imperfect Obligations


Existence of the
Only the performance
obligation depends
of the obligation is left
exclusively upon the
to the will of the debtor
judgment of debtor

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Natural Obligations Moral Obligations d.   Payment of a natural obligation is not subject to


There is a juridical tie reduction by reason of inofficiousness,
between the parties appearance of children or ingratitude.
No juridical tie
which is not
whatsoever. Examples of Natural Obligations
enforceable by court
action. Art. 1424. When a right to sue upon a civil
Voluntary fulfillment Voluntary fulfillment of obligation has lapsed by extinctive prescription, the
of such produces legal such does not produce obligor who voluntarily performs the contract
effects which the court any legal effect which cannot recover what he has delivered or the value
will recognize and the court will recognize of the service he has rendered.
protect. and protect.
Within the domain of Within the domain of Requisites under Art. 1424 (Prescribed Civil
law morals Obligation – Obligor)
a.   There is a civil obligation
The promise made by an organizer of a dog racing b.   The right to sue upon it has already lapsed by
course to a stockholder to return to him certain extinctive prescription
amounts paid by the latter in satisfaction of his c.   Obligor performs contract voluntarily
subscription upon the belief of said organizer that he
was morally responsible because of the failure of the Consequence: Obligor cannot recover what he has
enterprise, is not the consideration required by Art. delivered or value of the service he rendered.
1261 of the Civil Code as an essential element for the
legal existence of an onerous contract which would Art. 1425, CC. When without the knowledge or
bind the promissor to comply with his promise. The against the will of the debtor, a third person pays a
promise was prompted by a feeling of pity and is, debt which the obligor is not legally bound to pay
therefore, purely moral and as such, not demandable because the action thereon has prescribed, but the
in law but only in conscience, over which human debtor later voluntarily reimburses the third
judges have no consideration. [Fisher v. Robb, supra] person, the obligor cannot recover what he has
paid.
Conversion to Civil Obligations
General Rule: Partial payment of a natural obligation Requisites under Art. 1425 (Prescribed Civil
does not make it civil; the part paid cannot be rd
Obligation – Payment to 3 Person)
recovered but the payment of the balance cannot be a.   There is a debt
enforced. b.   Action upon the debt has prescribed
c.   A third person, without the knowledge or against
This applicable only to natural obligations because of the will of the debtor, pays the debt
prescription or lack of formalities (nullity due to form d.   Debtor voluntarily reimburses the third person
e.g. Art. 1430) and not to natural obligation subject to
ratification or confirmation Consequence: Obligor cannot recover what he has
paid.
Note: Payment by mistake is not voluntary and may be
recovered. Payment is voluntary when the debtor
Art. 1426, CC. When a minor between eighteen and
knew that the obligation is a natural one. The debtor,
twenty-one years of age who has entered into a
however, has the burden of proving the mistake.
contract without the consent of the parent or
a.   By novation
guardian, after the annulment of the contract
b.   By ratification or confirmation voluntarily returns the whole thing or price
received, notwithstanding the fact that he has not
Rules on Natural Obligation:
been benefited thereby, there is no right to demand
a.   The promise to perform a natural obligation is as
the thing or price thus returned.
effective as performance itself, and converts the
natural obligation to a civil obligation.
b.   Partial payment of a natural obligation does not Requisites under Art 1426 (Voluntary Return of
make it civil; the part paid cannot be recovered, Payment – Minor between 18 and 21)
but payment of the balance cannot be enforced. a.   There is a civil obligation
The exception would be if the natural obligation is b.   Minor between 18 and 21 entered into the contract
susceptible of ratification. without consent of parent or guardian
c.   Guaranties for the performance of a natural c.   Obligation is annulled after minor has received
obligation are valid. the price or whole thing

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d.   Minor returns whole thing or price received Art. 1429, CC. When a testate or intestate heir
voluntarily voluntarily pays a debt of the decedent exceeding
the value of the property which he received by will
Consequence: There is no right to demand the thing or or by the law of intestacy from the estate of the
price returned. deceased, the payment is valid and cannot be
rescinded by the payer.
Art. 1427. When a minor between eighteen and
twenty-one years of age, who has entered into a Requisites under Art 1429 (Payment made by Heir)
contract without the consent of the parent or a.   Decedent incurred in debt during his lifetime
guardian, voluntarily pays a sum of money or b.   Heir voluntarily pays debt
delivers a fungible thing in fulfillment of the c.   Value of debt exceeds value of heir’s inheritance
obligation, there shall be no right to recover the
same from the obligee who has spent or consumed Consequence: Payment is valid and heir cannot rescind
it in good faith. it.

Requisites under Art 1427 (Voluntary Payment – Art. 1430, CC. When a will is declared void because
Minor between 18 and 21) it has not been executed in accordance with the
a.   There is a civil obligation formalities required by law, but one of the intestate
b.   Minor between 18 and 21 entered into the contract heirs, after the settlement of the debts of the
without consent of parent or guardian deceased, pays a legacy in compliance with a
c.   Minor pays a sum of money or delivers a fungible clause in the defective will, the payment is effective
thing voluntarily and irrevocable.
d.   Obligee spends the money or consumes the thing
in good faith Requisites under Art 1430 (Payment of legacy – Will
declared Void)
Consequence: There is no right to recover the money a.   There is a will providing for a legacy
paid or thing delivered. b.   The will is declared void because it was not
executed in accordance with the formalities
It is not the voluntary payment that prevents recovery, required by law
but the consumption or spending of the thing or c.   Heir pays legacy
money in good faith.
Consequence: Payment is effective and irrevocable.
Arts. 1426 and 1427, CC, distinguished
Art. 1426 Art. 1427
Presupposes a prior No prior annulment is
annulment involved
Refers to money or
Refers to any object
fungible things
Consumption in good Requires consumption
faith is not required in good faith

Art. 1428, CC. When, after an action to enforce a


civil obligation has failed the defendant voluntarily
performs the obligation, he cannot demand the
return of what he has delivered or the payment of
the value of the service he has rendered.

Requisites under Art 1428 (Payment by Defendant


notwithstanding failed action)
a.   There is a civil obligation
b.   An action to enforce such has failed
c.   Defendant voluntarily performs the obligation

Consequence: Defendant cannot demand return of


what he has delivered or the payment of the value of
the service.

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  Estoppel Cases where estoppel applies


a.   When a person who is not the owner of a thing
sells or alienates and delivers it, and later the
1.   Definition seller or grantor acquires title thereto, such title
passes by operation of law to the buyer or grantee
A condition or state by virtue of which an admission or [Art. 1434, CC].
representation is rendered conclusive upon the b.   If a person in representation of another sells or
person making it, and cannot be denied or disproved alienates a thing, the former cannot subsequently
as against the person relying thereon [Art. 1431, CC] set up his own title as against the buyer or grantee
[Art. 1435, CC].
Estoppel is a bar which precludes a person from c.   A lessee or a bailee is estopped from asserting
asserting anything contrary to that which has been title to the thing leased or received, as against the
established as the truth, either by the acts of judicial lessor or bailor [Art. 1436, CC].
or legislative officers or by his own deed or d.   When in a contract between third persons
representation, either express or implied. [Tolentino] concerning immovable property, one of them is
misled by a person with respect to the ownership
or real right over the real estate, the latter is
2.  K inds of Estoppel precluded from asserting his legal title or interest
therein, provided all these requisites are present:
a.   Equitable Estoppel or Estoppel in pais or by 1.   There must be fraudulent representation or
conduct [Art. 1433, CC] wrongful concealment of facts known to the
1.   Estoppel by silence [Art. 1437, CC] party estopped;
2.   Estoppel by acceptance of benefits 2.   The party precluded must intend that the
b.   Technical Estoppels other should act upon the facts as
1.   Estoppel by Deed – a party to a deed is misrepresented;
precluded from asserting as against the other 3.   The party misled must have been unaware of
party, material fact asserted therein; [Art. the true facts; and
1433, CC] and 4.   The party defrauded must have acted in
2.   Estoppel by Record – a party is precluded accordance with the misrepresentation [Art.
from denying the truth of matters set forth in 1437, CC].
a record whether judicial or legislative and 5.   One who has allowed another to assume
also to deny the facts adjudicated by a court apparent ownership of personal property for
of competent jurisdiction. the purpose of making any transfer of it,
c.   Estoppel by Judgment – a party to a case is cannot, if he received the sum for which a
precluded from denying the facts adjudicated by pledge has been constituted, set up his own
a court of competent jurisdiction title to defeat the pledge of the property,
d.   Estoppel by laches made by the other to a pledgee who received
the same in good faith and for value [Art.
Persons bound 1438, CC].
Estoppel is effective only as between the parties
thereto or their successors-in-interest. [Art 1439, CC]
3.  Laches
The government is not estopped by mistake or error on
the part of its officials or agents. In Manila Lodge No. Failure or neglect, for an unreasonable and
761 Benevolent and Protective Order of the Elks v. CA, unexplained length of time, to do that which, by
G.R. No. L-41001 (1976), the sale executed by the City exercising due diligence, could or should have been
of Manila to Manila Lodge was certainly a contract done earlier. It is negligence or omission to assert a
prohibited by law, and that estoppel cannot be urged right within a reasonable time, warranting a
even if the City of Manila accepted the benefits of such presumption that the party entitled to assert it either
contract of sale and the Manila Lodge No. 761 had has abandoned it or declined to assert it. [Miguel v.
performed its part of the agreement, for to apply the Catalino, G.R. No. L-23072 (1968)]
doctrine of estoppel against the City of Manila in this
case would be tantamount to enabling it to do Elements:
indirectly what it could not do directly. a.   Conduct on the part of the defendant, or of one
under whom he claims, giving rise to the situation
of which complaint is made and for which the
compaint seeks a remedy;

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b.   Delay in asserting the complainant’s rights, the


complainant having had knowledge or notice of   Trusts
the defendant’s conduct and having been
afforded an opportunity to institute a suit; DEFINITION
c.   Lack of knowledge or notice on the part of the A fiduciary relationship with respect to property,
defendant that the complaint would assert the subjecting the person holding the same to the
right on which he bases his suit; and obligation of dealing with the property for the benefit
d.   Injury or prejudice to the defendant in the event of another person [Reyes and Puno]
relief is accorded to the complainant, or the suit is
not held to be barred Characteristics of Trust:
1.   It is a relationship
Prescription Laches 2.   The relationship is of fiduciary character
Concerned with the Concerned with the 3.   The relationship is with respect to property, not
fact of delay effect of delay one involving merely personal duties
Question of inequity of 4.   It involves the existence of equitable duties
Question or matter of imposed upon the holder of the title to the
permitting the claim to
time property to deal with it for the benefit of another
be enforced
Statutory Not statutory 5.   It arises as a result of a manifestation of intention
Applies in law Applies in equity to create the relationship
Cannot be availed of
Being a defense in Trust as distinguished from other concepts
unless it is specifically
equity, it need not be Trust Stipulation pour autrui
pleaded as an
specifically pleaded Refers to a specific Involves any stipulation
affirmative allegation
Not based on a fixed property in favor of a third person
Based on a fixed time
time
Trust Condition
Performance or
Performance of trust
accomplishment is not
is enforceable
enforceable

Guardianship or
Trust
Executorship
Guardians or Executors
do not have legal title but
Trustees has legal
mere actual possession
title to the property
and limited powers over
the property

Trust Contract
Always involves A legal obligation
ownership, embracing a based on an
set of rights and duties undertaking supported
fiduciary in character, by a consideration,
which may be created which obligation may or
by a declaration without may not be fiduciary in
consideration character.

Trust Debt
The beneficiary of a trust A creditor has merely a
has a beneficial interest personal claim against
in the trust property. the debtor.
There is a fiduciary
There is no fiduciary
relationship between a
relationship between a
trustee and a
debtor and a creditor.
beneficiary.

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Trust Sale document, upon mere


An express trust is not acquiescence in the
perfected by mere formation of the trust
consent, but requires the Seller obliges himself and acceptance under
actual delivery of the to transfer ownership the second paragraph of
naked or legal title to and deliver possession Art. 1311.
the trustee for the to the buyer
relationship of legality to
arise.
1.   Governing Rules
Trustee in an express
Buyer takes full Art. 1442, CC. The principles of the general law of
trust only takes naked or
ownership of the trusts insofar as they are not in conflict with this
legal title and for the
subject matter for his Code, the Code of Commerce, the Rules of Court
benefit of another
sole benefit. and special laws are hereby adopted.
person, the beneficiary.
Constituted merely as a
preparation, 2.  P arties [Art. 1440, CC]
arrangement, medium, Entered into for its own
by which the trustee is end, the acquiring of a.   Trustor – the person who establishes the trust
expected to pursue other title of the subject b.   Trustee – one in whom the confidence is reposed
juridical acts for the matter by the buyer. as regards property for the benefit of another
benefit of the person
beneficiary. c.   Beneficiary or cestui que trust – person for whose
benefit the trust has been created
Trust Lease
Naked title is transferred
to the trustee; full 3.  Kinds of Trust
Lessor retains naked
beneficial ownership is
title.
for the account of the a.  Express Trust
beneficiary.
Essence of the contract Created by the intention of the trustor or of the parties
is for the trustee to [Art. 1441, CC]
Essence of the contract
manage the rust
is the enjoyment of the
property as the legal Elements:
possession and use of
title holder for benefit or 1.   Competent trustor or settlor
the leased property.
interest of the 2.   Trustee
beneficiary. 3.   Ascertainable trust res / Trust property
Benefits enjoyed by the 4.   Sufficiently certain beneficiaries
Benefits enjoyed by the
essee are only for
beneficiary are usually of
limited contracted Trust is created:
a permanent nature.
period. 1.   By declaration of the trustor or settlor that he
holds property in trust
Trust Donation 2.   By conveyance to the trustee:
There is a transfer of a.   Inter vivos, or
An existing legal property as well as the b.   By testament
relationship which disposition of both
involves the separation legal and equitable Proof Required:
of legal and equitable ownership except in 1.   No express trusts concerning an immovable or
title cases of gifts in the any interest therein may be proved by parol
trust. evidence [Art. 1443, CC].
The beneficiary of a trust Trusts over real property are unenforceable
may demand unless in writing, although writing is not required
The done must comply
performance of the for validity, only for proof.
with the legall
obligation without 2.   Where the trust is over personal property, an oral
requirements in
having formally trust is sufficient between the parties.
accepting donations.
accepted the benefit of 3.   But to bind third persons the trust must be in a
the trust in public public instrument [Art. 1358(1) and (3), CC]

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Form of Express Trusts uncertain evidence or on loose, equivocal or indefinite


Art. 1444, CC. No particular words are required for declarations [de Leon v. Molo-Peckson, G.R. No. L-
the creation of an express trust, it being sufficient 17809 (1962)]
that trust is clearly intended.
Where a trust is to be established by oral proof, the
Want of Trustee testimony supporting it must be sufficiently strong to
Art. 1445, CC. No trust shall fail because the trustee prove the right of the alleged beneficiary with as much
appointed declines the designation, unless the certainty as if a document proving the trust were
contrary should appear in the instrument shown [Suarez v. Tirambulo, G.R. No. L-37090 (1933)]
constituting the trust.
Examples of Implied Trusts
1.   Resulting Trusts - a trust raised by implication of
To permit the trust to fail for want of trustee is to
law and presumed to have been contemplated by
defeat the intention of the trustor in creating the trust.
the parties, the intention as to which is to be found
in the nature of their transaction, but not
Acceptance by beneficiary
expressed in the deed or instrument of
Acceptance by beneficiary is necessary [Art. 1446, CC].
conveyance [Salao v. Salao, G.R. No. L-26699
It may be:
(1976)]
1.   Express
2.   Implied
Acceptance by the beneficiary is not subject to the Art. 1448, CC. There is an implied trust when
formal rules of donations [Cristobal v. Gomez, G.R. property is sold, and the legal estate is granted to
No. L-27014 (1927)] one party but the price is paid by another for the
3.   Presumed – if the trust imposes no onerous purpose of having the beneficial interest of the
condition upon the beneficiary property. The former is the trustee, while the latter
is the beneficiary. However, if the person to whom
Termination of Express Trusts the title is conveyed is a child, legitimate or
1.   Revocation or modification by the trustor under a illegitimate, of the one paying the price of the sale,
reserved power no trust is implied by law, it being disputably
2.   Rescission presumed that there is a gift in favor of the child.
3.   Expiration of the period or happening of the
resolutory condition Art. 1449, CC. There is also an implied trust when a
4.   Accomplishment of the purpose or its becoming donation is made to a person but it appears that
impossible or illegal although the legal estate is transmitted to the
5.   Dissolution by the Court if continuation will defeat donee, he nevertheless is either to have no
the purpose of the trust beneficial interest or only a part thereof.
6.   Dissolution by the consent of all the beneficiaries
and/or the settlor Art. 1451, CC. When land passes by succession to
7.   Merger any person and he causes the legal title to be put in
the name of another, a trust is established by
b.  Implied Trust implication of law for the benefit of the true owner.

How established Art. 1452, CC. If two or more persons agree to


Implied trusts come into being by operation of law purchase property and by common consent the
[Art. 1441, CC]. legal title is taken in the name of one of them for
the benefit of all, a trust is created by force of law in
The essential idea involves a certain antagonism favor of the others in proportion to the interest of
between the cestui que trust and the trustee even each.
where the trust has not arisen out of fraud or an
immoral transaction [Reyes] Art. 1453, CC. When property is conveyed to a
person in reliance upon his declared intention to
Proof required hold it for, or transfer it to another or the grantor,
Art. 1457. An implied trust may be proved by oral there is an implied trust in favor of the person
evidence. whose benefit is contemplated.

A trust must be proven by clear, satisfactory and


convincing evidence. It cannot rest on vague and

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Express and Implied Trust Distinguished Lumber Co.,


Express Trust Implied Trust G.R. No. L-
Comes into being 11497 (1957)]
Created by the
by operation of
intention of the
trustor or the
law. c.   Constructive Trust
parties.
Those, without Constructive Trusts - a trust not created by any words,
being expressed, either expressly or impliedly evincing a direct intension
Created by the
are deductible to create a trust, but by the construction of equity in
direct and
As to from the nature order to satisfy the demands of justice [Salao v Salao,
positive acts of
Creation of the transaction supra]
the parties by
by operation of
some writing or
law as matters of
deed or will or Art. 1450, CC. If the price of a sale of property is
equity,
by words loaned or paid by one person for the benefit of
independently of
evidencing an another and the conveyance is made to the lender
the particular
intention to or payor to secure the payment of the debt, a trust
intention of the
create a trust. arises by operation of law in favor of the person to
parties.
whom the money is loaned or for whom it’s is paid.
An express trust
The latter may redeem the property and compel a
over an
conveyance thereof to him.
immovable
An implied trust
property or any
As to Proof may be proved by Art. 1454, CC. If an absolute conveyance of property
interest therein
oral evidence is made in order to secure the performance of an
cannot be
proved by parol obligation of the grantor toward the grantee, a
evidence trust by virtue of law is established. If the fulfillment
In resulting trust: of the obligation is offered by the grantor when it
Action must be becomes due, he may demand the reconveyance of
made within 10 the property to him.
years from
Action must be
knowledge of Art. 1455, CC. When any trustee, guardian or other
made within 10
repudiation, person holding a fiduciary relationship uses trust
years from
As to otherwise funds for the purchase of property and causes the
knowledge of
Prescription prescribed. conveyance to be made to him or to a third person,
the repudiation,
a trust is established by operation of law in favor of
otherwise
In constructive the person to whom the funds belong.
prescribed.
trust: It must be
made within 10 Art. 1456, CC. If property is acquired through
years from date mistake or fraud, the person obtaining it is, by force
of registration. of law, considered a trustee of an implied trust for
An express the benefit of the person from whom the property
In constructive
repudiation comes.
trusts, even if
made known to
there is no
the beneficiary Express trust is a "continuing and subsisting" trust,
repudiation,
is necessary in not subject to the statute of limitations, at least, until
laches may bar
order that repudiated, in which event the period of prescription
As to an action to
laches or begins to run only from the time of the repudiation.
Laches enforce an
acquisitive [Tamayo v Callejo, G.R. No. L-25563 (1972)]
implied trust
prescription
may bar an In constructive trusts, the rule is that laches
Exception: If
action to constitutes a bar to actions to enforce the trust, and
there is
enforce an repudiation is not required, unless there is a
concealment.
express trust. concealment of the facts giving rise to the trust.
Trustee can sue [Fabian v. Fabian, G.R. No. L-20449 (1968)]
Trustee cannot
As to and be sued
sure and be sued
Suability alone [PAL, Inc.
alone.
vs. Heald

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Resulting Trust Constructive Trust


The trust is created
The intent of the
irrespective of or even
parties to create a
contrary to the intention of
trust is presumed or
the parties to promote
implied by law from
justice, frustrate fraud and
the nature of their
to prevent unjust
transaction.
enrichment.
The 10-year
prescriptive period The 10 year prescriptive
shall be counted period shall be counted
from the time from the time that the
repudiation is made constructive trust arises.
known to beneficiary.

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SALES
Civil Law

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U.P. LAW BOC SALES CIVIL LAW

VII.  SALES when the option is founded upon a


consideration, as something paid or
promised. [Art. 1324, CC]
  Nature and Form of e.   Unless it appears otherwise, business
advertisements of things for sale are not
Contract definite offers, but mere invitations to make
an offer. [Art. 1325, CC]

1.   Definition of Sales 2.   Option Contracts [Art. 1479 (2), CC]


A preparatory contract, separate and distinct from
Art. 1458, CC. By the contract of sale one of the the main contract itself which the parties may
contracting parties obligates himself to transfer the enter into upon the consummation of the option.
ownership and to deliver a determinate thing, and [de Leon]
the other to pay therefor a price certain in money or
its equivalent. Option
An accepted unilateral promise to buy or to sell a
A contract of sale may be absolute or conditional. determinate thing for a price certain is binding
upon the promissor if the promise is supported by
a consideration distinct from the price. [Art. 1479(2),
The essence of a contract of sale is the transfer of
CC; de Leon]
ownership or that the recipient has the ability to
alienate the thing transferred to him.
The option is not the contract of sale itself. The
optionee has the right, but not the obligation, to
2.  F ormation and Essential buy. Once the option is exercised timely, i.e., the
offer is accepted before a breach of the option, a
Requisites of a Contract of bilateral promise to sell and to buy ensues and
Sale both parties are then reciprocally bound to comply
with their respective undertakings. [Ang Yu v. CA,
G.R. No. 109125 (1994)]
a.  Formation of a Contract of
Sale An option is a contract granting a privilege to buy
or sell within an agreed time and at a determined
Stages in the life of a Sale [Villanueva]: price. It is a separate and distinct contract from
1.   Policitacion that which the parties may enter into upon the
2.   Perfection consummation of the option. It must be supported
3.   Consummation by consideration. [Equatorial Realty v. Mayfair
Theater, G.R. 106063 (1996)].
POLICITACION
Deals with the legal matter arising prior to the Separate Consideration
perfection of the Sale. [Villanueva] A consideration for an optional contract is just as
important as the consideration for any other kind
The following are not contracts of sale as defined in of contract. If there was no consideration for the
Art. 1458 [Villanueva]: contract of option, then it cannot be enforced any
1.   Offer more than any other contract where no
a.   The offer must be certain and the acceptance consideration exists. [Enriquez dela Cavada v. Diaz,
absolute. [Art. 1319, CC] G.R. No. 11668 (1918)]
b.   The person making the offer may fix the
time, place, and manner of acceptance, all of Rules Re: Option Period [Ang Yu v. CA, G.R. No.
which must be complied with. [Art. 1321, CC] 109125 (1994); Villanueva]
c.   An offer becomes ineffective upon the death, a.   If the period is not itself founded upon or
civil interdiction, insanity, or insolvency of supported by a consideration, the offeror is
either party before acceptance is conveyed. still free and has the right to withdraw the
[Art. 1323, CC] offer before its acceptance, or, if an
d.   When the offerer has allowed the offeree a acceptance has been made, before the
certain period to accept, the offer may be offeror's coming to know of such fact, by
withdrawn at any time before acceptance by communicating that withdrawal to the
communicating such withdrawal, except offeree.

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b.   The right to withdraw, however, must not be negating the indispensable element of
exercised whimsically or arbitrarily; consensuality in the perfection of contracts. [Ang
otherwise, it could give rise to a damage Yu v. CA, G.R. No. 109125 (1994)]
claim under Article 19 of the Civil Code which
ordains that "every person must, in the 4.   Mutual Promise to Buy and Sell
exercise of his rights and in the performance A promise to buy and sell a determinate thing for a
of his duties, act with justice, give everyone price certain is reciprocally demandable. [Art.
his due, and observe honesty and good faith." 1479, CC]
c.   If the period has a separate consideration, a
contract of "option" is deemed perfected, and Such an arrangement would be the true contract to
it would be a breach of that contract to sell, which embodies the main obligation of the
withdraw the offer during the agreed period. seller to enter into a contract of sale upon full
d.   The option, however, is an independent compliance with the condition of the buyer fully
contract by itself, and it is to be distinguished paying the purchase price, wherein the main
from the projected main agreement (subject obligation is a person obligation “to do.” Such
matter of the option) which is obviously yet to contracts to sell are really within the policitacion
be concluded. stage for they do not represent a species of a sale
e.   If, in fact, the optioner-offeror withdraws the defi ned under Article 1458 of the Civil Code.
offer before its acceptance (exercise of the [Villanueva]
option) by the optionee-offeree, the latter
may not sue for specific performance on the PERFECTION
proposed contract ("object" of the option) The perfection of the contract takes place upon the
since it has failed to reach its own stage of concurrence of the essential elements thereof. [Ang Yu
perfection. v. CA, G.R. No. 109125 (1994)]
f.   The optioner-offeror, however, renders
himself liable for damages for breach of the CONSUMMATION
option. In these cases, care should be taken Begins when the parties perform their respective
of the real nature of the consideration given, undertakings under the contract of sale, culminating
for if, in fact, it has been intended to be part in the extinguishment thereof. [San Miguel Properties
of the consideration for the main contract v. Sps. Huang, G.R. No. 137290 (2000)]
with a right of withdrawal on the part of the
optionee, the main contract could be deemed b.  Essential Elements of a
perfected; a similar instance would be an
"earnest money" in a contract of sale that can Valid Contract of Sale
evidence its perfection (Art. 1482, CC).
1.   Consent or meeting of the minds
3.   Right of First Refusal 2.   Object or subject Matter
In a right of first refusal, while the object might be 3.   Cause or consideration
made determinate, the exercise of the right, [Coronel vs CA, G.R. No. 103577 (1996); De Leon]
however, would be dependent not only on the
grantor's eventual intention to enter into a binding When all 3 elements are present, there being a
juridical relation with another but also on terms, meeting of the minds, then a perfected contract of sale
including the price, that obviously are yet to be arises, and its validity is not affected by the fact that
later firmed up. Prior thereto, it can at best be so previously a fictitious deed of sale was executed, or by
described as merely belonging to a class of the fact of non-performance of the obligations
preparatory juridical relations governed not by thereafter.
contracts (since the essential elements to establish
the vinculum juris would still be indefinite and However, when all 3 elements are present, but there is
inconclusive) but by, among other laws of general defect or illegality constituting any such elements, the
application, the pertinent scattered provisions of resulting contract is voidable or void. [Villanueva]
the Civil Code on human conduct. Even on the
premise that such right of first refusal has been CONSENT OR MEETING OF THE MINDS
decreed under a final judgment, like here, its Consent refers to seller’s consent to transfer
breach cannot justify correspondingly an issuance ownership of, and deliver, a determinate thing, and to
of a writ of execution under a judgment that merely buyer’s consent to pay the price certain.
recognizes its existence, nor would it sanction an
action for specific performance without thereby

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Being a consensual contract, the contract of sale is Art 1347, paragraph 2, characterizes a contract
perfected at the moment there is a “meeting of the entered into upon future inheritance as void. Art.
minds” upon the thing which is the object of the 1347 applies when the following requisites concur:
contract and upon the price. [Art. 1475, CC] o   Succession has not yet been opened;
o   The object of the contract forms part of the
Requisites: inheritance; and
1.   Legal Capacity o   The promissor has, with respect to the
2.   Offer and acceptance, and object, an expectancy of a right which is
3.   No vitiation of consent purely hereditary in nature. [Vda. de Cabatu
v. Spouses Tabu, G.R. No. 188417 (2012)]
A person is not incompetent to contract merely •   Sale of animals suffering from contagious
because of advanced years or by reason of physical diseases [Art. 1575, CC]
infirmities [Paragas vs. Heirs of D. Balacano, G.R. No. •   Sale of animals if the use or service for which they
168220 (2005)]. are acquired has been stated in the contract, and
they are found to be unfit therefor [Art. 1575, CC]
Exceptions to consent being a requisite: •   Sale of land in violation of Constitutional
1.   Expropriation, prohibition against the transfer of lands to aliens.
2.   Ordinary Execution Sale, [Art. XII of Constitution]
3.   Judicial Foreclosure Sale, and •   When the subject matter is illicit, the contract of
4.   Extra-Judicial Foreclosure Sale sale is void [Art. 1409 (7), CC]
Special Case: If sale involves the conjugal property of EXISTING, FUTURE, CONTINGENT
spouses, consent must be given by both. The goods which form the subject of a contract of sale
may either be—
OBJECT OR SUBJECT MATTER a.   Existing goods owned or possessed by the
Must be determinate or capable of being determinate, seller;
licit and within the commerce of man, and possible b.   Goods to be manufactured, raised, OR
acquired by the seller – “Future Goods”; [Art
Requisites of a Valid Subject Matter [Arts. 1459- 1462, CC]
1465, CC] It is valid only as an executory contract to be
1.   Licit fulfilled by acquisition and delivery of goods
2.   Existing, Future, Contingent specified.
3.   Determinate or determinable c.   Things having potential existence may be the
object of a contract of sale. [Art 1461, CC]
Must be licit [Art. 1459, CC] A sale may be made of a thing which, though not
The thing is licit when— yet actually in existence is reasonably certain to
a.   Within the commerce of man [Art. 1347, CC] come into existence as the natural increment or
b.   Examples of properties that are not within the usual incident of something in existence already
commerce of man: belonging to the seller, and the title will vest in
•   Those belonging to the State or its political the buyer the moment the thing comes into
subdivisions intended for public use or public existence. [Sibal vs Valdez, G.R. No. L-26278
service. [Art. 420, CC] (1927)]
•   Church
•   Narcotics or dangerous drugs except upon Sale of Things Having Potential Existence
prescription (RA 6425, the dangerous drugs Emptio Rei Emptio Rei Spei
act of 1972) Speratei Mere Hope Vain Hope
c.   When right is not intransmissible [Art 1347, CC] Sale of a thing Sale of a Sale of a VAIN
d.   It does not contemplate a future inheritance, expected or MERE HOPE HOPE or
unless expressly authorized by law future thing or expectancy expectancy
General rule: Exception:
Kinds of illicit things: Valid
Valid Void
a.   Per Se – of its nature Example: Sale
b.   Per Accidens – due to provision of law. Example: Sale Example: Sale
of the grain a
of a valid of a fake
field may grow
Examples of illicit sale lottery ticket lottery ticket
in a given time
•   Sale of future inheritance is void [Art. 1347, CC]

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Deals with a A thing is determinable when it is capable of being


future thing made determinate at the time the contract was
Deals with a thing that currently
that is entered into without the necessity of a new or further
exists – the hope or expectancy
currently not in agreement between the parties. [Art 1460, CC]
existence
Subject to the Art. 1165, CC: If the obligation to deliver is a
Not subject to any condition; The determinate thing, the creditor has the right to compel
condition that
contract comes into existence specific performance and to recover damages for
the thing will
immediately breach of the obligation. [Jurado]
exist
Future thing is
certain as to Failure to state the exact location of the land does not
itself, but make the subject matter indeterminate, so long as it
incertain as to can be located. [Camacho v CA, G.R. No. 127520
quantity and (2007)]
quality
In case of doubt, the presumption is in favor of The fact that the exact area of the land specified in the
emptio rei speratae since it is more in keeping with contract of sale is subject to the result of a survey does
the commutative character of the contract. not render the subject matter indeterminate. [Heirs of
Juan San Andres v. Rodriguez, G.R. No. 135634 (2000)]
Sale of specific things
a.   Sale of things in litigation [Art 1381(4), CC] CAUSE OR CONSIDERATION
Sale of things under litigation entered into by Refers to “price certain in money or its equivalent.”
defendant, without the approval of the litigants or
the court, is rescissible. [Art 1381 (4), CC] Meaning of Price [Arts. 1469-1474, CC]
Price signifies the sum stipulated as the equivalent of
But no rescission where the thing is legally in the the thing sold and also every incident taken into
possession of 3rd persons who did not act in bad consideration for the fixing of the price put to the debit
faith [Art 1385 (2), CC] of the buyer and agreed to by him [Inchausti v.
b.   Sale of an undivided interest in a thing [Art 1463, Cromwell, G.R. No. L-6584 (1911)]
CC]
LEGAL EFFECT: Make the buyer a co-owner in the Requisites for a Valid Price
thing sold: 1.   Certain or ascertainable at the time of perfection
i.   acquire full ownership of his part 2.   In Money or its equivalent
ii.   may sell his part even without consent of a.   N.B.: Example of “equivalent”: Letters of
iii.   subject to reserva troncal; pacto de retro credit
sale other co-owners b.   If price is partly in money and partly in
c.   Sale of undivided share of a specific mass [Art another thing: Determine manifest intention
1464, CC] of the parties to see whether it was barter or
The sale of an undivided share in a specific mass sale. [Art 1468, CC]
of fungible goods makes the buyer a co-owner of c.   If intention does not clearly appear, it shall be
the entire mass in proportion to the amount he considered a barter if the value of the thing
bought. exceed the amount of money or its
equivalent. [Art 1468, CC]
If later on it was discovered that the mass of 3.   Real
fungible goods contain less than what was agreed When buyer has an intention to pay and the seller
upon, the buyer becomes owner of whole mass has an expectation to receive the price
and seller must make up for the difference. [De a.   If simulated: Sale is VOID; BUT act may be
Leon] shown to have been a donation or some other
d.   Sale of things subject to resolutory condition [Art act or contract. [Art 1471, CC]
1465, CC] b.   If Price is false – when the real consideration
Examples: Things acquired under legal or is not the price stated in the contract:
conventional right of redemption; or i.   Sale is void
ii.   UNLESS proved to be founded on
DETERMINATE OR DETERMINABLE another true and lawful price [Art 1353,
A thing is determinate when it is particularly CC]
designated or physically segregated from all others of
the same class. [Art 1460, CC]

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How Price is Determined/When Certain b.   Where price is so low to be shocking to the


1.   Fixed by agreement of the parties conscience (fraud, mistake, undue influence),
a.   Fixing of price cannot be left to the discretion then sale may be set aside.
of one of the parties c.   Where price is simulated such as when the
b.   BUT if such is accepted by the other, sale is real intention was a donation or some other
perfected. [Art. 1473, CC] contract.
2.   Determination is left to the judgment of a d.   Where the parties did not intend to be bound
specified person at all, sale is void.
2.   In Involuntary sales
General Rule: Price fixed by 3rd persons designated by A judicial or execution sale is one made by a court
the parties is binding upon them with respect to the property of a debtor for the
satisfaction of his indebtedness.
Exceptions: a.   Where price is so low to be shocking to the
1.   If unable or unwilling: Sale is inefficacious unless conscience, such that a reasonable mind
parties subsequently agree about the price. would not be likely to consent to it, then
2.   If in bad faith/by mistake: Courts may fix price judicial sale will be set aside.
(but mere error in judgment cannot serve as basis b.   If in event of a resale, a better price can be
for impugning price fixed) obtained.
3.   If 3rd person is prevented from fixing price by fault 3.   Rescissible contracts of sale
of seller or buyer: Innocent party may avail of Inadequacy of price is a ground for rescission of
remedies (rescission or fulfillment of obligation, conventional sale under Art. 1381 (a) and (b), CC.
with damages)
4.   If 3rd person disregards specific It must be real, certain, and pecuniary.
instructions/data/procedure, thereby fixing an
arbitrary price When No Price Agreed
The price is made in reference to another thing, or 1.   Sale is inefficacious [Art. 1474, CC]
when the price fixed is the price of the commodity 2.   But if the thing or part thereof has been delivered
on a definite day, or in a particular exchange or and appropriated by the buyer, he must pay a
market, or when the amount fixed is above or reasonable price therefor.
below the price on such day, exchange or market. a.   What is a reasonable price is a question of
[Art. 1472, CC] fact dependent on the circumstances of each
particular case. [Art. 1474, CC]
When the price is not certain, the contract is without b.   The reasonableness of a price may be
effect and no obligation arises from it. determined on the basis of a company’s
balance sheet showing the book value or fair
Exception: When the thing is already delivered, the market value of its shares. [Philippine Free
buyer must pay a reasonable price therefor. This Press v. CA, G.R. No. 132864 (2005)]
exception only arises when the means contemplated
by the parties for fixing the price have become Generally, the reasonable price is the market price at
ineffectual. the time and place fixed by the contract or by law for
delivery of goods.
Inadequacy of Price [Arts. 1355, 1470, CC]
General Rule: Does not affect a contract of sale’s False Price v. Simulated Price
validity. [Art. 1470, CC] 1.   False Price (Relative Simulation) – price stated
in the contract is not the true price. Parties
The stipulation in a contract of sale which states that intended to be bound.
the consideration is “PhP1 and other valuable Effect: Binds the parties to their real agreement
considerations” does not make the contract void. when it does not prejudice 3rd persons and is not
Gross inadequacy of price does not affect the contract intended for any purpose contrary to law, morals,
of sale except that it may indicate a defect in consent. public policy, etc.
[Bagnas v. CA, G.R. No. L-38498 (1989)] 2.   Simulated Price (Absolute Simulation) – price
stated in the contract is not intended to be paid.
Exceptions: Parties never intended to be bound.
1.   In Voluntary sales Effect: Void for lack of cause/consideration, but
a.   Where low price indicates a vice of consent, can be shown as a donation or some other
sale may be annulled. contract. Parties may recover from each other
what they may have given under the contract.

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Disagreement on the manner of payment is stipulations. (Ex. Warranty against eviction,


tantamount to a failure to agree on the price. hidden defects)
[Toyota Shaw v. CA, G.R. No. L-116650 (1995)] 2.   Accidental – those which may be present or
absent depending on the stipulations of the
Earnest Money v. Option Money parties. (Ex. Conditions, interest, penalty)
Art. 1482, CC. 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
3.  Form of Contract of Sale
contract. [Art. 1483, CC]
Earnest Money – paid in advance of the purchase General Rule: Form is not important
price agreed upon by the parties in a contract of sale,
given by the buyer to the seller, to bind the latter to the Exceptions:
bargain. a.   Form important for Enforceability
1.   Statute of Frauds [Arts. 1403 and 1405, CC]
Option Money Earnest Money b.   Form important for Validity
Separate and distinct 1.   Sale of Realty through Agents [Art. 1874, CC]
Part of purchase price 2.   Sale of Large Cattle [Art. 1581, CC’ Sec. 529,
consideration from the
[Art 1482, CC] Administrative Code]
purchase price
Given when sale is not Given only when there 3.   Electronic Commerce Act [Secs. 7, 8, and 11,
yet perfected is already a sale RA 8792]
When given, the would-
be-buyer is not required When given, the buyer 4.  S tages of Contract of Sale
to buy, but may even is bound to pay the
forfeit it depending on balance a.   Preparation, conception, negotiation, or
the terms of the option generation stage – from the time the prospective
Grantee of option is still contracting parties indicate interest in the
Buyer manifests his
undecided whether or contract to the time the contract is perfected
earnest desire to buy
not to buy or sell the b.   Perfection or “birth” of the contract –takes place
the property
property [Baviera] upon the concurrence of the essential elements of
Limson vs. CA, G.R. No. 135929 (2001) the sale which are the meeting of the minds of the
parties as to the object of the contract and upon
False Price Non-payment of Price the price; and
Real price is not Failure of buyer to pay c.   Consummation or “death” of the contract –
declared the price begins when the parties perform their respective
Contract is void if it undertakings under the contract of sale,
Contract is not void but
should not be proved culminating in the extinguishment thereof.
gives rise to a right to
that it was founded [de Leon]
demand fulfillment or
upon another casue
cancellation of the
which is true and lawful
[Art. 1353, CC]
obligation 5.  O bligations Created
There can be sale even when no price is agreed upon. Art. 1165, CC. When what is to be delivered is a
When the price cannot be determined in accordance determinate thing, the creditor, in addition to the
with Arts .1469-1473, the contract is inefficious. right granted him by Article 1170, may compel the
debtor to make the delivery.
Exception: when the thing or part thereof has been
delivered to and appropriated by the buyer, in which If the thing is indeterminate or generic, he may ask
case the buyer has to pay a reasonable price therefor. that the obligation be complied with at the expense
of the debtor.
c.   Non-Essential Elements of If the obligor delays, or has promised to deliver the
a Contract of Sale same thing to two or more persons who do not have
the same interest, he shall be responsible for any
1.   Natural – those deemed to exist in certain fortuitous event until he has effected the delivery.
contracts in the absence of any contrary

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Specific or Determinate Thing – capable of particular


designation, e.g. this car, the car with plate no. XNY
7.  Sale Distinguished from
200 Other Contracts
Generic or Indeterminate Thing – refers only to a
class, to a genus, and cannot be pointed out with
a.  Donation
particularity, e.g. a car (genus nunquam perit)
Sale Donation
Nature of Obligations Created per Definition in Onerous Gratuitous
Art.1458, CC [Villanueva] Requires consent and
a.   For the SELLER: To transfer ownership and to must comply with the
Perfected by mere
deliver possession of the subject matter formalities required by
consent
b.   For the BUYER: To pay the price law for its validity. [Art.
745, CC]
Requires that there be
The property sold is
a diminution of the
6.  C haracteristics of a replaced by the
estate of one party
equivalent monetary
Contract of Sale consideration; there is
(donor) and the
enrichment of the
no diminution of the
a.   Consensual – perfected by mere consent and other party’s estate
seller’s estate
without any further acts. (donee)
b.   Bilateral and Reciprocal – imposes correlative
obligations on both parties to the relationship. When the price of the contract of sale is simulated, the
Consequently, power to rescind is implied. sale may be void but the act may be shown to have
c.   Principal – can stand on its own and does not been in reality a donation or some other contract.
depend on another contract for validity, as [Art.1471, CC]
contrasted from an accessory contract.
d.   Onerous – imposes valuable consideration as b.  Barter
prestation, as distinguished from a gratuitous
contract. Sale Barter
Consequence: all doubts in construing an Consideration is price in Consideration is
onerous contract shall be resolved in that which money or its equivalent another thing
gives greater reciprocity of interests. [Art. 1378]
e.   Commutative – because a thing for value is Barter is a contract where one of the parties binds
exchanged for equal value, as contrasted from an himself to give one thing in consideration of the other’s
aleatory contract. promise to give another thing [Art.1638, CC]
Test: As long as the party believes in all honesty
that he is receiving equal for what he gave up for, If consideration consists partly in money and partly in
then commutative character is complied with. another thing, the intention of the parties determines
f.   Nominate – given a particular name by law whether the contract is one of sale or barter.

a.  Sale is Title and Not Mode If manifest intention is not clear: Barter when the value
of thing is more than the amount of money or its
Delivery or tradition is the mode to transfer ownership equivalent; otherwise, sale. [Art.1468, CC]
and possession to the buyer.
Rules to determine whether contract is sale or
When a contract of sale is perfected, the seller is barter:
merely obligated to transfer ownership and to deliver •   Manifest intention of the parties: Even if the
the property. Transfer of ownership is effected only acquisition of a thing is paid for by another object
upon delivery. of greater value than the money component, it
may still be a sale and not a barter, when such was
Sale is merely title that creates the obligation on the the intention of the parties
part of the seller to transfer ownership and deliver •   When intention does not appear and
possession, but on its own, sale is not a mode that consideration consists partly in money and partly
transfers ownership. [Equatorial Realty Dev. v. Mayfair in another thing:
Theater, G.R. No. 133879 (2001)]

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o   BARTER = where the value of the thing given Bilateral promise to buy and sell
as part of the consideration exceeds the A promise to buy and sell a determinate thing for a
amount of money given or its equivalent price certain is reciprocally demandable. [Art. 479, CC]
o   SALE = where the value of the thing given as
part of the consideration equals or is less than Like a sale, the thing must be determinate and the
the amount of money given price, certain.

c.   Contract for a Piece of e.   Contract to Sell


Work
Contract of Sale Contract to sell
Contract for a Piece of Ownership is only
Sale Ownership is transferred
Work transferred upon full
upon delivery
Goods are manufactured Goods are payment of price
or procured in the manufactured for Full payment is a
ordinary course of customer upon his positive suspensive
business special order condition, hence non-
Non-payment is a
For the general market, payment would not
For a specific customer resolutory condition
whether on hand or not give rise to the
obligation to transfer
Governed by Statute of Not within Statute of
ownership
Frauds Frauds

The fact that the object were made by the seller only Conditional Contract of
Contract to sell
when customers placed their orders, does not alter the Sale
nature of the contract of sale, for it only accepted such Sale is already perfected No perfected sale yet
orders as called for the employment of such materials A subsequent buyer is A subsequent buyer is
as it ordinarily manufactured or was in a position presumed to be a buyer presumed to be a
habitually to manufacture such. [Celestino Co & Co v. in bad faith buyer in good faith
Collector, G.R. No. L-8506 (1956)]
f.   Agency to Sell
When each product or system executed is always
UNIQUE and could not mass-produce the product Sale Agency to sell
because of its very nature, such is a contract for a piece Buyer receives the goods Agent receives good as
of work. [Commissioner vs. Engineering Equipment and as owner goods of the principal
Supply Co., G.R. No. L-27044 (1975)] Agent delivers the
price which he got from
Buyer pays the price
d.  Dacion en Pago his principal
Buyer cannot return the
Sale Dacion en pago object sold as a general Agent can’t return the
No pre-existing debt Pre-existing debt rule goods
Extinguishes the
Creates an obligation obligation (mode of Seller warrants the thing Agent makes no
payment) sold warranty
Price is more freely Not unilaterally
Price is value of the Essentially revocable
agreed upon, fixed by revocable
thing given
the parties
Payment is received by CONTRACT OF AGENCY: A contract whereby a
Buyer has to pay the person binds himself to render some service or to do
the debtor before
price something in representation or on behalf of the
contract is perfected
principal, with the consent or authority of the latter
There is a novation of the contract of loan into a
contract of sale when the creditor agrees to accept a g.  Lease
thing in payment of the debt. Hence, if the thing given
in payment turns out to belong to another, the Sale Lease
creditor’s remedy should be governed by the law on Ownership transferred No transfer of
sales, not loan. [Baviera] by delivery ownership

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Permanent
Seller must be owner at
Temporary
  Capacity to Buy or Sell
Lessor neet not be
time of delivery
owner Art. 1489, CC. All persons who have capacity to
enter into obligations may enter into a contract of
sale
8.  K inds of Contract of Sale
General Rule: Any person who has capacity to act may
a.   Absolute – when sale is not subject to any enter into a contract of sale. [Villanueva]
condition and the title immediately passes to the
purchaser upon delivery Capacity to act, which is the power to do acts with legal
b.   Conditional – ownership of the object remains effect, is acquired and may be lost. [Art. 37, CC]
with the vendor until fulfillment of the condition/s

1.   Kinds of Incapacity
a.   Absolute incapacity – when persons cannot bind
themselves at all
b.   Relative incapacity – only with regard to certain
persons and certain class of property
c.   Specific incapacity or Special disqualifications

a.  Absolute Incapacity
[Art. 1327, 1397, 139, CC]

1.   Minors
2.   Insane or Demented
3.   Deaf-mutes who do not know how to write
4.   Civil Interdiction
5.   Judicially-declared Incompetents [Art. 39, CC]
a.   Prodigal
b.   Imbeciles
c.   Absence & presumption of death
d.   Persons not of unsound mind but by reason of
age, disease, weak mind, and other similar
causes, cannot take care of themselves and
manage their property without outside aid
(Easy prey for deceit and exploitation)

b.  Relative Incapacity:
Married Persons
1.   Husband and wife [Art. 1490, CC]
General Rule: Cannot sell property to each other

Exceptions:
a.   Separation of property in marriage
settlement, OR
b.   Judicial separation of property.

Sale by husband in favor of a concubine after he


had abandoned his family and left conjugal home
where his wife and children lived and from whence
they derived their support, is void. [Ching v.
Goyanko, Jr., G.R. No. 165879 (2006)]

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2.   Alienage[Art. 39, CC] 5.   Lawyers - Cannot acquire or purchase property or


General Rule: Aliens are disqualified from rights in litigation in which they take part by virtue
purchasing or acquiring real property. of their profession
Exception: If acquisition is through hereditary Lawyers may have undue influence over client;
succession greed may get the better of the sentiments of
3.   Trusteeship [Art. 39, CC] loyalty and disinterestedness. [Valencia v
Cabanting, A.M. Nos. 1302, 1391 and 1543 (1991)]
c.   Special Disqualifications
[Arts. 1491-1492, CC] Prohibition is definite and permanent and cannot
be cured by ratification. [Rubias v Batiller, G.R. No.
The sale entered into by agents, guardians, and L-35702 (1973)]
executors and adminstrators shall be voidable, as it
affects only private interests. Exceptions: An assignment to a lawyer by his
client of an interest in the property does not
The sale entered into by public officers, lawyers, violate Art 1491, where:
justices and judges, and others specially disqualified a.   A judgment has been rendered and has
by law shall be void, as it affects public interest. become final; and
1.   Agents- Cannot purchase or acquire property b.   In case of contingency fee arrangements: the
whose administration or sale was entrusted to interest of the lawyer may be annotated as an
them adverse claim on the property awarded to his
Exception: Principal gives consent. client [Director of Lands v Ababa, G.R. No. L-
2.   Guardian - Cannot purchase property of person 26096 (1979)]
under his guardianship 6.   Justices, Judges, prosecuting attorneys, clerks
Guardianship is a trust of the highest order, and and other officers and employees connected
the trustee cannot be allowed to have any with the administration of justice - Cannot
inducement or neglect his ward’s interest. [Phil acquire or purchase property or rights in litigation
Trust Co v Roldan, G.R. No. L-8477 (1956)] or levied upon on execution before the court
within whose jurisdiction or territory they exercise
Art. 1491(2) in relation to Art. 1409 does not apply their respective functions.
where the sale was under a special power
attached to the real estate mortgage, pursuant Rationale: to prevent fraud and to surround their
law. Under Act No. 3135, a mortgagee-creditor is profession with prestige.
allowed, as an exception, to participate in the
bidding under the same condition as any other Prohibition applies only on sales or assignment
bidder. [Fiestan v. CA, G.R. No. 81552 (1990)] during the pendency of litigation involving the
3.   Executors and Administrators - Cannot acquire property. [Macariola v Asuncion, A.M. No. 133-J
or purchase property of estate under their (1963)]
administration. 7.   Others specially disqualified by law
Does not apply to purchase of hereditary rights, as a.   Unpaid sellers with goods in transit from
these are not under their administration. buying the goods
b.   Officer conducting the execution sale of
The prohibition on executors and administrators deputies
does not apply if the principal consents to the
sale. [Distajo v. CA, G.R. No. 112954 (2000)] Although Art. 1491, CC does not state the legal
4.   Public Officers and Employees - Cannot acquire consequences of having entered into contracts in
or purchase property of State/any of its violation of such, the current view, as held in
subdivisions, GOCC or administration, the Rubias v. Batiller, supra is that such contracts are
administration of which was entrusted to them. void, and not merely voidable.
Includes judges and government experts who, in
any manner whatsoever take part in the sale. Art. 1492, CC. The prohibitions in the two preceding
articles (Arts. 1490, 1491) are applicable to sales in
Requisites: legal redemption, compromises and renunciations.
a.   Properties must belong to the State, any of its
subdivisions, or of any GOCC Art 1646, CC. The persons disqualified to buy
b.   Administration of these properties are referred to in articles 1490 and 1491, are also
entrusted to the public officers/officials

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disqualified to become lessees of the things Exception: Sales entered into by guardians,
mentioned therein. administrators, and agents (specific incapacities) in
violation of Art. 1491 may be RATIFIED by means of
and in the form of a new contract when the cause of
2.  E ffects of Incapacity nullity has ceased to exist. Ratification is valid only
from date of execution of the new contract and does
a.  Absolute Incapacity not retroact.

1.   If both parties are incapacitated: unenforceable


[Art. 1403 (3), CC]
2.   If only 1 party is incapacitated: voidable
Exception: Where necessaries are sold and
delivered to a minor or to a person without
capacity to act, he must pay a reasonable price
therefor. [Art. 1489, par. 2, CC]

The resulting sale therefore described in the


foregoing article is valid and binding.

b.  Relative Incapacity
Sale between spouses is void.

Rationale:
1.   To protect 3rd persons who may have contracted
with the spouse
2.   To avoid undue advantage of the dominant
spouse over the weaker spouse.
3.   To avoid circumvention of the prohibition against
donations between spouses. [Medina v CIR, G.R.
No. L-15113 (1961)]

Such prohibition shall likewise apply to common law


spouses. [Calimlim-Canulas v Fortun, G.R. No. L-
57499 (1984)]

But if already sold to a third person who relied on the


title of his immediate seller, reconveyance to the seller
spouse is no longer available [Cruz v CA, G.R. No.
120122 (1997)]

c.   Specific Incapacity/
Special Disqualifications
General rule: Contracts expressly prohibited by law are
VOID and CANNOTBERATIFIED. Neither can the right
to set-up the defense of illegality be waived. [Art. 1409
(7), CC]

Those entered into by public officers/employees,


justices and judges, and lawyers in violation of Art.
1491 are inexistent and VOID from the beginning.
[Rubias v Batiller, supra]. It is NOT subject to
RATIFICATION.

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  Effects of the Contract Pursuant to Art. 1262, CC if the thing is destroyed


without the fault of the debtor/seller, the
When the Thing Sold has obligation to pay shall subsist.
.
Been Lost 2.   Res perit domino or the seller bears the risk of loss.
Basis: The rule on loss is different from the rule on
deterioration for the loss would be for the account
1.   Res Perit domino of the seller, while the deterioration would be for
[Art.. 1263, 1189, CC] the account of the buyer.

Res perit domino: Owner bears risk of loss and In reciprocal obligations, the extinguishment of
deterioration the obligation due to loss of the thing
extinguishes the entire juridical relation.
The ownership is transferred only upon delivery.
b.  Deterioration
2.  P rior to Perfection of [Art. 1189, CC]
Contract Impairment is borne by the BUYER if the thing
deteriorates without the fault of the seller.
Seller bears risk of loss and deterioration.
If it deteriorates through the fault of the seller, the
Basis: Res perit domino buyer may choose between rescission of obligation
and fulfillment, either case with indemnity for
3.  At Time of Perfection damages.
[Arts. 1493 and 1494, CC]
5.  A fter Delivery
Seller bears risk of loss and deterioration.
General Rule: Buyer bears risk of loss and
Basis: Res perit domino deterioration.

Partial Loss (Or loss which Exceptions [Art. 1504 (1) and (2), CC]
Total Loss results in substantial a.   Where delivery has been made either to the buyer
change in character) or to the bailee for the buyer, but ownership in the
Contract is void Buyer may withdraw from goods has been retained by the seller merely to
because the object the contract secure performance by the buyer of his
did not exist at the or obligations under the contract; and
time of the Buy the remainder at a b.   Where actual delivery has been delayed through
transaction. proportionate price the fault of either the buyer or seller, the goods are
at the risk of the party in fault.
4.  A fter Perfection but
Before Delivery
a.  Loss
General Rule: Stipulations in the contract will govern.
In the absence of stipulation, there are two conflicting
views:
1.   Res perit creditori or the buyer bears the risk of
loss. This is an exception to the rule of res perit
domino
Basis: Art. 1504, CC only covers goods.

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  Obligations of the Vendor 2.   Owner has either lost the thing or has been
unlawfully deprived. [Art. 559, CC]
b.   Reimbursement is necessary before owner can
1.   Obligations of the Vendor recover when:
1.   Buyer acted in good faith
in General 2.   Acquired at a public auction [Art. 559, CC]
c.   Recovery no longer possible when:
a.   To transfer ownership of the thing [Art. 1495, CC] 1.   Buyer in good faith
b.   To deliver the thing, with its accessions and 2.   Acquired it at a merchant’s store, fair or
accessories, if any [Arts. 1164, 1166, CC] market. [Art. 1506, CC]
c.   To warrant against eviction and against hidden
defects [Arts. 1545-1581, CC]
d.   To take care of the thing, pending delivery, with
4.  M anner of Transfer
proper diligence [Art. 1163, CC] [Arts. 1477, 1496-150, CC]
e.   To pay for the expenses of the deed of sale [Art.
1487, CC] General Rule: Ownership of the thing sold shall be
transferred to the vendee upon:
a.   Actual; or
2.  W hen Seller is Not the b.   Constructive
delivery thereof [Art. 1477, CC]
Owner
Obligation to transfer ownership and to deliver is
General Rule: Ownership is not acquired by the buyer. implied in every contract of sale [Arts. 1458-1459, CC]
One cannot give what one does not have. [Art. 1505,
CC] Transfer of ownership requires delivery [Art. 1495, CC]
Exceptions: Exceptions
a.   Seller has a right to transfer ownership a.   Contrary stipulation
Seller need not be the owner of the thing at the b.   Contract to sell
time of perfection of the contract. It is sufficient c.   Contract of insurance
that seller has a right to transfer ownership d.   Sale on acceptance/Trial
thereof at the time it is delivered. [Art. 1459, CC] e.   When seller is not the owner or has voidable title
One who sells something he does not own yet is
bound by the sale when he acquires the thing General Concepts
later. [Bucton v. Gabar, G.R. No. L-36359 (1974)] Under Article 1495, the seller has twin obligations to
b.   Estoppel: Owner is, by his conduct, precluded (a) transfer the ownership and (b) deliver the thing,
from denying the seller’s authority to sell. [Art. which is the object of sale to the buyer. In Article 1164,
1434, CC] this includes the obligation to deliver the fruits and
c.   Registered land bought in good faith accessories from the time the obligation to deliver it
General rule: Buyer need not go beyond the arises; however he shall acquire no real right over
Torrens Title them until the same has been delivered to him.
Exception: When he has actual knowledge of facts
and circumstances that would impel a reasonably Transfer of ownership is effected even if the purchase
cautious man to make further inquiry has been made on credit. Payment of the purchase
d.   Order of courts; Statutory Sale price is not essential to transfer of ownership as long
In execution sale, the buyer merely steps into the as the property sold was delivered.
shoes of the judgment debtor [Sec. 33, Rule 39,
ROC] Intention to transfer ownership
e.   When goods are purchased in Merchant’s store, a.   All forms of delivery shall be coupled with
Fair, or Market [Art. 1505, CC] intention of delivering the thing sold.
b.   Seller must be owner or authorized by owner of
3.  Sale by Person having a the thing sold
Voidable Title When right to transfer ownership must exist: At the
time of delivery and not at the time of perfection of
a.   True owner may recover the thing when the ff. contract of sale.
requisites concur:
1.   Subject matter is movable

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Buyer becomes the owner when he –


5.  C oncept of Delivery 1.   Signifies his approval or acceptance to the seller
2.   Does any other act adopting the transaction (i.e.
a.  Requisites sale to a third person)
3.   Retains the goods without giving notice of
1.   Identity – between what must be delivered and rejection after the time fixed has expired; if no
what is actually delivered time has been fixed, after the expiration of a
2.   Integrity – in a condition suitable for enjoyment reasonable time [Art. 1502, CC]
3.   Intentional
b.  Sale or Return
b.  What to Deliver
Buyer becomes owner of the property on delivery, BUT
1.   Thing sold [Art. 1495, CC] has the option to revest ownership in the seller instead
2.   Fruits [Art. 1164 & 1537, CC] – belong to the of paying the price by returning the goods within the
vendee from day of perfection. time fixed in the contract, or, if no time is fixed, within
3.   Accessions and accessories [Art. 1166 & 1537, CC] a reasonable time. Otherwise, the sale becomes
– in the same condition they were in on day of absolute.
perfection
a.   Improvements by seller at his expense Loss or destruction of the property prior to return falls
grants him a usufructuary right [Art 1138, upon the buyer and makes him responsible for the
1189, CC] purchase price.
b.   No indemnification
c.   But he may remove it to the extent that there Sale on Approval v. Sale or Return
is no damage [Art. 1538, CC] Sale on Approval Sale or Return
Ownership does not Ownership passes to
c.   Where to Deliver pass upon delivery buyer on delivery and
remaining with the subsequent return
1.   A hierarchy is followed: seller until buyer revests ownership in
a.   Stipulation signifies his approval. the seller.
b.   Usage of trade Depends on the
Depends on the will of
c.   Seller’s place of business (office) character or quality of
the buyer
d.   Seller’s residence goods
2.   In case of specific goods, which the parties knew Subject to a suspensive Subject to a
to be at some other place when the contract was condition resolutory condition
perfected, that place is the place of delivery Risk of loss remains Risk of loss remains
3.   If goods are at the time of sale are possessed by with the seller with the buyer
a third person, then there is no delivery until he
acknowledges to the buyer that he holds the Express Reservation
goods for the buyer. If it was stipulated that ownership in the thing shall
not pass to the purchaser until he has fully paid the
price, then ownership remains with seller even when
d.  When to Deliver delivery is made [Art 1478, CC]
Absent a stipulation as to time, delivery must be made
Implied Reservation
within a reasonable time; demand or tender of delivery
The following are instances when there is an implied
shall be made at a reasonable hour.
reservation of ownership:
1.   Goods are shipped, but by the bill of lading
6.  W hen Delivery Does Not goods are deliverable to the seller or his agent,
or to the order of the seller or his agent
Transfer Title 2.   Bill of lading is retained by the seller or his agent.
3.   When the seller of the goods draws on the buyer
a.  Sale on Approval or Trial for the price and transmits the bill of exchange
and bill of lading to the buyer, and the latter
Title remains with the seller notwithstanding delivery does not honor the bill of exchange by returning
of the goods. the bill of lading to the seller.

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c.   When Sale Not Valid b.  Constructive Delivery


When the thing sold is a public property Execution of public instrument [par. 1, Art. 1498, CC]
General Rule: produces the same legal effects of actual
d.  When Seller is Not the delivery.
Owner Exceptions:
1.   The parties intended otherwise.
General Rule: Ownership is not acquired by the buyer. 2.   At the time of execution, the subject matter was
One cannot give what one does not have. [Art. 1505, not subject to the control of the seller, which
CC] control must subsist for a reasonable length of
time after execution. [Pasagui v Villablanca, G.R.
Exceptions: No. L-21998 (1975)]
1.   Seller has a Right to transfer ownership
2.   Estoppel: Owner is, by his conduct, precluded “Control” over thing sold must be such that seller is
from denying the seller’s authority to sell. [Art. capable of physically transferring it to buyer.
1434, CC]
3.   Registered land bought in good faith Although parties may stipulate that the execution of a
4.   Order of courts; Statutory Sale public instrument is equivalent to delivery, this legal
5.   When goods are purchased in Merchant’s store, fiction holds true only when there is no impediment
Fair, or Market [Art 1505, CC] that may prevent the passing of the property from the
vendor to the vendee. [Vda. de Sarmiento v. Lesaca,
e.   Sale by Person Having a G.R. No. L-15385 (1960)]
Voidable Title If, notwithstanding execution of the instrument, the
buyer cannot enjoy material tenancy and make use of
True owner may recover the thing when the ff. the object himself or through another in his name,
requisites concur: there is no delivery. [Power Commercial v. CA, G.R. No.
1.   Subject matter is movable 119745 (1997)]
2.   Owner has either lost the thing or has been
unlawfully deprived. [Art. 559, CC] Execution of a public instrument gives rise only to a
prima facie presumption of delivery, negated by failure
Reimbursement is necessary before owner can of the buyer to take actual possession of land sold. A
recover when: person who does not have actual possession cannot
1.   Buyer acted in good faith transfer constructive possession by execution and
2.   Acquired at a public auction [Art. 559, CC] delivery of public instrument. [Spouses Santiago v.
Villamor, G.R. No. 168499 (2012)]
Recovery no longer possible when:
1.   Buyer in good faith Symbolic Delivery
2.   Acquired it at a merchant’s store, fair or market. Delivery of keys of the place or depositary where the
[Art. 1506, CC] movable is stored or kept. [Art 1498, CC]

7.  Kinds of Delivery Unless otherwise agreed, when symbolic delivery has


been made, the seller is not obliged to remove tenants
to place the buyer in actual possession of the property
a.  Actual Delivery as he has already complied with his obligation to
transfer ownership of and deliver the thing sold.
1.   Deemed made when the thing sold is placed in [Power Commercial and Industrial Corp. v. CA, G.R. No.
the control and possession of the vendee [Art. 119745 (1997); Sabio v. The International Corporate
1497, CC] Bank, Inc., , G.R. No. 132709 (2001)]
2.   Not always essential to passing of title [Art. 147,
CC] Tradition Longa Manu (Long Hand)
Delivery of movable property by mere consent or
Parties may agree when and on what conditions the agreement, if the thing sold cannot be transferred to
ownership shall pass to the buyer [E.g.: Art 1478 where the possession of the buyer at the time of sale. [Art.
ownership will only pass after full payment of the 1499, CC]
price]

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Example: Seller points to the property without actually 3.   By allowing the buyer to use his rights as new
transferring physical possession thereof. owner with the consent of the seller

Delivery by mere agreement; seller points out to the Delivery to a Common Carrier
buyer the property without need of actually delivering General Rule: Delivery to the courier or carrier is
(as when the thing sold cannot be transferred to the tantamount to delivery to buyer, whether carrier is
possession of the vendee at the time of sale). Delivery named by buyer or not. The buyer assumes the risk of
takes place when the thing is placed in the sight of the loss.
purchaser so that he can take possession of it at
pleasure. With regard to movable property, its delivery Exceptions
may also be made by the delivery of the keys of the 1.   Seller reserved title through the form of the bill
place or depository where it is stored or kept. of lading, with intent to remain the owner, not
merely for the purpose of securing payment, OR
When an employer assigned all its rights and title to 2.   Contrary intention appears in the contract (i.e.
all surplus property salvaged by the contractor, seller is required to deliver goods to buyer at the
tradition longa manu takes place. Delivery is upon the point of destination)
moment a thing is salvaged. [Board of Liquidators v. 3.   Delivery by the seller is in breach of the contract
Floro, , G.R. No. L-15155 (1960)] 4.   F.O.B. (Free on Board or Freight on Board)-
When seller bears the expenses of transportation
Tradition Brevi Manu (Short Hand) up to the F.O.B. point.
Delivery of movable property by mere consent or 5.   C.I.F. (Cost, Insurance, Freight) - Price quoted
agreement, if the buyer already had it in his possession includes the costs of the goods, insurance, and
for any other reason. [Art. 1499, CC] freight charges on the goods up to the point of
destination.
Happens when the already has possession of the thing 6.   F.A.S. (Free Alongside) -Seller bears the
sold before the sale by virtue of another title (as lessee, expenses of transportation until he delivers the
borrower, depositary, etc.) goods alongside a vessel at a named port.

Tradition Constitutum Possessorium


Seller continues to be in possession of the property
8.  D ouble Sales
sold not as owner but in some other capacity, like as [Art. 1544, CC]
tenant or lessee.
General Rule: Prior tempore, prior jure (“First in time,
At the time of perfection, the seller held possession of priority in right”) applies.
the subject matter in the concept of owner, and
pursuant to the contract, the seller continues to hold Requisites
physical possession thereof as lessee or other form of a.   2 or more valid sales;
possession other than the concept of owner. b.   Same subject matter;
c.   2 or more buyers with conflicting interests over
For example, a seller remains in possession of the the rightful ownership of the thing sold;
property sold, by virtue of a lease agreement with the d.   Same seller. [Cheng v Genato, G.R. No. 129760
vendee, at the time of the perfection of the contract of (1998)]
sale.
Rules on Double Sale:
Vendee became, as lessor, the legal possessor while There is no double sale when:
the vendor is in material possession of the property in a.   Not all the elements of a sale are present
the name and representation of the vendee. b.   The principle of prior tempore, prior jure (he who
is first in time is preferred in right) should apply
Quasi-traditio c.   The two different contracts of sale are made by
Mode of delivery of incorporeal things or rights. two different persons, one of them not being the
owner of the property sold.
Delivery is effected: d.   The land sold is not yet registered under the
1.   By execution of public instrument Torrens system
2.   When such is not applicable, by placing the e.   The first sale occurred when land was not yet
titles of ownership in the possession of the registered, and the second sale was done when
buyer the land was already registered – prior tempore,
prior jure should apply

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Rules on preference: of an execution sale. This is because a buyer of


a.   Personal property unregistered land at an execution sale only steps into
b.   First possessor in good faith the shoes of the judgment debtor (the person who sold
c.   Real property the property prior to the execution sale). The second
d.   First registrant in good faith: second buyer must buyer merely acquires the latter's interest in the
register the document in good faith, otherwise, property sold as of the time the property was levied
he does not have a better right upon. [Carumba v. CA, G.R. No. L-27587 (1970)]
e.   First possessor in good faith
f.   Person with oldest title in good faith Sale of Immovables: Unregistered Land
1.   Instrument or deeds establishing, transmitting,
Caveat emptor: One who purchases real property acknowledging, modifying or extinguishing
which is in actual possession of others should make rights with respect to lands not registered under
some inquiry concerning the rights of those in posses the Land Registration Act or the Spanish
Mortgage Law, are required to be registered in
a.  Rules Governing Sale of the Registry of Property to prejudice 3rd persons,
although such registration is understood to be
Movables, Immovables and “without prejudice to a third party with a better
Unregistered Lands right”. [PD 1528 Sec 113]
2.   Art. 1544 applies to unregistered land subject to a
Sale of Movables conventional sale (because of Art. 1358) but NOT
Ownership shall be transferred to the person who may to unregistered land subject to judicial sale.
have first taken possession in good faith. 3.   Unregistered by both buyers, the first buyer is
preferred.
Sale of Immovables: Registered Land 4.   If first buyer did not register but second buyer
Ownership belongs to the person who: registered property, second buyer is preferred.
1.   In good faith first recorded the sale in the
Registry of Property; or 9.  P roperty Registration
2.   If there is no inscription of sale on the title,
ownership passes to the person who in good faith Decree
was first in possession; or
3.   In the absence thereof, to the person who REQUISITES FOR REGISTRATION OF DEED OF
presents the oldesttitle, provided there is good SALE IN GOOD FAITH
faith.
Purchaser in Good Faith
Possession refers to any of the modes of possession in One who buys the property of another, without notice
Arts. 1497-1501, CC that some other person has a right to or interest in
such property, and who pays a full and fair price for the
Oldest Title as to any public document showing sale, at the time of the purchase or before he has
acquisition of the land in good faith. To constitute notice of the claim/interest of some other person in
“title,” the transmission of ownership must appear in the property. [Agricultural and Home Extension
a public document [Art. 1358 (1), CC] Development Group v. CA, G.R. No. 92310 (1992)]

Registration includes any entry made in the Primary General Rule: As a rule, he who asserts the status of a
Entry Book of the registry, including both registration purchaser in good faith and for value has the burden
in its ordinary and strict sense and cancellation, of proving such assertion. [Mathay v. CA, G.R. No.
annotation, and even marginal notes. [Cheng v. 115788 (1998)]
Genato, G.R. No. 129760 (1998)]
When buyer is presumed to be in bad faith
Pencilled entries on the title are not considered a.   Annotation of adverse claim: Places any
registration. [AFPMBAI v. Court of Appeals, G.R. No. subsequent buyer of the registered land in bad
126745 (1999)] faith. [Balatbat v. CA, G.R. No. 109410 (1996)]
b.   Annotation of Lis Pendens: Buyer cannot be
Second Sale Made by Virtue of Execution and considered an innocent purchaser for value
Attachment where it ignored the lis pendens on the title.
Art. 1544 does NOT apply in cases where the first sale c.   A purchaser of a parcel of land cannot close his
of an unregistered immovable occurred prior to an eyes to facts which should put a reasonable man
execution sale and the second sale occurred by virtue upon his guard, such as when the property

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subject of the purchase is in the possession of Condition v. Warranty


persons other than the seller. A buyer who could Condition Warranty
not have failed to know or discover that the land Goes into the
sold to him was in the adverse possession of Pertains to and affects
performance of an
another is a buyer in bad faith. [Heirs of Ramon the existence of the
obligation and may, in
Durano v. Uy, G.R. No. 136456 (2000)] obligation
itself, be an obligation
Non-happening does Non-fulfillment
Annotation of not amount to breach of constitutes breach of
Lis Pendens
Adverse Claim contract contract
May be cancelled even May be cancelled only Stipulation or
before the action is in one instance, i.e., Must be stipulated
operation of law
finally terminated for after the claim is May attach either to the Always relates to the
causes which may not adjudged invalid or seller’s duty to deliver subject matter or the
be attributable to the unmeritorious by the thing or some other seller’s obligations as
claimant Court circumstance to the subject matter

The two are not contradictory or repugnant to one If seller has promised that the condition should
another; nor does the existence of one automatically happen or be performed, the buyer may treat the
nullify the other, and if any of the registrations should nonperformance of the condition as a breach of
be considered unnecessary or superfluous, it would warranty. [Art.1545, CC]
be the notice of lis pendens [A. Doronila Resources
Development Inc v. CA, G.R. Nos. L-42956-571988]
a.  Express Warranties
Accompanied by vendors duplicate certificate of
For there to be express warranty, the following
title, payment of capital gains tax, and
requisites must concur:
documentary tax registration fees
1.   An affirmation of fact or any promise relating to
Must be accompanied by:
the thing sold;
a.   Vendor’s duplicate certificate of title
2.   The natural tendency of such affirmation or
b.   Payment of capital gains tax – 6% of the selling
promise is to induce the buyer to buy;
price or zonal value, whichever is higher
3.   The buyer buys the thing relying thereon. [Art.
c.   Documentary tax registration fees – 1.5% of the
1546, CC]
selling price or zonal value, whichever is higher
4.   Made before the sale not upon delivery or any
other point
10.  Risk of Loss
An express warranty can be made by and also be
See Effects of Contracts Where the Thing is Lost above. binding on the seller even in the sale of a second hand
article. [Moles v. IAC, G.R. No. 73913 (1989)]
11.  Warranties Express Warranty v. Dealer’s/Trader’s Talk
Dealer’s or Trader’s
A statement or representation made by the seller Express Warranty
Talk
contemporaneously and as part of the contract of sale, Affirmation of the value
having reference to the character, quality, or title of of the thing or
the goods, and by which he promises or undertakes to statement of only the
ensure that certain facts are or shall be as he then seller’s opinion is not a
represents. warranty unless:
What is specifically
1.   The seller made it
Not every false representation voids the contract, only represented as true in
as an expert;
those matters substantially affecting the buyer’s said document cannot
2.   It was relied upon
interest, not matters of opinion, judgment, probability, be considered as mere
by the buyer.
or expectation. When the buyer undertakes his own dealer's talk. [Moles v.
[Art.1546, CC]
investigation, and the seller does nothing to prevent it IAC, supra]
3.   Ordinarily, what
from being as full as the buyer chooses, the buyer does not appear on
cannot afterwards allege misrepresentations. [Songco the face of the
v. Sellner, G.R. No. L-11513 (1917)] written instrument
[Moles v. IAC, supra]

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Express Warranty v. False Representation IMPLIED WARRANTY OF TITLE


Express Warranty False Representation 1.   Implied warranty arises by operation of law and
When concealment of need not be stipulated in the contract of sale.
facts comes with an 2.   Warranty of Seller’s Right to Sell: Seller warrants
active misstatement of his right to sell at the time the ownership is to
fact or a partial pass.
statement of fact such Inapplicable to a sheriff, auctioneer, mortgagee,
that withholding of pledgee, or other person professing to sell by
that unsaid portion virtue of authority in fact or law. [Art. 1547, CC]
makes that which is 3.   Warranty against Eviction: seller warrants that
stated absolutely false buyer, from the time ownership passes, shall
have and enjoy legal and peaceful possession of
However, a buyer who the thing. Its requisites are:
fails to inspect the a.   Buyer is deprived of the whole or a part of the
condition of property thing sold;
despite ample b.   Eviction is by final judgment
Concealment of facts opportunity to do so c.   Final judgment based on a right prior to the
does not necessarily when there is no sale or an act imputable to the vendor
amount to false opposition on the part d.   Seller is summoned and made co-defendant
representation of seller to inspect in the suit for eviction at the instance of the
cannot later on allege buyer. [Power Commercial and Industrial Corp.
false representation. v. CA, G.R. No. 119745 (1997)]
[Philippine
Manufacturing Co. v. IMPLIED WARRANTY AGAINST
Go Jocco, G.R. No. L- ENCUMBRANCE/NON-APPARENT SERVITUDES
24256 (1926)] Requisites for breach:
1.   Thing sold is an immovable
Reason: buyer’s duty 2.   Burden or servitude encumbering the thing sold
to inspect remains is:
despite false a.   Non-apparent to the naked eye
representation by the b.   Not mentioned in the agreement
seller; he has the duty c.   Of such nature that it must be presumed that
to exercise due the buyer would not have bought it had he
diligence. been aware of it
d.   Not recorded in the Registry of Property
unless there is an express warranty that the
b.  Implied Warranties thing is free from all burdens and
[Art. 1547, CC]
encumbrances [Art.1560, CC]
An implied warranty is derived by law by implication or
IMPLIED WARRANTY AGAINST HIDDEN DEFECTS
inference from the nature of the transaction or relative
Requisites for breach:
situation, or circumstances of the parties, irrespective
1.   The defect renders the thing sold unfit for the use
of any intention of the seller to create it. [de Leon]
for which it was intended OR diminishes its fitness
for such use to such an extent that had the buyer
Implied Warranty of Title
been aware thereof, he would not have bought it
1.   Implied Warranty against Encumbrance/Non-
or would have paid a lower price;
Apparent Servitudes
2.   The defect is not patent or visible;
2.   Implied Warranty against Hidden Defects [Art.
3.   The buyer is not an expert who, by reason of his
1547, CC]
trade or profession, should have known the defect
a.   Implied warranty as to Merchantable Quality
4.   The seller is aware of the hidden fault or defect,
and Fitness of Goods
OR even if he is not aware thereof, if there is no
b.   Implied warranty against Redhibitory Defect
stipulation to the contrary [Art.1566]
in the Sale of Animals [Art. 1572, CC]
c.   Quality and Fitness of Goods in Sale by
The buyer must also give notice of such redhibitory
Sample or Description
defect within a reasonable time.
3.   Other Warranties

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The use contemplated must be that which is Veterinarians are liable if they fail to discover or
stipulated, and in absence of stipulation, that which is disclose the hidden defect through ignorance or bad
adopted to the nature of the thing, and to the business faith. [Art. 1576, CC]
of the buyer.
Seller liable if animal dies within 3 days after its
IMPLIED WARRANTY AS TO MERCHANTABLE purchase due to a disease that existed at the time of
QUALITY AND FITNESS OF GOODS sale. [Art. 1578, CC]
Merchantable Quality
1.   Where the goods are brought by description from c.   Effects of Warranties
a seller who deals in goods of that description
[Art. 1562, CC] 1.   Natural tendency is to induce buyer to purchase
2.   In a sale by sample, if the seller is a dealer in the subject matter
goods of that kind and the defect is not apparent 2.   Buyer purchases subject matter relying thereon
on reasonable examination of the sample [Art. 3.   Seller liable for damages in case of breach
1566, CC]

Warranty of merchantability is warranty that goods d.  Effects of Waivers


are reasonably fit for the general purpose for which the
same are sold. Only applicable to waiver of warranty against eviction;
parties may increase or decrease warranty against
Warranty of fitness is warranty that goods are suitable eviction but the effect depends on good/bad faith of
for the special purpose of the buyer which will not be the seller:
satisfied by mere fitness for general purposes. 1.   Seller in bad faith and there is warranty against
eviction – null and void
In a sale by sample, there is implied warranty that 2.   Buyer without knowledge of a particular risk and
goods are free from defects not apparent on made general renunciation of warranty – not
reasonable examination of sample and which render waiver but merely limits liability of seller in case of
goods unmerchantable. [Mendoza v. David, G.R. No. eviction (pay value of subject matter at the time of
147575 (2004)] eviction)
3.   Buyer with knowledge of risk of eviction assumed
“Fitness for a particular purpose”:Where the buyer its consequences and made a waiver – vendor not
expressly or impliedly makes known to the seller the liable
particular purpose for which the goods are acquired 4.   Waiver to a specific case of eviction – wipes out
AND it appears that the buyer relied on the seller’s warranty as to that specific risk but not as to
skill or judgment [Art.1562(1, CC)] eviction caused by other reasons

IMPLIED WARRANTY AGAINST REDHIBITORY One who purchases real estate with knowledge of
DEFECT IN THE SALE OF ANIMALS defect or lack of title cannot claim he acquired title
[Art. 1572, CC] thereto in good faith, as against true owner of land or
of interest therein. [J.M. Tuason v. CA, G.R. No. L-
Redhibitory defect – a hidden defect of animals of 41233 (1979)]
such nature that expert knowledge is not sufficient to
discover it, even in a case where a professional The same rule must be applied to one who has
inspection has been made knowledge of facts which should have put him upon
such inquiry and investigation as might be necessary
No warranty in case of [Art. 1574, CC] to acquaint him with the defects in the title of his
1.   Animals sold at fairs or public auctions vendor. A purchaser cannot close his eyes to facts
2.   Livestock sold as condemned which should put a reasonable man upon his guard
and then claim that he acted in good faith under the
The following sales are void [Art. 1575, CC] belief that there was no defect in the title of the
1.   Sale of animals suffering from contagious vendor.
diseases
2.   Sale of animals unfit for the purpose for which e.   Buyer’s Options in Case of
they are acquired as stated in the contract
Breach of Warranty
[Art. 1599, CC]

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EXPRESS WARRANTY 4.   Expenses of the


contract, if buyer
Prescriptive period: Period specified in express has paid them
warranty OR 4 years, if no period is specified (following 5.   Damages and
the general rule on rescission of contracts) interests, and
ornamental
Remedies expenses, IF sale
1.   Accept goods + demand diminution/ extinction of was made in bad
price faith
2.   Accept goods + damages
3.   Refuse to accept goods + damages Rules:
4.   Rescind (Refuse to accept or return or offer to 1.   Buyer need not appeal from decision to hold seller
return) + recover price paid liable for eviction
2.   When adverse possession commenced before
Rescission not available when buyer: sale, but prescription period completed after
1.   Knew of breach of warranty when he accepted the transfer: seller is not liable
goods without protest 3.   If property sold for nonpayment of taxes due and
2.   Fails to notify the seller about election to rescind not made known to the buyer before the sale:
within a reasonable period of time seller liable
3.   Fails to return or offer to return the goods to the 4.   Judgment debtor also responsible for eviction in
seller in substantially a good condition as they judicial sales, unless it is otherwise decreed in the
were when delivered, unless deterioration was judgment
due to breach of warranty
If there is waiver of warranty:
Measure of damages: Difference between value of 1.   Seller acted in bad faith: Waiver is void, seller
goods at the time of delivery and the value they would liable for eviction
have had if they had answered to the warranty 2.   Buyer made waiver without knowledge of risks of
eviction: Seller liable only for the value of the
Effects of rescission thing sold at time of eviction
1.   Buyer no longer liable for price: Entitled to the 3.   Buyer made waiver with knowledge of risks: Seller
return of any part of price paid, concurrently with not liable; buyer assumed the consequences
or immediately after an offer to return the goods
2.   If seller refuses to accept offer to return goods: IMPLIED WARRANTY AGAINST ENCUMBRANCES
buyer deemed as bailee for seller and has right of [Art. 1560, CC]
lien to secure payment of part of price paid 1.   Rescission: Within 1 year from execution of deed
of sale OR
IMPLIED WARRANTY AGAINST EVICTION [Arts. 2.   Damages: Within 1 year from execution of deed of
1555, 1556, CC] sale or discovery of the burden or servitude
Total Eviction Partial Eviction
Enforce liability for IMPLIED WARRANTY AGAINST HIDDEN DEFECTS
eviction [Arts. 1567-1571, CC]
Enforce liability
If thing is not lost:
(demand VICED)
Demand from seller: 1.   Withdraw from contract (accion redhibitoria) +
OR
(VICED) damages
Rescind within 6
1.   Value of thing sold 2.   Demand a proportionate reduction of the price
months from delivery
at time of eviction (accion quanti minoris) + damages
1.   If he would not
2.   Income or fruits, if
have bought the
he has been If thing is lost:
thing sold without
ordered to deliver Due to fortuitous event
the part lost; Due to hidden fault
them to the party or fault of buyer
2.   BUT he must return
who won the Demand:
the thing without If seller aware of defect,
eviction suit 1.   Price paid minus
other buyer may demand:
3.   Costs of eviction value of thing when
encumbrances than 1.   Return of price
suit and in a it was lost
those which it had 2.   Refund of expenses
proper case, suit 2.   Damages, if seller
when he acquired it 3.   Damages
against seller for acted in bad faith
warranty

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If seller not aware of


defect:   Obligations of the
Buyer may demand
price and expenses BUT
Vendee
NOT damages
1.   Obligation to Accept
Prescriptive period: 6 mos. from delivery
Delivery
IMPLIED WARRANTY AGAINST REDHIBITORY
DEFECTS OF ANIMALS a.  What is Acceptance
Remedies Acceptance is assent to become owner of the specific
1.   Withdraw from contract + damages goods when delivery of them is offered to the vendee.
2.   Demand a proportionate reduction of the price + [de Leon]
damages
The buyer is deemed to have accepted the goods
If sale is rescinded: when:
1.   Buyer must return animal in the condition in 1.   He intimates to the seller that the has accepted
which it was sold and delivered them
2.   Buyer shall be liable for injury due to his 2.   The goods have been delivered to him and he does
negligence. any act in relation to them which is inconsistent
with the ownership of the seller
Prescriptive period: 40 days from delivery 3.   After the lapse of a reasonable time, he retains the
goods without intimating to the seller that he has
f.   Warranty in Sale of rejected them.
Consumer Goods General rule: Exercise of acts of ownership over the
[Sec. 68, RA 7394] goods is a manifestation of acceptance, such as
making use of them as owner, making alterations in
If implied warranty accompanies express warranty, the goods or subjecting it to the process of
both will be of equal duration. manufacture.

Express Warranty Implied Warranty Exception: Buyer’s right to make a test of goods, but
1.   Demand repair only if necessary, to enable him to determine whether
within 30 days to accept or reject the goods.
1.   Retain the goods
Extendible for
and recover
causes beyond the MODES
damages
control of the 1.   Express acceptance (Buyer intimates to the seller
OR
warrantor that the has accepted them)
2.   Reject the goods,
2.   Demand refund of 2.   Implied acceptance
cancel contract and
price minus a.   When the vendee, after delivery of goods,
recover from seller
amount directly does any act inconsistent with the vendor’s
so much of the
attributable to the ownership or makes alteration in them in a
purchase price as
use of the manner proper only for an owner
has been paid +
consumer prior to
damages
the discovery of the Acts inconsistent with vendor’s ownership:
non-conformity •   Use of property except if the single act
of use does not affect the condition or
value of the property
•   Resale or mortgage
•   Alteration
•   Conduct after rejection – if the vendee
performs an act inconsistent with the
vendor’s ownership after rejection

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b.   When the buyer, after the lapse of a c.   Delivery of Goods in


reasonable time, retains the goods without
intimating his rejection. Installment
Vendee’s refusal General rule: The vendee is not bound to accept
delivery of goods in installment
If vendee has the right to refuse and rightfully refused
upon delivery, Exception: Unless otherwise agreed upon [par. 1, Art.
1.   He has no obligation to return them UNLESS 1583, CC]
otherwise agreed BUT he has to take
reasonable care of the goods WHERE SEPARATE PRICE HAS BEEN FIXED FOR
2.   He is not a depositary thereof UNLESS he EACH INSTALLMENT [par. 2, Art. 1583, CC]
voluntarily agrees to be one
Where there is a contract of sale of goods
If the vendee’s refusal to accept is wrongful 1.   To be delivered by stated installments,
1.   The title passes to the vendee from the moment 2.   To be separately paid for, and
they are placed at his disposal 3.   The seller makes defective deliveries in respect of
UNLESS there is a stipulation to the one or more instalments, or the buyer neglects or
contrary [as specified in Article 1523, par. refuses without just cause to take delivery of or
1, CC] pay for one or more instalments,

It depends in each case on the terms of the contract and


the circumstances of the case,
b.  Buyer’s Right to Examine 1.   Whether the breach of contract is so material as
to justify the injured party in refusing to proceed
The buyer is not deemed to have accepted the goods further and suing for damages for breach of the
delivered which he has not previously examined unless entire contract,
and until he has had a reasonable opportunity to or
examine them for the purpose of ascertaining whether 2.   Whether the breach is severable, giving rise to a
they are in conformity with the contract claim for compensation but not to a right to treat
the whole contract as broken.
Exception: If there is a stipulation to the contrary [par.
1, Art. 1584, CC]
2.  O bligation to pay the price
The seller is bound, when he tenders delivery to the
buyer, on request, to afford the buyer a reasonable a.  Obligation to pay interest
opportunity to examine the goods for the purpose of
ascertaining whether they are in conformity with the The three instances when the vendee shall pay interest
contract. for the period between delivery and payment of the
price:
Exception: Unless otherwise agreed upon [par. 2, Art. 1.   If there was a stipulation
1584, CC] 2.   If the thing sold and delivered produces fruits or
income
Exception to the right to examine: C.O.D. Sales 3.   If the vendee is in default, from the time of
Where goods are delivered to a carrier by the seller, in judicial or extrajudicial demand for payment [Art.
accordance with an order from or agreement with the 1589, CC]
buyer, upon the terms that the goods shall not be
delivered by the carrier to the buyer until he has paid
the price, whether such terms are indicated by b.  Right of Vendee to
marking the goods with the words "collect on Suspend Payment of Price
delivery," or otherwise, the buyer is not entitled to
examine the goods before the payment of the price, in The vendee has the right to suspend in two instances:
the absence of: 1.   If he is disturbed in the possession or ownership
1.   agreement; or of the thing bought; or
2.   usage of trade 2.   If he has reasonable grounds to fear such
permitting such examination. [par. 3, Art. 1584, CC] disturbance, by a vindicatory action or a
foreclosure of mortgage [Art. 1590, CC]

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Except:
1.   If the vendor gives security for the return of the   Actions and Remedies
price in a proper case
2.   If it has been stipulated
for Breach of Contract of
3.   If the vendor caused disturbance or danger to
cease
Sale
4.   If the distrubance is a mere act of trespass
5.   If the vendee has already fully paid the price [de 1.   General Remedies [Art.
Leon]
1191, CC]
c.   Payment in installments The following remedies arise from the bilateral nature
of the contract of sale:
General rule: The vendee has no right to pay in a.   Specific performance
installments b.   Rescission
Exception: Unless otherwise agreed c.   Damages

3.  Obligation to Bear the General rule: Rescission of a contract will not be


permitted for a slight or casual breach, but only for
Expenses for the Execution such substantial and fundamental breach as would
defeat the very object of the parties in making the
and Registration of the agreement. [Song Fo & Co. v. Hawaiian-Philippine Co.,
Sale and Putting the G.R. No. 23769 (1925)]
Goods in a Deliverable Prescriptive periods
State, if so Stipulated a.   10 years if based on written contract
b.   6 years if based on oral contract

2.  B . Remedies of the Seller


a.  Sale of Goods
Action for Price [Art. 1595, CC]
1.   When the ownership of the goods has passed to
the buyer and he wrongfully neglects or refuses
to pay for the price
2.   When the price is payable on a certain day and
the buyer wrongfully neglects to pay such price,
whether or not ownership has passed
3.   When the goods cannot readily be resold for a
reasonable price, and the buyer wrongfully
refuses to accept the goods, whether or not
ownership has passed.

In an action by the seller under (2), buyer can set up


the defense that seller, at any time before judgment in
such action, could not or did not intend to deliver the
goods.

Unless the contrary appears, payment and delivery are


presumed to be concurrent acts, and the obligation of
each party to perform the contract is dependent upon
the simultaneous performance by the other party [de
Leon]

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If ownership has not yet passed to the buyer, the seller The seller cannot unilaterally and extrajudicially
cannot maintain an action for the price, unless it rescind a contract absent express stipulation to do
involves (1) or (3). so, except as provided in Art. 1597. [De Leon]

Title to goods passes from the moment the goods are b.  Special Remedies of the
placed at the buyer’s disposal when refusal to accept
is without just cause. [de Leon citing Art. 1588, CC] Unpaid Seller [Arts. 1525-
1535, CC]
Action for Damages [Art. 1596, CC]
When ownership has not yet passed and the buyer, 1.   Possessory lien;
without lawful cause, neglects or refuses to ACCEPT 2.   Stoppage in transitu;
and PAY for the goods 3.   Special right of resale; and
4.   Special right to rescind,
General rule: Measure of damages is the ESTIMATED
LOSS directly and naturally resulting in the ordinary Note: These special remedies have a hierarchical
course of events from the buyer’s breach. application. The special rights to resell and to rescind
can be availed of by the unpaid seller only when either
Exceptions: of the two prior rights of possessory lien or stoppage
1.   Where there is available market for goods: in transitu have been exercised by the unpaid seller.
Difference between the contract price and the [Villanueva]
market price. The market price is fixed at the time
the goods ought to have been accepted, or if no Definition of an Unpaid Seller
time was fixed, at the time of refusal to accept. [Art. 1525, CC]
Note: When there are special circumstances
showing proximate damages of a greater amount A seller is considered to be an unpaid seller if the
than the difference between the contract price whole price has not been paid or tendered, or when
and market price, seller is entitled to such higher check received as a conditional payment was
amount of damages when such damages may be dishonored by non-payment or insolvency of the buyer
reasonably attributed to the non-performance of [Baviera]
the obligation. [de Leon; par. 3, Art. 1596 read
with par. 2, Art. 2201, CC] A seller is unpaid within such definition whether or not
2.   Where labor or expense of material amount is title has been passed. Partial payment of the price
necessary on the part of the seller to perform the does not extinguish the unpaid seller’s lien. [de Leon]
contract: Cost of labor performed or expenses
made before receiving notice of buyer’s Term also includes:
repudiation, and unrealized profit. 1.   The agent of the seller to whom the bill of lading
was endorsed,
Rescission by giving the buyer notice of the election 2.   The consignor or agent who had paid the price or
to rescind [Art. 1597, CC] is responsible for the price
When the goods have not yet been delivered to the 3.   Any other person who is in the position of a seller
buyer, and the buyer repudiated the contract of sale, (i.e. buyer who paid the price and had a right to
or manifested his inability to perform his obligations, return the goods). [Baviera]
or has committed a breach of the contract of sale.
POSSESSORY LIEN OVER THE GOODS
Under this rule, rescission would bar an action on the
contract because it means cancellation of the Right to retain possession of goods until payment or
contractual obligations between the parties. [Baviera] tender of the whole price, or unless he agrees to sell
on credit [Arts. 1526-1529, 1503, 1535, CC]
The unpaid seller’s right to rescind for non-
performance is not absolute. Not allowed to rescind When lien available
when: a.   The seller is unpaid
rd
1.   There are 3 persons possessing the objects of the b.   The unpaid seller has possession over the thing
contract to whom no bad faith is imputable [de c.   Ownership of the thing has passed to the buyer
Leon; Ocejo Perez & Co. v. International Bank, G.R. d.   Any of the following: [Art 1527, CC]
No. L-10658 (1918)] i.   Goods are sold without stipulation as to
2.   Breach is on slight or casual [de Leon; Song Fo & credit
Co. vs. Hawaiian-Phil. Co., supra]

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ii.   Goods are sold on credit, but term of d.   The seller either takes actual possession, or gives
credit has expired notice of claim to the carrier or other person
iii.   Buyer becomes insolvent possessing the goods
T e.   The seller must surrender the negotiable
he seller may exercise his right of lien notwithstanding instrument or title, if any, issued by the
that he is in possession of the goods as agent or bailee carrier/bailee
for the buyer [par. 2, Art. 1527, CC] f.   The seller must bear the expenses of the delivery
of the goods after exercise of such right.
When unpaid seller loses his lien [Art. 1529, CC]
a.   Seller delivers goods to carrier or other bailee for When Goods Are In Transit [par. 1, Art 1531, CC]
transmission to the buyer without reserving a.   From the time of delivery to the carrier or other
ownership or right of possession (i.e. under a bailee by the seller, for the purpose of
straight or non-negotiable bill of lading) transmission to the buyer, until the buyer or his
b.   Buyer or his agent lawfully obtains possession of agent takes such delivery from the carrier.
goods b.   Even when goods have reached their ultimate
c.   Seller waives the lien destination, if buyer rejects them and carrier
i.   But it is not lost with respect to the retains possession
remainder of the goods when only partial
delivery is made (unless such is symbolic To terminate transit by delivery to a middleman,
delivery of the whole) delivery must be to keep, not to transport.
ii.   It is not lost by the mere fact that seller
obtained a judgment for the price In case of misdelivery, the goods are still considered in
transit, hence, the seller may still exercise his right
When Lien May Be Revived After Delivery pursuant to Article 1523.
a.   If the buyer refuses to receive the goods after the
same are delivered to the carrier or other bailee on When Goods Are No Longer In Transit [par. 2, Art
his behalf, though the seller has parted with both 1531, CC]
ownership and possession. Here, the seller may a.   Buyer obtained delivery of the goods before they
reclaim the goods and revest the lien. [par. 1 (2). have reached their appointed destination
Art 1531, CC] b.   Goods have arrived at the appointed destination,
b.   If the buyer returns the goods in wrongful and the carrier/bailee acknowledges to hold the
repudiation of the sale, and the seller, in goods on behalf of the buyer
accepting the goods from the buyer, says he does c.   Goods have arrived at the appointed destination,
not assent to the rescission. but carrier wrongfully refuses to deliver to
buyer/his agent
Possessory lien is lost after the seller loses possession
but his lien as an unpaid seller remains. His preference Note: If the goods are delivered to a ship, freight train,
can only be defeated by the government’s claim to the truck, or airplane chartered by the buyer, it is a
specific tax on the goods. [Arts. 2241, 2247, CC] question depending on the circumstances of the
particular case, whether they are in the possession of
RIGHT OF STOPPAGE IN TRANSITU the carrier as such or as agent of the buyer.

An extension of the lien for the price; entitles unpaid How Right Is Exercised [Art. 1532, CC]
seller to resume possession of the goods while they are a.   By obtaining actual possession of the goods
in transit before the goods come in possession of the b.   By giving notice of his claim to the carrier/other
vendee [Arts. 1530-1532, 1535, 1636(2). CC] bailee who has possession of the goods
i.   Carrier must redeliver goods to seller, or
Note: This is an old common law remedy which is an according to his instructions
extension of the lien for the price and entitles the ii.   Carrier not obliged to redeliver until the
unpaid seller to resume possession of the goods while negotiable document of title, if any, has
they are in transit before the goods come in possession been surrendered for cancellation
of the vendee if the latter is or becomes insolvent.
Effect When Buyer Has Sold the Goods [Art. 1535, CC]
Requisites for the exercise of stoppage in transitu General Rule: Seller’s right to stoppage in transitu is
a.   The seller is unpaid not affected even if buyer has sold or disposed of the
b.   The buyer is insolvent goods unless the seller has given his assent thereto.
c.   The goods are in transit

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Exceptions: SPECIAL RIGHT TO RESCIND


a.   When seller has given consent thereto
b.   When a negotiable document of title has been Return of the title over the undelivered goods to the
issued for the goods to a purchaser for value in seller, and right to recover damages for breach of
good faith contract [Art. 1534, CC]

SPECIAL RIGHT OF RESALE When available


When the unpaid seller has either a right of lien or has
Available to unpaid seller who has a right of lien or stopped the goods in transitu and under any of the
who has stopped the goods in transitu [Art. 1533, CC] following conditions:
a.   Seller expressly reserved his right to rescind in
When available case buyer defaults
When the unpaid seller has either a right of lien or has b.   Buyer has been in default in payment for an
stopped the goods in transitu and under any of the unreasonable time
following conditions:
a.   The goods are perishable in nature Transfer of title shall not be held to have been
b.   The right to resell is expressly reserved in case the rescinded by the unpaid seller until he manifests by
buyer should default notice to the buyer or some other overt act an intention
c.   The buyer delays in paying the price for an to rescind.
unreasonable time
Communication to buyer of rescission is not always
The right to resell the goods is not mandatory, but necessary (it can be an overt act). But giving/failure to
permissive. give notice is relevant in determining reasonableness
of time given to the buyer to make good his obligation
How exercised under contract. [de Leon]
a.   He must do so within a reasonable time and in
such manner as to obtain the best price possible.
b.   The place of sale shall be at the place of delivery,
3.  Recto Law: Sale of
except if the seller cannot sell the thing at a fair Movables on Installment –
price at the place of delivery.
c.   Resale is deemed to be a fair sale if it is Arts. 1484-1486. CC
undertaken in accordance with established
business practices, with no attempt to take a.  When Applicable
advantage of the original buyer.
d.   Resale may be in a private or public sale, but seller Sale of movables in installment
cannot buy directly or indirectly. The rule is intended to apply to sales of movables, the
e.   For resale to be valid, buyer need not be notified price of which is payable in 2 or more installments, but
of an intention to resell or the time and place of not to straight-term sales where the price is payable in
the resale. full, after making a down payment because the law
aims to protect improvident buyers who may be
Exception: if the ground for resale is failure to pay for tempted to buy beyond their means. [Levy Hermanos
an unreasonable amount of time v. Gervacio, G.R. No. l-46306 (1939)]

The seller must exercise reasonable judgment in Lease of personal property with option to buy
making the sale. 1.   When lessor has deprived the lessee of the
possession or enjoyment of the thing (i.e. lessor
Effects of Resale files a complaint for replevin against lessee)
a.   Seller is no longer liable to the original buyer upon 2.   Also applies when seller assigns his credit to
the contract of sale or for any profit made by the someone else
resale
b.   Buyer at resale acquires good title as against the
original owner
b.  Alternative and Exclusive
c.   In case resale is at a loss, seller is entitled to Remedies
recover the difference from the original buyer
d.   Seller may recover damages from original buyer The exercise of one remedy bars the exercise of the
for breach of contract others.

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1.   Specific Performance
General Rule: When the seller has chosen specific b.  Specific Performance +
performance, he can no longer seek for rescission
or foreclosure of the chattel mortgage Damages OR Rescission +
Damages
Exception: If specific performance has become [Art. 1191, CC]
impossible, the seller may still choose rescission
[Art. 1191, CC] 1.   Seller may choose between specific performance
and rescission, with damages in either case.
2.   Cancellation of sale if vendee fails to pay 2 or 2.   Court has discretion, for a just cause, to give the
more installments buyer more time to pay even if the seller chooses
a.   When the seller cancels the sale by rescission.
repossessing the property sold, he is barred 3.   If seller chose specific performance, and such
from exacting payment for its price. becomes impossible, he may still avail of
b.   It can only be carried out when he who rescission
demands rescission can return whatever he 4.   If absolute sale, seller must make a demand for
may be obliged to restore [Art. 1385, CC] rescission
a.   Judicially, OR
3.   Foreclosure of Chattel Mortgage if vendee fails b.   By a notarial act
to pay 2 or more installments 5.   Demand necessary even if automatic rescission is
a.   If seller chooses this remedy, he shall have no stipulated
further action to recover any unpaid balance, a.   Effect of lack of demand: Buyer can still pay
and any stipulation to the contrary shall be b.   Effect of demand: Court may not grant buyer
void. a new term
b.   The purpose of the law is to remedy the
abuses committed in foreclosure of chattel
mortgages. It prevents mortgagees from 5.  S ecs. 23 and 24, PD 957
seizing the mortgaged property, buying it at
foreclosure sale for a low price and then Non-forfeiture of payments
bringing the suit against the mortgagor for a a.   No installment payment made by the buyer shall
deficiency judgment. The almost invariable be forfeited in favor of the owner or developer of
result of this procedure was that the the condominium or subdivision project, after due
mortgagor found himself minus the property notice, when the buyer desists from paying due to
and still owing practically the full amount of the failure of the developer or owner to develop
his original indebtedness. [Bachrach Motor the project according to the approved plans or
Co., Inc. v. Millan, G.R. No. L-42256 (1935)] within the time limit stated.
b.   Buyer’s Remedy: At his option, he may reimburse
4.  S ale of Immovables the total amount paid including amortization
interest with interest thereon at the legal rate
a.  Rescission for Anticipatory c.   If the buyer fails to pay the installments for
reasons other than the failure of the owner or
Breach developer to develop the project, his rights shall
[Art. 1591, CC] be governed by RA 6552.
This is applicable to both cash sales and to sales in
installments. 6.  M aceda Law (RA 6552):
Requisites
Sale of Immovables on
1.   There is delivery of immovable property Installment
2.   Vendee has not yet paid the price; and
3.   Vendor has reasonable ground to fear the loss of RA 6552 does NOT apply to:
property and the loss of price a.   Industrial lots
b.   Commercial buildings
If there is no such reasonable ground, Art. 1191 applies c.   Sale to tenants under Agricultural Reform Code
(specific performance or rescission with damages). [RA 3844]
Court has no discretion to compel the seller to wait for d.   Sale of lands payable in straight terms
the expiration of the period to pay, or to grant the [Sec. 3, RA 6552]
buyer more time to pay.

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General rule: Courts will refuse to decree specific


Rights of the Buyer: performance with respect to chattels because
The law imposes additional requirements on the part damages are a sufficient remedy
of the seller for a valid rescission
a.   If buyer has paid at least 2 years of installments Exception: Buyer is entitled to the specific thing which
then defaults: to him has special value and which he cannot readily
1.   Buyer has right to a grace period of 1 month obtain in the market OR where damages would not
per year of installment payment made BUT furnish a complete and adequate remedy [Baviera]
the buyer may only avail of the grace period
once every 5 years a.  Sale of Movables
2.   Buyer has right to the refund of Cash
Surrender Value (CSV): 50% of total amount 1.   Remedy for breach of obligation to preserve
paid + 5% for every year after the first 5 years
of installments BUT total CSV should not be If thing is lost—
greater than 90% of total amount paid
Through fault of seller /
3.   After the lapse of the grace period, buyer is Without fault of
Through Fortuitous Event
given a notice of cancellation or demand for seller
(if seller is liable)
rescission by notarial act, effective 30 days
NO BREACH.
from the buyer’s receipt thereof AND only
upon full payment of CSV Damages
Obligation is
b.   If buyer has paid less than 2 years of installments:
extinguished.
1.   Grace period of at least 60 days
2.   After the lapse of the grace period, buyer is
A thing is lost when it—
given a notice of cancellation or demand for
a.   Perishes
rescission by notarial act, effective 30 days
b.   Goes out of commerce of man
upon receipt thereof
c.   Disappears in such a way that its existence is
c.   During the grace period, the buyer shall also have
unknown or it cannot be recovered
the right:
1.   To sell or assign his rights, evidenced in a
If thing deteriorates
notarial instrument
2.   To update his account Without fault of seller Through fault of seller
3.   To pay in advance any installment, or the full Rescission + damages
NO BREACH.
unpaid balance of the price, without any OR
Impairment shall be
interest, and to have such full payment of the Specific performance +
borne by buyer
purchase price annotated in the certificate of damages
title covering the property.
2.   Remedy for breach of obligation to deliver
Down payments, deposits, or options on the contract
shall be included in the total number of installments Delivery of wrong quantity [Art. 1522, CC]
made. Goods are MORE
Goods are LESS THAN
THAN what was
what was contracted
The seller may go to court for judicial rescission in lieu contracted
of a notarial act of rescission. Reject the goods
OR
Cancellation pertains to extrajudicial cancellation. Accept and pay
Absence of notice does not bar the filing of an action a.   At contract rate if
to cancel the contract. buyer accepts Reject the excess
knowing that seller OR
A decision in an ejectment case can operate as notice won’t perform in Reject the whole, if
of cancellation as required by RA 6552. However, full indivisible
mere filing of an unlawful detainer suit by the seller b.   At fair value if OR
does not operate as such notice. [de Leon] goods were used Accept the whole and
before knowing pay at contract rate
that seller won’t be
7.  Remedies of the Buyer able to perform in
full

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Buyer becomes the


owner of the whole   VII. Extinguishment of
mass and the seller is
bound to make good
Sale
the deficiency [Art.
1464] 1.   Causes
[Arts. 1600, 1231, CC]
b.  Sale of Immovables
[Art 1539 – 1543, CC] Generally, extinguished by the same causes as all
other obligations [Arts.1600, 1231, CC]
1.   If at the rate of a certain price per unit of
measure or number a.   Payment/performance
Less (in area or More (in area or b.   Prescription
quality) than what was quality) than what was c.   Loss of thing due
agreed upon: agreed upon: d.   Annulment
Proportional reduction e.   Novation
of price f.   Condonation/remission
OR g.   Confusion/merger
Rescission, if: h.   Compensation
a.   Lack in area is at i.   Rescission
least 1/10 of what is j.   Resolutory condition fulfilled
stated, or inferior Reject the excess k.   Redemption (Conventional or Legal)
value of thing sold OR
exceeds 1/10 of Accept the whole and 2.  C onventional Redemption
price pay at contract rate [Art. 1601, CC]
b.   Buyer would not
have bought the
property has he
a.  Definition
been aware of the
inferior quality or 1.   Vendor reserves the right to repurchase the thing
smaller area sold, with the obligation to comply with the
provisions of Article 1616 and other stipulations
This rule also applies to judicial sales [Art. 1541, CC] which may have been agreed upon. [Art 1601, CC]
2.   Available when the seller reserves the right to
2.   If for a lump sum repurchase the thing sold in the same instrument
of sale as one of the stipulations of the contract
Everything is within Not everything
[Villarica v. CA,G.R. No. L-19196 (1968)]
boundaries, even if less or is within the
more than stated area boundaries
Note: Conventional Redemption exists when the
No remedy
vendor reserves the right to repurchase the thing sold,
Proportional with the obligation to:
Where both the area and the
reduction in 1.   Return price of the sale
boundaries of the immovable
price 2.   Expenses of the contract
are declared, the area covered
OR 3.   Any other legitimate payments by reason of the
within the boundaries of the
Rescission sale
immovable prevails over the
4.   Necessary and useful expenses
stated area. [Rudolf Lietz, Inc. v.
CA, G.R. No. 122463 (2005)]
Redemption feature does not prevent the full
consummation of the contract of sale.
Prescriptive period: 6 months counted from date of
delivery
b.  Period
General Rule: Follow period stipulated in contract, but
should not exceed 10 years.

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Exceptions: The general rule in redemption is that it is not


1.   If no period stipulated but the parties intended a sufficient that a person offering to redeem manifests
period, then it shall be 10 years from the date of his desire to do so. The statement of intention must be
the contract. accompanied by an actual and simultaneous tender of
2.   If no period stipulated, then it shall be four years payment for the full amount of the repurchase price.
from the execution of the contract [BPI Family Savings Bank, Inc. v. Sps. Veloso, G.R. No.
3.   But vendor may still exercise the right to 141974 (2004)]
repurchase within thirty days from the time final
judgment was rendered in a civil action on the f.   Effect of Redemption
basis that the contract was a true sale with right
to repurchase 1.   The sale is extinguished
2.   The seller shall receive the thing free from all
c.   By Whom Exercised charges or mortgages constituted by the buyer
BUT he shall respect leases executed by the buyer
1.   Vendor in good faith and in accordance with local custom.
2.   His heirs, assigns or agents 3.   As to fruits:
3.   Creditor, if he has exhausted the property of the a.   If parties agreed on a distribution, the fruits
vendor shall be distributed according to the
4.   Co-owners of an immovable, if they sold their agreement.
interests to the same person, may only redeem b.   If parties did not agree on a distribution,
their respective shares i.   If there are growing fruits at the time of
a.   Vendee cannot be compelled to agree to a sale and at the time of redemption:
partial redemption 1)   Buyer receives reimbursement if
b.   If the co-owners sold their interest to the the buyer paid indemnity at the
same person who previously bought the time of the sale
share of a co-owner subject to a right of 2)   Buyer receives no reimbursement
redemption, then the latter may be or prorating if the buyer did not
compelled to redeem the whole property pay indemnity at the time of sale
ii.   If there were no growing fruits at the
d.  From Whom to Redeem time of sale, but some exist at the time
of redemption: fruits prorated (buyer
1.   Vendee a retro entitled to part corresponding to time
2.   His heirs, assigns or agents he possessed the land in the last year,
3.   Subsequent purchaser of property, even if the counted from the anniversary of the
right to redeem was not mentioned in the date of sale)
subsequent contract; except if registered land,
where the right to redeem must be annotated on g.  Effect of Non-Redemption
the title
4.   If several heirs, then the right of redemption can Ownership is consolidated in the buyer BUT the
be exercised against each heir for his share of the consolidation shall not be recorded in the Registry of
property property without a judicial order, after the vendor has
been duly heard.
e.   How Exercised
h.  Right to Redeem v. Option
1.   By returning the ff. to the buyer: to Purchase
a.   Price of the sale
Except if the parties agreed on a redemption
Right to Redeem Option to Purchase
price
Not a separate contract
b.   Expenses of the contract and other legitimate
but part of a main
payments made by reason of the sale; Generally a principal
contract of sale, and
c.   Necessary and useful expenses made on the contract and may be
cannot exist unless
thing sold created independent of
reserved at the time of
2.   Complying with any other stipulation agreed another contract
the perfection of the
upon, if any.
main contract of sale

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Must have a 3.   Period of redemption extended (or granted anew)


consideration separate upon or after the expiration of the right to
Does not need its
and distinct from the repurchase;
separate consideration
purchase price to be 4.   Part of the purchase price retained by the seller;
to be valid and effective
valid and effective [Arts. 5.   Payment of taxes on the thing sold borne by the
1324 and 1479, CC] seller;
The maximum period 6.   Any other case where it may be fairly inferred that
The period of the option the Real intention of the parties is for the
for the exercise of the
contract may be beyond transaction to secure a debt or other obligation.
right to repurchase
the 10-year period
cannot exceed 10 years
Requires in addition a Note: A contract shall be construed as an equitable
tender of payment of mortgage when any of the circumstance in Art. 1602 is
the amount required by present. When in doubt whether equitable mortgage
May be exercised by or sale, settle in favour or equitable mortgage because
law, including
notice of its exercise to it involves a lesser transmission of rights.
consignment thereof if
the offeror
tender of payment
cannot be made By itself, no equitable mortgage under the ff.
effectively on the buyer instances:
1.   mere tolerated possession
2.   mere delay in transferring title to the buyer
3.  Equitable Mortgage
[Arts. 1602-1604] The provisions on equitable mortgage of Art.1602, CC
also applies to a contract purporting to be a deed of
An equitable mortgage is defined as one which, absolute sale.
although lacking in some formality, or form or words,
or other requisites demanded by a statute, Remedy: Reformation of the instrument [must be
nevertheless reveals the intention of the parties to brought within 10 years]
charge real property as security for a debt, and 1.   If the agreement is construed to be an equitable
contains nothing impossible or contrary to law. mortgage, any money or other benefit received as
[Molina v. CA, G.R. No. 125755 (2003)] “rents,” shall be considered as “interest” (and
subject to usury laws)
A pactum commissorium is a stipulation enabling the 2.   The court may decree that the vendor-debtor to
mortgagee to acquire ownership of the mortgaged pay the outstanding loan to the vendee-creditor
properties without need of foreclosure proceedings 3.   Where the agreement is upheld as a pacto de
which is a nullity being contrary to the provisions of retro sale, the vendor may still exercise the right
Article 2088 of the Civil Code. The inclusion of such within 30 days from the time the judgment
stipulation in the deed shows the intention to becomes final.
mortgage rather than to sell. [Legaspi v. Sps. Ong, G.r.
No. 141311 (2005)] The right of repurchase is not a right granted to the
seller by the buyer in a subsequent instrument, but
A pactum commissorium is contrary to the nature of a one reserved by the seller in the same instrument as
true pacto de retro sale since ownership of the property the sale contract. Any right granted after the execution
sold is immediately transferred to the vendee a retro of the sale instrument is not a right to repurchase, but
upon execution of the sale, subject only to the some other right like an option to buy. [Roberts v.
repurchase of a vendor a retro within the stipulated Papio, G.R. No. 166714 (2007)]
period.
b.  Requisites for Presumption
a.  Presumption that a
of an Equitable Mortgage
Contract is an Equitable
Mortgage 1.   That the parties entered into a contract
[Art. 1602, CC] denominated as a contract of sale, and
2.   That their intention was to secure an existing debt
1.   Price unusually inadequate; by way of a mortgage. [Molina v. CA, supra]
2.   Possession retained by the seller as lessee or
otherwise;

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In case of doubt, a contract purporting to be a sale of the land. [Heirs of Arches v. Diaz, G.R. No. L-27136
with right to repurchase shall be construed as an (1973)]
equitable mortgage [Art. 1603, CC]
Where the petition of the buyer in a pacto de retro sale
c.   Rationale behind Provision is for a judicial orders pursuant Art. 1607, so that there
may be consolidation of ownership since there was
on Equitable Mortgage failure to redeem during the redemption period, the
right of action to foreclose or to collect the
1.   Circumvention of usury law indebtedness arises from the court judgment
2.   Circumvention of prohibition against pactum declaring the contract an equitable mortgage.
commissorium – creditor cannot appropriate the
things given by way of pledge or mortgage since
remedy is foreclosure.
f.   Exercise of the Right to
Redeem
d.  Remedies of Apparent [Art. 1616, CC]
Vendor The seller can avail himself of the right of repurchase
by returning to the buyer:
1.   If the instrument does not reflect the true 1.   the price of the sale
agreement: remedy is reformation 2.   the expenses of the contract and any other
2.   If decreed to be an equitable mortgage: any legitimate payments made by reason of the sale
money, fruits or other benefit to be received by the 3.   the necessary and useful expenses made on the
buyer as rent or otherwise considered as interest. thing sold [Art.1616, CC].
3.   If decreed as a true sale with right to purchase:
seller may redeem within 30 days from finality of
judgment, even if the period for redemption has
g.  How redemption is
expired. exercised
e.   Period of Redemption 1.   The vendor de retro must complete the
[Art. 1606, CC] repurchase before the expiration of the
redemption period [Panganiban v. Cuevas, G.R.
1.   No stipulation: 4 years from the date of contract No. 2001 (1907)]
2.   When there is agreement: Period not to exceed 2.   A sincere or genuine tender of payment is enough.
10 years The deposit of the amount of the repurchase
3.   General Rule: Period starts to run from the date money with the Clerk of Court was simply and
of the execution of the contract additional security [Legaapi v. CA, G.R. No. L-
4.   Exception: When the efficacy of the sale is subject 45519 (1986)]
to a suspensive condition, period should be 3.   When tender of payment cannot be validly made
counted not from the date appearing on the because the buyer cannot be located, it becomes
instrument, but from the date when the condition imperative for the seller a retro to file a suit for
is fulfilled, marking the consummation of the sale consignation with the courts of the redemption
[Tolentino citing Manresa]. price [Catangcatang v. Legayada, G.R. L-26295
(1978)].
Additional 30 days for Repurchase 4.   If the offer or tender of payment for repurchase is
The last paragraph of Art. 1606 giving the vendor the refused, it is not necessary for the vendor a retro
right to repurchase within 30 days from the time of the to consign in court or make judicial deposit of the
rendition of final judgment applies only where the repurchase price [Rosales v. Reyes, G.R. No. 8162
nature and the character of the transaction, whether (1913)].
as a pacto de retro or an equitable mortgage, was put
in issue before the court [Gonzales v. de Leon, G.R. No. The seller a retro is given no option to require the buyer
L-14532 (1965)] a retro to remove the useful improvements on the land
subject of the sale a retro, unlike that granted the
When an unrecorded pacto de retro sale was owner of a land under Arts. 546 and 547. Under Art.
construed as an equitable mortgage, the plaintiff had 1616, the seller a retro must pay for useful
the right to enforce his lien in a separate proceeding improvements introduced by the buyer a retro;
notwithstanding the fact that he had failed to obtain otherwise, the latter may retain possession of the land
judgment declaring him the sole and absolute owner

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until reimbursement is made. [Gargollo v. Duero, G.R. The law did not provide
No. L-15973 (1961)] for a particular mode of
written notice, thus any
4.  L egal Redemption compliance with
“written notice” should
[Art. 1619, CC]
suffice, including the
giving of a copy of the
Rationale for the law: Public policy (to minimize co-
deed of sale. [Conejero
ownership) and benefit of the redemptioner
v. CA, G.R. No. L-21812
(1966)]
a.  Definition Debtor in case a credit
30 days from the date
or
1.   Right to be subrogated: the assignee demands
incorporeal right in
a.   upon the same terms and conditions payment from debtor
litigation is sold
stipulated in the contract, [Art.1634, CC]
b.   in the place of one who acquires a thing by Taxpayer in case of tax 1 year from date of
purchase or dation in payment, or by any sale [Sec. 215, NIRC] forfeiture
other transaction whereby ownership is Judgment debtor,
transmitted by onerous title [Art. 1619, CC] successor–in- interest, 1 year from the date of
2.   Applies to transfers of ownership by onerous title or creditor with registration of the
where subrogation is possible. Hence, it cannot subsequent lien, in case certificate of sale
apply to barter or to transfer by gratuitous title or of execution sale [Sec.
hereditary succession. 27, Rule 39, ROC]
3.   Applies to sales with pacto de retro [Baviera citing Debtor-mortgagor,
Manresa] successors-in- interest,
judicial/judgment
b.  Manner creditor, any person 1 year from the date of
having a lien on the the sale
1.   a formal offer to redeem or property, in case of
2.   filing of an action in court together with the extrajudicial foreclosure
consignation of the redemption price within the of mortgage [Sec. 6, Act
reglementary period No. 3135]
Debtor-mortgagor in
case of judicial
c.   Period to Redeem foreclosure of real
90 days from finality of
estate mortgage IF the
To whom granted Period judgment
mortgagee is a bank or
30 days from notice a banking institution.
1.   In writing [General Banking Law
2.   By the seller of 2000]
3.   Of the actual Agricultural lessee w/o
execution and knowledge of sale of 2 years from the
Co-owner [Art 1620,
delivery of the deed landholding [Sec. 12, registration of the sale
CC]
of sale Agrarian Land
Adjoining owner of Reform Code]
Actual knowledge of
Rural Land [Art 1621,
the sale is immaterial,
CC] The notice required in Art. 1623 must be given by the
absent any showing
seller, because the seller is in a better position to
that the co-owner has
Adjoining owner of identify who his co-owners are. Said provision is
been shown a copy of
urban land [Art. 1622, clear.[Francisco v. Boiser, G.R. No. 137677 (2000)]
the deed of sale
CC]
through a written
communication. d.  Instances of Legal
[Doromal v. CA, G.R. Redemption
No. L-36083 (1975)]
a.   Redemption by Co-owners [Art. 1621, CC]

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A co-owner of a thing may exercise the right of b.   If same land area, then the one who first
redemption in case the shares of all the co-owners or requested the redemption
any of them are sold to a third person
a.   Third person refers to all persons who are not 3.   Redemption by adjoining land-owners of urban
heirs of the vendor, by will or intestate succession land (applies only to small portions of urban
b.   The right is available not only to original co- land) [Art. 1621, CC]
owners, but to those who had later acquired the Right of Pre-emption Right of Redemption
share of the co-owner Owner of any adjoining
c.   But the right of redemption may be exercised by a land has a right of pre- If the resale has been
co-owner only when part of the community emption at a perfected, the owner of
property is sold to a stranger. When the portion is reasonable price when: the adjoining land shall
sold to another co-owner, the right does not arise a.   Urban land is so have a right of
because a new participant is not added to the co- small and so redemption, also at a
ownership [Fernandez v. Sps. Tarun, G.R. No. situated that a reasonable price
143868 (2002)] major portion of it
cannot be used for Priority if 2 or more
If the price of the alienation is grossly excessive, the any practical adjoining owners want
redemptioner shall pay only a reasonable one. purpose w/in a to redeem: owner
reasonable time; whose intended use of
Should two or more co-owners desire to exercise the b.   Was bought merely the land appears to be
right, they may also do so in proportion to the share for speculation; best justified
they may respectively have in the thing owned in c.   Was resold
common. Arises before sale Arises after sale
No rescission because There can be rescission
The ff. requisites must concur: no sale exists yet of the original sale
a.   Co-ownership of a thing The action is directed
b.   Alienation of shares of co-owners or all of the Action is directed
against prospective
other co-owners against buyer
seller
c.   Sale must be to a third person or stranger
d.   Sale must be before partition 4.   Redemption of Credit
e.   Right must be exercised within the period Available when it is sold while in litigation (From the
specified in Article 1623 time the complaint is answered)
f.   Buyer must be reimbursed the price of the sale
Not available when the assignment is in favor of:
Rationale: Public Policy, since co-ownership is a a.   Co-heir/co-owner of right assigned
hindrance to the development and administration of b.   Creditor in payment of his credit
the property. [Baviera] c.   Possessor of a tenement or piece of land which is
subject to the right assigned
b.   Redemption by Adjoining Land-owners of rural
land [Art. 1621, CC] How exercised: reimburse the assignee for the:
a.   Price paid
The ff. requisites must concur: b.   Judicial expenses incurred
a.   All lands must be rural lands c.   Interest on the price from date of payment
b.   Lands must be adjacent to each other
c.   A piece of rural land is alienated Under the Public Land Act
d.   Area does not exceed one hectare Coverage:
e.   Buyer must already own other rural lands a.   Every conveyance of land acquired under a free
patent or homestead
When not applicable b.   The ownership of the land must have been
a.   The grantee does not own any rural land transferred to another. If the transaction is a mere
b.   Adjacent lands are separated by brooks, drains, promise to sell, there is no right yet to redeem
roads and other apparent servitudes for the c.   This refers to conveyances made after the
benefit of other estates prohibited 5 years from the issuance of the patent
or grant
Order of preference if two or more wishes to exercise
the right: Period:
a.   Owner with smaller land area a.   Within 5 years from the date of conveyance

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b.   If pacto de retro sale, the period to redeem cannot daughter. This right of repurchase by the
be less than 5 years homesteader cannot be waived.

Who may redeem: 6.   Under the Agrarian Land Reform Code


a.   General Rule: Applicant, widow, or heirs Lessee’s right of pre-emption
b.   Exception: land is sold to another member of the The agricultural lessee shall have the preferential
family of the applicant, or his direct descendant or right to buy under the same reasonable terms and
heir conditions, in case the lessor decides to hold the
c.   From whom: Subsequent purchasers landholding
T
he right to redeem can be exercised against any Conditions:
subsequent purchaser even if the land is registered a.   The landholding must be pre-empted by the DAR
under the Torrens System because the fact that it was b.   When two or more lessees, each shall have
acquired through a homestead or free patent can be preferential right only to the extent of the area
seen from the description of the property in the cultivated by him
certificate of title. Period: 180 days from notice in writing

5.   Redemption in Foreclosure and Execution Sales Lessee’s right of redemption


Who may redeem In case landholding is sold to 3rd person without the
In execution sales knowledge of the lessee, the latter shall have the right
a.   Judgment debtor to redeem the same at a reasonable price and
In extra judicial
b.   Successor in consideration. [Sec. 12, RA 3844]
foreclosure
interest
a.   Debtor
c.   Creditor having a Period: within 180 days from notice in writing
b.   Successor in
lien on the property
interest
sold by
c.   Judicial or
attachment,
judgment creditor
judgment or
of said debtor
mortgage on the
d.   Junior
property
encumbrancer
subsequent to the
judgment
Period to redeem
If land is
mortgaged in
Extra-judicial Execution favor of a bank:
foreclosure: sale: within 1 year
within 1 year within 12 after the sale
from the date months after (not available in
of the sale the sale case of a
corporate
mortgagor)
Amount of redemption
a.   Amount of the purchase
b.   Interest at 1% per month from the time of the
sale up to the time of redemption
c.   Any assessment or taxes which the purchaser
may have paid

Note: Every conveyance of land acquired under a


free patent or homestead, when proper, shall be
subject to repurchase by the applicant, his widow
or legal heirs within 5 years from the date of
conveyance.

Sale within the 5-year prohibition is void even if


the sale is in favor of the homesteader’s own son or

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  Assignment of Credits Subrogation is the change in the person of the


creditor with his credit being transferred to the new
creditor.
An assignment of credits and other incorporeal rights
shall be perfected in accordance with the provisions of Dation in payment is the alienation of property to the
article 1475. [Art. 1624, CC] creditor in satisfaction of a debt of in money. It is also
governed by the law on sales. It may be legal or
1.   Definition conventional.

An assignment of credit is a contract by which the 5.  B inding Effect


owner (assignor/creditor) of a credit and other
incorporeal rights transfers, either onerously or General rule: An assignment of a credit, right or action
gratuitously, to another (assignee) his rights and shall produce no effect as against third persons.
actions against a third person (debtor). [de Leon]
Note: No effect means no prejudice or damage
2.  N ature
Exceptions:
It is a consensual, bilateral, generally onerous, and a.   If it appears in a public instrument
commutative or aleatory contract. [de Leon] b.   If it is recorded in the Registry of Property in case
the assignment involves real property.
Where the aassignment is on account of pure liberality
on the part of the assignor, the rules on donation The assignee cannot acquire greater rights than those
would be pertinent; where valuable consideration is pertaining to the assignor. [Koa v. Court of Appeals,
involved, the assignment partakes of the nature of a G.R. No. 84847 (1993)]
contract of sale or purchase. [Nyco Sales Corporation v.
BA Finance Corporation, G.R. No. 71694 (1991)] The debtor who, before having knowledge of the
assignment, pays his creditor shall be released from
It merely effects the transfer of rights which the the obligation. [Art. 1626, CC]
assignor has at the time [of the assignment] to the
assignee. [Casabuena v. CA, G.R. No. 115410 (1998)] 6.  C onsent not Necessary
The act of assignment cannot operate to erase liens or Consent of debtor is not necessary; merely notice to
restrictions burdening the right assigned. [Gonzales v. him is necessary.
Land Bank of the Philippines, G.R. No. 76759 (1990)]
Hence, the duty to pay does not depend on the consent
3.  Perfection of the debtor; otherwise, all creditors would be
prevented from assigning their credits because of the
It is perfected from the moment the parties agree upon possibility of the debtors’ refusal to give consent.
the credit or right assigned and upon the price but the [Sison v. Yap Tico, G.R. No. L-11583 (1918)]
assignee will acquire ownership only upon delivery.
dDe Leon] The purpose of the notice by the assignee is to inform
the debtor that from the date of the assignment he
should make payment to the assignee and not to the
4.  A ssignment Distinguished original creditor.
from Other Terms
7.  Effect of Payment by
Renunciation is the abandonment of a right without a
transfer to another.
Debtor after Assignment
of Credit
Agency involves representation, not transmission
wherein the agent acts for the principal. a.   Before notice
Payment to the original creditor is valid. The
Substitution is the change of the previous debtor by a assignee has a right of action against the
new debtor with the credit remaining in the same assignor, the original creditor. Burden of proving
creditor.

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that the debtor had knowledge of the assignment contract, and any other legitimate payments by
is on the assignee. [de Leon citing Manresa] reason of the assignment.
2.   The liability of assignor in bad faith: Price, all
b.   After notice, or before notice but debtor had expenses, and damages
knowledge of assignment
Payment by the debto to the original creditor after c.   Duration of Assignor’s
the former had received notice of the assignment,
whether or not he consented, is not valid as Liability Where Debtor’s
against the assignee. Solvency Guaranteed [Art.
If he had knowledge even before the notice and
1629, CC]
still paid to the original creditor, he will not be
released from his obligation. He acted in bad In case of express warranty by assignor of debtor’s
faith. He can be made to pay again. [De Leon] solvency
1.   If there is a stipulation, for the term or period fixed
2.   If there is NO stipulation,
8.  E xtent of Assignment of a.   for 1 year from the assignment of the credit
when the period for payment of the credit has
Credit expired
Example: Debtor owed OG Creditor 10k
General rule: All the accessory rights (such as guaranty, payable on November 1, 2017. OG Creditor
mortgage, pledge or preference) are included. [Art. assigns his credit to Newbie Creditor on
1627, CC] December 1, 2017. The liability of OG Creditor
will be for 1 year from December 1, 2017.
Exception: The parties may stipulate otherwise. [de b.   For 1 year after its maturity, when such period
Leon] for payment has not yet expired
Example: (Same premise as above) If OG
9.  W arranties of the Assignor Creditor assigns his credit to Newbie Creditor
on October 1, 2017, the liability of OG Creditor
of Credit will be 1 year from the maturity date or
November 1, 2018.
a.   When a credtor assigns his credit
1.   Existence Reasons for this rule:
2.   Legality of credit at the perfection of the 1.   To prevent fraud
contract 2.   To oblige assignee to exert efforts in the recovery
UNLESS the credit had been sold as doubtful of the credit [de Leon, citing Manresa]

b.   No warranty as to the solvency of the debtor


UNLESS it was expressly stipulated 10.  Sale of Successional or
Hereditary Rights
UNLESS insolvency was already existing PRIOR to the
sale and of public knowledge at the time of the There is no law which prohibits an heir from selling his
assignment interests in an inheritance before partition except that
any such sale must be deemed subject to the result of
a.  Breach of Warranties the administration proceedings and any pending
litigation. [Beltran v. Soriano, 97 Phil. 50 (1955)]
If there be any breach of the above warranties, the
assignor-vendor shall be held answerable therefor. [se However, the law prohibits the sale of future
Leon] inheritance. [de Leon]

b.  Liabilities of the Assignor The subject of sale is hereditary right and not the
objects which make up the inheritance. [de Leon]
of Credit
The seller of hereditary rights warrants only the fact of
1.   The liability of assignor in good faith: Limited to his heirship but he does not warrant the objects which
the price received and to the expenses of the make up his inheritance. The sale is only a sort of an
aleatory contract. [de Leon]

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As distinguished form a waiver of hereditary rights


14.  Legal Redemption in Sale
The waiver is a mode of extinction of ownership where of Credit or Other
there is an abdication or intentional relinquishment of
a known right with knowledge of its existence and Incorporeal Right in
intention to relinquish it, in favor of other persons who
are co-heirs in the succession. [Acap v. CA, G.R. No.
Litigation
118114 (1995)]
a.  Requisites for the Exercise
11.  Sale of Whole of Certain by the Debtor of the Right
Rights, Rents, or of Legal Redemption
Products 1.   There must be a sale or assignment of credit or
other incorporeal right.
In the sale of the whole of certain rights, rents, or 2.   The credit or other incorporeal right must be in
products for a lump sum, the subject matter is the litigation
totality of such rights, rents, or products. 3.   There must be a pending litigation at the time of
the assignment.
The vendor warrants only the legitimacy of the whole Note: The claim must be one which is actually
and not the various parts of which it may be litigated (disputed or contested) – this happens
composed. [de Leon] only after an answer is filed by the creditor
[Robinsons v. Garry, G.R. No. L-3488 (1907)]
General rule: Vendor is not liable for eviction of any of 4.   The assignee must have demanded payment
the various parts of the whole from the debtor
5.   The debtor must reimburse the assignee:
Exceptions: Eviction involves the whole or the part of a.   The price paid by him
greater value [Art. 1631, CC] b.   The judicial costs
c.   The interest on the price from the date of
payment
12.  L iability of Vendor of
Inheritance for Fruits The reimbursement must be made by the debtor
within 30 days from the date the assignee
Received demands, whether judicially or extrajudicially,
payment from him. [de Leon]
General rule: Vendor shall pay the vendee if he profited
by the fruits or received anything from the inheritance b.  Purpose of Grant of Right
sold
to Debtor
Exception: If the contrary has been stipulated
It gives an advantage to the debtor because he will pay
less than the value of the credit assigned if he
13.  L iability of Vendee for exercises his right to redeem the same. [de Leon]
Debts and Charges on
Estate c.   Exceptions to the Debtor’s
Right of Legal Redemption
General rule: Vendee shall reimburse the vendor for all
that the latter may have paid for the debts of and Assignments or sales made
charges on the estate and satisfy the credits he may 1.   To a co-heir or co-owner of the right assigned
have against the same 2.   To a creditor in payment of his credit
3.   To the possessor of a tenement or piece of land
Exception: If there is an agreement to the contrary [Art. which is subject to the right in litigation
1633, CC] assigned. [Art. 1635, CC]

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  Documents of Title Who may negotiate? [Art.1512, CC]


a.   Owner
b.   Person to whom the possession or custody of the
1.   Definition document has been entrusted by the owner
[Art. 1636, CC] 1.   If bailee undertakes to deliver the goods to
such person
A document used in the ordinary course of business in 2.   If document is in such form that it may be
the sale or transfer of goods, as proof of the possession negotiated by delivery
or control of the goods, or authorizing or purporting to
authorize the possessor of the document to transfer or What is acquired? [Art.1513, CC]
receive, either by endorsement or by delivery, goods A person to whom a document has been negotiated
represented by such document. acquires:
a.   Title of person negotiating the document, over
Examples: bill of lading, quedan, warehouse receipts, goods covered by document
trust receipts, dock warrant b.   Title of depositor/owner over such goods
c.   Direct obligation of bailee/carrier to hold
possession of goods for him
2.  P urpose of Documents of
Title 4.  N on-Negotiable
a.   As evidence of possession or control of goods
Documents of Title
described therein
b.   As a medium of transferring title and possession Goods described in a non-negotiable document of title
over the goods described therein without having are transferable only to a specified person.
to effect actual delivery thereof [Villanueva]
c.   The custody of a negotiable warehouse receipts A person to whom a document has been transferred
issued to the order of the owner, or to bearer, is a acquires:
representation of title upon which bona fide a.   Title to goods as against the transferor
purchasers for value are entitled to rely, despite b.   Right to notify the bailee of the transfer thereof
breaches of trust or violations of agreement on the c.   Obligation of bailee to hold the goods [Art. 1514,
part of the apparent owner. [Siy Cong Bieng v. CC]
HSBC, G.R. No. L-34655 (1932)]
5.  W arranties of Seller of
3.  Negotiable Documents of Documents of Title
Title [Art. 1516, CC]

A document of title which states that the goods A person who negotiates or transfers a document of
referred to therein will be delivered to the bearer, or to title warrants:
the order of any person named in such document [Art. a.   The genuineness of document
1508, CC] b.   The legal right to negotiate or transfer
c.   That there is no knowledge of any fact which
would impair the validity or worth of the
Terms of the Document How negotiated
document
Goods are deliverable to
d.   The right to transfer the title to the goods and
bearer
merchantability or fitness for a particular purpose,
whenever such warranties would have been
Endorsed in blank or to By delivery of the
implied
bearer by the person to document to another
whose order the goods
He does not warrant that:
were supposed to be
a.   Common carrier will fulfill its obligation to deliver
delivered
the goods
Goods are deliverable to
By indorsement of such b.   Previous endorsers will fulfill their obligation [Art.
the order of a specified
person [Art. 1509, CC] 1516-1517, CC]
person

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Goods in the hands of the carrier covered by a


negotiable document cannot be attached or levied   Performance of Contract
upon, unless:
a.   Document is first surrendered to the carrier; or 1.   Delivery of Thing Sold
b.   Impounded by the court; or
c.   Its negotiation is enjoined. [Art. 1519-1520, CC] a.   Sale of movables [Arts. 1522, 1537, 1480, CC]
1.   When Quantity less than expected
6.  R ules on i.   Buyer may reject all
ii.   Buyer may accept.
Levy/Garnishment of a)   If buyer accepts with knowledge of
Goods seller’s inability to deliver the rest –
buyer pays contract price
Goods in the hands of the carrier covered by a b)   If Buyer has used or disposed prior to
negotiable document cannot be attached or levied knowing seller’s inability to deliver
upon, unless: the rest, or buyer does not know of
a.   Document is first surrendered to the bailee; or seller’s inability to deliver the rest –
b.   Its negotiation is enjoined. [Art. 1519, CC] buyer pays fair value
2.   Quantity more than expected
A creditor whose debtor is the owner of a negotiable i.   If divisible, buyer may accept only the
document of title shall be entitled to such aid from contracted quantity, and reject the rest
courts in regard to property which cannot be readily – buyer pays contract price
attached or levied by ordinary legal process [Art 1520, ii.   Buyer may accept all – buyer pays for
CC] all at contract rate
iii.   If indivisible, buyer may reject all
3.   Quality different or different goods
i.   If divisible, buyer may accept the goods
compliant with contract and reject
those that are not
ii.   If indivisible, buyer may reject all [Art.
1522, CC]
b.   Sale of specific mass of goods
In the sale of fungibles where the measure or
weight has not been agreed upon nor is there a
fixed rate based upon a measurement, the subject
matter of the sale is a determinate object – the
specific mass; seller is merely required to deliver
such mass even if actual quantity falls short of
parties’ estimate [Art. 1480, CC]
1.   Delivery by installments
i.   By default, buyer is not bound to
accept delivery of goods by
installments
ii.   In a contract of delivery by installment
to be paid by installment as well, delay
or breach may not necessarily mean
breach of the entire contract;
depending on the circumstances,
breach may be severable and the
aggrieved party is entitled to damages
and not rescission. [Art. 1583, CC]
c.   Sale of immovables [Arts. 1539, 1543, CC]
1.   Sale at a fixed rate per unit of measure
i.   Seller bound to deliver entire land, i.e.,
the entire area stated in the contract.
ii.   If the area is less than that stated,
buyer may rescind* or demand a
proportionate reduction in price.

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Buyer may only avail of rescission if the b.   Acceptance


area deficiency is 10% or more of total 1.   Form
area [Art. 1539, CC] i.   Express: buyer intimates acceptance
iii.   If a part of the land is not of the quality ii.   Implied:
stated in the contract, buyer may a)   Goods are delivered to the buyer and
rescind or demand a proportionate he does any act in relation to the
reduction in price. goods delivered that is inconsistent
Buyer may only avail of rescission if the with the ownership of the seller.
inferior value of the part of the land b)   After the lapse of a reasonable time,
exceeds 10% of the price agreed upon. the buyer retains the goods without
[Art. 1539, CC] intimating to the seller that he has
iv.   If the area turns out to be greater than rejected them. [Art.1585, CC]
that stated, buyer may accept area 2.   Effect of Refusal to Accept
included and reject the excess or If buyer refuses to accept goods, having the
accept all and pay a proportionate right to do so, he is not bound to return them
increase in price based on contract rate to the seller, it being sufficient that he notifies
[Art. 1540, CC] the seller of his refusal to accept
2.   Sale for a lump sum i.   If he voluntarily constitutes himself a
i.   Follows the same rule as the sale of a depositary of the goods, he shall be
specific mass which is explained above liable as such. [Art.1587, CC]
ii.   There is no change in price even if area ii.   Unjust refusal to accept still results to
or number turns out to be greater or transfer of ownership. In such case,
lesser than that stated [Art. 1542, CC] title to the goods passes to the buyer
iii.   Exception: when the excess or from the moment they are placed at his
deficiency is no longer reasonable disposal, except if ownership has been
[Asiain v. Jalandoni, G.R. No. L-20435 reserved by the seller [Art.1588, CC]
(1923)]
iv.   Exception to the exception: when buyer
expressly assumes risk on actual area
2.  P ayment of Price
of the land.
v.   If the price per unit or measure is not a.   Payment of interest [Art. 1589, CC]
provided for in the contract, then the Buyer is liable for interest when:
rules of lump sum sale should prevail. 1.   Interest is stipulated;
[Sta. Ana v Hernandez, G.R. No. L- 2.   Thing sold produces fruits or income;
16394 (1966)] 3.   Buyer is in default - interest accrues from the
time of judicial or extrajudicial demand for
If sale for lump sum, the cause of the contract payment
is the thing sold, independent of b.   Suspension of payments [Art. 1590, CC]:
number/measure. The law presumes that the General rule: Buyer may suspend payment when:
purchaser had in mind a determinate price for 1.   His ownership or possession of the thing is
real estate and the ascertained area and disturbed; OR
quality. The purchaser intended to buy thing 2.   He has reasonable grounds to fear such
in entirety, not just any unit of measure or disturbance by a vindicatory action or a
number. [de Leon] foreclosure of mortgage

Inspections and Acceptance Exceptions: Buyer cannot suspend payment when:


a.   Inspections 1.   Seller gives security for the return of the price
Right of Inspection– The buyer has reasonable in a proper case
opportunity to examine the goods upon delivery. 2.   It has been stipulated that, notwithstanding
If there is a stipulation that delivery is any such contingency, the buyer shall be
preconditioned on payment, then buyer has no bound to pay
right of inspection until he has paid. [Art.1584, i.   Suspension may continue until the
CC] seller has caused the disturbance or
danger to cease
Exception: in case such right of inspection is ii.   However, a mere act of trespass shall
permitted by agreement or usage of trade. not authorize the suspension of the
payment. [Art.1590, CC]

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c.   Sale of real property


1.   In the sale of immovable property, buyer may   The Law on Sale
pay even beyond the expiration of the period
agreed upon, as long as no demand for
of Subdivision and
rescission of the contract has been made
upon him either judicially or by a notarial act,
Condominium (PD 957)
despite a stipulation providing for ipso jure
rescission [Art.1592, CC] 1.   Definitions
2.   Mere failure to fulfill the contract does not
ipso facto entitle the offended party to Owner shall refer to the registered owner of the land
rescind. A judicial or notarial act is necessary subject of a subdivision or a condominium project.
before rescission can take place, whether or
not automatic rescission has been stipulated. Developer shall mean the person who develops or
A letter informing the buyer of automatic improves the subdivision project or condominium
rescission is not demand if such letter is not project for and in behalf of the owner thereof.
notarized. [de Leon]
3.   After demand, court may not grant him a new Dealer shall mean any person directly engaged as
term [Heirs of Escanlar v. CA, G.R. No. 119777 principal in the business of buying, selling or
(1997)] exchanging real estate whether on a full-time or part-
4.   R.A. 6552 (Maceda Law) applies to sale or time basis.
financing of real estate on installment [Rillo v.
CA, G.R. No. 125347 (1997)] Broker shall mean any person who, for commission or
other compensation, undertakes to sell or negotiate
the sale of a real estate belonging to another.

Salesman shall refer to the person regularly employed


by a broker to perform, for and in his behalf, any or all
functions of a real estate broker.

2.  R equirements for Owners


and Developers
a.   Registration of projects
(subdivision/condominium) with the NHA
b.   Registration of the owner
c.   License to sell of owner or dealer with
performance bond [Sec. 7, PD 957]

a.  Registration of Projects
[Sec. 4, PD 957]
The registered owner of a parcel of land who wishes to
convert the same into a subdivision project shall
submit his subdivision plan to the National Housing
Authority. The same procedure shall be followed in the
case of a plan for a condominium project except that
NHA also approves the building thereon in accordance
with the National Building Code.

b.  Registration of Owner [Sec.


4, PD 957]
The owner or the real estate dealer interested in the
sale of lots or units, respectively, in such subdivision

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project or condominium project shall register the 2.   Sale or transfer of a subdivision lot by the original
project with the Authority by filing therewith a sworn purchaser thereof and any subsequent sale of the
registration statement. same lot.
3.   Sale of a subdivision lot or a condominium unit by
Publication and issuance of registration certificate or for the account of a mortgagee in the ordinary
[Section 4, PD 957] course of business when necessary to liquidate a
A notice of the filing of the registration statement at bona fide debt.
the expense of the applicant-owner or dealer, in two
newspapers general circulation, one published in Grounds for suspension of license to sell [Sec. 8, PD
English and another in Filipino, once a week for two 957]
consecutive weeks. Notice shall state that subdivision 1.   misleading, incorrect, inadequate, or incomplete
lots or condominium units are open to inspection information in registration statement
during business hours by interested parties. The 2.   fraud upon prospective buyers on the sale or
project shall be deemed registered upon completion offering for a sale
of the publication requirement. The fact of registration
shall be evidenced by a registration certificate issued to Note: suspension is confidential unless order of
the applicant-owner or dealer. suspension has been violated.

c.   License to Sell [Sec. 5, PD Grounds for revocation of registration certificate


and license to sell [Sec. 9, PD 957]
957] 1.   Insolvency of owner/dealer
2.   Violation of owner of PD 957 or its IRR or any
The registration certificate does NOT authorize the undertaking of his/its performance bond
owner or dealer to sell any unit. They must first obtain 3.   Has been or is engaged or is about to engage in
a license to sell within two weeks from the registration fraudulent transactions
of the project. The license to sell is issued upon 4.   Misrepresentation in any prospectus, brochure,
examination of the registration statement filed by the circular or other literature about the subdivision
owner or dealer showing that: project or condominium project that has been
1.   the owner or dealer is of good repute distributed to prospective buyers
2.   that his business is financially stable 5.   Bad business repute of owner/dealer
3.   that the proposed sale of subdivision lots or 6.   Does not conduct his business in accordance with
condominium units to the public would not be law or sound business principles
fraudulent

Performance bond [Sec. 6, PD 957] 3.  Requirement for Dealers,


A license to sell can only be issued by the NHA if the Brokers, and Salesmen
owner or dealer files a performance bond
guaranteeing the construction and maintenance of
the roads, gutters, drainage, sewerage, water system, a.  Registration
lighting systems, and full development of the
subdivision project or the condominium project and 1.   Dealers, brokers, and salesmen (DBS) must be
the compliance by the owner or dealer with the registered (Sec. 11, PD 957)
applicable laws and rules and regulations. The bond
shall be executed in favor of the Republic of the Requisites of registration:
Philippines and shall authorize the Authority to use a.   Good reputation and compliance with NHA
the proceeds thereof for the purposes of its rules
undertaking in case of forfeiture as provided in this b.   Payment of prescribed fee
Decree. c.   Filing of bond or other security (amount fixed
by NHA) conditioned upon his faithful
When license to sell and performance bond not compliance with provisions of PD 957
required [Sec. 7, PD 957]
A license to sell and performance bond shall not be When registration of DBS terminates
required in any of the following transactions: a.   Termination of employment with dealer or
1.   Sale of a subdivision lot resulting from the broker
partition of land among co-owners and co-heirs. b.   Expiration (31st day of Dec each year)

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2.   Revocation of registration as DBS [Sec. 12, PD c.   Advertisements by the


957]
Owner or Developer [Sec.
Grounds 19, PD 957]
a.   Has violated any provision of this Decree or
any rule or regulation made hereunder; or 1.   Must reflect real facts, must not mislead or
b.   Has made a material false statement in his deceive public
application for registration; or 2.   Owner or developer shall be liable for any
c.   Has been guilty of a fraudulent act in misrepresentation as to facilities, etc.
connection with any sale of a subdivision lot 3.   Advertisements shall form part of the sales
or condominium unit; or warranties enforceable against the owner or
d.   Has demonstrated his unworthiness to developer
transact the business of dealer, broker, or 4.   Failure to comply with sales warranties is
salesman, as the case may be. punishable under PD 957

The NHA may suspend the DBS' registration


pending hearing of the case. The suspension or
d.  Non-Forfeiture of
revocation of the registration of a dealer or broker Payments (Sec. 23, PD 957)
shall carry with it all the suspension or revocation
of the registration of all his salesmen. No installment payment made by a buyer in a
subdivision or condominium project for the lot or unit
he contracted to buy shall be forfeited in favor of the
4.  C haracteristics of Sale of a owner or developer when the buyer, after due notice to
Condominium or the owner or developer, desists from further payment
due to the failure of the owner or developer to develop
Subdivision Unit and the subdivision or condominium project according to
Similar Contracts the approved plans and within the time limit for
complying with the same. Such buyer may, at his
option, be reimbursed the total amount paid including
a.  Registration of Sale, etc amortization interests but excluding delinquency
[Sec. 17, PD 957] interests, with interest thereon at the legal rate.

All contracts to sell, deeds of sale and other similar e.   Failure to Pay Installments
instruments relative to the sale or conveyance of the
subdivision lots and condominium units, whether or
[Sec. 24, PD 957]
not the purchase price is paid in full, shall be
registered by the seller in the Office of the Register of The rights of the buyer in the event of this failure to pay
Deeds of the province or city where the property is the installments due for reasons other than the failure
situated. of the owner or developer to develop the project shall
be governed by RA 6552 [Maceda Law].
b.  Mortgages on Unit or Lot f.   Issuance of Title [Sec. 25,
by Owner or Developer PD 957]
[Sec. 18, PD 957]
The owner or developer shall deliver the title of the lot
1.   Need prior written approval of the NHA or unit to the buyer upon full payment of the lot or unit.
2.   Must show that proceeds of mortgage will be used No fee, except those required for the registration of the
for development of the condominium or deed of sale in the Registry of Deeds, shall be collected
subdivision for the issuance of such title. In the event a mortgage
3.   Value of each lot or unit determined by the buyer over the lot or unit is outstanding at the time of the
(if there is one) and the buyer shall be notified issuance of the title to the buyer, the owner or
before release of loan developer shall redeem the mortgage or the
4.   Buyer may pay directly to mortgagee corresponding portion thereof within six months from
such issuance in order that the title over any fully paid
lot or unit may be secured and delivered to the buyer
in accordance herewith.

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g.  Realty Tax [Sec. 26, PD   The Condominium Act


957]
(RA 4726)
Real estate tax and assessment on a lot or unit shall
be paid by the owner or developer without recourse to 1.   Definition of
the buyer for as long as the title has not passed the
buyer; Provided, however, that if the buyer has Condominium [Sec. 2, RA
actually taken possession of and occupied the lot or
unit, he shall be liable to the owner or developer for
4762 ]
such tax and assessment effective the year following
such taking of possession and occupancy. A condominium is an interest in real property
consisting of separate interest in a unit in a residential,
industrial or commercial building and an undivided
h.  No Other Charges [Sec. 27, interest in common, directly or indirectly, in the land
PD 957] on which it is located and in other common areas of
the building. A condominium may include, in addition,
No owner or developer shall levy upon any lot or buyer a separate interest in other portions of such real
a fee for an alleged community benefit. Fees to finance property. Title to the common areas, including the
services for common comfort, security and sanitation land, or the appurtenant interests in such areas, may
may be collected only by a properly organized be held by a corporation specially formed for the
homeowners association and only with the consent of purpose (hereinafter known as the "condominium
a majority of the lot or unit buyers actually residing in corporation") in which the holders of separate interest
the subdivision or condominium project. shall automatically be members or shareholders, to
the exclusion of others, in proportion to the
appurtenant interest of their respective units in the
common areas.

a.  Other Definitions [Sec. 3,


RA 4726]
1.   Unit means a part of the condominium project
intended for any type of independent use or
ownership, including one or more rooms or spaces
located in one or more floors (or part or parts of
floors) in a building or buildings and such
accessories as may be appended thereto.
2.   Project means the entire parcel of real property
divided or to be divided in condominiums,
including all structures thereon,
3.   Common areas means the entire project
excepting all units separately granted or held or
reserved.

2.  T ransfers or Conveyances
of a Unit or an Apartment,
Office or Store, or Other
Space Therein [Sec. 5, RA
4726]
a.   Transfer or conveyance of a unit or a space therein
includes the transfer or conveyance of
1.   undivided interests in common areas

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2.   membership or shareholding in the been rebuilt or repaired substantially to its state


condominium corporation prior to its damage or destruction
b.   Proviso: only Filipino citizens or corporations at b.   That damage or destruction to the project has
least 60% of the capital stock are owned by rendered one-half or more of the units therein
Filipino citizens may be the transferee of common untenantable and that condominium owners
areas in cases where the common areas are holding in aggregate more than 30% interest in
owned by the owners of separate units as co- the common areas are opposed to repair or
owners (not by condominium corporation) restoration of the project
c.   Exception to proviso: hereditary succession. c.   That the project has been in existence in excess of
50 years, that it is obsolete and uneconomic, and
Shareholdings in a condominium corporation may be that condominium owners holding in aggregate
conveyed only in a proper case. Not every purchaser of more than 50% interest in the common areas are
a condominium unit is a shareholder of a opposed to repair or restoration or remodeling or
condominium corporation. The Condominium Act modernizing of the project
leaves to the Master Deed the determination of when d.   That the project or a material part thereof has
the shareholding will be transferred the buyer of the been condemned or expropriated and that the
unit. But ownership of a unit is an indispensable project is no longer viable, or that the
requisite to being a shareholder in the corporation. condominium owners holding in aggregate more
[Sunset View Condominium Corporation v. Campos, than 70% interest in the common areas are
G.R. No. L-52361 (1981)] opposed to continuation of the condominium
regime after expropriation or condemnation of a
material portion thereof
3.  Rights of a Condominium e.   That the conditions for such partition by sale set
Unit Owner (aside from forth in the declaration of restrictions, duly
registered in accordance with the terms of the
Rights Arising from Condominium Act, have been met
Ownership) [Sec. 6, RA
4726] 5.  D eclaration of Restrictions
by Owner of Project -
a.   Absolute right to sell or dispose of his
condominium unless there is a right of first refusal Precondition to
in favor of condominium owners Conveyance [Sec. 9, RA
b.   Exclusive right to mortgage, pledge or encumber
his condominium and to have the same appraised 4726]
independently of the other condominiums but any
obligation incurred by such condominium owner a.   The owner must register with the Register of
is personal to him Deeds a declaration of restrictions before the
conveyance of any condominium in the project
b.   The restrictions constitute a lien upon each
4.  P artition by Sale [Sec. 8, condominium in the project and shall insure to
RA 4726] and bind all condominium owners in the project
c.   The lien may be enforced by any condominium
This is an action that may be brought by one or more owner or by the management body of the project
persons owning condominiums in a condominium
project for the partition of the project by the sale
thereof. The effect is as if the owners of all the
6.  F . Assessment in
condominiums in such project were co-owners of the Accordance with
entire project in the same proportion as their interests
as their interests in the common areas.
Declaration of Restrictions
[Sec. 20, RA 4726]
A partition by sale can only be done upon showing any
of the following: This is the "tax imposition power" of the condominium
a.   That three years after damage or destruction to corporation. If unpaid, the management body may
the project which renders material part thereof cause a notice of assessment to be registered with the
unfit for its use prior thereto, the project has not Register of Deeds, which may be released only upon
payment of the assessed fees. This lien is superior to

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all other subsequent liens except real property taxes


liens and other liens provided for in the declaration of
11.  Stockholder/Member
restrictions. Demanding Payment for
Shares or Interest
7.  How Lien Enforced after
(Appraisal Right) [Sec. 17,
Non-Payment of Assessed
RA 4726]
Fees [Sec. 20, RA 4726]
By-laws of the condominium corporation shall provide
Judicial or extra-judicial foreclosure of real property that any shareholder/member demanding payment
mortgages, where the management body may bid for his share or interest must also consent to sell his
unless disallowed by the declaration of restrictions. separate interest in the project to the corporation or
any buyer of the corporation's choice.
8.  I nvoluntary Dissolution of
the Condominium 12.  R equirement for
Corporation [Sec. 12, RA Registration of
4726] Conveyance with the
Register of Deeds [Sec.
In case of involuntary dissolution, the common areas
held by the corporation shall be transferred pro- 18, RA 4726]
indiviso and in proportion to their interest to the
members/stockholders of the corporation, subject to Certificate of the management body of the project that
the rights of creditors of the corporation. The common the conveyance is in accordance with the declaration
areas remain in undivided co-ownership. of restrictions

9.  P ower of Attorney Held by 13.  R ealty Tax on


Corporation in Case of Condominiums [Sec. 25,
Voluntary Dissolution of RA 4726]
Condominium Corporation Each condominium separately owned shall be
[Sec. 15, RA 4726] separately assessed, for purposes of real property
taxation and other tax purposes to the owners thereof
The condominium corporation is deemed to hold a and the tax on each such condominium shall
power of attorney from all members/stockholders to constitute a lien solely thereon.
sell and dispose of their separate interests in the project.
To liquidate, the condominium corporation will sell
the entire project as if it owned the whole project itself,
subject to the corporate and individual condominium
creditors.

10.  Sale, Exchange, Lease, or


Disposition by
Corporation of the
Common Areas [Sec. 16,
RA 4726]
Generally not allowed unless authorized by affirmative
vote of all of the stockholders/members.

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  The Bulk Sales Law (as note, memorandum, or other evidence therefor, to
deliver to:
Amended) [Act No. 3952] 1.   such vendee, mortgagee, or agent, or
2.   if the vendee, mortgagee, or agent be a
corporation, then to the president, vice-president,
1.   Sale and Transfer in Bulk treasurer, secretary or manager of said
corporation, or,
[Sec. 2, Act No. 3952] 3.   if such vendee or mortgagee be a partnership
firm, then to a member thereof:
Any sale, transfer, mortgage or assignment of: a.   A written statement,
a.   a stock of goods, i.   Sworn to substantially;
b.   wares, ii.   Containing the names and addresses
c.   merchandise, of all creditors to whom said vendor or
d.   provisions, or mortgagor may be indebted, together
e.   materials with the amount of indebtedness due
1.   otherwise than in the ordinary course of or owing, or to become due or owing by
trade; and the regular prosecution of the said vendor or mortgagor to each of
business of the vendor, mortgagor, said creditors,
transferor, or assignor; or b.   Which statement shall be verified by an oath
2.   sale, transfer, mortgage or assignment of all,
or substantially all, of the business or trade Note: Any vendor, transferor, mortgagor or
theretofore conducted by the vendor, assignor of any stock of goods, wares,
mortgagor, transferor, or assignor, or merchandise, provisions or materials, in bulk, or
3.   sale, transfer, mortgage or assignment of all, any person acting for, or on behalf of any such
or substantially all, of the fixtures and vendor, transferor, mortgagor, or assignor, who
equipment used in and about the business of shall knowingly or willfully make, or deliver or
the vendor, mortgagor, transferor, or cause to be made or delivered, a statement, as
assignor, provided for in section three hereof, which shall
shall be deemed to be a sale and transfer in bulk, in not include the names of all such creditors, with
contemplation of this Act. the correct amount due and to become due to
each of them, or shall contain any false or untrue
Note: The applicability of this Act may be waived [Sec. statement, shall be deemed to have violated the
1, Act No. 3952] provisions of this Act. [Section 6]
If such vendor, mortgagor, transferor or assignor, Note further: The sworn statement containing the
produces and delivers a written waiver of the names and addresses of all creditors of the vendor
provisions of this Act from his creditors as shown by or mortgagor provided for in section three of this
verified statements, then, and in that case, the Act, shall be registered in the Bureau of
provisions of Section 1 shall not apply. Commerce. For the registration of each such
sworn statement a fee of five pesos shall be
charged to the vendor or mortgagor of the stock
2.  O bligations of the Seller If of goods, wares, merchandise, provisions or
the Transaction is Covered materials, in bulk. [Sec. 9, Act No. 3952]

by the Bulk Sales Law b.  Make an Inventory [Sec. 5,


Act No. 3952]
a.  Prepare and Deliver a
Statement of Creditors It shall be the duty of every vendor, transferor,
[Sec. 3, Act No. 3952] mortgagor, or assignor, at least ten days before the
sale, transfer or execution of a mortgage upon any
stock of goods, wares, merchandise, provisions or
It shall be the duty of every person who shall sell,
materials, in bulk,
mortgage, transfer, or assign any stock of goods,
1.   To make a full detailed inventory thereof; and
wares, merchandise, provisions or materials in bulk,
2.   To preserve the same
for cash or on credit, before receiving from the vendee,
a.   showing the quantity and,
mortgagee, or his, or its agent or representative any
b.   so far as is possible with the exercise of
part of the purchase price thereof, or any promissory
reasonable diligence, the cost price to the

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vendor, transferor, mortgagor or assignor of b.   Any such sale, transfer or mortgage shall be
each article to be included in the sale, fraudulent and void.
transfer or mortgage
4.  T ransfer without
c.   Notify Every Creditor [Sec.
5, Act No. 3952]
Consideration or for
Nominal Consideration
It shall be the duty of every vendor, transferor,
mortgagor, or assignor to notify every creditor whose
[Sec. 7, Act No. 3952]
name and address is set forth in the verified statement
of the vendor, transferor, mortgagor, or assignor, at It shall be unlawful for any person, firm or corporation,
least ten days before transferring possession thereof, as owner of any stock of goods, wares, merchandise,
personally or by registered mail, of the price, terms provisions or materials, in bulk, to transfer title to the
conditions of the sale, transfer, mortgage, or same without consideration or for a nominal
assignment. consideration only.

d.  Apply the Purchase or 5.  I napplicability [Secs. 1


Mortgage Money of the and 8, Act No. 3952]
Said Property to the Pro
In addition to those not mentioned in Section 1 of the
Rata Payment of the Bona law, nothing in the Act shall apply to executors,
Fide Claim or Claims of the administrators, receivers, assignees in insolvency, or
public officers, acting under judicial process.
Creditors of the Vendor or
Mortgagor, as Shown Upon 6.  A gency-in-Charge [Sec.
Such Sworn Statement
[Sec. 3, Act No. 3952]
10, Act No. 3952]
The provisions of this Act shall be administered by the
3.  Fraudulent and Void Sale, Director of the Bureau of Commerce and Industry, who
is hereby empowered, with the approval of the
Transfer or Mortgage [Sec. Department Head, to prescribe and adopt from time
4, Act No. 3952] to time such rules and regulations as may be deemed
necessary for the proper and efficient enforcement of
Whenever any person the provisions of this Act.
a.   Shall sell, mortgage, transfer, or assign any stock
of goods, wares, merchandise, provisions or 7.  Penalty [Sec. 11, Act No.
materials, in bulk, for cash or on credit, AND
b.   Shall receive any part of the purchase price, or any 3952]
promissory note, or other evidence of
indebtedness for said purchase price or advance Any person violating any provision of this Act shall,
upon mortgage, upon conviction thereof, be punished by imprisonment
1.   Without having first delivered to the vendee not less than six months, nor more than five years, or
or mortgagee or to his or its agent or fined in sum not exceeding five thousand pesos, or
representative, the sworn statement provided both such imprisonment and fine, in the discretion of
for in Section 3 hereof, and the court.
2.   Without applying the purchase or mortgage
money of the said property to the pro rata
payment of the bona fide claim or claims of
the creditors of the vendor or mortgagor, as
shown upon such sworn statement,

He shall:
a.   Be deemed to have violated this Act, and

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U.P. LAW BOC AGENCY CIVIL LAW

AGENCY
Civil Law

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U.P. LAW BOC AGENCY CIVIL LAW

VIII.  AGENCY 3.  Effects of Agency


a.   Integration (merger) of the personality of the
  Definition of Agency principal into that of the agent
b.   Extension (reproduction) of the personality of the
principal through the agent
1.   As a Type of Contract c.   Consequences:
1.   Merger: In an agency relationship, the agent,
Art. 1868, CC. By the contract of agency, a by legal fiction, becomes the principal,
person binds himself to render some service or authorized to perform all acts which the latter
to do something in representation or on behalf would have him do. [Orient Air Services v. CA,
of another, with the consent or authority of the G.R. No. 76931 (1991)]
latter. 2.   Agent is not a real party in interest: The
agent is not a party to the contract between
a.  Statutory Elements the principal and the third person. He is not a
real party in interest and cannot therefore sue
in his own behalf on a contract for his
1.   A person must bind himself to render some
principal, except if he is an assignee of such
service or to do something
contract. [Uy and Roxas v. CA, G.R. No.
2.   in representation or on behalf of another person;
120465 (1999)]
and
3.   Imputed Knowledge: Knowledge of facts
3.   With the consent or authority of the latter
acquired or possessed by an officer or agent
of a corporation in the course of his
b.  Jurisprudential Elements employment, and in relation to matters
within the scope of his authority, is notice to
1.   There is consent, express or implied, of the parties the corporation, whether he communicates
to establish the relationship; such knowledge or not. [Francisco v. GSIS,
2.   The object is the execution of a juridical act in G.R. No. L-18287 (1963)]
relation to a third person;
3.   The agent acts as a representative and not for The theory of imputed knowledge ascribes
himself; and knowledge of the agent to the principal, not
4.   The agent acts within the scope of his authority the other way around. [Sunace International v.
NLRC, G.R. No. 161757 (2006)]
On the part of the principal, there must be an actual
intention to appoint or an intention naturally inferable General rule: Notice to the agent constitutes
from his words or actions; and on the part of the agent notice to the principal [Air France v. CA
there must be an intention to accept the appointment (1983)]. Thus, knowledge of the agent is
and act on it, and in the absence of such intent, there ascribed to the principal [Rovels Enterprises v.
is generally no agency. [Victorias Milling v. CA, G.R. No. Ocampo, G.R. No. 136821 (2002)].
117356 (2000)]
Requisites:
Mere closeness of relationship is not tantamount to an a.   Actual notice to the agent;
agency relationship. [Apex v. Southeast Mindanao b.   Notice must pertain to a matter of fact
Mining, G.R. Nos. 152613 & 152628 (2006)] and not of law;
c.   The fact must be within the scope of the
2.  A s a Legal Relationship agent’s authority.

Exceptions:
It is possible for an agency to arise even without a
a.   Where the agent’s interests are adverse
contract. In such cases, an agency is more properly
to those of the principal;
described as a legal relationship.
b.   Where the agent’s duty is not to disclose
It is (a relationship) whereby one party, called the the 
information (e.g., he is informed by
principal, authorizes another, called the agent, to act way of 
confidential information);
for and in his behalf in transactions with third persons. c.   Where the person claiming the benefit of
[Rallos v. Felix Go Chan, G.R. No. L-24332 (1978)] 
the rule colludes with the agent to
defraud the principal [de Leon]. 


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U.P. LAW BOC AGENCY CIVIL LAW

4.   Bad faith of the Agent is Bad faith of the


Principal [Caram v. Laureta, G.R. No. 72194   Kinds of Agency
(1990)]
1.   In General
As to manner of creation:
a.   Express;
b.   Implied.

As to cause or consideration:
a.   Gratuitous;
b.   Compensated or onerous.

Note: Agency is presumed to be for a compensation,


unless there is proof to the contrary [Art. 1875, CC].

As to the extent of business covered:


a.   General;
b.   Special

To be a General Agent, it is sufficient that the listed


authorized transactions apparently cover all that is
required to run the business of the principal. It is not
necessary that the power granted actually says “all the
business of the principal.” [Dominion Insurance v. CA,
G.R. No. 129919 (2002)]

As to the authority conferred:


a.   Couched in general terms;
b.   Couched in specific terms.

As to nature and effect:


a.   Ostensible or representative, where the agent
acts in the name and representation of the
principal [Art. 1868, CC];
b.   Simple or commission, where the agent acting his
own name but for the account of the principal.

As to the kinds of principal:


a.   With a disclosed principal, where, at the time
the transaction was contracted by the agent, the
other party thereto was known:
1.   that the agent was acting for a principal; and
2.   the principal’s identity;
b.   Partially disclosed, where the other party knows
or has reason to know that the agent is or may be
acting for a principal but is unaware of the
principal’s identity;
c.   Undisclosed, where the party has no notice of
the fact that the agent is acting as such for a
principal

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1869 has no room for operation. [Uniland Resources v.


2.  A s to Manner of Creation DBP, G.R. No. 95909 (1991)]
Art. 1869, CC. Agency may be express, or implied ACTS OF THE AGENT
from the acts of the principal, from his silence or Acceptance of the agent may be implied from
lack of action, or his failure to repudiate the agency, 1.   His acts which carry out the agency
knowing that another person is acting on his behalf 2.   His silence or inaction if the agent does not inform
without authority. the principal of his rejection of the agency
relationship:
Agency may be oral, unless the law requires a a.   Within a reasonable amount of time under
specific form. the circumstances
b.   Prior to the principal suffering damage as a
a.  Express Agency result of the delay on the part of the agent in
informing the principal of his rejection of the
An express agency is one where the agent has been agency relationship [Casis]
actually authorized by the principal, either:
1.   Orally; or Art. 1871, CC. Between persons who are present,
2.   In writing [Art.1869, CC]. the acceptance of the agency may also be implied
if the principal delivers his power of attorney to the
agent and the latter receives it without any
b.  Implied Agency objection.
Art. 1870, CC. Acceptance by the agent may also be
express, or implied from his acts which carry out the
Note: Art. 1871 describes the most ideal form
agency, or from his silence or inaction according to
evidencing the perfection of the contract of agency
the circumstances.
when the constitution of the agency is made with both
principal and agent being physically present at the
As a rule, agency is not presumed. A presumption of time of perfection of the contract of agency. Thus,
agency may arise, however, in those few cases where there is absence [Art. 1872, CC] when both parties are
agency may arise by operation of law (i.e. Art. 1803, not physically present in one place. [Villanueva]
CC) or to prevent unjust enrichment. [de Leon]
Conditions for Applicability of Art. 1871, CC
ACTS OF THE PRINCIPAL 1.   The principal delivers his power of attorney to the
The act of the principal which constitutes consent may agent
be in the form of silence, lack of action, or failure to 2.   The agent personally receives it without any
repudiate the agency knowing that another person is objection, and
acting on his behalf without authority. [See Art. 1869, 3.   The agent must be aware of the contents of the
CC] document containing the powers of attorney
[Casis]
Requisites:
1.   The alleged principal should be aware of the acts Between persons who are absent, the acceptance of
of the alleged agent the agency cannot be implied from the silence of the
2.   The alleged principal has had reasonable agent, except [Art. 1872, CC]:
opportunity under the circumstances to repudiate 1.   When the principal transmits his power of
the acts of the alleged agent attorney to the agent, who receives it without any
3.   A third party has transacted with the alleged objection;
agent without being made aware of the alleged 2.   When the principal entrusts to him by letter or
agent’s lack of authority telegram a power of attorney with respect to the
4.   There were no facts or circumstances which may business in which he is habitually engaged as an
raise any suspicion on the part of the third person agent, and he did not reply to the letter or
that the agent was not authorized telegram.
Where no third party was prejudiced, and it was Conditions for Applicability of Art. 1872(1), CC
emphasized in no uncertain terms to the alleged agent 1.   The principal transmits the power of attorney
that no agency exists (therefore both principal and 2.   It is received by the agent without any objection.
agent knew that the agent had no authority) then Art

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U.P. LAW BOC AGENCY CIVIL LAW

Conditions for Applicability of Art. 1872(2), CC EFFECT OF ABSENCE OF SPECIFIC AUTHORITY


1.   The principal entrusts the power of attorney by
letter or telegram In General
2.   The power of attorney pertains to a business that If an agent performs a transaction under Art 1878
the agent is habitually engaged in, and without specific authority therefor, the transaction is
3.   The agent did not reply unenforceable. However, the agent can still seek the
principal’s ratification. [Dungo v. Lopena, G.R. No. L-
18377 (1962)]
3.  As to Extent of Business
Covered Sale of Land or Any Interest Therein
Art. 1874, CC. When a sale of a piece of land or any
a.   General agency comprises all the business of interest therein is through an agent, the authority
the principal. of the latter shall be in writing; otherwise, the sale
Scope: All acts connected with the business or shall be void.
employment in which agent is engaged
b.   Special agency comprises one or more specific Requirements:
transactions [Art. 1876, CC]. The authorization must be:
Scope: Only authorized acts or those necessarily 1.   Written, and
implied 2.   Specific

4.  A s to Authority Conferred Only specific authorization is required (and it need not


be written):
1.   If the contract is a sale of an immovable other than
a.  Couched in General Terms land
2.   If the contract transmits ownership over an
An agency couched in general terms is one created in immovable other than land
general terms and is deemed to comprise only acts of 3.   If the contract transmits ownership over land
administration, even if: through a transaction other than a sale
1.   The principal should state that he withholds no
power; EFFECT OF SPECIFIC AUTHORIZATION
2.   He should state that the agent may execute such
acts as he may consider appropriate; or Where an instrument specifies and defines powers and
3.   Even though the agency should authorize a duties, all such powers and duties are limited and
general and unlimited management [Art. 1877, confined to those which are specified and defined, and
CC]. all other powers and duties are excluded. [BPI v. De
Coster, G.R. No. L-23181 (1925)]
Acts of Administration
Acts of administration are those which do not imply Art. 1878, CC. Special powers of attorney are
the authority to alienate. [de Leon] necessary in the following cases:
(1)   To make such payments as are not usually
b.  Couched in Specific Terms considered as acts of administration;
(2)   To effect novations which put an end to
An agency couched in specific terms authorizes only obligations already in existence at the time
the performance of specific acts. Certain specific acts, the agency was constituted;
however, require special powers of attorney. (3)   To compromise, to submit questions to
arbitration, to renounce the right to appeal
A special power of attorney is an instrument in writing from a judgment, to waive objections to the
by which one person, as principal, appoints another as venue of an action or to abandon a
his agent and confers upon him the authority to prescription already acquired;
perform certain specified acts or kinds of acts on (4)   To waive any obligation gratuitously;
behalf of the principal. (5)   To enter into any contract by which the
ownership of an immovable is transmitted or
acquired either gratuitously or for a valuable
consideration;

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(6)   To make gifts, except customary ones for latter thereby becomes a duly authorized agent, in
charity or those made to employees in the the former case with respect to the person who
business managed by the agent; received the special information, and in the latter
(7)   To loan or borrow money, unless the latter case with regard to any person. [Art. 1873 par.1, CC]
act be urgent and indispensable for the
preservation of the things which are under Two Modes
administration; 1.   Specific Information: If a person specially informs
(8)   To lease any real property to another person another that he has given a power of attorney to a
for more than one year; third person, then that third person becomes his
(9)   To bind the principal to render some service agent with respect to the person who received the
without compensation; special information.
(10)  To bind the principal in a contract of 2.   Public Advertisement: If a person states by public
partnership; advertisement that he has given a power of
(11)   To obligate the principal as a guarantor or attorney to a third person, then that third person
surety; becomes his agent with respect to any person.
(12)  To create or convey real rights over
immovable property; How Rescinded
(13)  To accept or repudiate an inheritance; Par. 2, Art. 1873, CC. The power shall continue to
(14)  To ratify or recognize obligations contracted be in full force until the notice is rescinded in the
before the agency; same manner in which it was given.
(15)  Any other act of strict dominion.
This is agency by estoppel because no acceptance by
The requirement of special power of attorney refers to the agent is required.
the nature of the authorization, not to its form. Thus,
even if a document is titled as a general power of By remaining silent and thereby clothing the alleged
attorney, the requirement of a special power of agent with authority, the alleged principal is barred
attorney is met if there is a clear mandate from the from questioning the alleged agent’s authority.
principal specifically authorizing the performance of [Pahud v. CA, G.R. No. 160346 (2009), applying
the act [Bravo-Guerrero v. Bravo, G.R. No. 152658 estoppel in general]
(2005)].
BASED ON JURISPRUDENCE – REQUISITES
A special power of attorney can be included in the 1.   The principal manifested a representation of the
general power when it is specified therein the act or agent’s authority or knowingly allowed the agent
transaction for which the special power is required to assume such authority
[Veloso v. CA, G.R. No. 102737 (1996)]. 2.   The third person, in good faith, relied upon such
representation
A SPOA may be oral or written, but if it is oral, it must 3.   Relying upon such representation, such third
be duly established by evidence. [Lim Pin v. Liao Tan, person has changed his position to his detriment.
G.R. No. L-47740 (1982)]
Agency by estoppel is similar to the doctrine of
Art. 1879, CC. A special power to sell excludes the apparent authority. It requires proof of reliance upon
power to mortgage; and a special power to the representation and that the representation
mortgage does not include the power to sell. predated the action which relied on the
representation. [Litonjua v. Eternit, G.R. No. 144805
Art. 1880, CC. A special power to compromise does (2006)]
not authorize the submission to arbitration.
As to liability, implied agency and agency by estoppel
are different in that, in the former, the principal is
5.  S pecial Kinds of Agency liable, while in the latter, the person who acts in bad
faith is liable.
a.  Agency by Estoppel
Art. 1911, CC states that: “Even when the agent has
BASED ON STATUTE exceeded his authority, the principal is solidarily liable
Par. 1, Art. 1873, CC. If a person specially informs with the agent if the former allowed the latter to act as
another or states by public advertisement that he though he had full powers.” In this case, there is a duly
has given a power of attorney to a third person, the formed agency and estoppel only applies to the excess

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of authority. This is an application of the doctrine of agent to establish the agency. [Victorias Milling v. CA,
apparent authority. G.R. No. 117356 (2000)]

The doctrine of apparent authority is to the effect that: Exceptions:


One who clothes another with apparent authority as An agency may be established by operation of law,
his agent, and holds him out to the public as such, however, in a partnership, every partner is an agent of
cannot be permitted to deny the authority of such the partnership for the purpose of its business [Art.
person to act as his agent, to the prejudice of innocent 1818, CC]
third parties dealing with such person in good faith.
d.  Irrevocable Agency
Under the doctrine of apparent authority, the question
in every case is whether the principal has, by his Art. 1927, CC (on agency coupled with an interest)
voluntary act, placed the agent in such a situation that mentions three instances where the sole will of the
a person of ordinary prudence, conversant with principal cannot terminate an agency:
business usages and the nature of the particular 1.   A bilateral contract depends upon it;
business, is justified in presuming that such agent has 2.   It is the means of fulfilling an obligation already
authority to perform the particular act in question contracted; or
[Professional Services v. Agana, G.R. No. 126297 3.   A partner is appointed manager of a partnership
(2008)]. in the contract of partnership and his removal
from the management is unjustifiable.
Ratification Estoppel
Rests on intention Rests on prejudice Qualifications:
1.   Coupled with interest or not, the authority
Retroacts as if originally Affects only relevant certainly can be revoked for a just cause, such as
authorized parts of the transaction when the attorney-in-fact betrays the interest of
the principal. It is not open to serious doubt that
b.  Agency with Undisclosed the irrevocability of the power of attorney may
not be used to shield the perpetration of acts in
Principal bad faith, breach of confidence, or betrayal of
trust, by the agent for that would amount to
General Rule: If an agent acts in his own name (the holding that a power coupled with an interest
principal is undisclosed), the agent is directly bound in authorizes the agent to commit frauds against
favor of the person with whom he has contracted as if the principal [Manotok Brothers v. CA, G.R. No.
the transaction were his own. 94753 (1993)]
2.   A mere statement in the power of attorney that it
Ratio: There is no representation of the principal when is coupled with an interest is not enough. In what
the agent acts in his own name. The third person does such interest consist must be stated in the
cannot allege that he was misled by any power of attorney [Del Rosario v. Abad, G.R. No.
representation since he did not know of the existence L-10881 (1958)].
of the undisclosed principal. 3.   An agency coupled with an interest cannot affect
third persons. They are obligatory only on the
Exception: The principal is bound when the contract principal who executed the agency [New Manila
involves things belonging to him [Art. 1883, CC]. In this Lumber v. Republic, G.R. No. L-14248 (1960)].
case, the contract is considered as one between the
principal and the third person.
6.  K inds of Agents
Qualification: The exception only applies if the agent
contracts with the properties of the principal within a.  As to Nature and Extent of
the scope of his authority [PNB v. Agudelo, G.R. No. L-
39037 (1933)]. Authority
According to the nature and extent of their authority,
c.   Agency by Operation of agents have been classified into:
Law 1.   Universal agents are authorized to do all acts for
his principal which can lawfully be delegated to
General Rule: Normally, an agency is established only an agent. So far as such a condition is possible,
if there is mutual intent on the part of the principal and

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such an agent may be said to have universal


authority.   Rights and Obligations of
2.   General agents are authorized to do all acts
pertaining to a business of a certain kind or at a
the Agent
particular place, or all acts pertaining to a
business of a particular class or series. He has 1.   Rights of Agents
usually authority either expressly conferred in
general terms or in effect made general by the
usages, customs or nature of the business which
a.  Compensation
he is authorized to transact. An agent, therefore,
who is empowered to transact all the business of Art. 1875, CC. Agency is presumed to be for a
his principal of a particular kind or in a particular compensation, unless there is proof to the contrary.
place, would, for this reason, be ordinarily
deemed a general agent. Note: Compensation is not an element of an agency
3.   Special agents are authorized to do some contract [Casis]. The principal must prove that the
particular act or to act upon some particular agency is not for a fee if he contests it. But in itself,
occasion (i.e., acts usually in accordance with compensation is not an element of an agency contract.
specific instructions or under limitations The fact that the agency was for compensation or not,
necessarily implied from the nature of the act to shall be considered by the court in determining the
be done) [Siasat v. IAC, G.R. No. L-67889 (1985)]. extent of liability of an agent for fraud or negligence.

 [Art. 1909, CC]

Procuring Cause
b.  Attorney as Agent of Client A procuring cause starts a series of events, which,
without break in their continuity, result in the
General Rule: The relation of attorney and client is one accomplishment of the prime objective of the
of agency and the ordinary rules of agency apply. An employment of the broker – a sale. [Philippine Health
act performed within the scope of a “general or Care Providers v. Estrada, G.R. 171052 (2008)]
implied authority” is regarded as an act of the client.
[de Leon] The broker becomes entitled to the usual commissions
whenever he brings to his principal a party who is able
Attorneys have authority to bind their clients in any and willing to take the property and enter into a valid
case by any agreement in relation thereto made in contract upon the terms then named by the principal,
writing, and in taking appeals, and in all matters of although the particulars may be arranged and the
ordinary judicial procedure. But they cannot, without matter negotiated and completed between the
special authority, compromise their client’s litigation, principal and the purchaser directly. [Macondray v.
or receive anything in discharge of a client’s claim but Sellner, G.R. No. L-9184 (1916)]The agent is entitled to
the full amount in cash [Sec. 23, Rule 138, Rules of commission even if the (transaction) is consummated
Court]. after the revocation of his authority, if the revocation
was done in bad faith by the principal to avoid
payment of commission. [Infante v. Cunanan, G.R. No.
L-5180 (1953)]

Test
Even if the agent is not the procuring cause of the
transaction, he may still be awarded a sum of money
if he is “somehow instrumental in bringing the parties
together again and finally consummating the
transaction.” [Prats v. CA, G.R. No. L-39822 (1978)]

When there is a close, proximate and causal


connection between the agent’s efforts and labor and
the principal’s sale of his property, the agent is entitled
to commission. [Manotok Brothers v. CA, G.R. No.
94753 (1993)]

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Forfeiture of Right to Commission Exceptions:


An agent who takes a secret profit without revealing 1.   When prohibited by the principal; or
the same to his principal is guilty of a breach of his 2.   When the work entrusted to the agent to carry
loyalty to the principal and forfeits his right to collect out requires special knowledge, skill or
the commission from his principal, even if the principal competence.
does not suffer any injury, or he obtained better
results, or the agency is gratuitous, or that usage or Responsibility for Acts of the Substitute
custom allows it. The rule is to prevent the possibility General Rule: If the Agent validly appoints a substitute,
of any wrong, not to remedy an actual damage. the Principal is liable for the Substitute’s acts
[Domingo v. Domingo, G.R. No. L-30573 (1971)]
Exception: [Art. 1892, CC]
b.  Lend Money To/Borrow 1.   If the agent appoints a substitute although he
was not given the power to appoint one
Money From the Agency 2.   If the agent was given the power to appoint a
substitute, and the principal did not designate the
Art. 1890, CC. If the agent has been empowered to person he can appoint, but he appoints someone
borrow money, he may himself be the lender at the who is notoriously incompetent or insolvent
current rate of interest. If he has been authorized to (proven by history or record of failures in similar
lend money at interest, he cannot borrow it without business ventures in the past).
the consent of the principal.
Note: In the two aforementioned situations, the agent,
1.   Borrow Money From not the principal, will be the one responsible for the
Conditions: acts of the substitute. [Casis]
a.   The agent is empowered to borrow money
b.   The agent must borrow at the current rate of Validity of the Substitute’s Acts
interest If the principal prohibits the agent from appointing a
2.   Lend Money To substitute, then all the acts of the substitute are void.
Conditions:
a.   The agent is authorized to lend money at The acts will be valid if:The principal is aware that a
interest substitute is acting on his behalf without authority yet
b.   The principal consents to such arrangement. he fails to repudiate the substitute’s acts. There may
be implied agency.
c.   Appoint a Substitute
An agent cannot delegate to another the same
agency. Potestas delegate non delegare potest. Re-
Art. 1892, CC. The agent may appoint a substitute delegation is detrimental to the principal as the
if the principal has not prohibited him from doing second agent has no privity of contract with the
so; but he shall be responsible for the acts of the principal... Article 1892 allows the agent to appoint a
substitute: substitute (not a delegate). [Baltazar v. Ombudsman,
(1)   When he was not given the power to appoint G.R. No. 136433 (2006)]
one
(2)   When he was given such power, but without
designating the person, and the person d.  Retain in Pledge the
appointed was notoriously incompetent or Objects of Agency
insolvent.
Art. 1912, CC. The principal must advance to the
All acts of the substitute appointed against the agent, should the latter so request, the sums
prohibition of the principal shall be void. necessary for the execution of the agency.

Art. 1893, CC. In the cases mentioned in Nos.1 and Should the agent have advanced them, the
2 of the preceding article, the principal may principal must reimburse him therefore, even if the
furthermore bring an action against the substitute business or undertaking was not successful,
with respect to the obligations which the latter has provided the agent is free from fault.
contracted under the substitution.
The reimbursement shall include interest on the
General Rule: An agent may appoint a substitute. sums advanced, from the day on which the advance
was made.

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Art. 1913, CC. The principal must also indemnify the in fact exceeded the limits of his authority
agent for the damages which the execution of the according to an understanding between the
agency may have caused the latter, without fault or principal and the agent.
negligence on his part.
The Situation: the principal provided limitations to
Art. 1914, CC. The agent may retain in pledge the the authority of the agent orally or through a
things which are the object of the agency until the document other than the written power of attorney.
principal effects the reimbursement and pays the
indemnity set forth in the two preceding articles. General Rule: The third person can rely completely on
the written power of attorney to determine whether
Two scenarios under which the Agent may retain in the agent’s act is within the limits of his authority.
pledge the objects of the agency:
1.   When the agent advances funds for the execution Exception: If the third person is aware of the secret
of the agency, or understanding between the principal and the agent.
2.   When the agent has suffered injury caused by the
execution of the agency Note: Every person dealing with an assumed agent is
put upon inquiry and must discover upon his peril, if he
would hold the principal liable, not only the fact of the
2.  O bligations of Agents agency but the nature and extent of the authority of
the agent. If he does not make such inquiry, he is
a.  In General chargeable with knowledge of the agent’s authority,
and his ignorance of that authority will not be any
1.   ACT WITHIN SCOPE OF AUTHORITY excuse. [Pineda v. CA, G.R. No. 105562 (1993)]
Art. 1881, CC. The agent must act within the scope
of his authority. He may do such acts as may be Authority of Corporate Officers
conducive to the accomplishment of the purpose of The general principles of agency govern the relation
the agency. between the corporation and its officers or agents,
subject to the articles of incorporation, bylaws, or
relevant provisions of law. [San Juan v. CA, G.R. No.
An agent can bind his principal if he acts within the
129459 (1998)]
scope of authority granted to him.
A corporate officer entrusted with the general
Powers of attorney are generally construed strictly.
management and control of its business, has implied
The general rule is that the power of attorney must be
authority to make any contract or do any other act
pursued within legal strictures, and the agent can
which is necessary or appropriate to the conduct of the
neither go beyond it; nor beside it. The act done must
ordinary business of the corporation. As such officer,
be legally identical with that authorized to be done.
he may, without any special authority from the Board
[Woodchild v. Roxas, G.R. No. 140667 (2004)]
of Directors, perform all acts of an ordinary nature,
which by usage or necessity are incident to his office...
Advantageous Acts
Where similar acts have been approved by the
Art. 1882, CC. The limits of the agent's authority directors as a matter of general practice, custom and
shall not be considered exceeded should it have policy, the general manager may bind the company
been performed in a manner more advantageous to without formal authorization of the board of directors.
the principal than that specified by him. [Board of Liquidators v. Kalaw, G.R. No. L-18805
(1967)]
Collateral Acts
(The agent has the implied authority) to do all of the 2.   ACT IN ACCORDANCE WITH INSTRUCTIONS
collateral acts which are the natural and ordinary Art. 1887, CC. In the execution of the agency, the
incidents of the main act or business authorized. agent shall act in accordance with the instructions
[Guinhawa v. People, G.R. No. 162822 (2005)] of the principal.
With Respect to Third Persons In default thereof, he shall do all that a good father
Art. 1900, CC. So far as third persons are of a family would do, as required by the nature of
concerned, an act is deemed to have been the business.
performed within the scope of the agent's
authority, if such act is within the terms of the
power of attorney, as written, even if the agent has

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Note: The limits of the agent’s authority shall not be Continuing Business
considered exceeded should it have been performed in Par. 2, Art. 1884, CC. He must also finish the
a manner more advantageous to the principal than business already begun on the death of the
that specified by him. [Art. 1882, CC] principal, should delay entail any danger.

Authority Instructions In case of Withdrawal


Sum total of the powers Art. 1929, CC. The agent, even if he should
Private rule of guidance withdraw from the agency for a valid reason, must
committed or permitted
to the agent continue to act until the principal has had
to the agent
reasonable opportunity to take the necessary
Refers to the manner or steps to meet the situation.
Relates to the
mode of agent’s action
transaction or business
with respect to matters
with which the agent is Agent Not Required to Carry Out Agency
within the permitted
empowered to act Art. 1888, CC. An agent shall not carry out an
scope of authority
agency if its execution would manifestly result in
Does not bind third loss or damage to the principal.
Binds the parties
parties
The article covers only acts that would “manifestly”
Art. 1885, CC. In case a person declines an agency, lead to losses; in other words, the agent cannot be a
he is bound to observe the diligence of a good guarantor that the principal would suffer no loss or
father of a family in the custody and preservation of damage in the pursuit of the agency; the sustaining of
the goods forwarded to him by the owner until the losses due to human error is part of the risk that every
latter should appoint an agent or take charge of the owner or principal assumes. [Villanueva].
goods.
4.   ADVANCE FUNDS
The duty of care over goods given to his custody can Art. 1886, CC. Should there be a stipulation that
only cover a “reasonable period” because the law the agent shall advance the necessary funds, he
provides that the owner shall, as soon as practicable, shall be bound to do so except when the principal
either appoint an agent or take charge of the goods. is insolvent.
[Villanueva]
Conditions:
Art. 1899, CC. If a duly authorized agent acts in a.   There is a stipulation stating that the agent shall
accordance with the orders of the principal, the advance the necessary funds, and
latter cannot set up the ignorance of the agent as b.   The principal must be solvent
to the circumstances whereof he himself was, or
ought to have been, aware. 5.   PREFER THE PRINCIPAL’S INTEREST OVER
HIS OWN
3.   CARRY OUT THE AGENCY
In General
In General Art. 1889, CC. The agent shall be liable for
Par. 1, Art. 1884, CC. The agent is bound by his damages if, there being a conflict between his
acceptance to carry out the agency, and is liable for interests and those of the principal, he should
the damages which, through his non-performance, prefer his own.
the principal may suffer.
Note: Agency is a fiduciary relationship. A breach of
The agent is bound to carry out his duties as agent that relationship will expose the agent to liability for
once he accepts the authorization granted by the damages.
principal. Else, he is liable for damages if the principal
suffers injury. Art. 1889, CC does not declare the contract void, but
merely makes the agent liable for damages suffered
An agent is also liable for its own negligent acts or by the principal. [Villanueva]
omission in the performance of its duties. Such person
is liable for damages caused to the principal by such Over Property Being Administered
negligent acts. [British Airways v. CA, G.R. No. 121824 Art. 1491, CC. The following persons cannot acquire
(1998)] by purchase, even at a public or judicial auction,

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either in person or through the mediation of The Situation: the principal and the agent each
another: contracts with different people for the same thing, and
(2) Agents, the property whose administration or the contracts are incompatible.
sale may have been intrusted to them, unless the
consent of the principal has been given. General Rule [Art. 1544, CC]:
a.   The property is a movable, then the person who
The relations of an agent to his principal are fiduciary takes first possession in good faith (PGF) prevails
and it is an elementary and very old rule that in regard b.   The property is immovable, then the person who
to property forming the subject matter of the agency, first records it in good faith in the register of deeds
he is estopped from acquiring or asserting a titled prevails. If there is no record, the PGF prevails. If
adverse to that of the principal. His position is there is no PGF, then the person who has the
analogous to that of a trustee and he cannot oldest title. (record > PGF > title)
consistently, with the principles of good faith, be
allowed to create in himself an interest in opposition Exceptions: The contract “of a prior date” shall prevail
to that of his principal or cestui que trust. [Severino v. if:
Severino, G.R. No. L-18058 (1923)] a.   None of the buyers had obtained possession over
the movable, or
The prohibition against agents purchasing property in b.   None of the buyers had recorded, possessed or
their hands for sale or management is clearly not has title over the immovable
absolute. When so authorized by the principal, the
agent is not disqualified from purchasing the property Liability
he holds under a contract of agency to sell. [Olaguer v. a.   If the Agent was in good faith, then the principal
Purugganan, Jr., G.R. No 158907 (2007)] is liable for damages to the third person whose
contract won’t be honored
Double Sales b.   If the Agent was in bad faith, then he is liable for
Art. 1916, CC. When two persons contract with damages to the third person and to the principal
regard to the same thing, one of them with the [see Art. 1889, CC]
agent and the other with the principal, and the two
contracts are incompatible with each other, that of a.   RENDER ACCOUNT/DELIVER
prior date shall be preferred, without prejudice to Art. 1891, CC. Every agent is bound to render an
the provisions of article 1544. account of his transactions and to deliver to the
principal whatever he may have received by virtue
of the agency, even though it may not be owing to
Art. 1917, CC. in the case referred to in the
the principal.
preceding article, if the agent has acted in good
faith, the principal shall be liable in damages to the
Every stipulation exempting the agent from the
third person whose contract must be rejected. If the
obligation to render an account shall be void.
agent acted in bad faith, he alone shall be
responsible.
If an agent receives a secret gift from a client, he must
report it and deliver it to the principal.
Art. 1544, CC. If the same thing should have been
sold to different vendees, the ownership shall be The law imposes upon the agent the absolute
transferred to the person who may have first taken obligation to make a full disclosure or complete
possession thereof in good faith, if it should be account to his principal of all his transactions and
movable property. other material facts relevant to the agency. If he
makes a secret profit, he is guilty of breach of his
Should it be immovable property, the ownership loyalty, and he forfeits his right to his commission.
shall belong to the person acquiring it who in good [Domingo v. Domingo, G.R. No. L-30573 (1971)]
faith first recorded it in the Registry of Property.
Should there be no inscription, the ownership shall Note: Report imports a statement of collections.
pertain to the person who in good faith was first in Accounting means settling of account of
the possession; and, in the absence thereof, to the administration or agency, which includes payment.
person who presents the oldest title, provided there [de Leon].
is good faith.

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b.   PAY INTEREST Maintains no relations Maintains relations with


Art. 1896, CC. The agent owes interest on the sums with things to be the thing, the buyer and
he has applied to his own use from the day on which sold/bought the seller
he did so, and on those which he still owes after the
extinguishment of the agency. [ Responsibility For Goods Received
1.   The commission agent shall be responsible for
Applicability: The agent may only borrow funds from goods received by him in the terms and conditions
the agent if he has been authorized to lend money at and as described in the consignment, unless upon
interest [Art 1890]. If he does borrow, then he should receiving them he should make a written
pay interest for the amount he borrowed. statement of the damage and deterioration
suffered by the same [Art. 1903, CC].
c.   LIABILITY FOR FRAUD/NEGLIGENCE 2.   The commission agent who handles goods of the
ART. 1909, CC. The agent is responsible not only same kind and mark, which belong to different
for fraud, but also for negligence, which shall be owners, shall:
judged with more or less rigor by the courts, (a) Distinguish them by countermarks; and
according to whether the agency was or was not for (b)Designate the merchandise respectively
a compensation. belonging to each principal [Art. 1904].

The article has been applied against an agent for Sale of Goods n Credit Without Authority
negligence which caused damage against itself, General rule: The commission agent cannot sell on
credit. Should he do so, the principal may:
thereby preventing it from recovering from the
1.   Demand from him payment in cash, in which case
principal what it lost. [Metrobank v. CA, G.R. No. 88166
the commission agent shall be entitled to any
(1991)]
interest or benefit, which may result from such
sale [Art. 1905, CC]; or
b.  Factor or Commission 2.   Ratify the sale on credit, in which case the
Agent principal will have all the risks and advantages to
him [de Leon].
A factor or commission agent is one whose business is
to receive and sell goods for a commission (also called Exception: The commission agent can sell on credit
factorage) and who is entrusted by the principal with with the express or implied consent of the principal.
the possession of goods to be sold, and usually selling
in his own name. He may act in his own name or in that Sale of Goods on Credit with Authority
of the principal. If the commission agent was authorized to sell on
credit and should he so sell on credit, he shall inform
An ordinary agent need not have possession of the the principal of such sale, with a statement of the
goods of the principal, while the commission agent names of the buyers. Should he fail to inform the
must be in possession [de Leon]. principal, the sale is deemed to have been made for
cash as far as the principal is concerned [Art. 1906,
CC].
Ordinary Agent Commission Agent
Acts for and in behalf of Private rule of guidance The commission agent is obliged to collect the credits
the principal to the agent of his principal when they become due and
Refers to the manner or demandable [Art. 1908, CC].
mode of agent’s action
Need not have General rule: Failing to so collect, the agent shall be
with respect to matters
possession of the goods liable for damages.
within the permitted
scope of authority
Exception: He is not liable if he proves that he
exercised due diligence for that purpose.
Broker Commission Agent Should the commission agent receive a guarantee
Has no custody of the commission (del credere commission) on a sale, in
thing to be disposed of, Has custody or addition to the ordinary commission, he shall:
only acts as possession of the things 1.   Bear the risk of collection; and
intermediary between to be sold 2.   Pay the principal the proceeds of the sale on the
seller and buyer terms agreed upon with the purchaser [Art.
1907].

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3.  Liability of Agents as if the transaction were his own, except when the
contract involves things belonging to the principal.
The provisions of this article shall be understood to
a.  When Solidary be without prejudice to the actions between the
principal and agent.
Art. 1894, CC. The responsibility of two or more
agents, even though they have been appointed This is called an “Agency with an undisclosed
simultaneously, is not solidary, if solidarity has not principal.”
been expressly stipulated.
General Rule: If the agent enters contract without
General Rule: Two or more agents are jointly liable. notice to the third party that he was acting as an
Each of the agents can be held solidarily liable for the agent, the agent is directly bound as a party to the
non-fulfilment of the agency or for injuries caused by contract, and the principal and the third person have
fault or negligence if: no right of action against one another.
1.   The principal simultaneously appoints more than
one agent, and Exception: When the contract involves things
2.   There is an express stipulation that such agents belonging to the principal. The principal may seek
are solidarily liable damages for such contract.
An agent will not be solidarily liable if the fellow
agents acted beyond the scope of authority. [Art. 1895, The exception under Art 1883 “does not say that (a
CC] third party) does not have, and cannot bring an action
against the agent also.” [Beaumont v. Prieto, G.R. No.
b.  When Personal L-8988 (1916)]

1.   Expressly Bound or In Excess of Authority

General Rule: the agent who transacts as an agent is


not personally liable to the third person for the
obligation entered into

Exceptions:
a.   When the agent expressly binds himself
b.   When the agent exceeds the limits of his authority
without giving the person he is transacting with
sufficient notice of his powers [Art 1897, CC]
c.   When all of the following are present:
i.   The person transacting with the agent is
aware of the limits of the agent’s authority
ii.   The agent exceeded the scope of his
authority
iii.   The agent exceeded his or her authority,
and
iv.   The principal did not ratify the contract

Note: In (c), the transaction will be considered void.

2.   Acts in His Own Name

Art. 1883, CC. If an agent acts in his own name, the


principal has no right of action against the persons
with whom the agent has contracted; neither have
such persons against the principal.

In such case the agent is the one directly bound in


favor of the person with whom he has contracted,

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  Rights and Obligations of Acts which are absolutely void cannot be ratified. [de
Leon]
the Principal When Estoppel Applies
Art. 1911, CC. Even when the agent has exceeded his
1.   Obligations authority, the principal is solidarily liable with the
agent if the former allowed the latter to act as
a.  Comply with the though he had full powers.

Obligations Contracted by This is termed as agency by estoppel. [Villanueva]


the Agent
Even if there was no express authority, the principal is
Par. 1, Art. 1910, CC. The principal must comply still solidarily liable because he allowed the agent to
with all the obligations which the agent may have act as if he had authority.
contracted within the scope of his authority.
Acts by the Agent in His Own Name but Involving
Doctrine of Representation Things of the Principal [Art. 1883, par. 2, CC]
All contracts and transactions entered into by the When the properties of the principal are involved, the
agent on behalf of the principal within the scope of his principal is bound even when the contract was entered
authority are binding on the principal as though he into in the name of the agent. The purpose of this rule
himself had entered into them directly. [Villanueva] is to protect third persons against possible collusion
between the agent and the principal. [Gold Star Mining
If the agent acts within the scope of his authority, then Co. v. Lim-Jimena, G.R. No. L-25301 (1968); PNB v.
the principal must comply. Otherwise, the principal is Agudelo, G.R. No. 39037 (1933)]
bound to comply only if he ratifies the agent’s act that
was done beyond the scope of his authority. b.  Advance or Reimburse
Sums Necessary
Acts Within the Scope of Authority
1.   Those expressly specified in the power of attorney
Art. 1912, CC. The principal must advance to the
2.   Conducive acts
agent, should the latter so request, the sums
3.   Advantageous acts
necessary for the execution of the agency.
4.   Collateral acts
Should the agent have advanced them, the
principal must reimburse him therefor, even if the
Ratified Acts
business or undertaking was not successful,
Par. 2, Art. 1910, CC. As for any obligation wherein provided the agent is free from all fault.
the agent has exceeded his power, the principal is
not bound except when he ratifies it expressly or The reimbursement shall include interest on the
tacitly. sums advanced, from the day on which the advance
was made. [Article 1912, CC]
The principal must have full knowledge at the time of
ratification of all the material facts and circumstances The principal is not liable for the expenses incurred by
relating to the unauthorized act of the person who the agent in the following cases [Art. 1918, CC]:
assumed to act as agent. If the material facts were 1.   If the agent acted in contravention of the
suppressed or unknown, there can be no ratification. principal's instructions, unless the latter should
[Manila Memorial v. Linsangan, G.R. No. 151319 wish to avail himself of the benefits derived from
(2004)] the contract;
2.   When the expenses were due to the fault of the
By benefitting from the unauthorized act of an agent, agent;
the principal is said to have ratified the acts of the 3.   When the agent incurred them with knowledge
agent and is estopped from denying said authority. that an unfavorable result would ensue, if the
[Filipinas Life v. Pedroso, G.R. No. 159489 (2008)] principal was not aware thereof;
4.   When it was stipulated that the expenses would
However, in some cases, the mere acceptance of be borne by the agent, or that the latter would be
benefits is not tantamount to ratification by the allowed only a certain sum.
principal.

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General Rule: the principal must advance or reimburse conducive, advantageous, and collateral acts), for
(with interest) the sums necessary to execute the unauthorized acts which the principal has ratified and
agency. for acts which is estopped from denying.

Exceptions: b.  Be Solidarily Liable


1.   Expenses incurred through acts which contravene
the principal’s instructions, and the principal does
Art. 1911, CC. Even when the agent has exceeded his
not want to derive benefit therefrom
authority, the principal is solidarily liable with the
2.   Expenses due to the fault of the agent
agent if the former allowed the latter to act as
3.   Expenses incurred by the agent with the
though he had full powers.
knowledge that an unfavorable result would
ensue, and the principal was unaware
4.   If there is a stipulation that expenses would be Requisites:
borne by the agent or that he would be allowed 1.   Agency relationship exists
only a certain sum 2.   The agent acts in excess of his authority.
5.   Expenses incurred from acts outside the authority 3.   The principal allowed the agent to act as though
of the agent. he had full powers.

Sums to be reimbursed include those from Art. 1915, CC. If two or more persons have
unsuccessful undertakings as well as those initially in appointed an agent for a common transaction or
contravention of the principal’s instructions but later undertaking, they shall be solidarily liable to the
becomes a source of benefits. agent for all the consequences of the agency.

Note: Compare the obligation of the principal with the Requisites:


obligation of the agent, who is bound to advance the 1.   There are two or more principals;
sums necessary to carry out the agency only when he 2.   The principals have all concurred in the
so consents or it is stipulated in the agreement and if appointment of the same agent; and
the principal is not insolvent. 3.   The agent is appointed for a common transaction
or undertaking
c.   Indemnify the Agent for
Injury c.   If the Contract Involves
Things Belonging to the
Art. 1913, CC. The principal must also indemnify the Principal
agent for all the damages which the execution of
the agency may have caused the latter, without Art. 1883, CC. If an agent acts in his own name, the
fault or negligence on his part. [ principal has no right of action against the persons
with whom the agent has contracted; neither have
General Rule: The principal must indemnify the agent such persons against the principal.
for damages in the execution of the agency.
In such case the agent is the one directly bound in
Exception: When damage was caused due to the fault favor of the person with whom he has contracted,
or negligence of the agent. as if the transaction were his own, except when the
contract involves things belonging to the principal.
d.  Compensate the Agent The provisions of this article shall be understood to
be without prejudice to the actions between the
[Art. 1875, CC] principal and agent.
See Rights and Obligations of the Agent above.
General Rule: If the agent acts in his own name, then
the contract is between the agent and the third
2.  L iability of the Principal person. Neither the third person nor the principal has
a right of action against the other.
a.  In General Except: If the contract involves things belonging to the
principal, then the principal is also liable to the third
The principal is bound and liable for the acts of the
party. (Agency with an Undisclosed Principal).
agent done within the scope of his authority (express,

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However, it is not the case that the agent escapes


liability by simply contracting things belonging to the   Rights and Obligations of
principal.
Third Persons
There are two effects of the exception, according to
jurisprudence: 1.   Rights of Third Persons
1.   Principal and third persons now have a right of
action against each other. [Syjuco v. Syjuco, G.R.
No. 13471 (1920)]
a.  Require the Presentation of
2.   The principal is not bound by the contract if the Authority/Instructions
act is beyond the scope of the agent’s authority.
[PNB v. Agudelo, G.R. No. L-39037 (1933)] This Art. 1902, CC. A third person with whom the agent
operates as an exception to the exception. wishes to contract on behalf of the principal may
require the presentation of the power of attorney,
or the instructions as regards the agency. Private or
secret orders and instructions of the principal do
not prejudice third persons who have relied upon
the power of attorney or instructions shown them.

Art. 1900, CC. So far as third persons are


concerned, an act is deemed to have been
performed within the scope of the agent's
authority, if such act is within the terms of the
power of attorney, as written, even if the agent has
in fact exceeded the limits of his authority
according to an understanding between the
principal and the agent.

b.  Rely on Representations by
the Principal
Art. 1873, CC. If a person specially informs another
or states by public advertisement that he has given
a power of attorney to a third person, the latter
thereby becomes a duly authorized agent, in the
former case with respect to the person who
received the special information, and in the latter
case with regard to any person. 
The power shall
continue to be in full force until the notice is
rescinded in the same manner in which it was given.

2.  O bligations of Third
Persons
Based on Keeler Electric v. Rodriguez, G.R. No. L-19001
(1922),
a.   The law indulges in no bare presumptions that an
agency exists: it must be proved or presumed from
facts;
b.   The agent cannot establish his own authority,
either by his representations or by assuming to
exercise it;
c.   An authority cannot be established by mere rumor
or general reputation;

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d.   Even a general authority is not an unlimited one;


and   Modes of Extinguishment
e.   Every authority must find its ultimate source in
some act or omission of the principal. 1.   In General
The burden of proof to show that an agency Agency is extinguished [Art. 1919, CC]:
relationship exists is with the third person. a.   By its revocation;
b.   By the withdrawal of the agent;
Every person dealing with an agent is put upon inquiry c.   By the death, civil interdiction, insanity or
and must discover upon his peril the authority of the insolvency of the principal or of the agent;
agent. If he does not make such inquiry, he is d.   By the dissolution of the firm or corporation which
chargeable with knowledge of the agent's authority, entrusted or accepted the agency;
and his ignorance of that authority will not be any e.   By the accomplishment of the object or purpose of
excuse. [Bacaltos Coal Mines v. CA, G.R. No. 114091 the agency;
(1995)] f.   By the expiration of the period for which the
agency was constituted.

The provision enumerates only those which are


peculiar to agency and is, therefore, not exclusive.
Agency may also be extinguished by the modes of
extinguishment of obligations in general. [de Leon]

The modes of extinguishment may be classified into


three:
a.   By agreement [(e) and (f)];
b.   By subsequent acts of the parties:
1.   By the act of both parties or by mutual
consent; or
2.   By the unilateral act of one of them [(a) and
(b)]
c.   By operation of law [(c) and (d)]

2.  R evocation
a.  In General
Art. 1920, CC. The principal may revoke the agency
at will, and compel the agent to return the
document evidencing the agency. Such revocation
may be express or implied.

General Rule: The principal may revoke the agency at


will.

Exception: Agency cannot be revoked if it is coupled


with an interest, such that:
1.   A bilateral contract depends upon it;
2.   It is the means of fulfilling an obligation already
contracted; or
3.   A partner is appointed manager of a partnership
in the contract of partnership and his removal
from the management is unjustifiable.

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The principal can revoke the agency even if the period prejudice to the provisions of the two preceding
fixed in the contract has not yet expired. [CMS Logging articles.
v. CA, G.R. No. L-41420 (1992)]
Revocation takes effect when notice is given to the
Art. 1925, CC. When two or more principals have former agent, not when the new agent is appointed.
granted a power of attorney for a common
transaction, any one of them may revoke the same
without the consent of the others.
d.  Direct Management by the
Principal
Note: The rule enunciated by Art. 1925, CC is
consistent with Art. 1915, CC which provides that, if Art. 1924, CC. The agency is revoked if the principal
two or more persons have appointed an agent for a directly manages the business entrusted to the
common transaction or undertaking, they shall be agent, dealing directly with third persons.
solidarily liable to the agent for all the consequences
of the agency. If the principal believes that the agent is in breach of
the contract and thereby decides to deal with the
Qualifications: The right of the principal to terminate business directly, then the agency is said to be
the authority of his agent is absolute and unrestricted, revoked. [CMS Logging v. CA, supra] The mere act of
except that he is liable for damages in case: direct management by the principal is not enough to
1.   He revokes the agency in bad faith [Danon v. revoke the agency without such intention.
Brimo, G.R. No. 15823 (1921)]; or
2.   He revokes the agency before the expiration of the e.   Special Authority Revokes
period stipulated in the agency contract.
the General Authority
b.  When Revocation is Not Where a Special Matter is
Binding on Third Persons Involved
1.   When Notice is Required Art. 1926, CC. A general power of attorney is
Art. 1921, CC. If the agency has been entrusted for revoked by a special one granted to another agent,
the purpose of contracting with specified persons, as regards the special matter involved in the latter.
its revocation shall not prejudice the latter if they
were not given notice thereof. If Agent 1 is given a general agency, and Agent 2 is
later given a special agency, then Agent 1 can no
2.   When a Third Person in Good Faith Has No longer perform the powers granted to Agent 2 under
Knowledge of Revocation the special agency

Art. 1922, CC. If the agent had general powers, f.   When Agency Cannot be
revocation of the agency does not prejudice third
persons who acted in good faith and without
Revoked
knowledge of the revocation. Notice of the
revocation in a newspaper of general circulation is Art. 1927, CC. An agency cannot be revoked if a
a sufficient warning to third persons. bilateral contract depends upon it, or if it is the
means of fulfilling an obligation already
contracted, or if a partner is appointed manager of
An agent with general powers is most likely, an agent
a partnership in the contract of partnership and his
authorized to transact with the general public in
removal from the management is unjustifiable.
contradistinction to the agent who contracts with
specified persons under Art. 1921, CC.
Art. 1930, CC. The agency shall remain in full force
and effect even after the death of the principal, if it
c.   Appointment of New Agent has been constituted in the common interest of the
latter and of the agent, or in the interest of a third
Art. 1923, CC. The appointment of a new agent for person who has accepted the stipulation in his
the same business or transaction revokes the favor.
previous agency from the day on which notice
thereof was given to the former agent, without

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Even if the agency is coupled with an interest (which 2.   Contract between Agent Without Knowledge of
means that it is irrevocable), it may still be revoked if Death and Third Person in Good Faith
there is just cause to terminate such agency Art. 1931, CC. Anything done by the agent, without
relationship. knowledge of the death of the principal or of any
other cause which extinguishes the agency, is valid
3.  Withdrawal by the Agent and shall be fully effective with respect to third
persons who may have contracted with him in good
faith.
Art. 1928, CC. The agent may withdraw from the
agency by giving due notice to the principal. If the
3.   Unfinished business
latter should suffer any damage by reason of the
withdrawal, the agent must indemnify him Par. 2, Art. 1884, CC. He must also finish the
therefor, unless the agent should base his business already begun on the death of the
withdrawal upon the impossibility of continuing the principal, should delay entail any danger.
performance of the agency without grave detriment
to himself. c.   Death of Agent
General Rule: The agent may withdraw so long as he If the agent dies, his heirs must:
gives due notice to the principal. If the principal suffers 1.   Notify the principal thereof; and
damage because of the withdrawal, then the agent 2.   In the meantime adopt such measures as the
must indemnify him, except if the basis of his circumstances may demand in the interest of the
withdrawal is because continuing the performance of latter [Art. 1932, CC].
the agency is impossible without grave detriment to
the agent.
5.  D issolution,
If the Agent files a complaint against his principal, Accomplishment,
then he is understood to have renounced the agency
because his act was more expressive than words and Expiration
could not have caused any doubt. [Valera v. Velasco,
G.R. No. L-28050 (1928)] Accomplishment: The fulfillment of the purpose for
which agency was created ipso facto terminates
agency even though it was expressly made
4.  D eath, Civil Interdiction, irrevocable. If the purpose has not been accomplished,
Insanity or Insolvency the agency continues indefinitely for as long as the
intent to continue is manifested through words or
actions of the parties.
a.  In General
Dissolution: The dissolution of a partnership or
By reason of the very nature of the relationship corporation which entrusted (principal) or accepted
between the principal and agent, agency is (agent) the agency extinguishes its juridical existence,
extinguished by the death of the principal or the agent. except for the purpose of winding up its affairs. It is
Any act of an agent after the death of his principal is equivalent to death.
void ab initio unless the same falls under the
exceptions provided for in the aforementioned Art Expiration
1930 and 1931, CC. a.   If created for fixed period, expiration of the period
extinguishes agency even if the purpose was not
b.  Exceptions accomplished.
b.   If no time is specified, the courts may fix the period
1.   Agency Coupled with an Interest. as under the circumstances have been probably
Art. 1930, CC. The agency shall remain in full force contemplated by the parties [Art. 1197, CC].
and effect even after the death of the principal, if it Otherwise, the agency terminates at the end of a
has been constituted in the common interest of the reasonable period of time. Either party can
latter and of the agent, or in the interest of a third terminate the relationship at will by giving notice
person who has accepted the stipulation in his to the other [de Leon].
favor. The period contemplated may be implied from terms
of agreement, purpose of agency, and the
circumstances of the parties.

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PARTNERSHIP
Civil Law

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IX.   PARTNERSHIP 7.   Nominate – has a special designation in law. [de


Leon]

  Contract of Partnership b.  Essential Attributes of a


Partnership
By the contract of partnership:
1.   Two or more persons bind themselves to 1.   Informal/Consensual and Weak Juridical
contribute to a common fund: Personality [Arts. 1771, 1785, 1830, CC]
a.   money; a.   Generally, a partnership may be constituted
b.   property; or in any form
c.   industry b.   The juridical personality of a partnership is
2.   With the intention of dividing the profits among deemed weak since a partnership may be
themselves. dissolved without need of going through a
formal dissolution process,
Two or more persons may also form a partnership for 2.   Mutual Agency [Arts. 1803, 1818, CC]
the exercise of a profession. [Art. 1767, CC] a.   All partners shall be considered agents and
whatever any one of them may do alone shall
bind the partnership
1.   Elements b.   Every partner is an agent of the partnership
for the purpose of its business, and the act of
a.   Two or more persons bind themselves to every partner binds the partnership
contribute money, property, or industry to a 3.   Delectus Personae (Selection of Persons)
common fund,
b.   With the intention of dividing the profits among One selects his partners on the basis of their
themselves personal qualifications and qualities … it is for this
reason that there is mutual representation among
Common Fund the partners so that the act of one is considered
The CC requires the parties “bind themselves to the act and responsibility of the others as well.
contribute” to a common fund. The partnership may [Bautista]
therefore exist even before the common fund is 4.   Partners Burdened with Unlimited Liability [Arts.
created. The common fund may not even come from 1816, 1817, CC]
the partners themselves but may be borrowed from [Villanueva]
third persons. The form of the common fund may not
even be cash or property; it can be in the form of credit
or industry. [Lim Tong Lim v Philippine Fishing Gear, 2.  E ssential Features
G.R. No. 136448 (1999)]
a.   There must be a valid contract;
Intention to Divide Profits 1.   The essential elements of a contract must be
If the common fund’s work is “indispensable, present (cause, object, and consideration).
beneficial and economically useful to the business” of 2.   No required form is necessary but the
the partners and the profit motive is the primordial contract is subject to the provisions of Arts.
reason to establish the partnership, even if there are 1771 and 1773, CC and to the Statute of
no actual profits, then there is partnership. [AFISCO v Frauds.
CA, G.R. No. 112675 (1999)] b.   The parties must have legal capacity;
c.   There must be a mutual contribution of money,
a.  Characteristics of a property, or industry to a common fund;
1.   Money – must be in legal tender. Checks,
Partnership drafts, promissory notes, and other
mercantile documents are not money. There
1.   Principal – does not depend on other contracts; is no contribution of money until they have
2.   Preparatory – entered as a means to an end; been cashed. [Art. 1249, CC]
3.   Commutative – undertaking of each one is 2.   Property – may be real, personal, corporeal,
considered equal with others; or incorporeal property.
4.   Consensual – perfected by mere consent; 3.   Industry – means the active cooperation, the
5.   Bilateral – entered by two or more persons; work of the party associated, which may be
6.   Onerous – contributions have to be made, and either personal manual efforts or intellectual,

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and for which he receives a share in the profits case of failure to comply with the requirements of
(not salary) of the business. article 1772, first paragraph. [Art. 1768, CC]
d.   The object must be lawful;
e.   The primary purpose must be to obtain profits and
to divide the same among the parties;
3.  Parties
f.   The partnership has a juridical personality
separate from individual partners [Art. 1768, CC]. General Rule: Any person capacitated to contract may
enter into a contract of partnership.
a.  Lawful Purpose The following persons CANNOT enter into a contract
of partnership:
A partnership: a.   Those suffering from civil interdiction;
1.   Must have a lawful b.   Minors;
a.   Object; or c.   Insane or demented persons;
b.   Purpose; and d.   Deaf-mutes who do not know how to write;
2.   Must be established for the common benefit or e.   Incompetents who are under guardianship.
interest of the partners. [Art. 1770 (1), CC]
Exceptions : The capacity of the following persons to
Consequence if there is no lawful purpose: the enter into a contract of partnership, though
partnership agreement is void ab initio. capacitated to contract generally, are limited:
a.   Those who are prohibited from giving each other
Basis: Contracts whose purpose is contrary to law are any donation or advantage cannot enter into a
void from the beginning. [Art. 1409 (1), CC]. universal partnership [Article 1782];
b.   A corporation cannot enter into a partnership in
When an unlawful partnership is dissolved by a the absence of express authorization by statute or
judicial decree, the profits shall be confiscated in favor charter. [Mendiola v. CA, G.R. No. 159333 (2006)]
of the State, without prejudice to the provisions of the
Penal Code governing the confiscation of the Although a corporation cannot enter into a
instruments and effects of a crime. [Art. 1770 (2), CC] partnership contract, it may, however, engage in a
joint venture with others [Aurbach vs. Sanitary Wares
Upon the dissolution of an unlawful partnership, the Manufacturing Corp, G.R. No. 75875 (1989)]
profits are simply confiscated by the State. The
previous rule is to give such profits to a charitable On the other hand, there is no prohibition against a
institution. partnership being a partner in another partnership [de
Leon].
The profit and tools/instruments in the partnership
with an unlawful purpose will be confiscated in favor
of the government but if the partners were not in pari 4.  O bject
delicto, they may be able to recover their contribution
to the partnership instead of it being forfeited as well. a.  Object of Universal
Partnership
b.  Common Benefit [Art. 1770,
CC] A universal partnership may refer to:
1.   All present property :
A partnership must be established for the common a.   The partners contribute all the property
benefit of the partners. This “common benefit” is which belongs to them to a common fund,
always pecuniary based on Art 1799, CC. with the intention of dividing the same
among themselves, as well as the profits they
A stipulation which excludes one or more partners may acquire therewith [Art. 1778, CC].
from any share in the profits or losses is void. [Art. b.   The property contributed includes all those
1799, CC] belonging to the partners at the time of the
constitution of the partnership.
c.   A stipulation for the common enjoyment of
c.   Juridical Personality any other profits may also be made. However,
the property which the partners may acquire
The partnership has a juridical personality separate subsequently by inheritance, legacy or
and distinct from that of each of the partners, even in donation cannot be included in such

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stipulation, except the fruits thereof [Art. a.   Where immovable property or real rights are
1779, CC]. contributed:
2.   All the profits: 1.   The contract must appear in a public
a.   It comprises all that the partners may acquire instrument; and
by their industry or work during the existence 2.   Attached to such instrument must be an
of the partnership. inventory, signed by the parties, of the
b.   Only the usufruct over the property of the property contributed [Arts. 1771 and 1773, CC];
partners passes to the partnership [Art. 1780, b.   Where the capital is at least P3,000, in money or
CC]. property:
1.   The contract must appear in a public
When the articles of universal partnership do not instrument; and
specify its nature (all present property or all the 2.   It must be recorded in the Office of the
profits), the partnership will be considered as one only Securities and Exchange Commission (SEC).
of all the profits [Art. 1781, CC].
As to the second, failure to comply with these
Rule on After-Acquired Properties requirements, however, does NOT affect the liability of
Aside from the contributed properties, only the profits the partnership and the partners to third persons
of the contributed common property (no other profits) [Arts. 1768 and 1772, CC].
are included. Thus, should a partner subsquently
acquire a property as remuneration for his work, such Failure to comply with the requirements under Arts.
property and its fruits are not to be enjoyed by the 1771 and 1772, CC affords the parties the remedy of
universal partnership of all present property. [Paras] demanding that it be executed in a public instrument.
[Dauden-Hernaez v. De Los Angeles, G.R. L-27010
Properties subsequently acquired by inheritance, (1969); Art. 1357, CC]
legacy, or donation, cannot be included in the
stipulation but the fruits thereof can be included in the
stipulation
6.  D uration

b.  Object of Particular a.  Commencement


Partnership Art. 1784, CC. A partnership begins from the
moment of the execution of the contract, unless
A particular partnership has for its object determinate otherwise stipulated.
things, their use or fruits, or a specific undertaking, or
the exercise of a profession or vocation [Art. 1783, CC].
b.  Term
c.   Effect of Unlawful Object As to period, a partnership may either be:
1.   For a fixed term or particular undertaking; or
If the partnership has an unlawful object or purpose:
2.   At will, the formation and dissolution of which
1.   The contract is void ab initio [Art. 1409(1), CC].
depend on the mutual desire and consent of the
2.   Once dissolved by judicial decree:
parties. Any one of the partners may, at his sole
a.   The profits shall be confiscated by favor of the
pleasure, dictate the dissolution of the
State;
partnership, even in bad faith, subject to liability
b.   The instruments or tools and proceeds of the
for damages [Ortega v. CA, G,R, No. 109248
crime shall also be forfeited in favor of the
(1995)].
State [Art. 1770].
3.   The contributions of partners shall not be
confiscated unless they are instruments or tools of c.   Extension
the crime [de Leon]
A partnership term may be extended by:
1.   Express renewal; or
5.  F orm 2.   Implied renewal, when these requisites concur:
a.   The partnership is for a fixed term or
General rule: The contract may be constituted in any particular undertaking;
form [Art. 1771, CC]. b.   It is continued after the termination of the
fixed term or particular undertaking without
Exceptions: any express agreement [Art. 1785, CC].

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7.  Rules to Determine b.  As to its Object


Existence 1.   Universal partnership:
a.   Of all present property;
When the intent of the parties is clear, such intent b.   Of profits;
shall govern. When it does not clearly appear, the 2.   Particular partnership.
following rules apply:
a.   Persons who are not partners to each other are
not partners as to third persons, subject to the
c.   As to its Duration
provisions on partnership by estoppel.
b.   Co-ownership or co-possession does not of itself 1.   For a fixed term or particular undertaking;
establish a partnership, even when there is 2.   At will.
sharing of profits in the use of the property.
d.  As to the Liability of the
Exception: The co-ownership of inherited Partners
properties is automatically converted into an
unregistered partnership the moment said 1.   General partnership, consisting of general
common properties and/or the income derived partners only, who are liable pro rata for
therefrom are used as a common fund with intent partnership obligations with all their property
to produce profits for the heirs in proportion to after exhaustion of partnership assets;
their respective shares in the inheritance as 2.   Limited partnership, includes, aside from
determined in a project partition. [Ona v CIR, G.R. general partner/s, limited partners, who are not
L-19342 (1972)] personally liable for partnership obligations.
c.   Sharing of gross returns does not of itself
establish a partnership, even when the parties e.   As to its Publicity
have joint or common interest in any property
from which the returns are derived. 1.   Secret partnership, where the existence of certain
d.   The receipt by a person of a share in the profits of persons as partners is not made known by the
a business is prima facie evidence that he is a partners;
partner. 2.   Open or notorious partnership, the existence of
which is made known to the public by the
As to the fourth, no such inference is drawn if the partners.
profits are received in payment:
a.   As a debt by installments or otherwise; f.   As to its Purpose
b.   As wages of an employee or rent to a landlord;
c.   As an annuity to a widow or representative of a 1.   Commercial or trading partnership, for
deceased partner; transaction of business;
d.   As interest on a loan, though the amount of 2.   Professional or non-trading partnership, for the
payment vary with the profits of the business; exercise of profession.
e.   As the consideration for the sale of a goodwill of a
business or other property by installments or A profession has been defined as “a group of men
otherwise [Art. 1769, CC]. pursuing a learned art as a common calling in the
spirit of public service – no less a public service
8.  K inds of Partnerships because it may incidentally be a means of livelihood”
[In the Matter of the Petition for Authority to Continue
Use of Firm name “Sycip, Salazar, etc.”/“Ozaeta,
a.  As to the Legality of its Romulo, etc.”, 92 SCRA 1 (1979)].
Existence
1.   Partnership de jure is one which has complied with
9.  K inds of Partners
all the requisites for its lawful establishment; a.   Capitalist partner, whose contribution is money
2.   Partnership de facto is one which failed to so or property;
comply. b.   Industrial partner, contribution is only his
industry;

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c.   General partner, whose liability to third persons reimbursement from profits; if none, in
extends to his separate property; capitalist partners proportion to
d.   Limited partner, whose liability to third persons is contribution
limited to his capital contribution;
e.   Managing partner, who was designated to Engagement in business
manage the affairs or business of the partnership; Cannot engage, for
f.   Liquidating partner, who takes charge of the Cannot engage in
his own account, in
winding up of partnership affairs; business for himself,
the same kind of
g.   Partner by estoppel, who is not really a partner unless the partnership
business as that of
but is liable as such for the protection of innocent expressly permits him to
the partnership,
third persons; do so; should he do so
unless there is a
h.   Continuing partner, who continues the business without permission, the
stipulation to the
after dissolution of the partnership by admission capitalist partners may:
contrary; should he
of a new partner, or retirement, death or expulsion [1] exclude him from the
do so, he shall bring
of existing partners; firm; or [2] avail
to the common fund
i.   Surviving partner, who remains a partner after themselves of the
any profits accruing
dissolution by death of any partner; benefits obtained in
to him from his
j.   Subpartner, who is not a member of the violation of the
transactions and
partnership but contracts with a partner with prohibition, with right to
shall personally bear
regard to the share of the latter in the partnership; damages in either case
all the losses [Art.
k.   Ostensible partner, who takes active part in the [Art. 1789, CC]
1808, CC]
business of the partnership and is known by the
public;
l.   Secret partner, who takes active part in the 10.  Partnership,
business, but is unknown to the third persons as a
partner;
Distinguished from Other
m.   Silent partner, who does not take active part in Contracts
the business, but may be known to be a partner by
third persons; Partnership Joint venture
n.   Dormant partner, who does not take active part
in the business and is not known or held out as a Operates without
Operates with firm name
partner; firm name and legal
and legal personality
o.   Original partner, who has been a partner since personality
the constitution of the partnership; Generally relates to a
p.   Incoming partner, who is about to be taken as a continuing business of Usually limited to a
member into an existing partnership; various transactions of a single transaction
q.   Retiring partner, who is withdrawing from the certain kind
partnership.
Corporations may
Corporations may not
enter into joint
Industrial Capitalist enter into a partnership
ventures
partner partner
Form of contribution A joint venture is an agreement between two parties
Industry Money or property to enter into a commercial undertaking. It may fall
under a partnership with a limited purpose.
Share in profits
According to Under Philippine law, a joint venture is a form of
agreement; if none, partnership and should thus be governed by the laws
Just and equitable share of partnership [Auerbach v. Sanitary Wares
in proportion to
contribution Manufacturing Corp, G.R. No. 75875].
Share in losses
Partnership Co-ownership
According to
Exempted as to losses as Generally created by Generally created by
agreement; if none,
between partners, but either express or law and may exist even
in the same
liable to third persons, implied contract without a contract
proportion as the
without prejudice to
agreed share in

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Has a separate When management is


Has no separate Management is vested
juridical personality not agreed upon,
juridical personality in the board of directors
(not true for GPPs) every partner may act
or trustees
The purpose is the for the partnership
Generally, the purpose
common enjoyment of a Partners are generally
is to obtain profits
thing or right liable for partnership
Term depends upon debts (note difference Stockholders are liable
An agreement to keep a re: liability between only to the extent of
the lifetime of the
thing undivided for general partnerships their shares
partners,; death of any
more than ten years is and limited
of them generally
not allowed, but may be partnerships)
terminates a
extended
partnership A partner cannot
There is mutual There is no mutual dispose of his interest, A stockholder has the
agency between representation among so as to make the right to transfer his
partners co-owners assignee a partner, shares without consent
without consent of of others
Death or incapacity of a others
Death or incapacity of
co-owner does not
a partner dissolves the Term depends upon
dissolve the co-
partnership the lifetime of the
ownership The term limit is 50
partners,; death of
A partner cannot years, but may be
any of them generally
dispose of his interest, extended
A co-owner can dispose terminates a
so as to make the partnership
of his share without
assignee a partner,
consent of others May be dissolved at May only be dissolved
without consent of
others any time by one or all with the consent of the
of the partners state

Partnership Corporation Effects when parties come together intending to form a


Has juridical personality separate and distinct corporation, but no corporation is formed due to legal
from its individual members (not true for GPPs) cause:
1.   Parties who had intended to participate or
Distributes its profits to those who contributed
actually participated in the business affairs of the
capital to the business
corporation would be considered as partners
Taxable as in a corporation under a de facto partnership, and would be liable
Created by operation of as such in an action for settlement of partnership
Created by agreement obligations; and
law
2.   Parties who took no part except to subscribe to
Except for corporation shares of stock in a proposed corporation, do not
Involves at least two
sole, requires at least 5 become partners with other subscribers who
persons
incorporators engaged in business under the name of the
Personality pretended corporation, and are not liable for
Personality commences action for settlement of the alleged partnership
commences from the
from the issuance of contribution.
moment of execution
certificate of
of the contract
incorporation
(except for GPPs) Conjugal partnership of
Partnership
Can exercise only gains
powers conferred by the Created by voluntary
Arises in case the
Corporation Code or by agreement of two or
Can exercise any spouses, of opposite sex,
its articles of more partners of
power authorized by agree before marriage
incorporation, and such either sex
partners
as are necessary or
Governed by
incidental to the exercise Governed by law
agreement
of such powers

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Has juridical
personality (not true
Has no juridical   Rights and Obligations of
personality
for GPPs) the Partnership
Commencement is on

Commencement date
the date of the
celebration of the
1.   Right to Contribution,
may be stipulated marriage and any Right to Warranty
stipulation to the
contrary is void Every partner is a debtor of the partnership for
Share in profits may whatever he may have promised to contribute thereto.
be stipulated; [Art. 1786, CC]
otherwise, in Share in profits is equal
proportion to Contribution Of Money Or Property
contribution With respect to contribution of property, a partner is
obliged to:
Administration belongs a.   To contribute, at the beginning of the partnership
Management shared
to the spouses jointly, or at the stipulated time, the money, property or
by all partners, unless
but decision of husband industry which he undertook to contribute;
otherwise agreed
prevails in case of
upon
disagreement Effect of failure to contribute: Makes the partner
Partner can dispose Spouse cannot dispose ipso jure a debtor of the partnership even in the
of interest even of interest during absence of demand. The remedy is not rescission
without consent of marriage, even with but an action for specific performance with
others consent damages and interest. [Sancho v. Lizarraga, G.R.
L-33580 (1931)]
Partnership Voluntary association Note: When contribution is in goods, the amount
Has juridical thereof must be determined by proper appraisal
Has no juridical
personality (except of the value thereof at the time of contribution.
personality
GPPs) [Art. 1787, CC]
Not always organized
Organized for profit b.   In case a specific and determinate thing is to be
for profit
contributed:
Capital is not 1.   To warrant against eviction in the same
Capital is either
contributed, although manner as a vendor; and

borrowed or
fees are collected from 2.   To deliver to the partnership the fruits of the
contributed
members property promised to be contributed, from
The partnership is The members are liable the time they should have been delivered,
primarily liable; the individually for debts without need of demand [Art. 1786, CC];
partners are liable only which they authorized c.   In case a sum of money is to be contributed, or in
subsidiarily or ratified case he took any amount from the partnership
coffers, to indemnify the partnership for:
Share in profits may be 1.   Interest; and
stipulated; otherwise, 2.   Damages from the time he should have
Share in profits is equal
in proportion to complied with his obligation, or from the time
contribution he converted the amount to his own use,
respectively [Art. 1788, CC].
d.   To preserve the property with diligence of a good
father of a family pending delivery to the
partnership. [Art. 1163, CC]
e.   To indemnify for any interest and damages
caused by the retention of the property or by delay
in its obligation to contribute a sum of money.
[Art. 1788 and 1170, CC]

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Amount of Contribution c.   The partner who collects is authorized to manage


General rule: Partners are to contribute equal shares to and actually manages the partnership.
the capital of the partnership.
Exceptions:
Exception: a.   In case the receipt was issued for the account of
a.   When there is an agreement to the contrary, the the partnership credit only, however, the sum
contribution shall follow such agreement [Art. shall be applied to the partnership credit alone.
1790, CC]. b.   When the debtor declares, pursuant to Art. 1252,
b.   Industrial partners, unless he has contributed CC at the time of making the payment, to which
capital pursuant to an agreement to that effect. debt the sum must be applied, and if the personal
credit of the partner is more onerous to him, it
Additional Capital Contribution shall be so applied [Art. 1792, CC].
Requisites:
a.   There is an imminent loss of the business of the
partnership;
3.  Right to be Compensated
b.   The majority of the capitalist partners are of the
opinion that an additional contribution to the Every partner is responsible to the partnership for
common fund would save the business; damages suffered by it through his fault and he cannot
c.   The capitalist partner refuses deliberately (not compensate them with the profits and benefits which
because of financial inability) to contribute an he may have earned for the partnership by his industry.
[Art. 1794, CC]
additional share to the capital; and 

d.   There is no agreement that even in case of
Set-Off Of Liability
imminent loss of the business, the partners are
General rule: The liability for damages cannot be set-
not obliged to contribute. 
 off or compensated by profits or benefits which the
partner may have earned for the partnership by his
Any partner who refuses to contribute an additional industry.
share to the capital, except an industrial partner, to
save the venture, shall be obliged to sell his interest to Rationale: The partner has the obligation to secure the
the other partners, unless there is an agreement to the benefits for the partnership. As such, the requirement
contrary [Art. 1791, CC]. for compensation, that the partner be both a creditor
and a debtor of the partnership at the same time, is
Contribution Of Industry not complied with [Art. 1278, CC; de Leon].
An industrial partner is obliged to contribute his
industry at the stipulated time. Exception: The court may equitably lessen the liability
if, through his extraordinary efforts in other activities
2.  R ight to Have Sums of the partnership, unusual profits were realized [Art.
1794, CC]. Note, however, that there is still no
Applied Pro Rata compensation in this case.

General rule:
A partner: 4.  R ight to Accounting of
a.   Authorized to manage Profits Received without
b.   Who collects a demandable sum owed to him
1.   In his own name the Consent of the Other
2.   From a person who also owes the
partnership a demandable sum,
Partners
Is obliged to apply the sum collected to both credits
Every partner must account to the partnership for any
pro rata, even if he issued a receipt for his own credit
benefit, and hold as trustee for it any profits derived by
only.
him without the consent of the other partners from any
transaction connected with the formation, conduct, or
Requisites:
liquidation of the partnership, or from any use by him
a.   There exist at least two debts, one where the
of its property. [Art. 1807, CC]
collecting partner is creditor, and the other, where
the partnership is the creditor;
b.   Both debts are demandable ; and 
 5.  O bligation to Reimburse
Partners
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U.P. LAW BOC PARTNERSHIP CIVIL LAW

The partnership shall be responsible to every partner


for the amounts he may have disbursed on behalf of   Rights and Obligations of
the partnership and for the corresponding interest,
from the time the expenses are mad; it shall also
Partners Inter Se
answer to each partner for the obligations he may
have contracted in good faith in the interest of the 1.   Right to Associate
business, and for the risks in consequence of its
management. [Art. 1796, CC] Another in Share
Every partner may associate another person with him
in his share. The admission of the associate to the
partnership, however, requires consent of all the other
partners even if the partner having an associate is a
managing partner [Art. 1804, CC].

This arrangement refers to a contract of


subpartnership, which is a partnership within a
partnership, distinct and separate from the main
partnership. It is considered a modification of the
original contract [de Leon].

2.  R ight to Inspect
Partnership Books
The partnership books shall be kept:
a.   At a place agreed upon by the partners;
b.   When there is no such agreement, at the principal
place of business of the partnership.

Every partner shall, at any reasonable hour, have


access to and may inspect and copy any of them.

Any reasonable hour means reasonable hours on


business days throughout the year [Pardo v. Lumber
Co., G.R. No. L-22442 (1925)].

3.  Right to Formal Account


General rule: The right to a formal account of
partnership affairs accrues only when the
partnership is dissolved.

Exceptions: In the special and unusual cases


mentioned in Article 1809, formal accounting may be
demanded by any partner even before dissolution:
a.   If he is wrongfully excluded from the partnership
business or possession of its property by his co-
partners;
b.   If the right exists under the terms of any
agreement; 

c.   If, without his consent, a partner has derived
profits from any transaction connected with the
formation, conduct, or liquidation of the
partnership or from any use of partnership
property; 


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d.   Whenever other circumstances render it just and 1.   Formal accounting [Art.1809, CC]; or

reasonable [Art. 1809, CC]. 
 2.   Dissolution by judicial decree [Art.1831, CC]. 

d.   A partner’s right in such property is not
As long as the partnership exists, any of the partners assignable, except when all the partners assign
may demand an accounting of the partnership their rights in the same property;
business. Prescription of the said right starts to run e.   The right is not subject to attachment or
only upon the dissolution of the partnership when the execution, except on claim against the
final accounting is done. [Emnace v. CA, G.R. 126334 partnership.
(2001)]
In case of such attachment, the partners, or any of
4.  P roperty Rights of them, or the representatives of a deceased
partner, cannot claim any right under the
Partners homestead or exemption laws.
f.   The right is not subject to legal support under
In General Article 291 [Art. 1811, CC].
The property rights of a partner are: g.   Contemplates tangible property.
a.   Rights in specific partnership property;
b.   Interest in the partnership; and Interest In Partnership
c.   Right to participate in the management [Art. 1810, A partner’s interest in the partnership is his share of
CC]. the profits and surplus [Art. 1812, CC].

Property And Capital Distinguished Assignment Of Interest [Art. 1813, CC]


Partnership capital Partnership property Assignment by a partner of his whole interest in the
partnership, of itself:

Value varies with market
With constant value a.   Does not dissolve the partnership; or

conditions
b.   Does not entitle the assignee to:
Includes the 1.   Interfere in the management or
Includes only actually
contributions and administration of the partnership business or
contributed and
property acquired by the affairs;
promised capital
partnership 2.   Require information or account of
partnership; or 

Ownership Of Certain Properties 3.   Inspect the partnership books. 

a.   The ownership of property used by the
partnership depends on the intention of the It merely entitles the assignee to:
parties, which may be drawn from an express a.   Receive the profits to which the assigning partner
agreement or their conduct. was entitled;
b.   A partner may allow the property to be used by the b.   In case of fraud in management, avail 
himself of
partnership without transfer of ownership, the usual remedies;
contributing only the use or enjoyment thereof. c.   In case of dissolution:
c.   He may also hold title to partnership property, 1.   Receive his assignor’s interest; and
without acquiring ownership thereof [Art. 1819, 2.   Require an accounting from the date only
CC].
of the last account agreed to by all 
the
d.   Property acquired by a partner with partnership
partners [Art. 1813, CC]. 

funds is presumed to be partnership property. 

e.   The same presumption also arises when the
Reason: It would effectively allowed a third party to
property is indicated in the partnership books as
participate in the affairs of the partnership and would
partnership asset. 
 basically have a stranger become a partner without
f.   Other factors may be considered to determine the consent of all other partners.
ownership of the property. 

Risk of Loss of Things Contributed
Rights In Specific Property a.   Specific and determinate things which are not
a.   The partners have equal rights to possess fungible; only the usufruct is contributed – borne
partnership property for partnership purposes. by the partner because he remains the owner of
b.   For other purposes, the consent of his partners is the things;
necessary. 

c.   If the partner is excluded, he may ask for:

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b.   Specific and determinate things the ownership which may be revoked at any time. Removal, however,
of which is transferred to the partnership – should also be done by the partners having the
borne by the partnership as owner; controlling interest. [de Leon]
c.   Fungible things – partnership, because use is
impossible without the things being consumed or Managing By Two or More Partners

impaired; When there are two or more managing partners
d.   Things contributed to be sold – partnership for appointed,
there cannot be any doubt that the partnership a.   without specification of their duties;or
was intended to be the owner; and b.   without a stipulation on how each one will act:
e.   Things brought and appraised in the inventory – 1.   Each one may separately execute all acts of
partnership because the intention of the parties administration. 

was to contribute to the partnership the prince of 2.   If any of them opposes the acts of the others,
the things contributed with an appraisal in the the decision of the majority prevails. 

inventory. There is thus an implied sale.
3.   In case of a tie, the partners owning the
controlling interest will decide [Art. 1801, CC].
Note: The list presupposes delivery. Without delivery,
the loss is borne by the partner.
Requisites:
i.   Two or more partners have been
5.  R ight to Participate in appointed 
as managers; 

Management ii.   There is no specification of their
respective 
duties; and 

Management of the partnership is primarily governed c.   There is no stipulation that one of them 
shall not
by the agreement of the partners in the articles of act without the consent of all the others. 
The
partnership. It may be stipulated that the partnership right to oppose is not given to non-managers
will be managed by: because in appointing their other partners as
a.   All the partners; or managers, they have stripped themselves of all
b.   A number of partners appointed as managers, participation in the administration. [Paras]
which may be appointed:
1.   In the articles of partnership; or The other managers, however, should make the
2.   After constitution of the partnership. opposition before the acts produce legal effects
insofar as third persons are concerned.
Powers of A Managing Partner
General rule: The partner designated as manager in the IRRECONCILABLE DEADLOCK
articles may execute all acts of administration despite Those who vote against the contract shall prevail, the
opposition by the other partners. same having been entered into without authority. [de
Leon]
Exception: He cannot do so when he acts in bad faith.
Stipulation of Unanimity
Revocation Of Power By Managing Partner In case there is a stipulation that none of the
General Rule: Power is irrevocable without just or managing partners shall act without the consent of
lawful cause. others,
a.   The concurrence of all is necessary for the
The powers of the managing partner may be revoked: validity of the acts, and
a.   If appointed in the articles of partnership, when: b.   The absence or disability of one cannot be
1.   There is just or lawful cause for revocation; alleged,
and unless there is imminent danger of grave or
2.   The partners representing the controlling irreparable injury to the partnership. [Art. 1802, CC]
interest revoke such power.
b.   If appointed after the constitution of the Management When Manner Not Agreed Upon
partnership, at any time and for any cause [Art. When there is no agreement as to the manner of
1800, CC]. management, the following rules apply:
a.   All the partners are considered agents (mutual
Reason: Such appointment is a mere delegation of agency). Whatever any one does alone binds the
power, not founded on a change of will on the part of partnership, unless there is a timely opposition to
the partners, the appointment not being a condition of the act, under Art. 1801, CC.
the contract. It is merely a simple contract of agency,

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b.   Any important alteration in the immovable that no other money than that contributed as capital
property of the partnership, even if useful to the is involved. [de Leon; Martinez v. Ong Pong Co, G.R.
partnership, requires unanimity. If the alteration No. 5236 (1910)]
is necessary for the preservation of the property,
however, consent of the others is not required [de
Leon].
7.  Right to Ask for
Dissolution [Arts. 1830(2)
If the refusal is manifestly prejudicial to the
partnership, court intervention may be sought [Art. and 1831, CC]
1803, CC].
See Dissolution and Winding Up below.
The consent need not be express. It may be presumed
from the fact of knowledge of the alteration without
interposing any objection. [de Leon]
8.  O bligation to Render True
and Full Information
Mutual Agency
In addition to the Art. 1801, CC there is effectively a Partners shall render on demand true and full
mutual agency in the following cases: information of all things affecting the partnership to:
a.   Partners can dispose of partnership property even a.   Any partner;
when in partnership name [Art. 1819, CC]. b.   The legal representative of any deceased partner;
b.   An admission or representation made by 
any or
partner concerning partnership affairs is c.   The legal representative of any partner under

evidence against the partnership [Art. 1820, CC]. legal disability [Art. 1806, CC].
c.   Notice to any partner of any matter relating to
partnership affairs is notice to the 
partnership Even without demand, honesty demands the giving of
vital information, the refraining from all kinds of
[Art. 1821, CC]. 
 concealment. [Paras]
d.   Wrongful act or omission of any partner acting for
partnership affairs makes the partnership liable By “information”, it is meant that which can be used
[Art. 1822, CC]. 
 for partnership purposes, it is in the sense of a property
e.   Partnership is bound to make good losses 
for which the partnership has a valuable right. [de Leon]
wrongful acts or misapplications of partners [Art.
1823, CC]. 

9.  O bligation to Account and
6.  R ight to be Reimbursed by Act as Trustee
the Partnership Every partner must:
a.   Account to the partnership for any benefit; and
The partnership shall be responsible to every partner b.   Hold as trustee for it any profits derived by him
for the amounts he may have disbursed on behalf of without the consent of the other partners:
the partnership and for the corresponding interest, 1.   From any transaction connected with the
from the time the expenses are mad; it shall also formation, conduct, or liquidation of the
answer to each partner for the obligations he may partnership; or
have contracted in good faith in the interest of the 2.   From any use by him of its property [Art. 1807,
business, and for the risks in consequence of its CC].
management. [Art. 1796, CC]
General Rule: The partner cannot use or apply
The provision is meant to grant to every partner the exclusively to his own benefit partnership assets or
right to demand from the partnership reimbursement results of the knowledge or information gained by him
of advances made on behalf of the partnership as a partner to the detriment of the partnership. [de
business. [Villanueva] Leon]

Article 1796 is not applicable insofar as it provides that Exception: If the taking by the partner is with the
“the partnership shall be responsible to every partner consent of all other partners. [Lim Tanhu v. Ramolete,
for the amounts he may have disbursed on behalf of G.R. L-40098 (1975)]
the partnership and for the corresponding interest
from the time the expenses are made,” for the reason

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The duty to account continues until the partnership The test is the possibility of unfair competition.
relation is terminated. A partner occupies a fiduciary position with respect to
his co-partners imposing duties of utmost good faith
This obligation exists even when he issued a receipt for and he may not carry on any other business in rivalry
his share only [Art. 1793, CC]. with the business of the partnership whether in his
own name or for the account of another at the expense
Rationale: In this case, the debt becomes a bad debt. of the partnership. [de Leon]
It would be unfair for the partner who already
collected not to share in the loss of the other partners.
11.  Obligation to Share in the
Credit collected after dissolution: The collecting Profits/Losses
partner need not bring the same to the partnership
capital. Art. 1793 presupposes that there exists Rules For Distribution Of Profits And Losses
partnership capital. Upon dissolution of the The distribution of profits and losses shall be in
partnership and the return to each principal of what he accordance with the following rules:
contributed, the community of interest between them a.   They shall be distributed in conformity with the
disappears altogether. [de Leon] agreement.
b.   If only the share in profits has been stipulated, the
10.  Obligation not to Engage share in the losses shall be in the same
proportion. 

in Another Business c.   In the absence of any stipulation:
1.   The share in the profits of the capitalist
FOR INDUSTRIAL PARTNERS partners shall be in proportion to their
General rule: An industrial partner cannot engage in contributions.
business for himself. Should he do so, the capitalist 2.   The losses shall be borne by the capitalist
partners, as well as industrial partners [de Leon] may partners, also in proportion to the
either: contributions.
1.   Exclude him from the firm; or 3.   The share of the industrial partners in the
2.   Avail themselves of the benefit which he may profits is that share as may be just and
have obtained. equitable. If he also contributed capital, he
will receive a share of the profits in proportion
Exception: He may engage in business for himself to his contribution; and
when the partnership expressly permits him to do so 4.   The industrial partner, who did not contribute
[Art. 1789, CC]. capital, is not liable for losses [Art. 1797, CC].

Remedy of the other partners Exclusion Of Partner From Share


The other partners have the remedy of either General rule: A stipulation excluding one or more
excluding the erring partner from the firm or of partners from any share in the profits or losses is void
availing themselves of the benefits which he may have [Art. 1799, CC].
obtained.
Exception: A stipulation exempting an industrial
An action for specific performance to compel the partner from losses is valid, since, if the partnership
partner to perform the promised work is not available fails to realize profits, he can no longer withdraw his
as a remedy because this will amount to involuntary work or labor [de Leon].
servitude.
But this does not exempt the industrial partner from
Reasons: liability insofar as third persons are concerned. He may
1.   To prevent the industrial partner from exploiting however, recover what he has given to third persons
his services for his own personal benefit without from the other partners, for he is exempted by law
the permission of the firm. from losses.
2.   To prevent conflict of interest and to ensure
compliance by said partner with his prestation.

For a CAPITALIST PARTNER, the prohibition extends


only to any operation which is of the same or similar
kind of business in which the partnership is engaged,
unless there is a stipulation to the contrary.

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  Obligations of the Exceptions:


a.   A third person who transacted with the
Partnership/Partners to partnership can hold the partners solidarily
(rather than subsidiarily) liable for the whole
Third Persons obligation if the case falls under Articles 1822 or
1823 [Muñasque v. CA, G.R. L-39780 (1985)]. The
provisions refer to wrongful acts or omission and
1.   Operate Under a Firm misapplication of money or property by a partner
in the ordinary course of business.
Name b.   A person admitted as a partner into an existing
partnership is liable for all the obligations of the
Every partnership shall operate under a firm name, partnership arising before his admission, except
which may or may not include the name of one or more that his liability shall be satisfied only out of
of the partners. partnership property, unless there is a stipulation
to the contrary [Art. 1826, CC]. In other words, he
Those who, not being members of the partnership, is not personally liable.
include their names in the firm name, shall be subject
to the liability of a partner. [Art. 1815, CC] Pro Rata
The partners are liable pro rata. This liability is not
General rule: The partners may adopt any firm name increased even when a partner:
desired. a.   Has left the country and the payment of his share
of the liability cannot be enforced [Co-Pitco v.
Exceptions: Yulo, G.R. No. L-3146 (1907)]; or
a.   They cannot use a name which is “identical or b.   His liability is condoned by the creditor [Island
deceptively or confusingly similar to an existing or Sales v. United Pioneers, G.R. No. L-22493 (1975)].
corporation [or partnership] or to any other name
already protected by law or is patently deceptive, Basis for Pro-rating
confusing or contrary to existing laws” [Sec. 18, Pro rata must be understood to mean equally or jointly
Corporation Code]. and not its literal meaning.
b.   Use of names of deceased partner in law firms is
“permissible provided that the firm indicates in all After all partnership assets have been exhausted, pro-
its communications that said partner is deceased” rating is based on the number of partners and not on
[Rule 3.02, Code of Professional Responsibility]. the amount of their contributions to the common fund,
subject to adjustment among the partners [de Leon].
2.  L iability for Partnership
Liability of an Industrial Partner
Debts An industrial partner, who is not liable for losses, is not
exempt from this liability. However, he can recover the
Liability of Partners for Partnership Contracts amount he has paid from the capitalist partners,
The partnership is primarily liable for contracts unless there is a stipulation to the contrary [Cia.
entered into: Maritima v. Muñoz, G.R. No. L-24796 (1907)].
a.   In its name and for its account;
b.   Under its signature; and Stipulation against Individual Liability
c.   By a person authorized to act for it. Any stipulation against this liability is:
a.   Void against third persons; but
Upon exhaustion of its assets, all partners are liable b.   Valid among the partners [Art.1817, CC].
pro rata with all their property. Any partner may enter
into a separate obligation to perform a partnership Art. 1799, CC. A stipulation which excludes one or
contract [Art. 1816, CC]. more partners from any share in the profits or loses
is void.
Nature of Individual Liability Subsidiary
General rule: The partners are liable subsidiarily. It
only arises upon exhaustion of partnership assets [Cia. Art. 1817, CC. Any stipulation against the liability
Maritima v. Muñoz, G.R. No. L-24796 (1907)]. laid down in the preceding article shall be void,
except as among partners

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Reconciliation: 1.   Authorized by all the partners; or


The exemption of the industrial partner to pay losses 2.   The other partners have abandoned the
relates exclusively to the settlement of the partnership business [par. 3, Art. 1818, CC].
affairs among the partners themselves and has
nothing to do with the liabilities of the parties to third Acts In Contravention of a Restriction
persons. Art. 1816 refers to “liabilities” while Art. 1797 Any act of a partner in contravention of a restriction on
speaks of “losses”. There is therefore no conflict authority does not bind the partnership to persons
between the two articles [Nachura]. having knowledge of the restriction [par. 4, Art. 1818,
CC].
3.  Liability of Partners for The partnership is not liable to third persons having
Partnership Contracts actual or presumptive knowledge of the restrictions,
whether or not the acts are for apparently carrying on
a.   Acts apparently for the carrying on of usual in the usual business of the partnership [de Leon].
business
General rule: Any act of a partner which is Conveyance of Partnership Real Property
apparently for the carrying on of the usual a.   Title In Partnership Name
business of the partnership binds the latter, Any partner may convey the real property in the
including the execution of any instrument in the name of the partnership. The partnership can
partnership name. recover it, except when:
1.   The act of the partner binds the partnership,
Exception: The partnership is not bound when the when he has authority to carry out the usual
following concur: business of the partnership, under par. 1, Art.
1.   The partner has in fact no authority to act; 1818, CC; or
and 2.   If not so authorized, the property has been
2.   The person with whom he deals has conveyed by the grantee, or a person claiming
knowledge of such fact [par. 1, Art. 1818, CC]. under him, to a holder for value and without
knowledge that the partner exceeded his
b.   Acts not apparently for carrying on of the usual authority [par. 1, Art. 1819, CC].
business
General rule: Acts of a partner which is not A partner authorized to carry out the usual
apparently for carrying on of the usual business business may convey, in his own name, the
does not bind the partnership. equitable interest of the partnership [par. 2, Art.
1819, CC].
Exception: The partnership is bound if the other
partners authorized him to do the act [par. 2, Art. b.   Title In The Name Of Other Persons
1818, CC]. Where the title is in the name of one or more but
not all the partners, and the record does not
c.   Acts of Strict Dominion disclose the right of the partnership:
General Rule: One or some of the partners have no 1.   The partners having title may convey title.
authority to do the following acts of strict 2.   The partnership may recover it when the
dominion: partners conveying title have no authority to
1.   Assign the partnership property in trust for carry on the usual business of the
creditors or on the assignee’s promise to pay partnership, unless the purchaser or his
the debts of the partnership; assignee is:
2.   Dispose of the goodwill of the business; i.   A holder for value; and
3.   Do any other act which makes it impossible to ii.   Without knowledge that the act
carry on the ordinary business of the exceeded authority [par. 4, Art. 1819,
partnership; CC].
4.   Confess a judgment;
5.   Enter into a compromise concerning a Where the title is in the name of one or more or all
partnership claim or liability; the partners, or in a third person in trust for the
6.   Submit a partnership claim or liability to partnership a partner authorized to carry on the
arbitration; usual business may convey equitable title in the
7.   Renounce a claim of the partnership. partnership name or in his own name [par. 4, Art.
1819, CC].
Exceptions: They may do so if:

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Where the title is in the names of all the partners, LIABILITY OF THE OTHER PARTNERS UNDER
a conveyance executed by all of them passes all ARTS. 1822 AND 1823, CC
the rights to the property [par. 5, Art. 1819, CC].
All partners are solidarily liable with the partnership
for its liabilities under Arts. 1822 and 1823 [Art. 1824,
4.  L iability for Admission by CC].
a Partner
This is without prejudice to the guilty partner being
An admission or representation by any partner may be liable to the other partners. However, as far as third
used as evidence against the partnership when: persons are concerned, the partnership is answerable
a.   It concerns partnership affairs; [de Leon].
b.   Such affairs are within the scope of his authority
[Art. 1820, CC]. Applicability of the Rule of Respondeat Superior
The rule of respondeat superior (also called the rule of
Instances Where Knowledge of a Partner is command liability) applies to the law on partnership
Considered Knowledge of the Partnership in the same manner as other rules governing the
a.   Knowledge of the partner acting in the particular agency relationship [de Leon].
matter
1.   Acquired while a partner; or It is not only the partners who are liable in solidum; it
2.   Then present to his mind is also the partnership [Art 1824, CC].
b.   Knowledge of any other partner who reasonably
could and should have communicated it to the The injured party may proceed against the partnership
acting partner [Art. 1821, CC]. or any partner [Paras].

The reason for the law’s imposition of wider liability on


5.  L iability for Wrongful Acts the partnership with respect to torts and breach of
of a Partner trust is based on public policy [de Leon].

The partnership is solidarily liable with the partner Criminal Liability for Criminal Acts
who causes loss or injury to any person not a partner, A non-acting partner in a partnership engaged in a
or incurs any penalty through any wrongful act or lawful business is not criminally liable for the criminal
omission: acts of another partner but he is criminally liable if the
a.   In the ordinary course of the business of the partnership is involved in an unlawful enterprise with
partnership; or his knowledge or consent.
b.   Not in such ordinary course of business, but with
the authority of his co-partners [Art. 1822, CC]. Partnership Liability
a.   Does Not Extend to criminal liability where the
wrongdoing is regarded as individual in character,
6.  L iability for i.e. embezzlement.
b.   Extends to criminal liability where the crime is
Misapplication of Money statutory, especially where it involves fine or
or Property imprisonment [de Leon].

The partnership is liable for losses suffered by a third 7.  Liability in Case of


person whose money or property was:
a.   Received by a partner: Partnership by Estoppel
1.   Acting within the scope of his apparent
authority; and Partner By Estoppel
2.   Misapplied it; Estoppel – a bar which precludes a person from
b.   Received by the partnership: denying or asserting anything contrary to that which
1.   In the course of its business; and has been established as the truth by his own deed or
2.   Misapplied by any partner while it is in the representation, either express or implied [de Leon].
custody of the partnership [Art. 1823, CC].
A partner by estoppel is a person who, by words
spoken or written or by conduct (1) represents himself
as a partner or (2) consents to another representing
him to anyone as a partner:

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a.   In an existing partnership; or b.   He is liable jointly and pro rata (as though he were
b.   With one or more persons not actual partners a partner in fact) with those who consented to the
[par. 1, Art. 1825,CC]. representation when:
1.   There is an existing partnership but not all the
LIABILITY OF A PARTNER BY ESTOPPEL partners consented; or
2.   There is no existing partnership and all those
a.   Personal Representation represented as partners consented to the
A partner by estoppel is liable to any such representation.
persons: c.   He is liable separately when:
1.   To whom such representation has been 1.   There is an existing partnership but none of
made; and the partners consented; or
2.   Who has, on the faith of such representation, 2.   There is no existing partnership and not all of
given credit to the actual or apparent those represented as partners consented to
partnership [par. 1, Art. 1825]. the representation.

b.   Public Representation Note: Art 1825 does not create a partnership as


If he has made such representation or consented between the alleged partners. The law only considers
to its being made in a public manner, whether the them as partners and the association as a partnership
representation has or has not been (personally) insofar as it is favourable to third persons. However,
made or communicated to such persons so giving partnership liability is created only in favour of persons
credit by or with his knowledge, and: who on the faith of such representation given credit to
1.   Partnership liability results, he is liable as the partnership [de Leon].
though he were an actual member of the
partnership. The case arising under Art. 1825, CC must be
2.   No partnership liability results, he is liable distinguished from the situation covered by the last
pro rata with the other persons, if any, so par. Of Art 1834 which is not a situation where
consenting to the contract or representation. partnership by estoppel results. It is rather a
3.   When there are no such other persons, he is partnership liability which continues for lack of proper
separately liable [par. 1, Art. 1825, CC]. termination [de Leon].

Effect on Existing Partnership or Other Persons not Corporation by Estoppel


Actual Partners All persons who assume to act as a corporation
a.   When a person has been represented to be a knowing it to be without authority to do so shall be
partner (1) in an existing partnership, or (2) with liable as general partners for all debts, liabilities and
one or more persons not actual partners, he is an damages incurred or arising as a result thereof [Sec.
agent of the persons consenting to such 21, Corporation Code].
representation to bind them to the same extent
and in the same manner as though he were a
partner in fact, with respect to persons who rely
8.  L iability of an Incoming
upon the representation. Partner
b.   When all the members of the existing partnership
consent to the representation, a partnership act or A person admitted as a partner is liable:
obligation results. a.   For obligations incurred subsequent to his
c.   In all other cases, it is the joint act or obligation of admission as the other partners are liable;
the person acting and the persons consenting to b.   For obligations incurred before his admission, but
the representation [par. 2, Art. 1825]. will be satisfied only out of the partnership
property, unless otherwise stipulated that he fully
Nature of Liability assumes such obligations.
Summarizing Article 1825, a partner by estoppel is
liable in the following manner: Ratio:
a.   He is liable as though he were a partner when: a.   The new partner partakes of the benefits of the
1.   There is an existing partnership; partnership property and an already established
2.   All the partners consented to the business.
representation; and b.   He has every means of obtaining full knowledge
3.   A partnership liability results. of the debts of the partnership and remedies that
amply protect his interest [de Leon]

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Notice To Or Knowledge Of The Partnership b.   Appoint a receiver of the share of the profits and
The following operate as notice to or knowledge of the of any other money due or to fall due to 
the
partnership: partner; and 

a.   Notice to any partner of any matter relating to c.   Make all other orders, directions, accounts 
and
partnership affairs;
inquiries, which the debtor partner might have
b.   Knowledge of the partner acting in the particular
matter acquired while a partner; made, or which the circumstances may require. 

c.   Knowledge of the partner acting in the particular
matter then present to his mind; or (4) Knowledge The interest charged may be redeemed before
foreclosure or, in case of sale directed by the
of any other partner who
reasonably could and
court, may be purchased without causing
should have communicated it to the acting
dissolution:

partner.
1.   With separate property, by one or more of
These do not apply in case of fraud on the partnership the partners; or

committed by or with the consent of the partner [Art. 2.   With partnership property, by one or more of
1821, CC]. the partners, with consent of all, except the
debtor partner [par. 2, Art. 1814, CC].
Preference of Partnership Creditors in Partnership
Property
With respect to partnership assets the partnership
creditors are entitled to priority of payment. However
the private creditors of each partner may ask the
attachment and public sale of the share of the latter in
the partnership assets as provided in Art. 1814, CC.
[Art. 1827, CC].

Property Preference:
a.   Partnership Property – Partnership creditors are
preferred
b.   Partner’s Individual Property – Partner’s
individual creditors are preferred [de Leon].

Remedy in Case of Insufficiency of Assets:


a.   Partnership Creditor – After exhaustion of
partnership assets, the creditor may come after
the private property of the partners.
b.   Partner’s Individual Creditor – Ask for
attachment and public sale of the share of the
partner in the partnership assets [de Leon].

9.  L iability with Regard to


Personal Creditors of
Partners
Interest By Personal Creditors
General rule: Partnership creditors are preferred over
the personal creditors of the partners as regards
partnership property.

Exception: On due application by any judgment


creditor of a partner, a competent court may:
a.   Charge the interest of the partner for the
satisfaction of the judgment debt;

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  Dissolution and Winding 4.   By the expulsion of any partner from the business
bona fide in accordance with such a power
Up conferred by the agreement between the partners
[Art. 1830(1), CC].

1.   Concepts If, after the expiration of the definite term or particular


undertaking, the partners continue the partnership
Dissolution – the change in the relation of the without making a new agreement, the firm becomes a
partners caused by any partner ceasing to be partnership at will [Art. 1785, CC].
associated in the carrying on of the business. It is
different from the winding-up of the business [Art. Any one of the partners may, at his sole pleasure,
1828, CC]. It does not terminate the partnership, which dictate the dissolution of the partnership at will. He
continues until the winding up of partnership affairs is must, however, act in good faith, not that the
completed [Art. 1829, CC]. attendance of bad faith can prevent the dissolution of
the partnership but that it can result in a liability for
Note: The dissolution of a partnership must not be damages [Ortega v. CA, G.R. No. 109248 (1995)].
understood in the absolute and strict sense so that at
the termination of the object for which it was created b.  In Contravention of the
the partnership is extinguished [Testate Estate of Mota
v. Serra, G.R. No. L-22825 (1925)].
Agreement
Partnership Still Exists Where circumstances do not permit dissolution under
The partnership, although dissolved, continues to any other provision of Art. 1830, CC it may also be
exist until its termination, at which time the winding dissolved by the express will of any partner at any
up of its affairs should have been completed and the time.
net partnership assets are partitioned and distributed
to the partners [Emnace v. CA, G.R. No. 126334 Thus, even if there is a specified term, one partner can
(2001)]. cause its dissolution by expressly withdrawing even
before the expiration of the period, with or without
Winding up – the actual process of settling the justifiable cause. If the cause is not justified or no
partnership business or affairs after dissolution. It cause was given, the withdrawing partner is liable for
involves collection and distribution of partnership damages but in no case can he be compelled to
assets, payment of debts, and determination of the remain in the firm [Rojas v. Maglana, G.R. No. 30616
value of the interest of the partners in the partnership. (1990)].

Termination – the point in time when all partnership c.   By operation of Law


affairs are completely wound up and finally settled. It
signifies the end of the partnership life [de Leon]. 1.   By any event which makes it unlawful for the
business of the partnership to be carried on or for
the members to carry it on in partnership;
2.  C auses of Dissolution
Note: If the business or object had been unlawful
a.  Without Violation of the from the very beginning, the firm never had
Agreement juridical personality [Paras].
2.   When a specific thing which a partner had
1.   By the termination of the definite term or promised to contribute, perishes before delivery,
particular undertaking specified in the or by the loss of the thing, only the use or
agreement; enjoyment of which has been contributed; the loss
2.   By the express will of any partner, who must act in of a specific thing, however, does not dissolve the
good faith, when no definite term or particular is corporation after its ownership has already been
specified. transferred to the partnership;
3.   By the express will of all the partners who have 3.   By the death of any partner;
not assigned their interests or suffered them to be 4.   By the insolvency of any partner or of the
charged for their separate debts, either before or partnership;
after the termination of any specified term or Note: The insolvency of the partner or of the
particular undertaking; partnership must be adjudged by the court [de
Leon].

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5.   By the civil interdiction of any partner; A person who acquires the interest of a partner may
likewise apply:
Civil interdiction deprives the offender during the 1.   After the termination of the specified term or
time of his sentence of the right to manage his particular undertaking;
property and dispose such property by any act or 2.   At any time if the partnership was a partnership at
any conveyance inter vivos [Art. 34, RPC]. will when the interest was assigned or when the
charging order was issued
Ratio: One who is without capacity to manage his
own property should not be allowed to manage e.   Other Causes
partnership property [de Leon].
1.   When a new partner is admitted into an existing
d.  By Decree of Court partnership;
2.   When any partner retires;
A partner may apply for dissolution in court when: 3.   When the other partners assign their rights to the
1.   A partner has been declared insane in any judicial sole remaining partner;
proceeding or is shown to be of unsound mind; 4.   When all the partners assign their rights in the
partnership property to third persons [Art. 1840,
Note: The partner may have been previously CC].
declared insane in a judicial proceeding;
otherwise, his insanity must be duly proved. It
must materially affect the capacity of the partner
3.  Effects of Dissolution
to perform his contractual duties as such [de
Leon]. a.  On Authority of the
2.   A partner becomes in any other way incapable of Partners
performing his part of the partnership contract;
In general, upon dissolution, the authority of the
Note: The incapacity must be lasting, from which partners to represent the partnership is confined only
the prospect of recovery is remote [de Leon]. to acts necessary to:
3.   A partner has been guilty of such conduct as tends 1.   Wind up partnership affairs; or
to affect prejudicially the carrying on of the 2.   Complete transactions begun but not then
business; finished [par. 1, Art. 1832, CC].
4.   A partner willfully or persistently commits a
breach of the partnership agreement, or WITH RESPECT TO PARTNERS
otherwise so conducts himself in matters relating The authority of partners to act for the partnership is
to the partnership business that it is not terminated, with respect to partners:
reasonably practicable to carry on the business in 1.   When the dissolution is not by the act, insolvency
partnership with him; or death of a partner; or
2.   When the dissolution is by such act, insolvency or
Ratio: They defeat and materially affect and death, when the partner acting for the partnership
obstruct the purpose of the partnership [de Leon]. has knowledge or notice of the cause [Art. 1832
5.   The business of the partnership can only be and 1833, CC].
carried on at a loss;
In other cases, each partner is still liable for his share
Note: A court is authorized to decree dissolution in the liability created by the partner acting for the
notwithstanding the partnership has been partnership [Art. 1833, CC].
making profits where it appears at the time of the
application that the business can only be carried WITH RESPECT TO THIRD PERSONS
on at a loss [de Leon 233]. With respect to persons not partners:
6.   Other circumstances render a dissolution 1.   After dissolution, a partner can bind the
equitable. partnership by any act appropriate for:
a.   Winding up partnership affairs; or
Reason for necessity of court decree: In the b.   Completing transactions unfinished at
instances mentioned in Art. 1831, the facts may be dissolution.
so far open to dispute as to make necessary 2.   He can also bind it by any transaction which would
judicial determination as to dissolution rather bind the partnership as if dissolution had not
than allow them to be the occasion for automatic
dissolution by operation of law [de Leon at 231].

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taken place, provided the other party to the b.   Had not extended credit to the partnership
transaction: prior to dissolution, and, having no
a.   Had extended credit to the partnership prior knowledge or notice of his want of authority,
to dissolution and had no knowledge or the fact of his want of authority has not been
notice thereof; or advertised [Art. 1834, CC].
b.   Had not so extended credit but had known of
the partnership prior to dissolution, and Art. 1834, CC does not affect the liability under Art.
having no knowledge or notice of dissolution, 1825, CC of any person who, after dissolution,
the fact had not been advertised in a represents himself or consents to another
newspaper of general circulation in the place representing him as a partner in a partnership
[or in each place if more than one] at which engaged in carrying on business [Art. 1834, CC].
the partnership business was regularly
carried on [par. 1, Art. 1834, CC]. c.   On Liability for Contracts
Note the character of the notice required: after Dissolution by
1.   As to persons who extended credit to the Specific Causes
partnership prior to dissolution, notice must be
actual. General rule:
2.   As to persons who merely knew of the existence of A contract:
the partnership, publication in a newspaper of 1.   Entered into by a partner acting for the
general circulation in the place of business of the partnership
partnership is sufficient. 2.   After dissolution by
a.   act,
b.  On Liability for b.   death or
c.   insolvency
Transactions after of a partner
Dissolution Binds the other partners.

The liability of a partner, in general, is the same as in Exceptions:


ordinary contracts (pro rata and subsidiary). 1.   The dissolution being by act of any partner, the
partner acting for the partnership had knowledge
In the following cases, however, the liability shall be of the dissolution; or
satisfied out of the partnership assets alone (i.e., there 2.   The dissolution being by death or insolvency of a
is no subsidiary liability): partner, the partner acting for the partnership had
1.   When the partner had been, prior to the knowledge or notice of the death or insolvency
dissolution, unknown as a partner to the person [Art. 1833, CC].
with whom the contract is made;
2.   When the partner had been, prior to the d.  On Existing Liability of
dissolution, so far unknown or inactive in
partnership affairs that the business reputation of Partners
the partnership could not be said to have been in
any degree due to his connection with it [Art. 1834, General rule: Dissolution does not of itself discharge
CC]. the existing liability of any partner.

Any act of a partner after dissolution in no case binds Exception: A partner may be relieved when there is an
the partnership in the following cases: agreement to that effect between:
1.   Where the partnership is dissolved because it is 1.   Himself;
unlawful to carry on the business, unless the act is 2.   The partnership creditor; and
appropriate for winding up partnership affairs; 3.   The person or partnership continuing the
2.   Where the partner has become insolvent; business.
3.   Or, where the partner has no authority to wind up
partnership affairs, except by a transaction with Such agreement may be inferred from the course of
one who: dealing between:
a.   Had extended credit to the partnership prior 1.   the creditor having knowledge of the dissolution
to dissolution and had no knowledge or and
notice of his want of authority; or 2.   the person or partnership continuing the
business.

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In case of dissolution by death, the individual Note: When dissolution is caused by expulsion,
property of a deceased partner is liable for obligations expelled partner may be discharged from all
of the partnership incurred while he was a partner, partnership liability in the same manner as above but
after payment of his separate debts [Art.1835, CC]. he shall receive in cash only the net amount due him
from the partnership [de Leon].
4.  W inding Up Partners
b.  Dissolution in
a.  Who May Wind Up Contravention of the
Agreement
The following partners have the right to wind up the
partnership affairs: PARTNER WHO DID NOT CAUSE THE
1.   Those designated in an agreement; DISSOLUTION
2.   Those who have not wrongfully dissolved the The partners who did not cause the dissolution
partnership; or wrongfully has the following rights:
3.   The legal representative of the last surviving 1.   To demand the right under par. 1, Art. 1837, CC;
partner, who was not insolvent. 2.   To be indemnified for damages for breach of the
agreement against the partner who caused the
Any partner or his legal representative or assignee dissolution wrongfully [Art. 1837(1), CC];
may obtain winding up by the court, upon cause 3.   To continue the business:
shown [Art. 1836, CC]. a.   In the same name;
b.   By themselves or jointly with others;
b.  Manner of Winding Up c.   During the agreed term for the partnership.

1.   Extrajudicial, by the partners themselves; or For the purpose of continuing the business, the said
2.   Judicial, under the control and direction of the partners may possess the partnership property
proper court. provided:
a.   They secure the payment by bond approved by the
The action for liquidation of the partnership is court; or
personal. The fact that sale of assets, including real b.   They pay any partner who has caused the
property, is involved does not change its character, dissolution wrongfully the value of his interest in
such sale being merely a necessary incident of the the partnership, less any damages recoverable,
liquidation of the partnership, which should precede and indemnity against all present or future
and/or is part of its process of dissolution [Claridades partnership liabilities [Art. 1837(2), CC].
v. Mercader, G.R. No. L-20341 (1966)].
PARTNER WHO CAUSED THE DISSOLUTION
The partner who caused the dissolution wrongfully
5.  R ights of Partners in Case has the following rights:
of Dissolution 1.   If the business is not continued, all the rights par.
1, Art. 1837, CC, subject to liability for damages;
2.   If the business is continued, the right, as against
a.  Dissolution without his co-partners and all claiming through them, to:
Violation of the Agreement a.   Ascertainment, without considering the value
of the goodwill of the business, and payment
Each partner may have: to him in cash the value of his partnership
1.   The partnership property applied to discharge the interest, less any damage, or have the
partnership liabilities; and payment secured by a bond approved by the
2.   The surplus applied in cash to the net amount court; and
owing to the respective partners. b.   Be released from all existing liabilities of the
partnership [Art. 1837(3), CC].
This is a right as against his co-partners and all
partners claiming through them in respect of their The goodwill of a business may be defined to be the
interests in the partnership. It cannot be availed if advantage which it has from its establishment or from
there is an agreement to the contrary [Art. 1837 (1), the patronage of its customers, over and above the
CC]. mere value of its property and capital. The goodwill
[which includes the firm name] is part of the

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partnership assets and may be subject of sale [de b.  Amount of Contribution for
Leon].
Liabilities
T
6.  R ights of Partners in Case he rules for distribution of losses shall determine the
of Rescission contributions of the partners [Art. 1839(4), CC]. As
such:
A partner, who is induced by fraud or 1.   The contribution shall be in conformity with the
misrepresentation to become such partner, may agreement.
rescind the contract. Without prejudice to any other 2.   If only the share in profits has been stipulated, the
right, he is entitled: contribution shall be in the same proportion.
a.   To a lien on, or right of retention of, the surplus of 3.   In the absence of any stipulation, the contribution
the partnership property after satisfying the shall be in proportion to the capital contribution
partnership liabilities to third persons for any sum [Art. 1797, CC].
of money paid by him for the purchase of an
interest in the partnership and for any capital or c.   Enforcement of
advances contributed by him; Contribution
b.   To stand, after all liabilities to third persons have
been satisfied, in the place of the creditors of the The following persons have the right to enforce the
partnership for any payments made by him in contributions:
respect of the partnership liabilities; and 1.   An assignee for the benefit of creditors;
c.   To be indemnified by the person guilty of the fraud 2.   Any person appointed by the court; or
or making the representation against all debts 3.   To the extent of the amount which he has paid in
and liabilities of the partnership [Art. 1838, CC]. excess of his share of the partnership liability, any
partner or his legal representative [Art. 1839(5)
Nature of Fraud or Deceit and (6), CC].
The fraud or deceit must be material or substantial.
Mere exaggerations of one partner of the prospects of The individual property of a deceased partner shall be
enterprises or of value of the property which he has put liable for the contributions [Art. 1839(7), CC].
into the firm as capital is not ground for dissolution
[Pineda].
d.  Order of Application of
7.  Settling of Accounts Assets
between Partners The partnership liabilities shall rank, in order of
payment, as follows:
Subject to any agreement to the contrary, the 1.   Those owing to creditors other than partners;
following rules shall be observed in settling accounts 2.   Those owing to partners other than for capital and
between partners after dissolution. profits;
3.   Those owing to partners in respect of capital;
a.  Composition of Partnership 4.   Those owing to partners in respect of profits [Art.
1839(2), CC].
Assets
1.   The partnership property; and
e.   Doctrine of Marshaling of
2.   The contributions of the partners necessary for Assets
the payment of all the liabilities [Art. 1839(1), CC].
When partnership property and the individual
In accordance with the subsidiary liability of the properties of the partners are in possession of a court
partners, the partnership property shall be applied for distribution:
first to satisfy any liability of the partnership [Art. 1.   Partnership creditors have priority on partnership
1839(3),CC]. property;
2.   Separate creditors have priority on individual
property, saving the rights of lien of secured
creditors.
3.   Anything left from either shall be applied to
satisfy the other [Art. 1839(8), CC].

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f.   Distribution of Property of b.  Liability of A New Partner


Insolvent Partner
The liability to the creditors of the dissolved
Where a partner has: partnership of a new partner in the partnership
1.   become insolvent; or continuing the business shall be satisfied out of the
2.   his estate is insolvent, the claims against his partnership property alone. However, he may, through
separate property agreement, assume individual liability [par. 2, Art.
shall rank in the following order: 1840, CC].
a.   Those owing to separate creditors;
b.   Those owing to partnership creditors; c.   Priority of Creditors of
c.   Those owing to partners by way of Dissolved Partnership
contribution [Art. 1839(9), CC].
Creditors of the dissolved partnership have prior right
8.  R ights of Creditors of to any claim of the retired partner or the representative
of the deceased partner against the person or
Dissolved Partnership partnership continuing the business [par. 3, Art. 1840,
CC].
a.  As Creditors of the New
This is without prejudice to the right of creditors to set
Partnership aside any assignment on the ground of fraud [par. 4,
Art. 1840, CC].
In the following cases, creditors of the dissolved
partnership are also creditors of the person or Ratio: Business will be hampered if outside creditors
partnership continuing the business: are not given superior right. It will be risky for them to
1.   When the business is continued without deal with partnerships. Moreover, if partners enjoy
liquidation, and the cause of dissolution is: priority right, in the natural order of things, they will
a.   Admission of a new partner into the existing prefer their own interests to that of the outside
partnership; creditors. Such state will make it easy to defraud non-
b.   Retirement or death of any partner, and his partner creditors [Pineda].
rights to partnership property are assigned to
[1] two or more of the partners, or [2] one or
more of the partners and one or more third 9.  R ights of a Retired
persons;
c.   Retirement of all but one partner, and their
Partner or a
rights to partnership property are assigned to Representative of
the remaining partner, who continues the
business, either alone or with others; Deceased Partner
d.   Wrongful dissolution by any partner, and the
remaining partners continue the business, Unless otherwise agreed upon, when any partner retires
either alone or with others; or dies, and the business is continued without any
e.   Expulsion of a partner, and the remaining settlement of accounts as between him or his estate
partners continue the business, either alone and the person or partnership continuing the
or with others. business, he or his legal representative, as against
2.   When the cause of dissolution is the retirement or such person or partnership, subject to the prior rights
death of any partner, and business is continued of creditors of the dissolved partnership:
with the consent of the retired partner or the a.   May have the value of his interest at the date of
representative of the deceased partner, without dissolution ascertained; and
assignment of their rights to partnership property. b.   Shall receive as an ordinary creditor:
3.   When the cause of dissolution is the assignment 1.   An amount equal to the value of his interest
by all the partners or their representatives of their in the dissolved partnership with interest; or
rights in partnership property to one or more third 2.   At his option or at the option of his legal
persons who promise to pay the debts and who representative, in lieu of interest, the profits
continue the business of the partnership [par. 1, attributable to the use of his right in the
Art. 1840, CC]. property of the dissolved partnership [Art.
1841, CC].

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U.P. LAW BOC PARTNERSHIP CIVIL LAW

10.  Right to an account   Limited Partnership


In the absence of any agreement to the contrary, the
right to an account of his interest shall accrue to any 1.   Definition
partner, or his legal representative at the date of
dissolution, as against: a.   A partnership;
a.   The winding up partners; b.   Formed by two or more persons;
b.   The surviving partners; or c.   Having as members:
c.   The person or partnership continuing the business 1.   One or more general partners; and
[Art. 1842, CC]. 2.   One or more limited partners.

The limited partners as such shall not be bound by the


obligations of the partnership [Art. 1843, CC] except to
the extent of their capital contributions.

2.  C haracteristics
a.   A limited partnership is formed by compliance
with the statutory requirements [Art. 1844, CC].
b.   The business is controlled or managed by one or
more general partners, who are personally liable
to creditors [Arts. 1848 and 1850, CC].
c.   One or more limited partners contribute to the
capital and share in the profits but do not manage
the business and are not personally liable for
partnership obligations beyond their capital
contributions [Arts. 1845, 1848 and 1856, CC].
d.   Obligations or debts are paid out of the
partnership assets and the individual property of
the general partners [Art. 1843, CC].
e.   The limited partners may have their contributions
back subject to conditions prescribed by law [Arts.
1844 and 1957, CC].

A limited partnership has the following advantages:


a.   For general partners, to secure capital from
others while retaining control and supervision for
the business;
b.   For limited partners, to have a share in the profits
without risk of personal liability.

3.  General and Limited


Partners Distinguished
General partner Limited partner
Extent of liability
Personally, but Liable only to the extent
subsidiarily, liable for of his capital
obligations of the contributions [subject to
partnership exceptions]
Right to participate in management
Unless otherwise No right to participate in
agreed upon, all management

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general partners Composition


have an equal right One or more general,
to manage the Only general partners and one or more
partnership limited partners
Nature of contribution Firm name
Cash, property or Cash or property only, not Must include the word
industry industry “Limited” [SEC Memo.
Proper party in proceedings by or against Circ. No. 14-00]
partnership Must contain the word
Not proper party, unless “Company” [SEC Memo Must not include name
(1) he is also a general Circ No. 14-00], except of limited partners,
partner; or (2) where the for professional unless: [1] it is also the
object of the proceedings partnerships surname of a general
is to enforce his right partner, or [2] prior to
Proper party against or liability to the May or may not include the time when the
partnership the name of one or limited partner became
more of the partners such, the business has
The limited partner is a been carried on under
necessary but not a name in which his
indispensable party surname appeared

Firm name Rules governing dissolution

Name must not appear in Arts. 1828-1842, CC Arts. 1860-1863, CC


Name may appear in
the firm name [subject to
the firm name
exceptions] 5.  F ormation
Prohibition to engage in other business
Prohibited [subject
Not prohibited
a.  General Requirements
to qualifications]
Two or more persons desiring to form a limited
Effect of retirement, death, insanity or insolvency
partnership shall:
Does not dissolve 1.   Sign and swear to a certificate stating the items in
partnership; rights Art. 1844, CC; and
Dissolves
transferred to executor or 2.   File for record the certificate in the SEC [Art. 1844,
partnership
administrator for selling CC].
his estate
Assignability of interest A limited partnership is formed if there is substantial
compliance in good faith with the requirements [Art.
Not assignable Assignable 1844, CC]. When there is failure to substantially
comply with the requirements:
4.  G eneral and Limited 1.   In relation to third persons, the partnership is
general, unless they recognized that the firm is a
Partnership Distinguished limited partnership; and
2.   As between the partners, the partnership remains
General Limited limited, since they are bound by their agreement
partnership partnership [de Leon].

Creation
b.  Purpose of Filing
Partners must: [1] sign
and swear to a 1.   To give actual or constructive notice to potential
May be constituted in certificate in creditors or persons dealing with the partnership;
any form, subject to compliance with Art. and
exceptions 1844, CC; and [2] file 2.   To acquaint them with its essential features,
the certificate for including the limited liability of limited partners
record in the SEC [de Leon].

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c.   Firm Name 2.   be subject to all the restrictions of a general


partner,
General rule: The surname of a limited partner shall not except that, in respect to his contribution as a
appear in the partnership name. limited partner, he shall have the rights against the
other members which he would have had if he were
Exceptions: not also a general partner [Art. 1853, CC].
1.   It is also the surname of a general partner; or
2.   Prior to the time when the limited partner became 6.  M anagement
such, the business had been carried on under a
name in which his surname appeared. General Rule: Only general partners have the right to
manage the partnership.
A limited partner whose surname appears in a
partnership name contrary to this prohibition is liable A general partner shall have the rights and powers
as a general partner to partnership creditors who and be subject to all restrictions and liabilities of a
extend credit without actual knowledge that he is not partner in a partnership without limited partners.
a general partner. [Art. 1846, CC] Thus, he has general authority over the business.

d.  False Statement in the Thus, if a limited partner takes part in the control of
the business, he becomes liable as a general partner
Certificate [Art. 1848, CC].
If the certificate contains a false statement, one who However, written consent or ratification by all
suffers loss by reliance thereon may hold liable any limited partners is necessary to authorize the
party to the certificate who knew the statement to be general partners to:
false: a.   Do any act in contravention of the certificate;
1.   At the time he signed the certificate; or b.   Do any act which would make it impossible to
2.   Subsequently, but within a sufficient time before carry on the ordinary business of the partnership;
the statement was relied upon to enable him to c.   Confess a judgment against the partnership;
cancel or amend the certificate, or to file a petition d.   Possess partnership property, or assign their
for its cancellation or amendment [Art. 1847, CC]. rights in specific property, for other than a
partnership purpose;
Requisites: e.   Admit a person as a general partner;
1.   The partner knew the statement to be false: f.   Admit a person as a limited partner, unless the
a.   At the time he signed the certificate; or right to do so is given in the certificate;
b.   Subsequently, but having sufficient time to g.   Continue the business with partnership property
cancel or amend it, or file a petition for its on the:
cancellation or amendment, and he failed to 1.   Death;
do so; 2.   Retirement;
2.   The person seeking to enforce liability has relied 3.   Insanity;
upon the false statement in transacting business 4.   Civil interdiction; or
with the partnership; and 5.   Insolvency of a general partner,
3.   The person suffered loss as a result of reliance unless the right so to do is given in the certificate
upon such false statement. [Art. 1850, CC]

e.   General and Limited 7.  Obligations of a Limited


Partner at the Same Time
Partner
A person may be
1.   a general; and a.  Obligations Related to
2.   a limited partner in the same partnership
at the same time.
Contribution

This fact must be stated in the certificate. The contributions of a limited partner may be cash or
other property, but not services [Art. 1845, CC].
Such person shall have:
1.   all the rights and powers, and

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A limited partner is liable for partnership obligations c.   His surname does not appear in the
when he contributes services instead of only money or partnership name [Art. 1846, CC].
property to the partnership [de Leon].
b.  Liability to Partnership
A limited partner is liable to the partnership:
1.   For the difference between his actual contribution Creditors
and that stated in the certificate as having been
made; and General rule: A limited partner is not liable as a general
2.   For any unpaid contribution which he agreed in partner. His liability is limited to the extent of his
the certificate to make in the future at the time contributions [Art. 1843, CC].
and on the conditions stated in the certificate [par.
1, Art. 1858, CC]. Exceptions: The limited partner is liable as a general
partner when:
He holds as trustee for the partnership: 1.   His surname appears in the partnership name,
1.   Specific property stated in the certificate as with certain exceptions [par. 2, Art. 1846, CC].
contributed by him, but which was not 2.   He takes part in the control of the business [Art.
contributed or which has been wrongfully 1848, CC].
returned; and 3.   The certificate contains a false statement of which
2.   Money or other property wrongfully paid or he knows and which was relied upon, resulting in
conveyed to him on account of his contribution loss [Art. 1847, CC].
[par. 2, Art. 1858, CC].
In cases (1) and (2), the limited partner is entitled to
These liabilities can be waived or compromised only by reimbursement by the general partner/s.
the consent of all members. Such waiver or
compromise, however, shall not affect the right to Ratio: The general partner/s may not have been aware
enforce said liabilities of a creditor: of such false statement.
1.   Who extended credit; or
2.   Whose claim arose, after the filing or before a c.   Liability to Separate
cancellation or amendment of the certificate, to
enforce such liabilities [par. 3, Art. 1858, CC].
Creditors

Even after a limited partner has rightfully received the On due application to a court of competent jurisdiction
return in whole or in part of his capital contribution, he by any separate creditor of a limited partner, the court
is still liable to the partnership for any sum, not in may:
excess of such return with interest, necessary to 1.   Charge his interest with payment of the
discharge its liabilities to all creditors: unsatisfied amount of such claim;
1.   Who extended credit; or 2.   Appoint a receiver; and
2.   Whose claims arose before such return [par. 4, 3.   Make all other orders, directions and inquiries
Art. 1858, CC]. which the circumstances of the case may require.

A person The interest so charged may be redeemed with the


1.   who has contributed capital to a partnership, separate property of any general partner, but may not
2.   erroneously believing that he has become a be redeemed with partnership property [Art. 1862,
limited partner, CC].
3.   but his name appears in the certificate as a general
partner or he is not designated as a limited Note: In a general partnership, the interest may be
partner, redeemed with partnership property with the consent
Is not personally liable as a general partner by reason of all the partners whose interests are not charged
of his exercise of the rights of a limited partner, [Art. 1814, CC].
provided:
a.   On ascertaining the mistake, he promptly 8.  R ights of a Limited
renounces his interest in the profits of the
business or other compensation by way of Partner
income [Art. 1852, CC];
b.   He does not participate in the management
of the business [Art. 1848, CC]; and

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a.  In General Ratio: Otherwise, he will receive a share to the


prejudice of third-party creditors.
A limited partner shall have the same rights as a
general partner to: d.  Right to Return of
1.   Require that the partnership books be kept at the Contribution
principal place of business of the partnership;
2.   To inspect and copy any of them at a reasonable A limited partner may have his contributions
hour; withdrawn or reduced when:
3.   To demand true and full information of all things 1.   All the liabilities of the partnership, except
affecting the partnership; liabilities to general partners and to limited
4.   To demand a formal account of partnership affairs partners on account of their contributions, have
whenever circumstances render it just and been paid or there remains property of the
reasonable; partnership sufficient to pay them;
5.   To ask for dissolution and winding up by decree of 2.   The consent of all members is had, unless the
court; return may be demanded as a matter of right; and
6.   To receive a share of the profits or other 3.   The certificate is cancelled or so amended as to
compensation by way of income; and set forth the withdrawal or reduction [par. 1, Art.
7.   To receive the return of his contribution provided 1857].
the partnership assets are in excess of all its
liabilities [Art. 1851, CC]. Note: Once withdrawal has been approved by the SEC
and registered, the partnership may no longer recover
b.  Right to Transact Business the limited partner’s contributions.
with the Partnership
The return of his contributions may be demanded, as
A limited partner may: a matter of right [i.e., even when not all the other
1.   Loan money to the partnership; partners consent]:
2.   Transact other business with the partnership; and 1.   On the dissolution of the partnership;
3.   Receive a pro rata share of the partnership assets 2.   Upon the arrival of the date specified in the
with general creditors if he is not also a general certificate for the return; or
partner [par. 1, Art. 1854, CC]. 3.   After the expiration of a 6-month notice in writing
given by him to the other partners, if no time is
Limitations: A limited partner, with respect to his fixed in the certificate for:
transactions with the partnership, cannot: (a)   The return of the contribution; or
1.   Receive or hold as collateral security any (b)   The dissolution of the partnership [par. 2,
partnership property; or Art. 1857, CC].
2.   Receive any payment, conveyance, or release from
liability if it will prejudice the right of third persons General rule: A limited partner, irrespective of the
[par.1, Art. 1854] nature of his contribution has only the right to demand
and receive cash in return for his contribution.
Violation of the prohibition is considered a fraud on the
creditors of the partnership [par. 2, Art. 1854, CC]. Exceptions: He may receive his contribution in a form
other than cash when:
1.   There is a statement in the certificate to the
c.   Right to Share in Profits contrary; or
2.   All the members of the partnership consent [par.
A limited partner may receive from the partnership the 3, Art. 1857, CC].
share of the profits or the compensation by way of
income stipulated for in the certificate.
e.   Preference of Limited
This right is subject to the condition that partnership Partners
assets will still be in excess of partnership liabilities
after such payment [Art. 1856, CC]. The partnership General rule: The limited partners stand on equal
liabilities being referred to exclude the liabilities to the footing.
limited and general partners.
Exception: By an agreement of all the partners [general
and limited] stated in the certificate, priority or

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preference may be given to some limited partners over


others with respect to:
9.  D issolution
1.   The return of contributions;
2.   Their compensation by way of income; or A limited partnership is dissolved in much the same
3.   Any other matter [Art. 855, CC]. way and causes as an ordinary partnership [de Leon]

General rule: The retirement, death, insolvency,


f.   Right to Assign Interest insanity or civil interdiction of a general partner
dissolves the partnership.
The interest of a limited partner is assignable. The
assignee may become: Exception: It is not so dissolved when the business is
1.   A substituted limited partner; or continued by the remaining general partners:
2.   A mere assignee. a.   Under a right to do so stated in the certificate; or
b.   With the consent of all members [Art. 860, CC].
A substituted limited partner is a person admitted to
all the rights of a limited partner who has died or has Upon the death of a limited partner, his executor or
assigned his interest in a partnership. He has all the administrator shall have:
rights and powers, and is subject to all the restrictions a.   All the rights of a limited partner for the purpose
and liabilities of his assignor, except those liabilities of settling his estate; and
which: b.   The power to constitute an assignee as a
1.   The assignee was ignorant of; and substituted limited partner, if the deceased was
2.   Cannot be ascertained from the certificate [pars. so empowered in the certificate.
2 and 6, Art. 1859, CC]
The estate of a deceased limited partner shall be liable
An assignee is only entitled to receive the share of the for all his liabilities as a limited partner [Art. 1861, CC].
profits or other compensation by way of income, or the
return of contribution, to which the assignor would
otherwise be entitled. He has no right: 10.  Settlement of Accounts
1.   To require any information or account of the
partnership transactions; a.  Order of Payment
2.   To inspect the partnership books [par. 3, Art.
1859, CC]. In settling accounts after dissolution, the liabilities of
the partnership shall be entitled to payment in the
An assignee has the right to become a substituted following order:
limited partner if: 1.   Those to creditors, including limited partners
1.   All the partners consent thereto; or except those on account of their contributions, in
2.   The assignor, being empowered to do so by the the order of priority as provided by law;
certificate, gives him that right [par. 4, Art. 1859, 2.   Those to limited partners in respect to their share
CC]. of the profits and other compensation by way of
income in their contributions;
An assignee becomes a substituted limited partner 3.   Those to limited partners in respect to the capital
when the certificate is appropriately amended [par. 5, of their contributions;
Art. 1859, CC]. 4.   Those to general partners other than for capital
and profits;
g.  Right to Ask for 5.   Those to general partners in respect to profits;
6.   Those to general partners in respect to capital
Dissolution [par. 1, Art. 1863, CC].
A limited partner may have the partnership dissolved Note: In settling accounts of a general partnership,
and its affairs wound up when: those owing to partners in respect to capital enjoy
1.   He rightfully but unsuccessfully demands the preference over those in respect to profits.
return of his contribution; or
2.   He has a right to contribution but his contribution
is not paid because the partnership property is b.  Share in the Partnership
insufficient to pay its liabilities [par. 4, Art. 1857, Assets
CC].

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The share of limited partners in respect to their claims limited partner in case of substitution or addition
for capital, profits, or for compensation by way of of a limited or general partner; and
income, is in proportion of their contribution, unless: 3.   The writing to amend (with the certificate, as
1.   There is a statement in the certificate as to their amended) or to cancel must be filed for record in
share in the profits; or the SEC.
2.   There is a subsequent agreement fixing their
share [Art. 1863, CC]. When a person required to sign the writing, a person
desiring the cancellation or amendment may petition
the court to order cancellation or amendment. The
11.  Amendment or court shall order the SEC to record the cancellation or
Cancellation of Certificate amendment if it finds that the petitioner has a right to
have the writing executed.
a.  Cancellation of Certificate From the moment the amended certificate/writing or
a certified copy of a court order granting the petition
The certificate shall be cancelled when: for amendment has been filed, such amended
1.   The partnership is dissolved; or certificate shall thereafter be the certificate of
2.   All limited partners cease to be such limited partnership [Art. 1865, CC].
partners.

b.  Amendment of Certificate 12.  L imited Partnerships


Formed Prior to the CC
A certificate shall be amended when:
1.   There is a change in the name of the partnership Limited partnerships formed under the law prior to the
or in the amount or character of the contribution CC may
of any limited partner; a.   continue to be governed by the provisions of the
2.   A person is substituted as a limited partner; old law
3.   An additional limited partner is admitted; b.   become a limited partnership under the CC by
4.   A person is admitted as a general partner; compliance with Art. 1844, provided that the
5.   A general partner retires, dies, becomes insolvent certificate states:
or insane, or is sentenced to civil interdiction and 1.   the amount of the original contribution of
the business is continued; each limited partner and the time it was
6.   There is a change in the character of the business made; AND
of the partnership; 2.   that the partnership assets exceeds its
7.   There is a false or erroneous statement in the liabilities to third persons by an amount
certificate; greater than the sum of all limited partners’
8.   There is a change in the time as stated in the contributions [Art. 1867, CC]
certificate for the dissolution of the partnership or
for the return of a contribution;
9.   A time is fixed for the dissolution of the
partnership, or the return of a contribution, no
time having been specified in the certificate; or
10.   The members desire to make a change in any
other statement in the certificate in order that it
shall accurately represent the agreement among
them [Art. 1864, CC].

c.   Requirements for
Amendment or
Cancellation
To amend or cancel a certificate:
1.   The amendment or cancellation must be in
writing;
2.   It must be signed and sworn to by all the members
including the new members, and the assigning

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U.P. LAW BOC CREDIT TRANSACTIONS CIVIL LAW

CREDIT TRANSACTIONS
Civil Law

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X.   CREDIT Borrower must return the


Borrower need only pay
an equal amount of the
same thing loaned
TRANSACTIONS [Art.1933, CC]
same kind and quality
[Art. 1953, CC]
May involve real or
  Loan personal property
Refers only to personal
property
[Art.1937, CC]
Contract of Loan vs. Contract to Loan Loan for permissive or
Contract of Loan Contract to Loan temporary use [Art.1935, Loan for consumption
Consensual Contract: CC]
perfected by mere Bailor may demand the
consent. return of the thing Lender may not demand
Real Contract: perfected, loaned before the its return before the
not by mere consent, but An accepted promise to expiration of the term in lapse of the term agreed
by delivery of the object deliver something by way case of urgent need upon
of the contract. of commodatum or [Art.1946, CC]
simple loan is binding
Borrower suffers the loss
upon the parties [Art.
Bailor suffers the loss of even if caused exclusively
1934, CC]
the subject matter since by a fortuitous event and
he is the owner [Arts. he is not, therefore,
Contracts of Loan 1942 and 1174, CC] discharged from his duty
1.   Commodatum – a contract where one party to pay
delivers to another something not consumable so
that the latter may use the same for a certain time Purely personal in Not purely personal in
and return it. [Art. 1933, CC] character [Art. 1939, CC] character
2.   Mutuum (Simple Loan) – a contract where one Both are reciprocal obligations
party delivers to another, money or other
consumable thing, upon the condition that the
same amount of the same kind and quality shall 1.   Commodatum
be paid. [Art. 1933, CC]
Commodatum – an essentially gratuitous contract
Commodatum Vs. Mutuum where one party (bailor) delivers to another (bailee)
Commodatum Mutuum something not consumable so that the latter may use
the same for a certain time and return it. [Art. 1933]
Ordinarily involves
something not
consumable [Art.1936, a.  Kinds of Commodatum
Involves money or other
CC]
consumable thing 1.   Ordinary commodatum – the use of the thing by
N.B. If the goods are the bailee is for a certain period of time [Art. 1933]
Consumable - cannot be 2.   Precarium – the bailor may demand the thing
normally consumable
used in a manner loaned at will; if any one of the following is
but are not delivered for
appropriate to their present
the purpose of
nature without their a.   The duration and purpose of the contract is
consumption (e.g.,
being consumed. [Art. not stipulated, or
consumable goods for an
418, CC] b.   The use of the thing is merely tolerated by the
exhibition), the contract
remains to be a owner [Art. 1947]
commodatum.
Ownership of the thing b.  Parties
Ownership is transferred
loaned is retained by
to the borrower Bailor: creditor
lender [Art.1933, CC]
Bailee: debtor
May be gratuitous or
Essentially gratuitous
onerous, i.e. with Who may be a bailor in commodatum?
[Art.1933, CC]
stipulated interest Anyone. The bailor in commodatum need not be the
owner of the thing loaned [Art. 1938], but as against

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the bailee, the bailor retains ownership of the thing 7.   Obligation to be solidarily liable when there are
loaned. two or more bailees to whom a thing is loaned in
the same contract. [Art. 1945, CC]
c.   Use by the Bailee 8.   No obligation to answer for deterioration of the
thing loaned due only to the use thereof and
Rules as to who may make use of the property without his fault [Art. 1943, CC]
loaned
General rule: the bailee acquires permissive use of the Note: If, for the purpose of making use of the thing
thing loaned only for himself. He may not lend nor loaned, the bailee incurs ordinary or extraordinary
lease the thing loaned to him to a third person. expenses which are neither for the use nor the
preservation of the thing, he is not entitled to
Exception: the members of the bailee’s household reimbursement. [Art. 1950, CC]
may make use of the thing loaned
e.   Obligations of the Bailor
Exceptions to the exception:
1.   if there is a stipulation to the contrary, or 1.   Obligation not to demand the return of the thing
2.   the nature of the thing forbids such use. [Art. until the expiration of the term or after the
1939(2), CC] accomplishment of the use [Art. 1946, CC]

Rules as to the use of fruits of the thing loaned Exceptions:


General rule: The bailee acquires the permissive use of a.   When bailor has urgent need of the thing, he
the thing loaned but NOT its fruits [Art. 1935, CC] may demand its return (extinguish
commodatum) or its temporary use (suspend
Exception: Parties stipulate otherwise; such commodatum) [Art. 1946, CC]
stipulation is considered valid [Art. 1940, CC] b.   Precarium [Art. 1947, CC] or a contractual
relation where the bailor may demand the
d.  Obligations of the Bailee property loaned at will
c.   If bailee commits any acts of ingratitude in
1.   Obligation to take care of it with the proper Art. 765: [Art. 1948, CC]
diligence of a good father of a family. [Art. 1163, i.   Bailee committed some offense
CC] against the person, honor or property
2.   Obligation to use the thing loaned only for the of the bailor, or of his wife or children
purpose for which it was loaned and not for any under his parental authority;
other purpose. [Art. 1935, 1939(2), 1942 [1], CC] ii.   Bailee imputes to bailor any criminal
3.   Obligation to not lend the thing to a third person offense, or any act involving moral
who is not a member of his household. [Art. 1942 turpitude, even though he should
(4), CC] prove it, unless the crime or act has
4.   Obligation to return the thing upon the expiration been committed against the bailee
of the period stipulated or after the himself, his wife or children under his
accomplishment of the use for which it has been authority; or
constituted. [Art. 1944, 1946, CC] iii.   Bailee unduly refuses bailor support
Exception: when bailee is legally or morally
Bailee has right of retention for damages when bound to give support the bailor.
the bailor who, knowing the flaws of the thing 2.   Obligation to refund the extraordinary expenses
loaned, does not advise the bailee of the same. during the contract for the preservation of the
[Arts. 1946, 1944, CC] thing loaned. [Art. 1949, CC]
5.   Obligation to pay for the ordinary expenses for Provided that: Bailee brings the same to the
the use and preservation of the thing loaned. [Art. knowledge of the bailor before incurring them,
1941, CC] except when they are so urgent that the reply
6.   Obligation to bear equally (with the bailor) the cannot be awaited without danger.
extraordinary expenses arising on the occasion of 3.   Obligation to bear equally (with the bailee) the
actual use of the thing by the bailee even though extraordinary expenses arising on the occasion of
bailee acted without fault. [Art. 1949, CC] actual use of the thing by the bailee. [Art. 1949,
Exception: Contrary stipulation CC]
Exception: Contrary stipulation
4.   Obligation to pay damages to the bailee for
hidden flaws known to the bailor. [Art. 1951, CC]

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Note: Bailor has no right of abandonment; he cannot 1.   Death of either the bailor or the bailee [Art. 1939,
exempt himself from payment of expenses or CC]
damages to the bailee by abandoning the thing to the 2.   Expiration of term or accomplishment of purpose
latter. [Art. 1952, CC] [Art. 1946, CC]
3.   Bailor demands the return in case the bailee
f.   Liability for Deterioration committed acts of ingratitude
4.   Upon demand in case of precarium
General rule: the bailee is liable for the deterioration of 5.   Bailor demands the return (and not just
the thing loaned. temporary use) in case bailor has urgent need of
the thing loaned
Exception: when the deterioration of the thing is due
only to the use thereof and without his fault. [Art. 2.  M utuum
1943, CC]
Mutuum – a contract where one of the parties
g.  Liability for Loss (creditor) delivers to another (debtor/borrower)
money or other consumable thing upon the condition
General Rule: The Bailee is not liable for loss of the that the same amount of the same kind and quality
thing due to fortuitous event. [Art. 1174, CC] shall be paid.

Since the bailor retains ownership of the property a.  Obligations of the


loaned, generally, it is the bailor who bears the
liability for loss of the property loaned due to
Borrower
fortuitous events.
1.   Obligation to pay to the creditor an equal amount
Exceptions: Bailee is liable for loss of the thing, even if of the same kind and quality. [Art. 1953, CC]
it is through a fortuitous event: 2.   If impossible to deliver the same kind, pay value
1.   If he devotes the thing to any purpose different at the time of perfection of loan. [Art. 1955, CC]
from that for which it has been loaned; 3.   Pay interest, if stipulated. [Art. 1956, CC]
2.   If he keeps it longer than the period stipulated, or
after the accomplishment of the use for which the b.  Interest and Suspension of
commodatum has been constituted; Usury Law
3.   If the thing loaned has been delivered with
appraisal of its value, unless there is a stipulation Interest– the compensation allowed by law or fixed by
exempting the bailee from responsibility in case the parties for the loan or forbearance of money,
of a fortuitous event; goods or credits (conventional interest), or the
4.   If he lends or leases the thing to a third person, amount imposed by law or by courts as penalty or
who is not a member of his household; indemnity for damages (compensatory interest)
5.   If, being able to save either the thing borrowed or 1.   Simple interest – Paid for the principal at a
his own thing, he chose to save the latter. [Art. certain rate fixed or stipulated by the parties.
1942, CC] 2.   Compound Interest – that which is imposed upon
interest due and unpaid.
h.  Right of Retention Compound interest is allowed:
a.   When there is an express written stipulation
General Rule: the bailee has no right of retention of the to that effect [Art.1956, CC]
thing loaned on the ground that the bailor owes him b.   Upon judicial demand. However, debtor is
something, even though it may be by reason of not liable to pay compound interest even
expenses. [Art. 1944, CC] after judicial demand when there is no
stipulation for payment of interest. [Art.
Exception: the bailee has the right of retention for 2212, CC]
damages arising from hidden flaws. [Art. 1944, 1951, 3.   Legal Interest – that which the law directs to be
CC] charged in the absence of any agreement as to
the rate between the parties.
i.   Extinguishment 4.   Lawful Interest – that which the laws allow or do
not prohibit.

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5.   Unlawful or Usurious Interest – paid or c.   Where the demand is established with


stipulated to be paid beyond the maximum fixed reasonable certainty, the interest shall begin
by law. to run from the time the claim is made
judicially or extrajudicially [Art. 1169, CC]
c.   Requisites for Interest to d.   When such certainty cannot be so reasonably
established at the time the demand is made,
be Chargeable the interest shall begin to run only from the
date the judgment of the court is made [at
1.   Must be expressly stipulated [Art. 1956, CC] which time the quantification of damages
Exceptions: may be deemed to have been reasonably
a.   The debtor in delay is liable to pay legal ascertained].
interest (6% per annum) as indemnity for e.   The actual base for the computation of legal
damages [Art. 2209, CC] interest shall, in any case, be on the amount
b.   Interest accruing from unpaid interest – finally adjudged.
Interest demanded shall earn interest from 3.   When the judgment of the court awarding a
the time it is judicially demanded [Art. 2212, sum of money becomes final and executory, the
CC] or where there is an express stipulation rate of legal interest, whether the case falls under
[Art.1959, CC] paragraph 1 or paragraph 2, above, shall be 6%
2.   Agreement must be in writing [Art.1956, CC] per annum from such finality until its satisfaction,
3.   Must be lawful this interim period being deemed to be by then an
Note: If the conditions do not concur and the equivalent to a forbearance of credit.
borrower pays interest:
a.   If the borrower paid by mistake, the creditor The Usury Law [Act No.2566] – an act fixing rates of
is obliged to return what was delivered [Arts interests upon loans and declaring the effect of
1960 and 2154, CC] receiving or taking usurious rates and for other
b.   If the borrower voluntarily paid (i.e., with purposes. [Arevalo v. Dimayuga, G.R. No. 26218
knowledge that the conditions have not been (1927)]
met), the creditor is authorized to retain [Art.
1423, CC] CB Circular No. 905 abolished interest rate ceilings.
With the promulgation of such circular, usury has
Rules for award of interest in the concept of actual become “legally inexistent” as the parties can now
and compensatory damages [Nacar v. Gallery legally agree on any interest that may be charged on
Frames, G.R. No. 189871 (2013) modifying Eastern the loan.
Shipping Lines vs. CA, G.R. No. 97412 (1994)] in light
of BSP-MB Circular No. 799]
1.   When the obligation is breached, and it
d.  Elements of Usury
consists in the payment of a sum of money, i.e.,
a loan or forbearance of money, 1.   A loan or forbearance of money
a.   The interest due should be that which may 2.   An understanding between parties that the loan
have been stipulated in writing. shall and may be returned
b.   The interest due shall itself earn legal 3.   An unlawful intent to take more than the legal
interest from the time it is judicially rate for the use of money or its equivalent
demanded. 4.   The taking or agreeing to take for the use of the
c.   In the absence of stipulation, the rate of loan of something in excess of what is allowed by
interest shall be 6% per annum to be law.
computed from default, i.e., from judicial or Note: A usurious loan transaction is not a complete
extrajudicial demand under and subject to nullity but defective only with respect to the agreed
the provisions of Article 1169 of the CC. interest, i.e., as if no interest was stipulated. [Carpo v.
2.   When an obligation, not constituting a loan or Chua, G.R. Nos. 150773 and 153599 (2005)] Hence, if
forbearance of money, is breached the principal obligation is the payment of a sum of
a.   An interest on the amount of damages money, the debtor will be liable for the principal plus
awarded may be imposed at the discretion of legal interest, following Article 2209.
the court at the rate of 6% per annum.
b.   No interest, however, shall be adjudged on Although usury is legally inexistent, courts will not
unliquidated claims or damages, except hesitate to declare void “excessive, iniquitous,
when or until the demand can be established unconscionable, exorbitant” interest. [Gomez-
with reasonable certainty. Somera]

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  Deposit How Perfected: The deposit is perfected upon


delivery, which is made by the will of the depositor.
[Arts. 1963 and 1968, CC]
A deposit is constituted from the moment a person
receives a thing belonging to another, with the
obligation of safely keeping it and of returning the
a.  Extinguishment
same. [Art. 1962, CC]
1.   Loss or destruction of thing deposited, or
Object of Deposit 2.   In case of a gratuitous deposit, upon the death of
Art. 1966 provides that only movable things may be either the depositor or depositary [Art. 1995]. The
the object of a deposit. However, Art. 2006 provides depositary is not obliged to continue with the
that movable as well as immovable property may be contract of deposit
the object of sequestration or judicial deposit. 3.   By other modes provided in the CC, e.g. novation,
merger, etc. [See Art.1231, CC]
Principal Purpose
Safekeeping of the thing; if safekeeping is NOT the b.  Obligations of a Depositary
principal purpose, or is only an accessory obligation,
there is NO DEPOSIT but some other contract. [Art. 1.   Depositary is obliged to keep the thing safely and
1962, CC] 2.   Depositary is obliged to return it to the depositor,
heirs, successors or person designated in the
Consideration contract, when required [Art. 1972, CC], together
A deposit is generally gratuitous, except: with all its products, accessories and accessions.
1.   If there is an agreement to the contrary [Art. 1983, CC] at the place designated when
2.   When the depositary is engaged in the business deposit was made. Otherwise, where the thing
of storing goods [Art. 1965, CC] may be [Art. 1987, CC].

Parties Exception to return on demand: there is no


Depositor: the person who delivers, or formally obligation to return on demand when (a) the
transfers, gives, or yields possession or control of the thing is judicially attached while in the
movable property depositary’s possession, or (b) when depositary is
Depositary: the person who receives it notified of the opposition of a third person [Art.
1988, CC]
Kinds Of Deposit
1.   Extrajudicial Depositary NOT LIABLE FOR LOSS
a.   Voluntary – obligation arises as a General rule: The depositary is not liable in the event
consequence of contract; of loss. The required degree of care however, is
b.   Necessary – obligation arises as a greater if the deposit is for compensation.
consequence of law or quasi-contract
2.   Judicial – obligation arises as a consequence of a Exceptions:
law allowing the issuance of a judicial order 1.   Loss is through his fault or negligence [Art. 1170,
constituting a deposit CC], even if the thing was insured [Art. 2207, CC];
2.   Loss while in his possession, ordinarily raises
presumption of fault on his part. [See Art. 1265,
1.   Voluntary Deposit CC]
3.   Loss is through a fortuitous event if
Voluntary deposit –the deposit itself is a real a.   It is stipulated that depositary will be liable;
contract, as it is not perfected until the delivery of the b.   Depositary uses the thing without
thing. [Art. 1968, CC] A contract to deposit, or an Depositor’s permission;
agreement to constitute a deposit, is consensual and c.   Depositary delays its return;
binding. d.   Depositary allows others to use it. [Art 1979]
4.   Loss when depositary deposits the thing with a
A deposit may be made by two or more persons (who third person
believe that they are entitled to the thing deposited Exception: if deposit with a third person is allowed
with a third person). The third person is to deliver the
thing to the one to whom it belongs. [Art. 1968, CC] Exception to the exception: if such third person is
manifestly careless or unfit [Art. 1973, CC];
How Entered Into: Orally or in writing [Art. 1969, CC]

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5.   Depositary also liable for negligence of employee f.   Right of Retention


[Ibid.];
6.   Loss when depositary uses the thing The depositary may retain the thing until the full
Exception: use with permission or for preservation payment of what may be due him by reason of the
7.   Even if the depositary is not liable, if the he deposit [Art. 1994, CC]
receives money/replacement, he must deliver
such to the depositor [Art. 1990, CC]
2.  N ecessary Deposit
c.   Authority of Depositary
Made in compliance with a legal obligation, or on the
1.   Depositary may change way of deposit if he may occasion of any calamity, or by travelers with common
reasonably presume that the depositor would carriers [Arts.1734-1735, CC], or by travelers in hotels
consent if he knew the situation. He is to notify the and inns [Arts.1996-2004, CC]
depositor thereof and wait for the latter’s
decision, unless delay would cause danger. [Art. a.  Kinds of Necessary Deposit
1974, CC]
2.   Depositary is required to collect on interest 1.   It is made in compliance with a legal obligation,
earned by certificates, bonds, securities and in which case it is governed by the law
instruments when it becomes due. [Art 1975, CC] establishing it, and in case of deficiency, the rules
3.   Depositary cannot make use of the thing on voluntary deposit, e.g., Arts. 538, 586 and
deposited unless with depositor’s consent or its 2104
preservation requires its use. [Art 1977, CC] 2.   It takes place on the occasion of any calamity,
4.   If there is justifiable reason not to keep the thing, such as fire, storm, flood, pillage, shipwreck, or
depositary may return it to the depositor even other similar events. There must be a causal
before the time designated relation between the calamity and the
Exception: when the deposit is for valuable constitution of the deposit. In this case the
consideration [Art. 1989, CC] deposit is governed by the rules on voluntary
deposit. [Art. 2168, CC]
d.  Obligations of a Depositor 3.   Made by passengers with common carriers.
[Art.1754, CC]
1.   Gratuitous deposit: depositor is obliged to 4.   Made by travelers in hotels or inns. [Art. 1998, CC]
reimburse the depositary for expenses incurred
for preservation. [Art.1992, CC] b.  Deposit by Travelers in
2.   Depositor is obliged to pay losses incurred due to Hotels and Inns
character of thing deposited. [Art. 1993, CC]
Exceptions: Before keepers of hotels or inns may be held
a.   Depositor was not aware of the danger; responsible as depositaries with regard to the effects
b.   Depositor was not expected to know the of their guests, the following must concur:
dangerous character of the thing; 1.   Keepers or their employees have previously been
c.   Depositor notified the depositary of such informed about the effects brought by the guests;
dangerous character; and
d.   Depositary was aware of the danger without 2.   The latter have taken the precautions prescribed
advice from the depositor. [Ibid.] regarding their safekeeping.

e.   Authority of Depositor c.   Extent of Liability Under


1.   When there are two or more depositors and they Art.1998, CC
are not solidary and the thing admits of division,
one cannot demand more than his share [Art. 1.   Those in hotel rooms which come under the term
1985, CC]. “baggage” or articles such as clothing as are
2.   If he should lose his capacity to contract after ordinarily used by travelers
having made the deposit, the thing cannot be 2.   Include those lost or damaged in hotel annexes
returned except to persons who may have such as vehicles in the hotel’s garage.
administration of his property and rights. [Art.
1986, CC].

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d.  When Hotel-Keeper Liable a.  Nature and Purpose


Regardless of the amount of care exercised, the hotel- It is auxiliary to a case pending in court. The purpose
keeper is liable when— is to maintain the status quo during pendency of the
1.   The loss or injury to personal property is caused litigation or to insure the right of the parties to the
by his servants or employees as well as by property in case of a favorable judgment.
strangers [Art. 2000, CC].
2.   The loss is caused by the act of a thief or robber b.  Depositary of Sequestered
done without the use of arms and irresistible
force. [Art. 2001, CC] Property
A person is appointed by the court [Art. 2007] with the
e.   When Hotel-Keeper not obligations—
Liable 1.   To take care of the property with the diligence of
a good father of the family. [Art. 2008, CC]
1.   The loss or injury is caused by force majeure, like 2.   To continue in his responsibility until the
flood, fire, [Art.2000, CC] theft or robbery by a controversy which give rise thereto is ended
stranger—not the hotel-keeper’s servant or unless the court so orders. [Art. 2007, CC]
employee—with the use of firearms or irresistible
force [Art.2001, CC] c.   Applicable Law
Exception: Hotel-keeper is guilty of fault or
negligence in failing to provide against the loss Judicial deposit law is remedial or procedural. The
or injury from his cause. [Arts.1170 and 1174, CC] Rules of Court shall govern matters not provided for
2.   The loss is due to the acts of the guests, his in the CC. [Art. 2009, CC]
family, servants, visitors [Art.2002, CC]
3.   The loss arises from the character of the things
brought into the hotel [Art. 2002, CC]

The hotel-keeper cannot free himself from


responsibility by posting notices to the effect that he
is not liable for the articles brought by the guest. Such
kind of stipulation shall be void. [Art. 2003, CC]

f.   Hotel-Keeper’s Right to
Retention
The hotel-keeper has a right to retain the things
brought into the hotel by the guest, as a security for
credits on account of—
1.   lodging,
2.   supplies usually furnished to hotel guests [Art.
2004, CC]

The right of retention recognized in this article is in the


nature of a pledge created by operation of law.

3.  Judicial Deposit or
Sequestration
Takes place when an attachment or seizure of
property in litigation is ordered [Arts. 2005-2009, CC]
It is the only type of deposit that may involve
immovable property.

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  Guaranty and Suretyship notified of the default


of the principal
how much he may be
injured thereby
Guaranty – a contract whereby a person (guarantor) A guarantor is the
binds himself to the creditor to fulfill the obligation of A surety is the insurer of
insurer of the solvency
the principal debtor in case the latter should fail to do the debt, and he
of the debtor and thus
so. [Art. 2047, CC] obligates himself to pay
binds himself to pay if
if the principal does not
the principal is unable
Suretyship – a relation which exists where one person pay
to pay
[principal] has undertaken an obligation and another
person (surety) is also under a direct and primary
obligation or other duty to a third person (obligee), 1.   Nature and Extent of
who is entitled to but one performance, and as
between the two who are bound, the one rather than
Guaranty
the other should perform.
General rule: Guaranty is gratuitous
While a surety undertakes to pay if the principal does
Exception: When there is a stipulation to the contrary
not pay, the guarantor only binds himself to pay if the
[Art. 2048, CC]
principal is unable to pay. [See benefit of excussion,
Art. 2058, CC]
Parties to a Guaranty
a.   Creditor
Guaranty distinguished from Suretyship [Zobel, Inc.
b.   Debtor of the Principal Obligation
vs. CA, G.R. No. 113931 (1998)]
c.   Guarantor [Gomez-Somera]
Guaranty Surety
An accessory promise Qualifications of a guarantor [Art. 2056]
A collateral
by which a person binds
undertaking to pay the a.   He possesses integrity;
himself for another
debt of another in case b.   He has capacity to bind himself;
already bound, and
the latter is unable to c.   He has sufficient property to answer for the
agrees with the creditor
pay the debt. obligation which he guarantees.
to satisfy the obligation
if the debtor does not
General rule: Creditor has the right to demand another
The contract of guarantor with the qualifications in Art. 2056 if
guaranty is the previous guarantor has:
guarantor's own a.   Been convicted in first instance of a crime
separate undertaking, involving dishonesty; or
A surety is usually
in which the principal b.   Become insolvent
bound with his principal
does not join. It is
by the same
usually entered into Exception: Creditor has no right to demand a
instrument, executed at
before or after that of replacement guarantor if he himself required and
the same time, and on
the principal, and is stipulated that the specified person should be the
the same consideration.
often supported on a guarantor.
He is an original
separate consideration
promissor and debtor
from that supporting On the cause of a guaranty contract
from the beginning,
the contract of the A guarantor or surety is bound by the same
and is held, ordinarily,
principal. The original consideration that makes the contract effective
to know every default of
contract of his principal between the principal parties thereto. [Severino v.
his principal.
is not his contract, and Severino, et al., G.R. No. 34642 (1931)]
he is not bound to take
notice of its non- Guaranty or surety agreement is regarded valid
performance despite the absence of any direct consideration
A surety will not be received by the guarantor or surety, such
A guarantor is often
discharged, either by consideration need not pass directly to the guarantor
discharged by the mere
the mere indulgence of or surety; a consideration moving to the principal will
indulgence of the
the creditor to the suffice.
creditor to the
principal, or by want of
principal, and is usually
notice of the default of General Rule: A married woman who is a guarantor
not liable unless
the principal, no matter binds only her separate property [Art. 2049, CC]

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Exceptions: contemplates a future course of dealings,


a.   With her husband’s consent, bind the community covering a series of transactions generally for an
or conjugal partnership property indefinite time or until revoked.
b.   Without husband’s consent, in cases provided by b.   It is prospective in its operation and is generally
law, such as when the guaranty has redounded to intended to provide security with respect to future
the benefit of the family. transactions.
c.   Future debts, even if the amount is not yet known,
A guaranty need not be undertaken with the may be guaranteed but there can be no claim
knowledge of the debtor [Art. 2050, CC] against the guarantor until the amount of the
Guaranty is unilateral. It exists for the benefit of the debt is ascertained or fixed and demandable.
creditor and not for the benefit of the principal debtor
Rationale: A contract of guaranty is subsidiary
Creditor has every right to take all possible measures a.   To secure the payment of a loan at maturity –
to secure payment of his credit—guaranty can be surety binds himself to guarantee the punctual
constituted even against the will of the principal payment of a loan at maturity and all other
debtor obligations of indebtedness which may become
due or owing to the principal by the borrower.
However, as regards payment made by a third b.   To secure payment of any debt to be
person— subsequently incurred – a guaranty shall be
a.   If payment is without the knowledge or against construed as continuing when by the terms
the will of the debtor— thereof it is evident that the object is to give a
1.   Guarantor can recover only insofar as the standing credit to the principal debtor to be used
payment has been beneficial to the debtor from time to time either indefinitely or until a
[Art. 1236, CC] certain period, especially if the right to recall the
2.   Guarantor cannot compel the creditor to guaranty is expressly reserved.
subrogate him in his rights [Art. 1237, CC] c.   To secure existing unliquidated debts – refers to
b.   If payment is with knowledge or consent of the debts existing at the time of the constitution of
debtor: Subrogated to all the rights which the the guaranty but the amount thereof is unknown
creditor had against the debtor and not to debts not yet incurred and existing at
that time.
The guaranty must be founded on a valid principal d.   The surety agreement itself is valid and binding
obligation [Art. 2052 (1), CC] even before the principal obligation intended to
Guaranty is an accessory contract: It is an be secured thereby is born; for example, those
indispensable condition for its existence that there securing obligations subject to a condition
must be a principal obligation. Hence, if the principal precedent are valid and binding before the
obligation is void, it is also void. occurrence of the condition precedent.

A guaranty may secure the performance of a A guaranty may secure the performance of a
voidable, unenforceable, and natural obligation conditional obligation [Art. 2053, CC]
[Art. 2052(2), CC] a.   Principal obligation subject to a suspensive
A guaranty may secure the performance of a: condition – the guarantor is liable only after the
a.   Voidable contract – such contract is binding, fulfillment of the condition.
unless it is annulled by a proper court action b.   Principal obligation subject to a resolutory
b.   Unenforceable contract – because such contract condition – the happening of the condition
is not void extinguishes both the principal obligation and
c.   Natural obligation – the creditor may proceed the guaranty
against the guarantor although he has no right of
action against the principal debtor for the reason A guarantor’s liability cannot exceed the principal
that the latter’s obligation is not civilly obligation [Art. 2054, CC]
enforceable. When the debtor himself offers a General rule: Guaranty is a subsidiary and accessory
guaranty for his natural obligation, he impliedly contract – guarantor cannot bind himself for more
recognizes his liability, thereby transforming the than the principal debtor and even if he does, his
obligation from a natural into a civil one. liability shall be reduced to the limits of that of the
debtor. But the guarantor may bind himself for less
A guaranty may secure a future debt [Art. 2053, CC] than that of the principal.
Continuing Guaranty
a.   Not limited to a single transaction but which

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Exceptions: therefore, of the agreement cannot be received


a.   Interest, judicial costs, and attorney’s fees as part without the writing, or a secondary evidence of its
of damages may be recovered (under the term contents. However, it need not appear in a public
accessories in Art. 2055 as held in Diño v. CA, G.R. document.
No. 89775, 1992) – creditors suing on a suretyship
bond may recover from the surety as part of their
damages, interest at the legal rate, judicial costs,
2.  N ature and Extent of
and attorney’s fees when appropriate, even Suretyship
without stipulation and even if the surety would
thereby become liable to pay more than the total Nature of Liability
amount stipulated in the bond. Although contractual (limited by the terms of the
contract) and accessory (arises only if principal debtor
Interest runs from: is held liable), a surety’s liability is direct, primary,
1.   Filing of the complaint (upon judicial and absolute.
demand); or
2.   The time demand was made upon the surety General Rules
until the principal obligation is fully paid a.   In the absence of collusion, the surety is bound by
(upon extra-judicial demand) a judgment against the principal even though he
was not a party to the proceedings;
Rationale: Surety is made to pay, not by reason b.   The creditor may sue, separately or together, the
of the contract, but by reason of the debtor’s principal debtor and the surety;
failure to pay when demanded and for having c.   A demand or notice of default is not required to
compelled the creditor to resort to the courts to fix the surety’s liability
obtain payment.
b.   Penalty may be provided – a surety may be held Exception: Where required by the provisions of the
liable for the penalty provided for in a bond for contract of suretyship
violation of the condition therein. d.   A surety bond is void where there is no principal
debtor because such an undertaking
Principal’s liability may exceed guarantor’s presupposes that the obligation is to be
obligations [Art. 2054, CC] enforceable against someone else besides the
The amount specified in a surety bond as the surety’s surety, and the latter can always claim that it was
obligation does not limit the extent of the damages never his intention to be the sole person obligated
that may be recovered from the principal, the latter’s thereby.
liability being governed by the obligations he
assumed under his contract Note: A surety is NOT entitled to the benefit of
excussion, but has the right of indemnification
The existence of a guaranty is not presumed [Art. and subrogation [Art. 2066 and 2067, CC].
2055, CC]
Guaranty requires the expression of consent on the The undertaking is to the creditor, not the debtor
part of the guarantor to be bound. It cannot be The surety makes no covenant or agreement with the
presumed because of the existence of a contract or principal that it will fulfill the obligation guaranteed
principal obligation. for the benefit of the principal. The surety’s
undertaking is that the principal shall fulfill his
Rationale: obligation and that the surety shall be relieved of
a.   There be assurance that the guarantor had the liability when the obligation secured is performed;
true intention to bind himself; unless otherwise expressly provided.
b.   To make certain that on making it, the guarantor
proceeded with consciousness of what he was The stipulation in the indemnity agreement allowing
doing. the surety to recover even before it paid the creditor is
enforceable. In accordance therewith, the surety may
Contract of guaranty is covered by the Statute of demand from the indemnitors even before paying the
Frauds [See Art. 1403 (2) (b), CC] creditors. [Mercantile Insurance Company v. Ysmael,
Guaranty must not only be expressed but must so be G.R. No. L-43862 (1989)]
reduced into writing. Hence, it shall be unenforceable
by action, unless the same or some note or Note: Prior demand by the creditor upon the principal
memorandum thereof be in writing, and subscribed is not required. The surety is not exonerated by
by the party charged, or by his agent; evidence, neglect of the creditor to sue the principal.

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debtor as the same would be but a useless


Strictissimi juris rule is applicable ONLY to formality. It is not necessary that the debtor
accommodation surety and not applicable to be judicially declared insolvent.
compensated sureties [Pastoral v. Mutual Security The right of guarantors…to demand exhaustion
Insurance Corp., G.R. No. L-20469 (1965)]. of the property of the principal debtor, exists only
when a pledge or a mortgage has not been given
Rationale: An accommodation surety acts without as special security for the payment of the
motive of pecuniary gain and hence, should be principal obligation. [Southern Motors, Inc. v.
protected against unjust pecuniary impoverishment Barbosa, G.R. No. L-9306 (1956)]
by imposing on the principal, duties akin to those of a 2.   If he does not comply with Art. 2060, CC:
fiduciary. In order that the guarantor may make use of the
benefit of excussion, he must:
a.   Set it up against the creditor upon the latter’s
3.  Effect of Guaranty demand for payment from him;
b.   Point out to the creditor:
a.  Effects of Guaranty i.   Available property of the debtor –
between the Guarantor and the guarantor should facilitate the
realization of the excussion since he
the Creditor is the most interested in its benefit.
ii.   Within the Philippine territory –
The guarantor has the right to benefit from excussion of property located
excussion/exhaustion [Art. 2058, CC] abroad would be a lengthy and
The guarantor cannot be compelled to pay the extremely difficult proceeding and
creditor unless the latter has: would not conform with the purpose
1.   Exhausted all of the property of the debtor; and of the guaranty to provide the
2.   Resorted to all the legal remedies against the creditor with the means of obtaining
debtor. the fulfillment of the obligation.
iii.   Sufficient to cover the amount of the
Exceptions to benefit of excussion debt
1.   As provided in Art. 2059, CC: 3.   If he is a judicial bondsman and sub- surety [Art.
a.   If the guarantor has expressly renounced it. 2084, CC]
b.   If he has bound himself solidarily with the 4.   Where a pledge or mortgage has been given by
debtor - here, the liability assumed is that of him as a special security
a surety. The guarantor becomes primarily 5.   If he fails to interpose it as a defense before
liable as a solidary co- debtor. In effect, he judgment is rendered against him.
renounces in the contract itself the benefit of
exhaustion. The creditor has the right to secure a judgment
c.   In case of insolvency of the debtor – the against the guarantor prior to the excussion
guarantor guarantees the solvency of the General rule: An ordinary personal guarantor (NOT a
debtor. If the debtor becomes insolvent, the pledgor/mortgagor), may demand exhaustion of all
liability of the guarantor arises as the debtor the property of the debtor before he can be compelled
cannot fulfill his obligation to pay.
d.   When the debtor has absconded, or cannot
be sued within the Philippines – the creditor Exception: The creditor may, prior thereto, secure a
is not required to go after a debtor who is judgment against the guarantor, who shall be
hiding or cannot be sued in our courts, and to entitled, however, to a deferment of the execution of
incur the delays and expenses incident said judgment against him, until after the properties
thereto. of the principal debtor shall have been exhausted, to
Exception: When the debtor has left a satisfy the latter’s obligation. [Tupaz v. CA, G.R. No.
manager or representative 145578 (2005)]
e.   If it may be presumed that an execution on
the property of the principal debtor would The creditor has the duty to make prior demand for
not result in the satisfaction of the obligation payment from the guarantor [Art. 2060, CC]
– if such judicial action including execution The demand is to be made only after judgment on the
would not satisfy the obligation, the debt.
guarantor can no longer require the creditor
to resort to all such remedies against the

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The guarantor has the duty to set up the benefit of b.  Effects of Guaranty
excussion [Art. 2060, CC]
As soon as he is required to pay, guarantor must also between the Debtor and
point out to the creditor available property (not in the Guarantor
litigation or encumbered) of the debtor within the
Philippines. The guarantor who pays has the right to be
subrogated to the rights of the creditor [Art. 2067,
The creditor has the duty to resort to all legal CC]
remedies [Arts. 2058 and 2061, CC] A guarantor who pays the debt is entitled to every
After the guarantor has fulfilled the conditions remedy which the creditor has against the principal
required for making use of the benefit of excussion, it debtor, to enforce every security and all means of
becomes the duty of the creditor to: payments; to stand in the place of the creditor not
1.   Exhaust all the property of the debtor pointed out only through the medium of the contract, but even by
by the guarantor; means of the securities entered into without the
2.   If he fails to do so, he shall suffer the loss for the knowledge of the surety; having the right to have
insolvency of the debtor, but only to the extent of those securities transferred to him though there was
the value of the said property no stipulation for it, and to avail himself of all
securities against the debtor.
The creditor has the duty to notify the guarantor in
the action against the debtor [Art. 2062, CC] However, if a guarantor has compromised with the
Notice to the guarantor is mandatory in the action creditor for the payment of the obligation, then the
against the principal debtor. The guarantor, however, guarantor cannot demand more than what he has
is not duty bound to appear in the case, and his non- really paid.
appearance shall not constitute default, w/ its
consequential effects. The guarantor has the duty to notify the debtor
before paying the creditor [Art. 2068; see also Arts.
Rationale: To give the guarantor the opportunity to 1236 and 1237, CC]
allege and substantiate whatever defenses he may Should payment be made without notification or
have against the principal obligation, and chances to against the debtor’s will, and supposing the debtor
set up such defenses as are afforded him by law has already made a prior payment, the debtor would
be justified in setting up the defense that the
A compromise shall not prejudice the person not obligation has already been extinguished by the time
party to it [Art. 2063, CC] the guarantor made the payment. The guarantor will
A compromise between creditor and principal debtor then lose the right of reimbursement and
benefits the guarantor but does not prejudice him. consequently the right of subrogation.
The guarantor cannot demand reimbursement for
A compromise between guarantor and the creditor payment made by him before the obligation has
benefits but does not prejudice the principal debtor. become due [Art. 2069, CC]
General rule: Since a contract of guaranty is only
Co-guarantors are entitled to the benefit of division subsidiary, the guarantor cannot be liable for the
[Art. 2065, CC] obligation before the period on which the debtor’s
General Rule: The benefit of division applies only when liability will accrue. Any payment made by the
there are several guarantors and one debtor for a guarantor before the obligation is due cannot be
single debt. A co-guarantor is liable only to the extent indemnified by the debtor. Can only demand
of his share in the obligation as divided among all the reimbursement upon expiration of the period.
co-guarantors.
Exception: Prior consent or subsequent ratification by
Exception: the debtor
1.   Liability will be solidary if it has been expressly
stipulated. The guarantor may proceed against the debtor even
2.   Also, the circumstances enumerated in Art. 2059, before payment has been made [Art. 2071, CC]
CC will preclude application of the benefit of General rule: Guarantor has no cause of action against
division. the debtor until after the former has paid the
obligation.

Exceptions [Art. 2071, CC]:


1.   When he is sued for the payment;

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2.   In case of insolvency of the principal debtor; Requisites for the applicability of Art. 2073, CC
3.   When the debtor has bound himself to relieve him 1.   There are two or more guarantors of the same
from the guaranty within a specified period, and debtor for the same debt
this period has expired; 2.   Payment has been made by one guarantor;
4.   When the debt has become demandable, by 3.   The payment was made because
reason of the expiration of the period for a.   Of the insolvency of the debtor, or
payment; b.   By judicial demand
5.   After the lapse of 10 years, when the principal 4.   The paying guarantor seeks to be indemnified
obligation has no fixed period for its maturity, only to the extent of his proportionate share in the
unless it be of such nature that it cannot be total obligation.
extinguished except within a period longer than
10 years; For purposes of proportionate reimbursement, the
6.   If there are reasonable grounds to fear that the other guarantors may interpose such defenses
principal debtor intends to abscond; against the paying guarantor as are available to the
7.   If the principal debtor is in imminent danger of debtor against the creditor, except those that are
becoming insolvent. personal to the debtor [Art. 2074, CC]

When any of these grounds for exceptions are


present, then the guarantor may (1) obtain
4.  E xtinguishment of
release from the guaranty, or (2) demand a Guaranty
security that shall protect him from any
proceedings by the creditor and from the danger Once the obligation of the debtor is extinguished in
of insolvency of the debtor. any manner provided in the CC, the obligation of the
guarantor is also extinguished [Art. 2076, CC].
Rationale: To enable the guarantor to take
measures for the protection of his interest in view However, there may be instances when, after the
of the probability that he would be called upon to extinguishment of the guarantor’s obligation (as in
pay the debt. As such, he may, in the alternative, the case of a release from the guaranty), the
obtain release from the guaranty; or demand obligation of the debtor still subsists.
security that shall protect him from any
proceeding by the creditor, and against the Although the guarantor generally has to make
insolvency of the debtor. payment in money, any other thing of value, if
accepted by the creditor, is valid payment and
Arts. 2066, CC vs. Art. 2071, CC therefore releases the guarantor (dacion en pago)
Art. 2066 Art. 2071 [Art. 2077, CC].
Provides for the
Provides for the
protection before he If one guarantor is released without the consent of the
enforcement of the
has paid but after he others, the release would benefit the co-guarantors to
guaranty/surety against
has become liable, the extent of the proportionate share of the guarantor
the debtor after he has
but before payment of released [Art. 2078, CC].
paid the debt
the debt
Gives a right of action Protective remedy A guarantor is released if the creditor, without the
after payment before payment guarantor’s consent, extends the time within which
Substantive Right Preliminary remedy the debtor may perform his obligation [Art. 2079, CC].
This is to protect the interest of the guarantor should
c.   Effects of Guaranty as the debtor be insolvent during the period of extension
and deprive the guarantor of his right to
Between Co-Guarantors reimbursement.

When the Debtor has two or more Guarantors For The guarantors are released if by some act of the
the Same Debt creditor they cannot be subrogated to the rights,
1.   The one who pays may demand from each of the mortgages and preferences of the latter. [Art. 2080,
others the share proportionally owing to him CC]
2.   If any of the guarantors is insolvent, his share
shall be borne by the others, including the payer, In order to constitute an extension discharging the
in the same proportion [Art. 2073, CC] surety, it should appear that the extension was for:
a.   a definite period,

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b.   pursuant to an enforceable agreement between


the principal and the creditor, and   Pledge
c.   that it was made without the consent of the surety
or with a reservation of rights with respect to him. Pledge – is a contract constituted to secure the
[Filipinas Textile Mills v. CA, G.R. No. 119800 fulfillment of a principal obligation where the thing
(2003)] pledged, which may be a movable, or an incorporeal
right evidenced by a document, is placed in the
possession of the creditor or a third person by
5.  L egal and Judicial Bonds common agreement. [Art. 2093 in relation to Art.
2085, CC]
Bond – an undertaking that is sufficiently secured,
and not cash or currency. The pledgor must be the absolute owner of the thing
pledged, and he must have the free disposal of the
Bondsman – a surety offered in virtue of a provision of property, and in the absence thereof, that he be
law or a judicial order. legally authorized for the purpose. [Art. 2085 (2) and
(3), CC]
Qualifications of personal bondsman [Art. 2082 in
relation to Art. 2056, CC]
a.   He possesses integrity; 1.   Characteristics
b.   He has capacity to bind himself;
c.   He has sufficient property to answer for the a.   Real – perfected upon the delivery of the thing
obligation which he guarantees. pledged [Art. 1316, CC]
b.   Accessory – cannot exist independently (i.e.,
Pledge or mortgage in lieu of bond [Art. 2083, CC] without a principal obligation)
Guaranty or suretyship is a personal security. c.   Unilateral – obligation on the part of the creditor
to return the thing pledged upon the fulfillment
Pledge or mortgage is a property or real security. If the of the principal obligation
person required to give a legal or judicial bond should d.   Subsidiary– obligation incurred does not arise
not be able to do so, a pledge or mortgage sufficient until the fulfillment of the secured principal
to cover the obligation shall be admitted in lieu obligation
thereof.
2.  K inds
Bondsman not entitled to excussion [Art. 2084, CC]
A judicial bondsman and the sub-surety are not a.   Voluntary or Conventional – created by
entitled to the benefit of excussion. agreement of the parties.
b.   Legal – created by operation of law.
Reason: They are not mere guarantors, but sureties
whose liability is primary and solidary. Legal Pledge / Pledge By Operation Of Law [Arts.
2121-2122, CC]
Effect of negligence of creditor a.   Necessary expenses shall be refunded to every
Mere negligence on the part of the creditor in possessor, but only a possessor in good faith may
collecting from the debtor will not relieve the surety retain the thing until he has been reimbursed.
from liability. Useful expenses shall be refunded only to the
possessor in good faith with the same right of
retention, the person who has defeated him in the
possession having the option of refunding the
amount of the expenses or of paying the increase
in value which the thing may have acquired and
by reason thereof [Art. 546, CC]
b.   He who has executed work upon a movable has a
right to retain it by way of pledge until he is paid.
This is called the mechanic’s lien. [Art. 1731, CC]
c.   The agent may retain the things which are the
objects of agency until the principal effects the
reimbursement and pays the indemnity. This is
called the agent’s lien. [Art. 1914, CC]
d.   The laborer’s wages shall be a lien on the goods

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manufactured or the work done. [Art. 1707, CC] e.   The thing pledged may be alienated by the
pledgor or owner only with the consent of the
Note: pledgee. Ownership of the thing pledged is
a.   In legal pledges, the remainder of the price of the transmitted to the vendee or transferee as soon
sale shall be delivered to the obligor. [Art. 2121, as the pledgee consents to the alienation, but the
CC] latter shall continue to have possession [Art.
b.   Public auction of legal pledges may only be 2097, CC].
executed after demand of the amount for which f.   Creditor has the right to retain the thing in his
the thing is retained. It shall take place within one possession or in that of a third person to whom it
month after the demand, otherwise the pledgor has been delivered, until the debt is paid [Art.
may demand the return of the thing pledged, 2098].
provided s/he is able to show that the creditor did g.   Special laws apply to pawnshops and
not cause the public sale without justifiable establishments engaged in making loans secured
grounds. [Art. 2122, CC] by pledges. Provisions of the CC shall apply
subsidiarily to them. [Art. 2123, CC]
3.  Essential Requisites In case of doubt as to whether a transaction is a
pledge or a dation in payment, the presumption is in
Provisions Common to Pledge and Mortgage [Art. favor of pledge, the latter being the lesser
2085, CC] transmission of rights and interests. [Manila Banking
a.   Constituted to secure the fulfillment of a principal Corp. v. Teodoro, G.R. No. 53955 (1989)]
obligation.
b.   Pledgor or mortgagor must be the absolute
owner of the thing pledged or mortgaged. 4.  R equisites for Perfection
c.   The persons constituting the pledge or mortgage
have the free disposal of their property, and in the a.   For the pledge to take effect between the parties,
absence thereof, that they be legally authorized the thing pledged is placed in the possession of
for the purpose. the creditor or a third person [Art. 2093, CC]
Note: Third persons who are not parties to the b.   For the pledge to take effect as against third
principal obligation may secure the latter by persons, a description of the thing pledged and
pledging or mortgaging their own property. [Art. the date of the pledge should appear in a public
2085, CC] instrument [Art. 2096, CC]
d.   Cannot exist without a valid obligation, but may
be constituted to guarantee the performance of a
voidable or unenforceable contract. [Art. 2052,
5.  O bligations of Pledgee
CC]
a.   The pledgee cannot deposit the thing pledged
e.   Debtor retains the ownership of the thing given as
with a 3rd person, unless there is a contrary
a security. stipulation [Art. 2100 (1), CC].
f.   When the principal obligation becomes due, the b.   Pledgee is responsible for the acts of his agents
thing pledged or mortgaged may be alienated for or employees with respect to the thing pledged
the payment to the creditor. [Art. 2087, CC]
[Art. 2100 (2), CC].
c.   General Rule: Has no right to use the thing or to
Provisions Applicable Only to Pledge
appropriate its fruits without authority from the
a.   Transfer of possession to the creditor or to third
owner. If he does so, or misuses it in any way, the
person by common agreement is essential [Art.
owner may ask that the thing be judicially or
2093, CC]. extrajudicially deposited. [Art. 2104, CC]
b.   All movables within the commerce of man may be
pledged as long as they are susceptible of Exception: When the preservation of the thing
possession [Art. 2094, CC].
pledged requires its use, it must be used by the
c.   Incorporeal rights may be pledged. The
creditor only for that purpose.
instruments representing the pledged rights
d.   May cause the public sale of the thing pledged if,
shall be delivered to the creditor; if negotiable,
without fault on his part, there is danger of
must be indorsed [Art. 2095, CC].
destruction, impairment or diminution in value of
d.   Pledge shall take effect against 3rd persons only the thing. The proceeds of the auction shall be a
if the following appear in a public instrument: security for the principal obligation [Art. 2108,
1.   Description of the thing pledged. CC].
2.   Date of the pledge [Art. 2096, CC].

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creditor may appropriate the thing pledged but


6.  R ights of Pledgor he shall give an acquittance (release) for his
entire claim.
a.   Takes responsibility for the flaws of the thing
pledged [Art. 2101 in relation to Art. 1951, CC].
b.   Cannot ask for the return of the thing against the b.  Effects of the Sale of the
will of the creditor, unless and until he has paid Thing Pledged
the debt and its interest, with expenses in a [Art. 2115, CC]
proper case [Art. 2105, CC].
c.   Subject to the right of the pledgee under Article 1.   Extinguishes the principal obligation, whether
2108, pledgor is allowed to substitute the thing the proceeds of the sale is more or less than the
which is in danger of destruction or impairment amount due.
without any fault on the part of the pledgee with 2.   General Rule: If the price of sale is more than
another thing of the same kind and quality [Art. amount due, the debtor is not entitled to the
2107, CC]. excess
d.   May require that the thing be deposited with a 3rd Exception: (1) Unless the contrary is provided. (2)
person, if through the negligence or willful act of Legal pledge
the pledgee the thing is in danger of being lost or 3.   If the price of sale is less, the creditor is not
impaired [Art. 2106, CC]. entitled to recover the deficiency. A contrary
stipulation is void.
The pledgee can temporarily entrust the physical
possession of the chattels pledged to the pledgor
without invalidating the pledge. The pledgor is 8.  P ledge as Distinguished
regarded as holding the pledged property merely as from Chattel Mortgage
trustee for the pledgee. The type of delivery will [Arts. 2140 and 1484, CC]
depend upon the nature and the peculiar
Pledge Chattel Mortgage
circumstances of each case. [Yuliongsiu v. PNB, G.R.
Delivery of Personal Property
No. L-19227 (1968)]
Delivery is required for
Not required
validity
A pledgee cannot become the owner of, nor
appropriate to himself, the thing given in pledge. If by Registration in the Chattel Mortgage Register
the contract of pledge the pledgor continues to be the Not necessary;
Necessary for validity of
owner of the thing pledged during the pendency of the Public document is
the CM against third
obligation, it stands to reason that in case of loss of enough to bind third
persons
the property, the loss should be borne by the pledgor. persons
[PNB v. Atendido, G.R. No. L-6342 (1954)] Right to Excess of Proceeds of Sale
The excess goes to the
pledgee/creditor,
7.  Foreclosure unless otherwise
The excess goes to the
stipulated
debtor/ mortgagor
a.  Requirements in Sale of Note: In legal pledge,
the excess goes to the
the Thing Pledged by a debtor [Art. 2121, CC]
Creditor, if Credit is not Right to Recover Deficiency
Paid on Time Creditor/ mortgagee is
[Art. 2112, CC] not entitled to recover Creditor/ mortgagee can
any deficiency after recover from the debtor/
1.   Debt is due and unpaid. the property is sold, mortgagor, except if
2.   Sale must be at a public auction. notwithstanding covered by Recto Law
3.   Notice to the pledgor and owner, stating the contrary stipulation
amount due.
4.   Sale must be made with the intervention of a The provisions of the CC on pledge, insofar as they are
notary public. not in conflict with the Chattel Mortgage Law shall be
5.   If at the first auction the thing is not sold, a applicable to chattel mortgages [Art. 2141, CC]
second one with the same formalities shall be
held.
6.   If at the second auction, there is no sale either, the

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9.  P actum Commissorium   Chattel Mortgage


Elements: Chattel mortgage – a contract whereby personal
a.   There is property pledged by way of security for property is recorded in the Chattel Mortgage Register
the payment of the principal obligation as a security for the performance of an obligation.
b.   There is a stipulation for automatic appropriation [Art. 2140, CC] The CC has repealed the definition in
by the creditor in case of non-payment of the Act 1508 or the Chattel Mortgage Law. [Gomez-
principal obligation within the stipulated period Somera]

Effect on Pledge
The nullity of the pactum commissorium does not 1.   Form of Chattel Mortgage
affect the validity of the contract of pledge. The
creditor may recover the credit from the proceeds of a The Chattel Mortgage Law prescribes a specific
foreclosure sale effected in accordance with law format for a chattel mortgage. It must be written and
[Gomez-Somera]. subscribed to by the parties in the presence of 2
witnesses. The law also requires it to contain specific
terms.
10.  Equitable Mortgage
It is a contract that reveals the intention of the parties
a.  Required Recording
to charge property as security for a debt, but contains
nothing impossible or contrary to law [Gomez- General rule: the chattel mortgage shall not be valid
Somera]. against any person unless the mortgage is recorded in
the office of the register of deeds
Essential Requisites
Exception: it shall be valid between the parties
a.   Parties entered into a contract denominated as a
contract of sale
Place of Recording
b.   The true intention is to secure an existing debt by The mortgage must be recorded in the office of the
way of mortgage
register of deeds:
1.   If the mortgagor resides in the Philippines at the
Presumption that there is an equitable mortgage: time of making the mortgage - of the province in
a.   When the price of a sale with right to repurchase which the mortgagor resides at the time of
is unusually inadequate; making the same.
b.   When the vendor remains in possession as lessee
2.   If the mortgagor resides outside the Philippines –
or otherwise;
of the province in which the property is situated
c.   When upon or after the expiration of the right to
3.   If the province in which the property is situated
repurchase another instrument extending the
and the province of the mortgagor’s place of
period of redemption or granting a new period is
residence are different – it shall be recorded in
executed; both provinces. [Sec. 5, Chattel Mortgage Law]
d.   When the purchaser retains for himself a part of
the purchase price;
e.   When the vendor binds himself to pay the taxes b.  Contents of an Affidavit of
on the thing sold; Good Faith
f.   In any other case where it may be fairly inferred
that the real intention of the parties is that the 1.   That chattel mortgage is made solely for the
transaction shall secure the payment of a debt or purpose of securing the obligation specified
the performance of any other obligation [Art. therein
1602, CC] 2.   That such principal obligation is just and valid,
not entered into for the purpose of fraud

2.  O bligations Secured
A chattel mortgage cannot secure after-incurred
obligations or future debts. [Gomez-Somera]

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An increase or an extension of the chattel mortgage


obligation becomes a new chattel mortgage in itself,
5.  F oreclosure
and will take effect only from the date the same are
made and not from the date of the original chattel a.  Equity in Redemption
mortgage [Gomez-Somera]
A mortgagor in default may prevent the foreclosure
sale of the mortgaged property by paying the amount
3.  Objects of Chattel due on the mortgage and the reasonable costs and
Mortgage expenses before the sale. [Sec. 13, Chattel Mortgage
Law]
General Rule: All personal property shall be subject to
mortgage, agreeably to the provisions of this Act, and b.  No Right of Redemption
a mortgage executed in pursuance thereof shall be
termed chattel mortgage. [Sec. 2, Chattel Mortgage There is no statute that vests the right of redemption
Law] over personal property. [Gomez-Somera]

Exception: Jurisprudence provides that


immovable/real properties may be the object
c.   Right to Possession
of a chattel mortgage when
1.   parties validly agree/consent to treat them A mortgagee, unlike a pledgee, is generally not in
as movable/personal properties, and possession of the collateral unless and until the
2.   no third persons are prejudiced by such an principal debtor defaults and the mortgagee seeks to
agreement [Makati Leasing and Finance foreclose. [Gomez-Somera]
Corp v. Wearever Textile Mills, G.R.No. L-
58469 (1983) citing Tumalad v. Vicencio, Rationale: right of possession of the collateral is
G.R. No. L-30173 (1971)] conditioned upon fact of actual default of debtor, and
this may be subject to controversy, hence foreclosure
cannot be the first recourse since the sheriff has no
a.  Reasonable Description duty or authority
Rule
d.  Right to Surplus or
The mortgaged property must be so described in the
document such as to enable the parties or any other
Deficiency
person, after reasonable inquiry and investigation,
to identify the mortgaged property. [Sec. 7, Chattel Order Of Application Of Proceeds:
Mortgage Law] 1.   Costs and expenses of keeping and sale
2.   Obligation secured
3.   Subsequent mortgagees
b.  After Acquired Properties
SURPLUS
General rule: after acquired properties cannot be The surplus shall be paid to the mortgagor.
described in the chattel mortgage, so it cannot be
covered by the same DEFICIENCY
Although the law is silent on the matter, there is a
Exception: stocks in retail stores [Gomez-Somera corollary obligation for the mortgagor to pay the
citing Torres v. Limjap, G.R. No. 34385 (1931)] deficiency. [Gomez-Somera citing PAMECA Wood
Treatment Plant, Inc. v. Court of Appeals, G.R. No.
4.  M ortgagor’s Right to 106435 (1999)]

Alienate the Collateral e.   Procedure


The mortgagor must have the written consent of the 1.   File with the executive judge through the clerk of
mortgagee to sell or pledge personal property already court (but it is the sheriff who conducts the sale)
pledged. [Art. 319, RPC] 2.   Notice requirement: 10 days before the sale (post
in 2 or more public places in the municipality
where the collateral is located or where the
mortgagor resides)

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3.   Second notice requirement: 10 days before sale,


sheriff must notify: a) mortgagor; b) person   Real Mortgage
holding under him (assignee of mortgagor); c)
persons holding subsequent mortgages Real mortgage – a contract whereby the debtor
personally or by mail secures to the creditor the fulfillment of a principal
4.   Equity of redemption or grace period: Wait for 30 obligation (real security transaction), immediately
days from time of default making immovable property or real rights answerable
5.   Public sale is conducted (where property to the principal obligation in case it is not complied
situated/mortgagor resides), then sheriff should with at the time stipulated.
make a return
6.   Payment of the proceeds (in order)
a.   Costs and expenses of sale
1.   Objects of Real Mortgage
b.   Payment of demand/obligation secured by [Art. 2124, CC]
mortgage (principal obligation)
c.   Residue shall be paid to persons holding a.   Immovables
subsequent mortgages b.   Alienable real rights over immovables.
d.   Balance: mortgagor/person holding under
him Future property CANNOT be an object of mortgage;
7.   Winning bidder acquires ownership however:
a.   A stipulation subjecting to the mortgage
improvements which the mortgagor may
subsequently acquire, install or use in connection
with real property already mortgaged belonging
to the mortgagor is valid.
b.   A stipulation in a registered (or recorded) real
estate mortgage that all property taken in
exchange or replacement by the mortgagor
(after-acquired property) shall be come subject to
the mortgage is binding. [Gomez-Somera]

2.  O bligations Secured
General Rule: A real estate mortgage is limited to the
principal obligations mentioned in the contract
(within its four corners). [Lim Julian v. Lutero, G.R. No.
L-25235 (1926)]

Exception: A real estate mortgage may contain a


dragnet or blanket mortgage clause which subsumes
all debts, whether past or future. [Philippine Bank of
Communications v. CA, G.R. No. 118552 (1996)]

Note: This clause will be strictly construed and its


inclusion makes the mortgage a continuing security,
not to be discharged by repayment of the amount
named but by payment of the full amount of the
principal obligation. [Gomez-Somera]

Reliance on Security Test: when the mortgagor takes


another loan for which another security was given it
could not be inferred that such loan was made in
reliance solely on the original security with the
dragnet clause, but rather, on the new security given
[Prudential Bank v. Alviar, G.R. No. 150197 (2005)]

3.  Characteristics
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the obligation becomes due.


a.  Characteristics of the 3.   Third persons who introduce improvements upon
the mortgaged property may remove them at any
Collateral time

As a general rule, the mortgagor retains possession of The right to alienate the real estate mortgage credit is
the property. He may deliver said property to the the right of the mortgagee to assign its rights under
mortgagee without altering the nature of the contract the principal obligation secured. Although the
of mortgage. mortgagee does not become the owner of the
collateral, it owns the real estate mortgage and may
Mortgage creates an encumbrance over the property, alienate the same. [Art. 2128, CC; Gomez-Somera]
but ownership of the property is not parted with. It
merely restricts the mortgagor’s jus disponendi over Pactum de non alienando (Sp. pacto de non
the property. The mortgagor may still sell the alienando) is prohibited by Art. 2130
property, and any stipulation to the contrary (pactum 1.   Stipulations forbidding the mortgagor from
de non alienando) is void [Art. 2130, CC] selling the collateral
2.   Stipulations forbidding the mortgagor from
However, a stipulation prohibiting the mortgagor selling the collateral without the consent of the
from entering into second or subsequent mortgages mortgagee
is valid since there is no law prohibiting it. [Litonjua et
al. v. L&R Corporation, et al., G.R. No. 130722 (1999), Alienation or assignment of mortgage credit is valid
citing Philippine Industrial Co. v. El Hogar & Vallejo, even if it is not registered.
G.R. No. L-20482 (1923)]

b.  Characteristics of the
4.  K inds
Mortgage a.   Voluntary – constituted by the will of the owner
of the property on which it is created
A registered real estate mortgage is a right in rem, a b.   Legal – required by law to be executed in favor of
lien that a creditor has on the property; therefore, it is certain persons:
inseparable from the collateral and until discharged, 1.   Persons in whose favor the law establishes a
it follows the property. [Gomez-Somera] mortgage have no other right than to
demand the execution and recording of the
A real estate mortgage that is unregistered binds the document in which the mortgage is
parties to the contract and it only gives the mortgagee formalized [Art. 2125, CC]
the right to demand the execution and recording of 2.   The bondsman who is to be offered in virtue
the mortgage. To bind third parties, a real estate of a provision of law or of a judicial order shall
mortgage must be recorded in the Registry of have the qualifications prescribed in Art
Property. 2056 [integrity, capacity to bind himself, and
sufficient property to answer for the
It is not an essential requisite that the principal of the obligation], and in other laws [Art. 2082, CC]
credit bears interest, or that the interest as
compensation for the use of the principal and the 3.   If the person bound to give a bond should not
enjoyment of its fruits be in the form of a certain be able to do so, a pledge or mortgage
percentage thereof. considered sufficient to recover his obligation
shall be admitted in lieu thereof [Art. 2083,
Mortgage extends to the natural accessions, to the CC]
improvements of growing fruits and the rents or c.   Equitable – One which, although lacking the
income not yet received when the obligation becomes proper formalities of a mortgage, shows the
due, including indemnity from insurance, and/or intention of the parties to make the property a
amount received from expropriation for public use security for the debt.
[Art. 2127, CC] 1.   Lien created by equitable mortgage ought
1.   Applies only when the accessions and accessories not to be defeated by requiring compliance
subsequently introduced belongs to the with formalities necessary to the validity of
mortgagor. voluntary real estate mortgage. Ex.: Pacto de
2.   To exclude them, there must be an express retro
stipulation, or the fruits must be collected before 2.   Provisions governing equitable mortgage:

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Arts. 1365, 1450, 1454, 1602, 1603, 1604 and


1607. Foreclosure – is the remedy available to the
mortgagee by which he subjects the mortgaged
property to the satisfaction of the obligation secured
5.  P rinciple of Indivisibility by the mortgage.
of Pledge/Mortgage
[Arts. 2089 to 2090, CC] In general, an action for foreclosure of a mortgage is
limited to the amount mentioned in the mortgage,
A mortgage directly and immediately subjects the except when the mortgage contract intends to secure
property upon which it is imposed. It is indivisible even future loans or advancements.
though the debt may be divided, and such indivisibility
is likewise unaffected by the fact that the debtors are Mortgage may be used as a “continuing security”
not solidarity liable. [Dayrit v. CA, G.R. No. L-29388 which secures future advancements and is not
(1970)] discharged by the repayment of the amount in the
mortgage.
Where only a portion of the loan is released, the
mortgage becomes enforceable only as to the Acceleration clause allowed
proportionate value of the loan. [Central Bank v. CA, Acceleration clause, or the stipulation stating that on
G.R. No. L-45710 (1985)] the occasion of the mortgagor’s default, the whole
sum remaining unpaid automatically becomes due
Indivisibility applies only as to pledgors/mortgagors and demandable, is ALLOWED.
who are themselves debtors in the principal
obligation, and NOT to accommodation pledgors/ Kinds of foreclosure
mortgagors. a.   Judicial Foreclosure
b.   Extrajudicial Foreclosure
When several things are pledged or mortgaged,
each thing for a determinate portion of the debt, the Judicial Foreclosure vs. Extrajudicial Foreclosure
pledges or mortgage, are considered separate from Judicial Extrajudicial
each other. But when the several things are given to Court intervenes No court intervention
secure the same debt in its entirety, all of them are There is equity of There is right of
liable for the debt, and the creditor does not have to redemption – period redemption – period
divide his action by distributing the debt among the starts from the finality start from date of
various things pledged or mortgaged. Even when only of the judgment until registration of
a part of the debt remains unpaid, all the things are order of confirmation certificate of sale
still liable for such balance. [Tolentino] Decisions are
Not appealable
appealable
The question is whether or not the written instrument Special power of
No need for a special
in controversy was a mortgage or a conditional sale. attorney in favor of the
power of attorney in the
The correct test, where it can be applied, is the mortgagee is required
contract of mortgage
continued existence of a debt or liability between the in the contract
parties. If such exists, the conveyance may be held to
be merely a security for the debt or an indemnity a.  Judicial Foreclosure
against the liability. [Reyes v. Sierra, G.R. No. L-28658
[Rule 68, Rules of Court]
(1979), citing Cuyugan v. Santos, G.R. No. L-10265
(1916)]
1.   May be availed of by bringing an action in the
proper court which has jurisdiction over the area
6.  R ecording Required wherein the real property involved or a portion
thereof is situated
The real estate mortgage must be recorded in the 2.   If the court finds the complaint to be well-
Registry of Property in order to be validly constituted. founded, it shall order the mortgagor to pay the
[Art. 2125, CC] amount due with interest and other charges
within a period of not less than 90 days nor
Note: The mortgage would still be binding between more than 120 days from the entry of judgment
the parties even if the instrument is not recorded. [Art. Note: The mortgagor may exercise the equity of
2125, CC] redemption during this period of grace in order to
extinguish the mortgage and retain ownership of
7.  Foreclosure of Mortgage
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the collateral by paying the mortgage obligation. mortgagor or mortgagee. This is an agency
[Top Rate International Services, Inc. v. IAC, G.R. coupled with interest.
Nos. L-67496 and L-68257 (1986)] 3.   Public sale should be made after proper notice to
It is this equity of redemption that is conferred on the public; otherwise, it is a jurisdictional defect
the mortgagor’s successors-in-interest or on third which could render the sale voidable.
persons acquiring rights over the collateral from General Rule: Statutory provisions governing
the mortgage subsequent. posting of notice must be strictly complied with
Although these subsequent or junior lien-holders and even slight deviations will invalidate the
acquire the equity of redemption, this right is notice.
strictly subordinate to the superior lien of the first
mortgagee. [Gomez-Somera] Exception: If the objectives are attained,
3.   If the mortgagor fails to pay at time directed, the immaterial errors and mistakes may not affect
court, upon motion, shall order the property to be the sufficiency of the notice. [Metropolitan Bank
sold to the highest bidder at a public auction. and Trust Company v. Wong, G.R. No. 120859
4.   Upon confirmation of the sale by the court, also (2001) discussing Olizon v. CA, G.R. No. 107075
upon motion, it shall operate to divest the rights (1994)]
of all parties to the action and to vest their rights 4.   There is no need to notify the mortgagor, where
to the purchaser subject to such rights of there is no contractual stipulation therefor.
redemption as may be allowed by law.
Note: A foreclosure sale is not complete until it is Proper notice consists of:
confirmed. Thus, after the foreclosure sale but a.   posting notice in three public places and/or
before its confirmation, the court may grant the b.   publication in newspaper of general
judgment debtor or mortgagor the equity of circulation
redemption. Purpose of notice is to obtain the best bid for the
5.   Before the confirmation, the court retains control foreclosed property
of the proceedings; execution on judgment 5.   Surplus proceeds of foreclosure sale belong to
6.   The proceeds of the sale shall be applied to the the mortgagor.
payment of the: 6.   Debtor (who must be a natural person) has the
a.   costs of the sale; right to redeem the property sold within 1 year
b.   amount due the mortgagee; from and after the date of sale.
c.   claims of junior encumbrancers or persons a.   If the mortgagee is a bank, quasi-bank or
holding subsequent mortgages in the order trust entity and the debtor is a juridical
of their priority; and person, then there is no right of redemption.
d.   the balance, if any shall be paid to the However, juridical mortgagors may redeem
mortgagor the property before the registration of the
7.   Sheriff’s certificate is executed, acknowledged TCT to the buyer, which is similar to the
and recorded to complete the foreclosure equity of redemption. The TCT must be
registered within three months after the
Nature of judicial foreclosure proceedings foreclosure.
1.   Quasi in rem action. Hence, jurisdiction may be b.   The mortgagor can only legally transfer the
acquired through publication. right to redeem and the use of the property
2.   Foreclosure is only the result or incident of the during the period of redemption.
failure to pay debt. 7.   Remedy of party aggrieved by foreclosure is a
3.   Survives death of mortgagor. petition to set aside sale and the cancellation of
writ of possession. However, if the mortgagee is
b.  Extrajudicial Foreclosure a bank, the mortgagor is required to post a bond
equal to the value of the mortgagee’s claim.
A real estate mortgage may be extrajudicially 8.   Republication of the notice of sale is necessary for
foreclosed only if there is a special power inserted or the validity of the postponed extrajudicial sale
attached to the document in which the real estate 9.   In foreclosure of real estate mortgage under Act
mortgage appears and only in accordance with the 3135, the buyer at auction may petition the land
provisions of Act No. 3135. [Gomez-Somera] registration court for a writ of possession pending
the one-year period of redemption of the
Act No. 3135 foreclosed property.
1.   Applies to mortgages where the authority to
foreclose is granted to the mortgagee.
2.   Authority is not extinguished by death of

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c.   Nature of Power of foreclosure of a mortgage is in the nature of a


mortgage action because its purpose is precisely to
Foreclosure by enforce the mortgage contract. [Caltex v. IAC, G.R. No.
Extrajudicial Sale 74730 (1989)]

1.   Conferred for mortgagee’s protection.


2.   An ancillary stipulation.
8.  W aiver of Security by
3.   A prerogative of the mortgagee. Creditor
Note: a.   Mortgagee may waive the right to foreclose his
1.   Both should be distinguished from execution sale mortgage and maintain a personal action for
governed by Rule 39, ROC. recovery of the indebtedness.
2.   Foreclosure retroacts to the date of registration of b.   Mortgagee cannot have both remedies. This is
mortgage. because he only has one cause of action, the
3.   A stipulation of upset price, or the minimum price non-payment of the mortgage debt.
at which the property shall be sold to become
operative in the event of a foreclosure sale at
public auction, is null and void.
9.  R edemption
It is a transaction by which the mortgagor reacquires
d.  Right to Surplus or the property which may have passed under the
Deficiency mortgage or divests the property of the lien which the
mortgage may have created
Right of the Mortgagor
The mortgagor is entitled to the surplus, if any, after a.  Kinds
payment of the proceeds of the sale.
1.   Equity of redemption – in judicial foreclosure of
Right of the Mortgagee real estate mortgage under the ROC, it is the right
1.   Mortgagee is entitled to recover deficiency. This of the mortgagor to redeem the mortgaged
extends to judicial foreclosure of mortgage property by paying the secured debt within the
arising out of the settlement of estate. 120 day period from entry of judgment or after the
2.   If the deficiency is embodied in a judgment, it is foreclosure sale, but before the sale of the
referred to as deficiency judgment. mortgaged property or confirmation of sale
3.   Action for recovery of deficiency may be filed even
during redemption period. A formal offer to redeem preserves the right of
4.   Action to recover prescribes after 10 years from redemption, e.g., by filing an action to enforce the
the time the right of action accrues. right to redeem
2.   Right of redemption – in extrajudicial
e.   Effect of Inadequacy of foreclosure of real estate mortgage, the right of
the mortgagor to redeem the property within a
Price in Foreclosure Sale certain period after it was sold for the
satisfaction of the debt. (If the mortgagee is a
1.   Where there is right to redeem, inadequacy of bank, the redemption period expires after
price is immaterial because the judgment debtor registration of the sale.)
may redeem the property. a.   For natural persons – one year from the
Exception: Where the price is so inadequate as to registration of the TCT
shock the conscience of the court, taking into b.   For juridical persons – until, but not later
consideration the peculiar circumstances. than, the registration of the certificate of
2.   Property may be sold for less than its fair market foreclosure sale (no more than 3 months
value, upon the theory that the lesser the price after foreclosure)
the easier it is for the owner to redeem. c.   Formal offer to redeem must be with tender
3.   The value of the mortgaged property has no of redemption price to preserve right of
bearing on the bid price at the public auction, redemption
provided that the public auction was regularly
and honestly conducted. In a judicial foreclosure sale, the right of redemption
must be allowed by law.
A suit for the recovery of the deficiency after the

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The references in Rule 68 and Rule 39 to the right of


redemption are not grants of this statutory   Antichresis
prerogative. To claim a right of redemption in judicial
foreclosure, there must be a specific law that allows Antichresis – a real security transaction that arises by
it. contract, where the antichretic creditor acquires the
right to receive the fruits of an immovable of the
Example: RA 8791 (General Banking Law of 2000) antichretic debtor, with the obligation to apply them
to the payment of the interest, if owing, and thereafter
Note: There is no right of redemption in pledge and to the principal. [Art. 2132, CC]
chattel mortgage.

Requisites for a Valid Redemption:


1.   Characteristics
1.   Redemption must be made within: a.   Accessory contract – it secures the performance
a.   For natural persons: one year from the of a principal obligation
registration of the TCT b.   Formal contract – it must be in a specified form
b.   For juridical persons: until, but not later than, to be valid [Art. 2134, CC]
the registration of the certificate of
foreclosure sale (no more than 3 months Note: The obligation to pay interest is not the essence
after foreclosure) of the contract of antichresis; antichresis is only
2.   Payment of the purchase price of the collateral applicable to securing the payment of interest-
involved, plus 1% interest per month, together bearing loans. It is susceptible of guaranteeing all
with the amount of any assessments or taxes if kinds of obligations, pure or conditional.
any, paid by the purchaser after the sale
Note: Under RA 8791, the amount is the amount
due under the mortgage deed 2.  F ormal Requisites
3.   Written notice of the redemption must be served
on the officer who made the sale and a duplicate The amount of the principal and the interest must be
filed with the Register of Deeds of the province. specified in writing; otherwise, the contract of
antichresis shall be void [Art. 2134, CC]
Equity of Redemption Right of Redemption
Sec. 3, Rule 68 Act No. 3135 There must be an express agreement that the debtor
Right to redeem the Right to redeem the will give possession of the property to creditor and
property after default in property within 1 year that the latter will apply the fruits to the interest, if
the performance of the from the date or any, then to the principal of his credit.
obligation but before registration of the
the foreclosure sale
Applies to judicial
certificate of sale 3.  Object of the Contract
Applies to extrajudicial
foreclosure of real An antichresis can cover only the fruits of an
foreclosure of real
estate and chattel immovable property.
estate mortgage
mortgage
Delivery of the immovable is necessary for the creditor
The rule up to now is that the right of a purchaser at a to receive the fruits, not to make the contract binding.
foreclosure sale is merely inchoate until after the
period of redemption has expired without the right
being exercised. The title to land sold under mortgage 4.  A s Distinguished from
foreclosure remains, in the mortgagor or his grantee
until the expiration of the redemption period and
Other Contracts
conveyance by the master's deed. [Medida v. CA, G.R.
No. 98334 (1992)] Antichresis Pledge
Kind of property
Real property Personal property
Perfection
Delivery of thing
Mere consent
pledged

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Antichresis Real mortgage obligation. The debtor cannot reacquire enjoyment of


Possession the immovable until he pays what he owes to the
Delivered to creditor Retained by debtor creditor. [Ortiz v. Kayanan, et al., G.R. No. L-32974
Right to the fruits (1979)]
Creditor does not have
Creditor acquires only the right to receive Because of the right of the creditor to judicially
the right to receive fruits, but a real right foreclose, antichresis is generally viewed as a species
fruits over the property is of real estate mortgage, in which the mortgagee
created retains possession of the collateral and takes the
Payment of taxes and charges fruits of the property in lieu of interest on the debt.
Creditor is generally Creditor has no [Gomez-Somera]
obliged to pay obligation to pay
Application of fruits
First applied to the
Mortgagee has no such
payment of interest,
obligation
and then to principal

5.  O bligations of Antichretic
Creditor
a.   To pay taxes and charges on the estate, including
necessary expenses [Art. 2135, CC]
Note: The creditor may avoid said obligation by:
1.   Compelling the debtor to reacquire
enjoyment of the property
2.   By stipulation to the contrary
b.   To apply all the fruits, after receiving them, to the
payment of interest, if owing, and thereafter to
the principal
c.   To render an account of the fruits to the debtor
d.   To bear the expenses necessary for its
preservation and repair

6.  R emedies of Creditor in
Case of Non-Payment of
Debt
a.   Action for specific performance
b.   Petition for the sale of the real property as in a
foreclosure of mortgage under Rule 68 of the
Rules of Court [Art. 2137, CC]
1.   The parties, however, may agree on an
extrajudicial foreclosure in the same manner
as they are allowed in contracts of mortgage
and pledge [Tavera v. El Hogar Filipino, Inc.,
G.R. 45963 (1939)]
2.   A stipulation authorizing the antichretic
creditor to appropriate the property upon the
non-payment of the debt within the agreed
period is void [Art. 2088, CC]

There is a right of retention in favor of the creditor,


which is used as a means of extinguishing the

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  Quasi-Contracts a.   If he undertakes risky operations which the


owner was not accustomed to embark upon
b.   If he has preferred his own interest to that of
A quasi-contract is that juridical relation resulting the owner
from a lawful, voluntary and unilateral act, and which c.   If he fails to return the property or business
has for its purpose the payment of indemnity to the after demand of the owner
end that no one shall be unjustly enriched or d.   If he assumed management in bad faith [Art.
benefited at the expense of another [Art. 2142, CC] 2147, CC]
Based on presumed will or intent of the obligor e.   If he is manifestly unfit to carry on the
dictated by equity and by the principles of absolute management
justice [Padcom vs. Ortigas Center, G.R. No. 146807 f.   If by his intervention he prevented a more
(2002)] competent person from taking up the
management. [Art. 2148, CC]
Unlike contracts, here there is absence of consent. It Note: The gestor shall not be liable for (e) and (f)
is voluntary and unilateral [Casis] if the management was assumed to save the
property or business from imminent danger.
1.   Negotiorum Gestio 5.   Be personally liable for contracts which he
entered into with third persons, even though he
(Unauthorized acted in the name of the owner, and there shall
be no right of action between the owner and third
Management) persons.
The gestor shall NOT be personally liable for such
Negotiorum gestio – takes place when a person contracts, provided:
voluntarily takes charge of another’s abandoned a.   The owner has expressly or tacitly ratified the
business or property without the owner’s authority management, or
[Art. 2144, CC]. As a rule, reimbursement must be b.   When the contract refers to things pertaining
made to the gestor (i.e., one who carried out the to the owner of the business. [Art. 2152, CC]
business) for necessary and useful expenses.
Note: The responsibility of two or more gestors
The obligation does not arise: shall be solidary, unless the management was
a.   When the property or business is not neglected or assumed to save the thing or business from
abandoned; imminent danger.
b.   If in fact the manager has been tacitly authorized
by the owner.
b.  Obligations of the Owner
In the first case, the provisions of Articles 1317, 1403, of the Property or Business
No. 1, and 1404 regarding unauthorized contracts
shall govern. Although the management was not expressly ratified,
the owner who enjoys the advantages of the same
In the second case, the rules on agency in Title X of shall:
this Book shall be applicable. [Art. 2144, CC] 1.   Be liable for the obligations incurred in his
interest
a.  Obligations of a Gestor 2.   Reimburse the gestor for the necessary and
useful expenses and for the damages the latter
1.   Perform his duties with all the diligence of a good may have suffered in the performance of his
father of a family duties
2.   Pay the damages which through his fault and
negligence may be suffered by the owner of the The above obligations shall be incumbent upon the
property/business under his management [Art. owner if the management had for its purpose the
2145, CC] prevention of an imminent and manifest loss,
3.   Be liable for the acts of the persons to whom he although no benefit may have been derived. [Art.
delegated all or some of his duties. This is without 2150, CC]
prejudice to the direct obligation of the delegate
to the owner of the business. [Art. 2146, CC] If the owner did not derive any benefit and there was
4.   Be liable for any fortuitous event under the no imminent and manifest danger to the property or
following conditions: business, the owner would still be liable for the
abovementioned obligations and expenses, provided:

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1.   The gestor has acted in good faith; and c.   When Money or Thing
2.   The property or business is intact, ready to be
returned to the owner. [Art. 2151, CC] Delivered is Owned by
Third Person
c.   Effect of Ratification
The payee cannot demand that the payor prove his
The ratification of the management by the owner of ownership of the thing delivered.
the business produces the effects of an express
agency, even if the business may not have been Nevertheless, should he discover that the thing has
successful. [Art. 2149, CC] been stolen and who its true owner is, he must advise
the latter.
d.  Extinguishment of If the owner, in spite of such information, does not
Management claim it within the period of one month, the payee
shall be relieved of all responsibility by returning the
1.   When the owner repudiates or puts an end thing deposited to the payor.
thereto
2.   When the gestor withdraws from the If the payee has reasonable grounds to believe that
management, subject to Art. 2144 the thing has not been lawfully acquired by the payor,
3.   By the death, civil interdiction, insanity or the former may return the same. [Art. 2158]
insolvency of the owner or the gestor. [Art. 2153,
CC] d.  Liability of Payee
2.  S olutio Indebiti (Undue If in bad faith, he shall be liable:
1.   For legal interest if a sum of money is involved,
Payment) or
2.   For the fruits received or which should have been
Solutio indebiti – takes place when something is received if the thing produces fruits, and
received when there is no right to demand it, and it 3.   For any loss or impairment of the thing for any
was unduly delivered through mistake. The recipient cause, and
has the duty to return it [Art. 2154, CC]. 4.   For damages to the person who delivered the
thing, until it is recovered. [Art. 2159, CC]
This situation my cover payment by reason of a
mistake in the construction or application of a If in good faith, he shall be liable:
doubtful or difficult question of law [Art. 2155, CC] 1.   For the impairment or loss of the thing certain
and determinate or its accessories and accessions
The Government also comes within the scope of insofar as he has thereby been benefited.
solution indebiti. Tax refunds are based on such. [CIR 2.   For the return of the price or assign the action to
v. Acesite, G.R. No. 147295 (2007)] collect the sum if he has alienated the same. [Art.
2160, CC]
a.  When Debt Not Yet Due
e.   Exemption from the
If the payer was in doubt whether the debt was due,
he may recover if he proves that it was not due. [Art.
Obligation to Restore the
2156, CC] Payment Unduly Made
b.  Responsibility of Two or A person who, believing in good faith that the
payment was being made of a legitimate and
More Payees subsisting claim,
1.   destroyed the document, or
When there has been payment of what is not due, 2.   allowed the action to prescribe, or
their responsibility is solidary. [Art. 2157, CC] 3.   gave up the pledges, or
4.   cancelled the guaranties for his right shall be
exempt from the obligation to restore.

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The person who paid unduly may proceed only regulations concerning property, undertakes to
against the true debtor or the guarantors with regard do the necessary work, even over his objection, he
to whom the action is still effective. [Art. 2162, CC] shall be liable to pay the expenses. [Art. 2169, CC]
g.   When by accident or other fortuitous event,
f.   Presumption of Payment movables separately pertaining to two or more
persons are commingled or confused, the rules
by Mistake, Defense on co-ownership shall be applicable. [Art. 2170,
CC]
The presumption arises if something which had never h.   The rights and obligations of the finder of lost
been due or had already been paid was delivered; but personal property shall be governed by Articles
he from whom the return is claimed may prove that 719 and 720. [Art. 2171, CC]
the delivery was made out of liberality or for any other i.   The right of every possessor in good faith to
just cause. [Art. 2163, CC] reimbursement for necessary and useful
expenses is governed by Article 546. [Art. 2172,
3.  Other Quasi-Contracts CC]
Note: Possessor in good faith may retain the thing
a.   When, without the knowledge of the person until he has been reimbursed [Casis].
obliged to give support, it is given by a stranger, j.   When a third person, without the knowledge of
the latter shall have a right to claim the same the debtor, pays the debt, the rights of the former
from the former, unless it appears that he gave it are governed by Articles 1236 and 1237. [Art. 2173,
out of piety and without intention of being repaid. CC]
[Art. 2164, CC] Note: Cannot compel creditor to subrogate him in
b.   When funeral expenses are borne by a third his rights [Art. 1237, CC].
person, without the knowledge of those relatives k.   When in a small community a nationality of the
who were obliged to give support to the inhabitants of age decide upon a measure for
deceased, said relatives shall reimburse the third protection against lawlessness, fire, flood, storm
person, should the latter claim reimbursement. or other calamity, anyone who objects to the plan
[Art. 2165, CC] and refuses to contribute to the expenses but is
rd
Note: Only necessary expenses. 3 person must benefited by the project as executed shall be
claim [Casis]. liable to pay his share of said expenses. [Art. 2174,
c.   When the person obliged to support an orphan, CC]
or an insane or other indigent person unjustly l.   Any person who is constrained to pay the taxes of
refuses to give support to the latter, any third another shall be entitled to reimbursement from
person may furnish support to the needy the latter. [Art. 2175, CC]
individual, with right of reimbursement from the
person obliged to give support. The provisions of
this article apply when the father or mother of a
child under eighteen years of age unjustly refuses
to support him. [Art. 2166, CC]
d.   When through an accident or other cause a
person is injured or becomes seriously ill, and he
is treated or helped while he is not in a condition
to give consent to a contract, he shall be liable to
pay for the services of the physician or other
person aiding him, unless the service has been
rendered out of pure generosity. [Art. 2167, CC]
e.   When during a fire, flood, storm, or other
calamity, property is saved from destruction by
another person without the knowledge of the
owner, the latter is bound to pay the former just
compensation. [Art. 2168, CC]
Note: Just compensation probably pertains to
value of service rendered, not the value of the
property saved [The Law on Contracts, Casis
(2016), p. 285].
f.   When the government, upon the failure of any
person to comply with health or safety

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  Concurrence and Note: Only taxes in Arts. 2241 and 2242, CC enjoy a
preference; for all other claims, there is only a
Preference of Credits concurrence of credits. [Gomez-Somera]

Special preferred credits exclude all other claims to


Concurrence of credits – implies possession by two or the extent of the value of the affected property.
more creditors of equal rights or privileges over the
same property or all of the property of the debtor, and These take precedence over ordinary preferred credits
the value of such property is insufficient to pay in full insofar as the property, to which the liens attach, is
all the claims. concerned. [Gomez-Somera]
Preference of credits – is a method adopted to Pro-rating – total amount to be paid is equal to:
determine and specify the order in which credits
should be paid in the final distribution of the proceeds Credit
of the insolvent’s assets, as opposed to a lien, which ------------------ x value of property
creates a charge on a particular property. [DBP v. Total amount of
NLRC, G.R. No. 86932 (1990)] concurring
debts
Preference – is the right held by a creditor to be
preferred in the payment of his claim above others out N.B.: Sec. 136 of RA 10142 (FRIA) creates a special
of the debtor’s assets. preference of credit in favor of trade-related claims
upon trade-related assets. This special preferred
The provisions on concurrence and preference of credit enjoys absolute priority over all other claims,
credit does not apply when the situation does not including taxes. [Gomez-Somera]
involve two or more creditors having separate and
distinct claims against the same debtor who has Article 2241 refers only to specific immovable
insufficient property. property. It does not cover claims for the payment of
money, which is generic property and not specific or
Consequently, concurrence and preference of credit determinate. [Cordova v. Reyes Daway Lim Bernardo
may only be ascertained in the context of some Lindo Rosales Law Offices, G.R. No. 146555 (2007)]
proceeding, such as insolvency proceedings, where
the claims of the creditors may be bindingly
adjudicated. [Gomez-Somera] b.  Ordinary Preferred Credits
These enjoy a preference, excluding the credits that
1.   When Rules on Preference are later in order, but only as against the value of the
Applicable property not otherwise subjected to any special
preferred credit.
a.   There are two or more creditors
b.   With separate and distinct claims Art. 2244, CC does not create a lien on specific
c.   Against the same debtor property; rather, it creates rights in favor of certain
d.   Who has insufficient property, and creditors to have the free property of the debtor
e.   Such debtor is insolvent applied in accordance with an order of preference.
[Gomez-Somera]

2.  C lassification of Credits N.B. Sec. 133 of the FRIA reiterates jurisprudence to


the effect that Article 110 of the Labor Code does not
a.  Special Preferred Credits create a lien in favor of workers or employees for
unpaid wages upon the properties of the employer.
These are considered as mortgages or pledges of real The first preference in Art. 110, Labor Code instead
or personal property, or liens within the purview of modifies the order of preference in Art. 2244, CC by
legal provisions governing insolvency. [Art. 2243, CC] removing the one-year limitation and by moving
claims for unpaid wages from second priority to first
Taxes in Art. 2241 and 2242 shall first be satisfied. priority in the order of preference in Art. 2244, C.
[Art. 2243, CC] [Gomez-Somera]

For Arts. 2242 and 2249, CC to apply, there must be


first some proceedings where the claims of all the

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preferred creditors may be bindingly adjudicated [De (7)   For expenses of salvage, upon the goods
Barretto v. Villanueva, G.R. No. L-14938 (1962)]. This salvaged;
applies to cases involving either specific immovable or (8)   Credits between the landlord and the tenant,
specific movable property. [DBP v CA, G.R. No. arising from the contract of tenancy on shares,
126200 (2001)] on the share of each in the fruits or harvest;
(9)   Credits for transportation, upon the goods
Taxes and assessments in 2244 do not have the carried, for the price of the contract and
overriding preference that 2241 and 2242 create. incidental expenses, until their delivery and for
[Gomez-Somera] thirty days thereafter;
(10)  Credits for lodging and supplies usually
c.   Common Credits furnished to travellers by hotel keepers, on the
movables belonging to the guest as long as
These enjoy no preference, as there is only a such movables are in the hotel, but not for
concurrence of credits, which must be paid pro rata money loaned to the guests;
regardless of dates [Arts. 2245, 2251, CC]. (11)   Credits for seeds and expenses for cultivation
and harvest advanced to the debtor, upon the
These are not liens and do not attach to any specific fruits harvested;
property of the debtor. [Gomez-Somera] (12)  Credits for rent for one year, upon the personal
property of the lessee existing on the
immovable leased and on the fruits of the
d.  Special Preferred Credits same, but not on money or instruments of
on Specific Movable credit;
Property (13)  Claims in favor of the depositor if the
depositary has wrongfully sold the thing
Art. 2241, CC. With reference to specific movable deposited, upon the price of the sale.
property of the debtor, the following claims or
liens shall be preferred: In the foregoing cases, if the movables to which the
(1)   Duties, taxes and fees due thereon to the State lien or preference attaches have been wrongfully
or any subdivision thereof; taken, the creditor may demand them from any
(2)   Claims arising from misappropriation, breach possessor, within thirty days from the unlawful
of trust, or malfeasance by public officials seizure.
committed in the performance of their duties,
on the movables, money or securities obtained
Trade-related claim preference over trade-related
by them;
assets
(3)   Claims for the unpaid price of movables sold,
Trade-related claims of clients or customers of a
on said movables, so long as they are in the
securities market participant which, for purposes of
possession of the debtor, up to the value of the
investor protection, are hereby deemed to have
same; and if the movable has been resold by
absolute priority over all other claims of whatever
the debtor and the price is still unpaid, the lien
nature or kind insofar as trade-related assets are
may be enforced on the price; this right is not
concerned. [Sec 136, RA 10142]
lost by the immobilization of the thing by
destination, provided it has not lost its form,
substance and identity; neither is the right lost e.   Special Preferred Credits
by the sale of the thing together with other on Specific Immovable
property for a lump sum, when the price
thereof can be determined proportionally; Property and Real Rights
(4)   Credits guaranteed with a pledge so long as
the things pledged are in the hands of the Art. 2242, CC. With reference to specific
creditor, or those guaranteed by a chattel immovable property and real rights of the debtor,
mortgage, upon the things pledged or the following claims, mortgages and liens shall be
mortgaged, up to the value thereof; preferred, and shall constitute an encumbrance on
(5)   Credits for the making, repair, safekeeping or the immovable or real right:
preservation of personal property, on the (1)   Taxes due upon the land or building;
movable thus made, repaired, kept or (2)   For the unpaid price of real property sold, upon
possessed; the immovable sold;
(6)   Claims for laborers' wages, on the goods (3)   Claims of laborers, masons, mechanics and
manufactured or the work done; other workmen, as well as of architects,

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engineers and contractors, engaged in the (7)   Fines and civil indemnification arising from a
construction, reconstruction or repair of criminal offense;
buildings, canals or other works, upon said (8)   Legal expenses, and expenses incurred in the
buildings, canals or other works; administration of the insolvent's estate for the
(4)   Claims of furnishers of materials used in the common interest of the creditors, when
construction, reconstruction, or repair of properly authorized and approved by the
buildings, canals or other works, upon said court;
buildings, canals or other works; (9)   Taxes and assessments due the national
(5)   Mortgage credits recorded in the Registry of government, other than those mentioned in
Property, upon the real estate mortgaged; Articles 2241, No. 1, and 2242, No. 1;
(6)   Expenses for the preservation or improvement (10)  Taxes and assessments due any province,
of real property when the law authorizes other than those referred to in Articles 2241,
reimbursement, upon the immovable No. 1, and 2242, No. 1;
preserved or improved; (11)   Taxes and assessments due any city or
(7)   Credits annotated in the Registry of Property, municipality, other than those indicated in
in virtue of a judicial order, by attachments or Articles 2241, No. 1, and 2242, No. 1;
executions, upon the property affected, and (12)  Damages for death or personal injuries caused
only as to later credits; by a quasi-delict;
(8)   Claims of co-heirs for warranty in the partition (13)  Gifts due to public and private institutions of
of an immovable among them, upon the real charity or beneficence;
property thus divided; (14)  Credits which, without special privilege,
(9)   Claims of donors or real property for pecuniary appear in [a] a public instrument; or (b) in a
charges or other conditions imposed upon the final judgment, if they have been the subject of
donee, upon the immovable donated; litigation. These credits shall have preference
(10)  Credits of insurers, upon the property insured, among themselves in the order of priority of
for the insurance premium for two years. the dates of the instruments and of the
judgments, respectively.
f.   Ordinary Preferred Credits
Worker preference in case of bankruptcy
In the event of bankruptcy or liquidation of an
Art. 2244, CC. With reference to other property,
employer’s business, his workers shall enjoy first
real and personal, of the debtor, the following
preference as regards their wages and other monetary
claims or credits shall be preferred in the order
claims, any provisions of law to the contrary
named:
notwithstanding. Such unpaid wages and monetary
(1)   Proper funeral expenses for the debtor, or
claims shall be paid in full before claims of the
children under his or her parental authority
government and other creditors may be paid. [Art. 110,
who have no property of their own, when
Labor Code]
approved by the court;
(2)   Credits for services rendered the insolvent by
employees, laborers, or household helpers for g.  Common Credits
one year preceding the commencement of the
proceedings in insolvency; Art. 2245, CC. Credits of any other kind or class, or
(3)   Expenses during the last illness of the debtor by any other right or title not comprised in the four
or of his or her spouse and children under his preceding articles, shall enjoy no preference.
or her parental authority, if they have no
property of their own;
(4)   Compensation due the laborers or their 3.  Order of Preference of
dependents under laws providing for Credits
indemnity for damages in cases of labor
accident, or illness resulting from the nature of a.   Credits which enjoy preference with respect to
the employment; specific movables exclude all others to the extent
(5)   Credits and advancements made to the debtor of the value of the personal property to which the
for support of himself or herself, and family, preference refers [Art. 2246, CC].
during the last year preceding the insolvency; b.   If there are two or more credits with respect to the
(6)   Support during the insolvency proceedings, same specific movable property, they shall be
and for three months thereafter; satisfied pro rata, after the payment of duties,

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taxes and fees due the State or any subdivision


thereof [Art. 2247, CC]
c.   Those credits which enjoy preference in relation
to specific real property or real rights exclude all
others to the extent of the value of the immovable
or real right to which the preference refers
[Art.2248, CC].
d.   If there are two or more credits with respect to the
same specific real property or real rights, they
shall be satisfied pro rata, after the payment of
the taxes and assessment of the taxes and
assessments upon the immovable property or
real right [Art. 2249, CC].
e.   The excess, if any, after the payment of the credits
which enjoy preference with respect to specific
property, real or personal, shall be added to the
free property which the debtor may have, for the
payment of other credits [Art. 2250, CC].
f.   Those credits which do not enjoy any preference
with respect to specific property, and those which
enjoy preference, as to the amount not paid, shall
be satisfied according to the following rules:
1.   Order established by Art. 2244, CC
2.   Common credits referred to in Art. 2245, CC
shall be paid pro rata regardless of dates
[Art. 2251, CC].

Arts. 2241 and 2242, CC jointly with Arts. 2246 to


2249, CC establish a two-tier order of preference. The
first tier includes only taxes, duties and fees due on
specific movable or immovable property. All other
special preferred credits stand on the same second
tier to be satisfied pari passu and pro rata, out of any
residual value of the specific property to which such
other credits relate. [Republic v. Peralta, G.R. No.
56568 (1920)]

4.  E xempt Property
a.   Present property
1.   Family home [Arts. 152, 153 and 155, CC]
2.   Right to receive support, as well as money or
property obtained by such support, shall not
be levied upon on attachment or execution.
[Art. 205, CC]
3.   Rule 39, Sec. 13
4.   Sec 118, Public Land Act [CA 141, as
amended]
b.   Future property:
1.   A debtor who obtains a discharge from his
debts on account of insolvency, is not liable
for the unsatisfied claims of his creditors with
said property [Sec. 68 and 69, Insolvency
Law, Act 1956]
2.   Property in custodia legis and of public
dominion

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SUCCESSION
Civil Law

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XI.   SUCCESSION b.   Intransmissible by stipulation


c.   Intransmissible by provision of law

  General Provisions Examples:


•   Usufruct [Art. 603, CC]
•   Agency [Art. 1919, CC]
1.   Definition •   Commodatum [Art. 1939, CC]
2.   Monetary debts left by the decedent are
Succession is a mode of acquisition by virtue of intransmissible in the sense that they are paid
which the property, rights and obligations, to the from the estate of the decedent and only the net
extent of the value of the inheritance, of a person are estate or remainder goes to the heirs. If the
transmitted through his death to another or others decedent’s estate is not sufficient to pay his
either by his will or by operation of law. [Art. 774, debts, his heirs cannot be held liable for said
CC] debts in their personal capacity [Rule 88-90,
Rules of Court].
Succession is one of the modes of acquiring
ownership and other real rights over property. [par Rule on Transmission
2, Art. 712, CC] General rule: All property rights which have accrued
to the hereditary estate since the opening of
Kinds of Succession succession are transmitted to the heirs [Art. 777,
a.   Testamentary CC].
b.   Legal or Intestate
c.   Mixed Rules on Opening of Succession
d.   Compulsory 1.   The rights to succession are transmitted from
the moment of the death of the decedent. [Art.
777, CC]
2.  O bject of Succession and
Transmission Implications of this principle:
a.   The law in effect at the time of death of the
Scope of Inheritance decedent governs the succession [Art.
General rule: 2236, CC]
1.   All the property, rights and obligations of a b.   The heir becomes the owner of his share as
person which are not extinguished by his death well as all fruits which accrue after the
[Art. 776, CC] death of the decedent.
2.   Not only the property and the transmissible c.   Upon death of the decedent, heirs may
rights and obligations existing at the time of his immediately possess, administer and
death, but also those which have accrued dispose of their shares in the estate (in the
thereto since the opening of the succession [Art. absence of existing debts/claims against
781, CC] the estate);
d.   Since succession takes place by operation
Exceptions: of law at the moment of the death of the
1.   Rights and obligations extinguished by death decedent, the heirs can sue upon the rights
and are not transmissible [Art. 1311, CC] of the decedent, without having to be
a.   Intransmissible by nature: this refers to appointed executor or administrator
rights and obligations which are strictly [Emnace v. CA, G.R. No. 126334 (2001)],
personal (intuitu personae and without need of a judicial declaration
of their status as heirs [De Vera v. Galauran,
Examples: 67 Phil 213 (1939)]. Heirs may also be sued
•   Those relating to family relations without a previous declaration of heirship,
provided there is no pending special
•   Those arising from public law
proceeding for the settlement of estate of
•   Those which involve or require the the decedent [Gayon v. Gayon, G.R. No. L-
personal skills, qualifications, 28394 (1970)].
characteristics or circumstances of a e.   The possession of hereditary property is
particular individual deemed transmitted to the heir without
•   Criminal responsibility interruption and from the moment of death

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of the decedent, in case the inheritance is


accepted [Art. 533, CC]   Testamentary
f.   Estate taxes accrue upon death of the
decedent, even if the heirs come into
Succession
possession only later.
2.   A person may be “presumed” dead for the 1.   Wills
purpose of opening his succession. In this case,
succession is only of provisional character
because there is always a chance that the
a.  In General
absentee may still be alive [Arts. 390-391, CC].
A will is an act whereby a person is permitted, with
the formalities prescribed by law to control to a
3.  Subjects of Succession certain degree the disposition of his estate to take
effect after his death [Art. 783, CC].
a.   Decedent – person whose property is
transmitted through succession, whether or not Kinds of wills
he left a will [Art. 775, CC] 1.   Notarial – an ordinary or attested will, which
must comply with the requirements of the law
Testator – a decedent who left a will [Art. 775, [Arts. 804-808, CC]
CC] 2.   Holographic – a will entirely written, dated and
b.   Successor – person who succeeds to the signed by the hand of the testator [Art. 810, CC]
property of the decedent. He may be either—
Characteristics of Wills
1.   Heirs – those who are called to the whole 1.   Purely personal – the making of a will is non-
or an aliquot portion of the inheritance delegable
either by will or by operation of law [Art. What cannot be
782, CC] rd What may be entrusted
delegated to 3 rd
•   Compulsory Heirs to 3 persons
persons
•   Voluntary or Testamentary Heir
a.   designation of
•   Legal or Intestate Heirs person/institution
2.   Devisees and Legatees falling under a
•   Devisees are persons to whom gifts of a.   designation of class specified by
real property are given by virtue of a heirs, devisees testator
will. [Art. 782] 
and legatees 
 b.   manner of
•   Legatees are persons to whom gifts of b.   duration/efficacy of distribution of
personal property are given by virtue of designation property specified
a will. [Art. 782] c.   determination of by testator [Art.
portions, when 786, CC]
Note: The distinction between heir and referred to by name
legatee/devisee is significant in case of [Art. 785, CC] 
 Note: testator must first
preterition, which annuls the institution of heirs, specify the class and the
but does not affect the institution of legatees amount of property for
and devisees to the extent that the legitimes are proper delegation
not impaired [Art. 854, CC].
2.   Free and intelligent [Art. 839, CC]
3.   Solemn or formal – if the form is defective, the
will is void
4.   Revocable and ambulatory – will can be
revoked at any time before the testator’s death
[Art. 828, CC]
5.   Mortis causa - takes effect upon the testator’s
death
6.   Individual – prohibition against joint wills [Art.
818, CC]
7.   Executed with animus testandi – intent to
dispose of the property

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8.   Executed with testamentary capacity Supervening incapacity does not invalidate an


9.   Unilateral act – does not involve an exchange effective will nor is the will of an incapable validated
of values or depend on simultaneous offer and by a supervening of capacity [Art. 801, CC].
acceptance
10.   Dispositive – disposes of property Requisites for Capacity to Make a Will
A will disinheriting a compulsory heir is still a 1.   The testator must not be expressly prohibited
dispositive will even in the absence of by law to make a will [Art. 796, CC]
dispositive provisions because a disinheritance 2.   The testator must not be under 18 years of age
has the effect of disposing the legitime of the [Art. 797, CC]
disinherited compulsory heir in favor of other “Year” shall be understood to be 12 calendar
compulsory heirs [Seangio v. Reyes, G.R. Nos. months [Sec. 31, Book 1, Administrative Code]
140371-72 (2006)]. 3.   The testator must be of sound mind at the time
of execution [Art. 798, CC]
Exceptions: Non-dispositive wills.
e.g. A will recognizing an illegitimate child Test of soundness of mind: To be of sound mind,
11.   Statutory grant – permitted only by law, not a the testator must know:
constitutional right a.   The nature of the estate to be disposed of;
b.   The proper objects of his bounty;
Rules of Construction and Interpretation [Arts. c.   The character of the testamentary act [Art.
788-795] 799, CC]
Main principle: Testacy is preferred to intestacy and
the intent of the testator is paramount and must be General rule: Soundness of mind is presumed
given effect as far as legally possible. [Art. 800, CC]

Note: There is no real difference in the prescribed Exceptions


solution for either latent or patent ambiguity. In a.   When the testator, one month or less
either case, extrinsic evidence or evidence of before the execution of the will, was
external circumstances can be considered. publicly known to be insane. [Art. 800, CC]
Moreover, in either case, the oral declarations of the b.   When the testator executed the will after
testator are excluded. being placed under guardianship or
ordered committed, in either case, for
Governing Laws, In General insanity under Rules 93 and 101 of the
Aspect of the Will Governing Law Rules of Court, and before said order has
Law in force at the been lifted. [Torres v. Lopez, G.R. No. L-
Formal Validity time the will was 25966 (1926); Balane]
executed [Art. 795, CC]
Law of decedent’s c.   Form
nationality at the time
Intrinsic Validity
of his death [Arts. 16 In General [Art. 804, CC]
and 2263, CC] 1.   The will must be in writing
2.   It must be in a language or dialect known to the
Aspects of the Will Governed by the National Law of testator
the Decedent:
1.   Order of succession; Applicable Laws as to Formal Validity
2.   Amount of successional rights; Formal validity is governed by the law in force at the
3.   Intrinsic validity of testamentary provisions; and time the will was executed [Art. 795, CC]
4.   Capacity to succeed [Art. 16, CC]
As to the place, forms and solemnities of a will are
b.  Testamentary Capacity governed by the law of the country in which the will
was executed [Art. 17, CC]
and Intent
Arts. 815-81, CC (summarized in the table below)
Time of Determining Capacity provide for the various governing laws in these
Capacity to make a will is determined as of the time instances:
of making thereof [Art. 798, CC]. 1.   A will was made in a foreign country by a
Filipino [Art. 815]

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2.   A will was made in a foreign country by an alien 2.   By the testator’s name written by a
[Art. 816] representative in his presence and under his
3.   A will was made in the Philippines by an Alien express direction.
[Art. 817]
ATTESTATION CLAUSE: Attested and subscribed
Governing Law as to Place of Execution of Will by 3 or more credible witnesses in the presence of
Place of the testator and of one another [Art. 805, CC]
Testator Execution Governing Law
of Will The attestation clause shall state the following [par.
Philippine Law [Art. 3, Art. 805, CC]:
Philippines 1.   Number of pages;
16, CC]
1.   Law of the 2.   The fact that the testator or his representative
country in which it under his express direction signed the will and
Filipino Outside of every page in the presence of instrumental
is executed [Art.
the witnesses
17, CC]; or
Philippines 3.   That the witnesses signed the will and all its
2.   Philippine Law
[Art. 815, CC] pages in the presence of the testator and of one
1.   Philippine Law; or another.

2.   Law of the country The signatures of the witnesses must be at the


Philippines of which testator bottom of the attestation clause [Cagro v.
is a citizen or Cagro, G.R. No. L-5826 (1953)].
subject [Art. 817,
CC] The notary public cannot be counted as an
1.   Law of the place attesting witness [Cruz v. Villasor, G.R. No. L-
where the will is 32213 (1973)].
Alien executed [Art. 17,
CC]; or Test of presence: Not whether they actually
2.   Law of the place saw each other sign, but whether they might
Outside of have seen each other sign had they chosen to do
where the testator
the so considering their mental and physical
resides; or
Philippines condition and position with relation to each
3.   Law of the
testator’s country; other at the moment of inscription of each
or signature [Jaboneta v. Gustilo, G.R. No. 1641
4.   Philippine Law (1906)].
[Art. 816, CC]
Effect of Omissions
ATTESTED OR NOTARIAL WILLS Omissions can be supplied by an examination of the
will itself, without the need of resorting to extrinsic
FORMAL REQUIREMENTS FOR NOTARIAL evidence, will not be fatal and will not prevent
WILLS allowance of the will.
1.   Subscribed at the end
2.   Attestation clause Examples:
3.   Marginal signatures 1.   The fact that the testator/witnesses signed
4.   Page numbers each and every page of the will can be proved
5.   Acknowledged by a notary public also by the mere examination of the signatures
6.   Additional requirements for handicapped appearing on the document itself.
testators
7.   Subscribed by 3 or more witnesses in the Omission of this fact in the attestation clause is
presence of the testator and of one another not fatal.
2.   The failure to state in the attestation clause the
Note: Unlike in holographic wills, there is no number of pages of the instrument is ordinarily
requirement that an attested will should be dated. a fatal flaw. However, such omission will not
invalidate the will if the number of pages
SUBSCRIPTION: Subscribed to, at the end of the appears elsewhere in the will itself so that no
will [Art. 805, CC] evidence aliunde is necessary.
1.   By the testator himself; or

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However, those omissions which cannot be supplied PAGE NUMBERINGS: Numbered correlatively in
except by evidence aliunde would result in the letters placed on the upper part of each page (i.e.
invalidation of the attestation clause, and Page One of Five Pages). [Art. 805, CC]
consequently, of the will itself. •   Mandatory part: pagination by means of a
conventional system
Example: •   Directory part: pagination in letters on the
Whether the testator signed in the presence of the upper part of each page [Balane]
witnesses, or the witnesses signed in the presence of
the testator and of one another. ACKNOWLEDGED before a notary public by the
testator and the witnesses [Art. 806, CC]
Substantial Compliance Rule refers ONLY to the
form of the attestation clause The certification of acknowledgement need not be
Substantial compliance rule applies only in cases signed by the notary in the presence of the testator
when such defects and imperfections can be and the witnesses. [Javellana v. Ledesma, G.R. L-
supplied by an examination of the will itself. 7179 (1955)]

Example: ADDITIONAL RULES FOR HANDICAPPED


The signature in the attestation clause is sufficient TESTATORS:
compliance for marginal signatures on the same 1.   Deaf Mute [Art. 807, CC]
page because the signature in the attestation clause a.   Testator must personally read the will; or
also authenticates the page which is the purpose of b.   Testator shall personally designate two
the marginal signatures. persons to read the contents and
communicate it to him in some practicable
The marginal signature, however, is not sufficient manner.
compliance with the requirement of signing the 2.   Blind [Art. 808, CC]
attestation clause because the purpose of the a.   The will shall be read to the testator twice
marginal signature is only to authenticate the page. – By one of the subscribing witnesses and
The attestation clause has a purpose that is not by the notary public acknowledging the
fulfilled by the marginal signature (attest to the act will.
of signing by testator and witnesses) [Balane]. b.   A testator suffering from glaucoma may be
considered as legally blind [Garcia v.
Note: The doctrine of substantial compliance Vasquez, G.R. No. L-26615 (1970)]
applies only as to defects in the form or language of
the attestation clause. WITNESSES
Qualifications [Art. 820, CC]
MARGINAL SIGNATURES 1.   Of sound mind
General rule: Testator or his representative shall 2.   Aged 18 years or over
write his name, and the witnesses shall sign each 3.   Not blind, deaf or dumb
and every page except the last page [Art. 805, CC]. 4.   Able to read and write

Exceptions: Disqualifications [Art. 821, CC]


1.   When the will consists of only one page 1.   Person not domiciled in the Philippines
2.   When the will consists of only two pages, the 2.   Those who have been convicted of falsification,
first of which contains all dispositions and is perjury, or false testimony.
signed at the bottom by the testator and the
witnesses, and the second page contains only Rules on Interested Witness [Art. 823, CC]
the attestation clause duly signed at the bottom General Rule Exception
by the witnesses. [Abangan v. Abangan, G.R. If there are three other
No. L-13431 (1919)] Devises or legacies in competent witnesses,
3.   The use of thumbprint was allowed [Matias v. favor of an interested the devise or legacy
Salud, G.R. No. L-10751 (1958)] witness or his or her shall be valid and the
4.   The inadvertent failure of one witness to affix spouse, parent, or interested witness
his signature to one page of a testament, due to child will be void shall be treated as a
the simultaneous lifting of two pages in the mere surplusage
course of signing, is not per se sufficient to
justify denial of probate. [Icasiano v. Icasiano, Creditors may be witnesses [Art. 824, CC].
G.R. No. L-18979 (1964)]

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Supervening incompetency shall not prevent the Note, however, that in the case of Kalaw v. Relova,
allowance of the will [Art. 822, CC]. the alteration involved the designation of the
testator’s sole heir.
HOLOGRAPHIC WILLS
EFFECT OF INSERTION WRITTEN BY ANOTHER
FORMAL REQUIREMENTS FOR HOLOGRAPHIC PERSON ON THE VALIDITY OF A HOLOGRAPHIC
WILLS WILL
1.   In writing [Art. 804, CC] When Made Effect
2.   In a language known to the testator [Art. 804, Insertion considered
CC] After the execution, not written. Validity
3.   Entirely written, dated and signed in the hand without consent of cannot be defeated by
of the testator himself [Art. 810, CC] testator the malice or caprice
of a third person
WITNESSES REQUIRED FOR PROBATE [Art. 811, After execution, with Will is valid, insertion
CC] consent is void
1.   At least one witness who knows the Contemporaneous to Will is void because it
handwriting and signature of the testator; the execution of the is not written entirely
explicitly declare that it is the testator’s will by the testator
2.   If contested – at least 3 of such witnesses
3.   In the absence of a competent witness, expert JOINT WILLS
testimony may be resorted to 1.   A single testamentary instrument,
2.   Which contains the wills of two or more
General rule: The holographic will itself must be persons,
presented for probate [Gan v. Yap, G.R. No. L-12190 3.   Jointly executed by them,
(1958)] 4.   Either for their reciprocal benefit or for the
benefit of a third person.
Exception: If there is a photostatic copy or xerox copy
of the holographic will, it may be presented for Filipinos cannot make Joint Wills
probate [Rodelas v. Aranza, G.R. No. L58509 (1982)] Joint wills executed by Filipinos, whether in the
Philippines or abroad, are prohibited.
ADDITIONAL DISPOSITIONS
In holographic wills, the dispositions of the testator Note: Separate documents, each serving as one
written below his signature must be dated and independent will (even if written on the same sheet)
signed by him in order to make them valid as are not considered joint wills.
testamentary dispositions [Art. 812, CC]
MUTUAL WILLS
When a number of dispositions appearing in a 1.   Executed pursuant to an agreement between
holographic will are signed without being dated, two or more persons,
and the last disposition has a signature and date, 2.   Jointly executed by them,
such date validates the dispositions preceding it, 3.   Either for their reciprocal benefit or for the
whatever be the time of prior dispositions. [Art. 813, benefit of a third person.
CC]
This is prohibited under Article 818.
INSERTION, CANCELLATION, ERASURE OR
ALTERATION [Art. 814, CC] RECIPROCAL WILLS
1.   Testators name each other as beneficiaries in
Testator must authenticate by his full signature. their own wills (there are therefore 2 separate
Note: Full signature does not necessarily mean the documents),
testator’s full name; it rather means his usual and 2.   Under similar testamentary plans - valid
customary signature [Balane].

If such change is not authenticated by the testator,


d.  Codicils
such change is considered not made. Thus, “the will
is not thereby invalidated as a whole, but at most Codicil
only as regards the particular words erased, 1.   It is a supplement or addition to a will,
corrected, or inserted.” [Kalaw v. Relova, G.R. No. L- 2.   made after the execution of a will,
40207 (1984), citing Velasco v. Lopez (1903)] 3.   and annexed to be taken as a part of the will,

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4.   by which any disposition made in the original Note: Even if a holographic will was not intended to
will is explained, added to, or altered. be revoked, unless a xerox copy exits, it can no
5.   in order that it may be effective, it shall be longer be proved.
executed as in the case of a will. [Arts. 825-826,
CC] Law Governing Revocation [Art. 829, CC]
Place of Testator’s
Governing Law
Note: A codicil must be in the form of a will – can Revocation Domicile
have a notarial codicil attached to a holographic Philippines,
will, and a holographic codicil attached to a notarial or some
will. Philippines Philippine Law
other
country
e.   Incorporation by 1.   Law of
Domicile -
Reference Philippines Philippine
(This law
Requisites [Art. 827, CC] situation is 2.   Law of lace of
1.   The document or paper referred to in the will not Revocation
must be in existence at the time of the execution governed by 3.   Law of Place
of the will. Art. 829) of Execution
2.   The will must clearly describe and identify the of Will
same, stating among other things the number [Balane]
of pages thereof. Outside the
1.   Law of the
3.   It must be identified by clear and satisfactory Philippines
Place of
proof as the document or paper referred to Execution of
therein; and Will; or
4.   It must be signed by the testator and the 2.   Law of the
witnesses on each and every page, except in Foreign
place in which
case of voluminous books of account or Country
the testator
inventories. had his
domicile at
Note: Not available to holographic wills. the time of
revocation
f.   Revocation
General Rule: A revocation made in a subsequent
A will may be revoked by the testator at any time will shall take effect, even if the new will should
before his death [Art. 828, CC] become inoperative by reason of the incapacity of
the heirs, devisees or legatees designated therein,
Modes of Revocation [Art. 830, CC] or by their renunciation. [Art. 832, CC]
1.   By implication of law (e.g. preterition [Art. 854,
CC]; legal separation [Art. 63, FC]; Exception: Doctrine of Dependent Relative
unworthiness to succeed [Art. 1032, CC], et al.); Revocation [Molo v. Molo, G.R. No. L-2538 (1951)]
or
2.   By the execution of a will, codicil or other writing The rule that where the act of destruction is
executed as provided in the case of wills (may connected with the making of another will so as to
be total or partial); or fairly raise the inference that the testator meant the
3.   By burning, tearing, canceling, or obliterating revocation of the old to depend upon the efficacy of
the will with the intention of revoking it, by the the new disposition intended to be substituted, the
testator himself, or by some other person in his revocation will be conditional and dependent upon
presence, and by his express direction. the efficacy of the new disposition; and if for any
reason, the new will intended to be made as a
The act contemplating revocation must be done at substitute is inoperative, the revocation fails and the
any time before the death of the testator. The right original will remain in full force.
of revocation cannot be waived or restricted. [Art.
828, CC] The failure of the new testamentary disposition
upon whose validity the revocation depends is
equivalent to the non-fulfillment of a suspensive
condition and hence prevents the revocation.

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False Cause/Illegal Cause The testator himself may, during his lifetime
A revocation based on a false cause or illegal cause petition the court having jurisdiction for the
is null and void [Art. 833, CC]. allowance of his will [Art. 838, CC].

It must appear from the will that the testator is Kinds of Probate
revoking because of the cause which he did not 1.   Post-mortem: after death
know was false. 2.   Ante-mortem: during the testator’s lifetime

Recognition of Illegitimate Child Note: Probate of a will is mandatory.


The recognition of an illegitimate child does not lose
its legal effect even though the will wherein it was Matters to be proved in probate
made should be revoked [Art. 834, CC]. 1.   Identity
2.   Due Execution
Principle of Instanter 3.   Capacity of the Testator
nd
Revoking clause in the 2 will is not testamentary
in character but operates to revoke the prior will SCOPE OF PROBATE PROCEEDINGS [Art. 839,
instanter (immediately) upon the execution of the CC]
nd
will containing it. The revocation of the 2 will does General rule: The probate court cannot inquire into
st
not revive the 1 will which has already become a the intrinsic validity of testamentary provisions.
nullity. Only the extrinsic validity of such wills may be
examined.
g.  Republication and Revival
Exceptions:
REPUBLICATION VS. REVIVAL 1.   When practical considerations demand that the
intrinsic validity of the will be resolved: When
Republication Revival
the will is intrinsically void on its face (e.g.,
Takes place by an act
Takes place by when there is clearly a preterition) such that to
of the testator
operation of law rule on its formal validity would be a futile
Corrects extrinsic and
Restores a revoked will exercise [Acain v. IAC, G.R. No. L-72706 (1987)].
intrinsic defects
2.   Claimants are all heirs and they consent, either
expressly or impliedly, to the submission of the
Art. 835 Art. 836 question of intrinsic validity to the court [Valera
Void as to: v. Inserto, G.R. No. L-56504 (1987)].
Void as to form [Art.
1.   Non-formal defect 3.   Probate court may pass upon the title to a
805, CC]
2.   Previously revoked property, but such determination is provisional
How to Republish: How to Republish: and not conclusive, and is subject to the final
1.   Execute new will 1.   Execute new will decision in a separate action to resolve title
2.   Copy out the or codicil [Pastor v.CA, G.R. No. L-56340 (1983)].
provisions from 2.   Simply make 4.   Probate court may decide on the ownership of a
the original void references to old property when the estate contains only one
will will property to be adjudicated upon [Portugal v.
Reference to original Reference to original Portugal-Beltran, G.R. No. 155555 (2005)].
insufficient sufficient
Revocation vs. Disallowance
h.  Allowance and Revocation Disallowance
Disallowance of Wills Voluntary act of the Given by judicial
testator decree
Probate Requirement Must always be for a
With or without cause
No will shall pass either real or personal property legal cause
unless it is proved and allowed in accordance with Always total, except
the Rules of Court [Art. 838, CC] when the ground is
fraud or influence
May be partial or total
Probate – a proceeding in rem required to establish which affects only
the validity of a will and in order to pass real or certain portions of the
personal property [Art. 838, CC] will

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Effect of Final Decree of Probate, Res Judicata on Effect of Predecease of Heir [Art. 856, CC]
Formal Validity Any heir who dies before the testator or is
The probate of a will by the probate court having incapacitated to succeed or renounces the
jurisdiction thereof is usually considered as inheritance transmits no rights of the testator to his
conclusive as to its due execution and validity and is own heirs. This is without prejudice to the rights of
also conclusive that the testator was of sound and representation [TOLENTINO].
disposing mind at the time when he executed the
will, and was not acting under duress, menace, a.  Manner of Distribution
fraud, or undue influence, and that the will is
genuine and not a forgery. [Mercado v. Santos, G.R. 1.   Heirs instituted without designation of shares
No. 45629 (1938)] shall inherit in equal parts [Art. 846, CC]
2.   If the institution pertains to some heirs
Grounds for Denying Probate individually and others collectively, the
1.   If the signature of the testator was procured by presumption is that all are individually
fraud; instituted [Art. 847, CC].
2.   If it was procured by undue and improper 3.   If siblings are instituted (whether full or half-
pressure and influence, on the part of the blood), the presumption is that the inheritance
beneficiary or some other person; is to be distributed equally [Art. 848, CC]. This
3.   If the testator acted by mistake or did not is different from the rules of distribution in
intend that the instrument he signed should be intestate succession.
his will at the time affixing his signature 4.   If parents and children are instituted, they are
thereto; presumed to have been instituted
4.   If the testator was insane or otherwise mentally simultaneously and not successively [Art. 849,
incapable of making a will at the time of its CC].
execution;
5.   If the formalities required by law have not been Note: By “unknown,” the Code actually means
complied with; or persons who could not be ascertained; a disposition
6.   If it was executed through force or under in favor of a stranger is valid [Tolentino].
duress, or the influence of fear, or threats. [Art.
839, CC]
b.  Preterition
2.  I nstitution of Heir NOT NAMED ALTHOUGH NAMED
He is not named in the He is neither:
A will shall be valid even though it—
will. 1.   Instituted as an heir
a.   should not contain an institution of an heir; or 2.   Expressly disinherited
b.   such institution should not comprise the entire
3.   Assigned any part of
estate; or
the estate
c.   the person so instituted should not accept the
Thus: tacitly deprived of his right to legitime.
inheritance or be incapacitated to succeed.

In such cases, the testamentary dispositions made Concept [Art. 854, CC]
in accordance with law shall be complied with and 1.   There must be a total omission of one, some or
the remainder of the estate shall pass to the legal all of the heir/s from the inheritance. [Seangio
heirs. [Art. 841, CC] v. Reyes, G.R. Nos. 140371-72 (2006)]
2.   The omission must be that of a compulsory heir.
Extent of Grant [Art. 842, CC] 3.   The compulsory heir omitted must be of the
Freedom of disposition depends upon the existence, direct line.
kind and number of compulsory heirs. 4.   The omitted compulsory heir must be living at
a.   No compulsory heirs – Testator has full power the time of the testator’s death or must at least
of disposition have been conceived before the testator’s
b.   One with compulsory heirs cannot disregard the death.
rights of the latter; may only dispose of the free
portion of his estate If the heir in question is instituted in the will but the
portion given to him by the will is less than his
legitime – there is no preterition. [Reyes v. Barretto-
Datu, G.R. No. L-17817 (1967)]

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If the heir is given a legacy or devise – there is no


preterition. [Aznar v. Duncan, G.R. No. L-24365
3.  Substitution of Heirs
(1966)]
Substitution - the appointment of another heir, so
If the heir had received a donation inter vivos from that he may enter into the inheritance in default of
the testator – the better view is that there is no the heir originally instituted [Art. 857, CC]
preterition. The donation inter vivos is treated as an
advance on the legitime under Articles 906, 909, 910 The substitute shall be subject to the same charges
and 1062. and conditions imposed upon the instituted heir,
unless the testator has expressly provided the
The remedy, if the value of inheritance, legacy or contrary, or the charges or conditions are personally
devise, or donation inter vivos is only for completion applicable only to the heir instituted [Art. 862, CC].
of his legitime under Articles 906 and 907.
a.  Kinds [Art. 858, CC]
Distinguished from Disinheritance
Preterition Disinheritance 1.   Brief or Compendious [Art. 860, CC]
•   Tacit deprivation Brief – Two or more persons were designated
of a compulsory by the testator to substitute for only one heir
heir of his legitime •   Express Compendious – One person is designated to
deprivation of a take the place of two or more heirs
•   May be voluntary
compulsory heir
but the
of his legitime 2.   Reciprocal [Art. 861, CC]
presumption of
law is that it is •   Always voluntary If the heirs instituted in unequal shares should
involuntary 
 •   For some legal be reciprocally substituted, the substitute shall
cause
 acquire the share of the heir who dies,
•   Law presumes
•   If the renounces, or is incapacitated, unless it clearly
there has been
disinheritance is appears that the intention of the testator was
merely oversight
valid, the otherwise. If there is more than one substitute,
or mistake on the
compulsory heir they shall have the same share in the
part of the
disinherited is substitution as the institution.
testator
•   Since preterition totally excluded
from the Example (only 1 substitute): If two heirs are
annuls the reciprocally substituted, then if one of them
institution of inheritance. In
case of invalid dies before the testator dies, renounces, or
heirs, the omitted turns out to be incapacitated, the other will get
heir gets not only disinheritance,
the compulsory his share, regardless of whether or not their
his legitime but shares are equal.
also his share in heir is merely
the free portion restored to his
legitime Example (more than 1 substitute): A is instituted
not disposed of by to 1/3, B to 1/6, and C to ½. If C dies before the
way of legacies testator, renounces or turns out to be
and devises 
 incapacitated, then the other two will get his
shares in the same proportion as in the
Effects of Preterition [Art. 854, CC] institution. A will get twice as much as B
1.   The institution of the heir is annulled. (because his share of 1/3 in the institution is
2.   Devises and legacies shall remain valid as long twice the size of B’s share of 1/6)
as they are not inofficious.
3.   If the omitted compulsory heir should die 3.   Simple Substitution [Art. 859, CC]
before the testator, the institution shall be The testator may designate one or more
effective, without prejudice to the right of persons to substitute the heir/s instituted in
representation. case the heirs should:
a.   die before him (predecease),
When there are no devises and legacies, preterition b.   should not wish to accept the inheritance
will result in the annulment of the will and give rise (repudiation), or
to intestate succession [Neri v. Akutin, G.R. No. L- c.   should be incapacitated to accept the
47799 (1941)]. inheritance (incapacitated).
4.   Fideicommissary Substitution

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The testator institutes an heir with an 3 Kinds of Testamentary Disposition


obligation to preserve and to deliver to another a.   Conditional [Art. 871, CC]
the property so inherited. The heir instituted to b.   Dispositions with a term [Art. 885, CC]
such condition is called the First Heir or the c.   Dispositions with a mode/modal dispositions
Fiduciary Heir; the one to receive the property is [Art. 882, CC]
the Fideicommissary or the Second Heir [Art.
863, CC]. CONDITIONAL DISPOSITIONS

Requisites: [Arts. 863-865, CC] Prohibited conditions: (considered as not imposed)


a.   A Fiduciary or first heir instituted is a.   Any charge, condition or substitution
entrusted with the obligation to preserve whatsoever upon the legitimes [Art. 872, CC]
and to transmit to a Fideicommissary b.   Impossible and illegal conditions [Art. 873, CC]
Substitute or second heir the whole or part c.   Absolute condition not to contract a first
of the inheritance. marriage [Art. 874, CC]
b.   The substitution must not go beyond one d.   Absolute condition not to contract a
degree from the heir originally instituted. subsequent marriage unless imposed on the
c.   The Fiduciary Heir and the widow or widower by the deceased spouse, or
Fideicommissary are living at the time of by the latter’s ascendants or descendants [Art.
the death of the testator. 874, CC]
d.   The fideicommissary substitution must be e.   Scriptura captatoria or legacy-hunting
expressly made. dispositions - dispositions made upon the
e.   The fideicommissary substitution is condition that the heir shall make some
imposed on the free portion of the estate provision in his will in favour of the testator or of
and never on the legitime any other person [Art. 875, CC]
In the absence of an obligation on the part
of the first heir to preserve the property for Effect: Entire disposition is void
the second heir, there is no fideicommissary
substitution. [PCIB v. Escolin, G.R. Nos. L- Potestative, Casual, and Mixed Conditions
27860 and L-27896 (1974)] a.   Potestative Conditions – Depends solely on
the will of the heir
Effects of predecease of the first heir/fiduciary General rule: Must be fulfilled as soon as the heir
or the second heir/fideicommissary learns of the testator’s death
Situation 1: If the first heir dies followed by the
second heir, then the testator dies, who will Exception: If the condition was already
inherit? The legal heirs. There is no complied with at the time the heir learns of the
fideicommissary substitution because first and testator’s death; or if the condition is of such a
second heirs are not living at the time of the nature that it cannot be fulfilled again.
testator’s death [Art. 863, CC].
Constructive Compliance: deemed fulfilled
Situation 2: The testator dies first followed by
the second heir. The first heir survived them but b.   Casual or mixed
subsequently dies, who will inherit? The SH and Casual condition – one whose fulfillment
his heirs under Art. 866, CC. This is because the depends on chance or the will of a third person.
SH passes his rights to his own heirs when he
dies before FH. Mixed condition – one whose fulfillment
depends partly on the will of the heir and partly
Situation 3: If the first heir dies, followed by the on chance or the will of a third person.
testator, then the second heir, who will inherit?
No specific provision in law, but SH inherits General rule: May be fulfilled at any time (before
because the T intended him to inherit. or after testator’s death), unless testator
provides otherwise.
Exception: If already fulfilled at the time of
4.  T estamentary execution of will:
Dispositions with a 1.   if testator unaware of the fact of fulfillment
– deemed fulfilled
Condition, a Term, and a 2.   if testator aware:
Mode
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U.P. LAW BOC SUCCESSION CIVIL LAW

i.   can no longer be fulfilled again: Every renunciation or compromise as regards a


deemed fulfilled future legitime between the person owing it and his
ii.   can be fulfilled again: must be compulsory heirs is void, and the latter may claim
fulfilled again. the same upon the death of the former; but they
must bring to collation whatever they may have
Constructive Compliance: received by virtue of the renunciation or compromise
1.   if casual – not applicable [Art. 905, CC].
2.   if mixed – applicable only if dependent
partly on the will of a third party not a.  Compulsory Heirs and
interested.
Various Combinations
DISPOSITIONS WITH A TERM
A term may either be suspensive or resolutory. Classes of Compulsory Heirs [Art. 887, CC]
a.   If the term is suspensive: 1.   Primary: Legitimate Children and Legitimate
Before the arrival of the term, the property Descendants with respect to their Legitimate
should be delivered to the legal or intestate Parents and Ascendants
heirs. 2.   Secondary: Those who succeed only in the
A caución muciana has to be posted by the legal absence of the primary compulsory heirs:
or intestate heirs. a.   Legitimate Parents and Legitimate
b.   If the term is resolutory: Ascendants, with respect to their
Before the arrival of the term, the property Legitimate Children and Descendants.
should be delivered to the instituted heir. (They will inherit only in default of
No caución muciana required as the heir has a legitimate children and their descendants)
right over the property during the period. b.   Illegitimate Parents with respect to their
Illegitimate Children. (They will inherit
MODAL DISPOSITIONS only in default of the illegitimate and
Dispositions with an obligation imposed upon the legitimate children and their respective
heir, without suspending the effectivity of the descendants).
institution, as a condition does.
Note that other illegitimate ascendants are
A mode functions similarly to a resolutory condition. not included.
In modal institutions, the testator states (1) the 3.   Concurring: Those who succeed together with
object of the institution, (2) the purpose or the primary or the secondary compulsory heirs:
application of the property left by the testator, or (3) •   Surviving Spouse
the charge imposed by the testator upon the heir •   Illegitimate Children and Illegitimate
[Rabadilla v. CA, G.R. No. 113725 (2000)]. Descendants

CAUCIÓN MUCIANA If the testator is a If the testator is an


A security to guarantee the return of the value of legitimate child: illegitimate child:
property, fruits, and interests, in case of 1.   LC and
contravention of condition, term or mode 1.   LC and
descendants
descendants
2.   In default of No. 1,
Instances when it is needed: 2.   ILC and
LP and
a.   Suspensive term [Art. 885,CC] descendants
ascendants
b.   Negative potestative condition - when the 3.   In default of No. 1
3.   SS
condition imposed upon the heir is negative, or and 2, ILP only
4.   IC and
consists in not doing or not giving something 4.   SS
descendants
[Art. 879, CC]
c.   Mode [Art. 882, par. 2, CC] b.  Specific Rules on
Legitime
5.  L egitime
1.   Direct Descending Line
It is that part of the testator’s property which he a.   Rule of Preference between lines [Arts.
cannot dispose of because the law has reserved it for 978 and 985, CC]
his compulsory heirs. [Art. 886, CC]

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i.   Those in the direct descending line Legitimate Descendants may succeed in


shall exclude those in the direct their own right.
ascending and collateral lines; and 2.   Direct Ascending Line
ii.   Those in the direct ascending line a.   Rule of division between lines
shall, in turn, exclude those in the i.   The father and the mother shall
collateral line. inherit equally if both living. One
iii.   Rule of Proximity [Art. 926, CC]: The parent succeeds to the entire estate
relative nearest in degree excludes of the child if the other parent is
the farther one dead [Art. 986, CC].
b.   Right of representation ad infinitum in case ii.   In default of the mother and the
of predecease, incapacity, or father, the ascendants nearest in
disinheritance [Arts. 972 and 992, CC] degree will inherit [Art. 987, CC].
i.   For decedents who are Legitimate iii.   If there is more than one relative of
Children, only the Legitimate the same degree but of different
Descendants are entitled to right of lines, one half will go to the paternal
representation. ascendants and the other half to the
ii.   For decedents who are Illegitimate maternal ascendants [Art. 987, CC].
Children, both the Legitimate and b.   Rule of equal division
the Illegitimate Descendants can i.   The relatives who are in the same
represent, only with respect to the degree shall inherit in equal shares
decedent’s illegitimate parents. [Art. 987, CC].
c.   If all the Legitimate Children repudiate
their legitime, the next generation of

SUMMARY OF LEGITIMES OF COMPULSORY HEIRS

Legend:
LC – legitimate ILC – illegitimate SS – surviving LP – legitimate ILP – illegitimate
children children spouses parents parents

Surviving LC and LP and


SS ILC ILP
Relatives Descendants Ascendants
½ of the estate
LC alone in equal
portions
¼ of the estate
1 LC, SS ½ of the estate taken from the
free portion
½ of the estate
2 or more LC, Same portion
in equal
SS as 1 LC
portions
½ of the estate
LC, ILC in equal ½ share of 1 LC
portions
½ share of 1 LC

N.B. May suffer


¼ (preferred reduction pro
1 LC, SS, ILC ½
over ILC) rata because
share of SS is
given
preference
½ of the estate
2 or more LC, Same as share
in equal ½ share of 1 LC
SS, ILC of 1 LC
portions
LP alone ½

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¼ in equal
LP, ILC ½
portions
LP, SS ¼ ½
LP, SS, ILC 1/8 ¼ ½
½ in equal
ILC alone
portions
1/3 in equal
ILC, SS 1/3
portions
GR: ½

Exception:
marriage in
articulo mortis
and testator
dies within 3
months from
marriage – 1/3
SS alone
Exception to
the exception:
Have been
living together
as husband
and wife for
more than 5
years – 1/2
ILP alone ½
ILP, SS ¼ ¼

c.   Steps in Determining the and devises [Art. 854,


CC]
Legitimate of Compulsory Reduction of the
Testamentary
Heirs [Arts. 908-910, CC] dispositions impairing
disposition insofar as
they may be inofficious
or diminishing the
1.   Value of the Estate or excessive [Art. 907,
legitime
2.   Less Taxes CC]
3.   Less Liabilities = NET ESTATE Completion of the
Partial impairment
4.   Add collationable donations = THEORETICAL legitime [Art. 906, CC]
HEREDITARY ESTATE Collation – reduction
Impairment by
(“Theoretical” because this amount is what the of donations [Arts. 771
inofficious donations
legitime will be based on, but the actual and 911, CC]
amount available for physical distribution is the
net estate.) e.   Method of Reduction [Art.
d.  Remedy of a Compulsory 911, CC]
Heir in Case of Order of priorities to be observed in the reduction
Impairment of Legitime [Balane]:
1.   Reduce pro rata the non-preferred legacies and
Extent and Nature of devises, and the testamentary dispositions to
Remedy heirs
Impairment
2.   Reduce pro rata the preferred legacies and
Total omission of a
Annulment of devises
compulsory heir who is
institution and 3.   Reduce the donations inter vivos according to
a direct descendant or
reduction of legacies the inverse order of their dates (oldest is the
ascendant (preterition)
most preferred)

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exercise it; should the latter not make use of it, the
How are Devises and Legacies with usufructs, life property shall be sold at public auction at the
annuities and pensions reduced? instance of any one of the interested parties [Art.
1.   If the value of these grants exceeds the free 913, CC].
portion, it impairs the legitimes and should be
reduced Note: Rule on Reduction of Legitimes (Shares)
2.   The compulsory heir has 2 options: Legitimate Never reduced, they are primary
a.   Delivering to the devisee or legatee the free children and preferred
portion Surviving
b.   Complying with the testamentary provision Never reduced
spouse
Subject to reduction, pro rata,
Note: Illegitimate without preference (you get the
If the devise subject to reduction should consist of children remaining portion, divide it by the
real property, which cannot be conveniently divided, number of illegitimate children)
it shall go to the devisee if the reduction does not
absorb ½ of its value; and in a contrary case, to the
compulsory heirs; but the former and the latter shall 6.  R eserva Troncal
reimburse each other in cash for what respectively
belongs to them. The ascendant who inherits from his descendant
any property which the latter may have acquired by
The devisee who is entitled to a legitime may retain gratuitous title from another ascendant, or a
the entire property, provided its value does not brother or sister, is obliged to reserve such property
exceed that of the disposable portion and of the as he may have acquired by operation of law for the
share pertaining to him as a legitime [Art. 912, CC]. benefit of relatives who are within the third degree
and who belong to the line from which said property
If the heirs or devisees do not choose to avail came [Art. 891, CC].
themselves of the right granted by the foregoing,
any heir or devisee who did not have such right may

Origin
R’ista

Operation of law
Gratuitous title (legitimes or
(donation or intestacy) By instestacy
succession

Preposituss
Prepositus
R’ios

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st
Concept of Reserva Troncal The 1 transfer from the origin does not make the
a.   A descendant (prepositus) inherits or acquires property reservable.
st
property from an ascendant or from a brother or The 1 transferee owns the property he receives in
sister (origin or mediate source) by gratuitous full and in fee simple. If he sells the property, then
title there is no reserva that can be created. It is at this
b.   The same property is inherited by another point, however, that a reserva may ignite, because if
st
ascendant (reservista) or is otherwise acquired the 1 transferee has no legitimate descendants, the
by him by operation of law from the said property, by operation of law, will go back up to his
descendant (prepositus) ascendant.
c.   The said ascendant (reservista) must reserve the
nd
property for the benefit of the relatives of the The 2 transferee is the reservor.
deceased descendant within the third civil The reservor can enjoy the property, but his title is
degree and who belong to the line from which subject to a double resolutory condition. So, if he
the said property came (reservatarios). dies, you need to ask 2 questions:
a.   Does the prepositus have relatives?
Parties: [Balane] b.   Are these relatives qualified to inherit from the
a.   Origin or Mediate Source – either an ascendant prepositus?
of any degree of ascent or a brother or sister of If the answers are YES: then a reserva occurs.
st
the Prepositus; responsible for the 1 transfer
b.   Prepositus – the first transferee of the reserved Note: The reservatarios actually inherit, by delayed
property intestacy, from the prepositus.
c.   Reservista – an ascendant of the Prepositus
other than the Origin or Mediate Source; the one Juridical Nature of Rights
obligated to reserve the property Nature of the reservista’s right: [Edroso v. Sablan,
rd
d.   Reservatarios – within the 3 degree of G.R. No. 6878 (1913)]
consanguinity from the Prepositus [Cabardo v. a.   The reservista’s right over the reserved property
Villanueva, G.R. No. L-19003 (1922)] belonging is one of ownership
to the line from which the property came b.   The right of ownership is subject to a resolutory
condition, i.e. the existence of reservatarios at
Requisites for Reserva Troncal [Chua v. CFI, G.R. the time of the reservista's death
No. L-29901 (1977)]: c.   The right of ownership is alienable, but subject
a.   That the property was acquired by a descendant to the same resolutory condition.
(Prepositus) from an ascendant or from a brother d.   The reservista’s right of ownership is
or sister (Origin or Mediate Source) by gratuitous registrable.
title,
b.   That the Prepositus died without (legitimate*) Nature of reservatarios’ right: [Sienes v. Esparcia,
issue, G.R. No. L-12957 (1961)]
c.   That the property is inherited by another a.   The reservatarios have a right of expectancy
ascendant (Reservista) by operation of law, and over the property.
rd
d.   That there are relatives within the 3 degree b.   The right is subject to a suspensive condition,
(Reservatarios) belonging to the line from which i.e. the expectancy ripens into ownership if the
said property came. reservatarios survive the reservistas.
c.   The right is alienable but subject to the same
Note: Only legitimate descendants will prevent the suspensive condition.
property from being inherited by the legitimate d.   The right is registrable.
ascending line by operation of law [Balane]
Reserva Minima vs. Reserva Maxima
Three transmissions involved: [Balane] a.   The prepositus acquired property gratuitously
st
a.   1 transfer – by gratuitous title, from a person to from an ascendant, a brother or sister
his descendant, brother or sister b.   In his will, he institutes as his heir his ascendant
nd
b.   2 transfer – by operation of law, from the (who is also a compulsory heir) such that the
st
transferee in the 1 transfer to another ascendant receives half of the estate by
ascendant. This creates the reserva. operation of law as legitime and the other half
rd
c.   3 transfer – from the transferee in the second by testamentary disposition
transfer to the relatives

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Two Views testator, if the disinherited heir should deny it [Art.


a.   Reserva Maxima: As much of the potentially 917, CC].
reservable property as possible must be deemed
included in the part that passes by operation of Causes Common to Disinheritance and
law (maximizing the scope of the reserva) Unworthiness
b.   Reserva Minima: every single property in the
prepositus’s estate must be deemed to pass, Article 1032 enumerates five acts of unworthiness
partly by will and partly by operation of law, in which likewise constitute grounds to disinherit a
the same proportion that the part given by will compulsory heir. The effect of the concurring causes
bears to the part not so given [Balane of unworthiness and grounds for disinheritance is as
follows. If the testator failed to disinherit the
Either view is defensible, but Reserva Minima finds offender, the law nonetheless intervenes by
wider acceptance in the Philippines [Balane] excluding the offender from the inheritance of the
testator or the decedent by reason of unworthiness.
Extinguishment of the Reserva
a.   Loss of the reservable property How do you reconcile unworthiness and
b.   Death of the reservista disinheritance as regards Restoration to Capacity?
c.   Death of all the relatives within the third degree Under the rules on Under the rules on
belonging to the line from which the property Disinheritance – note: this Unworthiness –
came is expressly made by note: this is by
d.   Renunciation by the reservatarios, but a future testator operation of law
reservatario is not bound by such renunciation ® Either:
a conditional extinguishment. 1) written pardon,
e.   Prescription, when the reservista holds the A subsequent or
property adversely against the reservatarios, as reconciliation is enough 2) subsequent will
free from reservation reconciliation is
not enough
7.  Disinheritance Overlap of Rules: Remedy
a.   If the offended party
does not make a will
A compulsory heir may, in consequence of subsequent to the
disinheritance, be deprived of his legitime, for causes occurrence of the
expressly stated by law [Art. 915, CC].
cause
•   Unworthiness sets
Effect of Disinheritance
in
A disinherited heir is totally excluded from the
inheritance. This means the he forfeits not only his •   Written
legitime, but also his intestate portion (if any), and condonation is
any testamentary disposition made in a prior will of necessary to
the disinheriting testator [Balane]. restore.
b.   If the offended party
makes a will If he did not know
Requisites of a Valid Disinheritance the cause
a.   Heir disinherited must be designated by name subsequent to the
occurrence of the •   Unworthiness
or in such a manner as to leave no room for stays
doubt as to who is intended to be disinherited. cause
b.   It must be for a cause designated by law. •   If he knew the
c.   It must be made in a valid will. cause
d.   It must be made expressly, stating the cause in •   If he disinherits -
the will itself. Art 922
e.   The cause must be certain and true, and must •   If he institutes or
be proved by the interested heir if the person pardons the
should deny it. offender
f.   It must be unconditional. •   Restored to
g.   It must be total. capacity
•   If will silent –
Note: The burden of proving the truth of the cause for unworthiness
disinheritance shall rest upon the other heirs of the stays

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Summary of Causes of Disinheritance


Children and Parents and
Spouse [Art. Unworthiness
Grounds for disinheritance Descendants Ascendants
921, CC] [Art. 1032, CC]
[Art. 919, CC] [Art. 920, CC]
Guilty or Convicted of Attempt
Against the Life of the Testator, ✓ ✓ ✓ ✓
Spouse, Ascendant or Descendant
Accused Testator or Decedent of
Crime Punishable by Imprisonment
✓ ✓ ✓ ✓
of 6 years or more, and Found
Groundless or False
Causes testator or decedent to Make
a Will or Change one by Fraud,
✓ ✓ ✓ ✓
Violence, Intimidation, or Undue
Influence
Unjustified Refusal to Support
✓ ✓ ✓
Testator
Convicted of Adultery or
Concubinage with Spouse of Testator ✓ ✓ ✓
or Decedent
Maltreatment of testator by Word

and Deed
Leading a Dishonorable or

Disgraceful Life
Conviction of Crime which carries the

penalty of Civil Interdiction
Abandonment of Children or
Inducing Children to Live Corrupt and
✓ ✓
Immoral Life or Against Attempted
Virtue
Loss of Parental Authority ✓ ✓
Attempt by One Parent Against the
Life of the Other Unless there is ✓
Reconciliation Between Parents
Spouse Has Given Cause for Legal
✓ ✓
Separation
Failure to Report Violent Death of
Decedent Within One Month Unless

Authorities Have Already Taken
Action
Force, Violence, Intimidation, or
Undue Influence to Prevent Another
from Making a Will or Revoking One ✓
Already Made or Who Supplants or
Alters the Latter’s Will
Falsifies or Forges Supposed Will of

Decedent

Modes of Revocation of Disinheritance Note: The moment that testator uses one of the acts
a.   Reconciliation [Art. 922, CC] of unworthiness as a cause for disinheritance; he
b.   Subsequent institution of the disinherited heir thereby submits it to the rules on disinheritance.
c.   Nullity of the will which contains the Thus, reconciliation renders the disinheritance
disinheritance. ineffective.

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Reconciliation [Art. 922, CC] d.   The estate represented by the executor or


Effect of Reconciliation between Offender and administrator, if no one is charged with this
Offended Person: If no disinheritance has been duty to pay or deliver the legacy or devise in the
made yet, the offended person will be deprived of his will
right to disinherit.
If there is an administration proceeding, it
If disinheritance has been effected, it will be constitutes a charge upon the estate. If there is
rendered ineffectual. no administration proceeding, it is a charge
upon the heirs
Rights of Descendants of Person Disinherited [Art.
923, CC] Validity and Effect of Legacy or Devise
Disinheritance gives rise to the right of Legacy or Devise of a owned in part by the
representation in favor of the children and testator [Art. 929, CC]
descendants of the disinherited person with respect The legacy or devise shall be understood to be
to his legitime. limited to such part or interest
If testator expressly declares that
Ineffective Disinheritance [Art. 918, CC] Exception
he gives the thing in its entirety.
Instances of Ineffective disinheritance:
a.   There is no specification of the cause. Legacy or Devise of a thing belonging to
b.   The cause is not proved. another [Art. 930, CC]
Testator erroneously
The cause is not among those specified in the believed that the
provisions. Void
property belonged to
him
Effect of Ineffective Disinheritance: if the The thing bequeathed
disinheritance lacks one or other of the requisites Afterwards becomes Effective
mentioned in this article, the heir in question gets his by whatever title
his legitime [Balane]. Valid – estate must try
Testator knew property to acquire property or
Ineffective did not belong to him else give heir monetary
Preterition
Disinheritance value.
Person disinherited Person omitted must be
may be any compulsory a compulsory heir in the Legacy of devise of a thing belonging to the
heir direct line legatee or devisee
Only annuls the The thing already
institution in so far as it Annuls the entire belongs to the legatee or
prejudices the person institution of heirs devisee at the time of the Ineffective
disinherited execution of the will [Art.
932, CC]
8.  L egacies and Devises The thing is subject to an
Valid only as to the
encumbrance or interest
interest or
Legacy Devise of another person [Art.
encumbrance
A gift of personal A gift of real property 932, CC]
property given in a will given in a will Legatee or devisee
It is bequeathed It is devised subsequently alienates Ineffective
the thing [Art. 933,CC]
Persons Charged with the Duty to Give Legacies After alienating the
and Devises in a Will thing, the legatee or
a.   Compulsory heir, provided, their legitimes are devisee subsequently Ineffective
not impaired [Art. 925, CC] reacquires it gratuitously
b.   Voluntary heir [Art. 933, CC]
c.   Legatee or devisee can be charged with the After alienating the
Legatee or devisee
duty of giving a sub-legacy or sub-devise but thing, the legatee or
can demand
only to the extent of the value of the legacy or devisee acquires it by
reimbursement from
devise given him [Art. 925, CC] onerous title [Art. 933,
the heir or estate
CC]

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Different Objects of Legacies and Devises [Art. 934-944, CC]


Objects of Legacy or Devise Effect
Thing pledged or mortgaged •   Estate is obliged to pay the debt
to secure a debt •   Other charges pass to the legatee or devisee
•   Effective only as regards the credit or debt existing at the time of the
Credit or remission or release testator’s death
of a debt •   Legacy lapses if the testator later brings action against the debtor
•   If generic, comprises all credits/debts existing at time of execution of will
Thing pledged by debtor to a •   Only the pledge is extinguished; the debt remain
creditor •   Shall not be applied to his credit unless the testator so declares
•   If testator does not really owe the debt, the disposition is void
Order of payment of a debt •   If the order is to pay more than the debt, the excess is not due
•   This is without prejudice to the payment of natural obligations
•   The choice is with the heir, or the executor or administrator
Alternative legacies and
•   If the heir, legatee or devisee dies, the right passes to their heirs
devises
•   Once made, the choice is irrevocable
•   Legacy is valid even if there are no things of the same kind in the estate
Legacy of generic personal •   Devise of indeterminate real property valid only if there are immovable
property or indeterminate property of the same kind in the estate
real property •   The choice belongs to the heir, legatee or devisee or the executor or
administrator
•   Lasts until the legatee is of age or beyond the age of majority in order that
he may finish some professional, vocational or general course provided he
Legacy of education pursues his course diligently
•   If testator did not fix the amount, it is fixed in accordance with the social
standing and circumstances of the legatee and the value of the estate
•   Lasts during lifetime of legatee
•   If the testator used to give the legatee a sum of money for support, give the
Legacy of support same amount unless it is markedly disproportionate to the estate
•   If testator did not fix the amount, it is fixed in accordance with the social
standing and circumstances of the legatee and the value of the estate

Order of Payment in Case the Estate Is Not Sufficient to Cover All the Legacies and Devises
Art. 911: Order or Preference Art. 950
•   Remuneratory legacy/devise
•   Preferential legacy/devise
•   Legitime of compulsory heirs
•   Legacy for support
•   Donations inter vivos
•   Legacy for education
•   Preferential legacies or devises
•   Legacy/devise of specific, determinate thing which
•   All other legacies or devises pro rata
forms a part of the estate
•   All others pro rata
Application
•   When the reduction is necessary to preserve the •   When there are no compulsory heirs and the entire
legitime of compulsory heirs from impairment estate is distributed by the testator as legacies or
whether there are donations inter vivos or not; or 
 devises; or
•   When, although, the legitime has been preserved •   When there are compulsory heirs but their
by the testator himself there are donations inter legitime has already been provided for by the
vivos. 
 testator and there are no donations inter vivos.

Art. 911, CC governs when there is a conflict between Art. 950, CC governs when the question of reduction is
compulsory heirs and the devisees and legatees. 
 exclusively among legatees and devisees themselves.

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Delivery of Legacy/Devise [Art. 951, CC]   Legal or Intestate


a.   The very thing bequeathed shall be delivered and
not its value
Succession
b.   With all its accessions and accessories
c.   In the condition in which it may be upon the death 1.   General Provisions
of the testator
d.   Legacies of money must be paid in cash Intestacy – that which takes place by operation of law
in default of compulsory and testamentary
Effect of ineffective legacies or devises [Art. 956, CC] succession. Not defined in the Civil Code.
In case of repudiation, revocation or incapacity of the
legatee or devisee, the legacy or devise shall be Legal succession is a mode of transmission mortis
merged with the mass of the hereditary estate, except causa which takes place in the absence of the
in cases of substitution or accretion. expressed will of the decedent embodied in a
testament [Tolentino].
Revocation of Legacies and Devises [Art. 957, CC]
a.   Testator transforms the thing such that it does INSTANCES WHEN LEGAL OR INTESTATE
not retain its original form or denomination SUCCESSION OPERATES [Art. 960, CC]
b.   Testator alienates the thing by any title or for any a.   If a person dies without a will, or with a void will,
cause. Reacquisition of the thing by the testator or one which has subsequently lost its validity
does not make the legacy or devise valid, unless b.   When the will does not institute an heir
it is effected by right of repurchase. c.   Upon the expiration of term, or period of
c.   Thing is totally lost during the lifetime or after the institution of heir [Balane]
death of the testator d.   Upon fulfillment of a resolutory condition
d.   Other causes: nullity of will, non-compliance with attached to the institution of heir, rendering the
suspensive condition, sale of the thing to pay the will ineffective [Balane]
debts of the deceased during the settlement of e.   When the will does not dispose of all the property
his estate. belonging to the testator. Legal succession shall
take place only with respect to the property which
the testator has not disposed (mixed succession)
f.   If the suspensive condition attached to the
institution of the heir does not happen or is not
fulfilled
g.   If the heir dies before the testator
h.   If the heir repudiates the inheritance, there being
no substitution, and no right of accretion takes
place
i.   When the heir instituted is incapable of
succeeding, except in cases provided in the Civil
Code
j.   Preterition – Intestacy may be total or partial
depending on whether or not there are legacies or
devises [Balane]

Note: In all cases where there has been an institution


of heirs, follow the ISRAI order:
a.   If the Institution fails, Substitution occurs.
b.   If there is no substitute, the right of
Representation applies in the direct descending
line to the legitime if the vacancy is caused by
predecease, incapacity, or disinheritance.
c.   The right of Accretion applies to the free portion
when the requisites in Art. 1016 are present.
d.   If there is no substitute, and the right of
representation or accretion is not proper, the
rules on Intestate succession shall apply.

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FUNDAMENTAL PRINCIPLES IN INTESTATE a.  Relationship


SUCCESSION
a.   Rule of Preference between Lines The number of generations determines the proximity
1.   Those in the direct descending line shall of the relationship. Each generation forms one degree
exclude those in the direct ascending and [Art. 963, CC].
collateral lines;
2.   Those in the direct ascending line shall, in Note: It is important to distinguish between direct and
turn, exclude those in the collateral line. collateral, as the direct has preference over the
b.   Rule of Proximity collateral.
The relative nearest in degree excludes the
farther one [Art. 962(1), CC], saving the right of In a line, as many degrees are counted as there are
representation when it properly takes place. generations [Art. 966, CC].
c.   Rule of Equal Division
The relatives who are in the same degree shall Note: Descending line is preferred over ascending.
inherit in equal shares [Arts. 962(2), 987 and
1006, CC]. Blood relationship is either full or half-blood [Art. 967,
CC].
Exceptions: [Balane]
1.   Rule of preference between Lines Note: As among brothers and sisters and nephews
2.   Distinction between legitimate and and nieces, there is a 2:1 ratio for full-blood and half-
illegitimate filiation. The ratio under present blood relatives. Direct relatives are preferred. But this
law is 2:1 [Art. 983, in relation to Art. 895 as distinction does not apply with respect to other
amended by Art. 176, FC]. collateral relatives.
3.   Rule of division by line in the ascending line
[Art. 987 (2), CC] INCAPACITY [Art. 968, CC].
4.   Distinction between full-blood and half- General rule: If there are several relatives of the same
blood relationship among brothers and degree, and one or some of them are unwilling or
sisters, as well as nephews and nieces [Art. incapacitated to succeed, his portion shall accrue to
1006 and 1008, CC] the others of the same degree.
5.   Right of representation.
d.   Rule of Barrier between the legitimate family Exception: When the right of representation should
and the illegitimate family (the iron-curtain take place.
rule)
The illegitimate family cannot inherit by intestate Note: This accretion in intestacy takes place in case of
succession from the legitimate family and vice- predecease, incapacity, or renunciation among heirs
versa [Art. 992, CC] of the same degree. The relatives must be in the same
e.   Rule of Double Share for full blood collaterals relationship because of the Rule of Preference of
When full and half-blood brothers or sisters, Lines.
nephews or nieces, survive, the full blood shall
take a portion in the inheritance double that of REPUDIATION [Arts. 968-969, CC]
the half-blood [Arts. 895 and 983, CC]. There is no right of representation in repudiation. If
the nearest relative/s repudiates the inheritance,
Note: those of the following degree shall inherit in their own
a.   If one of the legitimate ascendants, illegitimate right.
parents, legitimate children or illegitimate
children survives, the brother, sisters, nephews, In case of repudiation by all in the same degree, the
and nieces (BSNN) are excluded. right of succession passes on the heirs in succeeding
b.   If one of the legitimate ascendants, illegitimate degrees: descending line first, ascending line next,
parents, legitimate children, illegitimate children and collateral line next [Balane].
or surviving spouse survives, the other collateral
relatives and the state are excluded. ADOPTION [Art. 189, FC]
c.   If any of the heirs concur in legitimes, then they In adoption, the legal filiation is personal and exists
also concur in intestacy. only between the adopter and the adopted. The
adopted is deemed a legitimate child of the adopter,
but still remains as an intestate heir of his natural
parents and other blood relatives.

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Note: Section 16 of the Domestic Adoption Act (RA If the children survive alone, they inherit in their own
8552) provides that all legal ties between the right and share in equal proportions or per capita [Art.
biological parent(s) and the adoptee shall be severed 975, CC].
and the same shall then be vested on the adopter(s).”
Right of representation in the collateral line is only
b.  Right of Representation possible in intestate succession. It cannot take place
in testamentary succession.
Representation – right created by fiction of law, by
virtue of which the representative is raised to the place Per stirpes
and the degree of the person represented, and Inheritance per stirpes means that the
acquires the rights which the latter would have if he representative/s shall receive only what the person
were living or if he could have inherited [Art. 970, CC] represented would have received, if he were living or
could inherit [Art.975, CC].
Effect of Representation
The representative heir acquires the rights which the If there are more than one representative in the same
person represented would have if he were living or if degree, then it shall be divided equally, without
he could have inherited. prejudice to the distinction between legitimate and
illegitimate, if applicable.
When it occurs
Representation is allowed with respect to inheritance The Double Heirship Test
conferred by law (legitime and intestate based on Art. In determining whether or not representation is
923) proper, it is necessary that the representative must be
a legal heir of both the person he is representing and
It occurs only in the following instances: (DIP) the decedent [Art. 973, CC].
1.   Predecease of an heir
2.   Incapacity or unworthiness But the representative need not be qualified to
3.   Disinheritance [Art. 923, CC] succeed the person represented [Art. 971, CC]. In the
same manner, the person represented need not be
Note: There is no representation to a devise or a qualified to succeed the decedent, as it is his
legacy. disqualification which gives rise for representation to
apply.
A renouncer can represent, but cannot be •   Legitimate children may not be represented by
represented. Rationale is found in Art. 971 which their illegitimate descendants (because of the bar
states that “The representative does not succeed the in Art. 992). In contrast, illegitimate children
person represented but the one whom the person may be represented by their legitimate and
represented would have succeeded.” illegitimate descendants [Art. 902].
•   Illustration: A has legitimate son L and
Representation in the Direct Descending Line illegitimate son I. L has an illegitimate son L-1
Representation takes place ad infinitum in the direct while I also has an illegitimate son I-1. I-1 may
descending line but never in the direct ascending line inherit from A by representation of I (under Art.
[Art. 972, CC]. 902, CC), but L-1 may not inherit from A (because
of the barrier under Art. 992, CC).
General rule: Grandchildren inherit from the
grandparents by right of representation, if proper. Representation in Adoption
If the adopting parent should die before the adopted
Exception: Whenever all the children repudiate, the child, the latter cannot represent the former in the
grandchildren inherit in their own right because inheritance of the parents or ascendants of the
representation is not proper [Art. 969, CC]. adopter. The adopted child is not related to the
deceased in that case, because filiation created by
Representation in Collateral Line fiction of law is exclusively between the adopter and
In the collateral line, representation takes place only the adopted [Tolentino].
in favor of the children of the brothers or sisters (i.e.,
nephews and nieces) whether of the full or half-blood
[Art. 972, CC] and only if they concur with at least one
uncle or aunt. In this case, they share in the
inheritance per stirpes.

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2.  O rder of Intestate Succession


Decedent is a Legitimate Child Decedent is an Illegitimate Child Decedent is an Adopted Child
Legitimate children or descendants Legitimate children or descendants Legitimate children or descendants
(LCD) (LCD) (LCD)
Legitimate parents or ascendants Illegitimate children or descendants Illegitimate children or descendants
(LPA) (LPA) (ICD)
Legitimate or illegitimate parents,
Illegitimate children or descendants
Illegitimate parents (IP) or legitimate ascendants, adoptive
(ICD)
parents
Surviving spouse (SS) Surviving spouse (SS) Surviving spouse (SS)
Brothers and sisters, nephews, Illegitimate brothers and sisters, Brothers and sisters, nephews,
nieces (BS/NN) nephews, nieces (IBS/NN) nieces (BS/NN)
Legitimate collateral relatives
th State State
within the 5 degree (C5)
State

RULES OF EXCLUSION AND CONCURRENCE IN INTESTATE SHARES


Intestate Heirs Excludes Excluded By Concurs With
Ascendants, Collaterals
LC + LD No one SS + ILC
and State
ILC + D ILP, Collaterals and State No one SS, LC, LP
LP + LA Collaterals and State LC ILC + SS
ILP Collaterals and State LC and ILC SS
Collaterals other than
LC, ILC, LP, ILP, Siblings,
SS siblings, nephews and No one
Nephews, Nieces
nieces, State
All other collaterals and
Siblings, Nephews, Nieces LC, ILC, LP, ILP SS
State
th
Other collaterals within 5 Collateral more remote in Collaterals in the same
LC, ILC, LP, ILP and SS
degree degree and State degree
State No one Everyone No one

Note: In partial intestacy, the testamentary proportions that they are entitled to receive from
dispositions can reduce the shares of intestate heirs, such disposable portion as intestate heir.
provided that their legitimes, if they are also c.   If the legal or intestate share of a compulsory
compulsory heirs, are not impaired. More heir is equal to his legitime, then the amount of
specifically: the testamentary disposition must be deducted
a.   The law of legitimes must be brought into only from the legal or intestate shares of the
operation in partial intestacy. others.
b.   If among the concurring intestate heirs there are d.   If the testamentary dispositions consume the
compulsory heirs whose legal or intestate entire disposable portion, then the intestate
portions exceed their respective legitimes, the heirs who are compulsory heirs will get only
amount of the testamentary disposition must be their legitimes, and those who are not
deducted from the disposable portion, to be compulsory heirs will get nothing [Tolentino].
borne by all the intestate heirs in the

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Outline of Intestate Shares Surviving spouse gets ½ of the estate, while the
a.   Legitimate children only rest gets the other ½ with the nephews and
Divide entire estate equally among all nieces inheriting by representation if proper
legitimate children [Art. 979, CC] [Art. 1001].
Legitimate children include an adopted child. o.   Surviving spouse and illegitimate brothers
b.   Legitimate children and Illegitimate children and sisters, nephews and nieces
Divide entire estate such that each illegitimate Surviving spouse gets ½ of the estate while the
child gets ½ of what a legitimate child gets [Art. rest gets the other ½ with the nephews and
983, CC and Art. 176, FC] nieces inheriting by representation, if proper;
Ensure that the legitime of the legitimate Note that all the other relatives should be
children are first satisfied. “illegitimate” because of the iron-curtain rule
c.   Legitimate children and surviving spouse [Art. 994, CC].
Divide entire estate equally between the p.   Illegitimate parents only
legitimate children and the surviving spouse, Entire estate goes to the illegitimate parents
the latter deemed as one child. The same rule [Art. 993, CC].
holds where there is only one child. q.   Illegitimate parents and children of any kind
d.   Legitimate children. Surviving spouse, and (whether legitimate or illegitimate child)
Illegitimate children Illegitimate parents are excluded and do not
Divide the entire estate such that the surviving inherit. For the rule on the respective shares of
spouse is deemed one legitimate child and each the children, see numbers 1, 2 or 10, whichever is
illegitimate child getting ½ of what the applicable.
legitimate child gets. [Art. 996, CC and Art. 176, r.   Legitimate brothers and sisters only
FC] Divide the entire estate such that full-blood
Ensure that the legitime of the legitimate brothers/sisters gets a share double the amount
children and the spouse are first satisfied. of a half-blood brother or sister [Art. 1004 and
e.   Legitimate parents only 1006, CC].
Divide the entire estate equally [Art. 985]. s.   Legitimate brothers and sisters, nephews and
f.   Legitimate ascendants only (excluding nieces
parents) Divide the entire estate observing the 2 is to 1
Divide the entire estate equally but with the ratio for full and half-blood relationships with
observance of the rule of division by line [Art. respect to the brothers and sisters, with the
987]. nephews and nieces inheriting by
g.   Legitimate parents and illegitimate children representation, if proper [Art. 1005 & 1008, CC].
Legitimate parents get ½ of the estate, t.   Nephews and nieces only
illegitimate children get the other ½ [Art. 991]. Divide the entire estate per capita, observing the
h.   Legitimate parents and surviving spouse 2 is to 1 ratio [Arts. 975 and 1008, CC].
Legitimate parents get ½ of the estate; The u.   Other collaterals [Arts. 1009 and 1010]
surviving spouse gets the other ½ [Art. 997]. Divide entire estate per capita. Collateral
th
i.   Legitimate parents, surviving spouse and relatives must be with the 5 degree of
illegitimate children consanguinity.
Legitimate parents get ½ of the estate; surviving Note: the nearer relative excludes the more
spouse and the illegitimate child each get ¼ remote relatives.
each, the latter to share among themselves if v.   State
more than one [Art. 1000]. If there are no other intestate heirs, the State
j.   Illegitimate children only inherits the entire estate through escheat
Divide the entire estate equally [Art. 988]. proceedings [Art. 1011, CC].
k.   Illegitimate children and surviving spouse
Illegitimate children get ½ of the estate; the
surviving spouse gets the other ½ [Art. 998].
l.   Surviving spouse only
Entire estate goes to the surviving spouse [Art.
994/995].
m.   Surviving spouse and illegitimate parents
Illegitimate parents get ½ and the spouse gets
the other ½ [by analogy with Art. 997].
n.   Surviving spouse and legitimate brothers and
sisters, nephews and nieces

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  Provisions Common to There can only be accretion if there is an institution of


heirs with respect to specific properties [Art. 1016, CC].
Testate and Intestate In other words, both heirs were called to inherit Plot
A.
Succession If there was “earmarking” – there can be no accretion.
•   What is “earmarking?” – Heir #1 was called to
1.   Right of Accretion inherit the southern part of Plot A, and Heir #2
was called to inherit the northern part of Plot A.
DEFINITION OF ACCRETION [Art. 1015, CC]
It is a right by virtue of which, when two or more Among compulsory heirs, there can only be accretion
persons are called to the same inheritance, devise or with respect to the free portion. There can be no
legacy, the part assigned to one who renounces or accretion with respect to the legitimes [Arts. 1021 and
cannot receive his share or who died before the 1018, CC].
testator is added or incorporated to that of his co-
heirs, co-devisees, or co-legatees. The heirs to whom the portion goes by the right of
accretion take it in the same proportion that they
Basis inherit [Art. 1019, CC].
The right of accretion is based upon the presumed will
of the decedent. Thus, the testator can expressly Exceptions [Balane]
provide that there shall be no accretion among a.   In testamentary succession, if the testator
persons who would otherwise be entitled thereto. provides otherwise
Conversely, the testator may validly provide for b.   If the obligation is purely personal, and hence
accretion in a case where no accretion would take intransmissible
place under the provisions of the law [Tolentino].
The heirs to whom the inheritance accrues shall
REQUISITES [Tolentino] succeed to all the rights and obligations which the
a.   Unity of object and plurality of subjects (two or heir who renounced or could not receive it would have
more persons are called to the same inheritance had [Art. 1020, CC].
or same portion thereof)
b.   Vacancy of share (one of the heirs dies before the In testamentary succession, when the right of
testator, or renounces the inheritance, or is accretion does not take place, the vacant portion of
incapacitated) the instituted heirs, if no substitute has been
designated, shall pass to the legal heirs of the
When does Accretion Occur? testator, who shall receive it with the same charges
Accretion happens when there is repudiation, and obligations [Art. 1022, CC].
incapacity, or predecease of an heir.
Accretion shall also take place among devisees,
It is the mechanism where the share of an heir is legatees and usufructuaries under the same
increased by vacant shares vacated by heirs who conditions established for heirs [Art. 1023, CC].
cannot inherit for various reasons. (Rationale: the
decedent intended to give the property to nobody but
the co-heirs.)
Effect of Predecease, Incapacity, Disinheritance or Repudiation
Testamentary Succession
Cause of Vacancy Intestate Succession
Legitime Free Portion
Representation
Representation Accretion
Predecease Intestate
Intestate Succession Intestate Succession
Succession
Representation Accretion Representation
Incapacity
Intestate Succession Intestate Succession Intestate Succession
Representation
Disinheritance - -
Intestate Succession
Repudiation Intestate Succession Accretion Accretion

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Based on acts of unworthiness [Art. 1032, CC]


2.  C apacity to Succeed by The following are incapable of succeeding by reason
Will or Intestacy of unworthiness:
a.   Parents who have abandoned their children or
REQUISITES FOR CAPACITY TO SUCCEED BY induced their daughters to lead a corrupt or
WILL OR BY INTESTACY: [Art. 1024 – 1025, CC] immoral life, or attempted against their virtue;
a.   The heir, legatee or devisee must be living or in b.   Any person who has been convicted of an
existence at the moment the succession opens; attempt against the life of the testator, his or
[Art. 1025, CC] and her spouse, descendants, or ascendants;
b.   He must not be incapacitated or disqualified by c.   Any person who has accused the testator of a
law to succeed [Art. 1024, par.1, CC]. crime for which the law prescribes
imprisonment for six years or more, if the
PERSONS INCAPABLE OF SUCCEEDING [Arts. accusation has been found groundless;
1027, 739, 1032, CC] d.   Any heir of full age who, having knowledge of
the violent death of the testator, should fail to
Based on undue influence or interest [Art. 1027, report it to an officer of the law within a month,
CC] unless the authorities have already taken
a.   Priest who heard the last confession of the action; this prohibition shall not apply to cases
testator during his last illness, or the minister of wherein, according to law, there is no obligation
the gospel who extended spiritual aid to him to make an accusation;
during the same period; e.   Any person convicted of adultery or
b.   Individuals, associations and corporations not concubinage with the spouse of the testator;
permitted by law to inherit; f.   Any person who by fraud, violence, intimidation,
c.   Guardian with respect to testamentary or undue influence should cause the testator to
dispositions given by a ward in his favor before make a will or to change one already made;
the final accounts of the guardianship have g.   Any person who by the same means prevents
been approved, even if the testator should die another from making a will, or from revoking
after the approval thereof; except if the one already made, or who supplants, conceals,
guardian is his ascendant, descendant, brother, or alters the latter's will;
sister, or spouse; h.   Any person who falsifies or forges a supposed
d.   Relatives of the priest or minister of the gospel will of the decedent.
within the fourth degree, the church, order,
chapter, community, organization, or Pardon of Acts of Unworthiness
institution to which such priest or minister may Express Implied
belong;
Made by the execution Effected when the
e.   Attesting witness to the execution of a will, the
of a document or any testator makes a will
spouse, parents, or children, or any one
writing in which the instituting the unworthy
claiming under such witness, spouse, parents,
decedent condones the heir with knowledge of
or children;
cause of incapacity the cause of incapacity
f.   Physician, surgeon, nurse, health officer or
druggist who took care of the testator during his Revoked when the
last illness. Cannot be revoked testator revokes the will
or the institution
Based on morality or public policy [Arts. 739 and
1028, CC] Effect of Pardon
a.   Those made in favor of a person with whom the Once the act of unworthiness has been pardoned,
testator was guilty of adultery or concubinage whether expressly or tacitly, the heir is restored to
at the time of the making of the will. full capacity to succeed the decedent, as if the cause
b.   Those made in consideration of a crime of which of unworthiness had never existed.
both the testator and the beneficiary have been
found guilty. Unworthiness vs. Disinheritance
c.   Those made in favor of a public officer or his Unworthiness Disinheritance
spouse, descendants and ascendants, by
reason of his public office. Disinheritance is the act
Unworthiness renders a
by which a testator, for
person incapable of
just cause, deprives a
succeeding to the
compulsory heir of his

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U.P. LAW BOC SUCCESSION CIVIL LAW

succession, whether right to the legitime them – the heir must first accept the
testate or intestate [Art. 815, CC] inheritance before he can dispose of it.
2.   If the heir renounces the same, even though
gratuitously, for the benefit of one or more
Determination of Capacity [Tolentino]
of his co-heirs – this is actually a donation.
General Rule: At the death of the decedent [Art.
The heir must first accept the inheritance
1034, CC]
before he can donate it.
3.   If the heir renounces it for a price in favor of
Exceptions:
all his co-heirs indiscriminately – this is
a.   Those falling under 2, 3, and 5 of Art. 1032 –
actually an onerous disposition. The heir
when the final judgment is rendered
must first accept the inheritance before he
b.   Those falling under 4 of Art. 1032 – when the
can dispose of it.
month allowed for the report expired
c.   If the institution is conditional – when the
Note: But if the renunciation should be gratuitous,
condition is complied with
and in favor of all the co-heirs (to whom the portion
renounced should devolve by accretion), the
3.  Acceptance and inheritance shall not be deemed as accepted [Art.
1050, CC]. This is a true case of renunciation.
Repudiation of the
Inheritance FORMS OF REPUDIATION [Art. 1051, CC]
a.   In a public instrument acknowledged before a
Definition of Acceptance notary public; or
The act by which the person called to succeed by b.   In an authentic document – equivalent of an
universal title either by the testator or by law indubitable writing or a writing whose
manifests his will of making his own the universality authenticity is admitted or proved; or
of the rights and obligations which are transmitted c.   By petition presented to the court having
to him [Tolentino]. jurisdiction over the testamentary or intestate
proceeding
Definition of Repudiation
The manifestation by an heir of his desire not to HEIRS IN TWO CAPACITIES [Art. 1055, CC]
succeed to the rights and obligations transmitted to a.   If a person is called to the same inheritance as
him [Tolentino]. an heir by will and by law and he repudiates the
inheritance in his capacity as a testamentary
REQUISITES [Art. 1043, CC] heir, he will be considered to have also
a.   Certainty of death of the decedent repudiated the inheritance as a legal heir.
b.   Certainty of the right to the inheritance b.   If he repudiates it as a legal heir, without
knowledge of his being a testamentary heir, he
FORMS OF ACCEPTANCE [Arts. 1049 – 1050, CC] may still accept it in the latter capacity.
a.   Express Acceptance – one made in a public or
private document [Art. 1049, par. 1, CC] IRREVOCABILITY OF ACCEPTANCE OR
b.   Tacit Acceptance – one resulting from acts by REPUDIATION
which the intention to accept is necessarily General Rule: The acceptance or repudiation of an
implied or from acts which one would have no inheritance, once made, is irrevocable and cannot
right to do except in the capacity of an heir. be impugned.
c.   Implied Acceptance - Within thirty days after
the court has issued an order for the distribution Exceptions:
of the estate in accordance with the Rules of a.   When the acceptance or repudiation suffers
Court, the heirs, devisees and legatees shall from any of the vices which annul consent; and
signify to the court having jurisdiction whether b.   When an unknown will appears [Art. 1056, CC]
they accept or repudiate the inheritance; if they
do not do so within that time, they are deemed 4.  C ollation
to have accepted the inheritance [Art. 1057, CC].
Concept of Collation
An inheritance is deemed accepted: To collate is to bring back or to return to the
1.   If the heir sells, donates, or assigns his right hereditary mass in fact or by fiction property which
to a stranger, or to his co-heirs, or to any of came from the estate of the decedent, during his

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U.P. LAW BOC SUCCESSION CIVIL LAW

lifetime by donation or other gratuitous title but to collation what their parent has received
which the law considers as an advance from the gratuitously from their grandparent.
inheritance [Art. 1061, CC].
What to Collate
It is the act by virtue of which, the compulsory heir a.   Any property or right received by gratuitous title
who concurs with other compulsory heirs in the during the testator’s lifetime [Art. 1061, CC]
inheritance brings back to the common hereditary b.   All that they may have received from the
mass the property which they may have received decedent during his lifetime [Art. 1061, CC]
from the testator so that a division may be effected c.   Expenses incurred by the parents in giving their
according to law and the will of the testator. children a professional, vocational or other
career shall not be brought to collation unless
In reducing inofficious donations, the last to be the parents so provide, or unless they impair the
donated should be the first to be reduced. legitime; but when their collation is required,
the sum which the child would have spent if he
Rationale for collation: If donations inter vivos will had lived in the house and company of his
not be collated, then the rule on legitimes shall be parents shall be deducted therefrom [Art. 1068,
circumvented or disregarded. CC]
d.   Any sums paid by a parent in satisfaction of the
Operations Related to Collation [Tolentino] debts of his children, election expenses, fines,
a.   Collation – adding to the mass of the hereditary and similar expenses shall be brought to
estate the value of the donation or gratuitous collation [Art. 1069, CC]
disposition.
b.   Imputing or Charging – crediting the donation Note: Only the value of the thing donated shall be
as an advance on the legitime (if the donee is a brought to collation.
compulsory heir) or on the free portion (if the
donee is a stranger, i.e., not a compulsory heir). PROPERTIES NOT SUBJECT TO COLLATION
[Balane at 522] Absolutely no collation
c.   Reduction – determining to what extent the Expenses for support, education (only elementary
donation will remain and to what extent it is and secondary), medical attendance, even in
excessive or inofficious. extraordinary illness, apprenticeship, ordinary
d.   Restitution – returning or the act of payment of equipment, or customary gifts [Art. 1067, CC]
the excess to the mass of hereditary estate.
Generally not imputable to legitime/ cannot be
Persons Obliged to Collate collated, subject to exceptions
General rule: Compulsory heirs a.   Expenses incurred by parents in giving their
children professional, vocational or other career
Exceptions: unless the parents so provide, or unless they
a.   When the testator should have so expressly impair the legitime [Art. 1067, CC]
provided [Art. 1062, CC] – in which case you b.   Wedding gifts by parents and ascendants,
collate against the disposable free portion consisting jewelry, clothing and outfit, except
because there MUST be collation. when they exceed 1/10 of the sum disposable by
b.   When the compulsory heir should have will [Art. 1070, CC]
repudiated his inheritance [Art. 1062, CC] c.   Neither shall donations to the spouse of the
c.   When there is only ONE compulsory heir! child be brought to collation; but if they have
been given by the parent to the spouses jointly,
Grandchildren who survive with their uncles, aunts, the child shall be obliged to bring to collation
or first cousins and inherit by right of representation one-half of the thing donated [Art. 1066, CC]
[Art. 1064, CC]
Note: Parents are not obliged to bring to collation in
Note: Grandchildren may inherit from their the inheritance of their ascendants any property
grandparents in their own right, i.e., as heirs next in which may have been donated by the latter to their
degree, and not by right of representation if their children [Art. 1065, CC].
parent repudiates the inheritance of the
grandparent, as no living person can be represented Wedding Gifts:
except in cases of disinheritance and incapacity. In The wedding gift under Article 1070 of the Civil Code
this case, the grandchildren are not obliged to bring may be compared to a donation propter nuptias as
follows:

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A void partition may be valid if:


Donation Propter Nuptias Wedding Gift 1.   The will was in fact a partition
2.   The beneficiaries of the void will were legal heirs
The object is not specified.
The object is jewelry,
It could be anything of
clothing or outfit. The titles of acquisition or ownership of each
value.
property shall be delivered to the co-heir to whom
The donor is not specified. said property has been adjudicated [Art. 1089, CC].
The donor must be a
He or she could be anyone
parent or ascendant of
with capacity to dispose JUDICIAL vs. EXTRAJUDICIAL PARTITION
the donee.
property. Judicial – Partition done by Court pursuant to an
If given by a parent, the Order of Distribution which may or may not be based
donee is either the child of on a project of partition.
The donee is either a
the donor, or the future
child or a descendant of Extra-judicial – partition made by the decedent
spouse of the child of the
the donor. himself by an act inter vivos or by will or by a third
donor, or both of them
jointly. person entrusted by the decedent or by the heirs
The gift may be given at themselves [Paras].
The gift must be given •   Partition Inter Vivos: It is one that merely
any time, either before
before the celebration of allocates specific items or pieces of property on
or after the celebration
the marriage. the basis of the pro-indiviso shares fixed by law
of the marriage.
or given under the will to heirs or successors
The donation is governed [Art. 1080, CC].
by the rules of ordinary
donations, except as Who May Effect Partition
The gift is non-
modified by the provisions 1.   The Decedent, during his lifetime by an act inter
collationable to the
of the Family Code. Thus, a vivos or by will [Art.1080, CC]
extent of one-tenth of
donation propter nuptias 2.   The decedent’s heirs [Art.1083, CC]
the disposable free
given by a parent to a child 3.   A competent court [Art. 1083, CC]
portion of the hereditary
is collationable in full, 4.   A third person not an heir designated by the
estate of the donor.
except if the donor decedent [Art.1081, CC]
declared it to be non-
collationable Who Can Demand Partition
1.   Compulsory heir
5.  P artition and 2.   Voluntary heir upon fulfillment of condition if
any [Art. 1084, CC]
Distribution of Estate 3.   Legatee or devisee
4.   Any person who has acquired interest in the
a.  In General estate

Separate, Divide, Assign. Partition is the When Partition Cannot Be Demanded


separation, division and assignment of a thing held 1.   When expressly prohibited by the testator for a
in common among those to whom it may belong. period not exceeding 20 years [Art. 1083, CC]
The thing itself or its value may be divided [Art. 2.   When the co-heirs agreed that the estate shall
1079, CC]. not be divided for a period not exceeding 10
years, renewable for another 10 years [Art. 494,
Owned in common. Before partition, the whole CC]
estate of the decedent is owned in common by the 3.   When prohibited by law
heirs [Art. 1078, CC]. 4.   When to partition the estate would render it
unserviceable for the use for which it is intended
Thing or value may be divided [Art. 1079, CC].
Prohibition to Partition
Acts deemed partition. Every act which is intended 1.   The prohibition to partition for a period not
to put an end to indivision among heirs and legatees exceeding 20 years can be imposed even on the
or devisees is deemed a partition, although it should legitime.
purport to be a sale, an exchange, a compromise, or 2.   If the prohibition to the partition is for more
any other transaction [Art. 1082, CC]. than 20 years, the excess is void.

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3.   Even if a prohibition is imposed, the heirs by partition by title under any other person, or by title
mutual agreement can still make the partition. paramount to the title of the parties among whom
the partition may have been made [Rule 69, Sec. 12,
Effects of Inclusion of Intruder in Partition [Art. ROC].
1108, CC]
1.   Between a true heir and several mistaken heirs A judicial partition in probate proceedings does not
– partition is void. bind the heirs who were not parties thereto
2.   Between several true heirs and a mistaken heir [Tolentino].
– transmission to mistaken heir is void
3.   Through error or mistake, share of true heir is Warranty
allotted to mistaken heir – partition shall not be After the partition has been made, the co-heirs shall
rescinded unless there is bad faith or fraud on be reciprocally bound to warrant the title to, and the
the part of the other persons interested, but the quality of, each property adjudicated [Art. 1092, CC].
latter shall be proportionately obliged to pay
the true heir of his share. The partition with The reciprocal obligation of warranty shall be
respect to the mistaken heir is void [SEMPIO- proportionate to the respective hereditary shares of
DY]. the co-heirs.

Right of Redemption in Partition If any one of them should be insolvent, the other co-
Should any of the heirs sell his hereditary rights to a heirs shall be liable for his part in the same
stranger before the partition, any or all of the co- proportion, deducting the part corresponding to the
heirs may be subrogated to the rights of the one who should be indemnified.
purchaser by reimbursing him for the price of the
sale, provided they do so within the period of one Those who pay for the insolvent heir shall have a
month from the time they were notified in writing of right of action against him for reimbursement,
the sale by the vendor [Art. 1088, CC]. should his financial condition improve [Art. 1093,
CC].
Strangers – those who are not heirs on the
succession. An action to enforce the warranty among the co-
heirs must be brought within ten years from the date
Legal Redemption by Co-Heir; Requisites: the right of action accrues [Art. 1094, CC].
1.   That there are several heirs of the common
inheritance; If a credit should be assigned as collectible, the co-
2.   That one of them sells his hereditary rights; heirs shall not be liable for the subsequent
3.   That the sale is made to a stranger, and before insolvency of the debtor of the estate, but only for
the partition has been made; his insolvency at the time the partition is made [Art.
4.   That one or more of the co-heirs demand the 1095, CC].
repurchase within a period of one month,
counted from the time he or they were notified The warranty of the solvency of the debtor can only
in writing of the sale; and be enforced during the five years following the
5.   That the buyer is reimbursed the price of the partition.
sale [Garcia v. Calaliman, G.R. No. L-26855
(1989)]. Co-heirs do not warrant bad debts, if so known to,
and accepted by the distributee.
Note: The redemption can be exercised only by a co-
heir. But if such debts are not assigned to a co-heir, and
should be collected, in whole or in part, the amount
b.  Effects of Partition collected shall be distributed proportionately
among the heirs [Art. 1095, CC].
Effect
A partition legally made confers upon each heir the End of Warranty
exclusive ownership of the property adjudicated to The obligation of warranty among co-heirs shall
him [Art. 1091, CC]. cease in the following cases:
1.   The testator himself has made the partition
No partition shall be construed so as to prejudice, Unless it appears, or it may be reasonably
defeat, or destroy the right or title of any person presumed, that his intention was otherwise, but
claiming the real estate involved in the action for the legitime shall always remain unimpaired.

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2.   When it has been so expressly stipulated in the 5.   A partition which includes a person believed to
agreement of partition be an heir, but who is not, shall be void only with
Unless there has been bad faith respect to such person [Art. 1105, CC].
3.   When the eviction is due to a cause subsequent
to the partition, or has been caused by the fault The action for rescission on account of lesion shall
of the distributee of the property [Art. 1096, CC]. prescribe after four years from the time the partition
was made [Art. 1100, CC].
c.   Rescission and
The heir who is sued shall have the option of
Nullification of Partition indemnifying the plaintiff for the loss, or consenting
to a new partition
Causes for Rescission or Annulment
1.   A partition may be rescinded or annulled for the Indemnity may be made:
same causes as contracts [Art. 1097, CC]. 1.   By payment in cash or
2.   A partition, judicial or extra-judicial, may also 2.   By the delivery of a thing of the same kind and
be rescinded on account of lesion, when any quality as that awarded to the plaintiff.
one of the co-heirs received things whose value
is less by at least one-fourth, than the share to If a new partition is made, it shall affect neither
which he is entitled, considering the value of the those who have not been prejudiced nor those who
things at the time they were adjudicated [Art. have not received more than their just share [Art.
1098, CC]. 1101, CC].
•   This article applies only to cases of partition
among-coheirs An heir who has alienated the whole or a
•   Lesion is the injury suffered in consequence considerable part of the real property adjudicated to
of inequality of situation by one party who him cannot maintain an action for rescission on the
does not receive the full equivalent for what ground of lesion, but he shall have a right to be
she gives in a sale or any commutative indemnified in cash [Art. 1102, CC].
contract
3.   The partition made by the testator cannot be The omission of one or more objects or securities of
impugned on the ground of lesion, except when the inheritance shall not cause the rescission of the
the legitime of the compulsory heirs is thereby partition on the ground of lesion, but the partition
prejudiced, or when it appears or may be shall be completed by the distribution of the objects
reasonably be presumed, that the intention of or securities which have been omitted [Art. 1103,
the testator was otherwise [Art. 1099, CC]. CC].
4.   Preterition of a compulsory heir in the
partition [Art. 1104, CC]: Difference of Nullity from Rescission
•   Partition shall not be rescinded unless bad •   Nullity – the act is supposed to never have
faith or fraud on the part of other heirs is existed
proved. •   Rescission – the act is valid at the origin though
•   The culpable heirs shall share in the it afterwards became ineffective
damages of the prejudiced compulsory heir
proportionately.

Important Periods in Partition


Testator, if publicly known to be insane, burden of proof is on the one
1 month or less before making a will
claiming validity of the will
20 years Maximum period testator can prohibit alienation of dispositions
5 years from delivery to the State To claim property escheated to the State
To report knowledge of violent death of decedent lest he be considered
1 month
unworthy
5 years from the time disqualified Action for declaration of incapacity & for recovery of the inheritance,
person took possession devise or legacy
30 days from issuance of order of
Must signify acceptance/repudiation otherwise, deemed accepted
distribution
1 month form written notice of sale Right to repurchase hereditary rights sold to a stranger by a co-heir

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To enforce warranty of title/quality of property adjudicated to co-heir


10 years
from the time right of action accrues
To enforce warranty of solvency of debtor of the estate at the time
5 years from partition
partition is made
4 years from partition Action for rescission of partition on account of lesion

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LAND TITLES AND DEEDS


Civil Law

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XII.  LAND TITLES AND 2.   Fee Tail – One designed to pass title from
grantee to his heirs, in the intent of the

DEEDS grantor being to keep the property in the


grantee’s line of issue
3.   Life Estate – One held for the duration of the
 Torrens System life of the grantee; In some cases, it may
terminate earlier as by forfeiture
b.   Less-than-Freehold Estate – Signifies some sort
1.   General Principles of right short of title
1.   Estate for Years – In the nature of a lease
Land Title – It is the evidence of the right of the owner short of title; grantee or lessee takes over
or the extent of his interest, by which he can maintain possession of the land for a period agreed
control, and as a rule, assert right to exclusive upon but the grantor retains the legal title to
possession and enjoyment of the property. [Peña] the property
2.   Tenancy from period to period – Also in the
Title and Certificate of Title Distinguished nature of a lease which may run from month
to month or from year to year, with the
Title Certificate of Title
peculiarity of automatic renewal from time to
Lawful cause or ground
time, unless expressly terminated by either
of possessing that
party
which is ours. It is a mere evidence of
3.   Tenancy at will – Another form of lease
ownership; it is not the
agreement where a person is permitted to
That which constitutes title to the land itself
occupy the land of another without any
a just cause of exclusive [Castillo v. Escutin, G.R.
stipulation as to period, but either party
possession, or which is No. 171057 (2009).
reserves the right to terminate the
the foundation of
occupation at will or at any time
ownership of property.
Land Registration – A judicial or administrative
The title is a conclusive evidence of ownership and it
proceeding whereby a person’s claim of ownership
cannot be attacked collaterally.
over a particular land is determined and confirmed or
recognized so that such land and the ownership
Deed – A written instrument executed in accordance
thereof may be recorded in a public registry.
with law, wherein a person grants or conveys to
another certain land, tenements or hereditaments.
Note: Registration does not vest title. It is not a mode
[Peña]
of acquiring ownership but is merely evidence of such
title over a particular property.
Elements Of A Deed:
a.   Grantor
Nature of Land Registration – Judicial proceedings
b.   Grantee
for the registration of lands throughout the
c.   Words of Grant
Philippines shall be in rem and shall be based on the
d.   Description of the property involved
generally accepted principles underlying the Torrens
e.   Signature of the grantor
system [Sec. 2, par. 1, PD 1529]
f.   At least two (2) witnesses
g.   Notarial acknowledgment
It is therefore binding on the whole world because “by
the description in the notice (of initial hearing of the
ESTATE – An estate, strictly speaking, represents the
application for registration) “To Whom It May
nature, extent, degree, and quantity of a person’s
Concern,” all the world are made parties defendant.”
interest in land.
[Aquino, citing Esconde v. Barlongay, G.R. No. L-
67582 (1987)]
Types of Estate:
a.   Freehold Estate – Indicates title of ownership
In a registration proceeding, the judgment of the court
1.   Fee Simple – An absolute title; Absolute
confirming the title, and ordering its registration in
estate in perpetuity; Title to land is conferred
one’s name constitutes, when final, res judicata
upon a man and his heirs absolutely and
against the whole world [Ting v. Heirs of Liro, G.R. No.
without any limitation imposed upon the
16891 (2007)]
estate

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There is no need to personally notify the owners or 5.   To issue a certificate of title to the owner
claimants of the land sought to be registered if it is which shall be the best evidence of his
involved in a land registration case since it is a ownership of the land
proceeding in rem. This gives automatic power and 6.   To avoid conflicts of title in and to real estate
authority to the court over the res. [Guido-Enriquez v. and to facilitate transactions
Victorino, et al. G.R. No. 180427 (2013)] d.   As held in Capitol Subdivisions, Inc. v. Province of
Negros Occidental [G.R. No. L-16257 (1963)]
Laws Implementing Land Registration 1.   To avoid possible conflicts of title in and to
a.   Public Land Act [CA 141, as amended] real property, and
b.   Property Registration Decree [PD 1529, as 2.   To facilitate transactions relative thereto by
amended] giving the public the right to rely upon the
c.   Cadastral Act [Act 2259, as amended] face of the Torrens certificate of title and to
d.   Indigenous Peoples Rights Act of 1997 [RA 8371] dispense with the need of inquiring further
e.   Emancipation Decree [PD 27, as amended]
f.   Comprehensive Agrarian Reform Law of 1988 [RA Object of Registration – Only real property or real
6657, as amended] rights may be the object of registration under the
existing land registration laws.
To simplify and streamline land registration
proceedings, Presidential Decree No. 1529 was issued Classification Of Lands: [Art. XII, Sec. 3, 1987
on June 11, 1978, otherwise known as the Property Constitution]
Registration Decree, governing registration of lands a.   Private or public
under the Torrens system as well as the recording of b.   Alienable or inalienable
transactions relating to unregistered lands, including c.   Registered or unregistered
chattel mortgages. This Decree consolidates, in d.   Registrable or Non-registrable
effect, all pre-existing laws on property registration
with such appropriate modifications as are called for Classification of lands is an exclusive prerogative of
by existing circumstances. [Peña] the executive department. In the absence of such
classification, the lands remain as unclassified until it
Purposes Of Land Registration is released therefrom and rendered open to
Registration is merely a species of notice. The act of disposition. The President, through a Presidential
registering a document is never necessary in order to Proclamation or Executive Order can classify or
give it legal effect as between the parties. The system reclassify land to be included or excluded from the
maintains a permanent record of landholdings, in public domain. The DENR Secretary is also
order to prevent fraudulent claims to land by empowered to approve a land classification and
concealment of transfers. declare such land as alienable and disposable.
[Agcaoili, citing Fortuna v. Republic, G.R. No. 173423
Another purpose is to notify and protect the interests (2014)]
of strangers to a given transaction, who may ignorant
thereof. However, where a document so registered is Registrable lands are:
invalid or legally defective, registration will not in any a.   Alienable public agricultural lands,
way render it valid or cure its defect. If the land is in the public domain, the land must
be classified as alienable and disposable. It must
a.   Constructive notice to the whole world. [Sec. 52, be classified as such at the time of filing the
PD 1529] application for registration. [Republic v. CA and
b.   To notify and protect the interests of strangers to Naguit, G.R. No. 144057 (2005)]
a given transaction, who may be ignorant thereof b.   Private lands
[Sapto, et al. v. Fabiana, G.R. No. L-11285 (1958)]
c.   As held in Legarda v. Saleeby [G.R. No. L-8936 Non-registrable lands - those found in the CC
(1915)] dealing with non-registrable properties (e.g. property
1.   To quiet title to the land and to stop forever of public dominion)
any question as to the legality of said title
2.   To relieve the land of unknown claims
3.   To guarantee the integrity of land titles and
2.  T orrens System
to protect their indefeasibility once the claim
of ownership is established and recognized Torrens System - A system for registration of land
4.   To give every registered owner complete under which, upon landowner’s application, the court
peace of mind may, after appropriate proceedings, direct the

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issuance of a certificate of title. [Black’s Law General Rule: A title once registered cannot be
Dictionary]; those systems of registration of impugned, altered, changed, modified, enlarged, or
transactions with interest in land whose declared diminished.
object is, under governmental authority, to establish
and certify to the ownership of an absolute and Exception: Direct proceeding permitted by law,
indefeasible title to realty, and to simplify its transfer. usually for the protection of innocent third persons
[Grey Alba v. De la Cruz, G.R. No. L-5246 (1910)]

The boldest effort to grapple with the problem of


3.  Administration of The
simplification of title to land was made by Mr. Torrens System
(afterwards Sir Robert) Torrens, a layman, in South
Australia in 1857. . . In the Torrens system title by
registration takes the place of "title by deeds" of the
a.  Land Registration
system under the "general" law. A sale of land, for Authority
example, is effected by a registered transfer, upon
which a certificate of title is issued. The certificate is •   The agency charged with the efficient execution
guaranteed by statute, and, with certain exceptions, of the laws relative to the registration of lands
constitutes indefeasible title to the land mentioned •   Under the executive supervision of the DOJ
therein. The object of the Torrens system, then, is to
do away with the delay, uncertainty, and expense of Composition:
the old conveyancing system. 1.   Administrator
2.   2 Deputy Administrators (as assistants)
The Torrens system was introduced in the Philippines
by Act No. 496, which took effect on Jan. 1, 1903. This Functions of LRA:
was later amended and superseded by PD 1529 which 1.   Extend speedy and effective assistance to the
took effect on June 11, 1978. Department of Agrarian Reform, the Land Bank,
and other agencies in the implementation of land
The underlying principle of the Torrens system is reform program of the government
security with facility in dealing with land. This is made 2.   Extend assistance to courts in ordinary and
possible by defining the absolute status of a given cadastral land registration proceedings; and
property in a certificate of title with a governmental 3.   Be the central repository of records relative to
and universal guaranty. This certificate of title should original registration of lands titled under the
better be known as certificate of title and Torrens system, including the subdivision and
encumbrances. In the words of Torrens himself the consolidation plans of titled lands.
main object is “to simplify, quicken, and cheapen the
transfer of real estate and to render title safe and
indefeasible.” [Ponce]
b.  Register of Deeds

Advantages Public repository of records of instruments affecting


a.   Secures title registered or unregistered lands and chattel
b.   Protection against fraud mortgages in the province or city wherein such office
c.   Simplified dealings is situated.
d.   Restoration of the estates to its just value, whose
depreciation is caused by some blur, technical Composition:
defect 1.   Register of Deeds
e.   Barred the recurrence of faults in the title 2.   Deputy (as assistant)
[Legarda v. Saleeby, supra]
Functions of Registers of Deeds:
Nature: Judicial in nature. 1.   Immediately register an instrument presented for
registration dealing with real or personal
Purpose: The real purpose of the Torrens system of property which complies with the requisites for
registration is to quiet title to land; to put a stop registration;
forever to any question of the legality of the title, 2.   Shall see to it that said instrument bears the
except claims which may arise subsequent thereto. proper documentary stamps and that the same
[Agcaoili] are properly cancelled;
3.   If the instrument is not registerable, he shall deny
the registration thereof and inform the presentor

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of such denial in writing, stating the ground or c.   Patents – Whenever public land is by the
reason therefore, and advising him of his right to Government alienated, granted or conveyed to
appeal by consulta in accordance with Sec. 117 of any person, the same shall be brought forthwith
PD 1529. under the operation of this Decree [PD 1529, Sec.
4.   Prepare and keep and index system which 103, par. 1]
contains the names of all registered owners and 1.   Patents only involve public lands which are
lands registered. alienated by the Government pursuant to the
Public Land Act [CA 141, as amended]
The function of the ROD with reference to registration 2.   The patent (even if denominated as deed of
of deeds, encumbrances, instruments, and the like is conveyance) is not really a conveyance but a
ministerial in nature, provided the applicant contract between the grantee and the
complies with all the requisites. [Baranda v. Gustilo, Government and evidence of authority to the
G.R. No. 81163 (1988)] Register of Deeds to make registration.
3.   The act of registration is the operative act to
Instances when ROD may validly deny registration of affect and convey the land.
a voluntary instrument:
•   When there is more than 1 copy of the owner’s Probative Value: A Torrens Certificate of Title is valid
duplicate certificate of title and not all such and enforceable against the whole world. It may be
copies are presented to the ROD; received in evidence in all courts of the Philippines,
•   Where the voluntary instrument bears on its face and shall be conclusive as to all matters contained
an infirmity; therein, principally the identity of the owner of the
•   Where the validity of the instrument sought to be covered land thereby and identity of the land.
registered is in issue in a pending court suit,
notice of which must be given to parties; A Torrens title, once registered, cannot be defeated,
•   Where required certificates or documents such as even by adverse, open and notorious possession. A
DAR clearance, copy of latest tax declaration, are registered title under the Torrens system cannot be
not submitted defeated by prescription. The title, once registered, is
[Balbin v. ROD, G.R. No. L-20611 (1969)] notice to the whole world. All persons must take
notice. No one can plead ignorance of the registration.
Note: When the ROD is in doubt as to the proper [Egao v. CA,G.R. No. L-79787 (1989)]
action to take on an instrument or deed presented to
him for registration, he should submit the question to 5.  E ffect of Registration
the Administrator of the LRA en consulta [P.D. 1529,
Sec 117] under the Torrens System
a.   Land is placed under the operation of the Torrens
4.  C ertificate of Title system
b.   Claims and liens of whatever character existing
The Torrens Title – Certificate of ownership issued by against the land prior to the issuance of the
the Register of Deeds naming and declaring the certificate of title are cut off by such certificate
owner of the real property described therein free from and the certificate so issued binds the whole
all liens and encumbrances, except such as may be world, including the government
expressly noted thereon or otherwise reserved by law 1.   It is an elemental rule that a decree of
a.   Original Certificate of Title (OCT) – It is the first registration bars all claims and rights which
certificate of title issued in the name of the arose or may have existed prior to the decree
registered owner by the Register of Deeds of registration. By the issuance of the decree,
covering a parcel of land which had been the land is bound and title thereto quieted,
registered under the Torrens System, by virtue of subject only to certain exceptions under the
judicial or administrative proceedings property registration decree. [Heirs of
b.   Transfer Certificate of Title (TCT) – The Alejandra Delfin, namely, Leopoldo Delfin, et
subsequent certificate of title pursuant to any al. v. Avelina Rabadon, G.R. No. 165014
deed of transfer or conveyance to another person. (2013)]
The Register of Deeds shall make a new 2.   Exceptions:
certificate of title and give the registrant an i.   Those claims noted on the certificate
owner’s duplicate certificate. The previous ii.   Liens, claims, or rights arising or
certificate shall be stamped “cancelled.” existing under the laws and the
Constitution, which are not by law

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required to appear on record in the registered owner shall be acquired by prescription or


Register in order to be valid adverse possession. [Dream Village Neighborhood
iii.   Unpaid real estate taxes levied and Association, Inc., represented by its Incumbent
assessed within 2 years immediately President Greg Seriego v. Bases Conversion
preceding the acquisition of any right Development Authority, G.R. No.192896 (2013)]
over the land by an innocent purchaser
for value Dealings in Land before Issuance of Decree
c.   Title to the land becomes non-prescriptible With the filing of an application for registration, the
1.   Even adverse, notorious, and continuous land described therein does not cease to become
possession under claim of ownership for the open to any lawful transaction. If the transaction
period fixed by law is ineffective against a takes place before the issuance of the decree of
Torrens title [JM Tuason and Co. Inc. v. CA, registration, Section 22 of PD 1529 provides that the
G.R. No. L-41233 (1979)] instrument is to be presented to the RTC, together
2.   The fact that the title to the land was lost with a motion praying that the same be considered in
does not mean that the land ceased to be relation with the pending application.
registered land before the reconstitution of
its title. It cannot perforce be acquired by However, if the motion is filed after the decision of
prescription. [Ruiz v. CA, 1977] adjudication has become final but before the issuance
d.   Land becomes incontrovertible and indefeasible. of the decree by the Administrator of Land
A decree of registration and registered title Registration Authority, the court shall require the
cannot be impugned, enlarged, altered, interested party to pay the fees prescribed as if such
modified, or diminished either in collateral or instrument had been presented for registration in the
direct proceeding after the lapse of the 1-year office of the Register of Deeds. [Peña]
period prescribed by the law.
Laches, When Applicable
Exceptions: Laches sets in if it would take 18 years for a person to
1.   If previous valid title of the same land exists file an action to annul the land registration
2.   When the land covered is not capable of proceedings, especially so if the registrant has already
registration subdivided the land and sold the same to innocent
3.   When acquisition of certificate is attended by third parties. A party’s long inaction or passivity in
fraud asserting his rights over disputed property precludes
e.   Torrens certificate is presumed valid and devoid him from recovering the same. [Heirs of Teodoro dela
of flaws. Cruz v. CA, G.R. No. 1117384 (1998); Aurora Ignacio v.
Valeriano Basilio, et al., G.R. No. 122824 (2001)]
Note: Registration is not equivalent to legal title.
Under the Torrens system, registration only gives
validity to the transaction or creates a lien upon the
land. It merely confirms, but does not confer,
ownership [Lu v. Manipon, G.R. No. 147072 (2002)]

Effect of Non-Registration
If a purchaser, mortgagee or grantee should fail to
register his deed the conveyance, in light of our
existing registration laws, shall not be valid against
any person unless registered.

Exceptions:
a.   The grantor,
b.   His heirs and devisees, and
c.   Third persons having actual notice or knowledge
thereof.

It is a settled rule that lands under a Torrens title


cannot be acquired by prescription or adverse
possession. Section 47 of P.D. No. 1529, the Property
Registration Decree, expressly provides that no title to
registered land in derogation of the title of the

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  The Regalian Doctrine The President shall notify the Congress of every
contract entered into in accordance with this
provision, within thirty days from its execution.
A western legal concept that was first introduced by
the Spaniards into the country through the laws of the
The principle of State ownership of lands and all other
Indies and the Royal Cedulas whereby the Philippines
natural resources had its roots in the 1935
passed to Spain by virtue of “discovery” and conquest.
Constitution, which expressed the overwhelming
Consequently, all lands became the exclusive
sentiment in the Convention in favor of the principle
patrimony and dominion of the Spanish Crown.
of State ownership of natural resources and the
[Agcaoili]
adoption of the Regalian doctrine as articulated in
Sec. 1, Art XIII.
Sec. 2, Art. XII, 1987 Constitution.
All lands of the public domain, waters, minerals, The 1973 Constitution reiterated the Regalian
coal, petroleum, and other mineral oils, all forces Doctrine in Sec. 8, Art. XIV.
of potential energy, fisheries, forests or timber,
wildlife, flora and fauna, and other natural The present Constitution provides that, except for
resources are owned by the State. With the agricultural lands of the public domain which alone
exception of agricultural lands, all other natural may be alienated, forest or timber, and mineral lands,
resources shall not be alienated. The exploration, as well as all other natural resources must remain
development, and utilization of natural resources with the State, the exploration, development, and
shall be under the full control and supervision of utilization of which shall be subject to its full control
the State. The State may directly undertake such and supervision albeit allowing it to enter into co-
activities, or it may enter into co-production, joint production, joint venture, or production-sharing
venture, or production-sharing agreements with agreements, or into agreements with foreign-owned
Filipino citizens, or corporations or associations at corporations involving technical or financial
least 60 per centum of whose capital is owned by assistance for large-scale exploration, development,
such citizens. Such agreements may be for a and utilization. [Secs. 2 and 3, Art. XII; La Bugal-B’laan
period not exceeding twenty-five years, renewable Tribal Association, Inc. v. Ramos, G.R. No. 127882
for not more than twenty-five years, and under (2004)]
such terms and conditions as may be provided by
law. In cases of water rights for irrigation, water The Regalian Doctrine is enshrined in the 1987
supply, fisheries, or industrial uses other than the Constitution [Art 12, Sec 2 & 3] which states that all
development of waterpower, beneficial use may lands of public domain belong to the State, thus
be the measure and limit of the grant. private title to land must be traced to some grant,
express or implied, from the State, i.e. The Spanish
The State shall protect the nation’s marine wealth Crown or its successors, the American Colonial
in its archipelagic waters, territorial sea, and government and thereafter the Philippine Republic
exclusive economic zone, and reserve its use and
enjoyment exclusively to Filipino citizens. It does not negate native title to lands held in private
ownership since time immemorial. [Cruz v. Sec. of
The Congress may, by law, allow small-scale Environment and Natural Resources, G.R. No. 135385
utilization of natural resources by Filipino citizens, (2000)]
as well as cooperative fish farming, with priority to
subsistence fishermen and fish workers in rivers, Native title recognizes ownership of land by Filipinos
lakes, bays, and lagoons. independent of any grant from the Spanish crown on
the basis of possession since time immemorial [cf:
The President may enter into agreements with Cariño v. Insular Government, G.R. No. 2869 (1907)]
foreign-owned corporations involving either Lands embraced by native title are presumed to have
technical or financial assistance for large-scale been held prior to the Spanish conquest and never to
exploration, development, and utilization of have been public land.
minerals, petroleum, and other mineral oils
according to the general terms and conditions
provided by law, based on real contributions to 1.   Effects
the economic growth and general welfare of the
country. In such agreements, the State shall a.   All lands of public domain belong to the State,
promote the development and use of local and that the State is the source of any asserted
scientific and technical resources. right to ownership in land and charged with the

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conservation of such patrimony [Republic v. IAC, interrupted by war, force majeure or displacement by
G.R. No. 71285 (1987)] force, deceit, stealth or as a consequence of
b.   Under the Regalian doctrine, all lands of government projects or any other voluntary dealings
whatever classification and other natural entered into by government and private
resources not otherwise appearing to be clearly individuals/corporations, and which are necessary to
within private ownership are presumed to belong ensure their economic, social and cultural welfare.
to the State which is the source of any asserted
right to ownership of land. [Repubic v. Remnan It shall include ancestral lands, forests, pasture,
Enterprises, Inc. G.R. No. 199310 (2014)] residential, agricultural, and other lands individually
c.   The burden of proof in overcoming the owned whether alienable and disposable or
presumption of State ownership of the lands of otherwise, hunting grounds, burial grounds, worship
the public domain is on the person applying for areas, bodies of water, mineral and other natural
registration (or claiming ownership), who must resources, and lands which may no longer be
prove that the land subject of the application is exclusively occupied by ICCs/IPs but from which they
alienable or disposable. To overcome this traditionally had access to for their subsistence and
presumption, incontrovertible evidence must be traditional activities, particularly the home ranges of
established that the land subject of application ICCs/IPs who are still nomadic and/or shifting
(or claim) is alienable or disposable. [Valiao v. cultivators
Republic, G.R. No. 170757 (2011)]
Certificate of Ancestral Domain Title (CADT) refers
to a title formally recognizing the rights of possession
2.  C oncept of Native Title, and ownership of ICCs/IPs over their ancestral
Time Immemorial domains identified and delineated in accordance with
this law [Sec. 3(c), IPRA]
Possession
Certificate of Ancestral Lands Title (CALT) refers to
A recognized exception to the theory of jura regalia, a title formally recognizing the rights of ICCs/IPs over
the ruling in Cariño v. Insular Government (supra) their ancestral lands.
institutionalized the recognition of the existence of
native title to land, or ownership of land by Filipinos Individually-owned ancestral lands, which are
by virtue of possession under a claim of ownership agricultural in character and actually used for
since time immemorial and independent of any grant agricultural, residential, pasture, and tree farming
from the Spanish Crown [Agcaoili] purposes, including those with a slope of eighteen
percent (18%) or more, are hereby classified as
Lands under native title are not part of public domain, alienable and disposable agricultural lands [Sec. 12,
“lands possessed by an occupant and his IPRA]
predecessors since time immemorial, such possession
would justify the presumption that the land had never Native title, however, is a right of private ownership
been part of the public domain or that it had been particularly granted to ICCs/IPs over their ancestral
private property even before the Spanish conquest lands and domains. The IPRA categorically declares
[Republic v. CA, G.R. No. 130174 (2000)] ancestral lands and domains held by native title as
never to have been public land. [Cruz v. Sec. of
Certificate of Ancestral Domain Title Environment and Natural Resources, supra]
A formal recognition, when solicited by Indigenous
Cultural Communities/ Indigenous People (ICCs/IPs)
concerned, shall be embodied in a Certificate of
Ancestral Domain Title (CADT), which shall recognize
the title of the concerned ICCs/IPs over the territories
identified and delineated [Sec. 11, IPRA]

ANCESTRAL DOMAINS – refer to all areas generally


belonging to ICCs/IPs comprising lands, inland
waters, coastal areas, and natural resources therein,
held under a claim of ownership, occupied or
possessed by ICCs/IPs, by themselves or through their
ancestors, communally or individually since time
immemorial, continuously to the present except when

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  Citizenship Requirement area limitations may no longer apply since the


law expressly grants him the same right, as any
Filipino citizen, to “enjoy full civil and political
1.   Individuals rights” upon the re-acquisition of his Filipino
citizenship [Agcaoili].
Art. XII, Sec. 3, 1987 Constitution provides, in part: c.   Aliens, although disqualified to acquire lands of
Lands of the public domain are classified into public domain, may lease private land for a
agricultural, forest or timber, mineral lands and reasonable period provided, that such lease does
national parks. Agricultural lands of the public not amount to a virtual transfer of ownership.
domain may be further classified by law according to They may also be given an option to buy property
the uses to which they may be devoted. Alienable on the condition that he is granted Philippine
lands of the public domain shall be limited to citizenship. [Llantino v. Co liong Chong, G.R. No.
agricultural lands. Private corporations or L-29663 (1990)]
associations may not hold such alienable lands of the d.   Lands acquired by an American citizen prior the
public domain except by lease, for a period not proclamation of Philippine Independence on July
exceeding twenty-five years, renewable for not more 4, 1946 but after the passage of the 1935
than twenty-five years, and not to exceed one Constitution may be registered, based on the
thousand hectares in area. Citizens of the Philippines ordinance appended to the 1935 Constitution.
may lease not more than five hundred hectares, or [Moss v. Director of Lands, G.R. No. L-27170
acquire not more than twelve hectares thereof, by (1977)]
purchase, homestead, or grant. e.   Land sold to an alien which is now in the hands of
a naturalized citizen can no longer be annulled
The Krivenko Doctrine - The capacity to acquire [De Castro v. Tan, GR No. L-31956]. The litigated
private land is made dependent upon the capacity to property is now in the hands of a naturalized
acquire or hold lands of public domain. Private land Filipino. It is no longer owned by a disqualified
may be transferred or conveyed only to individuals or vendee. The purpose of the prohibition ceases to
entities ‘qualified to acquire lands of public domain. be applicable. [Barsobia v. Cuenco, G.R. No. L-
[Bernas] 33048 (1982)]

The 1935 Constitution reserved the right for Filipino 2.  C orporations


citizens or corporations at least sixty percent of the
capital of which was owned by Filipinos. Aliens, Private corporations may not hold alienable lands of
whether individuals or corporations, have been the public domain except by lease for a period not
disqualified from acquiring public lands; hence they exceeding twenty-five years, renewable for not more
have also been disqualified from acquiring private than twenty-five years, and not to exceed one
lands. [Krivenko v. Register of Deeds, G.R. No. L-630, thousand hectares in area. [Sec. 3, Art. XII, 1987
1947] Constitution]

General Rule: Non-Filipinos cannot acquire or hold Limitations to Ownership of Land by Corporations:
title to private lands of public domain, except only by a.   For private lands:
way of legal succession [Halili v. CA, G.R. No. 113539 •   At least 60% Filipino [Sec. 2, Art. XII, 1987
(1998); Secs. 2 and 5, Art. XII, 1987 Constitution] Constitution; Agcaoili]
•   Restricted as to extent reasonably necessary
Exceptions: to enable it to carry out the purpose for which
a.   Aliens by way of hereditary succession [Sec. 7, Art. it was created
XII, 1987 Constitution]
•   If engaged in agriculture, it is restricted to
b.   Natural born citizens who have lost their
1,024 hectares
citizenship:
b.   For patrimonial property of the State [Sec. 3, Art.
For business use: limited to 5,000 sq. m. for
XII, 1987 Constitution]
urban land and 3 hectares for rural land [RA No.
7042 as amended by RA No. 8179] •   Lease only for a limited period of 25 years
•   Limited to 1,000 hectares
But where a Filipino citizen naturalized as a •   Applies to both Filipino and Foreign
citizen in a foreign country has “reacquired” his Corporations
Philippine citizenship under the terms of RA 9225 •   This limitation does not apply where the
(2003) otherwise known as the “Citizenship corporation acquired the land, the same was
Retention and Re-acquisition Act of 2003,” the already private land [Republic v. IAC and

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Acme Plywood & Veneer co., Inc., G.R. No.


73002 (1986)]   Original Registration
A corporation sole may acquire and register private ORIGINAL REGISTRATION - This is a proceeding
agricultural land. It has no nationality, thus the brought before the land registration court to
constitutional proscription against private determine title or ownership of land on the basis of an
corporations acquiring public agricultural lands will application for registration or answer by a claimant in
not apply. [RC Apostolic Administrator of Davao v. a cadastral registration.
LRC, G.R. No. L-8415 (1957)]: A corporation sole,
which consists of one person only, is vested with the A decree of registration merely confirms, but does not
right to purchase and hold real estate and register the confer ownership. [City Mayor of Parañaque City v.
same in trust for the faithful or members of the Ebio, G.R. No. 178411, (2010)] Registration does not
religious society or church for which the corporation vest title or give title to the land, but merely confirms
was organized and thereafter protects the title already possessed by
the owner, making it imprescriptible by occupation of
third parties. The registration does not give the owner
any better title than he has. He does not obtain title
by virtue of the certificate. He secures his certificate by
virtue of the fact that he has a fee simple title.
[Legarda v. Saleeby, supra]

Original Distinguished From Subsequent


Subsequent
Original Registration
Registration
Any transaction
affecting such
When right of
originally registered
ownership or title to
land, if in order, may be
land is for the first time
registered in the Office
made of public record
of the Register of
Deeds concerned

1.   Kinds of Original
Registration
a.   Voluntary – by filing with the proper court under:
1.   PD 1529, Property Registration Decree
2.   CA 141, Public Land Act
3.   RA 8371, IPRA
b.   Involuntary – as in Cadastral Proceedings
•   This is compulsory registration initiated by
the government to adjudicate ownership of
the land
•   Involuntary on the part of the claimant but
they are compelled to substantiate their
claim or interest

2.  W ho May Apply
a.   Under Sec. 14, PD 1529
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

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a bona fide claim of ownership since June 12, of owner since time immemorial or for
1945, or earlier. a period of not less than thirty (30)
2.   Those who have acquired ownership of years immediately preceding the
private lands by prescription under the approval of this Act and uncontested
provisions of existing laws. by the members of the same ICCs/IPs
3.   Those who have acquired ownership of shall have the option to secure title to
private lands or abandoned river beds by their ancestral lands
right or accession or accretion under the ii.   Option granted shall be exercised
existing laws. within 20 years from the approval of
4.   Those who have acquired ownership of land RA 8371
in any other manner provided for by law (see:
Republic represented by Mindanao Medical JURISDCITION
Center v CA, G.R. No. 40912 (1976)] Where to File: The court that should take cognizance
i.   If land is owned in common, ALL co- of a registration case is that which has territorial
owners shall file the application jointly jurisdiction over the property.
ii.   If land has been sold under pacto de
retro, the vendor a retro may file an General Rule: RTC of the province, city, or municipality
application for the original where the property is situated
registration of the land, provided, The RTC shall have exclusive jurisdiction over all
however that should the period for applications original for registration of title, with
redemption expire during the power to hear and determine all questions arising
pendency of the registration upon such applications or petition. [Sec. 2, par. 2, P.D.
proceedings and ownership to the No. 1529]
property consolidated in the vendee a
retro, the latter shall be substituted for Exception: Delegated jurisdiction to the MTC, MeTC,
the applicant and may continue the and MCTC by the Supreme Court in cadastral and
proceedings. land registration cases IF:
iii.   A trustee on behalf of his principal a.   There is no controversy over the land, OR
may apply for original registration of b.   Its value is less than P100,000 [Sec. 34, BP 129]
any land held in trust by him, unless
prohibited by the instrument creating
the trust.
3.  Procedure in Ordinary
b.   Under Sec. 12, CA 141; Any person who: Land Registration
1.   Is a citizen of the Philippines over the age of
18, or the head of a family STEP 1: Survey of the land by the Bureau of Lands or
2.   Does not own more than 24 hectares of land a duly registered private surveyor
in the Philippines, or has not had the benefit
of any gratuitous allotment of more than 24 Note: No plan of such survey, whether it be original or
hectares of land since the occupation of the subdivision, may be admitted in land registration
Philippines by the United States proceedings until approved by the Director of Lands
[Sec. 1858, Administrative Code]
Note: they may enter a homestead of not
exceeding 24 hectares of agricultural land of STEP 2: Filing of application for registration by the
the public domain applicant at the RTC of the province, city, or
c.   Under RA 8371 municipality where the property is located;
1.   Sec. 11 – Formal recognition of ancestral a.   Form of the application
domains by virtue of Native Title may be 1.   In writing
solicited by ICCs/IPs concerned 2.   Signed by the applicant/s or person duly
2.   Sec. 12 – Option to secure certificate of title authorized in his behalf
under CA 141 or Land Registration Act 496 3.   Sworn before any officer authorized to
i.   Individual members of cultural administer oath for the province or city where
communities with respect to the application was actually signed
individually-owned ancestral lands 4.   Application is presented in duplicate
who, by themselves or through their b.   Contents of the application:
predecessors-in -interest, have been 1.   A description of the land
in continuous possession and 2.   The citizenship and civil status of the
occupation of the same in the concept applicant, whether single or married, and, if

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married, the name of the wife or husband, 3.   Intestate Estate of Don Mariano San Pedro v.
and, if the marriage has been legally CA G.R. No. 130727 (1996)]: A person
dissolved, when and how the marriage claiming ownership of real property must
relation terminated. It shall also state: clearly identify the land claimed by him.
3.   The full names and addresses of all 4.   In re: Application for Land Registration v.
occupants of the land and those of the Republic [G.R. No. 147359 (2008)] An
adjoining owners, if known, and, if not applicant in a land registration case must
known, it shall state the extent of the search prove the facts and circumstances
to find them. evidencing the alleged ownership of the land
4.   Whether the property is conjugal, applied for. General statements which are
paraphernal or exclusively owned by the mere conclusions of law and not factual
applicant. proof of possession are unavailing. The
c.   Documents to accompany the application [from deeds in its favor only proved possession of
Regulations in Ordinary Land Registration Cases] its predecessors-in-interest as early as 1948.
1.   Tracing-cloth plan duly approved by the (The law now stands that a mere showing of
Director of Lands, together with two possession for 30 years is not sufficient.
blueprint or photographic copies thereof; Open, continuous, exclusive, and notorious
2.   Three copies of the corresponding technical (OCEN) possession must be shown to have
descriptions; started on June 12, 1945 or earlier.)
3.   Three copies of the surveyor’s certificate;
4.   All original muniments of title in the STEP 3: Setting of the date for the initial hearing of
possession of the applicant which prove his the application by the Court;
rights, to the title he prays for or to the land a.   The Court shall issue an order setting the date
he claims; and and hour of the initial hearing within 5 days from
5.   Certificate in quadruplicate of the city or filing of the application
provincial treasurer of the assessed value of b.   The initial hearing shall be 45 – 90 days from the
the land, at its last assessment for taxation, date of the order [Sec. 23, PD 1529]
or, in the absence thereof, that of the next
preceding year. However, in case the land STEP 4: Transmittal to the LRA
has not been assessed, the application may The application and the date of initial hearing
be accompanied with an affidavit in together with all the documents or other evidences
quadruplicate of the fair market value of the attached thereto are transmitted by the Clerk of Court
land, signed by three disinterested persons. to the Land Registration Authority (LRA)
d.   Amendments to the Application
1.   Sec. 19, PD 1529 permits the applicants to STEP 5: Publication of a Notice of the Filing of the
amend the application at any stage of the Application and date and place of hearing
proceedings upon such just and reasonable a.   Publication shall be sufficient to confer
terms as the court may order; jurisdiction upon the court. [Sec. 23, PD 1529]
2.   However, Sec. 23, PD 1529 mandates that b.   Form and contents of the notice:
there is a need to comply with the required 1.   Addressed to all persons appearing to have
publication and notice as in an original an interest in the land involved
application if the amendment is substantial 2.   Requires all persons concerned to appear in
as in: court on the date and time indicated to show
i.   A change in the boundaries cause why the application for registration
ii.   An increase in the area of the land should not be granted
applied for; or c.   The public shall be given notice of the initial
iii.   The inclusion of an additional land hearing of the application by publication
e.   Special Cases: 1.   The Commissioner of Land Registration
1.   If the land is bounded by a road, the (CLR) shall cause it to be published once in
applicant must state in his application if he the Official gazette AND once in a
claims any portion of the land within the newspaper of general circulation
limits of the road, or if he likes to have the 2.   This is sufficient to confer jurisdiction to the
boundaries determined. [Sec. 20, PD 1529] court
2.   If the applicant is a non-resident, he shall d.   It is not necessary to give personal notice to the
appoint an agent or representative who is a owners or claimants of the land sought to be
Philippine resident. [Sec. 16, PD 1529] registered to vest the court with authority over the
res. Land registration proceedings are actions in

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rem. [Director of Lands v. CA, G.R. No. 102858 3.   The court may also cause notice to be served
(1997)] to such other persons and in such manner as
e.   Once the registration court had acquired it may deem proper.
jurisdiction over a certain parcel, or parcels, of c.   Notice of application and initial hearing by
land in the registration proceedings in virtue of publication is sufficient and the mere fact that a
the publication of the application, that person purporting to have a legitimate claim in
jurisdiction attaches to the land or lands the property did not receive personal notice is not
mentioned and described in the application. If it a sufficient ground to invalidate the proceedings
is later shown that the decree of registration had although he may ask for the review of the
included land or lands not included in the original judgment or the reopening of the decree of
application as published, then the registration registration, if he was made the victim of actual
proceedings and the decree of registration must fraud. [Republic v. Abadilla, CA, G.R. No. 6902-R
be declared null and void insofar — but only (1951)]
insofar — as the land not included in the
publication is concerned. [Benin v. Tuason, G.R. STEP 7: Filing of answer or opposition to the
No. L-26127 (1974)] application by any person whether named in the
notice or not;
STEP 6: Service of notice upon contiguous owners, a.   Who may file? Any person claiming an interest,
occupants and those known to have interest in the whether named in the notice or not
property by the Sheriff; b.   When to file? On or before the date of initial
a.   Mailing: hearing, or within such further time as may be
1.   Within 7 days from publication, the CLR shall allowed by the court.
mail a copy of the notice c.   What shall it contain? It shall state all the
2.   Copies of the notice shall be mailed to: objections and the interest claimed by the party
i.   Every person named in the notice the remedy desired.
whose address is known. d.   How shall it be made? It shall be signed and
ii.   the Secretary of Public Highways, to sworn to by him or by some other duly authorized
the Provincial Governor, and to the person. Sec. 25, PD 1529 provides for the
Mayor of the municipality or city, in requisites of an opposition:
which the land lies, if the applicant 1.   It shall set forth “all the objections to the
requests to have the line of a public application” and
way or road determined 2.   It shall state the “interest claimed by the
iii.   Secretary of Agrarian Reform, the party filing the same”
Solicitor General, the Director of e.   Effect of Failure to Answer:
Lands, the Director of Mines and/or 1.   If no one appears/files an answer, upon
the Director of Fisheries and Aquatic motion, the court shall order a default to be
Resources, (as appropriate) if the recorded.
land borders on a river, navigable 2.   By the description in the notice "To all Whom
stream or shore, or on an arm of the It May Concern", all the world are made
sea where a river or harbor line has parties defendant and shall be concluded by
been established, or on a lake, or if the default order.
it otherwise appears from the 3.   Where an appearance has been entered and
application or the proceedings that an answer filed, a default order shall be
a tenant-farmer or the national entered against persons who did not appear
government may have a claim and answer.
adverse to that of the applicant 4.   Absence of opposition does not justify
b.   Posting: outright registration. [Director of Lands vs.
1.   CLR shall cause the sheriff or his deputy to Agustin, G.R. No. L-16173 (1921)]
post the notice at least 14 days before the f.   Effects of Default:
hearing: 1.   With respect to the Applicant – he has the
2.   In a conspicuous place on each parcel of land right to present or adduce evidence ex parte
included in the application and in a 2.   With respect to those covered by the default
conspicuous place on the bulletin board of order – they have no legal standing in court;
the municipal building of the municipality or therefore, they are no longer allowed to
city in which the land or portion thereof is participate and no opportunity to present
situated. evidence

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g.   For relief from an order of default, see Sec. 3, Rule c.   Finality of Judgment - Sec. 30, par. 1, PD 1529
18, Rules of Court provides that the judgment becomes final upon
the expiration of 30 days counted from receipt of
STEP 8: Hearing of the case by the court notice of judgment.
a.   Applicable procedural law:
1.   Reception of evidence is governed by PD Note: This has been MODIFIED to the lapse of 15
1529 days counted from receipt of notice of judgment
2.   Rules of Court shall, insofar as not as per Sec. 39, BP 129
inconsistent with the provisions of the
Decree, be applicable to land registration STEP 10: Issuance of the decree
and cadastral cases by analogy or in a a.   If the court finds after hearing that the applicant
suppletory character and whenever or adverse claimant has title as stated in his
practicable and convenient [Sec. 34, PD 1529] application or adverse claim and proper for
b.   Sec. 27, PD 1529: Court may either: registration, a decree of confirmation and
1.   Hear the parties and their evidence, or registration shall be entered
2.   Refer the case or any part thereof to a referee b.   The Court declares the decision final and
i.   Referee shall hear the parties, receive instructs the LRA to issue a decree of
their evidence, and submit his report confirmation and registration within 15 days from
thereon to the Court within 15 days entry of judgment
after termination of such hearing Note: It is not the court that issues the decree,
ii.   Hearing before a referee may be held but the LRA
at any convenient place within the c.   One year after issuance of the decree, it becomes
province or city as may be fixed by him incontrovertible and amendments of the same
and after reasonable notice thereof will not be allowed except in cases of clerical
shall have been served to the parties errors
concerned
iii.   Upon receipt of the report the Court Court retains jurisdiction over the case until after
may: the expiration of 1 year from the issuance of the
a)   Adopt the same decree of registration. [Gomez v. CA, 1988]
b)   Set aside the report
c)   Modify the report Note: While a decision in land registration
d)   Refer back or recommit the case proceeding becomes final after the expiration of
to the referee for presentation of thirty days from the date of service of its notice,
evidence the decree of registration does not become final
until after the lapse of one year from the date of
STEP 9: Promulgation of judgment by the Court; its issuance and entry.
a.   This is the adjudication, determination, and
resolution of the issue of ownership STEP 11: Entry of the decree of registration
b.   Forms of Judgment: a.   Decree is entered in the LRA
1.   Dismissal of the application – with b.   Every decree of registration shall:
prejudice or without prejudice 1.   Bear the day of the year, hour, and minute of
2.   Partial Judgment – in a case where only a its entry,
portion of the land subject of registration is 2.   Be signed by the Administrator of the Land
contested, the court may render partial Registration Authority in his ex officio
judgment provided that a subdivision plan capacity as Clerk of Court in land registration
showing the contested and uncontested matters
portions approved by the Director of Land is 3.   State whether the owner is:
previously submitted to said court. [Sec. 28, i.   Married or unmarried, and if married,
PD 1529] the name of the husband or wife,
3.   Judgment Confirming Title - Judgment may provided that if the land adjudicated is
be rendered confirming the title of the conjugal property, it shall be issued in
applicant, or the oppositor as the case may the names of both spouses.
be, to the land or portions thereof upon ii.   If the owner is under disability, it shall
finding that the party concerned has state the nature of the disability,
sufficient title proper for registration. [Sec. iii.   If the owner is a minor, his age
29, PD 1529] 4.   Contain a description of the land as finally
determined by the court,

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5.   Set forth the estate of the owner, and also, in


such manner as to show their relative priority,   Subsequent Registration
all particular estates, mortgages,
easements, liens, attachments and other SUBSEQUENT REGISTRATION - a proceeding where
encumbrances, including rights of tenant- incidental matters after original registration may be
farmer, if any, to which the land or owner’s brought before the land registration court by way of
estate is subject, motion or petition filed by the registered owner or a
6.   Contain any other matter properly to be party in interest
determined
Necessity And Effects Of Registration
STEP 12: Sending of copy of the decree of registration [Sec. 51 and 52, PD 1529]
to the corresponding Register of Deeds (Registrar of The deed, mortgage, lease, or other voluntary
Land Titles and Deeds) instrument, except a will shall ONLY operate as:
1.   A contract between the parties and
STEP 13: Transcription of the decree of registration 2.   Evidence of authority to the Register of Deeds to
a.   It is transcribed in the registration book of the make registration.
Registrar of Land Titles and Deeds
b.   Registrar issues owner’s duplicate OCT of the The act of registration shall be the operative act to
applicant by the Registrar of Land Titles and convey or affect the land insofar as third persons are
Deeds, upon payment of the prescribed fees. concerned.

Also, by registration, it creates constructive notice to


4.  E vidence Necessary the world.

Proofs necessary in land registration General Rule: A forged deed is an absolute nullity and
a.   Proofs that land has been declassified from the conveys no title.
forest zone, is alienable or disposable, and is
registrable (e.g. Presidential proclamation, Exception: If there is good faith, a TCT has already
legislative acts) been issued to the purchaser, the latter being an
b.   Identity of the land (e.g. survey plan) innocent purchaser for value according to Sec. 39, PD
c.   Possession and occupation of the land for the 1529, then the title is good.
length of time and in the manner required by law
[Sec. 4, PD 1073 amending Sec. 48(b) and (c) of General Rule: A person dealing with registered
Public Land Act] property need not go beyond, but only has to rely on,
d.   If he claims private ownership not because of his the title. [Campillo v. PNB, G.R. No. L-19890 (1969)]
possession, he must prove the basis of such claim
by submitting muniments of title. He is charged with notice only of such burdens and
claims which are annotated on the title, for
Proving Private Ownership: registration is the operative act that binds the
a.   Spanish titles are inadmissible and ineffective property.
proof of ownership in land registration
proceedings filed AFTER Aug. 16, 1976 [PD 892 as Exception: When should a purchaser investigate?
discussed in Santiago v. SBMA, G.R. No. 156888, 1.   Banks are required to exercise more care and
(2006)] prudence in dealing with registered lands for
b.   Tax declaration and receipts are not conclusive their business is one affected with public interest.
but have strong probative value when The general rule does not apply.
accompanied by proof of actual possession. 2.   When party concerned has actual knowledge of
[Municipality of Santiago v. CA, G.R. No. L-49903 facts and circumstances that would impel a
(1983)] reasonably cautious man to make inquiry. [Leung
c.   Other proofs such as testimonial evidence Yee v. Strong Machinery Company, G.R. No. L-
11658 (1918)]
3.   When purchaser is in bad faith; e.g. he had full
knowledge of a previous sale. [Jamoc v. CA, 200
SCRA 74 (1991)]
4.   When a person buys land from one whose rights
over the land is evidenced only by a deed of sale

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and an annotation in the certificate of title but no Sps. Labayen v.


TCT. [Quiniano v. CA, G.R. No. L-28466 (1971)] Serafica, G.R. No.
Armed Forces and Police
178443 (2008): At
Mutual Benefit
Two Types Of Dealings the time of the filing
Association, Inc. v.
(1)   Voluntary Dealings – these are deeds, of the petition for
Santiago, G.R. No.
instruments, documents which are the results of cancellation of
147559 (2008): Entry of
free and voluntary acts of parties thereto. encumbrance, the
the attachment in the
(2)   Involuntary Dealings – these refer to writ, order, lease contract
books is sufficient notice
or process issued by the court of record affecting already lost its
to all persons. Hence, the
registered land, also other instruments which are efficacy. Thus, there
fact that the deed of sale
not willful acts of the registered owner, executed is no basis to save its
was already annotated is
without his knowledge or consent annotation on
of no moment with regard
defendant’s title. The
to third persons. The
Voluntary Dealings Compared To Involuntary fact that the
preference created by the
Dealings cancellation of the
levy on attachment is not
Voluntary Dealings Involuntary Dealings lease contract was
diminished by the
Presentation of the forged is of no
subsequent registration
owner’s duplicate moment, for there
of the deed of sale.
certificate of title is was no violation of a
Entry in the day book of
required to notify; right.
ROD is sufficient notice to
mere entry in the day
all persons
book of the Register
of Deeds (ROD) is
1.   Voluntary Dealings
insufficient
Registration of Voluntary Instruments in General
An innocent
Process of Registration [Sec. 55, PD 1529]
purchaser for value of
a.   The deed or other voluntary instrument must
registered land
contain:
becomes the
registered owner the 1.   The following details of the grantee or other
Saberon v. Ventanilla, Jr., person acquiring or claiming interest:
moment he presents
G.R. No. 192669 (2014): i.   Full name
and files a duly
Entry thereof in the day ii.   Nationality
notarized and valid
book of the ROD is iii.   Residence
deed of sale and the
sufficient notice to all iv.   Postal address
same is entered in
persons even if the v.   Civil status (if married, include name
the day book of the
owner’s duplicate in full of spouse)
ROD and at the same
certificate of title is not 2.   If grantee is a corporation:
time he surrenders or
presented to the ROD. It must contain a recital showing that such
presents the owner’s
corporation or association is legally qualified
duplicate certificate
to acquire private lands
of title covering the
b.   File instrument creating or transferring interest
land sold and pays
and certificate of title with Register of Deeds
the registration fees.
together with:
Villasor v. Camon, R-
1.   Owner’s duplicate - the issuance of a new
C.A. No. 8551 (1951):
Director of Lands v. Reyes, transfer certificate without presentation of
It is necessary to
G.R. No. L-27594 (1976): an owner’s duplicate is unwarranted and
register the deed or
Entry in the day book of confers no right on the purchaser [PNB v.
instrument in the
the ROD is sufficient Fernandez, 1935]
entry book of the
notice to all persons of an 2.   Payment of fees & documentary stamp tax
ROD and a
adverse claim without the 3.   Evidence of full payment of real estate tax
memorandum
same being annotated at 4.   Document of transfer – 1 copy additional for
thereof shall also be
the back of the certificate city/provincial assessor
made in the owner’s
of title c.   Payment of fees and DST
duplicate certificate
1.   After payment of entry fee the Register of
and its original
Deeds shall enter the instruments in a
primary entry book [Sec. 56, PD 1529]

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2.   The national, provincial and city b.   If ONLY A PORTION of property is the subject
governments are exempted from payment of [Sec. 58, PD 1529]
entry fees 1.   Include a plan which shows all the portions
3.   RA 456 prohibits registration of documents already subdivided with verified and
affecting real property which is delinquent in approved technical description.
the payment of real estate taxes. Further, if 2.   That plan with the certified copy of the
evidence of such payment is not presented technical descriptions shall be filed with the
with 15 days from the date of entry of said Register of Deeds for annotation in the TCT.
document in the primary entry book of the 3.   Register of Deeds shall issue a TCT and
register of deeds the entry shall be deemed cancel the grantor's certificate partially OR it
cancelled. may be cancelled totally and a new one
d.   Entry of the Instrument in the Primary Entry Book: issued describing therein the remaining
Instruments are regarded as registered from the portion
time the Register of Deeds enters them in the c.   If there are SUBSISTING encumbrances and
book annotations: They shall be carried over in the new
e.   TCT shall then be issued certificate or certificates; except when they have
been simultaneously discharged.
Registration of Dealings Less than Ownership [Sec.
54, PD 1529] Registration of Mortgages and Leases [Sec. 60, PD
If an instrument does not divest ownership or title 1529]
from owner or from transferee of the registered Sec. 60, PD 1529 provides that mortgages and leases
owners, then NO NEW CERTIFICATE shall be entered shall be registered in the manner provided in Sec. 54
or issued. (Dealings less than ownership)

Process of Registration for Dealings less than The deed shall take effect upon the title only from the
Ownership time of registration.
a.   Filing of the instrument with the Register of
Deeds When a deed of mortgage is presented, the Register
b.   A brief memorandum thereof is made: of Deeds will enter upon the OCT and upon the
1.   On the certificate of title by the Register of owner’s duplicate a memorandum thereof and shall
Deeds and signed by him, and sign said memorandum.
2.   On the owner’s duplicate
Registration of Powers of Attorneys
Cancellation or extinguishment of such interests shall [Sec. 64, PD 1529]
be registered in the same manner. Powers of attorney and revocations shall be
registered with the Register of Deeds of the province
Registration of Deeds of Sale and Transfers or city where the land lies.
a.   If ENTIRE property is the subject [Sec. 57, PD
1529] Any instrument revoking such power shall be
1.   Owner executes and registers the deed which registered in like manner.
must be sufficient in form.
2.   A new certificate of title is issued and Registration of Trusts
Register of Deeds prepares and delivers to Registration is by memorandum:
grantee his owner's duplicate certificate a.   A memorandum by the words “in trust” or “upon
3.   Register of Deeds notes upon the OCT and condition” or other apt words is made if a deed or
the duplicate certificate the date of other instrument is filed in order to:
transfer, the volume and page of the 1.   Transfer registered land in trust, or upon any
registration book where the new certificate is equitable condition or limitation expressed
registered therein, or
4.   The original and the owner's duplicate of the 2.   Create or declare a trust or other equitable
grantor's certificate shall be stamped interests in such land without transfer [Sec.
"cancelled". 65, PD 1529]
5.   The deed of conveyance shall be filed and b.   A memorandum by the words “with power to
indorsed with the number and the place of sell,” or “power to mortgage” or other apt words
registration of the certificate of title of the is made when: The instrument creating or
land conveyed. declaring a trust or other equitable interest

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contains an EXPRESS POWER to sell, mortgage, 2.   Court after notice shall enter an order to
or deal with the land in any manner owner to surrender certificate at time & place
to be named therein.
However, if an implied or constructive trust is claimed, c.   Although notice of attachment is not noted in
person claiming such must execute a sworn duplicate, notation in book of entry of Register of
statement thereof with the Register of Deeds, Deeds produces effect of registration already
containing a description of the land, the name of the
registered owner and a reference to the number of the Effect of registration of attachment
certificate of title. Such claim shall not affect the title a.   Creates real right
of a purchaser for value and in good faith before its b.   Has priority over execution sale
registration. [Sec. 68, PD 1529] c.   But between 2 attachments – one that is earlier
in registration is preferred
2.  I nvoluntary Dealings Duty of Register of Deeds - Duty is ministerial but
may refuse registration in the following
The following involuntary dealings affecting circumstances:
registered land must be registered: a.   Title to land is not in the name of defendant
a.   Attachments [Sec. 69, PD 1529] Exception: If petitioner is an heir
b.   Adverse claim [Sec. 70, PD 1529] b.   No evidence is submitted to show that he has
c.   Sale on execution or for taxes or for any present or possible future interest in land
assessment [Sec. 74, PD 1529]
d.   Notice of lis pendens [Sec. 76, PD 1529] Registration of Adverse Claim
A claim is adverse when: [Sec. 70, par. 1, PD 1529]
Registration of Attachment a.   Claimant’s right or interest in registered land is
Attachment is a writ issued at the institution or during adverse to the registered owner, and
progress of an action commanding the sheriff to b.   Such right arose subsequent to date of original
attach the property, rights, credits or effects of the registration, and
defendant to satisfy demands of the plaintiff. c.   No other provision is made in the Decree for the
registration of such right or claimant
Kinds
a.   Preliminary Requisites for registration of an adverse claim:
b.   Garnishment a.   The adverse claimant must give a statement of
c.   Levy on execution the following in writing:
1.   His alleged right or interest
Process of Registration 2.   How and under whom such alleged right or
a.   Copy of writ in order to preserve any lien, right or interest is acquired
attachment upon registered land shall be filed 3.   The description of the land in which the right
with the Register of Deeds where the land lies, or interest is claimed and
containing number of certificate of title of land to 4.   The number of the certificate of title
be affected or description of land [PD 1529, Sec b.   The statement must be:
69] 1.   Signed by the adverse claimant
b.   Register of Deeds to index attachment in names 2.   Sworn before a notary public
of both plaintiff & defendant or name of person c.   The statement must also state his residence or
whom property is held or in whose name stands the place to which all notices may be served upon
in the records him. [Lozano v Ballesteros, G.R. No. 49470 (1991)]
1.   If duplicate of certificate of title is not
presented: Duration of an adverse claim
i.   Register of Deeds shall within 36 a.   30 days from the date of registration.
hours send notice to registered owner b.   After that the annotation of adverse claim may be
by mail stating that there has been cancelled upon filing of a verified petition by the
registration & requesting him to party in interest.
produce duplicate so that When cancelled, no second adverse claim based
memorandum be made on the same ground may be registered by the
ii.   If owner neglects or refuses – Register same claimant.
of Deeds shall report matter to court.

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Adverse claim is not ipso facto cancelled after 30 days, Registration of Notice Lis Pendens
hearing is necessary. [Sajonas v. CA, G.R. No. 102377 Purpose of notice of lis pendens: To keep the subject
(1996)] matter within the power of the court until the entry of
final judgment. It therefore creates merely a
REGISTRATION OF EXECUTION AND TAX contingency & not a lien.
DELINQUENCY SALES
When notice of lis pendens is proper:
Execution sale a.   To recover possession of real estate
a.   To enforce a lien of any description on registered b.   To quiet title
land, any execution or affidavit to enforce such c.   To remove clouds upon the title thereof
lien shall be filed with Register of Deeds where d.   For partition
the land lies e.   Other proceedings of any kind in court directly
b.   Register in the registration book & memorandum affecting the title to land or the use or occupation
upon proper certificate of title as adverse claim or thereof or the buildings thereon
as an encumbrance
c.   To determine preferential rights between 2 liens: When notice of lis pendens is NOT proper:
priority of registration of attachment a.   Proceedings for the recovery of money judgments
b.   Attachments
Tax sale c.   Proceedings on the probate of wills
a.   Sale of land for collection of delinquent taxes and d.   Administration of the estate of deceased persons
penalties due the Government e.   Levies on execution
b.   In personam (all persons interested shall be f.   Foreclosure
notified so that they are given opportunity to be
heard) Process of Registration: By Memorandum or Notice
1.   Notice to be given to delinquent tax payer at stating
last known address a.   The institution of the action or proceeding
2.   Publication of notice must also be made in b.   The court wherein the same is pending
English, Spanish & local dialect & posted in a c.   The date of the institution of the action
public & conspicuous place in place wherein d.   Reference to the number of the certificate of title
property is situated & at the main entrance of e.   Adequate description of the land affected and
the provincial building registered owner thereof
c.   Sale cannot affect rights of other lien holders
unless they are given the right to defend their Other parties who need to register
rights: due process must be strictly observed a.   Assignee in involuntary proceeding for insolvency
d.   Tax lien superior to attachment 1.   Duty of the officer serving notice to file a copy
of the notice to the Register of Deeds where
Note: No need to register tax lien because it is the property of debtor lies
automatically registered once the tax accrues. 2.   Assignee elected or appointed by court shall
However, sale of registered land to foreclose a tax be entitled to entry of new certificate of
lien needs to be registered. registered land upon presentment of copy of
assignment with bankrupt’s certificate of
Process of Registration title (duplicate)
a.   Officer’s return shall be submitted to Register of 3.   New certificate shall note that it is entered to
Deeds together with duplicate title him as assignee or trustee in insolvency
b.   Register in the registration book proceedings
c.   Memorandum shall be entered in the certificate b.   Government in eminent domain
as an adverse claim or encumbrance 1.   Copy of judgment shall be filed in the
d.   After the period of redemption has expired & no Register of Deeds which states description
redemption (2 years from registration of auction of property, certificate number, interest
sale) is made: cancellation of title & issuance of a expropriated, nature of public use
new one 2.   Memorandum shall be made or new
e.   Before cancellation, notice shall be sent to certificate of title shall be issued
registered owner: to surrender title & show cause
why it shall not be cancelled Effect of registration
a.   Impossibility of alienating the property in dispute
Note: Actual knowledge of a person is equivalent to during the pendency of the suit – may be
registration as against him

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alienated but purchaser is subject to final


outcome of pending suit   Cadastral Registration
b.   Register of Deeds is duty bound to carry over
notice of lis pendens on all new titles to be issued It is a proceeding in rem, initiated by the filing of a
petition for registration by the government, not by the
Cancellation of lis pendens [Sec. 77, PD 1529] persons claiming ownership of the land subject
a.   Before final judgment – court may order thereof, and the latter are, on the pain of losing their
cancellation after showing that notice is only for claim thereto, in effect compelled to go to court to
the purpose of molesting an adverse party or it is make known their claim or interest therein, and to
not necessary to protect the rights of the party substantiate such claim or interest.
who caused it to be registered
b.   Register of Deeds may also cancel upon verified Unlike other kinds of registration, this is compulsory
petition of the party who caused such registration as it is initiated by the government.
c.   Deemed cancelled when certificate of clerk of
court stating manner of disposal of proceeding is The government does not seek the registration of land
registered in its name. The objective of the proceeding is the
adjudication of title to the lands or lots involved in
said proceeding.

Cadastral Distinguished From Ordinary


Registration
Ordinary Registration Cadastral Registration
Voluntary Compulsory
Applicant is a person
Applicant is the Director
claiming title to the
of Lands
land
Usually involves
private land; it may
also refer to public
agricultural lands if the
All classes of land are
object of the action is
covered (private and
judicial confirmation of
public alienable lands)
imperfect or
incomplete title (in
which case CA 141
applies)
Applicant comes to
Government asks the
court to confirm his
court to settle and
title and seek
adjudicate the title of
registration of the land
the land
in his name
In cadastral
registration, if the
If the applicant fails to
applicant cannot prove
prove his title,
that he is entitled to the
application may be
land, the land becomes
dismissed without
2 public land.
prejudice.
However, the cadastral
If the judgment
case decision does not
determines ownership,
constitute res judicata
then it is res judicata
as to bar even the same
upon the parties.
claimant from
subsequently filing an

2
 Santiago  v.  Santos,  G.R.  No.  31568,  March  19,  1930;;  
Verzosa  v.  Nicolas,  G.R.  No.  9227,  February  10,  1915  

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application for judicial STEP 8: Director of Lands represented by Solicitor


confirmation of title to General shall institute original registration
the same land, provided proceedings
the requisites are 1.   Petition is filed in the appropriate RTC where the
3
complied with. land is situated
2.   Contents of the Petition:
PROCEDURE IN CADASTRAL REGISTRATION (Sec. a.   That public interest requires that the title to
35 and 36, PD 1529) such lands be settled and adjudicated and
praying that such titles be so settled and
STEP 1: Determination of the President that public adjudicated
interest requires title to unregistered lands be settled b.   Description of the lands
and adjudicated c.   Accompanied by a plan thereof
d.   Such other data as may serve to furnish full
President then orders the Director of Lands to conduct notice to the occupants of the lands and to all
cadastral survey persons who may claim any right or interest
therein
STEP 2: Director of lands shall make a cadastral
survey STEP 9: Publication, mailing posting

STEP 3: Director of Lands gives notice to interested STEP 10: Hearing


persons and to the general public Jurisdiction of the Cadastral Court:
1.   Adjudicate title to any claimant thereto
Contents of the Notice: 2.   Declare land as a public land
1.   Day on which the survey will begin 3.   Order correction of technical description
2.   Full and accurate description of the lands to be 4.   Order the issuance of new title in place of the title
surveyed issued under voluntary registration proceedings
5.   Determine the priority of overlapping title
STEP 4: Publication of notice 6.   Order the partition of the property
1.   Published once in the Official Gazette
2.   A copy of the notice in English or the national STEP 11: Decision
language shall be posted in a conspicuous place
on the bulletin board of the municipal building of STEP 12: Issuance of the decree and certificate of title
the municipality in which the lands or any portion
thereof is situated Note: Reopening of cadastral cases no longer allowed

A copy of the notice shall also be sent to: RA 931, effective June 20, 1953 for five (5) years,
•   Mayor of the municipality authorizing the reopening of cadastral cases under
•   Barangay captain certain conditions and which had been extended until
•   Sangguniang Panlalawigan and Dec. 31, 1968, is no longer in force.
Sangguniang Bayan concerned
Courts are thus without jurisdiction or authority to
STEP 5: Geodetic engineers or other Bureau of Land reopen a cadastral proceeding since Dec. 31, 1968.
employees in charge of the survey shall give notice [Aquino, citing Republic v. Estenzo, G.R. No. L-35512
reasonably in advance of the date of the survey (1988)]
They shall also mark the boundaries of the lands with
monuments

STEP 6: Interested persons should communicate with


the geodetic engineer if he requests for any
information about the land

STEP 7: Actual survey and plotting of the land

3
 Director  of  Lands  v.  CA  &  Pastor,  G.R.  No.  L-­47847,  July  31,  
1981  

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  Judicial Confirmation of 30 years, or at least since Jan. 24, 1947 [RA


1942]
Imperfect Title c.   Natural born citizens of the Philippines who
have lost their citizenship and who has legal
capacity to enter into a contract under
Applicable law: CA 141, as amended Philippine laws may be a transferee of private
No title or right to, or equity in, any lands of the public land up to a maximum area of 5,000sqm, in
domain may be acquired by prescription or by adverse case of urban land, or 3 hectares in case of
possession or occupancy except as expressly provided rural land to be used by him for business or
by law. [Sec 57, CA 141] other purposes [Sec. 5, RA 8179]
d.   Natural-born citizens of the Philippines, who
The Public Land Act recognizes the concept of have lost their Philippine citizenship, who
ownership under the civil law. This ownership is have acquired disposable and alienable
based on adverse possession and the right of lands of the public domain from Filipino
acquisition is governed by the Chapter on judicial citizens who had possessed the same in the
confirmation of imperfect or incomplete titles. same manner and for the length of time
indicated in numbers (1) and (2) above.
When applicable: This applies only to alienable and 2.   Corporations
disposable agricultural lands of the public domain. Private domestic corporations or associations
Under Sec. 6 of CA 141, the President, shall classify the which had acquired lands from Filipino citizens
lands of the public domain into: who had possessed the same in the manner and
1.   Alienable or disposable; for the length of time indicated in numbers (1) and
2.   Timber, and (2) above.
3.   Mineral lands,
Notwithstanding the prohibition in the 1973 and
The rule on confirmation of imperfect title does not 1987 Constitutions against private corporations
apply unless and until the land classified as, say, holding lands of the public domain except by
forest land, is released in an official proclamation to lease not exceeding 1000 hectares, still a private
that effect so that if may form part of the disposable corporation may institute confirmation
agricultural lands of the public domain. [Bracewell v. proceedings under Sec. 48, (b) of the Public Land
CA, G.R. No. 107427 (2000)] Act if, at the time of institution of the registration
proceedings, the land was already private land.
The law, as presently phrased, requires that On the other hand, if the land was still part of the
possession of lands of the public domain must be public domain, then a private corporation cannot
from June 12, 1945 or earlier, for the same to be institute such proceedings. [Director of Lands v.
acquired through judicial confirmation of imperfect IAC and Acme Plywood & Veneer c., Inc., supra]
title [Republic v. Doldol, G.R. No. 132963 (1998)]

Who may apply: 1.   Filing of the Application:


1.   Individuals:
a.   Filipino citizens who by themselves or Period of Filing is EXTENDED: RA No. 9176 extended
through their predecessors-in-interest have the period to file an application for judicial
been in open, continuous, exclusive, and confirmation of imperfect or incomplete title to
notorious possession and occupation of December 31, 2020. Prior to RA 9176 the deadline for
alienable and disposable lands of public filing was on Dec. 31, 1987.
domain under a bona fide claim of
acquisition since June 12, 1945 or prior Scope of the Application: RA 9176 also limited the
thereto since time immemorial [Sec. 48, CA area subject of the application to 12 hectares. Prior to
141, as amended by Sec. 4, PD 1073] RA 9176, the maximum area applied for was 144
b.   Filipino citizens who by themselves or their hectares.
predecessors-in-interest have been, prior to
effectivity of PD 1073 on Jan. 25, 1977, in Applicant must Prove:
open, continuous, exclusive, and notorious a.   The land is alienable and disposable land of
possession and occupation of agricultural public domain at the time of filing of application);
lands of the public domain, under a bona fide and
claim of acquisition of ownership for at least b.   S/he must have been in open, continuous,
exclusive, and notorious (OCEN) possession and

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occupation of the land for the length of time and


in the manner and concept provided by law   Remedies
[Director of Lands v. Buyco, G.R. No. 91189 (1992)]
It is important to take note of the following concepts
in studying remedies:
2.  P rocedure in Judicial
Confirmation Innocent Purchaser for Value – one who buys the
property of another without notice that some other
Sec. 48, par.1, of CA 141 as amended provides, “The person has a right to or interest in it, and who pays a
following-described citizens of the Philippines, full and fair price at the time of the purchase or before
occupying lands of the public domain or claiming to receiving any notice of another person’s claim
own any such lands or an interest therein, but whose [Rosales v. Burgos, G.R. No. 143573 (2009)]
titles have not been perfected or completed, may
apply to the Court of First Instance of the province Extrinsic or Actual fraud – any fraudulent act of the
where the land is located for confirmation of their successful party in a litigation which is committed
claims and the issuance of a certificate of title therefor outside the trial of a case against the defeated party,
under the Land Registration Act…” or his agents, attorneys or witnesses, whereby said
defeated party is prevented from presenting fully and
Hence, the procedure in original registration fairly his side of the case. [Sterling Investment
discussed in the previous section is also followed in Corporation v. Ruiz, G.R. No. L-30694 (1969)]
judicial confirmation of imperfect or incomplete title.
An aggrieved party in a registration proceeding may
avail himself of the following remedies:
3.  Evidence Necessary to 1.   Motion for New Trial [see Rule 37, ROC] Relief
from Judgment [see Rule 38, ROC]
Substantiate Application 2.   Appeal
3.   Relief from Judgment
The applicant must prove: 4.   Petition for Review of Decree of Registration
a.   That the land applied for has been declassified 5.   Action for Reconveyance
and is a public agricultural land, is alienable and 6.   Quieting of Title
disposable, or otherwise capable of registration. 7.   Cancellation of Title
Specifically, the following may be presented: 8.   Action for Damages
1.   Presidential proclamation 9.   Action for Compensation from the Assurance
2.   Executive Order Fund
3.   Administrative Order issued by the DENR 10.   Reversion
Secretary 11.   Criminal Suit
4.   Bureau of Forest Development Land
Classification Map Annulment of Judgment [see Rule 47, ROC]
5.   Certification by the Director of Forestry Appeal – Sec. 30, PD 1529 as amended by BP 129
6.   Investigation reports of Bureau of Lands provides that an appeal may be taken from the
Investigator judgment of the court as in ordinary civil cases.
7.   Legislative act or statute
b.   The identity of the land; the following may be Period in Sec. 30, PD 1529 has been modified to 15
submitted: days as per Sec. 39, BP 129
1.   Survey plan
2.   Tracing cloth plan and blue print copies of Unlike ordinary civil actions, the adjudication of land
plan in a cadastral or land registration proceeding does not
3.   Technical description of the land become final in the sense of incontrovertibility until
4.   Tax declarations after the expiration of one (1) year after the entry of the
5.   Boundaries and area final decree of registration. As long as a final decree
c.   Possession and occupation of the land for the has not been entered by the LRA and the period of 1
length of time and in the manner required by law year has not elapsed from date of such decree, the
title is not finally adjudicated and the decision in the
registration proceeding continues to be under the
control and sound discretion of the court rendering it.
[Gomez v. CA, G.R. No. 77770 (1988)]

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Petition to Reopen or Review Decree of Registration b.   The registration of the land in the name of
– Sec. 32, PD 1529 the defendant was procured through fraud or
1.   To whom available: Only to an aggrieved party other illegal means;
who has been deprived of land or any estate or c.   The property has not yet passed to an
interest therein by decree of registration innocent purchaser for value; and
2.   When to file: Any time after the rendition of the d.   The action is filed after the certificate of title
court’s decision and before the expiration of 1 year had already become final and
from entry of decree of registration incontrovertible but within 4 years from the
a.   Upon expiration of the 1 year period, every discovery of the fraud [Balbin v. Medalla, G.R.
decree becomes incontrovertible No. L-46410 (1981)] or not later than 10 years
b.   The Court held that the petition may be filed in the case of an implied trust [New Regent
at any time after rendition of the court’s Sources, Inc. v. Tanjuatco, G.R. No. 168800
decision (no need to wait for actual entry in (2009)]
the LRA) and before expiration of one year
from entry of the final decree of registration. Quieting of Title – remedy for the removal of any
[Rivera v. Moran, G.R. No. L-24568 (1925); cloud of doubt or uncertainty with respect to real
Director of Lands v. Aba, G.R. No. L-45648 property
(1939)] 1.   Who may file: See Sec. 1, Rule 63, ROC
3.   Sole and ONLY Ground: Actual Fraud 2.   Requisites:
a.   Actual fraud proceeds from an intentional a.   Plaintiff or complainant has a legal or an
deception practiced by means of equitable title to or interest in the real
misrepresentation or concealment of property subject of the action; and
material fact b.   The deed, claim, encumbrance or proceeding
b.   The fraud must consist in an intentional claimed to be casting a cloud on his title
omission of fact required by law to be stated must be shown to be in fact invalid or
in the application or a wilful statement of a inoperative despite its prima facie
claim against the truth appearance of validity or legal efficacy.
4.   Requisites for Petition to Reopen or Review
a.   The petitioner has a real and dominical right; Cancellation of Title – It is initiated by a private party
b.   That he has been deprived thereof (through usually in a case where there are two titles issued to
fraud); different persons for the same lot. [Agcaoili]
c.   That the action is filed within one year from
the issuance and entry of the decree of Action for Damages - It can be availed of when
registration; and reconveyance is no longer possible as when the land
d.   That the property has not been transferred to has been transferred to an innocent purchaser for
an innocent purchaser for value; [Agcaoili, value [Ching v. CA, G.R. No. L-59731 (1990)]
citing Walstrom v. Mapa, G.R. No. 38387
(1990)] Action for Compensation from the Assurance Fund
Requisites:
Action for Reconveyance: 1.   That a person sustains loss or damage, or is
1.   When to file: deprived of any estate or interest in land;
a.   Before issuance of decree, or within/after 1 2.   On account of the bringing of land under the
year from entry operation of the Torrens System arising after
b.   If based on implied trust, 10 years; original registration;
c.   If based on express trust and void contract, or 3.   Through fraud, error, omission, mistake or
if the plaintiff is in possession of the land, misdescription in a certificate of title or entry or
imprescriptible memorandum in the registration book;
d.   If based on fraud, 4 years from the discovery 4.   Without negligence on his part; and
2.   It does not reopen proceedings but a mere 5.   Is barred or precluded from bringing an action for
transfer of the land from registered owner to the the recovery of such land or estate or interest
rightful owner [Esconde v. Barlongay, supra] therein. [Agcaoili]
3.   Requisites:
a.   The action must be brought in the name of a Reversion - Instituted by the government, thru the
person claiming ownership or dominical Solicitor General in all cases where lands of public
right over the land registered in the name of domain are held in violation of the Constitution or
the defendant; were fraudulently conveyed.

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Indefeasibility of title, prescription, laches, and


estoppel do not bar reversion suits.   Petitions and Motions
after Original
Registration
All petitions or motions after original registration
shall be filed and entitled in the original case in which
the decree of registration was entered [Sec 108, PD
1529]
1.   Lost Duplicate Certificate
a.   Person in interest must file a sworn
statement that the certificate is lost or
destroyed before the Register of Deeds
b.   A petition will then be filed for the issuance
of new title
c.   Court will order issuance of new title after
due notice and hearing, with memorandum
that it is issued in place of a lost certificate
2.   Petition seeking surrender of duplicate title
a.   In voluntary and involuntary conveyances;
when the duplicate cannot be produced, the
party must petition the court to compel
surrender of duplicate certificate of title to
Register of Deeds
b.   After hearing, court may order issuance of a
new certificate and annul the old certificate
3.   Amendment and alteration of certificate of title
a.   A certificate of title cannot be altered or
amended except in a direct proceeding in
court which is summary in nature
b.   No amendment or alteration of decree is
permitted except upon order of the court
c.   No time limit to file petition
d.   Grounds:
i.   New interest that does not appear on
the instrument have been created
ii.   Interest have been terminated or
ceased
iii.   Omission or error was made in
entering certificate
iv.   Name of person on certificate has
been changed
v.   Registered owner has married
vi.   Marriage has terminated
vii.   Corporation has dissolved and has not
conveyed the property within 3 years
after its dissolution
viii.   Allowable corrections as long as the
rights or interest of persons are not
impaired
4.   Reconstitution of Certificate of title
a.   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

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b.   To have the same reproduced after proper


proceedings in the same form they were   Dealings with
when the loss or destruction occurred [Heirs
of Pedro Pinote v. Dulay, 1990]
Unregistered Lands
c.   Kinds:
i.   Judicial No deed, conveyance, mortgage, lease, or other
1)   A petition is filed before the RTC voluntary instrument affecting land not registered
2)   Petition is published in the Official under the Torrens system shall be valid, except as
Gazette for 2 consecutive issues and between the parties thereto, unless such instrument
posted on main entrance of shall have been recorded in the manner herein
municipality for at least 30 days prescribed in the office of the Register of Deeds for the
before hearing province or city where the land lies. [Sec. 113, par. 1, PD
3)   Hearing is then conducted 1529]
4)   Court may then order reconstitution
if meritorious Effects Of Transactions Covering Unregistered Land
ii.   Administrative, which may be availed 1.   As between the parties – The contract is binding
only in case of: and valid even if not registered
1)   Substantial loss or destruction of 2.   As among third persons – There must be
original land titles due to fire, flood, registration for the transaction to be binding
or other force majeure as against third persons
determined by the LRA
2)   Number of certificates of title lost or Primary Entry Book And Registration Book
damaged should be at least 10% of The Register of Deeds for each province or city shall
the total number in possession of keep a Primary Entry Book and a Registration Book.
the Register of Deeds 1.   The Primary Entry Book shall contain, among
3)   In no case shall the number of other particulars:
certificates of title lost or damaged a.   Entry number
be less than 500; AND b.   Names of the parties
4)   Petitioner must have the duplicate c.   Nature of the document
copy of the certificate of title [RA d.   Date, hour and minute it was presented and
6732] received
2.   The Registration Book – Provides spaces
whereon the annotation is made after the
instrument has been entered in the Primary Entry
Book

Process of Registration
1.   Registration is by way of annotation
2.   The instrument dealing with unregistered land is
presented before the Register of Deeds
3.   The Register will then determine if it can be
registered:
a.   If, on the face of the instrument, it appears
that it is sufficient in law, the Register of
Deeds shall forthwith record the instrument
b.   In case the Register of Deeds refuses its
administration to record, he shall advise the
party in interest in writing of the ground or
grounds for his refusal

The latter may appeal the matter to the


Commissioner of Land Registration
Recording by the Register of Deeds is ministerial.

Recording made under this section shall be without


prejudice to a third party with a better right. [Sec. 113,
PD 1529]

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Better right – refers to a right which must have been


acquired by a third party independently of the   Non-Registrable
unregistered deed, such, for instance, as title by
prescription, and that it has no reference to rights
Properties
acquired under that unregistered deed itself. [Peña, p.
600] Sec. 2, Art. XII, 1987 Constitution. All lands of the
public domain, waters, minerals, coal, petroleum,
Involuntary Dealings In Unregistered Lands and other mineral oils, all forces of potential
PD 1529 now permits the registration of involuntary energy, fisheries, forests or timber, wildlife, flora
dealings in unregistered lands. and fauna, and other natural resources are owned
by the State.
Tax sale, attachment and levy, notice of lis pendens,
adverse claim and other instruments in the nature of Sec. 2, Art. XI, 1987 Constitution. With the
involuntary dealings with respect to unregistered exception of agricultural lands, all other natural
lands, if made in the form sufficient in law, shall resources shall not be alienated.
likewise be admissible to record under Sec. 113. [Sec.
113 (d), PD 1529] The classification of public lands is an exclusive
prerogative of the Executive Department of the
Government and not of the courts. In the absence of
such classification, the land remains as unclassified
land until it is released therefrom and rendered open
to disposition. [Aquino, citing Director Lands and
Director of Forest Development v. CA, G.R. No. L-58867
(1984)]

CC provisions dealing with non-registrable


properties
1.   Properties of public dominion [Art. 420, CC]
a.   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;
b.   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.
2.   Waters under Art. 502, CC
a.   Rivers and natural beds
b.   Continuous or intermittent waters of springs
and brooks running in their natural beds and
the beds themselves
c.   Waters rising continuously or intermittently
on lands of public dominion
d.   Lakes and lagoons formed by Nature on
public lands, and their beds
e.   Rain waters running through ravines or sand
beds, which are also part of public dominion;
f.   Subterranean waters on public lands
g.   Waters found within the zone of operation of
public works, even if constructed by a
contractor
h.   Waters rising continuously or intermittently
on lands belonging to private persons, to the
State, to a province, or to a city or
municipality from the moment they leave
such lands

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i.   The waste waters of fountains, sewers, and to registration. [Republic v. CA, G.R. No. L-61647
public establishments (1984)]
Specific kinds of non-registrable properties or lands 13.   Reservations for public and semi-public
1.   Forest or timberland, public forest, forest purposes – Sec. 14, Chapter 4, Book III of EO No.
reserves 292 provides that the President shall have the
2.   National parks – Under the present Constitution, power to reserve for settlement or public use, and
national parks are declared part of the public for specific public purposes, any of the lands of
domain, and shall be conserved and may not be public domain, the use of which is not otherwise
increased nor diminished, except by law [Rep. v directed by law.
AFP Retirement and Separation Benefits System,
G.R. No. 180463,(2013)] The land registration court has no jurisdiction over
3.   Mangrove swamps - Mangrove swamps or non-registrable property and cannot validly adjudge
mangroves should be understood as comprised the registration of title thereof in favor of a private
within the public forests of the Philippines as applicant. [Peña]
defined in Sec. 1820, Administrative Code of 1917.
[Director of Forestry v. Villareal, G.R. No. L-32266 Thus, where it has so been adjudged, the river not
(1980)] being capable of private appropriation or acquisition
4.   Mineral lands - Both under the 1987 Constitution by prescription, the title thereto may be attacked,
and Sec. 2 of the Public Land Act, mineral lands either directly or collaterally, by the State which is not
are not alienable and disposable. [Lepanto bound by any prescriptive period provided by the
Consolidated Mining Co. v. Dumyung, G.R. No. L- Statute of Limitation. [Peña, citing Martinez v. CA,
31666 (1979)] G.R. No. L-31271 (1974)]
5.   Foreshore land and seashore and reclaimed
lands- Seashore, foreshore, and/or portions of
territorial waters and beaches, cannot be
registered. Even alluvial formation along the
seashore is part of public domain. [Aquino, citing
Dizon v. Rodriguez, G.R. Nos. L-20300-01 (1965)]
6.   Lakes - Lakes are part of public dominion. [Art.
502(4), CC]
7.   Creeks and Streams – A dried up creek bed is
property of public dominion [Fernando v. Acuna,
G.R. No. 161030 (2011)]
8.   Military or Naval Reservations - The reservation
made segregates it from the public domain and
no amount of time in whatever nature of
possession could have ripen such possession into
private ownership. [Republic v. Marcos, G.R. No.
L-32941 (1973)]
9.   Watershed - The Constitution expressly
mandates the conservation and utilization of
natural resources, which includes the country’s
watershed. [Tan v. Director Of Forestry, G.R. No. L-
24548, (1983)]
10.   Grazing lands - While the 1987 Constitution does
not specifically prove that grazing lands are not
disposable, yet if such lands are part of a forest
reserve, there can be no doubt that the same are
incapable of registration. [Aquino, citing Director
of Lands v. Rivas, G.R. No. L-61539 (1986)]
11.   Previously titled land - Proceeds from the
indefeasibility of the Torrens title.
12.   Alluvial deposit along river when man-made -
Such deposit is really an encroachment of a
portion of the bed of the river, classified as
property of the public domain under Art. 420,
par. 1 and Art. 502 (1) of the CC, hence not open

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TORTS AND DAMAGES


Civil Law

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XIII.  TORTS/QUASI- cannot recover damages twice for the same act or
omission of the defendant.
DELICTS Art. 100, RPC. Every person criminally liable for a
felony is also civilly liable.
 Preliminary Considerations
An act or omission causing damage to another may
give rise to two separate civil liabilities on the part of
1.   Definition of Tort the offender—for civil liability ex delicto, and
independent civil liabilities. The choice is with the
Tort plaintiff who makes known his cause of action in his
A private or civil wrong violating a right for which the initiatory pleading or complaint [LG Foods v.
law provides a remedy in the form of damages Philadelfa, G.R. No. 158995 (2006)]

Elements DELICT QUASI-DELICT


a.   Duty
b.   Breach Affects public interest Only of private concern
c.   Injury; and The law merely repairs
d.   Proximate Causation [Garcia v. Salvador, G.R. No. The law punishes or
the damages through
168512 (2007)] corrects the criminal act
indemnification
Covers only acts punished Any kind of fault or
2.  D efinition of Quasi-Delict by the law negligence

Art. 2176, CC. Whoever by act or omission causes


damage to another, there being fault or 4.  C ulpa Aquiliana
negligence, is obliged to pay for the damage done. Distinguished from Culpa
Such fault or negligence, if there is no pre-existing
contractual relation between the parties, is called a Contractual
quasi-delict and is governed by the provisions of
this Chapter. a.  As to Source
Quasi-delict In culpa aquiliana, it is the wrongful or negligent act or
Also known as culpa aquiliana omission itself which creates the vinculum juris,
whereas in contractual relations, the vinculum exists
Elements independently of the breach of voluntary duty
a.   Act/omission committed through assumed by the parties when entering into the
fault/negligence contractual relation [Cangco v. Manila Railroad, G.R.
b.   Damage/injury is caused by such act/omission No. L-12191 (1918).
c.   Does not arise under a pre-existing contractual
obligation
b.  As to Applicability of the
Note: Most jurisprudence does not include the third Doctrine of Proximate
element. Cause
3.  Quasi-Delict The doctrine of proximate cause [to establish the fault
or negligence of the defendant] is applicable only in
Distinguished from Crime actions for quasi-delict, not in actions involving breach
of contract [Calalas v. CA, G.R. No. 122039 (2000)].
A quasi-delict is a separate source of obligation under
Art. 1157, CC.

Art. 2177, CC. Responsibility for fault or negligence


under the preceding article is entirely separate and
distinct from the civil liability arising from
negligence under the Penal Code. But the plaintiff

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U.P. LAW BOC TORTS AND DAMAGES CIVIL LAW

c.   As to the Defense of an connected by a


legal tie
Employer for the
Presence of It is the vinculum
Negligence of an Employee negligence juris
Merely incidental

As it is not necessary for the plaintiff in an action for Existence of


What must be A lack of the
breach of contract to show that the breach was due to contract and
proven diligence required
the negligent conduct of the defendant or his servants, breach thereof
proof on the part of the defendant that the negligence Diligence in
or omission of his servants or agents caused the selection and Rebuttal of the
breach of contract would not constitute a defense to Defense
supervision of breach
the action [Cangco v. Manila Railroad, supra] employee
Direct and
EX DELICTU QUASI-DELICT Direct liability of
Liability immediate, as
(Under Art. 100, (Under Art. the employer
contracting party
RPC) 2176, CC)
[Cangco v. Manila Railroad, supra]
Cause of
Delict Quasi-delict
action Presence of Contractual Relations
Deemed instituted The Supreme Court held there may instances where
Separate legal there can be a quasi-delict even when there is a
with criminal case;
Need for institution; no contract between the parties. The test (whether a
must be reserved
reservation need to be quasi-delict can be deemed to underlie the breach of
to proceed
reserved a contract) can be stated thusly: Where, without a pre-
separately
existing contract between two parties, an act or
Preponderance of evidence (only
Quantum of omission can nonetheless amount to an actionable
criminal action needs
evidence tort by itself, the fact that the parties are contractually
proof beyond reasonable doubt)
During pendency of Proceeds The fact that the parties are contractually bound is no
Suspension prosecution of independent of bar to the application of quasi-delict provisions to the
criminal case criminal case case. [Far East v. CA, G.R. No. 108164 (1995)].
No effect, unless
acquittal is
Effect of because the act
No effect
acquittal does not exist or
accused is not the
author of the act
Before
arraignment: May be
May still be recovered from
Effect of recovered from the estate of the
death of estate of the accused,
accused* accused regardless of the
stage the case is
After arraignment: in
Extinguished
*Sec. 4, Rule 111, Rules of Court

CULPA CULPA
AQUILIANA CONTRACTUAL
Negligence
A breach in the
becomes source
performance of
Vinculum juris of obligation
an obligation
between persons
already existing
not formerly

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  Negligence situation? If not, then he is negligent. Negligence in a


given case is not determined by reference to the
personal judgment of the actor in the situation before
1.   Negligence him, but is determined in the light of human
experience and the facts involved in the particular
case. Conduct is said to be negligent when a prudent
Art. 1173, CC. The fault or negligence of the obligor
man in the position of the tortfeasor would have
consists in the omission of that diligence which is
foreseen that an effect harmful to another was
required by the nature of the obligation and
sufficiently probable to warrant his foregoing the
corresponds with the circumstances of the persons,
conduct or guarding against its consequences [Picart
of the time and of the place. When negligence
v. Smith, G.R. No. L-12219 (1918)].
shows bad faith, the provisions of Articles 1171 and
2201, paragraph 2, shall apply.
b.  Standard of Care Needed in
If the law or contract does not state the diligence Specific Circumstances
which is to be observed in the performance, that
which is expected of a good father of a family shall 1.   Operators of Motor Vehicles
be required. In Relation to Cyclists
Because of inherent differences between
Negligence motorists and cyclists, the former being capable
It is the omission to do something which a reasonable of greater speed and destruction, operators of
man, guided by those considerations which ordinarily motor vehicles have a higher standard in his duty
regulate the conduct of human affairs, would do, or of care [Anonuevo v. CA, G.R. No. 130003 (2004)].
the doing of something which a prudent and
reasonable man would not do [Layugan v. IAC, G.R. 2.   Banks
No. 73998 (1988)]. The law imposes on banks high standards in view
of the fiduciary nature of banking. Section 2 of
The diligence with which the law requires the Republic Act No. 8791 (RA 8791), which took effect
individual to at all times govern his conduct varies with on 13 June 2000, declares that the State
the nature of the situation in which he is placed and recognizes the ‘fiduciary nature of banking that
the importance of the act which he is to perform [Jorge requires high standards of integrity and
v. Sicam, G.R. No. 159617 (2007)]. performance.’ This fiduciary relationship means
that the bank’s obligation to observe high
To determine whether there has been negligence by standards of integrity and performance is deemed
the defendant, this 2-step analysis may be used: written into every deposit agreement between a
a.   Determine the diligence required of the actor bank and its depositor. The fiduciary nature of
under the circumstances, and banking requires banks to assume a degree of
b.   Determine whether the actor has performed the diligence higher than that of a good father of a
diligence required. Failing the second step would family [Consolidated Bank v. CA, G.R. No. 138569
lead to the conclusion that the defendant has (2003)].
been negligent.
3.   Experts (In General)
By jumping into the sea, the employee failed to Those who undertake any work calling for special
exercise even slight care and diligence and displayed skills are required not only to exercise reasonable
a reckless disregard of the safety of his person. His care in what they do but also possess a standard
death was caused by his notorious negligence. minimum of special knowledge and ability. In all
Notorious negligence has been held to be tantamount employments where peculiar skill is requisite, one
to gross negligence which is want of even slight care who offers his services is understood as holding
and diligence [Ameda v. Rio, G.R. No. L-6870 (1954)]. himself out to the public as possessing the degree
of skill commonly possessed by others in the same
a.  Default Standard of Care: employment [Far Eastern Shipping v. CA, G.R. No.
130068 (1998)].
Good Father of a Family When a person holds himself out as being
competent to do things requiring professional
Test: Did the defendant in doing the alleged negligent skill, he will be held liable for negligence if he fails
act use that reasonable care and caution which an to exhibit the care and skill of one ordinarily
ordinarily prudent man would have used in the same skilled in the particular work which he attempts to

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U.P. LAW BOC TORTS AND DAMAGES CIVIL LAW

do [Culion v. Philippine Motors, G.R. No 32611 only, and this is to be determined in each case by
(1930)]. the circumstances of the case [Taylor v. Manila
Railroad, G.R. No. 4977 (1910)].
4.   Doctors
Whether or not a physician has committed an No contributory negligence can be imputed to
‘inexcusable lack of precaution’ in the treatment children below 9 years old [Jarco Marketing v. CA,
of his patient is to be determined according to the G.R. No. 129792 (1999)].
standard of care observed by other members of
the profession in good standing under similar The degree of care required to be exercised must
circumstances bearing in mind the advanced vary with the capacity of the person endangered
state of the profession at the time of treatment of to care for himself. …The standard of conduct to
present state of medical science. It is in this aspect which a child must conform for his own protection
of medical malpractice that expert testimony is is that degree of care ordinarily exercised by
essential to establish not only the standard of care children of the same age, capacity, discretion,
of the profession but also that the physician’s knowledge and experience under the same or
conduct in the treatment and care falls below similar circumstances [Ylarde v. Aquino, G.R. No.
such standard [Cruz v. CA, GR. No. 122445 (1997)] L-33722 (1988)].

5.   Pharmacists c.   Presumptions of
The profession of pharmacy, it has been said
again and again, is one demanding care and skill. Negligence
Even under the first conservative expression,
"ordinary care" with reference to the business of a IN MOTOR VEHICLE MISHAPS
druggist…must be held to signify "the highest
practicable degree of prudence, thoughtfulness, Liability of the owner
and vigilance, and most exact and reliable
safeguards consistent with the reasonable Art. 2184, CC. In motor vehicle mishaps, the owner
conduct of the business in order that human life is solidarily liable with his driver, if the former, who
may not constantly be exposed to the danger was in the vehicle, could have, by the use of the due
flowing from the substitution of deadly poisons diligence, prevented the misfortune. xxx
for harmless medicine [US v. Pineda, G.R. No. L- If the owner was not in the motor vehicle, the
12858 (1918)].” provisions of article 2180 are applicable.

Mistake is negligence and care is no defense Art. 2186, CC. Every owner of a motor vehicle shall
[Mercury Drug v. de Leon, G.R. No. 165622 file with the proper government office a bond
(2008)]. executed by a government-controlled corporation
or office, to answer for damages to third persons.
6.   Possessor of Extremely Dangerous The amount of the bond and other terms shall be
Instrumentalities fixed by the competent public official.
[A] higher degree of care is required of someone
who has in his possession or under his control an The owner is solidarily liable with the driver for motor
instrumentality extremely dangerous in vehicle mishaps when:
character, such as dangerous weapons or 1.   The owner was IN the vehicle at the time, AND
substances. Such person in possession or control 2.   The owner could have, by the use of due diligence,
of dangerous instrumentalities has the duty to prevented the misfortune.
take exceptional precautions to prevent any injury
being done thereby. Unlike the ordinary affairs of Note: If the owner was NOT inside the vehicle, Art.
life or business which involve little or no risk, a 2180 applies.
business dealing with dangerous weapons
requires the exercise of a higher degree of care The presumption is against the owner of the motor
[Pacis v. Morales, G.R. No. 169467 (2010)]. vehicle. He has the burden of proving due diligence.
Thus, once a driver is proven negligent in causing
7.   Children damage, the law presumes the vehicle owner equally
The conduct of an infant of tender years is not to negligent and imposes upon the latter the burden of
be judged by the same rule, which governs that of proving proper selection and supervision of employee
an adult. …The care and caution required of a as a defense.
child is according to his maturity and capacity

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As held in Vargas v. Langcay [G.R. No. 17459 (1962)],


“the registered owner/operator of a passenger vehicle Art. 2185, CC. Unless there is proof to the contrary,
is jointly and severally liable with the driver for it is presumed that a person driving a motor vehicle
damages incurred by passengers or third persons as a has been negligent if at the time of the mishap, he
consequence of injuries or death sustained in the was violating any traffic regulation.
operation of said vehicles. Regardless of who the
actual owner of a vehicle is, the operator of record Article 2184 establishes a presumption of negligence
continues to be the operator of the vehicle as regards on the part of the driver based on previous violations
the public and third persons and as such is directly and of traffic regulations. Article 2185 establishes a
primarily responsible for the consequences incident to presumption of negligence on the basis of
its operation, so that in contemplation of law, such simultaneous violations.
owner/operator of record is the employer of the driver,
the actual operator and employer being considered Despite the presumption of negligence arising from
merely as his agent.” the traffic regulation violation, the claimant must still
prove that such negligence was the proximate cause
The registered owner of a motor vehicle is primarily in order to successfully claim for damages [Sanitary
liable for the damage or injury caused to another, but Steam v CA, G.R. No. 119092 (1998)].
he has a right to be indemnified by the real owner of
the amount he was required to pay. This rule applies Article 2185 was not formulated to compel or ensure
both to private and to common carriers with respect to obeisance by all to traffic rules and regulations. It does
their passengers [Tamayo v. Aquino, G.R. No. L-12634 not apply to non-motorized vehicles, in recognition of
(1959)]. the unequal footing of standards applicable to motor
vehicles as opposed to other types of vehicles
The law does not require that a person must possess a [Añonuevo v. CA, supra].
certain measure of skill or proficiency either in the
mechanics of driving or in the observance of traffic POSSESSION OF DANGEROUS WEAPONS OR
rules before he may own a motor vehicle. The test of SUBSTANCES
his negligence, within the meaning of Article 2184, is
his omission to do that which the evidence of his own Art. 2188, CC. There is prima facie presumption of
senses tells him he should do in order to avoid the negligence if the death or injury results from his
accident. And as far as perception is concerned, possession of dangerous weapons or substances,
absent a minimum level imposed by law, a maneuver such as firearms and poison, except when the use
that appears to be fraught with danger to one or possession thereof is indispensable in his
passenger may appear to be entirely safe and occupation or business.
commonplace to another. Were the law to require a
uniform standard of perceptiveness, employment of
COMMON CARRIERS
professional drivers by car owners who, by their very
inadequacies, have real need of drivers' services,
would be effectively proscribed [Caedo v. Yu Khe Tai, Art. 1735, CC. In all cases other than those
G.R. No. L-20392 (1968)]. mentioned in Nos. 1, 2, 3, 4, and 5 of the preceding
article (calamity, act of public enemy in war, act of
The owner of the motor vehicle is not liable for the owner of the goods, character of the goods, order
misfortune unless the negligent acts of the driver are of competent public authority), if the goods are lost
continued for such a length of time as to give the destroyed or deteriorated, common carriers are
owner a reasonable opportunity to observe them and presumed to have been at fault or to have acted
to direct his driver to desist therefrom. The act negligently, unless they prove that they observed
complained of must be continued in the presence of extraordinary diligence as required under Art. 1733.
the owner for such a length of time that the owner, by
his acquiescence, makes his driver’s act his own Art. 1752, CC. Even when there is an agreement
[Chapman v. Underwood, G.R. No. L-9010 (1914)]. limiting the liability of the common carrier in the
vigilance over the goods, the common carrier is
Liability of the driver disputably presumed to have been negligent in
case of their loss, destruction or deterioration.
Art. 2184, CC. xxx It is disputably presumed that a
driver was negligent, if he had been found guilty of
reckless driving or violating traffic regulations at
least twice within the next preceding two months.

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RES IPSA LOQUITUR d.  Persons Liable


The doctrine of res ipsa loquitur (“the thing or the 1.   The direct tortfeasor, for his own acts
transaction speaks for itself”) is a rule of evidence (not
of substantive law) peculiar to the law of negligence.
Art. 2176, CC. Whoever by act or omission causes
The doctrine treats the injury itself as proof of
damage to another, there being fault or
negligence.
negligence, is obliged to pay for the damage done.
xxx
Elements: [Ramos v. CA, G.R. No. 124354 (1999)]
1.   The accident is of a kind which ordinarily does not
occur in the absence of someone’s negligence; The tortfeasor may be a natural or juridical person. For
2.   It is caused by an instrumentality within the natural persons, apply requisites of Art. 2176 and for
exclusive control of the defendant or defendants; juridical persons, apply vicarious liability provisions.
and
3.   The possibility of contributing conduct, which 2.   Persons vicariously liable
would make the plaintiff responsible, is
eliminated. Art. 2180, CC. The obligation imposed by Article
2176 is demandable not only for one’s own acts or
Basis omissions, but also for those of persons for whom
The res ipsa loquitur doctrine is based in part upon the one is responsible.
theory that the defendant in charge of the
instrumentality which causes the injury either knows xxx
the cause of the accident or has the best opportunity
of ascertaining it and that the plaintiff has no such The responsibility treated of in this article shall
knowledge, and therefore is compelled to allege cease when the persons herein mentioned prove
negligence in general terms and to rely upon the proof that they observed all the diligence of a good
of the happening of the accident in order to establish father of a family to prevent the damage.
negligence [DM Consunji v. CA, G.R. No. 137873
(2001)]. The rationale is to extend liability by legal fiction to
those in a position to exercise absolute or limited
Effect control over the direct tortfeasor. The doctrine does
The fact of the occurrence of an injury, taken with the not apply where moral culpability can be imputed
surrounding circumstances, raise a presumption of directly, as when there is actual intent to cause harm
negligence, or make out a plaintiff’s prima facie case, to others.
and present a question of fact for defendant to meet
with an explanation [Ramos v CA, supra]. The liability of the vicarious obligor is primary and
direct (solidarily liable with the tortfesor), not
In medical malpractice cases, when the doctrine of res subsidiary. His responsibility is not conditioned upon
ipsa loquitur is availed by the plaintiff, the need for the insolvency of or prior recourse against the
expert medical testimony is dispensed with because negligent tortfeasor.
the injury itself provides the proof of negligence. The
reason is that the general rule on the necessity of PERSONS
expert testimony applies only to such matters clearly VICARIOUSLY ACTORS
within the domain of medical science, and not to LIABLE
matters that are within the common knowledge of
mankind which may be testified to by anyone familiar Father and, in case of
with the facts. his death or Minor children who live in
incapacity, the their company
Note: For the res ipsa loquitur doctrine to apply, it must mother
appear that the injured party had no knowledge as to Minors or incapacitated
the cause of the accident, or that the party to be persons who are under their
Guardians
charged with negligence has superior knowledge or authority and live in their
opportunity for explanation of the accident. company
Owners and Employees in the service of
managers of an the branches in which the

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establishment or latter are employed or on the parental authority is exercised by both the father and
enterprise occasion of their functions the mother. Thus, the distinction in Art. 2180 where
the father is liable before the mother no longer
Employees and household applies.
helpers acting within the
scope of their assigned tasks, Who are liable for minors?
Employers
even though the former are 1.   Parents/Adoptive parents
not engaged in any business 2.   Court-appointed guardians
or industry 3.   Substitute Parental Authorities
State Special agent a.   Grandparents
b.   Oldest qualified sibling over 21 years old
Teachers or heads of Pupils and students or
c.   Child’s actual custodian, provided he is
establishments of apprentices, so long as they
qualified and over 21 years old.
arts and trades remain in their custody
4.   Special Parental Authorities
a.   School
a.   Persons exercising parental authority b.   Administrators
c.   Teachers
Art. 2180 (2), CC. The father and, in case of his d.   Individual, entity, or institution engaged in
death or incapacity, the mother, are responsible for child care
the damages caused by the minor children who live
in their company. Illegitimate children
Responsibility is with the mother whom the law vests
Art. 221, FC. Parents and other persons exercising with parental authority.
parental authority shall be civilly liable for the
Basis of liability of parents and adopters
injuries and damages caused by the acts or
Parental liability is anchored upon parental authority
omissions of their unemancipated children living in
coupled with presumed parental dereliction in the
their company and under their parental authority
discharge of the duties accompanying such authority.
subject to the appropriate defenses provided by
The parental dereliction is, of course, only presumed
law.
and the presumption can be overturned under Article
2180 of the CC by proof that the parents had exercised
Art. 216, FC. In default of parents or a judicially all the diligence of a good father of a family to prevent
appointed guardian, the following person shall the damage [Tamargo v. CA, G.R. No. 85044 (1992)].
exercise substitute parental authority over the child
in the order indicated: Meaning of “Minority”
(1)   The surviving grandparent, as provided in Art. Par. 2 and 3 of Art. 2180 speak of minors. Minors here
214; refer to those who are below 21 years of age, not below
(2)   The oldest brother or sister, over twenty-one 18 years. The law reducing the majority age from 21 to
years of age, unless unfit or disqualified; and 18 years old did not amend these paragraphs. Basis is
(3)   The child's actual custodian, over twenty-one FC, Art. 236 (3), as amended by RA 6809, provides,
years of age, unless unfit or disqualified. “Nothing in this Code shall be construed to derogate
from the duty or responsibility of parents and
Whenever the appointment or a judicial guardian guardians for children and wards below 21 years of age
over the property of the child becomes necessary, mentioned in the second and third paragraphs of 2180
the same order of preference shall be observed. of the CC.”

Art. 217, FC. In case of foundlings, abandoned Art. 2180 (3), CC. Guardians are liable for damages
neglected or abused children and other children caused by the minors or incapacitated persons who
similarly situated, parental authority shall be are under their authority and live in their company.
entrusted in summary judicial proceedings to
heads of children's homes, orphanages and The liability of guardians with respect to their wards is
similar institutions duly accredited by the proper governed by the same rule as in the liability of parents
government agency. with respect to their children below 21 years and who
live with them
Art. 221 FC provides that persons exercising parental
authority shall be civilly liable for the torts of the
children in their care. Art. 211 FC then states that “Incompetent” includes (Rule 92, ROC):

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1.   Those suffering the penalty of civil interdiction, Teacher in


2.   Prodigals, Persons Head of
charge; not
3.   Deaf and dumb who are unable to read and write liable establishment itself
administrator
4.   Unsound mind, even though they have lucid
intervals Custody Required
5.   Being of sound mind, but by reason of age, Heads of Heads of
disease, weak mind, and other similar causes, academic establishments of
cannot take care of themselves or manage their institutions arts and trades
property exercise only have apprentices,
administrative who they are in
Liability of minor or insane tortfeasor without a Rationale
authority over close proximity to.
parent or guardian the students, Therefore they can
He shall be answerable with his own property in an and are not in be liable for the tort
action against him where a guardian ad litem shall be close proximity by the
appointed. [Art. 2182] to them. apprentice/student.
Diligence of a good father of a family
b.   Teachers and schools Defense
to prevent damage
Art. 2180 (7), CC. Lastly, teachers or heads of
establishments of arts and trades shall be liable for RESPONSIBILITY FOR MINOR CHILDREN IN
damages caused by their pupils and students or SCHOOL (FC REGIME)
apprentices, so long as they remain in their SCHOOL, PARENTS,
custody. ADMINISTRATORS, GUARDIANS,
TEACHERS, ETC. ETC.
Art. 218, FC. The school, its administrators and Provided by Art. 218 Art. 219
teachers, or the individual, entity or institution
engaged in child are shall have special parental Parental
authority and responsibility over the minor child Kind of authority or
Special parental
while under their supervision, instruction or authority substitute
authority
custody. required parental
authority
Authority and responsibility shall apply to all Liability if
authorized activities whether inside or outside the tort is Principal and
premises of the school, entity or institution. Subsidiary
committed solidary
in school
Art. 219, FC. Those given the authority and
responsibility under the preceding Article shall be Under Article 2180, the teacher is liable for the acts or
principally and solidarily liable for damages caused omissions of the pupils and students, and so is the
by the acts or omissions of the unemancipated head of establishment of arts and trades for the
minor. The parents, judicial guardians or the apprentices, so long as they remain in custody,
persons exercising substitute parental authority regardless of age. Under the Family Code, liability
over said minor shall be subsidiarily liable. attaches to the school, its administrators and
teachers, or the individual or entity engaged in child
The respective liabilities of those referred to in the care, so long as the child is under their supervision,
preceding paragraph shall not apply if it is proved instruction, or custody, and the child is below 18 years
that they exercised the proper diligence required old.
under the particular circumstances.
Basis of liability of teachers and heads of
All other cases not covered by this and the establishments of arts and trades
preceding articles shall be governed by the They stand, to a certain extent, in loco parentis and are
provisions of the CC on quasi-delicts. called upon to exercise reasonable supervision over
the conduct of the child.
“TEACHERS” “HEADS”
“Custody” means the protective and supervisory
Academic Arts and trades, custody that the school, its head and teachers exercise
Institution
institutions establishments over the pupils, for as long as they are in attendance in

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school, which includes recess time [Palisoc v. 2.   Tortious act had been committed while the
Brillantes, G.R. No. L-29025 (1971)]. tortfeasor was acting in the normal course of
employment
As long as it is shown that the student is in the school
premises pursuant to a legitimate student objective, in BASIS OF LIABILITY: NOT RESPONDEAT
the exercise of a legitimate right, or the enjoyment of SUPERIOR, BUT PATER FAMILIAS
a legitimate student privilege, the responsibility of the
school authorities over the student continues RESPONDEAT SUPERIOR PATER FAMILIAS
[Amadora v CA, G.R. No. L-47745 (1988)]. There is only a
Master is absolutely liable
presumption of
to servant’s act or
STUDENTS COVERED negligence on the part
omission
of the employer
ARTS. 218-219 ART. 2180
Defense of negligence
All students, even those no No defense of negligence
available
longer minors, as long as they
Minor students only Embodied in the
remain in the custody of the Embodied in primary
persons responsible subsidiary liability under
liability under Art. 2180,
RPC – no defense of
where the defense of
diligence; only lack of
c.   Owners/managers of diligence is available
criminal liability
establishments/employers

Art. 2180 (4), FC. The owners and managers of an “Owners and managers of an establishment or
establishment or enterprise are likewise enterprise” does not include a manager of a
responsible for damages caused by their corporation. (Spanish term “directores” connotes
employees in the service of the branches in which “employer.” But manager of a corporation is not an
the latter are employed or on the occasion of their employer, but rather merely an employee of the
functions. owner.) [Philippine Rabbit v. Philam Forwarders, G.R.
No. L-25142 (1975)].
Art. 2180 (5), FC. Employers shall be liable for the The liability imposed upon employers with respect to
damages caused by their employees and damages occasioned by the negligence of their
household helpers acting within the scope of their employees to whom they are not bound by contract is
assigned tasks, even though the former are not based on the employer’s own negligence, such as
engaged in any business or industry. when he places a powerful automobile in the hands of
a servant whom he knows to be ignorant of the
NATURE OF EMPLOYERS’ LIABILITY method of managing such vehicle [Cangco v. Manila
The basis of his liability is not his Railroad, supra].
employee’s negligence, but his own
Direct This Court still employs the "control test" to determine
negligence in hiring and supervising
the employee. the existence of an employer-employee relationship
between hospital and doctor. Under the "control test",
The amount for which he is liable an employment relationship exists between a
may be pursued without having to physician and a hospital if the hospital controls both
Primary exhaust the employee’s assets, as the means and the details of the process by which the
opposed to subsidiary liability under physician is to accomplish his task. The Court earlier
the RPC. ruled that there was employer-employee relationship
He may recover the full amount of between the doctor and employee but reversed itself
the liability from his employee, as upon motion for reconsideration. They still held the
Solidary per Art. 2181, and not merely a hospital liable on the basis of agency and corporate
prorated amount, unlike in Art. responsibility [Professional Services v. CA and Agana,
2184, CC. G.R. No. 126297 (2010)].

“Within the scope of their assigned task” in Art. 2180


What must be established for vicarious liability
includes any act done by an employee in furtherance
1.   Existence of an employer-employee relationship
of the interests, or for the account of the employer at
between company and tortfeasor
the time of the infliction of the injury or damage
[Filamer v. CA, G.R. No. 75112 (1990)].

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Basis of liability of and beneficial to their employee [Metro Manila


Employer’s negligence in Transit v. CA, G.R. No. 104408 (1993)].
1.   The selection of their employees (culpa in
eligiendo) Due diligence in the selection of employees require
2.   The supervision over their employees (culpa in that the employer carefully examined the applicant for
vigilando) employment as to his qualifications, his experience
and record of service.
Presumption of Negligence
The presentation of proof of the negligence of its Criminal Negligence
employee gives rise to the presumption that the The vicarious liability of the employer for criminal
defendant employer did not exercise the diligence of a negligence of his employee is governed by RPC 103.
good father of a family in the selection and supervision Conviction of the employee conclusively binds the
of its employees [Lampesa v. De Vera, G.R. No. 155111 employer. Defense of due diligence in the selection
(2008)]. and supervision of the employee is not available. The
employer cannot appeal the conviction [Fernando v.
th th
Distinction between the 4 and 5 paragraphs of Franco (1971)].
Article 2180
A distinction must be made between the two Note: The liability of the employer under Art. 103 RPC
provisions to determine what is applicable. is subsidiary.
1.   Both provisions apply to employers:
a.   the fourth paragraph, to owners and managers Registered Owner Rule
of an establishment or enterprise; and The registered owner of the vehicle is primarily
b.   the fifth paragraph, to employers in general, responsible to the public for whatever damage or
whether or not engaged in any business or injury the vehicle may have caused, even if he had
industry. already sold the same to someone else. The policy is
2.   The fourth paragraph covers negligent acts of the easy identification of the owner who can be held
employees committed either in the service of the responsible so as not to inconvenience or prejudice the
branches or on the occasion of their functions, third party injured [Cadiente v. Macas (2008)]. The
while the fifth paragraph encompasses negligent registered owner, however, has the right to be
acts of employees acting within the scope of their indemnified by the real or actual owner of the amount
assigned task. that he may be required to pay as damages for the
a.   The latter is an expansion of the former in both injury caused to the plaintiff [Orix Metro Leasing v.
employer coverage and acts included. Mangalinan (2012)]. This rule applies even if the
b.   Negligent acts of employees, whether or not vehicle is leased to third persons. The liability of the
the employer is engaged in a business or registered owner is subject to his right of recourse
industry, are covered so long as they were against the transferee or buyer.
acting within the scope of their assigned task,
even though committed neither in the service of “Owner” shall mean the actual legal owner of the
the branches nor on the occasion of their motor vehicle, in whose name such vehicle is duly
functions. registered with the LTO. Registration of motor vehicles
c.   For, admittedly, employees oftentimes wear is required not because it is the operative act which
different hats. They perform functions which transfers ownership in vehicles, but because it is the
are beyond their office, title or designation but means by which the owner can be identified so that if
which, nevertheless, are still within the call of any accident occurs, or damage or injury is caused in
duty [Castilex Industrial Corp. v. Vasquez, G.R. the operation of the vehicle, responsibility can be
No. (1999)]. fixed.

Defense of diligence in selection and supervision d.   The State


Due diligence in the supervision of employees includes
the formulation of suitable rules and regulations for Sec. 3, Art. XVI, 1987 Constitution. The State may
the guidance of employees and the issuance of proper not be sued without its consent.
instructions intended for the protection of the public
and persons with whom the employer has relations
Art. 2180 (3), CC. The State is responsible in like
through his or her employees and the imposition of
manner when it acts through a special agent; but
necessary disciplinary measures upon employees in
not when the damage has been caused by the
case of breach or as may be warranted to ensure
official to whom the task done properly pertains, in
performance of acts as indispensable to the business

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which case what is provided in Article 2176 shall be Art. 2194, FC. The responsibility of two or more
applicable. persons who are liable for quasi-delict is solidary.

Who may be sued under the State Definition of “Joint Tortfeasors”


1.   A special agent under Art. 2180 They are all persons who command, instigate,
2.   Instrumentalities discharging proprietary promote, encourage, advise, countenance, cooperate
functions in, aid or abet in the commission of a tort, or who
•   The power to enter into contracts implies the approve of it after it is done, if done for their benefit
consent to be sued [Filipinas Broadcasting Network v. AMEC-BCCM, G.R.
•   The charter of the instrumentality may No. 141994 (2005)].
expressly provide that it may be sued
3.   Those that consent to be sued Applicability of the provision
Where the concurrent or successive negligent acts or
Instances where the State gives its consent to be omissions of two or more persons, although acting
sued independently, are in combination the direct and
1.   Art. 2180 (6) is an example of an express proximate cause of a single injury to a third person, it
legislative consent. Here, the State assumes a is impossible to determine in what proportion each
limited liability for the acts of its special agents. contributed to the injury and either of them is
2.   Art. 2189 provides for state liability for damages responsible for the whole injury. Where their
caused by defective condition of public works. concurring negligence resulted in injury or damage to
3.   Local Government Code provides for the liability a third party, they become joint tortfeasors and are
of local government units for wrongful exercise of solidarily liable for the resulting damage [Far Eastern
its proprietary (as opposed to its governmental) Shipping v. CA, supra].
functions. The latter is the same as that of a
private corporation or individual. [Mendoza v. de
Leon, G.R. No. L-9596 (1916)]
2.  C ause
Special Agent a.  Concept of Proximate
One who receives a definite and fixed order or Cause
commission, foreign to the exercise of the duties of his
office if he is a special official. This concept does not In order that civil liability for negligence may arise,
apply to any executive agent who is an employee of the there must be a direct causal connection between the
active administration and who on his own damage suffered by the plaintiff and the act or
responsibility performs the functions which are omission of the defendant.
inherent in and naturally pertain to his office [Merritt v.
Government of the Philippine Islands, G.R. No. 11154 Where the particular harm sustained was reasonably
(1960)]. foreseeable at the time of the defendant’s misconduct,
his act or omission is the legal cause thereof.
A corporate body performing non-governmental Foreseeability is the fundamental basis of the law of
functions becomes liable for the damage caused by negligence. To be negligent, the defendant must have
the accident resulting from the tortious act of its acted or failed to act in such a way that an ordinary
driver-employee. Such corporate body assumes the reasonable man would have realized that certain
responsibility of an ordinary employer and as such, interests of certain persons were reasonably subjected
becomes answerable for damages [Fontanilla v. to a general but definite class of risks. [Jarencio]
Maliaman, G.R. No. 55963 (1991)].
Two definitions of proximate cause:
Why the State cannot be sued 1.   Proximate cause immediately resulting in
1.   Neither fault nor negligence can be presumed on injury: defined as “that cause, which, in natural
the part of the State in the organization of and continuous sequence, unbroken by any
branches of public service and in the appointment efficient intervening cause, produces the injury,
of its agents. and without which the result would not have
2.   Suing the State will divert its focus from the occurred” [Bataclan v. Medina, G.R. No. 10126
delivery of necessary public services. (1957)].
2.   Proximate cause not immediately resulting in
e.   Joint tortfeasors injury but sets in motion a chain of events, also
known as Proximate Legal Cause: that acting first

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and producing the injury, either immediately or by cause and the injury a distinct, successive,
setting other events in motion, all constituting a unrelated, and efficient cause of the injury, even
natural and continuous chain of events, each though such injury would not have happened but
having a close causal connection with its for such condition or occasion [Manila Electric v.
immediate predecessor, the final event in the Remonquillo, G.R. No. L-8328 (1956)].
chain immediately effecting the injury as a natural
and probable result of the cause which first acted, 3.   Intervening Cause
under such circumstances that the person The test of determining whether or not the
responsible for the first event should, as an intervening cause is sufficient to absolve a prior
ordinary prudent and intelligent person, have cause of the injury is as follows: whether the
reasonable ground to expect at the moment of his intervention of a later cause is a significant part of
act or default that an injury to some person might the risk involved in the defendant’s conduct, or is
probably result therefrom [Bataclan v. Medina, so reasonable connected with it that the
supra]. responsibility should not be terminated. In the
affirmative, such foreseeable intervening forces
Respondent was mistakenly given Dormicum, a are within the scope of the original risk, and hence
potent sleeping tablet, instead of medication for his of the defendant’s negligence. In the negative,
blood sugar. He took a pill for 3 consecutive days and there exists an efficient intervening cause that
on the third day, he fell asleep on the wheel and relieves the defendant of liability.
figured in a vehicular accident. The Court found that
the proximate cause of the accident was the Mercury If the intervening cause is one which in ordinary
Drug employee’s mistake in reading the prescription human experience is reasonably to be anticipated,
[Mercury Drug v. Baking, G.R. No. 156037 (2007)]. or one which the defendant has reason to
anticipate under the particular circumstances, the
Note: Here, 3 days have elapsed from the time of the defendant may be negligent, among other
negligent act determined by the Court as the reasons, because of failure to guard against it.
proximate cause; thus, the Court did not consider the There is an intervening cause combining with the
time element in determining proximate cause but the defendant’s conduct to produce the result, and
nature and gravity of the injury. the defendant’s negligence consists in failure to
protect the plaintiff against that very risk [Phoenix
Differentiated from: Construction v. IAC, G.R. No. L-65295 (1987)].
1.   Concurrent Cause – Several causes producing the
injury, and each is an efficient cause without b.  Tests to Determine
which the injury would not have happened. The
injury is attributed to any or all the causes, and Proximate Cause
recovery may be had against any or all of those
responsible. 1.   But for / Sine qua non rule
Whether such negligent conduct is a cause
Note: They’re the same thing from the point of without which the injury would not have occurred
view of solidarity. or is the efficient cause which set in motion the
chain of circumstances leading to the injury.
As a general rule, that negligence in order to [Bataclan v. Medina, supra]
render a person liable need not be the sole cause
of an injury. It is sufficient that his negligence, 2.   Sufficient link
concurring with one or more efficient causes other Plaintiff, however, must establish a sufficient link
than the plaintiff’s, is the proximate cause of the between the act or omission and the damage or
injury. injury. That link must not be remote or far-
fetched; otherwise, no liability will attach. The
2.   Remote Cause – a cause which would have been damage or injury must be a natural and probable
a proximate cause, had there been no efficient result of the act or omission. [Dy Teban Trading,
intervening cause after it and prior to the injury. Inc. v. Ching, G.R. No. 161803 (2008)]

A prior and remote cause cannot be made the


basis of an action if such remote cause did nothing
more than furnish the condition or give rise to the 3.   Substantial factor
occasion by which the injury was made possible, if If the harmful result would not have come about
there intervened between such prior or remote had the defendant not been negligent, his

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conduct is a substantial factor and there would be merely serves to reduce the recovery of damages
legal causation. Thus, when this test is utilized, it by the plaintiff but does not exculpate the
is also being applied as a test of actual causation defendant from his breach of contract
or “cause in fact’’ test. [de Leon] [Consolidated Bank v. CA, G.R. No. 138569
(2003)].
4.   Mixed considerations
There is no exact formula to determine probable Last clear chance applies only if the person who
cause. It is based upon mixed considerations of allegedly had the last opportunity to avert the
logic, common sense, policy and precedent [Dy accident was aware of the existence of peril or
Teban v. Jose Ching, supra]. should, with exercise of due care, have been
aware of it. The doctrine can never apply where
5.   Cause v. condition the party charged is required to act
The distinction between cause and condition has instantaneously, and if the injury cannot be
already been almost entirely discredited. So far as avoided by application of all means at hand after
it has any validity at all, it must refer to the type of the peril is or should have been discovered
case where the forces set in operation by the [Pantranco v. Baesa, G.R. No. 79051-51(1989)].
defendant have come to rest in a position of
apparent safety, and some new force intervenes. The doctrine of last clear chance, as enunciated in
But even in such cases, it is not the distinction Anuran v. Buno, applies in a suit between the
between “cause” and “condition” which is owners and drivers of colliding vehicles. It does
important, but the nature of the risk and the not arise where a passenger demands
character of the intervening cause [Phoenix responsibility from the carrier to enforce its
Construction v. IAC, supra]. contractual obligations. It will be inequitable to
exempt the negligent driver of the jeepney and its
6.   Last clear chance owners on the ground that the other driver was
likewise guilty of negligence [Bustamante v. CA,
The Doctrine of Last Clear Chance G.R. No. 89880 (1991)].
Also known as: "doctrine of discovered peril” or
“doctrine of supervening negligence” or Note:
“humanitarian doctrine”. •   If plaintiff is the proximate cause: no recovery can
be made.
The antecedent negligence of the plaintiff does •   If plaintiff is not the proximate cause: Recovery
not preclude him from recovering damages can be made but such will be mitigated.
caused by the supervening negligence of the •   If negligence of parties is equal in degree, then
defendant, who had the last fair chance to prevent each bears his own loss.
the impending harm by the exercise of due
diligence [PNR v. Brunty, supra].
3.  Defenses
If both parties are found to be negligent; but, their
negligence are not contemporaneous, the person a.  Due Diligence to Prevent
who has the last fair chance to avoid the
impending harm and fails to do so is chargeable the Damage under Art.
with the consequences, without reference to the 2180, CC
prior negligence of the other party [Picart v. Smith,
supra]. Art. 2180, CC. The obligation imposed by Article
2176 is demandable not only for one’s own acts or
The doctrine of last clear chance finds no omissions, but also for those of persons for whom
application in a case where the proximate cause one is responsible.
of the injury has been established [PNR v Brunty,
supra]. xxx

The doctrine of last clear chance does not apply in (8) The responsibility treated of in this article shall
a case of culpa contractual, where neither the cease when the persons herein mentioned prove
contributory negligence of the plaintiff nor his last that they observed all the diligence of a good father
clear chance to avoid the loss, would exonerate of a family to prevent damage.
the defendant from liability. Such contributory
negligence or last clear chance by the plaintiff

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The presumption of negligence on the part of the part of the remedy allowed for the injury caused by a
master or employer, either in the selection of breach or wrong [Custodio v. CA, G.R. No. 116100
servant/employee or in the supervision, when an injury (1996)].
is caused by the negligence of a servant/employee
may be rebutted if the employer shows to the INJURY DAMAGE DAMAGES
satisfaction of the court that in the selection and
supervision, he has exercised the care and diligence of Loss, hurt, harm Recompense or
Illegal invasion
a good father of a family [Ramos v. PEPSI, G.R. No. L- resulting from compensation
of a legal right
22533 (1967)]. the injury awarded

b.  Acts of Public Officers One who made use of his own legal right does no
injury, thus, whatever damages are caused to another
should be borne solely by him under the principle of
A public officer is not liable for damages which a
damnum absque injuria. This principle, however, does
person may suffer arising from the just performance of
not apply when there is an abuse in the exercise of a
his official duties and within the scope of his assigned
person’s right. [Amonoy v. Gutierrez, G.R. No. 140420
tasks. An officer who acts within his authority to
(2001)]
administer the affairs of the office which he/she heads
is not liable for damages that may have been caused
to another, as it would virtually be a charge against the e.   Plaintiff’s Negligence is
Republic, which is not amenable to judgment for the Proximate Cause
monetary claims without its consent. However, a
public officer is by law not immune from damages in Art. 2179, CC. When the plaintiff’s own negligence
his/her personal capacity for acts done in bad faith was the proximate cause of his injury, he cannot
which, being outside the scope of his authority, are no recover damages. xxx
longer protected by the mantle of immunity for official
actions. [Vinzons-Chato v Fortun, G.R. No. 141309
(2008)]. This defense of plaintiff’s negligence as proximate
cause is absolute, for it bars recovery on the part of the
plaintiff. In Manila Electric v. Remoquillo, supra, the
c.   Authority of :aw Court did not allow recovery by Magno, ruling that his
death was primarily caused by his own negligence and
Art. 5, CC. Acts executed against the provisions of in some measure by the too close proximity of the
mandatory or prohibitory laws shall be void, “media agua” to the electric wire.
except when the law itself authorizes their validity.
If the plaintiff in a negligence action, by his own
Art. 11, CC. The following do not incur any criminal carelessness contributed to the principal occurrence,
liability: xxx that is, to the accident, as one of the determining
(5)   Any person who acts in the fulfillment of a causes thereof, he cannot recover [Bernardo v. Legaspi,
duty or in the lawful exercise of a right or office G.R. No. 9308 (1914)].
xxx
(8)   Any person who acts in obedience to an order f.   Contributory Negligence of
issued by a superior for some lawful purpose
the Plaintiff
d.  Damnum Absque Injuria Art. 2179, CC. xxx But if his negligence was only
contributory, the immediate and proximate cause
There can be damage without injury in those instances of the injury being the defendant's lack of due care,
in which the loss or harm was not the result of a the plaintiff may recover damages, but the courts
violation of a legal duty. shall mitigate the damages to be awarded.

Right to recover damages does not arise from the Art. 2214, CC. In quasi-delicts, the contributory
mere fact that the plaintiff suffered losses. To warrant negligence of the plaintiff shall reduce the
the recovery of damages, there must be both a right of damages that he may recover.
action for a legal wrong inflicted by the defendant, and
damage resulting to the plaintiff therefrom. Wrong
without damage, or damage without wrong, does not Contributory negligence is defined as conduct on the
constitute a cause of action, since damages are merely part of the injured party, which contributed as a legal
cause to the harm he has suffered, which falls below

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the standard to which he is required to conform for his precludes the recovery of damages by one who has
own protection [Valenzuela v. CA, GR. No. 115024 knowingly and voluntarily exposed himself to danger,
(1996)]. even if he is not negligent in doing so. This is so
because, in theory, the plaintiff’s acceptance of the risk
Contributory negligence does not defeat an action if it has wiped out the defendant’s duty, and as to the
can be shown that the defendant might, by the plaintiff the defendant’s negligence is not a legal
exercise of reasonable care and prudence, have wrong.
avoided the consequences of the injured party's
negligence. Where the plaintiff contributes to the Requisites:
principal occurrence as one of its determining factors, 1.   That the plaintiff had actual knowledge of the
he cannot recover. Where, in conjunction with the danger;
occurrence, he contributes only to his own injury, he 2.   That he understood and appreciated the risk from
may recover the amount that the defendant the danger; and
responsible for the event should pay for such injury, 3.   That he voluntarily exposed himself to such risk
less a sum deemed a suitable equivalent for his own
imprudence [MH Rakes v. Atlantic, G.R. No. L-1719 The defense is not applicable in the following cases:
(1907)]. A person is excused from the force of the rule (volenti
non fit injuria), that when he voluntarily assents to a
The defense of contributory negligence does not apply known danger he must abide by the consequences, if
in criminal cases committed through reckless an emergency is found to exist or if the life or property
imprudence, since one cannot allege the negligence of of another is in peril or when he seeks to rescue his
another to evade the effects of his own negligence endangered property [Ilocos Norte v. CA, G.R. No.
[Genobiagon v. CA, G.R. No. 40452 (1989)]. 53401 (1989)].

g.  Fortuitous Event The doctrine does not find application to the case
because even if respondent Reyes assumed the risk of
being asked to leave the pary, petitioners, under
Art. 1174, CC. Except in cases expressly specified
Articles 19 and 21 of the CC, were still under the
by the law, or when it is otherwise declared by
obligation to treat him fairly in order not to expose him
stipulation, or when the nature of the obligation
to unnecessary ridicule and shame [Nikko Hotel v.
requires the assumption of risk, no person shall be
Roberto Reyes, G.R. No. 154259 (2005)].
responsible for those events which, could not be
foreseen, or which, though foreseen, were
inevitable. i.   Prescription
Elements of caso fortuito [Juntilla v. Fontanar, G.R. Art. 1146, CC. The following actions must be
No. L-45637 (1985)]: instituted within four years:
1.   The cause of the unforeseen and unexpected (1)   Upon an injury to the rights of the plaintiff;
occurrence, or of the failure of the debtor to (2)   Upon a quasi-delict;
comply with his obligation, must be independent
of the human will; However, when the action arises from or out of any
2.   It must be impossible to foresee the event or if it act, activity, or conduct of any public officer
can be foreseen, it must be impossible to avoid; involving the exercise of powers or authority
3.   The occurrence must be such as to render it arising from Martial Law including the arrest,
impossible for the debtor to fulfill his obligation detention and/or trial of the plaintiff, the same
in a normal manner; and must be brought within one (1) year.
4.   The obligor must be free from any participation
in the aggravation of the injury resulting to the Art. 1150, CC. The time for prescription for all
creditor. kinds of actions, when there is no special provision
which ordains otherwise, shall be counted from
h.  Plaintiff’s assumption of the day they may be brought.
risk /Volenti Non Fit Injuria Prescription periods:
The doctrine of volenti non fit injuria (that to which a •   4 years for QD
person assents is not presumed in law as injury) refers •   1 year for defamation
to self-inflicted injury or to the consent to injury which

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It is clear that the prescriptive period must be counted


when the last element occurs or takes place, the time   Intentional Torts
of the commission of an act or omission violative of the
right of the plaintiff, which is the time when the cause Liability for personal acts or omission is founded on
of action arises. Thus, the prescription period begins that indisputable principle of justice recognized by all
from the day the quasi-delict is committed [Kramer v. legislators that when a person by his act or omission
CA, G.R. No. 83524 (1989)]. causes damage or prejudice to another, a juridical
relation is created by virtue of which the injured person
acquires a right to be indemnified and the person
j.   Waiver causing the damage is charged with the
corresponding duty of repairing the damage. The
Art. 6, CC. Rights may be waived, unless the reason for this is found in the obvious truth that man
waiver is contrary to law, public order, public should subordinate his acts to the precepts of
policy, morals, or good customs or prejudicial to prudence and if he fails to observe them and cause
a third person with a right recognized by law. damage to another, he must repair the damage
[Manresa].
Art. 1171, CC. Responsibility arising from fraud is
demandable in all obligations. Any waiver of an INTENTIONAL TORTS NEGLIGENT TORTS
action for future fraud is void.
The act or omission
Harmful consequences are merely creates a
k.   Emergency Rule or Sudden substantially certain to foreseeable risk or
Peril Doctrine occur or are intended harm, which may or may
not actually be realized
An individual, who suddenly finds himself in a
situation of danger and is required to act without
much time to consider the best means that may be
1.   Human Relations Torts
adopted to avoid the impending danger, is not guilty
of negligence if he fails to undertake what a.  Abuse of Right
subsequently and upon reflection may appear to be a
better solution, unless the emergency was brought by Art. 19, CC. Every person must, in the exercise of
his own negligence [Gan v. CA, G.R. No. L-44264 his rights and in the performance of his duties, act
(1988)]. with justice, give everyone his due, and observe
honesty and good faith.

Generally, the exercise of any right must be in


accordance with the purpose for which it was
established. It must not be excessive or unduly harsh;
there must be no intention to injure another.

There is abuse of right when:


1.   The right is exercised for the only purpose of
prejudicing or injuring another
2.   The objective of the act is illegitimate
3.   There is an absence of good faith

Elements [Albenson v. CA, G.R. No. 88694 (1993)]:


1.   There is a legal right or duty;
2.   Which is exercised in bad faith;
3.   For the sole intent of prejudicing or injuring
another.

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the principle of when it is abused,


LEGAL RIGHT AND damnum absque especially to the
CASE DOCTRINE
INJURY injuria. prejudice of
Right to transfer others.
credit. Right to forbid Article 19, known
The transfer of credit uninvited guests to contain what is
from Shell from entering the commonly
Philippines to Shell The standards in party. referred to as the
Velayo v. principle of abuse
USA was deemed a NCC 19 are
Shell
violation of NCC 21 as implemented by Ruby Lim’s throwing of rights, is not a
(1959) panacea for all
it allowed Shell to NCC 21. Nikko out of complainant
attach properties of Reyes, as a human hurts and
Hotel
their creditor CALI to gatecrasher in a social grievances.
Manila
the prejudice of its private party, was The object of this
Garden v.
other creditors. Reyes merely in exercise of article is to set
her duties as certain standards
Right to dismiss an When a right is (2005)
Executive Secretary which must be
employee. exercised in a of the hotel where observed not only
manner which the party was held, in the exercise of
does not conform and did not one’s rights but
The dismissal itself with the norms in
was not illegal but it constitute a violation also in the
NCC 19, and of Article 19. performance of
was the manner of results in damage one’s duties.
Globe v. dismissal which was to another, a legal
CA (1989) deemed in violation
wrong is thereby
of Article 19, as such committed. The b.  Acts Contrary to Law
was based on law, therefore,
unfounded recognizes a Art. 20, CC. Every person who, contrary to law,
accusations of primordial willfully or negligently causes damage to another,
dishonesty. limitation on all shall indemnify the latter for the same.
rights.
The conscious The provision is intended to provide a remedy in cases
The conscious indifference of a where the law declares an act illegal but fails to
indifference of the person to the provide for a relief to the party injured. [Jarencio]
University
school in not rights or welfare
of the Art. 20 does not distinguish, and the act may be done
informing its student of the others who
East v. willfully or negligently.
that he could not may be affected
Jader
graduate formed the by his act or
(2000) Requisites
basis for the award of omission can
damages. support a claim 1.   The act must be willful or negligent;
for damages. 2.   It must be contrary to law; and
3.   Damages must be suffered by the injured party.
Right to demolish The principle of
another’s house on damnum absque Salvador was misdiagnosed with Hepatitis, as a result
his own property. injuria does not of which she lost her job. During trial, it was proven
Amonoy obtained a apply when the that the clinic was operating under substandard
judgment in his favor exercise of the conditions, in violation of the Clinical Laboratory Law,
legal right is DOH Administrative Order No. 49-B, and the
Amonoy v. for Gutierrez to
suspended or Philippine Medical Technology Act of 1969. The Court
Gutierrez vacate. A demolition
order was issued but extinguished held that violation of a statutory duty is negligence,
(2001)
the court suspended pursuant to a and that Article 20 provides the legal basis for award
it with a TRO. court order. The of damages to a party who suffers damage whenever
Amonoy proceeded exercise of a right one commits an act in violation of some legal provision
with the demolition. ends when the [Garcia v. Salvador, G.R. No. 168512 (2007)].
In a complaint for right disappears,
damages, he claims and it disappears

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under Article 21 is made [Tanjanco v. CA, G.R. No.


c.   Acts Contrary to Morals L-18630 (1966)].

2.   Malicious Prosecution
Art. 21, CC. Any person who willfully causes loss or
Malicious prosecution is the institution of any
injury to another in a manner that is contrary to
action or proceeding, either civil or criminal,
morals, good customs or public policy shall
maliciously and without probable cause.
compensate the latter for the damage.
Elements: [Magbanua v. Junsay, G.R. No.132659
This article is designed “to expand the concept of torts (2007)]
and quasi-delict in this jurisdiction by granting a.   The fact of the prosecution or that the
adequate legal remedy for the untold number of moral prosecution did occur and that the defendant
wrongs which is impossible for human foresight to was himself the prosecutor or that he
specifically enumerate and punish in statute books” instigated its commencement;
[Baksh v. CA, supra]. b.   That the action finally terminated with an
acquittal;
Elements: [Albenson v. CA, supra]. c.   That in bringing the action, the prosecutor
1.   There is an act which is legal; acted without probable cause
2.   But which is contrary to morals, good customs, d.   That the prosecutor was actuated or impelled
and public policy; and by legal malice, that is, by improper or sinister
3.   It is done with intent to injure. motive.
Examples of acts contrary to morals: The mere dismissal of the criminal complaint by
1.   Breach of Promise to Marry and Moral the fiscal’s office did not create a cause of action
Seduction for malicious prosecution, because the
Mere breach of promise to marry is not an proceedings therein did not involve an exhaustive
actionable wrong. But to formally set a wedding examination of the elements of malicious
and go through all the above-described prosecution. To constitute such, there must be
preparation and publicity, only to walk out of it proof that the prosecution was prompted by a
when the matrimony is about to be solemnized, is sinister design to vex and humiliate a person and
quite different. This is palpably and unjustifiably that it was initiated deliberately by the defendant
contrary to good customs xxx [Wassmer v. Velez, knowing that his charges were false and
G.R. No. L-20089 (1964)]. groundless [Que v. IAC, G.R. No. 66865 (1989)].
Where a man's promise to marry is in fact the Malicious prosecution involves not only criminal
proximate cause of the acceptance of his love by a but civil and administrative suits as well
woman and his representation to fulfill that [Magbanua v. Junsay, supra].
promise thereafter becomes the proximate cause
of the giving of herself unto him in a sexual 3.   Public Humiliation
congress, proof that he had, in reality, no intention Lolita’s family filed a case against Alfonse Pe, a
of marrying her and that the promise was only a married man, for allegedly seducing Lolita and
subtle scheme or deceptive device to entice or causing great damage to the name of her parents,
inveigle her to accept him and to obtain her brothers, and sisters. The Court sustained the
consent to the sexual act, could justify the award claim, finding an injury to Lolita’s family in a
of damages pursuant to Article 21 not because of manner contrary to morals, good customs and
such promise to marry but because of the fraud public policy as contemplated in Article 21 of the
and deceit behind it and the willful injury to her new CC [Pe v. Pe, G.R. No. L-17396 (1962)].
honor and reputation. It is essential, however, that
such injury should have been committed in a It is against morals, good customs and public
manner contrary to morals, good customs or policy to humiliate, embarrass and degrade the
public policy [Baksh v. CA, supra]. dignity of a person. Everyone must respect the
dignity, personality, privacy and peace of mind of
However, when for one whole year, the plaintiff, a his neighbors and other persons (Article 26, CC)
woman of legal age, maintained sexual relations [Grand Union v. Espino, G.R. No. L-48250 (1979)].
with the defendant, with repeated acts of
intercourse, there is here voluntariness. No case 4.   Oppressive Dismissal
The right of an employer to dismiss an employee

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is not to be confused with the manner in which this The restitution must cover the loss suffered by the
right is to be exercised and the effects flowing plaintiff but it can never exceed the amount of unjust
therefrom. If the dismissal was done antisocially enrichment of the defendant if it is less than the loss
or oppressively, then there is a violation of Article of the plaintiff.
1701, which prohibits acts of oppression by either
capital or labor against the other, and Article 21, Requisites:
which makes a person liable for damages if he 1.   That the defendant has been enriched;
willfully causes loss or injury to another in a 2.   That the plaintiff has suffered a loss;
manner that is contrary to morals, good customs, 3.   That the enrichment of the defendant is without
or public policy. When the manner in which the just or legal ground; and
company exercised its right to dismiss was 4.   That the plaintiff has no other action based on
abusive, oppressive and malicious, it is liable for contract, crime or quasi-delict.
damages [Quisaba v. Sta. Ines, G.R. No. L-38000
(1974)]. e.   Violation of Human Dignity
d.  Unjust Enrichment Art. 26, CC. Every person shall respect the dignity,
personality, privacy and peace of mind of his
Art. 22, CC. Every person who through an act of neighbors and other persons. The following and
performance by another, or any other means, similar acts, though they may not constitute a
acquires or comes into possession of something at criminal offense, shall produce a cause of action
the expense of the latter without just or legal for damages, prevention and other relief:
ground, shall return the same to him. (1)   Prying into the privacy of another’s residence;
(2)   Meddling with or disturbing the private life or
Art. 23, CC. Even when an act or event causing family relations of another;
damage to another’s property was not due to the (3)   Intriguing to cause another to be alienated
fault or negligence of the defendant, the latter from his friends;
shall be liable for indemnity if through the act or (4)   Vexing or humiliating another on account of
event he was benefited. his religious beliefs, lowly station in life, place
of birth, physical defect, or other personal
Art. 2142, CC. Certain lawful, voluntary and condition.
unilateral acts give rise to the juridical relation of
quasi-contract to the end that no one shall be Article 26 specifically applies to intentional acts which
unjustly enriched or benefited at the expense of fall short of being criminal offenses. It itself expressly
another. refers to tortious conduct which "may not constitute
criminal offenses." The purpose is precisely to fill a gap
Art. 2143, CC. The provisions for quasi contracts in or lacuna in the law where a person who suffers injury
this Chapter do not exclude other quasi-contracts because of a wrongful act not constituting a crime is
which may come within the purview of the left without any redress. Under Article 26, the person
preceding article. responsible for such act becomes liable for "damages,
prevention and other relief." In short, to preserve
peace and harmony in the family and in the
One person should not be permitted to unjustly enrich
community, Article 26 seeks to eliminate cases of
himself at the expense of another, but should be
damnum absque injuria in human relations [MVRS
required to make restitution of, or for property or
Publications v. Islamic Da'wah Council, G.R. No.
benefits received, retained, or appropriated where it is
135306 (2003)].
just and equitable that such restitution be made, and
where such action involves no violation or frustration
The principal rights protected under this provision are
of law or opposition to public policy, either directly or
the following:
indirectly.
1.   The right to personal dignity
2.   The right to personal security
Enrichment at the expense of another is not per se
3.   The right to family relations
forbidden. It is such enrichment without just or legal
4.   The right to social intercourse
cause that is contemplated here. Just and legal cause
5.   The right to privacy
is always presumed, and the plaintiff has the burden
6.   The right to peace of mind
of proving its absence.

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Note: Coverage of Art. 26 is not limited to those 3.   Family Relations


enumerated therein, the enumeration being merely Alienation of affection
examples of acts violative of a person’s rights to This is a cause of action in favor of a husband
dignity, personality, privacy and peace of mind. Other against one who wrongfully alienates the
“similar acts” are also covered within the scope of the affection of his wife, depriving him of his conjugal
article. rights to her consortium, that is, her society,
VIOLATION OF PERSONAL DIGNITY affection, and assistance.
In order to be actionable it is not necessary that the act Note: This cause of action was mentioned in the
constitutes a criminal offense. The remedy afforded by case of Tenchavez v. Escaño, G.R. No. L-19671
the law is not only the recovery of damages. (1965).
“Prevention and other relief” is also available. In other
words, injunction and other appropriate reliefs may Elements:
also be obtained by the aggrieved party. a.   Wrongful conduct of the defendant:
intentional and malicious enticing of a
VIOLATION OF PRIVACY spouse away from the other spouse
Privacy is the right to be let alone, or to be free from b.   Loss of affection or consortium
unwarranted publicity, or to live without unwarranted Note: Complete absence of affection between
interference by the public in matters in which the the spouses is not a defense.
public is not necessarily concerned. This right is purely c.   Causal connection between such conduct and
personal in nature, such that it can be invoked only by loss
the person actually injured, it is subject to a proper
waiver, and it ceases upon death. However, the There is no evidence that the parents of Vicenta,
privilege may be given to heirs of a deceased to protect out of improper motives, aided and abetted her
his memory, to protect the feelings of the living heirs. original suit for annulment, or her subsequent
divorce; she appears to have acted independently,
Reasonableness of Expectation of Privacy Test: and being of age, she was entitled to judge what
[Ople v. Torres, G.R. No. 127685 (1998)] was best for her and ask that her decisions be
1.   Whether by one’s conduct, the individual has respected. Her parents, in so doing, certainly
exhibited an expectation of privacy cannot be charged with alienation of affections in
2.   Whether this expectation is one that society the absence of malice or unworthy motives, which
recognizes and accepts as reasonable have not been shown, good faith being always
presumed until the contrary is proved [Tenchavez
The general rule is that the right to privacy may only v. Escaño, G.R. No. L-19671 (1965)].
be invoked by natural persons. Juridical persons
cannot invoke this because the basis to this right is an Liability of Parents, Guardians or Kin
injury to the feelings and sensibilities of the injured The law distinguishes between the right of a
party, and a corporation has none of those. The parent to interest himself in the marital affairs of
exception is where the right to privacy is invoked along his child and the absence of rights in a stranger to
with the right against unreasonable searches and intermeddle in such affairs.
seizures. “An individual’s right to privacy under Article a.   Such distinction between the liability of
26(1) of the CC should not be confined to his house or parents and that of strangers is only in regard
residence as it may extend to places where he has the to what will justify interference.
right to exclude the public or deny them access” [Sps. b.   A parent is liable for alienation of affections
Hing v. Choachuy, G.R. No. 179736 (2013)]. resulting from his own malicious conduct, as
where he wrongfully entices his son or
INTERFERENCE WITH RELATIONS daughter to leave his or her spouse, but he is
An interference with the continuance of unimpaired not liable unless he acts maliciously, without
interests founded upon the relation in which the justification and from unworthy motives.
plaintiff stands toward one or more third persons c.   He is not liable where he acts and advises
[Prosser and Keeton]. his child in good faith with respect to his
child's marital relations in the interest of his
Kinds child as he sees it…
1.   Family relations d.   He may in good faith take his child into his home
2.   Social relations and afford him or her protection and support, so
3.   Economic relations long as he has not maliciously enticed his child
4.   Political relations away, or does not maliciously entice or cause him
or her to stay away, from his or her spouse. This

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rule has more frequently been applied in the case Art. 28, CC. Unfair competition in agricultural,
of advice given to a married daughter, but it is commercial or industrial enterprises or in labor
equally applicable in the case of advice given to a through the use of force, intimidation, deceit,
son. [Tenchavez v. Escaño, G.R. No. L-19671 machination or any other unjust, oppressive or
(1965)]. highhanded method shall give rise to a right of
4.   Social Relations action by the person who thereby suffers damage.
Meddling with or disturbing family relations
Art. 26, CC. Every person shall respect the dignity,
personality, privacy and peace of mind of his
f.   Dereliction of Duty
neighbors and other persons. The following and
similar acts, though they may not constitute a Art. 27, CC. Any person suffering material or moral
criminal offense, shall produce a cause of action loss because a public servant or employee refuses
for damages, prevention and other relief; or neglects, without just cause, to perform his
xxx official duty may file an action for damages and
(2) Meddling with or disturbing the private life or other relief against the latter, without prejudice to
family relations of another; any disciplinary administrative action that may be
taken.
3.   Economic Relations
This applies only to acts of nonfeasance or the
a.   Interference with contractual relations nonperformance of some acts which a person is
obliged or has responsibility to perform. The duty of
Art. 1314, CC. Any person who induces another to
the public servant must be ministerial in character. If
violate his contract with another person shall be
the duty is discretionary, he is not liable unless he
liable for damages to the other contracting party.
acted in a notoriously arbitrary manner.
Elements of tort interference: [So Ping Bun v. CA, The defense of good faith is not available because an
G.R. No. 120554 (1999)] officer is under constant obligation to discharge the
i.   Existence of a valid contract duties of his office, and it is not necessary to show that
ii.   Knowledge on the part of the third person his failure to act was due to malice or willfulness.
of the existence of contract; and
iii.   Interference of the third person is without Requisites: [Amaro v. Sumanguit, G.R. No. L-14986
legal justification or excuse. (1962)]
1.   Defendant is a public officer charged with a
Everyone has a right to enjoy the fruits and performance of a duty in favor of the plaintiff;
advantages of his own enterprise, industry, skill 2.   He refused or neglected without just cause to
and credit. He has no right to be protected against perform the duty;
competition; but he has a right to be free from 3.   Plaintiff sustained material or moral loss as a
malicious and wanton interference, disturbance consequence of such non-performance;
or annoyance. If disturbance or loss comes as a 4.   The amount of such damages, if material.
result of competition, or the exercise of like rights
by others, it is damnum absque injuria, unless
some superior right by contract or otherwise is 2.  I ndependent Civil Actions
interfered with. Thus, a plaintiff loses his cause of
action if the defendant provides a sufficient Sec. 3, Rule 111, ROC. In the cases provided for in
justification for such interference, which must be Articles 32, 33, 34 and 2176 of the CC of the
an equal or superior right in themselves. The Philippines, the independent civil action may be
defendant may not legally excuse himself on the brought by the offended party. It shall proceed
ground that he acted on a wrong understanding independently of the criminal action and shall
of his own rights, or without malice, or bona fide, require only a preponderance of evidence. In no
or in the best interests of himself [Gilchrist v. case, however, may the offended party recover
Cuddy, G.R. No. 9356 (1915)]. damages twice for the same act or omission
charged in the criminal action.
Bad faith/Malice is required to make the
defendant liable for damages in cases of tortuous
interference [So Ping Bun v. CA, supra]. a.  Violation of Civil and
Political Rights
b.   Unfair Competition

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Art. 32, CC. Any public officer or employee, or any independently of any criminal prosecution (if the
private individual, who directly or indirectly latter be instituted) and may be proved by a
obstructs, defeats, violates or in any manner preponderance of evidence.
impedes or impairs any of the following rights and
liberties of another person shall be liable to the The indemnity shall include moral damages.
latter for damages: Exemplary damages may also be adjudicated.
(1)   Freedom of religion
(2)   Freedom of speech The responsibility herein set forth is not
(3)   Freedom to write for the press or to maintain demandable from a judge unless his act or
a periodical publication omission constitutes a violation of the Penal code
(4)   Freedom from arbitrary or illegal detention or any other penal statute.
(5)   Freedom of suffrage
(6)   The right against deprivation of property Art.32, CC
without due process of law 1.   Speaks of a particular specie of an “act” that may
(7)   The right to just compensation when property give rise to an action for damages against a public
is taken for public use officer, and that is, a tort for impairment of rights
(8)   The right to equal protection of the laws and liberties. [Vinzons-Chato v. Fortune, supra]
(9)   The right to be secure in one’s person, house, 2.   Not only public officers but also private
papers and effects against unreasonable individuals can incur civil liability for violation of
searches and seizures rights enumerated therein. Because the provision
(10)  The liberty of abode and of changing the same speaks of an officer, employee or person “directly
(11)   The right to privacy of communication and or indirectly” responsible for the violation of the
correspondence constitutional rights and liberties of another, it is
(12)  The right to become a member of associations not the actor alone who must answer for damages
and societies for purposes not contrary to law under Article 32. It is not even necessary that the
(13)  The right to take part in a peaceable assembly defendant should have acted with malice or bad
and petition the government for redress of faith, otherwise, it would defeat its main purpose,
grievances which is the effective protection of individual
(14)  The right to be free from involuntary servitude rights. [Silahis v. Soluta, G.R. No. 163087 (2006)]
in any form 3.   It is obvious that the purpose of Art. 32 is to
(15)  The right of the accused against excessive bail provide a sanction to the deeply cherished rights
(16)  The right of the accused to be heard by himself and freedoms enshrined in the Constitution.
and counsel, to be informed of the nature and
the cause of the accusation against him, to Its message is clear; no man may seek to violate
have a speedy and public trial, to meet the those sacred rights with impunity. In times of great
witnesses face to face, to have compulsory upheaval or of social and political stress, when the
process to secure the attendance of witnesses temptation is strongest to yield. [Aberca, et al. v.
on is behalf; Ver, et al., G.R. No. 69866(1988)].
(17)   Freedom from being compelled to be a
witness against one’s self, or from being
forced to confess his guilt, or from being
b.  Defamation, Fraud,
induced by a promise of immunity or reward to Physical Injuries
make such confession, except when the
person confessing becomes a State witness. Art. 33, CC. In cases of defamation, fraud, and
(18)  Freedom from excessive fines, or cruel and physical injuries, a civil action for damages,
unusual punishment, unless the same is entirely separate and distinct from the criminal
imposed or inflicted in accordance with a action, may be brought by the injured party. Such
statute which has not been judicially declared civil action shall proceed independently of the
unconstitutional; criminal prosecution, and shall require only a
(19)  Freedom of access to the courts preponderance of evidence.

In any of the cases referred to in this article, The civil action for damages that Article 33 allows to
whether or not the defendant’s act or omission be instituted is ex-delicto. This is manifest from the
constitutes a criminal offense, the aggrieved party provision which uses the expressions “criminal action”
has a right to commence an entirely separate and and “criminal prosecution”. Quoting Tolentino, the
distinct civil action for damages, and for other Court ruled that this provision is an exception to the
relief. Such civil action shall proceed general rule that the civil action for recovery of civil

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liability arising from the offense charged is impliedly but in their generic sense. With these apparent
instituted with the criminal action. Where the offense circumstances in mind, it is evident that the
is defamation, fraud, or physical injuries, a civil action term “physical injuries” could not have been
may be filed independently of the criminal action, even used in its specific sense as a crime defined in
though no reservation is made [Madeja v. Caro, G.R. the Revised Penal Code, for it is difficult to
No. 51183 (1983)]. believe that the Code Commission would have
used terms in same article—some in this general
1.   Defamation – the offense of injuring a person’s and others in its technical sense. In other words,
character, fame or reputation through false or the term “physical injuries” should be understood
malicious statements. Defamation is an invasion to mean bodily injury, not the crime of physical
of a relational interest since it involves the opinion injuries, because the terms used with the latter
which others in the community may have, or tend are general terms [Carandang v. Santiago and
to have, of the plaintiff. Valenton, G.R. No. L-8238 (1955)].

Elements of libel pursuant to Art. 353, RPC: Paje was acquitted of the charge of homicide and
a.   An allegation or imputation of a discreditable double serious physical injuries through reckless
act or condition concerning another imprudence on the ground that the collision was
b.   Publication of the imputation a pure accident and the negligence charged
c.   Identity of the person defamed against him did not exist. In a separate civil action
d.   Existence of malice to enforce civil liability filed by the heirs of the
deceased, the Court ruled that criminal
Where the defamation is alleged to have been negligence is not one of the three crimes
directed at a group or class, it is essential that the mentioned in Article 33, which authorizes the
statement must be so sweeping or all-embracing institution of an independent civil action.
as to apply to every individual in that group or Although in the case of Dyogi v. Yatco, the Court
class, or sufficiently specific so that each held that the term “physical injuries” includes
individual in the class or group can prove that the homicide, it is borne in mind that the charge
defamatory statement was specifically pointed to against Paje was for reckless imprudence
him [MVRS Publications, Inc. v. Islamic, supra]. resulting in homicide, and the law penalizes the
negligent or careless act, not the result thereof
In determining whether certain utterances are [Corpus v. Paje, G.R. No. L-26737 (1969)].
defamatory, the words used are to be construed in
their entirety and taken in their plain, natural and c.   Neglect of Duty
ordinary meaning, as they would naturally be
understood by persons hearing or reading them,
Art. 34, CC. When a member of a city or municipal
unless it appears that they were used and
police force refuses or fails to render aid or
understood in another sense. When malice in fact
protection to any person in case of danger to life or
is proven, assertions and proofs that the libelous
property, such peace officer shall be primarily
articles are qualifiedly privileged communications
liable for damages, and the city or municipality
are futile, since being qualifiedly privileged
shall be subsidiarily responsible therefor. The civil
communications merely prevents the
action herein recognized shall be independent of
presumption of malice from attaching in a
any criminal proceedings, and a preponderance of
defamatory imputation [Yuchengco v. Manila
evidence shall suffice to support such action.
Chronicle, G.R. No. 184315 (2009)].

2.   Fraud – Estafa under Art. 315, RPC; violations of Art. 34 covers a situation where:
B.P. 22 are not covered 1.   There is danger to the life or property of a person;
2.   A member of a city or municipal police force who
3.   Physical Injuries (Assault and Battery) is present in the scene refused or failed to render
aid or protection to the person; and
Defamation and fraud (in Art. 33) are used in their 3.   Damages are caused whether to the person
ordinary sense because there are no specific and/or property of the victim.
provisions in the Revised Penal Code using these
terms as names of offenses defined therein, so Nature of liability
that these two terms defamation and fraud must 1.   Of the police officer – Primary
have been used not to impart to them any 2.   City or municipality – Subsidiary
technical meaning in the laws of the Philippines,

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The defense of having observed the diligence of a good


father of a family to prevent the damage is not   Liability Attached to
available to the city/municipality.
Specific Persons
1.   Strict Liability
d.  Catch-All Independent Civil a.  Possessor or User of
Action Animals
Art. 35, CC. When a person, claiming to be injured Art. 2183, CC. The possessor of an animal or
by a criminal offense, charges another with the whoever may make use of the same is responsible
same, for which no independent civil action is for the damage which it may cause, although it
granted in this Code or any special law, but the may escape or be lost. This responsibility shall
justice of the peace finds no reasonable grounds to cease only in case the damage should come from
believe that a crime has been committed, or the force majeure or from the fault of the person who
prosecuting attorney refuses or fails to institute has suffered damage.
criminal proceedings, the complaint may bring a
civil action for damages against the alleged The law makes no distinction as to what kind of animal
offender. Such civil action may be supported by a is used or possessed. Hence, it may be construed as
preponderance of evidence. Upon the defendant's applicable generally to all animals, whether domestic,
motion, the court may require the plaintiff to file a domesticated, or wild. It would seem that birds are
bond to indemnify the defendant in case the covered since they can also cause damage. [de Leon]
complaint should be found to be malicious.
Possession of the animal, not ownership, is
If during the pendency of the civil action, an determinative of liability under Art. 2183. The
information should be presented by the obligation imposed by said article is not based on the
prosecuting attorney, the civil action shall be negligence or on the presumed lack of vigilance of the
suspended until the termination of the criminal possessor or user of the animal causing damage. It is
proceedings. based on natural equity and on the principle of social
interest that he who possesses animals for his utility,
pleasure, or service, must answer for any damage
which such animal may cause. The contention that the
defendant could not be expected to exercise remote
control of the animal is not acceptable. In fact, Art.
2183 holds the possessor liable even if the animal
should “escape or be lost” and so be removed from his
control. It is likewise immaterial that the animal was
tame and was merely provoked by the victim. The law
does not speak only of vicious animals but covers even
tame ones as long as they cause injury [Vestil v. IAC,
G.R. No. 74431 (1989)].

Possible defenses against this liability


1.   Force Majeure
2.   Fault of person suffering damage
3.   Act of third persons

b.  Provinces, Cities, and


Municipalities
Art. 2189, CC. Provinces, cities and municipalities
shall be liable for damages for the death of, or
injuries suffered by, any person by reason of the
defective condition of roads, streets, bridges,

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public buildings, and other public works under Liability does not attach to the proprietor if the
their control or supervision. damage was caused by any defect in the construction
mentioned in Article 1723, in which case the action
It is not even necessary that the defective roads or should be against the engineer or architect.
streets belong to the province, city or municipality for
liability to attach. The article only requires that either Under Article 2190, the plaintiff is required to prove:
control or supervision be exercised over said street or 1.   The total or partial collapse of a building or
road [Guilatco v. Dagupan, G.R. No. 61516 (1989)]. structure
2.   That the defendant is the proprietor
3.   That the collapse was due to the lack of necessary
c.   Proprietor of Building or repairs
Structure
Note: There is no requirement to prove negligence.
Art. 2190, CC. The proprietor of a building or
structure is responsible for the damages resulting Under Article 2191, with the exception of No. 1,
from its total or partial collapse, if it should be due negligence is also not an issue.
to the lack of necessary repairs.
The owner or proprietor of a place of public
amusement impliedly warrants that the premises,
Art. 2191, CC. Proprietors shall also be responsible
appliances and amusement devices are safe for the
for damages caused:
purpose for which they are designed, the doctrine
(1)   By the explosion of machinery which has not being subject to no other exception or qualification
been taken care of with due diligence, and the
than that he does not contract against unknown
inflammation of explosive substances which
defects not discoverable by ordinary or reasonable
have not been kept in a safe and adequate
means [Gotesco Investment Corp. v. Chatto, G.R. No.
place;
87584 (1992)].
(2)   By excessive smoke, which may be harmful to
persons or property;
(3)   By the falling of trees situated at or near d.  Engineer or Architect of
highways or lanes, if not caused by force Collapsed Building
majeure;
(4)   By emanations from tubes, canals, sewers or Art. 1723, CC. The engineer or architect who drew
deposits of infectious matter, constructed up the plans and specifications for a building is
without precautions suitable to the place. liable for damages if within fifteen years from the
completion of the structure, the same should
Art. 2192, CC. If damage referred to in the two collapse by reason of a defect in those plans and
preceding articles should be the result of any specifications, or due to the defects in the ground.
defect in the construction mentioned in article The contractor is likewise responsible for the
1723, the third person suffering damages may damages if the edifice falls, within the same
proceed only against the engineer or architect or period, on account of defects in the construction or
contractor in accordance with said article, within the use of materials of inferior quality furnished by
the period therein fixed. him, or due to any violation of the terms of the
contract. If the engineer or architect supervises the
Ownership of a building imposes on the proprietor construction, he shall be solidarily liable with the
thereof the duty to maintain it in good condition at all contractor.
times to the end that it may not collapse either totally
or partially as to cause damage or injury to another’s Acceptance of the building, after completion, does
person or property. This duty obtains whether the not imply waiver of any of the cause of action by
building is leased or held in usufruct. Considering, reason of any defect mentioned in the preceding
however, that the lessee or usufructuary has direct and paragraph.
immediate control of the building, the law imposes on
him the duty to notify the proprietor of such urgent or The action must be brought within ten years
extraordinary repairs. And where the proprietor’s following the collapse of the building.
failure to make the necessary repairs was due to the
failure of the lessee or usufructuary to notify him, the Engineer or architect who drew up the plans and
proprietor is entitled to indemnification for damages specifications is liable if the building collapses within
he may have been required to pay to the parties. 15 years due to:

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1.   A defect in those plans and specifications; or employers” [Alarcon v. Alarcon, G.R. No. L-15692
2.   Due to the defects in the ground. (1961)].

Contractor is liable if the edifice falls within 15 years Situations covered:


due to: 1.   Death or injury arising out of or in the course of
1.   Defects in the construction; employment – here, the employer is liable even if
2.   The use of materials of inferior quality furnished the event which caused the death or injury was
by the contractor; or purely accidental or due to a fortuitous event
3.   Due to any violation of the terms of the contract. 2.   Illness or disease caused by their employment
or as the result of the nature of the employment
Here, the plaintiff need only prove that such conditions
(defects) exist, and need not prove that negligence of Defenses available to the employer:
the defendant be the cause of the conditions. 1.   When death or injury is not caused by a fellow
worker
e.   Owners of Enterprises or The mishap due to the employee’s own notorious
negligence or voluntary act, or drunkenness
Other Employers 2.   When death or injury is caused by a fellow worker
General rule: The employer is solidarily liable with
Art. 1711, CC. Owners of enterprises and other the fellow worker causing the death or injury
employers are obliged to pay compensation for the
death of or injuries to their laborers, workmen, Exception: If the only cause of the death or injury
mechanics or other employees, even though the was the fellow worker’s intentional or malicious
event may have been purely accidental or entirely act
due to a fortuitous cause, if the death or personal
injury arose out of and in the course of the Exception to the exception: If it is shown that the
employment. The employer is also liable for employer did not exercise due diligence in the
compensation if the employee contracts any selection and supervision of the fellow worker
illness or disease caused by such employment or causing the death or injury
as the result of the nature of the employment. If
the mishap was due to the employee's own f.   Head of a Family for Things
notorious negligence, or voluntary act, or
drunkenness, the employer shall not be liable for Thrown or Falling
compensation. When the employee's lack of due
care contributed to his death or injury, the Art 2193, CC. The head of a family that lives in a
compensation shall be equitably reduced. building or a part thereof, is responsible for
damages caused by things thrown or falling from
Art. 1712, CC. If the death or injury is due to the the same.
negligence of a fellow worker, the latter and the
employer shall be solidarily liable for The purpose of the law is to relieve the injured party of
compensation. If a fellow worker's intentional the difficulty of determining and proving who threw
malicious act is the only cause of the death or the thing or what caused it to fall, or that either was
injury, the employer shall not be answerable, due to the fault or negligence of any particular
unless it should be shown that the latter did not individual.
exercise due diligence in the selection or
supervision of the plaintiff's fellow worker. Lessee is considered as the head of the family. It is
enough that he lives in and has control over it
Alarcon, a teacher, hired Urzino and Azaña to dig a [Dingcong v. Kanaan, G.R. No. L-47033 (1941)].
well on his land; in the course of which Urzino died of
asphyxia. The Court found that under the principle of g.  Products Liability
ejusdem generis, said “other employers” mentioned in
Article 1711 must be construed to refer to persons who MANUFACTURERS/PROCESSORS OF
belong to a class analogous to “owners of FOODSTUFFS
enterprises”, such as those operating a business or
engaged in a particular industry or trade, requiring its Art. 2187, CC. Manufacturers and processors of
managers to contract the services of laborers, workers foodstuffs, drinks, toilet articles and similar goods
and/or employees. Alarcon, not owning any shall be liable for death or injuries caused by any
enterprise, did not fall under the category of “other

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noxious or harmful substances used, although no manufacturer. In case of imported products, the
contractual relation exists between them and the manufacturer's representatives or, in his absence,
consumers. the importer, shall be deemed the manufacturer.

Under the foregoing provision, liability is not made to Article 92. Exemptions. – If the concerned
depend upon fault or negligence of the manufacturer department finds that for good or sufficient
or processor. The provision likewise dispensed with reasons, full compliance with the labeling
any contractual relation between the manufacturer requirements otherwise applicable under this Act is
and the consumer, thereby clearly implying that impracticable or is not necessary for the adequate
liability is imposed by law as a matter of public policy. protection of public health and safety, it shall
promulgate regulations exempting such
Proof of negligence under this provision is not substances from these requirements to the extent
necessary; as such, traditional contract and warranty it deems consistent with the objective of
defenses as (1) lack of privity; (2) lack of reliance on a adequately safeguarding public health and safety,
warranty; (3) lack of notice to the defendant of the and any hazardous substance which does not bear
breach of warranty; and (4) disclaimer of implied a label in accordance with such regulations shall be
warranties are inapplicable. deemed mislabeled hazardous substance.

Requisites of liability Article 97. Liability for the Defective Products. – Any
1.   Defendant is a manufacturer or possessor of Filipino or foreign manufacturer, producer, and
foodstuff, drinks, toilet articles and similar goods; any importer, shall be liable for redress,
2.   He used noxious or harmful substances in the independently of fault, for damages caused to
manufacture or processing of the foodstuff, drinks consumers by defects resulting from design,
or toilet articles consumed or used by the plaintiff; manufacture, construction, assembly and erection,
3.   Plaintiff’s death or injury was caused by the formulas and handling and making up,
product so consumed or used; and presentation or packing of their products, as well as
4.   The damages sustained and claimed by the for the insufficient or inadequate information on the
plaintiff and the amount thereof. use and hazards thereof.

Burden of proof A product is defective when it does not offer the


The burden of proof that the product was in a defective safety rightfully expected of it, taking relevant
condition at the time it left the hands of the circumstances into consideration, including but not
manufacturer and particular seller is upon the injured limited to:
plaintiff. (a)   presentation of product
(b)   use and hazards reasonably expected of it;
Who may recover (c)   the time it was put into circulation.
Although the article used the term “consumer”, such
term includes a “user” and “purchaser” of the A product is not considered defective because
injuriously defective food product or toilet article. The another better quality product has been placed in
person who may recover need not be the purchaser of the market. The manufacturer, builder, producer or
the foodstuff or toilet article. importer shall not be held liable when it evidences:
(a)   that it did not place the product on the
CONSUMER ACT market;
RA 7394, Secs. 92-107 (Ch. 1) (b)   that although it did place the product on the
market such product has no defect;
Article 4. Definition of Terms. (c)   that the consumer or a third party is solely at
(n) "Consumer" means a natural person who is a fault.
purchaser, lessee, recipient or prospective
purchaser, lessor or recipient of consumer Article 98. Liability of Tradesman or Seller. – The
products, services or credit. tradesman/seller is likewise liable, pursuant to
the preceding article when:
(as) "Manufacturer" means any person who (a)   it is not possible to identify the manufacturer,
manufactures, assembles or processes consumer builder, producer or importer;
products, except that if the goods are (b)   the product is supplied, without clear
manufactured, assembled or processed for another identification of the manufacturer, producer,
person who attaches his own brand name to the builder or importer;
consumer products, the latter shall be deemed the

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(c)   he does not adequately preserve perishable paragraph; but such shall not be less than seven (7)
goods. The party making payment to the nor more than one hundred and eighty (180) days.
damaged party may exercise the right to
recover a part of the whole of the payment The consumer may make immediate use of the
made against the other responsible parties, in alternatives under the second paragraph of this
accordance with their part or responsibility in Article when by virtue of the extent of the
the cause of the damage effected. imperfection, the replacement of the imperfect
parts may jeopardize the product quality or
Article 99. Liability for Defective Services. – The characteristics, thus decreasing its value.
service supplier is liable for redress, independently
of fault, for damages caused to consumers by If the consumer opts for the alternative under sub-
defects relating to the rendering of the services, paragraph (a) of the second paragraph of this
as well as for insufficient or inadequate information Article, and replacement of the product is not
on the fruition and hazards thereof. possible, it may be replaced by another of a
different kind, mark or model: Provided, That any
The service is defective when it does not provide difference in price may result thereof shall be
the safety the consumer may rightfully expect of it, supplemented or reimbursed by the party which
taking the relevant circumstances into caused the damage, without prejudice to the
consideration, including but not limited to: provisions of the second, third and fourth
4.   the manner in which it is provided; paragraphs of this Article.
5.   the result of hazards which may reasonably be
expected of it; Article 101. Liability for Product Quantity
6.   the time when it was provided. Imperfection. – Suppliers are jointly liable for
imperfections in the quantity of the product when,
A service is not considered defective because of the in due regard for variations inherent thereto, their
use or introduction of new techniques. net content is less than that indicated on the
container, packaging, labeling or advertisement,
The supplier of the services shall not be held liable the consumer having powers to demand,
when it is proven: alternatively, at his own option:
(a)   that there is no defect in the service rendered; (a)   the proportionate price
that the consumer or third party is solely at fault. (b)   the supplementing of weight or measure
differential;
Article 100. Liability for Product and Service (c)   the replacement of the product by another of
Imperfection. – The suppliers of durable or the same kind, mark or model, without said
nondurable consumer products are jointly liable imperfections;
for imperfections in quality that render the products (d)   the immediate reimbursement of the amount
unfit or inadequate for consumption for which they paid, with monetary updating without
are designed or decrease their value, and for those prejudice to losses and damages if any.
resulting from inconsistency with the information
provided on the container, packaging, labels or The provisions of the fifth paragraph of Article 99
publicity messages/advertisement, with due regard shall apply to this Article.
to the variations resulting from their nature, the
consumer being able to demand replacement to The immediate supplier shall be liable if the
the imperfect parts. instrument used for weighing or measuring is not
gauged in accordance with official standards.
If the imperfection is not corrected within thirty
(30) days, the consumer may alternatively demand Article 102. Liability for Service Quality
at his option: Imperfection. – The service supplier is liable for
(a)   the replacement of the product by another of any quality imperfections that render the services
the same kind, in a perfect state of use; improper for consumption or decrease their value,
(b)   the immediate reimbursement of the amount and for those resulting from inconsistency with the
paid, with monetary updating, without information contained in the offer or advertisement,
prejudice to any losses and damages; the consumer being entitled to demand
(c)   a proportionate price reduction. alternatively at his option:
(a)   the performance of the services, without any
The parties may agree to reduce or increase the additional cost and when applicable;
term specified in the immediately preceding

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(b)   the immediate reimbursement of the amount (3)   Shocks, defies or disregards decency or
paid, with monetary updating without morality; or
prejudice to losses and damages, if any; (4)   Obstructs or interferes with the free passage of
(c)   a proportionate price reduction. any public highway or street, or any body of
water; or
Reperformance of services may be entrusted to (5)   Hinders or impairs the use of property.
duly qualified third parties, at the supplier's risk and
cost. Art. 696, CC. Every successive owner or possessor
of property who fails or refuses to abate a nuisance
Improper services are those which prove to be in that property started by a former owner or
inadequate for purposes reasonably expected of possessor is liable therefor in the same manner as
them and those that fail to meet the provisions of the one who created it.
this Act regulating service rendering.
Art. 697, CC. The abatement of a nuisance does not
Article 103. Repair Service Obligation. – When
preclude the right of any person injured to recover
services are provided for the repair of any product,
damages for its past existence.
the supplier shall be considered implicitly bound to
use adequate, new, original replacement parts, or
those that maintain the manufacturer's technical Art. 698, CC. Lapse of time cannot legalize any
specifications unless, otherwise authorized, as nuisance, whether public or private.
regards to the latter by the consumer.
Nuisance is a condition and not an act or failure to act,
Article 104. Ignorance of Quality Imperfection. – The so that if a wrongful condition exists, the person
supplier's ignorance of the quality imperfections responsible for its existence is responsible for the
due to inadequacy of the products and services resulting damages to others.
does not exempt him from any liability.
A person who creates or maintains a nuisance is liable
Article 105. Legal Guarantee of Adequacy. – The for the resulting injury to others regardless of the
legal guarantee of product or service adequacy degree of care or skill exercised to avoid the injury. The
does not require an express instrument or creation or maintenance of a nuisance is a violation of
contractual exoneration of the supplier being an absolute duty. [Sangco]
forbidden.
Liability for Negligence v. Liability for Nuisance
Article 106. Prohibition in Contractual Stipulation. – NEGLIGENCE NUISANCE
The stipulation in a contract of a clause preventing, Liability is based Liability attaches
exonerating or reducing the obligation to indemnify on lack of proper regardless of the
for damages effected, as provided for in this and in Basis
care and skill exercised to
the preceding Articles, is hereby prohibited, if there diligence avoid the injury
is more than one person responsible for the cause
of the damage, they shall be jointly liable for the There is continuing
redress established in the pertinent provisions of harm being suffered
Act complained
this Act. However, if the damage is caused by a by the aggrieved
of is already done
component or part incorporated in the product or Condition party because of the
which caused
service, its manufacturer, builder or importer and of the act maintenance of the
injury to the
the person who incorporated the component or part act or thing which
plaintiff
are jointly liable. constitutes the
nuisance
h.  Nuisance Remedy
Action for
Abatement
damages
Art. 694, CC. A nuisance is any act, omission,
establishment, business, condition of property, or Easement against Nuisance
anything else which:
(1)   Injures or endangers the health or safety of Art. 682, CC. Every building or piece of land is
others; or subject to the easement which prohibits the
(2)   Annoys or offends the senses; or proprietor or possessor from committing nuisance

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through noise, jarring, offensive odor, smoke, heat, A nuisance is, according to Blackstone, "Any thing
dust, water, glare and other causes. that works hurt, inconvenience, or damages."
They arise from pursuing particular trades or
Art. 683, CC. Subject to zoning, health, police and industries in populous neighborhoods; from acts
other laws and regulations, factories and shops of public indecency, keeping disorderly houses,
may be maintained provided the least possible and houses of ill fame, gambling houses, etc.
annoyance is caused to the neighborhood. Nuisances have been divided into two classes:
Nuisances per se, and nuisances per accidens. To
the first belong those which are unquestionably
The provisions impose a prohibition upon owners of
and under all circumstances nuisances, such as
buildings of land from committing therein a nuisance
gambling houses, houses of ill fame, etc. The
or using such buildings or lands in a manner as will
number of such nuisances is necessarily limited,
constitute a nuisance. It is based on the maxim sic
and by far the greater number of nuisances are
utere tuo ut alienum non laedas (so use your own as not
such because of particular facts and
to injure another’s property).
circumstances surrounding the otherwise
harmless cause of the nuisance. For this reason, it
The general rule is that everyone is bound to bear the
will readily be seen that whether a particular thing
habitual or customary inconveniences that result from
is a nuisance is generally a question of fact, to be
the proximity of others, and so long as this level is not
determined in the first instance before the term
surpassed, he may not complain against them. But if
nuisance can be applied to it [Iloilo Ice and Cold
the prejudice exceeds the inconveniences that such
Storage Co. v. Municipal Council, G.R. No. L-7012
proximity habitually brings, the neighbor who causes
(1913)].
such disturbances is held responsible for the resulting
damage, being guilty of causing nuisance. There can be
3.   Public nuisance
no doubt that commercial and industrial activities
which are lawful in themselves may become nuisances
if they are so offensive to the senses that they render Art. 695, CC. Nuisance is either public or private.
the enjoyment of life and property uncomfortable. It is A public nuisance affects a community or
no defense that skill and care have been exercised and neighborhood or any considerable number of
the most improved methods and appliances employed persons, although the extent of the annoyance,
to prevent such result. In this case, the Court ruled that danger or damage upon individuals may be
causing or maintaining disturbing noises or sounds unequal. A private nuisance is one that is not
may constitute an actionable nuisance [Velasco v. included in the foregoing definition.
Manila Electric Co., G.R. No. 18390 (1971)].
A public nuisance is the doing of or the failure to do
Types of Nuisance: something that injuriously affects safety, health, or
1.   Nuisance per se morals of the public, or works some substantial
It is recognized as a nuisance under any and all annoyance, inconvenience or injury to the public. It
circumstances because it constitutes a direct causes hurt, inconvenience, or damage to the public
menace to public health and safety and, for that generally, or such part of the public as necessarily
reason, may be abated summarily under the comes in contact with it in the exercise of a public or
undefined law of necessity. common right.

To become a nuisance per se, the thing must, of Art. 699, CC. The remedies against a public
itself, because of its inherent qualities, without nuisance are:
complement, be productive of injury, or, by reason (1)   A prosecution under the Penal Code or any
of the matter of its use or exposure, threaten or be local ordinance: or
dangerous to life or property. (2)   A civil action; or
(3)   Abatement, without judicial proceedings.
2.   Nuisance per accidens
It becomes a nuisance depending upon certain Art. 700, CC. The district health officer shall take
conditions and circumstances, and its existence care that one or all of the remedies against a
being a question of fact, it cannot be abated public nuisance are availed of.
without due hearing thereon in a tribunal
authorized to decide whether such a thing does in
law constitute a nuisance. Art. 701, CC. If a civil action is brought by reason
of the maintenance of a public nuisance, such

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action shall be commenced by the city or 5.   Attractive Nuisance


municipal mayor. General Rule: When people come to the lands or
premises of others for their own purposes, without
Art. 702, CC. The district health officer shall right or invitation, they must take the lands as
determine whether or not abatement, without they see them.
judicial proceedings, is the best remedy against a
public nuisance. Exception: Attractive Nuisance doctrine.

One who maintains on his premises dangerous


Art. 703, CC. A private person may file an action on instrumentalities or appliances of a character
account of a public nuisance, if it is specially likely to attract children at play, and who fails to
injurious to himself. exercise ordinary care to prevent children from
playing therewith or resorting thereto, is liable to
Art. 704, CC. Any private person may abate a a child of tender years who is injured thereby, even
public nuisance which is specially injurious to him if the child is technically a trespasser in the
by removing, or if necessary, by destroying the premises. The principle reason for the doctrine is
thing which constitutes the same, without that the condition or appliance in question
committing a breach of the peace, or doing although its danger is apparent to those of age, is
unnecessary injury. But it is necessary: so enticing or alluring to children of tender years
(1)   That demand be first made upon the owner or as to induce them to approach, get on or use it,
possessor of the property to abate the and this attractiveness is an implied invitation to
nuisance; such children [Hidalgo Enterprises v. Balandan,
(2)   That such demand has been rejected; G.R. No. L-3422 (1952)].
(3)   That the abatement be approved by the
district health officer and executed with the It is doubtful whether contributory negligence can
assistance of the local police; and properly be imputed to the deceased, owing to his
(4)   That the value of the destruction does not immature years and the natural curiosity which a child
exceed three thousand pesos. would feel to do something out of the ordinary, and
the mere fact that the deceased ignored the caution of
4.   Private nuisance a companion of the age of 8 years does not, in our
It is one which violates only private rights and opinion, alter the case. Contributory negligence of a
produces damage to but one or a few persons, and minor does not bar recovery, where his immaturity and
cannot be said to be public. natural curiosity impelled him to act to his injury; but
discretion shown by the child is the decisive factor [Del
Art. 705, CC. The remedies against a private Rosario v. Manila Electric Co., G.R. No. L-35283 (1932)].
nuisance are:
(1)   A civil action; or When Applicable/Not Applicable: [de Leon]
(2)   Abatement, without judicial proceedings. •   The danger to the child must be caused by the
attraction itself, or by something with which the
Art. 706, CC. Any person injured by a private attraction brings the child in contact.
nuisance may abate it by removing, or if necessary, •   Protects a meddling child, but not a danger which
by destroying the thing which constitutes the was created by the child himself.
nuisance, without committing a breach of the •   Limited to latent dangers, and is no basis for
peace or doing unnecessary injury. However, it is recovery where peril is obvious or patent.
indispensable that the procedure for extrajudicial •   Does not apply to natural dangers.
abatement of a public nuisance by a private person •   The age and maturity of the injured child and the
be followed. reason for the child’s presence are important
considerations in the application of the doctrine.
Art. 707, CC. A private person or a public official
extrajudicially abating a nuisance shall be liable
for damages:
(1)   If he causes unnecessary injury; or
(2)   If an alleged nuisance is later declared by the
courts to be not a real nuisance.

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SUMMARY OF STRICT LIABILITY

PERSON STRICTLY LIABLE FOR WHAT DEFENSES OR EXCEPTIONS


Possessor of an animal or •   Force majeure
whoever makes use of them even For the damage the animal may cause •   Fault of the person who suffered
if the animal is lost or escaped damage
•   Solidary liability only if the owner
was in the vehicle and if he could
have prevented it thru due
Owner of Motor Vehicle Motor vehicle mishaps
diligence
•   If not in vehicle, apply Art. 2180 for
his liability as employer
Manufacturers and processors of
Death and injuries caused by any noxious or Absence of contractual relation not a
foodstuffs, drinks, toilet articles
harmful substances used defense
and similar goods
Defendant in possession of
Possession or use thereof is
dangerous weapons/ Death or injury results from such
indispensable in his occupation or
substances such as firearms and possession
business
poison
The death or injuries suffered by any person
Provinces, Cities and by reason of the defective condition of The defective public work is not under
Municipalities roads, streets, bridges, public buildings, the LGU’s control or supervision
and other public works
a.   Total or partial collapse of building or
structure if due to lack of necessary
repairs
b.   Explosion of machinery which has not
been taken cared of with due diligence,
and the inflammation of explosive
substances which have not been kept
in a safe and adequate place
Responsibility for collapse should be
Proprietor of building/ structure c.   By excessive smoke, which may be
due to the lack of necessary repairs
harmful to persons or property
d.   By falling of trees situated at or near
highways or lanes, if not caused by
force majeure
e.   By emanations from tubes, canals,
sewers or deposits of infectious matter,
constructed without precautions
suitable to the place
If within 15 years from completion of the
structure, the same should collapse by
reason of:
a.   Defects in the plans or specifications;
or
b.   Defects in the ground. Action not brought within 10 years
Engineer or Architect
from collapse
If within the same period, the edifice falls
on account of:
a.   Defects in the construction;
b.   Used of materials of inferior quality
furnished by him; or

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c.   Violation of the terms of the contract


and he supervised the construction.
If within 15 years from the completion of the
structure, the edifice falls on account of:
a.   Defects in the construction; Action not brought within 10 years
Contractor
b.   Used of materials of inferior quality from collapse
furnished by him; or
c.   Violation of the terms of the contract
Head of the Family that lives in a Liable for damages caused by things
building or any part thereof thrown or falling from the same

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XIV.  DAMAGES (6)   Exemplary or corrective.

a.  According to Purpose
 Definition
1.   For adequate reparation of the injury
Damages may be defined as the pecuniary a.   Compensatory damages
compensation, recompense, or satisfaction for an (reparation of pecuniary losses)
injury sustained, or as otherwise expressed, the b.   Moral (reparation for non-pecuniary losses:
pecuniary consequences, which the law imposes for injury to feelings; physical suffering, etc.)
the breach of some duty or the violation of some right 2.   For vindication of the right violated:
[People v. Ballesteros, G.R. No. 120921 (1998)]. a.   Nominal damages
3.   For less than adequate reparation:
The recompense or compensation awarded for the a.   Moderate
damage suffered [Custodio v. CA, G.R. No. 116100 4.   For deterring future violations:
(1996)]. a.   Exemplary or corrective

1.   When Allowed b.  According to Manner of


Determination
The obligation to repair the damages exists whether
done intentionally or negligently and whether or not 1.   Conventional (or liquidated)
punishable by law [Occena v. Icamina, G.R. No. 82146 2.   Non-conventional, which may either be:
(1990)] a.   Statutory (fixed by law, as in moratory
interest)
The mere fact that the plaintiff suffered losses does b.   Judicial (determined by the courts)
not give rise to a right to recover damages. To warrant
the recovery of damages, there must be both a right of General Damages
action for a legal wrong inflicted by the defendant, Those which are the natural and necessary result of
and damage resulting to the plaintiff the wrongful act or omission asserted as the
therefrom. Wrong without damage, or damage foundation of liability, and include those which follow
without wrong, does not constitute a cause of action, as a conclusion of law from the statement of the facts
since damages are merely part of the remedy allowed of the injury.
for the injury caused by a breach or wrong [Custodio v.
CA, supra]. Special Damages
Damages that arise from the special circumstance of
Injury vs. Damage vs. Damages the case, which, if properly pleaded, may be added to
INJURY DAMAGE DAMAGES the general damages which the law presumes or
implies from the mere invasion of the plaintiff’s rights.
The loss, hurt, or The recompense or Special damages are the natural, but NOT the
The illegal
harm, which compensation necessary result of an injury. These are not implied by
invasion of a
results from the awarded for the law.
legal right
injury damage suffered

Elements for recovery of damages


a.   Right of action
b.   For a wrong inflicted by the defendant
c.   Damage resulting to the plaintiff

2.  T ypes of Damages
Art. 2197, CC. Damages may be:
(1)   Actual or compensatory;
(2)   Moral;
(3)   Nominal;
(4)   Temperate or moderate;
(5)   Liquidated; or

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  Actual and Actual or compensatory damages cannot be


presumed, but must be proven with a reasonable
Compensatory Damages degree of certainty [MCC Industrial Sales Corp. v
Ssangyong Corp., G.R. No. 170633 (2007)].
Compensatory damages Damages must be proved with reasonable accuracy,
Damages in satisfaction of, or in recompense for, loss even when not denied [Valencia vs. Tantoco, G.R. No.
or injury sustained. The phrase “actual damages” is L-7267 (1956)].
sometimes used as synonymous with compensatory
damages. Degree of certainty required as to fact, cause and
amount of damages
Requisites Damages are not rendered uncertain just because
To seek recovery of actual damages, it is necessary to they cannot be calculated with absolute exactness or
prove the actual amount of loss with a reasonable because the consequences of the wrong are not
degree of certainty, premised upon competent proof precisely definite in pecuniary amount.
and on the best evidence obtainable [Asilo, Jr. v. People
and Sps. Bombasi, G.R. No. 159017-18 (2011)]. The principle, which will disallow recovery of damages
when their existence rests solely on speculation,
When is a person entitled? applies both to the fact and cause of damages.
1.   When there is a pecuniary loss suffered by him; 1.   The requirement of certainty does not prevent the
2.   When he has alleged and prayed for such relief drawing of reasonable inferences from the fact
[Manchester Dev’t Corp v. CA, G.R. No. L-75919 and circumstance in evidence.
(1987)]; 2.   Events which occur after the wrong complained of
3.   When he has duly proved it; may serve to render the damage sufficiently
4.   When provided by law or by stipulation. certain.
3.   The damages must be susceptible of
No proof of pecuniary loss is necessary for: moral, ascertainment in some manner other than by
nominal, temperate, liquidated or exemplary damages. mere speculation, conjecture or surmise and by
The assessment of such damages is discretionary reference to some fairly definite standard, such as
upon the court, except liquidated ones. (Art. 2216, CC) market value, established experience or direct
inference from known circumstances.
Alleged and proved with certainty
Art. 2199, CC. Except as provided by law or by Where, however, it is reasonably certain that injury
stipulation, one is entitled to an adequate consisting of failure to realize otherwise reasonably
compensation only for such pecuniary loss expected profits had been incurred, uncertainty as to
suffered by him as he has duly proved. Such the precise amount of such unrealized profits will not
compensation is referred to as actual or prevent recovery or the award of damages [Talisay-
compensatory damages. Silay v. Associacion, G.R. No. 91852 (1995)].

The damages must be proven by competent COMPONENTS


evidence (admissible or probative) Actual damage covers the following:
There must be pleading and proof of actual damages 1.   Value of loss; unrealized profit
suffered for the same to be recovered. In addition to 2.   Attorney’s fees and expenses of litigation
the fact that the amount of loss must be capable of 3.   Interest
proof, it must also be actually proven with a
reasonable degree of certainty, premised upon LOSS COVERED
competent proof or the best evidence obtainable. The In General
burden of proof of the damage suffered is, Art. 2200, CC. Indemnification for damages shall
consequently, imposed on the party claiming the comprehend not only the value of the loss
same, who should adduce the best evidence available suffered, but also that of the profits which the
in support thereof… In the absence of corroborative obligee failed to obtain.
evidence, it has been held that self-serving statements
of account are not sufficient basis for an award of Indemnification for damages is not limited to damnum
actual damages [Oceaneering Contractors v Baretto, emergens (actual loss) but extends to lucrum cessans
G.R. No. 184215 (2011)]. (a cession of gain or amount of profit lost).

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The award of damages for loss of earning capacity is In case of fraud, bad faith, malice or wanton
concerned with the determination of losses or attitude, the obligor shall be responsible for all
damages sustained by the [plaintiffs], as dependents damages which may be reasonably attributed to
and intestate heirs of the deceased, and that said the non-performance of the obligation.
damages consist, not of the full amount of his
earnings, but of the support they received or would Art. 2214, CC. In quasi-delicts, the contributory
have received from him had he not died in negligence of the plaintiff shall reduce the
consequence of negligence of [defendant’s] agent… damages that he may recover.
Only net earnings, and not gross earnings are to be
considered. That is, the total of the earnings less
expenses necessary in the creation of such earnings or Art. 2215, CC. In contracts, quasi-contracts, and
income and less living and other incidental expenses quasi-delicts, the court may equitably mitigate the
[Candano Shipping Lines, Inc. v. Sugata-on, G.R. No. damages under circumstances other than the case
163212 (2007)]. referred to in the preceding article, as in the
following instances:
Extent or scope of actual damages (1)   That the plaintiff himself has contravened the
SOURCE EXTENT OF LIABILITY terms of the contract;
(2)   That the plaintiff has derived some benefit as
•   If the obligor acted in
a result of the contract;
GOOD FAITH, he shall be
(3)   In cases where exemplary damages are to be
liable for natural and
awarded, that the defendant acted upon the
probable consequences of
advice of counsel;
the breach, which the
(4)   That the loss would have resulted in any
parties have foreseen or
event;
could have reasonably
(5)   That since the filing of the action, the
foreseen at the time the
defendant has done his best to lessen the
Contracts obligation was
Art. plaintiff's loss or injury.
and Quasi- constituted.
2201
contracts
The damages recoverable upon breach of contract are,
•   If the obligor acted with
primarily, the ordinary, natural and in a sense the
FRAUD, BAD FAITH,
necessary damages resulting from the breach. Other
MALICE or WANTON
damages, known as special damages, are recoverable
ATTITUDE, he shall be
where it appears that the particular conditions which
responsible for all
made such damages a probable consequence of the
damages which may be
breach were known to the delinquent party at the time
reasonably attributed to
the contract was made [Daywalt vs. Recoletos et al.,
the breach.
G.R. No. L-13505 (1919)].
Liability extends to all
damages which are the
Bad faith does not simply connote bad judgment or
natural and probable
negligence; it imports a dishonest purpose or some
consequence of the act or
Crimes and moral obliquity and conscious doing of wrong; it
Art. omission complained of
Quasi- partakes of the nature of fraud…BPI-FB acted out of
2202
delicts the impetus of self-protection and not out of
WON the damage was
malevolence or ill will. BPI-FB was not in the corrupt
foreseen or could have been
state of mind contemplated in Article 2201 and should
reasonably foreseen by the
not be held liable for all damages now being imputed
defendant is irrelevant
to it for its breach of obligation [BPI Family Bank v.
Franco, G.R. No. 123498 (2007)].
In contracts and quasi-contracts
Art. 2201, CC. In contracts and quasi-contracts, the That there was fraud or bad faith on the part of
damages for which the obligor who acted in good respondent airline when it did not allow petitioners to
faith is liable shall be those that are the natural and board their flight in spite of confirmed tickets cannot
probable consequences of the breach of the be disputed. Overbooking amounts to bad faith,
obligation, and which the parties have foreseen or entitling the passengers concerned to an award of
could have reasonably foreseen at the time the moral damages [Spouses Zalamea v. CA, G.R. No.
obligation was constituted. 104235 (1993)].

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In crimes and quasi-delicts amount of damages to be awarded, the Supreme


Art. 2202, CC. In crimes and quasi delicts, the Court considered the plaintiff’s age, probable life
defendant shall be liable for all damages which are expectancy, the state of his health, and his mental and
the natural and probable consequences of the act physical condition before the accident… Taking into
or omission complained of. It is not necessary that account [the plaintiff’s] outstanding abilities, he
such damages have been foreseen or could have would have enjoyed a successful professional career in
reasonably been foreseen by the defendant. banking [Mercury Drug v Huang, G.R. No. 172122
(2007)].
In case of crimes, damages are to be increased or
decreased according to aggravating or mitigating Injury to business standing or commercial credit
circumstances present. Loss of goodwill should be proven with the same
standard of proof as other compensatory damages
Interest, as part of damages, may be adjudicated in a [Tanay Recreation Center v. Fausto, G.R. No. 140182
proper case, in the Court’s discretion. (2005)].

Contributory negligence of the plaintiff, in case of Formula for the net earning capacity
quasi-delicts, shall reduce the damages to which he Net earning capacity = Life Expectancy × (Gross
may be entitled. However, in case of crimes, there is no annual income –Reasonable living expenses)
mitigation for contributory negligence of the plaintiff. [People vs. Aringue, G.R. No. 116487 (1997)].

The indemnity authorized by our criminal law as civil Where:


liability ex delicto for the offended party, in the Life expectancy = 2 3 × (80 – age of victim at the time
amount authorized by the prevailing judicial policy of death)
and aside from other proven actual damages, is itself
equivalent to actual or compensatory damages in civil As a rule, documentary evidence should be presented
law. The principal consideration for the award of to substantiate the claim for loss of earning capacity
damages is the penalty provided by law or imposable [Tan, et al. vs. OMC Carriers, Inc., G.R. No. 190521
for the offense because of its heinousness, not the (2011)].
public penalty actually imposed on the offender…
Hence, notwithstanding the fact that the imposable By way of exception, damages for loss of earning
public penalty against the offender should be lowered capacity may be awarded despite the absence of
due to his minority, there is no justifiable ground to documentary evidence when: (1) the deceased is self-
depart from the jurisprudential trend in the award of employed and earning less than the minimum wage
damages in the case of qualified rape, considering the under current labor laws, in which case, judicial notice
compensatory nature of the award of civil indemnity may be taken of the fact that in the deceased's line of
and moral damages [People v. Sarcia, G.R. No. 169641 work, no documentary evidence is available; or (2) the
(2009)]. deceased is employed as a daily wage worker earning
less than the minimum wage under current labor laws.
EARNING CAPACITY, BUSINESS STANDING
Art. 2205, CC. Damages may be recovered: Death by Crime or Quasi-Delict
(1)   For loss or impairment of earning capacity in Art. 2206, CC. The amount of damages for death
cases of temporary or permanent personal caused by a crime or quasi-delict shall be at least
injury; three thousand pesos, even though there may have
(2)   For injury to the plaintiff's business standing been mitigating circumstances.
or commercial credit.
In addition:
Loss or impairment of earning capacity (1)   The defendant shall be liable for the loss of the
The Court did not award actual damages because it earning capacity of the deceased, and the
was found that plaintiff’s employment was lost even indemnity shall be paid to the heirs of the
before the injury upon which she was suing. The Court latter; such indemnity shall in every case be
equated loss of employment with loss of earning assessed and awarded by the court, unless the
capacity [Gatchalian v. Delim, G.R. No. 56487 (1991)]. deceased on account of permanent physical
disability not caused by the defendant, had no
The plaintiff need not be actually engaged in gainful earning capacity at the time of his death;
employment to recover damages due to loss or (2)   If the deceased was obliged to give support
impairment of earning capacity. In determining the according to the provisions of article 291, the
recipient who is not an heir called to the

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decedent's inheritance by the law of testate or to be imposed, and maintained the same at Php.
intestate succession, may demand support 75,000 [People v. Bartolini, G.R. No. 179498 (2010)].
from the person causing the death, for a period
not exceeding five years, the exact duration to In cases of rape with homicide, civil indemnity in the
be fixed by the court; amount of Php. 100,000 should be awarded to the
(3)   The spouse, legitimate and illegitimate heirs of the victim [People vs. Pascual, G.R. No. 172326
descendants and ascendants of the deceased (2009)].
may demand moral damages for mental
anguish by reason of the death of the Attorney’s fees and expenses of litigation
deceased. Art. 2208, CC. In the absence of stipulation,
attorney's fees and expenses of litigation, other
Civil/death indemnity than judicial costs, cannot be recovered, except:
Mere commission of the crime shall entitle the heirs of (1)   When exemplary damages are awarded;
the deceased to such damages. (2)   When the defendant's act or omission has
compelled the plaintiff to litigate with third
But there has been inconsistency as to whether persons or to incur expenses to protect his
indemnity is 50,000 or 75,000 [Casis. interest;
(3)   In criminal cases of malicious prosecution
As to the loss of earning capacity against the plaintiff;
General Rule: Shall be awarded in every case, and that (4)   In case of a clearly unfounded civil action or
claimant shall present documentary evidence to proceeding against the plaintiff;
substantiate claim for damages. (5)   Where the defendant acted in gross and
evident bad faith in refusing to satisfy the
Exceptions: plaintiff's plainly valid, just and demandable
1.   If the deceased was self-employed and earning claim;
less than the minimum wage; or (6)   In actions for legal support;
2.   The deceased was a daily wage worker earning (7)   In actions for the recovery of wages of
less than the minimum wage. household helpers, laborers and skilled
workers;
Additional Exception: Testimonial evidence suffices to (8)   In actions for indemnity under workmen's
establish a basis for which the court can make a fair compensation and employer's liability laws;
and reasonable estimate of the loss of earning (9)   In a separate civil action to recover civil liability
capacity [Pleyto v. Lomboy, G.R. No. 148737 (2004)] arising from a crime;
(10)  When at least double judicial costs are
Note: Such an exception to documentary proof awarded;
requirement only exists as to the loss of earning (11)   In any other case where the court deems it just
capacity. and equitable that attorney's fees and
expenses of litigation should be recovered.
In Rape Cases
No statutory basis but in several cases the court In all cases, the attorney's fees and expenses of
awards compensatory damages to victims of rape. litigation must be reasonable.

Civil indemnity, in the nature of actual and General Rule: Attorney’s fees and costs of litigation are
compensatory damages, is mandatory upon the recoverable IF stipulated.
finding of the fact of rape. Awarded Php. 50,000 for
simple rape [People v. Astrologo, G.R. No. 169873 Exceptions:
(2007)]. If there is no stipulation, they are recoverable only in
the following cases:
When imposable penalty is death, then the civil 1.   By reason of malice or bad faith
indemnity must be Php. 75,000 [People vs. Apattad, a.   When exemplary damages are awarded
G.R. No. 193188 (2011)]. b.   In case of a clearly unfounded civil action
c.   Where defendant acted in gross and evident
The SC held that it could not be proven that the age of bad faith
the victim was such that it would support a penalty of d.   When at least double judicial costs are
death. Thus, it imposed reclusion perpetua instead. awarded
But SC said that this should not affect the civil liability 2.   By reason of plaintiff’s indigence in
a.   Actions for legal support

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b.   Actions for recovery of wages of laborers, Art. 2210, CC. Interest may, in the discretion of the
etc. court, be allowed upon damages awarded for
c.   Actions for workmen’s compensation breach of contract.
3.   By reason of crimes in
a.   Criminal cases of malicious prosecution Art. 2211, CC. In crimes and quasi-delicts, interest
b.   Separate actions to recover civil liability as a part of the damages may, in a proper case, be
arising from crime adjudicated in the discretion of the court.
4.   By reason of equity
a.   Where the defendant’s act compelled
plaintiff to litigate with third persons Art. 2212, CC. Interest due shall earn legal interest
b.   Where the Court deems it just and equitable from the time it is judicially demanded, although
the obligation may be silent upon this point.
Note: In all cases, attorney’s fees and costs of litigation
must be reasonable. Art. 2213, CC. Interest cannot be recovered upon
unliquidated claims or damages, except when the
Even if expressly stipulated, attorney’s fees are demand can be established with reasonable
subject to control by the Courts. certainty.
Attorney’s fees in CC 2208 is an award made in favor
of the litigant, not of his counsel, and the litigant, not Interest accrues when:
his counsel, is the judgment creditor who may enforce 1.   The obligation consists in the payment of a sum of
the judgment for attorney's fees by execution money
[Quirante v. IAC, G.R. No. 73886 (1989)]. 2.   Debtor incurs in delay
3.   There being no stipulation to the contrary
Attorney's fees cannot be recovered except in cases
provided for in CC 2208 [MERALCO v. Ramoy, G.R. No. No interest may be recovered on unliquidated (not
158911 (2008)]. fixed in amount) claims or damages, except when the
demand can be established with reasonable certainty
Attorney’s fees and expenses of litigation are at the Court’s discretion.
recoverable only in the concept of actual damages, not
as moral damages nor judicial costs. Hence, such must Compounding of interest
be specifically prayed for…and may not be deemed Interest due shall earn legal interest from the time it is
incorporated within a general prayer for "such other judicially demanded, although the obligation may be
relief and remedy as this court may deem just and silent on the point.
equitable [Briones v Macabagdal, G.R. No. 150666 Note that interest due can earn only at 6%, whether
(2010)]. the rate of interest of the principal is greater than 6%.

For Art. 2208 (2), CC, an adverse decision does Determination of legal interest
not ipso facto justify an award of attorney’s fees to the 1.   When an obligation, regardless of its source (i.e.,
winning party. Even when a claimant is compelled to law, contracts, quasi-contracts, delicts or quasi-
litigate with third persons or to incur expenses to delicts) is breached, the contravenor can be held
protect his rights, still attorney’s fees may not be liable for damages.
awarded where no sufficient showing of bad faith 2.   With regard particularly to an AWARD OF
could be reflected in a party’s persistence in a case INTEREST in the concept of actual and
other than an erroneous conviction of the compensatory damages, the RATE of interest, as
righteousness of his cause [Bank of America v. well as the ACCRUAL thereof, is imposed, as
Philippine Racing Club, G.R. No. 150228 (2009)]. follows [Eastern Shipping Lines v. CA, G.R. No.
97412 (1994) as modified by Nacar v. Gallery
Interest Frames, G.R. No. 189871 (2013)]:
Art. 2209, CC. If the obligation consists in the BASE RATE ACCRUAL
payment of a sum of money, and the debtor incurs When the a.   That which
To be computed
in delay, the indemnity for damages, there being obligation is may have
from default, i.e.,
no stipulation to the contrary, shall be the breached, been
from JUDICIAL or
payment of the interest agreed upon, and in the and it stipulated
EXTRAJUDICIAL
absence of stipulation, the legal interest, which is consists in in writing.
demand under
six per cent per annum. the b.   In the
and subject to
PAYMENT absence of
the provisions of
OF A SUM stipulation,

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OF MONEY, the rate of Article 1169 of Note: The new rate of legal interest (6%) in Nacar does
i.e., a loan or interest the CC. not apply to judgments that have become final and
forbearance shall be executory prior to July 1, 2013.
of money, the 6% per
interest due annum Start of Delay
should be- (legal 1.   Extrajudicial: Demand letter
interest) 2.   Judicial: Filing of complaint
Furthermore, 3.   Award
the From the time it
INTEREST Legal interest is JUDICIALLY Duty to Minimize
DUE shall demanded. Art. 2203, CC. The party suffering loss or injury
itself earn must exercise the diligence of a good father of a
When an family to minimize the damages resulting from the
If claim or
obligation, act or omission in question.
damages are
NOT
LIQUIDATED,
constituting a Article 2203 of the CC exhorts parties suffering from
from default, i.e.,
loan or loss or injury to exercise the diligence of a good father
from judicial or
forbearance of a family to minimize the damages resulting from the
extrajudicial
of money, is act or omission in question. One who is injured then by
demand. (Art.
breached, an the wrongful or negligent act of another should
1169, CC)
interest on exercise reasonable care and diligence to minimize
the AMOUNT the resulting damage. Anyway, he can recover from
If
OF the wrongdoer money lost in reasonable efforts to
UNLIQUIDATED,
DAMAGES preserve the property injured and for injuries incurred
from the time the
awarded may in attempting to prevent damage to it [Lim and
demand can be
be imposed Gunnaban vs. CA, G.R. No. 125817 (2002)].
6% per established with
at the
annum. reasonable
discretion of Burden of Proof
certainty. Hence,
the court. The DEFENDANT has the burden of proof to establish
the interest shall
begin to run only that the victim, by the exercise of the diligence of a
The actual good father of a family, could have mitigated the
FROM THE DATE
base for the damages. In the absence of such proof, the amount of
THE JUDGMENT
computation damages cannot be reduced.
OF THE COURT
of legal
IS MADE (at
interest Note:
which time the
shall be on The victim is required only to take such steps as an
quantification of
the amount ordinary prudent man would reasonably adopt for his
damages may be
finally own interest.
deemed to have
adjudged.
been reasonably
ascertained).
When the
JUDGMENT
of the court
awarding a
From FINALITY
sum of
UNTIL ITS
money
SATISFACTION,
becomes
6% per this period being
final and
annum deemed to be an
executory,
equivalent to a
whether or
forbearance of
not the case
credit.
consists in
the payment
of a sum of
money

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  Moral Damages 4.   The award of damages is predicated on any of the


cases stated in Article 2219 of the CC.

Art. 2217, CC. Moral damages include physical General Principles of Recovery:
suffering, mental anguish, fright, serious anxiety, 1.   Moral damages must somehow be proportional to
besmirched reputation, wounded feelings, moral the suffering inflicted.
shock, social humiliation, and similar injury. 2.   In culpa contractual or breach of contract, moral
Though incapable of pecuniary computation, damages may be recovered when the defendant
moral damages may be recovered if they are the acted in bad faith or was guilty of gross
proximate result of the defendant's wrongful act or negligence (amounting to bad faith) or in wanton
omission. disregard of his contractual obligation and,
exceptionally, when the act of breach of contract
Art. 2218, CC. In the adjudication of moral itself is constitutive of tort resulting in physical
damages, the sentimental value of property, real injuries.
or personal, may be considered. 3.   By special rule in Article 1764, in relation to Article
2206, moral damages may also be awarded in
Moral damages are emphatically not intended to case the death of a passenger results from a
enrich a complainant at the expense of the defendant. breach of carriage.
Its award is aimed at the restoration, within the limits 4.   In culpa aquiliana or quasi-delict,
of the possible, of the spiritual status quo ante, and it a.   when an act or omission causes physical
must be proportional to the suffering inflicted [Visayan injuries, or
Sawmill v. CA, G.R. No. 83851 (1993)]. b.   where the defendant is guilty of intentional
tort, moral damages may aptly be recovered.
Mental suffering means distress or serious pain as This rule also applies to contracts when
distinguished from annoyance, regret or vexation breached by tort.
[Bagumbayan Corp. v. IAC, G.R. No. L-66274 (1984)]. 5.   In culpa criminal, moral damages could be
lawfully due when the accused is found guilty of
Mental anguish is intense mental suffering. Generally, physical injuries, lascivious acts, adultery or
damages for mental anguish are limited to cases in concubinage, illegal or arbitrary detention, illegal
which there has been a personal physical injury or arrest, illegal search, or defamation.
where the defendant willfully, wantonly, recklessly, or 6.   Malicious prosecution can also give rise to a claim
intentionally caused the mental anguish. for moral damages. The term "analogous cases,"
referred to in Article 2219, following the ejusdem
When awarded generis rule, must be held similar to those
Awarded when injury consists of: expressly enumerated by the law.
1.   Physical suffering 7.   Although the institution of a clearly unfounded
2.   Besmirched reputation civil suit can at times be a legal justification for an
3.   Mental anguish award of attorney's fees, such filing, however, has
4.   Fright almost invariably been held not to be a ground for
5.   Moral shock an award of moral damages. [Expertravel & Tours
6.   Wounded feelings vs. CA., G.R. No. 130030 (1999)].
7.   Social humiliation 8.   The burden rests on the person claiming moral
8.   Serious anxiety damages to show convincing evidence for good
9.   Similar injury faith is presumed. In a case involving simple
negligence, moral damages cannot be recovered.
Requisites for awarding moral damages [Villanueva v. Salvador, G.R. No. 139436 (2006)].
The conditions for awarding moral damages are 9.   Failure to use the precise legal terms or
[Sulpicio Lines v. Curso, G.R. No. 157009 (2010)]: "sacramental phrases" of "mental anguish, fright,
1.   There must be an injury, whether physical, serious anxiety, wounded feelings or moral shock"
mental, or psychological, clearly substantiated by does not justify the denial of the claim for
the claimant; damages. It is sufficient that these exact terms
2.   There must be a culpable act or omission factually have been pleaded in the complaint and evidence
established; has been adduced [Miranda-Ribaya v. Bautista,
3.   The wrongful act or omission of the defendant G.R. No. L-49390 (1980)].
must be the proximate cause of the injury 10.   Even if the allegations regarding the amount of
sustained by the claimant; and damages in the complaint are not specifically
denied in the answer, such damages are not

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deemed admitted. [Raagas, et al. v. Traya et al, The spouse, descendants, ascendants, and
G.R. No. L-20081 (1968)]. brothers and sisters may bring the action
11.   An appeal in a criminal case opens the whole case mentioned in No. 9 of this article, in the order
for review and this 'includes the review of the named.
penalty, indemnity and damages’. Even if the
offended party had not appealed from said award, In Criminal Offense Resulting in Physical Injuries
and the only party who sought a review of the Under paragraph (1), Article 2219 of the CC, moral
decision of said court was the accused, the court damages may be recovered in a criminal offense
can increase damages awarded. [Sumalpong v. resulting in physical injuries. In its generic sense,
CA, G.R. No. 123404 (1997)]. "physical injuries" includes death [People v. Villaver,
12.   It can only be awarded to natural persons. The G.R. No. 133381 (2001)].
award of moral damages cannot be granted in
favor of a corporation because, being an artificial In a case where the father of a family was stabbed to
person and having existence only in legal death, the SC said that “a violent death invariably and
contemplation, it has no feelings, no emotions, no necessarily brings about emotional pain and anguish
senses, It cannot, therefore, experience physical on the part of the victim’s family… For this reason,
suffering and mental anguish, which can be moral damages must be awarded even in the absence
experienced only by one having a nervous system. of any allegation and proof of the heirs’ emotional
The statement in People vs. Manero and suffering [Arcona v CA, G.R. No. 134784 (2002)].”
Mambulao Lumber Co. vs. PNB that a corporation
may recover moral damages if it "has a good In Quasi-Delicts Causing Physical Injuries
reputation that is debased, resulting in social In culpa aquiliana, or quasi-delict, moral damages may
humiliation" is an obiter dictum [ABS-CBN v. CA, be recovered (a) when an act or omission causes
G.R. No. 128690 (1999)]. physical injuries, or (b) where the defendant is guilty of
intentional tort. The SC held that an employer that is
While it is true that besmirched reputation is included vicariously liable with its employee-driver may also be
in moral damages, it cannot cause mental anguish to held liable for moral damages to the injured plaintiff
a corporation, unlike in the case of a natural person, [B.F. Metal v. Lomotan, G.R. No. 170813 (2008)].
for a corporation has no reputation in the sense that
an individual has, and besides, it is inherently In seduction, abduction, rape and other lascivious
impossible for a corporation to suffer mental anguish acts
[NAPOCOR v. Philipp Brothers, G.R. Ni, 126204 Anent the award of damages, civil indemnity ex delicto
(2001)]. is mandatory upon finding of the fact of rape while
moral damages is awarded upon such finding without
When Recoverable need of further proof because it is assumed that a rape
Art. 2219, CC. Moral damages may be recovered in victim has actually suffered moral injuries entitling the
the following and analogous cases: victim to such award. If without factual and legal
(1)   A criminal offense resulting in physical bases, no award of exemplary damages should be
injuries; allowed [People v. Calongui, G.R. No. 170566(2006)].
(2)   Quasi-delicts causing physical injuries;
(3)   Seduction, abduction, rape, or other In a case where the offender-father was convicted of
lascivious acts; simple rape instead of qualified rape due to the
(4)   Adultery or concubinage; prosecution’s failure to specifically allege the age and
(5)   Illegal or arbitrary detention or arrest; minority of the victim-daughter, but such was
(6)   Illegal search; nonetheless established during the trial, the award of
(7)   Libel, slander or any other form of civil indemnity and moral damages in a conviction for
defamation; simple rape should equal the award of civil indemnity
(8)   Malicious prosecution; and moral damages in convictions for qualified rape.
(9)   Acts mentioned in article 309; Truly, [the victim’s] moral suffering is just as great as
(10)   Acts and actions referred to in articles 21, 26, when her father who raped her is convicted for
27, 28, 29, 30, 32, 34, and 35. qualified rape as when he is convicted only for simple
rape due to a technicality [People v. Bartolini, supra].
The parents of the female seduced, abducted,
raped, or abused, referred to in No. 3 of this article, Where there are multiple counts of rape and other
may also recover moral damages. lascivious acts, the SC awarded moral damages for
each count of lascivious acts and each count of rape
[People v. Abadies, G.R. Nos. 13946-50 (2002)].

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Note: Recovery may be had by the offended party and (3)   Intriguing to cause another to be alienated
also by her parents. from his friends;
(4)   Vexing or humiliating another on account of
In Illegal or Arbitrary Detention or Arrest his religious beliefs, lowly station in life, place
Since the crime committed in this case is kidnapping of birth, physical defect, or other personal
and failure to return a minor under Article 270 of the condition.
Revised Penal Code, the same is clearly analogous to
illegal and arbitrary detention or arrest, thereby Violation of Human Dignity
justifying the award of moral damages [People v. The law seeks to protect a person from being unjustly
Bernardo, G.R. No. 144316 (2002)]. humiliated. Using this provision, the SC awarded
moral damages to the plaintiff, a married man,
In Case of Malicious Prosecution against the defendant, who confronted the plaintiff
As a rule, no moral damages is imposed for litigation, face-to-face, invading the latter’s privacy, to hurl
because the law could not have meant to impose a defamatory words at him in the presence of his wife
penalty on the right to litigate. A person's right to and children, neighbors and friends, accusing him of
litigate, as a rule, should not be penalized. This right, having an adulterous relationship with another
however, must be exercised in good faith. Absence of woman [Concepcion v. CA, G.R. No. 120706 (2000)].
good faith in the present case is shown by the fact that
petitioner clearly has no cause of action against Art. 27, CC. Any person suffering material or moral
respondents but it recklessly filed suit anyway and loss because a public servant or employee refuses
wantonly pursued pointless appeals, thereby causing or neglects, without just cause, to perform his
the latter to spend valuable time, money and effort in official duty may file an action for damages and
unnecessarily defending themselves, incurring other relief against the latter, without prejudice to
damages in the process [Industrial Insurance v. any disciplinary administrative action that may be
Bondad, G.R. No. 136722 (2000)]. taken.
Moral damages cannot be recovered from a person
Refusal or Neglect of Duty
who has filed a complaint against another in good
Under Art. 27, in relation to Arts. 2219 and 2217, a
faith, or without malice or bad faith. If damage results
public officer may be liable for moral damages for as
from the filing of the complaint, it is damnum absque
long as the moral damages suffered by [the plaintiff]
injuria [Mijares v. CA, G.R. No. 113558(1997)].
were the proximate result of [defendant’s] refusal to
perform an official duty or neglect in the performance
The adverse result of an action does not per se make
thereof. In fact, under Articles 19 and 27 of the CC, a
the act wrongful and subject the actor to the payment
public official may be made to pay damages for
of moral damages. The law could not have meant to
performing a perfectly legal act, albeit with bad faith
impose a penalty on the right to litigate; such right is
or in violation of the "abuse of right" doctrine
so precious that moral damages may not be charged
[Concepcion v. CA, supra].
on those who may exercise it erroneously [Barreto v.
Arevalo, G.R. No. L-7748 (1956)].
Art. 28, CC. Unfair competition in agricultural,
In acts referred to in Arts. 21, 26, 27, 28, 29, 32, 34 commercial or industrial enterprises or in labor
and 35, CC through the use of force, intimidation, deceit,
machination or any other unjust, oppressive or
Art. 21, CC. Any person who wilfully causes loss or
highhanded method shall give rise to a right of
injury to another in a manner that is contrary to
action by the person who thereby suffers damage.
morals, good customs or public policy shall
compensate the latter for the damage.
Art. 29, CC. When the accused in a criminal
prosecution is acquitted on the ground that his
Art. 26, CC. Every person shall respect the dignity,
guilt has not been proved beyond reasonable
personality, privacy and peace of mind of his
doubt, a civil action for damages for the same act
neighbors and other persons. The following and
or omission may be instituted. Such action
similar acts, though they may not constitute a
requires only a preponderance of evidence. Upon
criminal offense, shall produce a cause of action
motion of the defendant, the court may require the
for damages, prevention and other relief:
plaintiff to file a bond to answer for damages in
(1)   Prying into the privacy of another's residence:
case the complaint should be found to be
(2)   Meddling with or disturbing the private life or
malicious.
family relations of another;

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If in a criminal case the judgment of acquittal is statute which has not been judicially declared
based upon reasonable doubt, the court shall so unconstitutional; and
declare. In the absence of any declaration to that (19)  Freedom of access to the courts.
effect, it may be inferred from the text of the
decision whether or not the acquittal is due to that In any of the cases referred to in this article,
ground. whether or not the defendant's act or omission
constitutes a criminal offense, the aggrieved party
Art. 32, CC. Any public officer or employee, or any has a right to commence an entirely separate and
private individual, who directly or indirectly distinct civil action for damages, and for other
obstructs, defeats, violates or in any manner relief. Such civil action shall proceed
impedes or impairs any of the following rights and independently of any criminal prosecution (if the
liberties of another person shall be liable to the latter be instituted), and mat be proved by a
latter for damages: preponderance of evidence.
(1)   Freedom of religion;
(2)   Freedom of speech; The indemnity shall include moral damages.
(3)   Freedom to write for the press or to maintain Exemplary damages may also be adjudicated.
a periodical publication;
(4)   Freedom from arbitrary or illegal detention; The responsibility herein set forth is not
(5)   Freedom of suffrage; demandable from a judge unless his act or
(6)   The right against deprivation of property omission constitutes a violation of the Penal Code
without due process of law; or other penal statute.
(7)   The right to a just compensation when
private property is taken for public use; Violation of Civil and Political Rights
(8)   The right to the equal protection of the laws; The purpose of [CC 32] is to provide a sanction to the
(9)   The right to be secure in one's person, house, deeply cherished rights and freedoms enshrined in the
papers, and effects against unreasonable Constitution. Under [CC 32], it is not necessary that the
searches and seizures; public officer acted with malice or bad faith. To be
(10)  The liberty of abode and of changing the liable, it is enough that there was a violation of the
same; constitutional rights of petitioner, even on the pretext
(11)   The privacy of communication and of justifiable motives or good faith in the performance
correspondence; of one's duties [Cojuangco v. CA, G.R. No. 119398
(12)  The right to become a member of associations (1999)].
or societies for purposes not contrary to law;
(13)  The right to take part in a peaceable assembly Article 32 of the CC provides that moral damages are
to petition the government for redress of proper when the rights of individuals, including the
grievances; right against deprivation of property without due
(14)  The right to be free from involuntary servitude process of law, are violated [Meralco v Spouses Chua,
in any form; G.R. No. 160422 (2010)].
(15)  The right of the accused against excessive
bail; Art. 34, CC. When a member of a city or municipal
(16)  The right of the accused to be heard by himself police force refuses or fails to render aid or
and counsel, to be informed of the nature and protection to any person in case of danger to life or
cause of the accusation against him, to have a property, such peace officer shall be primarily
speedy and public trial, to meet the witnesses liable for damages, and the city or municipality
face to face, and to have compulsory process shall be subsidiarily responsible therefor. The civil
to secure the attendance of witness in his action herein recognized shall be independent of
behalf; any criminal proceedings, and a preponderance of
(17)   Freedom from being compelled to be a evidence shall suffice to support such action.
witness against one's self, or from being
forced to confess guilt, or from being induced Art. 35, CC. When a person, claiming to be injured
by a promise of immunity or reward to make by a criminal offense, charges another with the
such confession, except when the person same, for which no independent civil action is
confessing becomes a State witness; granted in this Code or any special law, but the
(18)  Freedom from excessive fines, or cruel and justice of the peace finds no reasonable grounds to
unusual punishment, unless the same is believe that a crime has been committed, or the
imposed or inflicted in accordance with a prosecuting attorney refuses or fails to institute

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criminal proceedings, the complaint may bring a (3)   Seduction, abduction, rape, or other
civil action for damages against the alleged lascivious acts;
offender. Such civil action may be supported by a (4)   Adultery or concubinage;
preponderance of evidence. Upon the defendant's (5)   Illegal or arbitrary detention or arrest;
motion, the court may require the plaintiff to file a (6)   Illegal search;
bond to indemnify the defendant in case the (7)   Libel, slander or any other form of
complaint should be found to be malicious. defamation;
(8)   Malicious prosecution;
If during the pendency of the civil action, an (9)   Acts mentioned in article 309;
information should be presented by the (10)   Acts and actions referred to in articles 21, 26,
prosecuting attorney, the civil action shall be 27, 28, 29, 30, 32, 34, and 35.
suspended until the termination of the criminal
proceedings. The parents of the female seduced, abducted,
raped, or abused, referred to in No. 3 of this article,
Art. 2220, CC. Willful injury to property may be a may also recover moral damages.
legal ground for awarding moral damages if the
court should find that, under the circumstances, The spouse, descendants, ascendants, and
such damages are justly due. The same rule brothers and sisters may bring the action
applies to breaches of contract where the mentioned in No. 9 of this article, in the order
defendant acted fraudulently or in bad faith. named.

In Willful Injury to Property Relatives of Injured Persons


To sustain an award of damages, the damage inflicted Article 2219 circumscribes the instances in which
upon [plaintiff’s] property must be malicious or willful, moral damages may be awarded. The provision does
an element crucial to merit an award of not include succession in the collateral line as a source
moral damages under Article 2220 of the CC [Regala of the right to recover moral damages. The usage of
v. Carin, G.R. No. 188715 (2011)]. the phrase analogous cases in the provision means
simply that the situation must be held similar to those
In Breach of Contract in Bad Faith expressly enumerated in the law in question [Sulpicio
Moral damages may be recovered in culpa Lines v Curso, supra].
contractual where the defendant acted in bad faith or
with malice in the breach of the contract. However, a Juridical Persons
conscious or intentional design need not always be The award of moral damages cannot be granted in
present since negligence may occasionally be so gross favor of a corporation because, being an artificial
as to amount to malice or bad faith. Bad faith, in the person and having existence only in legal
context of Art. 2220 of the CC, contemplation, it has no feelings, no emotions, no
includes gross negligence. Thus, we have held in a senses, It cannot, therefore, experience physical
number of cases that moral damages may be awarded suffering and mental anguish, which can be
in culpa contractual or breach of contract when the experienced only by one having a nervous system. The
defendant acted fraudulently or in bad faith, or is statement in People vs. Manero and Mambulao Lumber
guilty of gross negligence amounting to bad faith, or Co. vs. PNB that a corporation may recover moral
in wanton disregard of his contractual obligations damages if it "has a good reputation that is debased,
[Bankard, Inc. v. Feliciano, G.R. No 141761 (2006)]. resulting in social humiliation" is an obiter dictum
[ABS-CBN v. CA, supra].
As an exception [to the requirement of bad faith],
moral damages may be awarded in case of breach of Factors Considered in Determining Amount
contract of carriage that results in the death of a The amount of damages awarded in this appeal has
passenger [Sulpicio Lines v. Curso, supra]. been determined by adequately considering the
official, political, social, and financial standing of the
Who may Recover Moral Damages offended parties on one hand, and the business and
Art. 2219, CC. Moral damages may be recovered in financial position of the offender on the other. The SC
the following and analogous cases: further considered the present rate of exchange and
(1)   A criminal offense resulting in physical the terms at which the amount of damages awarded
injuries; would approximately be in U.S. dollars, the defendant
(2)   Quasi-delicts causing physical injuries; being an international airline [Lopez v. Pan American,
G.R. No. L-22415 (1966)].

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  Nominal Damages Nominal damages "are recoverable where a legal


right is technically violated and must be vindicated
against an invasion that has produced no actual
Nominal damages consist in damages awarded, not present loss of any kind.” Its award is thus not for the
for purposes of indemnifying the plaintiff for any loss purpose of indemnification for a loss but for the
suffered, but for the vindication or recognition of a recognition and vindication of a right. When granted
right violated by the defendant. by the courts, they are not treated as an equivalent of
a wrong inflicted but simply a recognition of the
Requisites and characteristics existence of a technical injury. A violation of the
1.   Invasion or violation of any legal or property right. plaintiff’s right, even if only technical, is sufficient to
2.   No proof of loss is required. support an award of nominal damages. Conversely, so
3.   The award is to vindicate the right violated. long as there is a showing of a violation of the right of
the plaintiff, an award of nominal damages is proper
When awarded [Gonzales v. PCIB, G.R. No. 180257 (2011)].
Art. 2221, CC. Nominal damages are adjudicated
in order that a right of the plaintiff, which has been The plaintiffs sought to recover damages from the
violated or invaded by the defendant, may be hotel due to its breach of contract as regards food
vindicated or recognized, and not for the purpose service for the plaintiff’s guests. The SC did not award
of indemnifying the plaintiff for any loss suffered actual and moral damages because it found that the
by him. plaintiff’s failure to inform the hotel regarding the
increase of guests (from 350 expected guests, at
Art. 2222, CC. The court may award nominal maximum capacity of 380, the number of guests
damages in every obligation arising from any reached 470) was the proximate cause of the
source enumerated in article 1157, or in every case plaintiff’s injury. Nevertheless, the SC awarded
where any property right has been invaded. nominal damages under considerations of equity, for
the discomfiture that the plaintiffs were subjected to
during the event, averring that the hotel could have
Art. 2223, CC. The adjudication of nominal
managed the "situation" better, it being held in high
damages shall preclude further contest upon the
esteem in the hotel and service industry. Given
right involved and all accessory questions, as
respondent’s vast experience, it is safe to presume
between the parties to the suit, or their respective
that this is not its first encounter with booked events
heirs and assigns.
exceeding the guaranteed cover [Spouses Guanio v.
Makati Shangri-la, G.R. No. 190601 (2011)].
One does not ask for nominal damages, and it is in lieu
of the actual, moral, temperate, or liquidated Nature and determination of amount
damages. The assessment of nominal damages is left to the
discretion of the trial court according to the
Nominal damages are incompatible with actual, circumstances of the case. Generally, nominal
temperate and exemplary damages. damages by their nature are small sums fixed by the
court without regard to the extent of the harm done to
Nominal damages cannot co-exist with actual or the injured party. However, it is generally held that a
compensatory damages [Armovit v. CA, G.R. No. nominal damage is a substantial claim, if based upon
88561 (1990)]. the violation of a legal right; in such a case, the law
presumes damage although actual or compensatory
No moral or exemplary damages was awarded. damages are not proven [Gonzales v. People, G.R. No.
Nevertheless, when confronted with their failure to 159950 (2007)].
deliver on the wedding day the wedding cake ordered
and paid for, petitioners gave the lame excuse that
delivery was probably delayed because of the traffic,
when in truth, no cake could be delivered because the
order slip got lost. For such prevarication, petitioners
must be held liable for nominal damages for
insensitivity, inadvertence or inattention to their
customer's anxiety and need of the hour [Francisco v.
Ferrer, supra].

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  Temperate Damages equity, the principle affording relief to those definitely


injured who are unable to prove how definite the injury
[Republic v. Tuvera, G.R. No. 148246 (2007)].
Art. 2224, CC. Temperate or moderate damages,
which are more than nominal but less than There are cases where from the nature of the case,
compensatory damages, may be recovered when definite proof of pecuniary loss cannot be offered,
the court finds that some pecuniary loss has been although the court is convinced that there has been such
suffered but its amount cannot, from the nature of loss. For instance, injury to one's commercial credit or
the case, be provided with certainty. to the goodwill of a business firm is often hard to show
certainty in terms of money. Note: In this case actual
Art. 2225, CC. Temperate damages must be and temperate damages were awarded. It is
reasonable under the circumstances. postulated that the actual damages is for the car while
the temperate damages is for the lost actual income
These damages are awarded for pecuniary loss, in an not sufficiently proved.)
amount that, from the nature of the case, cannot be
proved with certainty. Factors in determining amount
The SC awarded temperate damages where from the
Requisites nature of the case, definite proof of pecuniary loss
1.   Actual existence of pecuniary loss cannot be adduced, although the court is convinced
2.   The nature and circumstances of the loss prevents that the plaintiff suffered some pecuniary loss. The SC
proof of the exact amount also increased the award of temperate damages from
3.   They are more than nominal and less than P100,000 to P150,000, taking into account the cost of
compensatory. rebuilding the damaged portions of the perimeter
4.   Causal connection between the loss and the fence [De Guzman v. Tumolva, G.R. No. 188072 (2011)].
defendant’s act or omission.
5.   Amount must be reasonable. Where there are receipts provided amounting to less
than P25,000
In cases where the resulting injury might be continuing Anent the actual damages, we note that the CA
and possible future complications directly arising from awarded P3,000.00 representing the amount spent
the injury, while certain to occur are difficult to predict, for the embalming as shown by the receipt. However,
temperate damages can and should be awarded on the prosecution also presented a list of expenses such
top of actual or compensatory damages; in such cases as those spent for the coffin, etc., which were not duly
there is no incompatibility between actual and covered by receipt. If the actual damages, proven by
temperate damages as they cover two distinct phases receipts during the trial, amount to less
[Ramos v. CA, supra]. than P25,000.00, the victim shall be entitled to
temperate damages in the amount of P25,000.00, in
Temperate damages are incompatible with nominal lieu of actual damages. In this case, the victim is
damages hence, cannot be granted concurrently entitled to the award ofP25,000.00 as temperate
[Citytrust Bank v. IAC , G.R. No. 84281(1994)]. damages considering that the amount of actual
damages is only P3,858.50. The amount of actual
Temperate damages are included within the context damages shall be deleted [People v. Lucero, G.R. No.
of compensatory damages. [Tan v. OMC Carriers, 179044 (2010)].
supra].
Where no receipts were provided
The SC awarded temperate damages in lieu of actual The award of P25,000.00 as temperate damages in
damages for loss of earning capacity where earning homicide or murder cases is proper when no evidence
capacity is plainly established but no evidence was of burial and funeral expenses is presented in the trial
presented to support the allegation of the injured court [People v. Gidoc, G.R. No. 185162 (2009)].
party’s actual income [Pleno v. CA, G.R. No. 56505
(1988)]. Where the amount of actual damages cannot be
determined because no receipts were presented to
Courts are authorized to award temperate damages prove the same but it is shown that the heirs are
even in cases where the amount of pecuniary loss entitled thereto, temperate damages may be
could have been proven with certainty, if no such awarded, fixed at P25,000. Considering that funeral
adequate proof was presented. The allowance of expenses were obviously incurred by the victim’s heirs,
temperate damages when actual damages were not an award of P25,000 as temperate damages is proper
adequately proven is ultimately a rule drawn from [People v. Surongon, G.R. No. 173478 (2007)].

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  Liquidated Damages Exceptions


1.   When there is a stipulation to the contrary.
2.   When the obligor is sued for refusal to pay the
Art. 2226, CC. Liquidated damages are those agreed penalty.
agreed upon by the parties to a contract, to be paid 3.   When the obligor is guilty of fraud.
in case of breach thereof.
The amount can be reduced if:
Art. 2227, CC. Liquidated damages, whether 1.   it is unconscionable as determined by the court
intended as an indemnity or a penalty, shall be 2.   there is partial or irregular performance.
equitably reduced if they are iniquitous or
unconscionable.

Liquidated damages are those damages agreed upon


by the parties to a contract to be paid in case of breach
thereof.

It differs from a penal clause in that in the latter case


the amount agreed to be paid may bear no relation to
the probable damages resulting from the breach.
Basically, a penalty is “ad terrorem,” while liquidated
damages are “ad reparationem.”

Requisites and characteristics


1.   Liquidated damages must be validly stipulated.
2.   There is no need to prove the amount of actual
damages.
3.   Breach of the principal contract must be proved.

Rules Governing Breach of Contract

Art. 2228, CC. When the breach of the contract


committed by the defendant is not the one
contemplated by the parties in agreeing upon the
liquidated damages, the law shall determine the
measure of damages, and not the stipulation.

Liquidated damages are those agreed upon by the


parties to a contract to be paid in case of breach
thereof. The stipulation on attorney’s fees contained in
the said Promissory Note constitutes what is known as
a penal clause. A penalty clause, expressly recognized
by law, is an accessory undertaking to assume greater
liability on the part of the obligor in case of breach of
an obligation. It functions to strengthen the coercive
force of obligation and to provide, in effect, for what
could be the liquidated damages resulting from such
a breach. The obligor would then be bound to pay the
stipulated indemnity without the necessity of proof on
the existence and on the measure of damages caused
by the breach [Suatengco v. Reyes, G.R. No. 162729
(2008)].

General Rule: The penalty shall substitute the


indemnity for damages and the payment of the
interests in case of breach.

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  Exemplary or Corrective Being corrective in nature, exemplary damages,


therefore, can be awarded, not only in the presence of
Damages an aggravating circumstance, but also where the
circumstances of the case show the highly
reprehensible or outrageous conduct of the
Art. 2229, CC. Exemplary or corrective damages offender. As in this case, where the offender sexually
are imposed, by way of example or correction for assaulted a pregnant married woman, the offender
the public good, in addition to the moral, has shown moral corruption, perversity, and
temperate, liquidated or compensatory damages. wickedness. He has grievously wronged the institution
of marriage. The imposition then of exemplary
In common law, these damages were termed damages by way of example to deter others from
“punitive.” committing similar acts or for correction for the public
good is warranted in quasi-delicts [People v. Alfredo,
The grant of temperate damages paves the way for the G.R. No. 188560 (2010)].
award of exemplary damages. Under Article 2234 of
the CC, a showing that the plaintiff is entitled to Art. 2231, CC. In quasi-delicts, exemplary
temperate damages allows the award of exemplary damages may be granted if the defendant acted
damages [Canada v All Commodities Marketing with gross negligence.
(2008)].
In this case, the defendant, the previous employer of
However, the award of P1,000,000 exemplary the plaintiff, wrote a letter to the company where the
damages is also far too excessive and should likewise plaintiff subsequently applied for employment,
be reduced to an equitable level. Exemplary damages stating that the plaintiff was dismissed by the
are imposed not to enrich one party or impoverish defendant from work due to dishonesty, accusing
another but to serve as a deterrent against or as a plaintiff of malversation of defendant’s funds.
negative incentive to curb socially deleterious actions Previous police investigations revealed that the
[PNB v. CA, G.R. No. 116181 (1996)]. defendant’s accusations against the plaintiff were
unfounded, and cleared the plaintiff of such
WHEN RECOVERABLE ‘anomalies’. Here, the lower court awarded exemplary
damages to the plaintiff, which the defendant
In criminal offenses questioned, averring that CC 2231 may be awarded
Art. 2230, CC. In criminal offenses, exemplary only for grossly negligent acts, not for willful or
damages as a part of the civil liability may be intentional acts. The SC upheld the grant of exemplary
imposed when the crime was committed with one damages, stating that while CC 2231 provides that for
or more aggravating circumstances. Such quasi-delicts, exemplary damages may be granted if
damages are separate and distinct from fines and the defendant acted with gross negligence, with more
shall be paid to the offended party. reason is its imposition justified when the act
performed is deliberate, malicious and tainted with
Award of exemplary damages is part of the civil bad faith [Globe Mackay v. CA, G.R. No. 81262 (1989)].
liability, not of the penalty.
In contracts and quasi-contracts
Damages are paid to the offended party separately Art. 2232, CC. In contracts and quasi-contracts,
from the fines. the court may award exemplary damages if the
defendant acted in a wanton, fraudulent, reckless,
Although an aggravating circumstance not oppressive, or malevolent manner.
specifically alleged in the information, albeit
established at trial, cannot be appreciated to increase REQUISITES
the criminal liability of the accused, the established
Art. 2233, CC. Exemplary damages cannot be
presence of one or two aggravating circumstances of
recovered as a matter of right; the court will decide
any kind or nature entitles the offended party to
whether or not they should be adjudicated.
exemplary damages under Article 2230 of the CC
because the requirement of specificity in the
information affected only the criminal liability of the Art. 2234, CC. While the amount of the exemplary
accused, not his civil liability [People v. Dadulla, G.R. damages need not be proved, the plaintiff must
No. 172321 (2011)]. show that he is entitled to moral, temperate or
compensatory damages before the court may
consider the question of whether or not exemplary

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damages should be awarded. In case liquidated DAMAGES IN CASE OF DEATH


damages have been agreed upon, although no Re. Crimes and quasi-delicts
proof of loss is necessary in order that such Art. 2206, CC. The amount of damages for death
liquidated damages may be recovered, caused by a crime or quasi-delict shall be at least
nevertheless, before the court may consider the three thousand pesos, even though there may
question of granting exemplary in addition to the have been mitigating circumstances. In addition:
liquidated damages, the plaintiff must show that (1)   The defendant shall be liable for the loss of
he would be entitled to moral, temperate or the earning capacity of the deceased, and the
compensatory damages were it not for the indemnity shall be paid to the heirs of the
stipulation for liquidated damages. latter; such indemnity shall in every case be
assessed and awarded by the court, unless
Art. 2235, CC. A stipulation whereby exemplary the deceased on account of permanent
damages are renounced in advance shall be null physical disability not caused by the
and void. defendant, had no earning capacity at the
time of his death;
Requisites to recover exemplary damages and (2)   If the deceased was obliged to give support
liquidated damages agreed upon according to the provisions of article 291, the
The plaintiff must show that he/she is entitled to recipient who is not an heir called to the
moral, temperate or compensatory damages: decedent's inheritance by the law of testate or
intestate succession, may demand support
from the person causing the death, for a
WHEN EXEMPLARY
IF ARISING period not exceeding five years, the exact
DAMAGES ARE
FROM duration to be fixed by the court;
GRANTED
(3)   The spouse, legitimate and illegitimate
The crime was committed
Art. descendants and ascendants of the deceased
Crimes with an aggravating
2230 may demand moral damages for mental
circumstance/s
anguish by reason of the death of the
Art. Defendant acted with
Quasi-delicts deceased.
2231 gross negligence
Defendant acted in a
Contracts In death caused by breach of conduct by a common
Art. wanton, fraudulent,
and Quasi- crime
2232 reckless, oppressive, or
contracts When death occurs as a result of a crime, the heirs of
malevolent manner
the deceased are entitled to the following items of
damages:
General Principles
1.   As indemnity for the death of the victim of the
1.   Exemplary damages cannot be awarded alone:
offense — P12,000.00, without the need of any
they must be awarded IN ADDITION to moral,
evidence or proof of damages, and even though
temperate, liquidated or compensatory damages.
there may have been mitigating circumstances
2.   The purpose of the award is to deter the
attending the commission of the offense.
defendant (and others in a similar condition) from
2.   As indemnity for loss of earning capacity of the
a repetition of the acts for which exemplary
deceased — an amount to be fixed by the Court
damages were awarded; hence, they are not
according to the circumstances of the deceased
recoverable as a matter of right.
related to his actual income at the time of death
3.   The defendant must be guilty of other malice or
and his probable life expectancy, the said
else negligence above the ordinary.
indemnity to be assessed and awarded by the
4.   Plaintiff is not required to prove the amount of
court as a matter of duty, unless the deceased had
exemplary damages.
no earning capacity at said time on account of
a.   But plaintiff must show that he is entitled to
permanent disability not caused by the accused. If
moral, temperate, or compensatory damage;
the deceased was obliged to give support, under
that is, substantial damages, not purely
Art. 291, CC, the recipient who is not an heir, may
nominal ones. This requirement applies even
demand support from the accused for not more
if the contract stipulates liquidated damages.
than five years, the exact duration to be fixed by
b.   The amount of exemplary damage need not
the court.
be pleaded in the complaint because the
3.   As moral damages for mental anguish, — an
same cannot be proved. It is merely incidental
amount to be fixed by the court. This may be
or dependent upon what the court may award
recovered even by the illegitimate descendants
as compensatory damages.
and ascendants of the deceased.

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4.   As exemplary damages, when the crime is


attended by one or more aggravating   Graduation of Damages
circumstances, — an amount to be fixed in the
discretion of the court, the same to be considered In crimes
separate from fines. Art. 2204, CC. In crimes, the damages to be
5.   As attorney's fees and expresses of litigation, — adjudicated may be respectively increased or
the actual amount thereof, (but only when a lessened according to the aggravating or
separate civil action to recover civil liability has mitigating circumstances.
been filed or when exemplary damages are
awarded). In quasi-delicts
6.   Interests in the proper cases. Art. 2214, CC. In quasi-delicts, the contributory
7.   It must be emphasized that the indemnities for negligence of the plaintiff shall reduce the
loss of earning capacity of the deceased and for damages that he may recover.
moral damages are recoverable separately from
and in addition to the fixed sum of P12,000.00 Contributory negligence
corresponding to the indemnity for the sole fact of The alleged contributory negligence of the victim, if
death, and that these damages may, however, be any, does not exonerate the accused in criminal cases
respectively increased or lessened according to committed through reckless imprudence, since one
the mitigating or aggravating circumstances, cannot allege the negligence of another to evade the
except items 1 and 4 above, for obvious reasons effects of his own negligence [Genobiagon v. CA,
[Heirs of Raymundo Castro v. Bustos, G.R. No. L- supra].
25913 (1969)].
If so, the disobedience of the plaintiff in placing
At present, the SC allows civil indemnity of P50,000 himself in danger contributed in some degree to the
in cases of homicide [De Villa v. People, G.R. No. 151258 injury as a proximate, although not as its primary
(2012)] and P75,000 in cases of murder [People v. cause [Rakes v. Atlantic, G.R. No. L-1719 (1907)].
Camat, G.R. No. 188612 (2012)].
(Supreme Court in this case cited numerous foreign
The omission from Article 2206 (3) of the brothers and precedents, mostly leaning towards the doctrine that
sisters of the deceased passenger reveals the contributory negligence on the part of the plaintiff did
legislative intent to exclude them from the recovery of not exonerate defendant from liability, but it led to the
moral damages for mental anguish by reason of the reduction of damages awarded to the plaintiff.)
death of the deceased. Inclusio unius est exclusio
alterius [Sulpicio Lines v. Curso, supra]. In determining the question of contributory
negligence in performing such act — that is to say,
whether the passenger acted prudently or recklessly —
the age, sex, and physical condition of the passenger
are circumstances necessarily affecting the safety of
the passenger, and should be considered [Cangco vs.
Manila Railroad Co., supra].

Plaintiff’s negligence
Even if Manila Electric is negligent, in order that it may
be held liable, its negligence must be the proximate
and direct cause of the accident [Manila Electric v.
Remonquillo, supra].

Both of the parties contributed to the proximate cause;


hence, they cannot recover from one another
[Bernardo v. Legaspi, supra].

In contracts, quasi-contracts and quasi-delicts


Art. 2215, CC. In contracts, quasi-contracts, and
quasi-delicts, the court may equitably mitigate the
damages under circumstances other than the case

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referred to in the preceding article, as in the illegal contract; no suit can be maintained for its
following instances: specific performance, or to recover the property
1.   That the plaintiff himself has contravened the agreed to be sold or delivered, or the money agreed to
terms of the contract; be paid, or damages for its violation; and where the
2.   That the plaintiff has derived some benefit as parties are in pari delicto, no affirmative relief of any
a result of the contract; kind will be given to one against the other."
3.   In cases where exemplary damages are to be
awarded, that the defendant acted upon the This rule, however, is subject to exceptions that permit
advice of counsel; the return of that which may have been given under a
4.   That the loss would have resulted in any void contract to:
event; 1.   the innocent party (Arts. 1411-1412, CC);
5.   That since the filing of the action, the 2.   the debtor who pays usurious interest (Art. 1413,
defendant has done his best to lessen the CC);
plaintiff's loss or injury. 3.   the party repudiating the void contract before the
illegal purpose is accomplished or before damage
GROUNDS FOR MITIGATION OF DAMAGES is caused to a third person and if public interest is
subserved by allowing recovery (Art. 1414, CC);
For contracts: 4.   the incapacitated party if the interest of justice so
1.   Violation of terms of the contract by the plaintiff demands (Art. 1415, CC);
himself; 5.   the party for whose protection the prohibition by
2.   Obtention or enjoyment of benefit under the law is intended if the agreement is not illegal per
contract by the plaintiff himself; se but merely prohibited and if public policy would
3.   Defendant acted upon advice of counsel in cases be enhanced by permitting recovery (Art. 1416,
where exemplary damages are to be awarded CC); and
such as under Articles 2230, 2231, and 2232; 6.   the party for whose benefit the law has been
4.   Defendant has done his best to lessen the intended such as in price ceiling laws (Art. 1417,
plaintiff’s injury or loss. CC) and labor laws (Arts. 1418-1419, CC).

For quasi-contracts: Liquidated damages


1.   In cases where exemplary damages are to be Art. 2227, CC. Liquidated damages, whether
awarded such as in Art. 2232; intended as an indemnity or a penalty, shall be
2.   Defendant has done his best to lessen the equitably reduced if they are iniquitous or
plaintiff’s injury or loss. unconscionable.

For quasi-delicts: Compromise


1.   That the loss would have resulted in any event Art. 2031, CC. The courts may mitigate the
because of the negligence or omission of another, damages to be paid by the losing party who has
and where such negligence or omission is the shown a sincere desire for a compromise.
immediate and proximate cause of the damage or
injury;
2.   Defendant has done his best to lessen the
plaintiff’s injury or loss.

The SC deemed CC 2215(2) inapplicable where the


harm done to private respondents outweighs any
benefits the plaintiffs may have derived from being
transported to Tacloban instead of being taken to
Catbalogan, their destination and the vessel's first
port of call, pursuant to its normal schedule [Sweet
Lines v. CA, G.R. No. L-46340(1983)].

Rule when contracting parties are in pari delicto


Generally, parties to a void agreement cannot expect
the aid of the law; the courts leave them as they are,
because they are deemed in pari delicto or "in equal
fault." In pari delicto is "a universal doctrine which
holds that no action arises, in equity or at law, from an

Page 496 of 497


U.P. LAW BOC TORTS AND DAMAGES CIVIL LAW

  Miscellaneous Rules DAMAGES THAT MUST STAND ALONE: Nominal


damages
Art. 2223, CC. The adjudication of nominal
DAMAGES THAT CANNOT CO-EXIST damages shall preclude further contest upon the
1.   Nominal with other damages right involved and all accessory questions, as
Art. 2223, CC. The adjudication of nominal between the parties to the suit, or their respective
damages shall preclude further contest upon the heirs and assigns.
right involved and all accessory questions, as
between the parties to the suit, or their respective
heirs and assigns.

The propriety of the damages awarded has not been


questioned, Nevertheless, it is patent upon the record
that the award of P10,000 by way of nominal damages
is untenable as a matter of law, since nominal
damages cannot co-exist with compensatory
damages [Vda. De Medina v. Cresencia, G.R. No. L-
8194 (1956)].

The purpose of nominal damages is to vindicate or


recognize a right that has been violated, in order to
preclude further contest thereon; “and not for the
purpose of indemnifying the Plaintiff for any loss
suffered by him” (Arts 2221 and 2223, CC)

Since the court below has already awarded


compensatory and exemplary damages that are in
themselves a judicial recognition that Plaintiff’s right
was violated, the award of nominal damages is
unnecessary and improper. Anyway, ten thousand
pesos cannot, in common sense, be deemed
“nominal”.

2.   Actual and liquidated


Art. 2226, CC. Liquidated damages are those
agreed upon by the parties to a contract, to be paid
in case of breach thereof.

DAMAGES THAT MUST CO-EXIST: Exemplary with


moral, temperate, liquidated or compensatory
There is no basis for awarding exemplary damages
either, because this species of damages is only
allowed in addition to moral, temperate, liquidated, or
compensatory damages, none of which have been
allowed in this case, for reasons herein before
discussed [Francisco v. GSIS, G.R. Nos. L-18287 and
18155 (1963)].

There was, therefore, no legal basis for the award of


exemplary damages since the private respondent was
not entitled to moral, temperate, or compensatory
damages and there was no agreement on stipulated
damages [Scott Consultants & Resource Development
Corp. v. CA, G.R. No. 112916 (1995)].

Page 497 of 497

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